Conference Agenda

Climate change mitigation undoubtedly proves a political matter, thereby stalling efficient energy transition. Hence, a natural question seems to arise: are certain political systems more capable than others of conducting effective climate policy? On the one hand, authoritarian governments possess the necessary apparatus to implement unpopular but effective solutions. Yet, in practice, it appears that these tools are not utilised for environmental goals to a degree comparable with democratic states. This paper aims to establish the theoretical impact of such institutional conditions (i.e. level of democracy) on the economics of climate change mitigation. Thus, we rely on a dynamic adaptation of the seminal model of political economy by McGuire and Olson (1996) and introduce a climate externality. The results suggest that lower democratic accountability is associated with fewer cumulative emissions. This is achieved, however, by reduced economic growth and the ability to constrain societal consumption rather than higher investment in renewables. We show that a positive democracy shock contributes to increased investment in renewables, as well as fewer emissions when expressed as a percentage of output. Moreover, democratic policymakers prove more efficient in limiting emissions in the event of a climate shock.