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What Are Governments For?

Given the emphasis on market mechanisms and investor rights, it is easy to lose sight of the fact that the job of governments is…to govern. Governing means drawing up the rules by which society functions. These may entail both mandates and incentives, and the best policy is ultimately one that combines a rich repertoire of appropriate tools. There is a proper role for markets, too. But the voluntary measures that have been embraced so eagerly in recent years are increasingly at odds with the planetary climate and sustainability emergency.

A broad range of governmental actions can steer economies toward climate stability and environmental sustainability. This includes rising energy efficiency standards for industrial equipment, buildings, motor vehicles, and consumer goods. Binding emission limits are another option, such as proposed carbon pollution standards for U.S. power plants that would effectively rule out conventional coal units. In many instances, such policies already exist but need to be made more ambitious and stringent.

Government regulation and market mechanisms can be combined in imaginative ways, as Japan's Top Runner program has shown since 1998. Efficiency standards for a wide range of products are set by committees composed of representatives from the manufacturing industry, trade unions, universities, and consumer organizations. They identify the most efficient model in a given product category. It becomes a baseline that all manufacturers must meet within 4–8 years, when the process is then repeated. This approach drives continuous innovation but also provides time for lagging manufacturers to catch up or to invent an even more efficient product.

Governments can contribute to greater sustainability by reorienting their own procurement budgets and infrastructure projects—for example, away from additional road building and toward public transport; away from sprawl and toward denser cities (which thereby tend to gain in livability).

Another field where government action is needed is in redirecting public financial streams from unsustainable to sustainable economic activities. This includes phasing out fossil fuel subsidies and ending financing by international development banks and national export credit agencies for fossil fuel projects. According to a preliminary analysis by the Natural Resources Defense Council, in just the 2007–13 period, the top four funders alone— Japan, the United States, Germany, and South Korea—have provided $37.7 billion for coal projects in developing countries. But Denmark, Finland, Iceland, Norway, Sweden, the United Kingdom, and the United States have now announced that they will no longer finance coal projects abroad.

An often-overlooked and potentially promising trend with respect to functional government is the apparent shift of impetus for action on critical sustainability issues from national governments, which have often dithered, to local and regional governments. As Monika Zimmermann discusses in Chapter 14, in the last 20 years or so local governments have radically stepped up their organizing, cooperation, and degree of commitment to addressing issues such as climate change. It is perhaps no coincidence that local and regional governing bodies are both closer (in distance as well as in degree of bureaucratic separation) to the people and communities governed, and less likely to be captured by special interests.

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