Climate policy and politics

The current divergence is unlikely to disappear soon, as the forces of divergence are deeply rooted in domestic climate politics. At the same time, given the international interconnectedness of central banking, we expect global policy norms to provide sustained pressure toward convergence. In this context, the ECB could still scale back some of its proactive commitments (Van Doorslaer and Vermeiren 2022), although it is unlikely to entirely disavow its current stance. The Fed is likely to seek a more favorable compromise, such as assuring domestic audiences of policy restraint, while cooperating with international peers on less overt regulatory interventions.

[T]he body of research produced by political scientists is different from either of these two positions and shows that the problem is not simply a lack of political will. Making the clean energy transition happen is a political problem that is phenomenally complicated and filled with obstacles beyond those typically highlighted by either economics or physical sciences.[…] While the world is indeed beginning to engage in a clean energy transition away from oil and other fossil fuels, that transition can only be understood in the context in which oil is likely to be, at the global level, one of the largest primary energy sources for decades to come. Oil consumption might decline rapidly in some places, and some oil producers will be among the losers from the energy transition. Worldwide, however, the oil industry will continue to be a major force.