Understanding the role of regional influence and innovation in EU policymaking: Bavaria and Cars and CO 2

Introduction

This article examines the vertical and horizontal interaction between actors at different levels of governance that occurred in the development of the EU Cars and CO₂ Regulation. It explores whether Bavaria – an economically – and politically – powerful German state, with distinct political characteristics and a commanding auto-industry – influenced these processes. It allows for investigation of the role of the sub-national ‘state’ level in supra-national policy development and also explores the regional policy dynamics and embedded relationships between industry and government in Bavaria. Fostering innovation is a major priority for Bavarian regional policy, and this article explores how the government reconciles competing policy priorities in this respect.

The automobile sector is a significant contributor to the European economy. In 2013, 14.6 million passenger cars were produced in the EU-27, 22% of worldwide total. The industry turned over €843 billion or 6.6% of European GDP and was responsible for 12.7 million jobs, or 6% of total employment (European Automobile Manufacturers Association (ACEA), 2014). Just as Germany is a significant contributor to the European car market, Bavaria is one of the largest car manufacturing hubs in Germany, providing 23% of car industry-based jobs. Car manufacturing provides almost 30% of Bavaria’s economic output (€92.8 billion), making it the state’s most profitable sector (StMWIVT, 2011).

Just as the car industry is important for the European economy, it also has a considerable environmental impact. Transport accounts for 24% of EU-27 CO₂ emissions – 94% of these come from road transport (with 60% from passenger cars) (European Environment Agency, 2015). The transport sector has experienced the largest emission increase of all sectors – 36% (1990–2014) (European Commission, 2014) and it is expected to continue to grow as other sectors’ emissions begin to stabilise. There is a clear imperative for ‘aggressive and sustained reductions’ to come from the sector (IPCC, 2014). But in order to address the impact of the sector, entire business models need to change; innovation needs to be focused towards lower emission cars and new forms of mobility. This poses a strategic and economic challenge for many car companies and is not a natural evolution for the industry (Hildermeier and Villareal, 2011).

Nevertheless, the need for action was acknowledged by the car industry in 1998, when Directive (93/116/EC) committed ACEA members to voluntarily reduce tailpipe emissions of new passenger vehicles sold to an average 140 g CO₂/km by 2008. By the mid-2000s, it was clear the target of these voluntary agreements (VAs) were not going to be achieved. By 2004, the average emissions had fallen from 186 g CO₂/km in 1995 to just over 160 g CO₂/km.

Contemporaneously, Europe’s first Climate Change Programme – established in 2000 – explored appropriate policies to achieve the EU Kyoto target. In 2005, the second iteration reframed responses around the Lisbon strategy for increasing economic growth and job creation (DG Clima, 2011). In 2007, the ‘20–20–20’ climate and energy package was announced to deliver 20% GHG reduction on 1990 levels by 2020. ¹ The targets became law in 2009. In 2011, the ‘Roadmap for moving to a low-carbon economy in 2050’ established longer-term plans. Centrally important in EU policy processes is the idea of climate policy mainstreaming which:

… means that actors whose main tasks are not directly concerned with […] climate change also work to attain these goals. (DG Clima, 2010a)

In 2005, a high-level group was established by the Commissioner of the European Directorate-General for Enterprise (DG ENTR) to make short-, medium- and long-term recommendations for the European automotive industry (DG Entr, 2006). This CARS-21 group suggested an ‘integrated approach’ to reduce CO₂ emissions, to involve all relevant stakeholders (manufacturers, fuel suppliers, drivers, governments, etc.). This demonstrates both the ‘climate mainstreaming’ of the issue within the automotive sector and recognises that multi-stakeholder activity is required to deliver the goal of emission reduction.

Following the failure of the VAs, in 2007 the Commission decided that binding legislation was needed to achieve the necessary emission reductions (Euractiv, 2011). European Commission (2007) Communication 19 to the Council and Parliament outlined plans to pursue a 120 g CO₂/km by 2012 target. In the period 2007–2009, when the legislation was introduced, the proposed law went through a number of negotiations and the eventual standard set by the Directive required 100% of new cars sold in 2015 to emit 130 g CO₂/km and 95 g CO₂/km by 2020 (T&E, 2011), but allowed for an ‘integrated approach’ whereby emissions are reduced to 130 g CO₂/km by fuel efficiency improvements, with the additional 10 g CO₂/km being achieved by ‘complementary measures’. Significantly, Cars and CO₂ is different from common rulemaking in that the regulation is imposed directly on industry, not on the Member States, so the conventional EU policy and law making frameworks do not apply in the same way for this Directive. Navigating new industrial and governmental relations is therefore a central consideration for the law and its implementation. This article is primarily focused on the two-year period between 2007 and 2009 and the negotiation that took place to shape the Directive into this form. ²

Particularly, there is an interesting trade-off to understand between the strong narratives of economic growth that dominates development in the auto-sector, with those of environmental protection and the necessity to reduce emissions from the industry, which Cars and CO₂ is designed to address. The incompatibilities between economic growth and environmental sustainability are well documented in the literature generally (Arrow et al., 1995; Ekins, 2000; Meadows et al., 1972; Rockström et al., 2009) and in terms of the motor vehicles (Banister et al., 2011; Button, 1993; Whitmarsh and Köhler, 2010).

Research on understanding the institutional change required for such environmentally focused regimes as Cars and CO₂ to be successful is still in its infancy (Young, 2010), and whilst attention has been paid to Germany’s role in supporting its industry’s interests in the development of the regulation (Gulbrandsen and Christensen, 2014; Hey, 2010; Hildermeier and Villareal, 2011; Schwedes et al., 2013), the role of the state/sub-national level has been left relatively unexplored. As Uyarra and Flanagan (2010) emphasise, there is a need to understand the policy dynamics which affect regional spaces and the complexity of the multi-level policy mix.

Therefore, this article contributes an interesting case study not only for its in-depth exploration of a legislation designed to compel actors whose primary concerns are profit margins and growth to deliver emission reductions, but also by exploring the questions ‘how’ is policy development progressed and ‘by whom’, focusing particularly on changes to multi-level, multi-actor governance.

It is not the intention of this article to prove that without Bavaria’s interventions, Cars and CO₂ would or would not have been developed, but more to indicate where it has played the role of regional influencer to shape the policy. It is clear that numerous factors played a part in the resulting regulation. The article’s main objective is to understand the interactions between levels of government (supra-national – EU, national – Germany and sub-national – Bavaria) and with industry in formulating Cars and CO₂. It explores how Bavaria took steps to influence the negotiations of the regulation to ensure that it would protect its regional economic interests and most influential players.

As it is concerned with different levels and multiple policy areas, a conceptual framework was developed using elements of Young’s (2002, 2008, 2009) institutional interplay (II), Kooiman’s (1993, 1999, 2000) social-political governance (SPG) and ideas from Chhotray and Stoker’s (2009) cross-disciplinary governance (CDG) to navigate the governance landscape of the regulation. Two key themes are explored in the article – scale is concerned with an exploration of the multi-level interactions between governments, and scope is concerned with the interplay between government and industry in Bavaria.

This approach is elaborated on in the next section before a brief overview on the history and context of Bavaria and its industry is offered. The activities that took place during the Cars and CO₂ Directive’s passage into law will be discussed, as well as the specifics of the legislation. The insight derived from the research is offered before a discussion of what these findings can infer about the broader political landscape for governing environmental policy developments now and in the future.

Approach

The findings of this article were obtained from a larger international comparative study that investigated the role of sub-national governments in the development and implementation stages of various policies tasked to reduce emissions from transport. Utilising the case study approach allows for a systematic study of actual experience in policy development (Rabe, 2007), which contributes to our knowledge of individuals, groups, organisational, social, political and related phenomena (Yin, 2009). Semi-structured interviews were conducted with professionals involved in or aware of the policy development process, ‘as a means of eliciting relevant, valuable and analytically rich data’ (Barbour, 2008: 114) and to allow participants to share relevant experiences and knowledge about the case study context as well as discuss the policy in question.

Twenty participants, a mix of transport and environment/climate change professionals at state, national and EU government levels, as well as industry, academia and NGO actors were interviewed between March 2010 and March 2011 to examine their role in and perspectives about the Cars and CO₂ regulation (see Appendix 1 for a list of interviewees). The data collection faced challenges, the ‘standard policy response’ that was offered by a number of the participants limited the insight that could be drawn from the interviews. In addition, many of the car companies in Bavaria were unresponsive to interview requests. Input from some of the centrally relevant industry actors was limited to and reliant on official strategic documents and statements, which did not offer the additional insight to be expected from interviews. Official company perspectives were gathered from published resources to supplement the primary research material.

The case study approach was underpinned by the development of a multi-disciplinary theoretical framework, which draws from literature within and outside political studies and is situated in emerging theories of governance. It links the concepts of II, SPG and CDG to examine the multi-actor, multi-level interactions at play in the development of Cars and CO₂. Whilst the initial study had a broader, more in-depth focus on additional elements of the legislation, this article focuses on two key themes – scale and scope.

In their work on multi-level governance (MLG), Hooghe and Marks (2003) describe a ‘system of continuous negotiation among nested governments at several territorial tiers—supranational, national, regional and local’ (3). However, it could be contested that negotiation is often far from continuous and that there is much diversity between interactions occurring between different levels throughout the policymaking process. Indeed, when thinking specifically about the governance of climate change and the policies being develop to address its impact, Betsill (2011) affirms that interactions are more fluid and less formulated; that a more complex multi-level process in global climate change governance is emerging. For these reasons, it is necessary to look beyond the traditional understanding of MLG for additional theoretical tools to help explain the processes under scrutiny here.

II is a concept developed by Young (2002, 2008, 2009) in the field of international relations, which examines the relationships between national governments and international institutions. Young distinguished horizontal (at the same level) and vertical (across levels) interplay as well as functional (whereby standard activities influence operation of another entity) and political (intentional linking to pursue goals) interplay. He suggests that in most cases, the key to success lies in allocating specific tasks to the appropriate level of social organisation and then taking steps to ensure that cross-scale interactions produce complementary rather than conflicting actions. These concepts offer a useful typology to determine the nature of the cross-scalar relationships under examination. This research expands on Young’s original work, by applying II to a multi-level setting and also seeks to contribute to better understanding task allocation across levels. Cars and CO₂ offers a unique and novel opportunity for such insight given that it is the first example of a EU law whose successful implementation required direct engagement with a new set of actors.

Kooiman (1993, 1999, 2000) developed the idea of SPG in which he refers to lengthening ‘chains of interaction’ that are brought about by increasingly complex societal changes. This concept is a useful complement to II because in addition to determining the type of interaction, it is possible to see whether a proliferation of the number of actors (across scales) and interactions is taking place, which results in a blurring of dividing lines between sectors and levels. The societal change in this instance is the need to respond to climate change through emission reduction, which will result in the necessity to bring diverse actors together and create more interaction. Understanding how chains lengthen and which actors are involved is important to understand how blurring (or not) existing lines may inhibit or impede successful policy implementation.

Finally, in taking elements from international relations, socio-legal studies, economics and development studies, as well as political science, Chhotray and Stoker (2009: 228–229) have developed CDG theory with some centrally important characteristics:

Appropriate governance arrangements should be developed in the context of a particular policy challenge or problem as opposed to particular country or system;

Utilising these theories in combination, a conceptual framework with four distinct research themes was developed to undertake the comparative analysis between the case studies under scrutiny – scale, scope, leadership and process. Figure 1 outlines the elements of each of these themes that are investigated here. Scale refers to the vertical interactions occurring across levels of government and scope refers to the policy focus (transport/climate change) and the horizontal interactions within and outside government. Notions from II and SPG informed both of these themes. Leadership/power refers to the role of distinct agents or organisations in influencing, promoting or preventing policy development and implementation. Process refers to specific details of policy development and implementation. These themes were informed by CDG. There is an element of cross-over between these themes and many responses obtained in the research cut across themes; nonetheless, this framework provided structure to help explore the organisational and process governance of the case studies in the larger study. OPEN IN VIEWER

In this paper, the framework is used to examine how the interactions between agents and organisations in the Bavarian context played a role in shaping the development of Cars and CO₂ at the European level. Here, the scale and scope elements of the research are the primary focus. The role of the Bavarian government in influencing policy development at other levels is the main element of the scale theme. The scope theme is used to explore the relationship between the auto industry in Bavaria and the government. Although CDG is not utilised in depth here, the insight it offers the case study is briefly reflected upon. First, in order to fully understand the governance arrangements under scrutiny, and with the importance of context and history in mind, the next section offers background information on the state of Bavaria, before the following section explores the development of Cars and CO₂ in depth.

The ‘Bavaria effect’ ³

Germany’s basic law (Grundgesetz) formulated in 1949, divides power between the 16 states (Länder) and the central government and holds that states can implement federal law to suit their own circumstances, so long as not specified otherwise in the Grundgesetz (Müller-Graff, 2005). This affords states a significant degree of autonomy. In Germany, certain areas of policymaking reside with the states, but may also be considered as an area over which the EU has jurisdiction and this can create tension between levels and render responsibility for particular policy areas unclear or contested. Each state has a permanent office in Berlin and many, including Bavaria, have a presence in Brussels to enable state interaction with national and European policymaking.

Despite many similarities with the other states, Bavaria is seen as distinct for several reasons. The primary distinction is political. Bavaria can be seen as a ‘system within a system’ (James, 1995: 1). The Christian Social Union of Bavaria (CSU) shares a special relationship with the Christian Democratic Union (CDU) – one of the two major parties in Germany’s political system – not replicated elsewhere in Germany. CSU has dominated Bavarian politics since 1957, winning all subsequent elections. In the 2008 state election, CSU and Free Democratic Party formed a coalition and this was the ruling government during the period under examination in this article. In 2013, the CSU won the election with an absolute majority. Such political stability and connection to the federal level enables Bavaria to be a politically powerful force in steering national politics. Hepburn (2008) suggests that Bavaria and the CSU in particular – with its conservative social and cultural values – identify with concepts of ‘Heimat’ (homeland), conceiving of the state as a nation.

Bavaria’s situation can also be attributed to historical developments over the last century, which saw it change from a largely agricultural-based economy, with small areas of industrial activity, to emerge as a hub of high-technology industries in the post-war period (Mintzel, 1993). Bavaria has managed to maintain the political principles of its agrarian system whilst establishing ‘a tool-making, engineering culture’ (Geoghegan, 2010: 7), along with the rest of Germany, which makes it competitive and importantly rich (Geoghegan, 2010).

Both Germany and Bavaria have a powerful industrial lobby and influential luxury car market which contributes significantly to the state, national and EU economies and to shaping and resourcing innovation and technological development. Bavaria’s economy is amongst the largest and healthiest in Germany and Europe. GDP in 2013 was €488 billion, second only to North Rhine-Westphalia (NRW) (Statistische Ämter des Bundes und der Länder, 2014). The large companies headquartered in Bavaria include vehicle manufacturers BMW and Audi and 16% of all automotive industry suppliers, including Siemens and Continental. The industry accounts for 25% of all Bavarian manufacturing activity (Invest in Bavaria, 2011). In describing the distinct ‘carscape’ of Germany, Wells (2010) cites both Audi and BMW alongside Mercedes in describing the large, high power cars of Germany that are supported by wealth and the autobahn system. Bavaria’s cars are embedded in Germany’s auto-culture.

Bavaria is clearly seen as an important economic and political influencer in Germany. In this research, Bavaria was referred to as ‘big’, ‘important’, as ‘a special place’ of ‘special importance’ and ‘well-recognised’ in federal policy by interviewees. However, the formal role that sub-national governments (like Länder in Germany) play in EU policymaking is contested.

Although certain sub-national entities (like Bavaria) have higher populations and economic output than some entire European Member States and therefore their inclusion could be justified, state governments are not formally recognised as participants in EU policymaking. However, Baker (2001) sees the EU as a policymaker, leaving implementation to the lower levels, and over recent years, states have clearly assumed an informal role in policy development. Weatherill (2005: 27) emphasises the ‘sophisticated models of involvement (on paper at least)’ used by German states to shape ‘their’ Minister’s stance in (EU) Council. And the presence of permanent sub-national offices in Brussels highlights that these entities have carved a role in lobbying and negotiation, which indirectly influences policy development. And through interacting with these offices, this role is reinforced by the EU.

Using the case of Bavaria and Cars and CO₂, it is possible to better understand the informal role played by sub-national governments in policy development at the EU level. It is first important to understand the policy development process of Cars and CO₂ before examining the role that Bavaria played in shaping the final regulation.

Developing Cars and CO₂

Following the announcement of the need to regulate tailpipe emissions, the legislation that became Cars and CO₂ took 18 months to develop. The proposal went through the following stages before becoming binding legislation:

19 December 2007: Commission presented the draft;

This timeline demonstrates the tension between the industry and environmental lobbies, which played out in the respective committees and led to a ‘watering down’ of the Regulation. The compromise agreement also made a number of additional concessions, perhaps most significant is the consideration of electric vehicles as zero emission for the purposes of the law. This decision has been criticised because it does not consider ‘upstream’ emissions from (non-renewable) electricity generation, but also because ‘supercredits’ ⁴ allow carmakers to sell 3.5 high-emitting vehicles for every electric vehicle sold and still reach their designated target. This will likely cause emissions to rise, not decline (T&E, 2009). Other features of the legislation include:

– Phasing-in: 65% of new cars must reach target in 2012; 75% in 2013; 80% in 2014 and 100% in 2015.

The law that was finally enacted contains loopholes and dispensations for the auto-manufacturers, which make it easier to achieve the targets set. This outcome is a result largely due to the lobbying, particularly from the French and German car industry, which met the Commission’s proposal to introduce binding legislation. German Green MEP Rebecca Harms stated at the time that ‘There was a big fight with industry and governments, and the Germans and French were adding a lot of pressure’ (Euractiv, 2008). According to Hey (2010: 211), Germany’s opposition – particularly the targets and timetable – was so strong and effective that the political agreement achieved on 1 December 2008 ‘mainly reflects German industrial policy interests’. Indeed, the need to balance environmental considerations with economic impacts is clear in a comment by then German chairwoman of the EU Parliament’s Industry Committee Angelika Niebler – ‘We have climate legislation that will also ensure that people can keep their jobs’ (Stearns, 2008).

The integrated approaches and mainstreaming of climate action that have been called for in European law and policymaking were met with resistance as demonstrated by the regulation that was agreed upon. But the extent to which Bavaria contributed to shaping Cars and CO₂ to maintain its own industrial policy interests warrants further exploration.

Bavaria and Cars and CO₂

To ascertain whether Bavaria played a role in influencing the development of Cars and CO₂, interview participants were asked a series of questions which were grouped into themes relating to various aspects of the policymaking process. The findings presented here represent just two of the major themes – the role of Bavaria generally in policymaking at both the national and the EU levels (scale), and the relationship that the Bavarian state government has with the auto-manufacturing sector in the state (scope). From the responses offered around these two major themes, it became evident that the role of research and innovation in the state also warranted further exploration and discussion. The themes are explored in turn here, before turning to a broader discussion on the findings and their significance to understanding multi-level policymaking.

Bavarian influence on national and EU policymaking (Scale)

In order to understand the role of the state government in multi-level policymaking, participants were asked whether Bavaria influences policymaking at other government levels (Table 1). The question was not posed specifically about Cars and CO₂, but more generally in order to understand any existing precedent for interaction between government levels. The crosses in the table determine whether the participants saw Bavaria having an influence over (a) German (national) or (b) EU (supra-national) policymaking. It is not intended to be an exhaustive or even comprehensive account of multi-level interactions, but more to identify whether they exist, to highlight that there are different mechanisms for interaction and different perceptions of interactions within multi-level, multi-actor policy settings. The information in the comments demonstrates the formal and informal mechanisms used by Bavaria (and others) to influence policy at the other levels and that states can and do have distinct relationships with different levels of government.

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Table 1.

Does Bavaria influence national and EU policymaking?

Participant	Bavaria >  Germany	Bavaria >  EU	Comments	Type of influence
NGO		x	German Länder are really strong at influencing the European Parliament. […] In Germany there are bodies to reflect the Länder position when the government position is being formed, yet they all have offices here, and they are actively lobbying their national MEPs […] And the most active ones are Bavaria and Baden Württemberg, the ‘car making offices’.	Informal – lobbying
State government	x	x	Bavaria monitors what's happening on the European level. […] Information is really important, what's happening, so that you can influence it only at a really early stage and that's why we're watching the developments. The influence which the Länder has on the federal level is possible through the Länder Vertreter in the Bundesrat.	Informal – information gathering
State government	x		Bavaria is special, you have this subunit for the Conservative Party and also what the state of Bavaria says in the Bundesrat has some special importance.	Formal – via national government
National government	x	x	It [Bavaria] has a much stronger position than the other states on a political level (due to CSU). Also active at the National and European level. Lobbying for its own interests (given its manufacturing – BMW – and its agricultural interests.) Some [Bavarians] would say that influencing Brussels is more important than influencing Berlin. German government is careful in not acting against them.	Informal – lobbying
DG (EU level)		x	So far, until the Lisbon treaty went into force, local government was not very explicitly recognised in the EU multi-level governance framework. That has now changed a bit. Local government is a stakeholder in the debate.	Formal – recognised stakeholder
Bavaria permanent representation in Brussels (BVB)		x	Yes but the liaison is a rather informal one […] of course we influence but not on the European scale – we would run into troubles because of negotiations and the Council. A formal German point is formulated in Berlin […] If we want to influence the position we have to influence the German position and that would be done not via Brussels but via Munich.	Formal – via national government
SG (EU level)		x	As regards formal negotiations – it's always led by the German federal government […] their role […] as a kind of forum to bring together different views, and they have quite a big budget for that, so there's a high level involvement of all the stakeholders around the table. But in terms of formal negotiations and formal processes, they are not in the picture […] they're like a lobbyist, they're not speaking as a Member State.	Informal – knowledge exchange; lobbying
Academic			They look at what is happening on the European level and try to adjust their way forward. Most of these activities are in line but we are a little bit ahead of what is coming from the Commission.	Informal – information gathering

Bavaria has a formal role in influencing the national government and in this manner it can input to developments at the EU level. Informal mechanisms such as information gathering, knowledge exchange and lobbying are all recognised as playing a role in influencing EU policy developments.

Interestingly, the table demonstrates that more participants saw that Bavaria influences the EU than the German government. There are several reasons why this may be the case. Mechanisms exist for formal state involvement in federal policymaking – the Landesvertretung and the Bundesrat. The ‘German position’ is formulated after negotiations in this forum have been undertaken, with input from each of the states – therefore it can be considered less as influence (or as political interplay – following Young), and more as procedure or functional interplay. Participants did, however, reference Bavaria’s ‘special role’ in this system, perceiving it as somewhat distinct from the rest of the states – in part because of the CSU and in part because of its industrial interests.

The Bavarian administration is well recognised within the Federal system and also with the other states so in many fields other states look at Bavaria […] It also has to do with our strong party CSU. (Participant, State government)

However, the mechanisms available to influence EU policy are more peripheral and informal. The physical presence of the permanent representation in Brussels – Bayerische Vertretung in Brüssel (BVB) – was highly valued by participants as an influencing tool, due to the events and bilateral meetings conducted at this venue and the ‘visibility’ ⁵ of these activities. That Bavaria takes steps over and above the formal mechanisms provided in Germany, illustrates that it is undertaking activities of political interplay – to intentionally link with actors across scales to pursue its own goals. The Bavaria effect was acknowledged by interviewees – it was seen that Bavaria could influence and was more visible than other regional representations:

Bavaria has a special role to play if you consider our economic impetus and our sheer size. […] We are not better than others but we have a very prominent role here […] Bavaria invests in the European future in sending people like me here to do this work and to provide the expertise. Other German Länder; their representation is four/five people, we've about thirty people. (Participant, BVB)

In terms of Cars and CO₂, interviewees highlighted specific examples of how Bavaria contributed to influencing the outcome of the regulation. It is clear that no formal role was played at the EU level, aside from interacting with regional Politicians at the European level:

With the EU cars regulation there are none whatsoever representatives of Bavaria sitting at the table. […] We have one formal angle of attack, it's working with the Bavarian parliamentarians […] on amendments during the process of legislation. (Participant, BVB)

However, knowledge exchange and stakeholder engagement were identified as the two primary informal mechanisms utilised by Bavaria to interact with and influence the negotiations. Such involvement was perceived as unprecedented.

The Bavarian representation here in Brussels was hosting debates on these car issues, they had both Commissioners Dimas and Verheugen attend an event which is unheard of. Normally the Commission sends one person not two. They have been very present in influencing, trying to shape the debate and [in my understanding], the 2014 phase-in target is 80% for the simple reason that BMW couldn't meet any other target. (Participant, NGO) ⁶

They [Bavarian permanent representation] organise a lot of useful events including stakeholders conferences, seminars where there's an exchange of information, a debate on the various policies. And it happened quite a lot also on the cars at the time. (Participant, SG)

Many participants put this influence down to its industrial activity and economic weight. It is apparent that in the context of Cars and CO₂, the interplay taking place is much more political with intentional linking with relevant actors across levels to try and shape the outcome, primarily to support the interests of companies located within the state.

Examining the extent to which the industry is embedded in regional governance is important in order to understand the rationale for Bavaria influencing the Cars and CO₂ negotiations.

Conclusion

The original governance framework developed by incorporating II, SPG and CDG to investigate the case study was useful for analysing the activities under scrutiny. It enabled an exploration of both multi-level, multi-actor interaction (scale) and regional government and industry dynamics (scope). However, in focusing the article on only two of the themes, the insights that can be derived from CDG have been limited.

However, it is clear that history does indeed matter here, Bavaria’s industry fought long and hard to become the market leader of luxurious vehicles and Cars and CO₂ in its original guise stood to jeopardise this.

In Germany, the Grundgesetz assures the state a role in domestic policymaking. The CSU’s strong political ties to CDU enables Bavaria to influence the federal position, and because culturally Bavaria plays a strong role in shaping Germany’s external identity and is home to some of the world’s most iconic brands, it clearly demonstrates political and economic influence within Europe, both formally and informally.

The case of Bavaria and Cars and CO₂ highlights that sub-national government clearly has a role in EU decision-making, albeit it informal. Bavaria was identified as an influential stakeholder through facilitating multi-level, multi-actor policy development and bringing decision-makers together. Given the limited mechanisms for formal engagement, this informal role is centrally important.

Bavaria also played a confrontational role in shaping Cars and CO₂, through direct lobbying and working with the German government and car companies in the state to negotiate an acceptable emission standard that would not restrict too severely the ability of the auto-manufacturers in the region to continue to create luxury vehicles. Disagreement and conflict appear to be prominent and effective policymaking tools in Europe, with fierce contest to preserve economic interests. Both formal and informal procedures and unconventional methods of negotiation were seen throughout the case study.

In the Bavarian and German contexts, the interactions between government (across levels) and industry are more embedded and well established. Economic considerations are fundamental to all of Bavaria’s decision-making. So whilst references are made to climate change mainstreaming and integrated approaches, it is worth noting that all efforts across scales remain caveated with ‘so long as it makes economic sense’.

Whilst Bavaria has had the luxury of fairly sustained, stable political rule, it is not entirely immune to the shocks. There needs to be recognition that as multi-level policy gets implemented, there will be knock-on effects and changes across scale. It is less easy to mitigate against these, but this is one of the reasons why increased dialogue and less fragmentation is necessary. Understanding better how the regional level is involved in and can influence multi-level policymaking is important and therefore this study goes some way to improving knowledge in this area.

More long-term planning would be advisable, and although unlikely, a shift away from economic framing would help to address some of the major environmental issues, climate change included. The path-dependency that is driven by an underlying commitment to economic growth (Carter, 2007) should not be underestimated. However, the recent events surrounding the so-called ‘dieselgate’ scandal may well bring about some of the needed institutional changes to move the industry towards the cleaner vehicles that are required to meet the CO₂ standards.

Whilst the uniqueness of Bavaria clearly had a role to play in ensuring the final Cars and CO₂ Directive was palatable for the region’s industry, there are some transferable lessons that this case study can provide on the subject of multi-level policymaking more generally. There is not necessarily a lack of interplay between stakeholders across levels and departments of government and with industry, but there are insufficient structures in place to cope with the new policy challenges that current and new collaborations are seeking to address. It is clear that as policy problems become more complex and as more actors and agencies become involved in the developments to resolve these issues, effort needs to be placed on understanding where action is best taken, at what level, and by whom, and these decisions need to be made cooperatively.

Bavaria is clearly influential in decision-making across levels and regarded as a leader by fellow state governments. If Bavaria could utilise its political stability, frugal mind-set, technical expertise and innovative profile and focus attention towards decarbonising the automobile industry it has been instrumental in developing, emission reduction would surely follow.