Modest (insipid) Green New Deal proposals miss the point – Part 2

This is the second and final part of my recent discussion on the what a Green New Deal requires. All manner of proposals seem to have become part of the GND. The problem is that many of these proposals sell the idea short and will fail to achieve what is really required – a massive transformation of society and the role the government plays within it. The imprecision is exacerbated by progressives who are afraid to go too far outside the neoliberal mould for fear of being shut out of the debate. So we get ‘modest’ proposals, hunkered down in neoliberal framing as if to step up to the plate confidently is a step too far. In Part 1, I argued that the progressive side of the climate debate became entrapped, early on, by ‘free market’ framing, in the sense that the political response to climate action has typically emphasised using the ‘price system’ to create disincentives for polluting activities. In Part 2, I argue that we have to abandon our notion that the role of government in meeting the climate challenge is to make capitalism work better via price incentives. Rather, we have to accept and promote the imperative that governments take a central role in infrastructure provision, rules-based regulation (telling carbon producers to cease operation) and introducing new technologies.

The very influential and early contribution in 1976 published by Foreign Affairs (Volume 55, No.1, October, pp. 65-96) from Amory Lovins – Energy Strategy: The Road Not Taken? – set the pattern of how I consider the progressive environmental movement started to lose its way in this debate.

Lovins argued that:

Though economic answers are not always right answers, properly using the markets we have may be the greatest single step we could take toward a sustainable, humane energy future.

He then proposed a series of pricing initiatives that would work through the market to “help us use energy efficiently and get it from sustainable sources”.

The idea is simple – firms offer goods and services to consumer at a price which reflects their costs and targetted profit margin.

If their production costs do not fully reflect the use of resources needed to create the goods and services, then the price offered to the ‘market’ will be too low and consumers will be encouraged to buy ‘excessive’ quantities.

Excessive in relation to the ‘optimal’ quantity.

This is the so-called ‘market failure’ case – where the market fails to allocate productive resources in a socially optimal way. It is standard neoclassical microeconomics.

The solution, in this framework, is to force the ‘unpaid for’ costs onto the producer (via a tax or financial imposition of some sort) which will then be passed on in the form of a higher price, which will then see consumers shift their spending, somewhat, towards other goods and services.

At the basis of the ‘solution’ is the belief that there is a trade-off between, say, environmental damage and economic growth (production).

And the market failure skews that trade-off towards growth at the expense of environmental health.

So all that is needed is some intervention (a tax) that will skew the trade-off back to something more preferable.

The problem is that the whole idea that there is a trade-off between protecting our environment and economic production is flawed at the most elemental level.

There is no calculus (which underpins this sort of microeconomic reasoning) that can tell us when a biological system will die. The idea that we can have a ‘safe’ level of pollution, regulated via a price system, is groundless and should not form part of a progressive response.

Carbon trading schemes (CTS) are neoliberal constructs which start with the presumption that a free market is the best way to organise allocation.

CTS privatise the commons asset we call the natural environment and thus create private property relations over public space.

Further the political and institutional realities militate against this sort of solution.

Too often we see situations where governments compensate consumers for the higher prices if their power bills rise as a result of a carbon tax (Australia).

We see large industry lobby groups forcing governments to give them free carbon permits (aluminium in Australia) or exemptions altogether (agriculture in Australia).

The European Union Emission Trading Scheme (EU ETS), launched in 2005, demonstrated how quantity-based Carbon trading schemes can be compromised.

Phase I was a disaster – more permits were issued than measured pollution with the result that the market collapsed from excess supply of permits.

Verified emissions rose during Phase I.

Phase II was compromised by heavy lobbying from large polluters which resulted in under-priced permits.

The Economist magazine article (March 3, 2012) – Breathing difficulties – concluded that the EU ETS was “failing wretchedly” to provide “firms an incentive to invest in clean technology”.

And it had only reduced “carbon-dioxide emissions” below the “agreed cap” because of “the economic malaise” (GFC), rather than the pricing initiatives.

The Economist Magazine concluded that:

Oversupplied with permits, the market has tanked. Having reached nearly €30 ($47) a tonne in 2008, the carbon price is now persistently under €10: much too low to prod firms to make their investment plans greener.

Further, in typical neoliberal sound finance vein:

The situation is about to get worse. The EU is in the process of selling an additional 300m permits to raise cash for green energy projects, adding to oversupply.

What was also evident – and this goes to the heart of the arrogance of the EU elites – the scheme permitted use of about 35 per cent of the global carbon dump while Europe had about 12 per cent of World’s population.

The Clean Development Mechanism (CDM) which was the EU ETS’s carbon offset system has had disastrous effects in poor countries and regions.

The inherent notion built into these schemes was exemplified by the conclusions of the British Committee on Climate Change – The First Report of the Committee on Climate Change – which concluded that:

… the cost of abatement opportunities differs between different firms and different countries, free trading of credits can ensure that mitigation occurs at least-cost.

The Stockholm Environment Institute report (July 2015) – Has Joint Implementation reduced GHG emissions? Lessons learned for the design of carbon market mechanisms – examined the CDM in detail and concluded that:

1. Projects “grossly overestimate the actual emission reductions” and “80 per cent” of the claimed “Emission Reduction Units … come from projects types with questionable or low environmental integrity”.

2. There is a “lack of transparency” which make it difficult to determine validity of claims.

3. Firms are allowed to use their own eccentric methodologies in calculating emission reductions – “In many cases, these projects used inappropriate approaches, made unrealistic assumptions, or applied questionable values for key parameters, often leading to overcrediting and significantly higher emission reductions …”

Overall, the extensive research on the CDM mechanisms (offsets) concluded:

… that at about three quarters of ERUs are unlikely to represent additional emissions reductions, and about 95% of the total ERUs were from countries with a significant AAU surplus … the use of … [offsets] … may have enabled global GHG emissions to be about 600 million tonnes of carbon dioxide equivalent … higher than they would have otherwise been.

This recent ProPublica analysis (May 22, 2019) – An Even More Inconvenient Truth: Why Carbon Credits For Forest Preservation May be Worse Than Nothing – also bears on this issue.

And this story (April 30, 2006) about Coldplay being duped is representative – How Coldplay’s green hopes died in the arid soil of India.

There is also considerable evidence that large foreign polluters lobby officials in poorer countries to allow them to set up ‘offset’ projects, which them trample the rights ot the local communities.

And the idea that that poorer nations are less important than richer nations was exemplified by the famous 1991 – Summers Memo – where Larry Summers, then head economist at the World Bank signed off on a memo written by one of his staff but published in Summers’ name, which said that toxic waste from richer nations should be dumped in poorer nations for payment because:

… the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable and we should face up to that.

That logic claimed that the poorer nations were “vastly UNDER-polluted” and that poorer nations will not have the same priority for clean air as the richer nations (this was expressed in terms of differential “income elasticity” estimates).

For all these reasons and more, the reliance on ‘market’ mechanisms is not a sound progressive strategy.

But then we get to the urgency scenarios …

In Part 1, I cited the latest offering from Ted Nordhaus – The Empty Radicalism of the Climate Apocalypse – which appeared in the Summer 2019 edition of Issues in Science and Technology – who argued that:

…. what is striking about the Green New Deal and similar proposals coming from climate hawks and left-leaning environmentalists is not their radicalism but their modesty.

His argument – in effect, is congruent with my long-held position (articulated in Part 1) that if we are to be serious about tackling climate change then we need fundamental behavioural shifts that will not be driven by any ‘market’ process.

Ted Nordhaus notes that in the plethora of proposals that are congregating under the Green New Deal umbrella:

… almost no one, in either electoral politics or nongovernmental organizations, seems willing to demand that governments take direct and obvious actions to slash emissions and replace fossil energy with clean.

He isn’t talking about “regulating emissions” here via price systems.

He is talking about “specific proposals to rapidly build the infrastructure of a low carbon economy or restrict carbon-intensive activities woven into the fabric of Americans’ daily lives.”

In this regard:

It is one thing to suggest to Americans that tackling climate change will involve regulating fossil fuel companies or providing tax credits to help build the clean energy industries of the future, quite another to tell them that they will need to stop flying or that starting immediately the government will need to take possession of the auto or utility industries.

The point is if “serious climate disruption is already upon us” – then we need to call for a war footing.

I have long argued that we should declare war on unemployment – to allow us to accept the government introduces a Job Guarantee.

We accept much more when there is an impending threat like a war on our doorsteps.

Ted Nordhaus thinks a “a World War II-style mobilization to fight climate change” is necessary:

But virtually no one will actually call for any of the sorts of activities that the United States undertook during the war mobilization – rationing food and fuels, seizing property, nationalizing factories or industries, or suspending democratic liberties.

Such a mobilisation would seem to be appropriate if the “climate crisis” was really upon us.

The fact that environmentalists resist radical action – and respond to claims that they are really advocating restrictions on air travel and the like – by insisting “that such claims were just standard conservative smear tactics”, leads Ted Nordhaus to conclude that:

… most climate advocates, though no doubt alarmed, don’t actually see climate change as the immediate and existential threat they suggest it is.

Their emphasis on neoliberal ‘market’ solutions – reinforces that conclusion.

Progressive environmentalists thus frame the climate debate in terms of the role of government being to make the capitalist ‘market’ work better rather than any radical intervention into the primacy of capital to allocate resources.

The idea that the state should actually be at the centre of resource allocation, which I have advocated all my academic life, was rejected by the Left in the 1970s, at it started to pursue various derivations of the ‘market’ mentality.

We analyse that shift in Reclaiming the State: A Progressive Vision of Sovereignty for a Post-Neoliberal World (Pluto Books, 2017).

You can also see many of my relevant blog posts under the category – Demise of the Left.

Ted Nordhaus also concludes that the early environmental movement became antagonistic to mass consumption and economic growth, and, instead, adopted “a vision of small-scale, decentralized, ‘appropriate’ technologies in contrast to centralized, state-led, technocratically planned and operated infrastructure and technology”

Further, the emphasis on ‘market’ solutions has altered our conception of the role of government in providing goods and services to advance well-being.

Ted Nordhaus writes that:

Historically, nations have provided these sorts of goods directly and governments have done just that for public goods as diverse as national defense, public health, scientific research, and clean and abundant water. In these cases, government agencies don’t incentivize or mandate that private firms build, say, modern water and sewage systems; rather, they either build them themselves or contract with firms to build them.

This state-led provision has been compromised by the neoliberal imperatives of outsourcing, privatisation, competition policy and the like.

This has pushed us into failing to see “climate change as a public infrastructure challenge” rather than “a private market failure”.

Environmentalists have resisted centralised technology solutions because they think, like Amory Lovins did in 1976, that these will be ‘hard’ technologies (nuclear, hydro dams, etc).

But in Ted Nordhaus’s assessment:

Most renewable energy today comes not from homes clad in solar panels but from enormous, industrial-scale wind, solar, and biomass facilities.

Large-scale is the key.

Projects such as the Numurkah Solar Farm – which has been constructed in a small country town in Northern Victoria (Australia) and according to news reports “will soon generate enough electricity to power Melbourne’s entire tram network” Source.

Melbourne has over 4.8 million people and an extensive tram network – one of the best I have travelled on.

The solar farm was built in less than 12 months and will generate carbon reductions “equivalent of taking 75,000 cars off the road or planting 390,000 trees”.

While this project was developed by a private supplier – it was funded by public money and given guaranteed sales.

It could have easily been a purely government project which would have been able to offer cheaper energy to consumers with no loss of effectiveness.

However, large-scale public action according to Ted Nordhaus:

… cannot be easily reconciled with the communitarian, small-is-beautiful, localism that has defined the culture and politics of contemporary environmental thought and action since the rise of the movement in the 1960s.

And that is the rub.

As a result, the climate action response is too modest and not matched to the asserted urgency of the problem.

But it is worse than that:

Progressive environmentalists … find themselves advocating corporate subsidies for clean energy technology while inveighing against corporations, calling for an end to capitalism and attacking market-based climate policies while continuing to advocate for policies that are predicated on private-sector development and diffusion of low carbon technology, and calling for enormous investments in low carbon infrastructure in principle but often opposing that infrastructure in practice, when it would bring local environmental impacts or require the abrogation of local control and prerogatives over zoning and planning.

So there is a contradictory stance – hate capitalism but subsidise it.

And none of these approaches are commensurate with the urgency and scale of the problem – “the rhetoric on the left about both climate catastrophe and capitalism is hollow.”

By rejecting “centralized planning and technocratic institutions”, the environment movement has played into the hands of the neoliberals – accepted their frames (‘markets’ etc) and language (‘price incentives’ etc.

What is needed is a vision where “governments would build low carbon public works projects” which would lead to “decarbonizing the global economy rapidly”.

We will also, surely, have to accept the authority of public pronouncements restricting our use of cars as our governments build high speed mass transit systems.

We should be looking to the government via education for more significant shifts in behaviour.

For example – Environmental vegetariansim – is a no-brainer and clearly supported by scientific research.

Livestock for food has been estimated as being responsible for 51 per cent of total global emissions (Source).

A recent report in the British medical journal Lancet (January 16, 2019) – Food in the Anthropocene: the EAT-Lancet Commission on healthy diets from sustainable food systems – found that:

1. “global food production is the largest pressure caused by humans on Earth, threatening local ecosystems and the stability of the Earth system.”

2. “changes in food production practices could reduce agricultural greenhouse-gas emissions in 2050 by about 10%, whereas increased consumption of plant-based diets could reduce emissions by up to 80%”.

3. “Transformation to healthy diets by 2050 will require substantial dietary shifts, including a greater than 50% reduction in global consumption of unhealthy foods” – meat and sugar.

4. “The Commission highlights the need for a Great Food Transformation-ie, a substantial change in the structure and function of the global food system so that it operates with different core processes and feedback. This transformation will not happen unless there is widespread, multi-sector, multi-level action to change what food is eaten, how it is produced, and its effects on the environment and health, while providing healthy diets for the global population.”

The last point is important – there needs to be a centralised action, for example, to curb the practices of corporate farming.

The so-called lobbying power of ‘Big Ag’ has to be curbed.

And more – another day.

Conclusion

The essential point that Ted Nordhaus is making is that a major transformation in our behaviour but also in the role of government if we are to meet the challenges of the climate urgency.

If that urgency is correct, then we have to move now and the various ‘solutions’ proposed by the majority of the environmental movement are too modest, play into neoliberal framing and will not shift behaviour quickly enough, if at all.

The Green New Deal has to be radical and elevate the government to the centre, rather than just seeing government as a facilitator for a better capitalism.

We should not apologise about that.

And when the government issues edicts that we are no longer allowed to drive our cars on some days or in some areas – then we should happily alight the beautiful mass transit system they have provided, which simultaneously offers well-paid, secure jobs to workers.

Toying with better designed cap-and-trade systems and a few solar panels on roofs is not going to cut the mustard!

Confession: We have solar panels and batteries at our home and feel better about that!

That is enough for today!

(c) Copyright 2019 William Mitchell. All Rights Reserved.