Earning a profit from global warming

As evidence mounts that a warming world is hurtling toward the point of no return, the plan of the world’s governments is to make adjustments to the ability of corporations to profit from polluting. Short-term profits continue to be elevated above the long-term health of the environment.

There does seem to be a new sense of governmental urgency ahead of the Paris climate summit scheduled for December, with several governments announcing new proposed reductions in future greenhouse-gas emissions. But is it already too late? Two scientific studies issued this year suggest that so much carbon dioxide already has been thrown in the air that humanity may have already committed itself to a six-meter rise in sea level. A separate 2015 study, prepared by 18 scientists, found that the Earth is crossing several “planetary boundaries” that together will render the planet much less hospitable.

Haze from forest fires in St. Mary Valley, Glacier National Park (photo by Pete Dolack)

Haze from forest fires in St. Mary Valley, Glacier National Park (photo by Pete Dolack)

The Paris climate summit, officially known as the 21st Session of the Conference of the Parties to the United Nations Framework Convention on Climate Change, or COP 21, has set itself the goal of “achiev[ing] a new international agreement on the climate, applicable to all countries, with the aim of keeping global warming below 2°C.” Representatives of the world’s governments will meet with an intention of setting goals for combatting global warming.

Thus far, however, the world’s governments have done little, relying on “cap and trade” schemes that make pollution a market commodity, setting goals for far in the future, and raising false hopes that “green capitalism” will magically save the day with shiny techno-fixes that will allow business as usual to continue. Worse yet, the same governments that claim to be taking steps toward reigning in pollution and greenhouse-gas emissions are negotiating destructive “free trade” agreements like the Trans-Pacific Partnership and Transatlantic Trade and Investment Partnership that will allow corporations to eliminate laws that protection the environment.

There are no free lunches, however, and definitely no free planets.

“Free trade” is not free for the environment

Already, under the North American Free Trade Agreement, laws protecting people and the environment from toxic chemicals have been overturned. NAFTA is the starting point for The Trans-Pacific Partnership and similar secret deals, which will have still more draconian rules.

Maude Barlow of the Council of Canadians notes that measures to reduce greenhouse-gas emissions are no less susceptible to attack:

“Lawsuits totalling hundreds of billions of dollars have challenged environmental protection measures such as solar power programs, neurotoxin and additive bans, and the rejection of proposed mines. Canada, the most-sued state under NAFTA, is facing $2.6 billion in corporate challenges against legislation that restricts or bans carcinogenic additives in gasoline, lawn pesticides and fracking. Around the world, corporations have challenged governments over 600 times. With no way around these provisions, countries have been unable or unwilling to advance climate change legislation.”

“Free trade” agreements also contribute directly to global warming because they facilitate the transfer of production to the countries with the lowest wages and weakest regulation. Products are assembled from parts produced in multiple countries then shipped across oceans, greatly adding the environmental costs of transportation. This is not some natural phenomenon like the tides of the ocean, but rather are products of the competitive dynamics of capitalism.

Not wanting to upset this dynamic, or their benefactors, political leaders instead fiddle while the Earth burns, as the G7 leaders did when declaring their intention to commit themselves to a 40 to 70 percent reduction in greenhouse-gas emissions in 2050 and a complete phaseout in 2100. No government can bind a successor 80 years in the future, but it surely is easier to announce such a goal than to impose one scheduled to take effect when you might still be in office.

Those long-term targets mirror those of last year’s Intergovernmental Panel on Climate Change report, which set them with an eye toward holding greenhouse-gas concentrations in the atmosphere to 450 parts per million in 2100, and even there envisions a temporary rise above 450 ppm before falling late in the 21st century.

The Paris climate summit, scheduled to take place November 30 to December 11, is being billed as the last chance for the world’s governments to set interim goals that could prevent global temperatures from rising more than 2 degrees Celsius above the pre-industrial average, a level widely believed (perhaps optimistically so) to be the limit before runaway global warming results. Yet the Earth is already experiencing climatic changes of a speed never before seen in the geological record, with atmospheric carbon dioxide at 400 ppm.

Sure we’ll cut emissions — eventually

National global-warming commitments include these goals:

  • The United States has pledged to reduce greenhouse-gas emissions by 26 to 28 percent in 2025, relative to 2005 levels; instituted new national regulations on power-plant emissions; and announced a state-level cap-and-trade system whereby states, rather than enterprises, will trade pollution permits.
  • China intends to reach a peak in its greenhouse-gas emissions by 2030; will inaugurate a cap-and-trade system in 2017; and pledges to have 50 percent of its new buildings meet “green” standards by 2020.
  • The European Union’s goal is a 40 percent cut in emissions in 2030, relative to 1990. The centerpiece of E.U. efforts is a failed cap-and-trade system that will not be reformed until 2021.
  • Brazil said it would cut emissions by 37 percent in 2025, relative to 2005, and intends to achieve a 43 percent reduction by 2030. Brazil intends to generate 20 percent of its electricity from non-hydropower renewables by 2030 and pledges to restore 30 million acres (120,000 square kilometers) of forests.
  • Canada has committed to cutting output of greenhouse gases by 30 percent in 2030, relative to 2005, but this includes international “offsets” and fails to address the Alberta tar sands. On a provincial level, Ontario and Québec will participate in a cap-and-trade system.
  • Japan intends to reduce emissions by 26 percent in 2030, relative to 2013 (the equivalent to 18 percent below 1990 levels by 2030), reductions that would include international “offsets” and “credits” for forest management.
  • India has pledged to reduce the intensity of its emissions 33 to 35 percent in 2030, relative to 2005, and to produce 40 percent of its electricity from non-fossil fuel sources by that year. This goal, however, is a commitment to only slow the rate of emissions rather than cut them.
  • Australia has committed a 26 to 28 percent cut in emissions, relative to 2005, reductions to be achieved in part through land-use changes and forestation. But the current coalition government has repealed the Clean Energy Future Plan, seen as a step backward.

None, however, are judged by environmentalists to be making adequate progress toward these goals.

Cap-and-trade a subsidy for polluters

There has been a flurry of approval over Chinese President Xi Jinping’s September 25 announcement that China would institute a cap-and-trade program. Such schemes are often promoted by North American liberals and European social democrats. But these do virtually nothing to reduce greenhouse gases while allowing corporations to profit from pollution.

The European Union cap-and-trade program, 10 years old and the world’s biggest, has been a complete failure. Europe’s emissions trading system mandates that an enterprise that emits carbon dioxide must hold certificates equal to their emissions, and can buy or sell them from other corporations. But 43 percent of these certificates are issued for free, a subsidy for carbon emitters.

The targeted carbon trading price was €30 per metric ton, but because far too many certificates were issued, they trade at between €6 and €8. The E.U. proposes to reduce the number of free certificates, but not until 2021. Moreover, although the number of industries eligible for free carbon certificates will be reduced to 50 from 177, wine makers and tomato growers will no longer be eligible for the freebies, but cement factories, aluminum plants and others in heavy industry will still get them, according to Deutsche Welle.

The watchdog group Carbon Market Watch issued this caustic summation:

“[T]he EU Emissions Trading System review proposes to increase pollution subsidies to industry to at least €160 billion after 2020. … After more than a decade, the EU’s main climate instrument still lacks the teeth to make the polluter pay and drive emission reductions. Today’s proposal serves the interests of Europe’s largest polluters at the expense of the climate and taxpayers’ money.”

Carbon Market Watch reports that industries representing about 95 percent of industrial greenhouse-gas emissions will continue to receive free pollution permits after 2020. Despite the current excessive number of tradable credits — the reason for the plunge in pricing — there will be no cancelations of any of them despite calls by environmental activists for the number of credits to be diminished. Threats by industrialists to move out of Europe helped shape the “reforms.”

Industry had already shaped the cap-and-trade plan from the beginning. Richard Smith, in his paper Green capitalism: the god that failed, recounts the experience of former German environment minister Jürgen Tritten, a Green Party official:

“Mr. Tritten recalled a five-hour ‘showdown’ with [Social Democrat] Wolfgang Clement, then economy minister, in which he lost a battle to lower the overall limit. Clement reproached the Greens saying that ‘at the end of their policy there is the de-industrialization of Germany.’ Similarly, in confrontation with the Federation of German Electricity Companies, ‘good sense triumphed in the end’ and industry won: whereas under EU commitments, German electricity companies were supposed to receive 3 percent fewer permits than they needed to cover their total emissions between 2005 and 2007, which would have obliged them to cut emissions by that amount, instead the companies got 3 percent more than they needed – a windfall worth about $374 billion at that time.”

Offsets don’t necessarily offset emissions

A French plan to go beyond cap-and-trade schemes with a tax on carbon was ultimately declared unconstitutional because, among other problems, it would have exempted more than 1,000 of France’s biggest polluters, Professor Smith said.

An additional weakness of cap-and-trade schemes is that some allow “offsets,” whereby companies can buy emission credits from outside the program to “offset” emissions above the allowable level. But the offset is not necessarily real, and often is counted twice, by the enterprise buying the credit and by the entity providing the offset. Food & Water Watch explained this slight of hand:

“Through offsets, a company can pay to theoretically prevent emissions outside of the cap, instead of reducing emissions at the source. For example, a power plant in California could pay for a section of forest to not be cut down in Oregon. This would count toward the polluter’s required reductions even though emissions are not reduced in California but are in theory prevented in Oregon. … The supposed benefits that offsets are intended to provide often fail to materialize. … [I]n reality, [offsets] allow polluters to substitute unverifiable reductions for real reductions.”

Business as usual isn’t possible: The atmospheric content of carbon dioxide continues to rise. Less reliance on fossil fuels and more reliance on renewable fuels is certainly a strong step in the right direction, but because many renewables also produce considerable greenhouse gases, they are incapable of reversing global warming by themselves.

There is no escaping that humanity must consume much less, an impossibility under a system, capitalism, that demands continual growth, whose incentives are for more consumption, and that enforces a competitive race to the bottom that includes the ongoing corporate globalization that systematically moves production to low-wage havens.

To stave off further global warming, and avoid the massive disruptions it promises, requires nothing less than an entirely new economic system, one that provides for human need under community control rather than private profit under the control of industrialists and financiers. Let us not sugar-coat this: Such wrenching changes will come with considerable costs. But the costs of business as usual will be immeasurably greater from rising sea levels, mass extinctions, droughts and chaotic weather. Our descendants are not likely to believe short-term profits for a few now will be a fair exchange for an unlivable planet for the many then.


16 comments on “Earning a profit from global warming

  1. Cap and trade needs to die. Climate activists made a big mistake capitulating on this. Happily the New Zealand Green Party has abandoned its support for emissions trading schemes. A carbon tax that charges polluters for polluting is the only way to go. And with renewable energy being cheaper than fossil fuels in many markets, the argument that a carbon tax hurts the poor no longer holds water.

    • Cap and trade certainly needs to die, but even carbon taxes on polluters won’t be effective unless they are high. Usually when such taxes are imposed, they are low and are a cost of business to be passed on to customers. So perhaps some combination of carbon taxes, subsidies to renewable energy sources, mandates to make everything vastly more fuel-efficient, and the creation of mass-transportation systems is necessary for now, until we have a rational economic system and learn to live with using much less energy (or until Mother Nature imposes that on us).

      Good for the New Zealand Greens for recognizing a mistake. If only more parties would do that.

    • Karl T. says:

      How about earning a profit from pushing anthropologic global warming?

      “Getting Rich off Climate Extremism”

      Doesn’t help the cause any, does it.

      • It is immaterial to the cause of heading off environmental disaster. As the only other source for this supposed scandal is Breitbart, as far from a reliable source as one can get, I’ll hold off screaming to the heavens on this one.

        And you might want to be careful about raising accusations — the biggest propagandists denying global warming (Willie Soon, Breakthrough Institute, Heartland Institute) are funded to the tune of many millions of dollars by energy companies. The last of those links provides an excellent roundup of the well-funded global-warming-denial industry.

  2. […] Source: Earning a profit from global warming […]

  3. James Hansen’s gas/fossil fuel tax proposal which returns the tax collected to the people (nothing to the government) equally each year seems hard to argue against for its incentives of reducing consumption, spurring people moving to higher-mileage vehicles, renewable energy and so on,, punishing those who over consume gasoline and other fossil fuels, etc.

    • The criticisms I have seen of Hansen’s proposals, and similar proposals, is that if it is revenue-neutral, it is impact-neutral. Food & Watch Watch has a detailed critique of carbon-tax proposals, and I’ll highlight some of their points:

      “The problems with the carbon tax begin with its regressivity. A regressive tax is one that hits households with lower income harder than those with higher income. The Congressional Budget Office estimated that under a $28/ton carbon tax, the bottom 20 percent of income earners would pay 2.5 percent more in taxes, while the top 20 percent would pay less than 1 percent more.

      The politics of passing a carbon tax will make this inequality worse. While the carbon tax is already regressive, the most likely proposals to get bipartisan and corporate support couple it with a reduction in individual and corporate taxes that make it even more so. Unfortunately, the politics that would have to come together to pass a carbon tax would likely necessitate just this sort of tax swap to get the votes to pass. …

      We should be clear, polluting companies want to have a set cost they can factor into their pricing of their products, that is, pass on to us, instead of having to respond to regulation that will clean up their businesses and reduce their pollution. And they want that cost to be unrealistically low.”

      There are energy companies that are actually in favor of carbon taxes, and I believe that should give us some pause.

  4. Guys,

    Sure, capitalism has to be replaced – eventually. That’s gong to take quite a while, the neoliberal consensus being what it is worldwide.

    Let’s just fix the chemistry problem now. Worry about capitalism later.

    Why do we continue to imagine that we can fix the chemistry problem by screwing around with economic, political, and social tinkering? Stuff like cap-and-trade, offset credits, fee-and-dividend, etc.

    Why not just drive the fossil-fuel barons out of business with a superior energy source, one that can beat fossil carbon on capitalism’s own terms, namely reliability and price. That would be Generation 3+ nuclear right now, while working on Generation 4 liquid fuel reactors for the medium term.

    Please don’t tell me, Mr. Dolack, that nuclear is expensive. The two new Westinghouse model AP-1000 reactors at Vogtle, GA will produce 2200 megawatts with capacity factor of 92%. Annual energy production = 2200 e6 W X 0.92 X 8760 hr /year = 18 e9 kWh /year.

    They have a 60-year operating life. Cumulative lifetime energy = 18 e9 X 60 years = 1 e12 kWh total.

    They’re supposed to cost $14 Billion to build. $14 e9 divided by 1 e12 kWh = 1.4 cents per kWh. Can anything beat that?

    • I am afraid I will have tell you that nuclear is expensive, Mr. Maloney. Once again, the very fact that the nuclear-power industry only exists due to massive government subsidies should tell us what the economics are. And that is to just run and the plants and deliver the energy — those subsidies don’t include the costs of storage, of environmental degradation and other social costs. And, oh yeah, the waste products are dangerously radioactive for thousands of years.

      Moreover, I have serious doubts about any reactor lasting 60 years as all existing ones last far fewer years. Nuclear can’t beat fossil fuels, or any other energy source, on price and if we take seriously the waste problem, it isn’t competitive on a reliability standard, either.

      There was a sobering article just posted on ZNet that there may be a core meltdown beginning to occur in one of the Fukashima plants and it is not known if the containment walls will keep the massing nuclear fuel from escaping into the Earth. The article also says that so much cesium-137 has contaminated a 1,000-square-mile area surrounding the Chernobyl nuclear plant that that area might not be habitable for another 180 to 320 years. Madness!

  5. Alcuin says:

    As long as profits come before people, the United States has no chance of ever healing. This country is profoundly sick and very few people know the cause: capitalism. There’s nothing to do but passively watch the death spiral because no one in this country wants to give up the idea that one day they, too, will be rich. In money. The only way one becomes rich in money is via capitalism. Rich in money and rich in social networks and friends are diametrically opposed realities. One cannot exist in the presence of the other.

    Morris Berman has much to say about why america failed. He’s worth a read.

    • An interesting commentary. Mr. Berman writes:

      “Most Americans have a dull sense that their lives are fundamentally ‘off’—because for the most part, they are. They hate their lives, but to get through the day, besides taking Prozac and consulting their cell phone every two minutes, they talk themselves into believing that they want to be doing what they are doing. This is probably the major source of illness in our culture, whether physical or mental. …

      Groupthink is enormously powerful. Even if it occurs to you to stop following the herd, it seems crazy or terrifying to attempt it. This is Sartre’s ‘bad faith,’ the phenomenon whereby a human being adopts false values because of social pressure, and is thus living a charade, an inauthentic life.”

      In other words, “there is no alternative,” as Margaret Thatcher put it. The lack of belief in an alternative does more to keep capitalism and all its ills in place than any other single factor, in my opinion.

      • Eugene says:

        Even people who claim to believe in alternatives are unwilling to pursue them. There is a profound fear that underpins the perpetuation of capitalism. The comedian Louie CK has a good bit about “believies” – beliefs people hold for the sake of holding them and/or projecting to others, but that have no tangible impact on the way they live their lives. One could argue that the “belief” in human-caused global warming as one of them. In liberal circles, of course people line up behind this and the need to make changes. But what does that amount to beyond the politically/socially correct need to hold the belief?

        By the way, just wanted to say thanks for the blog. I appreciate your work.

        • Greetings, Eugene, and thank you for your kind words.

          Even people who claim to believe in alternatives are unwilling to pursue them.” You have written words that are so true. There is an unwillingness to act seriously on beliefs; in this case that is exemplified by the insistence that we can smoothly switch from fossil fuels to renewable energy without pause to relentless consumption and all the expansion and growth behind it. I believe that fear also plays a significant role here — fear of the unknown and a fear that anything other than the consumerist, debt-fueled rat race they have spent their lives living under will be worse.

          People don’t really like the world they live in with all the stress and lack of control over their lives, but can’t imagine anything different and are afraid any alternative will be worse, and those last two are endlessly propagated by the corporate media. Throw on top of that psychological pressure the series of defeats social movements have suffered over the past four decades, and we have immense impediments to the creation of a better world.

          Still, nothing lasts forever and the very fact that such relentless, overwhelming propaganda is necessary to maintain the system speaks for itself.

  6. Found your post very interesting and informative. I am at a stage of trying to raise my own awaremess of what is happening in this world, posts like yours are helping me. As i see it politicians will only do what they see brings about the best votes so are fickle and changeable and supported by large corporations who just want to earn money in what ever way serves them best. How do we get them to listen? How do we get them to serve the planets and by definition our ownselves in a positive way. “I want action not rhetoric” I think is going to be my slogan.

    • The way for us to have a voice is collective, coordinated action, grasping hands across borders and understanding we face a global crisis that can only be tackled on a global basis. Nothing changes without large numbers of bodies in the street and large numbers of people refusing to accept business as usual.

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