Economics tells a lot of stories to make it seem inevitable the things it tells us to do. When it comes to climate action, the orthodox view has been to conceive of people as atoms; atoms who cannot hope to coagulate into some productive molecule: where we all know in some sense that cooperation would be wise, but cannot for the life of us put down our vanity. Now this is where capitalism sets up its stall. The incentive of profit, a return on green investment, rescues us from these unproductive collective action stalemates. Profit guarantees the benefits of cooperation; remunerating the productive whilst fobbing off the free-riders.
This is the story that has been invoked to rationalise our current decarbonisation trajectory. Appease and reward the ‘productive’ (read the asset managers, the big financiers). Or else we are doomed. Decarbonising energy production alone will be formidable. 14% of the emissions reductions needed by 2050 could require technology currently non-existent.
The price of appeasement? Just a guaranteed rate of return, please and thank you.
As ever, how we describe our problems constrains how we might remedy them. Needless to say, we do not have to become global finance’s butler to save the planet from ecological breakdown. There are other ways of securing cooperation.
We are now merrily traversing, what has been promised to us as, the path of least resistance. Beset by an understandable cynicism, we cannot seem to conjure how people might come together and mitigate the climate crisis deliberatively. Such creative imaginaries are utopian, pie in the sky thinking, time-wasting, and what we need now is action. Note here the persuasive radicalism, the rhetoric of urgency, awkwardly melded to a conservative politics. A politics of resignation. Or in the de-growther Geoff Mann’s words ‘desperation.’
It is as if we have no choice.
But the current paradigm of decarbonisation cannot shunt the burden of proof onto alternative trajectories. Why? Because the present method, despite deploying $2.6 trn of resources on renewable energy in the past decade alone, has achieved little. Fossil fuels account for 84% of electricity generated globally. The figure was 86% in 1995. Moreover, finance for energy transition delivered to emerging market economies has flatlined. Our carbon offsets, Californian trees to be precise, have succumbed to forest fires – I mean the irony. Carbon Capture remains a boondoggle for now, a mere glint in the eye of those oil barons who really want to emphasise the ‘net’ in net zero. The marketising of ecosystems, putting a price on ecological services, has metaphorically flattened the unquantifiable – nature, and has actually flattened 99% of the habitats in a study of 558 such projects . HSBC has helped fund several questionable projects, one Indian cement company’s CO2 emissions outstripping the whole country of Greece, as parts of its green investment drive. The cold calculus of risk and reward, of profit and loss, should have gotten us much further. What gives? A carbon price of at least $135/t could equate to a balmy 1.5 degree warming. Perhaps we ought ditch the carrots and sharpen our sticks.
So the current, hoped for, route to the sunlit uplands of net zero is not obviously efficacious. And nor is it efficient. At a 2% reduction of fossil fuel derived electricity in near three decades(!), the official policy of appeasement is decidedly wasteful.
On this topic, and on giving a catchy name to our predicament, Daniela Gabor is essential. She finds that we are living under the ‘Wall Street Consensus.’ Under this consensus, the elite agreed paradigm of decarbonisation, the state pursues green development as ‘de-risking.’ That is the socialising of risks, and the privatising of gain. It therefore becomes the job of governments around the globe to assemble the choicest portfolio of assets. These investments will be suitably de-risked, think a new offshore wind farm contractually guaranteed to have its output bought at a set price in perpetuity. Now that’s a deal!
Having read Gabor, and having waded through reams of green finance policy papers, our current paradigm really boils down to this. This is our mission:
If the conditions are not right for private investment, we need to work with our partners to de-risk projects, sectors, and entire countries.’ Jim Yong Kim, World Bank Group President.
The onus is on governments (and citizens it must be said) to lay the ground for private finance, more like the red carpet. The language may be one of partnership, but this is no egalitarian union. Indeed, the operative concern is about tending to the ‘conditions’ that are deemed to be ‘right for private finance.’ Private finance is very much the privileged constituency.
You won’t believe what these conditions are for private finance to parachute in. For the World Bank, they just happen to be ‘fully consistent’ with past non-green World Bank programmes. Shocker. Again, countries are being asked to trade away economic sovereignty for the promise of cheap private capital tomorrow. Accordingly, Green investment requires Creating investment-friendly business environments. Treasuries should be repurposed, with the goal of guaranteeing revenues… providing investors with the confidence, and mending the social dislocation some of these disruptive infrastructure projects will create.
Currently the transition to Net Zero is creating the greatest commercial opportunity of our ageand little else. We can have decarbonisation without the ransom demands. Be that from private finance, petrostates, or emergent electrostates. It simply cannot be that we are hopelessly beholden to this conspiracy against the social. We must radically open up the realm of the possible. Cooperation is what we need. This must be conducted on terms more egalitarian than the present method of privileging those who happen to exercise a monopoly on finance. Why? Because it turns out that creating masses of veto points – who can withhold investment on a whim if the conditions are just not ‘business-friendly’ enough – is not conducive to the rapid decarbonisation of human activity. We can no longer afford to be held to the pace that private finance sets.