George Monbiot
Almost everyone seems to agree: governments now face a choice between saving the planet and saving the economy. As recession looms, the political pressure to abandon green policies intensifies. A report published yesterday by Ernst and Young suggests that the EU’s puny carbon target will raise energy bills by 20% over the next 12 years(1). Last week the prime minister’s advisers admitted to the Guardian that his renewable energy plans were “on the margins” of what people will tolerate.
But these fears are based on a false assumption: that there is a cheap alternative to a green economy. Last week New Scientist reported a survey of oil industry experts, which found that most of them believe global oil supplies will peak by 2010. If they are right, the game is up. A report published by the US Department of Energy in 2005 argued that unless the world begins a crash programme of replacements 10 or 20 years before oil peaks, a crisis “unlike any yet faced by modern industrial society” is unavoidable.
If the world is sliding into recession, it’s partly because governments believed that they could choose between economy and ecology. The price of oil is so high and it hurts so much because there has been no serious effort to reduce our dependency. Yesterday in the Guardian, Rajendra Pachauri suggested that an impending recession could force us to confront the flaws in the global economy. Sadly it seems so far to have had the opposite effect: a recent Ipsos Mori poll suggests that people are losing interest in climate change. Opportunities for energy populism abound: it cannot be long before one of the major parties abandons the pale green consensus and starts invoking an oil cornucopia it cannot possibly deliver. …
Oliver Tickell proposes setting a global limit for carbon pollution then selling permits to pollute to companies extracting or refining fossil fuels. This has the advantage of regulating a few thousand corporations – running oil refineries, coal washeries, gas pipelines and cement and fertiliser works for example – rather than a few billion citizens. These firms would buy their permits in a global auction, run by a coalition of the world’s central banks. There’s a reserve price, to ensure that the cost of carbon doesn’t fall too low, and a ceiling price, at which the banks promise to sell permits, to ensure that the cost doesn’t cripple the global economy. In this case companies would be borrowing permits from the future. But because the money raised would be invested in renewables, the demand for fossil fuels would fall, so fewer permits would need to be issued in later years.
Tickell calculates that if the cap were set low enough to ensure that the world became carbon neutral by 2050, the total cost of permits would be about $1 trillion a year, or roughly 1.5% of the global economy. The money would be spent on helping the poor to adapt to climate change, paying countries to protect forests and other ecosystems, developing low-carbon farming, promoting energy efficiency and building renewable power plants.
But his figure seems too low. Like many of the world’s climate scientists, Oliver Tickell proposes that the concentration of greenhouse gases should eventually be stabilised at 350 parts per million (carbon dioxide equivalent) in the atmosphere, and his calculations are based on this target. …
If the price of the carbon permits sold at auction were much higher than Tickell suggests, the extra money could be used for massive tax rebates and social spending, aimed especially at the poor. But could the world afford it?
This money doesn’t disappear, it gets spent. Tickell’s proposal could represent a classic Keynesian solution to economic crisis. The $1, $2 or even $5 trillion the system would cost is used to kick-start a green industrial revolution, a new New Deal not that different from the original one (whose most successful component was Roosevelt’s Civilian Conservation Corps, which protected forests and farmland(10)). This would not be the first time that business was rescued by the measures it most stoutly resists: there’s a long history of corporate lobbying against the kind of government spending that eventually saves the corporate economy.