There is no greater challenge in the world today than responding adequately to the threat posed by climate change. As time goes by the scale of the challenge gets bigger and bigger. It exists on may different levels - technological, economic and political. But above all, as Al Gore said in his film, "An Inconvenient Truth" the climate crisis is an ethical challenge. It is this not only because it compels us to re-consider personal lifestyle and consumer choices but because, as a society we must find ways of responding to the climate crisis together and that involves deciding on equitable burden sharing and human relationships.
Leading climate experts are now telling us that we have a very short window of opportunity to make a massive transformation in our economic and social arrangements as a world society and that the nearest comparable situation is that it is as we are all entering a war together - not against each other but a war to transform our ways of living profoundly in the space of one generation. Thus Lester R Brown in his latest book Plan B write of the need to reduce carbon emissions by 80% by 2020. Meanwhile leading climate scientist, James Hansen and colleagues, writing of the need to phase out all coal power generation without carbon capture in the next 20-25 years, refers to this task as "herculean, yet feasible when compared with the efforts that went into World War II." They go on "The stakes, for all life on the planet, surpass those of any previous crisis. The greatest danger is continued ignorance and denial, which could make tragic consequences unavoidable."
"Target Atmospheric CO2: Where Should Humanity Aim?" by James Hansen, Makiko Sato, Pushker Kharecha, David Beerling, Valerie Masson-Delmotte, Mark Pagani, Maureen Raymo, Dana Royer, James C. Zachos
So what are the tools to do this collctive job that is akin to the challenge of a war? In a war people have to bind together against a common enemy - in this case the problem is not other people but the threat of climate change. Or is this actually true?
To make a massive transformation like a war possible there needs to be a sense that everyone is looking after and responsible to everyone else. If a society becomes divided in a war, if there is a sense of injustice, that some people have to bear a heavier burden than others, that some profiteer while others do the fighting and the dying, that some people are half hearted and do not really support the fight, then this will eventually lead to a break down of trust, a bitterly divided and fragmented society and victory will not be possible.
It has to be said that this describes well the current phoney war against climate change. A large part of the political and business elite that run the global economy is uninterested in, ignorant of, unprepared for, reluctant or even hostile to doing anything about climate change. They are pre-occupied with other power agendas - making money - and have to be constantly pressured to do something about climate change. In consequence, although the rhetoric has changed in recent years the policy mechanisms put in place so far are, at best, half hearted gestures that show clear signs that they don't really mean it. While there are a tiny number of business and political leaders who have studied the climate crisis, and who have become appropriately alarmed, there are not many of these. According to MPs who should know there are, for example, probably only 20 British parliamentarians who understand anything about climate change.
For most of the rest of the business and political elite it seems self evident that the only way action will be taken on climate change is if there is some money in it for them. Thus the idea of developing carbon markets has struck a chord because it will make carbon more expensive and thus drive a process to use less carbon. For most politicians and business people their thinking does not go further than that. As we are using war analogies here this is rather like the way arms manufacturers support a war effort.
It should come as no surprise then that while the official rhetoric of carbon markets is all about fighting climate change the reality is far more to do with making money. This is why so many people who have devoted huge amounts of time and emotional energy at their own personal expense to thankless tasks of being the bearers of bad news about climate change are cynical and contemptuous of this way of fighting climate change. If these campaigners who have got the issue taken up had been in it for the money then nothing at all would happen. At the interface between the campaigners and the political economic elite is the deepest of all cultural divides - where people meet who simply do not share the same purposes. Indeed the market focused elite have no place in their concept system for the campaigners as, in the world of theology of market economics in which they believe, everyone is supposed to be principally motivated by making money.
That explains why many campaigners reject any idea of carbon trading and regard it, with some revulsion, as self evidently a veritable ethical swamp whose manner of operation is the very same as the problem that needs dealing with.
Looking at the situation from across the cultural divide the other way, from the markets, there is either indifference, incomprehension, irritation or cynicism. It is a hallmark of power that one single mindedly pursued one's agendas (i.e. money making), that in the time pressure of everyday decision taking one does not have the luxury, like academics to take a wider view and explore all the wider issues before one acts. To do that is to prevaricate, to lose the initiative to others, to load oneself with additional complications and additional costs. In large measure decision making is a process of self fulfilling prophecies - well resourced action in a well connected and powerful network creates a momentum that others fall in with, follow and then facilitate - this way political and business leaders make headway. This means that single minded pursuing money agendas and the self confidence to ignore others goes with the territory. The mind set is one in which all other issues are re-constructed - so that it is self evident that climate change is a fantasy or exaggerated idea in order to trip up business leaders and be used as a further excuse for taxation.....Either that or it is another way to make money. If the customers are concerned with climate change - then charge them more and use the money to do the things that one was going to do anyway. As the Financial Times put it:
“Industry Caught in Carbon Smokescreen – Companies and Individuals rushing to go green have been spending “millions” on carbon credit projects that yield few if any environmental benefits. A Financial Times investigation has uncovered widespread failings in the new markets for greenhouse gases, suggesting that some organisations are paying for emissions reductions that do not take place. Others are meanwhile making big profits from carbon trading for very small expenditure and in some cases for clean ups that they would have made anyway” http://www.ft.com/cms/s/0/48e334ce-f355-11db-9845-000b5df10621.html
A year later with global financial markets in turmoil the UK Financial Services Agency have produced a report saying something very similar.
" FSA warns of false 'green' claim risks
Emissions trading firms risk damaging the integrity of the nascent market by making false claims about their green credentials, the City watchdog has warned.
In a 37-page study, the FSA identified a number of risks specific to the emissions market, including investors being sold unsuitable products, confusion over the regulation of emissions traders and insufficient official data.
It warned that these could "pose a risk to the FSA's statutory objectives" if they spilled over into the emissions derivatives markets that it regulates. The FSA's objectives include a duty to maintain market confidence in the financial system and a duty to protect consumers.
"Some authorised firms are seeking to positively market themselves as 'carbon neutral'. This marketing must be credible, sustained and accurate to avoid jeopardising the firms' and the market's reputation," warned the paper.
"There may be instances where unsuitable products are sold to investors, either at the request of the firm or of the investor itself, because of the climate change association. This could potentially lead to damage to consumers, or to disorderly markets, and so a lack of confidence in the market."
The paper added: "The market is also at risk if the perceived favourable reputational dividend of participating in it is jeopardised by unsatisfactory advice being given to investors. There have been claims of firms that have held out their FSA, or other, authorisation in emissions-related business as
a mark of endorsement for activities that do not fall within the FSA's regulatory perimeter.
"Aside from being misleading and leading to a potential enforcement action, this type of behaviour undermines confidence in the market."
It is important to note that this is happening at the same time that the financial markets in general are in the grip of a serious crisis that is caused by a break down in trust. In the newspapers it is repeatedly said that the banks do not trust each other because they are aware that they have been sold securities from the sub prime sector of the USA which are of little or no value. Indeed a closer look at the entire sub prime debacle reveals that it was a massive exercise in predatory lending that was contrary to US law. However, the Federal government blocked action against the institutions making huge fees out of making loans to people that should never have taken them on and then selling them on to pensions funds and banks the world over. Now that the banks that were responsible for this catastrophe are being bailed out and their executives walking away with huge pay offs the cultural and ideological shock should not be underestimated. So the crisis of trust in the carbon markets is taking place against the backdrop of a collapse of trust in the cornerstones of the global economic system - the banks. Against this backdrop too the political system is showing itself for what it is - in the pockets of the bankers and incapable of effective and real control.
This creates huge dangers - but it also creates huge opportunities. For the politicians, business leaders who have been leading the phoney war against climate change are the ones currently being discredited and in panic and confusion. The time is therefore ripe for a New Deal that seriously addresses the climate crisis, peak oil and the economic crisis at once. Such a New Deal must be carefully constructed so that it is seen to be fair to all and constructs unity to use economic resources for a transformation of the economy and society in the short window of opportunity that still exists to save the planet from a climate catastrophe. This is nothing like the current arrangements with the European Union's Emissions Trading System which starts from the assumption that the right to emit belongs to the polluting companies.
Policies like Cap and Share must be part of that comprehensive New Deal. At the moment the big financial interests seeing the financial market in turmoil are trying to turn their wealth into real commodities like foodstuffs, oil, metals and gold. Huge volumes of financial power is currently seeking to get out of traded paper instruments into real goods. This is likely to push out the ordinary people of the world who have done nothing to create this crisis but are in danger of being set up to be its victims - priced out of the market for food and fuel. It is important in this situation that those who own the fossil fuels must buy their right to bring it to market from the ordinary people of the earth. This matches the Cap and Share agenda neatly.
Under Cap and Share the right to sell fossil fuels into the economy is limited to those companies that have permits for the greenhouse gas content of the fuels when later burned. The money from the sale of permits is rebated to the people on a per capita basis from a Trust set up for the purpose of protecting the atmosphere in the interests of everyone equally. Such a Trust would be responsible for auctioning the limited number of permits to primary energy producers and then ensuring that all are treated equally (or, in alternative arrangement the permits must be bought from the people by the energy companies via intermediaries).
Under a system like this, if it were applied globally, the vast majority of the earth's population would benefit from a high carbon price that would go to them. They would get what economists call the scarcity rent arising from limiting the use to the earth's atmosphere. Most people on a low income could get a revenue from the sale of their permits that would be more than they had to pay out extra. The people who would be paying this extra amount would be the people with the carbon intensive lifestyles - this is when the prices of goods rose because the cost of carbon was passed on to fuel purchasers and then passed on again to those who bought carbon fuel intensive goods.
If we are to build trust in the transformation of the world it must be those who have and are using most carbon that must pay most and those who have not caused this problem, those who are the poorest, must be supported and get most out of it. Trust can only be built on equity.