Commons Manifesto (Part 2) – How can we squeeze CARBON out of the economy?
Most of the serious commentators on climate change see us as having already gone past the point of no return. This is not because the emissions in the atmosphere and the degrees of warming we are already committed to will take us passed 1.5C, but because they do not believe we can unhook ourselves from an expansionist industrial economy fast enough to halt emissions before they overpower the climate and ecosystems ability to absorb and restore equilibrium.
In fact the situation is both much worse and much more hopeful than this.
It is worse, because emission levels are just one aspect of the destruction being wrecked on the ecosystem, and focusing on them makes it look as though the problem is in the future, whereas this economy is systematically destroying the conditions for life right now.
At the same time the situation is much more hopeful, since emissions are directly connected to industrial growth and – although the International Energy Authority has pointed out that emissions rose in 2010 to their highest level ever, 30.6 gigatonnes, up 5% from the previous highest record in 2008 and taking us close to the level of emissions we are not supposed to reach until 2020 – emissions dipped in 2009 because of the recession.
What is needed is a rapid planned reduction of industrial economic activity. Not a recession that is simply the bust side of boom, but a relinquishing of that whole cycle.
So what is the current approach to the carbon problem and what are the alternatives?
Current regressive approach: Cap and Trade
Governments, corporations and international institutions have met in Copenhagen and Cancun and failed to reach any agreement that will reduce emissions. They have promised targets for the future but take no effective action in the present. Worse than this, their so called ‘climate change solutions’ make matters worse rather than better.
For example, the ‘Cap and Trade’ system established by the EU has increased profits for the large emitters, increased fuel costs for citizens and increased emissions. It has also blocked policy makers from being willing to consider the other far more effective ways to rapidly reduce carbon ion the economy outlined below.
Meanwhile, REDD was the great success of Cancun – Reducing Emissions from Deforestation and Forest Degradation in the Global South. However REDD is simply a means for those in the Global North to delay action by buying the right to continue emitting as long as they hold permits gained through being able to claim they are retaining ‘sinks’ for our carbon by protecting forests in the Global South from being destroyed. The methodologies employed to ‘prove’ that nothing is happening in the forests (and therefore that their carbon are being protected and these carbon ‘sinks’ maintained) are completely porous, but worse than this the only real way for a conservation or corporate organisation to demonstrate they are doing something on the ground is to impose paramilitary force and to exclude local people from using resources they have sustainably used for millennia, often destroying commons regimes in the process and opening up forests to destruction by outsiders as those who have lived with and protected them are forced to move away.
Meanwhile many environmentalists see nuclear power as the lesser of two evils in the context of climate change, missing the point that – whatever energy is being used – the underlying problem is an expansionary economic system. Debating which form of power is least worst in fuelling this system misses the point that the system is driving us off a cliff and we need to slow and stop it – we need to shift to human scale living rather than refuel an inhumane system with another power source.
Potential reformist approach: TEQs
In Scotland, Parliament approved a radical set of carbon reduction targets that set our ambition very high in terms of reducing our emissions. Alongside this, however, the highest priority of this administration is sustainable economic growth (’sustainable’ in the sense of sustaining that economic growth not in the sense of ensuring the economy is restrained to ensure we live sustainably). There are some admirable moves to meet these targets, but alongside this the expansion of motorways and airports, and the building of an entirely unnecessary second Forth Road bridge, continues apace.
A powerful tool exists which could help to shift us away from carbon intense consumption and resource use: Tradable Energy Quotas. TEQs cold be introduced without disturbing Scotland’s relationship with other countries economies, and in a way which would help the Scottish economy and policy to become cutting edge and enable it to export the expertise it develops to other countries that are going to have to demonstrate they are doing something.
The first stage of the TEQs approach offers a very simple system which would involve all households/ individuals using something akin to a carbon credit card so that their domestic/ individual purchases of fuels (e.g. for home heating or personal motor car use) takes into account the carbon they are using. Everyone is allocated an equal quota of carbon they are allowed to use, and anyone using above their quota has to pay to do so, anyone using below their quota can sell that portion and make money from so doing. Given that the poor use far less carbon than the rich there is a redistributive aspect to the process, and there is incentive for everyone to shift to a less carbon intense lifestyle.
The second stage of TEQs deals with the other 50% of Tradable Energy Quotas which would be auctioned to companies and organisations for all the other uses of fossil fuels (e.g. sales of fuels to power stations, sales of fuels to transport fleets carrying freight, fuel purchased by factories to power production processes or to offices for heating). Of course, ultimately, households have to pay for the rising price of electricity from the power stations, for the rising price of freight transport, for the rising carbon price of products with “embedded carbon”. In the TEQ system they get no compensation for this part of the rising carbon price. However in the more radical ‘Cap and Dividend’ system they do.
Potential radical approach: Cap and Dividend
The ‘Cap and Dividend’ approach is similar to TEQs – in that it is also aims to reduce the amount of carbon coming through the economy – but it is different in that it is an ‘upstream’ rather than ‘downstream’ approach. TEQs focuses on each transaction by each ‘consumer’. In contrast Cap and Dividend would set a cap on the amount of carbon coming into Scotland, and charge the large oil, gas and coal companies for the right to bring them into the country. The companies would pay into a fund which would redistribute the money equally to each adult in the country. This would have two effects:
(i) Firstly, companies would pass on the cost of bringing carbon into the country at the petrol pump, the plastics factory, the fertiliser company, etc, so all products and services involving carbon would rapidly increase in prices, encouraging a shift to non-carbon intensive and more local forms of production and services.
(ii) Secondly, citizens would receive a solid amount of cash every month which would enable 80% of people to be better off as a result of the situation, and only the wealthy high emitters to be penalised. [Note: there would need to be ways of addressing fuel poverty alongside this so that a poor elderly person in a remote location needing to use carbon fuel for heating and transport would not be penalised].
Potential transformational approach: Cap and Share
Like Cap and Dividend, this policy could be one of the game changers that both enables and locks in individual, community and society-wide attempts to move away from fossil fuel use and towards sustainability. The system is similar to Cap and Dividend. It is a permit system that physically limits the amount of carbon to be sold. Like a tax it does raise revenue, because the permits to sell fossil fuels must be purchased. Unlike a tax, where the revenue raised per unit sold is know the revenue raised by the share would not be known in advance – this is because the permit price may vary depending on the demand for the fixed and limited amount of fuels. In a period of high demand for fuels the price of permits would be high – in a period of contraction it might be low.
The key difference between Cap and Share and Cap and Dividend is that with Cap and Dividend the limited number of upstream permits are auctioned – whereas with Cap and Share the permits are first passed to individual citizens – and it is then down to those citizens to sell them (via intermediaries like banks or post offices). The ‘share’, the cash generated by the auction of these permits to the large companies bringing fossil fuel into the economy could then be used (or partly used) to directly support communities to relocalise the economy, and directly support communities in the Global South to cope with the impact of climate change today. Or all (or part of) the ‘share’ could go to the public as individuals on a per capita basis as with Cap and Dividend. Unlike with Cap and Dividend, however, people could choose not to put their shares forward to auction and therefore they can directly contribute to removing that amount of carbon from being allowed to enter the economy and the atmosphere.
Where, on balance, should we aim for in Scotland in terms of Carbon policy?
If we judge that the most we can aim for is TEQs, then that is at least a huge leap in the right direction compared to current regressive policies. If we judge that people would be ready to go straight to Cap and Share then rapid transition is possible. However, I suggest that Cap and Dividend is the best potential tipping point, in that it is more electorally appealing than Cap and Share (80% of people have more cash in their pockets without having to involve themselves in thinking about selling auctioning their share) but is more effective in altering the system than TEQs since it moves us from being consumers counting our carbon as well as cash credit cards to being citizens beginning to control the large fuel companies and reshape the economy.
It is crucial to remember that all these reformist, radical and transformational policies are transitional. They are intended to transform the context from one of an ever-expanding and unequalising economy to one of human-scale commons social forms.
In the next post, I will briefly sketch the other three policy areas in relation to Scotland, not because they are less important but because I hope the general approach I am suggesting is now clear. It is that we need:
(i) A shared vision of where we are going; we need
(ii) To collectively resist regressive approaches that seek to maintain us on our current ecocidal trajectory; and we need
(iii) To support each other in taking clear action, even if we disagree about what level of change is immediately necessary and/ or politically feasible.
This is the eleventh post in the series of ‘Case for the Commons: the kinder Society we want’. The twelfth will continue to propose a routemap for Scotland.