7: Changing the Climate of Opinion
Molly Scott Cato and Spencer FitzGibbon
So Tony and Gordon plan to use the unusually powerfully situation the UK will enjoy in both the EU and the G8 from January to make serious political steps forward in dealing with the twin evils of our time: global poverty and climate change. Rather than greeting this announcement with the cynical shrug it probably deserves, we can grasp the opportunity to publicise our well thought-through, practical and just response to both these problems: Contraction and Convergence.
Readers of Sustainable Economics are no doubt familiar with the general outline of the idea: beginning with a base of the earth’s carrying capacity for carbon dioxide, at least the IPCC’s present best guess, and then sharing this fairly between the world’s citizens. So much for the theory, which is hard to reject, being so obviously both simple and fair. But what about the politics? How can we both bring the US on board and introduce a system that is so clearly against the vested interests of global capital? I have a few modest proposals.
At the level of pub-chat we can go a long way once we take as our basic assumption the fact that the economy of the 21st century will be a carbon- limited economy. Once that is understood it becomes clear that every gram of CO2 produced must be used to generate the maximum amount of human well-being, rather than the maximum profit, as at present. In such a world the present trade system, transporting steel from one corner of the earth to the other and encouraging UK farmers to grub up their orchards so that we can import apples and pears from China, is plainly insane. Any CO2 emitted for the transportation of goods that can be produced close to home has been entirely wasted. We should organize our economy according to the principle of trade subsidiarity: goods being produced as close to the point of consumption as possible. Peter Mandelson eat your heart out.
A slightly more subtle point involves the problem of burden-shifting. This is when the carbon dioxide produced when goods are produced in China (are there any goods that aren’t these days?) but consumed in the USA or UK is counted as part of China’s output rather than ours. Researchers at Best Foot Forward have estimated that alongside our net per capita emissions of CO2 of 9,029 kg we should add CO2 embodied in net imports of 2,132 kg — a 23.6% increase. This artificial reduction in our CO2 emissions should be ended, with CO2 being allocated where the goods are consumed rather than produced.
And now for the politics. How are we going to put political pressure on the US to get serious about climate change? The most convincing argument from self-interest — and one that appears to be being taken on board by subnational actors in the USA — is that the inevitability of a future low-carbon economy means that those who resist this movement will be left behind in future competition. Even from a standard competitive view of economics, the first players in the low-carbon game will have a huge advantage.
It is likely that any proposals made at the EU or G8 will involve carbon trading, and, in spite of our opposi- tion to markets, we should be prepared to welcome this, so long as the market operates within a frame- work involving an absolute limit on CO2 and measures are taken to prevent the countries controlling reserve currencies gaining an unfair advantage. The best way of ensuring this is to create a new global currency for trade in goods and in carbon dioxide. Richard Douthwaite has developed proposals for such a currency, called the EBCU: Environment-Backed Currency Unit.
But the US’s trading partners have another source of power they can use: countries from the poorer world may begin to refuse to recycle US foreign debt, in response to both US foreign policy and the risk the USA poses to sustainability by its refusal to reduce CO2 emissions. Foreigners now own 38 per cent of US Treasury securities, which is more than twice the amount a decade ago, and gives them considerable leverage over the US economy. The inherent weakness of the US’s position is made clear in the the article by Janet Bush reprinted elsewhere in this issue (see p.16). The USA relies on this purchase of Treasury bonds to remain solvent and is thus dependent on the Asian economies. Thus in spite of the apparent omnipotence of the US and its currency the dollar, it is possible for the Asian economies to exercise leverage. Challenging the power of the dollar in world trade was always part of the point of the creation of a European currency, the euro. At the EU our political representatives should focus on increasing the amount of binational trade that is conducted in euros, pounds and other non-dollar currencies and should encourage Asian economies to do the same. But rather than using the value generated through this use of their reserve currencies to fund spending on arms, as the US has done, EU nations should use it to purchase carbon permits from countries with a CO2 surplus (i.e. countries which are currently emitting less than their per capita allowance under C&C), thus effectively using it for the benefit of poorer countries. And finally, we need to find ways of responding to poverty in the South without an increase in CO2, so that standards of living can be raised without the environmental costs we in the West have always imposed in return for our dubious ‘progress’.
The British government plays an important role in influencing the structure of foreign trade via the payment of Export Credit Guarantees. These export-supporting grants could be used to encourage the transfer of technologies to developing countries that would enable them to gain a head start in creating sustain- able economies. The support grants currently paid to arms industries, currently around 30% of the total, which are a destructive influence on poorer countries’ economies, should be switched towards industries which would help these countries build sustainable economies. The proportion of Export Credit Guarantees currently paid for the export of arms should be switched with immediate effect towards support for the export of renewable energy technologies.
Molly Scott Cato and Spencer FitzGibbon