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