May 25, 2017

The Crash Programme: a solution-multiplier

The crash programme required to restabilise global climate can be funded by mobilising funds that are either currently wasted or used in destructive ways. The real cost for humanity is negative since the programme has to be undertaken in any case to solve nearly all the other critical problems that confront us today.

Published in The Ecologist Vol. 29 No. 2, March/April 1999.

What must be done to prevent climatic disaster and how could such preventative action come about? If the date today were 1950 instead of 1999 the problem would be much easier. However, virtually nothing has been done and the problem is becoming rapidly more serious and less tractable. We cannot afford to wait any longer. Effective action must be taken immediately.

What is more, because of the time we have wasted, action must now take the form of a crash programme in which the necessary changes must be compressed into a period of time that is undoubtedly too short for comfort. Otherwise all sorts of potentially synergistic effects and positive feedbacks might become operative.

We might then find for instance that the Gulf Stream had changed its course causing a freezing up of north-western Europe, that a major part of the Antarctic ice-sheet had collapsed, with the resulting sea-level rises, that the monsoon had shifted, causing famines in south and south-east Asia, or that Amazonia has become a desert with further serious climatic consequences for the planet.

As Bill Hare in Greenpeace’s Carbon Logic notes, [1] such catastrophes once triggered are effectively irreversible, at least on a historical time-scale, and the longer we put off effective action the more likely they are to materialise. It is essential that Governments, industrialists and the public at large are made to understand this.

However, the transition to renewables, within the time frame set out in Greenpeace’s Carbon Logic, is likely to prove politically and economically difficult. The monetary costs, it is argued, are going to be high, particularly with regard to replacing the infrastructure of our fossil-fuel-powered economy. Where then is the money going to come from? There are a number of obvious sources.

Reforming taxation

The tax system must be reformed. Taxes must be increased exponentially on all those economic activities that give rise to greenhouse gases. In this way, they will provide the necessary incentive for companies and the public to make the appropriate changes as quickly as possible. Clearly, this means above all the introduction of a carbon tax, which must increase from year to year until such a time as it becomes prohibitive.

The principle could be adopted as a means of phasing out the other economic activities that contribute to climate change, such as logging of old growth forests, the production of chlorine-based ozone layer depleting chemicals, and agro-chemicals. The extent of the tax and the rate at which it increases over time must of course depend on the rate at which the activities in question must be phased out.

In addition, a Tobin tax (named after the economist and Nobel laureate Dr James Tobin, who first proposed it) on international currency transactions should be introduced. These transactions are estimated to be in the order of $1.3 trillion per day. A tax of merely 0.25 percent would yield $150-200 billion annually. A tax of 0.5 percent would thereby yield $300-400 billion every year, assuming that this did not reduce the volume of transactions, though even if it did, the sum yielded would still be very considerable. [2]

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Redirecting subsidies

Another huge source of funds for subsidising the transition to renewables must be the redirection of the vast amount of money spent each year in actually subsidising fossil fuels and other activities that contribute to global warming. According to the watchdog group Alliance to Save Energy, the energy sector in the US is subsidised at the rate of $21-36 billion annually. [3]

As if this were not sufficient, electric utilities are about to receive another major windfall from taxpayers in order to facilitate the deregulation of the industry. It seems that so-called ‘stranded costs’ will be passed on to taxpayers and consumers. These costs have been incurred by investing in highly uneconomical installations, such as nuclear power plants, whose true costs have been known for years to be incomparably higher than the industry admits. The value of the bailout, according to Moody’s Investor Services, is $50-300 billion. Consumer and environmental activists say it could be as much as £500 billion. [4]

Worldwide, it appears that subsidies to the fossil fuel industry are at present close to $300 billion. David Roodman tells us [5] that even developing countries spent some $65 billion in 1991 to fund price controls on fossil fuels, including kerosene and diesel, which the poor increasingly depend on for heating and lighting purposes. In addition, $46 billion was handed out by developing countries in 1991 to compensate power companies for the lower prices prevalent at the time. Eastern bloc countries apparently also spent $135-180 billion that same year – as much as 10 percent of their GDP – to keep fuel costs to a fraction of what they were in the West. Another $34-39 billion was spent in the same countries on electricity subsidies.

Subsidies for fossil fuels are actually very much higher if we take into account the national security cost of oil, that is the cost of maintaining regimes friendly to the West and to US interests in power in oil-rich parts of the world. This has been estimated by Edwin S. Rothchild, Energy Policy Director of Citizen Action, [6] to be in the area of $57 billion per year or approximately $9.19 per barrel of the oil used in the US.

Costs of course can run very much higher when there is an acute security problem such as when Iraq invaded Kuwait, threatening the US’s main oil supplies. Operation Desert Storm – America’s response to this crisis, cost more than $60 billion, [7] spread out among all the governments that participated. If fossil fuels are to be phased out, then clearly all of these subsidies must, quite logically, be shifted very rapidly to investments in renewable energies.

A further source of funds to be tapped in order to pay for the transition must be the money poured into the Third World by the World Bank to fund large-scale fossil fuel power stations, environmentally destructive infrastructural projects like large dams, and highways through forested areas.

The same applies to the other multinational development banks and to bilateral aid agencies such as the Department for International Development (DfID), in the UK; and the United States Agency for International Development (USAID) in America, whose main function is not helping the poor, but subsidising UK and US companies seeking to put up often destructive infrastructure projects in the Third World.

Of equal importance is the re-direction of government subsidies that currently go to the nuclear industry, in particular on research and development, the extent of which has been massive. According to Roodman, [8] such subsidies have amounted to some $534 billion since 1948. However, there are also indirect subsidies. In the US, the Price-Anderson Act of 1959 took over the responsibility of paying costs of the damage caused by nuclear accidents, leakages from nuclear waste dumps and other installations, over a specific sum of money. If the nuclear industry were to pay for its own liability insurance it would cost it an estimated $3 billion a year over and above the cost of its normal operations.

It also appears that, since 1974, $247 billion in nuclear research and development has been paid by the governments of OECD countries for nuclear programmes, including conventional reactors, breeders and nuclear fusion research. Government support for nuclear power worldwide contrasts only too strikingly with the tiny subsidies provided for renewable energy. The main reason of course is that, as Steven Gorelick notes,

“nuclear energy meets the needs of a large-scale industrial economy, while decentralised renewable energies – like rooftop solar water heaters – inherently run against the grain of the centralised industrial model.” [9]

But it is not just the fossil fuel and electricity industries that are subsidised worldwide. So, of course, is the motor industry, as governments spend enormous sums on building highways to accommodate the industry’s most basic requirements. According to David Roodman, [10] “governments at present pour at least $500 billion a year into such environmentally-destructive activities”, and he considers that the full amount may be far greater. This too must be re-directed, not least to improve public transport.

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Curbing military expenditure

Yet a further source of funds most be the almost unbelievable amount of money spent world-wide on armaments. According to Michael Renner, global military expenditure since World War II has been in the area of 30 to 35 trillion dollars. This includes indirect costs such as

“the scrapping of stocks of obsolete armaments, the decontamination and rehabilitation of polluted land and facilities that have been used to produce, test and maintain weapons, the destruction and dislocation caused by wars, the loss of harvests, and the cost of humanitarian assistance to refugees and their resettlement”. [11]

Renner estimates that if we take all these factors into account, the total cost of the Iran/Iraq war of 1980 to 1988 was in the area of $416 billion and that of the Gulf war of 1991 of $676 billion [the Arab Monetary Fund’s military estimate]. [12] Once the use of fossil fuels has been phased out and the necessary move towards a largely low-tech localised economy has been achieved, there will be a drastic reduction in the need for these expenditures – reducing by the same token all the human, social and ecological costs involved.

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The ‘costs’ in perspective

Hence, it is clear that the funds could clearly be made available if the political will were there to overcome the formidable opposition from large sections of industry. What the US industry opponents, to prevent climate change in particular, fear most is that action to prevent climate change would make US industry uncompetitive. Yet a World Research Institute (WRI) study [13] clearly shows that the most important part of the requisite programme – the phasing out of fossil fuels – need not make US industry uncompetitive. Its arguments are as follows:

  • Over two thirds of US trade and investment is with other industrialised countries that generally have higher energy prices and are also bound to the same (and in some cases higher) emissions reductions under the climate treaty.
  • US foreign direct investments in energy-intensive sectors are not flowing to developing countries with low-energy prices, but rather to other industrialised countries with higher energy prices.
  • Among US industries that produce goods that can be traded, less than two percent of jobs are in energy-intensive sectors. Energy costs are an insignificant share of the value of most tradable goods and services. More than 80 percent of output and 90 percent of employment in tradables is in industries in which energy costs represent no more than 3 percent of the value of sales. [14]

Moreover, energy reforms in developing countries are generating significant trade and investment opportunities for US firms that can help provide cleaner and more efficient energy sources. As Brent Blackwelder, Director of Friends of the Earth USA, says, the US will not lose its competitive edge: quite the reverse:

“wherever the US becomes the leader we tend to bring others along with us. If we start running our economy on a solar efficiency basis, China will do the same.” [15]

Conversely, those countries and companies that remain bolted to the status quo should realise that they are heading down a fatal cul-de-sac. Unless fossil fuel companies start investing in renewable energies and efficient technologies now, and on a very large scale, they will indeed become uncompetitive in comparison with those companies, particularly in Europe, which are already beginning to go down the renewable route. Even more importantly, unless those corporations which are currently preventing necessary action from being taken, reverse their positions, they will incur devastating financial costs from worsening climatic destabilisation. If they continue to ignore this reality, they do so at their peril.

Moreover, it is not as if many of the challenges that are faced are technically insurmountable. Indeed, the US has been one of the most technologically advanced and innovative nations this century, and so to argue that Americans cannot employ their talent to fight climate change is simple nonsensical.

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Job creation

Another argument used by industrialists who oppose effective action on climate change is that it would lead to a huge increase in unemployment. This need not be so. In the US, studies show that reducing greenhouse emissions by 2010 to just 10 percent below 1990 levels (through the expansion of public transport, rapid development of renewable energy sources and increases in energy efficiency) would generate 773,000 new jobs and save the average household $530 a year in energy bills. [16]

  • A study for the European Foundation for the Improvement of Living and Working conditions found that the adoption of the best available energy conservation technologies could create 500,000 extra jobs in the EU. [17]
  • A study by Friends of the Earth in the UK shows net job gains of 130,000 in the UK through a reduction in passenger road traffic of 10 percent by 2010, from 1990 levels, and a switch to public transport and cycling. [18]
  • An EU study calculates a job gain of over 500,000 jobs following a 35.6 percent increase in rail passenger kilometres by the year 2010 and a concurrent decrease in passenger car kilometres by 21.4 percent. [19]
  • Belgian government economists estimate that the original EU’s carbon energy tax (£10/barrel of oil) proposal, if adopted, would lead to the creation of 700,000 new jobs in the EU largest member states. [20]
  • Moreover, a study by the SAFE Alliance shows that after a conversion from a chemical to an organic farm in the UK, (a requirement to protect our carbon-absorbing soils and to phase out nitrous oxides), there was a 60 percent increase in unpaid family labour, an 80 percent increase in full-time labour, a 100 percent increase in part-time labour, and a 550 percent jump in casual labour. [21]
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A new economic direction: the real solution-multiplier

We must realise, however, that this increase in employment cannot be sustained within the context of a global economy controlled, as it must be, by highly automated, cost-cutting transnational corporations that rapidly put small enterprises, except highly-controlled sub-contractors, out of business. In such an economy, employment levels must be unacceptably high. [22]

According to the Institute for Policy Studies, in Washington DC, the 200 largest transnational corporations that control 28 percent of the global economy provide less than 1 percent of jobs. [23] The bulk of the jobs in the US and elsewhere is provided by small and medium-sized companies, which means that as the global economy develops, and these are replaced by TNCs, unemployment can only increase.

In China, in the late 1970s, it was decided to set up a large number of small enterprises to cut down on the massive influx of people to the cities, an inevitable concomitant of the globalisation process. By 1991, there were 19 million of these small companies and they provided 112 million new jobs. [24] However, it seems unlikely that these will survive economic globalisation – unless of course they were all highly subsidised, as small farms and small shops have been in Japan until very recently.

Indeed, it is in the rural areas of highly populated Third World countries, such as India and China, that the worst unemployment will occur. In India, for instance, at least 600 million people live off the land as small farmers, small shopkeepers, street traders and artisans. None has any future whatsoever, as India industrialises: the vast bulk of them will, by necessity, be forced into the slums of the nearest conurbations – where unemployment levels may already be as high as 20-30 percent.

To render it conceivable to provide the inhabitants of our planet with a proper livelihood, we have no alternative but to move our society in a very different direction, towards an economy that is run by small and medium, relatively low-tech, companies, catering for mainly local, regional and national markets, rather than an economy controlled by massive high-tech transnationals catering for a world market. In other words, we must shift towards a localised rather than a globalised economy. It is also precisely in this direction, of course, that our society must move if we are to restabilise our climate, as the process of economic globalisation significantly increases the emission of greenhouse gases in many different ways.

Indeed, we change direction in order to reduce the present unparalleled destruction of our natural environment as a whole. For at the rate at which we are presently destroying our forests, draining our wetlands, grubbing up our coral reefs, compacting, eroding, salinising, desertifying and paving over our agricultural land and polluting our soil, our rivers, our oceans, the food we eat, the water we drink and the air we breathe, we will have rapidly made this planet uninhabitable, even without climate change.

We must move in this new direction too because only a localised economy can provide an economic infrastructure for renewed families and communities that have always provided humans with their most fundamental source of security. This is critical today, as surrogate sources of security, such as jobs and welfare, can no longer be counted upon.

What is more, it is only within the context of renewed families and communities that the cultural patterns that have traditionally held societies together; that life can re-emerge and once again acquire a meaning; so that we can be rescued from the appalling nihilism that prevails today; and that leads to so much crime, delinquency and sheer despair.

Finally, only in this way can we create the conditions under which real democracy can flourish. For it is only at the level of the community that individuals can make their voices heard and their views acted upon. The alternative is yet further growth in corporate control with more and more human, social and ecological imperatives sacrificed on the altar of corporate financial interests. In such a world there is no hope for humanity, nor, for that matter, for life itself.

The adoption of the programme required to restabilise climate, therefore, does not in reality lead our society to incur any extra costs at all – as it is indispensable for solving most of the other major and otherwise intractable problems that confront us today.

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1. Bill Rare, Fossil Fuels and Climate Protection: The Carbon Logic, Greenpeace.
2. World Energy Movement, Declaration, p.9. World Energy Movement, Brookline, Mass, November 1988.
3. Alliance to Save Energy, Federal Energy Subsidies: Energy, Environment and Fiscal Impacts. Cited in M. Shelby, R. Shackleton, M. Shealy and A. Cristofaro, The Climate Change Implications of Eliminating US Energy (and related) Subsidies, 1994, p.4. Quoted in Small is Beautiful, BIG is subsidised, Principal author Steven Gorelick, p.4.
4. Gil Friend, “Stranded Assets. Why can’t you ever find a capitalist around when you need one? The New Bottom Line”. The Strategic Perspectives on Business and Environment, Vol. 6 No. 17, 1997.
5. D. M. Roodman, Paying the Piper: Subsidies, Politics and the Environment. Worldwatch Paper No.133.
6. E. S. Rothschild, Oil Imports, Taxpayers Subsidies and the Petroleum Industry, Washington DC, Citizen Action, May 1995, pp.9-11. Quoted in Small is Beautiful: BIG is Subsidised, ISEC.
7. S. Gorelick, Small is Beautiful: BIG is Subsidised. ISEC, 1998.
8. Op.cit. 7, p.48.
9. Op.cit. 5.
10. Op.cit. 7, p.6.
11. Michael Renner, Budgeting for Disarmament, Worldwatch Paper 112, p.10.
12. Ibid p.11.
13. R. Repetto, L. Maurer, G. Bird, US competitiveness is not as (sic) risk in the climate negotiations. World Resource Institute, 1997.
14. Ibid.
15. Brent Blackwelder in an interview with Simon Retallack.
16. Reaping the Double Dividend – Climate Change and Jobs, p.2. Friends of the Earth, 1997.
17. Less Traffic, More Jobs: The Direct Employment Impacts of Developing a Sustainable Transport System in the United Kingdom. Friends of the Earth, 1997.
18. Ecotec 1994, The Potential for Employment Opportunities from Pursuing Sustainable Development. Report to the European Foundation for the Improvement of Living and working Conditions, Birmingham/Brussels.
19. F. Bossier and T. Brechet, “A fiscal reform for increasing employment and mitigating CO2 emissions in Europe”. Energy Policy Vol. 23 No. 9, 1995, pp.789-793.
20. SAFE Alliance, Double Yield: Jobs and Sustainable Food Production, p.16, 1997.
21. H. Kane Enterprise. Worldwatch, March/April 1996, p.17.
22. J. Rifkin, New Technology and the End of Jobs. In Jerry Mander and Edward Goldsmith, The Case Against the Global Economy and For a Turn Towards the Local, Sierra Club, 1996.
23. J. Cavanagh, in Sadruddin Aga Khan (Ed.), Policing the Global Economy. Cameron May, London, 1998, p.56.
24. Friends of the Earth, Energy for Sustainable Development. Special briefing sheet based on modelling work of independent consultants.
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