Opinion

Capitalists put profit ahead of attempts to save the planet

Jeff Rudin

Karl Marx noted that the last capitalist would sell the rope used for his own hanging and the burying of the system.

Despite the effects of climate change, such as the melting of glaciers in Greenland, companies in India and China still abuse the carbon credits system put in place by the United Nations. (Michael Kappeler, AFP)

Others are now hailing the green economy as capitalism's opportunity to save the world while still maximising profit.

Powerful support for using a profit-based green economy as the bulwark against the catastrophe of climate change comes from an impeccable source: James Hansen, the very person credited with having first forced the United States government to take global warming seriously. Hansen, the head of the Nasa Goddard Institute for Space Studies since 1981 and adjunct professor in the department of earth and environmental sciences at Columbia University, evokes the virtues of the market at the same time as warning us that climate change is worse than even he expected.

Writing in the Washington Post on August 6, he confessed to having made a serious mistake when, in 1988, he first alerted the United States Senate to the fact and implications of human-caused global warming. His warning of 22 years ago has turned out to be far too optimistic. The speed of global warming, leading to what he describes as "a stunning increase in the frequency of extremely hot summers", has surprised him.

These extreme weather events are the key finding of a new analysis of the past six decades of average global temperatures. This peer-reviewed study, which the US Academy of Science published, shows that it is no longer enough to "repeat the caveat that no individual weather event can be directly linked to climate change". The study instead shows that "there is virtually no explanation other than climate change" for such recent events as the European heat wave of 2003 (which killed 50 000 people), the Russian heat wave of 2010, the 2011 drought in Texas and Oklahoma (which had a damage bill of more than $5-billion in Texas alone), or the extremely hot summer the US has just experienced, which is alarming the world in terms of food prices.

"The odds that natural variability created these extremes are minuscule, vanishingly small," according to Hansen, for whom, as a scientist, caveats are a stock in trade. "To count on those odds," he warns, would be "like quitting your job and playing the lottery every morning to pay the bills".

When someone like Hansen speaks with such definiteness, it behoves all of us to listen – and to act with the urgency that his dire warnings demand: "The future is now. And it is hot."

Carbon tax
Hansen offers what he sees as a "simple, honest and effective solution": a carbon tax on all fossil fuel companies, with the money collected being distributed on a per-capita basis to all legal residents. This, he assures us, will "stimulate innovations to create a clean-energy economy".

Alas, for all of us, he is wrong on this score. A New York Times article on August 9 blows away the "simple solution" Hansen offered only a few days earlier. Marx seems to be right after all: the pursuit of immediate profit maximisation takes precedence over life itself, including the lives of those making the profit. Capitalism has little, if any, place for Hansen's good intentions.

One year before Hansen began his often lonely campaign to warn the world about climate change, the Montreal Protocol on substances that deplete the ozone layer was adopted (in September 1987). The European Union plus 197 other countries have ratified the protocol, making it the most widely supported treaty in the history of the United Nations. Unlike the Kyoto Protocol, which seeks to limit the greenhouse gases that cause climate change and which the US has rejected, the ozone-specific Montreal Protocol has the full support of the US, which is probably why, in the words of Kofi Annan, then UN secretary general, it is "perhaps the single most successful international agreement".

By the mid-1980s, the science of the "ozone hole" had been sufficiently established for the world's leaders to take the problem seriously. Chlorofluorocarbons (CFCs) – the main coolant used in refrigerators and air conditioners as well as in the manufacture of solvents and blowing agents for plastic-foam manufacture, fire extinguishers and aerosol cans – were causing the depletion of the ozone layer. The resulting hole was leading to an in increase in ultraviolet-B radiation - an increase in skin cancer and damage to crops and marine phytoplankton being the outcome. The Montreal Protocol binds all parties to phasing out the use of CFCs despite manufacturers and users' strenuous objections.

Hydrochlorofluorocarbons (HCFC) are acceptable transitional CFC replacements and the basis of the current problem.

The Montreal Protocol relies on market mechanisms to repair the ozone hole. Embracing the principle of all countries having a common but differentiated responsibility to protect and manage the global commons - a cardinal principle in all climate-change negotiations – the protocol restricts the use of HCFC in developed countries, but not in developing ones. Moreover, it allows for companies in developing countries to be compensated for not using HCFC.

The rub
The UN, under whose auspices this takes place, assigned the value of one to carbon dioxide (CO2), the most common of the greenhouse gases. Other industrial gases are assigned values relative to that, based on their warming effect and how long they linger in the atmosphere. Methane is valued at 21, nitrous oxide at 310 and HCFC-22, the waste gas produced while making HCFC, is near the top of the list at 11 700.

And there is the rub. These values are used to calibrate exchange rates for the carbon "credits" the UN began issuing in 2005. Companies awarded these credits under the UN's clean development mechanism are free to sell them on global trading markets. Companies in the developed world that exceed their legal carbon emission limits under various international agreements buy these credits. Profit maximisation, the engine of capitalism, has produced a perverse – though highly profitable – outcome. Rather than eliminating one tonne of carbon dioxide and earning one credit, entrepreneurs quickly realised they could destroy the HCFC-22 produced as a by-product of HCFC (the transitional coolant pending the total outlawing of all CFC) and earn 11 700 credits.

Nineteen plants, mainly in India and China, now legally produce as much HCFC as they can in order to maximise the carbon credits they get for destroying its waste product. The result has been that 46% of all carbon credits awarded worldwide have gone to these 19 companies. Worse still, their production of HCFC has been so enormous that it has brought the cost of the gas down so far that companies in the developed world no longer have any economic incentive to stop using it. Long live profit. To hell with the ozone hole and climate change.

Damn Marx for being right. It would be so much easier if market realities had not turned Hansen's "simple, honest and effective solution" on its head.

Dr Jeff Rudin is on the board of the Alternative Information and Development Centre

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