Why Market 'Solutions' Won't Fix Climate Problems by Patrick Bond University of KwaZulu-Natal

1. Why Market 'Solutions' Won't Fix Climate Problems by Patrick Bond University of KwaZulu-Natal Centre for Civil Society, Durban Presentation to the Parkland Institute Conference 'From Crisis to Hope: Building Just and Sustainabile Communities' University of Alberta, Edmonton 16 November 2007 (cartoons by Zapiro)‏

2. How do we defeat fossil fuel addiction with energy justice? A Canadian-South African-world challenge • strategic perspective • stagnation, volatility, uneven development • petro-mineral boom: Africa's 'resource curse' • North's ecological debt to Africa • logic of carbon trading: 'privatisation of the air' • carbon trading case studies and critiques • the need for equitable electricity distribution

3. Is a green-red energy alliance possible?Conservation plus electricity-as-a-right?

4. Durban Group for Climate Justice • October 2004 initiative • supported by Dag Hammarskjold Foundation • Driven by grassroots activists in India, Brazil, South Africa • Largest signatory: Friends of the Earth International • Key support sites: DHF, The Cornerhouse, FERN, SEEN (Washington), CarbonTrade Watch (TNI), Dartmouth, RisingTide, UKZN Centre for Civil Society editor: Larry Lohmanndownload: www.cornerhouse.org

5. Reformist Reforms or Non-Reformist Reforms? • In Strategy for Labour (1964), Andre Gorz (died September 2007) distinguished between • reformist reforms strengthening the underlying logic, institutions and legitimacy of prevailing power relations, versus • nonreformist reformsundermining the logic, institutions and legitimacy of power – opening possibilities of deeper change. • Carbon trading is a reformist reform – and does not even work on its own terms

6. Context: Stagnation of world GDP growthGlobalisation and neoliberal economic policy correlates to slowdown

7. Dubious statistics:Correcting the GDP bias (global)‏ Source: redefiningprogress.org

8. Dubious statistics:Adjusting the data • Subtract resource depletion; • Subtract pollution; • Subtract long-term environmental damage (climate change, nuclear waste generation); • Add household and volunteer work (gender implications); • Correct for income distribution (rewarding equality); • Subtract crime and family breakdown; • Add opportunities for increased leisure time; • Factor in lifespan of consumer durables and public infrastructure; • Subtract vulnerability upon foreign assets. Source: Redefining Progress

9. Especially low growth since 1980, and extremely uneven development • Dramatic differences in annual % change of per capita GDP (note: constant 1995$, not PPP values) Source: Alan Freeman

10. volatility: US ‘economic calamities’ • rapidly rising trade deficit, which in 2006 grew to more than $760 billion, or nearly 6 percent of GDP • since 2001, loss of 3 million manufacturing jobs, or more than a sixth of the entire sector • unchecked growth of the housing bubble, with short-term interest rate down to 1.0% in 2001; by 2006, prices were 73% higher than their pre-bubble values: $8 trillion in unsustainable ‘wealth’ (source: Dean Baker, Harpers, June 2007)‏

11. US housing bubble

12. Stock market crashes

13. Stock market volatility: emerging markets

14. Financing of US capital inflows Source: International Monetary Fund Global Financial Stability Report 2004, p.148

15. Higher US interest rates to attract fundingthen decline to avoid financial meltdown Source: IMF

16. Since 2002, substantial commodity price increases

17. World economy reverts to 'accumulation by dispossession':David Harvey A closer look at Marx’s description of primitive accumulation reveals a wide range of processes: • the commodification and privatisation of land and the forceful expulsion of peasant populations; • conversion of various forms of property rights (common, collective, state, etc.) into exclusive private property rights; • suppression of rights to the commons; • commodification of labour power and the suppression of alternative (indigenous) forms of production and consumption; • colonial, neocolonial and imperial processes of appropriation of assets (including natural resources)... -- David Harvey, The New Imperialism, 2003

18. The Shock Doctrine by Naomi Klein (and Milton Friedman)‏ • According to Friedman (advisor to Pinochet after 9/11/73 coup): ‘only a crisis - actual or perceived - produces real change’ • Klein: ‘It was the most extreme capitalist makeover ever attempted anywhere, and it became known as a "Chicago School" revolution, as so many of Pinochet's economists had studied under Friedman there. Friedman coined a phrase for this painful tactic: economic "shock treatment". In the decades since, whenever governments have imposed sweeping free-market programs, the all-at-once shock treatment, or "shock therapy", has been the method of choice.’ • Other examples: Malvinas war of 1982 (Argentina, Britain), China’s Tiananmen Square 1989, Eastern Europe 1990s, 9/11/01, 3/03 war on Iraq, 12/04 tsunami, 8/05 Katrina - also SA • Psychological dynamic: ‘The bottom line is that, for economic shock therapy to be applied without restraint, some sort of additional collective trauma has always been required.’

19. Walter Rodneyon the productionof poverty The question as to who and what is responsible for African underdevelopment can be answered at two levels. Firstly, the answer is that the operation of the imperialist system bears major responsibility for African economic retardation by draining African wealth and by making it impossible to develop more rapidly the resources of the continent. Secondly, one has to deal with those who manipulate the system and those who are either agents or unwitting accomplices of the said system.

20. Africa’s ‘resource curse’: Excessive fossil fuel resources in a context of growing int'l interest (US Africa Command, Chinese patrimonial politics, EU EPAs, SA arms acquisitions, persistent coups)‏ • Which regions have used up their ‘own’ oil already? • Source: C.J.Campell, www.energycrisis.org

21. Africa’s oil mostly exported 3.6% of world refining capacity Supply of motor gasoline in Nigeria (2001)‏

22. World Bank (minimalist) adjustments to GDP so as to derive ‘genuine savings’fixed capital (-), education (+), natural resource depletion (-), and pollution damage (-)

23. Where is Africa’s wealth?World Bank recording of African countries’ adjusted national wealth and ‘savings gaps’, 2000

24. Jubilee South: ecological debt is ‘the debt accumulated by Northern, industrial countries toward Third World countries on account of resource plundering, environmental damages, and the free occupation of environmental space to deposit wastes, such as greenhouse gases, from the industrial countries.’

25. Types of ecological debt (Joan Martinez-Alier): • unpaid costs of reproduction or maintenance or sustainable management of the renewable resources that have been exported; • actualised costs of the future lack of availability of destroyed natural resources; • compensation for, or the costs of reparation (unpaid) of the local damages produced by exports (for example, the sulphur dioxide of copper smelters, the mine tailings, the harms to health from flower exports, the pollution of water by mining), or the actualised value of irreversible damage; • (unpaid) amount corresponding to the commercial use of information and knowledge on genetic resources, when they have been appropriated gratis (‘biopiracy’); • (unpaid) reparation costs or compensation for the impacts caused by imports of solid or liquid toxic waste; and • lack of payment for environmental services or for disproportionate use of ‘Environmental Space’, e.g. (unpaid) costs of free disposal of gas residues (carbon dioxide, CFCs, etc) assuming equal rights to sinks and reservoirs ($75 billion/year).

26. SA context:municipal services discontent(recent 12-month record of protest by SA Police Services:5813 - 16/day)‏

27. Protest against Johannesburg World Summit on Sustainable Development, 31 August 2002 30 000 march 12km from Alexandra to Sandton against UN and SA eco-social policies

28. Major sites for neoliberal plus sustainable dev. discourses

30. ‘Privatisation of the air’Two types of trading • Emissions trading (‘cap and trade’)‏ • Project-based credits (e.g. Plantar trees or Bisasar dump methane extraction), either as Clean Development Mechanism projects in the South, or Joint Implementation projects in industrialised countries • These are mutually exchangeable (‘hybrid’) under Kyoto and the EU Emissions Trading System • They assume that polluters have a ‘property right to pollute’ at existing levels, that must be (gradually) reduced through market incentives – even though this means creating a market out of thin air

31. How did carbon trading emerge as central strategy for emissions reduction?Al Gore insisted in Kyoto, 1997 – quid pro quo for US support (?!)‏

32. Not only: when do we run out of oil?Should we be using remaining supplies? Following slides courtesy ofLarry Lohmann

33. The sink ‘solution’ via carbon trading

34. The Kyoto Protocol’s • Clean Development Mechanism formula: +

35. Buyers Sellers Shell Tata Chemicals BHP-Billiton ITC EDF Plantar RWE Votorantim Endesa Petrobras Rhodia Energy Shri Bajrang Mitsubishi Birla Cargill Oil & Gas Nat. Corp. Nippon Steel Sasol ABN Amro Mondi Chevron Hu-Chems Fine Chemical Chugoku Electric Power Chhatisgarh Electricity • Who benefits?

36. George Monbiot dubunks timber plantations as sink investments ‘When you drain or clear the soil to plant trees, for example, you are likely to release some carbon, but it is hard to tell how much. Planting trees in one place might stunt trees elsewhere, as they could dry up a river which was feeding a forest downstream. Or by protecting your forest against loggers, you might be driving them into another forest. As global temperatures rise, trees in many places will begin to die back, releasing the carbon they contain. Forest fires could wipe them out completely.’

37. Plantar’s gum tree carbon offset, Brazil The ‘green desert’

38. The South African pilot:Bisasar Rd dump, Africa’s largest- in the Clare Estate suburb of Durban Home of the Khan family

39. The South African pilot • Will the PCF cause more public health damage -- through environ- mental racism? • Source: TNI Briefing Series 2003/1: The Sky is Not the Limit

40. Sajida Khan (1952-2007)her EIA challenge rebuffed the World Bank PCF, 2005 at present, Durban lacks investors

41. Durban Group crits of emissions trading • Delays transition away from fossil fuels. • Selects against immediate investment in long-term structural change. • Short term and uncertain price signals discourage structural change. • Cost-spreading discourages innovation. • Cannot yet be implemented due to measurement problems. • Involves other enforcement obstacles. • Creates and hands out property rights to the biggest polluters in the North, increasing their power and the inertia of a fossil-intensive system – “polluter earns”. • Large unaccounted stage-setting and opportunity costs.

42. Other crits of EU Emissions Trading System • The EU ETS “has not encouraged meaningful investment in carbon-reducing technologies.” - Tony Ward, Ernst & Young, May 2006 • “ETS has done nothing to curb emissions . . . [and] is a highly regressive tax falling mostly on poor people . . . Enhances the market power of generators. Have policy goals been achieved? Prices up, emissions up, profits up . . . so, not really. . . All generation-based utilities – winners. Coal and nuclear-based generators – biggest winners. Hedge funds and energy traders – even bigger winners. Losers . . . ahem . . . Consumers!” - Peter Atherton, Citigroup, January 2007 • Emissions trading “would make money for some very large corporations, but don’t believe for a minute that this charade would do much about global warming . . . old-fashioned rent-seeking . . . making money by gaming the regulatory process.” - Wall Street Journal, 3 March 2007 • “European Commissioner for Energy gives damning verdict . . . ‘A failure’.” TVChannel 4 Evening News, London, 7 March 2007

43. More carbon trade critiques • “It isn’t working . . . a grossly inefficient way of cutting emissions in the developing world . . . A shell game . . . $3 billion to some of the worst carbon polluters in the developing world.” - Newsweek, 12 March 2007 • “Industry caught in carbon ‘smokescreen’ ” - Financial Times front page, 25 April 2007 • “Truth about Kyoto: Huge profits, little carbon saved . . . Abuse and incompetence in fight against global warming . . . The inconvenient truth about the carbon offset industry” - Guardian, 2 June 2007 • “Die Linke fordert Moratorium für CDM-Projekte” - DIE LINKE press release, 4 September 2007

44. Instead of working within the system’s logic, we needPolanyi’s ‘double movement’ Karl Polanyi, The Great Transformation (1957):‘the extension of the market organisation in respect to genuine commodities was accompanied by its restriction’ via civil society activism/advocacy (i.e., sometimes Gramscian war of movement)‏ Other double movements:extension of racism, patriarchy, militarism, homophobia, fascism, ecological degradation often met by civil society activism/advocacy

45. Genuine reform:plug fossil fuel consumption – leave the oil in the soil

46. Petro-mineral resources:Keep the oil in the soil! • Alaska wilderness campaigners • Oil Watch(October 2006, international meeting, Quito)‏ • Women of the Niger Delta (and Movement for the Emancipation of the Niger Delta) ‏ • Rafael Correa agrees with Accion Ecologia that Ecuador’s main oil reserve (Ishpingo-Tiputini-Tambococha, in Yasuní National Park) should stay in the ground (August 2007)

47. Petro-mineral resources:Keep the oil in the tarsands! Gordon Laxer suggestion - 'No new approvals until standards are met': • Strict limit water / GHG emissions • Realistic land reclamation plans • Deposit cover full-cost land reclamation up-front • No subsidies production dirty energy • Energy security for Cdns • Much higher econ rents on dirty energy to fund clean energy industry

48. Durban Group for Climate Justice: • Leave resources in the ground! • Radically new industrial policies. • Tough state regulation of emissions. • Massive investment in renewables. • Waste reduction. • Grassroots carbon reduction initiatives.

49. In considering reform strategy, crucial biases from Africa • excessive fossil fuel resources in context of adverse power relations and rising imperialist interest in Africa (the ‘resource curse’); • the unfair burden represented by the ‘ecological sink’ function Africa plays in relation to global greenhouse gas emissions; • inadequate access to electricity for poor people (combined with excessively cheap electricity for large corporations).

50. Electrification rates World average Developing countries average