Climate change: Market-based policies will not work

“Simply using price mechanisms will lead to a policy failure with catastrophic consequences for most people and most species”

David Spratt is a policy analyst with the Australian group CarbonEquity, and co-author, with Philip Sutton, of Climate Code Red: The Case for Emergency Action, which Climate and Capitalism will review soon. Spratt was interviewed by Ben Courtice of Green Left Weekly.

The interview mentions Ross Garnaut, an advisor to the Australian Labor government; see “Can Markets Stop Climate Change” for another critique of his report and proposals.

Your book suggests that ‘business as usual’ economics won’t fix the problem. What does it mean to abandon business as usual economics in outline?

The essence of the solution is to recognize the need, based on the scientific imperatives, to de-carbonize the economy as fast as humanly possible, for the state and society to plan and support a rapid transition far beyond the speed at which market mechanisms can effectively work. Given the emergency speed at which this must be done, simply using price mechanisms will lead to a policy failure with catastrophic consequences for most people and most species.

It is fatuous to believe that simple pricing/market mechanisms can achieve the wholesale restructuring of society in the decade or two we have to achieve this task before the falling dominoes of carbon cycle feedbacks start crashing around our ears, signalling that we have left it too late to stop the climate catastrophe sweeping far beyond the capacity of human action to further affect its trajectory.

The traditional environmental organizations have been timid in embracing the radical ideas that flow from the recognition that we are truly in an emergency. Do you think these groups will come on board with the ‘emergency’ approach?

Many of the peak environment organizations are still setting policies and plans based on political convenience rather than on science-based analysis. The dilemma for the peak green groups is that they will get squeezed by the scientific imperatives and the scientists on the one side (such as NASA climate scientist James Hansen) and the grassroots climate and environment groups on the other, who are moving to the climate emergency position. Hansen’s challenge of a 325 ppm target [to reduce atmospheric CO2 to, at most, 325 parts per million] is being studiously ignored in most cases.

In a comment for Climate Code Red, Hansen now says that:

“Recent greenhouse gas emissions place the Earth perilously close to dramatic climate change that could run out of our control, with great dangers for humans and other creatures. There is already enough carbon in the Earth’s atmosphere for massive ice sheets such as West Antarctica to eventually melt away, and ensure that sea levels will rise metres in coming decades.

“Climate zones such as the tropics and temperate regions will continue to shift, and the oceans will become more acidic, endangering much marine life. We must begin to move rapidly to the post-fossil fuel clean energy system. Moreover, we must remove some carbon that has collected in the atmosphere since the Industrial Revolution.”

Hansen and seven fellow scientists have circulated a paper making the precautionary case for global cooling and a swift return to 325 ppm atmospheric carbon. The response, according to former US Greenpeace deputy director Ken Ward, has been “a deafening silence” from most climate lobby groups.

If the peak green groups maintain their old positions and put a relationship to government ahead of the science and what they once considered “their” base they will become irrelevant, or simply an obstacle, to the campaign for action at emergency speed. At the moment they are way to the conservative side of Gore, and some of them are more conservative than Garnaut. This is scandalous.

Do you think that large industrial/financial interests can be convinced into taking action by the scope of the emergency or are they likely to play a sabotaging role?

Some will get it (already get it — have a look at T. Boone Pickens!) and most will not. Those who get it will prosper, the others will have to be bitterly fought over such issues as the coal industry. We have to expect that the elite will not be homogenous on the rapid transition question, as the Al Gore/T. Boone Pickens “zero emissions in 10 years” for electricity initiative illustrates.

The Garnaut report’s recommendations are woefully inadequate in many activists’ opinion. What do you think are the weakest aspects of Garnaut’s approach?

One large contradiction is that Garnaut is modelling “middle of the road” impacts, yet in his recent public meetings has talked about the “bad possibilities” with “immense impacts” and “highly adverse outcomes,” and then says there is a “10% chance” of these occurring. In fact, its more like 95% given the present trajectory of the climate and political inertia!

The Garnaut modelling is for targets for temperatures rises of at least two and three degrees. But two degrees is not a real target because, as Adelaide university Professor Barry Brook told a recent conference in Canberra, “two degrees has the potential to lead to three or four degrees because of carbon-cycle feedbacks.”

And a three-degree rise would destroy the Barrier Reef, Australia’s tropical rainforests and wetlands, cause widespread desertification, a mass extinction and a sea-level rise of perhaps 25 metres. At three degrees the climate will kick into a new state and run away from the human capacity to live with it. Tens, perhaps hundreds, of millions of people would not survive.

In chapter two of his report, Garnaut notes the limitations of the modelling process and elaborates on why only what he calls “currently measurable market impacts” are being modelled. So, for example, the loss of the Queensland tourism industry because of the destruction of the Barrier Reef is not being modelled!

Thus Garnaut is modelling what will not happen and will not model what is going to happen!

How do you think the debate has progressed in the last 12 months?

That is the good news. Twelve months ago Climate Code Red would have been dismissed as crazy by many. The response to it now shows how much the understanding of the scientific imperatives has changed.

Posted in Australia, Carbon Pricing

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Jaime McCarthy
6 years 9 months ago

i am currently writing an essay on global warming at university. i am commenting on the fact that economic theory shows market based policies used to deal with environmental problems leads to an economically efficient outcome, however, legal regulations and restrictions are most often used. is it wrong to suggest that market based policies are better for the environment than the legal regulations and restrictions? or would it be fair to suggest that both provide an aid to the environment?

i would also like to add that the article is very good and has helped me a great deal with my essay.

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