A Tale... Full Of Sound And Fury, Signifying Nothing
[This is part of a ZNet debate between Robin Hahnel and Patrick Bond about the Left and Climate Change. Please view the ZNet debate page to follow the exchanges.]
I did not mention Patrick Bond, or anyone else for that matter by name, in my three part series on the Left and Climate Change posted on ZNet on December 24, 25, and 26. Nor did I speculate about the motives or political character flaws of any authors or signers of the "Durban Declaration of October 2004" and the "People's Declaration from Climatforum09" I quoted from and criticized. Forty years ago much of what posed as debate on the Left consisted of impugning the motives and ideological pedigree of those one disagreed with over some particular matter. It is a good thing that much less of this goes on today than was all too common last century.
But as one who appreciates trash talking in sports and jest, I must admit it can be fun. I will stick to substance in the main, but since Patrick opened the door so widely I will walk through and talk a little smack about why others come to different conclusions than I do toward the end.
Here are the major bones of contention as I see them:
(1) Do Climate Justice Action (CJA) criticisms of those working to secure an effective international treaty along cap and trade lines constitute "CJ carbon market wisdom gathered up over the past decade?" (Patrick Bond) Or is much of CJ criticism of carbon trading ill-informed and misguided, and thereby undermines the credibility of the CJ movement and divides and weakens the progressive response to climate change? (Robin Hahnel)
CJ critics like Patrick complain that when carbon emission credits, or CERs, are traded "cheating" often goes undetected and when this happens it undermines efforts to achieve global emissions reduction. The claim that carbon trading under Kyoto is a scam, and therefore Kyoto only deceives people into thinking we are addressing climate change when in fact we are not, is important to examine carefully. It is also important to determine if there are easy ways to prevent cheating from undermining efforts to reduce global emissions without sacrificing equity.
Trading Between Annex-1 Governments: If Annex-1 governments meet their treaty obligations under Kyoto then it is impossible for any trading between Annex-1 governments to undermine the aggregate emissions reduction those countries agreed to.
Under Kyoto each Annex-1 country has agreed to reduce emissions from within its national territory by a certain number of tons. The percentage reductions for different Annex-1 countries are not all the same, but under Kyoto both Japan and Canada, for example, have agreed to reduce emissions by some number of tons. Suppose the government of Japan fails to meet its commitment by ten million tons. If, Canada exceeds its Kyoto reduction quota by 10 million tons then Canada can sell "credits" for 10 million tons to Japan, which Japan can use to make up its deficit.
As long as Canada actually reduced its emissions by 10 million tons more than required by Kyoto, then total emissions reduction in Canada and Japan together are exactly what they would have been had the two countries each met their Kyoto quotas through internal reductions. Moreover, monitoring to make sure this is the case requires only the ability to verify Canadian and Japanese national emissions, which is necessary even if Annex-1 countries were not permitted to trade credits with one another.
Trading Between Individual Sources in Different Annex-1 Countries: If Annex-1 governments meet their treaty obligations then it is impossible for any trading between individual sources in Annex-1 countries to undermine the aggregate emissions reduction those countries agreed to - no matter how much chicanery is involved in the certification and trading process. This is an important point many CJ critics fail to understand.
Suppose a Japanese power company buys certified emissions reductions, or CERs, for 100 tons of carbon emissions from a Canadian power company. This allows Japan to exceed its national emissions under Kyoto by 100 tons because after counting actual reductions in Japanese emissions any CERs purchased by sources inside Japan from sources outside Japan are added to Japan's measured, national reductions, just as any credits purchased by the Japanese government from other Annex-1 governments are added to Japanese measured reductions. However -- and this is the crucial point - when a source within Canada sells CERs for 100 tons to a source outside Canada, Canada must now reduce emissions by 100 tons more than its Kyoto reduction quota because after counting reductions from within Canada any CERs sold by sources inside Canada to sources outside Canada are subtracted from measured Canadian reductions, just as any credits sold by the Canadian government to other Annex-1 governments are subtracted from measured Canadian reductions.
If the CERs sold by the Canadian power company are legitimate, i.e. the Canadian power company actually reduced its emissions by 100 tons more than it would have otherwise and this actually lowered Canadian emissions by 100 tons, then it is easy to see that trading CERs did not reduce total emissions reductions in Canada and Japan combined. The 100 tons the Japanese power company did not reduce is made up for by the 100 additional tons the Canadian power company did reduce. But what if CERs are not legitimate? What if the Canadian seller of CERs is cheating?
A great deal of criticism has been focused on private parties who buy CERs that are not legitimate in lieu of reducing their own emissions. These "bogus" CERs may not deserve certification because no actual reduction on the part of the seller took place, or because the actual reduction was less than the amount certified. They may not be legitimate because the reduction would have taken place in any case, i.e. it was not "additional" and more than a business as usual scenario would have achieved. Or, they may not deserve certification because the additional reduction that took place allowed an increase in emissions somewhere else in the country that would not have been possible otherwise. Moreover, critics point out correctly that the Japanese power company buying the CERs has no reason to care if the CERs are legitimate or not. The market for CERs is not like the market for apples where the buyer can be relied on to monitor the "integrity" of the exchange by refusing to pay for rotten apples. The piece of paper certifying the CERs is the only thing that matters to the Japanese power company because that is all they must present to the Japanese government in lieu of a 100 ton reduction in their own emissions. What really did or did not take place in Canada is of no concern to the buyer of the CERs. Nor does the Japanese government care if the CERs they will accept without question from the Japanese power company were legitimate. The Japanese government will present those CERs for a 100 ton reduction to those in charge of verifying that Japan has met its treaty obligations, who will simply add those CERs for 100 tons to the measured reductions from within Japan, also with no questions asked.
Much of the literature criticizing carbon trading consists of exposes of cases where certification and sales have taken place when the reductions were not legitimate in one of these ways. But what critics fail to understand is that if the seller of a bogus CER is located within an Annex-1 country this does not erode overall emission reductions as long as the seller's Annex-1 country is forced to comply with its national obligations under Kyoto. Suppose the CERs for a 100 ton reduction sold by the Canadian power company to the Japanese power company is completely bogus -- a pure hoax. Under Kyoto, Japan can now emit 100 tons more than it would have been permitted to otherwise. The Canadian power company, by assumption, will not emit any less than it would have in any case. However, the country of Canada will now be required to emit 100 tons less than it would have been required to otherwise because a source within Canada sold CERs for 100 tons to a source outside Canada, and those responsible for verifying that Canada has met its Kyoto treaty obligations will add 100 tons to the reductions Canada is required to make. So global reductions will be exactly equal to the global reductions agreed to by Canada and Japan even if the CER is totally bogus, as long as the Canadian government is forced to meet its obligations under Kyoto.
In other words, the effort to avert climate change is not "cheated" when sources in Annex-1 countries sell bogus CERs to sources in other Annex-1 countries. But if not the environment, then who has the devious Canadian power company cheated by accepting a handsome payment for doing nothing? Usually when a seller cheats, i.e. sells a rotten apple, it is the buyer who is cheated. However, in this case the Japanese power company got exactly what it wanted -- the CERs for 100 tons which allowed it emit 100 tons more than it could have otherwise. But if neither the environment nor the buyer of the bogus CERs were cheated by the Canadian power company scam, then who was cheated? Could this be one of those so-called crimes without victims? Unfortunately not. The Canadian power company has cheated its fellow Canadians. By selling bogus CERs it has forced Canada to reduce its emissions by 100 more tons than it would have had to otherwise. Somebody else in Canada is going to have to reduce their emissions by 100 more tons than they should have had to. Or somebody else in Canada is going to have to buy CERs for 100 tons from a source outside Canada it should not have had to buy. Or the Canadian government is going to have to buy credits for 100 tons from another Annex-1 government that it should not have had to buy to avoid being in violation of the Kyoto Treaty. It is other Canadians who are the victims when a source in Canada sells bogus CERs to someone in another country.
For this reason governments of Annex-1 countries have good reason to prevent private parties located in their national territory from selling bogus CERs because this will harm other Canadians and make it more difficult for the government to meet its treaty obligations. But even if CERs are not "additional," or create "leakage," sales of bogus CERs does not erode emissions reductions for the country as a whole because national emissions in 2012 will be measured and the country will be required to make up for any bogus CER sales with real reductions elsewhere.
The key is the international treaty organization must be able to measure aggregate, annual emissions from Canadian territory in 2012. Once this is done, any Canadian government sales of credits to other Annex-1 governments, and any private sales of CERs by parties within Canada to parties outside Canada are added to measured emissions, and any Canadian government purchases of credits and any private purchases of CERs by parties within Canada from parties outside Canada are subtracted from Canadian measured emissions. Those verifying Canadian compliance with its obligations under Kyoto simply compare the resulting number to the cap Canada committed to when it agreed to (a) its percentage reduction by 2012, and (b) a figure for Canadian emissions in 1990. If measured emissions in Canada, plus credits and CERs sold to outsiders, minus credits and CERs purchased from abroad is higher than Canada's cap, the government of Canada is in violation of its treaty obligations and subject to whatever sanctions have been established.
Most commentators believe that measuring Canadian emissions in 2012 will not be a daunting task. In particular, measuring national emissions in 2012 faces none of the difficulties involved in measuring "additionality" and "leakage" which create serious problems for anyone trying to decide whether or not to certify a particular project, and how many tons to credit the project for. Whereas the Clean Development Mechanism (CDM) Executive Board does face the difficult task of establishing a" base-line" as I discuss below, those monitoring national compliance have no need to create any hypothetical scenarios. The base-line for measuring national compliance is the level of actual national emissions in 1990. That is what actual annual emissions in 2012 will be compared to. Moreover, while Canada may question the initial estimate of its 2012 emissions and petition for adjustments, most observers believe that arriving at an agreement between countries and those charged with verifying national compliance with the treaty about what their actual national emissions are in 2012 will not be overly difficult because there are relatively straightforward ways to verify national emissions that will prove difficult for governments to deny.
Trading Between Annex-1 and Non-Annex-1 Countries: Critics point out that Kyoto allows for governments and private parties in Annex-1 countries which are capped to purchase CERs from governments and private parties in non-Annex-1 countries where emissions are not capped through the CDM. Critics argue that carbon trading between Annex-1 and non-Annex-1 countries undermines the effort to reduce global emissions since countries with caps can avoid domestic reductions by purchasing CERs from countries which are permitted to increase emissions without limit. Critics have a valid argument if the CDM accreditation process fails to work as it is supposed to. Whether this has been and is likely to be the case in the future I discuss below. However, first it is important to understand that if the accreditation process accomplishes its mission, carbon trading through the CDM mechanism does not diminish global reductions and is a powerful mechanism for making sure the costs of combating climate change are born by wealthier rather than poorer countries.
The CDM Executive Board (EB) is supposed to grant CERs only to projects in non-Annex-1 countries if: (a) the project represents a real reduction in greenhouse gas emissions, (b) the reduction is "additional," i.e. above and beyond what would have occurred had the project not taken place, and (c) the project does not create "leakage," i.e. the project does not cause an increase in emissions elsewhere in the country that would not have occurred had the project not happened. Determining (b) and (c) requires establishing what is called a "base line," i.e. a hypothetical scenario of what would have happened had the project never occurred, which is obviously the most problematic part of the exercise. However, to the extent that the CDM Executive Board -- with the help of Designated National Authorities (DNAs) in non-Annex-1 countries and professional private contractors called Designated Operational Entities (DOEs) - only approves "Project Design Documents" (PDDs) which meet the three criteria above, carbon trading through the CDM does not undermine global emission reduction targets. Instead, it merely lowers the cost of reductions and distributes the efficiency gain from doing so between MDC purchasers and LDC sellers of CERs.
Under Kyoto there is a cap on Canadian emissions but not on Mexican emissions. Suppose a company in Mexico sells a CER to a company in Canada. Further suppose the CDM Executive Board did its job and the reduction is real, additional, and causes no leakage. So far the trade reduces global emissions by the same amount as had the Canadian company reduced emissions itself and the project in Mexico never occurred. The only difference is that the reduction took place in Mexico. While the location of the reduction has changed, the trade has not changed who pays for the reduction. The Canadian company has paid for the reduction -- presumably less than it would have cost to make the reduction itself in Canada. The seller of the CER in Mexico has been paid - presumably more than it cost the Mexican seller to make the reduction. So even though the reduction took place in Mexico, not Canada, it is the Canadian company that is paying for the reduction.
However, since there is no cap on emissions in Mexico isn't it possible that Mexican emissions will increase? Isn't it possible that rather than achieving a reduction in global emissions by mandating a reduction inside Canada, instead we get no reduction in emissions in Canada because the Canadian company instead bought an allowance from Mexico, and even though the Mexican company that sold the CER did reduce its emissions more than it would have otherwise, and even though this did not cause an increase in emissions somewhere else in Mexico, nonetheless, other sources in Mexico will increase emissions leaving us with no reduction, or even an increase in global emissions?
With no cap on Mexican emissions this could happen. However, when CERs are legitimate it is not trading that causes this problem, it is the lack of a cap on Mexican emissions that makes it possible for emissions in Mexico to increase. Since so many CJ critics have misunderstood this issue it warrants more careful scrutiny at risk of belaboring the obvious. For those who are still not convinced that permitting trading between countries with caps and without caps does not erode global reductions as long as CERs are legitimate and in accord with CDM guidelines, let us consider what would happen if no trading were allowed between sources of emissions in Canada and Mexico. Mandated reductions for wealthy, industrialized countries, no mandated reductions for developing economies, and no trading are what some CJ activists favor. Under such a program where no trading is allowed we would get reductions in emissions from sources in Canada, but there would be no reason for sources in Mexico to do anything different than they were going to do anyway. If sources in Mexico were going to reduce emissions they would still reduce them. If they were going to increase emissions they would still increase them. It is possible that global emissions would fail to decline because emissions in Mexico might increase by more than emissions decline in Canada. But this is obviously not because we allowed trading - since we did not allow trading in this scenario. Instead, it is because we failed to cap emissions in Mexico. Moreover, both Mexico and Canada would be worse off because trading was prohibited. Sources in Canada would have to pay more to reduce their own emissions than it would cost them to buy legitimate CERs from Mexico. And sources in Mexico would be unable to profit from selling legitimate CERs for more than it cost them to reduce their emissions. In sum, no useful purpose is served by prohibiting trading as long as CERs are "real," "additional," and do not cause "leakage."
Many CJ critics fail to understand that carbon trading of legitimate CERs under the CDM not only reduces the cost of compliance for MDC sources and governments - which is good, not bad, because it makes it easier to lower MDC caps even further - it also provides a substantial benefit to LDCs. LDC sellers of CERs and MDC buyers of CERs divide the efficiency gain from reducing emissions in the LDC rather than in the MDC between them. Of course, the higher the price paid for CERs the more of the efficiency gain goes to LDCs, and the lower the price of CERs the more of the efficiency gain goes to MDCs. But in either case the CDM generates a flow of income from North to South that would stop if the CDM were shut down, as many CJ activists call for.
However, some CERs approved by the Executive Board of the CDM clearly have not been legitimate. This is where CJ critics of international carbon trading have a valid point. It is not easy to establish a hypothetical base line scenario, determine how much more a project reduced emissions than they would have fallen anyway, much less be sure the project did not allow for an increase in emissions someplace else in the country. And if CERs are not "legitimate," i.e. if the accreditation process fails to carry out its admittedly challenging mandate successfully, then criticisms that trading through the CDM undermine global reduction efforts are valid. If a CDM approved project does not represent "additional" emission reductions, or creates "leakage," trading will cause global reductions to be less than planned since non-Annex-1 countries without caps do not have to make up for any short-fall due to sales of illegitimate CERs with real reductions elsewhere in their countries. Moreover, since governments of non-Annex-1 countries selling CERs have no incentive to police the legitimacy of CERs sold by their residents, and since the buyers and sellers of CERs never have any incentive to guarantee that the CER represents a real, additional emission reduction, there is every reason to be concerned.
A great deal has been written criticizing carbon trading under the CDM of the Kyoto treaty. The valid criticisms expose cases where CDM authorities failed to ensure that reductions were additional and without leakage, in which case their failure does undermine achieving the global emissions reduction planned under Kyoto, which was admittedly insufficient to begin with. However, much of the criticism is not compelling. Most critics fail to acknowledge dramatic improvements in monitoring after the first year of the program, including a significant tightening of standards. Many critics wrongly criticize what they consider over or under paying for CERs as undermining global reductions or "inefficient" even though the price paid for CERs has no bearing on reductions or efficiency, but only on equity. Some CJ activists who want to shut down the CDM cite the work of Michael Wara at the Stanford Program on Energy and Sustainable Development and Stanford Law School. Wara strongly criticized the CDM Executive Board certification of CERs for capturing and destroying HFC-23 at refrigerant plants and N2O at Teflon plants in China in the first year of the program. His criticism, however, was that MDC buyers paid much more for these CERs than it cost Chinese sellers to make the emission reductions, which Wara incorrectly describes as "inefficient." In fact the price paid for CERs has nothing to do with efficiency but only with how the efficiency gain from trade is distributed between buyers and sellers of CERs. It is ironic that CJ activists cite work whose criticism was that too much of the efficiency gain from CER trade went to sellers in LDCs and too little was captured by MDC buyers as reason to shut down the CDM!
Others have criticized the CDM program because the bulk of projects certified have been in China and India while African countries which are much poorer have failed to benefit from the program. These criticisms are well taken. But notice that the criticism is based on the (correct) assumption that sales of CERs through the CDM mechanism strongly benefit poor countries, and the problem is not enough projects have been accredited for trade in poor African countries. If the program did not work to the benefit of LDCs who are the sellers of CERs through the CDM, then it would be illogical to complain that the program was hurting African countries by failing to certify projects there. Instead of shutting down the CDM what needs to be done is to figure out ways to expand its operation in African countries - but unfortunately CJ critics like Patrick adamantly oppose this.
CJ critics also make no attempt to compare the beneficial effects of the majority of CER trades which are legitimate with any ill-effects from the minority of CER trades which are not. But most importantly, CJ critics fail to consider obvious ways to correct the flaws in Kyoto that sometimes make carbon trading through the CDM mechanism problematic. The changes I proposed in part 3 of my initial series would render all CJ objections to full international carbon trading moot, including objections to selling offsets for sequestration increases. Moreover, there is nothing in Patrick's response that points out why this would not the case. Notice that simply assigning emission caps to all countries - which can be done based on differential responsibilities and capabilities - renders all trading like the trading we analyzed above between sources located in Annex-1 countries which we discovered cannot possibly reduce global emission targets even if the projects are bogus, provided national governments are held to their caps. But if national governments cannot be held to their caps no international treaty can prevent climate change even if all carbon trading is banned.
If CJ critics want to continue to insist that carbon trading is immoral and repugnant, so be it. But unless they can point out a flaw in my argument - which is not only mine, but is well known to many progressive economists who write about climate change policy -- they should stop making these false claims about carbon trading. (1) CJ activists should stop claiming that carbon trading between Annex-1 governments undermine global reduction efforts under Kyoto. (2) They should stop claiming that trading between sources located in Annex-1 countries undermines global reduction efforts under Kyoto even when the projects certified are bogus. (3) They should stop pretending there is no practical way to assign caps to all countries fairly, i.e. in accord with differential responsibilities and capabilities. And (4) CJ activists should stop claiming that carbon trading between any sources anywhere, no matter how bogus the certification process, would undermine global reduction efforts if emissions were capped in all countries.
(2) Are the Climate Justice Action demands and program a solid basis for a Left response to climate change? (Patrick Bond) Or, do the CJA demands fail to provide an effective response to climate change and diminish the ability of CJ activists to affect climate policy positively? (Robin Hahnel).
These were the six demands Climate Justice Action brought to Copenhagen:
1. Leave fossil fuels in the ground.
2. Reassert peoples' and community control over production.
3. Relocalize food production.
4. Massively reduce overconsumption, particularly in the North.
5. Respect indigenous and forest peoples' rights.
6. Recognize the ecological and climate debt owed to the peoples of the South and make reparation.
In part 2 of my series I argued that #1 and #4 in effect assume the conclusion that climate change has been averted without suggesting any actual means for bringing these changes about. I argued that #3 suffers from the same defect but also provides no means of judging what degree of food self-sufficiency is desirable. I argued that #5 is obviously just and important, but even if fully achieved would only marginally reduce net carbon emissions globally in and of itself. I argued that if #2 was a call to replace capitalism with participatory eco-socialism it had my full support. If on the other hand it was a call to return to a bygone era when people and communities supposedly had control over production I did not recall any such golden age in modern human history. While I did not object to #6 I suggested that it was not the most effective way to maximize the size of payments flowing from North to South to rectify past and present climate injustice. In sum I argued that the CJA six point program was tautological, incomplete, and in fact, not a serious program to avert climate change at all. However, when I wrote part 2 of my series I was unaware that the criterion for choosing demands was not that they provide an effective response to climate change and distribute the costs of doing so fairly, but instead that they be "non-reformist reforms" that somehow miraculously challenge the capitalist system. But more on that below. In any case, I found nothing in Patrick's response that addressed my criticisms of the demands CJA presented in Copenhagen. Nor did Patrick bother to explain why the alternative set of demands I proposed would fail to avert climate change, fail to do so fairly, or fail to provide a concrete set of goals that climate justice activists would do well to join the fight for.
Alternative Demands for a Progressive International Environmental Movement:
1. Recommit to the Kyoto path which recognizes the necessity of (a) binding caps on national emissions agreed to jointly and enforced by an international treaty, and (b) sharing the costs of averting climate change according to differential responsibilities and capabilities.
2. Let science determine the global cap that is necessary. Right now scientists tell us we need caps that will stabilize concentrations at 350 ppm by 2050.
3. Cap emissions in all countries, but very differently.
4. Assign differential national caps according to the Greenhouse Development Rights formula based on per capita cumulative emissions and income.
5. Cap NET emissions, not emissions.
6. Make national governments the "sheriff" for certifying any carbon emission credits (CERs) sold by residents to foreigners.
Patrick said he did not like these demands because they still allow for carbon trading as part of an international climate treaty. And he said he thought it would be very difficult to mobilize sufficient political support to win these demands. But Patrick did not offer any specific argument for why these demands, if won, would fail to avert climate change and do so fairly. As regards whether the CJA or alternative demands -- which stand firmly in the tradition of Kyoto and therefore are hardly "other worldly" -- can attract more or less political support quickly, I don't think I will bother to debate that point with Patrick, but am content to leave readers to judge for themselves.
(3) Are the UN, the UNFCCC, and the Kyoto Protocol so bad that we should celebrate failure to implement, improve and extend international responses to climate change along the lines of Kyoto and applaud when international negotiations are moved to a different venue? (Patrick Bond) Or, despite imperfections, are the UN and the UNFCCC still the best available venues for addressing climate change at the international level in the here and now, and are the major features of the Kyoto framework worth retaining and strengthening? (Robin Hahnel)
I must admit I underestimated the degree to which Patrick celebrates the breakdown of international negotiations and the Kyoto process and framework that took place in Copenhagen. I could quote from various passages to demonstrate that "gloat" would not be too strong a word to describe his reaction, but it hardly seems necessary since readers have Patrick's piece readily available. This kind of gloating over the train wreck in Copenhagen rings of nihilism and "après mois le deluge" in ways that will send cold chills down the veins of most of the millions who are fighting to avert climate change around the world. It stands in stark contrast to Bill McKibben's reaction (350 Campaign) which I quoted in agreement to open part 1 of my series. It is also quite different from the response of the Venezuelan, Bolivian, and Cuban delegations who denounced the governments responsible for the breakdown in negotiations, as well as the violation of long standing democratic rules of procedure at the meetings in Copenhagen. But there was no gloating in their speeches at the meetings, nor in their communiqués afterwards. The ALBA sponsored meetings Evo Morales will host in Bolivia in April will be an important effort to respond to a serious setback and get international climate negotiations back on track by organizing progressive governments and movements to stand united behind a real and fair solution. But I do not believe any government delegations from ALBA countries were celebrating on their flights home from Copenhagen, as apparently Patrick was. To replace inclusive international negotiations through UN auspices where poor and small countries do have voice and vote with secret negotiations involving only the players most resistant to reducing their national emissions is not progress. Only someone who thinks that the CJ movement with its current programs, demands, and leadership will grow to be larger and stronger ten times faster than any movement in human history ever has to fill a vacuum would draw solace from the setback in Copenhagen. I find this even more deeply disturbing than CJ ill-informed criticism of carbon trading because it indicates a dangerous degree of self-delusion and will divide progressive forces even more than squabbling over carbon markets at a time when we can ill afford it.
SPECIFIC RESPONSES TO PATRICK'S CRITICISMS
Patrick never responded concretely to my criticisms of the CJA demands, nor offered any specific rebuttal to my claim that the six point international climate treaty which I proposed in part 3 of my series -- which is firmly in the tradition of Kyoto and therefore not altogether "other worldly" -- would successfully address all of the criticisms he and others in the CJ movement have raised to carbon trading. He repeated that in his opinion carbon markets are bad. He was clear he rejects my proposal because it includes an international carbon market as one component. He implied that I am ignorant of a large CJ literature criticizing carbon markets, when in fact I know this literature quite well and find it rife with error rather than ripe with "wisdom" as Patrick does. But he never explains concretely why an international treaty along the lines I outline would fail to accomplish what I claim it would and adequately address complaints he and other CJ critics have voiced about Kyoto. Admittedly it might be difficult for someone with no formal training in economics to provide a concrete rebuttal to my claims about what is, in the end, an economic policy where incentives are important to assess. But Patrick is a professional economist and therefore should be capable of offering a concrete rebuttal on economic grounds if he has one. In any case, I will respond specifically and concretely to several of Patrick's arguments.
(1) According to Patrick my proposals are overly influenced by the backward state of US political conditions and, in effect, would hold back the rest of the world from moving forward as fast as they are able to avert climate change.
I only discussed international climate change treaties in my series, and that is all I have talked about in this response. In my view different countries should and will decide on their own domestic policies, and progressive environmentalists in different countries would do well to assess the alignment of political forces when choosing what domestic policies to favor and fight for. I would not be the least surprised if a wise domestic policy campaign in Sweden looked different from a wise domestic climate program for the United States.
That being said, in my own view my suggestions regarding international negotiations and the US was quite the opposite of what Patrick charges. I think the rest of the world should not allow itself to be held back by the backward state of political consciousness regarding climate change in the US and the ridiculously undemocratic nature of the US Senate and its powers. The rest of the world should proceed down the only path that will avert climate change and do so fairly which is to fix Kyoto along the lines I have outlined. Right now the US will not follow in that path. But the most effective way for the international community to force the US to eventually join them on the only path that will work and be fair is to keep steady on the right path and confront the US with negative consequences if we continue to stand aloof. The worst thing the rest of the world could do is to dismantle the Kyoto process and framework in an attempt to mollify the US. To do so would cripple their own efforts and minimize pressure on the US to move forward.
In this regard Patrick and many others in the CJ movement blame the US and Al Gore in particular for imposing a cap and trade framework on the rest of the world in Kyoto who, they argue, may have been more inclined to consider an international carbon tax. First, that was 1997 and this is 2010. Erasing 13 years of negotiations to start from scratch again should not be considered lightly when time is at a premium. Second, just because the international treaty is a cap and trade treaty does not dictate domestic policy to any government. It leaves any government that prefers to meet its Kyoto cap through a domestic carbon tax - or any other policy or combination of policies -- free to do so. Third, and this is really the major point, cap and trade may not be the best policy choice for a particular country when choosing a domestic climate policy. However, cap and trade is a better framework for an international treaty than an international carbon tax for two important reasons.
(1) An international carbon tax would do far less to avert climate change than caps. The world is now willing to listen to scientists who can speak with authority regarding parts per million and emission reductions required to reach particular levels. Right now caps designed to stabilize concentrations at 350 ppm by 2050 has a solid seat at the bargaining table. There is no way we could ever get the international community -- minus the US -- to agree to a carbon tax that would achieve nearly that much reduction. Even for those who are not tax-phobes, without the testimony of scientists to tell them it is necessary they are simply not going to agree to a tax that is high enough. (2) An international carbon tax would be far less fair than differential caps will be. The only way to administer an international carbon tax is for country governments to collect it. Theoretically an international treaty organization could set a uniform carbon tax rate and collect the tax revenue itself from every country government based on national emissions. But this is just not going to happen. Instead, the only way an international carbon tax would be administered is for governments to agree on a tax they would all impose, and then collect it themselves. But once national governments have collected the tax there is no chance in hell the rich countries are going to send mammoth portions of the taxes they collected from their citizens to poor country governments. That would be the US Senate sending hundreds of billions of dollars per year to the Communist Chinese government. Sure thing! On the other hand, a cap and trade treaty along the lines of Kyoto where caps are set according to differential responsibilities and capacities automatically sends those hundreds of billions from the richer to the poorer countries through international carbon markets. Ah! Those terrible international carbon markets!
Al Gore surely argued for cap and trade over a carbon tax in Kyoto for the wrong reasons. No doubt he listened to mainstream economists in the US who were all in a buzz over their new policy toy -- cap and trade -- in the aftermath of what they ballyhooed as their sulfur dioxide cap and trade "success" story. No doubt Al listened even more attentively to Wall Street bankers who favor cap and trade over tax because, surprise, surprise, Wall Street makes its money from trading! But if Al Gore did tip the scales away from an international carbon tax toward the Kyoto cap and trade framework, it turns out with hindsight that the world is better off regardless of why he did it. (Note: One needn't thank Al Gore. Sometimes even opportunistic fools get something right.)
(2) According to Patrick: "Amongst the reasons that progressive environmentalists and political economist have consistently rejected carbon trading as a valid strategy, there are, in particular, two central problems that Robin doesn't even try grappling with in his carbon trading analysis: Markets generate and amplify power relations in society (favoring the institutions which caused the problems). And financial markets generate speculative activity that amplify capitalism's intrinsic crisis tendencies."
As Patrick knows well I have been preaching fire and brimstone against the market system long before he entered graduate school. And among the many evils I have warned against is precisely that markets tend to aggravate inequality and amplify power disparities. I have also been warning that banks by their very nature are dangerous threats to go bankrupt even when things seem to be running smoothly, and that free market finance is literally an accident waiting to happen. I have written so many articles and books on these subjects for so long that I became persona non grata among mainstream economists, and among many "progressive" economists who during the past thirty years chose to be far less critical of markets than I was. Knowing all this, one would think that Patrick would pause to give thought to why someone like me, who has not recanted a single word I have ever written about the evils of markets and see even less reason for doing so now, would urge CJ activist to drop their objection to a carbon market. I thought I made the reasons clear, but apparently not.
(1) While markets usually aggravate inequalities and amplify power disparities, and it would be foolish to expect the market system as a whole to do otherwise over the long haul, it is possible to create circumstances that tilt a particular market to favor the angels over the devils. The Kyoto treaty did this by classifying richer countries as Annex-1 countries with required reductions, classifying poorer countries as non-Annex-1 countries with no required reductions, and them to trade through the CDM. Setting caps on all national emissions inversely proportional to a country's per capita cumulative emissions and income, and allowing trades between sources in all countries whose governments choose to certify credits for sale would do so as well. Under both of these circumstances trading emission credits produces a massive flow of income from devils to angels.
(2) Due to the free rider problem we will not avert global warming without a binding international treaty, and the only practical international treaty is one that caps national emissions, as explained above. If we cap national emissions according to the Greenhouse Development Rights formula trading will not only yield efficiency gains it will dramatically reduce inter-country global inequalities. It is the job of climate justice activists to fight for the kind of caps that will do this and oppose any caps that would do otherwise. Kyoto provides a terrific starting point for future negotiations in this regard.
(3) There are only two ways to fight against Wall Street rip-offs and prevent financial crises that punish the innocent. The best way, which I fully support, is to declare the entire financial industry too important to be allowed to repeatedly fail, and replace private finance with public finance. I also think that given what has just happened this is an excellent time to preach the virtues of a public financial sector, and do so at every opportunity. The second way is to subject Wall Street to competent regulation. If we do either we needn't fear that CERs will become part of the next toxic financial soup. If we fail to do either then there will be more financial toxic soups, with or without CERs as one of its ingredients. You cannot prevent future financial crises by refusing to create certified emission reduction credits.
However, suppose a post Kyoto treaty along the lines I propose went into effect. Suppose financial regulatory reform never happened. Suppose Wall Street did mix CERs into a terrible toxic financial soup, and the new bubble did crash with a vengeance. This would be terrible indeed. And if the financial crash were worse than the one that just occurred it would lead to even more terrible consequences for all of us who live on Main Street. But this is the important point. The integrity of the international climate treaty would not be affected in the slightest. The global reduction target would not be undermined one iota. And the highly progressive redistribution of global wealth that took place in the form of differential caps followed by trading under circumstances highly favoring poorer countries would not have been compromised either. So much for all the boogey-man, Wall Street, fear mongering that some CJ activists love to engage in.
In this worst case scenario what would have happened is that Wall Street would have siphoned off a big chunk of world product -- first by trading in toxic assets as a bubble built, and then by shifting the cost of the financial clean up onto the rest of us. But this has nothing to do with the carbon market per se, and is certainly not the fault of the carbon market. This tragedy would be due entirely to the failure to either nationalize or regulate the financial sector.
CAN WE AGREE ON THIS MUCH...
(1) Capitalism is the root source of climate change as well as many other social problems which should not go ignored.
(2) Global capitalism is not going to disappear overnight.
(3) We should believe the scientific community who tell us that dramatic reductions in global emissions are necessary and must start now to avert cataclysmic climate change by century's end.
(4) The implication of #3 combined with #2 is that demands and a campaign strategy that is most likely to reduce emissions most dramatically in the here and now, even while global capitalism persists, is of the highest priority.
(5) In light of #1, while #4 should be a high priority, it is not the only priority. As always, progressives should also prioritize making the response to climate change in the here and now fair. As always, anti-capitalists should also prioritize organizing to replace the economics of completion and greed, a,k.a. global capitalism, with the economics of equitable cooperation, a.k.a participatory eco-socialism.
... EVEN IF WE CONTINUE TO DISAGREE ON HOW BEST TO ACCOMPLISH #4 AND #5
With Respect to #4: I think there is a useful role for the CJ movement fighting for a just response to climate change and explaining how and why capitalism is the root source of the problem. Nobody else can be relied on to do this. Nor are there others at this point to engage in tactics that reflect the urgency of the problem and help catalyze larger constituencies to greater efforts as well. I am a charter member of this kind of CJ movement and have every intention of continuing to work as a CJ activist.
But I think that the CJA demands fail miserably as a program that could accomplish #4 for reasons I explained in part 2. (Since I found no rebuttal to my criticisms of CJA demands as tautological and insufficient to prevent climate change in Patrick's response I have no reason to change my view in this regard.) I also believe that much of the criticism of carbon trading that a number of CJ spokespersons engage in and Patrick calls "wisdom" is ill-informed and misguided. I did not elaborate on the errors in CJ criticisms of carbon trading in my original ZNet series -- although I had made those criticisms available to Patrick many months before Copenhagen in case he wished to consider them. In any case, I have now explained in this rejoinder why most of the CJ critique of carbon trading is ill-founded, and reiterated how the only valid criticism can easily be fixed.
To be frank, much of the CJ criticism of carbon trading is pure poppy-cock, and I am resentful that because drafters insisted on including it in both the Durban Declaration of 2004 and A People's Declaration from Klimaforum09 it is impossible for someone like me to sign those declarations. You would think that drafters might reconsider the wording of declarations if an ardent environmentalist who is also a life-long anti-capitalist and self-declared market abolitionist cannot sign them. Nor am I alone, as much as Patrick might want to minimize the size of the progressive constituency who, like me, knows how an international carbon market can help us achieve deeper cuts in global emissions and simultaneously generate massive income flows from the global north to the global south when there are no other practical means of achieving either of those goals. But let me not behave like Al Franken and make this all about me (I speak of the old, Saturday Night Live, comedian Al Franken, not the new, distinguished, progressive US Senator Al Franken.) More importantly, incompetent CJ criticism of carbon trading undermines the credibility of the CJ movement making it less effective as a voice for climate justice and system change than it could be. And most important of all, insistence on ill-founded carbon market bashing by spokespersons for the CJ movement (combined with unseemly gloating over breakdowns in international negotiations) has unnecessarily divided progressive forces fighting to avert climate change fairly.
With Respect to #5: I also believe Patrick is fundamentally wrong about how best to fight for system change at the same time we fight for reforms that reduce the damage capitalism wreaks on humans and the environment. The Old Left was wrong about some important things besides the environment - most notably, the importance of democracy and racial and gender oppression in addition to economic exploitation and oppression. To our credit, beginning in the 1960s the New Left and the New Social Movements that followed overcame some of those key mistakes. But we on the New Left made a few mistakes of our own, and I think the idea that there is a magic bullet called a "non-reformist reform" that is qualitatively different from "reformist reforms" was one of them. Following Andre Gorz many on the New Left - including me for many years -- replaced the Old Left doctrine of "maximum and minimum programs" with the doctrine of "non-reformist reforms." Both doctrines were attempts to grapple with the difficult dilemma of how to avoid isolation and participate in mass reform movements while simultaneously laying the groundwork for replacing the system we fight to reform. While this can only be the beginning of a longer discussion, since strategic thinking of some CJ activists, including Patrick, seems to derive from adherence to the doctrine of non-reformist reforms, a brief critique is in order.
Any transition to a democratic and equitable economy has no choice but to pass through reform campaigns, organizations, and institutions however tainted and corrupting they may be. The New Left tried to exorcise the dilemma that reform work is necessary but corrupting with the concept of non-reformist reforms, i.e. reforms that improved people's lives while undermining the material, social, or ideological underpinnings of the capitalist system. There is nothing wrong with the notion of winning reforms while undermining capitalism. As a matter of fact, that is a concise description of precisely what we should be about. What was misleading was the notion that there are particular reforms that are like silver bullets and accomplish this because of something special about the nature of those reforms themselves. Trying to separate out "non-reformist reforms" from "reformist reforms" and thinking we can solve the dilemma of how to combine reform work with system change by working only for the former and eschewing the latter was by and large a mistake.
How do reforms differ? Some reforms improve peoples' lives more, and some less. Some reforms are easier to win, and some are harder to win. Some reforms are easier to defend, and some are less so. And of course, different reforms benefit different groups of people. Those are ways reforms, themselves, differ. On the other hand, there are also crucial differences in how reforms are fought for which is where we should concentrate our strategic thinking. Reforms can be fought for by reformers preaching the virtues of capitalism. Or reforms can be fought for by anti-capitalists pointing out that only by replacing capitalism will it be possible to fully achieve what reformers want. Reforms can be fought for while leaving institutions of repression intact. Or a reform struggle can at least weaken repressive institutions, if not destroy them. Reforms can be fought for by hierarchical organizations that reinforce authoritarian, racist, and sexist dynamics and thereby weaken the overall movement for progressive change. Or reforms can be fought for by democratic organizations that uproot counterproductive patterns of behavior and empower people to become masters and mistresses of their fates. Reforms can be fought for in ways that leave no new organizations or institutions in their aftermath. Or reforms can be fought for in ways that create new organizations and institutions that fortify progressive forces in the next battle. Reforms can be fought for through alliances that obstruct possibilities for further gains. Or the alliances forged to win a reform can establish the basis for winning more reforms. Reforms can be fought for in ways that provide tempting possibilities for participants, and particularly leaders, to take unfair personal advantage of group success. Or they can be fought for in ways that minimize the likelihood of corrupting influences. Finally, reform organizing can be the entire program of organizations and movements. Or, recognizing that reform organizing within capitalism is prone to weaken the personal and political resolve of participants to pursue a full system of equitable cooperation, reform work can be combined with other kinds of activities, programs, and institutions that rejuvenate the battle weary and prevent burn out and sell out. In sum, any reform can be fought for in ways that diminish the chances of further gains and limit progressive change in other areas, or fought for in ways that make further progress more likely and facilitate other progressive changes as well.
So where does the "undermining capitalism" part come in? If reforms are successful they will make capitalism less harmful to some extent. There is no way around this, and even if there were such a thing as a non-reformist reform, it would not change this fact. However, the fact that every reform success makes capitalism less harmful does not mean successful reforms necessarily prolong the life of capitalism -- although it might, and this is something anti-capitalists must simply learn to accept if we hope to win the allegiance of a majority of our fellow citizens. But if winning a reform further empowers the reformers, and whets their appetite for more democracy, more economic justice, and more environmental protection than capitalism can provide, it can hasten the fall of capitalism. That is how winning reforms can undermine capitalism - by further empowering popular forces, whetting their appetite for more than capitalism can provide, and convincing them we humans are not hopelessly chained to the economics of competition and greed but fully capable of functioning happily in a system designed to facilitate equitable cooperation.
Because little in reform work helps people understand that we are fully capable of equitable cooperation under conditions that encourage rather than discourage it, I argue we must combine work in reform campaigns and movements with building living experiments in equitable cooperation within global capitalism. ZNet readers interested in why I think combining reform with prefigurative work better addresses this pivotal dilemma than either the Old Left doctrine of maximal and minimal programs or the New Left doctrine of non-reformist reforms should read Part IV, pages 251-385 in Economic Justice and Democracy: From Competition to Cooperation, (Routledge, 2005.) I would simply point out two things here: (1) You do not convince people that something besides capitalism is possible by refusing to commodify a single commodity, such as permission to emit carbon. You convince people we can do better than capitalism by building organizations like successful worker owned enterprises and consumer cooperatives and linking them together through equitable planning rather than through markets where power not fairness determines the terms of exchange. (2) It would be hard to make a case that the New Left enjoyed greater success in the last half century at building mass movements and undermining capitalism by pursuing non-reformist reforms than the Old Left enjoyed in the half century before using maximal and minimal programs. In any case, Patrick is right that he and I disagree with regard to some fundamental issues of Left political strategy, i.e. about what works and does not work as far as building a majoritarian movement for system change is concerned. But no doubt that is a much longer discussion.
What is accomplished by demanding that coal be left in the hole and oil in the soil instead of demanding caps on net carbon emissions by countries assigned according to differential responsibility and capabilities? Keeping all fossil fuels in the ground is not possible for at least twenty years irrespective of political will, whereas only lack of political will prevents placing effective and fair caps on national emissions right now. Not only is it ridiculously naïve to think that CJ activists can shut down enough mines and wells to make more than an insignificant dent in global emissions, the pattern of reductions achieved by wherever CJ activists proved to be more or less powerful and successful would distribute the costs of averting climate change very unfairly as well as inefficiently.
So what do CJ activists gain by making an impossible demand that even if enacted would be grossly unfair and inefficient, rather than a demand that will avert climate change fairly if we can muster enough political support? I suspect it is the illusion of ideological purity. Apparently some CJ activists can ignore the fact that their demand is actually nonsensical and think of it instead as non-reformist. More concretely, they can avoid being drawn into a logic that leads to emission trading which they feel will dirty their hands if not defile their souls.
Some CJ activists say they have no objection to caps, it is trading they object to. However, the problem the CJ movement faces if they replace their demand to "keep the coal in the hole and the oil in the soil" with a demand for "effective and fair national emission caps" is that once we have capped national emissions the issue of whether or not to allow trading inevitably arises. And upon close inspection, for all their "sound and fury" CJ objections to carbon trading are either ill-founded or easily fixed, and therefore in the end will "signify nothing." In particular, poorer countries would be ill-advised to oppose carbon trading because they stand to gain the most.
Failure to cap emissions means that the wealth that consists of the right to put carbon dioxide into the upper atmosphere is being stolen by those who do so in vast quantities from the rest of us. This de facto seizure of wealth is grossly unfair and will persist until it is replaced by an international agreement that puts caps on national emissions and thereby distributes the wealth among nations consciously. Assigning national caps based on "differential responsibilities and capabilities" is the only fair way to go about this, and the Greenhouse Development Rights Framework proposes a very practical formula for doing so that rewards poorer countries quite handsomely. Once this is done, preventing poorer countries (with more emission rights per capita) from selling some of their rights to richer countries (with fewer emission rights per capita) only prevents poorer countries from getting as much from their new wealth as they could, thereby dimming their development prospects. It also increases political opposition to tackling climate change in richer countries by inflating their costs unnecessarily. Once everyone figures this out CJ activists have every reason to fear that their warnings that carbon trading "commodifies the atmosphere" and is the moral equivalent of "polishing the chains of apartheid" will fall on deaf ears.
It makes good sense to call for an end to the commodification of life known as capitalism and its replacement with a system of participatory planning which is quite feasible. And it makes good sense to demand that healthcare be provided according to need rather than ability to pay, and that water be subsidized for those who could not otherwise afford it even while capitalism persists. However, refusal to limit aggregate carbon emissions and award emission rights fairly when it means they will continue to be seized by the least deserving among us and abused to excess until the planet is soon destroyed makes no sense. Preventing those who are poorer from selling their excess emission rights to those who are richer for a substantial gain makes no sense. And believing it is possible to keep Wall Street from creating financial crises by denying them access to one commodity among millions to use as an ingredient in their toxic financial soups makes the least sense of all. Short of nationalization, the only way to prevent Wall Street from lining its pockets by preparing toxic financial potions that eventually poison the rest of us is to impose competent regulation on the financial sector. Absent competent regulation the financial industry will create financial crises whether there are CERs or not.
It is free market finance that is an accident waiting to happen. And the proper remedy is competent financial regulation, not reducing the number of commodities in the market economy by one. It is the commodity system that defiles our souls. And redemption lies in replacing the commodity system with participatory eco-socialism, not in reducing the number of commodities by one.