By Paul Keenlyside, a campaigner and researcher on environmental, trade and economic justice issues. He currently works at Greenpeace UK with previous positions at the Trade Justice Movement and Sierra Club. Originally published at openDemocracy
Rich countries are investing vast sums in fossil fuel booms abroad whilst seeking climate brownie points with their home audiences, finds a brand-new report. A focus on ‘territorial’ emissions makes little sense in a globalised economy.
Picture the following: a UK investor buys a coal mine in Africa. The coal is shipped to China where it powers factories that produce goods which are shipped to the UK for consumption. Citizens in the UK benefit financially from the coal extraction, and materially from the goods produced.
So who’s responsible for tackling the huge amounts of carbon dioxide dumped into the atmosphere along that supply chain? According to UN rules, it’s not the UK.
Under the Paris Agreement and the Kyoto Protocol before it, countries are only responsible for the greenhouse gases physically emitted within their borders. Unfortunately, this exclusive focus on ‘territorial’ emissions makes little sense in a globalised economy in which capital and goods flow across borders, and results in a completely misleading picture of where responsibility actually lies.
Take the Netherlands as an example. Between 1990 and 2014, the Netherlands reduced its annual domestic emissions by around 15%. That’s not great, and the average emissions for Dutch citizens are still far above the global average. But it’s not a bad direction of travel compared to other countries, and enough for the Dutch to enjoy a reputation of ‘climate leadership’ on the world stage.
Yet dig a little deeper, and you find that in 2014, Dutch investors were sat on interests in oil and gas extraction outside the EU of over $400 billion, and earnt $37 billion from these investments. If realised, Dutch investments in oil and gas would result in carbon dioxide emissions between 6.7 and 9.1 billion tonnes – up to fifty times the Netherlands’ annual domestic emissions. Worse, Dutch investors are still increasing their positions in oil and gas extraction abroad.
Of course this is not solely a Dutch problem. As revealed in a new report published today by the Trade Justice Movement and Transport and Environment, investors in seven wealthy countries including the UK, Norway and Canada, were sat on investments in oil and gas overseas in 2014 worth an eye-watering $1 trillion. This is 250 times greater than the $4 billion the same seven countries allocated in bilateral aid in 2014 to tackle climate change internationally.
So what about all of the money going into renewables? Just last week, the private sector arm of the World Bank, the International Finance Corporation (IFC), released a report championing the huge sums flowing into low carbon industries. But while this is a good thing, it doesn’t matter how many wind and solar farms are installed as long as we continue to burn fossil fuels. It’s like ordering a side salad with a full English breakfast and expecting to lose weight. The IFC, which has been quietly funding a coal boom in Asia, should know this better than anyone.
There are a number of reasons why huge outward foreign direct investment in oil, coal and gas is a bad thing. On a very basic level, it is totally inconsistent with the stated position of almost every developed country Party to the UNFCCC to support low carbon development internationally. Beyond the hypocrisy, there is also a financial risk in allowing investors to pile into fossil fuel reserves that could become ‘stranded assets’ – reserves that will be placed off-limits by regulators in an effort to curb climate change.
But perhaps the bigger risk is that, far from becoming stranded, coal, oil and gas reserves will be extracted precisely because of the value they represent to investors and the wider economies of their home countries – leading to catastrophic climate change. Think again of the English breakfast, and ask how likely a café is to switch to a healthier menu where the owner has just invested in a deep fryer and a decade’s supply of bacon.
That is why wealthy countries should look beyond the border and take action to stop the carbon intense development overseas driven by their own investors.
A first step would be to require all large companies and investors to disclose their interests in coal, oil and gas extraction overseas, and report on the carbon dioxide emissions associated with the fossil fuels extracted each year, as well as the potential carbon dioxide emissions associated with the reserves under their control, if fully exploited. This would be a small step, and an extension of rules that already require large companies to report on the carbon dioxide emissions associated with activities for which they are responsible.
Next, governments could levy a carbon tax on income derived from investments in coal, oil and gas extraction, wherever it takes place. A fixed cost on every tonne of carbon dioxide released would penalise the dirtiest fuels the most, and would also free up resources that could be directed towards clean energy projects that everybody wants to see. As above, such a measure would be an extension of existing laws that already charge large companies for each tonne of carbon dioxide released from their domestic activities. The tax could be increased over time to encourage early divestment.
In the atrophied UN climate change Conference of the Parties (COP) negotiations, which bear an ever more tenuous relationship to the physical universe, it is easy to conclude that climate change is simply too complicated for governments to do anything about (on the agenda this time round is the operationalisation of a financial mechanism with no money, and the adoption of rules for transparent accounting of ‘emissions reductions’ that aren’t happening).
In fact, there are lots of simple, effective measures governments could adopt now. But for that to happen, our governments need take an honest look at the economic interests driving fossil fuel extraction, and not just fall back on the arbitrary accounting principles of the UNFCCC, which are more an exercise in blame absolution than an effort to stop climate change.
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Reminds me to think about how much C02 emissions would be laid at US door steps if all the outsourcing to China, North and South East Asia, Mexico were laid at the feet of the US consumer.
Seems to me if you feel your local weather and long term seasonal trends are in a warming/amplified severity trend line, it is already affecting you. Daily choices, living in the moment and recognizing the impact of those choices.
I’m working this week on the front range in Crowdorado- a large metro area with miles of commuting adjacent to a natural barrier (think either US coast, or the rockies (SLC, Denver). I try not to judge. But it sure seems like there isn’t much car-pooling, lots of dithering and chasing bright new shiny things, and precious little evident deeper thinking about lifestyle, choices, and relative precarious unsustainable lifestyle of the urban/suburban sprawl.
Kids should be taught ecology, and we all need to really bear down on the closed loop that the earth is. Small example of the way the US government approaches this distant-lands local impacts: raise the threshold level of what is deemed acceptable radiation exposures… because…. Fukushima?
Fukishima- zero media coverage/ updates (complicit media). Tar sands development in Alberta, coal in NE Wyoming. Like watching news feed of Syria- distant lands- not my backyard or issue. I do enjoy my convenient life, however!! Closed loop of the earth is classic Karmic chickens coming home to roost.
I adore the public transportation buses- running on “clean natural gas…. ” billboards proudly promoting. Have you ever seen a drill-site? Clean? Har dee har har!!! No free lunch, and if it wasn’t grown, it was mined. The petri dish of human-kind is doubling, and my sense is we are near the last, fatal doubling and collapse.
Happy happy ..
Ships burn Bunker C, the most polluting form of fossil fuels, carrying the crap from Asia after it’s made in the most polluting factories on earth. Another reason to promote National Origin products as well as jobs.
The CO2 emissions should only secondarily be laid at the feet of the US consumer. The CO2 emissions should primarily be laid at the feet of the elites who pushed for free trade and globalization and most of all at the elites who finally achieved it. This means that the CO2 emissions should be laid at the feet of the Reagan, Mulroney and Bush architects of free trade agreements and should be laid hardest at the feet of Bill Clinton and all the Congress members who finally got the free trade agreements passed. The American consumer did not ask to have his places of work closed down and his job sent overseas. The American consumer did not ask to have his wages ( if any) lowered to the point where the China Price ( as per Walmart) becomes the only price the American consumer can afford.
Some years ago I read in Foreign Affairs an article by someone named Elizabeth Economy. It was about China. It mentioned in passing that China emits twice as much carbon per unit of physical production as what America used to emit for that same unit of physical production before the physical production factories were all transferred to China. Since it took several decades to destroy industry throughout America and rebuild it overseas, it would take several decades to destroy all that industry in China and restore it back into America. But we are not going to lower our American carbon footprint unless we bring back all the production for our own consumption from the higher emission lower efficiency foreign economies back to our lower emission higher efficiency American economy.
Free trade and globalization cause global warming. Indeed, one might well call it Globalization Warming, in honor of the cause. The only way to stop global warming is to stop free trade and to undo globalization all the way back to separate national and regional and local economies.
Picture the following: a UK investor buys a coal mine in Africa. The coal is shipped to China where it powers factories that produce goods which are shipped to the UK for consumption. Citizens in the UK benefit financially from the coal extraction, and materially from the goods produced.
The citizens of the UK do not benefit financially from the coal extraction. The investor does.
Where do the UK citizens get the money to buy the Chinese made goods, when they themselves have no income because the jawbs to produce those goods are in China? I see, tax the profits of the investor and distribute those taxes so that Chinese made goods can be purchased? Or lend moar money to those jawbless consumers to purchase Chinese made goods?
Long supply chains are the reason for the gargantuan emissions of greenhouse gasses. Ripping up raw materials from all over the world and shipping those raw materials to China where they are processed into finished goods in the most polluting way possible, and then shipping the finished goods back all over the world is the way it’s done now. This gluttonous energy consuming system has been cemented into place.
Picture the following: A UK investor sets up a factory in the UK to produce the goods locally, employs labor that then has the money to purchase the goods produced. Win, win instead of lose, lose. Can’t have that though. UK labor is too expensive compared to Chinese slavery.
Globalization is a disaster, and growing bigger by the day.
No, wait! You don’t need to tax anyone – especially rich investors! You can just quantitative ease (i.e. ‘print’ the money). Heck, you could even cut the taxes on rich investors, a la Trump and the U.S. Congress. All that new money just turns into more sovereign debt, which, since it is backed by the ‘full faith and credit’ of the US and other Western governments, becomes ‘capital’. That capital then “flows uphill” from developing nations to what used to be called the ‘industrial democracies’ (See Eswar Prasad’s The Dollar Trap: How the U.S. Dollar Tightened Its Grip on Global Finance)
All of this so people who have more money than they can spend in several lifetimes can add another zero or two to their bank accounts or, as US president Donald Trump puts it, “keep score”. And if you have any hope the Chinese, with all that Western ‘capital’ in their bank accounts to purchase the compliance of Western politicians, will show any more enlightened global leadership than their Western money-grubbing peers, ask yourself why they don’t spend all the money they have accumulated on making life better for their people rather than New Silk Roads to unload their growing industrial surpluses on the (apparently very stupid) West. Could it have anything to do with the new crop of billionaires afflicted with the same money hunger that is destroying Western Civilization?
bacon bashing? the low carb/keto community would disagree (about it’s impact on weight loss).
I agree wholeheartedly with the proposition being put forward by this post (I.e. that assigning responsibility for emmisions output should go beyond national borders). This also cuts to the heart of what is disastrous about financial liberalization, capital is now freer than people and can slosh around the globe in search of yield, sidestepping or steamrolling weak regulatory protections in its path. What’s more, shrewd investors are highly adept at moving capital from regions with high regulatory scrutiny to those with low to non-existent scrutiny and/or taking advantage of poorly designed and uncoordinated inter-regional policy responses (which is exactly what dutch investors are doing here I.e. putting their capital to work where the resultant emmisions from their investment activities will not be tallied up with those of the Netherlands).
A global, highly coordinated accounting system to track direct and “sponsored emmisions” (i.e. emmisions resulting from investment activity outside the investors’ home country) coupled with a polluter ranking system that tallies both direct (I.e. emissions produced inside the borders of a country) and sponsored emmisions in assigning rankings to countries is what’s needed imho if the problems outlined by the authors are to be addressed.
Tasks assigned to “government,” to create complex structures that might reduce greenhouse gas emissions: now that’s a laugher. Who owns “government”? Not the mopes who are getting cooked. “We” can chatter all we want about what ought to be done (and be careful not to offend bacon-loving low carb/ keto meatophages, eating stuff that generates huge GHG emissions through their supply chains). There’s fundamental disjoint of perception and interests– why should either the investor or the consumer care about external impacts that get slowly nastier and more disruptive and deadly, slowly enough that they will be dead of other causes before the ice all melts? Where’s the profit and pleasure in self-denial and altruism?
But maybe there will be some mystical convergence, and humankind will suddenly develop a mass sense of responsibility to and for the unborn future…?
An even bigger howler – ‘world government will solve all our problems.’ I can see a new World Court ruling 50 years or so hence: “ONLY international bankers are people” in the Western plutocracy’s New World Order.
“governments could levy a carbon tax on income derived from investments in coal, oil and gas extraction, wherever it takes place. A fixed cost on every tonne of carbon dioxide released would penalise the dirtiest fuels the most, and would also free up resources that could be directed towards clean energy projects that everybody wants to see. ”
That is precisely what China’s new national emissions trading scheme does. The regulations on supply chain emissions mean that all China’s trading partners will have to clean up their emissions because China regulates and taxes ‘emissions generated outside the direct control of a Chinese business, possibly by extraction and production of products (coal, oil) purchased by the business, third-party transport (polluting cargo ships and airplanes) and products’ after-sale use’.
Good news!! Maybe there IS someone, somewhere with half a brain and a little power?
Power of reason, of science or power of finance?
Power of finance = quarter of century of neoliberal cant and precursors to “fat tail” ACD
vs.
Kevin Anderson 10/6/17
Mitigation on Methadone
@ 20m.
http://www.resilience.org/stories/2017-10-06/the-gordon-goodman-memorial-lecture-2017-kevin-anderson/
and
Climate change morphing into an existential problem: Prof V Ramanathan (March 2017)
Understanding Climate Change
https://m.youtube.com/watch?v=gUDEKh2cnOk
Carbon trading does not work. Refer to 43:17 of “Prof. Philip Mirowski keynote for ‘Life and Debt’ conference” [https://www.youtube.com/watch?v=I7ewn29w-9I] This slide
shows the trading history for EU carbon credits — two collapses in the last decade and trending downward. Do you have a special faith in China? The idea for carbon trading comes right out of Coase’s Neoliberal toolkit.
Ha! If Enron were still operating, I suspect they would make a fortune from carbon trading. Carbon trading seems to me to be on the level of credit default swaps and other esoteric forms of gambling. A revenue neutral carbon tax would be far better than carbon trading.
We — the U.S. I’ll let others speak for their own — can’t seem to do anything about the carbon dioxide emissions from our own industrial farts so now Greenpeace wants us to worry about the farts we cause in others? Wait! Hasn’t this conundrum of international externalities — no I mean Market imperfections — been a deal breaker for past international gatherings convened to reach agreements for reducing carbon dioxide emissions?
I had been pessimistic about the future my children will see but reading the this post and the Lancet link in today’s links is beginning to make me very worried about my own future. Without some catharsis of the body politic no meaningful actions will be taken to reduce carbon emissions [and the emissions of other greenhouse gases].
The biggest reductions in carbon dioxide emissions comes from regulating other pollution and environmental degradation issues. Local people understand when they can’t breathe the air or drink the water. So regulating smog, ash products, and water impacts from extracting and burning fossil fuels increases the cost of using the fossil fuels which forces the per capita reduction usage just to keep costs in check. We are seeing China and India starting to react to smog. As people get wealthier, they also want to be healthier.
So the greenhouse gas emission problem is one that many people struggle to grasp, but they understand when they can’t breathe and want something done. In Britain the Great Fog of 1952 forced the government to pass the Clean Air act of 1956. Similar air pollution problems in the US forced the Clean Air Act of 1963 with a major expansion in 1970. I expect we will see similar actions in China and India in the coming decade or so.
I agree with your point — but must quibble. I’m not convinced that action to reduce noxious pollution will have sufficient impact in reducing CO2 emissions. The CO2 doesn’t burn your eyes or irritate your respiratory system — but its accumulation in our atmosphere will slowly cook us like the storied frogs in the pot brought to a slow boil.
This definitely pours some cold water on the smattering of recent articles that “we are turning the corner” (paraphrased) when it comes to controlling greenhouse gases.
I’ve started to wonder if such articles are published so people don’t become too despondent and give up hope.
Can’t let this one go by with recommending Merchants of Doubt (MoD). There is no need for a Nuremberg trial for the likes of the Koch brothers (and perhaps our Deal maker-in-chief’s Sec. of State). The documentary evidence is right there. Their crimes against humanity make the Nazis look like a bunch of pikers.
P.S. It is way past time for pitchforks!
I’ve been saying pitchforks since 2008. And everyone hunkered down and allowed us in Occupy to get pepper-sprayed, beaten and ridiculed.
Where were you? We needed you!
I want to plug the idea of a carbon tax traded for doubling or tripling the personal and dependent exemptions. Take low end earners out of the incomtax system.
Developers harvest climate brownie points and large profits with the chimera of “Transit oriented housing”.
Outsized apartment blocks are built near new or existing transit so that people don’t have to commute long distances in their car to jobs. Sounds nice. The transit oriented development residents supposedly will ride the transit to jobs.
However, there’s a parking place or two for every unit.
Not all people in the apartment have jobs, but they do drive. Not all people that live in the units work near transit, but they do drive to work. They will all drive for recreation and shopping for large items or purchases. Carless people will rent parking places to other people.
The old places that residents of the new transit oriented developments have moved out of will have new people move in with their cars. Thus there’s a potential doubling of vehicles on the road.
Hit and run developers harvest big profits with shoddy multi-unit buildings and move a few poor people in, who usually have no connection to the community, and thus they harvest low income housing tax credits. People that oppose this are called NIMBY’s, ‘not in my back yard’, a term developed by that radical progressive, Jack Kemp, the Secretary of Housing and Urban Development under Bush Senior.
The YIMBYs, “Yes In My Back Yard” activists are the useful idiots in this scheme. Already there’s a radical push for building transit oriented housing in the burned zones of single family units in Santa Rosa, California before the ashes have even cooled. Wonder how many home owners there will take their check and sell their single family lot and ruins to a conglomerating developer?
And no, it won’t look like Paris when they are through.
It looks like what we need are some BANANAs.
Build Absolutely Nothing Anywhere Near Anything.
Copyright, National Apartment Builders Association.
Speaking of the Santa Rosa transit oriented housing built in the ashes, this was mentioned by a media seeking county supervisor who did not consider that various tax laws encourage homeowners to rebuild as before.
This is a non-starter unless the city ponies up for the tax consequences of homeowners selling their empty and perhaps isolated lots to a developer.
The county is adjusting property tax bills down for burned out properties, so it has even less money to work with.
I have a vested interest in this action, given that our house + replacement contents are now represented by some bookkeeping entries at a local Santa Rosa bank.
I know a lot of people who lost their homes, one co-worker lost his own, his daughter’s and his father’s on that Monday morning.
Interesting stat to contemplate, in 1964 a similar fire burned toward Santa Rosa, but it took 4 days to reach the north side of town and the fire chief had enough time to build a large earthen berm to stop the fire..
This fire took 4 HOURS to traverse a similar path.
I believe a conglomerating developer will have a difficult time assembling land (and getting an additional train stop built) even if the city and county were not strapped for cash.
The only silver lining so far is that we don’t have to remember where we left something.