Green Capitalism: The God That Failed; Long, Essential Article
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The Inevitable Failure of Market Solutions
Because no government is going to impose carbon taxes that would really curtail production, the entire green-carbon tax strategy collapses. As Hawken, Brown and Cairncross freely admit: Because profit seeking and environmental protection are irreconcilably opposed, the only way to "align" these contradictory interests is to have the government intervene to "get the prices right" by imposing green taxes. Yet the worst problem with the carbon tax idea is that even if serious carbon taxes were actually imposed, there is no guarantee whatsoever that they would reduce greenhouse gas emissions because they would do little, if anything, to stop overall growth and consumption. That's why, even though in the United States calls for green taxes have elicited fierce opposition from many quarters, nevertheless, many in government, many businesses, and a long list of industrial CEOs including Rex Tillerson, CEO of ExxonMobil and Paul Anderson, CEO of Duke Energy, support carbon taxes - because they understand that unlike cap and trade, carbon taxes would add something to the cost of doing business, like other taxes, but they pose no finite limit, no "cap" on growth.(26) Worse, because carbon taxes are transparently a tax (whereas cap-and-trade is a disguised tax), most carbon advocates have tendered their proposals as "revenue neutral" to make them more palatable to politicians, business and consumers. Paul Hawken and Al Gore call for "offsetting" carbon taxes by reducing income taxes. Hansen's "tax and dividend" plan proposes "returning 100 percent of the collected tax back to the public in the form of a dividend."
27) Yet, as ecological economist William E. Rees, co-founder of the science of ecological footprint analysis, points out, if carbon-tax offsets are revenue-neutral, they are also "impact neutral." Money returned to consumers likely will just be spent on something else that consumes or trashes the planet. So, Rees says, if a consumer, say, takes an eco-car rebate from the government to junk his/her clunker for a Prius, this could save several hundred bucks in fuel costs each year. But if the consumer then spends the savings on, say, a round-trip air ticket to some vacation destination (which she or he could do every year with the fuel savings) or buys a new heavily polluting flat-screen TV, the carbon "savings" would evaporate.(28) And, meanwhile, she or he has added more to the global waste heap by junking the clunker. In the end, to coin a phrase, taxing pollution is a problem, not a solution.
Of course, the government could just drop these market approaches and directly regulate CO2 output by imposing fixed limits on greenhouse gas emitters, because governments already regulate many toxic chemicals. Legally, President Obama has the authority under clean-air legislation to do just that. And since his election, the somewhat emboldened EPA has asserted its right to do so. But where fossil fuels are concerned, we're not just talking about banning or restricting a single chemical here or there. If we're talking about 90 percent cuts in CO2 and other greenhouse emissions, then we're talking about the need to impose huge cuts in everything from farming to fashions – which is why business is fiercely resisting Obama's emboldened EPA.(29)
The Economics vs. the Science on the Scope of the Problem
When climate scientists such as Hansen tell us we need to "shut down the coal industry" and "leave most of the fossil fuels in the ground" to reduce greenhouse gas emissions, it's only natural that, like those auto workers, none of us really want to think about the full implications of this imperative. So the tendency often is to think about this issue in isolation from the rest of the economy, as if fossil fuels are mainly in the "energy sector," which we could fix by switching to renewables, by junking the clunker for a Prius, and go on driving and consuming as before while, hopefully, the economy also keeps on growing. But this is a delusion because in our economy, fossil fuels are in virtually everything we depend upon. Today, most of the fossil fuels we extract are burned directly to produce energy in power plants and to propel our vehicles, planes, trains and ships. The rest become chemical feedstocks embodied in everything we consume from food to clothes to manufactures of every sort. Right now, when we add up the coal, oil and the natural gas, the world is consuming some 200 million barrel equivalents of oil every day. That's equal to more than 23 times the daily output of Saudi Arabia, the world's largest producer.(30) Currently, renewables like solar and wind provide a grand total of about 0.6 percent of global energy consumption. In short, "getting off fossil fuels" is going to be a challenge. It will require big changes, to say the least.
But you would hardly get that impression from listening to the optimistic scenarios of mainstream economists. Thus the UK's Nicolas Stern, former World Bank chief economist and author the Stern Review, commissioned by the UK government, says we can prevent runaway global warming by pricing in carbon mitigation and that the cost to do so will reduce growth by as little as 1 percent to 3 percent of GDP per year by 2050.(31) Paul Krugman, echoing Stern and citing figures from a Congressional Budget Office survey of models, concludes that "strong climate-change policy would leave the American economy between 1.1 percent and 3.4 percent smaller in 2050 than it would be otherwise." So the whole process, they reassure us, will be fairly painless. Green tech will save us and, of course, growth can spiral on upward forever, if only a bit slower.(32) Stern, Krugman and a host of mainstream economists, politicos and the media have trumpeted this happy-face win-win message that "tackling climate change is a pro-growth strategy" (Tony Blair). The whole process, they reassure us, will be fairly painless. Best selling New York Times columnist Thomas Friedman, cheerleader for globalization and author of Hot, Flat and Crowded (2008), claims that if we transition to solar and other renewable energies, we can even increase growth, turn clean energy into a "new growth driver" and produce all the consumer goodies that the billions of Chinese and Indians and the whole world could want, so the whole planet can enjoy "the American way of life."
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http://www.truth-out.org/news/item/21060-green-capitalism-the-god-that-failed
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