The Green Party must support climate justice not emissions trading schemes

Climate change is what is known as a ‘wicked’ problem [1]. That’s not a street term – it is a formal academic term for problems which suffer from:

— incomplete description,

— changing parameters, and

— complex interdependencies,

to which we might add

— a limited time frame to reach solutions,

— the lack of a single authority to implement solutions, and

— our own involvement in generating both problem and solutions.

Furthermore, a solution to one part of a wicked problem can reveal or cause new aspects of the problem.

We all do recognise the wickedness of the problem. At Climate Change Minister Nick Smith’s recent consultation meetings on emissions reduction targets, many people pushed strongly for a 40% reduction in New Zealand’s greenhouse gas emissions by 2020 [2], which is a good step on the road to stabilising greenhouse gas concentrations at 400ppm or maybe even less.

Now that 40% cut is relative to 1990 – it’s more like a 55% cut in present emission levels.

In ten years.

That’s an average of a 5.5% reduction per year, or almost 0.5% per month.

By starting to talk about emissions reductions of this scale, I think we are starting to be honest with ourselves about the climate emergency. We are starting to be honest about the scale of the social and economic changes that we must embrace if we are to address the emergency successfully. We are starting to be honest about the choices we face.

There is no ‘win-win’ scenario for any climate change policy; there can be no expectation of minimal impacts on economic growth and development. Cuts in emissions of 5.5% per year cannot be achieved by business as usual.

The choice is between an orderly and equitable transition to a low emission society by way of our own active intervention, or a catastrophic collapse into a low emission society brought on by devastating climate change.

By endorsing the 40% target, many New Zealanders are willing to sign up for an orderly and equitable transition.

An emissions trading scheme (ETS) will not deliver it. In my view, the ETS does not even score on the minimal grounds of ‘better than nothing’ because in many respects it is worse than nothing.

And on that basis I want to argue that it is time for the Green Party to reject the ETS concept.

Risks and benefits of the present political strategy

I want to talk about the advantages of an ETS first.

As we know the ETS is a scheme that attempts to control the volume of greenhouse gas emissions by way of capped national quotas. A price on emissions arises because of the cost of retooling a business or purchasing credits from elsewhere to come within the quota.

But since the government itself has not directly imposed the price on carbon – it is a ‘market price’ after all – the government has distanced itself from price rises.

Thus an ETS has the benefit of political convenience [3]. But that is the only benefit I can see.

So what are the problems that make the ETS ‘worse than nothing’?

I think it is fair to say that if the ETS is to live up to its promise of dealing with climate change, it must internalise the full social, environmental and economic costs of GHG emissions. That would create the true ‘price signal’ for a tonne of CO2 emission.

If it can’t do this, why bother going to the trouble of setting up a market?

So let’s think about markets – a market is all about economic efficiency. So a carbon market might allocate the available carbon credits efficiently but will it allocate them fairly?

There is certainly no guarantee of that.

A carbon market mechanism means that there is no public control of how or where allowed emissions occur [4]. There is no consideration of the people, the communities involved when emissions credits are reallocated by the market. Economic cost is the one and only consideration.

But all the potential social and environmental consequences of climate change are central to our concerns – we can hardly leave them out of the picture when we consider an emissions trading scheme.

We might argue that governments are there address market failures, as they always have addressed market failures – through health care policies, pollution regulations, conservation projects, social welfare schemes, job creation, nationalisation, etc …

But if that’s what happens with an ETS, the true cost of emissions is not being paid by the market – costs are being externalised again!

In fact, it seems the ETS is caught in a logical impossibility. A market is interested in economic efficiency but we want a carbon market to be interested in social and environmental efficacy as well.

It just can’t do it.

As I said earlier, either an ETS internalises the full social and environmental cost of GHG emissions or it fails.

However, this basic design flaw is not the only problem with the ETS.

Many new problems arise in the developing world through the noble sounding ‘Clean Development Mechanism’ or CDM.

CDM schemes take place in developing countries, as:

— renewable energy developments such as hydro or windfarming schemes,

— projects to destroy greenhouse gases such as N2O and HFC-23, or

— carbon ‘offset’ (or ‘sink’) projects such as tree plantations.

These projects are claimed to be the same as reductions in greenhouse gas emissions and the project owners earn tradeable emission credits. Corporations in over-developed countries offset their own inability to reduce emissions by purchasing these credits.

CDM projects are supposed to be ‘additional’ schemes that would not have happened but for the income generated by the credits. However, many of these projects are already fully funded and are simply relabelled as CDM in order to gain carbon credits into the bargain.

In a report published by Stanford University Law School, it was estimated that up to two-thirds of all projects fall into this category [5].

Now we can see why so many people favour the market approach – while it might not actually do anything about climate change, it sure does seem like a great way to make truckloads of money.

But even if the CDM did have some integrity in its own terms, its external impacts would still be distressing.

At the sharp end of the CDM schemes, developing nations become a ‘carbon dump’ for the industrialised world, as land is enclosed and converted to exotic forestry or occupied by windmills, and as rivers that have been used sustainably by local communities for generations are dammed for hydro schemes [6].

Many NGOs around the world also now recognize these schemes for what they are, including Friends of the Earth Australia and International Rivers [6].

In May 2008, 39 climate justice groups, many from the South, published a statement indicting the “false solutions” of “a new 21st century phase of colonialism” [7].

Let’s be honest about these false solutions. They exist so that we in wealthy countries can maintain our hyperconsumption lifestyle. The credits that these offset schemes generate are tainted by exploitation, injustice and more ecological degradation.

Overall, then, there are a number of major risks associated with the ETS:

— the risk of failure of the scheme to deliver an orderly and equitable transition to a low emission society;

— the risk of serious social, environmental and economic impacts on the people of the global South; and

— the risk of significant damage to Green Party credibility by association with flawed schemes and Third World exploitation.

Other Green Parties recognize this.

The German Green Party congress at Nuremburg in 2007 passed a resolution stating that “the strategies for fighting climate change which governments have adopted so far are useless” [8].

So what should we be doing instead?

Alternative strategies

Some business advocates such as the UK Financial Times [3] and even the NZ Business Roundtable [9] have suggested that a carbon tax is preferable to an ETS. Their reasoning is that a carbon price signal is more predictable than an emission volume signal and this allows more certainty in business planning.

However, that only deals with the business perspective – what about social justice issues? Both ETS and carbon tax have problems in terms of equity. Either way, the poorest in society will suffer the most from the increasing cost of basic necessities.

One option available would be some serious wealth redistribution, which could be done by reducing tax imposed elsewhere, for example on the first ten thousand dollars of income. This is exactly in line with NZ Green Party tax shifting policy [10].

Alternatively, we could return all carbon tax revenue back to the people in the form of a monthly rebate paid equally to every individual [9].

However, even taxes are still, in the end, market instruments using price signals to suggest changes in behaviour. Those with sufficient wealth can ignore the suggestion and will still speed by in their SUVs for as long as possible.

Some other options that would generate real change include [11]:

— non-tradable quotas for industries or individual corporations, with legal action and sanctions in the face of quota breaking;

— the end of government support for fossil fuel extraction, for new highways, etc;

— large scale public works initiatives in energy efficient buildings, sustainable land management, public transport, etc;

— large scale public investment in research in the renewable energy sector – thus far, only 6% of the world’s energy research budget has supported renewable energy; and

— large scale public investment in research in the agriculture sector to develop effective ways to mitigate N2O and CH4 emissions.

But I believe the climate emergency we face requires a range of interventions that aren’t determined by bureaucrats or abstract market transactions, but involve the whole community in shaping the future [12]. In that way, communities can select and develop the solutions that suit their own circumstances.

We need to learn from other communities living in low-emission contexts and small businesses and grassroots organisations working to reduce the use of fossil fuels.

These communities and organisations are ignored by the carbon market as they do not trade in carbon credits. But these are precisely the people who will lead the way to real, sustainable solutions to the climate crisis.

Community engagement is going to be essential if we consider compulsory phasing out of some emission-intensive products, processes, technologies, transportation systems, and agricultural practices.

That’s because such change must be accompanied by just employment transitions for workers in obsolete industries.

And, throughout, there must be firm democratic control of climate change policy in the interests of all people around the world rather than a market oriented only to the interests of the wealthy.

Summing up

Wicked problems such as climate change have no single, simple solution. Imposing, top down, a gigantic global carbon market is a response from another era, when neoliberalism ruled and policy makers cared nothing for social and environmental consequences.

In the face of the climate emergency, radical changes are needed in the way our society functions and the way our economy operates within it. Neoliberalism is a bankrupt option.

I believe the reality check of the 40% by 2020 campaign has opened up an opportunity for us to rethink climate change policy.

We can develop a broad range of solutions that do not depend on market principles of self-interest and the profit motive but draw on political leadership, a sense of community, mutual aid, co-operation, and a resolute commitment to democracy and justice.

Not everything we try will work, so we need to try a wide range of plausible solutions and we need to be flexible enough to learn by doing [1].

The Green Party can begin by acknowledging that the ETS is riddled with flaws, it is wide open to abuse and it generates new oppression and injustice among the most vulnerable. We cannot support it.


[1] Gwyn Prins and Steve Rayner (2007) The wrong trousers: Radically rethinking climate policy (pdf here).

[2] Reports at 350 Aotearoa.

[3] See the UK Financial Times here.

[4] Larry Lohmann (2008) Carbon trading, climate justice and the production of ignorance here (summarised on Wellsharp here).

[5] Rachel Morris (2009) Could cap and trade cause another market meltdown? Mother Jones magazine (here) referring to research by Michael Wara and David G Victor (here).

[6] See Wellsharp here.

[7] Report by the Transnational Institute here.

[8] Ingolfur Bluhdorn (2009) Reinventing green politics: On the strategic repositioning of the German Green Party. German Politics 18(1), 36-54 (pdf here).

[9] See Wellsharp here.

[10] Green taxation and monetary policy summary here.

[11] Daniel Tanuro (2008) Carbon trading – an ecosocialist critique here.

[12] Larry Lohmann (2006) Carbon trading – a critical conversation on climate change, privatization and power here.


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