Politically Fashionable Carbon Gradualism vs. Reality

By Michael Hoexter

The recent re-entry of the Obama Administration into public discussions and advocacy for climate change action has been a mixed blessing for the climate action movement.  On the one hand, President Obama possesses the (U.S.) bully pulpit as President and thus can broadcast messages, which can be heard around the country and the world.  Furthermore he leads the executive branch of the US federal government, where his Administration can enforce existing regulations, negotiate international business and political relationships, and set climate and energy targets for the functioning of the federal government’s internal operations.  Indications that the US President personally is concerned about climate and assigns it a medium or high priority would, one would assume, make more likely real policy and executive actions, not just speeches.  Against the background of relative US government inaction on climate change over the past two and a half decades, the decision to bring the climate issue out of the shadows in the beginning of his last term in office and his June 25th speech would under most circumstances be viewed as a net “win” for climate action and the climate movement, no matter what the exact content of his policy prescriptions.

On the other hand, Obama has had a now long history of attracting the electoral or moral support of, and then frustrating or working against, reform and progressive movements.  In numerous policy arenas including climate, after exciting “hope” that change was imminent, Obama has supported corporate friendly actions by government often against the public interest.  In numerous speeches, Obama has reinforced in a seemingly self-defeating manner, the deficit hawk creed that the US government is running out of money.  His signature reform, the Affordable Care Act, attempts to extend health coverage by institutionalizing the roles of large profit-minded corporations within the already excessively expensive and profit-oriented American healthcare system.  Despite a few critical remarks directed at Wall Street, the Obama Administration has been a steadfast friend to the bloated FIRE sector of the economy, favoring mere cosmetic reforms of the banking and financial system, the industry that blew up the world economy in 2007-2008.  He has as well reinforced the covert war-fighting and surveillance capacities of the US government, belying his image in some (deluded) quarters as a “liberal” or someone who would be expected to care about civil liberties.

Obama’s climate speech on the 25th and the policy prescriptions accompanying it stoked in equal measure, the first idea that Obama is an ultra-timid liberal/progressive genuinely concerned about his legacy or, alternatively, that Obama is just playing another game with those who actually care about the content of policy as it impacts real people, the real economy and the environment.

Supporting the “timid progressive” thesis, Obama talked on June 25th, seemingly with sincerity, of the generational and moral imperative associated with climate change.  He displayed a more than adequate intellectual understanding of the history of the greenhouse effect and the discovery of climate change. He said that he refused “to condemn your generation and future generations to a planet that’s beyond fixing”.  In a message echoed for the several months leading up to the speech by the successor to Obama’s campaign vehicle Organization for Action, Obama made fun of climate change deniers in Congress (“we don’t have time for a meeting of the Flat Earth Society”) seemingly pointing the finger once again at them as the chief roadblock to climate action.  In a surprise within the speech, Obama addressed the Keystone pipeline issuing saying that it would be approved only if it did not “significantly exacerbate the problem of carbon pollution.”  At one point towards the end of the speech he, in “movement” call-and-response fashion, called upon people to “invest, divest”, seemingly giving Presidential approval to 350.org’s fossil fuel divestment program.  The general tone of the speech was then in marked contrast to the usual disregard with which Obama has treated those to his “left” in his previous four and a half years in office.

However there was also adequate support for the hypothesis that Obama’s speech was the next, cunning strategic play to co-opt climate action rhetoric and policy for the oil and gas industry.  Obama is well aware of a mounting consensus ranging from “centrists” to the left end of the spectrum that the Keystone XL pipeline would be a monumental step against a sound climate policy.  The growing movements against various unconventional fossil fuel sources and extraction technologies cannot have escaped his notice, even if he sees them as a hindrance to his or his patrons’ plans.  Still, Obama’s announced policy prescriptions on energy and climate seem to rely almost exclusively on a transition from coal to natural gas, as the primary (source) energy upon which the modern economy would be based.  Much of the natural gas that Obama’s energy plan/rhetoric depends upon would be natural gas from hydraulic fracturing or fracking, with its attendant local environmental damage and fugitive methane leakage.

Natural gas system leakage of greater than 2.8%, which is a matter of course in the extraction and distribution of natural gas, will more than negate any positive climate impacts of transitioning from coal to natural gas; the marginal benefit of switching from coal to natural gas only would occur if greater than 97-98% of the fuel extracted from the ground is transformed into carbon dioxide upon combustion.  The reason for this result is that uncombusted methane is a 72 times more potent greenhouse gas than carbon dioxide within the first 20 years of its release into the atmosphere.  The calculation of supposed reductions in emissions and net social benefit that would come from switching from coal to natural gas would then have to ignore methane leakage as well as wholesale damages to communities and eco-systems from fracking. These non greenhouse damages include overuse of the local fresh water supply for the purposes of fracking and damage to the water table from inevitable leakage of methane and fracking waste fluids.

In these beliefs about natural gas as a “bridge” fuel, Obama has unfortunately been backed by a segment of the environmental and policy community that believes or wants desperately to believe that fracked natural gas is cleaner and otherwise preferable to coal.  Obama may be just acting the role of the natural gas industry lobbyist or may believe, along with this credulous and/or corrupted sector of the environmental and policy community, that there must be fossil fuel “bridge” to the radically different energy and transport system we will need which would generate net zero carbon emissions.

Carbon Gradualism, Born of Neoclassical Economics

The discovery of anthropogenic global warming as a well-supported scientific theory and ongoing process occurred in the 1980’s within the climate science community but it was only in the 1990’s that a significant segment of the international policy community came to realize that action was required in stopping or slowing global warming and addressing its impacts.  Many of the world’s leaders or high level bureaucrats in environmental ministries at around the time of the UN’s Earth Summit in 1992 concluded that some policy with regard to carbon emissions would be necessary for human civilization to be sustainable over the longer term.  Furthermore the issue of only a small fraction of humanity, located for the most part in developed nations, that was using up the carbon buffering capacity of the atmosphere and oceans in pursuit of its own benefit, became a central dynamic of the international politics of climate change.

The 1990’s were also a time when the neoliberal worldview, based on a blend of neoclassical and Austrian economics, became fully consolidated as the dominant understanding of human society among political elites.  With the collapse of Soviet Communism and the embrace of state-led capitalist development by the People’s Republic of China, as well as the growing dominance of finance in the developed capitalist world, the “market” became both the ideal and the assumed encompassing reality of society, the combination of an aspirational goal and a natural fact.  Within neoliberal ideology, people were thought to naturally and exclusively “truck and barter” with each other to maximize their individual “utility” and respond in their behavior only to price differentials or their equivalent as a guide to this supposedly all-encompassing drive towards utility maximization.  The problem with Communism, it was thought, was that these natural commercial impulses were suppressed by government.  Furthermore, financial markets were believed, conveniently, to be the expression of the same sort of natural commercial impulse, efficiently allocating financial resources according to the real requirements of the economy, and whose outsized profits were a reflection of the value they delivered.  The nominally “left” parties, such as the Labour and Democratic Parties, in the developed world became convinced of the market’s power or inevitability and became as well political exponents of financialization of the economy and objects of political patronage by the FIRE industry. 

In reflection of the dominant trends in economics and economic policy of that era, the central policy instrument which the international community arrived at to combat climate change was an offspring of the neoliberal worldview, itself based on the assumptions of Austrian and neoclassical economics.  The Kyoto protocol which became the consensus instrument within the UN to slow warming is anchored in a carbon pricing system that is administered and regulated via permit trading market, a so-called cap and trade system.  The idea was that governments would set a quantity cap on the amount of carbon emissions and then sell the permits to emit up to that amount of carbon into a market.  In addition, less developed countries could sell offsets to the higher emitting countries, enabling the most “cost-effective” emissions cuts to happen first, often via the purchase of these offsets from less developed countries.

The only mainstream idea that has been discussed as an alternative to cap and trade, a carbon taxation system, shares with cap and trade a similar fundamental model of the economy and how to wring out or replace carbon emitting activities within the economy.  Both a carbon tax and cap and trade take the task of social transformation as one that is a step-wise evolutionary transformation of the energy and transport systems, via progressively throttling demand for fossil fuels via increased pricing while, it is implied, increasing demand for non-fossil, non-emitting or low-emitting alternatives.  While in the cap and trade the price is a secondary outcome of both the quantity allotments by government and then the trading market for permits and offsets, the idea behind cap and trade is that high emitters will be disadvantaged in the marketplace by having to pass on the increased costs of permits or higher carbon taxation on to buyers or from diminished output to avoid emitting over the cap.

The engine of transformation and energy innovation is in both cases the consumption and entrepreneurial activities of market participants spurred on by increases and decreases in demand brought on by the carbon price.  Public sector or private sector “entrepreneurs” will supposedly over time will invent solutions that reduce carbon emissions, as the price of carbon goes up and/or the quantity of permitted emissions goes down.  The idea is that successive generations of technology will be invented that gradually approach the zero-carbon bound or dip into carbon negativity, all inspired by calculations of monetary gain and loss by entrepreneurs and private sector actors in the market.  The carbon pricing systems both share a view of governments as “herders” of the market and driving market participants (the “herd”) towards lower carbon activities and away from higher carbon activities.

While a carbon price is an inevitability in a carbon constrained world, the belief among policymakers and pundits that the carbon price itself is the engine of change is an outgrowth of erroneous assumptions about political and social reality more generally as well as the economic realities of technological systems, energy innovation and early deployment of energy–using technologies.  The notion that markets and entrepreneurial activity will deliver a transformation of the energy and transport system is an idea that lives only in the fact-free world of neoclassical economic theory or unrealistic and/or dishonest policy advocacy derived from that theory.

Natural Gas as a Carbon Gradualist Fantasy

The carbon gradualist ideal contained within the idea of carbon pricing as the leading edge of energy transformation is not simply born out of too-studious acceptance of neoclassical economics’ worldview but also out of the fantasy of an non-disruptive, non-wrenching transition from a fossil fuel run economy to one that is run entirely on renewable energy and perhaps some as yet undiscovered nuclear energy.  Politicians and political actors are not eager to join the fight against the fossil fuel industry as well as confronting our societies’ fossil fuel and “cheap” energy addiction overall.   The notion that there must exist a gradual transition away from fossil fuels is preferable to a sharp turning away from them because of the consequence that political leaders would have to stage a bitter fight with fossil fuel interests, and would need to fight to assume, in most cases, complete regulatory control over the fossil fuel industry.

It is in this context that the notion of there being a fossil “bridge fuel” and anointing natural gas this status holds a powerful sway in the minds of policy makers.  With (fracked) natural gas and for that matter any number of other unconventional fossil fuel products, a bone can be thrown to the oil and gas industry to keep them at bay, and or to receive patronage from the industry to promote and defend them.   The threat of radically scaling down their operations by regulatory or other means, is deferred or taken off the table.

Also this allows in the area of electrical generation for there to be a temporary maintenance of the industry’s structure as it currently stands.  So-called “thermal” power plants that burn a fossil fuel can be reconfigured from coal or oil to burn natural gas, thereby maintaining the basic infrastructure of the grid intact.  That natural gas, however does not appear out of nowhere, and the source of it is increasingly from hydraulic fracturing of shale formations, so called “fracking”.    Within the vaporous world of neoclassical economics, far from considerations of the contours of the real, physical world, the tendency of economists to “assume a can opener” is evident in not taking into account the systems of interacting parts that make real economies function.  That economists and therefore policymakers would imagine a quick and easy substitution of one input for another is therefore unsurprising but fantasy-based.

While the damages to the land, the politics and welfare of regions and the nation by fracking is being publicized by the journalist/filmmaker Josh Fox and documented by a number of academic researchers, an almost equally appalling spectacle is the shocking credulousness and blindness of government and industry elites in buying the natural gas hype in the first place.  Even if the worst abuses of fracking can be technically remedied, which is unlikely,  not choosing the available zero-carbon emitting alternative, renewable energy generators, incurs enormous opportunity costs, including the inestimable economic value of a livable climate.  One recoils at first from realizing how misled we have been on this front, especially if we include those environmental organizations that have pushed for natural gas conversion.  President Obama, though he in both a rather bizarre and also predictable manner turned his big climate speech with its calls to intergenerational morality into an advertisement for natural gas and fracking, is in tune with a good portion of Washington conventional wisdom in this regard.

To be clear, the construct of “carbon gradualism” is not identical to natural gas advocacy nor is it identical to carbon pricing: one can have carbon pricing without carbon gradualist justification.  Alternatively one can have natural gas advocacy (most often the case) without a carbon gradualist policy orientation.   Carbon gradualism is an implied policy orientation, an embedded assumption in climate policy.  The notion of “carbon gradualism” helps explain the fixity and enthusiasm with which both of these politically popular supposed “solutions” are held aloft as near panaceas for energy and climate challenges.  Because of the political functions as well as the economic justifications for gradualism, we would expect to see politicians and advocates of gradualism having a hard time absorbing information that de-idealizes natural gas and fracking.  The notion of a sharp turn away, a transformation, an “Energiewende” is anathema to the ways they think and or handle themselves politically.  It also works against, in many cases, their own personal economic interests because of the wealth and power of the fossil fuel lobby.

Why Carbon Gradualism is Unrealistic

While carbon gradualist policy measures were conceived over twenty years ago as a non-disruptive solution to global warming (though an effective carbon price would still be somewhat disruptive to the long-term business plans of the fossil fuel industry) the physical climate landscape has literally changed.  Carbon gradualism’s selling point, besides its harmony with neoclassical economic models of how the economy works, was that supposedly it reflected political and economic realism to be a gradualist rather than working immediately to effect an entire energy and transport system-change.  The realism of gradualist approaches turns out to be not a very substantial assumption at all for the following reasons.

  1. Time is Short; Shortening the Approach is the Only Choice

The concentration of carbon dioxide in the atmosphere is now above 400 parts per million, 12.5% 14.3%more than the 350 parts per million that was thought to be the upper boundary of carbon dioxide to maintain the Holocene climate, favorable to human civilization.  Carbon emissions on a worldwide basis continue to rise and we are seeing, probably due to already “baked-in” emissions an increase in global temperatures to levels not seen for 3 million years or more.  As predicted by climate scientists decades ago, we are now experiencing freakish weather in many locations around the world with either long, intense droughts or with excessive precipitation leading to record flooding.   We therefore don’t have much time to take a leisurely route to a near-zero or zero-net-carbon society.  We do not have the leisure to experiment and arrive at climate solutions by approximation or by lengthy trial-and-error, as the more the climate is stoked with heat-trapping gases, the more chaotic and disruptive the world will become for human endeavors.

  1. Foundations of a Zero Carbon Transport and Energy System are Buildable Now

The shift then to a zero or near-zero carbon transport and energy generation infrastructure is now necessary, rather than building first an intermediate infrastructure that simply emits somewhat less carbon.   For land-based energy and transport needs we have almost all the technological tools we need to go to a zero-carbon emissions system:

    1. Zero carbon emissions electricity generators: renewable energy generators like wind, solar, and hydropower (with management of dam reservoir methane).
    2. High-voltage DC power lines that allow low-loss long-distance electricity transmission (to balance renewable energy flows with power demand)
    3. grid-tied electric trains, trucks, and buses
    4. battery electric vehicles that can travel 200-300 miles on a charge
    5. battery switching technology that can allow battery electric vehicles unlimited mileage with 90 second refueling.
    6. Building or retrofitting buildings to the Passivhaus standard reduces building energy use by anywhere from 55 to 80% in climates with high space conditioning demand.
    7. Replacement in many construction applications of steel and concrete with engineered wood products, enables with sustainable forestry, structures to become carbon negative.
  1. Building a Merely “Lower” Carbon-Emitting Infrastructure and Policy Regime Locks in the Carbon-Emitting Status Quo

The building of long-lived buildings and power plants in anticipation of a “somewhat-carbon constrained” world installs stakeholders in the carbon-emitting status quo in positions of power and apparent “virtue”.   It also builds long-lived objects that require or at least stimulate demand for fossil fuel inputs.  A carbon pricing scheme that targets “cost-effectiveness” in the short-term will encourage investments in half-measures, like for instance a somewhat more efficient way to use fossil fuels (one example are on-site co-generation facilities that use natural gas).  Installing a combined-cycle natural gas power plant contrasts well with a coal fired power plant but not with a renewable energy-based supergrid (multiple generators producing the required power output).   The cap and trade idea installs the private financial industry in its current bloated form as the pivotal stakeholder in determining how climate change policy is conducted.

  1. For a Rapid Transition, Planning and Implementation Today for a Zero-Carbon Infrastructure is Required 

Certain aspects of infrastructure, including urban and land use planning need to be anticipated by policymakers and leaders, rather than policymakers or builders waiting for or calculating the effects of a price signal, which those leaders or their predecessors had anyway designed with a certain set of intentions embedded therein.  Planning can take into account anticipation of needs beyond calculation of risk reward; it draws upon human functions that are generally depreciated by market processes.  Building infrastructure often means disregarding price (often it is not wise to choose the lowest bidder) and focusing on the availability and future of real resources like people and things.  There is here as well a creative component which rightly or wrongly people nowadays are loathe to entrust to government: the exact planning and execution of such a building project could not be decided by plebiscite, though with online voting, alternative choices could probably be vetted and commented upon by the public.    The alternative to transparent government planning is oligarchic planning where government and powerful stakeholders collude to create an outcome favorable for the few.  Carbon gradualism pushes off the day to plan and implement a zero-carbon infrastructure, incentivizing market participants and policymakers to only plan for the medium-term investment horizon and not the longer-term goal.

The Only Realistic Alternative:  Rapid, Planned Transition to a Zero-Carbon Energy System with Price Drivers

As above, for a number of reasons, the only practical path is to build as quickly as possible an infrastructure the use of which does not depend upon carbon-inputs for operation, an endeavor that we can plan and execute starting today in many critical economic sectors. A plan such as this requires statements of intention that are in some way or another ratified by the population that express a commitment to create a sustainable society that doesn’t depend upon fossil inputs. Without this statement of intention, followed by credible actions by government and also by individuals and businesses, a plan cannot be reasonably be put in place and acted upon.  Such statements of intention are particularly important in nations such as the US or Canada, where there is a strong fossil fuel industry, fossil fuel lobby, and large fossil fuel reserves.  There must be an expressed public intention “not” to extract and use fossil fuels and an expressed public intention “to” only use non-carbon emitting energy transformation process within the economy.  This contrast sharply with the notion that the only realistic political stance vis-à-vis the fossil fuel industry, or any industrial lobby for that matter, is to adjust regulations slightly, levy a tax or engage them in a pollution permit trading system.  A forthright intention to “stop” wholesale fossil fuel extraction and use must be in the mix in order to communicate the moral and existential imperative.

The institution of a “gradualist” carbon pricing system is not a substitute for publicly endorsed statements of intention and a plan, as well as the financial operations of a currency-issuing government that can make such a plan credible.  The carbon gradualist fantasy is that somehow the operations of and gyrations within a carbon pricing system would substitute for political and social statements of intention and planning based on those intentions.  What carbon gradualism edits out is the role and operations of government both in the economy and within a polity where ethical values that go beyond the purely economic have weight and consequence.  Within a political and physical framework of these intentions and plans, a carbon pricing system can then play a role in driving market behavior towards the intended zero-carbon outcome.  However, the notion of a “headless” (and heartless) market that somehow cobbles together the zero-carbon energy system by price setting alone, is a fantasy.

The wartime style mobilization required to credibly build such a zero-carbon energy system, rather than being a “pie in the sky” dream, is the only realistic alternative left for our societies and our governments to start on the path to solving multiple co-occurring social and economic problems.  I will address the specifics of relevant policy, politics and economics in future installments.