Required: A Complete Pivot on Climate and Energy

By Michael Hoexter

With the release of Obama’s much heralded EPA regulations on coal fired power plants we are encountering once again the ongoing tragedy of low expectations with regard to climate action.  While compared to other Presidents, and there have been only three in the era of pressure for climate action, Obama’s proposal that coal-fired power plants reduce their carbon dioxide emissions by 30% from 2005 levels by 2030 is the most ambitious climate rule to be implemented, even the relative journalistic “friend” of the Obama Administration, Ezra Klein pointed out, this is a less ambitious path to cut carbon than that proposed by the Republican McCain/Palin candidacy in 2008.   Of course, there is a difference between campaign proposals and a President setting into motion energy and climate regulations but the degree to which expectations have been lowered even in the course of 6 years (despite the appearance of obvious changes in the climate itself) is frightening.  In the best case scenario, the ruling establishes a precedent that may be reinforced in the future.

The selection of the 2005 emissions baseline is a sleight of hand, as this was around the peak of US emissions, rather than using the typical 1990 baseline employed in, among others, the now seemingly unambitious 80% reduction from 1990 levels by 2050 goal.   Most analysts who include a consideration of the impacts of existing and future emissions on the environment, think that achieving an actual net zero carbon emissions society by 2050 or sooner is more in line with the goal to limit warming to 2 degrees Celsius.  Mark Hertsgaard points out that Obama has over time persisted in using the less rigorous and non-orthodox 2005 standard:  for his previous 2009 climate bills 2005 was also selected as the baseline.  Of course, the projected reductions from the new regulations are also not for the entire economy but simply for the electrical power generation sector which is 34% of total greenhouse gas emissions for the US economy.

Half of the 30% from 2005 reduction has already been achieved by the deep economic recession and continuing de-industrialization of the US, as well as the wholesale shift to natural gas power plants premised on the unlikely continuation of the natural gas fracking bubble.  Fugitive methane from fracking and natural gas distribution remain undercounted so actual positive (warming) climate forcings (the point of cutting carbon emissions is to cut positive climate forcings) from the US power sector using natural gas are also undercounted.  If the methane emissions from fracking and distribution remain uncounted, the new Obama regulations drive power utilities choosing to make changes in power mix (rather than buying offsets in a cap and trade system) towards replacing coal with combined-cycle natural gas power plants and/or some combination of natural gas, energy efficiency, and renewable generation.  Fracked fossil resources (gas and oil) are a financial and resource supply “bubble” because these resources tend to deplete very rapidly, yet have been sold to the public and power utilities as a durable source of fuel, attempting as a marketing ploy to associate the relative longevity of conventional oil and gas resources with the newer faster-depleting resources.

Furthermore, the shape of these proposals contain within them points of attack, which may spell political trouble to Democrats and others who might be put in the position of celebrating them as either a great achievement or a step in the right direction.  The targeting of coal-fired power rather than all power plants creates the appearance of targeting the poorer, “red” states who are more dependent on cheaper, dirtier coal power.  The richer, “blue” states tend now to get more of their power from natural gas which at least in EPA accounting has lower carbon emissions, though the undercounting of fugitive methane from fracking casts grave doubt on targeting coal alone as the primary driver of emissions levels and growth.  Already the targeting of coal has led the Democratic candidate for Senate in Kentucky, Alison Lundergren-Grimes to distance herself from Obama’s climate initiative and others will follow suit.  Many point out that coal has already been “victimized” by the switch to natural gas, yet still a continued focus on coal, leaves the impression of adding insult to injury.

Obama’s choice to offer states the option of using cap and trade mechanisms is a further sign of the unseriousness of this proposal.  As Gaius Publius observes, permit trading is in the best case, an instrument to improve practices of an industry you want to maintain, not one that you want to regulate out of business.  Cap and trade systems can easily be designed to postpone actual emissions cuts to such a degree that even by the program end-date, compliance is achieved by “paying to pollute” via offsets rather than a net emissions reduction in the targeted economic sector.  Furthermore, it is almost impossible to prove that offsets initiate a net decrease in overall global emissions equivalent to what the original program has targeted.

The shape of the new coal-plant regulations could be viewed as another example of Obama the corporate “front-man” creating rules that give the oil and gas industry an opportunity for growth while appearing to cut the coal industry loose (though the slackness of the regulations gives coal plants and coal miners plenty of leeway).   Just before the announcement of the EPA move, the Obama Administration awarded offshore oil drilling leases to ExxonMobil, with the Administration heralding the move as part of the President’s “all of the above” energy strategy.  In Obama’s recent interview with Thomas Friedman for the documentary “Years of Living Dangerously”, we don’t get the sense of a man who feels the “fierce urgency of now” in the area of climate action, leaving plenty of time for the oil and gas industry to amortize their investments in unconventional gas and oil.

In the design of these measures on so many fronts are the marks of Obama’s small-bore, neoliberal approach to almost every social and economic challenge.  In all likelihood, Obama has some, though far from proportionate, level of concern about climate change but he is approaching it with the tools and political outlook not matched to the job and, along the way, in all likelihood doing damage to a cause that apparently means something to him.  While on the one hand, this move establishes a precedent to build on, that carbon dioxide concentrations do cause harm, a subsequent Administration or Congress will have to unwind and replace some of the lax regulatory structures laid down by Obama’s rule-making.

A Climate and Energy Pivot

The Obama Administration’s half-measures are not the same thing as the required “about face” on energy and climate that is indicated in the analyses of climate scientists, including in the Obama Administration’s own National Climate Assessment 2014, and the corresponding demands of the climate action movement.  The trajectory of emissions is on a worldwide basis going up in our integrated world economy, while the current concentrations of long-lived greenhouse gases in the atmosphere are already over their safe levels.  Beyond their negative environmental impacts, the economies of the developed and rapidly developing worlds have become distorted by gross inequalities between rich and poor and in the developed, emissions-heavy core, chronic unemployment.  These economies are premised on readily affordable energy that currently is 84% from fossil sources, a massive proportion of humanity’s non-food energy which within the space of three decades or less will not be allowable if climate science is taken seriously.   Economic growth has been both the means by which the rich have become richer but as well the means by which many of the poor have bettered their situation.  Economic growth within the current capitalist system has assumed, until recently, increased use and increased demand for fossil fuels, a ready store of energy that runs the mechanical and electronic devices that have come to signify in real terms economic development and being, on a world scale, among the wealthy few.

The approach of the world and US climate action community to date has been what I have termed “carbon gradualism”, the idea that the setting of an ascending price signal or a gradually declining cap on emissions with permit auctions would ease the fossil dependent world and domestic economies into eventually a low- or net-zero emissions society.  Carbon gradualism has been premised on several different ideas:

  1. The private sector will via the “invisible hand” of market actors create the net-zero or low-enough-emitting society
  2. There is enough time and atmospheric buffering capacity to allow market processes to “discover” in an undirected manner climate and energy solutions based on a set price (tax) or auction-determined carbon price
  3. Government innovation, investment, and planning are not central ingredients of the transition to a net-zero carbon society, that’s why they are not part of the carbon pricing policy model other than to regulate the cap and/or carbon price.
  4. The incentives to build possibly-cheaper “somewhat” lower carbon infrastructure in the interim will not politically and economically block the building of near-zero or zero net carbon technologies in a few years time (creation of a transitional incumbent industry whose interests oppose near zero or net-zero carbon solutions).

Carbon gradualism is based upon economic models that have shown themselves to be of limited value in describing ordinary economic development, the kind premised on externalizing the costs of fossil fuel combustion, let alone an understanding of the challenges of a rapid technological and social transition to a clean energy economy.  (As an example, the road to industrial development for most developed and rapidly developing nations has relied on some form of protectionism and a domestic industrial policy, while free trade has remained an economic dogma for over a century).  The simple fact that physical infrastructure, like buildings and bridges have a forty or more year life span clashes with the carbon gradualist assumption that the net-zero carbon society will be approached via “successive approximations”, dictated by stages of the carbon price/cap and the resulting changes in cost accounting by private investors related to that price.  The type of physical infrastructure we have, often public property or a public good, is one of the main determinants of whether we can transition our civilization from one powered from fossil sources to one powered largely from renewable sources.

Instead, what is obviously required, given the nature of the challenge and short time available for change is a 180 degree “pivot” on multiple levels of society, away from fossil fuels and towards energy saving and clean energy.  The “pivot” will not be instantaneous but at the highest conceptual and ethical levels might occur within a few days or weeks, followed by months and years of political fighting and, we hope, policymaking to salvage something of the Holocene climate.  What is required is a resolve to abandon the fossil fuel industries as viable, future-oriented industries and turn to carbon-reducing and eliminating projects and industry segments that will deliver within a short period of time a near-zero or net-zero emissions society.

Such a pivot means the end of the petrostate, the close relationship between federal and state governments on the one hand and fossil fuel industries on the other hand.  The petrostate in the United States has consisted of a set of direct and indirect subsidies as well as preferential rule-making and lax oversight of the oil, gas, and coal industries.  The petrostate has of course been supported by lavish contributions to politicians and against action on fossil fuel dependence and global warming.  Such an end of the petrostate will not be frictionless or easy but it must be conceptualized and then executed for the sake of everyone on the planet.  Painfully for some politicians, chummy political relationships with the real and some of them honorable, human beings who work in the oil and gas industries will cease.  These individuals and corporations are simply in the wrong business at the wrong time.  Their efforts to extend that business beyond its expiration date are causing more destruction and chaos than is necessary to keep society functioning as it transitions from fossil primary energy to mostly or entirely renewable energy (there may be an ancillary role for a cleaner, newer form of nuclear energy).   Many within the fossil fuel industries will fight tooth and nail and deploy massive political-economic resources to retain their position of political and economic privilege.  Others, we hope, will understand that they need to bow out of their fossil fuel extraction and marketing endeavors and turn to other pursuits in harmony with the great societal pivot away from fossil fuels.

A Multi-level Pivot

The leaders of monetarily sovereign governments, like the US federal government, have the greatest latitude in determining the completeness and success of this pivot from fossil to clean energy, energy & resource efficiency and conservation.  They have both the regulatory power and, as fiat currency issuers, the spending power to create new infrastructure, like electric transport infrastructure, electric transmission infrastructure, rules and regulations to encourage clean energy and energy efficiency, even encourage bicycling on a national scale etc.  In addition changes in land use and tillage to fix more carbon are also within the power of regulations, government funded projects, and market incentives.  With the instrument of monetary sovereignty, leaders of governments like the US federal government have the latitude to create within bounds of acceptable inflation levels and currency valuation, new realities that are in keeping with the demands of the climate challenge without regard for the pecuniary interests of the dying fossil fuel extraction sector.  As the Modern Money school of economics has demonstrated, the spending of fiat currency issuing governments does not require funding via taxes or borrowing and therefore, unlike current monetary myths that demand fiscal austerity, does not subtract on a one-to-one basis from household or business wealth and income via taxation.

But state and local governments, currency users rather than currency issuers, can as well through leadership, rule-making, tax and spending policy create realities for regional and local communities that also pursue the goal of a net-zero carbon emitting society within the span of a few decades.  They have lesser latitude and policy space than the leaders of national, monetarily sovereign governments because they must fund their operations via taxing money from the private sector (families and businesses) and therefore must compete with the private goals of individuals to save or consume.  However through proposing and implementing wise investments on a local and regional level, a majority of a given constituency might be able to endorse that their tax dollars are well-spent to maintain and enhance the community, region, and ultimately the global climate in which they live.  In the end, some degree of harmony between the policy orientations of the monetarily sovereign central government and local authorities will produce the fastest and most satisfactory results in the transition to a clean energy economy.

By divestment from fossil energy and reinvestment in clear alternatives, nonprofit groups, political groups, and businesses as well can pivot towards the clean energy economy though these are often more constrained by having to maintain financial viability and are highly dependent on the rule making  and infrastructure provision of all levels of government.

People on the ground, citizens, consumers, workers will also have opportunities within some constraints to pivot as well, though the progress that society as a whole makes will greatly aid individual choices.  Individuals and families will have to decide to 1) politically endorse or abide with the above pivot on international, national, regional and local levels and 2) endeavor within reason to change their own lifestyles in accord with the goal of transitioning to a clean energy society, eventually one that is ultimately sustainable in the long-term.  There have been those who only emphasize the individual level and in some way, carbon pricing advocates seem to suggest that the chief driver of change is the “pivot” or preferences of individual buyers and sellers, influenced by pricing.  The climate and energy pivot on a national or regional level will only occur if individuals as citizens and consumers are also open to turning in one way or another towards a sustainable, climate-friendly energy economy.

Monetary Sovereignty Completes the Pivot

The climate action movement, set on carbon pricing as its default policy, is still so enmeshed within the neoliberal model of social development that it fails to see the crucial role of government and the public sector at critical inflection points in economic history.  For instance, land use patterns in the United States are in part dictated by the road system built by a combination of the US federal government and state governments, based on the assumption of unlimited, cheap energy for transportation.  Settlement patterns in turn reflect this massive subsidy of sprawl and detached single family home dwellings.  While the ideal of one’s own detached home was not imposed by government fiat, the building of the US and Interstate highway systems became the infrastructure and subsidized support for what became the majority of the US housing market.  Particularly with the climate and energy challenge, besides the efforts of the fossil fuel industry and its surrogates to block action, the primary impediment to change is the energy use and lifestyle embedded in trillions of dollars worth of energy, transport and building infrastructure.

The instrument and institution of government, along with its monetary operations, is the means by which the critical changes for climate stabilization to the transport and built infrastructure of society will occur.  We cannot expect leaders of governments to do this entirely by drawing from a reservoir of pre-existing wisdom or will on their part.  Ultimately climate action movements must converge upon governments throughout the world to influence governments to institute changes to common infrastructure and the built environment, to enable the construction of structures that enable the use of sustainable sources of energy rather than fossil energy.

The neoliberal model of carbon policy, dependent on the accounting decisions of households and businesses as they respond to a carbon price, edits out both the ethical impulses of the citizenry to change government spending patterns as well as the instrument of government itself.  Climate action, to be effective, must use the functions of the public sector to reinvent and rebuild aspects of society that are causing harm to the prospects of future generations to live in a viable climate and a viable society that equitably values.

5 responses to “Required: A Complete Pivot on Climate and Energy

  1. There is (seemingly) an error in the Netherlands climate report referenced here – can someone clarify if this is the case? It states first that CO2 emissions in 2012 grew by 1.4 percent over 2011, but then corrected this to 1.1 percent due to 2012 having been a leap year. I can see that the 2012 amount would need to be corrected by 364/365 – a difference of 0.3 percent as they sate, but you wouldn’t just SUBTRACT this 0.3 percent from the 1.4 percent; instead, you would subtract 0.3 percent OF 1.4 percent from the 1.4 percent. Am I missing something?

    • Michael Hoexter

      They would subtract the 1/365th not from the increment but from the year’s total. I get that 0.3 is 1/338th of 101.4… close enough with rounding errors…

      • I actually did a mockup to be sure what I thought was right – what they should have done is multiple the 2012 figure by 364/365 (or, in other words, subtract 0.3 percent from the 2012 total) and then use that in the proportion: percent increase 2012 = (2012*(364/365)-2011)/2011, which would not change the 1.4 percent increase by much at all. I know it’s not a big deal in the context of the article (and thank you for posting it, and for replying 🙂 – it just sticks out for me if such a large government report could actually make such an error – am very open to being proven wrong.

  2. Shamefully the UK seems to be heading in totally the opposite direction, with the recent short sighted change of policy on wind energy,having just announced a total ban on anymore onshore wind. check out more UK news atGreenforce UK

  3. Dr. A. Cannara

    Good piece, Michael, I’ll send specific comments directly to you/.

    As to the UK’s wind policy change, it’s simply the proper environmental/scientific approach — wind is the least efficient form of generation and requires that a majority of its total output be backed up by fast-response systems, usually gas turbine. It also has no better construction carbon footprint than hydro, geo or nuclear, while suffering great maintenance costs and vulnerability to climate change. This is especially true for offshore wind. And, wind power’s subsidies and damage to flying species and ecology are unjustifiable.

    This Harvard meta study illustrates why wind’s poor power density will not suffice for our descendants’ future… (video, note graph axes).

    Dr. A. Cannara
    650 400 3071