subject: Can a dose of recession solve climate change?
posted: Mon, 25 Aug 2008 12:41:09 +0100

[An article that addresses the apparent conflict between our desire
for prosperity, and our desire for sustainability. To me, there is
no conflict, however - in the long run it's not possible to have
prosperity without sustainability, therefore, those seeking
prosperity at the expense of sustainability are chasing rainbows,
"short-termists" in the current vernacular. The article considers
only climate change, and does not address other, more serious issues
such as retention of biodiversity and resource depletion. The
article concludes by discussing the "Cap and Share" ideas of Richard
Douthwaite, which don't seem very different from the global carbon
trading system proposed by the Kyoto Protocol [1] (so I'm a bit
confused as to why the author thinks these things will never happen,
they are a certainty, and are happening already). In the end though,
no amount of laissez-faire economics is going to solve the long-term
sustainability problem we have. In the end, there seems to be only
one answer, and that is to find a new planet to live on. More detail
on that logic here:

- Stu]

Can a dose of recession solve climate change?

Subverting the growth-at-all-costs model is appealing but not
politically feasible

Larry Elliott, economics editor
The Guardian, Monday August 25 2008

Britain has just suffered its weakest period of growth since the
recession of the early 1990s. The economy "ground to a halt" in the
second quarter of the year - the worst performance since the first
quarter of 1992. The signs are that the news will get even more grim
in the second half of this year.

Note the deliberate use of language. In the world of conventional
economics, countries suffer periods of weak expansion but enjoy
spells of strong growth. When the economy fails to grow that is
axiomatically a worse performance than when it does. It is "grim"
news that Britain may fulfil the technical definition of recession -
two consecutive quarters of negative growth - in the second half of

This may strike some as a strange way of looking at things. Sure, the
global economy is slowing. But what's so bad about that? Is it, in
fact, bad news that the world economy will no longer grow at its
recent rate of 5% a year? And if the answer to that question is "no",
wouldn't it be good news if this modest retrenchment was turned into
a full-blown slump? Indeed, why stop there? Shouldn't those who fear
for the future of the planet pursue something akin to the Great
Depression of the 1930s?

It's an interesting thought. Logically, if the obsession with growth
at all costs has increased emissions to the point where rising
temperatures pose a threat to mankind's existence (as many experts
believe) then a prolonged period of slow or negative growth will
limit the damage to the environment. At the very least, it would
provide a breathing space to come up with an international agreement
on how to tackle the problem.

There are many reasons why it is not quite as simple as that. My
rudimentary understanding of the science of climate change is that
concentrations of greenhouse gases have been building up over many
decades, and you can't simply turn them off like a tap. Even a three-
or four-year 1930s-style global slump would have little or no impact,
particularly if it was followed by a period of vigorous catch-up
growth. On a chart showing growth since the dawn of the industrial
age 250 years ago, the Great Depression is a blip. Similarly,
Britain's trade deficit always comes down in recessions because
imports go down, but then widens again once the economy returns to
its trend rate of growth.

Politically, recessions are not helpful to the cause of
environmentalism. Climate change is replaced by concerns about
unemployment and stimulating growth. To be fair, politicians respond
to what they hear from voters: Gordon Brown's survival as prime
minister depends on how well his package of economic measures is
received, not on what he does or doesn't do to limit greenhouse

Looking back, it is clear that every advance in the green movement
has coincided with period of strong growth - the early 1970s, the
late 1980s and the first half of the current decade. It was tough
enough to get world leaders to make tackling climate change a
priority when the world economy was experiencing its longest period
of sustained growth: it will be mightily difficult to persuade them
to take measures that might have a dampen growth while the dole
queues are lengthening.

Those most likely to suffer are workers in the most marginal jobs and
pensioners who will have to pay perhaps 20% of their income on energy

Hence, recession does not offer even a temporary solution to the
problem of climate change and it is a fantasy to imagine that it
does. The real issue is whether it is possible to challenge the
"growth-at-any-cost model" and come up with an alternative that is
environmentally benign, economically robust and politically feasible.
Hitting all three buttons is mightily difficult but attempting to do
so is a heck of a lot more constructive than waiting for industrial
capitalism to collapse under the weight of its own contradictions.

Richard Douthwaite, author of the Growth Illusion in the 1990s, has
come up with one possible way forward, which he calls Cap and Share.
His analysis begins with three propositions - firstly that there
needs to be a ceiling on carbon emissions at their current level;
secondly, that rising oil and gas prices are leading to windfall
gains - so-called economic rents - for oil producing countries and
energy companies; and thirdly, that this redistribution of wealth
will have the same sort of detrimental impact on the global economy
and its tottering financial system as the first wave of petro-dollars
from the Opec countries in the 1970s and early 1980s.

According to Douthwaite, most oil fields were developed on the
assumption of oil prices at $20 (10) a barrel. Last year, the cost
of crude averaged $64 a barrel, and Douthwaite estimates that half of
the $1,975bn paid for oil last year was a "scarcity" rent to fossil
fuel producers. That represented a loss of income of $150 to each
person on the planet. Oil prices look certain to average well over
$70 a barrel in 2008, and at $120 a barrel, Douthwaite says oil
producers would be making excess profits worth around 6% of global

"The problem with that is that the producers are not buying and
consuming anything like that part of the world's production," he
added. "Instead, they are either lending the rent out through the
wholesale money markets or using it to buy stakes in banks or
property in heavily oil dependent countries."

Douthwaite's idea is that everybody should get their fair share of
the rent that derives from the scarcity of fossil fuels. There would
be a new world energy agency with the task of cutting carbon
emissions and it would do so by issuing permits for the amount of CO2
it believed consistent with this objective. These permits would be
scarcer than the supplies of fossil fuels, which would raise their
price. Consumers would realise their share of the economic rent from
the sale of such permits to the oil producers. People in the poorest
parts of the world, with low energy consumption, would gain most.

The proposal is certainly an alternative to the "growth-at-all-costs
model" and has definite economic attractions - the avoidance of a
slump caused by the ferocious squeeze on energy consumers. Whether it
is politically feasible is another matter. Douthwaite believes his
scheme may be considered hopelessly utopian. Sadly, he may be right.

Cap & Share: Richard Douthwaite

[email protected]


* Origin: [green] revolution through evolution -

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