5th Feb, 2009

An historic opportunity being missed

Looking at the way in which world leaders, including Australia’s, are attempting to deal with the global economic crisis, one might be forgiven for wondering whether an outbreak of split-brain has occurred.

There seems to be no difficulty among them–or indeed among economic commentators– in separating the two global crises, economic recession and climate change, as though they operated in independent domains.  Yet it is very clear that both their causes and solutions are intimately connected.  To ignore this fact is to place the world in far greater peril than a global depression.

It’s clear, to begin with, that both crises have their roots in unrestrained consumption.  There is a worldwide preference, it seems, for characterising the economic crisis as a production of Wall Street.  So it is, in part; but the deeper roots have to do with patterns of consumption.  The US produces 25% of the world’s production, and consumes 35%.  This debt is largely funded by foreign capital.  Across the world economy as a whole, the debt:asset ratio is somewhere between20:1 and 30:1–it is impossible to be more specific than that, because of the depth of hidden leveraging.  This unsustainable debt funds unsustainable consumption.  There is something lemming-like in the world-wide panic to stimulate consumption as a means of ending the economic crisis–outdated Keynesian thinking which has little to do with the realities of the modern world economy.  There are serious structural problems in the world economy which are driving the crisis.  These will only be exacerbated by such a strategy.  Any recovery under such conditions can only be short-lived.  And no political leader seems able to recognise this relatively simple truth and act accordingly.

It is abundantly clear, too, that unsustainable consumption, both in volume and kind, is at the root of global climate change.  As argued in previous posts, the refusal to acknowledge this reality has lead to a strategy of energy supply at any cost to meet the challenge of climate change, rather than a strategy to manage demand–an approach which leads to such bizarre outcomes as the revival of nuclear energy as a ‘green’ strategy designed to provide the energy requirements of this unsustainable consumption.

It follows that stimulating consumption, even if it did reestablish the balance of the growth economy (which is highly doubtful), is a bad strategy for the global biosphere unless the energy underpinnings of the economy have been comprehensively restructured around renewables.  The current solution which seems to have been adopted by the world’s governments is a high carbon solution, which is no solution at all–more a massive compounding of the problem.

The irony is that, prior to the economic crisis, there was very little little likelihood that any government would commit to the comprehensive funding needed to move an economy from a high carbon to a low carbon state.  One of the strange outcomes of the economic crisis is that suddenly this funding is available.  Hundreds of billions of dollars have been borrowed to put into the world economy, mainly to stimulate the economic activity needed to save and perhaps generate jobs, which are at the heart of the political agenda.  This offers an historic opportunity to restructure economies to low carbon configurations, an opportunity which currently is largely, and incomprehensibly, being missed.

Most of the emergency funding is being directed to public works–here in Australia, predictably (given our obsession with cars) to roads, also to school and other building. But the emerging threats of climate change demand a fundamental principle: every policy must be viewed through the prism of climate change.  The embedded energy in road construction is very large, as are the emissions from the larger number of cars which will drive on them, with all their embedded energy.  Schools need buildings, but only if they are green buildings, constructed with a focus on materials and design that reduce energy and emissions.  It doesn’t seem, on the face, of it, that this is difficult to understand.

Let’s take this kind of thinking further.  Why not direct this windfall, generously provided by the economic crisis, to precisely the kind of economic restructuring that combating climate change requires?  Why not provide massive injections into research and development of renewable energy sources, into retrofitting houses (far beyond the subsidies for roof insulation proposed by the Australian government), into developing cheaper electric and hybrid cars, into improved and expanded public transport, into large-scale reafforestation programs, into phasing out and restructuring high emission industries, and so on?  These initiatives will still generate jobs; but in new sectors that represent the emerging low carbon economy that is so urgently required–jobs saved or created in high carbon sectors are are on borrowed time.  It’s difficult to see anything but gain all round by taking this path.

Rather paradoxically in this global recession the world has been given the opportunity to draw breath–literally, as lower levels of global economic activity also lower emissions–and to embark upon the reconstruction of national activity, at all scales, that is the only practical way of achieving the kinds and levels of emissions reductions that can have any chance of slowing dangerous climate change.  Not to take this opportunity up would represent a dereliction of intelligence and courage by this generation of leaders that the majority of the world’s population, now and in the future, will not forgive.

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