Profit-depleting agreements

Climate Change—The Facts

Global mean temperatures have increased by between 0.3 degrees and 0.6 degrees Celsius since the late 19C—global sea levels have risen by between 10 and 25cm over the past century” The 1980s were easily the warmest decade on record and exhibited an unprecedented number of extreme climatic events such as storms and droughts.(1)

Most scientists agree that these rises in the earth’s temperature have, at least partly, been caused by humans. The International Panel on Climate Change (IPCC) at a meeting in November stated that the temperature rise in the past century (a rise of about 0.5 degrees Celsius) is

unlikely to be entirely due to natural causes, and that a pattern of responses to human activities is identifiable in the climate record”(2). Their report in June stated that “The balance of evidence suggests a discernible influence on global climate.”(3) In 1990, they warned that global warming caused by a build up of carbon dioxide and other ‘greenhouse gases’ would worsen seriously unless strong action was taken to halt the rise in emissions of these gases.

According to Nature magazine,

the accumulation of carbon dioxide and other greenhouse gases in the Earth’s atmosphere means that there is a higher chance, perhaps 80% or so, that there will be an increase of average surface temperature of about one degree or thereabouts in the next half century(4)

According to a report to the 1988 conference on the subject:

Humanity is conducting an unintended, uncontrolled, globally pervasive experiment whose ultimate consequences could be second only to global nuclear war… Far-reaching impacts will be caused by global warming… as a result of the continued growth in atmospheric concentrations of carbon dioxide and other greenhouse gases. The best predictions available indicate potentially severe economic and social dislocation for present and future generations, which will worsen international tensions and increase risk of conflicts between and within nations. It is imperative to act now.(5)

Which are the ‘Greenhouse Gases’?

The single largest contributor to global warming is carbon dioxide. Rising levels of carbon dioxide in the atmosphere are cause mainly by (Deforestation) and the burning of fossil fuels. Concentration of carbon dioxide in the atmosphere by 1985 had increased 25% since pre-industrial times. If present trends continue this will increase 40% by 2050.(6)

The additional warming effect of other trace gases, especially methane, nitrous oxide, and CFCs are expected to be about equal to carbon dioxide (Ozone Depletion) .

Consequences of Global Warming

According to the UN, the consequences of global warming include the exacerbation of problems of such as drought, desertification, deforestation and soil erosion. A higher sea level would influence habitation patterns, agriculture, industry, particularly in river deltas, flood plains and other low-lying coastal areas.(7) While we cannot be sure what the exact extent of these problems will be it is generally agreed that action is needed.

Fossil Fuels and the Profit Motive

The burning of fossil fuels represents a cheaper source of energy and any attempt to ‘clean up’ this practice currently has a cost that both governments and industry have been not only unwilling but also unable to meet.

The Framework Convention on Climate Change (FCCC)

After a series of non-binding international agreements on the issue of climate change, the Framework Convention on Climate Change was established at the Rio summit in 1992. The FCCC aimed to return greenhouse gas emissions to 1990 levels by the year 2000. It was signed by 166 nations (including the EC).

An article in International Environmental Affairs warned that many of the national targets set in accordance with the FCCC were non-binding (implicitly or explicitly) and governments could retract pledges if other nations did not introduce changes commensurate with their own.(8) This warning was later vindicated:

Most industrialised nations now seem likely to miss the target, agreed in Rio, of stabilising emissions of carbon dioxide at 1990 levels by 2000. They are also under pressure from industrial and power companies to reject further cuts in emissions.(9)

Few countries have established a genuine, detailed vision of how they will reach their targets. Czech, Hungarian & Polish delegations have said they cannot predict their future emissions nor whether any policy measures to control emissions would be needed, wise or politically feasible.(10)

Oil prices have remained low, reducing the incentives for saving energy and spurring growth in the global economy. Economic barriers to reducing fossil fuel emissions have therefore remained. The FCCC itself acknowledged that measures “should be integrated with national development programmes” and should “take into account the need to maintain strong and sustainable economic growth”—hints that a conflict of interests was to be expected.

So what exactly are the costs entailed by the FCCC?

On the basis of historical responsibility and ability to pay, the net incremental costs to the North of global warming mitigation and adaptation programmes in the south has been estimated as $30bn per year.(11)

Perhaps Environment magazine is under-stating the problem when suggesting that the task of “dividing this ‘net responsibility’ among the donors and the resulting funds among the claimants is likely to be a contentious and drawn-out affair.” (Environment April 1994). Internationally raised funds for the FCCC to come from the Global Environmental Facility (GEF) were just $281 million between 1991 and 1994. Clearly, the burden was to be largely with national governments if the FCCC was to be implemented.

An IPCC report translates this cost as 1.5–2% of gross world product (GWP) (Nature 9/11/96). While the environmental lobby rightly object to the value of human life being reduced to it’s profitability it seems that it is this profit—oriented logic that is all too visible in the aftermath of the FCCC and it’s failure.

Anyone doubting the conflict between profits and the environment should take a look at America where the vested interests of the coal, oil and electricity industry set up the Global Climate Convention in 1989. Its role is

to coordinate business participation in the scientific and policy debate on the global climate change issue

– in other words, to ensure the protection of their interests. Alternatives to fossil fuels are not employed on any wide scale today because they would add to production costs and so are ruled out by the economic laws of capitalism. Governments and industry have been not only unwilling but also unable to meet targets that have been set to reduce their use. This is borne out by the outcome of two international attempts to achieve a clean up—the FCCC and the failed European carbon tax.

European Carbon Tax

One suggested means of restricting carbon dioxide emissions has been a carbon tax. The European Commission have discussed the possibility but refrained from implementing it due to concern about how it would affect their international competitiveness. The European Union (EU) would certainly look to other member nations of the Organisation for Economic Co-operation & Development (OECD), particularly the US and Japan, to also implement such a tax.

Some have argued that while countries with a carbon tax or energy tax need not be worse off relative to nations without a tax, they admit that particular industries would still be resistant to the policy. Lobbyists from these industries could still prevent governments agreeing to the policy (International Environmental Affairs 6.1). Most studies have concluded that the tax would adversely effect the competitiveness of some countries. The US, among the major economic powers, would experience the greatest loss from such a tax. Domestic coal reserves provide more than 56% of US electricity.

If forced to reverse this situation, the US economy would probably suffer, and become more vulnerable to severe energy shocks. Certain US regions that rely disproportionately on coal could be severely affected.(13)

Furthermore, the US, as well as Canada and Australia, may be naturally pre-disposed by geography and natural resources, to a certain degree of specialisation in energy- intensive industrial goods—thus the competitiveness of its exports would be harmed:

The perceived effect that unilateral and even multilateral actions to mitigate GHG (greenhouse gas) emissions would have on the international competitiveness of a country’s products, as well as specific action and regions, has clearly become the overriding concern for OECD governments.(14)

An international agreement involving nine countries was reached during the early 1990s. They pledged to bring sulphur dioxide emissions down to less than half their 1980 levels by 1995. Austria, Sweden and the Federal Republic of Germany were committed to reducing them by two thirds. On nitrogen oxides, twelve West European nations agreed to go beyond the freeze and reduce emissions by 30% by 1988. The high costs involved have worked against adoption of a programme of retrofitting existing combustion facilities. (Germany, Japan, Netherlands, Sweden, Denmark and the UK all adopted programmes requiring major retrofit investments.)

At a recent meeting, 15 EU states concluded that the negotiations were not advancing as needed, if objectives are to be met. Predictions for 2000 vary from a 3% rise in global temperatures to a 1% cut. A 50% cut would be needed of over 2C in global temperatures is to be avoided.