Week 52: Degrowth or a Green New Deal? Or both?

In this issue: ▸ A Green New Deal without growth? ▸ A narrative to replace neoliberalism ▸ Why are we not panicking?! ▸ Meanwhile in Exxon ▸ ... in Asset Management ▸ ... in Norway ▸ And more

Dear all, 

This week, toward the end of this very perilous, heavy, dreadful year, we start with some positives!

But first, I need to mention neoliberalism. The word has become a rhetorical weapon. But it properly names the reigning ideology of our era, one that venerates the logic of the market and strips away the things that make us human.

We’re witnessing a battle of narratives, and this battle will dominate next decade of development on planet Earth.

A Green New Deal without growth?

The IPCC warns that in order to keep global warming under 1.5°C, global emissions must be cut to zero by 2050.

Policymakers and scholars debate how best to decarbonise the energy system, and what socio-economic changes might be necessary. In this article, the authors review the strengths, weaknesses, and synergies of two prominent climate change mitigation narratives: the Green New Deal and degrowth.

Green New Deal advocates propose a plan to coordinate and finance a large-scale overhaul of the energy system. Some see economic growth as crucial to financing this transition, and claim that the Green New Deal will further stimulate growth.

By contrast, proponents of degrowth maintain that growth makes it more difficult to accomplish emissions reductions, and argue for reducing the scale of energy use to enable a rapid energy transition.

The two narratives converge on the importance of public investments for financing the energy transition, industrial policies to lead the decarbonisation of the economy, socializing the energy sector to allow longer investment horizons, and expanding the welfare state to increase social protection.

The authors conclude that despite important tensions, there is room for synthesizing Green New Deal and degrowth-minded approaches into a ‘Green New Deal without growth’. 

A narrative to replace neoliberalism

In the above mentioned article you can not only read about the two narratives. It also describe how these narratives can be converged.

We need this discussion more than ever before. Why? Because the operating narrative has not changed at all, and we are the only ones who can change it.

Over the span of the past three to four decades, free market economic policies have been sold to or pushed upon every society on the globe in some way, shape, or form.

The upshot of this has been a world system structured in terms of a vast shift of power and resources from government to private enterprise. A dwindling civic life replaced by rising consumerism. An emerging oligarchic rentier class, large segments of population faced with meagre material conditions of existence and few prospects of socio-economic mobility. And a looming sense of a near future dominated by further economic collapses and mounting social strife.

In this piece from IMF, you can read more about the neoliberal narrative.

Why are we not panicking?!

Somehow something in all of this does not add up. Do we not know how dangerous the climate emergency is? Or is it because we are not yet feeling the deadly cold and deadly heat slowly sweeping in into all segments of our life?

It is strange and almost incomprehensible that we are not panicking.

Some of the most alarming science surrounding climate change is the discovery that it may not happen incrementally – as a steadily rising line on a graph – but in a series of lurches as various “tipping points” are passed.

And now comes a new concern: These tipping points can form a cascade, with each one triggering others, creating an irreversible shift to a hotter world.

A new study suggests that changes to ocean circulation could be the driver of such a cascade. Politicians, economists and even some natural scientists have tended to assume that tipping points in the Earth system – such as the loss of the Amazon rainforest or the West Antarctic ice sheet – are of low probability and little understood.

Yet evidence is mounting that these events could be more likely than was thought, have high impacts and are interconnected across different biophysical systems, potentially committing the world to long-term irreversible changes.

I have read many, many reports and viewed so many different scenarios over the last 20 years. But this one makes most of what I’ve read seem light-weight in terms of impact.

Meanwhile in Exxon…

While all of this is happening it’s been revealed that Exxon Mobil Corp. had plans to increase their annual carbon-dioxide emissions by as much as the output of the entire nation of Greece, an analysis of internal documents reviewed by Bloomberg shows.

News reports on the oil giant’s internal planning data revealed Exxon’s overall forecast for rising emissions through 2025. These documents showed that Exxon had previously projected to increase annual emissions by as much as 17%. Almost all of the industry’s public climate accounting is retrospective and seldom breaks out details on specific projects.

What’s more, Exxon’s planning documents reference previously undisclosed forecasts related to at least 10 major oil and gas companies who are its partners in dozens of projects — a clear indication that tracking future emissions is standard practice across the industry, even if these numbers aren’t always made public. Read more.

Internal planning documents reviewed by Bloomberg Green dating from before the pandemic show forecasts for direct emissions at Golden Pass in Texas that would equal 3.1 million metric tons of carbon dioxide in 2025.

That means the crown jewel of Exxon’s U.S. LNG export business would have about the same climate impact as a coal power plant, just based on the sheer amount of energy it takes to compress natural gas into a liquid for shipment. Transporting and burning the exported fuel would emit even more. Read more.

Meanwhile in Asset Management…

And while all of this is happening, some of the leading Asset Management houses in the world invest in Exxon and others and call it ‘Sustainable Investments’. This is so bad, very bad for this entire industry which has been struggling since 2008 to reinstate its credibility as a member of human collective.

In an analysis, the think tank Common Wealth probed more than 10,000 UK-registered funds and found that of the 33 marketed with a specific climate or low-carbon theme, 12 held oil and gas producing companies. Three were invested in Exxon.

Their report said: “Even for an actively managed fund, which might argue it aims to change the behaviour of carbon-intensive companies that it owns, Exxon Mobil seems an unlikely candidate for effective engagement.” Read more.

Meanwhile in Norway…

And while all of this is happening, here’s another example of the “business as usual” narrative in action:

On Tuesday, Norway’s Supreme Court rejected an effort, based on the country’s constitutional right to a clean environment, to invalidate licenses for new oil exploration in the Arctic, allowing drilling to continue and signalling to environmental groups that it would not interfere in climate politics.

In its decision, the court ruled 11 to 4 in favour of the state, a victory for Norway’s formidable oil industry.

The court concluded that a set of oil drilling permits in the Arctic, given in 2016, were not in breach of either the Norwegian Constitution’s right to a clean environment or the European Convention on Human Rights. The judges said that the right to a clean environment did not bar the government from drilling for offshore oil, and that Norway did not legally carry the responsibility for emissions stemming from oil it has exported.

If the environmental groups had won, then the ruling potentially could have upended petroleum policy in Norway, which has benefited from the oil industry while also setting ambitious climate change goals for itself.

Scandinavia is already feeling the effects of climate change: In the last decade alone, warming has produced milder winters, and in a half century, the region’s climate is forecast to move toward that of northern France, experts say.

You can ask yourself: If this can happen in Norway then what will happen in many other countries heavily dependent on oil for their GDP. Read more.

There’s also this interview with myself in a Norwegian daily (in Norwegian) about the financial risks associated with climate change – and about the climate trajectory for Norwegian companies. Read here.

O Sweden! My Sweden!

When in Norway, why not look east towards the kingdom of Sweden? The home of Greta, ABBA and IKEA. And the home of missed environmental goals. As it turns out, of the 16 environmental goals set by the Riksdag in 1999, only one has been achieved.

When the goals for Sweden’s environmental work were adopted, the hope was that they would have been achieved this year. In 2020. But only the goal of protected ozone layers has been reached, according to an evaluation by the Swedish Environmental Protection Agency. Read more.

Sweden is a country of big words. But when it comes to action, well, in this space we are pretty much the same as most of the others around the world. 

The climate crisis is also urgent

While coronavirus is understandably treated as an imminent danger, the climate crisis is still presented as an abstraction whose consequences are decades away.

Unlike an illness, it is harder to visualise how climate breakdown will affect us each as individuals. Perhaps when unprecedented wildfires engulfed parts of the Arctic last summer there could have been an urgent conversation about how the climate crisis was fuelling extreme weather, yet there wasn’t.

In 2018, more than 60 million people suffered the consequences of extreme weather and climate change, including more than 1,600 who perished in Europe, Japan and the US because of heatwaves and wildfires.

Mozambique, Malawi and Zimbabwe were devastated by cyclone Idai, while hurricanes Florence and Michael inflicted $24bn (£18.7bn) worth of damage on the US economy, according to the World Meteorological Organization.

Together we can change the rules to make the economy work for everyone. It is our choice.

Listen to the Weekly Economics Podcast

We end this week with a recommendation. You should listen to the Weekly Economics Podcast by New Economics Foundation. So far it’s been listened to by 1.8 million fellow humans.

Here’s the link – and it does give hope! 

All the best and stay safe! 

Best regards, Sasja