Capitalism can save the planet

November 30th, 2010 by Philip Stephens

Not so long ago governments around the world stepped in to rescue capitalism. It’s time for capitalism to repay the favour by turning its mind to saving the planet. Politicians, you see, have just about given up.

The only vaguely encouraging thing to say about next week’s Cancun climate change gathering is that expectations have been set so low the negotiators will struggle not to exceed them. The UN-led search for a global accord to replace the Kyoto protocol has stalled.

Before this month’s midterm elections the prospect of the US Congress passing legislation to put a price on the noxious gases pumped into the atmosphere by the world’s most profligate energy consumer was remote. The Republicans’ gains have rendered it non-existent.

For Sarah Palin and her pals, man-made global warming is nothing but a “bunch of snake oil science”. Even if America’s enthusiasm for the Tea Party movement begins to cool (let’s hope so), it would be 2013 at the earliest before Washington could offer a bankable commitment.

The US is not alone in its complacency. European politicians still speak the language of a global concordat to limit the expected rise of the planet’s temperature to 2 degrees centigrade. But these solemn pledges are offered in the reassuring knowledge that the US is absolving Europe of the obligation to act.

The European discourse of green growth has been elbowed aside by a preoccupation with austerity and debt. Britain’s David Cameron once ventured to the Arctic to signal his embrace of a low-carbon future. These days the subject is lucky to rate a sentence in parenthesis in the prime minister’s speeches.

During the good times governments were expansive about their stewardship of the planet for future generations. Such high-minded principle has fallen victim to recession. The politicians worry that voters faced with falling incomes and fading job prospects will be less than receptive to the idea of making sacrifices for their grand-children.

As for the world’s rising states, the recent summit of the Group of 20 leading economies in South Korea was a reminder not only of how rapidly power has been flowing eastwards, but also of how jealously the new powers guard their national sovereignty. They are unwilling to sign up to a script written in the west. As with exchange rates, so with climate change: encounters between Washington and Beijing usually end in recriminations.

One answer would be simply to give up – to concentrate on mitigating the impact of a warmer planet rather than imagine the process can be halted. After all, if the world’s two most powerful nations cannot agree, what hope is there of the other 190 signing up to a legally binding clean energy accord?

It is too early to take this leap from denial to despair. Pace the climate change deniers, the prospective costs, economic and human, of allowing temperatures to rise by much above 2 degrees far outweigh those of preventative action. And, as it happens, even amid the present gloom, there are one or two glimmers of hope.

This is where capitalism comes in. The top-down, everyone-in, all-or-nothing approach to climate change may have faltered, but things are still happening on the ground. The effort is being nationalised; and economic incentives are replacing the big stick of international direction. Altruism, never the strongest motivator, is making way for a more powerful self-interest.

You can see this in Asia and Latin America. Even as they disdain the west’s demands that they cap emissions, the rising powers have begun to recognise what they have to lose. One of the many unfairnesses of climate change is that while rich nations have been responsible for putting most of the carbon into the atmosphere, less developed countries will be the first to feel the consequences.

China and India are among those who have recognised their vulnerability to rises in sea levels and glacial melting. The UN climate change panel may have been a couple of hundred of years out in its first prediction of the disappearance of the Himalayan ice cap. But the ice is melting, threatening the ecologies and economies of the world’s two most populous nations.

China’s hope, expressed in its latest five-year plan, is to marry more sustainable growth at home with competitive advantage abroad. Earlier this month, I heard a policymaker from Beijing map the thinking behind the plan. One of the messages was that China intends both to clean up its environment and turn a profit in the process.

By 2015 it plans to be producing high-specification engineering equipment every bit as sophisticated as the stuff it now buys from Germany or Japan. In some areas it wants to leap ahead. One of these will be low-carbon technology. It seems only yesterday that western manufacturers were talking about setting the environmental standards for Chinese industry. Now China is thinking about eating their lunch.

The Indian government likewise is taking a different tack. Jairam Ramesh, the country’s outspoken environment minister, describes the hang-the-consequences American economic model as a recipe for national and global disaster. The rise of new middle classes is prompting governments in these countries to think hard about environmental costs. The wealthier you are, the more clean air matters.

A marriage between self-interest and market opportunities is not enough. It requires governments – not least in Europe – to show that they still intend to put a serious price on carbon. Business requires incentives to recognise the economic opportunities in low-carbon technologies. In the US, the case can yet be made in terms of reducing dependence on imported oil and building new green industries.

The negotiators in Cancun need not abandon the quest for a global treaty. Rather, they should recognise that there is plenty to be done between now and then. Green politics has too often sounded like the politics of misery. Better to frame it as about money and jobs.


This commentary was published originally in the Financial Times on 25 November 2010.

Philip Stephens is a commentator and author. He is Associate Editor of the Financial Times where as chief political commentator he writes twice-weekly columns on global and British affairs.

1 Response to “Capitalism can save the planet”

  1. global warming estimates

    With capitalism fraught by the calamitous vulnerabilities underlying the catastrophic consequences of Enron, Arthur Anderson, Worldcom, AIG, Goldman Sachs, Bernie Madoff, Countrywide, Citizens United, how do you see it saving the planet?

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