“There is no favorable wind for the sailor who doesn’t know where to go”
Taxing greenhouse-gas emissions: societies with unlimited irresponsibility
Pierre CALAME, July 2019
Once upon a time, it was imagined that peak production in fossil-energy, coal, gas, and oil would soon be reached and the reduced supply would automatically raise prices, thus turning need into a virtue. Bad luck! We keep discovering new reserves and peak production will have to wait for the day when hell freezes over.
This leaves taxing greenhouse-gas emissions, conjured up ritually, with a “please note” in the next sentence explaining that this is regressive taxing affecting the poor more than the rich, so it will have to be completed with redistributive measures… that will for all practical purposes cancel the expected effect.
An article by Pierre Calame, first published in the ’Blog de Pierre Calame‘, in July 2019
‘Hey! A second elephant is entering the room, it’s called responsibility’
Well now, there’s no longer just one elephant in the room, there are two. A few weeks ago, I attended, along with part of the upper crust of economists, at the Collège de France if you please, a conference organized by the Institut Louis Bachelier. My first surprise, though not really a surprise, was a splendid graph showing that since 1990 the growth of global gross domestic product and that of fossil-energy consumption have been practically one and the same. Even scrutinizing the graph with a magnifying glass would not show the slightest inflection around the times of major global conferences such as the Earth Summit in 1992 or the Paris Agreement in 2015.
As a matter of fact, despite their declarations with hand on heart, “serious people” do not believe for a second that the way things are going can be altered and that there is any real political resolve to do so. Proof of this lies in an analysis presented, during one of the sessions, of reports of the main French life-insurance companies on their portfolio risks. Climate risk… is not even mentioned! On the other hand, there is definitely an identified reputational risk. In plain language what this means is that these portfolios are threatened, not by climate disaster but by the fact that society is starting to believe in it and might decide to frown on companies not taking this risk seriously.
After such worrisome diagnoses, one might have expected our distinguished economists to propose some drastic remedies. Alas, they are all hooked on price signal. Once upon a time, it was imagined that peak production in fossil-energy, coal, gas, and oil would soon be reached and the reduced supply would automatically raise prices, thus turning need into a virtue. Bad luck! We keep discovering new reserves and peak production will have to wait for the day when hell freezes over.
This leaves taxing greenhouse-gas emissions, conjured up ritually, with a “please note” in the next sentence explaining that this is regressive taxing affecting the poor more than the rich, so it will have to be completed with redistributive measures… that will for all practical purposes cancel the expected effect. There will be the rich, on the one hand, whose budget share for fossil-energy expenses is so small that such a price rise will be no problem at all, and on the other hand, the poor, for whom the effect of such an increase will have been neutralized. What’s wrong with this picture?
At the end of the conference, I raised just one question: Are we stupid, hypocritical, or both? The obvious answer is of course: both. The negotiable-carbon-budget-allocated-to-everyone elephant remains in the room, comfortably seated on its rear end, and still no one is seeing it.
At the end of June 2019, the French Supreme Council for the Climate trumpeted in by President Macron turned in its first report. As noted in the public report (www.hautconseilclimat.fr), successive governments set “carbon budgets” for France every four years. The 2015–2018 budget was not complied with, by any means. Direct consumption of fossil energy, not including the energy embodied in export products, decreased by 1.1% per year instead of the 1.9% set by decree, not to mention the 3% per year needed to comply with our climate-related commitments. The truth is, however, much more serious and much more hypocritical. As noted by the Supreme Council’s report, since 1995 import-related greenhouse gas emissions, called grey energy, have doubled while those related to domestic production have diminished no more than 20%. This means that the national reduction in greenhouse gas emissions is not explained by energy-efficiency efforts, it is explained by deindustrialization in France and transfer to other countries of energy-consuming production. In 2019, says the report, the total energy footprint, that is the CO2 emissions needed to maintain our current standard of living, amounts to 11 tons per person a year, while the emissions needed for the same standard of living but emitted on national territory are only 6.6 tons a year. In plain language, any energy strategy that only addresses emissions on the national territory is hastily cobbled-together policy.
Looking more closely at the reasons why the French government is not capable, and by far, of complying with the goals it has set for itself, the Supreme Council’s report underscores the public authorities’ schizophrenia; they use one hand to set energy goals while their other hand adopts a series of laws regarding just about every aspect of fossil-energy-consuming greenhouse-gas-emitting activities without the slightest reference to the overall energy goal set by the first hand. And as observed by Sylvestre Huet in an article in Le Monde dated July 3, in which he describes the report, the basis of this schizophrenia is the radical irresponsibility of parliament and the government with regard to the goals they themselves have set. He remarks that to make the Supreme Council’s proposals on climate effective, a decisive element should be added whereby the mechanical consequence for elected representatives—members of parliament, senators, president of the republic—and rulers who will have failed to reach the climate goal set by law and our international commitments would be the ineligibility of this happy crowd if by the end of the period greenhouse gas emissions have been higher than national low-carbon strategy targets.”
Hey! A second elephant is entering the room, it’s called responsibility. As I have been able to show on numerous occasions, in order to allow companies to develop, our societies invented in the nineteenth century the principle of “limited liability,” in other words limited responsibility. This is the basis of the legal status of LLCs, or Limited Liability Companies, a status that allows investors to limit their risks when they invest capital in a company. Before that, if the company’s cumulative debt was greater than the total sum of invested capital, investors were personally liable and their assets could be seized, not to mention of course prison or slavery, which had been the common lot of small farmers for centuries.
This principle of so-called limited liability, or responsibility, then spread to the whole of society. What that does is turn the sum of each player’s limited responsibilities into… societies with unlimited irresponsibility. The example of the legal irresponsibility of those who govern with regard to the goals they set then disregard is only one illustration among thousands of others of this general principle of unlimited irresponsibility.
Two elephants in the room? That’s a bit much. We shudder for the china in the shop, if any is even left. The truth, however, is that there are not two, but four of them. At the outcome of the 2001 World Citizens Assembly, we had shown that humankind was facing, in the twenty-first century, four major challenges. In fact, those were the four major challenges to which I was referring in my previous blogpost on the importance for Europe and the world of a new Age of Enlightenment. The two other elephants are: How can societies expect to face irreversible global interdependencies without being deeply aware of humankind’s common destiny, an awareness from which we are moved away by the mechanisms underpinning international relations? And how can we imagine leading systemic transitions when our governance systems are based on competences that are segmented according to governance levels and, within a given level of governance, public policies that are divided by sector? The Supreme Council’s report on climate is a good illustration of this fourth challenge.
The heading of my blog site is the statement by the philosopher Seneca: “There is no favorable wind for the sailor who doesn’t know where to go.” Failing a clear vision of these four challenges, from the local level to the global level, our sailors will be stuck forever in the Sargasso Sea. Welcome to the Raft of the Medusa.