This Changes Everything (19 page)

Given this track record, it’s safe to assume that if fossil fuel companies are going to help pay for the shift to renewable energy, and for the broader costs of a climate destabilized by their pollution, it will be because they are forced to do so by law. Just as tobacco companies have been obliged to pay the costs of helping
people to quit smoking, and BP has had to pay for much of the cleanup of its oil spill in the Gulf of Mexico, it is high time for the industry to at least split the bill for the climate crisis. And there is mounting evidence that the financial world understands that this is coming. In its 2013 annual report on “Global Risks,” the World Economic Forum (host of the annual superelite gathering in Davos),
stated plainly, “Although the Alaskan village of Kivalina—which faces being ‘wiped out’ by the changing climate—was unsuccessful in its attempts to file a US$ 400 million lawsuit against oil and coal companies, future plaintiffs may be more successful. Five decades ago, the U.S. tobacco industry would not have suspected that in 1997 it would agree to pay $368 billion in health-related damages.”
But it did.
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The question is: how do we stop fossil fuel profits from continuing to hemorrhage into executive paychecks and shareholder pockets—and how do we do it soon, before the companies are significantly less profitable or out of business because we have moved to a new energy system? As the Global Risks report suggests, communities severely impacted by climate change have made several attempts
to use the courts to sue for damages, but so far they have been unsuccessful. A steep carbon tax would be a straightforward way to get a piece of the profits, as long as it contained a generous redistributive mechanism—a tax cut or income credit—that compensated poor and middle-class consumers for increased fuel and heating prices. As Canadian economist Marc Lee points out, designed properly,
“It is possible to have a progressive carbon tax system that reduces inequality as it raises the price of emitting greenhouse gases.”
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An even more direct route to getting a piece of those pollution profits would be for governments to negotiate much higher royalty rates on oil, gas, and coal extraction, with the revenues going
to “heritage trust funds” that would be dedicated to building the
post–fossil fuel future, as well as to helping communities and workers adapt to these new realities.

Fossil fuel corporations can be counted on to resist any new rules that cut into their profits, so harsh penalties, including revoking corporate charters, would need to be on the table. Companies would threaten to pull out of certain operations, to be sure, but once a multinational like Shell
has spent billions to build the mines and drilling platforms needed to extract fossil fuels, it is unlikely to abandon that infrastructure because royalties go up. (Though it will bitterly complain and may well seek damages at an investment tribunal.)

But the extractive industries shouldn’t be the only targets of the “polluter pays” principle. The U.S. military is by some accounts the largest
single consumer of petroleum in the world. In 2011, the Department of Defense released, at minimum, 56.6 million metric tons of CO
₂
equivalent into the atmosphere, more than the U.S.-based operations of ExxonMobil and Shell combined.
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So surely the arms companies should pay their share. The car companies have plenty to answer for too, as do the shipping industry and the airlines.

Moreover, there
is a simple, direct correlation between wealth and emissions—more money generally means more flying, driving, boating, and powering of multiple homes. One case study of German consumers indicates that the travel habits of the most affluent class have an impact on climate 250 percent greater than that of their lowest-earning neighbors.
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That means any attempt to tax the extraordinary concentration
of wealth at the very top of the economic pyramid, as documented so persuasively by Thomas Piketty among many others, would—if partially channeled into climate financing—effectively make the polluters pay. As journalist and climate and energy policy expert Gar Lipow puts it, “We should tax the rich more because it is the fair thing to do, and because it will provide a better life for most of
us, and a more prosperous economy. However, providing money to save civilization and reduce the risk of human extinction is another good reason to bill the rich for their fair share of taxes.” But it must be said that a “polluter pays” principle would have to reach beyond the super rich. According to Stephen Pacala, director of the Princeton Environmen
tal Institute and codirector of Princeton’s
Carbon Mitigation Initiative, the roughly 500 million richest of us on the planet are responsible for about half of all global emissions. That would include the rich in every country in the world, notably in countries like China and India, as well significant parts of the middle classes in North America and Europe.
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Taken together, there is no shortage of options for equitably coming up with
the cash to prepare for the coming storms while radically lowering our emissions to prevent catastrophic warming.

Consider the following list, by no means complete:

• A “low-rate” financial transaction tax—which would hit trades of stocks, derivatives, and other financial instruments—could bring in nearly $650 billion at the global level each year, according to a 2011 resolution of the European
Parliament (and it would have the added bonus of slowing down financial speculation).
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• Closing tax havens would yield another windfall. The U.K.-based Tax Justice Network estimates that in 2010, the private financial wealth of individuals stowed unreported in tax havens around the globe was somewhere between $21 trillion and $32 trillion. If that money were brought into the light and its earnings
taxed at a 30 percent rate, it would yield at least $190 billion in income tax revenue each year.
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• A 1 percent “billionaire’s tax,” floated by the U.N., could raise $46 billion annually.
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• Slashing the military budgets of each of the top ten military spenders by 25 percent could free up another $325 billion, using 2012 numbers reported by the Stockholm International Peace Research Institute.
(Granted, probably the toughest sell of all, particularly in the U.S.)
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• A $50 tax per metric ton of CO
₂
emitted in developed countries would raise an estimated $450 billion annually, while a more modest
$25 carbon tax would still yield $250 billion per year, according to a 2011 report by the World Bank, the International Monetary Fund, and the Organisation for Economic Co-operation and Development
(OECD), among others.
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• Phasing out fossil fuel subsidies globally would conservatively save governments a total $775 billion in a single year, according to a 2012 estimate by Oil Change International and the Natural Resources Defense Council.
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If these various measures were taken together, they would raise more than $2 trillion annually.
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Certainly enough for a very healthy start to finance
a Great Transition (and avoid a Great Depression). And that doesn’t count any royalty increases on fossil fuel extraction. Of course, for any of these tax crackdowns to work, key governments would have to coordinate their responses so that corporations had nowhere to hide—a difficult task, though far from impossible, and one frequently bandied about at G20 summits.

In addition to the simple fact
that the money is badly needed, there are practical political reasons why “polluter pays” should guide climate financing. As we have seen, responding to the climate crisis can offer real benefits to a majority of people, but real solutions will also, by definition, require short-and medium-term sacrifices and inconveniences. And what we know from past sacrifices made in the name of a crisis—most
notably via rationing, conservation, and price controls during both world wars—is that success depends entirely on a perception of fairness.

In Britain and North America during World War II, for instance, every strata of society was required to make do with less, even the very rich. And in fact, though overall consumption in the U.K. dropped by 16 percent, caloric intake for the poor increased
during the war, because the rations provided low-income people with more than they could otherwise afford.
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There was plenty of cheating and black market profiteering, of course, but these programs enjoyed broad-based support because they were, at least in theory, fair. The theme of equality pervaded government campaigns about these wartime programs: “Fair Shares for All” was a key slogan in
the U.K, while the U.S. went with “Share and Share Alike” and “Produce, Conserve, Share and Play Square.”
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An Office of Price Administration
pamphlet from 1942 argued that rationing was part of the American tradition. “What Is Rationing?” it asked.

First, let’s be sure what rationing is not. It is not starvation, long bread lines, shoddy goods. Rather, it is a community plan for dividing fairly
the supplies we have among all who need them. Second, it is not “un-American.” The earliest settlers of this country, facing scarcities of food and clothing, pooled their precious supplies and apportioned them out to everyone on an equal basis. It was an American idea then, and it is an American idea now, to share and share alike—to sacrifice, when necessary, but sacrifice together, when the country’s
welfare demands it.
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Governments also made sure that there were very public crackdowns on wealthy and well-connected individuals who broke the rules, sending the message that no one was exempt. In the U.K., movie stars, as well as corporations like Woolworth and Sainsbury, faced prosecution for rations violations. In the United States, cases were brought against some of the largest corporations
in the country. It was no secret that many large U.S. manufacturers disliked the entire rationing system; they lobbied against it, because they believed it eroded their brand value. Yet they were forced to accept it all the same.
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This perception of fairness—that one set of rules applies to players big and small—has been entirely missing from our collective responses to climate change thus far.
For decades, regular people have been asked to turn off their lights, put on sweaters, and pay premium prices for nontoxic cleaning products and renewable energy—and then watched as the biggest polluters have been allowed to expand their emissions without penalty. This has been the pattern ever since President Jimmy Carter addressed the American public in July 1979 about the fact that “too many
of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns.” He urged Americans “for your good and for your nation’s security to take no unnecessary trips, to use carpools or public transportation whenever you can, to park your car one extra day per week, to obey the speed limit, and to set your thermostats to save fuel.
Every act of energy conservation like this is more than just common sense—I tell you it is an act of patriotism.”
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The address was initially well received but came to be derided as the “malaise” speech and is frequently cited as one of the reasons Carter lost his reelection bid to Ronald Reagan. And though he was not talking about climate change but rather a broad “crisis of confidence” against
a backdrop of energy scarcity, the speech is still invoked as proof that any politician who asks voters to sacrifice to solve an environmental crisis is on a suicide mission. Indeed this assessment has shaped the win-win messaging of environmentalists ever since.

So it’s interesting to note that the late intellectual Christopher Lasch, who was one of Carter’s key advisors on the infamous speech,
was also one of its most pointed critics. The author of
The Culture of Narcissism
had strongly urged the president to temper his message of personal austerity with assurances of fundamental fairness and social justice. As Lasch revealed to an interviewer years later, he had told Carter to “put a more populist construction in his indictment of American consumerism. . . . What was needed was a program
that called for sacrifices all right, but made it clear that the sacrifices would be distributed in an equitable fashion.” And that, Lasch said, “would mean that those most able to make sacrifices would be the ones on whom the sacrifices fell. That’s what I mean by populism.”
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We cannot know if the reaction might have differed had Carter listened to that advice and presented a plan for conservation
that began with those pushing and profiting most from wasteful consumption. We do know that responses to climate change that continue to put the entire burden on individual consumers are doomed to fail. For instance, the annual “British Social Attitudes” survey, conducted by the independent NatCen Social Research, asked a set of questions about climate policies in the year 2000, and then again
in 2010. It found that, “Whereas, 43 per cent a decade ago said they would be willing to pay higher prices to protect the environment, this is nowadays only true of 26 per cent. There has been a similar fall in the proportion prepared to pay higher taxes (31 to 22 per cent), but a smaller decline in relation to cuts in the standard of living (26 per cent to 20 per cent).”
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These results, and
others like them, have been cited as proof that during times of economic hardship, people’s environmental concerns go out the window. But that is not what these polls prove. Yes, there has been a drop in the willingness of individuals to bear the financial burden of responding to
climate change, but not simply because economic times are hard. Western governments have responded to these hard times—which
have been created by rampant greed and corruption among their wealthiest citizens—by asking those least responsible for the current conditions to bear the burden. After paying for the crisis of the bankers with cuts to education, health care, and social safety nets, is it any wonder that a beleaguered public is in no mood to bail out the fossil fuel companies from the crisis that they not
only created but continue to actively worsen?