Climate change do the math

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Portrait of Bill McKibben, author and activist. photo ©Nancie Battaglia

Portrait of Bill McKibben, author and activist. photo ©Nancie Battaglia

No species survives unless it is good at adapting to its environment. And environments can change very fast.

Climate change has been humanity’s wake up call. Energy is at the heart of everything we do. For centuries we have used the energy of the sun in one form or another. It was only when oil was discovered, a form of stored sunlight energy compacted for millions of years, economic growth really took off.

How dense is oil? Richard Heinberg explains that to push your car for 30 miles would take 6-8 weeks of hard labour, but you can put a gallon of petrol in your car and get there quickly for a few dollars .

We use fossil fuel energy not just to power our cars and tractors, but power our assembly lines, make our cement, plastic, pharmaceuticals and paints. As the low hanging fruit becomes exhausted, the cost of digging out fossil fuels rises and the unconventional oil, gas and coal is of not such high quality. Despite massive financial challenges, oil companies continue to forecast increases in extraction.

When climate scientist Bill McKibben first wrote in 1989 on the coming climate challenge, he didn’t foresee the pace of change. He continues to be astonished at the rapidity of loss of Arctic ice, increasingly devastation cyclones and other extreme weather events. In a talk to the Oberlin College and Conservatory conference in Ohio, After Fossil Fuels: the Next Economy, he said we now have a very limited timeframe.

Founder of the Carbon Tracker, Mark Campanale, reminded listeners that economist Nicholas Stern had estimated that to get to two degrees of warming the world needed to spend $90 trillion in infrastructure for a low carbon economy. Campanale had calculated that there is only a 50% chance of getting there in the time estimated by major governments signing the Paris Agreement using their scenarios. There is so much unburnable carbon in the reserves of oil, gas and coal companies, that even if there was no further digging or mining activity than there is now, we would still overshoot the 2 degrees.

To put this $90 trillion in investment needed in perspective, the world GDP is $70 trillion and the total value of the stock of all the companies in the world is only $60 trillion. Campanale, a sustainable investment analyst, noted that some investors are saying it will all blow over and it is cyclical. So they keep their shares in fossil fuel companies until this happens. All the oil companies and OPEC forecast continual growth of fossil fuel extraction.

Two weeks before this particular conference Bill McKibben had posted an article Recalculating the Climate Math, in which he wrote that scientists now think that 2 degrees is too much warming. Moreover burning the fossil fuels in the currently operating plants worldwide would actually bring us above 2 degrees. So the amount we can burn has to be reduced from 943 to 800 gigatons of CO2. And if we are going to get to 1.5 degrees, a goal set in Paris, we will need to close all the coal mines and some of the gas fields we're currency operating long before they are exhausted. He finishes by saying ‘And if we don’t get it right, then all of us—along with our 10,000-year-old experiment in human civilization—will fail.’

The conference also had wonderful contributions from those involved with the divestment movement.

I have watched a considerable amount of this conference on youtube. While it is great as far as it goes, it would be even greater if this movement was linked to the very exciting currency design movement and the movement to reform the tax system so that taxes come from largely from ground rents. Imagine if they knew that dual currencies can lead to innovation and prosperity if the domestic currency  is designed to decay naturally. Yes imagine them knowing that the design of the currency actually affects whether you think long term or short term. Imagine them realising that it is critical to neutralise those who oppose carbon taxes because they fear job losses and there is finally a way of getting a basic income through rent sharing and this gives them safety from redundancy. Imagine if they asked and really understood what caused the economic growth imperative and how to fix this. Imagine if they realised the political impossibility of centralised solutions to  many issues. But insofar as it goes, it has contributed heaps. And it is very exciting that the critical topic is being discussed – how to design the next economy. This is what the New Economics Movement has been doing now for a considerable time.

Deirdre Kent
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Review of Naomi Klein’s book This Changes Everything, Capitalism vs Climate

Book Review by Peter Healy, Marist Priest of Otaki

This Changes Everything, Capitalism vs the Climate by Naomi Klein, 2014, $37

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This is a comprehensive and timely book. Klein says in part one, “If there has ever been a moment to advance a plan to heal the planet that also heals our broken economies and our shattered communities, this is it.” In the introduction she says “this is the hardest book I have ever written because climate change puts us on such a tight and unforgiving deadline.”

This book is about our “climate moment” with all its challenges and opportunities. First, Klein says we have to stop looking away. We deny because we fear letting in the full reality of a crisis that changes everything. The need to change everything is not something we readily accept. If we are to curb emissions in the next decade we need a massive mobilisation larger than any in history. She quotes the Bolivian Navarro Llamos who suggests it is time for a “Marshall Plan for Earth”.

The question is posed: What is wrong with us? What is really preventing us from putting out the fire that’s threatening to burn down our collective house? The global economy always takes centre stage. Market fundamentalism has systematically sabotaged our collective responses. Our economic system and our planetary systems are at war. We are faced with a stark choice: “either we allow climate change to disrupt everything about our world or we change pretty much everything about our world to avoid that fate”. We need a radical rethink for these changes to be remotely possible.

Our “climate moment” is accompanied by what she calls a “fossil fuel frenzy”. A wild dig is going on in most nations on the planet. Aotearoa/NZ being no exception. With the “fossil fuel frenzy” Klein says, “We have become a society of grave robbers, we need to become a society of life amplifiers, deriving our energy directly from elements that sustain life. It’s time to let the dead rest.” Our most important task now is to keep carbon in the ground.

To do all this we need to be thinking differently. A new worldview is required, “a project of mutual reinvention” has to be entered into. The door to 2 degrees of warming will close in 2017. We are in the midst of a civilisational wake-up call. This call is coming to us in the language of fires, floods, droughts and extinctions. We are being called to evolve, and the thing about a crisis this big is that it changes everything.

Wealthy nations need to start cutting emissions by 8-10 percent per year. They have to begin this now. We need to consume less and get back to 1970’s levels. Low consumptions activities like gardening and home cooking are good. Changing everything means changing how we think about our economy. Large corporations dodge regulations, and they refuse to change behaviours. No company in the world wants to put itself out of business, their goal is to always expand their market share. Klein talks about addiction rather than innovation when it comes to new methods of extraction. We need to keep all the fossil fuel we can in the ground, at the same time more extreme and innovative methods are being invented to get at whats left. The madness of “extractivism” is a relationship of taking with little care being given to regeneration and the future of life. As Klein says the market economy and the fossil fuel economy emerged at about the same time. “Coal is the blank ink in which the story of modern capitalism is written.”

There are no messiahs. The green billionaires will not save us, we have to change our lifestyles. Our most intoxicating narrative is that technology will save us, and this is one of our forms of magical thinking. There are some fascinating passages about Klein going to a geo-engineering conference in the UK. She describes the attendees as, “a remarkably small and incestuous world of inventors and scientists and funders.” It is all very risky, untested and dangerous stuff that they are proposing. The solution to global warming is not to fix the world, rather we need to fix ourselves.

The book has inspiring things to say about “Blockadia”. This is a broadbased grassroots resistance movement intent on shaking the fossil fuel industry to the core. Indigenous peoples are key in the Blockadia movement, their rights can be a great gift for the revival and reinvention of the commons we all love. Bolivia and Ecuador have already put “the Rights of Mother Earth” into their national statutes. Blockadia asks the question, “How come that a big distant company can come to my land and put me and my kids at risk and never ask my permission?” The corporations come from far away and go everywhere because the fossil fuel industry is one of extreme rootlessness.

Followers of recent global climate talks are well aware of failure and deadlocks. A Greenhouse Development Framework from the Stockholm Environment Institute is an attempt to deal with disparities within and between countries claiming the rights to develop and pollute.

In chapter 13 of the book Klein talks about her attempts to have a child while researching this book. There are some lovely descriptions of Klein coming to realise that earth is facing fertility challenges of her own. Many species are now against “infertility walls” and finding it hard to reproduce. Fertility is one of the first functions to erode when animals are under stress.

The challenge for the climate movement hinges on pulling off a profound and radical economic transformation. In extraordinary historical moments “the usual category that divides “activists” and “regular people” become meaningless, the activists are quite simply everyone”.

So this book is for you and me and everyone. We are all implicated in everything this book is about, so get hold of it, read it and pass it around. As a slogan at the recent climate march in New York said, “To change everything we need everybody.”

I found myself saying to someone the other day, “If any book will push us through and beyond the Great Transition that we all have to make, then this is it!” Along with the film that Klein’s partner is making on the same subject, we can take some hope. We still have our brief window of time. We are inventive and creative. We can join with the tangata whenua as guardians of Mother Earth.

Letter to a budding politician concerned about inequality and climate change

Letter to Miriam Pierard, Miriam I listened to your radio interview with Wallace Chapman and I was very impressed.

Yes, the top issues of our time are climate change and inequality. You say you are concerned to find answers. Great news.

Gosh Miriam I have been looking to solutions to the environmental crisis for decades. I was a candidate for the Values Party in 1975. And we were saying in those days that the GDP wasn’t necessarily an indicator of progress, because we had noticed inequality then – and unemployment and deprivation. And it is still worshipped forty years later.

Late in 2012 we had a 40 year reunion of New Zealand Values Party activists. We reflected on progress and it was quite sobering. Inequality had got worse and the environment had deteriorated to the situation where our very habitat is threatened with climate change and all the storms, flood, drought and food insecurity it brings.

A year before that reunion I had helped co-found the New Economics Party. Whereas most of the Values Party seniors said they were frustrated within the Green Party, I said I wasn’t at all because I was actively engaged in finding solutions and believed I had come to understand two of the big solutions.

I know I have. The very money system we have is structured so that the money supply has to grow, debt has to grow and the economy has to grow. So when it comes to climate change talks, after all the dire warnings from increasingly alarmed scientists, we usually watch helplessly while official delegates back away, claiming that the economy mustn’t be harmed and economic growth cannot be jeopardised. “Balance” is the cry… and they come up with some puny version of what is needed.

The structural problem we have here is this. We have a monetary system where if the economy doesn’t grow, it collapses. That is how it is designed. You are damned if you do and damned if you don’t scenario. So it’s not a great choice – runaway climate change if we do nothing or economic collapse if we do something that will halt it.

So I had finally found the cause of the growth imperative. It was the money system whereby we allow banks to create money as interest bearing debt. The negative consequences would all follow. It had taken me till 2004 to realise this.

But finding the cause(s) of inequality? It has come to me in various forms over the last few years. But now it is crystal clear. The earth has a finite supply of land and natural resources – land, water, fish, electromagnetic spectrum and so on. We all can’t occupy the same piece of land. Some land is more valuable than other land. Land is given its value by the desirability of its surroundings. So those who claim monopoly use of the best land must compensate the others for the privilege. In other words pay a full rental on the land to the public purse and then let this revenue be shared with all, perhaps as a Citizens Dividend or for health and education and other government services. Add to this the rental on the monopoly use of fish stock, water, coal, oil, minerals and you get government revenue.

If we don’t charge a rent on the monopoly use of natural resources, the consequence is asset inequality and this leads to income inequality. You are always going to derive income from monopolising resources like land.

I had also realised this land issue must be solved at the same time as the money issue. When I was starting to understand the money system and advocating for money spent into existence without interest (the Reserve Bank issues its coins this way) it became clear that interest-free money would cause a rise in the price of property. That really meant a rise in the price of land. We would have a land bubble. (that is why economists wouldn’t ever agree to zero interest money; they knew the bubble consequences).

But the land bubbles only happen because freehold land originally meant land “free of rent”. Apart from a small amount as the land proportion of our rates, there is no price on the holding of land. We can see that in Auckland as speculators buy valuable sections or old houses, and sit on them while the area develops and the price rises. Without doing anything at all the land speculators get an unearned windfall gain. (And a Capital Gains Tax won’t solve it, but I won’t go into that now).

Those who have freehold land should pay the public a full rental. Any valuer will tell you they can work out the rental value of any piece of land, it’s easy. And it should be reviewed annually, otherwise there are unpleasant hikes upwards.

But is this another tax? No, it is a replacement tax. Since there is no logic in income tax because there is plenty of labour we should get rid of that. Labour and entrepreneurship are valuable and we should encourage them. GST is regressive and income tax illogical.

Now I won’t go on any more, except to say if you are seriously concerned about inequality and climate change I encourage you and your party to focus your energies on economics. Other wonderful results follow from understanding these two issues. It’s the money system. It’s the tax system.

Few economists can tell you much about how money is created and, as two economists from the IMF and three from the Bank of England have recently embarked on a campaign to teach the economics profession about bank created credit. They say the textbooks are wrong.

However politicians worth their salt will also be aware that it is political suicide to favour a third tax on land. People will protest they pay their rates and they pay their mortgage so why should they pay another? Quite right. Actually the bank is getting the money that rightfully belongs to government. It’s a challenge.

Look I don’t know how this could all be implemented without shocking the economy. I have worked out one solution. I am not sure it is right. But I do know that somehow, someone must be politically creative, politically determined and wise enough to win the public over and finally address climate change and inequality at the root. Nothing else will suffice. Artificial bandaid solutions can’t work because they don’t get to the root of the problem.

As a woman in her seventies addressing a clever young budding politician I wish you the very best and hope that you can help make a better world for my grandchildren. Meanwhile I will keep doing what I do.

An open letter to Helen Clark UNDP re climate and the economy

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Late last night I engaged with you in 140 character tweets on the topic of climate and the economy. You were expressing the strong desire that we can have economic growth at the same time as halting climate change. And I pointed out that unless and until you reform the money system you are going to get a growth imperative built into the economy.

Helen, I believe the future of life on the earth depends on people like me pointing this out to people like you. There are a great many people wanting the same thing – a thriving economy AND a liveable climate. We need it desperately.

I see that your current meeting is another high powered one. Called The Global Commission on Climate and the Economy it has on it the Chairman of the Bank of America and the former chairman of the China Development Bank, the Vice Chairman of Deutsche Bank Group, as well as someone from the International Energy Agency with the UN Special Envoy on Climate Change. Nicholas Stern is there and so is a trade union representative as well as many ex Prime Ministers.

I see the purpose of this Commission is to “analyse and communicate the economic benefits and costs of acting on climate change.”

It looks as though the plan is to go down the path of green growth, to change towards sustainable energy sources. That is what economist Nicholas Stern and many others want. It is a good goal but not enough. It is just too limited.

But that is like mopping up a leaky pipe without stopping it leaking. It doesn’t get to the core of the problem.

What the bankers on your committee won’t tell you is that the function of banks is to create money and create it as interest bearing debt. You must know that having been Prime Minister of New Zealand for nine years. The country’s money supply comes into existence every time a bank makes a loan and disappears every time a loan is paid back. But it must keep on increasing. That’s the design of it.

What you have probably never had time to find out in your busy life is that when a bank creates the principle but not the interest, there is not enough total money in the system to pay off the debt and the interest. So someone has to get another loan. This increases the money supply and the money supply can’t be bigger than the number of trades in an economy. So the economy has to grow. See the Parable of the Eleventh Round for a story to illustrate this.

That is the growth imperative. It is built in to the current dysfunctional money system. You can’t have a thriving economy without growth in this system. All the time there is pressure to grow the total number of exchanges in the economy. And it can’t be done on a finite planet. Christchurch is helping our GDP grow because it had an earthquake. The economy grows when tobacco consumption or gambling rise. The economy grows when dairy farmers pollute the rivers with their runoff. Stupid.

This is not just debt money but it is interest bearing debt money. There is a world of difference. The latter has many other damaging and negative consequences like rising debt, instability and wealth concentration.

But let’s concentrate on the growth imperative.

Over the last couple of years there have been two excellent articles written by economists from the IMF and by economists from the Bank of England. Michael Kumhof of the IMF subsequently talks at a January 2013 seminar on Financial Reform for a Sustainable Economy here. Economist and former money trader Bernard Lietaer co-author of a Club of Rome book called Money the Missing Link in Sustainability speaks at the same seminar.

Gosh it is sad. Here you are at this high powered meeting of bankers, ex and current politicians, energy experts, CEOs of multinationals seeing if you can stop climate change without damaging economies. You are trying to find a way to get a thriving post fossil fuel economy and yet you are still working blindly. The paradigm of creating money is just not within your vision. The idea of radically reforming the tax system is probably far from member’s minds. Sad.

Look around the room and think “Who among you know that if we go on blindly allowing banks to create money as interest bearing debt we are never, never going to get sustainability?” Tragic.

And whatever decisions you make at this Commission, I hope you get on to the issue of tax policies. Can we in fact have a sustainable economy while we fail to tax the monopoly use of the commons – land, natural resources and the cultural commons.

So it won’t be any use having a series of indicators on green growth (as does the OECD). They want to monitor the natural asset base. Well if there aren’t tax policies that protect that asset base that base will just deteriorate. Measuring is good, but you might as well implement tax policies that are going to protect that natural asset base in the first place.

Alert: Environmentalists must start asking questions about currency design and tax reform

Oh goodness me. I have been doing some searches on “climate action economy” and “climate change” “economic growth” and I find myself mad as hell.

Heavens where are their brains? Economists from the World Bank and IMF, Nicholas Stern and many others are talking about the topic as though the economic system is a given. Shucks. How did they really think we got into this mess? Can’t they ask themselves some basic questions?

Environmentalist Hunter Lovins is just as much to blame. She, like others, thinks that there is an economic case for climate change, but fails to look at the currency system we have and fails to look at the tax system we have. Gosh when she visited New Zealand a couple of years ago I gave her a copy of my book but she can’t have read it or she would understand that if you allow the creation of the country’s currency as interest bearing debt then you have a growth imperative built in to the whole system.

Now calm down Deirdre. Why should an environmentalist be interested in examining why there are flaws in the economic system we assume to be the only one?

Actually there is more to think about than the currency system. You also have to design a thriving low carbon economy as well and you can’t do this without addressing the fundamental change necessary to turn the tax system on its head. It is time to stop taxing labour and sales and start taxing the use of the commons. A post carbon economy will have a flowing currency, but not flowing into the overuse of natural resources. Those avenues have to be blocked. And it can’t flow into housing bubbles either. That is a no-brainer.

That is why my first e-book is going to be about climate change. Its about how currency and tax reform can save us from global warming. I am writing it now, well actually I’m researching for it now. We need a land-backed currency introduced in every single country. Comments like those from the UK Chancellor, George Osborne, after Doha in 2011 “We are not going to save the planet by putting our country out of business” are going to be a thing of the past.

As resourceful human beings, if we are clever enough to have google glass this year, we are also clever enough to start redesigning the political economy so we have both a thriving low carbon economy and we halt the death rush to a burning planet and death from drowning, starvation or drought. We can do both. We must do both. We will do both.

British Columbia has an effective and politically popular carbon tax

In October 2013 the Los Angeles Times announced that the climate change debate was over and they will no longer be publishing letters from climate deniers. Great news.

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We live in a convenient spot for family travellers so have had a lot of visitors. Between visitors I have been thinking and reading on the politics of climate change. I noticed that since I started on twitter I have gradually become more and more interested in the topic. The typhoon in the Philippines this year made us all sit up and refocus our efforts to ensure there is a liveable planet for our descendants.

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We live in New Zealand and have watched Australian politics closely. It is been blindingly obvious that a carbon tax can be a recipe for animosity and political suicide both within and between parties. But the bitterness and vindictiveness can all be avoided.

So I was very excited when I read about what had happened over the last five years in British Columbia. They have had a carbon tax since July 2008, starting at the rate of $10 a tonne and increasing every year till this year it was $30 a tonne. In contrast to Australia, the carbon tax has been remarkably successful, both from the point of view of reducing emissions and keeping the economy healthy. Strangely enough it has also kept the government in power.

Why is this? Because they have wisely made it revenue neutral. The Minister of Revenue is obliged by law to look at the tax take from carbon tax and reduce other taxes by at least as much. So it isn’t a tax grab. It is a tax shift away from taxing things you want to encourage such as work, to taxing things you want to discourage such as pollution.

Energy policy activist Charles Komanoff in 2007 co-founded the Carbon Tax Center, website http://carbontax.org. On it Komanoff has written a summary of carbon taxes in various countries and starts with British Columbia. Komanoff believes that support for a carbon tax is growing steadily among public officials, economists, scientists, policy experts, business, religious, environmental leaders and ordinary citizens.

Komanoff is an advocate of revenue neutral carbon taxes. The state does not gain tax revenue from it. James Hansen, an American adjunct professor in the Department of Earth and Environmental Sciences at Columbia University and author of The Storms of My Grandchildren also recommends a fee and dividend system where all the carbon taxes collected are returned to the people.

But what is the best method of distributing the carbon tax money to citizens? I think it is the one used by Alaska which has the Alaska Permanent Fund which pays a yearly dividend to all residents who have lived there more than a year. This system is the closest thing to a basic income guarantee that exists in the world today. It is a small, yearly dividend, financed indirectly from oil revenues, paid by the state government to every citizen who lives in Alaska — including all children.

British Columbia has implemented a carbon tax which is revenue neutral, but they would have been better to use the Alaskan method of fair distribution. We can learn from both, and bring the best of each together.

What astonishes me most about the British Columbia carbon tax is the politics. Five years ago it was implemented in 2008 by the the BC Liberal Party, the party further to the right with the most free market policies. The left leaning BC New Democratic Party wanted to repeal the carbon tax but the BC Liberal Party was re-elected in 2009 and then again in 2013. Income taxes are now down to 10% and the drop in fossil fuel use over the five years has been 17% per capita.

A carbon tax makes sense whether you are a conservative or a conservationist, Labour or National, a climate skeptic or a believer. Right and left must unite on this vital issue as the biosphere is no respecter of political views. As academic Guy McPherson says “Nature Bats Last”. It is time the left leaning parties started to understand that tax shifts are not only politically popular but essential if we are to curb climate change. Adam Smith’s invisible hand works well when people are handed a dividend. On the whole the people will spend it wisely.

Why Climate Change is such a Difficult Political Issue

TOPSHOTS-PHILIPPINES-WEATHER-TYPHOONIt has finally struck me, albeit in the middle of the night. I have been pondering why, in the face of all the evidence and despite a growing willingness on the part of all nations to address the issue, efforts to reverse climate change are so insipid. Climate change is still in the too-hard basket. Conference after annual conference never fails to disappoint us and Warsaw 2013 wasn’t much different. A Guardian commentator called Warsaw "more like a shuffling of feet".

OK what is this Road to Damascus discovery? It is to do with affordability. We are trying to add an extra tax, a carbon tax in a context of deflation, where the affordability of everything is declining. Prices are going up relative to disposable income. We are losing our purchasing power (well apart from the 1% I suppose). So it is no surprise the climate change issue is too hard for politicians. Given the choice of putting up petrol and electricity costs when their constituents are already suffering, politicians will kick for touch and argue they need a ‘balance’. Disappointment is inevitable.

Well then how do you solve this political problem? The answer is by addressing the affordability issue head on.

So let’s look at what is reducing the purchasing power of people on this planet? Why, it is the same old two culprits – the bank issued money system and the illogical tax system.

What do I mean? Well if money is issued as interest bearing debt, then interest is built into the price of all goods. How? Every car comes out of a factory whose owners borrowed money at interest from banks. Every piece of furniture, clothing and kitchen goods is manufactured where the owner borrowed money from a bank at interest to do so. Every potato, every steak, every drop of milk and every orange came from a farm whose owners were mired in debt to a bank. The cost of the bank interest is built into the price of all goods. So if we issue money without debt the price of goods relative to wages will drop. Purchasing power will increase. Affordability will improve.

Then there is the incredibly silly tax system. When we tax labour, every manufacturer or primary industry producer has to build the tax in to the price of their goods. Take off income tax and your purchasing power increases. It is the same as GST and company tax and a range of other illogical taxes.

So part of the price of all primary produce and manufactured good is the burdensome tax and the totally unnecessary interest charged when issuing money. Solve those two problems and our purchasing power rises.

Our solution of having a parallel national currency spent into existence without interest and unburdened by these deadweight taxes will dramatically give more purchasing power. Affordability will improve. See this slideshow or read this site for more on this.

So when we change the tax system away from taxing labour and sales and towards charging rents on the right to use the commons, including the biosphere, it will be politically more possible to do something significant about climate change. After all, in proposing a carbon tax, climate change activists are only asking for a regular rental on the right to use the biosphere to get rid of their greenhouse gases.

If a currency flows freely through the economy and only meets opposition when it comes up against the constraints of the commons, it will stimulate innovation in producing and manufacturing clean liquid fuels and give impetus to the whole post fossil fuel economy. The term "green growth" will transform from rhetoric to reality and innovation will thrive.