Democracy in the Pits is a two-part series outlining the tarnished reputation of Canada's mining sector and the Harper government's role in supporting it. Read Part 1: The Corrosive Effect of Canadian Mining Companies Worldwide.

When your industry finds itself faced with a deteriorating reputation after its harmful practices have been exposed to the world, you have two available courses of action. The first is the honorable route: take the concerns of the public seriously, listen to the relevant experts, and figure out how to fundamentally change the way you do business. Admitting your mistakes and putting an end to your violent or unscrupulous behavior may be the first step to recuperating your standing in the community, even if damaged trust does take a long time to rebuild.

The second option is damage control. Rather than accept the fact that social, environmental and economic justice may pose legitimate constraints on your industry’s profitability, forge ahead with business as usual while trying to manage public opinion. This can be accomplished in a number of ways, ranging from discrediting your detractors to devising a flashy but shallow community engagement campaign, changing the style but not the substance of your actions.

Both of these responses fall under the rubric of corporate social responsibility. But while the first takes seriously the idea that a company requires a social license to operate, and has duties to the human community beyond earning a profit for its shareholders, the second only sees unprofitable distractions and collateral damage.

When a 2005 parliamentary report and a report compiled following the 2006 Corporate Social Responsibility Roundtables recommended that a tough legal framework be established to govern the conduct of the extractive industry, Canadian mining companies decided to band together to pursue the second option. Although the evidence clearly showed that their business model was displacing communities, poisoning water supplies and often resorting to organized violence to suppress dissent in developing countries, the mining sector felt that any kind of binding legal sanctions to clean up the industry would impose an unfair burden on their business.[view:in_this_series=block_1]

Following through on the policy recommendations detailed in the two reports would have meant taking real action to clean up the industry. It would have meant that the people responsible for committing criminal abuses including murder and rape would face justice. Since new regulations would have affected all Canadian mining companies equally (and since over 75% of the world’s mining companies are based in Canada), a new binding legal framework would have ensured a level playing field.  

International Development as Damage Control

But rather than take the reports’ conclusions to heart, members of the mining industry initiated a series of meetings with representatives from the non-profit sector, which would eventually culminate in the formation of a group called the Devonshire Initiative. The aim of the collaborative effort between these two unlikely partners was to forge an alternative to the framework recommended by the two reports, particularly by engaging the government as a partner rather than as a rule-enforcing authority. According to the organization’s website, “The objective of the Devonshire Initiative (DI) is improved social and community development outcomes wherever Canadian mining companies operate overseas.”

Devonshire Initiative companies operate in all countries shaded blue. From the Devonshire Initiative website.

The DI counts a number of high-profile companies and NGOs among its members. On the NGO side, the membership includes World Vision Canada, Save the Children Canada and Engineers Without Borders Canada. On the corporate side, mining heavyweights Barrick Gold, Goldcorp Inc. and Rio Tinto Alcan have all signed on.

At first glance, the premise sounds like it could have some potential. Since mining companies are naturally competent in the field of resource extraction, and development NGOs have on-the-ground expertise leading community projects in developing countries, bringing the two together should help to resolve some of the problems plaguing overseas mining operations. Yet there is a conspicuous lack of discussion of accountability or legal frameworks—in other words, the responses necessary for dealing with rampant criminality and environmental destruction.

When it comes to any discussion of the problems that the DI was formed to address, the language is kept vague and corporate. We are told that, “There is increasing dialogue around corporate social responsibility and best practices in sustainable community development.” There is brief mention of the “complex problems facing mining and development.” In a final flourish of high-gloss rhetoric, readers are assured that, “The realities of mining’s impact in Canada and overseas, combined with the silos of knowledge and experience, all suggest an opportunity to “do mining better,” together.“

Building the Canadian Advantage 

All of this would fall somewhere between relatively harmless and potentially beneficial if it were the mining companies themselves who would be footing the bill for their planned collaboration with development NGOs. They were riding high on an unprecedented commodities boom at the time the DI was conceived, so adequate funding was hardly an issue. But the members of the DI opted to lobby the Canadian government to provide them with funding and support through the Canadian International Development Agency (CIDA). Mining companies wanted money that was earmarked as official development assistance (ODA) to fund their corporate social responsibility initiatives on the ground, all without submitting to any new rules or regulations.

As outlandish as the idea sounds, the Devonshire Initiative’s preferred approach to extractive industry governance found a sympathetic ear in the Harper government. In a 2009 report entitled “Building the Canadian Advantage: A Corporate Social Responsibility (CSR) Strategy for the Canadian International Extractive Sector,” the Harper government outlined a policy that would allow CIDA to engage in development projects that directly benefit the mining industry.

According to Catherine Coumans of MiningWatch Canada, “This strategy provided policy cover for the first time for the government to put ODA directly at the disposal of the extractive sector.”

CIDA rolled out its new vision of development with $6.7 million in funding for three pilot projects that brought together mining companies and development NGOs: World Vision and Barrick Gold in Peru, World University Service of Canada and Rio Tinto in Ghana, and Plan Canada and IAMGOLD in Burkina Faso. On top of this was a $20 million fund for a program called the Andean Regional Initiative for Promoting Effective Corporate Social Responsibility, a development fund focused on the Andean region.

But the fund came with a catch: NGOs could only apply for projects if they were partnering with a mining company.

Canada Aid Exits World Stage

If these projects sound like the beginning of the end for an agency whose explicit mandate is poverty reduction and support for international development, that’s because they were. In 2013, omnibus budget Bill C-60 legislated the end of CIDA as an independent agency, folding it into the Department of Foreign Affairs and International Trade to create a new hybrid department: the Department of Foreign Affairs, Trade and Development (DFATD).

Under the newly created DFATD, decisions about how to utilize Canadian developmental assistance are now subject to one overarching criterion: their relevance to Canada’s commercial interests. But even before the official merger, CIDA had produced a report called “Reviewing CIDA’s Bilateral Engagement,” which prioritized countries with natural resources or significant Canadian investment potential as top destinations for development assistance.

Excerpt from the report "Reviewing CIDA's Bilateral Support." Note the mention of Canada's extractive industries listed first under 'Canadian Interests.'

With Canada's international standing already in freefall thanks to moves like Harper's withdrawal from the Kyoto Protocol and the UN Convention to Combat Desertification, the new direction in Canadian aid spending only makes matters worse.

As CIDA founder Maurice Strong put it in a Globe and Mail editorial, "The commercialization of our development funding further discredits Canada's commitment to supporting the progress of developing countries." 

In flagrant contravention of the Official Development Assistance Accountability Act that came into effect in 2008, as well as the 2005 Paris Declaration on Aid Effectiveness, Canada no longer takes poverty reduction and the perspectives of the poor as the primary factors to consider in choosing how to implement development funds. Instead it comes down to naked, cynical self-interest, a point the Conservatives have tried to sell as common sense. After all, why would we spend Canadian money overseas unless it brings direct material benefit to Canadians?

The problem is, the only “Canadians” who benefit from DFATD’s Orwellian redefinition of what constitutes development assistance are the mining companies and their shareholders. The very same companies who have been accused of egregious crimes in developing countries now receive free community engagement services from the government. They haven’t changed their business practices, and they aren’t constrained by any new laws. But they now receive extensive subsidies to pursue corporate interests.

In a time of generalized austerity, when ideological attacks on labour unions and public health care endlessly repeat the message that there isn’t enough money to pay for a decent standard of living for all Canadians, the public money to subsidize some of Canada’s wealthiest corporations is readily available.

And the generosity shows no signs of slowing: $25 million in federal funding for the new Canadian International Institute for Extractive Industries and Development (CIIEID) is only the latest example of the Harper government paying to improve the image of mining companies.

Just as the resource curse works to keep countries in the developing world trapped in poverty, so does the wealth and power of the Canadian extractive industry corrode our democracy.

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Democracy in the Pits is a two-part series outlining the tarnished reputation of Canada's mining sector and the Harper government's role in supporting it. Read Part 2: How Canada Uses Foreign Aid as PR for Mining Companies.

In a recent article chronicling the demise of Canadian social democracy at the hands of the Harper Conservatives, Marianne Lenabat draws an important comparison: what the financial sector is to the United States, so are the extractive industries to Canada. The similarity isn’t just about the two sectors’ relative size or contribution to GDP, although it starts there. It’s about how each country’s respective darling industry has come to dictate government policy, even when the social harm they inflict far outweighs their economic benefits.

In both countries, the same platitudes are trotted out to justify the government’s helpless devotion: The industry is vital to the economic health of the nation. It leads the world in innovation. It creates the jobs we need to build communities of hard-working families. 

In the United States, where a frenzy of speculation in the housing market spawned a global economic crisis that continues to ravage the world, the government love affair with Wall Street shows no signs of faltering. The big banks were bailed out with no significant strings attached, and the stock market is now back to record highs.

In Canada, the extractive industries enjoy a similarly cozy arrangement. The government spies on activists and meets with corporate executives to help ensure the speedy implementation of pipeline projects. The oil sands are given the green light for massive expansion, despite the indisputable fact that we need to immediately phase out fossil fuel extraction if we want to continue to enjoy a climate that remains hospitable to human life.

Just as the destructive reach of Wall Street is felt around the world, so does the impact of the Canadian extractive industries exceed the nation’s borders. The informal ambassadors for the Canadian way of life are no longer roaming around Europe or Southeast Asia with maple leaves sewn onto their backpacks. They’re hard at work on massive extractive projects in Central America and Sub-Saharan Africa, where the Canadian government has begun to use its foreign aid apparatus to provide crucial support in dealing with local opposition.  

Although the oil sands tend to monopolize our attention, nowhere is the unhealthy relationship between the Canadian government and the extractive industries more visible than in the toxic mix of foreign and economic policy surrounding the mining industry.[view:in_this_series=block_1]

Over the course of its tenure, the Harper government has subordinated both domestic and foreign policy to the mining industry, undermining Canadian democracy at home and damaging the nation's credibility abroad.

Canadian mining assets.

Canada is the Miner of the World

While most people have at least heard of Canadian mining giants like Barrick Gold, what is less well known is the extent to which the global mining sector has its roots in Canadian soil. The statistics are quite surprising: more than three-quarters of all the mining companies on the planet have their headquarters in Canada.

A 2009 report by the Department of Foreign Affairs, Trade and Development summarizes Canada’s dominance:

“Canadian financial markets in Toronto and Vancouver are the world’s largest source of equity capital for mining companies undertaking exploration and development. Mining and exploration companies based in Canada account for 43 percent of global exploration expenditures. In 2008, over 75 percent of the world’s exploration and mining companies were headquartered in Canada. These 1293 companies had an interest in some 7809 properties in Canada and in over 100 countries around the world…Canadian mining companies have invested over $60 billion in developing countries, including about $41 billion in Latin America (including Mexico) and almost $15 billion in Africa.”

It’s no accident that the vast majority of the world’s mining companies are based in Canada—they’re here for a reason. According to a Vice interview with Jamie Kneen, research coordinator at MiningWatch Canada, the preponderance of Canadian companies in the global mining sector can be partially attributed to a high degree of homegrown expertise in services related to the mining industry, particularly in law and finance.

But the more compelling explanation is simple: Canada is a comfortable place for mining companies to do business. As Kneen explained to Vice, it’s easy to get listed on the Toronto Stock Exchange, disclosure requirements aren’t overly demanding, and the Canadian government doesn’t subject companies to too much pesky scrutiny about their activities in foreign countries.

The Dark Side of the Commodities Boom

The first decade of the 21st century was a great time to be in the mining business. Driven by a combination of increasing demand for raw materials from the rapidly growing BRICS economies and speculative hot money looking for high returns after the dot-com bubble burst, commodities underwent a decade-long boom that saw prices soar to unprecedented levels all across the board. All commodities, from wheat to uranium and everything in between, were affected by the massive price increase.

Between 2001 and 2011, the price of gold rose by 528%, silver 1130%, copper 666% and platinum 435%, to name but a few examples.  

Price of gold from BuisnessInsider.

With such a disproportionate share of mining companies flying the Canadian flag, good times for the industry meant good times for Canada. But as the decade wore on, the social costs of the mining boom became increasingly difficult to ignore. Canadian mining companies were being implicated in a range of flagrant human rights and environmental abuses around the world.

The litany of offenses is too long to catalogue, and ranges from involvement in gang rapes and massacres of anti-mining activists to the poisoning of crucial water sources for rural communities. It includes the 2009 murder of Guatemalan community leader Adolfo Ich Chamán by security forces employed by CGN, a subsidiary of Manitoba’s HudBay Minerals. Chamán was a prominent community leader involved in anti-mining protests in Guatemala. In addition to the murder of Chamán, HudBay is accused of responsibility for a 2007 gang rape of 11 women during a land dispute. Claims by 13 Mayan Guatemalans against HudBay Minerals are currently awaiting trial in Canadian courts. 

By the end of 2009, the problem had become too glaring for even the industry to ignore. Research funded by the Toronto-based Prospectors and Developers Association of Canada (PDAC) produced a stunning report that was never published, though it was obtained by the Toronto Star. As the report claims, “Canadian mining companies are far and away the worst offenders in environmental, human rights and other abuses around the world.”

Excerpt from HudBay Minerals Corporate Social Responsibility 2012 report.

Social Irresponsibility

But the problem had been visible much earlier on. In 2005, the flood of criminal accusations against Canadian mining companies spurred a parliamentary report that called for a complete overhaul of the regulations governing the industry. Specifically, the report recommended that legal norms be established so that Canadian companies would be held accountable by the Canadian justice system for abuses committed in foreign countries.

Concerned by the fact that the reputation of the industry and of Canada as a whole was being undermined by the violent and unscrupulous conduct of Canadian companies operating overseas, the report also mandated the organization of Corporate Social Responsibility Roundtables. Held in Vancouver, Calgary, Toronto and Montreal, the roundtables examined the conduct of the Canadian extractive industries in developing countries, compiling input from a variety of stakeholder groups with the aim of producing a report for parliament.  

Published in 2007, the report advocated a series of sweeping changes to governance of the extractive sector, including mandatory accountability measures. But rather than implement the changes, Stephen Harper took a trip to Tanzania that same year to promote the beginnings of what has come to be a radical overhaul of the relationship between the Canadian government and mining companies.

Harper met with representatives from Barrick Gold while in Tanzania, where the company was seeking to replace a thousand miners who were striking in what Barrick deemed an illegal work stoppage. During a press conference, Harper made a seemingly innocuous announcement of what was on the agenda for his meeting with executives from Barrick and other Canadian companies operating in Tanzania: “We’ll be discussing, obviously, the general business climate, what the government of Canada can do to assist in building our investments here. And obviously we always want to promote notions of corporate social responsibility.”

What was not obvious at the time was the extent of the government support for the mining industry that Harper planned to implement. Rather than create a legal framework to address the disastrous conduct of Canadian mining companies operating in developing countries, Harper planned to turn the Canadian International Development Agency (CIDA) into the taxpayer-funded corporate social responsibility wing of the extractive industries. 

Read Part 2 of Democracy in the Pits: How Canada Uses Foreign Aid as PR for Mining Companies.

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On March 3rd, former Natural Resources Minister Joe Oliver unveiled a new transparency initiative that will require Canadian mining companies to report significant payments made to governments both abroad and in Canada. Under the new law, medium and large publicly traded companies will post the details of payments above the $100,000 threshold on their company websites, listed on a project-by-project basis.

Oliver described the initiative as a “comprehensive and meaningful approach” designed to “enhance transparency and accountability in the mining and oil and gas industries.” 

The new legislation comes as the most recent installment in a long list of policy changes implemented by the Conservative government in an attempt to improve the international standing of the Canadian extractive industries.

Last month saw the opening of the Vancouver headquarters of the Canadian International Institute for Extractive Industries and Development (CIIEID), a joint project between the University of British Columbia, Simon Fraser University and École Polytechnique de Montréal that received nearly $24.6 million in funding from the Department of Foreign Affairs, Trade and Development. According to the CIIEID website, the institute’s mission is “to improve governance of extractive sectors in developing countries.” 

The timing of both Oliver’s announcement and the opening of the CIIEID reflects not only the growing importance of the mining and oil and gas sector to the Canadian economy, but also the increasing level of social and environmental conflict associated with the activities of the Canadian extractive industries both at home and abroad.

Complaints against Canadian mining companies over environmental and human rights abuses and have been piling up in recent years. An unpublished mining industry report obtained by the Toronto Star in 2010 concluded that “Canadian companies are far and away the worst offenders in environmental, human rights and other abuses around the world.” 

The report listed 171 high profile incidents over the last decade, with Canadian companies involved in 34 percent of those incidents. Canadian companies were involved in four times as many incidents related to community conflicts, environmental infractions, human rights abuses and unethical behavior as the nearest runner-up countries, Australia and the UK.

This abysmal track record has prompted demands for better government oversight for Canadian companies operating overseas, with even the extractive industry itself calling for a clearer regulatory framework. In January this year, the Resource Revenue Transparency Working Group— composed of representatives from the extractive industries, along with non-profit organizations and transparency groups— released a report calling for stronger regulation of the mining industry. 

Screen shot from The Mining Association of Canada website.

“A lack of clarity around who benefits from resource extraction breeds mistrust between communities, governments and companies, generating unstable business environments, threatening the security of supply, and even, in extreme cases, contributing to violent conflict," the report states. The rules announced by Oliver are broadly aligned with the conclusions of the report.

The new transparency framework has met with mixed reactions. Organizations such as Oxfam, Publish What You Pay and Engineers Without Borders Canada have cautiously praised the new law. While they note that it leaves room for improvement, they describe Oliver’s announcement as a significant step towards shoring up an international transparency regime for the mining sector.

But the announcement has also faced serious criticism. David Eaves, a Vancouver-based public policy entrepreneur and advisor, pointed to the lack of a centralized system for collecting and displaying the payment disclosure data as a major shortcoming.

According to the rules spelled out by Oliver, the payment data posted on mining company websites will not be collected and put into a centralized database by the federal government. While Oliver describes the decision to reject a single database as a move to increase efficiency and cut down on bureaucratic excess, Eaves has called the move “secrecy by obscurity.” 

The decentralized approach favoured by Oliver stands in contrast to the Extractive Industries Transparency Initiative (EITI), an international framework for payment transparency currently implemented by 26 countries. Although Canada contributed $12.6 million to the creation of the EITI, it has declined to join the agreement. Notably, the EITI approach consolidates the payment data reported by extractive industry companies in an easy-to-read database format.

“So unlike EITI, which offers a centralized repository where records can quickly be downloaded and compared, Canada’s “compliance” will involve each company maintaining its own records “somewhere” and will require anyone interested in actually figuring out what is going on to track down each one individually,” wrote Eaves in an editorial for the Toronto Star. 

Oliver’s announcement comes after similar legislation proposed by Liberal MP John McKay failed to pass. McKay has made two separate attempts to tighten up regulation in the mining sector. Bill C-300, a private member’s bill that was narrowly defeated by a vote of 140-134 in 2010, would have required the Minister of Foreign Affairs and the Minister of International Trade to investigate all complaints made against Canadian extractive industry companies operating in developing countries.

Bill C-374, McKay’s second proposed piece of mining legislation, would have created a transparency framework with much stricter regulations than Oliver’s plan. Also known as the “The Sunshine Bill,” C-374 outlined a framework that would require companies to report all payments (not only those over $100,000) made to foreign governments and to display that information in a centralized database, in accordance with the international data standards employed by the EITI. The bill also called for an independent financial auditing system and hefty fines for non-compliance.

McKay sees little promise in Oliver’s new transparency framework, describing its unveiling as “an announcement essentially without substance.” While Oliver called for the rules to be implemented by April 2015, McKay sees 2017 or 2018 as a more likely timeline given the Conservative track record. 

Image Credit: CIIEID, EITI

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A coalition of First Nations and conservation groups are suing the Yukon government over a controversial new land-use plan for the Peel River watershed. The Nacho Nyak Dun and Tr’ondek Hwech’in First Nations joined with the Canadian Parks and Wilderness Society and the Yukon Conservation Society to file a lawsuit in the Yukon Supreme Court on January 27.

The lawsuit is part of growing opposition facing the Yukon government over the development plan released on January 21. The plan would see major portions of one of North America’s largest remaining wilderness areas opened to industrial development.

Critics claim that the government plan violates land claims treaties signed with First Nations groups and endangers a pristine wilderness ecosystem host to a diverse range of plant and animal species.

Located at the northern end of the Rocky and Mackenzie Mountain Chain, the Peel River Watershed features wetlands, river valleys, forest and tundra untouched by industrial development. Over seven times the size of Yellowstone National Park, the Peel Watershed is home to large populations of caribou, sheep, moose, wolves, wolverines and grizzlies. 

Protests against the new land-use plan were held across the Yukon and N.W.T. on Wednesday, demanding that the government respect both land claims treaties and the recommendations of an earlier plan produced after an intensive seven-year research and consultation process. 

“The 2011 plan was developed by the Peel Watershed Planning Commission, a body mandated under Yukon land claims treaties,” explained Yukon Conservation Society Executive Director Karen Baltgailis in an interview. The Planning Commission had worked together with representatives of government and First Nations groups to carefully assess the potential impacts of development in the region.

In a significant change of course, Yukon Premier Darrell Pasloski’s new plan rejects the Planning Commission’s recommendations, dramatically increasing the amount of land to be opened for resource development.

Overlooking the Hart River, one of the rivers recommended for protection under the Peel Watershed Planning Commission. Photo by Juri Peepre for protectpeel.ca.

According to Gill Cracknell, Executive Director of Canadian Parks and Wilderness Society Yukon, the key difference between the two plans is the amount of land in the Peel region to be opened for mining. The Planning Commission had recommended that 20% of the watershed be designated for new mineral claim staking. But under Premier Pasloski’s plan, that number skyrockets to 71%.

“The government’s plan is not science-based, it’s industry-based,” said Cracknell. “It gives lip service to the needs of the wilderness tourism industry and ignores the science behind large-scale protection.”

The Planning Commission report recommended that 55% of the Peel Watershed region be designated as a special management area, putting it under permanent protection from mining and oil and gas exploration. Under the new government plan, only 29% is set aside as a protected area, and the ambiguous language of the plan leaves the door open to future development.

David Suzuki at a viewpoint above the Hart River. Photo by Marten Berkman for protectpeel.ca.

Noted Canadian aboriginal rights lawyer Thomas Berger will represent the plaintiffs in the lawsuit against the Yukon government.  “It’s a lawsuit nobody wanted to bring,” said Berger at a press conference in Vancouver. “But the government of the Yukon has forced these plaintiffs to go to court not only in defense of First Nations right and environmental values in Yukon, but also to uphold principles entrenched in the Constitution.”

Yukon Premier Darrell Pasloski responded to the lawsuit in an interview on Thursday, but had little to say about the specific details of the land-use plan, or what prompted the government to unilaterally reject the earlier, inclusive planning process with First Nations.

"We truly are leading not only the country, but in a lot of respects leading the world on this, and that's why sometimes you have opportunities where there is disagreement and that resorts to going to the courts to create that certainty," he said.

Image Credit: Juri Peepre

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After years of economic crisis and the rise of social movements like Occupy Wall Street, the idea that there is something rotten in the financial sector has become commonplace. Banks that were too big to fail before the bailouts are bigger than ever, and investment in oilsands expansion, fracking, arctic oil exploration and deep-sea drilling continues at an alarming pace.

Financial activist Brett Scott describes the situation succinctly: “The financial sector right now is crap at social justice and crap at ecological sustainability.” But Scott believes there’s another crucial point that often gets overlooked in critiques of the financial system.

"Even if the financial sector was socially just and sustainable, there is still the sense that we actually have no democratic access to it," says Scott. "Politicians always seem fixated about how to make the sector into a more benign dictatorship, rather than focusing on how to increase people's sense of personal participation in it."

Reducing the sense of personal alienation that people feel in relation to the financial system was one of the goals that motivated Scott to write The Heretic’s Guide to Global Finance, published last year by Pluto Press. The book explains the basic functioning of financial markets in language that’s easy to understand, and provides ideas to contest the power of big money in determining the shape of our collective future. Since the continued growth of the fossil fuel industry relies heavily on investment from major financial institutions, Scott’s work provides a much-needed critical counterpoint to the system.   

Compared to the popular portrayals of stockbroker decadence in films like The Wolf of Wall Street, Scott’s book doesn’t rely on a story of bad behavior to explain why the financial system produces such spectacularly negative effects. Speaking as someone who has worked in the financial sector, Scott insists that most traders bear little resemblance to exaggerated cinematic villains like Gordon Gekko. When it comes to character or moral bearing, “there’s nothing fundamentally different between the people in the financial sector and those in the rest of the world,” Scott says.

For Scott, both moral judgment and technical discussions about how the financial system could be better regulated are less important than figuring out how to make finance more democratic.

“I’m not actually that interested in the big battles over the regulatory stuff, or how good or evil some particular CEO is,” he says. “I’m more interested in the power dynamic between the person on the ground and the financial sector.”

It was the unequal power dynamic between financial insiders and outsiders that motivated Scott to find out firsthand what makes the world of finance tick. Hailing from a background in activism and NGO work in South Africa, Scott had grown frustrated with the fact that he was fluent in macro-level critiques of the financial system, but still didn’t really understand the details of how money gets invested in concrete projects like mines and oil and gas operations.

Intent on figuring out the game from the inside, Scott moved to London in 2008 to join a start-up derivatives brokerage firm, where he spent two years learning the ropes of high finance. While he was on the phone persuading clients to buy derivatives, Scott was also doing a kind of activist research, learning how different financial products work and studying the relationships between financial professionals.

One of the key take-home points from his anthropological foray inside the financial sector is that investment decisions are not just about business, but are always inherently political. “One thing I always try to get across to activists is that fund managers are making political decisions with their money,” says Scott. “You’re deploying resources that you could deploy somewhere else, in a way that benefits some people and not others, and that’s incredibly political.”

Decisions about where to invest are ultimately decisions about what kind of a world we want to live in. If the financial system functioned under democratic oversight, putting money into projects like building desperately needed renewable energy infrastructure would be a no-brainer.

But as it stands, investment decisions are made by a small moneyed aristocracy of bankers and their corporate and political allies—which is why money continues to flow into profitable but destructive dirty energy.  

As Scott sees it, the undemocratic power concentrated in the financial sector is reinforced through the vocabulary of economic rationality that shapes our everyday lives. “The pseudo-scientific language of the financial sector is one way that people distance themselves from thinking about the underlying exploitation,” Scott explains.

We’ve become so accustomed to hearing endless reports about economic growth, yield spreads and returns on equity that it’s easy to lose sight of the human and ecological reality underneath the jargon.

A useful strategy for waking ourselves up to the social relationships that actually constitute economic activity is to denaturalize the language we use. Instead of talking about money, Scott refers to “COGAS”: claims on goods and services. It’s a simple linguistic move, but one that can help to break the spell of finance and get us thinking about the fact that money is ultimately just a socially-constructed medium of exchange, not some magic totem with unquestionable power over our lives.

Scott views strategies such as the oilsands divestment campaign in much the same way. Rather than use divestment as a tool to actually starve companies working in oil and gas extraction of operating funds, Scott sees the campaign as a means of changing the cultural consensus around fossil fuels.

“That to me is a really key thing about divestment, is how do you start to make it increasingly socially unacceptable to assume that it’s normal to invest in destructive projects. I don’t think the divestment projects in themselves are going to stop it, but they challenge the notion that something is normal,” he says.

Both in his book and on his blog Suit Possom, Scott’s writing is full of ideas for how to challenge the daunting authority of the financial sector, and experiments that could help to create better systems of sharing, exchange and investment that can go beyond the logic of profit. Somewhere between radical activist and entrepreneur, Scott is informed by what he describes as a “hacker ethos.”

“A hacker approach involves exploring a system and developing an acute sense of how you’re connected into it,” Scott says. Whether you’re into cryptocurrencies like BitCoin or disruptive forms of shareholder activism, The Heretic’s Guide to Global Finance offers some solid tools for taking control of the financial system.

You can find more of Brett Scott’s writings on financial activism and alternative economics on his blog, including plans for a London School of Financial Activism, due to launch this year.

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If we are to cut greenhouse gas emissions to levels low enough to mitigate the threat of runaway climate change, the way forward is as simple as it is daunting: we can’t burn half of the world’s remaining oil, coal and gas reserves. No amount of increased energy efficiency, reduced consumption or emissions trading will make a difference unless the greater part of the planet’s fossil fuels remains in the ground. But with our civilization driven by carbon and the global economy fired by the soaring profits of the energy sector, how on Earth can we resist the temptation to extract and burn?

This is the challenge at the heart of The Burning Question, a stark assessment of the complex political and social reality of climate change by Mike Berners-Lee and Duncan Clark. Recently released in North America, the book is galvanizing and bleak in equal measure, providing a much-needed and long overdue picture of what it would really look like to get serious about averting cataclysmic climate change. Unlike much of the writing on climate, The Burning Question does not simply present the terrifying math in order to rally the world to action. Instead, Clark and Berners-Lee face the dizzying complexity of the problem head-on, detailing how rising greenhouse gas emissions relate to international politics, the financial system and human psychology. The book is surely the most detailed, systematic attempt yet at thinking through the barriers to action on climate and what can be done to overcome them.    

In an interview with DeSmog Canada, co-author and Guardian consultant environment editor Duncan Clark discussed the difficulties of convincing the entire world to collectively phase out a source of energy:

The clear question your book poses is how we can leave half of our proven fossil fuel reserves in the ground. Could you explain why the numbers demand that we focus on leaving the fuels in the ground, rather than pursuing strategies like increasing efficiency and reducing consumption? In other words, could you briefly explain what you describe in the book as the “balloon squeezing” effect? 

It’s usually taken as a given that increasing energy efficiency and building clean energy capacity will help reduce global fossil fuel use. But – as the book shows – there’s been considerable progress on all these fronts in the last half century but none of that appears to have made a jot of difference to global carbon emissions, which have continued accelerating at the same rate observed since 1850. Why? Because none of these developments in themselves necessarily reduce the rate at which the world extracts and burns fossil fuels – something that is mainly driven by a feedback loop in which more energy of any type boosts economic activity and technological progress, which in turn increases both demand for and supply of oil, coal and gas.

In the very long run fossil fuels will become uneconomic and scarce but for a number of reasons (including the amount of fossil fuel infrastructure that we are continuing to build) there’s no prospect of that happening in time to avoid dangerous climate change. In that context it’s obvious that thinking about alternative energy and efficiency isn’t enough. We also need as a world to consciously constrain fossil fuel use – for example with taxes, caps or obligations on extractors to bury the carbon they pull out of the ground.

“Ballon-squeezing” is the phrase we coin in the book to describe the myriad ways that apparent carbon cuts in one home, company, sector or national economy get cancelled out by increases elsewhere. It boils down to this: globally there’s no lack of demand for energy so fossil fuels not burned in one place have a habit of getting burned elsewhere.

How do the Canadian tar sands play into the numbers? How much of the tar sands falls under the category of proven fossil fuel reserves? Further, what do you think of James Hansen’s rhetoric about the tar sands being “game over” for the climate—is it a helpful call to action, or does it distract from the larger challenge of leaving half of all conventional fossil fuels in the ground? 

According to the Alberta government, the region’s proven oil reserves (i.e. those deposits that could be viably extracted with current technology and at current energy prices) could produce 170 billion barrels. That’s around a tenth of global proved reserves and more than is held by Iran or Iraq – so a significant slice of the world’s oil, though in terms of carbon content probably only a few percent of the carbon in the world’s proven fossil fuels reserves.

But that’s not really the point. The reason the tar sands have become such a pressing issue is that they’re an example of how governments and companies are continuing to try and expand their fossil fuel reserves despite the obvious fact that we already have more than we can safely burn. If North America and other relatively rich regions are so gung ho about investing money and building infrastructure to increase fossil fuel supplies, they can hardly expect, say, China and India to slow the rate at which they extract and burn coal. In that sense, I think planning to extract all the proven tar sands reserves does in a sense represent “game over” for the climate, no matter precisely how much carbon they contain.

And of course the proven reserves are only part of the picture – around 9% of the total Alberta carbon deposits. So there could be much more coming on stream in future years and decades.

“This map shows how the listings of coal, oil and gas reserves are distributed, indicating that capital markets are supporting the continued exploitation of fossil fuel reserves around the world.” From the Carbon Tracker Initiative.

I want to touch on two aspects of the energy feedback loop:

1) You’ve identified the predicament that burning fossil fuels has both enabled the spectacular growth in technology and living standards of the last two centuries, while also bringing us to a point where it could make continued human civilization problematic. How can the question of eliminating fossil fuel use (i.e. the fuel of modern civilization) be communicated without seeming to appeal to anti-modern, primitivist thinking? Do you think there is a role to be played by environmentalists that rely on a moral critique of modernity?

There’s nothing anti-modern about the idea that if a product is shown to have dangerous side-effects for society then it should be phased out and replaced with safer alternatives. In my view, that’s how this issue needs to be understood and communicated – and I think it’s unhelpful that the discussion so often gets blurred with broader debates about capitalism or modernity or localism or economic growth or whatever else.

That’s not to say that it’s possible to make sense of climate change in a vacuum. The book argues that understanding our failure to solve the problem means grappling with everything from electoral funding to human psychology. But understanding the context is different from using climate change as a tool for pushing existing political, social and aesthetic positions. For me it’s not about challenging modernity; it’s about phasing out a product we now understand to be unacceptably dangerous.

2) A typical argument that arises in these discussions is the Malthusian question of overpopulation, with its problematic racist implications. How do you respond to people who see overpopulation as the central challenge of confronting climate change? 

In the book we note that in the last fifty years, the growth rate of human population has fallen like a stone. But the growth rate of emissions haven’t been affected – which is no surprise when you consider that reductions in population growth tend to go hand in hand with increases in livelihoods and energy use. Yes population is a factor in this whole issue but even if the population leveled off tomorrow it’s not by any means obvious that this would have a significant impact on global emissions.

From the Carbon Tracker Initiative.http://www.carbontracker.org/carbonbubble

Let’s talk about the economic impacts of addressing climate change. The necessary steps you describe (including spiralling fuel costs and writing off trillions of fossil fuel reserves, impacting everything from the biggest banks to individual pensioners) sound like a recipe for a severe economic depression. It seems to me that an equally burning question based on the data could be: how can we remake our economies and political systems in order to survive leaving fossil fuels in the ground? Do you think our current economic system is capable of withstanding the shock of leaving the fuels in the ground?

In the book we conclude that there’s no way to know what impact rapidly phasing out unabated fossil fuel use would have on the global economy. It depends on too many factors, from the future price of clean energy and carbon capture to whether or not societies embrace divisive alternatives such as wind farms and nuclear plants. And historical trends and examples don’t tell us much because the world has never tried to phase out a major energy source before.

But two things can be said for sure. First, if we started constraining fossil fuels in a serious way, that would trigger an explosion of innovation and investment in renewables, nuclear, carbon capture and energy efficiency. Second, the longer we leave it to reduce global emissions, and the more money we invest in developing potentially unburnable fossil fuel reserves and infrastructure, the harder it will be to avoid dangerous levels of warming without contracting the world economy. So however potentially unpalatable the medicine might be, we need to start taking it soon to avoid more serious treatment later.

In British Columbia, the government proudly advertises that the provincial carbon tax has not had any adverse effect on the economy. Do you think it’s possible to respond to the burning question without causing adverse effects? If not, how do you see citizens and governments coming together to deliberately inflict economic hardship on themselves?

I don’t know much about the British Columbia example but as a rule I think you can only meaningfully judge the economic and environmental impacts of carbon regulation when you consider the global picture. For example, British Columbia is presumably heavily reliant economically on goods from and investments in the wider world, across which emissions are still accelerating. So it doesn’t make much sense to look at it in isolation.

Personally I don’t think there’s any point pretending that solving climate change would have no unwanted side-effects. Even if global economic growth continued largely unaffected (which is a huge if, as discussed above), reducing fossil fuel use at the rate required to avoid dangerous warming would have serious implications for oil and coal companies and the governments, communities, companies and investors that rely on them economically.

The key question is when will enough of the world’s people care sufficiently about climate change – and the long-term economic risks it will bring – to make constraining fossil fuel supplies politically viable.

Following from that, what kind of problems are associated with regional or national goals for cutting emissions? When a province like BC or a country like the UK aims for major reductions in carbon emissions, do they give a false picture of the costs/ease, while offloading the burden to other countries within the larger global system?  

Yes, there’s definitely a risk of that. In the book we note that the continents and countries pushing hardest for a global deal tend (unsurprisingly) to be those with relatively few economically viable fossil fuel reserves. The UK is a good example. It has small remaining proven fuel reserves and is unusually reliant on imported goods and a financial sector with a big stake in overseas extractive industries. So it’s perhaps not surprising that it currently has relatively ambitious carbon targets, because it has less to lose than many other countries from a global carbon deal. But that’s a reason for the UK and other such countries to do more, not less. Without some nations pushing ahead and showing leadership, we’ll remain stuck where we are.

What are some ways that governments of nations with large remaining fossil fuel reserves (such as Canada) can be pressured to leave their fossil fuels in the ground? Would this involve some kind of compensation scheme?

Many forms of pressure could be applied, from the gentle – putting climate change as a key discussion point at all international forums, such as the G8 – through to the more hard-nosed, such as trade restrictions on countries that are refusing to play ball. The latter would of course open a can of worms in terms of the World Trade Organisation and barriers to trade, but until world leaders feel empowered and compelled to have some hard conversations, then it seems very unlikely that we’re going to leave all that carbon in the ground. One groups of economists even suggested banning nations that refuse to cut their emissions from the Olympics games!

Visit The Burning Question website for more information. 

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When it comes to strategies for changing the world, storytelling isn’t usually the first thing that comes to mind. Things like conviction, advocacy, mobilizing and building networks of supporters seem like more obvious candidates. Adam Kahane isn’t saying that the conventional repertoire doesn’t work. But in his experience, the stories we tell about ourselves, our opponents and the kind of world we want to live in can have transformative effects.  

Kahane is a specialist in “transformative scenario planning,” a kind of dialogue technique that aims to bring together allies and enemies alike to map out new ways of resolving seemingly intractable problems. Although the name sounds like a bit of business school esoterica, the method is actually quite straightforward. Instead of coming to the table with a collection of demands, a transformative scenario planning process invites the parties involved to put their demands aside in order to focus on figuring out what’s actually possible in the first place. 

 “The method in its simplest terms involves bringing together actors from across a given system, whether that’s a community or a sector or a country, or a larger system, and working together to understand what’s possible in this system,” explains Kahane. “That turns out to be the surprising key, that to talk about what’s possible rather than what we want (or what we don’t want) opens up a whole different kind of conversation.”

Kahane first tried his hand at scenario planning while working at Royal Dutch Shell in the late 1980s. Shell had begun using scenarios in the 1970s in an attempt to maintain a competitive edge over the other major oil companies. Still the corporate world’s leading practitioner of scenario planning, Shell claims that scenarios allowed them to anticipate the oil price shock of October 1973 and “recover more quickly than [their] competitors.”

“The key point about scenario planning in the Shell context is that it’s a tool for being able to adapt to a future that you can’t predict and can’t control,” says Kahane. Planners at Shell map out different variables such as political instability and resource constraints and flesh them out into plausible descriptions of the future. Rather than seek to change the world, scenario planning at Shell is an adaptive method for ensuring future corporate profits in the face of instability.

The transformative component of scenario planning first came into play in 1991, when Kahane was invited to South Africa to participate in a process known as the Mont Fleur Scenario Exercise. Bringing together politicians, ANC activists, trade unionists, economists and business executives, the aim was to foster dialogue about possible futures for a country in the midst of a tumultuous transition from apartheid to democracy.

The exercises in South Africa were distinct from previous uses of scenario planning for two reasons. “[Mont Fleur] was the first time, at least the first major time, that scenario work was done not as an expert activity, or as a staff activity, but as what we now call a multi-stakeholder activity,” he explains. Whereas corporate or military strategists had previously used scenarios to plan for the survival and success of their respective organizations, Mont Fleur brought together a diverse range of people, each with a stake in the future development of South Africa. The discussions that took place there were not negotiations, but rather a kind of imaginative exercise that worked to find common ground between groups from opposing ends of the social spectrum.

“The second and even more fundamental difference, which has really been the motivating or the key point I’ve been working on for these 20 years since, is that they were telling stories about what could happen, not in order to adapt, but in order to influence what would happen.” By creating multiple possible narratives from a diversity of perspectives, Kahane argues that the process helped to open up new pathways into the future.

Kahane’s work has evolved in the two decades since the South African experience, and he now works as a partner at Reos Partners, a global consulting firm using techniques such as transformative scenario planning to address tough social problems. When he comes to Vancouver on October 21 to deliver a public lecture at the Stonehouse Institute, one of the themes he’ll be discussing is the application of transformative scenario planning to the daunting task of confronting climate change.  

There may be more than just a passing irony in the fact that Kahane hopes to use a technique developed by a major oil company in an effort to address climate change, a process driven in large part by the burning of fossil fuels. While Shell publishes the results of its scenario planning exercises in glossy reports on climate change and the stressing of planetary systems, it continues to invest heavily in extreme energy like fracking and Arctic drilling. Despite the inspiring language in their reports, Shell remains a major multinational oil company whose sole reason for being is to extract oil, stay ahead of the competition and deliver higher profits to its shareholders.

The case of Shell points to a limitation of the transformative scenario planning model: there are some problems for which narrative and dialogue are not up to the task. We know that the majority of remaining global fossil fuel deposits need to stay in the ground if we are to stay below a 2°C temperature increase. For that to happen, Shell would need to write off untold billions and likely cease to exist as a corporation—a fate it would no doubt resist. With stakes that high, it seems unlikely that Shell or any fossil fuel company could meaningfully participate in a scenario planning exercise together with anyone serious about stopping climate change.

Kahane recognizes the fact that some issues simply can’t be resolved through discussion and forging shared narratives. When political conflict rests not on a lack of mutual understanding but rather a genuine, unresolvable antagonism between conflicting interests, then the more traditional tools in the activist’s toolkit come into play. “If you think that your opponent’s interests are such that they will never do what you think they need to do, what you think they ought to do, then you’re back to the other strategy, which is advocating and mobilizing and pushing,” says Kahane. “You always have that as an option.”

For more information on Kahane's talk in Vancouver on Monday, October 21, visit the Stonehouse Institute.

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is the third part of three-part series exploring the German Energy Transition or Energiewende, by David Ravensbergen. In Part 1, The Land of Wind and Solar, Ravensbergen describes how decentralized, small-scale changes can amount to a broad energy revolution. In Part 2, Is the German Energy Transition Everything It's Cracked Up to Be?, he takes a closer look at the promise and the reality of the German response to climate change along with energy researcher Tadzio Müller. In this third and final installment, Ravensbergen asks what the German experience can teach North Americans looking to make the transition away from fossil fuels.

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In Canada, hopes of implementing a national strategy on climate even remotely equivalent to the German Energiewende are continually sabotaged by the federal government’s unwavering commitment to propping up the fossil fuel sector. For Canadian climate activists struggling against the expansion of tar sands pipelines and Harper’s Paleolithic energy policies, one big question looms: how do the Germans do it?

According to Tadzio Müller, the explanation is simple. “What the German government has done was the result of 35 years of social struggle by movements.” While it may be tempting to chalk up the change to a healthier public discourse or more reasonable elected officials, Müller insists it wouldn’t have happened without the tireless work of activists. “The laws that were passed were fought for by movements. The government has done only what it has been forced to do.”

Nowhere is this lesson more visible than in Chancellor Merkel’s 2011 decision to completely shut down German nuclear power in the wake of Fukushima. Müller notes that Merkel’s government at the time was “a conservative-neoliberal coalition that had being in favour of nuclear power as one of its key brand elements.”

For some environmentalists who see nuclear power as a necessary component of a post-fossil fuel energy mix, the German public’s resolute anti-nuclear stance is difficult to grasp. But regardless of where you stand on nuclear power, the remarkable fact that a center-right government legislated the end of its own domestic nuclear industry while committing to a massive expansion of renewable energy begs explanation.[view:in_this_series=block_1]

A large part of the answer lies in the breadth of the social coalitions that mobilized around environmental issues like industrial pollution and acid rain in the mid-70s. As Joachim Jachnow writes in his excellent summary of the changing fortunes of the German Green Party, environmental activism gained critical mass around the issue of nuclear power: “Ecologists, feminists, students and counter-cultural networks joined with farmers and housewives in mass protests that brought nuclear-plant construction sites to a halt in Wyhl (Baden-Württemberg), Grohnde (Lower Saxony) and Brokdorf (Schleswig-Holstein).”

Out of these successful mass actions against the expansion of nuclear power, an unlikely coalition between the radical and conservative wings of the environmental movement began to take shape. As Müller explains, it was this loose alliance that slowly began to change German public opinion on energy and the environment. When renewable energy went mainstream with the introduction of feed-in tariffs the alliance grew bigger still, bringing those motivated by profit as well as conviction into the fold. By the time Fukushima happened, the anti-nuclear movement had become so powerful that Merkel was left with no choice but to expedite the nuclear industry’s downfall.

So what lessons can be drawn for people outside of Germany working towards building a movement capable of stopping climate change? The important thing to keep in mind is that the environmental movement in Germany had 35 years to achieve the limited progress of the Energiewende. We haven’t got nearly that much time. “How do you mobilize the green constituency to take action beyond what they’ve been doing so far?” asks Müller.

Owing to the urgency reinforced by the latest IPCC report, Müller argues that the time has come to step up the both the frequency and efficacy of nonviolent civil disobedience. “We need a drastic expansion of disobedient actions beyond what 350 has been doing so far. From Germany it looks a bit funny when people do these actions where they cross a line and then count the number of arrests—I’ve never seen an action in Germany count its success according to the number of arrests.”

While Müller acknowledges the major differences between North American and German movement culture, he says the strength of civil disobedience undertaken by the German environmental movement has been its focus on ambitious goals rather than symbolic gestures. In addition to mass protests and blockades that halted the construction of new nuclear reactors, tens of thousands of activists have taken part in highly coordinated lockdowns to prevent train shipments of nuclear waste from France from arriving at their destination in the German nuclear waste storage facility in Gorleben.

Often carried out in freezing conditions and with the help of local farmers using their tractors to build roadblocks for logistical support, these actions worked to keep the pressure on politicians who were looking for ways to renege on their commitments. “The radicals in the anti-nuclear movement were absolutely crucial in keeping the flame alive through the years when the issue didn’t have a lot of play in the media.”

Müller argues that radical activists have the necessary experience, skill and imagination to coordinate the kinds of ambitious direct action that could increase the pressure on climate change. Just as importantly, however, those radicals need to be integrated into a broad movement capable of winning support from diverse sections of society.

“The interesting challenge is how do you get all those different types of actors to work together: anti-capitalists, climate justice radicals, big greens and farmer’s groups,” says Müller. “That requires constant and active coordination and getting out of your comfort zone.” Drawing on the experience of the German anti-nuclear movement, Müller argues that building a popular front against climate change is the task ahead.

For a popular front strategy to work, groups with strong disagreements about both the causes of and solutions to climate change need to temporarily suspend their differences in pursuit of the common goal of drastically cutting emissions. Working together doesn't necessarily mean adopting the same strategies, but it does mean refraining from actively undermining other sections of the movement. Selecting a viable focus for action is also key. For Müller, struggles against pipelines like Northern Gateway and Keystone XL represent key points where a broad-based environmental movement can have the strongest impact. 

“We are too weak at this point to achieve the outcomes and effects we want to achieve, so we need to find points of leverage where we can amplify our power. We need to look at systems and at weak points,” says Müller.

“We know we can pressure Obama because we know that environmentalists are part of the Democratic coalition, and since the Keystone XL is an international decision we know that this goes over Obama’s desk. It’s these details that make choosing the Keystone XL as a focus a sound strategic decision.” 

Ultimately, the differences between different sections of the environmental movement will need to be worked through. But with the latest IPCC report confirming that the majority of remaining fossil fuel deposits need to stay in the ground if we are to have any chance of avoiding the wholesale destruction of runaway climate change, broad alliances are more important than ever. 

In the months and years ahead, Canadian environmentalists would be well advised to learn a bit of German: Fossil fuels? Nein danke. 

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is Part 2 of David Ravensbergen's series on the Germany Energy Transition. Read Part 1, In the Land of Wind and Solar and Part 3, Building a Popular Front Against Climate Change.

In the bleak realm of climate politics, Germany's progress on renewable electricity has been hailed as proof that another world may still be possible. In countries like Canada, addressing the energy crisis at the heart of climate change is something to be talked about now but accomplished later, once the economy has been adequately strengthened.

But economic growth is never sufficient: the goalposts are always moving, and there will always be more sacrifices to be made to ensure that the GDP continues to rise. As long as there’s bitumen in the ground, Canadians will be told that investment in clean energy will have to wait.

Things seem to work a bit differently in Germany, at least when it comes to electricity. Of course, Germany is just as committed as Canada to the sacred mission of securing economic growth. But this heavily industrialized exporter of high-quality manufactured goods has managed to maintain the world’s fourth-largest economy while undergoing a major transformation away from nuclear and fossil fuels. In this second installment in DeSmog Canada’s series on the German energy transition, we’ll take a closer look at the promise and the reality of the German response to climate change along with energy researcher Tadzio Müller.

Unlike Canada, Germany doesn’t suffer from the resource curse of large fossil fuel deposits. But when it comes to implementing renewable energy like solar, Germany doesn’t have any particular advantages either. The grey northern European Bundesrepublik is hardly known for its balmy blue skies, but that hasn’t stopped it from installing one-third of total global photovoltaic capacity.

Rather than wait for large corporations to deem solar energy profitable enough to be worthy of investment, Germany took a different route: subsidizing solar panels on the roofs of homes and small businesses, alongside communally-owned renewable energy infrastructure like solar and wind parks. [view:in_this_series=block_1]

Müller explains that this transfer of power was accomplished in part thanks to the Renewable Energy Act (Erneuerbare-Energien-Gesetz, EEG) of 2000, which mandated a system of feed-in tariffs for renewable electricity. The law essentially guaranteed that producers of electricity from renewable sources could sell their power to the grid at a fixed price for 20 years. In effect, the German government used feed-in tariffs to make clean energy infrastructure profitable for a segment of the population. By wooing these small-scale green capitalists, Germany incentivized the scaling up of renewable energy while securing ongoing electoral support for the continued implementation of the energy transition.

As a result, renewable energy has moved from the fringes to the mainstream of German economic life. “Renewable energy isn’t seen as something crazy in Germany. It’s an established branch of industry,” says Müller.

While the social acceptance of renewable energy means that there is enough political will to continue the transition away from nuclear and fossil fuels, the economic mainstreaming of the Energiewende comes along with familiar problems. For those not enjoying the government-guaranteed profits from feed-in tariffs, the move to renewables has meant a rapid jump in electricity costs for German households, hitting low-wage earners, retirees and people on welfare particularly hard. 

But what impact has the energy transition had on Germany’s greenhouse gas emissions? By the end of 2012, Germany had achieved a 25.5% reduction in GHG emissions relative to 1990 levels, actually surpassing its Kyoto Protocol-mandated target of a 21% reduction.

To Canadians still stinging from the Conservatives' embarrassing move to formally withdraw Canada from Kyoto, those numbers are cause for envy. But as Müller cautions, if something sounds too good to be true, it probably is.

“Most of Germany’s fairly impressive post-1990 emissions reductions have to do with the deindustrialization of East Germany,” says Müller. The formerly separate Federal Republic of Germany (West) and the German Democratic Republic (East) were officially reunited in 1990. During the initial process of reunification, East German industry was still operational, producing both manufactured goods and significant levels of greenhouse gas emissions. In other words, the baseline German emissions levels from 1990, the benchmark for the Kyoto Protocol, combine the total emissions of both West and East Germany.

As the reunification process unfolded, East German factories were privatized and eventually closed down, causing emissions levels across the newly reunified Germany to drop significantly. As a result, comparisons between emissions levels from 1990 and the present give the impression of a major reduction.

Two things are missing from this measurement of emissions. First, the dismantling of East German industry was not a government climate strategy. It was part of a process of shock therapy, as the formerly socialist economy was rapidly adjusted to the imperatives of capitalist production. For the residents of the former East, the result has been persistent long-term unemployment and lower income levels. Twenty-four years after the fall of the Berlin Wall, socio-economic divisions between the formerly separate nations remain stark.

The second point to consider is that deindustrialization only looks like a reduction in emissions if you measure from the point of view of production. As multinational corporations have shifted their factories away from the West to China and other parts of the developing world, emissions levels in wealthy nations like Germany have appeared to drop. But does it make sense to measure emissions at the point of production, when so many of the goods produced in places like China are exported to the West and consumed there? In fact, roughly one quarter of China’s much-maligned CO2 emissions can be attributed to the production of goods for export to Europe and North America.

According to Müller, the majority of emissions reductions in all western countries can be attributed to deindustrialization. But when measured from the point of view of consumption using the concept of embedded emissions, those reductions shrink dramatically. Shutting down factories and offshoring production isn’t a viable response to climate change.

Seen from this perspective, the German example looks somewhat less promising. On the one hand, the German energy transition shows that an advanced industrialized nation can make significant strides in moving away from fossil fuels. On the other, accounting for emissions at the international level shows that what appears to be progress in one country is cancelled out by the fact that climate change remains a resolutely global problem.

As always, the question remains: what is to be done? In the final segment of this series, Tadzio Müller offers some insight on how to resolve the contradictory lessons of the Energiewende, and what the Canadian environmental movement can learn from the German experience.  

Image Credit: Flickr via Cea

The Narwhal’s reporters are telling environment stories you won’t read about anywhere else. Stay in the loop by signing up for our free weekly dose of independent journalism.

This is the first installment of a three-part series. Read Part 2, Is the German Energy Transition Everything It’s Cracked Up to Be? and Part 3, Building a Popular Front Against Climate Change.

Last Sunday, German voters handed Chancellor Merkel a comfortable mandate for a third term in office in elections billed as “the most boring federal elections ever.” 

The victory of Merkel’s ruling Christian Democratic Union/Christian Social Union (CDU/CSU) was nearly a foregone conclusion. With Merkel’s hardline policies on the Euro safeguarding the German economy in the midst of a Europe wracked by crisis, and her main rivals the Social Democratic Party of Germany (SPD) failing to offer any serious alternative, German voters saw no reason to try any new experiments.   

But behind the bland façade of German prosperity major changes are afoot. What the predictable election results don’t show is the ongoing long-term transformation of the German energy sector, referred to as the Energiewende or energy transition. Building on the support of an unlikely coalition ranging from radical environmentalists to conservative CDU/CSU voters, the Energiewende aims at the kind of progress on energy and climate that most western governments argue is both politically and economically unfeasible.

The headline figures on the energy transition thus far are fairly impressive: renewable energy in Germany now accounts for 25% of total electricity production. 65% of the electricity generated by renewables comes from a decentralized network of small-scale producers, ranging from individuals to cooperatives to small communities. The official government target is 80% renewable electricity by 2050, with some expecting that number to be closer to 100%.[view:in_this_series=block_1]

According to German climate justice activist and Rosa Luxemburg Foundation energy researcher Tadzio Müller, these numbers are an important strategic indicator for the global environmental movement. “What the Energiewende shows is that ecologically and socially relevant transformative effects can be achieved at something much smaller than the global scale,” says Müller.

For Müller, the 2009 COP15 conference in Copenhagen was a watershed moment for activists fighting to stop climate change. Despite intense pressure from tens of thousands of activists on the streets and close media scrutiny from around the world, the conference ended in failure. Understanding that failure means rethinking the framing of climate change as an issue that activists can effectively tackle at the international scale.

“Projecting energy issues at the global level, as environmental organizations have done since the Rio Summit in 1992, has turned out to be a dead end,” argues Müller. “We simply won’t get an international climate agreement because economic growth is so strongly tied to fossil fuels. More economic growth means more emissions.”

In spite of his critique of the global framework for climate politics, Müller insists on the importance of a global perspective. Müller is a veteran activist of the anti-globalization movement, more accurately described by its French name, altermondialisme, or the movement for a different globalization: one created in the interests of people rather than profit.

Anti-globalization protests coalesced around international summits such as G8/G20 meetings and WTO negotiations. Müller argues that these summits functioned as global flashpoints where something was truly at stake, such as whether developing countries would be subject to punitive terms in so-called free trade agreements. Choosing these summits as a target for protest meant choosing a frame in which activists could potentially exert real influence on the direction of international development.

By contrast, international climate summits such as this year’s upcoming COP19 in Warsaw, Poland do little more than stage the appearance of meaningful negotiations. With rising emissions hard-wired into the ever-expanding global economy, national representatives have little room for manoeuver at the international level without altering the global economic paradigm of endless growth.

Müller’s point is not that we should accept defeat and resign ourselves to the inevitability of climate change. Instead, he argues that climate activists can be more effective by focusing their efforts where they have the greatest strategic leverage. For now, that means the local, regional and national level.

Germany is a case in point. For years, members of the German environmental movement engaged in local struggles over issues like nuclear waste storage and public control of utilities. While they may not have looked like much on their own, taken together these struggles transformed the broader social consensus on energy issues. As a result, climate denialism is essentially non-existent in Germany, and the massive expansion of renewable energy enjoys the support of all major political parties.

As we will see in the following installments in this series, the Energiewende is no magic bullet for the climate. Victories at the local level are important, but the challenge of scaling up to create a global movement for climate justice remains. As a step in that direction, we can see the energy transition as part of an ongoing process that is changing not only the way Germany produces electricity, but also how social power is distributed across German society.

“The Energiewende can reduce emissions and change the social playing field because it can generate more community power vis-à-vis corporate power,” says Müller. The more utilities are brought under public control and the more electricity is generated by small-scale producers, the less power large corporations will have over the energy sector. Beyond the transition to green energy, it’s this social transformation that should make Canadian climate activists stand up and take notice.

Stay tuned for parts 2 and 3 in this series.

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Read At the Limits of the Market: Why Capitalism Won't Solve Climate Change, Part 1.

One answer to the question of why free market capitalism has failed to generate technological solutions to the crisis of climate change is that green innovation simply isn’t as profitable as speculation. In an era when financial markets generate record profits and investment banks are too big to fail, the long work of investment, research and construction of new energy infrastructure simply isn’t attractive to profit-seeking corporations.

Faced with the clear failure of the free market to respond to the approaching dangers of climate change, politicians have reacted by attempting to coax corporations into serving the needs of people as well as the bottom line. This is typically referred to as finding “market-based solutions.” It sounds good at first: we’ll harness the best minds in the private sector to develop new technology, create new jobs and solve climate change in the process.

But all too often the phrase “market-based solutions” works as a kind of coded communication. In effect, it signals to corporations that the government will not take any measures that could interfere with their business model. Rather than impose meaningful restrictions on emissions or the extraction of fossil fuels, market-based solutions focus on changing behavior by creating the right set of incentives.  

But without strong penalties to go along with those incentives—a stick alongside the carrot—market-based solutions simply end up creating profitable new markets without addressing the underlying economic drivers of climate change.

When the Kyoto Protocol was adopted in 1997, the creation of markets for trading carbon emissions (typically referred to as a cap-and-trade system) was established as the primary means of tackling climate change without endangering profits. The basic idea of carbon markets is simple: establish a cap or limit on the total amount of CO2 that companies can emit. That amount of carbon is then divided up and allocated to different companies through the creation of carbon permits: in order to emit any amount of carbon, each company needs the corresponding permits.[view:in_this_series=block_1]

For those companies that emit less than the allotted amount, carbon permits can be traded or sold for additional income. For those companies that produce carbon emissions over the limit, the need to purchase costly permits should function as a reason to innovate and develop low-carbon production methods.

But carbon emissions trading hasn’t lived up to its promise. The world’s largest market for carbon emissions trading, the European Union Emissions Trading Scheme (EU ETS), is failing. The European system is awash in excessive permits, meaning that the price of emitting carbon is so low that corporations have no incentive to clean up their production methods. At the global level, the United Nations Clean Development Mechanism (CDM) is suffering a similar fate.

As Steffen Böhm, director of the Essex Sustainability Institute at the University of Essex contends, “Carbon markets have lost us more than 15 years in the battle against climate change.” A combination of aggressive industry lobbying for additional permits, a lack of transparency and inadequate oversight mechanisms has simply turned carbon markets into yet another profitable arena for speculation, with no measurable effect in terms of reducing emissions.

One of the staunchest critics of the emissions trading approach is NASA climate scientist and activist James Hansen. Hansen has accused carbon markets of failing to rein in emissions and allowing “polluters and Wall Street traders to fleece the public out of billions of dollars.”

Hansen’s critique is more than grousing from the sidelines. Alongside groups such as the Citizens Climate Lobby in Canada, Hansen advocates an alternative approach to reducing emissions called fee and dividend. Although it remains a solution based on the market, fee and dividend takes a different tactic: rather than work to create new avenues for profit, it restricts markets, makes the fossil fuel sector less lucrative, and attempts to direct markets to meet human needs.

Unlike the cap and trade system, which is plagued by an opaque structure and dominated by bankers, industry insiders and technocrats, fee and dividend relies on a simple mechanism. It works by imposing a carbon fee directly at the point in which fossil fuels enter the economy: the port, the wellhead or the mineshaft. The collected fees are then distributed in their entirety to the population in the form of a monthly dividend. Everyone receives the same amount deposited directly into their bank account, regardless of income or assets.

The carbon fee would then increase each year, slowly making reliance on fossil fuels less and less economical, while driving incentive for green innovation. Since the increased cost of fossil fuels would then be passed along to consumers in the form of higher prices, the monthly dividend provides a cushion to compensate for higher heating and transportation costs.

The advantages of this system over cap and trade are clear and significant. It is simple and transparent, requires no new government bureaucracy, and does not create new opportunities for speculation. When coupled with the removal of all fossil fuel subsidies, it aims straight for the heart of the economic motor of climate change: cheap oil, gas and coal.

Crucially, fee and dividend also has a progressive dimension. According to a 2011 report by the Canadian Centre for Policy Alternatives (CCPA), the emissions of the top 1% of households are approximately three times the average, or six times greater than those of the bottom 10%. The report also shows that two-thirds of Canadians have average or below-average emission levels. Since every household receives the same size monthly carbon dividend, fee and dividend acts as a progressive income boost for lower-income, lower-emission groups. Plus, it provides an economic incentive for all Canadians to reduce their household emissions.  

By ensuring that the costs of reducing emissions are largely borne by the enormously profitable fossil fuel companies themselves, fee and dividend provides an equitable and effective way forward. With the window for action on reducing emissions rapidly closing, we can’t afford to wait for the market to decide that preventing catastrophic climate change is profitable.    

Art by Will Brown. All Rights Reserved.

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