Learning from the Opposition, Part 1

Minimizing the worst effects of climate change seems like a goal we should all be able to agree on. If you ask them directly, very few people will come out in favour of increasingly frequent and severe storms, flooding in coastal cities or drought-induced famines. But as the evidence mounts that these things will come to pass unless we leave 80% of remaining proven fossil fuel reserves in the ground, why can’t we agree on the need to act?

The easiest answer is that opposition to transitioning to a low-carbon economy comes from those who stand to benefit the most from staying the course. The most obvious culprits here are oil and gas companies. While the International Energy Agency warns against exceeding an average global temperature increase of 2°, it also predicts that current policies will lead to a 35% increase in global demand for oil by 2035.

With Big Oil already posting record profits, the promise of substantial demand growth means those profits will balloon to unprecedented proportions. Faced with such alluring numbers, leaving oil reserves in the ground is not an attractive prospect for shareholders.

Although they make for easy targets, it’s not just ExxonMobil, Shell and co. that are standing in the way of meaningful action on climate change. As a key global commodity, oil is at the center of the business model not only for oil and gas companies, but also the automobile industry, logistics, plastics and pharmaceuticals, to name but a few.

The decrease in oil production needed to avert climate change’s worst effects would mean a significant cost increase for a basic factor of production across many sectors of the economy. This in turn would lead to serious reductions in profits—not to mention the additional costs for consumers.

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Since corporations are legal entities whose function is to maximize profits for their shareholders, they tend to oppose actions that limit profitability. While corporations depend on the state for their legitimacy and can therefore be compelled to accept reduced profits through regulation, government has its own reluctance about confronting climate change.

Just as corporations are constrained by quarterly profit requirements, governments are limited by the electoral cycle. Simply put, they need to maintain popularity with the electorate in order to stay in power. This leads to a bias in favour of policies with short-term benefits.

Although taking action on climate change is a platform that appeals to Canadians, the government knows it can’t be done without serious economic implications. If a governing party were to spearhead a massive industrial transformation away from fossil fuels, it would be blamed for any ensuing economic difficulties at the polls.

Beyond merely keeping voters happy, governments need to act in accordance with the multitude of rules and norms governing global capitalism. From G20 meetings to bilateral free trade agreements, the global economy rests on commitments from individual states to minimizing trade barriers, reducing regulation and maintaining fiscal discipline.

Charting a course away from fossil fuels within this framework is not impossible, but could encounter significant opposition at the international level. The ongoing financial crisis has already revived old fears of a return to protectionism and competitive currency devaluations. The overwhelming response from the IMF and other international financial institutions has been loud and clear: follow the rules to get back on track to oil-fueled global growth.

Taken together, all this means that the two most powerful institutions in modern society—the corporation and the state—lack the capacity to respond to the unfolding crisis of climate change. If the environmental movement is to be successful in spurring the immediate, drastic action necessary to reduce CO2 emissions, it needs to honestly assess these obstacles.

Institutional forms and economic relationships can be changed. But overcoming the path dependence of a global capitalism built on deeply entrenched principles of endless industrial growth and maximizing profits will take more than voting for the right party or investing in green growth.

The power of environmentalism rests on its ability to grow and sustain itself as a mass movement. In the second installment, we’ll look at some common criticisms of the environmental movement for ideas on how to increase its reach.