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Economic Growth is the Cause of Climate Change, Not the Solution to It

Through 2019, the last year for which data is available, greenhouse gas emissions and global GDP growth remained as highly correlated as they have been for the last half century. What this means is that despite the rhetorical back-and-forth over technological innovation and government policies as potential solutions to climate change, the role of economic production as its cause is unchanged from prior years. To date, the outsourcing of greenhouse gas emissions to China and India accounts for most or all of the alleged progress being claimed by rich nations.

This relationship between GDP and greenhouse gas emissions is more than a statistical anomaly. It is evidence of the causal relationship between them. And because GDP can be stated in terms of income, responsibility for climate change is approximated through the distribution of income. Those with higher incomes are responsible for a greater quantity of climate change than those with lower incomes. This assignment of responsibility works at the level of nations and economic class. Rich nations are responsible for more greenhouse gas emissions than poor. And the global rich bear more responsibility than the global poor.

Graph: the level of cumulative greenhouse gas emissions in the atmosphere has risen in close proportion to economic production as measured by GDP. While correlation doesn’t prove causation, several decades of examining the sources of greenhouse gas emissions does. And while theoretical analyses suggest that green technologies can reduce greenhouse gas emissions, the relationship of GDP levels (above) and rates of change (below) show no evidence of this promise to date. As has been demonstrated accidentally through the economic failures of neoliberalism, slowing the rate of economic growth is the only proven way of lowering greenhouse gas emissions. Source: World Bank, Github / Climate Watch.

In a world where capital is both fungible and mobile, the framing of greenhouse gas emissions within national geographical boundaries— as the Paris Climate Accord and other environmental agreements do, substantively misrepresents the political economy that produces them. Additionally, while technological innovation is both welcomed and encouraged here, the declining rate of economic growth since the neoliberal epoch began explains the declining rate of growth in greenhouse gas emissions. In other words, bottom-up theorizing about the impact of green technologies isn’t yet showing up in this top-down data.

For those unfamiliar with the history, the U.S. emerged from WWII with the only industrial infrastructure left intact. From about 1948 through the early 1970s, this produced a high level of real (inflation-adjusted) GDP growth coincident with high greenhouse gas emissions from within U.S. borders. As industrial infrastructure was built overseas, economic production became more widely distributed. Both China and India implemented export-led economic growth strategies, meaning that they took over greenhouse gas emitting economic production from the U.S. and Europe. The result: goods bound for U.S. and European markets are increasingly produced overseas.

In economic and environmental terms, globalization means that national geographical boundaries are of less value in identifying the sources of economic production. Most complex products like automobiles or computers now incorporate parts, resources, and labor from multiple countries. In environmental terms, this produces opportunistic mobility, a disconnect between legal jurisdiction and physical economic production. With China and India having taken over dirty economic production for the benefit of corporate interests and ‘consumers’ in rich countries, the question of who should bear the environmental costs is complicated.

Graph: this represents the ten-year rate of change in greenhouse gas emissions relative to the ten-year rate of change in global GDP using the same data from the top graph above. As the rate of growth in global GDP has fallen since the 1970s, so has the rate of growth in greenhouse gas emissions. Were ‘green growth’ a factor, greenhouse gas emissions would have fallen at a faster rate than global GDP. This has not happened. To date, cutting economic growth is the only demonstrated way of cutting the emissions that are causing climate change. Source: World Bank, Github / Climate Watch.

In terms of grabbing environmental headlines, the U.S. rejoining the Paris Climate Accord is good news. However, the framework of the accord as an agreement amongst nations plays into this disconnect between discrete national borders and the relocation of greenhouse gas emitting industries to China and India. Another way to consider the question is to ask: who benefits from economic production? The answer from mainstream economists illustrates the intellectual poverty of their premises: everyone. Markets didn’t ‘misprice’ carbon emissions for two centuries. Markets didn’t even know that they existed until climate scientists pointed them out.

One of the central points of the 2018 IPCC Climate Report on limiting global warming to 1.5 degrees Celsius is that the problem is global. There is no practical way to limit its impact to those who are creating it. The ‘steady state’ with respect to greenhouse gas emissions is a relative rate of growth. Irrespective of which party occupies the White House, every minute, hour, day, week, year, and decade environmental decline is getting worse in close proportion to economic production— GDP. The collective ‘we’ can either radically transform Western political economy starting three years ago or the future of humanity is an open question.

The longstanding use of marketing in the U.S. to quiet political disputes has resulted in a proneness to conflating symbolism with policy success. A quick perusal of environmental reporting found years of claims of success in reducing greenhouse gas emissions that disappear once the national environmental ledgers are adjusted for outsourced emissions. Imports into the U.S. from China and India are assigned carbon footprints based of the pollution that is released in their production. Because these products are made for export to the U.S. and Europe, the political argument can be made that this is where the environmental costs should be borne.

The question for environmental negotiators is how this disconnect between national boundaries and outsourced emissions will be rectified? The national economic goals of the Chinese and Indian political leadership in building-out dirty, export-based industrial infrastructure is development economics 101. It is how Chinese and Indian economists educated at Harvard or Yale would have been taught to do economic development. The problem of differing stages of economic development is well understood in environmental negotiations. The question of how eight billion people can drive Escalades and live in McMansions has not been answered yet.

The problem is complicated by the economic decision making whereby the types of economic production that have been exported aren’t clearly distinct from methods. Not only have the U.S. and Europe outsourced dirty economic production, but the U.S. has been exporting the U.S. coal ‘saved’ through EPA restrictions on its domestic use to India, Brazil, China, etc. That is, if the political leadership in the U.S. were held to account for greenhouse gas emissions, the dirty coal it sold to China— much of it mined from Federal lands, would have been left in the ground. While Trump! is guilty of environmental crimes, it was Barack Obama who did this.

To date, Joe Biden has followed the American practice of making symbolic environmental changes, such as canceling the Keystone XL pipeline and restricting the licensing process for new oil and gas exploration on Federal lands. These are welcomed as symbols. But they will have little environmental impact unless further action is taken. The Keystone XL pipeline was to carry particularly dirty tar sands oil from Alberta, Canada to the Gulf of Mexico. In fact, other pipelines are already built, and the capacity exists, such that canceling the Keystone XL pipeline won’t limit the distribution of tar sands oil.

The restrictions placed on the licensing process for oil and gas extraction from Federal lands is temporary, and it won’t have an impact on the volume of oil and gas extracted for a decade or more due to the licenses that were left in place. While these moves are welcomed, and they represent a departure from the Trump administration in terms of signaled interests, prior administrations made similar moves only to cynically undermine them once they had served their political purpose. The political challenge is to support the moves made by Mr. Biden without confusing symbolism with substantive action.

The larger problem, and the purpose of relating GDP to greenhouse gas emissions above, is that ‘better than Trump’ isn’t good enough. The political question of how ‘we’ get from current circumstances to meeting the IPCC timeline for reducing greenhouse gas emissions— already considered conservative by many environmentalists, won’t be answered by adding together a host of small-bore initiatives, no matter how substantive they may feel after decades of neglect. To use a mechanical metaphor, fixing a tractor isn’t a theoretical question. Intentions don’t matter— the tractor either works or it doesn’t. This becomes a life-and-death matter when applied to the environment.

While some of these tensions are tangential for present purposes, they illustrate how thinly considered ‘political’ environmental plans can be. If the Biden plan is to replace gas-burning vehicles with EVs, some effort should have been made to assure that the resources needed to do so are available. However, this doesn’t appear to be the case. And while EVs are expected to reduce the environmental footprint of transportation, this didn’t happen when fuel efficiency standards were applied to cars. While the emissions per mile driven were reduced, both the number of miles driven and the number of cars on the road increased dramatically.

But the real problem is the quantity of pollution that will be produced acquiring resources and manufacturing EVs. What is being proposed is a massive increase in environmental destruction under the theory that the long term payoff will offset the expenditure— and more, in environmental terms. To compound metaphors here, when one finds one’s self in a hole, stop digging. The plan with EVs is to get a better shovel. Again, the purpose of the graphs relating greenhouse gas emissions to GDP (above) is that as of 2021, any increase in GDP means an equivalent increase in greenhouse gas emissions.

The half-baked Trump administration plan to lead a coup in Bolivia was thankfully averted by the Bolivian people. However, the subtext of the coup was lithium, the as-of-now necessary ingredient for EVs to be built. According to Ilargi, as posted on nakedcapitalism.com, EV automaker Tesla alone needed 165% of the available lithium supply in 2020. How precisely is a program to replace the existing stock of gas-burners with EVs going to work without enough lithium? More to the point, if meeting the IPCC timeline is possible, increasing greenhouse gas emissions to do so would have been risky and implausible thirty years ago. But that time has run out.

More than five million people were killed in the 2010s in a resource war in Democratic Republic of Congo to acquire coltan needed in the manufacture of cell phones. While Glen Ford at Black Agenda Report did some good reporting on the conflict, it was otherwise invisible to Americans. Economists exclude the human costs of these wars from cost estimates of technological solutions to climate change. But all of them imply resource wars. Given how climate change will decimate agricultural production, these wars are destined to become more frequent and vicious.

If the supply of resources hasn’t been thought through, then the environmental accounting relative to EVs most certainly hasn’t been thought through. Lithium mining is profoundly environmentally destructive. And the U.S, military is the largest user of fossil fuels in the world. Paradoxically, much of this use goes toward securing supplies of natural resources. The point: the broader political context in which economic production takes place makes narrow environmental accounting more obfuscatory than illuminating.

More broadly still, a paradox of capitalism, or whichever term you prefer for Western political economy, is that profits are earned in proportion to the ability of polluting industries to dump their costs onto others. This provides the rationale for the proverbial ‘race to the bottom’ where no single industrialist or industrial organization can stop aggregate industrial pollution, but they all benefit from their ability to shift the costs of production to others. These profits produce favorable financing terms from Wall Street, broadly considered, further lowering costs— and enhancing corporate profits. Whomever is best at this game gains the economic power to control political outcomes.

While this reads as a morality play, and on a certain level it is, these intentions are built into the corporate form as well as the logic of capitalism. Corporate managers along multiple lines of responsibility are employed to game whatever regulatory regime exists to govern corporate behavior. This practice is well understood with taxation, where the lawyers and accountants of multinational corporations exploit discrete legal structures through ‘regulatory arbitrage.’ They use international mobility and the power of coercion to seek out and control locales and governments through which taxes can be avoided.

The legal limitation of the Paris Accord, the question of which bodies have the jurisdiction to midwife and enforce environmental agreements, doesn’t exist in a vacuum. ISDS (Investor-State Dispute Settlement) clauses embedded in the original NAFTA were removed from the re-negotiated NAFTA, but residual lawsuits remain. Had ‘free-trade’ proponents had their way, the ISDS clauses in the original NAFTA and the TPP would have made the enforcement of environmental regulations by national governments virtually impossible.

Of current relevance is that the legal structures created through ISDS clauses can be used to preclude environmental regulation without in any way identifying them as ‘environmental.’ While those who pay attention to trade issues might know them as such, political opportunists who publicly identify as environmentalists have become particularly adept at undermining their own well-publicized environmental programs. Joe Biden has left the door open to negotiating trade agreements with the promise to ‘give labor a seat at the table.’ However, if ‘the table’ isn’t where binding decisions are made, the offer is worse than useless because it is deceptive.

The point here isn’t to cast aspersions, but to consider how environmental agreements are conceived, negotiated, and enforced. Readers are invited to further consider how the income measure of GDP works as a framework for understanding the political economy of climate change. The logic, again, is that GDP and greenhouse gas emission levels and rates of change are causally related. At the levels of nations and class, rich nations and the global rich bear quanta of responsibility for these emissions approximated by their income-shares of GDP. The relationship isn’t perfect, but it fundamentally reframes environmental politics in the class terms from which the problems emanate.

The prospective benefit of a robust Green New Deal with a Job Guarantee is that it would shift social resources down the class distribution in a way that reflects the class basis of environmental problems. This isn’t what is being proposed and it is important to understand the difference. The rich made themselves rich by trashing the planet that the rest of us depend on for existence. Leaving it to the rich to voluntarily clean up the mess they created would look a lot like making nice-sounding but unenforceable agreements between nations while subsidizing corporations to further trash the planet through ‘green’ capitalism. This will not work, and we’re out of time for marketing b.s. and green capitalist experiments.

Rob Urie is an artist and political economist. His book Zen Economics is published by CounterPunch Books.

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