Emissions trading: How should socialists respond?

By Shua Garfield

The draft legislation for the government’s planned greenhouse gas (GHG) emissions trading scheme (ETS), released on March 10, contained no real answers to the problem. It followed the course of the December 15 white paper: protection of corporate profits, shifting responsibility for reducing pollution onto the “hidden hand of the market” and targets for pollution reduction so low that, if emulated by other industrialised countries, would guarantee global disaster.

The government hopes to introduce the legislation in a final form in May, have it passed by June and be in effect from July 1, 2010. If the legislation passes in its current form, companies emitting more than 25,000 tonnes of CO2-equivalent per year (or 10,000 tonnes in the case of some landfills), or which produce or import GHG-producing fuels for use in Australia, will be required to surrender permits for each tonne of emissions at the end of each financial year. Most pollution permits will be auctioned by the government and can be traded, so that companies that reduce emissions more than expected can profit by selling permits to companies that fail to reduce emissions. Emissions from agriculture and deforestation — which together accounted for 18.9% of Australia’s emissions in 2006 — are not covered by the scheme.

Many weaknesses

Nothing stops companies from passing on the costs of pollution permits to consumers. The government promises to offset this impact by using money raised from auctioning permits to assist low- and middle-income people. However, its capacity to deliver on this promise is undermined by its commitment to hand out $3.9 billion to coal-fired power stations — to help them remain competitive against less pollution-intensive electricity generators and thus perpetuate their polluting — and to allocate large numbers of free permits to highly polluting “trade-exposed” industries. According to a December 20 Melbourne Age article by the government’s climate change adviser, Ross Garnaut, if free permits are allocated at the levels the government proposes, by 2020 they will be such a large proportion of the total that funds for assistance to low- and middle-income people simply won’t exist.

The government has set extremely weak targets for emissions reductions. Its minimum target is to reduce GHG emissions 5% below 2000 levels by 2020. If there is a global agreement in which other countries commit to sufficiently large reductions, the government has declared a willingness to consider a target of 15% reductions by 2020. The government has also committed to a long-term target of 60% reductions by 2050. However, according to Garnaut, “Within a global effort to hold [atmospheric GHG] concentrations at 450 parts per million (ppm), Australia’s proportionate share of the effort would reduce emissions entitlements [by] 25 per cent of 2000 emissions by 2020, and 90 per cent by 2050”.

Four hundred and fifty ppm is a level likely to produce a 2°C increase in average global temperatures above pre-industrial levels. Even at this level, global disaster may not be averted. According to a study of the association between atmospheric CO2 and climate over millions of years published in June by James Hansen, director of NASA’s Goddard Institute for Space Studies, atmospheric concentrations of 450 ppm in the past have been associated with the melting of the Antarctic ice sheet, which would raise sea levels by 60 metres. Thus, the government’s current commitments don’t come even close to what is necessary.

Union response

The response to the government’s plan by most trade union leaders has been disappointing. With the exception of Peter Marshall, national secretary of the United Firefighters Unions — who has called for halving emissions by 2020 to reduce repeats of the recent Victorian bushfires — the top union officialdom has been completely uncritical of the government’s targets and emissions trading. Since the election of the Labor government, the ACTU has uncritically supported the ETS, even endorsing specific aspects that are clearly counterproductive. For example, the ACTU’s climate change campaign web site declares: “The union movement supports the commitment ... to achieve a 60 per cent reduction in Australia’s greenhouse gas emissions below the 2000 level by 2050”. And last July, the ACTU executive voted to support government handouts to pollution-intensive industries — the same handouts that threaten to undermine government assistance to low- and middle-income people to adjust to ETS-related price rises.

The position of the ACTU is not surprising, given the nationalist, class-collaborationist outlook of many union officials — their belief that what’s good for Australian capitalists is good for Australian workers. This is embodied in their support for the Labor Party.

Australian Workers Union national secretary Paul Howes has called on the Liberal-National coalition to unite with Labor to ensure that the ETS legislation is passed by the Senate. Howes — who, like many Liberal and Labor politicians, tries to disguise his support for the capitalist owners of the coal, uranium, aluminium, steel and other highly polluting industries with rhetoric about “jobs” — is worried that without bipartisan support, the ETS may be subject to amendments by the Greens. Howes has accused the Greens of “indulgence” for demanding stronger emissions reductions.

‘Clean competition’

To their credit, the Greens have called the government’s emissions reduction target what it is — “totally unacceptable and inadequate”, in the words of a March 10 media release by Senator Christine Milne. The Greens have called for emissions cuts to be based on current climate science, suggesting that 40% reductions below 1990 levels by 2020 and zero net emissions by 2050 would be necessary. They have pointed out that free pollution permits “protect the profits of Australia’s worst climate offenders”, and that this “unfairly transfers the cost of meeting the target to industries with less lobbying power and to the community at large”. They also correctly note that “setting such a weak target … will also mean that the efforts of everyone from householders to State Governments to reduce emissions will be helpful only in reducing the price pressure on polluters”; this will lead companies to favour investment in small decreases in emissions over investment in zero-emissions technology and infrastructure and will also undermine efforts to agree on strong global emissions reduction targets.

However, while criticising the specifics of the proposed ETS, the Greens — along with environment peak bodies such as the Australian Conservation Foundation, the World Wildlife Fund for Nature, the Wilderness Society and several state-based Conservation Councils — support emissions trading as a strategy. They claim that an ETS with a strong cap and without handouts to big polluters would encourage “clean competition”, sending “price signals” that would aid companies to develop clean technologies, infrastructure and products while making “dirty” industries less competitive.

The idea that capitalism could ever function as a “clean competition” is utopian. It is even more so in this era of monopoly capitalism, when the largest industries are controlled by a small number of parasitic mega-corporations — 90% of which are based in the First World and which are usually subsidised by their governments. It is just as utopian to believe that capitalist governments would impose rules that would drive out of business the very corporations whose interests they exist to defend. If a government did seek to impose such rules, the capitalists and their permanent state apparatus would act to undermine or overthrow it.

Even if a capitalist government imposed an ETS so stringent that highly polluting industries became unprofitable and had to radically alter themselves or fail, this would leave the responsibility for the technical innovations and infrastructure necessary for a cleaner economy to private corporations, which would have to fund these projects from their profits. To succeed without risking major economic chaos, such an ETS would have to be supported massively by government. The new cleaner industries would need just as much, if not more, subsidies and research-and-development support as the fossil fuel-based industries now receive. Throwing away huge amounts of public money to prop up private profits raises the obvious question of what social benefit there is in allowing industry to be held in private hands. And some governments — those in wealthy First World countries — would have more resources to do this. This in turn would reinforce and widen the technology and wealth gap between First and Third World countries.

The motive for making industry cleaner would still be private profit. This is inherently exploitative: a wealthy minority appropriates wealth created by the labour of the working majority. Moreover, the capitalists would find ways to shift the additional costs of the ETS to consumers, most of whom are workers. Industries that could no longer profit under an ETS would simply throw workers onto the scrapheap of unemployment. This is a recipe for undermining mass support for environmentalism — something that is necessary for any real transition to sustainability.

By using “price signals”, an ETS, like carbon taxes and carbon rationing, seeks to modify production methods and technologies indirectly, by altering consumption. This allows governments to avoid their responsibility for sustainable infrastructure. Indeed, it means that no-one is directly charged with this responsibility. Wouldn’t it be more straightforward and effective at combating climate change to change production methods directly — to implement a massive public program of renewable energy, reforestation, conversion of agriculture to lower-input methods, expansion of public transport etc.? Wouldn’t it be better if the $3.9 billion to be handed out to the coal industry, the $9 billion in free permits to emissions-intensive industries and the current $9 billion in annual subsidies and tax breaks to fossil fuel industries were all directed to such an effort, rather than the mere $500 million the government has allocated to its planned Renewable Energy Fund? It would, but here’s the rub — it wouldn’t be “effective” or “better” for the business of capitalist governments, which is to promote corporate profitability.

Green ‘New Deal’

A range of mainly local climate action groups have concluded that the ETS and other “market mechanisms” are socially irrational and argue in favour of direct government investment in renewable energy. On March 27, a loose network of these groups, which formed at the January 31-February 3 (Canberra) Climate Action Summit, organised protests at the offices of parliamentarians around the country, opposing the ETS and demanding 100% renewable energy by 2020. The government’s policy aims for only 20% of Australia’s energy to be produced by renewables by 2020.

To implement a massive switch to renewable energy, a wide range of environmental groups, the ACTU and some socialist groups have called for a “green New Deal” — harking back to the program of public works and deficit spending of the Roosevelt administration in the US during the mid-1930s. Many proponents of a “green New Deal” have also encouraged it as a solution to the current global recession — buying into the reformist myth that it was the New Deal that ended the 1930s Great Depression.

Of course, it is important that environmental activists mobilise people around immediate demands on the government to implement a range of programs to reduce GHG emissions. Such campaigns can potentially draw large numbers of people into independent, direct political action in the streets and workplaces, raising their combativity, confidence and political understanding, and possibly winning some concessions that may slow the development of the climate crisis. Socialists can help develop political consciousness through these campaigns if they seek to educate people about the complete inability of capitalist economic and political institutions to effectively tackle the crisis and the need for their revolutionary replacement. Socialists who don’t do this consistently only reinforce the reformist, parliamentarist illusions common among people coming into such campaigning activity.

For example, in an article titled “A green new deal to meet capitalism’s crisis” in the March issue of Solidarity, Chris Breen wrote: “Instead of pushing emissions trading, Rudd could be investing in green jobs. As companies like coal giant Xstrata threaten 5000 jobs, the government could be stepping in to fill the breach through job creation in renewable energy. It was recently leaked to newspapers that the Rudd government is planning to spend $35 billion on new submarines over 15 years … Instead of machines of war, $35 billion could create 700,000 jobs (or almost 50,000 jobs if spread over 15 years) at a yearly salary of $50,000.”

Without explaining why capitalist governments prioritise war spending over the welfare of the majority, Breen went on to contradict his own call for “a green New Deal”, writing: “There is a myth that says the Great Depression of the 1930s was cured by Franklin D. Roosevelt’s New Deal. It wasn’t … [W]hat ended it was the Second World War … Every great power redirected its whole economy to recruit soldiers and make weapons ...

“When the US joined the Second World War, the government immediately shut down all car production. Within three months those factories were open again, employing more workers, but with planes and weapons rolling out the door. The same can be done to build new wind turbines, solar power, railways, trains and buses … But it won’t be easy to make our politicians take this step. We need a national campaign for a million climate jobs, backed by trade unions, NGOs and political parties. But that needs to be linked to local fights, so that every factory or workplace facing obliteration can occupy and shout out — ‘give us the jobs that will save the world.’”

Who benefits?

What Breen doesn’t mention is that in the World War II-era US economy, most of these industries remained under direct capitalist ownership. The reason their owners agreed to these programs was that the government’s war contracts were extremely profitable. According to the US Council of Economic Advisers’ Annual Reports, total after-tax corporate profits, which were $4 billion in 1939, doubled by 1942 (to $8.3 billion) and almost tripled by 1944 (to $11.2 billion). To sweeten the deal, nationalist, pro-business union leaders pledged not to strike, submitting to a wage freeze.

Similarly, any “war” on climate change would be acceptable to the capitalist class only if it sought to make workers pay as much of the burden as could be squeezed out of them, while propping up profits. Despite this reality, Socialist Alliance (SA) national co-conveners Dick Nichols and Bea Bleile wrote in the February 11 Green Left Weekly that the right adjustments could turn the Rudd government’s economic stimulus package into a “green New Deal” that would “start to put people and planet before profit, putting a stake through the heart of the neoliberal capitalist model that has brought our planet and human society to the edge of disaster”.

In an interview with Nichols and SA national environment spokesperson David White in the January 28 GLW, White claimed, regarding SA’s call for the formation of a “Sustainable Energy Authority”: “Only a national authority accountable to parliament can make the necessary hard decisions to make the transition possible”. But any statutory authority accountable to parliament will be under the control of an institution designed to preserve capitalist rule, and therefore won’t make any “necessary hard decisions” that run counter to the collective interests of the capitalist ruling class.

Nichols followed up White’s call by saying: “Central to this entire idea is that the big decisions about sustainable investment are not left to private interests. Instead, the unions, scientists, activists and affected communities should be empowered to direct the environmental priorities.” A statutory authority accountable to parliament is going to “empower” working people to decide the allocation of society’s resources. Does Nichols really believe such parliamentarist nonsense?

Wouldn’t empowering working people to make the “big decisions” require an entirely different type of government than one based on a parliament governing a capitalist state? Not according to White, who, in a February 4 GLW article, wrote: “Governments that rely on the support of the big corporate and mining lobbies will only act to make the changes needed when they are under massive pressure from a strong grassroots climate change movement”. Similarly, Breen’s article in Solidarity claims that what working people need to do to “make our [sic] politicians take this step” is “a national campaign … backed by trade unions, NGOs and political parties … linked to local fights”.

These articles reflect the false idea that, to achieve progressive change, it’s enough to pressure capitalist governments with a mass protest movement. Yes, capitalist governments may make reforms under strong pressure from movements if not doing so will undermine the stability of capitalist rule. But mass protest movements wax and wane, and the capitalist rulers are always on the lookout for ways to make workers pay for the measures they’ve been forced by public pressure to implement, and to roll back concessions they’ve been forced to make under public pressure.

Wouldn’t it be better to get rid of these governments altogether and replace them with governments based on the organised power of the working majority, as was done in the 1959 revolution in Cuba — now rated by the World Wildlife Fund for Nature as the only country in the world to have an environmentally sustainable economy? And wouldn’t it be better if socialists pointed to this need? If the threat of extinction is not enough to cause socialist organisations to explain publicly the need for socialist revolution, what is?