Markets Won’t Stop Fossil Fuels

Markets Won’t Stop Fossil Fuels

Global climate institutions have embraced the primacy of capital, private firms, and markets—and in so doing have fatally undermined their own efficacy.

Sultan Al Jaber, ADNOC CEO and president of COP28, speaks at the Abu Dhabi International Petroleum Exhibition and Conference in 2017. (Karim Sahib/AFP via Getty Images)

In early January, the United Arab Emirates named Sultan Al Jaber president of COP28, the twenty-eighth meeting of the Conference of the Parties to the United Nations Framework Convention on Climate Change (UNFCCC). Al Jaber is CEO of the UAE’s state-owned oil company, Abu Dhabi National Oil Company (ADNOC), and chair of the board of Masdar, the state-owned renewable energy corporation. He has announced his commitment to bring the private sector’s “business mindset” to bear on “a pragmatic, realistic and solutions-oriented approach that delivers transformative progress for climate and for low-carbon economic growth.” Meanwhile, ADNOC is currently planning to increase production from 4.3 to 5.1 million barrels of oil per day by 2027, and potentially to 6 million or more by 2030—the very same year COP21’s Paris Agreement set as the deadline for a 43 percent reduction in global emissions.

The fact that COP28 is being led by an oil company boss is the logical outcome of a distorted and defanged framework. Corporations and several states—the United States most prominently—have worked to undermine the UNFCCC: the negotiation process is cumbersome and manipulable, commitments are easily diluted, objectives remain voluntary, and enforcement is not even on the table.

In 2018, Joel Wainwright and I published a book in which we argued that the COP meetings were one of several signals of a phenomenon we called “Climate Leviathan”—an inchoate but emerging set of institutions with the global reach to address climate change, which also aimed to protect capital and existing distributions of wealth and power. Those who currently sit atop the global hierarchy, we wrote, would attempt to deal with climate change in a way that reinforced that hierarchy. We suggested this effort would lead toward some form of planetary governance—a means of coordination or domination that set climate rules to save the capitalist planet. Not only would this development result in further injustice; it wouldn’t work, even on its own terms.

Five years on, there is perhaps less reason to expect further consolidation of planetary capitalist governance than we thought—at least in the short term. What is clear is that whatever those strolling the halls of corporate and state power are currently doing about climate change, it is inadequate to the task. The assumptions that underwrite the promises of the future—models that jauntily project 2 percent global growth rates propped up by stable political-economic regimes 100 years from now, or green tech’s dreams of electric airplanes and carbon-sink capitalism—are fantasies.

It still appears that global-scale arrangements may ultimately play a crucial role in adapting politics and governance to the needs of capital on a hotter planet; the March 2023 publication of the Sixth Assessment Report of the Intergovernmental Panel on Climate Change only adds to the momentum. At present, however, the only meaningful developments are at the national and subnational scales. This dynamic is of course partly attributable to the fact that so many powerful actors energetically oppose anything but a shallow performance of planetary coordination. But it is also a function of the manner in which global institutions have embraced the primacy of capital, private firms, and markets—and in so doing, fatally undermined their own efficacy.

The few existing mechanisms of planetary climate governance are almost all linked in some manner to the United Nations and share all its limitations. Meanwhile, the global or quasi-global economic institutions designed to ensure the stability and expansion of capitalism—including the Bank for International Settlements, the International Monetary Fund, and the World Trade Organization—view climate crises as mere variables in their calculations. Today, capital sometimes takes climate seriously, but its institutions are nonetheless either opposed to or unmotivated to pursue a true global response.

There are at least two related reasons this could be the case. First, many firms and states have actively obstructed global climate efforts, often while feigning support, because those efforts diminish their expected returns. Others have either hindered multilateral internationalism or not bothered to help it, because existing relations are much more amenable to their interests. But the pursuit of profit does not entirely explain it. Even businesses that stand to make billions in a changing global regulatory environment—J.P. Morgan, for example, has jumped enthusiastically into the carbon credit business—are part of an effort to render global governance a glacial, futile process, perhaps because they are not interested in endorsing any potentially precedent-setting framework at the global scale.

The second and linked reason is that the UNFCCC–COP process has put virtually all our climate eggs in the market basket. All the alleged progress trumpeted following each of the meetings since Paris 2015 has involved deepening commitments to market-based “solutions” and private-sector innovation. The principal regulatory tools include emissions trading schemes, carbon taxes, net-zero offsetting, and arbitrary subsidies for carbon capture (which at least in Canada often fund the fossil fuel industry’s pipe-dream promises to carbon-neutralize itself). All of this is backed by voluntary corporate ESG (environmental, social, and governance) commitments that, at least on the climate front, have largely proven a waste of the paper that the annual reports are printed on.

The point of these measures is to create conditions in which self-interested market activity will solve climate change by generating an eco-friendly variation of what it already does. But the limits of each of these tools makes realizing that goal impossible. Emissions trading schemes cover only a limited amount of economic activity. Carbon tax rates bear no relationship to actual environmental constraints. And “net-zero” pledges often slow efforts to bring emissions down, instead relying on offsets that are widely seen as a racket.

The current best-case scenario under the market framework involves using industrial policy to make fossil fuels noncompetitive. The path to this future is paved by robust state support for technological development and deployment. These schemes ultimately involve a disingenuous performance of market competition under a regime of national state capitalism. If renewables and green tech can create an industrial structure similar to the armaments or fossil fuel industries—where firms retain the structure of private companies but rely on direct subsidy from the government to sustain their profits—they will clamor to participate.

This sort of industrial policy has been portrayed as an alternative to more indirect neoliberal climate policies, but the current framework still enshrines private property, profit, and the “market” (however non-competitive in reality)—and all their attendant shortcomings. As the Climate and Community Project put it in a powerful new report, the current paradigm relies on “the theory that increasing the demand for clean energy will crowd fossil fuels out of the marketplace. Implicit in this strategy is the assumption that fossil fuel firms will voluntarily close their doors as they get pushed out and exit the market in an orderly fashion. They will not.”

Even if the oil majors do close up shop and reorganize for new green markets, it will take too long. Prophets of green growth tell us over and over of the global economy’s declining carbon intensity—the level of emissions associated with one unit of economic growth. But if growth accelerates, we can still have decreasing carbon intensity and rising emissions. And we simply do not have time to sit around and congratulate the business lobby while continuing to pour greenhouse gases into the atmosphere.

The failure of markets to solve climate change could eventually lead to a more panicked and authoritarian response on the part of capital and the world’s most powerful states. The global political-economic system will have to confront the potential disintegration of capitalism; we might say that the relations of governance will come into contradiction with the mode of production. There’s no reason to believe this response would work any better than the current one, and it will be even more unjust, prioritizing the interests of those with the capacity to determine and enforce the rules (and to decide when and how they can be broken).

In the face of this possibility, we must refuse the imposition of the anti-politics machine that is the market. We should also realize it is unlikely that the climate justice movement will be able to counter any planetary exercise of power with an equally global response. Naomi Klein is right to argue that there is no one big answer to climate change. There might not be an umbrella politics that can articulate the beliefs of movements around the world. Some links will form; others won’t. The next fossil-fuel-sponsored COP matters, but it is only one among many important for a for climate politics.

Climate justice will need to be pursued on a scale that meets human and community needs. Most climate action is happening at the national and subnational levels, which matches the scales at which capital is constructing, in tandem with the state, a supposedly green capitalism. We should be supporting, generously and respectfully, the range of efforts to realize climate justice, and cultivating the soil in which they grow, in the full recognition that the importance of smaller-scale struggles cannot yet be judged.

There are many ways to demonstrate the glaring insufficiency of market models. People all over the world are engaged in attempts to decommodify those dimensions of their lives in which popular democratic control can enhance public well-being and address the immediate threat of global warming. We have the opportunity to support them, while considering where we can make our own contributions to protect the dignity and security of those history has tried to sweep aside.

Geoff Mann teaches at Simon Fraser University in Vancouver, British Columbia. He is the co-author, with Joel Wainwright, of Climate Leviathan: A Political Theory of Our Planetary Future (Verso, 2018).

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