The Global Climate Ledger

The Global Climate Ledger

The rise of the global middle class threatens to blow up the environmental envelope. Can the link between income and emissions be broken?

Unsustainable Inequalities: Social Justice and the Environment
by Lucas Chancel
Harvard University Press, 2020, 184 pp.

The protests were all the more striking because environmental equity had been a hot topic in France from the moment that carbon taxes were first introduced under former President François Hollande in 2014. The Paris climate conference of 2015, remembered fondly in the United States as the high point for Obama-era climate action, was also the signal diplomatic achievement of the Hollande presidency. At the time, Macron was serving as economic minister in the Socialist cabinet. Distributional issues were front and center.

The basic shift agreed to in Paris was the abandonment of the firewall that limited demands for emissions reductions to industrialized countries, listed in Annex I of the UN Treaty signed at Rio in 1992. The willingness of emerging market countries like China and India to enter into carbon reduction talks made it all the more important for the rich countries to offer offsets in the form of funding. The main issue at Paris was climate mitigation—reducing the emissions of greenhouse gases. But, given the global warming that was already underway, precautionary investment in climate change adaptation was urgent. In 2015 the investment needed to protect vulnerable countries around the world was estimated at roughly €125 billion per annum by 2025 ($150 billion at then prevailing exchange rates). Actual spending was closer to €10 billion, of which Europe contributed 62 percent. Clearly, there needed to be a huge increase in spending. But who would pay?

In 2018 the advocates of the U.S. Green New Deal, inspired by the economic analysis of Modern Monetary Theory, would waive this question aside. Within the limits set by the risk of inflation, one should simply raise the funds needed by central bank credit. The question of debt issuance or taxation could be settled as and when required. But that is not how European argument in 2015 was wired. Green investments and distribution were directly coupled to the question of taxation and redistribution.

The blunt argument is that industrialized states are responsible and that they should pay. Since the start of global climate talks in the 1990s the climate justice movement had pointed the finger at the Western states. But according to the best available data in 2015, thanks to the huge surge in Asian growth, the share in cumulative CO2 emissions since the start of the industrial revolution attributable to members of the EU came to “only” 20 percent. The U.S. share was 27 percent. The disproportionate contribution of Western economies to global warming becomes more apparent when one calculates emissions in per capita terms. It is the relatively small populations of the Western societies that make their large emissions so egregious. But an approach in terms of per capita emissions begs another question. Europe and the United States are hugely unequal capitalist societies. A jet-setting executive, a single mother on welfare, and a peasant farmer do not make the same contribution to the climate crisis, whether they live in France, the United States, or China. In the aftermath of austerity measures passed during the eurozone crisis, it was political suicide to ask working-class Europeans to make bigger sacrifices for global climate measures. If green activists pointed out that Europe’s emissions were artificially reduced because so much industrial production had been shifted to China, the response of many Europeans was that they would happily have the emissions back, along with the jobs that went with them.

How, then, to establish a fair system of global climate funding? The obvious answer was that taxes should be assessed on the basis of individual income, which both defined the ability to pay and was closely correlated with carbon emissions. The crucial question was about the appropriate burden for middle- and low-income people in affluent countries compared to the rich both at home and in the booming emerging market economies. Radical Indian environmentalists had long accused their local elite of “hiding behind the poor.” The first statistical estimates released at the time of the Copenhagen climate conference in 2009 showed how national averages determined by poor populations hid the exorbitant lifestyles of poor-country elites. These results were powerful, but the methods used to calculate them were rudimentary.

If world leaders needed to make a complex measurement of inequality at the Paris climate conference, they didn’t even need to leave the city. Following the launch of Capital in the Twenty-First Century in French in 2013 and then in English in 2014, Thomas Piketty had soared to global celebrity as the superstar of inequality research. In time for the 2015 conference, Piketty produced a new set of estimates of inequality, this time in terms of CO2 emissions. His collaborator on the project was a youthful Lucas Chancel. Since 2015 Chancel has gone on to become codirector of the World Inequality Lab and of the World Inequality Database. His slim volume on inequality and the environment first appeared in French in 2017 as Insoutenables inégalités: Pour une justice sociale et environnementale. With some topical updates it has now been translated by Malcolm DeBevoise for Harvard University Press.

Attributing CO2 emissions across the global income distribution is a complicated business. In technical terms it involved the French duo borrowing the technique of Piketty’s great rival in global inequality research, Branko Milanović. Whereas Piketty in Capital approached inequality on a national basis, Milanović starts by putting the entire world’s population, from the poorest to the most rich, into a single pot, then slicing the resulting pool, representing billions of people, by income groups. Rather than comparing U.S. inequality with that in France, one can thus directly compare the position of a lower-middle-class American with a higher-income resident of Tanzania or Malaysia. On that basis one can then, as Piketty and Chancel show, makes guesses about CO2 emissions across the global income distribution, allowing for factors like national differences in energy infrastructure, the import and export of carbon, and direct and indirect emissions (the difference, for example, between emissions from driving a car and emissions produced in manufacturing the car in the first place).

The results of the statistical labor by Piketty and Chancel was to confirm the common sense of the climate justice movement. The top 10 percent of emitters in the global distribution contributed about 45 percent of total emissions, while the bottom 50 percent emitters were responsible for only 13 percent. The top 10 percent were spread around the world. Forty percent were concentrated in North America, more than twice Europe’s share of 19 percent. Though there were some very high emitters in India, they were swamped by far larger numbers of heavy polluters in China, Latin America, the Middle East, and the former Soviet bloc. Overall, one-third of those in the top 10 percent of global emitters lived in emerging countries.

There were still clear national differences. Whatever their incomes, Americans consumed more energy. This is built into their infrastructure and way of life. As a result, rather than there being a general “Western” pattern of energy consumption, the carbon budget of low-income Europeans and top 1 percent Americans are worlds apart. As Piketty and Chancel argued, rather than proceeding on a national basis, any global levy to combat climate change should bear on those responsible for the majority of the emissions.

There was a further implication of applying Milanović’s methods to the climate problem: an environmental “elephant curve.” This graph, made famous by Milanović, maps rates of income growth across the global income distribution since the 1980s. The profile of the graph resembles the silhouette of an elephant. The drooping tail on the left-hand side reflects the continuing misery of those at the bottom of global distribution. The bulky body captures the rising incomes of hundreds of millions of newly prosperous people, above all in Asia. They are rapidly catching up with the stagnant incomes of working-class and lower-middle-class earners in advanced economies. Their incomes put them at the top end of the global distribution but they have seen very little growth in recent decades. They make up the descending forehead of the elephant. Finally, the soaring income of all those at the very top of the income scale—those who manage and profit from globalization—give upward flourish to the trunk.

As Piketty and Chancel showed, the CO2 emissions data follow the same contour. The poverty of those at the bottom of the global distribution is reflected in their lack of energy consumption and emissions. The stagnation of living standards of the working and middle class in the advanced economies has kept their emissions of CO2 relatively unchanged since the 1990s. The global elite, by contrast, has seen a further increase in their emissions, though, given their already huge energy budgets, the increase in their energy consumption has not kept pace with their soaring incomes. The dominant feature of the environmental elephant curve is the surging emissions of middle-income consumers in emerging markets, who are moving to cities and buying motorbikes, cars, and air conditioners for the first time.

Adjusting to this shifting balance of global emissions has been the basic challenge of climate politics from the 1990s onward: How to bind everyone in, and to do so fairly? Though this point emerges somewhat obliquely, this is also the central dilemma of Chancel’s book: How are emerging market economies to catch up without blowing up the environmental envelope?

The problem is daunting. One bromide Chancel dispenses with swiftly is the idea of the environmental Kuznets curve, which suggested rather optimistically that as people grew richer they would become more interested in the environment and thus engage in effective protection. Though this may have some relevance for phenomena like air pollution, as far as climate change is concerned it is entirely misleading. All else being equal, emissions rise with income. The question is how to end that relationship.

For the left wing of climate politics, it is obvious that this requires radical action to break the essential nexus between fossil fuel use and capital accumulation. Chancel does not even discuss this basic entanglement. He offers no structural account either of inequality or the historic reasons for the relationship between growth and environmental damage. There is none of Piketty’s famous algebra. No r>g. Nor does Chancel deploy the kind of historical analysis of the Capitalocene developed by his contemporaries in Paris, Christophe Bonneuil and Jean-Baptiste Fressoz, whose brilliant L’évènement anthropocène appeared in 2013 (translated in 2017 as The Shock of the Anthropocene). Instead, Chancel is content to take us on a rambling tour of various possible reforms, ranging from food labeling to the tax proposals he formulated with Piketty in 2015.

One of Chancel’s concerns is that as the global middle class grows it will follow its peers in the West on a path of status-oriented consumption culminating in the purchase of automobiles. This would be an environmental disaster. Expanding public transport is the obvious solution. But in highly unequal societies like India, subways are unlikely to be used if they force the rich to mingle cheek by jowl with the abjectly poor. One solution to which Chancel gives serious consideration is the proposal to introduce socially segregated first-class public transport as a way of convincing middle-class Indians to forgo their cars. Chancel ruefully admits that the idea was ultimately rejected in New Delhi. When it comes to balancing glaring inequality, Indian politicians proved more socially adept than Macron.

Other than its indeterminate politics, another striking feature of Chancel’s discussion is the relative modesty of the transition he envisions. The €150 billion required annually for climate adaptation remains the benchmark for his proposals. As Chancel himself notes, that modest sum could be raised by taxing air travel at the rate of €20 per economy and €180 per business class ticket.

Unsustainable Inequalities, in short, is no manifesto for a climate left. Chancel is hard-hitting in his empirical diagnosis. Some of his proposals are positively utopian—like a global tax on the wealthiest polluters. But when it comes to the diagnosis of the political economy that holds the status quo in place he seems tongue-tied.

What Chancel tirelessly advocates for is more data. As he notes, we are in a moment in global policymaking that glories in defining objectives and goals. As a result of work like that of the Paris school, however, the discrepancy between ever more refined analysis, ambitious goals, and the dispiriting lack of action is ever more glaring. Chancel’s book is best read as a call to further increase that tension, in which, perhaps, lies some hope of breaking the deadlock.

Adam Tooze teaches history at Columbia University, where he directs the European Institute. He is the author of Crashed: How a Decade of Financial Crises Changed the World.