In the last instalment we described how since the 1970s the capitalist economic model has become progressively more maladjusted in a world of transformational technological change which is tending to make it as obsolete as the feudal model based on pre-industrial technology became at the start of the Industrial Revolution two centuries ago. However, a glaring difference between the situation now and at the start of the 19th century is that throughout the world the class with a vested interest in the survival of the existing (capitalist) order is still overwhelmingly dominant, whereas 200 years ago the then ruling élite (the landed aristocracy) were increasingly being challenged by the rising bourgeoisie.
Because of their continued dominance – based on their disproportionately huge share of global wealth and income – this group still retains almost total control of the political agenda via its virtual monopoly of the mainstream media (even though this position is now being progressively eroded by the growth of the internet and social media), not to mention the persistence of corrupt structures of political party funding and lobbying which ensure that money talks loudest in public discourse. Hence it is all too easy for big business to disseminate propaganda favouring its interests in the channels that most strongly influence public policy.
Thanks to this influence it has been possible for the very substantial vested interest comprising the global energy industry – representing not only the major oil companies but leading OPEC states as well – to conduct a sustained campaign of misinformation to try and discredit the overwhelming scientific evidence that man-made global warming – resulting primarily from exponentially growing consumption of fossil fuels – is a reality which may pose an existential threat to human society in much of the planet. While the strength of the evidence is such that this campaign of denial has only been partly successful, it has undoubtedly had the effect of sustaining a high degree of “climate change scepticism” among the global public, thereby weakening and delaying moves towards radical change in the pattern of energy use.
Furthermore, to the extent that the giants of the energy industry – and the rest of the traditional corporate sector (including big finance) – have found it necessary to “go green”, by promoting low-carbon forms of energy supply, they have not done so in ways best designed to serve the public interest. Thus rather than support policies designed to limit or phase out particular types of operation, such as coal-fired power generation, corporate interests have given priority to the seriously deficient mechanism of “cap-and-trade”, based on the idea that it is possible to reduce global production of carbon emissions by means of a market mechanism, namely trading in permits to pollute within an officially mandated emissions ceiling. Although this system has had some marginal benefits – mainly in facilitating investments that limit the growth of emissions in developing countries through the Clean Development Mechanism (CDM) – the overall experience of carbon trading to date (largely confined to the European Union) suggests it is highly unlikely to lead to significant reductions in emissions or promote the most cost-effective choices. Indeed it has been shown there is a danger of it having precisely the opposite effect if the incentives are badly calibrated. An example of this is provided by a widely used coolant gas whose by-product in the form of a waste gas resulting from the manufacturing process produces a massive amount of global warming – the destruction of which is accordingly assigned an extremely high value in terms of carbon credits saleable on international markets under the CDM. Hence the unintended result of this incentive has been a huge increase in output of the coolant gas in China and India – far beyond the demand for it simply in order to make profits from the excessive credits available on the harmful by-product (see Profits on Carbon Credit Drive Output of a Harmful Gas by Elisabeth Rosenthal and Andrew W. Lehren. New York Times, 8 August 2012).
Such counter-productive distortions illustrate the perverse rationale of the global ruling élite in trying to ensure that any new initiatives or activities aimed at limiting potentially harmful forms of production and consumption must as far as possible be designed to provide opportunities for the investment of profit-seeking capital and should extend rather than restrict the scope for market trading of assets and resources.
But arguably the most pernicious way in which the profit-maximising model works to subvert and defeat the public interest in the effort to rationalise global energy production and consumption is its tendency to promote those investments and technologies which are the most profitable for the private sector but which constitute the least cost-effective allocation of resources from the public’s perspective. This is reflected in the extent to which publicly supported programmes of research and investment (heavily influenced by corporate interests) tend to
Give low priority to supporting energy conservation – notably in respect of the design and refurbishment of buildings – which has the potential to meet up to half the requirements for emissions reductions in the industrialised world by 2050 at a far lower capital cost than would be absorbed by investment in renewable energy sources on a scale sufficient to achieve the same outcome. (This problem has clearly been exacerbated by the privatisation of so many energy utilities, giving them a vested interest in expanding rather than restricting demand – as confirmed by the fact that the utilities most effective in supporting energy-saving investments in industry are those which, as in Canada, have remained largely in public ownership);
Prioritise those forms of renewable / low carbon energy production that require relatively high levels of capital investment, thus providing outlets for the maximum amount of excess capital (surplus value) which will otherwise continue to weigh down corporate balance sheets and financial markets. The advantage of such outlets to investors is that the public interest in curbing carbon emissions is seen to justify high levels of public subsidy to energy utilities. This explains why the strategy of the UK and other OECD governments puts heavy emphasis on conventional nuclear and wind power despite – or perhaps precisely because of – the fact that they not only absorb high levels of fixed investment but are of such doubtful cost-effectiveness at market prices that projects can only be undertaken with the aid of a more or less indefinite state subsidy guaranteeing investors’ returns. (To the implied extra financial costs, moreover, must be added the environmental costs associated with both wind and nuclear power, which may be huge if scarcely quantifiable).
The criminal irresponsibility of pursuing such damaging strategies is apparent once it is understood that far more rational and efficient approaches to providing for future energy needs – while at the same time meeting the challenge of global warming – are increasingly available. Yet the existence of such options could scarcely be grasped from information provided by the mainstream corporate media; hence there is little awareness of the potential benefits to the planet, to consumers and to taxpayers alike from applying alternative technologies that have lately been developed. These should include:
Design / adaptation of buildings (to be encouraged through regulation and / or fiscal incentives) so as to make them self-sufficient in energy for space and water heating. This would be achieved both through a) extraction of heat from the sub-soil (geo-exchange) and b) improved building materials and insulation;
Development of small-scale electricity generation based on local / domestic installations (mainly solar), largely eliminating fossil-fuel dependence for power generation as well as minimising distribution costs (expensive national grid networks would become increasingly redundant);
Improvements in energy storage systems – batteries, hydrogen-based fuel cells using renewable energy – which could also render electric-powered transport systems much more competitive.
The adoption of such economically and socially desirable technologies would be greatly accelerated if more official support were provided to enhancing their commercial competitiveness. Given the active (if covert) hostility to such innovation from the existing corporate sector – for the reasons mentioned above – this would require the allocation of public resources to properly targeted research and development along with appropriately designed incentives to users – e.g. tax breaks for the capital cost of retro-fitting buildings for geo-exchange. The cost of such support would be a small fraction of that currently being devoted annually to subsidies to nuclear and wind energy.
While the overall scale of potential savings – in terms of reduced expenditure on investment in infrastructure as well as fossil-fuel consumption – is difficult to quantify a priori, particularly bearing in mind the continuing rapid pace of innovation, it is likely to be vast, especially once the qualitative benefits to the environment are factored in. One such saving might be the cancellation of the proposal for the mandatory installation of “smart meters” in all homes in the European Union projected to start in 2014, the benefits of which will probably far exceed the costs of at least €150 billion as consumers become less and less dependent on mains electricity supply thanks to the type of changes in supply sources outlined above. This prospect is of course what terrifies the existing energy corporates the most, which is why they and their political allies will continue striving to distort the debate with misinformation so as to foist wasteful investment and excessive use of fossil fuels (not to mention uranium) on the public for as long as possible. Equally, for those who have long sought to place some check on the enormously opaque and unaccountable power of the global energy conglomerates and OPEC this gathering revolution in the sector represents a welcome opportunity to advance economic democracy by empowering consumers and local communities alike.
14 August 2012