Why the World Bank and IMF should be nixed (not fixed)

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Why Market 'Solutions' Won't Fix Climate Problems
by Patrick Bond University of KwaZulu-Natal Centr
e for Civil Society, Durban Presentation to
the Parkland Institute Conference 'From Crisis to
Hope Building Just and Sustainabile
Communities' University of Alberta, Edmonton 16
November 2007 (cartoons by Zapiro)?
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• How do we defeat fossil fuel addiction with
  energy justice?
• A Canadian-South African-world challenge
• strategic perspective
• stagnation, volatility, uneven development
• petro-mineral boom Africa's 'resource curse'
• North's ecological debt to Africa
• logic of carbon trading 'privatisation of the
  air'
• carbon trading case studies and critiques
• the need for equitable electricity distribution

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Is a green-red energy alliance possible?
Conservation plus electricity-as-a-right?
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Durban Group for Climate Justice

• October 2004 initiative
• supported by Dag Hammarskjold Foundation
• Driven by grassroots activists in India, Brazil,
  South Africa
• Largest signatory Friends of the Earth
  International
• Key support sites DHF, The Cornerhouse, FERN,
  SEEN (Washington), CarbonTrade Watch (TNI),
  Dartmouth, RisingTide, UKZN Centre for Civil
  Society

editor Larry Lohmanndownload
www.cornerhouse.org
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Reformist Reforms or Non-Reformist Reforms?

• In Strategy for Labour (1964), Andre Gorz (died
  September 2007) distinguished between
• reformist reforms strengthening the underlying
  logic, institutions and legitimacy of prevailing
  power relations, versus
• nonreformist reforms undermining the logic,
  institutions and legitimacy of power opening
  possibilities of deeper change.
• Carbon trading is a reformist reform and does
  not even work on its own terms

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Context Stagnation of world GDP
growthGlobalisation and neoliberal economic
policy correlates to slowdown
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Dubious statisticsCorrecting the GDP bias
(global)?

• Source redefiningprogress.org

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Dubious statisticsAdjusting the data

• Subtract resource depletion
• Subtract pollution
• Subtract long-term environmental damage (climate
  change, nuclear waste generation)
• Add household and volunteer work (gender
  implications)
• Correct for income distribution (rewarding
  equality)
• Subtract crime and family breakdown
• Add opportunities for increased leisure time
• Factor in lifespan of consumer durables and
  public infrastructure
• Subtract vulnerability upon foreign assets.
• Source Redefining Progress

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Especially low growth since 1980, and extremely
uneven development

• Dramatic differences in annual change of
  per capita GDP (note constant 1995, not PPP
  values)
• Source Alan Freeman

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volatility US economic calamities

• rapidly rising trade deficit, which in 2006 grew
  to more than 760 billion, or nearly 6 percent of
  GDP
• since 2001, loss of 3 million manufacturing
  jobs, or more than a sixth of the entire sector
• unchecked growth of the housing bubble, with
  short-term interest rate down to 1.0 in 2001 by
  2006, prices were 73 higher than their
  pre-bubble values 8 trillion in unsustainable
  wealth
• (source Dean Baker, Harpers, June 2007)?

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US housing bubble
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• Stock market crashes

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• Stock market volatility emerging markets

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Financing of US capital inflows

• Source International Monetary Fund
• Global Financial Stability Report 2004, p.148

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Higher US interest rates to attract fundingthen
decline to avoid financial meltdown

• Source IMF

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Since 2002, substantial commodity price increases
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World economy reverts to 'accumulation by
dispossession'David Harvey

• A closer look at Marxs description of primitive
  accumulation reveals a wide range of processes
• the commodification and privatisation of land and
  the forceful expulsion of peasant populations
• conversion of various forms of property rights
  (common, collective, state, etc.) into exclusive
  private property rights
• suppression of rights to the commons
• commodification of labour power and the
  suppression of alternative (indigenous) forms of
  production and consumption
• colonial, neocolonial and imperial processes of
  appropriation of assets (including natural
  resources)...
• -- David Harvey, The New Imperialism, 2003

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The Shock Doctrine by Naomi Klein (and Milton
Friedman)?

• According to Friedman (advisor to Pinochet after
  9/11/73 coup) only a crisis - actual or
  perceived - produces real change
• Klein It was the most extreme capitalist
  makeover ever attempted anywhere, and it became
  known as a "Chicago School" revolution, as so
  many of Pinochet's economists had studied under
  Friedman there. Friedman coined a phrase for this
  painful tactic economic "shock treatment". In
  the decades since, whenever governments have
  imposed sweeping free-market programs, the
  all-at-once shock treatment, or "shock therapy",
  has been the method of choice.
• Other examples Malvinas war of 1982 (Argentina,
  Britain), Chinas Tiananmen Square 1989, Eastern
  Europe 1990s, 9/11/01, 3/03 war on Iraq, 12/04
  tsunami, 8/05 Katrina - also SA
• Psychological dynamic The bottom line is that,
  for economic shock therapy to be applied without
  restraint, some sort of additional collective
  trauma has always been required.

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Walter Rodneyon the production of poverty

• The question as to who and what is responsible
  for African underdevelopment can be answered at
  two levels. Firstly, the answer is that the
  operation of the imperialist system bears major
  responsibility for African economic retardation
  by draining African wealth and by making it
  impossible to develop more rapidly the resources
  of the continent. Secondly, one has to deal with
  those who manipulate the system and those who are
  either agents or unwitting accomplices of the
  said system.

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Africas resource curse Excessive fossil fuel
resources in a context of growing int'l interest
(US Africa Command, Chinese patrimonial politics,
EU EPAs, SA arms acquisitions, persistent coups)?

• Which regions have used up their own oil
  already?
• Source C.J.Campell, www.energycrisis.org

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Africas oil mostly exported
3.6 of world refining capacity
Supply of motor gasoline in Nigeria (2001)?
22
World Bank (minimalist) adjustments to GDP so as
to derive genuine savingsfixed capital (-),
education (), natural resource depletion (-),
and pollution damage (-)

23
Where is Africas wealth?World Bank recording
of African countries adjusted national wealth
and savings gaps, 2000
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Jubilee South ecological debt is the debt
accumulated by Northern, industrial countries
toward Third World countries on account of
resource plundering, environmental damages, and
the free occupation of environmental space to
deposit wastes, such as greenhouse gases, from
the industrial countries.
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Types of ecological debt (Joan Martinez-Alier)

• unpaid costs of reproduction or maintenance or
  sustainable management of the renewable resources
  that have been exported
• actualised costs of the future lack of
  availability of destroyed natural resources
• compensation for, or the costs of reparation
  (unpaid) of the local damages produced by exports
  (for example, the sulphur dioxide of copper
  smelters, the mine tailings, the harms to health
  from flower exports, the pollution of water by
  mining), or the actualised value of irreversible
  damage
• (unpaid) amount corresponding to the commercial
  use of information and knowledge on genetic
  resources, when they have been appropriated
  gratis (biopiracy)
• (unpaid) reparation costs or compensation for the
  impacts caused by imports of solid or liquid
  toxic waste and
• lack of payment for environmental services or for
  disproportionate use of Environmental Space,
  e.g. (unpaid) costs of free disposal of gas
  residues (carbon dioxide, CFCs, etc) assuming
  equal rights to sinks and reservoirs (75
  billion/year).

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SA contextmunicipal services discontent
(recent 12-month record of protest by SA Police
Services 5813 - 16/day)?
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Protest against Johannesburg World Summit on
Sustainable Development, 31 August 2002
30 000 march 12km from Alexandra to Sandton
against UN and SA eco-social policies
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Major sites for neoliberal plus sustainable dev.
discourses
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Privatisation of the airTwo types of trading

• Emissions trading (cap and trade)?
• Project-based credits (e.g. Plantar trees or
  Bisasar dump methane extraction), either as Clean
  Development Mechanism projects in the South, or
  Joint Implementation projects in industrialised
  countries
• These are mutually exchangeable (hybrid) under
  Kyoto and the EU Emissions Trading System
• They assume that polluters have a property right
  to pollute at existing levels, that must be
  (gradually) reduced through market incentives
  even though this means creating a market out of
  thin air

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How did carbon trading emerge as central strategy
for emissions reduction?Al Gore insisted in
Kyoto, 1997 quid pro quo for US support (?!)?
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Not only when do we run out of oil?Should we be
using remaining supplies?
Following slides courtesy ofLarry Lohmann
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The sink solution via carbon trading
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• The Kyoto Protocols
• Clean Development Mechanism formula

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• Who benefits?

Buyers Sellers Shell Tata
Chemicals BHP-Billiton ITC EDF Plantar RWE
Votorantim Endesa Petrobras Rhodia
Energy Shri Bajrang Mitsubishi Birla Cargil
l Oil Gas Nat. Corp. Nippon
Steel Sasol ABN Amro Mondi Chevron Hu-C
hems Fine Chemical Chugoku Electric
Power Chhatisgarh Electricity
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George Monbiot dubunks timber plantations as
sink investments

• When you drain or clear the soil to plant
  trees, for example, you are likely to release
  some carbon, but it is hard to tell how much.
  Planting trees in one place might stunt trees
  elsewhere, as they could dry up a river which was
  feeding a forest downstream. Or by protecting
  your forest against loggers, you might be driving
  them into another forest. As global temperatures
  rise, trees in many places will begin to die
  back, releasing the carbon they contain. Forest
  fires could wipe them out completely.

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Plantars gum tree carbon offset, Brazil
The green desert
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The South African pilotBisasar Rd dump,
Africas largest- in the Clare Estate suburb of
Durban
Home of the Khan family
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The South African pilot

• Will the PCF cause more public health damage --
  through environ- mental racism?

• Source TNI Briefing Series 2003/1 The Sky is
  Not the Limit

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Sajida Khan (1952-2007) her EIA challenge
rebuffed the World Bank PCF, 2005
at present, Durban lacks investors
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Durban Group crits of emissions trading

• Delays transition away from fossil fuels.
• Selects against immediate investment in long-term
  structural change.
• Short term and uncertain price signals discourage
  structural change.
• Cost-spreading discourages innovation.
• Cannot yet be implemented due to measurement
  problems.
• Involves other enforcement obstacles.
• Creates and hands out property rights to the
  biggest polluters in the North, increasing their
  power and the inertia of a fossil-intensive
  system polluter earns.
• Large unaccounted stage-setting and opportunity
  costs.

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Other crits of EU Emissions Trading System

• The EU ETS has not encouraged meaningful
  investment in carbon-reducing technologies. -
  Tony Ward, Ernst Young, May 2006
• ETS has done nothing to curb emissions . . .
  and is a highly regressive tax falling mostly
  on poor people . . . Enhances the market power of
  generators. Have policy goals been achieved?
  Prices up, emissions up, profits up . . . so, not
  really. . . All generation-based utilities
  winners. Coal and nuclear-based generators
  biggest winners. Hedge funds and energy traders
  even bigger winners. Losers . . . ahem . . .
  Consumers! - Peter Atherton, Citigroup, January
  2007
• Emissions trading would make money for some very
  large corporations, but dont believe for a
  minute that this charade would do much about
  global warming . . . old-fashioned rent-seeking .
  . . making money by gaming the regulatory
  process. - Wall Street Journal, 3 March 2007
• European Commissioner for Energy gives damning
  verdict . . . A failure. TV Channel 4 Evening
  News, London, 7 March 2007

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More carbon trade critiques

• It isnt working . . . a grossly inefficient way
  of cutting emissions in the developing world . .
  . A shell game . . . 3 billion to some of the
  worst carbon polluters in the developing world.
  - Newsweek, 12 March 2007
• Industry caught in carbon smokescreen -
  Financial Times front page, 25 April 2007
• Truth about Kyoto Huge profits, little carbon
  saved . . . Abuse and incompetence in fight
  against global warming . . . The inconvenient
  truth about the carbon offset industry -
  Guardian, 2 June 2007
• Die Linke fordert Moratorium für CDM-Projekte -
  DIE LINKE press release, 4 September 2007

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Instead of working within the systems logic, we
needPolanyis double movement Karl Polanyi,
The Great Transformation (1957) the extension
of the market organisation in respect to genuine
commodities was accompanied by its restriction
via civil society activism/advocacy (i.e.,
sometimes Gramscian war of movement)?
Other double movementsextension of racism,
patriarchy, militarism, homophobia, fascism,
ecological degradation often met by civil society
activism/advocacy
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Genuine reformplug fossil fuel consumption
leave the oil in the soil
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Petro-mineral resourcesKeep the oil in the soil!

• Alaska wilderness campaigners
• Oil Watch (October 2006, international meeting,
  Quito)?
• Women of the Niger Delta (and Movement for the
  Emancipation of the Niger Delta) ?

• Rafael Correa agrees with Accion Ecologia that
  Ecuadors main oil reserve (Ishpingo-Tiputini-Tamb
  ococha, in Yasuní National Park) should stay in
  the ground (August 2007)

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Petro-mineral resourcesKeep the oil in the
tarsands!

• Gordon Laxer suggestion - 'No new approvals until
  standards are met'
• Strict limit water / GHG emissions
• Realistic land reclamation plans
• Deposit cover full-cost land reclamation up-front
• No subsidies production dirty energy
• Energy security for Cdns
• Much higher econ rents on dirty energy to fund
  clean energy industry

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Durban Group for Climate Justice

• Leave resources in the ground!
• Radically new industrial policies.
• Tough state regulation of emissions.
• Massive investment in renewables.
• Waste reduction.
• Grassroots carbon reduction initiatives.

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• In considering reform strategy,
• crucial biases from Africa
• excessive fossil fuel resources in context of
  adverse power relations and rising imperialist
  interest in Africa (the resource curse)
• the unfair burden represented by the ecological
  sink function Africa plays in relation to global
  greenhouse gas emissions
• inadequate access to electricity for poor people
  (combined with excessively cheap electricity for
  large corporations).

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Electrification rates
World average
Developing countries average
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Redirect resources to lifeline household
suppliesSAs Free Basic Electricity

• African National Congress-led local government
  will provide all residents with a free basic
  amount of water, electricity and other municipal
  services, so as to help the poor. Those who use
  more than the basic amounts will pay for the
  extra they use.
• (ANC campaign promise, 2000 municipal elections)

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Two features

• The promise is based on a universal entitlement
  -- basic needs should be met (regardless of our
  income), consistent with the SA Constitutions
  Bill of Rights to a clean environment
• The promise also means that those who consume
  more should pay more per unit after the free
  basic supply, which promotes cross-subsidies
  (i.e., redistribution), and conservation.

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SA corps. enjoy lowest power prices in the world
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SAs CO2 emissions

• SA emits more C02, per capita corrected for
  income, than even the USA by a factor of 20!

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Another world is possible! SA struggles for
decommodification

• In addition to fighting the privatisation of the
  air, SA activists are at cutting edge of several
  ongoing struggles to turn basic needs into human
  rights
• thorough-going land reform
• free antiretroviral medicines to fight AIDS
• free water (50 liters/person/day)
• free electricity (at least 1 kiloWatt
  hour/person/day)
• free basic education
• Renationalisation of Telkom for lifeline phone
  services
• prohibition on services disconnections and
  evictions
• a 'Basic Income Grant' and
• the right to a job!
• All such services should be universal, and
  financed partly by penalizing luxury consumption
  (hedonism cross-subsidises basic needs)?
• Linkage of these campaigns into a new left
  project remains key challenge