Larry Elliott writes that the next recession will be complicated by climate change. The outlook is grim. And the solutions are not as simple as they were during the Great Depression:
The threat posed by global warming means the current crisis of capitalism is more acute than that of the 1930s, because all that was really required then was a boost to growth, provided by the New Deal, cheap money, tougher controls on finance and rearmament. In today’s context, a plain vanilla go-for-growth strategy would be suicidal.
One size will no longer fit all:
There are countries that are prepared to self-immolate their economies in pursuit of growth at all costs. America is one. Australia appears to be another. At the other end of the spectrum are those who say there will be a future for the planet only if the idea of growth is ditched altogether. Politically, this has always been a hard sell, and has become even more difficult now that populations in the west have experienced an entire decade of flatlining living standards.
In the developing world, the problem has been too little growth rather than too much. Tackling global population growth is a no-brainer from a climate-change perspective, and most of the projected increase comes from low-income countries, most notably in Africa. The reason is simple: poor families have more children. Birthrates fall as countries become richer.
Between the two extremes are those who think the circle can be squared by carbon-free growth, made possible by the dramatic fall in the cost of renewable energy. Technology will ride to the rescue, they insist.
But technology alone can't save us:
This sounds like a cost-free (or at least relatively cheap) option, and that’s why almost all politicians pay lip service to green growth. But then they act in ways that make achieving global warming targets harder – by building new roads and expanding airports. And always for the same reason: because doing so will be good for growth. This is called a balanced approach, but it is nothing of the sort. If the IPCC is even close to being right about its timeline, speeding up the transition from fossil fuels to renewables is vital.
So how do we speed up that transition? William Nordhaus -- one of this year's Nobel Economics laureates -- says there's a way -- "if policymakers get serious about a carbon tax set high enough to price oil, coal and gas out of the market." But, as the developing debate in Canada shows, there is increasing pushback to Nordhaus' prescription. And that pushback is worldwide:
Here, though, the breakdown in international cooperation and trust becomes really damaging. Ideally, existing global institutions – the IMF, the World Bank, the UN and the World Trade Organization – would be supplemented by a new World Environmental Organisation with the power to levy a carbon tax globally. Even in the absence of a new body, they would be working together to face down the inevitable opposition to change from the fossil fuel lobby.
What chance is there for a World Environmental Organization?
Precisely.
