Yanis Varoufakis
Wed 10 Nov 2021 08.00 GMT
Net zero is popular among polluters for good reason – it’s toothless compared to emissions restrictions and a carbon tax
“Make no mistake, the money is here, if the world wants to use it,” said Mark Carney, the former Bank of England governor who today serves as UN climate envoy, while also representing an alliance of financiers sitting on a pile of $130tn worth of assets. So, what does the world want? If only humanity had the power to organise a global poll based on one-human-one-vote, such a species-wide referendum would undoubtedly deliver a clear answer: “Do whatever it takes to stop emitting carbon now!” Instead, we have a decision-making process culminating in the colossal fiasco currently unfolding in Glasgow.
The failure of Cop26 reflects our failed democracies on both sides of the Atlantic. President Biden arrived in Glasgow as his people back in Washington were pushing his infrastructure bill through Congress – an exercise that decoupled the bill from any serious investment in renewables and funded an array of carbon-emitting infrastructure such as expanded roads and airports. Meanwhile in the European Union, the rhetoric may be painted in bright green, but the reality is dark brown – with even Germany looking forward to copious amounts of Russian natural gas in exchange of green-lighting the Nord Stream 2 gas pipeline. The EU should be creating a pan-European Renewable Energy Union, but alas our leaders are not even debating this idea.
There are three reasons Cop26 is proving such a spectacular debacle. The first reason is a planet-wide collective action problem over “free-riding”. Large businesses, as well as states, take a leaf out of St Augustine’s prayer, “Lord please make me chaste but not just yet”. Everyone prefers a planet on which no one emits carbon to a planet that sizzles. But everyone also prefers to delay paying the cost of transition if they can get away with it. If the rest of the planet does the right thing, the planet is saved, even if you selfishly postpone your own conversion to environmental probity. And if the rest of the planet does not do the right thing, why be the one sucker who does?
The second reason is a global coordination failure. In one sense, Carney is correct: mountain ranges of cash are lying idly in the global financial system, its ultra-wealthy owners keen to invest it in low-carbon activities. But a private investment in, say, green hydrogen will only return profits if many other investors invest in it too – and so the investors all sit around waiting for each other to be the first. Meanwhile, corporations, communities and states join this waiting game, unwilling to take the risk of committing to green hydrogen until big finance does. Tragically, there is no global coordinator to match the available money, technologies and needs.
The third reason is simply: capitalism …
