A recent BBC interview with the president of Guyana, Irfaan Ali, has racked up millions of views. In it, he calls out the hypocrisy of the interviewer questioning his government’s plans to extract billions of dollars worth of oil and gas from Guyana’s newly discovered reserves, on the basis that this will contribute to global climate change.
Ali points out that, even after extracting those resources, Guyana will still be carbon neutral due to its huge untouched forest, covering 80% of the country, with the lowest deforestation rate in the world.
He poses some questions to the interviewer: ‘If you value biodiversity and the climate, are you [the West] willing to pay for it?’ He argues that the global capitalist system leaves him no choice but to extract the oil and gas: “We have this natural resource. And we’re going to aggressively pursue this natural resource because we have to develop our country.” Around half of Guyana’s population live under the poverty line, but the country has seen economic growth averaging over 40% over the last three years due to the influx of oil money.
Profit problem
This highlights the major problem with attempting to solve the climate crisis under a capitalist system: the lack of profit to be made from protecting natural resources and the inability of capitalist nation states to cooperate in developing global productive potential. Capitalism is incapable of taking the united international action needed to reverse climate warming.
The serious thinkers of capitalism are only too aware that climate change is an existential threat that needs urgent action. Their proposals, however, are always constrained by the limits of the system they defend. To implement the urgent and sweeping changes needed to avoid climate catastrophe requires a global socialist plan of production, based on nationalisation of major industries under the democratic control and management of the working class.
In a recent address to investors, the former British Petroleum (BP) chief executive Lord John Browne urged them to consider Aesop’s fable of the rider who stops feeding his horse in peacetime, only to find it lame when war comes. The soldier in the analogy represented the companies who are pulling back on climate action, creating more long-term risk for all concerned as the ever-greater effects of the climate crisis loom.
Climate targets
Large corporations, including Unilever, Bank of America and Shell, have in the past year dropped or missed goals to cut emissions. Others have simply skipped over their promises to improve. The short-term nature of capitalist production makes the climate crisis an intractable problem for individual firms; if they decide to follow their climate targets, they may be undercut by a competitor.
But it’s not just companies finding it hard to hit climate targets; governments are too. The Scottish and German governments have both said their 2030 decarbonisation targets are out of reach, while populist right-wing political parties all over Europe have been able to play on legitimate fears that capitalist governments will attempt to pass the costs of a transition away from fossil fuels onto the working class in the form of higher prices and taxes.
If average global temperature rises are to be limited in line with the 2015 Paris climate agreement, climate finance will need to increase to about $9 trillion a year globally by 2030, up from just under $1.3 trillion in 2021-22. The former US special climate change envoy John Kerry puts the challenge of meeting this bluntly: “We don’t have the money.”
No money?
Currently, at least $7 trillion is spent on direct and indirect fossil fuel subsidies a year, as competing nation states attempt to ensure that they have access to sources of generating energy for themselves in the event of further breakdowns in global trade and fluctuations in the price of oil and other fossil fuels.
Russia’s invasion of Ukraine has led to increased energy costs globally, contributing to higher inflation rates and a search for alternative sources of energy, driving demand for new fossil fuel exploration.
The latest scientific data show that all key indicators of climate change are worsening. Levels of greenhouse gases in the atmosphere continue to rise rapidly. Glaciers and ice sheets are retreating. Global temperatures and sea levels continue to rise, as does the frequency of extreme weather events.
Far from the situation improving, the pace of global warming is accelerating faster than most scientists expected. Capitalism has launched us on a catastrophic trajectory that is forecast to see global temperatures rising to 3.5°C above pre-industrial levels by the end of the century. Unless reversed, that would mean irreversible tipping points are reached that result in permanent catastrophic change for humanity.
Climate change is a global problem that demands global co-operation and planning. The failure of decades of climate summits have shown without doubt that capitalism cannot meet the challenge. A world made up of competing nation states and economic blocs was never going to make agreements that could really tackle global warming with sufficient urgency.
Capitalism’s inability to overcome these national differences was glaringly obvious in the fact that neither China’s regime nor the USA administration have adopted binding targets after 1997. Yet these two nations alone accounted for 44% of the world’s CO2 emissions in 2018. The tensions between global competitors will remain a major stumbling block in reaching any global agreement on a capitalist basis.
Conflict or collaboration?
The shifting geopolitical landscape, from a unipolar world dominated by US capitalism in the immediate aftermath of the collapse of the Stalinist states in Russia and eastern Europe, to the multipolar world of today, means that the era of increased economic cooperation and ‘globalisation’ has come to a close. Widespread protectionist measures are being introduced between competing economic blocs, particularly attempting to block cheap exports from China into Europe and America.
The lack of a global climate agreement increases the risk that any reductions in greenhouse gas emissions made in one part of the world would be undermined by greater emissions elsewhere. For a country like Guyana, which has a long history of colonial occupation and poverty, the government is claiming they will use the discovery of massive oil reserves to finance public investment.
President Ali is no socialist, and his party has faced widespread corruption allegations as the massive oil and gas reserves are being extracted by Exxon, who are taking the lion’s share of the profits from the venture for themselves. Ali argues that the deal with Exxon was made by a previous government, and argues that he must uphold the ‘sanctity of the contract.’ He is not prepared to challenge the capitalist system which allows companies like Exxon to rapaciously profit from the natural resources of many countries ravaged by poverty.
The economic costs of increasing global warming are massive, and particularly fall on countries close to the equator in the neo-colonial world. The likelihood of extreme weather events is continuing to increase. The recent Hurricane Beryl caused devastation across the eastern Caribbean and southern United States. Economic losses due to climate change are projected to reach £30 trillion a year by 2050, meaning the costs of climate damage will be six times higher than the price of limiting global heating to 2oC.
Globally, annual food inflation rates could rise by over 3% a year within the next decade as a result of higher temperatures. Regions such as South America and Africa already routinely experience temperatures close to the thresholds at which they become damaging to crops.
Although the share of global energy use generated by renewable energy is rising, mainly due to massive state investment in renewable energy sources in China, this is being outweighed by the rise in electricity usage globally. The pace of the transition from fossil fuels to renewable energy must be massively increased in order to avert climate catastrophe, and the capitalist system is incapable of achieving this.
In volume 2 of his monumental work Capital, Karl Marx makes the point: “From the standpoint of a higher economic form of society, private ownership of the globe by single individuals will appear quite as absurd as private ownership of one man by another. Even a whole society, a nation, or even all simultaneously existing societies taken together, are not the owner of the globe. They are only it’s possessors … they must hand it down to succeeding generations in an improved condition”.
The starting point of any discussion on climate change must be the incapacity of the ‘economic arrangements’ of the world created by capitalism to solve these problems. The case of Guyana highlights the clash between the demand for growth in the neo-colonial world – necessary in order to eliminate hunger and lack of shelter – with the risks of environmental damage.
Socialist plan
Unplanned capitalist development of the world’s productive forces cannot prevent an unstoppable decline in the habitability of the Earth. The effects of climate change add to the world’s existing instability and volatility – including by provoking struggle of the working-class and poor masses.
A leading Chinese environmentalist has said that for China to reach the living standards of the US it will need the resources of four worlds! Do we conclude from this that the majority of the world’s population will never reach the living standards of the American people today and they are forever condemned to underdevelopment? No! Under a socialist system we can have sustainable growth and avoid the crimes that have been committed against the environment by capitalism and Stalinism.
So who will pay? Clearly not the capitalist class if it gets its way. Only by nationalising big energy companies, other major industry and the banks, under democratic working-class control and management, can investment be planned to deal with climate change. On the basis of genuine international collaboration between democratic workers’ states, it would be possible to develop an economic plan to raise the living standards of all, while protecting the environment.
Market solutions?
A myriad array of ‘market solutions’ have been proposed over the past few decades to try and price in the cost of climate change, but they have all fallen by the wayside.
In 1997, the Kyoto Protocol, among other things, established the setting of a price for carbon emissions. The treaty was meant to establish a global market for trading carbon permits that, through the ‘magic of the market’, would incentivise individual nations and companies to cut their greenhouse gas emissions and invest in low-carbon alternatives.
The preferred market model at the outset was an international cap-and-trade system. The idea was that countries would set a limit on emissions totalling an overall global cap. If one nation – or a business given its own limit by a government – wanted to exceed its cap, it would have to buy additional emission rights from the carbon market. If it managed to reduce emissions beneath the cap, it could sell the unused allocations on the market as well.
The plan was that the overall cap would be reduced gradually, leading to a phased reduction in greenhouse gases over time. Over twenty years later, it is self-evident that the market mechanisms proposed in Kyoto have completely failed to prevent continued global warming.
Other attempts to price in climate change to the market include the issuance of ‘sustainability-linked bonds’ which tied companies’ borrowing costs to whether they could achieve their climate promises. Global issuances of this type of bond fell to just $9.2 billion (less than 0.001% of world GDP) in the first three months of 2024 compared to a peak of close to $100 billion in the same period in 2021.
The reason that these market-based climate schemes have failed to reduce emissions is that most of the decisions that govern the global economy are not taken by any individual capitalist government, but are arrived at in the boardrooms of big business. These companies operate to make a profit above all else. They will attempt to frustrate any environmental regulation that hits their bottom line by lobbying and legal action.
