by Naomi Klein
During good times, it’s easy to deride “big government” and talk about the inevitability of cutbacks. But during disasters, most everyone loses their free market religion and wants to know that their government has their backs. And if there is one thing we can be sure of, it’s that extreme weather events like Superstorm Sandy, Typhoon Haiyan in the Philippines, and the British floods—disasters that, combined, pummeled coastlines beyond recognition, ravaged millions of homes, and killed many thousands—are going to keep coming.
Over the course of the 1970s, there were 660 reported disasters around the world, including droughts, floods, extreme temperature events, wildfires, and storms. In the 2000s, there were 3,322—a fivefold boost. That is a staggering increase in just over thirty years, and clearly global warming cannot be said to have “caused” all of it. But the climate signal is also clear. “There’s no question that climate change has increased the frequency of certain types of extreme weather events,” climate scientist Michael Mann told me in an interview, “including drought, intense hurricanes, and super typhoons, the frequency and intensity and duration of heat waves, and potentially other types of extreme weather though the details are still being debated within the scientific community.”36
Yet these are the same three decades in which almost every government in the world has been steadily chipping away at the health and resilience of the public sphere. And it is this neglect that, over and over again, turns natural disasters into unnatural catastrophes. Storms burst through neglected levees. Heavy rain causes decrepit sewer systems to back up and overflow. Wildfires rage out of control for lack of workers and equipment to fight them (in Greece, fire departments can’t afford spare tires for their trucks driving into forest blazes). Emergency responders are missing in action for days after a major hurricane. Bridges and tunnels, left in a state of disrepair, collapse under the added pressure.
The costs of coping with increasing weather extremes are astronomical. In the United States, each major disaster seems to cost taxpayers upward of a billion dollars. The cost of Superstorm Sandy is estimated at $65 billion. And that was just one year after Hurricane Irene caused around $10 billion in damage, just one episode in a year that saw fourteen billion-dollar disasters in the U.S. alone. Globally, 2011 holds the title as the costliest year ever for disasters, with total damages reaching at least $380 billion. And with policymakers still locked in the vise grip of austerity logic, these rising emergency expenditures are being offset with cuts to everyday public spending, which will make societies even more vulnerable during the next disaster—a classic vicious cycle.37
It was never a good idea to neglect the foundations of our societies in this way. In the context of climate change, however, that decision looks suicidal. There are many important debates to be had about the best way to respond to climate change—storm walls or ecosystem restoration? Decentralized renewables, industrial scale wind power combined with natural gas, or nuclear power? Small-scale organic farms or industrial food systems? There is, however, no scenario in which we can avoid wartime levels of spending in the public sector—not if we are serious about preventing catastrophic levels of warming, and minimizing the destructive potential of the coming storms.
It’s no mystery where that public money needs to be spent. Much of it should go to the kinds of ambitious emission-reducing projects already discussed—the smart grids, the light rail, the citywide composting systems, the building retrofits, the visionary transit systems, the urban redesigns to keep us from spending half our lives in traffic jams. The private sector is ill suited to taking on most of these large infrastructure investments: if the services are to be accessible, which they must be in order to be effective, the profit margins that attract private players simply aren’t there.
Transit is a good example. In March 2014, when air pollution in French cities reached dangerously high levels, officials in Paris made a snap decision to discourage car use by making public transit free for three days. Obviously private operators would strenuously resist such measures. And yet by all rights, our transit systems should be responding with the same kind of urgency to dangerously high levels of atmospheric carbon. Rather than allowing subway and bus fares to rise while service erodes, we need to be lowering prices and expanding services—regardless of the costs.
Public dollars also need to go to the equally important, though less glamorous projects and services that will help us prepare for the coming heavy weather. That includes things like hiring more firefighters and improving storm barriers. And it means coming up with new, nonprofit disaster insurance programs so that people who have lost everything to a hurricane or a forest fire are not left at the mercy of a private insurance industry that is already adapting to climate change by avoiding payouts and slapping victims with massive rate increases. According to Amy Bach, cofounder of the San Francisco–based advocacy group United Policyholders, disaster insurance is becoming “very much like health insurance. We’re going to have to increasingly take the profit motive out of the system so that it operates efficiently and effectively, but without generating obscene executive salaries and bonuses and shareholder returns. Because it’s not going to be a sustainable model. A publicly traded insurance company in the face of climate change is not a sustainable business model for the end user, the consumer.”38 It’s that or a disaster capitalism free-for-all; those are the choices.
These types of improvements are of course in far greater demand in developing countries like the Philippines, Kenya, and Bangladesh that are already facing some of the most severe climate impacts. Hundreds of billions of dollars are urgently needed to build seawalls; storage and distribution networks for food, water, and medicine; early warning systems and shelters for hurricanes, cyclones, and tsunamis—as well as public health systems able to cope with increases in climate-related diseases like malaria.39 Though mechanisms to protect against government corruption are needed, these countries should not have to spend their health care and education budgets on costly disaster insurance plans purchased from transnational corporations, as is happening right now. Their people should be receiving direct compensation from the countries (and companies) most responsible for warming the planet.
The Polluter Pays
About now a sensible reader would be asking: how on earth are we going to pay for all this? It’s the essential question. A 2011 survey by the U.N. Department of Economic and Social Affairs looked at how much it would cost for humanity to “overcome poverty, increase food production to eradicate hunger without degrading land and water resources, and avert the climate change catastrophe.” The price tag was $1.9 trillion a year for the next forty years—and “at least one half of the required investments would have to be realized in developing countries.”40
As we all know, public spending is going in the opposite direction almost everywhere except for a handful of fast-growing so-called emerging economies. In North America and Europe, the economic crisis that began in 2008 is still being used as a pretext to slash aid abroad and cut climate programs at home. All over Southern Europe, environmental policies and regulations have been clawed back, most tragically in Spain, which, facing fierce austerity pressure, drastically cut subsidies for renewables projects, sending solar projects and wind farms spiraling toward default and closure. The U.K. under David Cameron has also cut supports for renewable energy.
So if we accept that governments are broke, and they’re not likely to introduce “quantitative easing” (aka printing money) for the climate system as they have for the banks, where is the money supposed to come from? Since we have only a few short years to dramatically lower our emissions, the only rational way forward is to fully embrace the principle already well established in Western law: the polluter pays.
The fossil fuel companies have known for decades that their core product was warming the planet, and yet they have not only failed to adapt to that reality, they have actively blocked progress at every turn. Meanwhile, oil and gas companies remain some
of the most profitable corporations in history, with the top five oil companies pulling in $900 billion in profits from 2001 to 2010. ExxonMobil still holds the record for the highest corporate profits ever reported in the United States, earning $41 billion in 2011 and $45 billion in 2012. These companies are rich, quite simply, because they have dumped the cost of cleaning up their mess onto regular people around the world. It is this situation that, most fundamentally, needs to change.41
And it will not change without strong action. For well over a decade, several of the oil majors have claimed to be voluntarily using their profits to invest in a shift to renewable energy. In 2000, BP rebranded itself “Beyond Petroleum” and even changed its logo to a sunburst, called “the Helios mark after the sun god of ancient Greece.” (“We are not an oil company,” then–chief executive Sir John Browne said at the time, explaining that, “We are aware the world wants less carbon-intensive fuels. What we want to do is create options.”) Chevron, for its part, ran a high-profile advertising campaign declaring, “It’s time oil companies get behind renewables. . . . We agree.” But according to a study by the Center for American Progress, just 4 percent of the Big Five’s $100 billion in combined profits in 2008 went to “renewable and alternative energy ventures.” Instead, they continue to pour their profits into shareholder pockets, outrageous executive pay (Exxon CEO Rex Tillerson makes more than $100,000 a day), and new technologies designed to extract even dirtier and more dangerous fossil fuels.42
And even as the demand for renewables increases, the percentage the fossil fuel companies spend on them keeps shrinking—by 2011, most of the majors were spending less than 1 percent of their overall expenditures on alternative energy, with Chevron and Shell spending a deeply unimpressive 2.5 percent. In 2014, Chevron pulled back even further. According to Bloomberg Businessweek, the staff of a renewables division that had almost doubled its target profits was told “that funding for the effort would dry up” and was urged “to find jobs elsewhere.” Chevron also moved to sell off businesses that had developed green projects for governments and school districts. As oil industry watcher Antonia Juhasz has observed, “You wouldn’t know it from their advertising, but the world’s major oil companies have either entirely divested from alternative energy or significantly reduced their investments in favor of doubling down on ever-more risky and destructive sources of oil and natural gas.”43
Given this track record, it’s safe to assume that if fossil fuel companies are going to help pay for the shift to renewable energy, and for the broader costs of a climate destabilized by their pollution, it will be because they are forced to do so by law. Just as tobacco companies have been obliged to pay the costs of helping people to quit smoking, and BP has had to pay for much of the cleanup of its oil spill in the Gulf of Mexico, it is high time for the industry to at least split the bill for the climate crisis. And there is mounting evidence that the financial world understands that this is coming. In its 2013 annual report on “Global Risks,” the World Economic Forum (host of the annual superelite gathering in Davos), stated plainly, “Although the Alaskan village of Kivalina—which faces being ‘wiped out’ by the changing climate—was unsuccessful in its attempts to file a US$ 400 million lawsuit against oil and coal companies, future plaintiffs may be more successful. Five decades ago, the U.S. tobacco industry would not have suspected that in 1997 it would agree to pay $368 billion in health-related damages.” But it did.44
The question is: how do we stop fossil fuel profits from continuing to hemorrhage into executive paychecks and shareholder pockets—and how do we do it soon, before the companies are significantly less profitable or out of business because we have moved to a new energy system? As the Global Risks report suggests, communities severely impacted by climate change have made several attempts to use the courts to sue for damages, but so far they have been unsuccessful. A steep carbon tax would be a straightforward way to get a piece of the profits, as long as it contained a generous redistributive mechanism—a tax cut or income credit—that compensated poor and middle-class consumers for increased fuel and heating prices. As Canadian economist Marc Lee points out, designed properly, “It is possible to have a progressive carbon tax system that reduces inequality as it raises the price of emitting greenhouse gases.”45 An even more direct route to getting a piece of those pollution profits would be for governments to negotiate much higher royalty rates on oil, gas, and coal extraction, with the revenues going to “heritage trust funds” that would be dedicated to building the post–fossil fuel future, as well as to helping communities and workers adapt to these new realities.
Fossil fuel corporations can be counted on to resist any new rules that cut into their profits, so harsh penalties, including revoking corporate charters, would need to be on the table. Companies would threaten to pull out of certain operations, to be sure, but once a multinational like Shell has spent billions to build the mines and drilling platforms needed to extract fossil fuels, it is unlikely to abandon that infrastructure because royalties go up. (Though it will bitterly complain and may well seek damages at an investment tribunal.)
But the extractive industries shouldn’t be the only targets of the “polluter pays” principle. The U.S. military is by some accounts the largest single consumer of petroleum in the world. In 2011, the Department of Defense released, at minimum, 56.6 million metric tons of CO2 equivalent into the atmosphere, more than the U.S.-based operations of ExxonMobil and Shell combined.46 So surely the arms companies should pay their share. The car companies have plenty to answer for too, as do the shipping industry and the airlines.
Moreover, there is a simple, direct correlation between wealth and emissions—more money generally means more flying, driving, boating, and powering of multiple homes. One case study of German consumers indicates that the travel habits of the most affluent class have an impact on climate 250 percent greater than that of their lowest-earning neighbors.47
That means any attempt to tax the extraordinary concentration of wealth at the very top of the economic pyramid, as documented so persuasively by Thomas Piketty among many others, would—if partially channeled into climate financing—effectively make the polluters pay. As journalist and climate and energy policy expert Gar Lipow puts it, “We should tax the rich more because it is the fair thing to do, and because it will provide a better life for most of us, and a more prosperous economy. However, providing money to save civilization and reduce the risk of human extinction is another good reason to bill the rich for their fair share of taxes.” But it must be said that a “polluter pays” principle would have to reach beyond the super rich. According to Stephen Pacala, director of the Princeton Environmental Institute and codirector of Princeton’s Carbon Mitigation Initiative, the roughly 500 million richest of us on the planet are responsible for about half of all global emissions. That would include the rich in every country in the world, notably in countries like China and India, as well significant parts of the middle classes in North America and Europe.II48
Taken together, there is no shortage of options for equitably coming up with the cash to prepare for the coming storms while radically lowering our emissions to prevent catastrophic warming.
Consider the following list, by no means complete:
• A “low-rate” financial transaction tax—which would hit trades of stocks, derivatives, and other financial instruments—could bring in nearly $650 billion at the global level each year, according to a 2011 resolution of the European Parliament (and it would have the added bonus of slowing down financial speculation).49
• Closing tax havens would yield another windfall. The U.K.-based Tax Justice Network estimates that in 2010, the private financial wealth of individuals stowed unreported in tax havens around the globe was somewhere between $21 trillion and $32 trillion. If that money were brought into the light and its earnings taxed at a 30 percent rate, it would yield at least $190 billion in income tax revenue each year.50
• A 1 percent “billion
aire’s tax,” floated by the U.N., could raise $46 billion annually.51
• Slashing the military budgets of each of the top ten military spenders by 25 percent could free up another $325 billion, using 2012 numbers reported by the Stockholm International Peace Research Institute. (Granted, probably the toughest sell of all, particularly in the U.S.)52
• A $50 tax per metric ton of CO2 emitted in developed countries would raise an estimated $450 billion annually, while a more modest $25 carbon tax would still yield $250 billion per year, according to a 2011 report by the World Bank, the International Monetary Fund, and the Organisation for Economic Co-operation and Development (OECD), among others.53
• Phasing out fossil fuel subsidies globally would conservatively save governments a total $775 billion in a single year, according to a 2012 estimate by Oil Change International and the Natural Resources Defense Council.54
If these various measures were taken together, they would raise more than $2 trillion annually.55 Certainly enough for a very healthy start to finance a Great Transition (and avoid a Great Depression). And that doesn’t count any royalty increases on fossil fuel extraction. Of course, for any of these tax crackdowns to work, key governments would have to coordinate their responses so that corporations had nowhere to hide—a difficult task, though far from impossible, and one frequently bandied about at G20 summits.
