This Changes Everything

by Naomi Klein

  If that kind of coherent and sweeping vision had emerged in the United States in that moment of flux as the Obama presidency began, right-wing attempts to paint climate action as an economy killer would have fallen flat. It would have been clear to all that climate action is, in fact, a massive job creator, as well as a community rebuilder, and a source of hope in moments when hope is a scarce commodity indeed. But all of this would have required a government that was unafraid of bold long-term economic planning, as well as social movements that were able to move masses of people to demand the realization of that kind of vision. (The mainstream climate organizations in the U.S., in this crucial period, were instead narrowly focused on a failed attempt to get a piece of carbon-trading energy legislation through Congress, not on helping to build a broad movement.)

  In the absence of those factors, that rarest of historical moments—so pregnant with potential—slipped away. Obama let the failed banks do what they liked, despite the fact that their gross mismanagement had put the entire economy at risk. The fundamentals of the car industry were also left intact, with little more than a fresh wave of downsizing to show for the crisis. The industry lost nearly 115,000 manufacturing jobs between 2008 and 2014.6

  To be fair, there was significant support for wind and solar and for green initiatives like energy efficient building upgrades in the stimulus bill; without question, as journalist Michael Grunwald shows in The New New Deal, the funding amounted to “the biggest and most transformative energy bill in U.S. history.” But public transit was still inexplicably shortchanged and the biggest infrastructure winner was the national highway system, precisely the wrong direction from a climate perspective. This failure was not only Obama’s; as University of Leeds ecological economist Julia Steinberger observes, it was global. The financial crisis that began in 2008 “should have been an opportunity to invest in low-carbon infrastructure for the 21st century. Instead, we fostered a lose-lose situation: carbon emissions rocketing to unprecedented levels, alongside increases in joblessness, energy costs, and income disparities.”7

  What stopped Obama from seizing his historical moment to stabilize the economy and the climate at the same time was not lack of resources, or a lack of power. He had plenty of both. What stopped him was the invisible confinement of a powerful ideology that had convinced him—as it has convinced virtually all of his political counterparts—that there is something wrong with telling large corporations how to run their businesses even when they are running them into the ground, and that there is something sinister, indeed vaguely communist, about having a plan to build the kind of economy we need, even in the face of an existential crisis.

  This is, of course, yet another legacy bequeathed to us by the free market counterrevolution. As recently as the early 1970s, a Republican president—Richard Nixon—was willing to impose wage and price controls to rescue the U.S. economy from crisis, popularizing the notion that “We are all Keynesians now.”8 But by the 1980s, the battle of ideas waged out of the same Washington think tanks that now deny climate change had successfully managed to equate the very idea of industrial planning with Stalin’s five-year plans. Real capitalists don’t plan, these ideological warriors insisted—they unleash the power of the profit motive and let the market, in its infinite wisdom, create the best possible society for all.

  Obama, obviously, does not share this extreme vision: as his health care and other social policies suggest, he believes government should nudge business in the right direction. And yet he is still sufficiently a product of his anti-planning era that when he had the banks, the auto companies, and the stimulus in his hands, he saw them as burdens to be rid of as soon as possible, rather than as a rare chance to build an exciting new future.

  If there is a lesson in this tremendous missed opportunity, it is this: if we are going to see climate action of the scale and speed required, the left is going to have to quickly learn from the right. Conservatives have managed to stall and roll back climate action amidst economic crisis by making climate about economics—about the pressing need to protect growth and jobs during difficult times (and they are always difficult). Progressives can easily do the same: by showing that the real solutions to the climate crisis are also our best hope of building a much more stable and equitable economic system, one that strengthens and transforms the public sphere, generates plentiful, dignified work, and radically reins in corporate greed.

  But before that can happen, it’s clear that a core battle of ideas must be fought about the right of citizens to democratically determine what kind of economy they need. Policies that simply try to harness the power of the market—by minimally taxing or capping carbon and then getting out of the way—won’t be enough. If we are to rise to a challenge that involves altering the very foundation of our economy, we will need every policy tool in the democratic arsenal.

  Planning for Jobs

  Some policymakers already understand this, which is why so many of the climate disputes being dragged in front of WTO tribunals hinge on attempts by governments, whether in Ontario or India, to reintroduce some measure of industrial planning to their economies. These governments are saying to industry: we will support you, but only if you support the communities from which you profit, by providing well-paying local jobs, and sourcing your products locally.

  The reason governments turn to buy-local or hire-local policies such as these is because they make political sense. Any response to the climate crisis that has a chance of success will create not just winners but also a significant number of losers—industries that can no longer exist in their current form and workers whose jobs will disappear. There is little hope of bringing the fossil fuel companies onside to a green transition; the profits they stand to lose are simply too great. That is not the case, however, for the workers whose salaries are currently tied to fossil fuel extraction and combustion.

  What we know is this: trade unions can be counted on to fiercely protect jobs, however dirty, if these are the only jobs on offer. On the other hand, when workers in dirty sectors are offered good jobs in clean sectors (like the former autoworkers at the Silfab factory in Toronto), and are enlisted as active participants in a green transition, then progress can happen at lightning speed.

  The potential job creation is huge. For instance, a plan put forward by the U.S. BlueGreen Alliance, a body that brings together unions and environmentalists, estimated that a $40 billion annual investment in public transit and high-speed rail for six years would produce more than 3.7 million jobs during that period. And we know that investments in public transit pay off: a 2011 study by research and policy organization Smart Growth America found they create 31 percent more jobs per dollar than investment in new road and bridge construction. Investing in the maintenance and repair of roads and bridges creates 16 percent more jobs per dollar than investment in new road and bridge construction.9 All of which means that making existing transportation infrastructure work better for more people is a smarter investment from both a climate and an economic perspective than covering more land with asphalt.

  Renewable energy is equally promising, in part because it creates more jobs per unit of energy delivered than fossil fuels. In 2012, the International Labour Organization estimated that about five million jobs had already been created in the sector worldwide—and that is with only the most scattershot and inadequate levels of government commitment to emission reduction.10 If industrial policy were brought in line with climate science, the supply of energy through wind, solar, and other forms of renewable energy (geothermal and tidal power, for example) would generate huge numbers of jobs in every country—in manufacturing, construction, installation, maintenance, and operation.

  Similar research in Canada has found that an investment of $1.3 billion (the amount the Canadian government spends on subsidies to oil and gas companies) could create seventeen to twenty thousand jobs in renewable energy, public transit, or energy efficiency—six to eight times as many jobs as that money generates in the o
il and gas sector. And according to a 2011 report for the European Transport Workers Federation, comprehensive policies to reduce emissions in the transport sector by 80 percent would create seven million new jobs across the continent, while another five million clean energy jobs in Europe could slash electricity emissions by 90 percent. A bold coalition in South Africa, meanwhile, going under the banner of One Million Climate Jobs, is calling for mass job creation programs in areas ranging from renewable energy to public transit to ecosystem restoration to small-scale sustainable farming. “By placing the interests of workers and the poor at the forefront of strategies to combat climate change we can simultaneously halt climate change and address our jobs bloodbath,” the campaign states.11

  These are not, however, the kinds of jobs that the market will create on its own. They will be created on this scale only by thoughtful policy and planning. And in some cases, having the tools to make those plans will require citizens doing what the residents of so many German cities and towns have done: taking back control over electricity generation so that the switch to renewables can be made without delay, while any profits generated go not to shareholders but back into supporting hungry public services.

  And it’s not only power generation that should receive this treatment. If the private companies that took over the national railways are cutting back and eroding services at a time when the climate crisis demands expanded low-carbon transportation alternatives to keep more of us out of planes, then these services too must be reclaimed. And after more than two decades of hard experience with privatizations—which has too often involved diminished services combined with higher prices—a great many people are ready to consider that option. For instance, a British poll released in November 2013 found “voters of all politics united in their support for nationalisation of energy and rail. 68 per cent of the public say the energy companies should be run in the public sector, while only 21 per cent say they should remain in private hands. 66 per cent support nationalising the railway companies while 23 per cent think they should be run privately.” One of the most surprising aspects of the poll was the amount of support for nationalization among self-described Conservative voters: 52 percent favored taking back both the energy companies and the rails.12

  Planning for Power

  The climate case for rethinking private ownership is particularly strong when it comes to natural gas, which is currently being touted by many governments as a “bridge fuel.” The theory is that, in the time it takes for us to make a full switch to zero carbon sources of energy, gas can serve as an alternative to dirtier fossil fuels like coal and oil. It is far from clear that this bridge is necessary, given the speed of the shift to renewables in countries like Germany. And there are many problems, as we will see, with the whole idea of natural gas being clean. But from a planning perspective, the most immediate problem is that for the bridge concept to work, ways would have to be found to ensure that natural gas was being used only as a replacement for coal and oil—and not to undercut renewable energy. And this is a very real concern: in the U.S., the deluge of cheap natural gas thanks to fracking has already hurt the country’s wind market, with wind power’s share of the new electricity coming online plummeting from at least 42 percent in 2009 to 25 percent in 2010 and 32 percent in 2011—the key years that fracking skyrocketed.13 Moreover, once the “bridge” to a renewable future has been built, there would have to be a way to phase out gas extraction completely, since it is a major emitter of greenhouse gases.

  There are various ways to design a system that would meet these specific goals. Governments could mandate “combined-cycle” plants that are better at ramping up and down to support wind and solar when available, for example, and they could firmly link any new gas plants to coal plants taken off the grid. Also crucial, says the Canadian Centre for Policy Alternatives’ Ben Parfitt, an expert on fracking impacts, would be “regulations in place at the state and the national levels that made the link between where the gas is being produced and how it is being produced, and the ultimate production of the power,” meaning that power plants could only source gas that was proven to have lower life-cycle emissions than coal.14 And that could well rule out fracked gas completely. Barriers would also need to be placed on the ability of companies to export their gas, in order to prevent it from being burned in countries that place no such restrictions. These measures would limit many, though by no means all, of the risks associated with natural gas, but they would also seriously eat into the profitability of the sector.

  Which raises the question: why would notoriously ruthless for-profit companies accept a business model that relies on them not competing with large parts of the energy sector (wind and solar), requires that they submit to a huge range of costly regulation, all with the eventual goal of putting themselves out of business? The answer is that they would not. Treating natural gas as a truly temporary transition fuel is anathema to the profit-seeking imperative that drives these corporations. After all, who is doing the fracking? It’s companies like BP and Chevron, with their long track records of safety violations and fending off tough regulation. These are companies whose business model requires that they replace the oil and gas they have in production with new reserves of fossil fuels or face a shareholder rebellion. That same growth-above-all model demands that they occupy as much of the energy market as possible—which means competing not just with coal but with every player in the energy market, including vulnerable renewables. To quote John Browne when he was chief executive of BP (he now heads the gas giant Cuadrilla): “Corporations have to be responsive to price signals. We are not public service.”15 True enough—but that was neither always the case with our energy companies, nor must it remain so.

  The bottom line is simple. No private company in the world wants to put itself out of business; its goal is to expand its market. Which is why, if natural gas is to serve as a short-term transition fuel, that transition must be tightly managed by—and for—the public, so that the profits from current sales are reinvested in renewable technologies for the future, and the sector is constrained from indulging in the kind of exponential growth it is currently enjoying amidst the shale gas boom.16

  The solution is most emphatically not energy nationalization on existing models. The big publicly owned oil companies—from Brazil’s Petrobras to Norway’s Statoil to PetroChina—are just as voracious in pursuing high-risk pools of carbon as their private sector counterparts.17 And in the absence of a credible transition plan to harness the profits for a switch to renewable energy, having the state as the major shareholder in these companies has profoundly corrupting effects, creating an addiction to easy petrodollars that makes it even less likely that policymakers will introduce measures that hurt fossil fuel profits in any way. In short, these centralized monsters are fossils in every sense of the word, and need to be broken up and phased out whether they are held in public or private hands.

  A better model would be a new kind of utility—run democratically, by the communities that use them, as co-ops or as a “commons,” as author and activist David Bollier and others have outlined.18 This kind of structure would enable citizens to demand far more from their energy companies than they are able to now—for example, that they direct their profits away from new fossil fuel exploration and obscene executive compensation and shareholder returns and into building the network of complementary renewables that we now know has the potential to power our economies in our lifetimes.

  The rapid rise of renewables in Germany makes a powerful case for this model. The transition has occurred, first of all, within the context of a sweeping, national feed-in tariff program that includes a mix of incentives designed to ensure that anyone who wants to get into renewable power generation can do so in a way that is simple, stable, and profitable. Providers are guaranteed priority access to the grid, and offered a guaranteed price so the risk of losing money is low.

  This has encouraged small, noncorporate players to become renewable energy provi
ders—farms, municipalities, and hundreds of newly formed co-ops. That has decentralized not just electrical power, but also political power and wealth: roughly half of Germany’s renewable energy facilities are in the hands of farmers, citizen groups, and almost nine hundred energy cooperatives. Not only are they generating power but they also have the chance to generate revenue for their communities by selling back to the grid. Over all, there are now 1.4 million photovoltaic installations and about 25,000 windmills. Nearly 400,000 jobs have been created.19

  Each one of these measures represents a departure from neoliberal orthodoxy: the government is engaging in long-term national planning; it is deliberately picking winners in the market (renewables over nuclear power, which it is simultaneously closing down); it is fixing prices (a clear market interference); and creating a fair playing field for any potential renewable energy producer—big or small—to enter the market. And yet despite—or rather because of—these ideological heresies, Germany’s transition is among the fastest in the world. According to Hans Thie, the advisor on economic policy for the Left Party in the German parliament, who has been intensely involved in the transition, “Virtually all expansion estimates have been surpassed. The speed of expansion is considerably higher than had been expected.”20