A New Carbon Budgeting Tool

A guest post from Aubrey Meyer of the Global Commons Institute

In the light of the positive attention to 'Contraction and Convergence' shown by the Gaian Economics blog, please may I introduce you to CBAT, the 'Carbon Budget Analysis Tool'.

CBAT is the latest phase of C&C development: and is intended to be useful now that - following the IPCC's Fifth Progress Report (AR5) - 'carbon-budgeting' seems finally to be on the agenda.

For example, the analysis tool quickly shows the IPCC AR5 Contraction-to-Concentrations results as a result of the UK Climate Act (UKCA). This particular piece of analysis shows the emissions-budget-integral in the UK Climate Act is either: -

[a] twice too much (and that's without the feedbacks) or

[b] just a third too much or

[c] just right

This really gives one something to chew on over regarding IPCC's stated '1,000 Gt C' maximum for two degrees!

Its also interesting to see/play that combined that with contraction-convergence-rates CBAT Domain Two. CBAT Domain Two perhaps explains why the prescribed global convergence date of 2050 in the UKCA was so inflammatory at COP-15. The convergence to equality by 2050 in the UKCA was something of a fig-leaf and using CBAT D2 animation quickly shows that. Its quite an eye-opener i.e. convergence by the time 80% of the budget has been used up makes no real difference at all.

GCI has always modelled that convergence for any rate of global emissions contraction should be at a negotiated in the light of 'historic responsibilities'. Subject to the UNFCCC-compliance rates of Contraction and Concentrations in D1, the animation D2 clearly shows the maths sub-division of this.

The CBAT is open to consultation and amendment so please take some time to look at it and comment on it. So far some others have and said supportive things, which is encouraging which are available on our website.

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Any Economy So Long as it is Colourful

Henry Ford coined the adage that best describes the ethic of the mass production-mass production era of the 20th century: ‘Any customer can have a car painted any colour that he wants so long as it is black.’ I think we usefully adapt this pithy phrase to help us vision the economy of the future. In this case it can be as colourful as human creativity can encompass but it has one fundamental limit: the energy limit. To put an exact number of the reduction in energy that we are looking for is a speculative process, but we need to reduce our current demand by something between 70 and 90 per cent.

This number is based on estimates in the Zero Carbon Britain report about what we need to do to achieve global equity by 2050. The exact figure requires assumptions about how energy intensive it is to construct and maintain renewable energy generation facilities; the likelihood of technology advances increasing energy efficiency vs. rebound effects; the contribution to carbon sequestration made by changing land use; and many other factors that cannot be convincingly quantified.

Although many reports about social responses to climate change can feel fairly prescriptive in fact what we are looking for is creative and imaginative responses. You can have any economy you want so long as it is a low-energy economy. My work as a green economist is about visioning the most rewarding and satisfying economy we could create for the global human community while keeping within these planetary limits. Anybody is perfectly at liberty to create another vision, and in fact since Nature’s way is one of diversity we are likely to have a variety of different local economies within and between the present nation-states of the world to replace the stultifying uniformity of the globalised monoculture. Designing future economies, and devising the political pathway to follow to arrive at them, offers both a challenge and an opportunity.
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Living Within Our Means

Green Party conference is still in full swing at the Birmingham Conservatoire. I was lucky that the two motions I had an interest in - one on banking and the other on how to put forward a positive view of a sustainable economy in the context of public-spending cuts - were both scheduled for the Saturday. So by 6pm everything was done and dusted and I was able to practise what I preach and have Sunday off.

This post has the same title as one of the motions that I was proposing, and its passage was not entirely comfortable. The Green Party is struggling with an influx of socialists who are understandably disillusioned with the Labour Party. This is a small proportion of Labour Party membership but can become a significant minority of our party, and one which rapidly starts to weight us down towards one side of the left-right continuumn that we really should be transcending. Thus it was that I found myself in the uncomfortable position of being attacked by the left of the party as though I was defending public spending cuts.

Like most people who either work in our use the public services that working people fought so hard for in this country (and isn't that most people who live in this country?), I am delighted that the TUC will spend this week making a range of political and emotional arguments in their defence. I just know that this is not the role for the Green Party. We cannot join the old left in their Keynsian calls for restimulating the growth that is killing the planet. We have a more subtle and forward-looking message and it is our duty as a party to put that forward.

The vote was won and, aside from some personal attacks that are another feature of the Labour Party that we increasingly have to put up with these days, I felt generally well supported and - which was more cheering - well understood. The theme of this motion was taken up by Adrian Ramsay, in his Deputy Leader's speech to the conference where he drew attention to the different ways we interpret the phrase 'living within our means'. I am including the text of the motion here:

Living within Our Means

Synopsis. The unprecedented deficit is an indication that we are living beyond our means in a fiscal sense, which supports the Green Party’s long-held belief that we are living beyond our means in an ecological sense. Our recognition of the link between these two crises constrains the kind of response which the party can make to the current debate about publicspending cuts.

Motion

LWM1 The Green Party restates its commitment to developing an economic policy that is compatible with ecological sustainability and 'recognises the limits of . . . the
natural systems of the planet’(EC100).
LWM2 In this context it is important that we recognise the current fiscal deficit as a consequence of a policy based on monetary inflation without respect to ecological limits; for our policy to be consistent we cannot rely on growing our way out of debt, as many conventional economists propose.
LWM3 The unprecedented level of public deficit means that a significant restructuring of our economy is inevitable. The Green Party would use this opportunity to achieve the managed descent from overconsumption that our commitment to sustainability requires, while simultaneously addressing the rapid rise in inequality that has occurred in the past 30 years. We could consider this to be a domestic equivalent of our global policy for Contraction and Convergence.
LWM4 Conference instructs the policy co-ordinator, the economics policy working group, and the Party’s media team to work together to find ways to exploit the opportunity offered by the fiscal crunch to publicise the Green Party’s unique
commitment to steady-state economics.
LWM5 The policy co-ordinators are instructed to begin a process that will bring to spring conference proposals that will, in the context of the current public spending position, explore the synergies and conflicts between:
The Green New Deal proposals that were passed as a fast-tracked policy motion in Autumn 2008;
The proposals for implementing our economic vision included in the 2010 election manifesto;
The commitment to building an economy within ecological limits included in the first paragraphs of our economic policy. Tweet

Blood, Sweat and Tears?

Let's just imagine, for one moment, that we do not understand how international finance works, that we accept the notion that we have no control over our money supply, that we are victims of the depradations of global currency speculators. And then let's take an even more frightening step and imagine that we might be an economic strategist for one of the mainstream political parties. What on earth would we do about the economy? What would we have to say to the Chancellor once behind the closed doors of No. 11?

I have two suggestions about how we might tackle the debt problem within a conventional economic framework. I believe both could make the bitter pill easier to swallow, because they treat people like grown-ups and because they are based on an understanding of justice as fairness that has been singularly lacking from our politics since 1979.

While growth-addicted politicians have been luring the UK's citizens into debt-fuelled consumption for decades, the evidence is that this has not greatly enhanced our well-being. The gadgets and air flights have led to dislocation and the breakdown of the relationships that really guarantee our well-being. Citizens might be prepared to accept less money and less stuff on one vital condition: that they believed the inequality that has accompanied the expansion of our economy for the past 30 years were to be reversed.

At the global scale, we call for a Contraction and Convergence - reducing energy consumption to a level that the planet can survive, and sharing this equally between all the world's people. At a national level I would suggest a similar approach to tackling the debt. If there must be public-sector pay restraint, then the lowest paid should still see increases, with the cuts coming to the best paid. This would address the deficit while simultaneously reversing the inequality that is so pernicious to social health. For the private sector, a maximum wage differential and considerably more progressive tax system could effect a similar convergence of incomes.

Just as we argue for the global contraction and convergence as a way of enabling our economy to fit within planetary limits, so we could consider the need to reduce the need to reduce government spending as part of a policy of a managed reduction in economy activity. As argued by the degrowth movement, this help us to 'put the economy in its place'. Over the next decade we could take what Marshall Sahlins eloquently calls the 'Zen road to affluence', valuing our selves, each other and the beautiful world we share, rather than burning oil and cash to provide ourselves with more stuff.

Whether we have a government of national unity or a weak government of one or two parties on May 7th the task facing whoever moves into No. 11 will be the same: reassessing what a successful economy is and moving away from the growth-and-consumption beano, fuelled by debt, that has been the hallmark of UK plc since Big Bang in 1986. If enacted with justice and in order to rebalance our relationship with nature this could offer a great opportunity. Tweet

We've got the contraction, what about the convergence?

The most promising plan that the world can sign up to in order to reduce CO2 limits is Contraction and Convergence. It is appealing because it is simple and fair: under the plan every person on the earth has the right to emit an equal quantity of carbon dioxide. This sidelines the discussion about whether the US or China is the worst sinner, since in these terms the US loses out every time. No wonder that the proposal - nor anything similar - was not on the table at Copenhagen.

'Contraction' and 'convergence' are not attractive words and it is hard to imagine people marching the streets shouting 'What do we want?' 'Contraction and convergence', 'When do we want it?' 'Now!'. But what the plan neatly does is to link the need to limit economic activity to the need to share its proceeds fairly. Part of the reason governments are addicted to growth is that it allows them to sideline issues about distribution. Now that the world has run up against planetary limits, the link between the greed of a few and the need of the many is going to be harder to avoid.

But surely the same applies in our own country. The origin of the UK's economic collapse was clearly in the debt-ridden financial system and the government bailout, but for many green-minded economists, a shrinking economy could be a step towards living more in balance with what the earth can provide. Our proposals would require a reduction in consumption levels from those of the debt-fuelled binge of recent years.

The other side of our argument is that the smaller quantity of stuff would have to be shared fairly, so we cannot have sustainability without equity and we should not have a contraction of our national economy without a convergence in our levels of wealth. This is a proposal we could make in our own workplaces: if jobs are threatened and pay cuts loom, we should propose that the shortage of cash is addressed by reducing the wage differentials.

Recent evidence has shown clearly that inequality is the root cause of many of the social evils of 21st century life. It is also a driver of environmental destruction. The recession gives us the chance to argue for a better, fairer sharing of the earth's resources. Contraction and convergence is just as relevant domestically as it is globally. Tweet

Bursting the carbon bubble

The government hopes it has now stopped the decline in the asset base of Northern Rock by offering guarantees that all savers' deposits will be repaid in full. Let's enquire a little further into this guarantee. Where is the money coming from? The Bank of England, the government's bank, will supply it to the Northern Rock but it will be government money, or rather our money. Cash haemorrhaging across the counters of the bank will be replaced by a steady transfusion of public money, money that might have been spent on better hospitals or schools.

The most obvious problem with this is that it is transferring money from the poor (e.g. those who shovel chips or sweep streets and pay their taxes) to the rich (those with money in hedge funds). It also provides a huge incentive for the gamblers in the global financial casino to continue their high-risk strategies, knowing that when they fail it will be the working people of this country who will bail them out.

Since giving away the power to regulate financial markets with Big Bang in 1986 the government has irresponsibly left the management of the money system we all rely on to city speculators. The ideology behind this was essentially the Adam Smith doctrine of the invisible hand: if lots of players act with individual selfishness the outcome will be to the benefit of all. But it hasn't been. It has been to the benefit of those with more knowledge of, and power in, financial markets.

But even if any politicians who is accorded air time were to argue for the taking back of political control over the fundamentally important monetary system of this country how could that be done without precipitating exactly the sort of collapse that causes such social distress as witnessed in Russia frollowing the break-up of the Soviet Union?

The ideal would be to manage the descent in the consumption imbalance between rich and poor, whether we are thinking of individuals or nations, in conjunction with the managed decline in the production of carbon dioxide. This is entirely consistent with evidence showing that there is a close relationship between wealth and behaviour which causes climate change.

The debt bubble in the international financial system is funding by the purchase of US government debt by the booming Asian economies. The Contraction and Convergence model (http://www.gci.org.uk/contconv/cc.html) offers a mechanism for equalising carbon dioxide emissions on a global per capita basis and thus a means of rebalancing this relationship. Introducing the TEQ or tradable energy quota in the UK might be one tool to reduce consumption: if it could be linked to a managed withdrawal of debt from the national economy we might move towards a future that is financially, as well as ecologically, stable.

You might like to investigate this online petition: http://petitions.pm.gov.uk/NoCityBailout/

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Learning a stern lesson

As part of the Green Party’s submission to the Stern Review I wrote that ‘the globalised capitalist economy is inherently unsustainable because it is based on turning energy into money without regard for ecology. Climate change is just the first and most urgent piece of evidence that this is the case.’ OK, this is rather trite and simplistic, and says nothing of the vast proportion of capitalism (around 97%) that generates profits by speculating on the future values of currencies or commodities, but as a slogan it has much to recommend it.
In the sustainable economy energy will the important measure rather than money. In fact these two can be joined through the creation of a currency backed by carbon, as first suggested by Richard Douthwaite. Scarcity is one of the key requirements of a successful form of money (hence the use of gold or cows in other societies at other times) and now our most valuable scarce resource is the global atmosphere.
The poverty of the South can be explained in terms of their inadequate consumption of the global economy’s energy; the over-consumption of the rich, developed countries can be explained in the same way. The shares of carbon dioxide of poor countries do not match their shares of world population. The comparison of India and the USA is the most striking: a direct swap of carbon dioxide would resolve around a fifth of the inequality at a stroke. India is responsible for 5% of the global output of CO2 but has nearly 20% of the world’s population; the USA, by contrast, is responsible for 25% of emissions but with only 5% of world population.
The IPCC (Intergovernmental Panel on Climate Change is a UN panel of experts who have exhaustively analysed available data about the consequences of carbon dioxide emissions to estimate the ‘carrying capacity’ of the planet, that is how much CO2 it is reasonably safe for us to emit. The Global Commons Institute (GCI) in London has developed a model for sharing this total amount fairly between the world’s people on a per capita basis, and then for reducing this amount rapidly over time, called Contraction and Convergence (C&C). If we work with the year 2000 the sums work out rather neatly, since the model suggests around 6 billion tonnes of carbon can be produced, and the planet had around 6 billion people, which allows us 1 tonne each. At present in the UK we produce around 2.5 tonnes, which gives a clear idea of the size of cuts required just to reach fair shares today, even before the cuts that are necessary.
A comparison of CO2 emissions by country shows how the poorer the country is the less of its share of carbon dioxide it is producing and the more it needs an input of energy from the richer nations. At present we measure economic energy in terms of money, usually dollars. In an economy that respected planetary limits we would measure activity in terms of energy, since this is the scarcest planetary resource. As green economists we need to move towards an economy which uses energy as both a way of measuring the economy and, ultimately, the basis for its means of exchange or money. Tweet