Personal carbon allowances - Can we make a start?

A guest post by Ian Smith, a renewable energy consultant

I believe that some form of personal carbon allowance, at least from an ethical perspective, is something that we should be striving for.  However, I have no illusions about the difficulties involved in implementing any such scheme nationally, let alone internationally.  Leaving aside the political barriers, even with the internet, the transaction costs look like quite an impediment.  Having looked at a number of these systems, including David Fleming's TEQs, I started to think how one might run a much simpler proxy, and possibly as a precursor, for the idea.  I am suggesting that people in the public eye be encouraged to publicize their footprints.  This may seem like a request for them to shoot themselves in the foot (excuse the pun) as most of the people in the public eye (sports people, business people, actors/actresses, politicians and other celebrities) are likely to have higher than average footprints but, if some could be persuaded to do so, and the media encouraged to use the information then public and peer pressure for others to do so could be quite compelling.

How the idea might work:

1. Set up a website where people in the public eye are invited to record their footprint every year. The inputs to the calculation would be confidential but the final footprint number would be in the public domain and available for the general public & media to access and use. The website should include a date stamp with the footprint to advise users on its currency.

2. There should be a specified or dedicated calculator capable of covering international lifestyles. It should include some provision for estimating embedded emissions in goods and services consumed. Note that calculators suitable for the UK may not be suitable for other countries. For example, green electricity tariffs have little true additionality in the UK, but the case may be different elsewhere. Similarly, carbon intensity of electricity varies widely.

3. There should be no provision to credit carbon offsets though these could be recorded as a separate output.

4. Encourage the media to add the person's footprint when introducing (or subtitling) them – so “XX, CEO of YY” becomes “XX, CEO of YY, 25 tonnes”.

The combination of the website and the publicity would have a number of benefits. First, it would put pressure on such people to reduce their footprint year on year. It would, if done professionally, encourage others to publish theirs. It would raise awareness of the gap between individual emissions and sustainable levels and facilitate the understanding of the issue of personal carbon allowances.

Whilst the web site should include information the methodologies used in the calculator(s) and on what constitutes a sustainable level, it would probably detract from its role to include awards (or, indeed, naming and shaming). That should be left to the media. Indeed, this would probably be seen as an incentive by the media to cooperate. The calculator would need to be compromise between accuracy and simplicity to encourage take-up. Since the main purpose of this suggestion is to raise awareness, accuracy is not a prime concern.

When tested on others, this idea has tended to polarize opinion as to its viability. What it needs is a sponsor who believes it is viable with the web skills and media connections to take it forward. Suggestions - or even volunteers - welcome.
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Greek People Take on Financiers

The situation in Greece is giving clear evidence that economics never could be separated from politics, and that the subject should have retained its original title of ‘political economy’. It is also demonstrating the terror that strikes the heart of the elites when people begin to act like democratic citizens and try to influence the policies of their country, particularly policies in the crucial areas of currency, taxation and wealth.

The following summary of the outcome of the Greek elections is based on information supplied by Christina Laskaridis of the Greek Debt Audit Campaign.

The most striking outcome of the elections is the collapse in credibility of the conventional parties, what would be called in the UK the ‘mainstream parties’, i.e. those that support the neoliberal hegemony. In an exceptional situation since the retreat of the generals in 1974, neither of these parties has managed to gain a majority. Prior to the crisis they received around 70-90% of the popular vote; this has fallen to 33%. New Democracy’s vote has fallen from 33% in 2009 to 19% and from 2.3 million votes to 1.2 million. Pasok’s vote has fallen from 44% to 13% and from from 3 million votes to 800,000.

In desperation Greeks have voted for a whole range of other parties, some old and some new, but through this messy situation one thing becomes clear: it is the parties that have resisted the crippling requirements of the EU central authorities that have gained. So the far right party Laos, which supported the Eurozone agreement, saw its support fall from 5.6% to 2.9%, whereas the fascist party Golden Dawn, which resisted the deal, saw a huge increase in its vote (to 7% from nowhere). In total the vote for the far right has risen from 6% in 2009 to 21%.

The real winner from the elections was the Syriza: its vote increasing from 4.6% to 17%. Their support was especially strong in all the big cities (Athens, Thessaloniki, Patras) and in working-class neighbourhoods. Its platform was for an end to the impossible and destructive ‘austerity’ agreement, called ‘memorandums’ by Greek commentators, but a continuation of membership of both the EU and the euro. While this position seems impossible, it is precisely the right position to challenge elite domination of European financial and economic institutions. The other parties of the left, the Communists (KKE: 8.5%) and Antarsya (1.2%) both campaign for Greece to leave the EU.

Again, as in the UK, a growing number of electors are voting for parties that are prevented from entering the parliament. Greece has a PR system (with a twist) but the 3% threshold is now keeping the chosen representatives of 18% of electors outside the parliament. The twist is that the party that garners the most votes in the election is then gifted an additional 50 seats. This means that New Democracy, the party that formerly governed and was roundly rejected now has by far the largest number of seats: 108.

An important lesson from the Greek political situation seems to me to be one about engagement and representation, and it links directly to the nature of the electoral system. The free-gift-of-50-seats rule was presumably instituted to avoid the weak governments that a widely allocated vote can result in, since it creates an in-built majority. Its consequence has been to guarantee that absolute power has shifted between the largest parties of centre-right and centre-left — New Democracy and PASOK — for the past 40 years. This has left many Greek citizens’s views unrepresented and has surely encouraged the corrupt and self-serving nature of Greek politics. Our first past the post system is also partly used to create a pressure towards majority governments, and the corruption and failure to respond to electors here arises from a similar source.
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Is it the Economy, or is Osborne Stupid?

Now George Osborne has me really worried. We are all used to him misrepresenting how the economy works to score political points: there is no alternative to austerity, no wealth is created in the public sector, and so on. But this morning on the Andrew Marr show he seemed to just plain misunderstand something.

If you watch the beginning of the interview you will hear him make a familiar point about how we are benefiting from low rates of yield on our national debt because of market confidence in the savagery of the austerity policies being imposed. He then seeks to imply that this has a direct link to household finances via the interest rates they pay mortgages, and to growth via the interest businesses pay on loans. But in reality these are connected only indirectly if at all. The Bank of England has set the interest rate at 0.5%, which explains the comparatively low interest rates faced by households and businesses. If there is a connection between this and the yields financiers demand for gilts then I would be glad for a commentator to explain it.

This is precisely why the eurozone countries are in the hole they are in. They can control neither the rate they are charged for their debt, nor the rate at which money is priced, since they have abandond their central Banks and are now subject to the interest rate set by the European Central Bank. In fact, that rate has remained resolutely low as rates charged on Spanish or Greek debt has swung wildly, again illustrating Osborne's error.

The main advantage we have over the countries of the Eurozone is that we can print our own money and set our own interest rates. That gives us considerably more room for manoeuvre and scope for fiscal stimulus like that undertaken in the US, but which the European economies do not have the power to implement. Osborne should gain credit for helping to keep us out of the euro but, if he agrees with the independence of the Bank of England then the he cannot claim credit for low domestic interest rates.

Osborne's is, at best, a high-risk strategy. What if the markets turn? The rate they charge us for debt is entirely within their control and is the result of a calculation about how they can extract the most value from their various holdings of peonage and bonded labour across the world. If the countries of southern Europe cease to yield such healthy returns then they will turn their greedy eyes in our direction. We could find ourselves in the of a sterling crisis sooner than we think.
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Who Owes Whom?

I spent my Easter weekend this year in an exciting meeting of social movements focused on rejecting the debt at source: on conducting a series of Citizens' Audits to ascertain exactly how we came to be in this disastrous position and to ask the question, Who really owes to whom? And why should the tiny percentage of the super-wealthy continue to extract such a vast share of the common wealth of nations? This is empowerment as an alternative to austerity.

In the room were around 60 activists from across Europe and the newly liberated countries of the Middle East. Countries represented included France, Egypt, Poland, Tunisia, Italy, Greece, Portugal, the UK, Ireland, Germany, Belgium, and Spain. In each country, popular movements have grown up to resist the disfiguring of societies that austerity brings, some with more technical approach to debt audit, some with more direct campaigning responses.

In Spain the campaign against the debt was launched in October 2011 under the rubric 'We don't owe; We won't pay'. A coalition of social and ecological movements, trade unions and political parties. Their objective is a general one: to raise the issue of the debt nationally and regionally and to challenge the perceived inevitability of austerity policies. This campaign is less focused on the specific technical aspects of debt audit, rather the campaign for an audit is used as a vehicle to demand a real democratic debate about the national debate and its social and political consequences. The aim of the campaign is to change the political model, taking power from the financiers and giving it back to the people. A special conference on the process of debt audit specifically will be held in Catalonia in October 2012.

In Greece the campaign against an unquestioning policy of austerity and in favour of a open discussion about policy alternatives forms an umbrella within which a number of groups operate including three who were represented in Brussels: Comite grec contre la d'être, No debt no euro, and the Greek Debt Audit Campaign. Specific investigation of the debt itself has been undertaken mainly by the third of these, and has consisted of research into single-issue examples of illegitimate debt. Overall the campaign is working at the level of popular education to share and explain the idea of debt audit and debt cancellation. The defining characteristic of the Greek crisis is a failure of trust elites and particularly where money is concerned. For this reason the Audit campaigners do not feel able to consult experts or to seek funding to pay economists or accountants to study the government accounts. In the current context they feel that this would only lead them to lose credibility in the eyes of the public. For this reason they undertake to forensically analysis the debt using the data they can gain access to, and in a voluntary capacity.

In Portugal the campaign against the debt was launched officially in a big public meeting on 17 December 2011. The focus is on working towards a full-scale public debt audit although, as we were told at the conference, 'All initiatives of resistance and a new social paradigm are unequivocally indispensable at this moment'. The aim of the campaign is to produce technically reliable results from a thorough analysis of government accounts. In the mean time, however, the campaign process itself is providing the opportunity for considerable public education. The common sense view in Portugal, as in many European democracies, is that the debt must be paid: that there is no alternative. The campaign has achieved widespread media coverage and is organising a roadshow to take its message around the country. One particular campaign is the launch of a legal action against accountants Ernst and Young, who have been found to be auditing companies they themselves work for in a way that may raised questions about the ability to provide independent audit.

From Egypt we heard from Noha el Shoki, of the Campagne populaire pour l'audit. A trained economists she told us of her campaign's goals to suspend payment of the foreign debts inherited from the Mubarak era and to enter into negotiations with debt holders. They have a rather dubious history of such 'rescheduling', such as the 40% downgrade in foreign debts that Mubarak was allowed in exchange for his support for the Iraq War. The campaign is undertaking a technical exercise to audit their country's national debt from this point. They are meeting with the new parliament's public accounts committee and are being well supported with information. Less encouragingly, Noha told us that during the period between the overthrow of Mubarak and the election of the parliament, Egypt was allowed to borrow at 8 times its previous annual rate, acquiring illegitimate loans that the new democracy will now be forced to pay back. These loans were agreed in documents that were not even translated into Arabic.

A similar situation arose in Tunisia, which will host the World Social Forum in April 2013. Fathi Aloui told us how the national debt is preventing the fledging democracy from succeeding. As in Egupt, during the interim between old and new regimes, Western countries massively increased their loans for questionable projects, tying Tunisia into future debt bondage. On 17 January 2011, three days after Ben Ali was ousted, the World Bank took control of the Tunisian Central Bank. The campaign is seeking to make these facts known to the Tunisian people: without economic democracy political democracy is worthless.

Ireland is, in some ways, the most inspiring example, since three academics from the University of Limerick have already completed and published an audit. The Audit drew some interesting conclusions about the relationship between the Irish state and financial speculators:

'The profile of investors in Irish sovereign debt has changed significantly since the Irish banking guarantee was put in place in 2008. Prior to the crisis, Irish debt was viewed by the market as a low yielding, low risk asset and it usually found a home on European banking books, insurance companies and pension funds. The crisis has changed the nature of Irish sovereign debt and has led to the creation of a number of credit instruments that affect the credit risk of the Irish sovereign. Over the past three years the trading activity in Irish sovereign debt and related instruments has been unprecedented both in terms of volume and trade-type.'

Once the state was guaranteeing returns, the market was open for profiteering and extortion, spiking in 2011 when returns were at their maximum. The academics also question the democratic acceptability of having secret bond-holders owning government debt.

In Britain we are still at the early stages of building a coalition to call for a Debt Audit. A technical exercise is useful, but if nobody notices its findings then it does not take you very far. Instead we need to build an ideological movement to reject the austerity vs. growth dichotomy and find a third way of trascending debts and moving towards a stable and sustainable economy.
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The World Turned Upside Down

Greens are renowned for the penchant for catastrophising and the temptation to behave like a prophet of doom grows daily, as we are assailed by dire news on the state of our economy and our ecology. We feel justified in claiming that a system has reached its end and in demanding a new paradigm. But where are we to look for our models for a fundamental change, not just in a few aspects of our lives but in the whole way we perceive and interact with the world and each other?

I have received inspiration recently from the ideas and activities of the men and women who lived their lives during one of our country's most bloody and turbulent times: the English Civil War. Specifically I am thinking about rerunning a series of debates held in what was then the small village of Putney in 1647 amongst members of The New Model Army who had defeated the King's forces and now demanded the right to decide on the new world they would live in.

Their demands were widespread and radical. Army leader Thomas Rainsborough argued a case for radical equality of rights and property. His famous statement 'for really I think that the poorest he that is in England hath a life to live, as the greatest he’ was a key step on our road to democratic rights divorced from property, a case made more boldly by 'honest John' Lilburne, the pamphleteer whose words were so incendiary that he spent most of his life in gaol. These were 'the Levellers' who rejected the society based on privilege and inequality they had been born into.

These radical thinkers were clever enough to foresee that without a redistribution of resources political rights would ultimately be eroded. Hence the call for land redistribution so that it could become, in Gerard Winstanely's words 'a common Treasury'. Like today's radicals many out their words into practice, organising communes that followed the early Christian communes and gave models to later communities of the 1960s. Like many Greens today they had a spiritual onmection to the land, as demonstrated by Winstanley's comment that 'True religion and undefiled is to make restitution of the earth'.

For an intriguing and enjoyable introduction to those times you could try watching the Channel 4 drama series The Devil's Whore. This was sadly missold at the time as a lusty costume drama romp. In fact it is a skilfully written introduction to a time when nothing was unthinkable, viewed through the eyes of an imaginary Everywoman. If you believe we need to turn our world upside down, then learning from our courageous ancestors who demanded the right to live in freedom and equality may be a good place to start.
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Demand Clean Energy

A guest post by Friends of the Earth’s Energy Campaigner Paul Steedman

Renewable energy firms, campaigners and Ministers from all over the world waiting for a long over-due keynote speech on the environment were left feeling somewhat deflated last week, as the Prime Minister’s talk at the Clean Energy Ministerial fell far short of expectations. In a speech lasting just seven minutes, Cameron talked up Britain’s natural resources without actually announcing anything new. He said that clean energy, fossil fuels and nuclear would all have an important role to play in future. And in a nod to the Chancellor he stressed that the cost of renewable energy must fall – without setting out ways to drive the investment that’s needed.

David Cameron knows the idea that clean energy is antithetical to a growing economy and a thriving business sector just doesn’t stand up – our full page ad in the FT last week pulled this argument apart. Renewable energy is one of the few sectors growing while the rest of the economy stagnates. New research by the REA shows that the renewables industry already supports 110,000 jobs across the supply chain. The Offshore Valuation says that using just one third of the UK’s wind, wave and tidal resource could create 145,000 more – developing this sector would allow us to export technology and expertise.

When the Electricity Market Reform Bill enters Parliament this year, Ministers will have a once-in-a-generation opportunity to change our broken power market for the better. It’s a chance to end the stranglehold of the Big Six energy firms keeping the UK hooked on expensive fossil fuels, and provide better support to new and smaller companies developing clean British power from our wind, sun and sea. That’s why Friends of the Earth has launched its Clean British Energy campaign, calling on the coalition Government to bin the ‘bad-for-business’ rhetoric and commit to clean energy and a low-carbon future.

Crucially, a switch to clean energy and greater energy efficiency will bring much-needed long-term relief to the pockets of hard-pressed bill-payers – energy regulator Ofgem says it’s our reliance on gas that has driven up fuel bills in recent years. With six million UK households struggling to stay warm in winter, the need to shift from costly gas towards renewable alternatives has never been greater.

If David Cameron is serious about driving down the cost of renewable energy and driving forward low-carbon growth, he needs to act fast. It’s been two years since we were promised the “greenest Government ever” – with the UK entering a double-dip recession, now is the time to deliver. 

Join over 7,000 people who have already taken action, and add your voice to the call for a switch to clean British energy at www.cleanbritishenergy.com.  
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A Green Paradox of Thrift

In case you were wondering, Comment is Not Free, at least not at the Guardian. There are guardians of freedom, and they rejected the following piece. Whether on political or quality grounds who knows? But we tried, over quite a long time, and didn't succeed. In spite of the opnion of the Guardian's guardians I commend it to the higher in quality but smaller in quantity readers of this blog:

It is somewhat ironic that it was Keynes who said that politicians tend to be in the thrall of a defunct economist because his shade is haunting our council chambers at this budget-setting season, but sadly he is one of those ghosts that remains unseen and unheeded. John Maynard was a man with an aphorism for all seasons,and that most appropriate for today's economy was his 'paradox of thrift'.

Commenting on the horrifying consequences of the Depression of the 1930s, Keynes noticed that people's natural response to be cautious in times of crisis could actually make the problem worse. While saving at the individual level may be entirely noble, at the level of an economy as a whole, and especially one with insufficient demand, it can be devastating. The lost decade for the Japanese economy, when cautious citizens saved and the economy floundered, is often taken to be the paradigmatic case.

In this era where Depression threatens us again it is dangerous to have so many councillors whose experience is in running small businesses and who rather than understand economies as systems of interacting citizens take the perspective of the shop-keeping: economising rather than economics. What was revolutionary about Keynes's way of looking at economics was that he was able to see the system as a whole, to explain, and even to influence the system dynamics. We need our politicians nationally and locally rethink their understanding of their role. Two concepts that may be useful in this process are boundaries and circulation.

If you are a business, then money you spend goes on the negative side of your balance sheet - it is a leakage, its benefits are external to your balance-sheet and therefore it should be minimised. This is because your business has clear boundaries. If you are a highly diversified business you may be able to keep a much higher degree of spending within your organisation, which is why SMEs are facing unfair competition, but none the less keeping costs down makes absolute sense.

If you are a local authority all the businesses within your area are inside your organisation, since all pay taxes if they thrive as do the people they employ. The boundary you should bear in mind when writing budgets is the local economy: just as you try to minimise costs within a business your priority as a politician should be to minimise leakages from the local economy. To cut your own budgets to the bone, or not to spend money budgeted in this period, is like cutting your own income rather than cutting your own outgoings.

The question of circulation is a bit more difficult to grasp because it requires us to think systemically, something the human mind seems reluctant to do. It is also not entirely valid in an environment where the interaction between local and central government spending is so complex, but it is still true to say that money spent by local councils is not lost to them. Every time they create a job they potentially save spending on housing benefit or homelessness, and add to their revenue from council tax. If they intentionally spend more with local businesses then they may well see a rise in their business rates. This is an example of positive multipliers – local government spending can stimulate the local economy and as it grows more money flows into council coffers.

At the moment we are seeing the reverse effect – both national and local governments cut spending and this reduces their spending with businesses and reduces the revenue they gain from businesses. This happens when councils cut jobs, so, as a key local employer, the decision many local councils have taken to cut their staffing levels will inevitably reduce spending by their employees in the local economy.

It was because of the importance of flows rather than isolated transactions and of the economy as an interacting system that Keynes invented the term 'the multiplier'--government spending can stimulate activity, leading to more transactions in the economy, more money being raised in taxation, which can be respent into the economy, creating a virtuous circle. The austerity measures of the Coalition are achieving precisely the opposite: cuts are leading to economic shrinkage, lower tax revenues, and a growing deficit. This is the problem that Greece is facing, and is what Danny Blanchflower refers to as the 'death spiral'.

But let's return to Keynes's aphorism about the defunct economist, because what he was really criticising was the tendency amongst policy-makers to always respond to the previous crisis and to ignore the facts that have changed. This is the failure of the socialist and even, to some extent, the New Labour left. Their focus is still on jobs and on growth, but a Keynesian stimulus on the 1930s pattern cannot be the solution this time. We are boxed in by an environmental crisis that, if unsolved, will cast our present economic woes into the shadows.

Here is where green economists might play a useful role in rehabilitating and updating thrift. The idea of the thrifty housewife, who was a heroine during the war years, was deliberately targeted by advertisers keen to expand consumption to ensure sufficient 'aggregate demand'. The thrifty housewife who insisted on durable fabrics and eschewed fashion and refused to take on debt was persuaded to become the spendthrift retail therapist, maxing out her plastic and buying shoddy goods imported from foreign sweatshops. The consumer, and especially the person who consumed on credit, was the only thing standing between our national economy and economic disaster.

Before the economy had reached the planetary boundary this simulation of growth made sense, but it is now as dangerously obsolete as a death-dated printer or a cream stair-carpet. Our duty must be to become ecological citizens, to prioritise happiness founded on relationship and virtue rather than on material acquisition.

So where does this leave green economists with Keynes's paradox? As Stephen Fry likes to say, it is all a question of levels. An acknowledgement of the ecological limit to economic activity means rethinking the wastefulness of the global economy, but encouraging the health of local economies. In Keynesian terms we might think of this as working with local rather than global multipliers.

It may seem paradoxical but in fact it is entirely consistent to pursue an economic strategy that acknowledges the paradox of thrift while simultaneously arguing that we should learn to flourish within ecological limits. What a green economist would aim for is the substitution of local economic activity for global economic activity.
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