Is Climate Progress Illegal?

This is just stunning. I did not expect Naomi Klein’s book to make much of a mark in my thinking but she just did with just a few paragraphs.

The WTO ruled against Canada, determining that Ontario’s buy-local provisions were indeed illegal. And the province wasted little time in nixing the local-content rules that had been so central to its program. It was this, Mr. Maccario said, that led his foreign investors to pull their support for factory expansion. “Seeing all those, for lack of a better term, mixed messages … was the straw that broke the camel’s back.”

From a climate perspective, the WTO ruling was an outrage: If we want to keep warming below catastrophic levels, wealthy economies like Canada must make getting off fossil fuels their top priority.

How absurd, then, for the WTO to interfere with that success – to let trade trump the planet itself.

And yet from a strictly legal standpoint, Japan and the EU were perfectly correct. One of the key provisions in almost all free trade agreements involves something called “national treatment,” which requires governments to make no distinction between goods produced by local companies and goods produced by foreign firms outside their borders.

Worse, it’s not only critical supports for renewable energy that are at risk of these attacks. Any attempt by a government to regulate the sale or extraction of particularly dirty kinds of fossil fuels is also vulnerable to similar trade challenges.

For instance, in 2012, the U.S.-incorporated oil company Lone Pine began taking steps to use NAFTA to challenge Quebec’s hard-won fracking moratorium. It has since announced plans to sue Canada for at least $230-million U.S. under NAFTA’s rules on expropriation and “fair and equitable treatment.”

Yeah, that’s a problem. Basically, an international agreement is impossible and local action is illegal.

All the paranoia about an international climate enforcement power is misplaced. We already have a global power structure, but all it cares about is using everything up.

Comments:

  1. Haven't read it yet so I can't comment about Klein's coherence.

    I will point out that this sort of tactic is more available to incumbent, threatened industries than to nascent, disruptive ones though.

  2. I don't think we should be too surprised by this, there have always been "remedies" built into trade treaties to prevent countries using environmental or health concerns as a form of protectionism. The problem is that the trade treaties actually have teeth, whereas climate treaties, as Canadian Green Party leader Elizabeth May has put it, only have gums.

    There may be hope, though, that trade treaties could one day be used to implement, or at least allow, border tariffs, fees imposed by a jurisdiction that has carbon pricing on imports from another country that does not. For example, this via the Citizen's Climate Lobby:
    http://citizensclimatelobby.ca/sites/default/files/files/CCLWorldTradeO%20BorderAdjustments.pdf

    David Victor in his book Global Warming Gridlock argues that climate treaty negotiators could learn for trade treaty negotiators in making smaller club-like treaties that allow privileges for members and that can expand with time to become global treaties as non-members petition to join.
    http://www.amazon.ca/Global-Warming-Gridlock-David-Victor-ebook/dp/B004YPJ8ZU

    I'm not sure I buy that fully (there are immediate, visible and local benefits from trade, not so much from emissions reduction), but I am deeply pessimistic that anything will come of the UNFCCC COP process, now in its 23rd year--yes, twenty-three years--and still has not produced a proper treaty, even one with milk teeth.

  3. My experience in the UK is that energy policy and subsidy/pricing regimens definitively favour the Utilities and large-scale energy producers. This has impeded the flow and expansion of smaller scale or distributed energy substantially. In this sense, and context, her claim would appear to be reasonable.

    On top of this, there is the example of the EU attempting to place an import duty on Chinese solar products to protect existing local manufacturing and its margins.

    Elsewhere I have written about developments in hydrogen tech, another area where trade or safety regulation may be used as a tool to suppress potential.

    Inasmuch as all of these are examples of the status quo resisting change, they are no incompatible, even if they seem contrary.

  4. Hi Andy,

    I work with Naomi Klein and was the lead researcher on This Changes Everything. Respectfully, it isn't true that Naomi makes an argument in the book about "protectionism impeding" renewable energy, and I'm curious where you got that impression -- would you mind providing a page number?

    Kind regards,
    Rajiv Sicora

  5. An interview with Klein in the Guardian in case anyone misses it. This is pretty forthright: "Between the Heartlanders who recognise that climate change is a profound threat to our economic and social systems and therefore deny its scientific reality, and those who claim climate change requires only minor tweaks to business-as-usual and therefore allow themselves to believe in its reality, it’s not clear who is more deluded."

  6. It's easy to forget that power brokers are cynically exploiting these arguments to prevent people from thinking straight about what the real problem is (the survival of human life as we know it on earth, to a greater or lesser degree). The PR machine has us all so bamboozled that we answer each tentacle of the monster rather than noticing that the directing force is to prevent progress and maintain consumption at a level that justifies exploitation.

    The argument that developing nations cannot leapfrog cleaner fossil is suicidal, to put it bluntly. If it was fire one needed to put out, one would not pour a lower octane gas on it in the hopes that it would burn with a lesser flame. What good is a home that is burnt. And that's what we're doing, consuming our only home at an ever more feverish pace.

    Call me an alarmist: I am alarmed. Apathy, despair and ignorance are the same coin, keeping us from acting our conscience.

  7. she complains about protectionism

    It would be a serious omission if she didn't. (But I haven't yet got the book. Sale starts tomorrow in Germany.)

    A blatant example is the German EEG-Umlage (renewable energy surcharge). Brown coal miners are exempt. Thus Vattenfall got 70 million€ in 2013 for producing the dirtiest electricity in Germany. This on top of a derailed European emissions trading scheme which nobody wants to re-calibrate.

    (This will not change as long as chancellor Angela Merkel sticks with vice chancellor and minister for Economic Affairs and Energy, Sigmar Gabriel. Notoriously, he didn't even get it when James Hansen tried to explain him stuff in 2008.)

    For other examples I would first look for Spain, Hungaria, UK.

  8. > local action is illegal

    Of course it isn't. Any country can implement a carbon tax. What they can't do is discriminate against other countries products (except, bizarrely, as Fergus doesn't quite point out, you're allowed to block Chinese solar products under "anti dumping" work-arounds, which is weird).

  9. I wish people could tell when I'm speaking for effect and when I'm speaking literally. Yes of course there are still things one can do, but there are many things you can't, apparently, and some of those which might otherwise be considered reasonable.

    I am not sure how you can find anti-dumping laws bizarre and anti-local-incentive laws relatively reasonable.

    Anyway. In the large I am not supporting Klein's position so much as I am, tentatively, supporting the proposition that she has a coherent and serious position that is worth considering.

    In the case at hand, we see tools being removed from legitimacy that intuitively ought to be in the realm of local control.

    Specifically, Ontario wants to subsidize an industry which is NOT focused on export, I cannot see how that should be the business of the WTO or of some competitor who is inconvenienced. If you do so, you are essentially calling into question the entire mechanism by which Canada became a developed country in the first place, and I think the Swedes at least are hardly different. It's the normal behavior for a medium sized, wealthy country seeking to diversify. In this regard it seems to describe the Saudis as well.

    (Really, how it is different from how the private energy and technology sectors in the US suck on the teat of the Departments of Energy and Commerce also escapes me. Somehow there will be a reason it won't apply to America.)

    But once we move the topic to the global future, this isn't just a systematic interference in the development of mid-sized countries, it's an affront to the idea of sustainability. If a country wants to develop a stake in the transition to a reasonably, this mechanism tells it that in fact, it can't; that any solution has to be deployed at global scale or not at all. In effect, it reinforces the strange Sino-American hegemony that has emerged.

    Per Andy S's comment above, it isn't clear that a smallish country can implement an effective carbon tax under these constraints; possibly every country is too small. That is, if goods shipped from a non-compliant country can't be tariffed at the port of entry, a sufficiently motivating carbon tax simply moves anything movable offshore.

  10. In the very largest sense, the question at hand is how we measure success. The idea that everything of interest is commensurable with dollars is at best an undefended assumption; many of us think it flatly insane. The idea that the way to use dollars to measure success is by measuring the flux of dollars changing hands is even stranger if you set your mind to thinking about it, but that gets us off the present topic.

    The point is that we have built a system predicated on endless, roughly speaking exponential, expansion. Such a system will eventually fail. There are clear indications that the time of failure is at hand - in any case it cannot be too many generations in the future.

    I think the responsible question is what the smallest change is that will suffice. Klein, I gather, is among many who believe that the change must be large. The occasional sentence of hers that goes against the scientific sensibility notwithstanding, she writes compellingly and thinks seriously. It is high time we had the conversation. I hope she isn't as radical as I expect or as the articles I've read indicate; if she is, I hope she's wrong. But I am no denialist. Hoping for an easy answer doesn't make an easy proposed answer right.

    Contemporary capitalism is, above all else, incapable of distinguishing progress from exploitation. They are both dollar denominated after all. In its desperate hunger for growth in a time of limits, its rapacity tends to become a defining characteristic. I hope there is some relatively modest way to retune it to account for this built-in self-destruction. Most people seem to believe either that there is no problem or that there is no solution.

    It's time we started to discuss it more seriously in search of something between denial and nihilism.

  11. > I am not sure how you can find anti-dumping laws bizarre and anti-local-incentive laws relatively reasonable

    I meant its bizarre that the trade treaties forbid local-incentive laws but permit anti-dumping laws which are merely disguised protectionism.

    > being removed from legitimacy that intuitively ought to be in the realm of local control

    "Intuitively" is a fine word, but what does it mean in this context? I think it means, "something you'd like to be able to do". But the trouble is you're not free to do anything you'd like: you're bound by the law, and that includes past treaties you've signed up to.

    > cannot see how that should be the business of the WTO

    Because its the law, guv.

  12. Okay, but so what? Should it be the law? That's the question.

    It's certainly true that any treaty cedes national sovereignty, but these trade treaties cede vast amounts of it. To a large extent they were executed without much public consultation.

    Yet arguments against what amounts to fixing the treaty so that it doesn't systematically subtract value from the biosphere are opposed, with substantial corporate resources and fanfare, on grounds that they cede national sovereignty. That's, how shall I say this, somewhat irritating?

  13. I hope there is some relatively modest way to retune it to account for this built-in self-destruction. Most people seem to believe either that there is no problem or that there is no solution.

    It's time we started to discuss it more seriously in search of something between denial and nihilism.

    I have no hope (but a workaround): You would have to get rid of compound interest, which is the "reason" for the need for exponential growth. But compound interest seems something that always arises when you start dealing with money. And so we are all stuck with and dependent on exponential growth. Hm, well, I'm not so sure: Maybe Sharia compliant finance really is free of (implicit) compound interest.

    As Krugman said,

    Along come some scientists declaring that unrestricted pursuit of self-interest will destroy the world, and that government intervention is the only answer. It doesn’t matter how market-friendly you make the proposed intervention; this is a direct challenge to the libertarian worldview.

    And the natural reaction is denial — angry denial.

    ------------------

    The workaround: Counterbalance the system by a totally different parallel civilization where the unit of exchange is sequestered carbon banked in fertile soil.
    (Dr. Meta Frankenstein ist still working on this. On the internets nobody has yet taken the plan serious. But the Ought is self-evident. It follows from the Is (carbon cycle) almost tautologically. What a difference a century makes...)

  14. It turns out that in many tribal structures, according to Graeber's book Debt: The first 5000 years, there actually are two non-commensurable currencies.

    I agree with you; I also think that there's a possible solution space there. The trouble is that once people are in the habit of trade, they tend to look for ways to blur the distinction. So there needs to be some way of discouraging that.


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