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Left, Right or Small? We should open up markets to small operators, and we need good quality, independent regulation.

March 14, 2019 1:19 PM
By Julian Hawkins
Originally published by Green Liberal Democrats

Gas Flares (GreenLibDems.org.uk)

facebook Left, Right or Small?

I have seen a number of opinion pieces in various forums recently arguing that capitalism is the root of all our environmental ills, and that we urgently need to adopt left wing policies (state socialism and/or third way approaches) to solve the threat of global warming. Saving the world clearly requires us to adopt the most effective policies possible. So, the question is: whether large-scale corporate capitalism needs to be replaced by state socialism to stop global warming?

Let's test this against one specific article that was posted to the GLD Facebook group on 23 January 2019, with a request for people's views on this. I will pick two points from the article.

First, this states that 100 corporations are responsible for 71% of the problem. I traced this back to the original article (references below) which actually states -

"The highest emitting companies since 1988 that are investor-owned include: ExxonMobil, Shell, BP, Chevron, Peabody, Total, and BHP Billiton. Key state-owned companies include Saudi Aramco, Gazprom, National Iranian Oil, Coal India, Pemex, and CNPC (PetroChina). Coal emissions from China are represented by the state, in which key state-owned producers include Shenhua Group, Datong Coal Mine Group, and China National Coal Group."

So, the problem isn't big capitalist corporations, it is big corporations.

Second, original article claims that big corporations are undermining liberal democracy and obstructing green corporations through political donations and lobbying, and that we need to take the utilities back into public control - which I presume includes nationalising the large electricity generators.

There is clearly some truth in the first part of this claim about corporate influence, but is nationalisation the only answer?

The fundamental assumption appears to be that giving total power to a group of left-wing politicians will take away the problem with corporate influence, and hand over control to leaders who will actually serve the people. Consider this -

"Shadow Chancellor John McDonnell … said he would produce a tax regime that supports the oil and gas industry if Labour wins power at a General Election." (Again reference below.)

Or look at the Labour leadership's approach to Brexit - forgive a non-Green example, but I think this makes the point rather well. A large majority of Labour's new mass membership are anti-Brexit, but the Labour leadership have been careful to avoid a vote on Labour's Brexit policy amongst the membership.

One more example on public ownership - nuclear disasters, in approximate (because it is hard to get exact numbers) descending order of deaths:

  • Chernobyl
  • The Kyshtym disaster in the Urals 29/9/1957
  • Windscale
  • Fukushima
  • Three Mile Island
  • The Kyshtym disaster is particularly telling. The Communist USSR caused a massive leak of radiation, and then hid it for decades - the details only came out after the fall of the USSR.

This is only a quick survey, and I would welcome more examples, but I think that there's a clear pattern. The problem isn't incompetence, greed and abuse of power by the people in charge of large corporations, it is incompetence, greed and abuse of power by the people in charge.

This is not a defence of libertarianism or Neo-Conservatism - I am a Green Social Liberal who supports well-targeted state intervention where there is a clear need - but it is a clear indication that State Socialism is neither necessary nor sufficient to combat Global Warming.

So, what economic structures will work?

There isn't one answer that works in all situations, but I suggest that there are two things we should promote, and one we should not.

First, we should open up markets to small operators. This can empower individuals and community groups, and make markets work better by challenging established interests. Actions by individuals can make a difference, if enough people take them. The state should encourage this by establishing market structures that provide a level playing field to large and small entities, whether owned privately, or publicly, or by "third way" cooperatives and community groups.

Second, we need good quality, independent regulation. Regulatory capture is a real problem - not just in the UK and US, but in the former USSR and in modern China.

This is clearly relevant to Labour's proposals to nationalise the main electricity generators. The existing oligarchy is not a healthy situation, but combining them into one huge company will simply concentrate economic power, and could undermine the existing checks provided by Ofgem and the Committee on Climate Change.

What we should not do is to try to force one ownership structure on energy generators: either private or public ownership. A lot of Community Energy Groups have been created as a result of the Feed-in tariff, but other legitimate structures include Community Groups, local government enterprises (if created and operated for good reasons rather than political ideology), normal commercial organisations, and, of course, individual people. As Liberals, we should not try to tell people how to organise their working lives, just to encourage good behaviour and prevent bad.

Finally an example of good regulation working in a market setting.

In September 2017 offshore wind power contracts were awarded in the UK for a strike price of £57.50 per MWh, making the price cheaper than nuclear and competitive with gas.


facebook discussion of this article here

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References

A hundred companies

One particular quote "A hundred companies alone are responsible for an astonishing 71%. You tinker with those pens or that panel; they go on torching the planet." Tracing back to the original report shows that many of these are state actors:

https://www.theguardian.com/sustainable-business/2017/jul/10/100-fossil-fuel-companies-investors-responsible-71-global-emissions-cdp-study-climate-change

this links to the report "CDP Carbon Majors Report 2017" -

https://www.cdp.net/en/articles/media/new-report-shows-just-100-companies-are-source-of-over-70-of-emissions

Labour's "Green" policies

https://www.pressandjournal.co.uk/fp/news/politics/holyrood/1627367/shadow-chancellor-pledges-to-support-oil-and-gas/

nuclear disasters

Based on the INES scale, though this has been criticised for putting Chernobyl and Fukushima on the same scale, when nobody died as a result of the Fukushima accident.

https://en.wikipedia.org/wiki/International_Nuclear_Event_Scale

Level 7 -

Chernobyl https://en.wikipedia.org/wiki/Chernobyl_disaster

Fukushima https://en.wikipedia.org/wiki/Fukushima_Daiichi_nuclear_disaster owned by https://en.wikipedia.org/wiki/Tokyo_Electric_Power_Company

Level 6 -

Kyshtym disaster in the Urals 29/9/1957 https://en.wikipedia.org/wiki/Kyshtym_disaster

Level 5 total of four including -

Windscale https://en.wikipedia.org/wiki/Windscale_fire

Three Mile Island https://en.wikipedia.org/wiki/Three_Mile_Island_accident

Market price for offshore wind power - cheaper than nuclear

https://www.bbc.co.uk/news/business-41220948 - note that this is for an intermittent power source, compare nuclear which is steady but non-dispatchable.

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Gas Flares (GreenLibDems.org.uk)