Economics and politics - comment and analysis
18. March 2023 I Heiner Flassbeck I Climate change, Ecology and Growth, Economic Policy

National muddling through is not climate protection policy

It was bound to happen. Because German and European politicians persistently refuse to think for even a second before acting, they are now marching with a loud trumpet into nowhere when it comes to climate. A ban on combustion cars in 2035, a ban on oil and gas heating in 2024, a ban on private jets the day after tomorrow. The list could be extended indefinitely, and each individual measure would virtually paralyse the entire political process for months. On the one hand, the lobbies are getting into position to prevent what they see as the worst, while the “last generations” complain about the half-heartedness with which politics always solves a small problem but shies away from major change.

This is how it will go on for a few more decades. Because there is no global strategy, at the national level there is only government bumbling in the few rich countries that at least have a guilty conscience. The problem will never be solved in this way, but the attempted solutions, that much is certain, will become increasingly bizarre and the social climate will be massively poisoned in the long run. The worst thing about it is that because the muddling through does not solve the global problem, but causes great economic damage in the affected countries, sooner or later governments will be elected that largely ignore the climate problem or, like Donald Trump one day, outright deny it.

That’s not the way to do it. To tackle a global structural problem like global warming, we need to achieve lasting changes in the behaviour of people and businesses in all major countries of the world. At the same time, we need to ensure that fewer and fewer fossil fuels are extracted and burned. Both, the change of behaviour and the foreseeable end of the extraction of oil, coal and gas, however, fit together wonderfully.

If there were a global green dictator, he would not need to do anything other than extract five or ten percent less fossil raw materials from the earth every year. Automatically, the prices of these substances would rise permanently and irreversibly, thus forcing all people on earth to adapt to the ever scarcer resource. Small-scale and small-minded discussions about bans could then be dispensed with. One would try to keep the economy going under the restriction of increasingly scarce fossil energy sources, which would be easily feasible.

No green dictator exists on the global level

But the global green dictator does not exist. He could easily solve the climate problem, but almost everything else that is important to us, such as democracy and peaceful coexistence, would be highly endangered. Nevertheless, it remains the task of humanity to find ways to save fossil fuels. However, the last decades show that the global community, which is not a politically active actor, is far from being able to enforce a shortage of fossil energy sources. Globally, emissions have risen significantly almost consistently over the past twenty years (as can easily be checked here).

A few times prices have shot up in shocks, as most recently last year, but afterwards everyone is happy to see the price return to normal. Since the beginning of the seventies, even in Europe and Germany, where people are proud of their own efforts in terms of climate protection, the real price of oil, i.e. what we spend in labour time to buy a liter of oil, has not increased. Compared to the beginning of the sixties, it has fallen significantly, as Friederike Spiecker and I have shown in the latest Atlas of the World Economy.

As long as this does not change, all attempts at the national and even European level to limit the consumption of fossil fuels here and there by means of taxes, subsidies or preemptive measures are completely pointless. Any attempt at savings in Germany and Europe will with one hundred percent certainty lead to increased consumption in the rest of the world if the total global supply of fossil fuels is not reduced. What is extracted from the earth is also consumed.

Only a global agreement between producers and consumers that implements exactly what the green dictator would do can bring about an effective turnaround in the use of fossil raw materials. The Paris Climate Agreement and all subsequent attempts were doomed from the start because producers were never involved. The big consumers imagined they could use national declarations of intent (which is what these agreements are at the national level) to persuade governments around the world to change their behaviour, even though fossil fuels are produced without restriction and therefore remain ridiculously cheap.

Even democracies have a hard time

This misjudgement is based on a dramatic overestimation of the ability of governments in democracies, but also in other forms of government. Already in the USA, any attempt by a president to explain to the population that, because of an international agreement with the oil producers (of which the USA is one), they would have to live with constantly rising petrol prices from now on would end with his certain removal from office. Yet the price of fuel in the USA is only about half the European level. If he also tried to enforce that the richer part of society compensates for the poorer through significantly higher taxes, the remnants of democracy that can still be discerned in the USA would quickly be called into question by the majority of the population.

In developing countries, where many people struggle daily for sheer survival, global goals have a much lower priority than in richer societies. Even Germany has not managed to significantly reduce its CO2 emissions in the past twenty years, despite the much-praised energy turnaround, in which an enormous amount of public and private money has flowed. How can one explain to a developing country that cannot mobilise nearly as much public and private money that it should follow a similar path without being able to guarantee that this will have any impact in the country itself and, above all, globally?

The conclusion from these considerations is simple: the previous international agreements were less than a step in the right direction. Obviously, the Paris agreement was a complete failure. Only by admitting this can we succeed in reaching completely different international agreements in which the producers of fossil fuels are on board from the beginning and a continuous reduction in production is stipulated. Only such a global agreement can provide the framework within which all can successfully adapt.

Bringing developing countries on board

But such an agreement can only exist if the rich countries as a whole fundamentally change their relationship with the poorer ones. Those who, like the German Greens, create “systemic rivalries” with China have already lost the battle for the climate. Those who, like all German governments in the last forty years, regard the developing countries at best as competitors to which they are happy to supply their goods, but which they otherwise leave to their own devices and only allow to be “rescued” by Western institutions (from Washington) in the greatest need (as described here), can dispense with any effort to set a real global agenda for climate protection. Those who, like the FDP, believe that nations are also in competition with each other no longer even need to think about cooperation on climate protection. Those who, like German ministers travelling to South America, still believe that free trade agreements à la Mercosur can lure developing countries into a political alliance with the North have not understood how deep the frustration in the South is.

Effective climate protection requires much more than individual “agreements” containing full-bodied declarations of intent to commit. It requires action that shows that the rich countries, which have been responsible for the great mass of harmful emissions for 200 years, are really willing to cooperate with the developing countries. Nothing less than a new global economic order is called for, in which the richer countries dramatically improve the development opportunities of the poorer countries.

For one thing, this means saying goodbye to the old dogmas about the beneficent effects of “free” international trade. Developing countries need more than open borders; they need protection from the North’s corporations, which are superior in almost every respect. Secondly, we must begin to understand that the freedom of capital movements, which we take for granted as part of free trade, has brought immeasurable damage to the developing world in recent decades. Only those who take all this into account will be able to make a new attempt at climate protection that is not once again doomed to failure.