This post describes our need to take control of the banking, fossil fuel and utility industries to address climate change adequately. After hearing Dar Jamail speak at the Lensic, I am convinced that whatever hope we have requires the end of private market control over anything that matters.
Roxanne and I just returned from hearing Dar Jamail speak at the Lensic. I have never heard any talk that was more devastating. I needed to let it settle in for a bit before I tried to organize my thoughts and draw conclusions. But suffice to say, he outlines a far more devastating understanding of what climate science says and the implications of those conclusions on our actions.
Facing Climate Change Honestly: We Can’t Treat the Enemy as a Stakeholder and Here is What that Could Look Like
We’ve all heard some variation of this criticism of the Green New Deal: How can we afford it? In light of Tuesday’s post (a must read), the better question might be, how can we not afford to do it, as it may well be the best and last opportunity to at least mitigate the increasingly inevitable climate catastrophe. But as Retake’s blog has stated many times, capitalism is not well suited to address anything that goes beyond the next quarterly returns, lest stocks plummet whenever profit targets are not met. Everything is short-term and everything is about profit. At the same time, our investor owned utilities also are focused exclusively on short-term profit and at no time would environmental concerns enter the thinking of the leadership of fossil fuel and utility industries. Public benefit does not exist as a criteria in their decision making. With Wall St in charge of money, corporate energy moguls and private utilities in charge of energy, how on earth could we possibly expect a pivot toward renewable energy and a economically just transition? Buckle up, there is a path but it involves some radical solutions, solutions entirely appropriate for the current crisis.
We turn to a new source for Retake, Jacobin, who has published an eye opening two-part article on addressing climate change and economic inequality: nationalizing the banking industry and nationalizing energy. In the first half of Democratize Finance, Euthanize Fossil Fuels (love the title) Jacobin reinforces what has been written many times here, that capitalism is not the economic system for a transition to a just economy and a fossil fuel energy system and that to achieve that transition nationalizing our banking system would provide more financial flexibility in underwriting the cost of developing green energy and transmission. In the second half of the article, we get a glimpse at another bold, outside the box strategy; nationalizing a significant proportion of our energy industry. that is required if we are going to address climate change. This represents the kind of package of strategies that is required if we are ever to address the scale of what faces us. In truth, it was timely ten years ago when much of what is now inevitable, could have been prevented.
Capitalism is not particularly well suited to weighing long-term benefits against short-term costs. It is inherently unstable, prone to crises. And as the financial crisis ten years ago demonstrated, the sheer size and global inter-connectedness of modern financialized capitalism make it increasingly difficult to save capitalism when it veers into crisis. Capitalism’s structural cracks have been papered over for too long. Only a new model of public finance will allow us to move money quickly and effectively enough to decarbonize our economy. We need to expand public banking and democratize the Federal Reserve — enabling us to accelerate the energy transition with a focus on jobs and equality, through bold moves like nationalizing the fossil fuel industry, taking utilities into public hands, and establishing a national Green Investment Bank.”
An economic and political system not focused on near term profit would have long ago, invested heavily in renewable energy and begun a just transition to 100% renewable. Nowhere do we see the absence of planning for such a transition more clearly than in NM. Take for example, SB 489. Here we see our mainstream environmental organizations rallying around an increased RPS as if this were the full story. But RPS only measures what energy is produced for sale to NM customers. It says nothing about the entirely out of control fracking operations that are focused on exporting gas and oil. We could move to 100% RPS tomorrow, but if we are still fracking and exporting like crazy, our planet doesn’t really care whether that fracking is to light our homes or someone in Iowa’s home. It is still fracking, methane emissions, polluted water and increased carbon emissions.
But all we hear in NM is how we are so dependent upon gas and oil for state revenue. Leadership that didn’t have its head in the sand would have made a top priority: develop a 5 year plan for eliminating our economic reliance on the fossil fuel industry. But even studying such a thing would send the gas and oil industry into apoplectic tantrums. And so there was no bill in the Roundhouse to study how we make that transition and so no planning is going on and so we can look forward to more Roundhouse sessions where the G&O industry pollute our hearings with their disingenuous cries that even one cent in royalty increase will destroy the industry.
According to a 2017 study by the Carbon Disclosure Project, over half of all global emissions since 1998 can be traced back to just twenty-five fossil fuel production corporations. Fossil fuel companies have built strong political machines that oppose anything that jeopardizes their business model and short-term shareholder returns. They remain thoroughly committed to extracting and burning as many fossil fuels as possible, regardless of the danger. US production of oil and gas shot up 85 percent between 2010 and 2018, making it the top oil and gas producing country in the world. And so, in NM this translates into grasstop enviro organizations accepting the best SB 489 that could get past Senate Corporations and Transportation Committee (Papen and Sanchez, yet again). Having to develop bills that will pass the scrutiny of Senators who are utterly irresponsible….yes that is you, Senators Sanchez and Papen– is a constraint that prohibits precisely the kind of bold action that is needed to face up to the climate change challenge.
Jacobin posits that one key factor in making the needed transition would be to vastly expand public banking (not hard since outside North Dakota it doesn’t exist). By expanding public banking we would have a financial structure that understands the concept of investment for long term gain and long term benefit. From Jacobin
Already, public banks are being used around the world to finance renewable energy infrastructure, public transportation, and other ecologically important initiatives. Public banks in Germany and Costa Rica, for instance, have been instrumental in funding green projects, and the UK’s publicly owned Green Investment Bank (one of the first of its kind in the world) had an impressive record before the Conservative government privatized it in 2017.
Maybe Senators Sanchez and Papen, yes again, shouldn’t have killed the Senate version of a public banking memorial that would have at least allowed a study of how a public bank might benefit NM. Maybe that could have been part of a larger study to explore how a public bank could jump start a New Mexican transition. Maybe. We won’t find out soon because current leadership is too fearful it might send a message to gas and oil lobbyists that we are exploring other options. The other public financing solution proposed by Jacobin is to democratize the Federal Reserve. From Jacobin:
The Fed’s structure has made it exceedingly pro-banker, at the expense of workers. A limited audit of the central bank’s activities during the financial crisis — conducted in 2011 due to an amendment Sanders added to the Dodd-Frank financial reform bill — revealed, in Sanders’s words, how “an institution that was created to serve all Americans had been hijacked by the very bankers it regulates.” The Fed pulled out all the stops to save the major Wall Street banks, while abandoning millions of Americans to foreclosure, bankruptcy, and unemployment. A truly publicly owned, transparent, and democratically accountable central bank would change that — and could become a powerful weapon in the fight against climate change. As Fed expert William Greider puts it, we need to “create a new public institution that truly understands that its obligation is to society, not money markets.” Congressional action to reform the Fed could “harness the Fed’s money creation and lending powers to help finance major public objectives.”
So Jacobin starts with nationalizing the public banks and then turns our attention to the energy sector and takes on another vested member of the corporatocracy. From Jacobin: “According to a 2017 study by the Carbon Disclosure Project, over half of all global emissions since 1998 can be traced back to just twenty-five fossil fuel production corporations. Fossil fuel companies have built strong political machines that oppose anything that jeopardizes their business model and short-term shareholder returns. They remain thoroughly committed to extracting and burning as many fossil fuels as possible, regardless of the danger. US production of oil and gas shot up 85 percent between 2010 and 2018, making it the top oil and gas producing country in the world.” So in NM while SB 489 will ensure that New Mexicans use a far greater proportion of renewable energy. But at the same time, we merrily continue to operate hundreds of fracking operations going 24-7. We may feel good about the increased RPS; it is a shiny nice thing to point to as progress, but unless and until we face down the gas and oil industry and develop a thoughtful just transition to renewable energy.
Jacobin proposes for the U.S. to essentially purchase the leading fossil fuel companies through a strategy called “quantitative easing,” what was basically used by Obama to save the banking industry. Except that Jacobin proposes to go one step beyond what Obama did and take over the fossil fuel industry rather than rescuing it so it could continue to plunder. From Jacobin:
By enacting robust regulations and eliminating subsidies early in the Green New Deal, government action would cause fossil fuel companies’ share values to plummet. The state could then purchase these firms at a relatively low price — one that actually reflected their value given the unburnable reserves. The explicit goal would be to use public ownership to plan the sector for obsolescence: stopping all new exploration, closing shop before already-in-use reserves were fully exploited, and eliminating fossil fuel exports from the US. The phaseout would include a series of programs and investments that ensured a just transition for workers and communities that currently rely on fossil fuel extraction.
Jacobin goes still further by calling for the government to buy out the utility industry as well: “By taking energy utilities into public ownership, we can catalyze renewable energy deployment at the same time we redistribute wealth and power. Publicly owned utilities don’t have the same imperatives for growing shareholder returns, reinvest profits back into their community, and, critically, are accountable to their customer-owners rather than wealthy owners.”
The article incorporates many other strategies to support this transition, but what is of most importance, is that the strategies are bold. Five years ago, medicare for all was deemed Quixotic, along with most of Bernie Sanders proposals, but now virtually every Democratic presidential candidate (I’ve lost count have we hit 20 yet?) espouses all or most of those ideas. Now in the advent of the Green New Deal it is time to go even further and invent a future that is not circumscribed by capitalist limitations and small minds. We have no choice.
I noted on Tuesday, that when SB 489 is signed into law, grasstops enviros, legislators, the governor and PNM will hail the bill as game changing, a centerpiece to the 2019 legislative session. But while there are some nice pieces to the bill, it doesn’t even begin to warrant the term ‘game-changing,’ Game changing would have been if SB 374 Local Choice Energy had been signed into law, instead of sitting dormant from the day it was introduced. Game changing would be to have approved funding for a study of public banking so that NM could anticipate vastly reduced costs for green infrastructure. Game changing would have been had we passed SB 456 to insist upon competitive procurement, a small step in freeing ourselves from our shareholder owned utilities. And if you want real game changing, we would have passed SB 459, the bill that would have imposed a four year fracking moratorium throughout NM. Together, passing those four bills, that would have been game changing. But increasing our RPS that measures our use of gas and oil is not game changing as long as we are fracking like 24-7 in every corner of our state.
Game-changing is what is needed and I am hopeful that our Democratic Party leadership and our grasstop enviros can join forces with grassroots activists and our youth, who understand better the meaning of the term game changing.
In closing, please join our Santa Fe youth at the Plaza and in its sit-in protest at the Roundhouse tomorrow. They have their skin in the game and as so, they can claim the higher moral ground.
Paul & Roxanne