The math behind the notion of the carbon bubble is probably most familiar to climate activists from an article published a year ago by Bill McKibben in Rolling Stone entitled “Global Warming’s Terrifying New Math”. This article is a call to arms in which he declares that the the fossil fuel industry “is Public Enemy Number One to the survival of our planetary civilization”, which means that the task of the climate movement must be to destroy the industry’s political power. The piece went viral, and subsequently led to his Do the Math tour and 350.org’s “Fossil Free” divestment campaign.
Here is McKibben’s story: We need to keep warming under 2C degrees. This means the fossil fuel industry will have to leave roughly 80 percent of existing reserves in the ground. But this is equivalent to “$20 trillion in assets” (give or take) which the industry would have to write off. That would be devastating to the industry, which is therefore using its great political power, gained through the enormous sums it spends on lobbying and campaign contributions, to prevent climate action. This political influence is uniquely responsible for stopping political leaders from saving the climate (and humanity with it). So the enemy is the fossil fuel industry and its lobbying power, and climate strategy must focus on breaking the industry’s hold over politics.
This story is easy enough to understand, and is in line with the popular thought that “money in politics” is the most fundamental problem we face. But if this were right, then climate campaigners ought to have made much more progress with Obama and the Democratic Party than they actually have. In the 2012 election, the fossil fuel industry largely turned its back on Obama, contributing $13 million for Romney and the RNC compared to under a million for Obama and the DNC (New York Times). Why, then, does Obama, who clearly knows enough about the need for climate action, continue to push his “all of the above” energy strategy which includes development of “unconventional” fossil fuels, including fracking, deep sea drilling, and tarsands mining (while Obama is stalling on Keystone XL, mining in Utah was given the green light), thereby flaunting the demands of his environmentalist base, and all for the sake of an industry that bet against him in the elections? This calls for an explanation which McKibben’s analysis does not provide.
I think part of the answer lies in the “carbon bubble”, a term which McKibben applies to the $20 trillion worth of carbon reserves which must be forsaken. He notes that this constitutes a carbon bubble which “makes the housing bubble look small by comparison”. But let’s think through that analogy just a bit more. When the housing bubble burst, the damage wasn’t limited to the real estate industry. The entire global economy crashed and fell into an ongoing state of crisis. Similarly, if the carbon bubble should burst in the same way as the housing bubble (as it would if the US government were to suddenly signal a willingness to keep those $20 trillion of carbon in the ground), that would threaten more than just the fossil fuel industry. As financial and economic analysts have noted, the abrupt destruction of those trillions in assets would send shock waves through the financial system and beyond, leading to another “major economic crisis”.
If dealing with climate change means triggering an economic crisis, then we are up against the interests of the entire capitalist economy, and not just the fossil fuel industry. And while I agree with McKibben that a sufficiently powerful climate movement could drive a wedge between the state and the lobbying power of the fossil fuel industry, it is simply not possible to drive a wedge between the state and the entire economy. The overriding purpose of the state under capitalism is to ensure the health of the capitalist economy as a whole. If real climate action were a guarantee of renewed economic crisis, then the chances of achieving it under capitalism would be nil.
At this point it may seem that we face a stark choice: climate apocalypse, or the end of capitalism. But the deadline for climate action will pass us by long before any minimally plausible strategy for overcoming capitalism could come to fruition. Indeed, unless we develop other alternatives, the most likely way capitalism is going to end is through the destruction of the global economy by climate change. This would unfortunately also involve the destruction of most of humanity. If overcoming capitalism were the only route to climate survival, then we would be left with inescapable political despair.
So we are left with the task of dealing with climate change under capitalism. This requires a strategy for deflating the carbon bubble without violently popping it, which would allow a transition to a green economy without thereby throwing the economy into crisis. The task of executing this strategy must fall to the state.
Some serious thought on this topic can already be seen in some of the less hidebound regions of the policy world. For example, via the New America Foundation, here is one attempt to face the economic danger posed by the multitrillion dollar carbon bubble head on:
The resulting shock to hydrocarbon energy companies, which make up roughly 11 percent of the S&P 500 index, would pose a systemic risk to domestic and global markets. ...
It is imperative, therefore, for the United States to convene domestic and global stakeholders to manage this market transition [to a green economy] to avoid such an unacceptable disruption in global markets, index funds, and Americans’ retirement security. Washington should work with industry, scientific leaders, and other key stakeholders to negotiate a framework and predictable timetable to minimize the downside risk, to find non-emitting uses for hydrocarbons, and to turn the transition into another driver of innovation while redirecting investment flows into other market segments.When these suggestions are held up against the status quo of current climate policy, some key elements stand out: a serious industrial policy; the large-scale redirection of capital coordinated by the state; a reconfiguration of the fossil fuel industry coordinated by the state. These measures would have the effect of providing a gentle landing to the fossil fuel industry, and carefully transitioning capital out of the carbon bubble and into stable (and climate-friendly) investments.
However, here we are once again confronted with the need for government intervention into private industry and the marketplace which would (as I wrote in that earlier post) “shock the neoliberal conscience”. The neoliberal mind (for example, Obama’s mind) has a strong commitment to deregulation, and can hardly contemplate being so bold as to impose the necessary strategies on private industry and investors. This commitment has only intensified as the crisis has dragged on. But this is not an ahistorical feature of the capitalist state (for example). In our quest to avoid climate apocalypse, then, the real enemy is not the fossil fuel industry (not systemic enough), nor capitalism in general (not specific enough). Rather, as I argued in that earlier post, the real enemy is neoliberalism. Our only realistic hope is to force its transformation into a new kind of capitalism in which the state has a renewed capacity to intervene in the market, to discipline industry and investors and to direct their activities. Only then will real climate action become possible.
Now, although I’ve been critiquing McKibben’s analysis here, that should not be construed as a rejection of his leadership of climate activists and organizers. The critique is on the level of strategy, and not on the level of tactics or campaigns. Those working to curtail the fossil fuel industry, including McKibben and his followers, should continue to do so as they are able. And they should certainly continue to develop new leaders willing to engage in a serious political struggle against the dire threat of climate change. But ultimately all of this will need to be placed in the context of a broader strategy that takes on the real enemy: neoliberalism. It is our task to develop that strategy and build a movement around it.