Bad actors? Blame the script.
It's tempting to draw parallels between the 2008 global financial crisis and today's climate crisis. There are similarities, but this time we can’t just blame the bad guys.
Netflix recently suggested I might like Charles Ferguson’s 2010 documentary movie “Inside Job” about the 2008 financial crisis. It wasn't a hard sell: I'd seen it before and enjoyed it. Watching again at more than a decade's remove was instructive.
It's still a great documentary, channeling a quiet, controlled outrage that percolates from beginning to end. Outrage primarily at the financial services industry for perpetrating enormous harm on billions of people, but also on the governments and regulators that enabled that harm. So much so that by the time of the subprime mortgage crisis, systemic collapse was all but inevitable.
Inside Job presents compelling evidence about the role of "bad actors." It's not surprising when considering global warming, our latest global systemic crisis, that we instinctively look for the bad actors we can blame, regulate, and even punish. Big oil companies and oil-rich states are usually first in line, given their documented history of climate change obfuscation and denial.
But oil and other fossil fuels are not like complex derivatives, largely spurious products sold to greedy market participants by an inadequately regulated industry focused overwhelmingly on profit. The modern world is a complex system, and fossil fuels are deeply embedded in it. The idea that we can “Just stop oil” is as naive as it is impractical.
So to focus on fossil fuel suppliers as the root of the solution to climate change seems misguided. To be sure, there are bad actors. And yes, they absolutely need to be regulated and policed. But to find the practical solution the world so urgently needs, we need to change the script.
The systemic nature of our dependence on fossil fuels demands a systemic response. Our dependence on fossil fuels has emerged and become embedded partly because those fuels have been most readily available. But also, because the true cost of the carbon they emit has not been included in the price we pay for everything that makes up our modern lifestyles.
If we have any hope of writing a happier ending to this story, we need to correct that market failure. We need to be prepared to pay the price for the pollution carbon creates. At a price level that triggers the changes in behaviours we all need.
Here’s how it works (with apologies to those who've read my other stuff on this). First, it encourages cleaner choices. When there’s a higher cost associated with emitting carbon, companies and consumers are more likely to choose cleaner, more sustainable options. For example, a company is more likely to invest in renewable energy instead of fossil fuels, and consumers will be more likely to choose electric cars, locally produced food, or travel less compared with more carbon intensive alternatives.
Second, it creates financial incentives. Putting a price on carbon creates a financial incentive to reduce emissions. Third, it generates revenue. Governments can use the revenue from carbon pricing to fund climate initiatives, support green technologies, or return it to citizens through rebates. Fourth and not least, it promotes fairness. Carbon pricing ensures that those who pollute more pay more, which is fairer than spreading the cost of pollution across everyone, regardless of their carbon footprint.
Carbon pricing already exists in many countries and covers several of the most carbon-intensive industries. But there are big sectors and important countries like the USA that are not covered, and actual prices placed on carbon fall well short of the levels needed to incentivise change.
A whole new script
For it to become more widespread, it will take a significant uptick in public understanding and acceptance. That means looking beyond carbon emissions and thinking instead about the consumption of those emissions. It means considering not only the science behind the causes and impact of climate change but the economics of paying for solutions. Ultimately, it means seeing the climate crisis as a systemic challenge that needs a whole new script, not just better actors.
Now, one could argue—to torture the analogy a little further—that it's capitalism itself that's the all-powerful producer here. Just as the Marvel Cinematic Universe is condemned to ever more fantastical plot lines, one might suggest that capitalism’s structural flaws condemn us to climate disaster. Or that if left unchecked, the financial services industry will once again lead us sooner or later into GFC 2.0.
I wouldn't go that far. Systemic solutions like carbon pricing exist. They just need to get talked about more and ultimately become as commonly understood as, say, the greenhouse effect. That’s going to take leadership and direction, but it’s not too late for a rewrite.