Climate Change: Beware, large-sounding-sum-of-money approaching!

Sarah Bracking
By Sarah Bracking

Professor Sarah Bracking is the current holder of the South African Research Chair in Applied Poverty Reduction Assessment at the University of KwaZulu-Natal and Research Director of the Leverhulme Centre for the Study of Value, University of Manchester. She is editor of Corruption and Development (Palgrave, 2007), author of Money and Power (Pluto, 2009) and The Financialisation of Power in Africa (Routledge, 2012).

Posted on Friday, 9 December 2011 13:58

Money is the most supremely important and iconic commodity of our age, so much so that even when it is causing a problem, such as the environmental destruction caused by the unrelenting pursuit of growth and profits in our economic system, we still look to money to provide our solution.

This is a big problem, especially for the COP process, since the Green Climate Fund and its Copenhagen dream of ‘$100-billion per annum by 2020’ is a false solution: it simply won’t stop or even ameliorate, climate warming, and it could make it worse by paying the polluters to do more of the same while alternative policies that might work are left on the shelf. But, pre COP17 the climate change issue is being defined widely around the monetary parameters: that there is no money in this particular pot; that the rich countries should come up with some, particularly since climate change is historically and predeominantly their responsibility; and that once they have coughed up a large enough sum, the photos can be taken, success declared, and the 15,000 or so participants can fly away home (in carbon emitting jets).

When issues are complex, such as the science that surrounds how far, how fast and in what ways humans are causing climate change, society tends to look for a well known narrative to box the problem and make it manageable. It looks for precedents and commensurability with similar problems that have been ‘solved’. And there are many precedents to the spectacle that surrounds the announcement of a large sounding sum of money (always say 900 million rather than 1 billion since noughts appear comforting) which too frequently ends a conference like a COP 17. Gleneagles would be a precedent here, although the issue there was the debt ‘crisis’, rather than the environment ‘crisis’.

First, the issue must be formatted as a ‘crisis’: a bundle of phenomenon boxed together into a singular abstract, such that they can be negotiated over as if the problem has a singular solution, which invariably, and through negotiation, can be calibrated and priced. Second, contributions are committed, with good public relations headlines for the politicians. Then the crisis is deemed over, although there is no actual relationship between the numbers in the headlines, and the bundle of initial concerns that were packaged. Third, after the spectacle there follows the more lengthy process whereby civil servants re-categorise old money as new money, and prolong disbursement – pending the proper processes of calibration, classification and auditing of projects which are deemed eligible for funding – so that the money can be incrementally and easily found.

our collective addiction to the idea of money as saviour and icon

Thus Gleneagles money was offset against lesser spending in the rest of the Overseas Development Assistance (ODA) structure, and officially accounted as ODA in order for this to be done. In short the announcement of large sounding sums of money is only the beginning of a political process which determines their level of subsequent fixity in space and time, to benefit or otherwise a particular location or purpose. And that road is long.

However, that the special fund for crisis ‘x’ has problems of fictitious aid and implementation delays, despite its appeal to the media spectacle, is not even its biggest problem as a comforting narrative. This is much more fundamental. It is about our collective addiction to the idea of money as saviour and icon – as if just the mere fact of having more of it must inevitably make any problem recede. In this case this is lethally wrong, not least because money is not socially neutral: it liquidates pre- existing structures of economies and of power. The Green Climate Fund represents yet another giveaway of public money to private firms in a feeble and incremental attempt to get them to cut pollution levels that are quite unacceptable in the first place. In other words, a form of bribe to get firms to stop doing what they shouldn’t have been doing in any case.

A quick look at the types of Clean Development Mechanism (CDM) project being widely certified gives this away. Fossil fuel power generators and oil refining companies which, despite super profits for all these years and super rich CEOs, have singularly failed to invest in methane capture technologies – but can now get a public subsidy in the form of CERs (Certified Emission Reduction/Carbon Credits)– for the public to pay them to. No hit on the profits there then. Or the HFC-23 reduction projects, where refrigeration firms can emit a little bit less, for a grand CER subsidy (accounted at over 11,000 tonnes of carbon for tonne of HFC-23) even though the technology they should have bought already to do this is only a fraction of the cost of the CERs rent they receive. What company manager would do the right thing a priori, when it pays to be a polluter?

In fact, overall, energy, mining and infrastructure figure the most heavily in the global CDM portfolio – just those sectors that have ridden the commodity boom of the 2000s and come through the crash, well, in pretty good shape. In South Africa, the Designated National Authority (DNA), which falls under the Department of Minerals and Energy (DME), is responsible for the initial registration and approval of CDM projects, generating valuable CERs for some of the dirtiest and slowest adjusting industries in South Africa for their ‘contribution’ to a low carbon economy: Omnia, Sasol, PetroSA, South African Breweries, and Mondi and the GFI Mining South Africa owned Beatrix Mine (for methane capture). But none of these recipients of subsidy look as if they are struggling with the balance sheet.

the policy of using money to solve a problem caused by money thus allows global firms to make more of it

There is also a perverse effect of providing more money to these companies to pollute a little bit less that derives from the globalised structure of firms. In Africa this generally means that nationally based power, energy and mining companies have parents in tax havens, or at least access investments from global funds that live in tax havens. These funds then have portfolios which have both dirty industries and new renewables, sharing the same investors. Thus, if one of the fund’s investee companies picks up a CDM accreditation, and the lucrative CERs that go with it, its helping to subsidise the rest of the fund, and all the dirty aspects within it.

The incentive to invest away from fossil fuels is not incentivised at all: in fact CDMs indirectly shore up the profits of the worst offending funds. For example, Denham Capital Management (with US$ 4.3 billion under management) has extensive petrochemical and tar sands investments, and has been sued several times for fraud and aggressive practices by company directors of firms it invests in (Tanner Cos and Vulcan Power Co). It has been accused of purposely over indebting an investee company to get rid of its management.

Despite the rest of its dirty energy portfolio Denham invests in BioTherm Energy in South Africa, which funds projects such as the MethCap SPV1 biogas to power plant, which has netted hundreds of thousands of CERs for Denham and its other owner, PetroSA. Denham meanwhile, is still building two 300 MW coal-fired stations on Luzon Island in the Philippines, and exploiting virgin oil and tar sands in North America, despite widespread protests.

The policy of using money to solve a problem caused by money thus allows global firms to make more of it. And the climate? The narrative occludes the real point that the powerful are doing next to nothing about climate change: they are tapping into our cultural illusions about money and providing a recognisable narrative to help us process the ‘crisis’, while failing to pass the command and control law necessary to slow down global warming.

Any comfort in the ‘$100 billion’ is a delusion. Real change would involve strict legislation on pollution, legally enforceable caps and reductions on a whole raft of major pollutants that contribute to climate change. It needs political leadership to solve this collective action problem in the global commons, not the pathetic free riding behaviour of the major national delegations (trying to get someone else to bear the cost, or ‘if they do it first we will’ and so forth). The politics is occluded in this debate – by money as icon – illustrates the hegemony of the powerful.

But it is the powerful who will benefit as global funds and corrupt politicians enjoy a huge pot of public rents, throwing back the democratisation process continent wide. Beware, large- sounding-sum-of-money approaching in Durban!

Professor Sarah Bracking specialises in development and political economy. She is the author of Money and Power (Pluto Press) and editor of Corruption and Development: the Anti-Corruption Campaigns (Palgrave Macmillan).

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