The European Union’s new leadership has decided to invest much of its political capital in a plan to position Europe as the global leader in the transition to a carbon-neutral economy. But if too many constituencies feel as though they are being sacrificed on a green alter, the plan will never even get off the ground.
BERLIN – European Commission President Ursula von der Leyen’s ambition to lead a “geopolitical commission” is about to face its first big test. European heads of state are meeting to discuss her proposed European Green Deal, a sweeping project that could either unite the European Union and strengthen its position on the world stage, or generate a new intra-European political cleavage that leaves the bloc fractured and vulnerable.
The need for concerted action is clear. The Green Deal is a response to accelerating climate change, which poses an existential threat not just to Europe but to the entire planet. The problem does not observe national borders, and thus requires collective global action. But the transition to a carbon-neutral economy also offers far-reaching opportunities. With the right strategy in place, Europe can boost its own technological innovation and deploy carbon pricing and other fiscal policies to protect European labor markets from being undercut by lower-cost production in China and elsewhere.
Moreover, through the European Investment Bank, the EU already has a tool for mobilizing massive stores of capital for investments in infrastructure, research and development, and other essential areas. And, as Adam Tooze has argued, by issuing green bonds and other “safe assets,” Europe can secure greater economic independence from other powers and start to establish the euro as a global currency.
But alongside this positive vision are more dystopian scenarios in which the climate-policy debate creates geographic and socioeconomic divisions and fuels a populist backlash. Although climate change touches everyone, its effects are asymmetric, as are the costs of undertaking a transition to a carbon-neutral economy. The danger for Europeans is that the unequal distribution of the costs and opportunities will fuel a culture war between
- east and west,
- urban and rural, and so forth.
This European debate is an echo of a broader global challenge. Many Eastern European countries still depend heavily on coal for energy generation, and thus fear that the push for carbon neutrality is an underhanded form of protectionism by advanced economies like Germany. Poland’s energy minister, Krzysztof Tchórzewski, has dismissed as “a fantasy” the notion that Poland – which relies on coal for 80% of its electricity – could achieve carbon neutrality by 2050, and estimates that the costs of such a transition would approach €1 trillion ($1.1 trillion).
But, in addition to the east-west divide, the Green Deal could also create political rifts within every EU member state. French President Emmanuel Macron has tried to position France as a global climate leader. But his government’s attempt to raise taxes on fuel last year backfired when millions of gilets jaunes (“yellow vests”) took to the streets in protest in late 2018.
The European Council on Foreign Relations has conducted in-depth polling to understand policy preferences across Europe, and we have found climate policy to be a particularly divisive issue. On the surface, around two-thirds of Europeans in most countries polled think that tackling climate change should be a priority, even if it means curtailing economic growth. But up to one in four people do not think that climate change is a real threat, and are far more worried about Islamic radicalism and the rise of nationalism.
The gilets jaunes are not an isolated phenomenon. Recent elections have shown how a program like the Green Deal could become a useful punching bag for populists and parties like the Alternative für Deutschland (AfD) in Germany and Rassemblement National (National Rally, formerly the National Front) in France.
Critically, once you move from asking people whether climate change is a problem to how it should be addressed, concerns about socioeconomic fairness and the distribution of costs prove hugely divisive. Even in the European Parliament, where 62% of MEPs were elected on green-inspired platforms, only 56% agree that the EU should be pursuing a rapid transition to a low-emissions economy. Moreover, only one-third of MEPs are prepared to take tough action against companies with large carbon footprints.
Generally speaking, then, there are two possible futures for European climate policy. The Green Deal could become Europe’s chief new cause, lending momentum to European integration and strengthening the EU’s global position vis-à-vis China and the United States. Or, it could become the next “refugee crisis,” a singularly potent issue that divides Europe between east and west, and that mobilizes populist forces within countries across the bloc.
To make the first scenario more likely, EU leaders need to listen less to moralists like the young climate activist Greta Thunberg, and more to pragmatic realists who understand that paying off reactionary forces has long been part of the price of progress. The only way to shepherd the Green Deal to successful implementation will be to offer large fiscal transfers to the laggards, so that they, too, will have a stake in the clean-energy transition. Without European unity, there can be no effective European response to climate change.
How a playboy billionaire built a political army to defend his fossil fuel empire.
A few years ago, I was sitting in the book-lined study of an elegant condo with a view of downtown Washington, interviewing a former senior Koch Industries lobbyist about his job. I asked him what got him up in the morning when he worked for Koch. He gave me a one-word answer: “Carbon.”
At the time, I had been reporting for years on Koch Industries, one of the largest and most confusingly complex private companies in the world. Its annual revenue is larger than that of Facebook, Goldman Sachs and U.S. Steel combined, and it makes everything from gasoline to nitrogen fertilizer to nylon, paper towels and windows. For all this complexity, one business inside Koch Industries remains more important than the rest — processing and selling fossil fuels.
David Koch, who died Friday at the age of 79, is best known as a major funder of right-wing political causes, from tax cuts to deregulation, an enthusiastic patron of the arts and a man-about-town. But to his critics, his most lasting political legacy might very well be the rapidly warming world that he has left behind.
Koch Industries realized early on that it would be a financial disaster for the firm if the American government regulated carbon emissions or made companies pay a price for releasing carbon into the atmosphere. The effects of such a policy would be measured over decades for Koch. The company has billions of dollars sunk into the complex and expensive infrastructure of crude-oil processing. If a limit on greenhouse gas emissions were imposed, it could dampen demand for oil and diminish the value of those assets and their future sales. The total dollar losses would likely be measured in trillions over a period of 30 years or more.
Construction on the Koch political machine began in the 1970s, after Charles Koch took over the family company. He and David began funding and orchestrating a political project to restrain government power in the United States through lobbying, think tanks and political donations. The effort accelerated in the 1990s after a Senate committee, following a long investigation, accused Koch Industries of stealing oil from Native American reservations where the company was operating. That experience convinced David and Charles Koch that they needed to have a stronger presence in Washington to fend off their critics.
The machine reached full fruition in 2008, when Barack Obama was elected president. The machine is so effective because it is multifaceted. In addition to one of the largest registered corporate lobbying offices in the country, located about two blocks from the White House, there is a constellation of Koch-funded think tanks and university centers. They all convey a consistent message: that government programs can only cause more harm than good and that market forces alone must shape human society. And their work is bolstered by a private network of donors that David and Charles Koch assembled over the years, a network that gives donations at levels rivaling a political party.
Finally, Koch controls a “boots on the ground” army in the form of Americans for Prosperity, a network of employees and volunteers who knock on doors, attend rallies to protest climate change legislation, and visit the offices of any lawmakers who seem likely to cross Koch Industries on the issue.
This machine has been employed to great effect to ensure that no government action is taken to control greenhouse gas emissions. In the early 1990s, President George H.W. Bush made it clear that he would support a treaty to limit carbon emissions. The Republicans even had a market-based solution to tackle the problem, a system called “cap and trade” that put a price on pollution and allowed companies to buy and sell the right to pollute. Cap and trade had been used to great effect to reduce power plant pollution and acid rain. But in 1991, the Cato Institute, a Koch-funded think tank, held a seminar in Washington called “Global Environmental Crises: Science or Politics?” This was part of a decades-long effort to cast doubt about the reality of climate change.
David Koch worked tirelessly, over decades, to jettison from office any moderate Republicans who proposed to regulate greenhouse gases. In 2009, for example, a South Carolina Republican, Representative Bob Inglis, proposed a carbon tax bill. KochIndustries stopped funding his campaign, donated heavily to a primary opponent named Trey Gowdy and helped organize teams of Tea Party activists who traveled to town hall meetings to protest against Mr. Inglis. Some of the town hall meetings devolved into angry affairs, where Mr. Inglis couldn’t make himself heard above the shouting. Mr. Inglis lost re-election, and his defeat sent a message to other Republicans: Koch’s orthodoxy on climate rules could not be violated.
Mike Pence, who was then a congressman in Indiana, and others soon signed a “carbon pledge” circulated by Americans for Prosperity, which effectively prohibited the government from putting a price on carbon emissions. Those efforts and others effectively derailed the effort to pass a cap and trade plan for greenhouse gas emissions in 2009 and 2010. In 2009, the level of atmospheric carbon concentration hovered around 370 parts per million. In the decade since, levels have surpassed 400 parts per million, the highest level recorded in human existence.
Since the 2016 election, and in the face of more urgent scientific warnings about climate change and a growing popular movement for action, the Koch network has tried to build a Republican Party in its image: one that not only refuses to consider action on climate change but continues to deny that the problem is real. Just this week, Senator John Cornyn, Republican of Texas, dismissed data about climate change by pointing out on Twitter: “It’s summer.” In doing so, he reflected the politics of a party — and a world — that has been profoundly shaped by David Koch.
Jason Kenney, the newly elected premier, is set to clash with Justin Trudeau, Canada’s prime minister
“HELP IS on the way, and hope is on the horizon,” proclaimed Jason Kenney after his United Conservative Party decisively won the election in Alberta, an oil-producing province in western Canada, on April 16th. He was talking to Albertans depressed by a downturn in the oil industry, which has pushed up unemployment and left empty a quarter of the office space in Calgary, the province’s biggest city. For Justin Trudeau, Canada’s Liberal prime minister, Mr Kenney’s victory is more a source of worry than of hope.
Although Alberta’s slump was largely caused by factors beyond the province’s control—notably the fall in oil prices in 2014-15—voters took their anger out on the government of Rachel Notley of the left-leaning New Democratic Party. Her election four years ago had been a first for a province with a reputation for Texas-like conservatism and suspicion of the federal authorities in Ottawa. Ms Notley is a defender of the province’s oil industry, which extracts the stuff expensively from tar sands. She lobbied hard for an expansion of the Trans Mountain pipeline to take more oil to the Pacific coast for export.
But she is also an environmentalist, and introduced a carbon tax, now C$30 ($22) a tonne, to discourage greenhouse-gas emissions. In striking this balance she had an ally in Mr Trudeau, who championed the pipeline but also passed a law requiring provinces to set a price on carbon emissions or to submit to one imposed by the federal government.
Much of Canada has resisted that grand bargain. The province of British Columbia, the pipeline’s terminus, remains opposed to the project on environmental grounds. In August 2018 the federal government took it over from Kinder Morgan, the frustrated US-based firm trying to build it. Moreover, four provinces led by conservative premiers—Ontario, Manitoba, Saskatchewan and New Brunswick—are fighting Mr Trudeau’s carbon price in the courts.
Alberta will now join them. Mr Kenney, a former federal immigration minister described by Maclean’s, a magazine, as a “Guinness-sipping nerd”, is expected
- swiftly to kill the provincial carbon tax. He plans to
- raise an emissions cap on tar sands oil production and s
- low down plans to eliminate coal-fired electricity. He has
- threatened to cut off British Columbia from shipments of Alberta’s oil if it continues to oppose the pipeline expansion. Mr Kenney also
- promises to bring “tens of thousands of jobs” to Alberta by slashing environmental and labour regulation, and by reducing the corporate-tax rate from 12% to 8%.
At first glance, his victory will pose additional problems for Mr Trudeau, who has been hurt by allegations that his office put improper pressure on the country’s attorney-general to drop the prosecution of a Quebec-based engineering company. He faces a re-election battle in October. But Mr Trudeau may not mind a fight over climate policy. According to a poll conducted in March by Abacus Data, 69% of Canadians say climate change is one of the top five issues they will consider when they vote. Just 28% of Canadians are firmly opposed to a carbon tax.
The federal government has the power to override British Columbia’s opposition to the pipeline expansion. It could do so as early as May 22nd. That gives Mr Trudeau some hope that he can rescue his energy grand bargain, despite Mr Kenney’s opposition to the carbon tax.
Alberta’s new premier may benefit from an upturn in the province’s growth. The unemployment rate was 6.9% in March. That is still 1.1 percentage points above the national rate, but it is well below the peak of 9.1% in November 2016. TD Financial Group, a bank, predicts that Alberta’s economy will grow by 2.4% in real terms next year, the fastest rate in the country, thanks in part to a rise in oil prices. The sunnier outlook has nothing to do with the new premier’s pro-oil policies. That will not stop him from taking the credit.
“Since the early 90s, the vast majority of Americans have been in favor of higher taxes for the rich… these are mainstream ideas and positions, but if you watch Fox News it seems like it’s a crazy, lunatic idea,” says @rcbregman.“Donald Trump, who doesn’t want to show his own tax returns, and who knows how many billions he has hidden away in the Cayman Islands… he was brought into power by this propaganda channel, Fox News,” says @rcbregman.“It’s a very American idea…. If you want to make capitalism work, you got to ensure competition. If companies become too big, like it’s clearly the case with Amazon right now, you break them up, that’s what you do if you have a proper capitalist economy,” says @rcbregman.