As climate denialism wanes, the green transition now faces a new threat: the false solutions of so-called “green capitalism”. Devices such as carbon markets and offsets are showing the limits of any strategy that refuses to tackle existing power structures and inequalities. By itself, the invisible hand of the market will never be enough to cool our overheating planet.
This thesis is laid out by Adrienne Buller, a researcher at the progressive British think tank Common Wealth. Since 2019, she has been studying ownership models that might allow for a more democratic and sustainable economy. Buller is author of The Value of a Whale (Add publisher, 2024) and co-author with Mathew Lawrence of Owning the Future (Verso, 2022).
What does it mean to put a price on a whale?
A 2019 study by the International Monetary Fund (IMF) tried to establish the economic value of a whale, and came up with a figure of around two million dollars. The study was well-intentioned: expressing a whale’s value would encourage its conservation. But the anecdote illustrates a problem with the way capitalism sees the climate crisis. Everything must be mediated through the market and something can only have value if it has a price. Even the life of a whale.
Interesting article?
It was made possible by Voxeurop’s community. High-quality reporting and translation comes at a cost. To continue producing independent journalism, we need your support.
Subscribe or Donate
What does “green capitalism” mean? What are its aims?
On an ideological level, it is based on the view that we can tackle the climate crisis by transforming and decarbonising the global economy without having to address any of the social relationships and inequalities that define capitalism. I suppose its underlying aim is this: to maintain existing systems as much as possible while transforming large swathes of the economy. More concretely, it is a response to the climate crisis based almost exclusively on market mechanisms, be they carbon prices or corporate-responsibility policies (the ESG criteria) rather than on public investments and interventions. In simple terms: if we can set the right price, the market will do the rest.
Over the last ten years, hedge funds (such as BlackRock, Vanguard and State Street) have accrued more and more power. How does their growth influence climate action, or inaction?
The relationship between hedge funds and the climate is complex. On the one hand, their business is exposed to its risks, because they invest on a global scale. At the same time, they themselves can be winners or losers depending on precisely how the climate crisis is addressed. Naturally, hedge funds are in favour of any market mechanism which generates investment opportunities for the private sector, especially if they are state-backed.
Larry Fink, the CEO of the investment fund BlackRock, has described decarbonisation as “the greatest investment opportunity of our lifetime”. The size of these funds gives them great influence through their investment decisions and their role as the owners of large companies. Increasingly, they exert their power through direct political influence.
BlackRock is very active on this front. It is an effective lobbyist and is considered to have authoritative expertise. This is why, for example, it has been asked to advise on European sustainable-finance regulations. Several BlackRock alumni have held influential roles in the US administration of President Joe Biden, specifically on climate and economic policy.
You argue that the limits to global warming contained in climate agreements, such as the 1.5 degrees in the Paris Agreement, derive from economic assessments.
The origin of the two-degree threshold is attributed to the economist William Nordhaus and first appears in a 1975 paper in which he refers to the trade-off between temperature rise and economic growth. He assumes that rising temperatures would be detrimental to growth, but that action to reduce emissions would be as well.
Nordhaus’s work was hugely influential. He won the Nobel Prize in economics for his “dynamic integrated climate-economy model” (‘DICE’), which examines the interactions between climate change and economic outcomes. It is one of several “integrated assessment models” used for climate policy. Many of these models deal in huge abstractions. DICE holds, for example, that the “ideal” global average temperature increase would be between 3.5 and 4 degrees. Physical science considers that such a scenario would be disastrous and significantly increase the risk of breaching key environmental tipping points.
So there is good reason to criticise Nordhaus’s modelling from a scientific point of view, but the issue is broader. It is common practice to look at the relationship between climate and gross domestic product, but it strikes me as absurd to assume that the global GDP trend tells us anything useful about how we should act on the climate crisis. GDP is too coarse a figure and to use it in this way is a reflection of misplaced priorities.
Moreover, doing so perpetuates the idea that climate action is a trade-off against a thriving economy. That is not true at all. The majority of the world’s population has much to gain from climate justice: more secure and affordable energy, clean air, greener communities, and an economy that prioritises the needs of all rather than the massive enrichment of a minority.
To limit the damage of climate change, some have suggested that we settle for these solutions because they are “better than nothing”. What is the alternative?
Anyone who works in this area or is just concerned about the climate crisis is desperate for anything that can make an impact. And in some cases, green-capitalist interventions can have an impact. For example, state-subsidised initiatives in green energy and transport – which are happening under the US Inflation Reduction Act – are stimulating private-sector investments in these areas.
But the fact that these tools are having an impact does not mean that this is the best strategy possible, or that it will deliver results at the pace needed, or that it is addressing the question of justice on a national and global scale.
It is also worth remembering that most of these market mechanisms rely on significant public support, either through direct subsidies and “de-risking”, or through regulations to create new markets. This is certainly true of green energy, which is typically cited as a success of green capitalism. In fact, the story is much more complex than that. For those interested in delving into it, I recommend the book The Price is Wrong by Brett Christophers, of Uppsala University. While some policies that fit the mould of green capitalism might be helpful in the short term, many are a distraction and some are even harmful.
For the market to solve something, it must not only set a price, but this price must also be profitable for a private company.
Beyond massive subsidies to private companies – and here it is worth asking why states do not just invest directly – many of the things we need to do to build a truly sustainable future are simply less profitable than business as usual.
This is true not only because of our failure to curb fossil fuels, but also because of more subtle distinctions. Take for example the alternative between a future where everyone drives an electric vehicle and one based on a decarbonised public-transport system.
Only the latter is truly sustainable, but it is not the most profitable. Carbon emissions can also be reduced under the first scenario, but only with a negative impact on the environment and human rights through the intensive extraction of lithium needed for electric batteries.
This, I think, is the fundamental limitation of green capitalism: the market does not care about injustice and inequality, especially on a global level. The climate and ecological crises are fundamentally linked to huge inequalities, both within countries and between them. Without taking this fact into account, I see no path to a truly sustainable, secure and just future.
👉 Original article on Altreconomia.
📺 Watch Adrienne Buller on green finance on the Climate Pod
