Triple whammy of warming planet, high prices and energy insecurity

In the most comprehensive study yet of the global energy market, the International Energy Authority (IEA) has warned that within five years the planet will be on course to breach the limit of 2ºC of global warming which is said to be a “safe” level.

Of course, it is just the only level that supine corporate-serving politicians would agree at the UN's climate talks. Millions of people are already feeling the effects of global warming - ferocious rainfall causing floods in Thailand, Sindh province in Pakistan, the United States, Spain and Italy – and at the same time widespread drought. With 2ºC higher temperatures, such extreme weather will be commonplace, along with rising sea levels.

Over the last decade most of the world's growing energy needs have been met by burning coal; now not only China but also the United States is committed to building new coal power stations. The IEA projection shows that keeping to this course, the use of coal will increase by 65% by 2035.

Four-fifths of the CO2 emissions that would keep to the 2ºC limit are already locked in. Even if governments deliver on their weak, non-binding, greenwash targets, the cumulative CO2 emissions over the next 25 years will likely create a long-term average temperature rise of 3.5°C. And if, as seems likely, they fail to meet their targets, we are looking at a catastrophic 6ºC rise.

"As each year passes without clear signals to drive investment in clean energy, the ‘lock-in’ of high-carbon infrastructure is making it harder and more expensive to meet our energy security and climate goals," said Fatih Birol, IEA chief economist.

This week's BBC Panorama programme, made a crude attempt to blame soaring energy bills on the government's modest (to put it politely) efforts to promote alternative energy from wind, tide and solar.

The programme was a complete fraud. According to Ofgem, recent fuel price increases, which have left hundreds of thousands in fuel poverty, are due to the energy companies passing wholesale market price increases on to consumers, whilst never reducing them when the market falls.

Panorama tried to argue that because renewables require investment, and because the government is making some of that investment, consumers are being hit by subsidies.

But why are subsidies needed? Surely it is in the nature of an industry that if changes to new technology are required, these are paid for by investment by the companies that will profit in the long term.

Not on your life! In reality, the big six energy companies in Britain, and others throughout the world, are on an investment strike. They will go on dragging profits out of old-style power stations as long as they can, adapting them to dirtier and dirtier fossil fuels and they will never put a penny into developing the alternatives.

Their goal is NOT a clean, secure energy supply - it is profit, and that's a fact!

And where there is an increase in world market prices for gas and oil - and these will be ever-steeper as fossil fuels become scarcer and harder to extract - the consumer must pay.

We are left with a triple whammy of a warming planet, high energy prices and growing energy insecurity.

"Without a bold change of policy direction, the world will lock itself into an insecure, inefficient and high-carbon energy system," said Birol, adding that there is still time to act but the window of opportunity is closing.

The only action open to us is to achieve such a transformation is to take energy generation and supply out of private ownership and place it into a not-for-profit social trust, with raw materials becoming part of a new global commons.

A democratic network of People's Assemblies could then agree, with the help of experts and the collectively-owned power generating firms, a transitional plan to reduce, and then replace, fossil fuels. That is the only way to cut emissions, end fuel poverty and ensure that the lights stay on.

Penny Cole

Environment editor

Carbon capture rip-off

The government’s commitment to provide £90 million of public money for experiments in unproven, risky carbon capture technology is just the first instalment on a bill to the taxpayer and energy consumers that could run into billions.

Agreement to build a new generation of coal-fired power stations at Kingsnorth and elsewhere is imminent. They will be up and running probably two or more years before any carbon capture technology is ready, pumping out vast quantities of CO2.

Retro-fitting power stations with carbon capture and storage technology, or constructing them with it from the outset, will increase construction costs by between £1-2 billion per plant – a cost that will be passed on to energy consumers.

Generating power in this way will also use far more coal. A report from the Massachusetts Institute of Technology estimates that power stations would need to burn 27% more coal to power the carbon capture technology itself. In the meantime, investment in alternative energy has collapsed.

There is no evidence whatsoever that carbon capture actually works. But there are already some test projects out there – in Germany, the US and Saudi Arabia. If the government was really serious about reducing emissions they would wait to see how these experiments worked out – and take decisions based on the science.

In the meantime, they could spend public cash on super-insulating every home in the country to the best possible standard that could be achieved. At least then citizens would get the benefit of lower fuel bills in easier-to-heat homes, in return for the investment of their taxes.

The reality is that the funding for carbon capture has nothing to do with climate change. It is simply being used to justify the decision the government has in reality already taken to go ahead with new coal-fired power stations. And it will also give UK companies a foothold in the growing carbon capture and storage market that is developing across the world.

It is potentially lucrative business for the energy corporations – and as a bonus, they can get public money to enter the market AND increase the price of energy to consumers to cover the higher running costs.

What this underlines is that solutions to climate change cannot be delivered by the profit-driven energy market. They and the government are trying to pull the wool over our eyes and pick our pockets at the same time – excuse the mixed metaphors.

However, transferring public money to fraudulent (remember ENRON?,reckless, profit-driven energy corporations is the only response the government is capable of making to the combined financial/economic/climate crisis.

The vast indebtedness that the government is adding to with this latest corporate scam is going to blow up the public finances – a process that is underway already. The result will be a collapse of public services, a fall in the value of pensions and wages and mass unemployment.

And in the meantime – runaway climate change will continue unabated in any way by these market-based measures.

Who will come to our aid? We have to come to our own aid! If we act quickly to wrest power from the state and the corporations to make these reckless decisions then there is still time to start to mitigate the now unavoidable effects of climate change.


Penny Cole
Environment editor

An umbrella in a hurricane

The union leaders at the TUC week built up quite a head of theatrical steam over their demand – swiftly rejected - that New Labour politely asks the energy companies to pay a one-off, windfall tax to be used to hold down prices. It was a waste of everybody’s time – and energy.

Instead, the power companies are being invited to fund an insulation programme, the cost of which can be knocked off their tax bill or recouped through higher prices!

All in all, the government remains 100% in thrall to the corporations and especially the financial markets. You can learn much about the strength of their commitment by opening the rushed report Chancellor Alistair Darling commissioned from Sir James Crosby on how to improve the functioning of the mortgage market. Crosby is deputy chairman of the Financial Services Authority - the government’s “regulator” (do I hear cynical sniggers?), and former chief executive of the seriously ailing HBOS banking group.

As it happens Crosby left HBOS in 2006, having received a knighthood for services to the financial services industry. It’s what you get from New Labour for leading an organisation that now has an extremely high loan-to-deposit ratio. At 177 per cent, it is higher than any other British bank. In other words, the UK’s biggest mortgage lender lent out an awful lot more than they’ve got on deposit, and they’re not going to get much, if any of it, back. Ever. Does that make Crosby the man to sort out the mortgage mess? Apparently so.

And the report? It’s not as if Darling set Crosby an open-ended “what is to be done” kind of question. In his letter to Darling which fronts up the report Crosby writes: “In April of this year, you asked me to review what market-led initiatives might be necessary to improve the functioning of secondary and primary markets in UK mortgage-backed securities ... in the context of the recent and ongoing disruption in global financial markets.” (emphasis added in case any TUC leaders who may be reading, missed it).

Crosby and the government are wasting their time because their beloved markets have taken on a life of their own. A year ago this week, Northern Rock’s crisis became public. Taking the failed bank into temporary public ownership and pumping billions of our money down the plughole was a desperate, hopeless attempt to prevent the global market meltdown. A bit like an umbrella in a hurricane.

Which brings us to Fannie Mae and Freddie Mac, the US mortgage companies taken over by the American government earlier this week. Keyboards are rattling all over the world about the scale and significance of this, the biggest bail-out of a financial institution in history. Some say that it amounts to nationalisation – or the socialisation of debt, passing the risk of failure and the costs to the taxpayer. Some are arguing that the global crisis has got so bad that it has made the neo-liberals stand on their heads, cancelling shareholders’ rights, wiping them out.

Certainly it is bad. Very bad. Most of the big economies are either already in recession or will be by the end of the year. The collapse overnight of UK holiday firm XL is a sign of the times. Some analysts are beginning to say that there can’t be a recovery for eight to ten years. The giant global financial services company, Lehman Brothers, which borrowed billions of dollars from the US Federal Reserve earlier this year, is on the skids with no rescuer in sight.

But the US government hasn’t begun to adopt socialist measures, and the rescue won’t achieve US Treasury Secretary Henry Paulson’s aim “to protect the stability of the financial market, and to protect the taxpayer to the maximum extent possible”. Unless you understand “protection” as wiping out thousands of regional banks that are among the shareholders in Freddie and Fannie. In reality it is an unimaginably huge gamble, as jobs and incomes are blown away, to keep people with mortgages tied into repaying the debt they’ve been seduced into by the fantasy spun by global financiers and their friends in London and Washington. Some stability.

Gerry Gold
Economics editor

Policies for the crisis - finance

Centrica’s prediction of a 60% rise in household energy bills over the next two years comes as dire news for the millions already drowning in unaffordable debt. It signals a continuing upward price spiral which is rapidly eroding the value of wages and salaries, just as the International Monetary Fund (IMF) foreshadows the onset of a global recession.

Governments on both sides of the Atlantic are forced into taking desperate measures to stave off financial collapse. The Treasury is busily rewriting Gordon Brown’s rules to allow more government borrowing in the wake of US support for the shareholders in bankrupt housing finance agencies Fannie Mae and Freddie Mac.

Now that the credit-induced boom has reached its limit, there is a reluctance on the part of the authorities to follow the free-market logic of allowing bankrupt companies to fail, and shareholders lose their investments. Instead, responsibility for interest repayments on the debt to keep profits flowing to shareholders will be passed to those least able to pay it – the taxpayers. Some analysts call it socialisation of debt, with the assets remaining in private ownership.

The most radical of alternative proposals designed to get over the credit crunch is for the US government to follow the UK’s action on Northern Rock and nationalise the bankrupt housing agencies. The sums involved make the Rock’s £40+ billion debt pale into insignificance. As the guarantors of half of all US mortgages, Fannie Mae and Freddie Mac hold more than $5 trillion of debt.

The consequences of any of these attempts to rescue the system from the effects of its implosion are too horrible to contemplate. The last crisis on anything like this scale was in 1929. The crash was followed by a global slump, fascism and war. It is time to start on a new path before history repeats itself in the most tragic way.

A World to Win believes it is time to move from a globalised world capitalist system to a concept of local stewardship acting in the interests of global society. New forms of co-ownership of the major production and financial resources, should be enshrined in law in place of the private ownership for profit of the corporations, banks and investment firms.

Many of the component parts of the system of interdependent global corporations and financial markets that have been developed to sustain an increasingly socialised form of global and local production can be reused or recycled. We need to preserve these advances in a new global economy oriented towards the satisfaction of needs. Capitalism can and should be composted.

The distribution of profits to shareholders – the current private owners of capital must cease. Stock, currency and other markets for speculation should be closed. The financial system will be based around mutual funds and credit unions, owned and controlled by investors and borrowers.

The wealth generated by workers realised from sales of their products should be distributed according to the following principles:

• a part will be paid to the workers in the enterprise. An individual's income from employment will be set in relation to the basic living wage, supplemented by skill and performance-related amounts.
• a part will be retained for reinvestment in, and further development of the organisation.
• the value generated by an organisation, over and above the wages paid to workers, and the amounts retained for reinvestment, will be divided amongst the Social Needs Funds.
• these funds will support education and research; health and social care; recreation and the arts; infrastructure development including energy, communications and transport; pensions, and incomes for those unable to work through disability or illness.
• the proportion of the social surplus allocated to each of the various Social Needs Funds will be determined through planning rounds controlled by an entirely new democratic process.
• International trade transacted through a global currency will eliminate money-market speculation and assist the move to equality.

Many will say that these ideas are fantastic and Utopian and will never be taken up. Well, the present economic and financial system is heading rapidly towards a catastrophe, with all that entails. Our alternative requires revolutionary change, it is true. Its merit, however, is that provides a unique opportunity to shape our own future rather than having it decided for us by governments acting directly for corporate and financial interests.

Gerry Gold
Economics editor

Planet pays the price for energy crisis

As the energy crisis deepens, global capitalism is scraping the bottom of the oil barrel, leaving behind ruined land and communities. Climate change campaigners occupying farmland earmarked for open cast mining in the Derbyshire countryside are highlighting one key aspect of this.

The “Leave it in the Ground” campaign has moved on to a 122 hectare site owned by UK Coal, which plans to extract 1m tonnes, but will no doubt aim for more once they get going. That is what happened at Stobbswood in Northumberland, where the original permission covered 1,500 acres for 15 years up to 2004. Extraction is only now coming to an end, with communities suffering years of coal dust, noise pollution and giant machines rumbling through their villages day and night.

Coal companies always claim they will restore the land but that is not the experience of people in Greengairs in Lanarkshire where an open cast mine was turned over to become Scotland’s biggest landfill. Their village was left on the edge of a stinking waste dump, and designated an “area of sacrifice”. Now a huge incinerator is planned to add to the pollution.
This is the story right across the world. Governments support coal companies to override community opposition. In Bangladesh, protests against open cast mining by Asia Energy at Phubari were initially successful but now the military-backed government plans to give the London-based company the go-ahead.

And an even filthier form of extraction is on the rise, as oil sand extraction becomes economical. Oil sand is a mixture of clay, sand, water and bitumen, with an estimated 2 trillion barrels of oil available from massive deposits in areas such as Alberta, Utah and the Orinoco Basin. Currently, tar sands represent about 40% of Canada's oil production, and output is expanding rapidly. Around 20% of U.S. crude oil and products come from Canada, and a substantial amount comes from tar sands. Whole areas are strip mined, and then a costly and polluting recovery process extracts the oil deposits. Two tons of sand produce just one barrel of oil and the extraction process uses vast amounts of energy, chemical solvents and water.

The question is can the planet survive capitalist energy markets? This week George Bush asked Congress to lift the decades-old ban on oil extraction in the Alaska wilderness. Now there is a drive to pump CO2 into spent oil fields, including in the north sea, to make the “dregs” accessible. Greenpeace warns that the risks of ecological damage are incalculable, and that in any case the retention time in the ocean is too short for it to be worth doing. Our prediction: the oil companies will soon be trying to get projects to pump waste CO2 into dying oil fields registered for subsidy under the Clean Development Mechanism.

Meanwhile the British government is planning to allow construction of eight giant coal-fired power stations, including the one at Kingsnorth in Kent which will emit around 8m tonnes of greenhouse gas a year. And to fuel it, the drive for strip mining will increase.

We have not even touched here on the issue of uranium mining, the most dangerous, polluting and health-damaging of all. Prime Minister Brown last week repeated his megalomaniac dream of a UK economic boom based on building a world-wide network of nuclear power stations. He also repeated the crazy offer of bribes to local councils agreeing to bury nuclear waste (in the town hall cellars presumably).

Yesterday the energy companies confirmed that domestic fuel prices will increase by up to 40% over the winter – whilst at the same time Alistair Darling was urging wage restraint (not on the bosses of the energy companies, obviously).

The growing contradiction between the market measures to meet capitalism’s energy needs, and the survival of ecology, human life and livelihoods, is now creating volatile social tensions. We need to strengthen the survival side of that contradiction, and create energy plans that prioritise the needs of people and planet – not profit.

Penny Cole
Environment editor

The R word raises its head

You could argue that ordinary people understand the immediacy of the global economic crisis of capitalism better than political activists because working people are struggling with rising prices for food and energy, mounting debts, lower wages and redundancies. The coincidence of all these facts of daily existence with a mounting political crisis in Britain adds up to an even greater test for political campaigners.

There no obvious immediate “practical” solutions to recession plus inflation, especially when the market state and client governments like New Labour have neither the capacity nor the political will to intervene. So it’s a kind of double bind which provokes the development of ideas that link to immediate problems but raise the spectre of revolutionary change.

For example, on the energy crisis, the case for social ownership of power generating and oil corporations increases daily. This essential resource should not be left in private hands or market forces. In the interim, the state could slash prices and subsidise energy through the scrapping of Trident and foreign wars. To save energy, public transport fares could be reduced drastically and services reorganised so that people could get to and from work without using their cars. Rail and bus networks would then be taken back into public ownership.

Food prices could be frozen and steps taken towards bringing the supermarket chains into co-operative ownership, ending their profiteering at consumers’ expense. People threatened with repossession should be allowed to stay in their homes pending plans to convert everyone’s mortgage debt into something more affordable and less of a long-term burden. Speculating in commodities and currencies should be blocked and a programme of turning private sector finance into mutual, co-operatively owned enterprises launched.

The big question of questions looms: Who on earth is going to implement such a programme? New Labour? You can’t be serious. The Tories or Lib Dems? You are obviously joking. The apparent political impasse leads to the spectre already mentioned, that of a break with the capitalist present and a leap into a revolutionary future. It’s difficult to conceive of but it’s an eminently practical solution given that There is No Alternative.

The R word is being used by all sorts of people, including the environmentalist Jonathon Porritt. In his blog earlier this month, he sounded the alarm bells: “‘So, food security is back on the political agenda. Climate change is omni-present. Peak Oil is rising. The credit crunch is the new player on the block. Resource wars are looming. Rainforest destruction just won’t go away. Species loss is as bad as ever, but no one cares – for now. Water shortages are chronic. But much, much more worrying are the linkages between all these notionally ‘separate’ phenomena. The synergies, feedback loops, interdependencies.

“At long last, people are starting to make the connections – and are even beginning to link all those separate symptoms back to their root cause: today’s literally insane notion of getting richer by trashing the planet and screwing the poor.” Porritt summed it up pretty well. And then he went on: ‘Don’t hold your breath, but pretty soon you might even hear one or two of them start talking about population. And then you’ll know revolution is on the way.” And then on Newsnight last night, someone did. It was him.

As an advisor at the heart of the Brown government, Porritt is well-placed to know that collectively they just don’t get it about any of the truly catastrophic interdependent threats and crises that worry the hell out of the rest of us. And when they do, when for example a few hundred truckers try to drive slowly into town (stopped by the police), the only market-dependent, profit-enhancing “solutions” they can come up with are bound to make everything worse. Like tax breaks on oil – not for hard-pressed hauliers and farmers, but to encourage increased production in the North Sea. Climate change? Somebody else’s problem.

Porritt’s dangerous and reactionary talk about population numbers was in response to the global food crisis. But the Organisation For Economic Co-operation and Development (OECD) and the United Nations Food And Agriculture Organisation (FAO) tell a different story in their joint Agricultural Outlook 2008-2017. World population growth is declining and food production is increasing. But US attempts to keep corporate profits rolling in are driving the world over the edge into mass starvation.

A broad range of different ideas and proposals to bring this most dangerous period of capitalist production to an end came from the large number of concerned people who attended last Saturday’s Beyond the Market Economy conference (the discussion is now continuing online). Many saw the need to end corporate power and establish 21st century models of social ownership. The real challenge is to create the leadership and organisation needed to bring such policies to fruition. The urgency of achieving this cannot be overstated.

Gerry Gold & Paul Feldman
Co-authors A House of Cards – from fantasy finance to global crash