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Climate Change and the Neoliberal Imagination


Douglas Kysar is Joseph M. Field ’55 Professor of Law at Yale Law School and faculty co-director of the Law, Ethics and Animals Program.

Fredric Jameson once noted that “it is easier to imagine the end of the world than the end of capitalism.” That’s the famous version. What Jameson wrote in context is, “Someone once said that it is easier to imagine the end of the world than to imagine the end of capitalism. We can now revise that and witness the attempt to imagine capitalism by way of imagining the end of the world.” Climate change offers a vivid illustration of Jameson’s point. Through climate change, the end of the world as humans have known it is now imaginable to an unprecedented degree. And capitalism, viewed through the lens of climate change, appears to some observers to be a terminal planetary disease.

Rather than use the end of the world to better imagine capitalism as Jameson suggested, in a forthcoming paper I take a closer look at the climate calamity to consider the role of orthodox climate economics in helping to defend and preserve our dire trajectory. My argument is undeniably speculative, for we have no confident way of knowing whether climate economics strongly influenced policy outcomes as opposed to simply having been used strategically by holders of power to provide an academic veneer to decisions they would have taken regardless.

The exercise remains instructive, though, because it reveals how tightly neoliberal welfare economics has constrained our moral and political imagination. For this blog post, I’ll highlight two policy proposals that appear to fit comfortably within the standard climate economic paradigm, but that offer a wider scope of possibility than conventionally allowed. The ideas and claims lying behind the proposals have been recognized and advanced by climate justice advocates for some time. My aim here is to situate these proposals inside the conventional framework, making them legible within, but also heretical to, neoliberal climate policy.

From Carbon Offsets to Carbon Upsets

Long hailed as a means of lowering the costs of mitigating emissions, carbon offsets provide a particularly striking illustration of neoliberal climate policy’s poverty of imagination. The offset is a commodity said to represent emissions that otherwise would have occurred but for the intervention of an offset project sponsor. Whether through the compliance offset market, which exists to enable firms facing emissions caps to meet their regulatory obligations at reduced cost, or through the voluntary offset market, which is targeted at individuals and organizations that wish to offset their emissions even in the absence of legal mandates, emissions mitigation via offsets occurs through decentralized economic choices. Conveniently, agency and efficacy are seen to reside in market transactions rather than in mechanisms for political decision making. The yawning chasm between individual actions and collective consequences – perhaps the defining feature of climate change as a global conundrum – is bridged through the conjuring magic of “counterfactual carbon.”

What is especially fascinating about carbon offsets is that they explicitly rely on legal imagination. They are policy instruments designed to represent and monetize the emissions that would have existed in a hypothetical business-as-usual-world without the intervention of an agent who is credited with having shifted downward the collective carbon trajectory. Once one admits the possibility of counterfactual carbon as a basis for distributing economic rewards and behavioral incentives, there should be no limit to the kinds of mitigation schemes one could concoct. Yet the offset system remains tightly anchored to a business-as-usual vision. In this respect, the offset system seems politically palatable precisely because it is so consonant with the standard neoliberal path of finance, development, and growth.

What would an offset scheme look like that could reside within a neoliberal framework without being limited by its imagination? Consider a system of what we might call “carbon upsets.” Rather than award credits based on economic development that moves us from an imagined dirty path toward a marginally cleaner, but still very dirty future, why not award credits to legal and political actions that force downward our emissions pathway? Lawsuits, referenda, protests, boycotts, civil disobedience – these interventions too can lower emissions trajectories just as financial investments in offset projects supposedly do. For instance, the recent judgment in Montana in favor of youth climate plaintiffs will have a positive quantifiable impact via millions of tons of carbon equivalent emissions that the state could have authorized had the case not been brought. Likewise, a coalition of environmental justice groups in Louisiana last year successfully blocked approval of a massive petrochemical plant that would have emitted 13.6 million tons of carbon per year. Why don’t these groups earn carbon credits?

Upset credits could be awarded directly to groups and individuals when they work to achieve climate progress on their own. In addition, as with the existing offset approach, benefits could be shared in the case of legal and political activities that are “sponsored” by a financial partner. Imagine just for a moment a world in which global financial houses like Goldman Sachs devote their intellectual, financial, and political capital, not to the exploitation of dubious conventional offset opportunities, but to the identification and promotion of critical sites of political intervention by disempowered voices for sustainability.

The carbon upset approach is an immune response targeted at challenging the political and economic power of the status quo. It seeks to introduce dynamism into our political economy by actively seeding disruption and potential transformative change, recognizing that our current ideologies and institutions are built instead around preserving an unsustainable status quo.

Inequality Reduction as a Mitigation Device

The second policy call in the paper is to see social justice goals such as reductions in economic or gender inequality as potential tools for mitigation. Here I rely on emerging evidence that is empirically contestable but still powerful on a conceptual level.

Some evidence, for instance, appears to show that greater levels of female representation in national legislative bodies or corporate boards is correlated with reductions in greenhouse gas emissions. In all these years of academic fiddling between carbon taxes and cap-and-trade, why have we not explored the possibility that dismantling patriarchy might reduce emissions with essentially no legitimate social cost? Why are we instead subsidizing at up to $85 per ton untested technologies for sequestering carbon that merely perpetuate our dependency on a fossil fuel economy? Why not send $85 per ton to organizations that help women run for office or attain board positions? More to the point – why haven’t we run the serious economic analyses that would determine which is a more “cost-effective” way of reducing greenhouse gas emissions?

A similar analysis applies to wealth and income inequality. From the consumption perspective, taxing or limiting high-emitting activities like airplane travel or vacation home ownership is moving quickly from an “off the wall” to an “on the wall” policy proposal, to use Jack Balkin’s memorable terminology. But a separate question is whether economic inequality itself could be a driver of higher greenhouse gas emissions. The existing evidence (which I review in the paper) is equivocal but beginning to suggest a significant relationship.

A number of theoretical explanations have been proposed for why inequality might raise per capita greenhouse gas emissions, including: 1) inequality exacerbates the ability of the wealthy – who benefit more and suffer less from environmental degradation – to protect their interests within social decision-making processes; 2) inequality reduces cohesion, cooperation, and trust, potentially inhibiting collective action to protect the environment; 3) inequality impedes diffusion of green innovations to the mass market; and 4) inequality leads to Veblen effects whereby consumption of energy-intensive goods and services increases as individuals aim to emulate and compete with the status-based consumption of the wealthy.

Regardless of the explanation, an overlooked way of understanding such disparities in emissions levels is through the lens of mitigation. Rather than seeing mitigation as posing separate dimensions of efficiency and equity, we can instead see the promotion of equity as a pathway for promoting efficiency. This elision of the supposed “big tradeoff” between equity and efficiency occurs simply because we have escaped the neoliberal welfare economic paradigm and adopted a more basic focus on justice. Just as law and economics scholars like Zachary Liscow have begun to perceive the equity effects embedded within efforts to promote efficiency, we should also attend to the efficiency effects of promoting equity.

Again, the primary point is not to argue the case empirically but rather to make the conceptual claim that, for some of us, political imagination has been limited by the dominance of a narrow version of welfare economics. When we consider climate policy, there may be courses of action lying before us that would advance independently compelling goals, while also reducing greenhouse gas emissions. Advocates of climate justice have long been aware of such possibilities – my paper’s primary contribution is simply to situate them within the terminology and conceptual apparatus of the welfare economic framework in hopes they might become legible to the people who shape that framework.