Critiquing carbon markets: A conversation : Larry Lohmann and Steffen Böhm
Steffen Böhm (SB): Larry, you and your colleagues have been at the forefront of the critique of carbon markets for almost a decade now. You have published a great number of books, pamphlets, newspaper articles, blog entries as well as academic articles, all of which you have made available on the Corner House website.1 Many people from around the world, North and South, have downloaded these contributions, making it one of the key resource centres presenting critical thought on carbon markets. Let me congratulate you for making all of your work available free of charge; it’s been invaluable for researchers like myself. Do you have any ideas about the number of people who have downloaded your papers as well as the other material you have made available over the years?
Larry Lohmann (LL): It’s hard to say because of the unreliability of the devices that count ‘hits’ on websites, but wherever I go I’m amazed at the number of people who have made good use of our website and the websites of our colleague organizations.
SB: Do you find, when talking to people about carbon markets, that they know by now the basics about how they work, or do you think there is still a lot of ignorance and lack of information and knowledge about what carbon markets actually are? I’m asking because I must have formally presented and talked about the book I co-edited, Upsetting the Offset: The Political Economy of Carbon Markets (Böhm and Dabhi, 2009), more than 20 times over the course of the last two years. This has involved audiences ranging from undergraduate to PhD students, policy makers to business people, and a wide variety of academics, of course. But I’m still getting a sense that most people simply have no clue about what carbon markets are, how they function, who makes money and how, and what their implications and impacts are for people, politics and the environment. Do you think this is still a bit of a niche subject, or do you feel that there is now a broad understanding of carbon markets also amongst non-specialist audiences?
LL: You could almost say that carbon markets are designed not to be understood by ordinary people. One of the functions they have come to assume – partly by intention, partly not – is to conceal a lack of effective action about climate change. What is even more striking is the extent to which carbon markets are misunderstood by people that you might assume would know better: government officials, parliamentarians, economists, corporations, traders themselves, even many on the left. But maybe this phenomenon is predictable too. In both of these respects there is a parallel with the markets for subprime mortgage derivatives, which not only were designed in a way that foxed average investors but also – as Michael Lewis (Lewis, 2010) and many others have observed – were a site of mass self-delusion among the titans of Wall Street itself for many years. Or maybe ‘delusion’ isn’t the right word, since in both cases what is involved is less belief and disbelief (which falsely implies that all that is needed is ‘unmasking’) than fetishism, fantasy and magical thinking (cf. De Cock, 2009). Then the tipping point arrived, and the respectable, accepted wisdom abruptly switched from ‘this is normal; why are you raising questions?’ to ‘this is crazy; how did this happen?’ Maybe the same thing will happen with carbon markets. But to what extent that would lead to greater retrospective awareness of what has been going on during the past 15 years is – as with the derivatives markets – an open question. One that can only be settled by a commitment to continuing, dedicated activist discussion.
SB: If there are still people out there who have not heard about carbon markets, or know anything about their impacts and implications, how would you introduce them to this topic within a few lines? Recently, climate change has been less in the public’s mind; in the wake of the global financial/economic crisis, people are more concerned about their jobs and food/petrol prices than the price of carbon. So, why should we care about carbon markets today? Do you think it’s still important to talk about carbon markets or has the ‘caravan’ moved on, as it were?
LL: How I introduce a discussion of carbon markets depends on who I’m talking with. There’s no formula. In general, the topic is not hard to get into with villagers and activists from the global South and working-class audiences from the North, because they tend to have a background in the kind of analysis that is necessary. In discussions with (say) forest village leaders in Liberia, junior high-school students in the Philippines, social activists in the Andes or pollution-impacted poorer communities in the US, after 10 or 15 minutes you usually find that the audience is already exploring all of the essential issues involving political inequality, technical equivalences, colonialism, commodification, property rights and so on. And such audiences regularly wind up condemning carbon trading in terms whose strength would probably unsettle many genteel Northern observers, including academics. On the other hand, the concepts are more difficult to grasp for middle-class, highly-’educated’ people from industrialized societies, so you have to approach the topic in a different way and expect the discussion to follow a different path.
Take for example the equivalence that carbon trading posits between emissions reductions and offsets. Audiences in the South will immediately see the significance of this constructed equivalence and put their finger on all of its contradictions and paradoxes, political and technical. Professional carbon trading practitioners are also aware of many of the issues, if only because it’s they who have to put in the hard graft, day after day, of building the equivalence in the face of forbidding obstacles, negotiating the relevant property rights among various mutually-hostile parties, etc. But your average highly-educated middle-class Northern audiences – including economists, diplomats, political scientists, ‘big green’ NGOs and parliamentarians – are more likely to be predisposed to ‘black-box’ the processes by which this equivalence is created. They may wonder: Why are you spending time on something that ought to be unproblematic? Why are you challenging self-evident identities and neutral ‘economic instruments’? Why are you indulging yourself in these perverse, Garfinkelish questions? So with them you need to take a gentler, more roundabout route into the issue.
You ask why we should care about carbon markets. Well, that depends on who ‘we’ are. Millions of people in the Global South on the receiving end of the movements of dispossession in which carbon markets are implicated, as well as people in the North on the fence lines of polluting industrial installations, unfortunately don’t have much choice but to care, once they work out what is being done to them. Carbon markets are helping take away the basis for their livelihoods as well as their rights to the earth’s carbon-cycling capacity. Better-off intellectuals in the North, for whom carbon markets may be only an ‘interesting’ news item or a scholarly opportunity for the flexing of neoclassical or Foucauldian or Deleuzean muscles, might not be concerned in the same way. And for ordinary middle-class citizens of industrialized countries, the carbon market discourse might as well have been expressly designed to exclude them.
Regarding whether the ‘caravan’ has moved on, there are at least two questions here. First, are carbon markets on the way out? And second, is social transformation, or the study of it, best conceptualized in terms of ‘caravans’ drifting from place to place?
On the first question, we certainly have reason to hope that the current afflictions of carbon markets are terminal. The incoherence of the whole project is now coming home to many in the industrial, scientific and even banking sectors, as witness the recent pronouncement of one of Europe’s major electricity companies that the EU ETS is ‘dead’. On the other hand, on that strange world that my colleague Chris Lang from REDD Monitor calls ‘planet UN’ (Lang, 2011), it is still unthinkable that, once legislated, carbon markets could encounter any serious problems. Trevor Sikorski of Barclays Capital2 noted wryly at the Durban climate talks that it was hard to find a UN negotiator from any country who had bothered to acquire even the slightest conception of where carbon prices were or how they had been behaving – this at a UN conference maybe 75 per cent devoted to negotiating carbon market mechanisms. Similarly, although the European carbon market is collapsing, ‘big green’ Washington NGOs are busily promoting the expansion of other carbon markets in China, Thailand, wherever. This seemingly odd split should alert us to the complexity and diversity of the various functions that carbon markets assume. The superficially spectacular ‘failures’ of carbon markets – to have any effect on climate change, to create a robust new financial commodity, to sustain market actors’ confidence – are, viewed from another angle, spectacular ‘successesæ in terms of their role in creating the need for more ‘technical’ work and in delaying action on fossil fuel use. You have to hope that reports of the impending demise of carbon markets are not exaggerated, but, on the other hand, you also have to learn to apply pretty broad criteria for what counts as ‘dead’.
So the current location of the ‘caravan’, if there is one, is a little difficult to specify at present. But even if, as is to be hoped, carbon markets do expire shortly, I suspect that academics will be coming back for a look at them for many years hence. Are you an economist looking to get a handle on how the next financial crisis will unfold? Are you a sociologist trying to grasp the processes and effects of new kinds of commodity formation? Are you a Marxist historian seeking to understand new mechanisms of dispossession and accumulation? Are you a scientist trying to assess the potential of ecosystems services markets to conserve biodiversity, water or wetlands, or the potential of the ‘green economy’ being heralded at Rio + 20? You’re hardly going to be able to avoid delving into the details of carbon markets. Carbon markets are not an ‘instance’ of an abstract approach or historical process which, once understood, makes the detailed study of them superfluous. Like many other contemporary phenomena, they are a constitutive part of the process through which neoliberalism finds itself. Treating carbon trading, complex financial derivatives, deregulatory manoeuvres and the like as incidental to the study of modern politics would be a little like treating what since the Second World War have become known as ‘area studies’ as incidental ‘illustrations’ of economic theory. The carbon market experience is not a ‘place’ that the caravan can leave behind. It is rather one of the wagons that make it up, to which new wagons such as ‘the green economy’ and ecosystems services trading will be hitched as time goes on.