Hello, and welcome back to Drilled. I'm Amy Westerwaldt. Today we are bringing you another episode in our series Drilling Deep, in which we look at different books that are coming out, either on climate or on science or history, democracy, all of the things that we kind of look at here on Drilled. Most of the time these interviews are being done by Adam Lowenstein, Bless him. He's reading all the books and talking to all the authors and having these very very interesting conversations.
Today we're bringing.
You a book that has a lot to do with what's happening in climate politics at the moment, because the annual conference of the Parties, the UN Climate Summit, is underway at the moment in Brazil, and it's a good time to look at how that process has been politicized. In the book Existential Politics, Jessica F. Green from the University of Toronto argues that head on conflict with fossil
fuel interests is a prerequisite for real progress. Green is a longtime observer of global climate negotiations and an expert on a carbon accounting and she argues that the cop embodies a win win approach to the problem of the climate crisis and the transitions necessary to deal with it, for which someone has to lose. The challenging is to make sure the right people do the winning well, the fossil asset owners, as Green describes them, do the losing.
Adam had a really interesting conversation with Green, who's someone that I've also spoken with in the past about cop proceedings. She's really, really, really interesting on this stuff. I think you'll enjoy this chat.
It's coming up after this quick break.
One thing I was curious about as I was reading the book is the what drove you to write this book? Because it's incredibly complex stuff. As we were discussing a few minutes ago, it's not uplifting, So yeah, what was the driving force behind writing this book? Existential politics?
There are a couple of motivations for the book. One, I've been studying carbon accounting and the politics of carbon accounting for like fifteen twenty years. My first book, Rethinking Private Authority, looks a lot at the creation of private standard setters, who you know, eventually became the voluntary carbon market, and even then I was like, this is not going
to end well. So I, you know, I just have a deep knowledge of this stuff and it is very technical, and so therefore it sort of flies under the radar are And so given that I've sort of seen the evolution of the voluntary carbon market, I studied the origins of the Greenhouse Gas Protocol, which is now an ISO
standard for how all firms measure their greenhouse gas emissions. Like, I just know a lot about where all of this came from, and it's important to understand where it came from to understand how well it can or cannot work. So that's one motivation, and the other is I wrote a scholarly article with two colleagues, Tom Hale and Jeff Colgan called Asset Revaluation and Existential Politics, and that was
part of my thinking about this topic. And it was born out of the frustration that so many people say, oh, this is a collective action problem and we all have to cooperate to reduce emissions. And you know, what I saw as a student of climate politics over many, many
years is that this is really a distributional problem. This is about you know, who gets what when and how, and so the idea of like, oh, if we all just cooperate was just it seemed to me just the wrong looking at the wrong problem, and so those were the two real motivations for thinking about Okay, well, you know, like we need to wake up to the fact that we're just largely thinking about this the wrong way.
Yeah, we'll come back to the obsession, you might say, with cooperation among the elite standard setters and other organizations who have been leading the global charge on a lot of the stuff you write about in the book. But before we get there, I wanted to ask if you could define what existential politics are and then talk about how they differ from regular politics if they do it all.
Yeah.
So I define existential politics in the book as Okay, so I define existential politics as a political contest between different kinds of asset owners. And I offer this sort of very simple model of three kinds of asset owners fossil asset ownersulnerable asset owners, and green asset owners. And fossil asset owners are obviously like fossil fuel companies, mining companies, heavy industry, all of the kind of foundations, the high
emitting industries that are the foundations of our economy. Green asset owners are precisely what you would think they would be, you know, the basically the engines of the decarbonized economy, so producers of evs, solar PV cells, wind turbines, all the infrastructure we need to run those. And then there are vulnerable asseid owners, and vulnerable asset owners are those whose assets will be destroyed by the effects of climate change.
And so the idea, the basic idea of the book is that we have this profound asymmetry that fossil acid owners are running the show. They have been for decades, and saying that we're all in this together if we just cooperate, is ignoring the elephant in the room, which is these very powerful interests that have a vested interest
in maintaining the value of their assets. And the reason that I say that it's existential is so we describe it, as in the first article as distributional politics on steroids. So it's not just about who gets what, but whose assets become completely worthless, whose houses disappear, whose livelihoods disappear, which countries disappear as a result of both climate policies
and the effects of climate change. So it's really about the existence of many, many things, and unless we grapple with the visceral reactions, so that that is going to provoke in people, then we're not going to make much progress.
The title of the first chapter, which is very direct, we are not all in this together. And I think that gets at the heart of what you're saying there, which is that this is ultimately a question of power, and the power asymmetries, as you mentioned between right now, tilted very heavily in favor of the fossil asset owners
and against the vulnerable and the green asset owners. There is this idea, and we're going to get into this a little bit more, that there is a way that tackling the climate crisis can be a win win, that everyone can come out ahead if we just do this together.
And I think the thing that we are not all in this together that message gets at is the fact that no in order to tackle this crisis, someone has to lose, and that someone is not just the fossil fuel industry, but everyone invested in the fossil asset class and the status quo. So can you talk about that a little bit, The fact that as much as we might like to think, and it makes us feel better to think that there is a comfortable world in which
everybody wins, that's not the case. We've tried that and it's not working.
Yeah. I mean, I think again, as long time observer of climate politics, the UNF Triple C, the Framework Convention on Climate Change, and then subsequently the Kyoto Protocol and now the Paris Agreement. The UNF Triple C started, you know, assigned. The Framework Convention was signed in nineteen ninety two. It was the heyday of the liberal international order. We were
writing environmental treaties left and right. You know, humanitarian intervention was a thing that we did for better or for worse. The WTO was expanding and there was a lot of international cooperation and that's when we started, you know, as a global community working on climate and so I think it began in this moment where it's like we can
all cooperate. You know, look, we're doing it in all these ways, and it you know, ignored the fact that as early as the nineteen nineties, when the before the Framework Convention was even inked, you know, the fossil fuel industry was already generating disinformation around the science of climate change.
And that's been well documented. So you know, there's the argument here is that you cannot collaborate with obstructionists and there is this very long tradition of obstructionism, and so until we realize that we're just sort of fiddling at.
The margins, it seems like it describes sort of the status quo approach of some of these elite global institutions in some ways, fiddling at the margins in a way that doesn't try to tackle the fundamental political dynamics.
Look, I think it's worth saying that the world has changed a lot, like right, and the climate crisis has
changed a lot. So like in nineteen ninety two, you know, I don't know the exact number, but it's one hundred somewhere between one hundred and eighty and one hundred and ninety countries quickly signed the Framework Convention, which is, you know, it's not very highly It doesn't require a huge amount from countries other than sort of starting to take stock of what their emissions are and you know, cooperating on science and these these kinds of things. But you know,
it seemed like there was some consensus. And also the climate crisis was far away, so it was sort of like, okay, well, probably you know, arguably some of the politics weren't existential. Then there could be you know, winners and losers, but the losers maybe wouldn't lose as much or as quickly.
But now that we've just repeatedly kicked the can down the road, we're in a sort of do or diet moment, and those costs become much more precipitous, those changes become more precipitous, the costs becomes steeper, and therefore the politics more conflictual.
In one of the ways we've kicked the can down the road is what you describe as measuring tons. Can you give an overview of types of quote unquote solutions that it encompasses.
So yeah, so I refer to it as actually managing tons. And the idea is that we have this very narrow construction of the climate problem as a technical problem of measuring, managing or sorry, measuring, verifying, buying, and selling an account for carbon emissions. So we're just it's just this focus, this very narrow focus on measurement and buying and selling and making claims about the level of emissions. And so
measuring emissions is actually, in many ways very difficult. Some things are very straightforward, some are extremely difficult, Like we know how much energy is embedded in a ton of coal for you know, fossil fuels, so the direct combustion of those we can measure. But when you get into things like avoided emissions, how many emissions would there have been if you know, the German government had not invested
in a cook stove project in Malawi. You know, that's a very difficult set of calculations to make, which rely on a hypothetical baseline like this is what the world would have looked like if we hadn't done this. And then we take that hypothetical and we commodify it and we sell it and we say this is the you know, this buy this absence of emissions, which you know, if somebody came to your door and said, by this absence of a I don't know a set of encyclopedias, you wouldn't do it.
No matter how much I opposed encyclopedias. I would not think that it was anti encyclopedia.
You know. So we're commodifying things that are very difficult to measure, and then we are making them the foundation of our climate policy. And you know it's I think in many ways the book does not make very novel arguments, in the sense that, of course climate change is a
political problem about winners and losers. But I think the contribution is to say, as long as we are thinking about it in this technocratic way, which is pervasive in climate policy, then we're not going to make real progress.
I actually think the way that you articulate the pervasiveness of it is pretty novel. The reason I say that is because, yes, the root of the problem is the fossil acid owners, and they're decades of obstructionism, But there is also this consensus, this entire cottage industry of corporations, NGOs, organizations that exist sort of in the space between those two that are deeply, deeply invested in managing tons and all of the verification and in validation and certification that
this really complicated technocratic approach demands and has created. Can you just talk about that industry a little bit, because I think it's really hard for people who have not experienced it to appreciate just how broad it is, how connected it is with positions of power, governments and corporations and corporate trade groups and things like that, and also how much they just have invested in continuing the inertia of managing tons.
Yeah, so I'll talk about this in the context of carbon offsets, and then I can talk about sort of corporate corporate night zero as well. But carbon offset project so very basic overview carbon offset project is party A pays Party B to do a carbon reducing thing, and Party B gets the money and Party A gets the emissions reductions. But it doesn't just involve Party A and Party B. Someone's got to design the project. Someone has to make sure that the project conforms to whatever methodologies
are required. Then the project has to be validated, generally by a third party that says, yeah, this looks good, the methodology is sound, this is going to reduce approximately as much as you know. The document estimates and the
calculations estimate, and we sign off on this. Then the project is funded and that may involve a bunch of funders, and then the credits are then generated and sold through usually through a registry or a platform like other comodities are sold, and there are some that work on platforms
where other commodities are sold. And then at the end of the project there's someone who are a third party, a different third party that verifies yes, that verifies that everything has happened right, so that the project actually took place. That it generated the amount of reductions that it said it would, so on and so forth. So there's this big supply chain basically of actors involved in generating a
carbon offset, buying and selling those credits. And what I show in the book, what I argue in the book is that everybody who's involved in that project has a vested interest in the numbers adding up, and they want the biggest numbers possible for the least amount of money so that they can put that on their ledger and say, look how much we reduce because we pay for this project.
There's no constituency demanding high quality. Even though there have been all of these efforts tom the offset market, particularly the voluntary offset market, from a political perspective, it doesn't seem that these will be successful because really nobody has a vested interest in much deviation from the status quo, and so the numbers all add up, but the reductions aren't actually there.
Reductions and emissions, you mean, the.
Reductions and emissions are not actually there.
There was a recent study done by some folks in California that reviewed twenty percent of all of the offsets produced basically both in governmental programs and involuntary programs and found that they represent actually sixteen percent of the.
Total amount of emissions reductions claimed, so that there's almost an order like it's like shocking how little these are actually reducing emissions or avoiding emissions. And you know, I go through a lot of other problems with them besides just this number problem. But offsets are not only very problematic for this reason, but they are everywhere in climate policy.
So it's not just I mean some of us, like it's sort of like common knowledge in I would say in climate policy circles that offsets are kind of bullshit, but we use them everywhere anyway, all the time. So there's this real disjuncture between like what we know about how these work and how we actually use them as a policy instrument.
I feel like they're also one of the climate again quote unquote solutions that has broken through in sort of a mainstream way. Like if you go to book an airline ticket, most airlines now will say you can pay us extra money to offset your emissions, which is such a multi tiered scam that I can't. It's just PSA to everyone listening, don't pay your airline or any other company to offset whatever you're doing just to make yourself
feel better. They're just pocketing that money and it's not doing anything correct.
Answer, absolutely, And it's also usually like four bucks, Like how is four bucks set your flight across the country or across the ocean? I don't know.
And they're pretty deeply entrenched in the Paris Agreement and other global climate negotiations and climate agreements, right, Yeah.
So offsets are there's an offset market created by the Paris Agreement. It's called the Paris Agreement Crediting Mechanism. It's the successor to the one in the Kyoto Protocol called the Clean Development mechanism. So there's one there, a lot of the credits, not all of them, but a lot of the credits from the Kyoto Protocol are being grandfathered in, even though we know that there's a lot of problems
with quality of those credits. There's also this huge a reference for this huge voluntary market, right, which is basically run by non state actors. I also call it the unregulated market because a bunch of you know, NGOs and private firms said, this is what constitutes a carbon offset project in you know, afforestation or methane capture, or whatever right.
Or self regulation in their preferred euphemism.
Yes, it's self regulation. And they started selling those and corporations started buying them, and then they started, you know, those purveyors of offsets started lobbing for them to be
used as compliance instruments. So in twenty fifteen, countries got together through ECAL, the International Civil Aviation Organization, and created an emissions agreement to manage aviation emissions because that's not covered in the Paris Agreement, and that relies principally on offsets, right, because we don't have fossil fuel free means of air transport.
So you know, it's going to create a demand for between one and two billion credits between now and like twenty thirty five, and voluntary credits generated on the voluntary market are now going to be accepted as compliance grade. So we have this self regulated market and now these are going to these these offsets are going to be used in an international inter governmental agree. So that's the problem.
Can you talk a bit about why fossil asset owners, fossil fuel industry very much included, love this approach so much, Why it serves their interests so well?
Yeah, because they can say that they're doing things. They say, look, we bought all of these offsets at like five bucks a ton, or like, look here's our here's our really shiny annual report that measure reports all of our emissions. And now we know that shareholders have all the information they need to make responsible decisions about climate risk. And it's like, no, they don't. Nobody reads that, and even
if they did, they wouldn't understand it. It's I think it provides a lot of political cover for the status quo that these basically fossil asset owners can say that they're doing something that doesn't really address the problem of reducing the supply of fossil fuels. And indeed, if you look at like carbon pricing, one of these so this is the you know, the gnarling of economists and before
it became political poison of many governments as well. Carbon pricing, if you look at the extent to which it is driving reductions, it tends to be for things like efficiency improvements or fuel switching. So these aren't really changes from the perspective of a fossil acid owner. These aren't changes
that are fundamentally threatening their business model. Right, this is just like Okay, we're doing some stuff on the margins that's actually maybe that's good because it's cutting costs for us a little bit, but it's not catalyzing real decision making about how we wind down the use of these fossil assets.
Which is one of the reasons the entrenched interests love it so much. And also the fact that, as you point out in the book, Carbon Pricing, you know, carbon tax or cap and trade type of system is so politically unpopular. And I wrote a story about an organization called the Climate Leadership Council a few years ago which was exon BP other trade groups. Fossil fuel companies backed
organization that was advocating for a carbon tax. And one of the reasons they love it is because it's so politically unpopular that they can say, therefore something, and because people hate it because it has all the costs upfront and all the benefits down the road or diffuse you know, throughout the world. It's never going to pass. It's never going to go anywhere, so they don't have to worry about the solution that they say therefore ever becoming law.
It's it's so insidious, or they will advocate for Airmission's trading scheme and then lobby for free allowances, which is basically like, okay, well, we're participating in this thing, but we literally paid no costs because the government gave us free a free right to pollute up to x amount, you know, and once you start giving those away, it's
very hard, you know, to take them back. So yeah, they're both pretty insidious because they look on the face of them like something is happening, but in reality, very little is happening.
And then the last one I wanted to make sure we touch on probably briefly, because it shared there's a lot of the same flaws as what we've been talking about is the obsession with net zero, which you describe as an elaborate distraction. It's another thing that has obviously broken through in sort of the mainstream discourse, the idea of net zero. And you won't find a corporation or a government that has not proclaimed except maybe America, that
has not proclaimed it's commitment to net zero. By some far off distant point in the future.
Right It's like, so, you know, maybe thirty or forty years ago, the rhetoric shifted from environment from like development too, like sustainable development, it's sustainable development. Was this a great thing because you can bele and developed at the same time, and you could sort of put whatever you want in that conceptual basket. And I argued that net zero is the same because because the math is so difficult, particularly for firms, like for governments, it's a different issue. So
I want to bracket that for a moment. But if you claim to be net zero as a company, right, you have to measure what are called your scope one, your scope to, and your scope three emissions. Most people, I'm assuming a lot of your listeners have heard of those, the direct and indirect emissions. So Scope one are your direct emissions, either through you know, production or generated through purchased electricity. And then scope too are some of the
closely monitorable indirect emissions, like the commuting of employees. And then Scope three is sort of everything else. So it's everything all along the supply chain. So if your Walmart, your direct emissions are you know, the electricity used to keep the lights on, but you know the electricity or the emissions from electricity for your suppliers, or the carbon
emitted through moving things along the supply chain? Are your scope three missions and so measuring scope three emissions is, particularly if you have one hundred thousand suppliers like Walmart does, is impossible, right, because you can't get all that data.
You can ask your suppliers to you know, to give it to you, but it'll be incomplete, it'll be self reported, all of these kinds of things, and so what we get is a very partial picture of what the company's scope three emissions are, which is, you know, not entirely their fault because how you get all of that information, but it's extremely misleading about what their emissions actually are.
And one of the points I make in the book is everyone's scope three emissions are somebody else's scope one emissions. So if you measured everyone's direct emissions through say regulation, then you wouldn't have to have this kind of rigmarole where people are. You know, there's again a huge cottage industry of ESG officers and you know, carbon accounting firms and all these kinds of things of helping these companies implement,
you know, measure their their emissions. And I just argue that that is really not it's not getting it the fundamental question of asset ownership, right, it's just sort of window dressing in many cases.
For people again who have not maybe been in this world directly, it's hard to overstate how lucrative the you know, measuring net zero, measuring scope one, two and especially three emissions. That entire industry of measuring and reporting for consulting firms, accounting firms, ngeos, smaller companies is you know, the more complex, the better from their perspective. In a lot of ways, it's an entire sub industry that only grows as this gets more complicated.
And I should say there is you know, there has been a little bit of progress, like there's a number of countries that now have sort of anti greenwashing laws on the books that kind of help control some of the claims that companies can make. But it's you know, it's it's not really enough, and it's not really the key issue.
Something I thought was really interesting was an example you gave on that front about I think legislation in Canada that led to some very dramatic change in public performance of the oil Sands Pathways Alliance. Can you just talk about that real quick, just as an example of how what regulation can do in terms of prompting actual change in actual action from this industry group.
In I'm not I'm not, it's it's been in the last couple of years, Canada hassed to bill that basically said control what kinds of claims firms can make about their net zero work. And the Pathways Alliance is a group of basically companies that do oil extraction in the Tarsans and they are planning to be net zero, which if you think about it's a bit of an oxymoron, like it's some of the dirtiest oil in the world. How on earth do we get from that to net zero?
And so this bill was passed and basically the Pathways Alliance scrubbed their website overnight and just you know, had some nice pictures and took down all of the all of the words and all of the language because it didn't comply with or I mean, there was some criticism of the law. I can't remember what number it is.
There was some criticism that it was, you know, not sufficiently specific, and so that left the Pathways Alliance and other companies potentially open to litigation because of you know, how the law was being interpreted. But nonetheless it led to an about face by by the Pathways alliance, which yeah, I think speaks to your point of like, actually, yes, we can have regulations to you know that that will change behavior rather quickly and rather dramatically if there's the public will to do it.
So as the Conference of the Parties, the un COP thirty conference, approaches, there's certainly, as we were talking about before we started recording, there's certainly going to be an enormous amount of media coverage and fanfare and feel good pledges and things like that that emerge from the forthcoming conference. I wanted to read two sentences that you write in the book because I think they're important to keep in
mind as we head into the conference. The first thing you write is that at this point, the Paris Agreement is teetering on the brink of complete irrelevance, and the COP appears to be collapsing under its own weight. Can you just unpack those two arguments a little bit.
On the irrelevance question, Look, it gives me no joy to say any of this. I don't want this to happen, but it is happening, and so I think we need to reckon with that. So there's a few reasons. I mean, what is the Obviously, what political scientists would call output legitimacy, like institution is viewed as legitimate if it does what it says it's going to do, and it's not doing that,
it's failing by its own measure. Right, The target in Paris is to limit warming to one point five degrees c and there's already substantial evidence to suggest that we're above that. We're at one point six as the global average. So that's number one. It's not doing what it says it's going to do. It hasn't succeeded at bending the curve on emissions. Number two is like what the sort of coverage that happens every year and has for the last few years about you know, the growing influence of
both petro states and the fossil fuel industry. So you know, the last two cops were in Azerbaijohn and the UAE, and those are obviously big petro states, So there was a lot of criticism about you know, how how could you possibly have a cop in those countries, and I mean,
I'm of two minds about that. Obviously, there's some conflicts of interest, and in particular in the UAE, there was some suggestion that the president who of the of the COP, who was also in a leadership position in the in the state owned oil company ADNOC, was kind of tilting things away from consensus on the phase out of fossil fuels.
So yes, there's a conflict of interest, but this is also a multilateral institution.
You can't start introducing a litmus test for who gets to host and who gets to chair. I mean it looks like Australia's going to be chairing next year. Also a huge emitter, and arguably you you know, those countries really have to wrestle with what they're going to do next. So it's a complicated issue. But that's another reason that the COP and the UNF Triple C is really struggling with legitimacy. And I would say the third is just
the growing presence of the fossil fuel industry. I don't go to the COPS anymore because it's just an absolute circus. But you know, everybody that I know who goes, you know, says that there's tons and tons of representatives from the fossil field industry. They hold side events, they have you know,
a big physical presence there. So again, if this is the thing that we're purportedly trying to regulate and phase out, and yet you know we have you know, obviously the optimistic view would be, oh, well, you need those people at the table, but even the former Executive Secretary of the UNF Triple C, Christiana Figiettiz, said we can't have
those people at the table anymore because they are obstructing progress. Right, So you know, there's there's a lot that's not going well in the un of Triple C. It's hard, I mean, it's hard to know what to do, right because this is the place where all countries get represented and that counts for something, particularly in a world where like global cooperation is sinking by the second. But you know, on
the flip side, it's not producing any results. And so you know, we have more meetings, more more subsidiary bodies, more financial mechanisms. This year there's going to be a push for address transition mechanism. Last year it was loss in damage. So there's just kind of more and more on the agenda without actually completing the tasks that have come before them.
All right, and I will add not just the fossil fuel companies themselves, but all of their enablers as well, the pr firms and consulting firms and all the other companies who make money off them making money yes, and who can also say publicly and to their employees and their perspective employees, oh look here we are at cop We must care about the climate crisis. Hire us, come
work for us. There's kind of some second and third order money making off the appearance of doing stuff that follows from these.
Absolutely.
Yeah, I feel like we should spend a little bit of time talking about what we should do instead of managing tons, not just the problems with man tons. Can you give a bit of an overview of I hesitate to call it a solution section, because I feel like that has been so trivialized in a lot of ways, because solutions are always kind of a or have been just like performative in a lot of cases. Yours are not, though, and so I want to make sure we spend some time unpacking them.
I described the approach in the book as radical pragmatism. It's radical in that it gets to the root of the problem, which is this fundamental power asymmetry between fossil asset owners and green asset owners. But it's pragmatic in the sense that like, we need things that are actually possible and that don't require an entire remaking of the international order, because we just don't have time for that.
Climate wise, you know, solutions are hard. We're really there's a lot of grid luck, there's a lot of polarization, and so I tried, really there's a lot, but there's also a lot of doomerism, right, And so I tried really hard to think about, Okay, well, how can we chip away at this problem of the incumbency of fossil asset owners and really not just think about the energy transition, but think about the politics of creating conditions for destabilizing
the fossil fuel industry, which includes building up green asset owners as political you know, political interests of their own. And so with all of those caveats, like so basically I say, okay, well, if we're not going to think about tons, we got to think about dollars. How do
we move dollars around in the global economy? And the first Solutions chapter really looks at it looks at tax and investment policy, and so I did this deep dive into international tax law, which I cannot recommend to anyone.
Thanks for taking one for the team there exactly.
The OECD is now in the process of implementing these rules. They're called the Model Rules on base erosion and profit shifting, basically to put in place at corporate minimum tax to reduce offshoring corporations offshoring their profits to low tax jurisdictions, so to reduce tax avoidance and tax arbitrage. And this is actually surprisingly like well underway. It was the Model rules themselves. It's not a treaty, but it's like the sort of agreement that it puts together a framework that
countries can go and implement in their domestic laws. So in twenty twenty one they came to this agreement and slowly but surely countries about sixty of them now have put in place some pieces of this corporate minimum tax. And I argue that this is good for a bunch of reasons. Number one, governments need money, and they need money. And even number two, ideally they use this money for
climate stuff. Maybe they don't. Number three, even if they don't use it for climate stuff, if they are taxing wealthy fossil asset owners, they are taking power away from material power, away from those actors, which is important.
I actually thought that was a really revolutionary point. It's so straightforward, but I've certainly never come across it in the climate discourse, the fact that even if that money doesn't get used to tackle the climate crisis, it still makes them less powerful. And that is just such a fundamentally clear and straightforward argument for doing it.
And the related one is that we know that wealth inequality is a huge contributor to climate change. So again, the more you can chip away at this huge income inequality, you are contributing at least indirectly to reducing emissions.
Can you actually explain how wealth and incoming equality drives or contributes to the climate crisis.
Yeah, So, OXPAN does this report every year called the Carbon Inequality Gap, and it just shows I don't have the numbers quite in front of me, but it shows that the wealthier you are, the more you emit. And so that the top ten percent of people in the world that in terms of income are responsible for something like seventy percent of global emission, some overwhelming whelming number. Right. So, and you know we see it in like the tabloids or whatever all the time, yachts and private jets and
all these kinds of things, eating meat, flying around. All these very carbon intensive activities are enabled by wealth, and when you don't pay taxes, you get richer. It's pretty you know, pretty basic math. So I mean, the corporate minimum tax doesn't apply to individuals, although there is a separate discussion about a billionaire's tax for a very small number of people in the world. This covers corporations, but
it is a step in that direction nonetheless. So I can talk a little bit about the investment piece as well, which is also another Yeah, let's do that. So the other thing that I look at in the book is called the Investor State Dispute Settlement System, which is basically a set of investment protections for FDI for foreign direct investment.
So if you are a company and you invest in the you have a project where you're investing in a country, if that country does something that jeopardizes your investment, the company can sue basically through an arbitration system. So it's private,
private arbitrators. And what the work of others has shown is that these protections through ISDS have resulted in huge payouts to fossil fuel companies and mining companies because they build a mine or they start to, you know, prospect for oil and then countries say, hey, we're not doing offshore oil prospecting anymore, or you know, we're not doing you know, because we pass some climate regulations and then
the country, the firm can sue that country. So in the US, yes, and Canada when so you might have heard of this little thing called the Keystone pipeline when the US canceled those permits Canada, the Alberta Well, there's a couple of different suits, but basically a couple of energy firms in Canada, TC Energy included wanted to sue the US for fifteen billion dollars because it couldn't build its pipeline, saying we lost our you know, we lost
this potential revenue. And this case didn't go through because it was brought under KUZMA as opposed to NAFTA. NAFTA had these ISDS protections in the treaty, but KUZMA does not for Canada, so it can't make these claims.
So but that's an example of like TC Energy, we don't need to be subsidizing pipelines. TC Energy doesn't need any more money. And you know, in the case of the US potentially it could have paid it.
But in a lot of cases these are in developing countries where it's just huge amounts of money for governments that really can't afford to pay. The proposal here is a very basic one, which is to say, again doesn't involve a huge amount of work, is just to say countries should withdraw from or change the terms of treaties that have these ISDS protections. It can be done unilaterally, and there are some countries that have done this.
How much do you think the threat of a suit or some sort of arbitration from the ISDS process has deterred, especially maybe smaller mid sized countries from putting in place climate related regulations or laws.
So Kyla Shanhara, who has done a lot of work on this, calls this a regulatory chill that developing countries are legitimately afraid of being sued and so they don't put in place climate regulations because of this fear. So it's not just the payouts, it's the legend slation foregone for fear of you know, arbitration from these private firms. So it's a double whammy and it needs to go.
It would also, you know, if we really care about sort of accurately pricing climate risk, we wouldn't have these kind of protections, right, So building a pipeline or opening a mind becomes a much riskier endeavor when you know that you can't potentially get a payout from some country if they decide not to do this anymore.
There's a lot of stuff in the book that we didn't get to talk about. One of them is your argument what we sort of touched on it, but your argument that one of the ways to counter the power of fossil asset owners is to create a more powerful class of green asset owners to create winners. So climate policy is not seen as something that is just a loss or a punishment, but actually we have people who win. We have organizations, entrenched interests who in when these policies
go into a place. And so there's something you raised toward the end of the book that I wanted to ask you about, which is the service industry. And a lot of this discussion focuses on manufacturing for good reason, but there's as you point out, there's you know a huge portion of a lot of countries workers are working in service jobs. And how do you bring decarbonization to the industries they work in in a way that they win. And I'm just wondering how you're thinking about that.
It's a great question. And I started thinking about this when I, you know, did this, you know, started looking at sort of green industrial policy and how do we, yeah, how do countries really think systematically about decarbonization as an
economic policy? And I thought, wait a minute, Like, I mean, and I've seen it here, Like, you know, Canada is not going to become a global leader in the production of evs, right, so if they're going to green their you know, their economy, they're going to have to figure out other ways to do it. And so I looked around a lot to see, Okay, well who's thought about this, and most people said, we need to think about this. So I'm just going to sort of plant to flag
and say we need to think about this. I mean, there's been some discussion of sort of green jobs and reskilling, and I think that that's you know, a piece of it, and there are people who have looked sort of more carefully at specific sectors. But I mean, I think we also need to think about like the care economy as part of decarbonizing, you know, take that tax money and pay for teachers and nurses. These are all low carbon activities that we need desperately in a lot of OECD nations.
So I don't have a good proposal for like, how do we think about that, except to say, I mean, I think one of the sort of arguments underpinning a lot of the book is that solutions, even the sort of pragmatic ones, require a more muscular state. That is
not something that's really on the menu these days. Although things are changing so quickly with the sort of explosion or I should say implosion of the global trading regime that countries are really now trying to figure out, well, how do we retool our economies if we can't just buy and sell cheap stuff all the time?
Right?
And so that I think it provides a window for countries to think more carefully about what the service the role of the service industry is, But we haven't. I don't think we've seen a lot of it play out in politics thus far.
Is there anything in particular that you will be looking for when the COP convenes I think the second week in November. Are there signs that would tell you, you know, some of the ideas you talk about in the book might be seeing some progress or not.
Well, I mean, I think developing countries have been in particular, have been fighting very hard for language and activity around just transition. Like a lot of that is sort of code for my need to develop in countries to decarbonize. And so if there's any thinking about a just transition that involves a real mechanism for funding beyond, hey, guys, let's all contribute to this, like this is what we've seen.
At some point in the future, we promise, Yes.
At some point in the future, we promise we'll do it. But if there's a real conversation about like linking that mechanism to other actual flows of existing money, that might be a step in the right direction. But right now
I think it's a reckoning moment. Like I think, you know, I make some suggestions in the book about how we can sort of adjust our expectations downward for what the cop can and can't do, and I think that's really what we need to think about, because otherwise we're going to have this cottage industry sort of keep pushing for managing tons and legitimating this process, and you know, round and round we go.
There are a couple of points in the book where you address that cottage industry directly, which I appreciated very much, And I certainly hope that a copy of your book will end up in the hands of everyone there, which would also be great for book sales too, but I think it would be good for the climate as well.
Bad for my carbon footprint, but good for it. Yeah, so we'll see.
Thanks so much, Jessica.
Awesome thing. It was lovely to talk to you and thank you for reading my book.
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