Co-Written by David Fridley & Richard Heinberg
Ed. note: This is Chapter 8 of Richard Heinberg’s and David Fridley’s new book, Our Renewable Future, now available from Island Press. Post Carbon Institute’s companion website, ourrenewablefuture.org has also just been launched and contains additional content not in the book.
The ability to harness energy creates wealth and confers social power. With the advent of fossil fuels came a rush of wealth and power such as the world had never before seen. Naturally, humanitarians saw this as an opportunity to spread wealth and power around so as to lift all of humanity above drudgery, eliminate hunger, and even put an end to war. And to a large degree that opportunity has been seized: overall, child mortality rates are down, life expectancy is up, infectious diseases are on the decline, hunger has been reduced (even as population has dramatically grown), and mortality from violence has declined since the end of World War II.Yet globally, the wealthy industrial nations have disproportionately benefited from the fossil fuel revolution while poorer nations have largely borne the costs. A similar disparity also exists within nations, both rich and poor ones. Further, the injustice of energy wealth versus energy poverty is increasingly magnified by climate impacts, which fall disproportionately upon energy-poor societies—both because of geographical happenstance and because they do not have the same level of resources to devote toward adaptation.
Today nearly two billion people live with the perks of cheap, abundant energy—plenty of affordable food, easy mobility, advanced health care, a surfeit of entertainment options, and more. But according to the United Nations 1.3 billion people do not have access to electricity, and 2.6 billion don’t have access to clean cooking fuels and suffer a host of respiratory and cardiovascular diseases as a result. Disadvantaged communities suffer the brunt of externalities from fossil fuel production (such as the environmental impacts of coal mining and combustion) but reap few if any of the benefits. From the coal miners of Appalachia, to the Native Americans whose land and health were devastated for uranium mining, to poor people in urban neighborhoods where coal-fired power plants and refineries are often sited, the story is depressingly familiar. And it continues, in the United States (with fracking sites in low income rural communities), in China (where coal miners die by the thousands each year), in Nigeria (where oil extraction ruins the land of poor farmers on Niger Delta while generating lavish incomes for well-connected businesspeople and politicians in Lagos and huge profits for Shell and Chevron), and in dozens of other countries where fossil fuels are extracted.
One school of thought says that increased rates of energy flow through society actually create inequality. The recorded societies whose members have enjoyed the highest levels of economic equity are hunter-gatherer bands, in which individuals own little and share everything. These are also the societies with the lowest levels of energy consumption. As societies developed agriculture and then industry, full-time division of labor and the use of powered machines to generate wealth led reliably to the emergence of ruling and merchant classes, alongside large numbers of displaced landless peasants and economic refugees who were actually worse off, in many ways, than hunter-gatherers. Philosopher Ivan Illich epitomized this way of thinking in his 1974 book, Energy and Equity, wherein he wrote, “Below a threshold of per capita wattage, motors improve the conditions for social progress. Above this threshold, energy grows at the expense of equity. Further energy affluence then means decreased distribution of control over that energy.”
Figure 8.1. Per capita levels of energy use compared to levels of economic inequality in selected countries. The Gini index is a commonly used measure of inequity; its value for Egypt has not been updated since 2008, or for Kenya since 2005.
Source: World Bank, World Development Indicators.
However, even societies with very high per capita levels of energy use have varying levels of economic inequality as measured by the Gini index, which represents the income distribution within a nation (fig. 8.1). Typically, high-energy-flow societies achieve greater equity by taxing high incomes and inherited wealth, and through government redistributive programs (universal free health care, subsidized higher education, unemployment insurance, payments to retirees, and so on). Nevertheless, through trade such societies create poverty conditions elsewhere in the world (by encouraging ruinous and unnecessary indebtedness and by inducing regimes in poor nations to maintain inhumane labor conditions and inadequate environmental regulations), even though they manage to reduce and even mostly eliminate those conditions internally.
Now we arrive at a crossroads, where the wealth-generating energy sources of the past two centuries (fossil fuels) must give way to different energy sources. While the decades ahead may see declining per capita energy consumption in the wealthy industrialized world, the transition to renewable energy does not automatically herald a more egalitarian future. As everyone else adjusts to lower consumption levels, entrenched economic interests that benefited disproportionately during the fossil fuel era may seek to maintain their advantages, attempting to ensure that their slice of a diminishing pie is left untouched. It is also possible that nations, and wealthy communities within nations, will build robust, largely self-contained renewable energy systems while everyone else continues to depend upon increasingly dysfunctional and expensive electricity grids that are increasingly starved of fuel. In either case, current levels of economic inequality could persist or worsen.
Pursuing the renewable energy transition without equity in mind would likely doom the entire project. Unless the interests of people at all economic levels are taken into account and existing inequalities are reduced, the inevitable stresses accompanying this all-encompassing societal transformation could result in ever-deeper divisions both between and within nations. On the other hand, if everyone is drawn along into a visionary project that entails shared effort as well as shared gains, the result could be overwhelmingly beneficial for all of humanity. This is true not only for the renewable energy transition but also for our response to impacts of climate change that are by now unavoidable.
This chapter briefly traces some of the current economic fault lines between and within nations and surveys two of the frameworks that have been proposed to enhance equity or justice while simultaneously reducing carbon emissions and fossil fuel consumption.
Energy and Equity in the Least Industrialized Countries
Some nations (particularly in parts of sub-Saharan Africa and Central America) currently are desperately poor and need to increase their total and per capita energy consumption in order to achieve a living standard that is barely adequate. In these nations, access to food and water is problematic—not to mention housing, clothing, communication, and health care. Electricity, clean cookstoves, and refrigeration are rarely available. Often in these societies, the traditional village-based organization of society has more or less broken down as a result of war, rapid population growth, rapid urbanization, and global trade (organized under terms that tend to benefit the industrialized, wealthy nations), and there is little to replace it.
Conventional economic development aims to lift nations out of poverty by reproducing the process whereby currently wealthy nations obtained their wealth—that is, through resource extraction, manufacturing, urbanization, free market policies, debt, and trade, all based on ever-increasing consumption of fossil fuels. In this “development” process, most poor nations of the global South never seem to get (or are allowed to get) beyond the stage of resource extraction, and become trapped in an economic model in which a small elite class within the society gains control of whatever resources have trade value, thus monopolizing the country’s wealth, most of which is exported to the global North. What is actually needed for these countries, in addition to political and economic reforms, is a pathway to secure food, water, education, electricity, transportation, communication, and health care that leapfrogs fossil fuels and fuel-dependent infrastructure, while respecting common ownership of resources and traditional community-based culture where it still persists.
In these currently least industrialized nations, the solution must include intermediate or appropriate technology—a tool set originally proposed by economist E. F. Schumacher in the 1970s. These technologies are small-scale, decentralized, labor-intensive, energy-efficient, environmentally sound, and locally controlled. They include bicycle- and hand-powered water pumps (and other self-powered equipment), self-contained solar lamps and streetlights, and passive solar buildings that use local materials and respect traditional designs. To avoid expenses related to patents and licensing fees, appropriate technology can be (and often is) developed using open-source principles. For example, Open Source Ecology is developing, through open-source collaboration and experimentation, a “Global Village Construction Set”—fifty industrial machines, using modular parts that, in combination, it claims can build a small, sustainable civilization with modern comforts. As energy consumption levels decline in currently highly industrialized nations, intermediate technology may increasingly serve human needs in these countries as well.
Further, instead of dealing with food shortages in poor countries by dumping food surpluses from wealthy industrial nations (which often results in the bankrupting of indigenous farmers who cannot economically compete with free food from aid agencies), the better long-term solution is to implement land reform to reopen large tracts of privatized agricultural land to small-holding farmers, then offer free education in low-energy agroecology and permaculture, again respecting traditional practices and cultural norms (the capacity to offer free education along these lines at scale currently does not exist, nor is it clear what agency could accomplish it, though small nonprofit organizations such as Ecology Action have made a start). Proposals along these lines have been put forward for many years by Helena Norberg-Hodge and the International Society for Ecology and Culture, under the banner of “counterdevelopment.”
Energy and Equity in Rapidly Industrializing Nations
Other nations (e.g., China, India, and parts of Southeast Asia), now rapidly industrializing, are succeeding in building globally competitive manufacturing capacity with the use of cheap labor and cheap energy (typically from indigenous coal). From an international equity perspective, this might initially seem to be a path to progress, but it results in much higher global greenhouse gas emissions, as well as increased dependency on fossil fuel–reliant infrastructure. Crucially, these industrializing nations have also seen sharply rising domestic economic inequality, along with profound health and environmental costs. A recent study found that outdoor air pollution contributed to 1.2 million premature deaths in China in 2010 alone. In the context of what is needed for a successful and just energy transition, this conventional economic development pathway seems to hold little promise.
Indeed, for quickly industrializing countries, the energy transition would appear to require a profound directional shift. Typically, only two or three decades ago these nations consisted mostly of subsistence farmers. Policy makers have followed the example of the countries that were first to industrialize, with the clear goal of building a consumption-oriented middle class. They have systematically discouraged subsistence agriculture in favor of industrialized agriculture, built fossil fuel–dependent urban infrastructure, and promoted ever-expanding manufacturing for global trade using coal as a primary energy source. These nations are well on the road to achieving their goals. But since, in the process, they are generating greater income inequality as well as crippling levels of environmental pollution and unsustainable dependence on fossil fuels, those goals, as well as their methods for achieving them, require complete revision.
Pollution in China. (Smog image via shutterstock. Reproduced on Resilience.org with permission.)
One way or another, the trend toward urbanization in rapidly industrializing countries will taper and perhaps even reverse itself. Expanding cities require more capacity to transport people and goods. In a world with less liquid transport fuel, cities will need to prioritize clustered, compact, mixed-used development patterns and nonmotorized and electrified transportation infrastructure. Additionally, developing countries may do well to find ways to make life in existing smaller cities and towns and villages more rewarding and economically attractive: despite their energy efficiency, megacities like Shanghai and Mexico City have real problems with the overconcentration of pollution, traffic, and resource use (e.g., water). The flexibility of hundreds of medium-sized cities with a diversity of resources, leaders, and policies may be more suited to meeting the shifting challenges of the low-energy future. In addition, subsistence agriculture must be supported rather than economically discouraged.
At the highest level, the goal of these nations must not be to emulate the growth pathways of wealthy industrial nations of the twentieth century, because the economies of those latter nations depended upon unsustainable fossil fuel use, and the per capita energy consumption of already industrialized nations needs to be curbed to meet climate and equity objectives (and, as we have seen, probably will shrink in any case). A better goal would be to achieve a level of per capita energy consumption that is sustainable over the long term using renewable energy sources (what that level is, exactly, is presently unknown, though it is almost certainly much lower than the current per capita level of consumption in older industrialized nations), and to do so in a way that promotes economic equity. Ultimately, the per capita energy consumption of the already industrialized, and the rapidly industrializing, nations must converge on that sustainable and equitable mean.
Rapidly industrializing nations will benefit from a rapid reduction in pollution levels, which are currently resulting in millions of early deaths annually. A shift in focus from economic growth to improvement in quality of life could yield social, political, and health benefits.
To say that this will be a complicated and difficult transformation in priorities and goals is surely an understatement. To name just one quandary: currently China, the largest of the rapidly industrializing nations, is the world leader in the manufacturing of photovoltaic panels, which are produced using coal for high-temperature industrial heat and also for electricity. How will China wean itself from coal while actually increasing its production of photovoltaic panels?
Energy and Equity in Highly Industrialized Countries
For the United States, Canada, Australia, the countries of western Europe, and a few other nations, a significant transitional problem will consist of reducing per capita energy consumption equitably. Clearly, energy consumption correlates to a large extent with income and wealth; thus equity would be served by, for example, a tax on carbon-based energy consumption that primarily targets high-rate users (most of whom would be wealthy and thus capable of paying it).
However, this would by itself be insufficient. In the highly industrialized nations, more efficient ways of living are often out of the reach of lower-income people. Poorer members of industrial societies typically rent rather than own their homes, so energy-efficiency upgrades are the responsibility of landlords, many of whom are unwilling to make such investments. If they do own their homes, low-income families still may be unable to afford the costs of home insulation, double-pane windows, solar hot water heaters, air-source heat pumps, photovoltaic panels, and so forth. Government programs will be needed to help low-income homeowners make such upgrades, and government regulations requiring—and low-interest loans or other assistance to help—landlords to invest in them will also be needed.
Low-income people increasingly can’t afford to live in desirable central locations in cities, with walkable neighborhoods and good public transit. Pushed out to far-flung suburbs, what they may save in rent can be rapidly consumed by the cost of owning and maintaining a car and driving long distances to meet daily needs. Cities and suburbs will need to be redesigned so that all people have good alternatives to private car ownership, with a focus on mixed-use and clustered development. Transportation priorities will need to shift profoundly, with new road building coming to a halt and investment shifting to infrastructure for public transit, bicycling, and walking, particularly the revitalization of electrified public transit between and within communities.
Since the economic crisis of 2008–2009 there has been an upwelling of political and economic discussion about inequality within industrialized nations. Many people are aware that wages have stagnated, partly as a result of globalization and mechanization. Proposals merely to stimulate more consumption, manufacturing, and trade—the twentieth century solutions to stagnation and inequality—will not work during the renewable energy transition, at least not in the same way. The parts of the economy that will require stimulus—and that will accommodate an increase in consumption, manufacturing, and trade—are those related to renewable energy (solar panels, wind turbines, energy storage, grid upgrades) and energy efficiency (building retrofits, rail revitalization, public transit). Some other parts of the economy may need to shrink significantly as investment capital and energy are directed to these key transitional sectors. Policy will need to be crafted to make sure the burden of these shifts does not fall too heavily on workers in shrinking industries, by providing skills and training that will be relevant in the renewable future.
As globalization stalls and retreats as a result of constraints and trends outlined in chapter 4, it will be important to rebuild local economies—local manufacturing, investment, and food systems. This in itself will offer opportunities for increasing equity and justice, through the formation and promotion of local cooperative institutions (co-ops and credit unions), and through the devolution of a great deal of political organization and decision making. Localization efforts can create jobs that pay living wages and help individuals within the community develop critical skills that directly benefit themselves and their neighbors. They can build resilience in communities that face a future filled with economic and environmental challenges. And such efforts can focus on the inclusion of groups that have historically been disadvantaged.
Finally, the forms of ownership adopted for new renewable energy systems will likely go a long way toward determining the degrees of economic equity or inequity in the renewable future. Centralized ownership through for-profit corporations will tilt the playing field toward continued accumulation of wealth in fewer hands; distributed generation and ownership of generating capacity and grid-related infrastructure by communities, through cooperative, nonprofit financing and revenue-sharing models, will result in more equity. Equity and justice will not be automatic outcomes of relocalization. They will require intentional, organized effort and struggle.
Decentralized energy democracy could be a significant driver of equity. Rooftop solar (whether on single- or multifamily buildings) frees electricity consumers from monopoly utility companies charging monthly bills. The current utility system also distributes pollution unequally, with most going to the poor. Our current energy system (a centralized system dominated by fossil fuels) is inherently regressive. A decentralized grid, with decentralized ownership models, has the potential to be inherently progressive. Further, while distributed generation, distributed storage, microgrids, and community choice aggregation all serve to create a more equitable power infrastructure, they can also provide technical advantages, such as resource diversity and system resilience.
Policy Frameworks for Enhancing Justice While Cutting Carbon
The problem of reversing historic energy-related economic injustice during the renewable transition must be addressed not just within nations but also between and among nations. Two policy frameworks aim to deal with climate change and international inequality at the same time.
Greenhouse Development Rights
This framework, developed and modeled by Paul Baer and Tom Athanasiou of EcoEquity, along with Sivan Kartha and Eric Kemp-Benedict of the Stockholm Environment Institute, aims to show how the costs of rapid climate stabilization can be shared fairly among countries. Greenhouse development rights (GDRs) represent national “fair shares” in the costs of an emergency global climate mobilization, based on two factors: responsibility for contributing to climate change (see fig. 8.2) and capacity to act. Responsibility and capacity are defined relative to a “development threshold” that exempts the poorest nations from national obligations.
Figure 8.2. Selected countries’ historic per capita contribution to climate change.
Source: H. Damon Matthews et al., “National Contributions to Observed Global Warming,” Environmental Research Letters 9, no. 1 (January 15, 2014), doi:10.1088/1748-9326/9/1/014010.).
This threshold is set above the global poverty line (about $16 per person per day, in purchasing power parity terms), reflecting a level of welfare beyond the most basic needs but well below levels of consumption in the industrialized world. People with higher incomes assume a larger proportion of the costs of curbing emissions, as well as the costs of providing low-emissions pathways for development of those still living below the threshold. These obligations are taken to belong to everyone living above the development threshold, regardless of whether they live in countries that are rich or poor overall.
GDRs constitute a framework by which fair shares of emissions rights can be calculated and negotiated, and against which existing climate treaties and strategies can be evaluated and compared.
Common Wealth Trusts
This is a more general framework, pioneered by Peter Barnes of the Tomales Bay Institute, that can be applied not just to the atmosphere and climate but also to other natural resources that represent common wealth—that is, wealth belonging to everyone equally—and that therefore could and should be organized legally to be protected for all, and to benefit all equally.
Organizing common wealth so that markets respect its co-inheritors and co-beneficiaries requires the creation of legal shells, in the form of common wealth trusts that are legally accountable to future generations. These trusts would have authority to limit usage, charge for use, and pay per capita dividends. The shells are necessary to enable managers of common wealth to bargain with profit-seeking enterprises that would seek to use the resources in question. Fiduciary responsibility assures that the managers of common wealth act first and foremost on behalf of future generations.
Outwardly, the shells would be not-for-profit corporations with state charters, self-governance, and (within the United States, at least) legal personhood. Inwardly, the managers of these not-for-profit corporations would be required to protect their assets for future generations and to share current income (if any) for the common good.
The trust form of organization need not be applied to all forms of common wealth. However, at the very minimum, it could be applied to ecosystems (such as the global atmosphere and climate) that are approaching irreversible tipping points. In these cases, trusts would ratchet aggregate usage steadily downward, limiting human impact to scientifically determined levels. Prices would then be determined by the forces of demand and (now limited) supply. For sources of common wealth that are global, including the atmosphere and oceans, global negotiations would be necessary for harmonizing these limits.
Barnes recommends distributing the proceeds from the trusts to all citizens equally. In the United States, organized common wealth could, by his calculation, over time generate enough income to pay a dividend of up to $5000 per person per year.
There are precedents for this approach. Large-scale public funds (also known as sovereign wealth funds) already exist in some countries (Norway) and several American states—notably the Alaska Permanent Fund, which derives income from oil and gas extraction within the state, most of which is distributed equally to all Alaskan citizens. However, other states use revenues from such funds on social services (primarily public education). In Texas, revenues from the Texas Permanent School Fund—which owns and manages millions of acres of land in perpetuity—support public schools in every county and city both through direct transfers and bond guarantees.
This raises the question as to whether it would be more effective or even more equitable in the long run to distribute revenues from a common wealth trust as universal basic income (as suggested by Barnes) or on social or environmental spending. There is little evidence that a basic income alone will provide incentive for citizens to adopt more environmentally benign practices (it has not done so in Alaska). Moreover, for individuals at higher wealth and income distributions, a universal basic income could serve to further increase consumption, if prices of goods are relatively stable. On the other hand, if the cost of goods increases due to increasing energy costs, a guaranteed income could serve to ensure that those increased costs would be at least partially compensated for. In this case dollar spending would increase, though not necessarily material consumption. Accordingly, using at least some revenues from common wealth trusts for other public and environmental purposes may prove to be more effective at increasing environmental sustainability and reducing social inequality, at least in the short term.
An example more relevant to this report is California’s cap-and-trade program, which collects dividends on auctioned allowances to emit greenhouse gases. The California emissions cap declines each year so that about 3 percent fewer allowances are allocated per annum, ensuring that these allowances will become more valuable as time passes. This approach incentivizes large emitters to invest in emission reductions sooner rather than later. For 2015, annual revenue from the auctions is expected to exceed $2.5 billion. Funds generated are dedicated into two broad categories: 25 percent goes to ameliorate impacts on low-income groups affected by the policy or by climate change, the remainder is directed to statewide capital investments in renewable energy, conservation, public transportation, and research to transition California away from climate-destabilizing economic activity. Early evidence suggests that the program is succeeding in encouraging low-carbon infrastructure investments, both from the market response to the rising cost of emission allowances and from state investments in low-carbon infrastructure. However, cap-and-trade programs have been critiqued by economic justice advocates who say that pollution already disproportionately affects low-income communities and communities of color, and creating a carbon-trading system only exacerbates those trends.
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Clearly there are potential roadblocks to these frameworks, and to other ideas and proposals in this chapter. Rich countries, and wealthy individuals and legal entities within countries, are unlikely to be willing to part with their economic advantages, especially during a time when they’ll be experiencing an economic pinch anyway as a result of the withdrawal of fossil fuels from global manufacturing and transport systems. Only social action through organized movements could force them to do so.
In any case, the equity and justice questions won’t go away. From the perspective of global elites, something must be done to level the playing field and take everyone’s interests into account (whether through an overarching global framework or through piecemeal national and regional efforts), or those who feel excluded will disrupt efforts toward an orderly energy transition. From the perspective of those with far lower levels of power and wealth, there is no reason to support efforts to reduce fossil fuel consumption if those efforts only preserve or exacerbate economic inequality. To succeed, climate and energy policies need to be grounded in a universally shared and ethically based agreement that all human beings, regardless of income, gender, or ethnicity, have both the right to a safe and stable environment, and the responsibility to act in such a way as to sustain and protect it.
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Richard Heinberg is the author of thirteen books including:
– Our Renewable Future: Laying the Path for One Hundred Percent Clean Energy, co-authored with David Fridley (2016)
– Afterburn (2015)
– Snake Oil (July 2013)
– The End of Growth (August 2011)
– The Post Carbon Reader (2010) (editor)
– Blackout: Coal, Climate, and the Last Energy Crisis (2009)
– Peak Everything: Waking Up to the Century of Declines (2007)
– The Oil Depletion Protocol: A Plan to Avert Oil Wars, Terrorism & Economic Collapse (2006)
– Powerdown: Options & Actions for a Post-Carbon World (2004)
– The Party’s Over: Oil, War & the Fate of Industrial Societies (2003)
He is Senior Fellow of the Post Carbon Institute and is regarded as one of the world’s foremost advocates for a shift away from our current reliance on fossil fuels.
David Fridley: Since 1995, David Fridley has been a staff scientist at the Energy Analysis Program at the Lawrence Berkeley National Laboratory in California. He is also deputy group leader of Lawrence Berkeley’s China Energy Group, which collaborates with China on end-user energy efficiency, government energy management programs, and energy policy research. Mr. Fridley has nearly 30 years of experience working and living in China in the energy sector, and is a fluent Mandarin speaker. He spent 12 years working in the petroleum industry both as a consultant on downstream oil markets in the Asia-Pacific region and as business development manager for Caltex China. He has written and spoken extensively on the energy and ecological limits of biofuels. David is a Fellow of the Post Carbon Institute.
Originally published by Our Renewable Future |