Open letter on fossil fuel divestment to Chair of GM Pension Fund

FossilFree120Steady State Manchester is part of Fossil Free Greater Manchester (FFGM), a coalition of organisations and individuals campaigning for the Greater Manchester Pension Fund (GMPF) to take its money out of fossil fuels.  This is part of an international campaign for divestment, thereby building up pressure on governments and business to leave the vast majority of fossil fuels in the ground – our diminishing chance of averting runaway climate change.

An Open Letter to Councillor Kieran Quinn, chair of GMPF, picks up on radio interviews on Tameside radio with him and one of FFGM’s members, Jenny Ross.  Councillor Quinn contests that GMPF lost £148M on the stocks of four coal mining companies alone, in the 18 months from April 2014.  He also argues that engagement with fossil fuel companies is a superior approach to divestment.  The open letter makes three requests with regard to these claims:

  1.  With regard to the claim on losses:

    “To allow us to check our calculations could you please provide the holdings data on fossil fuel companies that have coal assets for the last 18 months from April 2014 (and ideally to the end of March 2016). This will enable us to quantify the actual loss that occurred as a result of falling share values of your major fossil fuel stocks”

    And with regard to the strategy of engagement:

  2. “Could you set out the specific goals of your engagement strategy? We are somewhat sceptical, we must admit, because fossil fuel companies are just that, fossil fuel companies, with an interest in the exploitation of fossil fuel reserves rather than the promotion of alternative forms of energy. What is it you hope to achieve by engagement?
  3. “Could you say what the successes of your engagement strategy have been so far? Is it possible to quantify them in terms of saved emissions or investments in alternative energy? Or is success limited, as we suspect, to adoption of resolutions to improve risk management in relation to unburnable reserves and stranded assets?”

FFGM awaits his response with interest.


Here is the full letter:

Fossil Free Greater Manchester

c/o Manchester Friends of the Earth
Green Fish Resource Centre
46-50 Oldham Street
Manchester
M4 1LE

Friday, 13 May, 2016

Councillor Kieran Quinn,
Chair, Greater Manchester Pension Fund,
Guardsman Tony Downes House
5 Manchester Road
Droylsden
M43 6SF

Dear Councillor Quinn,

Further to your comments in response to the Tameside Radio interview with one of our members (also covered in the Tameside Reporter), we would like to thank you for your engagement with the issues raised. In particular we were pleased to hear you acknowledge our effectiveness in raising public awareness of climate change and greenhouse gas emissions from fossil fuels.

Given your recent comments we would like to ask for responses to the following questions:

  1. You disputed our suggestion that the Greater Manchester Pension Fund (GMPF) recently lost approximately £148 Million in the value of its coal stocks. This figure was based on the publicly available information on GMPF’s holdings, together with published data on share price movements. The calculations were done by the think tank Platform and only cover the losses in value of four coal mining companies in the last 18 months from April 2014 (Anglo American, BHP Billiton, Glencore and Rio Tinto). Considering the Fund may have assets in coal companies other than the four listed we speculate the losses may be even greater. Platform’s study (also covered by Damian Carrington in the Guardian of 12 October) is at this link: http://platformlondon.org/p-pressreleases/uk-local-council-pensions-lose-683-million-with-coal-crash/. (See appendix.) However, we acknowledge that this analysis may have missed some changes in holdings (information on which is not available in real time). To allow us to check our calculations could you please provide the holdings data on fossil fuel companies that have coal assets for the last 18 months from April 2014 (and ideally to the end of March 2016). This will enable us to quantify the actual loss that occurred as a result of falling share values of your major fossil fuel stocks.

  1. In your interview you agreed with us on the need to leave fossil fuels in the ground as part of a major transformation in global energy systems to renewables. However, you disagreed with us that divestment is an effective way of pursuing that goal, instead arguing for engagement as a shareholder with fossil fuel companies. Could you set out the specific goals of your engagement strategy? We are somewhat sceptical, we must admit, because fossil fuel companies are just that, fossil fuel companies, with an interest in the exploitation of fossil fuel reserves rather than the promotion of alternative forms of energy. What is it you hope to achieve by engagement?

  1. In the light of the above, could you say what the successes of your engagement strategy have been so far? Is it possible to quantify them in terms of saved emissions or investments in alternative energy? Or is success limited, as we suspect, to adoption of resolutions to improve risk management in relation to unburnable reserves and stranded assets?

While we are critics of the amount of fossil fuel holdings the Fund has and of the failure to embrace a managed programme of divestment, we would like to recognise and commend the GMPF’s good practices. Specifically, the Fund’s decision to divest from the tobacco industry, the recent investment in offshore wind and the change to the Fund’s Statement of Investment Principles which now acknowledges the relevance of ethical factors in investment decisions. The threat that tobacco poses to public health is indisputable; scientists have determined that fossil fuels pose the same indisputable threat to public health and the global economy. We, and the 4000 people who have added their voice to our petition, believe that there is no ethical, financial or scientific reason to retain investments in the fossil fuel industry.

In light of this it is encouraging to see the Fund’s recent investments in renewables. Paired with a strategy of phased removal of investments from oil, gas and coal companies, this would provide the basis for a rebalanced investment approach in keeping with the threat of runaway climate change.

Globally, institutions worth $3.4 trillion had, by December last year, already committed to some form of fossil fuel divestment (see http://350.org/cop21-divestment/). Therefore, if the GMPF decided to divest from fossil fuels, they would join a growing number of leading health, charitable and financial institutions.

We look forward to hearing your responses.

Yours Sincerely,

Dr Ali Abbas and Dr Mark Burton

for Fossil Free Greater Manchester

Appendix

Calculations (from Platform) of losses over 18 months from April 2014.

calculation on GMPF coal losses

Source:

http://platformlondon.org/p-pressreleases/uk-local-council-pensions-lose-683-million-with-coal-crash/

 

Posted in Climate Change, energy, investments and finance, news | Tagged , , , | Leave a comment

Universal Basic Income (or Citizen’s Income) – a digest of issues

Universal basic income (UBI) is an unconditional, income paid to every individual as a right of citizenship.

Steady State Manchester is increasingly interested in the relationship between work and income as the number of relatively secure, decently paid jobs reduces and precarious employment increases. We and others are interested in the potential of UBI. We are attracted by the possibility that UBI could amongst other things broaden the concept of work and provide everyone with a basic income , as part of a viable economy. We are making links with local academics, politicians and others and planning a seminar later this year to explore the possibilities of widening conversations about universal basic income and promoting a pilot in Greater Manchester. Please let us know if you would like to know more about this area of our work.

Steady State Manchester member, Carolyn Kagan has pulled together literature and information about UBI and provides an introduction to what UBI could achieve and some of the things to be thinking about.
Also available as a pdf file.

There is increasing interest in the idea of a universal basic income (UBI).

The Citizen’s Income Trust campaigns for an unconditional, non-withdrawable income paid to every individual as a right of citizenship, and is a great source of information and discussion about universal basic income http://citizensincome.org/.

There was a campaign in 2014 across the EU for the introduction of a BI via a European Citizen’s Initiative. The campaign did not reach the million signatures needed (it got 285,000), but is continuing to mobilise support to put pressure on both the European Commission and other EU authorities to act on implementing studies and pilot projects for an unconditional basic income in Europe.
www.avaaz.org/en/petition/our_chance_to_end_poverty/

In 2015 the Royal Society of Arts (RSA) proposed a model of a universal basic income, arguing that not only would this simplify the benefits system, it would also release latent creativity https://www.thersa.org/action-and-research/rsa-projects/public-services-and-communities-folder/basic-income/. The RSA proposes a basic income experiment in a city or Region of the UK, which might chime with our Viable Economy vision.

There have been pilot programmes in India, and these have been fully documented with lots of lessons for implementation elsewhere http://unicef.in/Uploads/Publications/Resources/pub_doc84.pdf.

The Basic Income Earth Network showcases, through their newsletter, progress in other places, including actual or proposed schemes in Finland, Switzerland, Brazil, Iran, Alaska, Canada http://www.basicincome.org/about-bien/.

The Cherokee Tribe has introduced a basic income for members, funded from the proceeds of a casino http://www.demos.org/blog/1/19/14/cherokee-tribes-basic-income-success-story. In Europe some Dutch cities are proposing to introduce a pilot UBI to small numbers of benefit recipients (thus not following the principle of universality of the BI), but removing the conditionality pervading our own welfare system, so a start.

The Green Party has adopted UBI as policy https://policy.greenparty.org.uk/assets/files/Policy%20files/Basic%20Income%20Consultation%20Paper.pdf and John McDonnell is considering it. http://www.independent.co.uk/news/business/news/universal-basic-income-policy-under-consideration-by-uk-labour-party-shadow-chancellor-john-a6878856.html

Greek former finance minister and noted economist, Yannis Varoufakis , considers UBI a vital move towards social democracy. http://www.basicincome.org/news/2016/04/basic-income-essential-approach-varoufakis/

There is even an academic journal devoted to Basic Income Studies http://www.degruyter.com/view/j/bis.

BIEN (Basic Income Earth Network) http://www.basicincome.org says:

Common to all (UBI supporters) is the belief that some sort of economic right based upon citizenship – rather than upon one’s relationship to the production process or one’s family status – is called for as part of the just solution to social problems in advanced societies. Basic Income, conceived as a universal and unconditional, if modest, continuous stream of income granted throughout life to all members of a political community is just the simplest and most striking element in an expanding set of social policy proposals inspired by this belief and currently debated, if not already implemented.

What reasons are there for supporting a UBI as a move towards a Viable Economy?

Clearly the current system of welfare support and employment is not working. It is part of the unviable economy.

Jobs giving paid work are shrinking and becoming ever more automated, reducing available jobs even more.

Yet it is paid work that has a high social value. This means that those not in work, either through unemployment, caring or sickness are devalued, even stigmatised.

Those is paid work are often working long hours with high levels of stress, leaving less time for family, friends and for community activities.

There has been in increase in precarious work – with people taking several causal, uncertain, low paid jobs and with little social security as they move between different periods of work. http://www.guystanding.com/files/documents/Precariat_and_Class_Struggle_final_English.pdf .

Income inequality and poverty is increasing and in 2016 more than a million people are living in destitution in the UK. https://www.jrf.org.uk/report/destitution-uk

What would moving to a Universal Basic Income achieve?

Malcolm Torry (2015) gives 101 reasons for supporting UBI http://policypress.co.uk/101-reasons-for-a-citizens-income, covering the economy, a changing society, politics, administration and ideas. Here are just some of the central reasons it would give a basic level of financial security for those not in, or unable to find, paid employment, enabling everyone to have a satisfactory level of income.

  • It would be paid to everyone, all citizens. Therefore there would no longer be a distinction between those receiving financial support and those not: a reduced stigmatisation of people in financial insecurity and increased recognition for activities other than (well) paid employment.

  • It would mean that people in menial, tedious and unsatisfying jobs would not need to work in them for such long hours – people would have a higher degree of autonomy in their lives than they do at the moment. UBI could even kill of low paid menial jobs. http://www.theguardian.com/commentisfree/2015/feb/01/paying-everyone-a-basic-incomewould-kill-off-low-paid-menial-jobs.

  • Provided that the basic income is genuinely adequate, nobody is exploited, however low the pay. For the job is freely chosen in preference to an acceptable alternative of not having a job1.

  • It might mean that people could choose to work fewer hours in paid employment altogether, creating room for more time to be spent with family, on hobbies and pleasurable activities or in community activities. It would enable non-market activities to flourish that, while not materially productive, nonetheless make life meaningful and have important functions for the wellbeing of people and communities.

  • The work that people do at the moment that is not paid, and is predominantly carried out by women (caring, bringing up children, community activism) would be recognised more and be more socially valued. There would be a paradigm shift in what (paid) work means.

  • Those jobs that are unpleasant and that nobody wants to do would become higher paid.

  • Means tested benefits and complicated eligibility assessments for welfare payments would be abolished.

  • The security offered by UBI would facilitate creativity and flexibility.

Are there any challenges to the introduction of UBI?

Consumption

We do not know how UBI would work out in the advanced capitalist societies. It is possible that UBI would serve to maintain current levels of consumption – even increase them. Would the provision of UBI actually prevent progress being made on the argument for a decrease in consumption and the increased durability of goods?

Use of Time

We do not know what people in advanced capitalist societies would do with an increase in non-paid work time. We know at the moment that there are gender differences in leisure activities, https://www.oecd.org/gender/data/balancingpaidworkunpaidworkandleisure.htm with men spending more time on sport and TV and women on household tasks. National surveys indicate a lot of free time is spent in the home, watching television, listening to the radio. In 2010 the average amount of time spent watching television was 4 hr 2 min per day; and listening to the radio 2 hr 53 mins. http://webarchive.nationalarchives.gov.uk/20160105160709/http://www.ons.gov.uk/ons/dcp171766_258996.pdf

Would people be more creative, more sociable and active in their communities with a UBI? – we do not know. There is some suggestion that at the moment a small group of relatively highly educated people from more prosperous areas constitute the core of active citizenship (charitable giving, community participation, volunteer hours). http://www.birmingham.ac.uk/generic/tsrc/documents/tsrc/working-papers/working-paper- 62.pdf

If this is the case, then it is likely that considerable support would be needed for people to use non-work time positively in the service of conviviality and more resilient, participative, sustainable and flourishing communities, and in the development of craft and useful skills. However, we do know that given the opportunity we all learn together and from each other, so this bodes well for the continued development of socially useful skills and knowledge.

Identity

We do not know how long it will take for social values to change, away from the prime value of paid employment towards valuing other activities. There is some suggestion that it is necessary for values to change before UBI can be successfully mplemented. http://www.degruyter.com/view/j/bis.2013.8.issue-2/bis-2013-0025/bis-2013-0025.xml . A good first step towards this might be for those in well paid, full time (and long hour) jobs should reduce their hours voluntarily and publicly, in order to undertake caring or community activities. The idea is that this would begin to shift social norms and values away form paid employment towards these other activities.

At the moment paid work gives people a strong sense of personal and social identity. Obviously this is problematic for those out of paid employment and threats to identity underpin a lot of the lack of sense of purpose and ill health accompanying unemployment. http://www.cambridge.org/gb/academic/subjects/sociology/sociology-generalinterest/phenomenology-working-class-experience . From paid work, employees can get a sense of esteem and self worth, as well as of achievement. Work gives them social recognition. If people are to work less, then attention will need to be paid to other sources of esteem, achievement and recognition. And this will require a shift is social values.

We do not know how long it will take for social norms to change and the way people think about themselves in relation to others.

Sharing the caring

We do not know if UBI would share care out more fairly between women and men. At the moment women undertake most unpaid and paid caring. It is possible that there would be an increase in men’s caring within the household with a reduction of paid work time, but we do not know. Experience from the Scandinavian countries with good take up of paternity leave, is that participating in caring continues after the leave. However, in the UK we have a problem. At the moment few men take or are expected to take up paternity leave, even though the provision is there. Only 2%-8% are expected to take it up. http://www.theguardian.com/commentisfree/2016/mar/23/flexibility-at-work-isnt-just-aboutwomen-men-want-more-from-family-life-too

We should not expect UBI to change the balance of caring, but it should raise the esteem and reduce the stigma of caring, and perhaps lead to more highly paid jobs. http://dx.doi.org/10.1332/030557311X546299.

Education

UBI has implications for the kinds and amounts of paid work people do. The current emphasis on education is schools as preparation for paid work and jobs would need to change, in favour of education for varied and fulfilling roles. Away from the current emphasis on ‘ensuring a workforce able to compete in a global market’ to one where people ‘play full roles in developing sustainable local economies’. https://steadystatemanchester.net/2015/11/18/how-can-education-help-to-shape-a-steadystate-culture-a-discussion-paper

It will need to take place in community spaces beyond the school room, and emphasise relationship building and maintenance skills and cooperation. Education and learning beyond school will need to enable sharing of knowledge and skills through underpinning mutuality, shared ownership, collaboration, humility, creativity, experimentation, learning from failure, discovery, motivation and imagination. For some of the challenges and possibilities, see https://steadystatemanchester.net/2015/11/18/how-can-education-help-to-shape-a-steadystate-culture-a-discussion-paper

Disability, additional care and housing.

Some approaches to UBI suggest that there would need to be additional supplements to take account of the needs and additional costs associated with supporting disabled people as well as those who need higher levels of care. Similar challenges for implementation of UBI arise in relation to housing, the crisis in which UBI is unlikely to solve http://blog.shelter.org.uk/2016/04/what-could-a-citizens-income-do-for-the-housing-crisis

It could be that separate systems of housing, ability or care costs would be needed. Alternatively, the level of the UBI could be set at a rate high enough to meet the needs of every household. Even those who advocate a high level of UBI recognise the need for some supplementary system. And then would we be moving back to the current system of complexity and stigma?

Workplaces

One of the advantages hailed for UBI is the promise of shorter working hours and greater flexibility and autonomy for workers. We do not know how workplaces will adapt. Currently, although there is a right to request flexible working in the UK at the moment, employers can offer a business case in support of refusing requests. Depending on the eligibility criteria for UBI, there may well be a reserve of labour ineligible for UBI who might be willing and available to continue to work in low paid, long hours and menial jobs, thereby weakening the case for changes in the workplace. We do not know.

Is there support for the idea of UBI?

There have been some attempts to examine what the general public think of the idea of UBI. Sheffield Equality Group undertook some research showing people were generally in favour of the idea, but were concerned about who would be eligible to receive it. 95% respondents said they would take a job with good working conditions in addition to receiving the UBI and nearly half said they would take an additional job with poor working conditions. Nearly half thought other people might not take on additional work. https://sheffieldequality.wordpress.com/next-steps/basic-income-survey/

Another study compared the attitudes of people in Finland with those in Sweden towards UBI. Generally the Finns were more in favour and this was attributed in part to differences in the social conditions in which they lived, with unemployment being higher in Finland. http://www.basicincome.org/bien/pdf/2002AnderssonKangas.pdf . Younger people were more in favour than older people. Attitudes that support UBI in Germany are linked to the kinds of beliefs people hold towards social justice, social solidarity and acceptance of current systems of welfare combined with stigmatising (or not) attitudes towards welfare recipients. http://www.basicincome.org/bien/pdf/2002Carsten.pdf. Similarly, in a study looking at public attitudes towards UBI in Switzerland, http://ecpr.eu/Filestore/PaperProposal/0779bbad-57e4-4cbd-8050-215112a0a730.pdf, again, it was found that pre-existing values in favour of social justice or individualism determined support or antagonism for UBI. In Switzerland, though, popular support for UBI has precipitated a referendum in June 2016, despite opposition by both houses of parliament. http://www.basicincome.org/news/2016/01/switzerland-only-2-of-people-would-stop-workingif-they-had-a-basic-income

What level of UBI should there be?

Opinions differ on this. The Green Party suggest £80 pw (£4,160 p.a.) for adults between 18 and retirement age). Other suggestions are that it should be the dole plus housing benefit (approximately £8,000). Or it could be the basic tax allowance (£11,000).

Opinions differ, too as to whether it should be enough to provide an income – for example there are suggestions that the UK could afford approximately £20,000 in UBI. http://classonline.org.uk/docs/2013_Policy_Paper_Richard_Murphy__Howard_Reed_%28Social_State_-_Idleness.pdf . Alternative views suggest UBI should be just enough to prevent hunger, ill health and destitution. The differences in opinion largely revolve around whether UBI should be seen as a right or a choose to engage in paid work or not; or whether it is should be seen as a social protection against poverty.

There have been lots of attempts to clarify where the money might come from to pay for UBI, linked closely to the identification of the level to be set. The RSA and the Citizens Income Trust have both discussed this in depth http://citizensincome.org/ and https://www.thersa.org/action-and-research/rsa-projects/public-services-and-communities-folder/basic-income/. Equally there are debates about what kind of reciprocity should be required – is it enough to qualify as a citizen (and all the complexities behind this simple statement), or should some kind of community payback be expected? More work on people’s views about this would be needed in order to refine any proposals.

Who will be eligible for UBI?

Everyone over the age of 18? Some proposals have a rate for children too. A basic principle of UBI is that it is not means tested. Clearly debates about eligibility are linked to definitions of citizenship, and are linked to the issue of reciprocity above.

Why give to those who don’t need it?

Universal state support already exists. Even people in well paid jobs get an allowance from the state at the moment in terms of their Personal Tax allowance. UBI would probably encompass this. Equally, the state retirement pension and child benefit is paid to everyone, regardless of assets, giving a precedent for universal income protection. Other forms of universality at the moment include education (no conditions attached, that some do not take it up and prefer to pay for an alternative education does not undermine the basic principle) and to a lesser extent the National Health Service.

Will People work Less?

Most approaches to UBI assume that people would continue to undertake paid work to top up their income, although the extent to which they do this is probably linked to the level of UBI set. However, they would not be forced to work, and they could choose to reduce their hours in low paid and unpleasant jobs (or indeed, any jobs). Pilot programmes have shown that people do continue to work. In A pilot in India, levels of paid work went up http://unicef.in/Uploads/Publications/Resources/pub_doc84.pdf. In a pilot in Canada, the only people to reduce their paid working hours were young mothers, teenagers still in education and those due to retire soon http://www.newstatesman.com/politics/2014/08/citizens-income-71-week-person-would-make-britain-fairer .

A recent poll of people in Switzerland showed that only a tiny minority said they would stop working if UBI were to be introduced http://www.basicincome.org/news/2016/01/switzerlandonly-2-of-people-would-stop-working-if-they-had-a-basic-income .

What it would mean though is that the time spent on paid employment and on other activities would change, enabling a better work-life balance. This is no bad thing with shrinking employment: UBI may lead to a sharing of paid work more equitably.

Some interesting bits of history

Apparently Thomas More raised the idea in his 1516 work, Utopia. The English revolutionary Thomas Paine proposed something similar to UBI in 1797. And the German psychoanalyst and Frankfurt School theorist Erich Fromm advocated ‘a universal subsistence guarantee’ in his famous 1955 book The Sane Society. In 1966, he considered the issue in more depth in an essay entitled The Psychological Aspects of the Guaranteed Income http://newcompass.net/articles/should-left-support-basic-income .

In Britain the first costed proposal was put forward by Juliet Rhys Williams in 1942, as an alternative to the Beveridge Plan, which she said would damage work incentives and lead eventually to direction of labour . In 1972 it re-emerged under the Heath government as Tax Credits. And during the 1970s it was the subject of two investigations (this time as Social Dividend) by Nobel prize-winning economist James Meade. Since then it has been considerably refined. In 1982 the then Liberal Party submitted recommendations for a Tax-Credit system with individual assessment units, and the late Sir Brandon Rhys Williams MP (son of Juliet Rhys Williams) submitted proposals for a modified Basic Income or Basic Income Guarantee to a Sub Committee of the House of Commons Treasury and Civil Service Select Committee. In 1981 the Basic Income Research Group (BIRG) was formed under the auspices of the National Council for Voluntary Organisations, to research all aspects of reform along Basic Income lines, and in 1986, at the first ever international conference on Basic Income, delegates from fourteen European countries set up a Basic Income European Network – now known as the Basic Income Earth Network – BIEN. http://citizensincome.org/wp-content/uploads/2016/03/Basic-Income-and-the-Labour-Market.pdf

Endpoints

So there is a lot to think about! Before we can even think of putting UBI into place, I think a lot of work needs to be done in relation to how acceptable UBI would be. The very concept challenges several social norms and any successful introduction of UBO would depend on these norms changing. The kinds of norms I have in mind include: paid employment should be the main source of income for people of working age; paid employment (although it would have to be paid) is the means whereby we are able to structure time, make social contacts, gain a sense of collective purpose, gain a sense of social identity or status, have regular activity; caring and community activities are less important than paid employment; people should not be given state handouts for nothing but should earn them; we should allocate state benefits to those most in need – and there may well be many more. Support for UBI and debates about the practicalities amongst policy makers, think tanks and social commentators is growing. I haven’t come across much that sets UBI discussions alongside alternatives that might achieve some of the same viable economy goals. Could, for instance, a straightforward , widespread reduction in working hours deal with the restructuring of time in favour of more creative and convivial activities? Could a guaranteed job for all deal with the stigmatisation of those currently out of paid employment and ensure all achieve a level of social status. As well as ensure everyone has an acceptable level of income? Could paying caring and menial jobs a lot more deal with the lack of social value placed on this work at present? Or should some of these alternatives be considered alongside UBI? Even more to think about and widely discuss!

Carolyn Kagan
2016

Note
1 Barry, B. (1997), ‘The Attractions of Basic Income’, in J. Franklin (ed), Equality, London: Institute for Public Policy Research, pp 157-71.

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Building a picture of well-being in a viable economy

 

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Our next cafe conversation will be on Monday 23rd May, at Cross Street Chapel, Manchester M2 1NL.  

6.30-8.30pm

Book now

 

When it comes to happiness, social progress or well-being indexes, we are not in the top half dozen countries. However we are in the top half dozen richest countries in the world and continue growing the economy. Could we do better in a viable economy?

What can we learn from the majority world? For example, in many parts of Africa, Ubuntu underpins thinking, an underlying collective philosophy that  ‘I am because we are’. What can we learn from Latin American Buen Vivir, a culture of life which strives for solidarity and harmony between humans and nature.

Resources on our website make excellent background reading and watching including this recent short paper by Kothari, Demaria and Acosta on buen vivir, ubuntu and ecological swaraj:

See you there! Book now!

April’s cafe conversation voted overwhelmingly to remain in the EU and to campaign for the lesser of two ills

Are you finding it hard to get excited by the EU Referendum? You are not alone.

The campaign lacks many features that made the Scottish Referendum exciting and involved so many people (turnout 87%). In the EU Referendum there is little vision and hope on either side. With big imperfections within the EU and going it alone, it would be nice to think the impact might be irrelevant.  But can we ignore growing nationalism here and elsewhere and threats to the environmental and human rights which do get some attention from the EU?  Is it important to get out and argue for the lesser of two ills?

Nearly everyone at our cafe conversation on 19th April will vote to remain in. However, reasons given to stay included:

  • The EU is better for social justice, climate change, environment; it does more to regulate big business and hence helps to protect the population and the planet
  • Supranational challenges such as climate change require the EU
  • The economy is more likely to grow if we are in the EU (and we see this as a problem on a finite planet but that does not mean that exit would lead to a viable economy
  • We discussed how we can influence and encourage discussion and thought.                                                                                                                                                                                                                                                                                                                                                           We could:
  • Talk to people wherever we can e.g. letters to the Press, events, 1:1, social media.
  • Focus on understanding issues that concern people. Ask them what their vision is and examine specifics
  • Share how you see the positive impact of EU membership e.g. on labour laws and the environment
  • Use good practice examples from Europe to solve the UK’s problems e.g. housing, planning, transport, energy
  • Pick up on the terms of the debate to offer a critique e.g. GDP, growth, productivity, competition
  • Keep contextualising the issues e.g. migration – fundamental causes (oil, war, climate, arms trade) See the Viable Economy pps 28-30
  • Stress that remaining in may be more protective long term

Useful resources

We shared helpful resources; can you add anything to the list?

UNITE briefing on labour laws:  http://www.unitetheunion.org/campaigning/eu-referendum—23-june-2016/

RSPB briefing/ questions on environment 0 http://www.rspb.org.uk/news/details.aspx?id=415956

Friends of the Earth EU Referendum page: http://www.foe.co.uk/page/eu-referendum

Another Europe is Possible: http://www.anothereurope.org/

Democracy in Europe (Diem25): http://diem25.org/

Environmentalists for Europe:http://environmentalistsforeurope.org/

Environmentalists for Europe:http://environmentalistsforeurope.org/

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What’s most important for Greater Manchester

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We went to Chorlton and Whalley Range Green Festival on Saturday and ran an activity to help people engage with us.  We took some of the ideas that underpin “official” thinking on devolution and economic development in the city region and added in some alternative ideas that underpin our own thinking.  People had 5 votes which they could distribute among them.  Here are the results of this small and unscientific survey.

Social solidaritybeing together, caring for and supporting each other and working collectively for good.

22

Equalities & Social justicebuilding a fairer society with much smaller differences in wealth, income and well-being.

28

Economic Growthmaking the economy bigger

1

Infrastructureinvestment in roads, railways (e.g. HS2 and 3), airports, telecoms.

5

Jobsmore and better jobs

9

Welfare reformspending less on benefits and helping people into work.

4

Resiliencemaking our economy and society better equipped to withstand shocks from climate change, economic turbulence and geopolitical events such as wars.

11

Carbon reductionrapidly reducing our greenhouse gas emissions to zero to try & prevent climate change getting much worse.

26

Competitionpositioning Greater Manchester to compete for trade and investment in a global economy.

1

Sustainable financereducing debt while ensuring that our money funds things that society and the environment really need and avoiding bubbles, boom and bust.

17

Democratic accountabilityensuring our leaders reflect our interests and views and account for what they are doing through a variety of channels including public meetings.

13

Locally sourced foodmore of it produced and processed locally by people, co-ops, SME’s.

19

Scientific or not, the results are of some interest since they indicate that for this audience (not all of whom were stereotypical environmentalists) at least, a society that protects its environment while increasing levels of social solidarity and economic and social resilience matter more than the conventional notions of economic growth and jockeying for position in an international competition.

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New evidence on decoupling carbon emissions from GDP growth: what does it mean?

New evidence suggests absolute decoupling in some economies, but is it enough and will it last?

PDF version

Background

Does economic growth inevitably lead to more emissions of pollutants, and specifically of greenhouse gases? In previous posts I’ve shown that to date, claims that economic (GDP) growth is decoupling from greenhouse gas emissions (measured in CO2ei) do not stand up. The claims either failed to cite sources, were only based on energy-related or on territorial (rather than consumption) emissionsii, or only demonstrated relative decoupling (reduction of rate of emissions growth) rather than absolute decoupling (an actual reduction in emissions while the economy increased in size).

New evidence

Now, however, new research has been published that does seem to provide evidence for absolute decoupling, in some national economies, even when outsourced emissions are included (i.e. using consumption or total emissions rather than territorial emissions).

In this post, I will review the strength of that evidence, and consider what it means in relation to a) the thesis that emissions can be decoupled from economic growth, b) that this will be sufficient to the climate change challenge facing humanity.

The evidence

The most recent research has already been covered widely in the press. The New York Times for example carried an article with the headline, Signs Are Promising That Economies Can Rise as Carbon Emissions Decline. This article by Coral Davenport gives a helpful resumé of the work done by Nathaniel Aden at the World Resources Institute (also covered in a Guardian article by Fred Pearce that is worth a read). This study examined the relationships between GDP and CO2 emissions for each country. It found that in 21 countries, territorial emissions have decoupled from GDP growth, looking at the period 2000 to 2014. My first reaction was that this yet again concerned territorial emissions, so I looked at the corresponding consumption emissions. In fact, Sophie Yeo and Simon Evans of the UK-based Carbon Brief did the same thing. First they extended the data set to include all countries, not just the 65 in the BP database used by Aden in the WRI study. They used the Global Carbon Project data. This yielded a total of 35 countries where territorial emissions reduced while GDP grew. Then they looked at the consumption emissions. It is worth quoting their finding on this latter critical point:

Only 21 countries decoupled their economic growth from consumption-based CO2 emissions, between 2000 and 2013. This suggests some countries were only able to decouple by “offshoring” some of their emissions to other countries.

However, major economies including the UK, US, France and Germany still decoupled, even after accounting for the CO2 contained in imported goods.

I have used the same data to produce the following graphs that show the relationship between the territorial and consumption emissions for the 28 countries in the original group of 35 for which there is consumption emissions data available, plus Estonia.

First these 29 countries:

29 decoupling countries complete terr vs cons

The outlier is Côte d’Ivoire. I don’t know exactly what’s been going on there, but while it reduced its territorial emissions by 1.4%, its consumption emissions have increased by a staggering 106%. Whatever the reasons for this, the other country data is easier to see if we take Côte d’Ivoire out of the picture:

28 decoupling countries terr vs cons
Singapore, Ireland, Bulgaria, Portugal, Sweden, Netherlands, Cyprus and Japan (8 countries) actually, and to varying degrees, made bigger cuts to their consumption emissions than their territorial emissions. In addition Estonia reduced consumption emissions while increasing territorial emissions. However, all the other countries did less well on consumption emissions than on territorial emissions. In addition to Côte d’Ivoire, Ukraine, Slovak Republic, Lithuania, Poland, Canada, Jamaica, Switzerland, and Croatia (9 countries) all failed to decouple consumption emissions,. The others, Romania, Hungary, Czech Republic, UK, Denmark, Spain, Belgium, USA, France, Finland, Germany and Austria (12 countries) all showed evidence of decoupling consumption emissions but less than they decoupled territorial emissions. Carbon Brief, then, are correct to say that a group of 21countries show evidence, on these data, of decoupling their consumption-based emissions from GDP growth.

Here is a table summarising all this.

Country

Change in CO2 (Territorial), %

Change in CO2 (Consumption) %

Change in real GDP, %

Territorial reduction less than consumption reduction?

Singapore

-0.457

-3.70%

107.50%

YES

Ukraine

-0.316

16.02%

49.50%

NO

Slovak Republic

-18.50%

7.03%

74.60%

NO

Romania

-21.10%

-9.87%

65.30%

NO

Lithuania

-1.70%

20.97%

79.70%

NO

Hungary

-27.30%

-11.47%

29.00%

NO

Ireland

-15.60%

-19.05%

47.40%

YES

Estonia

9.46%

-5.00%

63.60%

YES

Czech Republic

-19.50%

-7.19%

40.10%

NO

UK

-23.70%

-8.98%

27.10%

NO

Bulgaria

-2.70%

-14.49%

61.70%

YES

Poland

-0.50%

3.39%

62.60%

NO

Denmark

-32.60%

-12.03%

8.30%

NO

Spain

-20.80%

-12.96%

19.70%

NO

Belgium

-19.30%

-3.50%

21.10%

NO

Canada

-9.30%

5.68%

32.40%

NO

Jamaica

-24.80%

10.18%

9.40%

NO

Cote d’Ivoire

-1.40%

106.99%

40.00%

NO

Switzerland

-9.30%

16.55%

28.30%

NO

US

-7.30%

-5.83%

28.10%

NO

France

-14.60%

-8.68%

16.30%

NO

Portugal

-25.10%

-28.82%

1.20%

YES

Finland

-12.40%

-6.07%

17.80%

NO

Germany

-13.70%

-11.85%

16.00%

NO

Sweden

-0.50%

-9.38%

30.60%

YES

Austria

-5.10%

-0.56%

21.10%

NO

Croatia

-2.60%

3.36%

22.60%

NO

Netherlands

-8.40%

-18.09%

15.10%

YES

Cyprus

-6.70%

-8.4%

21.70%

YES

Japan

0.00%

-1.98%

10.90%

YES

Discussion

Questions about emissions data.

These findings surprised me. But what do they really tell us? Firstly I’ll look at some questions about the data. This is not to criticise the work of either WRI or Carbon Brief, but to note a number of uncertainties about the data that they used and which I have also gone through, replicating their analysis.

Accuracy of country-level data and missing emissions

The data analysed is taken from two sources: The BP Statistical Review of World Energy and the Global Carbon Budget Project, part of the US Department of Energy’s “Carbon Dioxide Information Analysis Center”. The latter source takes its information on territorial emissions from the UN Framework Convention on Climate Change, whose sources are based on the individual country submissions. Where these are not available, BP data is used. Consumption emissions are taken from the Global Carbon Budget Project which relies heavily on research by Glen Peters of the University of Oslo, working with a number of colleagues in various countries: the data from the Peters et al. 2011 article is used, updated, but we don’t know exactly how. Without going into great detail, there are a number of issues with these various sources of data.

  1. Variability in the quality of data reported by countries. China’s emissions data has been questioned before but the same concerns about inaccuracy are likely to apply to the data from some other countries.

  2. The use of different reporting protocols by different countries. This is a historical legacy of Kyoto – some countries are newcomers to emissions reporting.

  3. Emissions from international transport (i.e. shipping and aviation) are reported by individual countries but not included in their totals: they are included in the global total of emissions. This is an important matter since when considering those emissions that arise from consumption of imported goods and services, these emissions are obviously a relevant component.

  4. There may well be other missing data, for example the scale of “fugitive” emissions from the petrochemical industry could be larger than estimated as demonstrated in recent work on methane escapes from shale gas (fracking) in the USA, or the increasing emissions from submarine hydrides and melting permafrost which might, or more likely might not, feature in country territorial emissions figures.

  5. The methodology for arriving at consumption emissions is even more complex.
    Although all emissions inventories have some uncertainty, including territorial emissions, consumption-based estimates will have larger uncertainty due to the incorporation of more input data, each with various levels of uncertainty.” (Barrett at al., 2016, p. 457).
    Two methods are used by the Peters group, but the most accurate one, the Multi-Regional Input–Output (MRIO) model was only possible for three years (1997, 2001, and 2004) due to data limitations. The simpler Embodied Emissions in Bilateral Trade (EEBT) model is used in the majority of years, or rather a variant of this is used: To avoid the time-lags and construction of an annual global database,
    “we develop a method to approximate the EEBT method with the components of the Gross Domestic Product (GDP).”
    Perhaps unsurprisingly, other researchers have reached rather different conclusions about the impacts of outsourced emissions: in a 2014 study, Kanemoto et al., using a different MRIO database, found that “adjusting for trade, developed countries emissions have increased, not decreased” and that “the sectors successfully holding or lowering their domestic emissions are the often the same as those increasing their imports of embodied CO2. This suggests that it is not cleaner production or consumption patterns that are reducing domestic emissions, but simply burden-shifting of the same emissions-intensive activities”.
    The Kanemoto Sydney model finds greater levels of consumption emissions than the Peters Oslo model while a further model from the University of Leeds finds still higher levels although in general they all move in the same direction showing the same general trends.
    A further problem is with the number of assumptions made in using these models, such as the use of monetary values as proxies for material flows, and the reduction of diversity in various exports to country-wide averages. For a full review of the complexities of calculating consumption emissions see Sato (2013), who concludes that although attempts at measurement are worthwhile and revealing of the nature of the problem, “quantities of [emissions embodied in trade] at the country level remain highly uncertain for most countries and years”. And it is worth noting that the uncertainties about territorial emissions apply also to estimates of consumption emissions since the methodologies for calculating them use exporting and importing countries territorial data as input to their calculation.

Questions about GDP data

GDP is also a complex, composite index (see World Bank definition), with many assumptions in its calculation. Leaving aside whether it measures something meaningful, there are methodological problems here too and these apply to its calculation for every single country.

Firstly, it is necessary to have accurate information on the sectors of each country’s economy, and countries differ widely in the areas that are hidden from the official statistics (the informal economy, the criminal economy and transactions hidden from the official gaze legally or illegally for tax avoidance/evasion), in the level of expenditure on public services (which to only varying degrees can be equated to economic activity such as production) and financial services (of which more later), and in the quality of data collected. Secondly, that data needs to be aggregated – and a variety of assumptions are made in doing this, as well as the use of estimates for missing data. See this and this piece for discussion of some of these issues. Finally, it has to be reported, and governments may have incentives for varying degrees of presentational inaccuracy.

It should be noted that, as seen above, GDP figures are themselves used in arriving at the estimates of consumption emissions, which again involves some assumptions about costs and prices.

So, the question of understanding the relationship between the growth of the economy and emissions rests on data sets that have, at best, considerable margins of error. The analyses by WRI and Carbon Brief do not cite “confidence limits”, or similar estimates of error, for either the variables or for the dependability of the relationships they identify – and indeed that would be a difficult task, given the heterogeneity of the “data behind the data”. However, the Barrett et al. article, reviewed recently by Carbon Brief does exactly this for the UK data, although only up to 2004: these estimates though are themselves based on the known variation within the data rather than the “known and unknown unknowns” that beset such ambitious enterprises. There is a tendency, particularly in the secondary literature, to give the impression that these data are the “real thing” rather than socially mediated estimates.

Issues of interpretation

We turn now to problems of interpreting the relationships between GDP growth and emissions reduction that have been reported. Let’s make the charitable assumption, for the moment, that the datasets are perfectly reliableiii. What could account for the changes?

1 Energy mix

It may be that the way energy is produced has become less carbon-intensive. That is to say, for each joule of energy produced, fewer molecules of greenhouse gases are produced. And for economies decarbonising both territorial emissions and consumption emissions, this would be happening at home and in enough of the economies producing goods and services that are imported.

We know that this has been happening. Globally, energy emissions have recently stalled, although not reduced (except in 2009 and in the early 1980s) and this is attributed to a reduction in the use of coal (the most carbon-polluting hydrocarbon source, used for electricity generation and in our declining steel industry) and to the growth of renewables. In the case of the UK, a similar but stronger picture can be seen with falls in territorial emissions in 2015 to 38% below the 1990 level (figures from Carbon Brief). For the first time, renewable energy generation surpassed coal (although this includes biomass, much of it using imported wood, substituting for coal, with the shipping emissions excluded from analysis). Changes in energy use internationally will also feed into the consumption data, for example, the two biggest sources of UK imports are the European Union and China, both of which have been ramping up renewables investment.

2 Composition of GDP growth

As we noted above, GDP is a composite of economic activities. It is perhaps no surprise that the big reductions in total emissions are seen after the Great Financial Crash of 2008 A number of things have been happening in the economies concerned since then. For illustration I will focus on the UK economy.

Between 2007 and 2011, households began repaying their debts:, UK net household saving went from more than MINUS £30Bn to PLUS £20Bn. That is to say there was a shift from consumption fuelled by credit to holding money in savings and investment accounts. This was in the context of static or reducing incomes: it is therefore not surprising if consumption decreased. However, from 2011 the pattern reversed with savings reducing and credit card debt increasing. Yet by 2013 (the last year of data in the consumption emissions analysis), household expenditure had only just recovered to its 2007 (pre-Crash) level in real terms according to ONS data and real wages are still below 2008 levels.

Since 2010, austerity has hit household spending in the UK hard so whatever the GDP figures are telling us, swathes of the population have less to spend on goods and services. While the GDP figures have risen, much of that has been dependent on “asset price inflation” (principally house prices in London and the South East). There are several aspects to this, including the siphoning away of housing proceeds to non-UK economies (due to speculative purchases by non-residents) and a rising proportion of UK citizen expenditure on rent rather than on consumption. These factors together mean that there is not a one-to-one relationship between economic growth and consumption: available statistics do not make it easy to unravel these relationships but we should be cautious in assuming that GDP rises necessarily equate to consumption increases. That means that a simple relationship between GDP growth and indices of GHG emissions will not apply under all circumstances. We need more sophisticated tools for understanding these relationships.

But what about the other economies? Several of the decoupling nations are European Union countries, and austerity policies there are likely to have had similar downward effects on consumption levels. This led me to look again at the most impressive decoupling countries. Household consumption as a percentage of GDP declined in the 2000-2015 period in 6 of the 8 countries whose consumption emissions reductions exceeded their territorial ones. Using World Bank Data on Final Household Consumptioniv, the percentage change for these countries from 2000 to 2014 was as follows.

Singapore

 -9.95% (decrease)

Ireland

-5.87% (decrease)

Bulgaria

-4.82% (decrease)

Portugal

4.24%

Sweden

-1.27% (decrease)

Netherlands

-10.63% (decrease)

Japan

7.41%

Estonia

-10.55% (decrease)

In a majority of these cases, then, a reduction in consumption by households will have contributed to the overall national decoupling.v It does not account for all the difference but there will be other associated reductions in consumption-related activity, elsewhere in the economy, not reflected in the figures for households (an inverse multiplier).

A further factor is the financialisation of the economy. In the UK and the US, as well as in many other “developed” economies, the share of GDP accounted for by non-productive financial growth (interest, speculative asset growth) rose over the period in question. Owners of this new capital have sought to make further profit, not from productive sections of the economy but from further financial “rent-seeking”. While credit growth has fuelled consumption, by allowing household expenditure in the face of static or falling real incomes, the ballooning profits appear to be much larger than this domestic “feedstock”. So financial growth, as a significant proportion of GDP growth, is not all directed at increased consumption. The same goes for Quantitative Easing which has been criticised for not aiding the productive economy but instead adding to asset bubbles.

There is not the space for further analysis here, the point however is that GDP rises do not necessarily translate into consumption rises in the short term.

3 Population changes

The “real GDP” figures used by Carbon Brief control for prices but not for population changes. Some of the decoupling economies have had high levels of emigration. Remittances in these cases will, on the one hand, have inflated the GDP figures for these countries but there are also fewer people consuming in the home country. Now a converse argument could be made for countries like the UK and US (whose populations have grown as a result of migration): the point is that again, these processes need to be unraveled before we can say with any confidence that we have a relationship.

4 How durable are these changes likely to be?

Since it is not clear what is underlying the apparent decarbonisation in selected economies, it is unclear how durable these changes may be. It may be that a set of short-run factors are combining, post Great Financial Crash. Some of these, such as the switch from coal, are positive and in themselves unidirectional, but others (particularly the phenomenon of “ungrounded growth” explored above) are potentially reversible. Even changes in energy usage patterns could, over time, be wiped out by rebound elsewhere in the economy, or by under-estimation of factors such as methane leakage, biofuel carbon emissions or from loss of sequestration and methane emissions following megadam projects.

Conclusions

We have two main areas of uncertainty and three areas of certainty:

1) We cannot be sure what the findings of decoupling in selected economies really mean because of problems of data quality, missing data and the “construct validity” of measures – i.e. are they actually measuring what they purport to? When we then look for relationships between the variables, the uncertainties increase. Moreover, they do not demonstrate a causal relationship: the relationship could in many cases be a result in the dissociation of consumption growth itself from overall GDP growth. At best there is only an association: practically you can’t point to say the Estonian or UK economy and say “do this”, although some of the things that have been done will indeed be helpful.

2) There is also uncertainty about the durability of the observed effects because they may reflect one-off or reversible changes, or they may under-estimate emissions.

3) Only some economies show these apparent effects. Even if these findings reflect a solid relationship between the growth of some economies and emissions reductions attributable to them, they would be just that, an effect in only some economies. Meanwhile, global emissions in the period 2000 to 2014 increased by 45%. (By definition territorial emissions equate to consumption emissions globally). So the global economy, is far from decoupling its emissions from its expansion.

4) The rates of emissions reduction in the apparently decoupling nations would be nowhere near sufficient to avert the climate catastrophe. As Anderson and Bows have shown, the Annex 1 nations (that includes most of the apparently decoupling countries) need to be reducing emisions at between 8 to 10% p.a. The figures in the above table do not give annual rates above 2%. As Anderson and Bows note, From Stern and the UK’s Committee on Climate Change through to virtually every 2°C emission scenario developed by ‘Integrated Assessment Modellers’, reductions in absolute emissions greater than 3% to 4% year on year are judged incompatible with a growing economy.”
This would seem to put degrowth firmly back on the agenda since to achieve radical emissions reduction, we need a global economy that is considerably smaller, in material terms, and the only socially justifiable course becomes “living better with less”.

5) And while measurement of emissions may have its flaws, we know that global CO2 concentrations continue their ever upward path, and that is a path that, if anything, appears to be accelerating.

Mark H Burton

April, 2016

Licensed under a Creative Commons Attribution-NonCommercial-
ShareAlike 4.0 International License
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http://creativecommons.org/licenses/by-nc-sa/4.0/

Notes.

iCO2e means CO2 equivalent. Other greenhouse gases (including Methane and the Nitrogen Oxides) have a greater insulating effect than Carbon Dioxide but are emitted in smaller quantities. CO2e provides a convenient single indicator that converts the greenhouse effect of these other gases to the amount of CO2 that would produce the same impact and then adds that to the CO2 figure.

iiTerritorial emissions are those emitted within the borders of a country. Consumption emissions are those attributable to all the services and products consumed by a country. As will be seen, territorial emissions are the easiest to measure and are the basis from which consumption emissions are calculated. Rich country economies have typically “outsourced a lot of their production of goods and services that are produced in other countries: therefore territorial emissions do not give a representative picture of the planetary impact of these economies, nor conversely of the economies where this production takes place. The UK has done this to a greater extent than other countries.

iiiReliable but not necessarily valid.

ivHousehold final consumption expenditure (formerly private consumption) is the market value of all goods and services, including durable products (such as cars, washing machines, and home computers), purchased by households. It excludes purchases of dwellings but includes imputed rent for owner-occupied dwellings. It also includes payments and fees to governments to obtain permits and licenses. Here, household consumption expenditure includes the expenditures of nonprofit institutions serving households, even when reported separately by the country. This item also includes any statistical discrepancy in the use of resources relative to the supply of resources.”

vFor the countries that decoupled consumption emissions, but at a lower rate than their territorial emissions, the picture is similar (decreases, or very small increases in household consumption) with the exception of the outlier Cyprus:
Romania -8.17% (decrease)

Hungary -7.27% (decrease)

Czech Republic -4.49% (decrease)

United Kingdom 0.16%

Denmark 3.21%

Spain -2.37% (decrease)

Belgium -1.95% (decrease)

USA 3.76%

France 1.93%

Finland 1.93% (2000-2008)

Germany -4.44% (decrease)

Austria 0.01%

Cyprus 13.28%

Posted in Climate Change, key concepts | Tagged , , , , , | 2 Comments

Amazing cafe conversations!

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This blog tells you about our next cafe conversation and  gives feedback on our last one ‘Let’s talk about the future of work and income’ held in March.

IMG_5789

 

 

The next one is on the EU Referendum. It is for environmentalists, anti-poverty campaigners and people  concerned with promoting a secure and safe world who are feeling left out of the debate. Tuesday 19th April, 6.30 to 8.30 at Cross Street ChapelRead more and book now

If you value a place where people talk about issues that matter to participants these conversations are for you.  Discussing in fours and fives enables everyone to participate, listen to one another and have real conversations.  The room is big enough that we can hear each other too! We have a brew and refreshments and enjoy talking about viable economics and all the ways we can share this with others.

Recent feedback has included:

‘ I have absolutely loved the first two events I’ve been to and intend to join as a member. ‘

I enjoy the chance to have a debate. ….. to have my say, as well of course to be influenced by others and further shape my own perspectives on the many issues that SSM cover.’

Continue reading

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Global emissions – a brief guide for the perplexed.

This article now republished at degrowth.de as Again and again: supposed evidence for decoupling emissions from growth is not what it seems.

Also available as a pdf file.

It can be difficult to form a view of what’s really going on in our atmosphere, given the amount of information and of contradictory claims.

This piece concerns recent reports on global greenhouse gas (GHG) emissions and levels.

On 16th March, a Guardian headline over an article by John Vidal said:

Surge in renewable energy stalls world greenhouse gas emissions

That sounds good, doesn’t it. But at best, the claim is only partly true. The article is actually about energy-related emissions. Now this is clear enough if you read the article carefully, Preliminary data for 2015 from the International Energy Agency (IEA) showed that carbon dioxide emissions from the energy sector have levelled off at 32.1bn tonnes”.
Yet the previous sentence says:
“Falling coal use in China and the US and a worldwide shift towards renewable energy have kept greenhouse gas emissions level for a second year running, one of the world’s leading energy analysts has said.”
And here is the clue: the “leading energy analyst” is none other than Fatih Birol, Director (and former chief economist) at the International Energy Agency. The IEA was terribly slow in waking up to the promise of renewables and still maintains a thoroughly orthodox position on the relationship between economic growth and emissions. The article on the IEA website that the Guardian is referring to has the headline:
“Decoupling of global emissions and economic growth confirmed”,
although the subheading again makes it clear that it was “energy-related emissions of CO2 [that] stalled”. And Birol is quoted as saying:

Coming just a few months after the landmark COP21 agreement in Paris, this is yet another boost to the global fight against climate change.”

This would indeed be good news, but let’s take a look at the data.

Here is the IEA graph:

IEA energy emissions 160316_CO2_gr

http://www.iea.org/media/news/2016/pressrelease/160316_CO2_gr.png

It shows a reduction in energy-related emissions after the Great Financial Crash (sanitised as the “Global economic downturn”) and then a rising trend, leveling out in the last two years. They attribute this largely to reductions in coal use in both China and the USA. Worryingly, they note that
“The decline observed in the two major emitters was offset by increasing emissions in most other Asian developing economies and the Middle East, and also a moderate increase in Europe.”

This might suggest that the triumphant tone is misplaced. To what extent are these changes temporary? To what extent might they be overtaken in years to come as cheap oil and gas continues to be exploited? To be sure the increase in Chinese renewables from 19% to 28% of electricity generation in four years is to be welcomed, as is the 10% decrease in coal, but as the New Climate Economy (a cheerleader for economic growth decoupling from emissions) reported on p. 17 of its report last year, even as late as 2030, fossil fuels globally are projected to increase by 64GW annually. In the case of China, the 5 year plan meanwhile forecasts that “Energy consumption and carbon dioxide emissions per unit of GDP will be reduced by at least 3.4% and 3.9% respectively”, while “GDP is projected to grow by 6.5-7%”. So the Chinese themselves are effectively stating that there will be no decoupling. And research on the extent of methane leaks from US shale gas production, that could wipe out other energy emission reductions, also indicate that it is a little early to celebrate.

These figures, it should be noted, represent the flow of CO2, from one source, into the atmosphere. However we are dealing with a system of flows, from other sources such as changes in land use and into carbon sinks in land (chiefly biomass) and sea: the interactions between these flows, over time, determines the stock of GHGs in the atmosphere (see this article for a longer discussion).

Let’s now look at the total global CO2 concentrations (the stock) to see whether the these are stalling too. It should be noted that the decoupling advocates are not claiming that these are reducing: their claims concern emissions, but the relationship between GDP and total global concentrations is what, in the final analysis matters, for it is the total concentrations, and its drivers that will determine the fate of our climate. Only 6 days earlier, The Guardian carried this headline:
CO2 levels make largest recorded annual leap, Noaa data shows
Noaa is the US National Oceanic and Atmospheric Administration. The subheading was also grim: “The last time the Earth saw such a sustained increase was over 11 millennia ago”. Here is the global trend from a global network of monitoring centres:

http://esrl.noaa.gov/gmd/ccgg/trends/global.html

There is no sign of a decline there. If we look at the annual increases, again there is no sign of any decline.

Noaa co2 annual increases

Graph by author from Noaa data

What does this tell us?

1) It shows that any suggestion that GHG emissions are stalling is not supported with solid long term evidence. Only the flow of emissions from electricity generation is doing that, and it is by no means clear that this is a durable trend. We hope it is, but it might not be, and anyway it isn’t enough because overall emissions are increasing.

2) Since generation emissions have not increased for the last two years, then other emission sources must be increasing at a greater rate. There are several components to this. Firstly emissions from human activity other than fuel combustion – e.g. cement manufacture (other than fuel use) and waste disposal. Secondly, release of GHG’s from sources such as forest fires, permafrost thawing, soil degradation, and ocean stores (this includes the indirect results of human activity). (For a full dataset, see here). Thirdly, there has been an exacerbation by this year’s El Niño event (but we have to ask why El Niño is so strong this time).

3) As for the claim that economic growth and GHG emissions have decoupled, look at this graph:

It shows levels of atmospheric CO2 (again from Noaa) and global GDP (IMF) over a 45 year period.

World GDP and CO2 trends

Graph by author from Noaa and IMF data

Here is the same data with each measure plotted against the other to show the association between them.

World GDP and CO2 association

Graph by author from Noaa and IMF data

The thin line is the line of best (linear) fit. You don’t get better associations than this: the shared variance is nearly 99%.

In the first graph, however, the GDP line is steeper than the emissions line, possibly indicating the well-known phenomenon of relative decoupling. We However, as discussed previously, CO2 levels are still growing with GDP even though the economy gets more efficient in its energy use. But as Jevons demonstrated in the nineteenth century, that reduction of energy intensity of economic activity leads to greater overall economic output, thus compounding the problem: the more that is saved, the more growth there is and therefore the more emissions.

It could be objected that data on levels of CO2 is not relevant to evaluating the claim that emissions have decoupled from GDP. However, it is clear that levels are increasing. Where from? We would have to look to the totality of emissions that originate from human activity, which corresponds (if crudely) to GDP. Although global GDP growth is slower than it once was, it continues nevertheless. To look at the association between increases in levels of CO2 and increases in GDP is, thereby, relevant to the decoupling hypothesis, even though the proponents of decoupling are not claiming that CO2 levels are decreasing.

So, yet again, claims that GDP growth has decoupled from carbon emissions are shown to be mere propaganda. And as February’s CO2 figures showed, we are in a very scary place indeed. It is incumbent on all of us to try to understand these relationships and to resist the tales told by those with vested interests in the current destructive system and struggle for an economy that is viable, ecologically as well as socially and economically..

Mark Burton
with acknowledgement to Dominic McCann for improvements on the original text.
This piece has been revised to a) correct the original text which wrongly stated that the IEA data in graph 1 only covered emissions from electricity generation, and b) to clarify further the relationship between the flow of emissions and the stock of CO2 levels in the atmosphere.  Thanks to those who have commented on this and the degrowth.de sites for provoking these improvements.

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Are small firms getting a good deal in Greater Manchester?

Did you know that there are 5.4 million small and medium-sized firms (those employing less than 250 people) in the country as a whole, employing some 23 million people?

They are the heart of the economy and of any future viable economy. But it is very difficult to find information about them. Search GMCA’s website or that of its economic think tank, New Economy and you will find little hard information about our SME’s1 – go on, try it.

Yet of these firms, perhaps only 10 per cent are doing well, while another 30 percent are in real difficulties. That leaves some 60 per cent surviving. Of new start ups, some 70% last less than five years. The failure rate is particularly high in Greater Manchester (along with Leeds City Region, Greater London and Greater Birmingham/Solihull). Think of the personal costs that entails: bankruptcy, loss of savings, loss of income, and sometimes the loss of the family home and even the family itself. Think of the stress and its effects on health and well-being…..

Small and medium enterprises (SME’s) have a positive role to play in a future Viable Economy. In general (and yes there are exceptions), they make a greater contribution to the local economy and our community than big firms with shareholders beyond the city region. They tend to be place based, rely on local trade, employ local people and contract with other local companies. They tend not to make excessive profits and what money they do make tends to stay local, rather than exported to tax havens. Indeed, many SME’s do not aspire to grow, being content with making a living, living off a fairly constant throughput of money and localised resources rather than having to grow and grow off the back of resources imported from miles away. For others, growth would be a good thing, helping build the replacement economy we need to deliver environmentally safe, resilient prosperity for all. They are therefore more likely to be part of the solution than part of the problem for the ecological crisis.

However, official policy in Greater Manchester has not consistently been to favour SME’s. Policy was influenced by the Manchester Independent Economic Review of 2009 which, following a narrow growth and productivity agenda, advised that “policy support should not be geared disproportionately … towards SME’s”. That seemed to be based on the view that “growth through indigenous SMEs … is slower and more organic” than that from large scale inward investment into big firms. However, there are some promising examples of initiatives2 to support SME’s, for example the Tameside Business Family which provides a variety of support and networking for local businesses, Manchester’s Sustainable Procurement Policy that tends to favour SME’s with its local emphasis, Greater Manchester Chamber of Commerce’s Skills Gateway (aimed at SME’s), and the GMCA’s Greater Manchester Loan Fund that specifically makes loans available to SME’s. The former Regional Development Agency also prioritised financial assistance for SME’s.

Moreover, since the big banks pretty much abandoned this sector, SME’s have struggled to obtain credit for investments they need to make.

We take the view that small, resilient, labour-intensive, local and stable firms are more compatible with the Viable Economy, than those larger, outward-facing firms attractive to well-resourced and footloose foreign investors. This is to generalise, but we are looking for a greater relative emphasis on those place and people orientated companies that appear3 to account for more than half of the Greater Manchester workforce.

In Greater Manchester, 86,100 firms employ fewer than 10 people: that’s out of a total of 105,000 businesses. This excludes self-employed people. How good a deal are they getting here in Greater Manchester? And what could be done to improve matters?

We think that the following should be priorities, both for leaders in the City Region but for those of us in all sectors, as citizens, consumers and activists:

  • Support SME’s that embody the principles of the Viable Economy in their products and practices.

  • Foster win-win collaborations among SME’s, and between SME’s and other organisations, public, private and community (as in this West Midlands example).

  • Develop IT, finance and marketing frameworks that support existing SME’s4 helping them to improve their performance and thereby survive, while stepping up to the challenges of establishing a Viable Economy in the region.

  • Identify with SME’s the barriers and constraints they face and help publicise these in policy arenas.

  • Use the philosophy of plugging the leaks to increase opportunities for money and resources to circulate around the sector rather than leaching out of the region.

  • Find ways to help them overcome the scarcity of financing, for the payback to the local economy can be much greater than from the large incoming-investment corporate schemes which tend to dominate political thinking. Recent discussions on public, community and municipal banking are relevant here, and Greater Manchester leaders should be actively promoting alternatives to Britain’s dysfunctional banking system.

Thanks to Allan Wort for drawing some of the above points to our attention.

Minor amendments: 16/3/2016

The Steady State Manchester team.

1Nor will you find much anywhere else: but do let us know if we’ve missed anything.

2Although typically underpinned by a narrative of “growth”.

3These data are not publicly available, although might be accessible on the NOMIS government website on paying a fee. We have conservatively estimated the average number of employees in each of the classes of enterprise using the figures given in the following paragraph to arrive at our estimate of 65%.

4In contrast to the Business Growth Hub, part of GMCAs Manchester Growth Company, efforts which seem to target support at trendy new startups rather than towards existing more run-of-the-mill SMEs

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