Capitalism and climate change are closely linked; critics blame capitalism for global warming while others believe we need an economic system to solve it. But ppolitical ideologies on the right and on the left are both poorly equipped to guide political resolve to tackle the worsening climate crisis that is happening around the world. This essay proposes a ‘third way’ or centric pragmatism that combines the best use cases of government intervention with innovative market forces to transition the global economic system to a sustainable and renewable future.
Conventional debate around root causes and solutions to the worsening climate crisis follows the classic left-right divide. On the one hand, the left argues that capitalism and its decades-long unregulated rise are fully responsible for the unbridled greed that brought us here and that in order to save our planet, capitalism must be completely uprooted and replaced. On the other hand, the far right believes that market forces alone can create the right incentives and mobilize the resources needed to achieve rapid and profound reductions in global carbon emissions. Further along the spectrum, the more radical conservative approach believes that we can continue business as usual and that the market will correct course as it has done in the past.
Both camps suffer from many shortcomings, including short-term and selfish dogmatism. If we adopt socialist measures to disband capitalism and rebuild a new economic system from scratch that focuses on climate, there will be no time left to actually implement measures to drastically reduce global warming. Likewise, business leaders need to recognize that governments and companies can and should work together to create the incentives and markets needed to protect our planet from climate catastrophe, and recognize that the business-as-usual scenario risks bringing us to the brink. . The stark reality is that global warming does not follow traditional political lines and the combination of mitigating factors will not fall neatly into any ideological container.
Although the worst impacts of climate change will manifest themselves on civil society in the form of catastrophic habitat destruction and mass migration, the root causes of the crisis are practical and not ideological. We just need to take urgent action to radically reduce our carbon emissions and transition completely to a low-carbon economy built on renewable energy sources and production. This essay therefore calls for a more pragmatic ‘third way’ of how we address the climate crisis, rejecting traditional left-right ideologies. Similar to third way political attitude which became popular in the late 1990s among world leaders such as Tony Blair and Bill Clinton who sought to reconcile center-left social policies with centre-right economic policies, today’s climate woes call for centrist pragmatism that combines the best use cases of government intervention. and the innovative power of market forces.
For further discussion of capitalism and climate change: You may also like: Degrowth: Socially and Ecologically Fair Economic Alternative?
Even as we shift to more renewable energy sources, new technologies may not be enough to compete with the dominance of fossil fuels. State intervention will play an important role in subsidizing nascent green technologies that may not initially be economically viable, but on a large scale will make a difference in removing tens of billions of tons of emissions from the atmosphere this century. Similarly, governments around the world have attempted to impose carbon tax, the price emitters have to pay for every tonne of carbon equivalent they release into the atmosphere, forcing businesses and consumers to turn to new, more carbon-efficient technologies. Such policies will play an important role in driving large-scale shifts to activities that are less carbon intensive and can only be implemented by a large and effective public sector.
Nothing is more real than the exponential growth of the renewable energy sector since the 1980s. In 2010, solar and wind combined produce only 1.7% of global electricity generation. In 2020, it has risen to 8.7% – much higher than previously predicted by mainstream energy models. Government support is widely credited for this growth and provides important support in the form of tax credits, subsidies and competitive auctions for government mandates, all of which help reduce costs and accelerate deployment. Therefore, radicals on the right would neglect to ignore the influence of an effective government role in stimulating the development of climate solutions.
Based on latest IPCC report, we are still far from limiting global temperature rise to below 2C, let alone 1.5C, a target set in 2015 in the Paris Agreement and consolidated again at the recent COP26 UN climate summit. Given these daunting delays, it is more important than ever for the forces of innovation, entrepreneurship and private investment to build and scale the technology solutions that can get us where we want to be. During the month April 2022 alone, over USD$2 billion committed to start-ups in carbon removal, a technology that removes CO2 directly from the atmosphere and stores it where it cannot re-enter the atmosphere for thousands of years. Entrepreneurs from around the world are building the companies needed to get us to net zero and then negative emissions globally, and attracting private market investors to realize their vision. Earlier this year, Stripe, McKinsey, Meta, and Alphabet joined forces to invest nearly a billion dollars in carbon-degrading startups over the coming years in a bid to drastically reduce development costs and advance the market. As climate venture capitalist Tom Rand . stateswe cannot move away from fossil fuels without the financial strength and market power of entrepreneurial talent alone to unlock it.
Proponents on both sides of the political divide play a role in helping humanity reduce the risk of future climate disasters. But whether the prevailing system of capitalism is to blame for the situation we are in is counterproductive and ultimately irrelevant given that the fire is already burning. Individually, both sides are badly prepared to build a solution to the climate crisis but combining strengths and ideas to form centrist pragmatism, ambitious government policies, and innovative market forces will give us a chance. As new technologies gain popularity, expand their support from governments and attract private investment, it becomes easier to raise further policy and financial support to achieve exponential growth. This is the dynamic that centrist pragmatism can achieve by bridging the political divide and creating a renewed capitalism that will create a clean and sustainable environment for future generations.