But the real question, of course, is how can we afford not to address the cataclysmic impacts of runaway global warming?
Finance and energy are the engines of a modern society. Currently run for the benefit of a privileged few, however, they are driving us down the road to ruin.
That road has a rapidly approaching fork. On the one side is the looming climate catastrophe; on the other is the prospect of another financial crisis as our fossil fuel energy infrastructure is rendered worthless.
Our task is to avoid both outcomes — and forge a new path to ecological and economic sustainability. Under public control, we could use money and electricity to power a better, healthier life for all, to protect the natural world, and to build a more equitable and democratic economic system.
Radically transforming two of the most powerful sectors of the capitalist economy, finance and energy, may seem insurmountable. But a Green New Deal won’t get far otherwise.
One of the sectors we need to transition most rapidly is energy.
According to a 2017 study by the Carbon Disclosure Project, over half of all global emissions since 1998 can be traced back to just twenty-five fossil fuel production corporations. Fossil fuel companies have built strong political machines that oppose anything that jeopardizes their business model and short-term shareholder returns. They remain thoroughly committed to extracting and burning as many fossil fuels as possible, regardless of the danger. US production of oil and gas shot up 85 percent between 2010 and 2018, making it the top oil and gas producing country in the world.
We need to nationalize the fossil fuel industry, take utilities into public hands, and establish a national Green Investment Bank.
Nationalizing the fossil fuel industry is the most effective — and at this point, perhaps the only — way to cut through corporate opposition and manage a timely and orderly decline of fossil fuels.
By enacting robust regulations and eliminating subsidies early in the Green New Deal, government action would cause fossil fuel companies’ share values to plummet. The state could then purchase these firms at a relatively low price — one that actually reflected their value given the unburnable reserves.
The explicit goal would be to use public ownership to plan the sector for obsolescence: stopping all new exploration, closing shop before already-in-use reserves were fully exploited, and eliminating fossil fuel exports from the US. The phaseout would include a series of programs and investments that ensured a just transition for workers and communities that currently rely on fossil fuel extraction.
Only a new model of public finance will allow us to move money quickly and effectively enough to decarbonize our economy. Capitalism’s structural cracks have been papered over for too long. Asserting public control over the financial system is therefore essential if we want to prevent catastrophic climate change.
Increasing public control over the financial system requires at least two separate, intersecting interventions.
The first is a large-scale expansion of public and cooperative banking.
The second is democratizing the Federal Reserve.
Together, these moves would take the processes of creating and allocating money out of the hands of elite private interests and make it possible to put them to work funding the Green New Deal.
Fighting climate change is a prime motivator of many public banking campaigns around the world, especially in the vibrant and growing US movement. Public banks are specifically mentioned in AOC’s Green New Deal legislation. Even private investors and neoliberal institutions are warming up to public banks, seeing them as partners that can take on the risks of green infrastructure investment while they reap the rewards. While cynical and self-interested, support from such unlikely quarters shows that public banks are and can be effective when it comes to green lending.
A truly publicly owned, transparent, and democratically accountable central bank … could become a powerful weapon in the fight against climate change. As Fed expert William Greider puts it, we need to “create a new public institution that truly understands that its obligation is to society, not money markets.”
Around the world, countries are leveraging the power and authority of central banks to defund fossil fuel infrastructure and finance climate sustainability. For instance, The Central Banks and Supervisors Network for Greening the Financial System (NGFS)now consists of twenty-eight members, including the People’s Bank of China, the Bank of England, and Deutsche Bundesbank. The notable exception: the United States Federal Reserve.
The Green Investment Bank would play an integral role in making the substantial investments in renewable energy that would accompany the fossil fuel company drawdown in order to maintain an adequate supply of energy to meet demand. In this way, the public money used to buy out the fossil fuel industry would be deployed to foster a new, clean energy system rather than simply line the pockets of investors.
Piecemeal incentives, deregulated markets, and easily rolled-back regulations just won’t cut it for the timescale we need — let alone advance justice, equity, and democracy. Overall, patterns of capital accumulation, wealth extraction, and elite control continue unaltered.
By taking energy utilities into public ownership, we can catalyze renewable energy deployment at the same time we redistribute wealth and power.
The Green New Deal could provide cities, counties, states, and tribal nations the legal authority, technical capacity, and a suite of patient financing and funding mechanisms through a Community Ownership of Power Administration (COPA), akin to the New Deal’s Rural Electrification Administration (REA) — which helped communities start public utilities and electric cooperatives and led to a massive, and rapid, rise in rural electrification — and a network of local, state, and national public banks.
While REA never intended to address legacies of discrimination, COPA would be designed to lift up communities struggling under the weight of structural injustice. Poor communities and people of color tend to bear the brunt of our existing dirty and extractive energy system. COPA would focus on strategies that build community wealth (for example, localized procurement processes, robust workforce development for a just transition, and worker-centered labor agreements) in such communities — while still leaving room for local design. The program could also include training, guidelines, and incentives for setting up institutions that allow for community empowerment and democratic participation (multi-stakeholder boards, neighborhood assemblies, participatory planning/budgeting processes, and online/digital tools for engagement and transparency).