But how can capitalism solve the problem of global warming? The answer: by financing the transition to a clean energy economy. This is the biggest challenge of all.
The Kyoto Protocol process framed the issue as a public problem that called for government solution and public financing (that is, tax-based financing). The process fell apart at the Copenhagen conference in December 2009 – and there has been nothing of note to replace it. Even the limp gesture of a Green Climate Fund amounting to $100 billion (a sum which falls far short of the investments in clean technology required) has not been honoured.
Yet the investments in clean energy needed to really address climate change – the renewal of the entire energy system over the course of the next three to four decades – will dwarf these sums. The International Energy Agency has talked of sums like $20 trillion to be invested up to the year 2030 – less than 20 years away. The Green Climate Fund, even if it ever got off the ground, would raise just 1/200th of the sums needed.
In retrospect, then, one of the greatest failings of the Kyoto process was that it never got to grips with this most critical of issues. And by keeping it off the agenda, it delayed any serious engagement with global warming by a decade.
So where are the funds going to come from?
The answer is that they will have to come from the bond markets – the real engines of capitalism. The scale of these markets is awesome. The Bank for International Settlements states that the total size of the global debt securities market (domestic and international securities) was about $100 trillion as of June 2011.
Almost all of those funds are invested ultimately in projects that uphold the fossil fuel economy – drilling new oil wells, building coal-fired power stations, pipelines and all the rest of it.