Financialization, commodification and carbon: the contradictions of neoliberal climate policy
Abstract
The carbon markets operating today under the aegis of the UN, the EU, and a variety of state and non-state actors reflect, extend and deepen neoliberalism. The project of building liquid global carbon markets worth hundreds of billions of dollars remains the default international approach to the climate crisis. These markets grew rapidly until 2008, when, according to the World Bank, they amounted to US$135 billion, although they have stumbled since, following the financial crash, the 2010 failure of the US Congress to pass proposed carbon trading legislation, uncertainty about the future of UN climate treaties, and a recent spate of criminal and other scandals.
Like the new derivatives, carbon commodities work through a process of radical disembedding – in this case, disembedding the climate issue from the historical question of how to organize for structural, long-term change capable of keeping remaining fossil fuels in the ground. Like other ecosystem services markets, carbon markets aim at ‘creating and stabilizing new areas for capitalist activity’, but also, more fundamentally, at securing those background conditions for accumulation that are most dependent on fossil fuels and most threatened by calls for emission cuts. Ominously, however, the valuation paradoxes that afflict climate commodities are even more intractable than those that affect complex financial derivatives, to say nothing of more familiar commodities like ordinary futures or food, energy, and consumer durables. To understand why, it is necessary to explore in some detail the peculiar algebra through which the climate commodity is created.
Like the new derivatives, carbon commodities work through a process of radical disembedding – in this case, disembedding the climate issue from the historical question of how to organize for structural, long-term change capable of keeping remaining fossil fuels in the ground. Like other ecosystem services markets, carbon markets aim at ‘creating and stabilizing new areas for capitalist activity’, but also, more fundamentally, at securing those background conditions for accumulation that are most dependent on fossil fuels and most threatened by calls for emission cuts. Ominously, however, the valuation paradoxes that afflict climate commodities are even more intractable than those that affect complex financial derivatives, to say nothing of more familiar commodities like ordinary futures or food, energy, and consumer durables. To understand why, it is necessary to explore in some detail the peculiar algebra through which the climate commodity is created.
