Reading Capital, Volume II
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Breaking the climate fix

by Gareth Bryant on April 26, 2017

I, along with my co-authors Siddhartha Dabhi and Steffen Böhm, were thrilled to be awarded the 2016 Richard Higgott prize for our article “‘Fixing’ the climate crisis: Capital, states and carbon offsetting in India”, published in Environment and Planning A. We would like to extend a big thank you to the Australian International Political Economy Network (AIPEN) membership and judging panel for the award. We would also like to congratulate the other shortlisted authors, Tim Di Muzio and Jeffrey D. Wilson, for their fantastic articles.

Our paper, published as part of a special issue edited by Esteve Corbera and Adrian Martin, analyses dynamics of accumulation and displacement in the Clean Development Mechanism (CDM), the primary carbon offsetting mechanism established under the Kyoto Protocol. In the study, we combine David Harvey’s notion of the ‘spatial fix’ and James O’Connor’s theorisation of the ‘conditions of production’ with a case study of the Gujarat Fluorochemicals Limited (GFL) industrial gas destruction CDM project in Gujarat, India.

We follow the journey of carbon credits from their production by GFL in India, via a range of financial institutions, to their consumption by large polluting companies covered by the European Union Emissions Trading System (EU ETS), such as Électricité de France (EDF), and wealthy country governments that have Kyoto climate targets, such as Japan. This method enabled us to connect opportunities for accumulation within the CDM market with the socio-ecological dislocation caused by the offsetting project.

We argue that the CDM can be understood as a spatial ‘fix’ in a variety of ways. It is a political economic ‘fix’ for capital and states seeking to continue burning fossil fuels and for new industries looking to profit from trading carbon. This is achieved by ‘fixing’ a socio-spatial divide between developed countries, where carbon credits are consumed, and developing countries, where carbon credits are produced. In doing so, CDM displaces the costs of responding to climate change to those affected by projects that are ‘fixed’ within particular local communities that have barely contributed to the problem.

In the conclusion to our article we alluded to Harvey’s comment that “there is, in short, no ‘spatial fix’ that can contain the contradictions of capitalism in the long run” to reflect on the contradictions within the climate fix for states and capital. GFL, which made over $500 million selling carbon credits, and other carbon traders, initially benefitted from carbon prices of over $30 per tonne. In the last few years, states have overseen the accumulation of a huge surplus of credits that has reduced the offset price to close to nothing. This has made polluting even cheaper for buyers of credits but has also wiped out profits for carbon traders.

When the research for our article was conducted, whether carbon markets could cohere political consensus for decarbonisation by creating new economic winners and minimising losers from climate action was an open question. This key promise of the climate ‘fix’ is now fundamentally broken, but the reasons are not well understood. Since taking up the position of Lecturer in Political Economy at the University of Sydney in 2016, I have been working on a book manuscript, now under contract with Cambridge University Press, on what went wrong with the carbon market agenda and what it means for the future of global climate action.

Climate policy is currently broken in another sense: into a number of different competing paradigms. The marketisation of climate change continues apace in some of the world’s most polluting economies, including China, and within the text of the Paris Agreement. But climate movements continue to press for alternatives, such as public support for renewable energy and divestment from fossil fuel corporations, that more directly address the source of carbon pollution. In this conjuncture, learning lessons from the crisis of carbon markets will be critical in convincing policy makers to break with easy climate fixes for good.

Nominations for the 2017 Richard Higgott Journal Article Prize are now open. See here for more information.

Gareth Bryant
Gareth Bryant is a Lecturer in the Department of Political Economy at the University of Sydney.

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