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The economics of global warming.

Prominent scientists around the world have made non-partisan approaches to global warming. The Intergovernmental Panel on Climate Change, which was established by the United Nations Environment Programme and the World Meteorological Organization, describes itself as "policy-relevant and yet policy-neutral." Other organizations such as Greenpeace and the Ecologic Institute are not affiliated with any political party. Yet politics and global warming are very closely related. The uncertain economic climate has adversely affected the fight against global warming by stirring up a debate about the roles of different political systems in solving the problem and threatening the industry of green economy.


The BBC reported on 21 September 2009 that the recession and government policies concerning emissions trading and increased energy efficiency will likely "bring the biggest annual fall in the world's carbon dioxide emissions in 40 years." The report came from the International Energy Agency (IEA), which estimated that the recession is responsible for 75 percent of the fall. According to another report from IEA earlier this year, renewable resources are suffering more than other types of generating capacity. Less demand in the industry, due to the poor economy, will mean increased capacity. However, the report states that if lower investments continue, it is possible that prices will spike again "when the economy is on the road to recovery."

Despite unprecedented growth in the US wind market in 2008, the recession prevented the market from expanding; so too, wind power was down nearly 30 percent this year. Wind power still only provides one percent of the country's total power supply and the industry is primarily dependent on the financial support of banks. According to The New York Times, the industry does not have enough investment for wind projects with the weak state of the financial sector. Developers are hopeful that the US stimulus plan, which focused on a number of green issues, will help. However, the frozen financial markets are an obstacle for progress.

Meanwhile, one of the main drawbacks of solar power as a renewable energy source is the expense. It costs four times as much as coal, and twice as much as wind energy to produce. Government subsidies helped fund solar power before the economic collapse, but it will need greater investments before it can compete with more mainstream energy sources like gas or oil.

The industry was initially doing well despite the recession. According to the Utility Solar Assessment Study released in July 2009, solar panels were becoming more cost-effective and able to compete with conventional energy sources. With rising gas and oil prices and dropping solar prices, the study predicted that solar would be less expensive than mainstream energy sources by around 2015. However, the market research firm the Information Network said this September that a solar crisis is imminent for 2010, and 50 percent of solar manufacturers might not survive due to overcapacity. The recession hit just as solar power was becoming more accessible. Demand went down with the recession, and prices decreased dramatically.


The ongoing conflict about global warming is ultimately an economic debate. Free marketers attempt to address climate change through the markets rather than through government and to formulate solutions through the private sector rather than legislation; they believe the private sector deals with environmental demands more effectively. Green socialism is a more proactive approach to solving the problem, which is derived from the idea that global warming is partly the result of market failure. It combines aspects of socialism and environmentalism, and suggests that the capitalist system causes environmental degradation through globalization.

Critics of environmentalism believe that global warming is an alarmist theory not based in scientific fact. The Czech president Vaclav Klaus is well known as one such critic. In his book, Blue Planet in Green Shackles, Klaus says that environmentalists care more about nature than they do about people. Klaus spends a great deal of time chastising environmentalists for utilizing propagandistic slogans and attempting to scare the public into following their lead. However, in doing so, he is similarly using scare tactics. He draws a connection between environmentalism and socialism by asserting that environmentalism, just like socialism, seeks complete power and minority rule over the majority.

He suggests that the environment in the Czech Republic has improved a great deal since the fall of communism, and he credits the free market for this positive change, along with private ownership. He believes that the approach of environmentalists is too idealistic and the efforts to impose such an ideology would restrict freedoms.

Klaus' demonization of environmentalists into socialists finds a parallel in the behavior of the American conservative news media, which used similar methods and applied similar terms when President Obama appointed Carol Browner as his global warming czar. The Washington Times reported in January that the socialist group Commission for a Sustainable World Society listed Carol Browner as one of 14 leaders. While the American conservative press has endowed the term "socialist" with negative connotations, such as in a Washington Examiner opinion piece entitled "Browner is an environmental radical--and a socialist (seriously)," Browner's association with Socialist International's Commission was hardly malicious.

Socialist International established the Commission for a Sustainable World Society to help address environmental challenges. The group seeks to establish cooperation with political leadership and knowledgeable scientists around the world to create a better model for energy use and thus reform the global economy. The Commission's website states three directives that they believe will create a peaceful and sustainable society. The third specifically addresses global warming. Since the overall goal of the Commission is to promote peace and sustainability, solving the problem of global warming is an important part of that. This requires government intervention, as the proposals mandate new democratic forms of governance that address economic inequality and social imbalances.

Hnuti DUHA, called the Rainbow Movement in English, is an environmental movement that a group of students from Brno, the Czech Republic founded in 1989. The movement's website says that their mission is to create a free and democratic society that keeps the environment clean while also respecting nature. Their suggested strategy for solving the problem of global warming includes restructuring the economic system and enacting legislation to transition to green technologies, rather than continuing to support dirty energy sources. The group supports government involvement to address renewable energy, organic farming, and energy efficiency, using diplomacy and public support to enact major changes in the law.

Recently on 9 October, the news organization Project Syndicate held a Global Editors' Forum, entitled From Kyoto to Copenhagen, in Copenhagen. The event was organized as a precursor to the United Nations conference that will take place in the Danish capital in December. The event included a pledge by George Soros to invest one billion USD in alternative energy and donate one hundred million USD to establish the Climate Policy Initiative. Panels discussed topics such as the business and economic implications of climate change as well as the politics of global warming. In a series on the Project Syndicate website, a professor from the London School of Economics and Politics, Nicholas Stern, wrote that climate change is a threat to the world's economic future and that lower carbon emissions could lead to increased prosperity.

Politicians have debated over the validity of different economic systems in the context of global warming. It is difficult to receive a completely non-partisan perspective on the issue, addressing the problem for what it is rather than for what political opportunities it provides. Government intervention is clean energy's best bet. The free market economy solution is the equivalent to denying that there is a problem in the first place. Global warming is a problem that needs to be addressed by trying to fix it, rather than avoiding the causes.

Suggested Reading

Burroughs, William James. Climate Change: A Multidisciplinary Approach, 2 ed. Cambridge University Press, 2007.

Graziani, Mauro. Renewable Resources and Renewable Energy: A Global Challenge. CRC, 2006.

Haggis, Geoffrey. The Energy Challenge: Finding Solutions to the Problems of Global Warming and Future Energy Supply. Matador, 2007.

Holmes, Dave, Terry Townsend, and John Bellamy Foster. Change the System, Not the Climate!: A Socialist View of Global Warming. Resistance Books, 2007.

Klaus, Vaclav. Blue Planet in Green Shackles: What Is Endangered: Climate or Freedom? Competitive Enterprise Institute, 2008.

Smith, Zachary A. The Environmental Policy Parado, 5 ed. Prentice Hall, 2008.

Maria Rocha-Buschel studies journalism at New York University, USA.
COPYRIGHT 2009 Martin Jan Stransky
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Title Annotation:ECONOMICS
Author:Rocha-Buschel, Maria
Publication:The New Presence: The Prague Journal of Central European Affairs
Geographic Code:1USA
Date:Sep 22, 2009
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