Chris Hedges discusses Ecosocialism with Victor Wallis

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Chris Hedges



On Contact - Ecosocialism with Victor Wallis

May 23, 2020
 

On the show this week, Chris Hedges talks to writer, teacher and activist Victor Wallis about the prospect and need for Ecosocialism.
 

Appendix


Beyond “Green Capitalism”

A disdain for the natural environment has characterized capitalism from the beginning. As Marx noted, capital abuses the soil as much as it exploits the worker.1 The makings of ecological breakdown are thus inherent in capitalism. No serious observer now denies the severity of the environmental crisis, but it is still not widely recognized as a capitalist crisis, that is, as a crisis arising from and perpetuated by the rule of capital, and hence incapable of resolution within the capitalist framework.

It is useful to remind ourselves that, although Marx situated capitalism’s crisis tendencies initially in the business cycle (specifically, in its downward phase), he recognized at the same time that those tendencies could manifest themselves under other forms—the first of these being the drive to global expansion.2 Such manifestations are not inherently cyclical; they are permanent trends. They can be sporadically offset, but for as long as capitalism prevails, they cannot be reversed. They encompass: (1) increased concentration of economic power; (2) increased polarization between rich and poor, both within and across national boundaries; (3) a permanent readiness for military engagement in support of these drives; and (4) of special concern to us here, the uninterrupted debasement or depletion of vital natural resources.

The economic recession of 2008, widely recognized as the most severe since the post-1929 Depression, has been variously interpreted on the left in terms of whether or not capital can overcome it by, in effect, restoring the restraints—some of them socially progressive—that it had accepted (in the United States) in the 1930s. To the extent that such remediation is viewed as possible, the crisis is seen as undermining only the neoliberal agenda and not capitalism, as such.3 In that case, we would witness a perhaps cyclical return to a period of greater governmental regulation (including greater responsiveness to limited working-class demands).

But what is not at all cyclical—and what most sharply distinguishes the present crisis from that of the 1930s—is the backdrop of aggravated environmental devastation. The reign of capital has now been thrown into disarray not only by financial chaos, but also by the shrinkage and disruption of the natural infrastructure which serves not only the survival needs of the human species but also the particular requirements of the capitalist ruling class. The immediate grounds for ruling-class concern arise along several major axes: (a) rising raw material and energy costs; (b) losses from catastrophic climate events; and (c) mass dislocation, popular disaffection, and eventual social upheaval.

It is this set of preoccupations that drives the political agenda of “green capitalism.” While there are obvious points of convergence between different green agendas, it eventually becomes clear that any full merger between an agenda that is insistently capitalist and one that accentuates the green dimension is impossible. Nonetheless, immediate pro-ecology steps are urgently needed, irrespective of their sponsorship. The resulting dilemma is one that the left must face without delay, as an integral step in developing whatever more radical strategy might be possible for the longer term.

The “Green Capitalist” Agenda4

At a conceptual level, it is clear that “green capitalism” seeks to bind together two antagonistic notions. To be green means to prioritize the health of the ecosphere, with all that this entails in terms of curbing greenhouse gases and preserving biodiversity. To promote capitalism, by contrast, is to foster growth and accumulation, treating both the workforce and the natural environment as mere inputs.

Capital is no stranger to contradiction, however. Just as it seeks to balance market-expansion with wage-restraint, so it must seek to balance perpetual growth with preservation of the basic conditions for survival. Despite the ultimate incompatibility of these two goals, therefore, capital must to some extent pursue both at once. Although green capitalism is an oxymoron, it is therefore nonetheless a policy-objective. Its proponents thus find themselves in an ongoing two-front struggle against, on the one hand, capital’s more short-sighted advocates and, on the other, the demand for a far-reaching ecologically grounded conversion of production and consumption.

The green capitalist vision is sometimes associated with small enterprises that can directly implement green criteria by, for example, using renewable energy sources, avoiding toxic chemicals, repairing or recycling used products, and minimizing reliance on long-distance shipment for either supplies or sales. But the scope of such practices is likely to be severely limited by market pressures. The aspect of local self-sufficiency is most widely seen in the food-services sector, especially in farmers’ markets, which have experienced a notable resurgence in recent years in industrialized countries. This corresponds more to what Marx called “simple commodity production,” however, than to capitalist enterprise. Agribusiness allows residual space for it, but at the same time undercuts it through economies of scale facilitated by technologies of food processing and storage; political clout, resulting in subsidies; and reliance on a typically migrant workforce that receives less than a living wage. Because of the resulting cost differences (as well as inconveniences of access), patronage of farmers’ markets is likely to remain primarily a political choice until much more is done to offset the artificial competitive edge enjoyed by the food-industrial complex.

Focusing now on the dominant corporate sector, we find the green capitalist agenda expressed partly by the enterprises themselves, partly by industry associations, and partly by government.5 For the corporations themselves, “green” practice takes essentially three forms: (1) energy-saving and other cost-cutting measures, which are advantageous to them in any case; (2) compliance with whatever regulations may be enforced by a government in which they normally have a large voice; and (3) most importantly, public relations (PR). The industry associations further amplify the PR aspect, playing an especially vital role on the global stage, where they strive to establish the common assumptions underlying international agreements. They have worked extensively to influence the United Nations Development Program, and they also carry out large-scale lobbying campaigns to set negotiating parameters for the periodic Earth Summits (Rio de Janeiro 1992, Kyoto 1997, Johannesburg 2002, Copenhagen 2009). The Business Council for Sustainable Development thus came into being in the run-up to the Rio conference, declaring in its charter that “economic growth provides the conditions in which protection of the environment can best be achieved.”

Under its influence, the monitoring of global environmental measures was entrusted to the World Bank, which in the ensuing decade paradoxically invested more than fifteen times as much in fossil-fuel projects as in renewable energy.6 The Kyoto conference advanced similar criteria five years later by enshrining emissions trading as the primary strategy for battling global warming. This practice, under the rubric of “cap and trade,” has become the centerpiece of governmental proposals in the United States. It posits an incentive-based approach to corporate policy, under which enterprises participate in a market in pollution credits. Because of the political clout of the corporations, however, the initial cost of these credits may be reduced to zero. At the same time, the most severe industrial offenders are allowed to “offset” their damages elsewhere (e.g., by funding reforestation programs) rather than directly curtailing them.

Cutting across all corporate insertions into the environmental debate is the assumption that the basic instruments for responding to ecological crisis are technology and the market. The technological fixation has been a constant of capitalist development. Initially focused on maximizing labor productivity, it is continuously replenished by ever more miraculous applications, especially in the spheres of communication and of genetic engineering. The unending proliferation of innovations—a hallmark of late capitalism7—lends credence, in public perception, to the idea that there is no challenge that technology cannot overcome. The unstated premise behind such claims is that the selection of any technology will continue to reflect corporate interests, which in turn reflect the goals implicit in market competition, i.e., profit-maximization, growth, and accumulation. While green technologies—e.g., renewable energy sources—may attract a degree of corporate attention (thanks mainly to social/political pressure), nothing short of a change in the basic locus of economic decision-making will stop certain corporations from continuing to pursue established (non-green) lines of production. Insofar as they must nonetheless try to present themselves in green clothing, they will not hesitate to misrepresent the questions at stake and to invoke technological “solutions” that have little chance of being successfully implemented.

A revealing and economically important illustration of this dynamic is the advocacy of so-called “clean coal.” To begin with, much of the coal industry’s PR emphasis is placed on the removal of specific impurities (such as sulfur and particulates) from coal-burning emissions, overlooking the biggest problem: the combustion process itself, and the resultant rise in atmospheric concentration of carbon dioxide. When this unavoidable “bottom line” can no longer be ignored, the industry, not wishing to be restrained even by such modest disincentives as a carbon tax, will assert, as did CEO Steven Leer of Arch Coal Inc., that “the enabling technology for stabilizing carbon dioxide levels in the atmosphere is carbon capture and sequestration. There is not another option.”8 Carbon capture and sequestration, however, is an unproven technology, with problems not unlike those associated with any toxic byproduct that has to be disposed of in very large quantities. While it is possible to isolate carbon dioxide emissions and to pump them into out-of-the-way sites (whether underground or perhaps even under the ocean), the potential blowback from such undertakings, once they exceed a certain threshold, is uncertain, incalculable, and possibly catastrophic.9

The desirability of shifting to certain inexhaustible or renewable energy sources is obvious. What is not so widely recognized, however, is that these sources too have their costs—in terms of installation, collection, maintenance, and transmission—and that therefore none of them, despite whatever abundance may characterize their occurrence in nature, can offer unlimited accessibility for energy supply.10 Some of the alternative sources, such as hydrogen and biomass, themselves require significant if not prohibitive energy inputs.

Biomass (burning biological materials as fuel) also threatens to reduce the land-area available for growing food. Hydrogen, for its part, carries the danger of leakage and of rising to the stratosphere, where it could destroy the ozone layer. Tapping geothermal energy can, in certain regions, risk provoking seismic disturbances; in addition, there may be high costs associated with the depth of requisite drilling, and the emerging heat may be dissipated in various ways. Wind energy, despite its clear positive potential, is limited by materials and space requirements, as well as by the irregularity of its source in many locations. Tidal power is more continuous than wind energy, but in addition to the high installation cost of its requisite barrages or underwater turbines, it poses—as do wind turbines—certain dangers for resident or migrant wildlife. Solar energy, finally, is extraordinarily promising in direct localized applications, but for power generation on a large scale, it would risk impinging on space required for other purposes. As for solar collectors situated in otherwise unused desert regions, their dust-free maintenance in such sites would require the long-distance trans-shipment of vast quantities of water.

All these technologies, with the partial exception of biomass, avoid adding to the net concentration of carbon dioxide in the atmosphere. The same might perhaps be said of nuclear power, provided that, as the more up-to-date versions promise, it does not entail further large-scale mining and refinement of fissionable material. Nuclear power has other problematic implications, however, beyond its daunting startup costs in both time and money. Even if we were to suppose—as is further claimed—that the problem of waste has been minimized via repeated re-use (until there is hardly any radioactive material left) and that the dangers of a Chernobyl-type disaster or of vulnerability to military attack have been addressed by engineering improvements,11 there still remains the fact that nuclear power is linked to the potential for making bombs, and no disarmament process is underway. The imperialist governments will therefore not allow nuclear power to be distributed on a scale sufficient to match the potential global demand for it. The longer-term ecological and political desideratum would not be to undo such restrictions, but rather to impose them on the imperialist powers themselves, as part of a full-scale conversion process.

The upshot of all these considerations is that the question of how to supply the world’s currently growing energy demand without continuing recourse to carbon dioxide-producing fossil fuels—coal, oil, and natural gas—has not yet been solved. In view of the problems associated with all the alternative energy sources, a radical and comprehensive reconsideration of the demand side of this equation would seem to be called for. This is the essence of the socialist response: while encouraging the use of various safe-energy alternatives, it can accept the fact that these alternatives are ultimately limited in their total power-generating capacity, and therefore that the world’s aggregate energy consumption will actually have to be reduced. Once this is understood, one can then focus on the interrelated issues of how to identify and prioritize real needs, and how to correspondingly reorganize society in such a way as to assure everyone’s well-being. This is beyond the purview of capitalist thought, whatever its level of awareness of the environmental danger.

The Politics of Reduced Energy Consumption

The ecological movement, as it has so far developed, has not yet been able to mount a socially persuasive agenda for reducing energy consumption on a large scale. Broadly speaking, critique of the capitalist growth model has advanced along two paths, which, although complementary in their ultimate thrust, have tended to clash politically. On the one hand has been the tradition identifiable with the “small is beautiful” slogan, associated with localism, ruralism, and (in varying degrees) rejection of “industrial society.” This tradition understands the danger of growth but tends to link it with the general condition of modernity, including modern technology, population increase, and urbanization.12 On the other hand is the socialist tradition, which, drawing on Marx, sees growth not in terms of human evolution as such, but rather in terms of the specific drives unleashed by capital. In its political expression, however, this tradition has been associated with revolutionary regimes arising in countries of widespread poverty, where the top priority appeared to be a form of “socialist growth.” As a result of this association—buttressed by real or ascribed failings of the regimes in question—critics of growth tended also to become critics of socialism, which they saw as sharing the major negative traits of capitalism. Conversely, those who felt the urgency of emerging from poverty rejected the anti-growth posture, viewing it as an ideological expression of sectors whose needs were already satisfied, and who would unfairly deny similar satisfaction to others.

A theoretical resolution to this antagonism already exists. It is implicit in Marx’s dual focus on nature and humans as sources/creators of wealth and as objects of capitalist depredation. The link has been discussed in depth by, among others, writers such as Paul Burkett, John Bellamy Foster, Joel Kovel, and Richard Levins. Foster’s book Marx’s Ecology, in particular, refutes the productivist stereotype of Marx’s thinking, and Levins has presented a concise yet wide-ranging refutation of developmentalist assumptions, informed by a blend of dialectical thought, biological expertise, and farming experience.13 Reading this literature, one can see implicit in the Marxist critique of capital a call for undoing high-tech agriculture, restoring biodiversity, drastically reducing the volume of long-distance trade, and generally bringing technology under social or community control. These are the same goals enunciated by zero-growth activists (who stress lifestyle choices and local actions over challenges to state power), but the realization of those goals is, for Marxists, clearly linked with class struggle. The basis for this link is simply that without successful class struggle the major vectors determining trade patterns and technological development will continue to be those of the capitalist market.

There is thus a clear theoretical symbiosis between ecological thinking and the anti-capitalist critique. Two major strands of radical activism are thereby poised to function as one, in the sense that the ecological movement, in seeking to override market dictates, is at its core anti-capitalist, while the critique of capitalism is, in its rejection of the growth/accumulation imperative, inherently ecological.14 The resultant socialist ecology or ecological socialism constitutes a full-blown alternative to the dominant ideology. Its political potential, moreover, should be greatly enhanced by the 2008 financial collapse, which showed the hollowness of capitalist “prosperity.” Yet there remain huge obstacles to popular recognition of the link between ecology and socialism, and hence to popular support for an agenda of collectively planned, society-wide reduction in energy use. What are these obstacles, and how can they be overcome?

Although the growth imperative at the macro level is specific to capitalism, it is not without some grounding in longer-standing human traits. Indeed, this is what makes possible the very idea of seeing growth as an inherent human pursuit. Like all such generalizations, it has a strand of accuracy, which is then amplified to the point of blotting out the truth of the whole. It is legitimate to say that there is a natural human striving for improvement and even for perfection. This is evident in various forms of artistic expression throughout the ages, as it is also in the care of artisans—whether individually or as a team—to make the best possible product. The goal of growth intersects with such striving in a qualified way. A healthy plant, animal, or human must grow to full stature. One can even say something similar of a community, which, unless it reaches a certain threshold of size and productive capacity, cannot expect to provide the range of services and diversions required in order to offer a satisfying life to each of its members.

But in any such unit of growth, one must distinguish optimum from maximum. Optimum growth for any living entity is part of what constitutes fulfillment of its potential. Anything above optimum, however, is pathological: the organism, whether an individual or a community, suffers disequilibrium either among its component parts or between itself and its environment (or both).

Capital’s growth-impulse is inscribed in its credo of accumulation. Its objective limits are determined, in the short run, by saturation of the market and, in the long run, by exhaustion of resources. When its productive potential is stymied, it turns to financial speculation, which only increases the gulf between the capitalist class and the rest of the species. Because of imperialist relations, deprivation is particularly vast, widespread, and seemingly intractable in countries of the global South. This has the ironic effect of creating a constituency which, although desirous of revolutionary redistribution, may at the same time be receptive to calls for growth as a kind of compensatory entitlement, as its members seek to overcome the huge gap between their own consumption-levels and those prevalent within the imperial metropolis.

Insofar as the world’s poor—and/or those who purport to speak for them on the global stage—retain this longing to ape the extravagant U.S.-advertised lifestyle, the U.S. leadership will continue to invoke the poor countries’ demands as a pretext for rejecting its own ecological responsibility. The government of the United States, on the one hand, and the governments of countries such as China and India, on the other, will remain locked together in a dance of death, in which each partner invokes the other’s intransigence to justify its own. The impact of progressive ecological steps taken in other countries will be severely limited, and most of the world’s peoples will be reduced to the status of spectators, if not victims, of the ongoing environmental breakdown. This is the prospect that loomed over the Summit in Copenhagen.

An alternative to this bleak scenario, if there is to be one, will depend primarily on the impact of popular movements around the world. There are promising steps in this direction, from both the South and the North, although the idea of a policy link to socialism—let alone of a politically powerful organization to articulate and embody such a link—remains elusive. The incipient efforts deserve our attention, as does the question of how to surmount the conceptual impasse that frustrates international negotiations.

In Search of a Mass Movement for Ecological Socialism

The most massive expressions of radical environmental awareness have arisen among the peasants and indigenous peoples of the global South. For these populations, the capitalist/productivist plunder of the environment—in the form of deforestation, reckless or deliberate pollution, sea-level rise from global warming, and misuse of fresh water (flooding by dams or depletion of aquifers)—is a direct assault on their homes and livelihoods.15 Their sense of outrage and desperation is beyond measure. It is, moreover, a community sentiment on the part of people who are being stripped of everything, and whose plight leads them to consciously reject the entire agenda of the invasive force. One would have to return to the early days of capitalism to find a comparable unanimity of antagonism to the agencies of exploitation.

Yet, while the anger and its justification are not unprecedented, the basis for the current movement distinguishes itself from that of earlier resistance in at least two ways, one of which makes it weaker, but the other of which could give it greater strength. The weakening factor has to do with dispensability. Through all its phases, capital has sought limitless supplies of its necessary inputs, including human labor power—for which its early recourse to open slavery has given way in more recent times to the large-scale abuse of migrant laborers and, in some countries, also of prisoners. Alongside this element of continuity, however, has come, with labor-saving technological advances, a markedly increased propensity on the part of capital to view certain populations as altogether expendable. Insofar as these populations exist on the margins of capitalist production, they lack economic leverage and their demands—much less their sufferings—therefore carry no political weight. So far as capital is concerned, these populations can thus be consigned with impunity to sickness, dispersion, or death.

Where then lies the potential strength of this constituency? These people do indeed hold one card which was not available to their exploited counterparts of an earlier age. Their direct tie to the long-term sustainability of the land, at a time when such sustainability is everywhere undermined, gives them in fact a strategic placement that contrasts diametrically with the supposed superfluity to which they have been relegated by capital. Their own “parochial” needs embody the collective need of the entire human species—not to mention other endangered life-forms—to stop the relentless destruction of the ecosphere. Ironically, therefore, although such peoples are among the world’s poorest, not just by capitalist standards (personal possessions), but also in terms of access to the means of mass communication, they have been thrust into a vanguard position, on a par with that of Cuba,16in the global ecosocialist movement.

Visible expressions of this leadership role have so far been sporadic, beginning with direct, on-site confrontations—especially dramatic in recent years in Latin America and India—but progressing to the world stage via international conferences of indigenous peoples,17interventions at the United Nations,18 and participation in the annual gatherings of the World Social Forum (WSF). From such platforms, they have been able to remind a worldwide audience how arbitrary has been the whole historical development underlying commonly held assumptions about the way our species should live. Their most recent WSF declaration (from Belém in 2009) characteristically includes statements like the following:

Modern capitalism was initiated centuries ago and imposed in America with the invasion of October 12, 1492. This gave way to global plundering and invented theories of “races” to justify American ethnocide, the incursion in Africa for its slave trade, and the plundering of other continents.…

[W]hat is in crisis is capitalism, Euro-centrism, with its model of Uni-National State, cultural homogeneity, western positive rights, developmentalism and the commodification of life.…

We belong to Mother Earth. We are not her owners, plunderers, nor are we her vendors, and today we arrive at a crossroads: imperialist capitalism has shown [itself] to be dangerous not only due to its domination, exploitation and structural violence but also because it kills Mother Earth and leads us to planetary suicide, which is neither “useful” nor “necessary.”19

This perspective is clearly one that speaks for a bigger constituency than that of its immediate exponents. Indigenous peoples, numbering approximately 300 million worldwide, constitute no more than 5 percent of the total human population. From a sociological standpoint, they are simply an ethno-linguistic category, distinguished above all by their immemorial roots in a particular locality. But, in terms of their collective message in an epoch of environmental breakdown, they express, more completely than any other demographic group, the common survival interest of humanity as a whole.

Our theoretical challenge is to define an arena of negotiation, and eventually a political strategy for reconciliation, between the global perspective of the indigenous peoples and the ongoing, though in part disputable, needs of the much larger population—in its majority, the international working class of the twenty-first century—that has been drawn into a mode of life far removed from the one that the indigenous are striving to preserve.20

From our earlier discussion, it is clear that total energy-consumption must be drastically reduced. To this end, indigenous communities can offer inspiration in several respects. They tend to be exemplary in their reverence for the natural world, also in their material self-sufficiency, their rejection of individual property-rights, their egalitarianism, and their sense of mutual accountability.

But how can these virtues, embodied in defiantly autonomous communities, with a way of life in many cases defined by low population density, be acquired on a massive scale by the other 95 percent of the world’s people—the majority of whom inhabit large urban settlements in which they have become alienated from the natural world and acculturated to livelihoods characterized, at one end of the spectrum, by energy-intensive services and comfort and, at the other, by a desperate and competitive scramble to stay alive?

This question is, in essence, the present-day form taken by long-standing enigmas of revolutionary transformation. From the beginning of the capitalist epoch, the challenge has centered on attaining class-consciousness, a key component of which is the process whereby wage-workers come to recognize that their interests are better served by mutual cooperation than by competition (which, in terms of contending wage-claims, has always entailed a race to the bottom—whether with one’s immediate co-workers or with others in distant locations). The progression from a competitive to a cooperative or solidaristic mindset is a cultural shift. As such, it weakens or undercuts ingrained defenses and prejudices. On a limited scale, it prefigures the new constellation of attitudes associated with the socialist project.

Such an initial step in the process of transformation has been an experience common to most countries. It has typically been offset, however, and in many instances reversed, by the enormous economic impact of transnational corporations. Previously powerful labor movements have suffered dramatic declines in membership, and their surviving leaderships have often been forced to accept humiliating concessions, always under the threat of an even worse alternative. Their readiness to acquiesce was forged, in the U.S. case, during the post-Second World War period of labor’s direct partnership with global capital. Now, in their weakened position, U.S. labor leaders are less capable than ever of challenging capitalist priorities. Instead, often in defiance of programmatic demands of their membership, they give unconditional support to one of the country’s two capitalist governing parties.21

In the wake of this evolution, any revival of the latent working-class predisposition to solidarity will have to come, at least in part, on the basis of a whole new set of cultural influences. These can be drawn from a mix of sources. Looking again at the U.S. case (no doubt the most resistant to such change), one possible source of fresh perspectives may be the arrival of immigrant workers with experience of class struggle in their home countries.22 Another may be the impact of various social movements, including those of radical youth, from outside the workplace. But a very important additional source, sooner or later, will be an awareness of the environmental crisis: in particular, the understanding that it cannot be adequately addressed merely by a mass of individual responses.

At this point, the collective nature of the response put forward by indigenous communities could resonate within an otherwise disoriented and dispirited working class. Most especially, if the struggles of those communities were to become widely known, they could further energize the current revival of worker self-management initiatives. Already, the recent chain of bankruptcies in the United States, as well as that of 2002 in Argentina, has given workers new inducements to take over their factories.23 In Venezuela, a similar process has evolved in response to economic sabotage by capitalist opponents of the Bolivarian Revolution.24 The potential for ecologically informed redesign of production processes could generate added motivation for such initiatives: workers not only can see at first hand where materials and energy have been wasted; they also identify, as a matter of course, with the nearby population’s non-negotiable interest (and their own) in eliminating or neutralizing toxins.

Complementing such workplace-grounded developments are those that may occur in the neighborhoods. Again, the indigenous models would have to be made known through every possible channel. But the manifest breakdown in the supply of fresh produce to poor urban communities will create an opening for new (or in some sense much older) solutions. People could begin to ask themselves why common food items need to be shipped great distances, via countless intermediaries. The farmers’ markets are a first step in breaking out of this circle; a second step, already gaining traction in some places, is urban gardens. All such practices restore a level of direct interaction among people, promoting collective autonomy and undercutting the impact of commodification. The infrastructure required for the necessary cooperative arrangements will be conducive also to political education, which is integral to the overall process. Here again, the experience of indigenous peoples could be brought into play—perhaps even by direct contacts—to combine practical advice with wider inspiration.25

The larger picture here is one of a vast learning process. This is something that revolution has always entailed, but with distinct contours in each period. The present conjuncture is marked by a core paradox. Capitalism is superannuated. This is not just a wishful assertion that it “should have” been superseded; it is recognition of the verifiable fact that its accelerated resource depletion has far outpaced the regenerative capacities of the ecosphere. Under these conditions, the most advanced technological achievements of the capitalist era are, taken as a whole, outdated.26 They are not collectively sustainable over the long term. As a result, they are now forcefully challenged by a perspective that rejects them altogether.

Relatively few, on a world scale, would consciously choose “business as usual” (worst-case scenario for the Stern Review)27 over species-survival. But the vast majority of the non-indigenous 95 percent are caught up in structures—many of them internalized—that impede our efforts to build a new paradigm. Mere exhortation will not induce us to jettison these relics of a nefarious mode of production. As a species, we will have to liberate ourselves “strategically” from the associated habits, by focusing on scale and on degrees of urgency, framing equitable criteria for restricting or eliminating one or another practice—be it a given form of transport, a given item of long-distance trade, or a particular energy-intensive amenity of any kind.28

In carrying out this process, those who do not belong to indigenous communities will have much to learn from those who do. Indigenous communities are being threatened, however, and their members may be understandably reluctant to visit “alien” territory. But they may also begin to recognize that their own survival depends on whether a transformation takes place in that outside world. If they can contribute to such a revolution, they would thus be serving their own interest as well.

Breaking the Impasse on the World Stage

The emergence of indigenous peoples as an organized presence on the world stage presents an extraordinary opportunity to the rest of humanity. We have already noted the traits that have earned these peoples a leadership role in terms of ecological practice, and how those traits are linked to their rejection of the property regime that underlies capitalism’s growth impulse. Of equally great importance is the fact that neither the indigenous population as a whole, nor any community within it, constitutes a nation-state. To the contrary, such a formation would violate their very essence. Instead, the world’s indigenous peoples are spread out over many countries and regions. Only in exceptional cases have their interests attained even limited expression in any national government.29 They therefore act at the global level as a kind of transnational pressure group, advocating for their own interests but, in so doing, serving also as a moral force reminding international organizations of a shared responsibility for the preservation of life.

This new element in the global equation matches the ecological issue itself as a phenomenon transcending national boundaries. It gives us the possibility of rethinking the entire framework of representation that currently exists for addressing matters of worldwide concern. The frustration that has attended international negotiations over environmental policy is well known. National governments speak for the dominant interests in their respective countries; their stances on ecological issues are only as good as they have been pressured to be by each society’s working-class and progressive movements.30 Moreover, the aggregate global outcome tends routinely to reflect the position of the ecologically most retrograde of the major powers, which, given the parameters of capitalist competition, are likely—in part precisely because of their ecological negligence—to be the ones with the greatest commercial advantage and therefore the biggest impact. Given this dynamic, the ambitious ecological proposals that may be put forward by other governments will go nowhere.

It is within this arena of inter-government negotiations that the deadly standoff between the most profligate “developed” economy (the United States) and the most populous “developing” countries (China and India) is sustained. The dynamic at work here is reminiscent of the fear of “mutually assured destruction” that for decades sustained the nuclear arms race between the United States and the Soviet Union, in that in both cases the logic of competition tends to block any concessions. That earlier dance of death ended only with the disintegration of one of the two partners. The present race to environmental oblivion is unlikely to be restrained without a series of political collapses of comparable scope. When the Soviet Union disappeared, progressive forces in the United States were unprepared to impose the anticipated “peace dividend” (diversion of military expenditure to social reconstruction), because they failed to recognize that, for the forces driving U.S. global military projection, the alleged threat of an equivalent Soviet thrust had never been more than a pretext—for which some substitute would quickly be devised.

At the global level, discussion over how to respond to environmental dangers requires a new framework. The non-state contours of the worldwide indigenous movement offer a hint as to where to begin. In the environmental debate among states, those opposing the status quo proceed on the assumption that every national unit has equal entitlement (on a per-capita basis) to deplete the earth’s resources. This seems fair enough so long as we accept the nation-state as the basic agent of policy, with the implication that the particular earmarking of environmental costs within each nation-state is beyond the purview of international scrutiny. But this is precisely where the problem lies. Each national aggregate encompasses its own mix of necessary and wasteful expenditures—with the proportion of the latter tending to vary with a country’s economic and military power-position (as well as its acquired patterns of excess consumption).31 Certain types of resource use must be curbed wherever they occur; the fact that they are more prevalent in richer countries will itself reinforce the concern for seeking equity between richer and poorer regions.

But the global community will now have to promote such equity not only between regions, but also within them. Such an externally driven reorientation will of course be fiercely resisted, initially with the argument that it violates sovereignty. National sovereignty, however, is properly understood not to supersede basic human rights, which are what is ultimately at stake in the environmental debate. The irrelevance of national boundaries to the spread of environmental devastation is well known, but the corresponding political conclusions have yet to be widely drawn. This is a clear case where the whole world has a legitimate interest in the measures that may or may not be taken—whether by government or by the private sector—within any given country. Although the formal means to implement this interest are at present very weak, the political potential of such universally formulated criteria has been amply demonstrated in connection with historic struggles against racism (e.g., the United States in the 1960s and South Africa in the 1980s).

In the sphere of environmental policy, the worldwide debate about emissions needs to undergo a radical shift, from a national to a sectoral focus.32 The first sector to be challenged will of course be the military. For each of the sectors addressed, however, the key issue to be resolved, through informed, society-wide debate, is: How much of the activity in that sector—and hence, of the resources it consumes—is directed, not at the satisfaction of human need, but rather at pursuits reflecting the priorities of capital and its ruling class?

It would be illusory to expect such a process to yield a universally accepted set of criteria that could be quickly applied. Like all revolutionary processes, its realization will be beset by obstacles and contingencies. But the challenge of identifying and eliminating social waste could prove to be a powerful unifying force for the vast majority, as human beings seek simultaneously to restore the environment and assure the satisfaction of their own needs. The process also readily lends itself to defining short-term targets—particular categories of energy waste—while nonetheless enabling activists to bring out the full scope of the longer-term task.

Notes

  1. Speaking respectively of “large-scale industry” and “industrially pursued large-scale agriculture,” Marx wrote, “the former lays waste and ruins labour-power and thus the natural power of man, whereas the latter does the same to the natural power of the soil.” Capital, vol. 3, tr. David Fernbach (London: Penguin Books, 1991), 950.
  2. Communist Manifesto, section I.
  3. Rick Wolff, “Economic Crisis from a Socialist Perspective,” Socialism and Democracy, no. 50 (July 2009), 3.
  4. For a more extensive treatment, see Victor Wallis, “Capitalist and Socialist Responses to the Ecological Crisis,” Monthly Review 60, no. 6 (November 2008).
  5. Kenny Bruno and Joshua Karliner, earthsummit.biz: The Corporate Takeover of Sustainable Development (Oakland, CA: Food First Books, 2002), 30.
  6. Ernest Mandel, Late Capitalism (London: New Left Books, 1975), 192.
  7. Alvin Powell, “Mining Exec: Coal Vital to Energy Mix,” Harvard University Gazette, February 9, 2009.
  8. The summary that follows is based, in part, on Tom Blees, Prescription for the Planet: The Painless Remedy for Our Energy and Environmental Crises (self-published, www.booksurge.com, 2008), 63-86, and, for solar power, on calculations presented in Gregory Meyerson and Michael Joseph Roberto, “Obama’s New New Deal and the Irreversible Crisis,” Socialism and Democracy, no. 50 (July 2009), 64n. Blees’s critical summary is useful irrespective of whether or not one shares his view that what must therefore be pursued is an updated version of nuclear power.
  9. Blees’s Prescription for the Planet argues that the new Integral Fast Reactors (IFRs) have solved the technical problems of safety and waste associated with earlier generations of nuclear power plants. Even in the absence of severe mishaps, however, the underlying risk of accumulated radiation effects on workers and, through them, on the wider population, remains. See John W. Gofman and Arthur R. Tamplin, Poisoned Power: The Case Against Nuclear Power Plants Before and After Three Mile Island (1979), http://www.ratical.org/radiation/CNR/PP/.
  10. Humanity and Nature (London: Pluto Press, 1992), chapter 5 (“Agricultural Ecology”).
  11. Numerous cases from Latin America are analyzed in Nacla Report on the Americas 42, no. 5 (Sept.-Oct. 2009) and in Gerardo Rénique, ed., “Latin America: The New Neoliberalism and Popular Mobilization,” in Socialism and Democracy, no. 51 (November 2009). See also the Joseph Berlinger’s 2009 documentary film on the struggle in Ecuador, Crude: The Real Price of Oil (http://www.crudefilm.com/).
  12. Cuba’s special significance as an ecological model, including its shift to 80 percent organic agriculture with large-scale urban gardening, is well brought out in the 2006 documentary film, The Power of Community: How Cuba Survived Peak Oil(http://www.powerofcommunity.org/cm/index.php).
  13. See, for example, materials on the 4th Continental Summit of Indigenous Peoples (May 2009) in Puno, Peru, which drew 6500 delegates from 22 countries (http://cumbrecontinentalindigena.wordpress.com/).
  14. UN interventions culminated in 2007 with the General Assembly’s overwhelming ratification of the Declaration of the Rights of Indigenous Peoples (http://www.un.org/esa/socdev/unpfii/en/declaration.html), which includes in its Preamble a clause, “Recognizing that respect for indigenous knowledge, cultures and traditional practices contributes to sustainable and equitable development and proper management of the environment.”
  15. http://www.indigenousportal.com/News/Declaration-of-Indigenous-Peoples-at-the-World-Social-Forum-Bel%C3%A9m-Amazon-Brazil.html.
  16. In many countries experiencing large-scale urban migration, one cannot draw a sharp distinction between indigenous and non-indigenous populations. People who have left their original territories may preserve much of their culture, as in the city of El Alto, Bolivia (see Adolfo Gilly, “Bolivia: A 21st-Century Revolution,” Socialism and Democracy, no. 39, November 2005). The global figure of 300 million indigenous could, in this respect, be viewed as an underestimate. In addition, the communication boundaries between indigenous and non-indigenous may sometimes be more porous than this apparent dichotomy suggests.
  17. See Kim Moody, Workers in a Lean World (London: Verso, 1997).
  18. For a suggestive example of such impact, see Héctor Perla Jr., “Grassroots Mobilization against US Military Intervention in El Salvador,” Socialism and Democracy, no. 48 (November 2008).
  19. A useful general analysis is Iain Bruce, The Real Venezuela (London: Pluto Press, 2008), esp. ch. 4.
  20. Although I here emphasize what indigenous peoples can teach us, the theoretical dialogue will need to go in both directions, inasmuch as certain spokespersons for the indigenous (e.g., Ward Churchill) and for a “subsistence” approach (e.g., Maria Mies) have popularized a severe misreading of Marx, ascribing to him the very notion of value—as excluding nature—that Marx had identified as a major fault of capital (which confuses value with real wealth). For a critique of such misreadings, see John Bellamy Foster and Brett Clark, “The Paradox of Wealth: Capitalism and Ecological Destruction,” Monthly Review 61, no. 6 (November 2009), 7-10.
  21. For detailed discussion, see Victor Wallis, “Socialism and Technology: A Sectoral Overview,” Capitalism Nature Socialism 17, no. 2 (June 2006).
  22. The Economics of Climate Change: The Stern Review (Cambridge University Press, 2006), a British government report prepared under the direction of Nicholas Stern, is perhaps the most comprehensive formulation of the “green capitalist” perspective. For a critique, see the Introduction by John Bellamy Foster et al. to Monthly Review 60, no. 3 (July-August 2008), 3-6.
  23. For a fuller exposition of this point, see my essay, “Vision and Strategy: Questioning the Subsistence Perspective,” Capitalism Nature Socialism 17, no. 4 (December 2006).
  24. Where they do attain such representation, as in Bolivia with Evo Morales, the government is inescapably subjected to conflicting pressures (in particular, over the exploitation of energy resources), as a result of which tensions arise between it and its indigenous base.
  25. For an initial attempt at itemizing categories of wasteful expenditure, see Wallis, “Toward Ecological Socialism,” 135-37.
  26. I noted such a desideratum in an earlier article—“‘Progress’ or Progress? Defining a Socialist Technology,” Socialism and Democracy, no. 27 (2000), 56—but at that time the political forces that might be able to embody its approach were not known to me.


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Planet of the Humans: Point/Counterpoint

Another important dispatch from The Greanville Post. Be sure to share it widely.



Editor's Note: As might be expected from a shockumentary artist like Michael Moore, his latest outing,  Planet of the Humans, packs a great deal of provocative, at times haunting, and vital information along with debatable truths. This is inevitable considering that Moore, despite the rabble-rouser posture, is essentially a liberal, a man who apparently sees no insurmountable contradiction in supporting frauds like Hillary Clinton, Barack Obama and Bernie Sanders while yearning for the kind of change that can deliver the planet from capitalist oppression.  We could go to some length on this topic alone, the self-delusions of liberals and their long tail of failures and betrayals, but that is not the object of this post, which is only meant to serve as a platform for a point/counterpoint between Moore's (and his collaborator Jeff Gibbs) positions on contemporary environmentalism and critics who have found the documentary wanting in precision, possibly integrity, scientific rigor, and ultimately misguided in its overall purpose. (Personally, I found the film flawed, often exasperatingly so, given its important focus, "greenwashing"—the corporate infiltration and evisceration of the environmental movement with apparent collaboration from within—and the stunted way, the glaring missed opportunities marring the film's narrative. Maybe the topic is too big for just one documentary. Maybe Moore and Gibbs should have considered a miniseries.). Still, this is not my counterpoint to Moore's film, but the responses of other critics.  Are they being too harsh? Are they misguided? What say you? Watch carefully and opine.—PG


PLANET OF THE HUMANS
By Michael Moore and Jeff Gibbs

Michael Moore presents Planet of the Humans, a documentary that dares to say what no one else will this Earth Day — that we are losing the battle to stop climate change on planet earth because we are following leaders who have taken us down the wrong road — selling out the green movement to wealthy interests and corporate America. This film is the wake-up call to the reality we are afraid to face: that in the midst of a human-caused extinction event, the environmental movement’s answer is to push for techno-fixes and band-aids. It's too little, too late.

CRITICISM & Moore rebuttals

Planet of the Humans: DEBUNKED | In Depth

Now You Know.  (May 8 2020).
 On today's episode of "In Depth" Zac & Jesse take the new Michael Moore/Jeff Gibbs documentary, "Planet of the Humans" to task and refute many of its claims about renewable energy! #planetofthehumans #nowyouknow #debunked    http://getenergysmartnow.com/2020/04/...
This post is part of a series on humans' destruction of the natural world.

Michael Moore on Planet of the Humans and Censorship | Useful Idiots

Michael Moore joins the show to discuss the removal of Planet of the Humans from YouTube, and addresses criticism he and the film have received. (May 31 2020)

Michael Moore, filmmakers respond to criticism of new bombshell environmental film


Academy award-winning filmmaker Michael Moore and associates discuss their new documentary, 'Planet of the Humans,' a documentary that says we are selling out the green movement to wealthy interests and corporate America. (Apr 28 2020)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



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The Russian Peace Threat examines Russophobia, American Exceptionalism and other urgent topics




China’s electric vehicles may be the future. Environmentalists should cheer.


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RT.COM DISPATCHES 
China launches bold new electric vehicle credit scheme

© Pixabay.com

Once again propelling itself ahead in global electric vehicle markets, Beijing has just rolled out a new credit scheme that will essentially pay citizens to make the switch to EVs.

This week the electric vehicle world is abuzz with the news of a new million-mile battery in the works, but another, much less flashy innovation announced this week could have even more sweeping implications for the EV sector. It may not make the sexiest headlines, but a new form of EV credit-trading being tested out in Beijing could revolutionize the way electric vehicle markets function.

“Tesla made about $354 million in Q1 2020 by selling regulatory credits,” Electrek reported this week. “Fiat Chrysler and General Motors, among others, buy billions of dollars in CO2 credits a year to avoid paying fines.” Despite the fact that the Trump administration is in the process of rescinding fuel economy rules that include greenhouse gas credits, Tesla has seen plenty of demand for their credits at the federal level. Even without these greenhouse gas credit sales, “Tesla has made over $2 billion from the sale of environmental credits over the years, but those have mostly consisted of ZEV credits from CARB states – mainly California,” Electrek reported in a  separate article last June.

According to Xinhua, he went on to say that “a driver can help cut carbon emissions by 1 tonne if he or she does not drive the car for about 200 days over a three-year period. The municipal authorities hope to bring 1 million car owners in the city to the one-tonne campaign with a target of reducing carbon emissions by 1 million tonnes within three years.”China has clearly been paying a lot of attention to what’s happening with high demand for environmental EV credits in Western markets, and this week the Beijing Environmental Exchange launched “a similar credit system to get individuals to drive an electric car, or avoid driving altogether.” As Electrek explains, “carbon emissions allowances are usually traded by companies. But the Beijing exchange’s mobile app allows individual car owners to create an account and accumulate credits.”

Xinhua Net, China’s state-run news source,  reported this week that this “new carbon-neutral solution provides a market-based incentive to encourage car owners to reduce their driving frequency and allows enterprises to buy emission quotas saved by car owners.” The article also referenced an interview with Wang Huijun, executive vice president of the exchange, who explained that “the average daily carbon dioxide emissions for an electric vehicle is 0.83 kg, while a fuel-powered vehicle with an engine of no more than 1.2 liters discharges 2.58 kg of carbon dioxide on average daily.” 

Essentially, the Chinese government will pay citizens to switch from traditional combustion engines to electric vehicles or not to drive at all. Beijing’s target to convert 1 million of the city’s car owners to participate in the 1 tonne campaign is a lofty goal, but represents fewer than a third of the city’s drivers, as “Beijing was among the 11 cities in China that had over 3 million cars on road by the end of 2019.”

“Using the Beijing Environmental Exchange’s ‘Green Traveler Platform,’ individual drivers would install a smart device to track a user’s emission-reduction behavior,” reports Electrek. “Emissions would be tallied in an account, building up credits. Then, other individuals or companies (including banks and insurance companies) would buy credits for cash.” Participants won’t see a huge influx of cash--in fact they’ll make less than a dollar per day on average. But over the course of the year, participants can make a few hundred dollars or more when these credits add up.

While Europe is often thought of as the EV headquarters of the world, and Tesla, the world’s most famous EV company, is located in the United States, China is taking over. Beijing has been on the cutting edge of the electric vehicles sector for a while now, and all but controls EV markets. Way back in 2018 Oilprice reported that “China Indirectly Controls EV Markets” because of its near-monopoly at various levels of the supply chain, most notably in the case of lithium ion batteries. It’s true that this program isn’t completely novel. As Electrek points out, “Metro Mile and other insurance providers in the US offer similar programs that use connected devices to monitor driving” and Beijing has already had parts of this system in place for a few years, like their auto insurance platform that is used to track driving behavior. But what Beijing launched this week is unique in that it  “not only reduces your insurance bill, it pays you not to drive at all or to get around in a zero-emissions vehicle.”

At that time Oilprice reported that “China produces about two thirds of the whole world’s supply of lithium ion batteries, the most common battery type used in electric vehicles. Furthermore, these highly valuable batteries make up a staggering 40 percent of the cars’ value. As it stands, Europe is far from being able to compete with China when it comes to the production of lithium ion batteries. In fact, currently the entire continent is estimated to hold just 1 percent of the market.” Because of this, EV companies around the world are moving their entire production to China. 

This credit trading market innovation is just another way that Beijing is securing its place at the forefront of the EV sector.

This article was originally published on Oilprice.com


Tesla could launch a million-mile battery this year

It's clear the EV industry is on the threshold of a major breakthrough. (Tesla China-made Model 3 vehicles at its factory in Shanghai, China © Reuters / Aly Song)

Tesla is set to launch a million-mile battery as soon as this year or early in 2021 for its Model 3 in China.

A million-mile battery would be just one pillar of Elon Musk’s strategy to make Tesla an energy company, according to the sources.  

Last year, a team from the Dalhousie University in Halifax, Canada, who do research for Tesla, said in a paper that they had tested lithium-ion battery cell chemistry expected to be able to power electric vehicles (EVs) for more than 1 million miles and last at least two decades in grid energy storage. 

Jeff Dahn and his research team presented testing results of “excellent moderate-energy-density lithium-ion pouch cell chemistry” that should be able to power an electric vehicle for over 1.6 million kilometers (1 million miles) and last at least two decades in grid energy storage.

The researchers from Dalhousie University have an exclusive agreement with Tesla, and they reported that they had designed battery cells with higher energy density without using the solid-state electrolyte that many believe is a necessary condition for enhanced density.  

Earlier this year, Reuters reported that Tesla was in talks with China’s Contemporary Amperex Technology Co Ltd (CATL) to make batteries without using cobalt for its China-made vehicles. Cobalt, one of the most expensive metals for batteries, is a key reason why EVs are still more expensive than vehicles with internal combustion engines.  After an initial rollout in China for the Model 3, the million-mile battery will be further improved for cost, storage capacity, and energy density and will be used in other Tesla models in markets outside China, including North America, Reuters’ sources said, while Tesla declined to comment on the report.

This article was originally published on Oilprice.com


Tesla's newest rival is taking the stock market by storm

© nikolamotor.co


They are both named after inventor Nikola Tesla. They are both aiming to upend the market of predominantly gasoline and diesel-powered cars and trucks with their zero-emission technologies.

And their stock prices are surging—but for different reasons.

The day on which Tesla's shares hit an all-time high closing price of $949.92 on Monday on record-high China-made Model 3 sales, shares in competitor Nikola more than doubled since their Friday closing price, hitting $73.27 per share after soaring 104 percent on the third day of trading on the NASDAQ.


© nikolamotor.com


Nikola – founded in 2015 and named after the same man that Tesla used for its name – made its debut on the stock market on June 4, after merging with special purpose vehicle company VectoIQ Acquisition Corp. Stephen Girsky, the current CEO of VectoIQ and former Vice Chairman of General Motors, joined Nikola's board of directors.

Nikola is not rivaling Tesla in the passenger car manufacturing business: it's aiming to build battery-electric and hydrogen-electric trucks and pickups. Its long game is in zero-emission heavy-duty transportation and related infrastructure such as hydrogen station networks.

But its new electric pickup truck, Badger, could become a competition of Tesla's Cybertruck. The Badger will have an estimated range of up to 600 miles, which is 100 miles more than the estimated maximum range of Tesla's Cybertruck.

Nikola Share Price Doubles Just Two Days After Market Debut   

On their third trading day since listing on the NASDAQ, shares in Nikola surged by 104 percent, after the company's founder and executive chairman Trevor Milton tweeted that Nikola would open up reservations for the Badger, "the most bad ass zero emission truck" on June 29. The projected retail price of the Badger will be between $60,000 and $90,000, depending on the configuration, according to the company.  

Nikola and its founder are betting big that policymakers will support zero-emission technology in road transportation and that investors will see the Environmental, Social, and Governance (ESG) credentials of the company.

"Nikola is thrilled to complete the Nasdaq listing and be part of the ESG investment world. This is a significant endorsement in fuel-cell and battery-electric technology," Milton said in a statement last week when the firm announced its listing.

© nikolamotor.com

So far, so good—the stock market, retail investors, traders, and fans are lapping up Nikola's stock. The market capitalization of the company exceeded on Monday the market caps of two of Detroit's Big Three.

"I've wanted to say this my whole adult life; $NKLA is now worth more than Ford and FCA. Nipping on the heels of GM. It may go up or down and that's life but I'll do my part to be the most accessible and direct executive on Twitter," Milton tweeted after markets closed on Monday.

Surpassing the market capitalization of each of Ford and Fiat Chrysler Automobiles is not bad for a company that has yet to make any revenue.



Revenue Generation Expected Next Year 

Nikola expects to start generating revenue by 2021 with the rollout of its Nikola Tre Class 8 BEV, followed by the Nikola Two Class 8 FCEV coming in 2023.

According to founder Milton, the company will make five times the revenue per truck sold compared to other companies. This will be achieved by vertically integrating the supply chain, Milton told Yahoo Finance in an interview on the day of the stock debut last Thursday.

Jeffrey Ubben, chief executive at Nikola investor ValueAct, said earlier this year that Nikola could be the next $100-billion company.

Milton told Yahoo Finance last week that "How you get there is because we vertically integrated the entire supply chain. It's very similar to Amazon."

© nikolamotor.com


Regardless of the different business models, comparisons between the two companies named after Nikola Tesla may be inevitable, not only because they bear the name of the same inventor.  

Going forward, Nikola will have to start generating revenues, preferably sooner rather than later, in order to convince the still sizable camp of skeptics that zero-emission heavy-duty vehicles could give fossil fuel-powered vehicles a run for their money over the next decade.

Delivering on targets and smooth production ramp-up could also spare Nikola some of the growing pains that Tesla had two years ago.


© nikolamotor.com


The trend in the stock price of Nikola – just three days into trading on the market – is impossible to predict, but so far, it shows the company may have already built a devoted group of followers and believers, just like Tesla has done.

(By Tsvetana Paraskova for Oilprice.com)

 


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How The Coronavirus Killed The Shale Industry

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DISPATCHES FROM MOON OF ALABAMA, BY "B"
This article is part of an ongoing series of dispatches from Moon of Alabama

A DISPATCH BY MOON OF ALABAMA, WITH SELECT COMMENTS


[dropcap]T[/dropcap]he answer to the question OPEC++ or a dead shale industry? is in.

The shale oil industry will die. It may come back in the future but that will be years from now.

The coronavirus pandemic has cut oil demand from 100 million barrels per day to some 75 Mbpd. Oil prices have fallen from $60 per barrel to $20/bl.

On Thursday OPEC+, the original oil producer cartel plus Russia, agreed formally to cut output by 10 million barrels per day. The real promised cuts would have been smaller. But the agreement depended on the commitment of all OPEC members.

Mexico did not agree to a cut. The country has hedged nearly all its oil exports:

Mexico, the world’s 12th-largest producer of oil, has hedged much of its 2020 output — that is, agreed ahead of time to a set price, reportedly about $49 a barrel. That practically eradicates any incentive Mexico might have to go along with production cuts this year.

At $1.3 billion the hedge was expensive for Mexico. But it guarantees that its budget for this year is fully covered. Mexico also redirected parts of its export to its own refineries to produce gasoline which it would otherwise have imported.

OPEC+ had also expected that other producers, the U.S., Canada, Brazil, would agree to cut their production by 5 Mbpd. Together with the 10 Mbpd from OPEC+ that would have helped to keep the oil price from sinking further. Yesterday a meeting of the G-20 countries was held to discuss the issue. None of them commited to hard cuts or quotas. Canada denied Russian assertions that it would cut 1 Mbpd. The U.S. rejected to cut more than what was already shut in for a lack of market. There will be no OPEC++.

Yesterday Trump talked again with Putin. He was told that there is no deal without Mexico and the other American producers committing to one. Trump then promised to somehow make up for Mexico:

By Friday afternoon, Trump was suggesting the U.S. falloff was sufficient to cover Mexico’s burden, as well — apparently without any sort of presidential order or quotas imposed by Washington.

It is questionable that OPEC+ will accept Trump's assertion as being equal to an official cut of Mexico's output. There is then no deal. While the OPEC countries will claim to stick to their official quotas to avoid U.S. pressure everyone will cheat and try to sell as much as possible.

Russia, Saudi Arabia and other Gulf countries may still cut some production. But the reason for that will not be Thursday's OPEC+ deal but a lack of demand and no room left to store surplus oil.

It means that the price of oil will move below $20/bl until demand comes back from its current 75 Mbpd to above 90 Mbpd. That can only happen when the coronavirus pandemic has ebbed, when the quarantines have ended and air traffic resumes at a sufficient rate. That point will probably come two years from now. But the effects of the global depression the pandemic will cause will take even longer to heal. When demand finally comes back to precious levels a rise in oil prices will still be much delayed because all storage is now full and must be sold off before more crude production can go back online.

Shale rock: whatever the market price, too high for the environment. (National Geographic)

U.S. shale oil was marginally profitable above $45/bl. That price is out of reach for the next to three to five years. That is much longer than the shale oil companies will be able to finance themselves. U.S. banks, which have loaned billions to those companies, are already getting ready to seize their assets. The banks will lose most of the $100+ billion they invested in shale companies. 

Canada's expensive oil sand production is also unsustainable under the current prices.

The oil industries in North America had been free riding on the previous OPEC+ deals which limited production in countries which can produce at much lower costs. The artificially upheld prices have broken down and there is no way that they will come back any time soon.

This is a catastrophe for the labor market in the U.S. oil patch. Especially as the job losses will come on top of those in other services and industries.

It is also catastrophic for those Persian Gulf countries that depend on oil sales to finance their budgets. Iraq will be hit very hard and the lack of money may cause it to fall apart. The Saudi 'royals' will no longer be able to finance the welfare state that has held down any serious challenges to their ruling.

Alternative energy producer may also become a casualty of lower oil prices as they are no longer competitive. With low gasoline prices electric cars will lose their advantage of cheap electricity.

Trump had argued for a disengagement of the U.S. from the Middle East as the U.S. had achieved independence from foreign energy. With the shale oil industry on its death bed the U.S. will again have to import oil from the Middle East. While Trump's disengagement was never fully carried out the new situation may lead to change his strategy.

Posted by b on April 11, 2020 at 18:36 UTC | Permalink


 

Comments • SAmpler

So, the US military will be very active in securing oil the US may need or want, but will also prevent other nations from accessing their oil.

The big reserves in Venezuela become very enticing now.

And poor Iraq definitely will have to fight a war against the US. Syria already knows it will be fighting soon to get control of its oil.

Logically, the easiest thing for the US is to dump the Kingdom and take the Saudi oil.

Lots of options for the Hegemon.

Trump's maxim: Take the Oil, soon will be national security policy. America First! MAGA. And all that Exceptional stuff.

Posted by: Red Ryder | Apr 11 2020 18:48 utc | 1

US Shale industry will not be allowed to collapse completely. If no deal with OPEC can be reached, look for war in the Persian Gulf. That would drive oil prices back up to where US Shale would be profitable again and it would avoid the unraveling of the derivative bomb.

US moves towards Venezuela and it consolidation of its forces in Iraq should be seen as preparatory moves for a war with Iran. The math has now changed in Washington...

Posted by: Bob | Apr 11 2020 18:52 utc | 2

WTI @ 22.76 this morning. That's not only going to drive shale out of business, it's going to take a big bite out of the majors as well. Peak oil is back on the table, and probably here to stay.

Posted by: Trisha | Apr 11 2020 19:20 utc | 3

Alberta is much closer, connected by rail and pipelines, and they are desperate to sell their crappy bitumen that no one wants. There's no need for Uncle Sam to steal Venezuelan oil and I doubt US really wants it. But Venezuela must be punished for disobedience, just like Cuba and elsewhere.

Anybody remember a few years ago there was a media campaign to promote Canada's "ethical oil"? I guess it didn't work so well, since recently they were selling Western Canada Select for $5 a barrel.

Posted by: Trailer Trash | Apr 11 2020 19:23 utc | 4

The banks will take over ownership of the oil wells and be simultaneously bailed out. The large oil companies will also be bailed out. The small companies will be SOL.

Posted by: Gareth | Apr 11 2020 19:23 utc | 5

Ha, ha, ha, ha, that's a good one! Various con artists have been promoting that idea since the day after the first refinery opened. It used to be that Peak Oil! would drive prices to infinity. Now they are saying it will drive prices to zero, then to infinity, or some other crazy prediction? Too funny.

(note: I didn't read the linked article - couldn't be bothered, today I'd rather bloviate!)

Posted by: Trailer Trash | Apr 11 2020 19:32 utc | 6

The USA has tried unsuccessfully to get their hands back on Venezuelan Oil.
Don't think they will be successful.
This is not an issue that capitalism understands.

Posted by: Duncan Idaho | Apr 11 2020 19:36 utc | 7

Low oil prices, in isolation, aren't bad news for the USA as it is also the largest oil consumer. So, whatever it loses in the producing end it gains in the consumer end.

What makes those low prices bad news for the USA is the addition of another ingredient: consumption in the USA is also low (since 2008).

The true winner here is China. The moment the oil crisis became imminent, it outright ordered its oil companies to lower production. Yes, theoretically, this is bad, because it would lose market share - except for the fact that it consumes all the oil it produces. And who's the owner of the Chinese oil sector? The Chinese government itself. So, as it lowers production, it gains either way.

Meanwhile, it can continue to import gargantuan quantities of oil at extraordinarily cheap prices and sell at the Chinese market at constant prices. The Chinese people wins two ways: 1) its own nation will emerge geopolitically stronger when the pandemic is over and 2) lower taxes: the government, as owner of the means of production, can afford to constantly lower taxes on the working classes. It has already cut taxes in this pandemic.

Posted by: vk | Apr 11 2020 19:42 utc | 8


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About the author(s)

"b" is Moon of Alabama's founding (and chief) editor.  This site's purpose is to discuss politics, economics, philosophy and blogger Billmon's Whiskey Bar writings. Moon Of Alabama was opened as an independent, open forum for members of the Whiskey Bar community.  Bernhard )"b") started and still runs the site. Once in a while you will also find posts and art from regular commentators. You can reach the current administrator of this site by emailing Bernhard at MoonofA@aol.com

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Burning the Future: the Growing Anger of Young Australians

Please make sure these dispatches reach as many readers as possible. Share with kin, friends and workmates and ask them to do likewise.



[dropcap]G[/dropcap]rowing up in a small town in Tasmania, Australia, not far from the coast, every summer we would spend seemingly endless carefree days at the beach – swimming, sunbathing and eating freshly-caught fish. I was there again last year with my family, during the Christmas break, but this time rather than enjoying the beach we spent the holiday glued to the television screen, watching as small bushfires across the country rapidly grew into huge uncontrollable conflagrations, burning everything right down to the shoreline.

Photograph Source: Helitak430 – CC BY-SA 4.0

My small home state was spared, but we know that summer in Australia will never be the same. Not only has the annual threat of fires grown, but Australians are now coming to terms with the fact that their government has no interest in dealing with the causes of this crisis and is, in fact, making it worse.

The fires did not come as a surprise to the Liberal/National party government – more frequent and intense fires were predicted in an official report in 2008. The National Disaster Risk Framework warned that “with the driver of a changing climate there is growing potential for some natural hazards to occur at unimagined scales, in unprecedented combinations and in unexpected locations”.

No less than 23 former fire chiefs and emergency leaders attempted to warn the government for months in 2019 that more resources were urgently needed to tackle bushfires.

What did the government do?

Some would say, “nothing”. But actually, that is not true. On top of ignoring the warnings from their own fire experts, government officials spent most of their time actively opposing any moves to limit climate damage and prevent bushfires.

Only weeks before the eruption of fires across the country, at December’s international climate change meeting in Madrid, Australia was one of a handful of nations that thwarted a deal on the implementation of the Paris Climate Agreement, using accounting tricks to reduce their emissions reduction commitment.



This at a time when Australia is one of the world’s biggest carbon emitters per person. In absolute terms, in 2017, Australia’s share of global CO2 emissions from domestic use of fossil fuels was about 1.4 percent. Accounting for fossil fuel exports would lift Australia’s global carbon footprint to about 5 percent, making it the fifth-biggest emitter in the world, despite its relatively small population of 25 million.

One might think that following the summer fires the government would start reducing carbon emissions. To the contrary, while Australia already has four of the 10 biggest coal mines in the world, they are planning to open an even bigger one – Adani in Queensland, which once operative would more than double Australia’s coal-based carbon emissions.

While standing in the incident control centre for a statewide bushfire emergency, National Party leader and Acting Prime Minister Michael McCormack announced that “… Adani is going ahead. The fact is, this is going to lead to more coal exports. We need more coal exports.”

Australia recently became the world’s largest producer and exporter of liquefied natural gas and in 2018 became the world’s third-largest exporter of CO2 in fossil fuels. While the world is heating rapidly, Australia is literally throwing fuel on the fire.

Comparing recent and planned coal extraction in Australia with Germany, one readily sees the opposing trends. Whereas Germany has been cutting back its coal mining, Australia is pushing forward as if climate science is fake news.

Disregarding all environmental predictions, the government continues to throw massive fossil fuel subsidies at the industry – estimated at $8bn annually. Solar power subsidies have been withdrawn, in a continent with the highest solar radiation per square metre in the world. Not surprisingly, photovoltaic energy in Australia still provides a lower percentage of electricity than in Germany.

The government’s myopic environmental policies can be traced back to different interest groups. Powerful mining corporations are calling the shots, to such an extent that even former Liberal Prime Minister John Hewson wrote recently that Prime Minister Scott Morrison is “almost totally beholden to the fossil fuel lobby”.

In tandem, Australia has the world’s third most concentrated media market in the world, with Rupert Murdoch controlling nearly 60 percent of daily newspapers. The media has played a key role in putting climate deniers into government, and maintained a consistent policy in the recent bushfire crisis of arguing that climate change is not the key cause.

The Australian government’s focus even now is on “resilience and adaption”, or in other words, they are telling their citizens “we’ll keep mining, selling and burning the fossil fuels, and you better just get used to the consequences”.

Young Australians are angry. They are rapidly losing the right to enjoy the sort of innocent summers I had when I was young, with the bushfire crisis this year likely to be just the beginning of a new reality. Indeed, they have the sight every day of the Australian government busy burning their future.

ABOUT THE AUTHOR
  Bill Spence is a Professor of Theoretical Physics at Queen Mary University of London. [First appeared in Al Jazeera]




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