A Capital Solution

Prominent US environmental advocate, Robert F. Kennedy Jr shocked attendees at last month’s Sustainable Operations Summit in California, by using his keynote speech to extol the benefits of free market capitalism in helping tackle climate change. According to Kennedy, free market capitalism will allow us to effectively tackle climate change by preventing damaging public-private sector “collusion”.

Kennedy contrasts this with the US’s present economic system, which he terms “crony capitalism”. “Show me a polluter, and I’ll show you a subsidy,” said Kennedy, who argues that the biggest polluters in the environment are currently subsidised by the taxpayer. He believes that it is currently too easy for environmentally-irresponsible corporations to take advantage of government subsidies intended to incentivise sustainable approaches to business.

However, Kennedy’s views have caused considerable consternation within the scientific, political and economic communities, with many critical of the idea that free market capitalism can really be the solution to climate change.

Bob Ward, Policy and Communications Director at the Grantham Institute for Climate Change, has voiced his concern at the idea. He argues: “At the moment, the price people pay for products and services does not reflect their true environmental cost…when we burn carbon, we’re essentially getting a free subsidy.” According to Ward, the solution is simple: a price needs to be put on carbon. “What we really need is a level playing field. That which we have at the moment is anything but fair, the system is stacked heavily against renewables” he added.

However, Sam Gill, Operational Director at the Environmental Investment Organisation, is more sympathetic to Kennedy’s point of view. He says: “If governments are not going to be able to tackle this then we have to look at the markets…financial markets are something to be harnessed, not something to be ignored.”

This was also the conclusion of a report by the Global Governance 2020 group, which was launched at the London School of Economics earlier this month. The report, entitled Beyond a Global Deal: A UN+ Approach to Climate Governance, concludes that “a global agreement on binding emissions reductions is unlikely” and that “businesses must be prepared to take the lead”. According to report co-author, Thomas Hale of  Princeton University: “At the moment subsidies are necessary, but, over the longer term, businesses need to become competitive without them…we can see this already starting to happen in a number of sectors”.

In conclusion, it would seem that Kennedy is certainly right in highlighting some of the ways in which government subsidy schemes are often abused. However, his call for a complete abandonment of such schemes and the adoption of a truly free market leaves him out of sync with other high profile figures in this field.

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