Climate Policy: The Principle of Unlimited Irresponsibility

A few weeks ago, a conference was held at the Collège de France organized by the Institut Louis Bachelier, bringing together a group of top economists. The first surprise, which is not a surprise at all, was a magnificent graph showing since 1990 the close link between growth in world gross domestic product and growth in consumption of fossil fuels. Even a close look at the graph shows no sign of any change in the direction of the major world conferences, from the 1992 Earth Summit to the Paris Agreement of 2015.

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D’elsewhere, despite the heartfelt declarations, "serious people" do not believe for a second in the real ability and political will to make a difference. The proof: theanalysis presented at the meeting reports from the main French life insurance companies on the risks in their portfolios. The climate risk ... simply does not appear there! On the other hand, the reputational risk is well identified: in short, what threatens portfolios is not the climate catastrophe but the fact that the company is beginning to believe in it and consequently decides to give a big eyebrow to companies that would not take the risk seriously.

 

After such worrisome diagnoses, one would expect our distinguished economists to propose horse remedies. Alas, everyone clings to the idea of the price signal: at one time, it was imagined that the peak of fossil energy production, coal, gas and oil, would soon be reached, so that the scarcity of supply would have imposed an increase in prices, making a virtue of necessity. Luckily, new reserves were constantly being discovered and peak production was postponed to the Greek Calends.

 

Then there is the ritual taxation of greenhouse gas emissions, which is of course invoked in the following sentence to note that such taxation is a regressive tax affecting the poor more than the rich, so that it must be immediately supplemented by redistributive measures ... which will practically eliminate its effect ...: there will be the rich, who spend a small enough portion of their budget on fossil fuels to easily cope with rising prices, and the poor, for whom the effect of rising prices will be neutralized. Look for the mistake.

 

At the end of June 2019, the High Climate Council, set up with a bang by President Macron, delivered its first report. As this report public, successive governments set "carbon budgets" for France every four years. The 2015 - 2018 budget has not been respected, far from it: the direct consumption of fossil energy, excluding energy incorporated in exported products, has decreased by 1.1 % per year instead of the 1.9 % per year set by decree, not to mention the 3 % per year needed to meet our climate commitments.

 

But there is in fact much more serious and much more hypocritical: as the High Council's report notes, since 1995 greenhouse gas emissions linked to imports, the so-called grey energy, have doubled, while those linked to domestic production have only decreased by 20 %. Clearly, it is not energy efficiency efforts that explain the reduction in national greenhouse gas emissions, it is the deindustrialization of France and the transfer of energy-consuming production to other countries. In 2019, says the report, the total energy footprint, i.e. the CO2 emissions needed to maintain our current standard of living, will be 11 tonnes per person per year, while emissions relating to the same standard of living but emitted on national territory will be only 6.6 tonnes per year. Clearly, any energy strategy that only looks at emissions on national territory is a scribble policy.

 

Going into detail on the reasons why the French government is far from being able to meet the objectives it has set itself, the High Council's report highlights the schizophrenia of the public authorities: on the one hand, energy objectives are set but on the other hand a series of laws are adopted concerning practically all aspects of activities that consume fossil fuels and emit greenhouse gases, without any reference to the overall objective that has been set for energy.

 

And, as Sylvestre Huet notes in the article in Le Monde dated 3 July in which he reports on this report, the basis of this schizophrenia is the radical irresponsibility of Parliament and the government with regard to the objectives they have set themselves. He points out that in order to make the proposals of the High Climate Council effective, a decisive element should be added, with a mechanical consequence for elected representatives - deputies, senators, the President of the Republic - and government officials who would have failed to achieve the climate objective set by law and our international commitments: ineligibility of all these beautiful people if, at the end of the period, greenhouse gas emissions have exceeded the objectives of the national low-carbon strategy".

 

Our companies invented the principle of "limited liability" in the 19th century to allow the development of entrepreneurship. This is the basis of the legal status of limited liability companies, SARL, a status that allows an investor to limit the risks he takes to the capital he invests, whereas in the past, if the accumulated debt of a company exceeded the totality of the capital invested, the personal assets of the investors were put to contribution, not to mention of course the prison or debt slavery that has been the common lot of small farmers for several millennia.

 

This principle of limited liability has been generalised to the whole of society. However, the sum of the limited liability of each actor leads to ... companies with unlimited irresponsibility. The example of the legal irresponsibility of governments towards the objectives they set and do not respect is only one illustration among a thousand others of this general principle of unlimited irresponsibility.

 

How can we hope to deal with irreversible global interdependencies without a deep awareness in societies of a common destiny for humanity, an awareness from which all the mechanisms of international relations distance us? And how can we imagine conducting systemic transitions with systems of governance based on the segmentation of competences from one level of governance to another and from one sectorisation of public policies within a given level of governance? The High Council's report to the climate is a good illustration of this fourth challenge.

 

" There's no wind for the sailor who doesn't know where he's going... " said Seneca. Without a clear vision of these four challenges, from local to global, our sailors will remain forever in the Sargasso Sea. Welcome to the raft of the Medusa.