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Europe’s new enclosure: the sky

The enclosure of the commons began several centuries ago in Europe, and alas, continues there in the 21st. This time the object of enclosure isnt land, but the carbon absorption capacity of the atmosphere.

In September I spoke at a conference in Berlin on the state of global efforts to combat climate change. The conference was groping for a path beyond the Kyoto Protocol, which expires in 2012 and whose modest targets for reducing greenhouse gas emissions wont be met. I expected US-bashing, but most of the European criticism was directed at Europe itself. A main focus of ire was the European Trading System, in which governments issue tradable carbon emission permits to polluting industries.

photo of a mancourtesy Peter Barnes

The European governments that set up the system are doing two things wrong: first, theyre handing out too many permits, and second, theyre giving them free to polluters, who raise prices and reap windfall profits.

In Germany, the big winners have been coal-burning utilities, and the losers have been nearly everyone else. As one German steelmaker complained, the utilities get windfall profits, and energy users get windfall costs. In Britain, the first-year windfall to polluters was estimated at £1 billion.

Whats going on here, of course, is a large-scale transfer of wealth triggered by a massive enclosure of a commons. The commons in this case is the earths atmosphere, a shared inheritance if there ever was one. Its being sliced into valuable private property rights that are handed free of charge to polluting corporations, in rough proportion to their historic pollution. The more they polluted in the past, the more new wealth they receive. Not just once, but year after year.

Theres no defensible rationale for this giveaway; the only reason for it is the political power of polluting corporations. As Peter Ainsworth, a spokesman for Britains Conservative Party put it, The problem will not be sorted out until the market is made to work properly by forcing firms to bid for their permits instead of being allowed to lobby government for them free of charge.

America can learn from Europes early  and costly  mistakes. Seven northeast states, plus California, are now designing their own carbon trading systems. These states can do carbon trading the right way: by making polluters pay for 100 percent of their permits. The windfall created when a previously free resource is converted into a priced commodity would then be captured by the public rather than by private corporations. It could be used for per capita dividends (as Alaska does with oil revenue), transition assistance to affected workers, communities and businesses, and investments in clean energy, public transit and the like. Billions of dollars that would otherwise go to a few corporations would instead benefit everyone.

It would be a tragic irony if the solution to climate change included a massive transfer of wealth to corporations that largely created the problem. This would be like rewarding tobacco companies with billions of dollars for all the lung cancer they caused in the past.

There's still time to avoid this 21st century tragedy of the commons, and to use our common atmosphere for the common good. It will take political courage and leadership  in California, New York and other venues  but it can happen. Stay tuned for updates.

Peter Barnes, a fellow at the Tomales Bay Institute, is the author of Who Owns The Sky? His new book, Capitalism 3.0: A Guide to Reclaiming the Commons, was published on October 15.


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