Which firm bankrolls the destruction of the planet? JP Morgan Chase stands first in line, according to the Rainforest Action Network, which lists the US-based multinational investment bank as the premier financier of fossil fuels during the period 2016-2018. The Guardian asserts that JP Morgan provided $75bn in financial services to fracking and Arctic oil and gas exploration in that time.
Now, the bank has produced a report, Risky Business: the climate and the macroeconomy, (January 2020) which at first glance looks like a veritable conversion of Saint Paul on the Road to Damascus.
The report brings into focus the efforts of the capitalist class and multinational banks to coordinate a response to climate change. JP Morgan is attempting to assess corporate financial exposure to the risks presented by climate change.
Does this report represent a turning point? Are oil and gas firms in “the death knell phase”, as the Guardian suggests? Are the world’s capitalists about to collaborate on a fix? It seems highly unlikely.
The technical and deeply pessimistic JP Morgan report hit the headlines. ‘Planet is Screwed, Says Bank That Screwed the Planet’, said one. What passed unnoticed was the report’s denigration of renewable energy as a replacement to oil and gas.
The report states that a “delayed policy response opens us up to potentially catastrophic outcomes, which might be impossible to reverse”. The response to climate change should be motivated by “the likelihood of extreme events”, where “human life as we know it is threatened”. This is not the line of the climate change denialists.
The report reads like an Armageddon movie. There will be impacts on “GDP, the capital stock, health, mortality, water stress, famine, displacement, migration, political stress, conflict, biodiversity and species survival”.
Existing estimates, such as those of the UN Intergovernmental Panel on Climate Change, “likely massively underestimate the effects”, the report correctly says. There’s a black concluding line from a capitalist point of view: “It is a global problem but no global solution is in sight”.
In reality, it must be emphasised that, as the Socialism Today Global Warning column has reported on many occasions, there exist well-researched, economically sound solutions based on current technology, such as that demonstrated in Scientific American ten years ago. (See Socialism Today No.137, April 2010) But the report also focuses on the inability of the capitalist system to implement these technologies.
Of course, the JP Morgan report does not stem from a platonic concern for the planet, but from a concern for the effect of climate change on the profits of big business. There is a recognition that the capitalist market cannot solve climate change. JP Morgan states, “climate change reflects a global market failure in the sense that producers and consumers of carbon dioxide (CO2) emissions do not pay for the climate damage that results”.
Climate change is thus dubbed an “externality” for which government intervention is a necessary solution. It is a constant theme of the report that the government should bail out the capitalist class from this self-inflicted catastrophe. Once again, it is socialism for the big corporations and austerity for the 99%. But, to add to the gloom, in section three, ‘The response to climate change’, the only weapon in the arsenal of the capitalist class, a carbon tax, is discussed and essentially dismissed. This is due to the “huge issue”, it says, of “equity across countries”. This was demonstrated when in 2017 US president Donald Trump took the US out of the 2015 Paris Agreement. He essentially argued that the cost to the US put it at a competitive disadvantage to China. This merely made explicit what is in fact crippling the global capitalist efforts to coordinate action on climate change.
The governments of capitalist nation states defend the profits of their native capitalist classes against competing nations. Competition between nations is dubbed “the competitiveness problem”. Socialism, which removes competition as a governing force, is the solution. The gloom of the JP Morgan report lies in its dismissal of renewables together with its assertion that capitalist market economics cannot solve the problems it reveals.
But can the capitalist class rise above these issues, as the Guardian hopes? The current coronavirus pandemic has introduced a ‘wartime effort’ analogy into public discourse. In times of great stress, the executive of the capitalist class, the state, which usually prefers to shovel tax money at corporate capitalist firms, can rise above them and take command. It can take over production and services – armaments, energy, transport, etc in the wartime analogy – and attempt to implement a plan. So it would seem to be wrong, at least on an individual national state level, to say categorically that it is impossible for capitalism to overcome the effects of climate change and move to a carbon neutral economy. But the wartime analogy breaks down when considering a world-wide crisis such as global warming, in the face of competition between capitalist nations.
Capitalism will not self-destruct. Unless overthrown it will grow like weeds out of the cracks of a destroyed world. The wartime analogy indicates the need for a permanent plan of production, on an international scale. The apparently intractable climate crisis indicates the need for international democratic socialist planning, achieved by nationalising the major carbon emitting companies, the major banks – like JP Morgan – and the multinational companies that dominate the globe, under democratic workers’ control and management. The aim must be to break the grip of capitalism and place the organisation of the economy and society as a whole in the hands of the 99%, the working class majority of society.
The JP Morgan report is galling in its duplicity. It opens with the statement that CO2 emissions have climbed dramatically since the industrial revolution, which marked the explosive, unregulated growth of capitalism. This fact was most prominently highlighted by the US academic Michael Mann in the famous ‘hockey stick’ graph in 1999, but he gets no mention. Mann in fact was hounded by the coal and oil lobby and their political representatives at state level. His emails were hacked and he faced the fake fury and venomous lies and misinformation that have broken many other scientists. Mann’s legal action against those defaming him is still ongoing 20 years later. Each of the simple statements of fact in the JP Morgan report is a stunning example of hypocrisy.
The report cites the 2019 World Energy Outlook produced by the Paris-based International Energy Agency (IEA). It admits that “using only near-shore, shallow water sites, the IEA estimates that offshore wind could generate 36,000 TWh (terawatt hours) of electricity per year. This is higher than current electricity production of 26,600 TWh per year”. It adds, “according to the IEA, the potential from offshore wind is 420,000 TWh of electricity production per year, around eleven times the projected production in 2040”.
But the report goes on to state: “The issue is not the potential opportunities, but the cost… coal remains the cheapest source of electricity”. Yet, in one of many reports, Bloomberg revealed in October of last year that, “wind and sun generate cheaper electricity than coal and gas”. With renewable prices falling on average 13% a year, there was never any justification for funding the hugely destructive fracking for oil over recent years.
2019 was the year that the falling costs of renewable energy essentially met the costs of coal and gas – which are only ‘cheap’ because their huge environmental costs are not factored in. But this trend goes unmentioned. The old JP Morgan bias remains. Outrageously, the report dismisses the IEA projections with the single gesture: “It isn’t going to happen”. Under capitalism, maybe not.
Pete Mason