As climate denial declines, the green transition now faces a new threat: the false solutions of so-called “green capitalism.” Devices like carbon markets and offsets are demonstrating the limits of any strategy that refuses to address existing power structures and inequalities. The invisible hand of the market alone will never be enough to cool down an overheated planet.
The paper was written by Adrienne Buller, a researcher at the progressive British think tank Common Wealth. She has been researching ownership models that could enable a more democratic and sustainable economy since 2019. Buller is the author of: The value of whales (Publisher added, 2024) and co-authored with Mathew Lawrence Own the future (Verso, 2022).
What does it mean to put a price on whales?
A 2019 study by the International Monetary Fund (IMF) attempted to establish the economic value of whales, and came up with a figure of around $2 million. The intentions of the study were good: expressing the value of whales would promote conservation. But this anecdote shows that there is something wrong with the way capitalism views the climate crisis. Everything must be mediated through markets, and something must have a price to be valuable, even the lives of whales.
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What does “green capitalism” mean? What is its purpose?
At an ideological level, it is based on the view that we can solve the climate crisis by transforming and decarbonizing the global economy without having to address the social relations and inequalities that define capitalism. I think that is the fundamental purpose: to preserve the existing system as much as possible while transforming large parts of the economy. More specifically, it is a response to the climate crisis based almost entirely on market mechanisms, whether carbon pricing or corporate responsibility policies (ESG criteria), rather than public investment and intervention. Simply put, if we can set the right price, the market will do the rest.
Over the past decade, hedge funds (BlackRock, Vanguard, State Street, etc.) have accumulated increasing power. What implications does their growth have for climate action or inaction?
The relationship between hedge funds and climate is complex. On the one hand, their business is exposed to risk because they invest on a global scale. At the same time, they themselves may be winners or losers depending on how exactly the climate crisis is solved. Naturally, hedge funds support any market mechanism that creates investment opportunities for the private sector, especially if governments support it.
Larry Fink, CEO of investment fund BlackRock, has described decarbonization as “the greatest investment opportunity of our lifetimes.” The size of these funds gives them significant influence through their investment decisions and their role as owners of large corporations. And increasingly, they exercise power through direct political influence.
BlackRock is very active in this area. It is considered an effective lobbyist and has a strong reputation for its expertise. For example, it has been asked to advise on sustainable finance regulations in Europe. Several BlackRock alumni have taken on influential roles in President Joe Biden’s US administration, particularly on climate and economic policy.
You argue that global warming limits included in climate agreements, such as the 1.5 degree target in the Paris Agreement, are derived from economic assessments.
The origins of the 2-degree limit are attributed to economist William Nordhaus, who first appeared in a 1975 paper in which he argued for a trade-off between warming temperatures and economic growth. He assumed that warming temperatures would be detrimental to growth, but that measures to reduce emissions would also be detrimental.
Nordhaus’s work has had a huge impact. He won the Nobel Prize in economics for his “Dynamic Integrated Climate-Economics Model” (‘DICE’), which examines the interactions between climate change and economic outcomes. It is one of several “integrated assessment models” used in climate policy. Many of these models deal with huge abstractions. For example, DICE argues that the “ideal” global average temperature rise would be between 3.5 and 4 degrees Celsius. Physical science tells us that this scenario would be catastrophic and would significantly increase the risk of breaching major environmental tipping points.
So while there are good reasons to criticize Nordhaus’s modeling from a scientific perspective, the problem is broader. While it is common practice to look at the relationship between climate and GDP, I think it is absurd to assume that global GDP trends provide useful information about how to respond to the climate crisis. GDP is too crude a measure, and using it in this way reflects the wrong priorities.
Moreover, doing so perpetuates the idea that climate action is a trade-off for a prosperous economy. That is simply not true. The vast majority of the world’s population has much to gain from climate justice: safer, more affordable energy, cleaner air, greener communities, and an economy that prioritizes the needs of all people over the accumulation of vast wealth for a few.
To limit the damage caused by climate change, some have suggested settling for these solutions because they are “better than doing nothing.” What are the alternatives?
Anyone who works in this field or cares about the climate crisis is desperate for something that can have an impact. And in some cases, green capitalist interventions can have an impact. For example, the state subsidy initiative for green energy and transportation under the US Inflation Reduction Act is stimulating private sector investment in these areas.
But the fact that these tools are having an impact doesn’t mean they’re the best strategy, that they’ll deliver results at the speed needed, or that they’re addressing issues of justice on a national or global scale.
It is also worth remembering that most of these market mechanisms rely on substantial public support through direct subsidies and “risk reduction” or through regulation to create new markets. This is certainly true of green energy, which is often cited as a success story for green capitalism. In fact, the story is much more complicated than that. For those interested in delving deeper, I recommend the following book: The price is wrong This is written by Brett Christophers of Uppsala University. Some policies that fit the green capitalism framework may help in the short term, but many are hindering and some are even harmful.
To solve a problem in the market, not only must a price be set, but that price must also be beneficial to private businesses.
Beyond massive subsidies to private enterprise – and it is worth asking why the government does not invest directly here – much of what we need to do to build a truly sustainable future is simply less profitable than doing business as usual.
This is not just because we failed to curb fossil fuels, but also because of more subtle differences: consider the alternative between a future where everyone drives an electric car and a future based on a decarbonized public transport system.
Only the latter is truly sustainable, but it is not the most profitable. Carbon emissions can be reduced even in the first scenario, but the intensive extraction of lithium needed for electric batteries has negative impacts on the environment and human rights.
I think this is a fundamental limitation of green capitalism. The market is not interested in injustice and inequality, especially on a global scale. The climate and ecological crisis are fundamentally linked to massive inequalities both within and between countries. Without considering this, we cannot find a path to a truly sustainable, secure and just future.
