July
22, 2024
We
are in real trouble. Global carbon dioxide emissions (the main cause of global
warming) continue to rise, hitting a new high in 2023. Last year was also the
hottest in recorded history and, year by year, more Americans are feeling the
consequences. Yet, we have seen only modest attempts to bring emissions down.
Unfortunately,
the U.S. government continues to believe, despite evidence to the contrary,
that market forces will encourage a speedy transition away from fossil fuels.
Instead, we need to organize in support of direct action to bring down energy
use and emissions. We need nothing less than a system-wide transformation of
our economy. Consideration of the World War II-era U.S. conversion experience
helps to demonstrate both the feasibility of such a transformation and the
importance of suppressing market forces to achieve it.
It’s
getting hotter
Alarm
bells are ringing in government circles. As Secretary of Health and Human
Services, Xavier Becerra, put it, “Heat is no longer a silent killer, From
coast-to-coast, communities are battling to keep people cool, safe and alive
due to the growing impacts of the climate crisis.” According to his agency,
there were an estimated 2,302 heat related deaths in 2023, triple the annual
average between 2004 and 2018.
However,
these totals, which rely on death certificate listings where heat is listed as
the main cause of death, are widely believed to be undercounts. One researcher,
asked by Miami-Dade County officials to provide a more accurate count of county
heat-related deaths, determined that the likely number was at least 10 times
the officially published one.
And
2024 is shaping up to be another scorcher. Miami recorded its hottest May on
record, with temperatures reaching 112 degrees Fahrenheit. Phoenix experienced
its hottest June ever, with temperatures hitting 113 degrees. The Maricopa
County heat-related death toll for the month will likely exceed 175—an 84
percent increase over the previous June.
In
fact, much of the country suffered from unusually hot weather. As the Guardian
reported in June:
“More than 270 million Americans—about 80
percent of the country’s population—are experiencing a kind of heatwave not
seen in decades, smashing records with temperatures at or above 90F (32.2C) for
long periods of time under a weather phenomenon known as a heat dome.”
The
Pacific Northwest is no exception, with July temperatures soaring over 100
degrees in a number of Oregon cities. As an Oregon Public Broadcasting article
pointed out, “The abnormally high temperatures, part of a multiyear warming
trend in Oregon, are prompting concerns about health in a state where many
homes lack air conditioning.’’ While temperatures are not expected to reach
levels as high as during the 2021 heatwave, when some 600 people died across
Oregon, Washington, and western Canada, the threat to human life remains
serious because of the expected length of this heat wave.
Excessive
heat also takes its toll on workers, greatly increasing the likelihood of
serious injury or illness. This is especially true for farmworkers and
landscapers; delivery and construction workers; and factory, warehouse, and
kitchen workers. Although the Biden administration recently proposed new safety
standards to protect workers when temperatures are elevated, business
opposition makes its chances of approval unlikely. The governors of Texas and
Florida, citing business concerns, each recently signed legislation preventing
local governments in their respective states from requiring heat protections
for those working outdoors.
As
challenging as conditions are becoming in the U.S., they are far worse in many
places in the Global South. Temperatures reached 126 degrees in parts of India
and Pakistan. And, as the New York Times explained, “For laborers, not working
because of the extreme temperatures can mean not eating.” Air conditioning is a
true luxury. In fact, the International Energy Agency reports that more than
750 million people do not even have access to electricity.
Air
conditioning isn’t the answer
Many
Americans continue to dismiss the dangers from rising temperatures, believing
that air conditioning will protect them. However, climate change generates its
own challenges to such fixes. A case in point: a major storm hit Houston in May
2024, knocking out power for almost a million households—there was no light and
no air-conditioning. The damage to the power infrastructure was so great that
even after five days more than 100,000 homes and businesses remained without
power. If the storm had struck during a major heat wave the heat-related death
toll could have been considerable.
Recognizing
that the number of major blackouts in the United States more than doubled from
2015-16 to 2020-21, several university researchers undertook a study of the
probable consequences of a major blackout during a heat wave in three cities:
Phoenix, Atlanta, and Detroit. According to a New York Times summary of their
results:
“ The researchers modeled the health
consequences for residents in a two-day, citywide blackout during a heat wave,
with electricity gradually restored over the next three days.”
“The results were shocking: In Phoenix,
about 800,000 people–roughly half the population–would need emergency medical
treatment for heatstroke and other illnesses. The flood of people seeking care
would overwhelm the city’s hospitals. More than 13,000 people would die.”
“Under the same scenario in Atlanta,
researchers found there would be 12,540 visits to emergency rooms. Six people
would die. In Detroit, which has a higher percentage of older residents and a
higher poverty rate than those other cities, 221 people would die.”
The
higher death toll in Phoenix was largely due to two factors: the city was
likely to suffer a blackout at higher temperatures than the other two cities
and the effects were likely to be greater because a far higher percentage of
its population relies on air-conditioning.
Critically,
the rise in temperature itself increases the threat of a serious power outage.
Warmer weather means more use of air conditioners and greater demand for
electricity. Add in the rapidly increasing demand for electricity from tech
companies and their data centers and you have a recipe for a system overload,
with transformers exploding and power plants failing. In fact a 2016 study
“found the potential for cascading grid failures across Arizona to increase
thirtyfold in response to a 1.8 degree rise in summer temperatures.”
Markets
are not the answer
President
Biden has touted his administration’s many efforts to reduce U.S. greenhouse
gas emissions. At its core, his clean energy strategy can be summarized as
follows: electrify as much of the economy as possible, as quickly as possible,
using solar and wind power. The Biden administration has used financial
incentives and regulatory initiatives to push the economy in the desired
direction, but market dynamics—the expected decline in the cost of renewal
energy relative to that of fossil fuels—was always expected to be the main
driver. That cost crossover happened some five years ago, and the cost
advantage of renewables over fossil fuels has only continued to grow. Yet our
fossil fuel use has also continued to grow.
U.S.
crude oil production set a new record in 2023; the U.S. has produced more oil
than any other country in each of the last six years. And although there has
been a major expansion in renewable energy production over the last years, the
production of fossil fuels for use in electricity generation has also continued
to grow, even if at a slower rate. The share of electricity generated by
natural gas hit a record high of 42.1 percent in 2023. Coal’s share has been
steadily falling, but even at its 2023 low of 16.2 percent, it remains higher
than the combination of solar (3.9 percent) and wind (10.2 percent). Rather
than replacing fossil fuel use, the increased generation of solar and wind
power is largely going to satisfy the steady increase in overall electricity
demand.
The
main reason that lower solar and wind costs have yet to speed the expected
transition away from fossil fuels is that investors don’t find renewable
investments sufficiently attractive. As Brett Christophers, a professor of
human geography, explains:
“Take the S&P Global Clean Energy
Index, which measures the stock performance of leading companies in clean
energy, especially solar and wind power. Since the beginning of 2021, this
index has lost more than half its value…”
“ The main cause of this sluggish
performance is low profitability. Bluntly stated, clean energy—developing and
operating solar and windfarms, and selling the electricity they generate—simply
isn’t a very attractive business. Returns are typically in the 5-8 percent
range. Compare that with oil and gas production, where returns generally exceed
15 percent, and it is little wonder clean energy stocks have been falling while
oil and gas shares outperform.”
Christophers
offers several possible explanations for the low returns on renewables. One is
that renewable energy production is a very competitive industry, in part
because of relatively low barriers to entry compared with fossil fuel
production. This market structure tends to drive down returns and thus investor
interest.
Another
is that most developers of renewable energy need outside financial help to
cover the upfront costs of building the facilities and transmission
infrastructure. And financial institutions are reluctant to provide it because
of uncertainty about anticipated costs and revenues. In contrast, fossil fuel
companies generally rely on internal funding for their new investments.
Regardless
of the reason, the lower costs of solar and wind energy have not encouraged
fossil fuel companies to shift their investments from fossil fuels to
renewables. It is profitability, not prices, that matter to their CEOs and
stockholders, and the profitability of fossil fuels is just too good to pass
up, no matter the climate threat. And, as the economist Michael Roberts
summarizes, this is not a conclusion that embarrasses them:
“The chief executive of oil producer
Chevron told the Financial Times last October, “You can build scenarios, but we
live in the real world, and have to allocate capital to meet real world
demands.” Four out of five corporate executives considered “the ability to
create acceptable returns on projects a main barrier to decarbonization of the
energy system.”“We should abandon the fantasy of phasing out oil and gas and,
instead, invest in them adequately reflecting realistic demand assumptions,”
says Amin Nasser, chief executive of Saudi Aramco. “You can argue green all day
and NGOs all day, but those are the facts. I think that message is beginning to
resonate,” Liam Mallon, head of ExxonMobil’s upstream business, said.”
It’s
not too late to act
It’s
not too late to take meaningful steps to reduce emissions. While most climate
scientists believe that it is no longer possible to keep the earth’s average
surface temperature from rising above the 1.5C target set by the 2015 Paris
Climate Conference, a Guardian survey of climate experts found that the great
majority believe that “1.5C was not a cliff-edge leading to a significant
change in climate damage. Instead, the climate crisis increases incrementally,
meaning every ton of CO2 avoided reduces people’s suffering.”
How
bad might it get? According to what the experts told the Guardian, if we allow
the temperature to rise to 2.7C: “Two billion people would be pushed outside
humanity’s ‘climate niche,’ i.e. the benign conditions in which the whole of
civilization arose over the past 10,000 years.” At 3C: Cities including
Shanghai, Rio de Janeiro, Miami and the Hague would end up below sea level. At
3C and above: “The impact of climate shocks in one place will cascade around
the world, through food price spikes, food and water shortages, broken supply
chains, and refugees by the millions.” As to current trends, according to the
UN climate chief, speaking at the June 2024 meeting of the International Energy
Agency, the planet is on track for a “ruinously high” 2.7C rise in the global
temperature over that of the pre-industrial era.
Clearly,
we need to act quickly to bring down emissions. And that means radically
transforming the way we live and work. The starting point for such a
transformation must be a reduction in the exploration, production, and use of
fossil fuels in favor of clean energy sources like solar and wind. However,
given the need to reduce overall emissions and resource exploitation, we cannot
aim for a simple one-to-one replacement of energy sources. As beneficial as
they may be, renewable energy sources also depend on critical raw materials
that are limited in supply and their extraction from the earth creates its own
ecological problems, especially for those in the Global South.
Limiting
our overall energy use (and emissions) in a way that protects the interest of
working people means that we must also take steps to reduce the production of
ecologically destructive and socially less necessary goods and services,
including single-family mansions, giant sport utility vehicles, private jets,
luxury cruises, fast fashion, industrially produced meat and dairy, single
use/disposable products, and the like. And because the Department of Defense
is, in the words of Neta C. Crawford, Co-Director of the Costs of War project
at Brown and Boston Universities, “the world’s largest institutional user of
petroleum and correspondingly, the single largest producer of greenhouse gases
in the world,” substantial energy savings can also be achieved from reducing
our military budget and global infrastructure for the projection of power.
With
a sizeable reduction in energy use from the actions highlighted above, a newly
expanded clean energy sector should be able to support, at a lower level of
overall energy use, a significant expansion in a number of socially beneficial
goods and services. Examples include a well-funded national health care system,
universal education system, and accessible and affordable program of public
housing; an expanded system of affordable public transportation; and support
for regenerative agricultural practices. The job creation from such programs
will be substantial.
After
decades of unchallenged neoliberal policies, many people will understandably
find it hard to imagine how such a transformation could be achieved. And the
challenges and tasks will be many. Some new industries will have to be rapidly
developed and the productive capacities of some existing ones expanded. We will
need to create agencies capable of deciding the speed of growth as well as
ownership of the new facilities, how the new investments will be financed, and
how best to ensure that the materials required will be produced in sufficient
quantities and made available to the designated enterprises at the appropriate
time.
We
will also have to develop mechanisms for deciding where new establishments will
be located and how to provide the social infrastructure to house and care for
the required workforce. And we will need to develop programs that will ensure
that newly hired workers receive appropriate training. In sum, a system-wide
transformation involves a lot of moving parts that must be managed and
coordinated.
Helpfully,
we have the World War II conversion experience to demonstrate the feasibility
of such a transformation. Despite the many differences in times and aims, there
are some significant similarities in the challenges planners faced then and
ones we are likely to face now. Most importantly, then as now, there was an
urgent need for a system-wide economic conversion, a conversion resisted by
many of the country’s most powerful corporations.
Corporations
producing goods of direct importance to the war effort—for example, those
producing aluminum and steel—refused to undertake needed investments. Overall
private investment fell in value over the years 1941 to 1943. That last year,
business investment was only 37 percent of its 1940 level. At the same time,
corporations producing consumer goods—most importantly those producing
automobiles—routinely ignored government entreaties to curtail or convert their
production to economize on the nonmilitary use of scarce materials.
The
U.S. government succeeded in transforming the economy from civilian to military
production, converting it into the celebrated “arsenal of democracy,” only
because it undertook the required spending, investing, and planning itself.
Military spending as a share of GDP rose from 1.6 percent in 1940 to 36.0
percent in 1944. As a result, the combined output of the war-related
manufacturing, mining, and construction industries doubled between 1939 and
1944. In that last year, federal purchases of goods for the military accounted
for approximately one-half of all goods produced.
The
economy was able to respond to the explosion in military spending because the
government pursued an active and aggressive policy of targeted investment. A
May 1940 act led to the creation of The Defense Production Corporation (DPC),
which was given a blank check to finance the expansion of facilities deemed
critical to the war mobilization. The DPC kept ownership of the new facilities
it financed, but planned the construction with predetermined companies who were
then allowed to manage them.
The
DPC alone financed and owned some one-third of all the plants and equipment
built during the war. At its termination in June 1945, the DPC:
“owned approximately 96 per cent of the
capacity of the synthetic-rubber industry, 90 per cent of magnesium metal, 71
per cent of aircraft and aircraft engines, and 58 per cent of the aluminum
metal industry. It also had sizeable investments in iron and steel, aviation
gasoline, ordnance, machinery and machine tools, transportation, radio, and
other more miscellaneous facilities.”
The
successful conversion also required detailed planning. For example, newly
created government agencies worked to free resources for war production by
selectively ordering the curtailment or outright suppression of production by
many civilian industries. As a result, between 1940 and 1944, the total
production of nonmilitary goods and services fell by more than 10 percent.
Other
agencies were created to ensure an efficient allocation of resources. During
the first years of the fighting, the military’s demand for goods and services
outpaced the economy’s ability to meet it. The result was a shortage of key
materials and components, inflation, and disrupted production. Order was
established only when planning agencies began directly allocating the existing
stock of critical metals and components among key producers, eventually forcing
the military to bring its plans in line with the economy’s capacity to produce.
Still other agencies were empowered to determine the location of the new
government owned plants and to finance the construction of the housing, day
care programs, and urban infrastructure needed to house and support the growing
workforce in the selected locations.
And
despite government efforts to win corporations to the war effort, which
included allowing high profit margins on government contracts and a willingness
to appoint business representatives to key positions in planning agencies,
corporate leaders remained critical of the government’s expanded role in the
economy throughout the war. In fact, many questioned whether the cost of
victory was too high. As the economist J.W. Mason describes,
“J. Howard Pew of Sun Oil declared that if
the United States abandoned private ownership and “supinely reli[es] on
government control and operation, then Hitlerism wins even though Hitler
himself be defeated.” Even the largest recipients of military contracts
regarded the wartime state with hostility. GM [chair] Alfred Sloan—referring to
the danger of government enterprises operating after war—wondered if it is “not
as essential to win the peace, in an economic sense, as it is to win the war,
in a military sense,” while GE’s Philip Reed vowed to “oppose any project or
program that will weaken” free enterprise.”
The
wartime conversion of the U.S. economy was a tumultuous affair, with many
mistakes made. Yet, for all that, government policy succeeded in orchestrating
a rapid transformation of the economy, one that enabled the U.S. to play a
pivotal role in the eventual Allied victory. Tragically, and perhaps not
surprisingly, corporate leaders were able to use their structural power to
ensure that the economic changes made during the war were quickly undone:
government owned factories were sold off at bargain prices to the companies
selected to run them and planning agencies were disbanded as quickly as
possible after the end of the fighting.
There
is much we can learn from this wartime conversion experience. Among other
things, it demonstrates the feasibility of a rapid, system-wide conversion of
the U.S. economy. It also shows the critical role of state planning, public
financing and ownership, and state direction of economic activity in achieving
such a conversion. And it highlights the resistance that a conversion process
can be expected to generate from business leaders.
But
having confidence that a transformation can be achieved is not the same as
having the political strength to achieve it. And we face enormous challenges in
building the movement we need. Among them: weakened unions, popular distrust of
the effectiveness of public planning and ownership, and weak ties among labor,
environmental, and other key community organizations. Overcoming these
challenges will require sustained conversations and organizing to strengthen
the capacities of and the connections among our organizations and to develop a
shared and grounded vision of the changes we desperately need to make.
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