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Europe's New Enclosure: The Sky
Published on Thursday, October 5, 2006 by the
Europe's New Enclosure: The Sky
Slicing up the Earth's Atmosphere for Corporate Profit
by Peter Barnes

The enclosure of the commons began several centuries ago in Europe, and alas, continues there in the 21st. This time the object of enclosure isn't land, but the carbon absorption capacity of the atmosphere.

Last week 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 won't be met. I expected a fair amount of U.S.-bashing, but most of the Euro-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.

The European governments that set up the system are doing two huge things wrong: first, they're handing out too many permits, and second, they're giving them free to polluters, who then 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 steel maker 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.

What's 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 earth's atmosphere, a shared inheritance if there ever was one. It's 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.

There's no defensible rationale for this giveaway; the only reason for it is the political power of polluting corporations. As Peter Ainsworth, a spokesman for Britain's 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 Europe's 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 that's necessarily 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' pockets would instead benefit everyone.

Let me be blunt here, as I was at the Berlin conference. 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,” will be published on October 15.


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