The Azimuth Project
The Great Transition (Rev #4, changes)

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The Great Transition is a report put out by the New Economics Foundation, which attempts to describe “ways to survive and thrive through financial crises, climate change and the peak and decline of global oil production”:

The term ‘transition’ is also used in a similar sense by the Transition Towns movement.

The Problem

This report seeks to find a way out of the following dilemma:

A team of researchers published two papers in the journal Nature in early 2009 arguing that to reduce the chance of global temperatures exceeding a 2 °C temperature threshold, specific caps on carbon emissions need to be set. For example Malte Meinshausen from the Potsdam Institute for Climate Impact Research and his colleagues found that to reduce the probability of exceeding 2 °C to 25 per cent, cumulative CO2 emissions between 2000 and 2050 need to be capped at 1000 billion tonnes (Gt) of CO2 (1,500 Gt CO2e). To reduce this risk by a further 5 per cent, emissions need to be capped at 890 Gt CO2 (1,356 Gt CO2e) or less. Given that between 2000 and 2006, 264 Gt CO2 were emitted, this means if rates of CO2 are kept at their current rate of 36.3 Gt per year, the total carbon budget would be exhausted by 2024 or 2027 depending on the accepted probability of exceeding 2 °C (20 per cent and 25 per cent respectively). However, the authors also warn that if global greenhouse gas emissions are still more than 25 per cent above 2000 levels in 2020, the probability of exceeding 2°C rises 53–87 per cent. Given that 80 per cent of greenhouse gases are due to the combustion of CO2, this means limiting use to less than one half of the proven economically recoverable oil, gas and coal reserves.

Using a different methodology, the second paper led by Myles Allen, Head of the Climate Dynamics group at University of Oxford’s Atmospheric, Oceanic and Planetary Physics Department yields results that are broadly consistent with Meinshausen. More recent work still from the Met Office Hadley Centre warns of a scenario in which a 4 °C rise in temperature by 2060 is possible.

In 2008, cautious calculations by nef’s climate change and energy programme suggest that there may be as little as 100 months, starting from August 2008, to stabilise concentrations of greenhouse gases in the atmosphere – before the risk of uncontrollable global warming occurring increases significantly. This has also been supported by the recent research by the Tyndall Centre for Climate Change Research.

More precisely, they calculate that by 2016 the CO2 concentration will reach 400 ppm given a 3.3 per cent annual growth rate of emissions:

This is based on the average growth rate of carbon dioxide emissions over the period 2000 through to 2006. We have assumed that the other radiative forcings remain constant. The 3.3 per cent growth rate includes carbon-cycle feedbacks (decrease in the effectiveness of the land and ocean sinks in removing anthropogenic CO2) as well as direct anthropogenic emissions. Of the 3.3 per cent increase, 18 ± 15% of the annual growth rate is due to carbon-cycle feedbacks, while 17 ± 6% is due to the increasing carbon intensity of the global economy (ratio of carbon per unit of economic activity – i.e. GDP). The remaining 65% ± 16% is due to the increase in the global economic activity. As the atmospheric concentration of CO2e increases, so will the strength of carbon-cycle feedbacks. Given this we have also included the conservative, lower bound estimate for acceleration of carbon cycle feedbacks.

Our analysis shows that, assuming that other anthropogenic driven radiative forcings remain constant and the growth rate of carbon dioxide emissions (due to economic growth and increasing carbon intensity of the economy) remains stable – by the end of December 2016 we will exceed an atmospheric CO2e concentration of 400ppmv.

The Strategy

Here is the executive summary:

In The Great Revaluing, we make the case that building social and environmental value should be the central goal of policy-making. We also argue that this needs to be true for private as well as for public decision-making, with market prices reflecting real social and environmental costs and benefits. We need to make ‘good’ things cheap and ‘bad’ things very expensive – too often this is the opposite of what we have today. As long as the achievement of good outcomes is separate from the real business of business, we will not see these outcomes achieved. Similarly, public policy cannot hope to create the best possible social and environmental outcomes unless this is at the heart of policy-making. In both cases, building real value requires us to accurately measure these outcomes and to build these measures into the core of public and private decision-making. This is a vital first step, upon which much else that is proposed in this report depends.

In The Great Redistribution, we show how a redistribution of both income and wealth would create value as resources are moved from those who do not need them to those who do. We propose the creation of Citizens’ Endowments of up to £25,000 for all people on reaching the age of 21 to enable them to invest in their future, as well as Community Endowments to provide commonly owned assets to invest in our local neighbourhoods. Both would be funded by a proposed increase in inheritance tax on all estates to 67%. As well as material factors, however, we also need to redistribute time. By sharing working hours and tasks more equally, everyone would be able to undertake more meaningful work, and by shortening the working week to four days we could create a better balance between paid work and the vital ‘core economy’ of family, friends and community life. We also propose a redistribution of ownership to create a form of ‘economic democracy’, where company shares are progressively transferred to employees in a resurgence of mutual and co-operative ownership forms. More equal societies are happier societies. By focusing on fairness we reap both social and economic benefits, as we no longer have to pay such a high price for the social ‘ills’ associated with high levels of inequality.

In The Great Rebalancing we make a positive case for markets, but only once markets have been set up in such a way that prices reflect true social and environmental costs and benefits, and when those markets operate within scientifically defined limits. We also argue that the market sphere needs to be more tightly drawn and rebalanced alongside the public sphere and the ‘core economy’ – our ability to care, teach, learn, empathise, protest and the social networks these capacities create. In laying out the essential functions of the state, we again make a positive case – the state should be seen as ‘us’ and not ‘them’, and as a domain where we come together to achieve those things that are best done collectively. Arguing for a broader definition of ‘public goods’ and for the importance of maintaining low levels of inequality, we sketch out a facilitating state, which supports citizens, but also works with them to ‘co-produce’ well-being in areas such as health and education. This facilitating role requires a balance to be struck between direct provision, co-production, and the fostering of strong local relationships where people are encouraged to come together to pursue their shared goals and shape their own outcomes.

This process is central to the ideas set out in The Great Localisation. Here we argue for an expanded concept of ‘subsidiarity’ – the idea that decisions are best taken at as local a scale as possible. This is enshrined in the principle, if not always the practice, of the European Union with regard to political participation and decision-making, which needs to be made more genuinely participatory and democratic but also more meaningful. By this we mean moving real power away from the centre to devolved democratic bodies and giving local people a real say in how this power is exercised. The principle of subsidiarity should also apply to the private sector. Redefining ‘efficiency’ beyond its narrow economic focus, we suggest a more rounded view, where the impact on the social fabric of cities, towns and rural areas is important when considering issues such as the production of goods and services. Exploring the question of what things are best produced locally, regionally, nationally and internationally, we suggest some criteria that might help in this judgement and make the case for greater local self-sufficiency in some areas, combined with regional, national and international trade in others. Big is clearly not always ‘best’ but neither, necessarily, is small. What we need is appropriate scale and, crucially, a clear means of deciding what this should be.

The Great Reskilling continues this train of thought, starting from the position that greater local production will require us to relearn many skills that have been forgotten. From agriculture to manufacturing to the provision of local finance, returning to appropriate scale means equipping ourselves with the means to do so. Becoming less passive in terms of consumption and production we would start to regain our autonomy, which would extend to culture and arts, where we describe the beginning of a life-enhancing renaissance. This is not just the case for the economy and for the arts however; local decision-making based on active participation will be most effective when people are well informed about what makes their local economy tick and what makes public services able to achieve the best outcomes. Achieving consensus requires as full an understanding of these issues as possible.

In The Great Economic Irrigation we outline how finance could facilitate many of the changes proposed in this report. For public finance we differentiate between tax and spending and between national and local levels. Developing criteria for what money should be raised at these two levels, we argue for a shift from taxing ‘goods’ such as work, to taxing environmental and social ‘bads’ such as pollution, consumption and short-term speculation. We argue for new variable consumption taxes, replacing income tax for the majority of the population, reflecting the social and environmental costs of goods. For private finance we again distinguish between national and local, arguing that large-scale projects such as building a green energy and transport infrastructure should be funded through national level environmental and ‘land’ taxes and the creation of public money where appropriate. This would be channelled through a national ‘Green Investment Bank’. For private credit we suggest linking the ability of banks to create credit with the ability of borrowers to build social and environmental value, creating a ‘race to the top’ and reducing damaging credit bubbles. To get us out of the debt trap we now face, rather than slashing public services we propose a New National Housing Bank, offering people the opportunity to transfer a portion of their mortgage debt into equity and paying social rent on the balance. Locally, we argue for a restructured ‘ecology of finance’ of private, public and mutually owned institutions designed to meet local needs. In the local public sphere, we again suggest using the tax system to encourage social ‘goods’ and discourage ‘bads’ and argue that priorities should reflect local, democratically determined priorities.

The Great Interdependence situates these national proposals firmly in an international context. While we focus on the UK in this report, we do this on the assumption of a particular global ‘deal’, which addresses global inequalities from both a development and an environmental perspective. Specifically, we assume that the essential global cap on carbon emissions to avoid irreversible climate change has been achieved and that the UK’s share of this total carbon budget is broadly based on its population. As part of a phased transition we factor in a ten-year period where the UK reduces its emissions to align with the required ‘convergence’ path, during which time annual transfers to developing countries totalling around £200 billion are made. Mirrored by other developed countries as part of the same ‘global deal’, this total financing would add up to the trillions of pounds needed to enable developing countries to eliminate poverty and fund their own transition to a sustainable development path. Reducing total imports and reshaping the composition of these imports would obviously impact on national development strategies, but this process is already underway to some extent. The current global crisis has caused many in the developing world to question the wisdom of export-led growth focused on developed economies. While we are by no means suggesting that exports would cease, they would certainly be reduced as the environmental impact of transporting goods around the world was factored into prices. A rebalancing of internally and externally focused development is desirable for many reasons, and we would see more local production and more regional trade becoming the norm. Again, we are already seeing this begin to happen. If carefully managed and well funded, this would see development accelerate and ‘stick’, becoming more resilient in a stable and environmentally sustainable global context, with poverty and global inequality being progressively reduced and the huge dangers to developing countries of irreversible climate change averted.

These are big assumptions, but we do not apologise for that. A global deal along the lines outlined here is essential for environmental reasons, but also to finally rid the world of the scourge of poverty and inequality. Business as usual has also failed in this regard. Just as within countries, trickle down approaches at global level have brought us to the brink of environmental disaster, while also increasing inequalities and entrenching grinding poverty in many parts of the world. Locally, nationally and globally we need to change direction quickly and radically. We need nothing short of a Great Transition – to collectively build a different future.

This report concludes with a discussion of two big challenges that have to be addressed before this can be achieved, but also sets out clear steps that can be taken straight away to start the journey. While there is much that the Government needs to do, there are also things that we can all do now. We cannot afford to wait and neither should we. The possible future sketched out in this document is not intended to be prescriptive in any way, but to show that not only is fundamental change possible, it is also very appealing. We might have to give some things up, but these are not the important things in life. What we could gain, on the other hand, would be something really worth having.

The Great Transition can start here.


The following references support the New Economics Foundation’s description of the problem which The Great Transition attempts to solve:

category: action

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