“It is more cost-effective to preserve the planet than to harm it”: the shift towards environmentally-friendly practices in capitalism.
The source of the climate problem is not capitalism itself, but rather the corruption within capitalist systems. This is the perspective of the author of a recently published book that examines the efforts of individuals, policies, and technology to combat global warming.
According to Akshat Rathi, a journalist at Bloomberg who covers environmental issues, implementing intelligent policies can use the power of capitalism to reduce carbon emissions without harming the market or competition. He states that it is currently more cost-effective to preserve the planet rather than cause its destruction, even from a capitalist perspective.
Rathi stated to the Guardian that capitalism is not the answer to climate change. However, there are examples of capitalism being successful in various regions, both on a large and small scale. If we can implement and adapt this form of capitalism in other parts of the world, it could be a valuable tool in addressing the issue.
In his book “Climate Capitalism,” Rathi shares stories of both triumph and defeat in the pursuit of clean technology. He explores how individuals have successfully created and marketed profitable environmentally-friendly products, and how these innovations have been implemented on a large scale. His journey takes him to various places, including an industrial park in Fujian, China known for its electric batteries, a massive solar plant on converted farmland in Pavagada, a region in India struggling with drought, and oil and gas fields in Texas that may soon be used for carbon storage.
According to him, in every scenario, capitalist systems are being shaped to drive capital and individuals away from pollution.
The US government implemented the Inflation Reduction Act to invest in clean technology. In Europe, the EU has a wider backing for climate action and is able to penalize polluters while also providing financial support for clean alternatives. However, this is done with less funding and more administrative processes compared to the US.
In China, the Communist party has invested heavily in national companies and encouraged private investment and entrepreneurship, turning the country into a major producer of electric vehicles and batteries. According to Rathi, this type of capitalism is focused on promoting Chinese companies as leaders in the global market, prioritizing domestic demand but also expanding to meet international demand.
However, India, the birthplace of Rathi, serves as the most pertinent illustration. India’s capitalism differs greatly due to its status as a developing economy. It has socialist origins and is currently attempting to attract international investors. However, it struggles with issues such as corruption and inadequate governance, and its infrastructure is not up to par. As a result, it is unable to fully utilize the capitalistic economy as it desires.
In 2019, Rathi considered installing solar panels on his parents’ residence in Nashik. He discovered that the process of purchasing and installing the panels was simple and that they would have a quick return on investment. However, connecting the system to the grid proved to be a lengthy process as the distribution company took several months to do so. Additionally, Rathi found that renewable energy suppliers were required to have significant cash reserves due to delayed payments from distributors, caused by government regulations and issues such as power theft. These payments were often delayed by two to three months.
These issues may appear insignificant, but they are widespread concerns for households and businesses in Asia, Africa, and South America. While the cost of solar panels has significantly decreased, making them the most affordable option for electricity globally, the initial expenses remain too steep in numerous countries. This is especially true in places where banks are hesitant to provide loans. According to the International Energy Agency, the cost of obtaining capital for a large solar farm is typically two to three times higher in developing economies compared to advanced economies or China. This same issue also affects other environmentally-friendly industries.
Rathi stated that while writing the book, it was vital to share the experiences of implementing solutions for scaling in developing nations. Although these countries may not have been major contributors to emissions historically, it is crucial to address the global issue of climate change. The success or failure of addressing this problem will depend on the actions taken by India and China. By showcasing the successful adoption of clean energy technologies in these countries and learning from their methods, it may be possible to apply similar strategies in other nations such as South Africa, Kenya, and Nigeria.
Rathi, a holder of a doctorate in organic chemistry from the University of Oxford, acknowledged the advancements that have taken place during his lifetime. He mentioned his grandparents, whom he believes would never have had the opportunity to attend university, and his father, who did and was able to provide him with a better life. He also acknowledged that this progress was made possible in part by the use of fossil fuels and the capitalist system, which may not have been equally accessible to all but still managed to uplift millions of individuals from poverty.
However, he cautioned against becoming too comfortable and emphasized that certain measures of advancement are now showing signs of decline. “Instances of hunger are on the rise. Prior to the pandemic, poverty levels were increasing… Although life expectancy has rebounded from its decline during the pandemic, there is no assurance that we will be able to maintain this trend in the face of climate change impacts and the influx of climate migrants in the years ahead.”
Rathi’s book features various individuals who have utilized their influence to alter capitalism in order to accelerate the energy transition. These individuals include Wan Gang, a Chinese government official who may have made a greater impact on electric cars than Elon Musk, and Farhana Yamin, a lawyer who played a key role in developing significant environmental legislation and staged a protest by attaching herself to the floor outside the headquarters of a major oil company.
Rathi suggested that there is a moderate approach between rejecting capitalism completely and having completely unregulated markets, which can be achieved more quickly and with less pollution. This is not a utopian concept, but a realistic one that countries have already demonstrated success with, despite their political limitations.