29 Aug Elizabeth Warren outflanks Trump on Trade by channeling Ross Perot
The IPCC Report showed that we have until 2030 to cut emissions by 45 per cent if we’re to limit global temperature change to 1.5C and avoid a climate catastrophe. What’s been somewhat lost in the coverage is the fact that 2020 is the year that carbon dioxide levels need to peak if we’re to hit this target. This means we have 18 months to take action against the climate crisis during which we’ll see two critical elections take place in Canada and the U.S.
How to address the climate crisis is a hotly debated subject. I’ve been an advocate for the divestment movement for a number of years, arguing that divesting away from fossil fuels and instead investing in climate change solutions, is an essential step to decarbonizing our carbon-intensive economy. It’s encouraging to see the divestment movement continuing to gain traction, with the recent news that Norway’s Government Pension Fund is the largest ever divestment at $13bn.
However, there is another market-focused policy solution that could accelerate our progression to addressing climate change, and it’s something that two unlikely allies have advocated for; Ross Perot, the businessman and politician who passed away last month, and Elizabeth Warren, one of many Democratic candidates in the 2020 United States presidential election.
Ross Perot is infamous for his staunch opposition to the North America Free Trade Agreement (NAFTA) in the 1990s, instead favoring tariffs to force other countries, in this case, Mexico to change its living standards for workers.
The concept of using tariffs to drive change is now coming back to the fore, this time by Elizabeth Warren, the U.S. Democrat candidate, who argues that “we need to completely transform our approach to trade.” Warren believes that “for too long, we have entered into trade deals with countries with abysmal records on labor, environmental, and human rights issues.”
Warren’s vision is to establish standards as a precondition for any trade agreement, and those that don’t meet these standards will be subject to tariffs. In terms of driving climate action, Warren’s proposed preconditions include countries being;
- A party to the Paris Climate agreement
- Having a national plan that has been independently verified to put the country on track to reduce its emissions consistent with the long-term emissions goals in the Paris Climate Agreement
- Eliminating all domestic fossil fuel subsidies
Currently, there are some regions, such as China, that are putting global progress on climate change at risk. From 1990 to 2015, China’s annual coal consumption went from 1.05 billion tons to 3.97 billion tons. And while China is putting a cap on coal domestically, its coal and energy companies are building furiously elsewhere as part of its ambitious Belt and Roads Initiative (BRI), a major project to increase industrial development and economic integration across the globe.
We need to strongly incentivize China, among other countries, to cut their emissions and be part of the Paris Climate Agreement. This market-place solution could be the game-changer we need to speeding-up the battle against the climate crisis.
Typically market-focused solutions are a tool for parties on the right, so it’s interesting to see this being advocated for by a Democrat candidate. With this policy, Warren has outflanked Trump and the right on trade. Not promoting a real market solution to address the climate crisis could hurt the right for generations, and prove to be a missed opportunity.
The climate crisis is the biggest threat we face today. While a lot of work is being done to advance technical solutions to this address problem, we need a strong and immediate market-based policy solution if we hope to decarbonize at the speed we need to prevent an even bigger climate change disaster.
Wayne Wachell, the “father of fossil-free investing” is the CEO and chief investment officer of Genus Capital.