By altering the planet’s climate, human beings have transformed the natural world irreversibly. These transformations will force us to live differently from the way we have been living since the beginning of the Industrial era. As the British conservative magazine “The Economist” notes “Humans have changed the way the world works…now they have to change the way they think about it.”. Indeed, it is still largely uncertain how climate change (one of the major transformations of our time) is going to impact humanity. Some environmental activists believe it marks the “end of nature” and the advent of a totally artificial, humanised planet, while others see in it an opportunity to abandon “advanced capitalism” and create new political and economic forms of organisation, more attuned to this new environmental reality.

It is clear that Europe needs to think deeply and seriously about ways to mitigate the large-scale impact of industrial era carbon emissions on the planet’s natural systems. This need not be a deeply traumatic process. In fact, climate change, perhaps the greatest environmental challenge that humanity has ever faced, could provide an impetus for Europe to find a new purpose for some of the pillars of its faltering integration project. All in all, climate change represents a unique opportunity for Europe’s green parties to “lead the way” by developing a sound strategy for “greening” Europe’s foreign and security policy, while facing up to the challenges raised by a degraded global climate system.

More Than Just A “Market Failure”

Climate change has been described by academics, the Intergovernmental Panel on Climate Change (IPCC) and most international policymakers as a textbook example of a “market failure”. It is enough to look at the Stern Review, to date the most influential study on the economics of the issue. As Stern puts it, “Climate change is a result of the greatest market failure the world has seen…The problem of climate change involves a fundamental failure of markets: those who damage others by emitting greenhouse gases generally do not pay”.

Thinking about the problem in this way has led international actors to place their mitigation bets in the construction of complex, nested “cap and trade” systems. “Cap and trade”, roughly speaking, seeks to create a rational, regulated market for carbon by trying to entice or coerce polluters and financiers wishing to maintain their profits to simultaneously serve the common good by mitigating emissions.

The time has come to acknowledge that this approach has failed to deliver on its promise. The most notable example of this failure is the European Union’s Emissions Trading Scheme (EU ETS). Not only has the EU ETS not met its ambitious emissions reduction goals, it has distorted the price for carbon permits in the market that the EU itself has created (reducing its value to practically unsellable levels) and opened up huge opportunities for fraud for the carbon intensive business and financial interests that were supposed to be incentivised by the system to solve the problem.

It remains to be seen whether – with deep streamlining – the EU ETS and other similarly ambitious regional initiatives like California’s Air Resources Board Emissions Trading Program (CARB TP) will ever prove to be effective. It is apparent, though, that at this point a critical re-evaluation of both the theoretical underpinnings and the effectiveness of “cap and trade” is sorely needed because soon negotiators in Paris will seek to, in all likelihood, base an international climate change treaty on the idea. This agreement, if enacted, could commit the international community to “cap and trade” for decades.

Given the growing urgency of mitigating greenhouse gas emissions it would be foolhardy to rely only on a “single bullet” approach to solving the climate change problem. The world needs a “Plan B” and the development of such a plan requires a substantial re-thinking of what climate change represents.

Climate Change is A Security Dilemma

Let us for a moment think of market failures not as a cause but as a consequence. This is no doubt a difficult exercise given the “economic” character of our age in which financial and economic interests seem to be the prime movers of all things. What if a supposed market failure were the consequence of an underlying “security dilemma”? The dilemma would emerge when a state seeking to mitigate climate change found itself inevitably trapped in a double bind reasoning regarding the consequences of action or inaction.

Let us imagine that a given state chose to act while other states did nothing. The economic cost of action, given the present cost of low carbon energy production, would surely make its economy uncompetitive which ultimately would lead to a “security crisis” with regards to its competitors. What if this state opted instead for inaction? This time a different type of “security crisis” would emerge, the result of a deteriorating climate system.

Dismaying, as they may seem, these types of security dilemmas are not new in international relations. Humanity has faced similar problems before, so there is no reason to believe that they cannot be solved.

The closest historical example of the successful resolution of a “security dilemma” was the nuclear standoff of the Cold War. A combination of arms races, disarmament treaties and effective “signalling” (meaning that the two nuclear powers were able to credibly convey information about themselves to the other party), prevented a catastrophic nuclear war from taking place. Indeed, international negotiators have intuitively grasped the similarities between these two “security dilemmas”, thus “cap and trade” treaties like the Kyoto Protocol have been inspired by the design of the Strategic Arms Limitation Treaties of the Cold War.

Learning From Disarmament?

However, applying “disarmament” treaty models to climate change may be reasoning through false analogy. Experience demonstrates that disarmament initiatives worked best when negotiated bilaterally. Multilateral disarmament treaties have, in general, fared much worse. Witness the Anti-Ballistic Missile Treaty which, though partially successful, has failed to contain nuclear proliferation in rogue states like North Korea. Proponents of disarmament may have also downplayed the importance of arms races as a successful strategy – for a limited amount of time and in particular contexts – for overcoming the “security dilemma” of the Cold War.

What are, then, the special characteristics of the new “security dilemma” represented by climate change? The biggest challenge raised this time is how to find a way of keeping our civilisation thriving in a post-carbon, post-industrial era. We need alternative energy sources that can both guarantee the material welfare of humanity and preserve the ecological systems upon which our civilisation relies not only for its survival but also for its spiritual well-being. An economically viable technological alternative to carbon does not exist yet. Yet, technology is what got us into the problem and – though other measures such as curbing “consumerism” and other culturally wasteful systems of political and economic organisation can also help to some extent – it is mostly technology that needs to get us out of the present quandary.

The task won’t be easy. We can’t simply turn back the clock and regress human civilisation to a pre-industrial era with low carbon emissions, in which the world’s population was but a fraction of what it is today. To add to our difficulties, the political environment in which this quest for alternative technologies must unfold has also changed substantially. The world is now asymmetrically multipolar. Europe, therefore, can no longer simply look across the Atlantic, as it did during the Cold War, for leadership and technological innovation. It must step up and face the responsibilities that the relative decline of the US entails.

Let’s Give it A P.U.S.H.

So, what can be done, then? When we look at climate change as a “security dilemma” rather than as a “market failure” the solution to the problem no longer relies exclusively on “cap and trade”. Instead the focus shifts to creating an international political environment more conducive to the development of alternative technologies that will drive fossil fuels – and their associated financial and industrial vested interests – into gradual economic and political obsoleteness. To facilitate this process the European Union should formulate a foreign and security policy that defines climate change as one of its top homeland security priorities, thereby clearly “signalling” to both its international allies and rivals that it takes the problem seriously. Moreover, it plans to benefit from the opportunities offered by a post-carbon, post-industrial globalised civilisation in whose creation it plans to pro-actively participate.

For synthetic purposes I have integrated what some of these policies would look like under the acronym P.U.S.H. which stands for “Positive Unilateral Signalling on Homeland Security climate change based priorities”

Reforming the EU’s rudderless security policy

Research & Development (R&D) projects on low carbon technologies, in my view, need to be financed at the European level, following the cooperative model developed for the military industry and, indeed, detracting resources from some of its most unnecessary projects. Why finance wasteful and ineffective “Eurocopter” and “Eurofighter” research schemes instead of alternative low carbon technologies? These could both mitigate climate change and guarantee energy security for Europe. R&D could also produce positive economic effects through “knowledge spillover” for the European industry and society. Though this may sound anathema to many “Greens”, military procurement may just be the path to jumpstarting the next technological revolution. It is no secret that many of humanity’s most transformative technologies were developed under military pressure and/or leadership. The internet, for example, was developed by the US military with the mostly beneficial “spillover” effects for the American and global economy.

Applying a homogeneous EU “carbon tax”

This tax should be carefully designed to favour business initiatives incorporating quantifiable improvements in emissions and/or low carbon energy intensiveness. The “green” movement, at the same time, should actively oppose “green” taxes that have as a real objective the levying of funds for purposes other than driving the technological transformation of carbon intensive industries. In fact, these types of industries should be the main target of the new “carbon tax” since most emissions arise from dysfunctions at the “supply” rather than the “demand” end of the market. “Green” taxes, finally, are not progressive economically penalising the poor and the rich equally. This generates hostility and scepticism towards anything “ecological” among the general population including, of course, Green parties which are viewed as caring more for nature than people.

A more prominent role for the Commission

Europe also needs to reinforce the executive powers of the European Commission (EC) and particularly the Competition Commissioner. A European wide financial, industrial and energy sector reform is needed that will limit the size of the existing actors and open markets to new “green” business initiatives on a level playing field. This implies curbing EU policies that favour the creation of “European champions” in industry, finance and energy that are supposedly competitive, but, in fact, derive their profits from the oligopolistic exploitation of European captive markets.

A fourth measure would require the decentralisation of mitigation and adaptation planning to the municipal and regional level. EU agricultural and cohesion funds could be partially conditioned to the development of “bottom up” regional plans by local communities whose informal governance and economic structures should also be reinforced financially. The goals and achievements of these plans should be quantifiable and verifiable in order to avoid, as much as possible, opportunities for corruption.

Climate change should be a priority

Finally, the EU’s foreign policy should be re-oriented towards the prioritisation of climate change mitigation and adaptation. To do so the EU should attempt to foment a “clean energy race” between the great regional blocs existing in the world today. Europe must lead through competition rather than “flexible mechanisms”, unbelievable 20/20/20 (maybe 30) unilateral goals and fraudulent emissions trading programs. In parallel, and to fully exploit the foreign policy advantages of this clear “signalling” method, the EU should focus its mitigation efforts on international multilateral negotiations at the G-20 rather than at the United Nations level, since 80% of the world’s carbon emissions are produced by countries belonging to this informal governance club for powerful countries.