Resource crises: Should we strike a deal with the dealers?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV.COM Ltd.

This article is part of our special report Resource efficiency: towards a circular economy.

The current high prices for oil and foodstuffs are indicators of an imminent crisis in the world economic order, which fails to internalise ecological limits and resource scarcity, says Luxembourg Green MEP Claude Turmes.

[The following is reproduced with the permission of Claude Turmes.]

What do riots in Central African cities, demonstrations by fishermen in Brussels, blockades by Spanish lorries, frenetic mergers and acquisitions in the raw material industry and rocketing revenues for oil and gas dealers have in common? 

The answer is easy: rising prices for oil, gas, food and other raw materials. But understanding the origins and causes of the price hikes is more complicated. 

Should we blame speculators for this? Perverse speculation is pushing up prices for commodities even higher. But could speculators be so 'successful' if the fundamentals of the food, oil, and raw materials trading floors were solid? Or is it because the market is so tight that speculators can raise their stakes? Almost all resource markets are tight in this moment and this is due to the boom in the Chinese and other emerging economies. So blame and shame the Chinese? But what if China has only one car for 15 inhabitants and is consuming today per capita not even a third of the meat and fish of US and Japan? 

All indicators show that we are at the edge of a major resource crisis. And the very reason for this resource crisis is a system error in the world's leading economic mainstream model: the non-internalisation of the environmental and resource scarcity into our economic logic. The 20th century's resource intensive and highly fossil fuel based economic model lived by one billion middle classes in the EU, US and Japan and some tiny elites elsewhere is just not fit for a 21st century with its hundreds of millions of new middle classes emerging in countries with large populations. 

Don't blame China, blame the 20th century's economic model.

The initial answers by our leaders to the crisis are reminiscent of the answers given by a typical junkie: if I need more stuff, I go to my dealer. Let's try to get some more oil out of the Saudis (Jeddah summit looming); let's see if we could give some tax breaks for the billion dollar 'poor' oil majors so that they invest in deep sea or Arctic drilling; let's ignore climate scientists – at the very moment they are ringing the alarm bell – and allow more oil tar sands and coal to liquid investments to replace conventional oil. Even more ruthless: let's divert substantial amounts of food crops to ethanol at the expense of the already existing food crisis that already affects millions of poor people all over the planet. 

Others want to exchange the fossil fuel 'hard drug' for an even stronger energy drug: the plutonium economy with all its risks of safety, nuclear proliferation and potential targets for terrorists. The common element in all these strategies is: it's a crisis situation, and in these situations, we, the political leaders, have to be tough and take unpopular decisions like deciding on nuclear power stations, ignoring climate change to secure our last resources and maybe send NATO to protect our pipelines. 

Dear leaders: Be intelligent and unspectacular, instead of tough and taking unnecessary risks.

The world's future economic, social and environmental situation depends on unspectacular decisions: how to train the Chinese workforce in the building sector to insure that the two billion square metres of new buildings (more than the existing building stock in all OECD countries combined) will be efficient in reality and not only on paper; how to agree on dynamic minimum performance standards and labelling requirements on global consumption goods like cars, refrigerators, computers and electric motors; how to ease public and private finance for investments in public transport in the mega-cities of developing and developed countries alike; how to prepare the electric grid systems for the uptake of millions of decentralised power stations from solar PV, to biogas and wind. 

Why is it so difficult to convince EU leaders gathering this week in Brussels to agree on a set of common sense measures like taxing the windfall profits of the speculators and the energy majors from the oil, gas and electricity sectors? These billions could be used as fresh money to launch a coordinated anti-cyclical investment programme into best available technologies backed up by cheap loans from the EIB, concentrating on a social housing programme, a programme to foster investment in public transport, financial incentives and an information campaign to speed up the replacement of energy efficient consumption goods like appliances, electric motors and cars. The money could also be used to fund three large-scale renewable energy projects of EU interest as part of the renewable energy directive. For example: converting the North Sea from a sea of declining oil and gas reserves into an offshore wind and marine energy sea. 

The oil end game: Innovation rich countries against resource rich countries.

And why don't our leaders understand that if the dominating driver of the geopolitics of this century is to be resource property, then the winners of the 21st century will be the not-very-democratic regimes in Russia, Saudi Arabia, Venezuela, Iran and others. The only chance for resource-poor economies like the EU, China and Japan to win the oil end game is to set a new paradigm: resource intelligence. The winner in the 21st century resource-scarce economy should be those countries, cities and regions that take care of the global ecological commons and which develop innovation around better use of resources and the quick build-up of renewable energies. 

The reason why our society as a whole, and the leaders in this society, are not taking these steps is that we are behaving like junkies. We prefer to strike another (bad) deal with our dealers – please Mr. Gazprom, send us more gas and we will not care about democracy or about human rights in your country; please dear Mr. Total, bring us more oil and we will not care about the environmental damage that tar sands cause; please Mrs. Areva, develop your plutonium economy and we will ignore all the risks this will put to humankind. 

Only once we recognise that we are junkies will we be ready for a cure.

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