The Green Market - campaigners using capitalism to change the world

| 1st February 2009
Environmentalists have long been suspicious of the free market, but a new generation of campaigners are using capitalism to change the world.

Let’s face it, in the heart of every Ecologist reader lurks a dark suspicion of the free market. Even early discussions of this article among magazine staff were cast in terms of ‘using the market against itself’ to do good, as if the market were geared up only to do bad. This suspicion itself is understandable: the business world is complicated, far beyond the understanding of almost anyone who does not work within it. As a result, those who do work in Big Business have been allowed to get away with too much for too long.

In recent years, some of those involved in the worst behaviour have relied on this lack of understanding to disguise their actions with greenwash – advertising that claims they are better than they are. That does not mean the market itself is bad, however, just that it has been used to do bad things. The truth is more subtle: the market itself is neutral; a mechanism of exchange, a means by which things can be achieved. Increasingly, those who understand how the mechanism works believe it can be used as a force for good. As this understanding grows, a new generation of environmentalist is born, wearing pin-stripe suits. This new breed realises that standing on the outside and shouting will only get you so far. The smart money is being spent from within.

A greenbelt buy-out

‘What is happening to the countryside? Inch by inch, year by year, its redeeming, restorative qualities are being eroded. Bypasses spawn developments filling in the ground between road and town; motorways suck vast shed-filled industrial estates in their wake.’

National Trust chairman Sir William Proby stirred up a swarm of protest with this speech in November 2007, revealing that the Trust was considering buying up greenbelt land to prevent it being concreted over by urban development.

‘The statistics are terrifying,’ Sir William said. More than 10,000 acres of the greenbelt, set up around cities to prevent their expansion and to allow populations to breathe, is believed to be at risk. More than three square miles of greenbelt are lost to development each year. Government plans to build an extra three million houses will only make these statistics worse.

With an annual income of almost £390 million and more members than the three main political parties combined, the Trust is a potentially powerful force, but since 2007 Proby has publicly pulled back, saying ‘we are not going to start buying land from in front of the bulldozers’. The Trust is, however, currently fundraising to buy the 18th-century Seaton Delaval Hall, an estate that sits plumb in the greenbelt surrounding Newcastle. A report setting out the organisation’s final position on the issue will be released in April.

One woman looking forward to the release is Dame Hilary Blume, director of the Charities Advisory Trust (CAT), itself raising public money to buy greenbelt land. Dame Hilary is hoping the Trust will provide some leadership on an issue in what is a politically fraught battle for Britain’s greenbelt. In a parallel project based in southern India’s Shola forests, the CAT is buying up pieces of this tiger territory under threat from encroaching tourist resorts. Blume does not see these Indian acquisitions as a way of using the market against itself. ‘I’m just not a campaigner,’ she says. ‘I’m not interested in standing around with a banner. I just wanted to get the damn thing sorted and the market is the quickest way to get it sorted. I just have a very pragmatic view of the world, and if you want to protect something, own it.’


Money trees?

Rainforests fall for one reason: they are worth more dead than alive. The profits from logging and agriculture are the driving force behind an annual destruction of around 15 million hectares of rainforest worldwide, a savaging that alone accounts for one-fifth of global CO² emissions.

Canopy Capital, a small London-based investment firm, is the first to try putting a market value on living rainforest. Last year the company announced it had paid an undisclosed sum for what it called a licence on the ‘ecosystem services’ of 370,000ha of pristine tropical forest in Guyana – an area roughly the size of Majorca. Ecosystem services include rainfall production, carbon and water storage, and weather moderation. Canopy Capital’s licence lasts for five years, with the money used to fund management and conservation in the reserve.

Managing director Hylton M Philipson openly admits the deal is speculative – he may lose his money – but in putting a financial value on the healthy ecosystem he hopes to create a market, and a profit, from its future trade. Possible investors might include insurance companies exposed to huge liabilities from weather-related disasters, looking to the forests as a means to prevent the worst effects of climate change. ‘I’ve been reading my entire adult life about the destruction of the Amazon forest, yet it’s still happening,’ Philipson says.‘What’s the problem? Frankly, lack of money. Philanthropy is too small, governments are too slow, so it’s going to be up to the market. The only way we are going to turn this thing around is through a profit motive.’

Permits to pollute

If you really want to achieve something, it’s best to wield both a carrot and a stick. That, at least, is the principle behind two of the main market-based systems the Government has set in place to tackle climate change: the Emissions Trading Scheme (ETS) and the use of Renewable Obligation Certificates. First,set a limit on either the amount of CO² a company can emit or on the amount of energy it can buy from non-renewable sources and punish those who break this limit. That’s the stick. Second, create a market where companies can profit simply by reducing their pollution or generating renewable energy. That’s the carrot. And once you understand the carrot and the stick, you can make them work for you:


By her own admission, Bryony Worthington didn’t fit the mould at Friends of the Earth, so she left to join the Government, helping draft the climate change bill, and later working for Scottish and Southern Energy, a company that in her campaigning days she called a ‘carbon dinosaur’.

Big Business taught Worthington a lot. There was less inertia for one thing; long meetings weren’t tolerated. She also became convinced that market-based systems such as the ETS were the only way to make polluters change.

Under the ETS, companies are given permits allowing them to produce CO². Those that reduce their pollution can make a buck by selling on their unused permits. Unfortunately, Worthington says, there are currently too many permits floating around, driving the price of each down and creating little incentive not to pollute. To change this, she set up Sandbag, an organisation that allows people to enter the emissions market themselves, buy up permits – currently trading at about €15 (£13.40) for one tonne of CO² – and ‘retire’ them. Each retired permit means one less tonne of CO² goes into the atmosphere. It also drives up the cost of the permits that remain, making pollution more expensive.

By engaging with the market, Worthington says, people also begin to understand it. ‘There is so much jargon and so many apparently complicated acronyms, but it is really very simple,’ she says. ‘People who were emitting freely now can’t.’

Good Energy

Juliet Davenport has also seen government from the inside, having worked on carbon taxation policy for the European Parliament.

‘The trouble with politics is that yes, when it makes its mind up it can move quickly, but it’s too political. It’s useless at making up its mind,’ she says. So, in 1998, she set up her own renewable electricity company, Good Energy. A few years later she began playing the market according to its own rules.

The renewable energy market is ruled over by the same carrot and stick as the ETS.

Renewable electricity producers are awarded Renewable Obligation Certificates (ROCs), at a rate of one certificate for each megawatt hour they produce. Electricity suppliers, who buy from the producers, must have a number of ROCs equivalent to nine per cent of their total supply each year, or face a fine. They do this either by buying nine per cent of their electricity – and its accompanying certificates – from renewable generators, or buying ROCs themselves from other companies that have more than they need.

Good Energy, which sells only renewable electricity, has a surplus of ROCs but doesn’t sell all of them on. Some are ‘retired’ instead, reducing the total number of certificates in the market and driving up the price of those that remain. This, in turn, increases the value of those generated by renewable electricity producers and makes it more expensive for electricity suppliers to avoid renewable sources and simply buy their way to the government’s nine per cent target.

‘It’s a way of effecting change, of finding a way of getting things to change as quickly as possible,’ Davenport says.

Cash for trash

At its height, before the current recession, Britain’s recycling business was worth about £8 billion, but none of this money found its way directly back to the people that provided the industry with raw material – that’s you and me. That may be about to change, with a US company, RecycleBank, in talks with London mayor Boris Johnson about exporting its own take on the trade in trash for cash to the capital.

Established in 2004, RecycleBank built itself up from working a few streets to more than 150,000 customers in nine US states. A million more are signed up and waiting to get started. Essentially, households put their recyclable waste in dedicated bins that are weighed on collection. A computerised system converts that weight into points and credits those to the household’s account. Points mean prizes and can be redeemed in local stores for everything from groceries to running shoes. Local authorities pay less for landfill as a result and RecycleBank in turn takes a cut of this saving.

Among the scheme’s success stories is Wilmington, Delaware, where approximately 90 per cent of residents are signed up, and where the amount of waste going to landfill has fallen by 40 per cent. By encouraging households into the market for their own rubbish in this way, RecycleBank claims to have saved 687,948 trees and 46 million gallons of oil. It may be very American to say it, but as founder Ron Gonen explains, ‘We want people to recognise that “eco” is not just a part of “ecology”, but also “economy”’.



Holding Pattern

Behind the car park of the William IV pub and next to an old gravel quarry lies a drab acre of scrubland. When they bought the land, its new owners claimed they wanted to build a donkey sanctuary. But this was a lie. In truth, once the deal went through, this anonymous plot near the village of Sipson in west London became a frontline in what may become the greatest environmental protest of our generation.

The acre in question lies directly in the path of the £8 billion development of Heathrow, including a third runway and sixth terminal, announced by the Government in January. By adding about 600 flights a day, that development could turn the airport into the biggest single source of CO² emissions in the country. Years of picnic protests and placards had failed to halt the decision, so Greenpeace – using the plight of the donkeys as a cover – turned to the market.

With £20,000 donated by various celebrities, as well as Ecologist director Zac Goldsmith, the charity bought the land and launched a campaign to register members of the public as ‘beneficial owners’ on the title deeds. The result was one of the country’s great property rushes; at its height, nearly 1,000 people an hour were asking to add their name to the paperwork. Any attempt by the Government to use compulsory purchase orders to acquire the land – which it must – will now run into a mass of expensive and time-consuming legal red tape. Similar tactics have been used in the past to protect tropical forests.

No profit will be made from the deal, Greenpeace director John Sauven said. ‘This is public activism. We will resist all attempts at compulsory purchase and will represent millions of people from across the world at any planning inquiry.’



 The old(ish) man and the sea

Orri Vigfússon first made his fortune selling vodka to the Russians, demonstrating a power of persuasion that has made possible his life’s work since: asking fishermen not to fish. As a businessman he was also convinced he knew the best way to achieve this. He would pay them.

Vigfússon was an angler who had seen fewer and fewer salmon returning to his native Iceland each year, the result of a vastly destructive drift-netting industry that had spawned across the fish’s North Atlantic migration routes. With the deployment of the drift-nets, salmon numbers crashed. In the decade until 1989, when Vigfússon founded the North Atlantic Salmon Fund (NAS F), catches fell from an annual four million to 700,000. His response was to buy from the fishermen the licences permitting them to fish. The organisation also helped those who sold find new employment and lobbied governments to provide funding or change policies on the fishing industry. All this was done on a huge scale, with Vigfússon brokering multimillion-dollar buyouts and government moratoriums in Iceland, the UK, Ireland, Greenland,France and Norway, among others.

Today, more than 80 per cent of the region’s long-line and drift-net fishermen have signed up, Vigfússon says, and the salmon are back in force. A slate of honours has followed, including the prestigious 2007 Goldman Environmental Prize. The award citation says Vigfússon ‘represents a new breed of environmental leader who utilises business skills and negotiating to effectively protect precious natural resources’. Not that the NAS F has always been welcomed. ‘The civil servants they hate us because we take away their jobs,’ Vigfússon says. ‘But I’m a businessman; I believe this is the best way to have success.’

For the future he plans to establish a capital trust, replacing the constant need to raise millions in funding each year, most from a few large donors. He also lobbies for the introduction of commercial agreements, based on transferable quotas that encourage individual fishermen to take responsibility for the health of fish stocks, to replace the abused and discredited government regulation. ‘Who takes the best care of your house? It’s you, if you are the owner,’ he says.


Dan Box is a freelance journalist who has previously worked as an oil and gas correspondent for the Sunday Times


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