MADRID

Saving the planet takes money, and lots of it. Money is both the theme and the subtext of the latest round of UN climate talks being held here—a vast river of cash flows through the UN climate process. Formally, the meeting is about nailing down one of the more obscure provisions of the Paris Agreement: Article 6, which provides for market-based instruments so that countries can trade their way out of their decarbonization commitments. Billions of cross-border dollars and transaction fees hang on the outcome.

With the negotiations concerning mind-paralyzing definitions of interest only to the most intrepid climate geeks, business and finance leaders could wind up taking center stage. When they first started coming to climate conferences, it was to observe and advise. Now it’s to show-and-tell their green virtue. “Momentum is there,” declared Paul Polman, the former Unilever CEO. “Climate change is the biggest business opportunity of all time.” We’re close to several policy tipping points, he suggested.

The EU is about to approve a massive Green New Deal. Michael Bloomberg’s Task Force on Climate-related Financial Disclosures (TFCD) encourages companies to make voluntary climate-related risk disclosures. Draft EU regulations, meantime, could pave the way for mandatory climate disclosures that would force investment managers to justify their investments against climate and environmental benchmarks. Businesses are transitioning to “net zero,” Polman claims—meaning zero carbon emissions. They’re so far advanced that at this point, it’s only governments holding them back.

Peeling away the hype reveals a very different picture. Companies promising to cut their carbon emissions rely on offsetting—that is, paying for their consumption of hydrocarbon energy by supporting projects that reduce greenhouse-gas emissions, such as renewable energy. If companies were genuine in their commitment to tackle climate change, though, they would develop zero-carbon baselines for their own activities.

A growing number of companies boast about the proportion of wind and solar in their energy consumption. These claims rely on an entirely legal accounting fraud that says that renewable electricity can be stored; the physical reality is that electricity is consumed the instant that it’s generated. In peddling the falsehood that business and households can depend on anything close to 100% intermittent renewable energy, companies are misleading the public.

Rather than demonstrating a genuine – and painful – commitment to radical decarbonization, business leaders’ public professions of climate awareness reflect a confluence of interest between, on the one hand, corporate public-affairs departments steeped in doctrines of corporate social responsibility (CSR), and, on the other, nongovernmental organizations (NGOs). It’s a collusive process. The more environmental reporting requirements, the greater the importance of CSR in corporate hierarchies, the more work there is for external environmental consultants—and the greater the leverage NGOs wield over corporations.

Then there’s the psychology of herding, whereby CEOs are fearful of being hung out to dry if they don’t sign the latest statement pledging their company to save the world from climate breakdown. All this might remind readers of two groups in Ayn Rand’s Atlas Shrugged: the Moochers, comprising, in this example, the craven CEOs and their in-house CSR crowd; and the Looters, the environmental NGOs. Their ultimate victim is capitalism, the only economic system ever to have produced durable, transformative economic growth.

Madrid also marks the debut of finance ministers at UN climate talks, with the formation of a coalition of finance ministers for climate action. Under their Santiago Action Plan, over 50 finance ministers, including most from the EU, pledged to incorporate climate-change considerations into economic policy and seek “analytical expertise” to put their economies on the path of “inclusive economics, social, and wider restructuring.”

The first rule of economic policymaking is that any government intervention in the economy involves trade-offs. In the case of decarbonization policies that drive up energy costs, “net zero” means zero growth. The en masse capitulation of finance ministries before the altar of climate change sends a negative signal about future economic growth. Patricia Espinosa, executive secretary of the UN climate-change convention, has already sent out invitations to finance ministers to attend next year’s talks. Once on the climate bandwagon, it’s almost impossible to get off.

Then there are those desperate to get on the climate bandwagon and never get off. Anyone who has attended a UN climate conference will have noticed that some of the best-dressed participants are from Africa’s poorest nations, some with chunky Rolexes on their wrists. The UN makes sure that they suffer no hardship from their climate-change-fighting efforts. The Daily Subsistence Allowance, once handed out in envelopes with $100 bills, is now disbursed in its plastic equivalent of Swiss value cards. NGOs, whose role at climate conferences is to act as the spontaneous expression of civil society, are also eligible. Unsurprisingly, youth NGOs want to get in on the DSA act, too.

The incentive this creates is to make the UN what its critics always accuse it of being: a talking shop. According to one estimate, participants in the Article 6 discussions have already spent 70,000 hours failing to define what a “market instrument” is. Why decide, when another comfortable meeting in another expensive city beckons?

When it comes to Article 6, rich nations want tight rules to ensure that their money won’t be used to fund phony emissions cuts. Environment ministries in poorer nations naturally see Article 6 as a stream of funding that will flow through them. In principle, though, it’s hard to see how an emissions market can work as intended, when developed nations with hard caps on their emissions can pay to outsource their cuts to nations with no caps and no rigorous inventory of greenhouse gases.

Back in the U.S., some 80 business leaders have signed a statement urging the U.S. to remain in the Paris Agreement, with its commitment to limit warming to 1.5 degrees Centigrade above pre-industrial levels. Anyone who has looked at the numbers and what they entail in terms of global emissions cuts knows that this is next to impossible. It’s conceivable that global greenhouse-gas emissions will plateau, but steep cuts to “zero” aren’t going to happen. But America must have a seat at the table, comes the response. Perhaps, then, to show that they have some skin in the game, these business leaders should endure thousands of hours of meetings trying to decide what a market instrument is.

Rupert Darwall is a Senior Fellow at the RealClear Foundation.