‘Cheaper to save the world than destroy it’: why capitalism is going green

Akshat Rathi argues that around the world economies are switching to clean technology as prices drop

The root of the climate crisis is “not capitalism but the corruption of capitalism”, according to the author of a new book on how people, policy and technology are working to stop the planet from heating.

Akshat Rathi, a climate reporter with financial news outlet Bloomberg, argues that smart policies can harness capitalism to cut carbon pollution without killing markets or competition. “It is now cheaper to save the world than destroy it,” he writes, adding that this holds true even when viewed through a narrow capitalist lens.

“Capitalism cannot be the solution to climate change,” Rathi told the Guardian. “But there can be a form of capitalism that we have seen working – in many different parts of the world, in big and small ways – that if we can use and deploy in other parts of the world, we really can use this tool to the advantage it provides us.”

In Climate Capitalism, Rathi runs through stories of success and failure that have helped people invent clean technologies, develop them into profitable products and build them at scale. His search takes him from an industrial park in Fujian, China’s electric battery capital, to a vast solar plant on former farmland in Pavagada, a drought-stricken region in India, to drill-scarred fields that may soon store carbon in Texas, the heart of the oil and gas industry in the US.

In each case, he says, capitalist systems are being moulded to push money and people away from pollution.

In the US, the government passed the Inflation Reduction Act to throw money at clean technologies. In Europe, where support for climate action is broader, the EU has been able to punish polluters as well as subsidise clean alternatives – though with less money and more bureaucracy than in the US.

In China, which has become the world’s electric vehicle and battery factory, the Communist party has pumped money into national companies while attracting private investment and empowering entrepreneurs. “The Chinese form of capitalism is very jingoistic,” said Rathi. “It’s aimed at creating national champions that can serve Chinese demand first and foremost, but then go out and satisfy global demand.”

But it is India, where Rathi was born, that provides the most relevant example. “India has a much different form of capitalism because it’s a much less developed economy. It comes from socialist roots, it’s trying to bring in global investors. But it has corruption, it has weak governance, its infrastructure is not quite up to scratch. So it’s unable to absorb as much capital as it would like from the capitalistic economy.”

When Rathi thought about sticking solar panels on his parents’ home in Nashik in 2019, he found it was easy to buy and install them, and that they would pay back quickly. But the distribution company took months to connect the system to the grid. What’s more, he found, renewable energy suppliers were forced to hold big reserves of cash because the distributors – hamstrung by government rules and held back by issues like stolen power – often delayed their payments by two to three months.

Such problems may seem small but are common headaches for households and businesses across Asia, Africa and South America. The price of solar panels has plummeted to make them the cheapest source of electricity in the world but the upfront costs are still too high in many countries, particularly where banks are reluctant to help out with loans. The cost of capital for a big solar farm is typically two or three times higher in emerging economies than in advanced economies or China, according to the International Energy Agency, and similar problems plague other green industries.

“When I was writing this book, it was absolutely crucial to try and bring the stories of scaling solutions in developing countries,” said Rathi. “Historically, they’re not the largest emitters, but we know that the climate problem is a global problem that will either succeed or fail depending on what India and China do … if we can show that clean energy technologies can scale in India and China, which they are doing, and learn from those lessons, we may be able to apply them in South Africa and Kenya and Nigeria.”

Rathi, who has a PhD in organic chemistry from the University of Oxford, said he was aware of the progress that had occurred within his lifetime. He cited his grandparents, who he says could never have gone to university, and his father, who had, and so was able to give him a better life. “That generational progress came partly because of fossil fuels, partly because of capitalism – again, not evenly distributed, but distributed enough that it pulled hundreds of millions of people out of poverty.”

But he warned against complacency and stressed that some indicators of progress have started to reverse. “Hunger has started to go up. Pre-pandemic, poverty started to go up … Life expectancy declined during the pandemic and is increasing again, but there’s no guarantee – given the kind of climate impacts we’re going to face, the kind of climate migration that’s coming our way – that we will continue to improve life expectancy in the future.”

In the book, Rathi profiles a range of actors using their power to reshape capitalism in ways that speed up the energy transition. They include Chinese bureaucrat Wan Gang, who may have done more for electric cars than Elon Musk, and Farhana Yamin, a lawyer who helped craft some of the biggest pieces of environmental law in the world and glued herself to the floor outside the offices of an oil giant.

Rathi said the experiences show a middle path between anti-capitalism and unfettered markets that can be reached faster than the former and pollute less than the latter. “It’s not an idealistic place, it is a practical place that we can get to – that countries have shown [lies] within their political constraints.”

Cover photo: Author and climate reporter Akshat Rathi says green economic policies are cutting pollution without killing markets or competition.