The Political Economy of the Paris Agreement: Preserving the Existing Social & Economic Order

Real-world Economics Review, Issue no. 75

The Political Economy of the Paris Agreement on Human Induced Climate Change: a Brief Guide

By Clive L. Spash [Vienna University of Economics and Business, Austria]





Technological optimism is at the core of the IPCC projections and the assumptions that inform the Paris Agreement. On publication of the IPCC 5th Assessment report the official press release quoted the Chair, R.K. Pachauri, as stating that:

“To keep a good chance of staying below 2ºC, and at manageable costs, our emissions should drop by 40 to 70 percent globally between 2010 and 2050, falling to zero or below by 2100.”

The latter is the new rhetoric of negative emissions that relies on imagined future technologies (e.g. biotechnology, geoengineering, carbon capture and storage). The press release also reports the findings of Working group III as showing that:

“…mitigation cost estimates vary, but that global economic growth would not be strongly affected. In business-as-usual scenarios, consumption – a proxy for economic growth – grows by 1.6 to 3 percent per year over the 21st century. Ambitious mitigation would reduce this by about 0.06 percentage points.”

This major transformation of the energy basis of the economy in fossil fuels is floated in the press as having no real impact on economic growth without anyone raising a qualm. In fact Lord Stern and colleagues have been arguing that economic growth will be boosted by the energy transformation to a “new climate economy” (GCEC, 2014). Elsewhere, I have discussed some of the many fallacies of this Green Growth argument and noted the connection to a power elite (Spash, 2014). Yet this is now the dominant international position and hope of the Paris Agreement.

The whole of Article 2 is qualified by the phrase: “…in the context of sustainable development and efforts to eradicate poverty”. As I have noted elsewhere (Spash, 2016), the Paris Agreement cannot be read outside the context of the, October 2015, UN Resolution A/RES/70/1 “Transforming our world: The 2030 Agenda for Sustainable Development”, which promotes economic growth, technology, industrialisation and energy use. Goal 8 is to sustain per capita economic growth at a rate of “at least 7 per cent gross domestic product per annum in the least developed countries”. The environmental devastation this would entail is meant to be addressed by the “endeavour to decouple economic growth from environmental degradation”, which is meaningless unless undertaken in absolute terms and that is simply impossible for the industrial economy being promoted in Goal 9. The Paris Agreement follows suit and claims that: “Accelerating, encouraging and enabling innovation is critical for an effective, long-term global response to climate change and promoting economic growth and sustainable development” (Article 10).

The ultimate concern is the threat to economic growth and this is a perspective that has been heavily lobbied for by advocates, such as Stern, of the new climate economy under the banner “better growth, better climate”. As they state: “In the long term, if climate change is not tackled, growth itself will be at risk” (GCEC, 2014a, p.9). The climate can and will be changed, but growth must not be threatened.

The negotiations around human induced climate change reveal the tensions and contradictions of the resulting policy. There are those who argue for more and better growth spurred on by new technologies to be developed via innovative corporations (GCEC, 2014). This is to be funded, as usual, by massive public investment that will ‘leverage’ private finance, or in plain terms subsidise corporate profit-making while pretending to remove market imperfections. Advocates are heavily invested in preserving the existing social and economic order as evident by the elite networks of the 1% within which they operate (Spash, 2014). The hope is for new miracle technologies to allow moving pollutants from the air to the soil and water, and reliance on treating the Earth as a mechanical toy for boys to (geo)engineer. The economics profession with its macroeconomic obsessions over jobs and growth is living in a fantasy world without any biophysical reality and merely plays along with this techno-optimist tune, and unfortunately the heterodoxy has so far done little to alter this.

The targets of Paris are not some simple internalisation of an externality that is messing-up the perfectly functioning market system. If taken seriously they are a call for a major transformation of the global economy away from its foundation on fossil fuels and energy intensive systems. As the UNFCCC’s Director for Strategy has stated:

“The objective is to put in motion a fundamental transformation in the way we use and produce energy, how we plan our cities, how we manage land and how we prepare for a changing climate and cooperate to minimise its disruptive effect. Transformation takes strategy. You need to know your destination if you are serious about reaching it” (Thorgeirsson, 2015).

Yet, while the need for transformation is now widely recognised, this is generally interpreted as being totally consistent with maintaining the same social ecological and economic structure as today. That is a structure of social inequity, ecological exploitation and an economy promoting hedonistic materialism supplied through a system of corporate and State capital accumulation. The politics of human induced climate change go to the heart of the modern industrialised capital accumulating economy and the rhetoric of growth as supplying development and progress. In the end the Paris Agreement changes nothing. The destination is the same old growth economy and that is in total contradiction with addressing human induced climate change.

Download the paper:

Clive L. Spash, “The political economy of the Paris Agreement on human induced climate change: a brief guide”,
real-world economics review, issue no. 75, xx June 2016, pp. xx-xx,


[Professor Clive L. Spash holds the Chair of Public Policy & Governance at WU in Vienna and is Editor-in-Chief of Environmental Values. He has conducted research on climate change economics and policy for over 25 years and his work in the area includes the book Greenhouse economics: Value and ethics as well as numerous articles. His critique of carbon trading was the subject of attempted censorship while he was a senior civil servant at the CSIRO in Australia. More information can be found at]