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«Abstract. Climate change represents a new era in the development of capitalism, whereby humanity has become such a force of nature so as to ...»

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Constructing Carbon Market Spacetime: Climate change and the onset of


Janelle Knox-Hayes

School of Public Policy, Georgia Institution of Technology

Contact. Janelle.knox@ouce.ox.ac.uk

Abstract. Climate change represents a new era in the development of capitalism, whereby

humanity has become such a force of nature so as to destabilize its own environment and

ultimately threaten its survival—neo-modernity. This paper explores the creation of markets to

control greenhouse gas emissions. Carbon markets are an important infrastructure to enable humanity to integrate nature into its socio-political and economic organization. The carbon markets are the embodiment of a process designed to reorganize human activities, but also to organize and assimilate the natural environment. As with other eras, the key to success in neomodernity is organizing complex and divergent human activities across space and time. Using an institutional approach, built on case-studies and close dialogue with market participants and policy makers in the United States and Europe this paper analyzes the construction of carbon market infrastructure, including how the markets organize environmental impacts in space and time. Particular attention is paid to the compressions of the spacetime of carbon commodities through the establishment of platforms, exchanges and verifiers. The paper concludes that markets are coordinating networks—the epitome of neo-modernity infrastructure, and the beginning of a process through which the natural environment will become valued only in the context of further capitalist expansion.

Keywords: Carbon Markets, Spacetime, Neo-modernity JEL classifications: F55, L14, Q54 Acknowledgements. The author would like to thank the many institutions and individuals who participated in the study and made this research possible. The author would also like to thank Gordon Clark, John Walsh, Amy Glasmeier, Dariusz Wójcik, Pratima Bansal, and Jarrod Hayes for helpful comments on the article. Support for this research was provided by the National Science Foundation and the Jack Kent Cooke Foundation. None of the above should be held responsible for errors, omissions or any opinions expressed herein.

Introduction Climate change marks a new challenge to the progression of capitalism. Capitalist development can be framed in two eras with distinctive (if overlapping) socio-political, economic and cultural features—modernity and post-modernity (Harvey, 1989). Each era can be defined by humanity’s struggle to overcome a greater challenge to progress. Modernity’s challenge was to emancipate the individual from the monarchy, religion, and tradition of the Middle Ages (Berman, 1983). It established a new system of hierarchy and order, marked among other things by scientific pursuit of ultimate truth, industrialization and individualism.

Post-modernity constituted a readjustment, a backlash against the hierarchy, linear-order, and supreme ‘truth’ (including the extremes of fascism and totalitarianism) that arose in modernity.

Integral to the framing of these eras is also the position or balance between humanity and nature.

Prior to modernity, humanity was subject to the forces of nature. Under modernity humanity strove to dominate and master nature. During post-modernity humanity began to recognize the fragility of nature. The environmental movement was born out of a counter narrative to the damage of unrespited capitalism. Constant throughout each era however, has been the drive to increase control of collective organization in space and time (Bell, 1976; Jameson, 1991). It is as though with mastery over space and time, humanity could overcome any threat, or achieve any modernizing goal (Foucault, 1977; Giddens, 1990).

I argue for the possibility of framing a new era of capitalist development—a ‘neomodernity.’ In some ways neo-modernity represents a continuation of the drive for progress, but like post-modernity it also represents a response or backlash to prior periods. Under neomodernity, human civilization is coming to realize the dire consequence of anthropogenic climate change. As in previous eras, the key to addressing this great challenge seems to lie in exerting ever deeper mastery of human organization in space and time. In neo-modernity, this mastery takes the form of the coordinated decarbonization of the activities of billions of people.

The distinction between post-modernity and neo-modernity lies in the identity and scope of capitalism. Post-modernity represents efforts to limit capitalist operation, restricting the use of conserved areas and limiting the extent of particular environmental damage. 1 The natural environment, if ever diminished in size, maintains a unique, non-capitalist identity. Neomodernity, in contrast represents efforts to fully integrate nature into the operation of capitalism.

The existence of nature is now becoming neither a mere input to production, nor a bounded area of restricted operation, but a priced and controlled element of the system of capitalism.

This article posits the introduction of neo-modernity by exploring the creation of carbon markets. These markets are developing around the world as a governance mechanism to reduce greenhouse gas emissions (Carr & Rosembuj, 2007; Hasselknippe, 2003). A number of schemes are in existence including the European Union Emissions Trading Scheme (EU ETS) and the Regional Greenhouse Gas Initiative (RGGI) in the northeastern United States (MacKenzie, 2007). I argue that carbon markets are coordinating networks—the epitome of neoI recognize that the term ‘post-modernity’ carries contested conations with significance for art, literature, and culture. The framing proposed here focuses on relationships between society and nature in time and space and is not intended to engage with cultural and literary debates. Rather the framing is intended to highlight the changing nature of capitalism’s relationship to the natural environment, as epitomized by carbon emissions markets, and to comment on the significance of these changes. With respect to the natural environment, the term post-modernity could also be substituted by ‘neo-romanticism.’ It encompasses recognition of the need to protect the environment from complete capitalist damage.

modernity infrastructure—which enhance our ability to organize our activities, and to organize use of the environment in space and time. Carbon markets need artificial spacetime to reduce greenhouse gas emissions in part because carbon pollution is itself spatially and temporally unbounded. The markets are in this respect environmentally unique, however the concept of the markets is being expanded to encompass virtually all other intangible components of the natural environment from biodiversity to ecosystem services.

The arguments of the article are supported by the use of cases studies with market institutions, which used close dialogue (Clark, 1998). More than 100 interviews with experts from banks, brokerages, intermediaries, legal firms, consultancies, power companies and political institutions in Europe and the United States were conducted to understand the development, operation and significance of carbon markets. The interviews provide insight into the social construction and operation of the markets, as well as the intent of market actors not readily available from open source data. Each interview has been qualitatively cross-checked with other interviews to verify the findings. The case study approach is well suited to describe and conceptualize the developing carbon markets and their relationships in space and time (Quattrone, 2006). However, since perspectives and experiences of individuals are not always accurate representations of actions or facts, the data were triangulated with company documents and websites to confer rigor and credibility to the conceptualization (Strauss & Corbin, 1998).

A key prerequisite for this rigor and confidence in the findings is access to key market and decision makers (Goldstein, 2003). To gain access these individuals were guaranteed anonymity; therefore interlocutors are reported anonymously.

This article proceeds in four sections. The second section examines the meaning of spacetime and built infrastructure, highlighting the contributions of Manuel Castells and David Harvey. The third section explains the nature of spacetime in carbon markets. The fourth section examines the creation and operation of infrastructure to sustain carbon markets, including conventions, registries and exchanges. The article concludes by suggesting that carbon markets are the beginning of a process through which the natural environment will become valued only in the context of further capitalist expansion.

Spacetime and the Infrastructure of Control Seminal works by David Harvey (1989) and Manuel Castells (1996) seek to theorize the essence of space and time in social interaction. Harvey and Castells are both concerned not so much with space and time as physical embodiments, but as social phenomenon at the heart of human organization and as phenomena constructed through economic processes. The history of social and economic development has been one in which spatial relationships are compressed, and the rate of interaction and spatial transformation is accelerated. Harvey (1989) refers to this acceleration as time-space compression. Time-space compression is a capitalist phenomenon that enables the shrinking of physical distance and enhances our ability to overcome time constraints.

It is a process designed to speed economic scale and productivity.

Each era of capitalism has been concerned with mastering space and time or reducing spacetime barriers to production to establish a global economy. Castells refers to this as network society, which is a “mixing of tenses to create a forever universe, not self-expanding but selfmaintaining, not cyclical but random, not recursive but incursive: timeless time, using technology to escape the contexts of its existence and appropriate selectively any value each context could offer to the ever-present” (Castells, 1996, p. 433). The ability to appropriate value from any context (spacetime) and bring it into the present is a form of control over spacetime.

As with any form of spacetime manipulations, the construction of timelessness, of instantaneous telecommunications and financial markets, requires the construction of infrastructure.

The physical manifestation of struggles to overcome space and time are preserved in the infrastructure of a society, whether the cables that link global time in the 19th century or the freeways that compress space in the 20th century. Architecture and infrastructure are the material demonstration of the wealth and collective achievement of a civilization (Orlikowski, 1992).

Infrastructure has form which records the composition, the struggles, and the development of the civilization that created it. It also has function which organizes society, and thereby embodies the civilization that creates it (Fligstein, 2001).

Infrastructure development in the last two-hundred years has performed the function of compressing spacetime and building a network society. Modernity achieved the synchronization of clocks to create simultaneity through Einstein’s theory of relativity (Galison, 2003). Postmodernity used the construction of vast networks of roads, railways, automobiles, airplanes, and finally fiber optic cables to link disparate localities around the globe and make them instantly accessible. Technological infrastructure has created a society of flows, a space of timeless time, capable of integrating both past and future time into the present. Virtual financial markets allow for the utilization of the future events with instruments such as derivatives (Tickell, 2000).

Social space and time has been virtually subsumed into network society. 2 The last point of resistance is what Castells refers to as ‘glacial time’, or the natural environment (Castells, 1996, p. 467). Regardless of social organization and spacetime compression, the environment exists according to its own timeframe. It sits at the edge of Castells’ forever time, and holds back the spread of ‘eternal ephemerality.’ The environment has always been a stable point of reference in capitalist development against which humanity has positioned itself. Modernity represents the pursuit of mastery of the natural environment. Postmodernity to an extent represents the embrace of chaotic and organic characteristics of the natural environment, as well as the need to protect segments of it. However, neither era fully takes account of its effect on the environment. As a result capitalist progress has drastically altered environmental cycles, and faces destabilization under anthropogenic climate change.

Capitalism’s response—the integration of the environment into network society—is the beginning of neo-modernity. It is an era which will reorganize human and natural functions in space and time. Yet in the capitalist assimilation of the natural environment, neo-modernity is less a path to addressing environmental destruction and more a path to enabling the continued expansion of capitalism.

This article explores the infrastructure of the markets that allow for the integration of the environment to occur with ever greater control of space and time. Like Einstein’s clock network, environmental markets are a broader symbol of order in neo-modernity. Although this article explores only the development of carbon markets designed to reduce greenhouse gas emissions, the principle of these markets allows them to be applied to other environmental areas such as waste, water, ecosystem services and biodiversity. 3 It should be noted that the argument here is not intended to imply that network society is universal nor equally shared. Castells (1996) recognizes that there are still communities without access to the network, and control of the network is anything but egalitarian. Production (or as directly explored here, market construction) is furthermore still very much a material project which requires proximity and social connection.

TZ1, an Australian registry, has already begun to develop and sell habitat conservation credits (Fogatry, 2007).

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