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Climate Capitalism—Global Warming and the Transformation of the Global Economy . Cambridge, UK : Cambridge University Press . 205 pages. ISBN 978-0-521-12728-8 , $29.99 paper . Peter Newell and Matthew Paterson . 2010 .

Few book titles grasp social phenomena as powerfully as Climate Capitalism. In the pages that follow this aptly chosen title, Peter Newell and Matthew Paterson offer a lucid, poignant, and engaging account of how global capitalism transforms itself in response to climate change. The authors set out to outline the nascent elements of climate capitalism, which they understand to be the “result of decarbonising the economy” (p. 1), to assess their effectiveness and governance, and to engage with different future scenarios. Business––in particular, global finance––is understood to be a key agent in the transformation of the global economy, the central element of which is the emergence of carbon markets. Three very useful chapters provide a comprehensive tour d’horizon of the pillars of carbon markets: the Clean Development Mechanism, cap-and-trade schemes, and voluntary carbon markets. While these mechanisms offer an embryonic version of climate capitalism, they face a number of limitations relating to, for instance, emission caps and measurement and verification, the authors argue. Therefore, the key to effective climate capitalism lies in the reform of the existing governance mechanisms of the carbon economy.

Newell and Paterson distinguish three modes of governance: governance by quantity––setting emission reduction targets; governance by price––defining the rules of trading and linkage; and governance by information disclosure––measuring, reporting, monitoring. and verifying emissions. Across these governance dimensions, learning among policy makers can be observed, e.g., in the reform of the European Union Emissions Trading Scheme (EU ETS). Yet the future of climate capitalism remains uncertain. In what is a highly instructive and original thought experiment, the authors engage with four scenarios: climate capitalist utopia––carbon markets lead to rapid decarbonization; stagnation––carbon markets collapse and political momentum vanishes; decarbonized dystopia––technical fixes lead to rapid decarbonization at high social and environmental cost; and climate Keynesianism––both policy makers and market participants work toward “re-embedding” carbon markets and implementing additional policies, the latter of which they identify as the most desirable outcome.

Climate Capitalism tells a powerful yet balanced story of how the global economy starts to respond to climate change. It thus masters the art of aggregating multiple analyses and providing an intriguing story that spans questions of the transformation of capitalism, market development, governance, and equality. This is a remarkable contribution to a debate that is otherwise occupied with technical questions of policy design. What is more, the authors make a very valuable contribution to the study of capitalism by placing the rise of climate capitalism in the context of neoliberal capitalism and by drawing anecdotal comparisons with previous waves of capitalist transformations, for instance, in the Bretton Woods era.

While the book travels easily across a breadth of topics, one major aspect is left out of the picture. One could argue that while carbon trading has absorbed much of the political attention, other policy instruments, including regulatory standards and subsidies, may, in fact, have been more effective in reducing emissions than carbon markets to date. Green stimulus packages, renewable energy portfolio standards, feed-in-tariffs, and fuel efficiency standards come to mind, to name a few. These “traditional” nonmarket-based policies are an integral part of emerging climate capitalism, yet they only feature in the discussion of future scenarios. Related to this point is how the book deals with the role of governments in driving the shift to a low-carbon economy. Newell and Paterson offer an excellent discussion of business and investors as driving forces, which comes somewhat at the neglect of the analysis of government action in building a low-carbon economy. Yet, arguably, government agencies and international organizations have been instrumental in creating institutions that led to early forms of a low-carbon economy.

These points notwithstanding, Climate Capitalism is a very impressive piece of analysis, which masterfully finds an intuitive label for a number of political–economic processes occurring in response to climate change. In addition, the book is an accessible read, which builds on the authors’ extensive previous theoretical work but is written for a wider audience. It is highly recommended to anyone eager to understand the nascent transformation of the global economy in response to climate change, including academic audiences and policy makers, the latter of which might benefit in particular from the scenario exercise on competing futures of climate capitalism.