Andrew Simms's Blog, page 15

Our addiction to oil is draining every last drop | Andrew Simms

Having taken oil for granted for decades, the global economy has failed to prepare for its absence. A bleak future awaits

"Oil is the trouble, of course," wrote Gertrude Bell in Baghdad in 1921, "Detestable stuff!" It had fuelled a world war and already was causing upheaval in the politics of the Middle East. For all the conflict caused by securing supplies of oil, and the environmental damage that goes hand in hand with its use, the problem for Bell, and now the rest of us, is that oil was just too useful. Concentrated energy, easily transported and hugely versatile. In Lord Curzon's famous phrase, Britain "floated to victory on a wave of oil", which then carried before it the modern age and the whole of consumer society.

We all became, and remain, hooked on its convenience. Today's energy supplies provide the equivalent of the work of 22 billion slaves, according to former oil industry man Colin Campbell. But now the wave of oil looks set to leave us high and dry. At well over $100 per barrel, prices are climbing again to the level last reached in 2008. Since then, however, the tone of commentary has changed.

Awareness is increasing of a fundamental problem looming, in which rising demand departs from flattening supply, leading to a shortage in the supply of the global economy's life blood. Until now, false reassurance that we can carry on as we are has come from two factors. First, that there is still oil and second, that new oil fields are still being discovered.

And, of course, there is still oil and small, new amounts are being found. But the situation is like knowing there are 10 mouths to feed tomorrow, yet only food stores enough for eight. Worse, each day, less food is replaced than the amount eaten, while the number of mouths to feed increases.

New discoveries of oil peaked in the mid-1960s, and based on a range of estimates we are either very near to, or possibly living through the peak of global oil production. After that, the gap between demand and supply inexorably widens. The difficulty of knowing exactly when is heightened by the political and economic sensitivity of the size of a nation's oil reserves. Publicly available figures are open to question. WikiLeaks revealed official scorn being poured, behind the scenes, on the size of Saudi Arabia's reserves, a key producer for the west.

Understandably, some people might think this is a good thing from an environmental perspective. After all, if the oil is running out, doesn't that help solve climate change? Unfortunately it doesn't. As the price of oil goes up it makes other, dirtier fossil fuels like brown coal and tar sands more attractive. And here is a problem even for people who discount the threat of global warming. In key areas of the economy like transport, especially aviation, and agriculture, oil is hard to replace.

During the 1970s Opec crises, the worst effects were moderated by so-called "swing producers", oil exporters who replaced access lost by the west to key suppliers. Those options are no longer available. Back then, Britain turned to its own resources, which are now in dramatic decline.

Today's reality is that if you rip the oil drip from the economy's arm, the choice is economic seizure or transition. Short-term concerns are that a high oil price, pushed by upheaval in the Middle East, endangers economic "recovery". But there is a greater, systemic threat from the peak and decline of global oil production. Driving to the supermarket, the range of food on the shelves, the family holiday in the sun, even how we brush our teeth in the morning – the whole character of modern living in rich countries relies on the assumption of cheap, abundant oil. Yet that can change as fast as the price of a commodity on the stock exchange.

Both the left and the right are firmly unprepared for the disappearance of cheap oil. We have all grown accustomed to the benefits of oil. Our plans to adapt to its absence are seriously wanting.

To some degree the age of plastic, disposability and consumerism was an artefact of overproduction in the oil industry. Higher prices and harder access will usher in a different age. Oil is still the trouble, 90 years on from Gertrude Bell's words. The coalition has shown itself capable of a truly radical programme of government, but unfortunately it chose a regressive, ideological one instead of an urgent, practical one.

Whether we take the opportunity of the passing of cheap oil to make a better age, or remain spellbound by its vanishing mirage, is down to us.

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70 months and counting ... | Andrew Simms

Reckless practices in the banking and oil industries are tying us together in what Ban Ki-moon calls a 'global suicide pact'

Capital One's advert for its World Mastercard is quite emphatic: "No, no, no, no, no, no, no, no, no, no, no, no, there's no limit." That kind of certainty normally comes wrapped in fundamentalist religion. It could be the magical thinking of an economic system drifted dangerously far from its real world roots, or just the "bring it on" machismo of banks desperate to forget the consequences of reckless lending.

Either way, it neatly illustrates Ban Ki-moon's suspicion that the world's economic model is an ecological "global suicide pact". Whichever data set you refer to, his concern is well grounded. Last year was either the equal warmest year on record, or second warmest.

But, given that the model for the world economy has also been something of a suicide note, you'd expect a growing clamour for system change. But, you'd be quite wrong.

As fatigue about climate change sees the issue recede from the news like a glacier up the Alps, column inches instead are filled with the increasingly indignant cries of an unrepentant financial sector.

At the recent meeting of the global elite in Davos, at which climate change seemed barely to be mentioned, the bankers were impatient, not for change, but to get back to business as usual.

But when they say that it is "time to move on", do the bankers realise that they just sound desperate to leave the scene of the crime.

Dame Clara Furse, former chief executive of the London Stock Exchange said as much as guest editor of BBC Radio 4's Today programme on 31 December. Since then, a queue has formed to sing the same tune.

Under questioning by the treasury select committee, Barclay's head, Bob Diamond, said that the time for "remorse and apology" in the financial sector was over.

Later, Diamond at least had the presence of mind to offer a "heartfelt thanks" to the various ministers in Davos who had engineered the trillions of public money in support of the banks. J P Morgan's boss, Jamie Dimon, was at a different point on the graph of worldly sensitivity, and told his audience that bank critics were being "unfair".

So, as we stumble through the early days of 2011, two economic and environmentally shattering issues are being neatly swept under the carpet. Could the reason for inaction be as simple that politicians in general, and the government in particular, are hugely dependent on financing from both the oil industry and financial services?

We have a banking system, still unreformed, getting back to its bad old ways, even though they are almost certain to need more public support in the coming months. Oddly, you can't help but think that when Goldman Sachs announced that its average pay for staff was going to be £269k, they thought we would all be impressed by their restraint. Until, at least, someone pointed out that when you excluded all the admin staff, the average package for their top 1,000-plus bankers was more likely £5 million.

When senior figures in banking refer to their pay as "compensation", you do wonder exactly what they are being compensated for. Perhaps it's the stress of having to suppress knowledge of the other issue kept under the carpet: how the economy, dancing to the tune of finance capital, is gambling, badly, with the stuff of life.

The wheel of high and volatile food and oil prices has spun around again very quickly since the last peaks of 2008. And BP, after its disaster in the Gulf of Mexico, is once again attracting investors and paying dividends in spite of its continuing, huge liabilities.

This month – number 70 in this countdown for action on climate change – saw BP publish its latest, industry standard projections of future fossil fuel demand and production. They predict that global carbon emissions will keep rising until at least 2030, in spite of the fact that to prevent dangerous climate change they should already be reducing. Presented in numbing pages of graphs and tables, this is the "global suicide pact" written invisibly into the world's economic model referred to by Ban Ki-moon. And it will remain so, until we can break the spell of magical thinking which allows us to believe that, economically and environmentally, there are no limits.

70 months and counting ...

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71 months and counting … | Andrew Simms

"You are not stuck in traffic," says the advert for a satnav system, "You are traffic."

The doors of perception often hang heavy on rusty hinges. Regardless of motivation, though, good advertising can work like good art. It issues an irresistible invitation to see the world differently. Here we leap from the familiar grumble about congestion, to the unsettling realisation that we are the thing we grumble about.

Behind the advert is a familiar irony, that the solution proffered merely relocates the problem, or creates a new one (such as taking a large family estate car full of screaming children up a track fit only for athletic goats – well, it looked good on the computer's map). But, in well-crafted messages meaning can escape narrow motivation.

We are not hapless victims of circumstances, we are deeply complicit in creating them. At the heart of our complicity is how we allow ourselves, actively or passively, to accept versions of reality. These may be offered, or emerge as unintended consequences of what we do. Sometimes we are so biddable that we allow our perception of reality to bend to breaking point. It is not merely the fault of weak self-awareness: are we stuck in traffic or are we the traffic? It is also due to our poor judgement of risk and what will give us the world we really want.

John Lanchester's brief but magisterial account of the banking collapse provides a perfect example.

The financial system is the (shaky) foundation upon which the economy rests. In recent decades money became not just the medium, but the message, and excuse for all sorts of antisocial behaviour. In turn, the financial system rested upon assessments of risk. To say that these, too, were shaky, doesn't quite capture the full picture. It mattered so enormously because – as we learned to our vast, incalculable cost – the foundations of our own livelihoods rested on this deeper foundation, understanding risk.

Here's what reality looked like down there. The edifice of modern, financial capitalism bet trillions of dollars and our collective economic future on the fact that people with often no income, job or assets were unlikely to default on large, relatively expensive mortgages.

To simplify, massively, after these debts had been chopped-up, sold-on and insured, the "masters of the universe" convinced themselves, using very impressive mathematics, that the chance of something going badly wrong (having lent lots of money to people with no obvious means of paying it back) would be, in Lanchester's words, "literally the most unlikely thing to have happened in the history of the universe".

The risks were, according to the CEO of Goldman Sachs, so-called "25 sigma" events. What's that? It's a number, a really big one, and worth quoting to demonstrate just how wrong the very influential and self-confident people who are running things can be. Imagine, says Lanchester, a number equal to 10 times all the particles in the known universe, and then move the decimal point 52 places to the right. Bang. We live with the consequences of a quite extraordinary collective delusion.

There were bad smells everywhere that should have alerted people in positions whose job it was to avoid collapse. But they hunkered down, ignored the signs. It was easier to go with the flow. Just like what we are doing now on the cusp of triggering potentially irreversible climatic upheaval.

What does it say when amid the global economic gloom a company like Control Risks, is handsomely in profit because it makes money by providing protection to oil companies in war zones?

Or, when measurements from the Mauna Loa observatory continue to show an inexorable rise of levels of greenhouse gases in the atmosphere? Bad smells, all.

Stick with those numbers. First, take the mega bank crisis, meant to be an unimaginably remote risk, but which happened. Second, roll the dice of potentially runaway global warming. Roughly, when this blog counts down to zero, the odds of getting "locked-in" to crossing the global warming danger line of temperatures rising by 2C becomes worse than 50/50. Not a number so large that only a savant could imagine it, but something more likely than coming up "heads" on the toss of a coin. With odds like that you might expect a flurry of activity, a rush to save energy, a great crushing of urban 4x4s, a drive to change the nations infrastructure. What we've had is a secretary of state for energy and climate change, reportedly suggesting that deficit reduction should come before financing a green investment bank.

For decades the financial sector demanded and received deference from virtually every government in the western world. It got its own way. In the UK we rolled out the red carpet. Yet their perception of risk and reality was so wrong that they wrecked the thing they were left in charge of.

If that is allowed to happen again with climate change, and the odds are looking a lot worse, there will be no way back. What can words do this new year? Perhaps, aid a simple shift of perception that may allow for change.

We are not stuck with global warming. We are global warming.

71 months and counting …

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72 months and counting … | Andrew Simms

There is a massive gap between rich countries' pledges to reduce emissions and what the science says is needed

Organised expectation-management has become the politics of the climate talks in Cancún.

"Don't expect too much," officials brief, while keeping their bosses out of sight. But, applying to dangerous global warming the same diplomatic took-kit used for thousands of other negotiations is to make what is called a "category error". Politicians are not alone. The routine campaigning of the big green and anti-poverty groups similarly drifts in expectation of disappointment from one UN conference to another, scoring a few moral points along the way.

But the situation now is different. The category error is to treat climate negotiations like any other in which the outcome sits on a scale of better or worse. Normally its theoretically possible to seek a compromise that pleases, or at least doesn't disappoint, all sides. You can argue for more or less poor country debt relief, for better terms of trade, more funding of sport or the arts, and an incrementally better health and education service. But, more like avoiding a nuclear holocaust, avoiding runaway global warming is a game of absolute avoidance.

The prospect for global temperature rises of 4C are explored in a new collection of research papers published by the Royal Society. But, in one paper, according to Kevin Anderson and Alice Bows of the Tyndall Centre for Climate Research at the University of Manchester, the impacts related to a rise of just half that are so bad, "that 2C now represents the threshold [of] extremely dangerous climate change".

This is the problem. Once the planet warms to the point where environmental changes that further add to warming feed off each other, it becomes almost meaningless to specify just how much warmer the planet may get. You've toppled the first domino and it becomes virtually impossible to stop the following chain of events. Honestly, nobody really knows exactly where that will end, but they do know it will end very, very badly.

If that is the danger, the whole game is to stop the first domino falling. It is not to lean back in conference chairs and complacently discuss how much ground your delegation is prepared to give, how much you are prepared to spend and what your "best offer" is. As Winston Churchill once said, the point is not that we must do our best, we have to succeed in doing what is necessary.

But what does that kind of organised, international political process look like? Well, it looks a bit like what governments have done over the past three years to preserve, at all costs (and those costs have been very high) the functioning of the international banking system. The question was asked: what is the scale of action necessary to avoid financial collapse? Talks were had, feet were stamped, tears were shed and the money and measures were found. If they hadn't been, we would all have been struggling to get by in economies rather like Argentina's after the 2001 run on the banks. We would have got by, with difficulty but we would have survived.

The same question about the scale of action necessary to avoid crossing the 2C threshold is not, honestly, being asked by the governments we trust to protect us from harm. There are plenty of talks, but the money and measures are not being found.

There is a massive gap between rich countries' pledges to reduce emissions and what the science says is needed.

Renewable energy targets in Britain are not being met, according to the public accounts committee. And, you can find editorials in City AM, the daily paper of the City of London, attacking the "green consensus" of the three main parties and calling for the government's policies on carbon reductions to be "loosened". Category error: avoiding the loss of a habitable climate is far less negotiable than maintaining the banking system.

A recent UN report said that conventional economic development in Africa was creating "oceans of poverty and islands of wealth". If the worst case scenario in the Royal Society papers spoke of a 4C temperature rise by 2060 happens, our legacy will be just that, oceans and islands.

Action to prevent dangerous climate change needs to be put in a new category.

72 months and counting ...

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'Big society' must be rooted in altruism | Andrew Simms

Appeal to self-interested individualism and you'll get self-interested individuals – not an active, engaged citizenry

There could be no better example of the coalition government's contradictory ambitions than news that councils, desperate to deliver David Cameron's "big society", are planning to offer supermarket-style reward points to goad people into being good citizens. But, why is that so bad?

Behaviour expressive of certain values tends to form a self-reinforcing loop. Hence, appealing to self-seeking, materialistic gain, makes people less likely to be communally and altruistically motivated. Conversely, being involved in a collective enterprise tends to make us less self-absorbed and more likely to be positively inclined to take part in a "big society". For example, it was the experience of "national unity" during war time, writes the historian Paul Addison, that laid the cultural and political foundations to build a more caring society fit for returning heroes after 1945.

In short, appeal to self-interested individualism and you will get self-interested individuals. Emphasise the intrinsic and mutual benefits of common endeavour and you will begin to grow a nation where people are more inclined to look out for each other.

Effectively paying people to be good citizens can also directly backfire. A classic study looked at the results of different approaches to blood donation in the UK, where people volunteer and in the United States where they got paid. In the US, research by the rightwing Institute of Economic Affairs theorised that paying donors was the way to increase supply. Subsequent analysis by Richard Titmuss found the opposite. Not only did more people give blood when it was unpaid, but that voluntarily donated blood was of a higher quality.

The financial incentive increased dishonesty among donors who lied more often about their health conditions. Titmuss concluded: "Commercialisation of blood and donor relationships represses the expression of altruism." It was a classic and common error. Think of how you feel when good friend invites you to dinner. Now imagine how you would feel if the same friend offered to pay you to go to dinner with them? Relationships nurtured by open gift giving and reciprocity differ from commercial ones. It's the difference between a loving relationship and prostitution.

Economics, too, often boils human relationships down to a caricature of self-interest and competition. In justification, it invokes misappropriated Darwinian notions of "survival of the fittest". But, this misses the equally successful evolutionary strategies of collaboration, symbiosis and co-evolution. Co-operative companies, tellingly, weathered the recession better than others.

The proposed hook-up with commercial, supermarket-based reward cards also appears self-defeating. The point of a big society is an active, engaged citizenry. But research on the impact of big stores on communities shows that their dominant presence can reduce voter turnout. They do so by unweaving the tighter social fabric that grows in more diverse economies. As more of every pound spent by shoppers stays locally if the shops are locally owned and operated, encouraging the opposite will drain not invigorate a big society. It gets more personal, too. Because of their socially alienating store formats, large chain stores even reduce the number of conversations people have while shopping, further dissolving the social glue.

Yet, a further worry might be the disturbing potential for data convergence that would occur once the enormous power of commercial store cards are combined with the personal and other information that government authorities hold on people.

I think it is far more likely that people don't vote with their feet to build the big society due to a lack of time, rather than financial or material incentive.

Recession and chronic public spending cuts are set to hugely stress social cohesion. And, there will be large numbers of people in structural unemployment (probably blamed for their fate) and many, many others working ever longer to stay afloat.

The big society needs more time banks where people swap time and skills, and a shorter working week, underpinned by sufficient safety nets, to create the conditions for a big society. Engaging vastly more people in helping communities to function will not only radically reduce costs (although that is not the reason to do it), it will enormously improve the quality of neighbourhood life, raising individual and communal wellbeing simultaneously. Getting involved ticks all the boxes that the literature tells us really improves life satisfaction: giving, being active, connecting, taking notice and learning. Papers are currently full of politicians and business people encouraging us to shop Britain back to its feet. But if we want the nation to stand up and be a truly big society, it's time that we need to spend with each other, not reward points in supermarkets.

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73 months and counting … | Andrew Simms

Living beyond our economic and environmental means got us into this mess, but October's spending review was an epic folly

Coincidence? It must be. It just feels that the world is trying to tell you something. Beware that point when you see patterns everywhere. Cue, on the same day in late October: a) a staged photograph of celebrities, wealthy retailers including Philip Green, and defender of City excess the London mayor, Boris Johnson, all smiling and walking boldly through the London West End laden with expensive-looking bags of shopping; b) a shiny new shopping mall for bankers and traders opens in the shadow of St Paul's Cathedral, brash consumerism openly competing for people soul's with the building next door (its called One New Change, although looking at the list of retailers, "Same Old Crap" might be more appropriate; c) chief executives of the FTSE 100 largest companies report an average pay rise of 55% over the previous year. Meanwhile, as a result of the October comprehensive spending review, the outlook elsewhere is, well, a little bleaker. There are massive cuts to public spending that will disproportionately hurt the poor and women in society. There's the unweaving of safety nets, housing benefit rules that are more restrictive and feared to lead to "social cleansing".

Counterproductively, creating no-go areas for the poor and more divided cities will probably lead to higher social costs. Policies sold as pragmatic are successively being revealed as ideologically motivated. Big cuts also hit the two key government departments dealing with the environment – the Department of Energy and Climate Change (DECC) and the Department for Environment, Food and Rural Affairs (Defra) – of 18% and 30% respectively over four years. Feeble start-up funds were announced for a green investment bank, one sixth of the minimum £6bn thought necessary, and there was a tragic-comic increase in one area after the government underestimated the cost of decommissioning nuclear power stations ("late and over-budget" will be carved on the concrete sarcophagi of the industry). National natural assets like swathes of our forests, too, look set to be sold off.

The wisdom of that very active day in October is a little, well, questionable, given that the economic and environmental mess we are in was largely brought on by pandering to reckless speculation and debt-fuelled overconsumption.

The same month we learned that one fifth of our plant species face extinction due to the pressures of human economic activity, and for similar reasons our overuse of freshwater systems means that the great majority of the human population, around 5 billion, now have questionable water security.

There should be a new test for all policies now that we face massive stresses brought on by living beyond our economic and environmental means and social stresses brought on by massive inequality and the structural unfairness of the economy. Whether policy changes enhance or reduce our collective resilience should be their measure.

On that basis, October reeked of epic folly, not to mention bad fashion sense also reeking of a 1980s retread. Flamboyance and excess for a few, and the costs of recession dumped on those who did nothing to create it. All this competing for column inches, while life-threatening environmental degradation was pushed back into the margins of public consciousness.

Politically there is a strange twist for the environmental movement. For decades greens have been told that the message to consume less and live better is an impossible one to sell. "Less is more", went the rule, was just bad politics. Yet somehow, in a different context and with much more dubious reasoning, this is very close to the message that the coalition government have sold to the public.

Glossing over the recession's roots in the failure of private financial markets, the cuts have been sold as necessary to correct on overextended public sphere. "Less", in terms of public spending is not only necessary, we are told (although this is increasingly being questioned by economists), but will also, they imply, magically lead to better government.

History will unpeel these multiple layers of wrong but the current government strategy fails even on its own terms. The unreformed banks look set for a further public bailout. And, if the depth of the spending cuts were not influenced by the fact that the government know, but won't admit this, it would be good to know what their plan actually is. Our energy security is declining, the oil sector is struggling and even Lloyds of London warned that we could be looking at a price of $200 per barrel by 2013.

Try pulling an oil-addicted economy out of recession with energy costs that high. David Cameron promised to strain every fibre to focus on jobs, jobs, jobs. Yet the easy and multiple benefits of channelling and leveraging serious resources into job-rich energy efficiency and renewable technologies have been spurned. Experts in the green energy sector were merely relieved that more cuts didn't happen. April may still be the cruellest month, but October got pretty nasty, laying waste to the land for many more months to come.

73 months and counting …

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Is George Osborne cutting for a rainy day of bailouts? | Andrew Simms

The severity of the cuts may be about making provision for another bailout of the unreformed banks

In politics, when somebody tells you that "there is no alternative", it usually means that they are just desperate to stop anybody else noticing that there are several. Where the depth, speed and scale of public spending cuts is concerned, the story told by the coalition government – and dutifully, and largely uncritically, repeated by the BBC – is that we have no choice. Yet in some fundamental ways the chancellor, George Osborne, is very successfully spinning us a yarn and certainly not telling us the whole story.

First, the cuts are likely to be so damaging to the economy that they will do precisely the opposite of his stated intention of restoring the trust and faith of the markets. This is odd, in any case, as it was the markets that failed, not the public sector, and odd also considering that the financial markets don't appear to give a fig about the public's trust or faith in them. Either way, finance is unlikely to be overenthusiastic about an economy that ends up in long-term decline.

Then there's the point that there are real alternatives to the cuts. Rather than cuts on services that disproportionately affect the poor, the government could pursue taxes left unpaid, evaded or avoided, with the potential to raise more than £50bn, and much more likely to affect the comfortably off. A sum like that alone would change the landscape of the cuts debate. But there is much more. The government could also reclaim part of the potentially profitable function of credit creation. This has been left almost entirely to the commercial banks, who create credit when making loans (it is one of the oldest myths in economics that banks merely lend out other people's savings).

The government could also choose to inject money directly into the economy rather than via the banks, preferably in the form of a green new deal to generate employment, improve infrastructure, reduce carbon emissions and raise energy security. Quantitative easing via the banks makes little sense when it is so poorly targeted and when the banks' behaviour continues to be remarkably self-serving, instead of serving the wider public and economic interest. Of course, the pressure on public services could also be greatly reduced if spending was better prioritised; cancelling the Trident replacement alone could save an estimated £97bn over several years.

Second, and critically, the unreformed banking sector looks set to hit the edge of a funding cliff, according to Bank of England data analysed in the New Economics Foundation's (Nef) new report, "Where Did Our Money Go?", published this week. Just to keep functioning, the main banks' monthly borrowing needs look set to more than double next year, rising to around £25bn a month. This raises a number of awkward questions for George Osborne.

Such as: where will the money come from? Reading between the lines of the Bank of England's analysis, it seems highly unlikely that the money will be found in the financial markets. Which leaves, you guessed it, you and me. If the public purse is the most likely last resort, the question that George Osborne must then answer is this: is the severity of public spending cuts being pushed by the fact that the government is also provisioning for another round of bailouts to the still unreformed banks? If it isn't, then what is the plan to deal with the funding cliff? When hit with the question on Sky TV today, Osborne looked decidedly uncomfortable and blind-sided.

There are already admissions that the tax on bonuses failed to change behaviour within the banks, and Simon Johnson, former chief economist at the International Monetary Fund, points out that most banks are largely unaffected by new rules on the amount of assets that banks must hold compared to their liabilities.

If we see a retread of the crisis of two years ago, at the same time that the government sucks money out of the economy with spending cuts, we will have the worst of all worlds.

If the cuts programme is being partly driven by a government saving for a future bailout, it will be much worse than merely making us all suffer in order that the banks, laughing behind their bonuses, carry on with business as usual.

Because, in this case, we will be suffering for a banking system that is now providing a worse service for fewer people. The general public would be taking a triple hit, earning less on its savings and paying more to borrow, while also weathering the spending cuts. In Ireland the new bank bailout was remarkably close in sum to recently announced cuts, €5bn as against €4bn. A direct connection may be hard to prove, but it raises reasonable suspicion.

Whatever is the case now, the agenda for reform of the banks is already long overdue. The minimum necessary is laid out in the new Nef report. Banking should be a utility to serve a productive economy and help us meet incredibly pressing social and environmental objectives. It has been allowed to become a law unto itself. We haven't yet been told where all our money went during the last bailout. Osborne has a duty to tell us where our money is going to go now.

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74 months and counting … | Andrew Simms

There are no certainties when it comes to climate change but we can be sure the greatest risk is not taking any action to mitigate it

Yesterday, the Royal Society, the voice in the UK for the scientific establishment, published a new general public guide to the science of climate change. It covers areas of general agreement, broad consensus where there is still some debate and aspects that are still not fully understood. The nature of scientific enquiry is such that there is no such thing as absolute certainty, merely explanations of the world that are waiting to be disproved.

But, if deniers of human-driven climate change were hoping for rare succour, they will be disappointed. The Royal Society guide is wholly supportive of the mainstream view of climate science. Humanity is dangerously altering the climate through the bad management of natural resources, overconsumption and the generation of waste. The chair of the IPCC, the group of scientists representing that mainstream view, recently took criticism. A broadcast journalist found some environmentalists prepared to agree with the suggestion that he should not complete a second term of office. Others, who were not reported, did not agree. The crime to be answered was defending too aggressively the IPCC's work, and the need for urgent action on the basis of what is known.

In spite of some of the more peculiar assumptions behind economic models, we never possess "perfect information". And absolute certainty is a condition more closely associated with fundamentalist religions, rather than the circumstances under which we daily have to make choices and take decisions.

This is the point: we make judgements on the balance of probabilities. And, as we stand on current greenhouse gas emissions trends and the scientific establishment's cautious assessment of risk, along with further cautious estimates of how damaging "feedback" will happen in key ecosystems, we have 74 months before the accumulation of greenhouse gases makes it more, rather than less likely we will become committed to cross the dangerous 2C temperature rise. Choices have to be made.

Yes, of course there are unknowns. Ecosystems could react badly, and much quicker to warming. Or some unforeseen events – such as a deep and long global recession – might slow things down. But while, as in medicine, a false positive diagnosis may be an inconvenience, a false negative one can be lethal.

On a beach in Phuket, Thailand, during Christmas 2004, a 10-year-old British schoolgirl suddenly remembered her geography lesson of two weeks before. The water looked different and was behaving oddly. It was just like the signs she'd been taught were the messengers of an impending tsunami.

Everyone else was out for a good time on a sunny day on the beach – who wanted to listen to a young, increasingly desperate girl? But she trusted her judgement, the best knowledge she had gained from her science lesson, and finally persuaded her mother who had helped with her geography homework. In turn, they persuaded the lifeguard and the beach was cleared, saving about 100 lives on a day when possibly a quarter of a million died.

On a different continent, and in a very different situation, James Hansen, the Nasa climate scientist, took a similar risk. He put his reputation and establishment credentials in jeopardy and was prepared to be arrested in a public demonstration against the use of fossil fuels.

"The most revolutionary thing one can do," wrote the radical intellectual Rosa Luxemburg, "is always to proclaim loudly what is happening." She both lived and died by these words, being murdered for speaking out.

Now we have as leader of the UK's official political opposition, Ed Miliband, the first-ever former minister for climate change. He is running on the ticket of the new generation. Unless his policy package contains measures to push action at the scale and speed to stay comfortably on the right side of the 2C climate threshold, his new generation may also be the last to live in a world not tormented by universal environmental upheaval. This is now an age when the greatest risk will be not taking any.

• Take action and visit onehundredmonths.org

Climate changeIntergovernmental Panel on Climate Change (IPCC)Climate change scepticismClimate changeAndrew Simms
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