Now of course we have to ask did anyone superglue themselves to any of these banks to achieve their aims?

Or did the banks consider their public image (they still have them unlike some I could mention) and also where the money is (carbon-trading and other green industries) and make a market decision?

This is good news, but perhaps not terribly significant – the right way to think about this is raising the cost of such activities. Direct action raises the cost of funding such activities from point of view of the banks, so the returns become unattractive and they exit the business. So the mountaintop destroyers and tar sands extractors will have to go elsewhere for their finance, and one would expect their financing costs to rise as a results. Unfortunately an increase in financing costs may only have a small impact on the quantity of mountain destroying and tar sand sucking that goes on.

I’d have thought either a legislative route (i.e. banning such practices) or a larger increase in costs (penal environmental taxes) are necessary, if you really want to stop these things.

Re Luis – see also China’s role in Africa, financing projects that western companies won’t touch with a bargepole because they involve horrific environmental damage to enrich crooked dictators.

So the mountaintop destroyers and tar sands extractors will have to go elsewhere for their finance, and one would expect their financing costs to rise as a results.

Is that another way of saying – ‘well someone has to sell these people horrific weaponry, so it may as well be us. Why force them to pay more to others’?

Unfortunately an increase in financing costs may only have a small impact on the quantity of mountain destroying and tar sand sucking that goes on.

You don’t know that – you’re just speculating.. In some cases it may stop the activity entirely.

Is that another way of saying – ‘well someone has to sell these people horrific weaponry, so it may as well be us. Why force them to pay more to others’?

No. Not remotely. You have badly misinterpreted me. I was merely making an assertion about what happens when fossil fuels companies are refused financing by a set of banks. My purpose is to understand what happens in the real world. I would like to see things like mountaintop mining and oil tar extraction stopped.

You don’t know that – you’re just speculating. In some cases it may stop the activity entirely.

Well yes, I am speculating. My speculations are based on the idea that the cost of raising finance from, say, a sovereign wealth fund or a non-Western bank are likely to be somewhat higher than from a US or UK bank, and that most oil tar or mountaintop mining projects are probably capable of absorbing a somewhat higher cost of finance. Yes, in the case of those projects that are so close to the wire that say a 1 percentage point increase in cost of capital will render the project unprofitable, you are right it may stop the activity entirely.

The idea that oil and mining projects are typically so close to making zero economic profit that a moderate increase in the cost of capital will shut them down is consistent with a free-market utopian world view of perfect competition. It is not consistent with a left-wing view of monopoly power, collusion and exploitation and excess profits. So which do you want to keep hold of, your views about the effects of raising financing costs or your left-wing conception of the economy?

Let’s make this explicit, rather than talking in term like “In some cases it may stop the activity entirely”. Relative to a counter-factual in which US and UK banks continue to fund these projects, what percentage of environmentally damaging projects do you think will still go ahead with other sources of funding. I’ll guess at 90%. What is your guess?

Now, it may well be that in addition to achieving a moderate increase in the cost of financing these projects, direct action also tips political opinion toward legislation and punitive taxation. Or it may be that direct action substitutes for efforts to change legislation. I don’t know.

“Or it may be that direct action substitutes for efforts to change legislation. I don’t know”

It complements it, it isn’t an either/or situation.

The problem is most legislators aren’t going to bother even researching an issue, let alone legislate against a sector that has billions of dollars available for lawsuits, lobbying, funding one’s political opponents etc. This applies in so many areas of industry now that simply calling for legislative changes is futile really without a strategy of how you are going to do that.

So which do you want to keep hold of, your views about the effects of raising financing costs or your left-wing conception of the economy?

What a bizarre set of alternatives you present.

The point about direct action here is to force banks to recognise that they’re funding environmental damage. To get them to withdraw and make it harder for companies to raise funds to do this, and push for a situation where these kinds of projects simply don’t get funded.

As you can see – the protests ARE having an impact. Though earlier on yo were sceptical about that too.

And if those companies doing this make less profits because raising money is more expensive – also a great outcome.

What a bizarre set of alternatives you present.

What is bizarre about asking you to chose between two consistent positions, and abandon an inconsistent one?

I’ll try a restatement: If you believe energy and resource corporations have monopoly power, engage in collusion and exploitation, and make excess profits this implies that moderate increases to the cost of financing will have little impact on their activity. That’s one set of consistent beliefs. If you want to believe that moderate increases to the cost of financing are effective, I think you need energy companies to be close to perfectly competitive* (not a position left wingers are noted for holding). That’s another set of consistent beliefs.

What’s not consistent is to believe that raising the cost of finance will have large effects and that corporations make excess profits, which is the position I am (perhaps wrongly) attributing to you.

I think the point is to stop mountain-destroying mining and oil tar extraction. What ARE protests having an impact on? They are causing some banks to exit this business but why do you think we are close to a situation where these kinds of projects simply don’t get funded? I could be wrong – perhaps alternative sources of finance are not available, but as John B suggests China isn’t short of a bob or two. I don’t quite understand your attitude to this – surely you appreciate that the existence (or not) of alternative sources of finance makes a big difference to the effectiveness (or not) of these banks withdrawing from financing these projects?

As far as I can recall the only skepticism I have expressed about “direct action” against banks is the same I am expressing now.

And if those companies doing this make less profits because raising money is more expensive – also a great outcome.

If they make less profit because of higher costs of finance, that profit goes instead to the financiers making higher returns. Not sure if higher profits for investors who finance tar sand extraction etc. is a “great outcome”

happily, Planeshift might be right, and this sort of thing may contribute to pressure on politicians to do other things that might help stop tar sand extraction etc. In which case we may celebrate these campaigning successes not because we expect them to directly lead to a reduction in tar sand extraction, but indirectly.

* actually even under perfect competition, I think increasing financing costs would cause a reduction in quantity, not industry shut-down. Not sure.

I wouldn’t criticise environmentalist for protesting because corporates do care about their image and pull out of projects when they perceive their image is being damaged. For example, the hated UK banks withdrew all banking services for the BNP a few years ago when they perceived allowing them accounts damaged their reputation. In contrast, the liberal BBC and Guardian gives the BNP a platform.

Personally I think it is completely pointless trying to attack supply from tar sands unless you can convince the Alberta or Canadian government. It will fail unless the demand for oil falls. So it should be on the demand side that environmentalists concentrate their energy. Actually the best way to end tar sands oil extraction in Alberta would be a cheaper oil price as that would make most of it no longer commercially viable. However, environmentalists would not want that as oil consumption would rise and the use of alternatives would fall. The tar sands have an economically recoverable breakeven figure of over $60 p.b. Contrast that price with the new oil fields in Iraq who can extract it for $1 p.b. So bizarrely it is cheaper oil you want to stop the extraction in Alberta.

@6 Planeshift: “The problem is most legislators aren’t going to bother even researching an issue, let alone legislate against a sector that has billions of dollars available for lawsuits, lobbying, funding one’s political opponents etc”

This is somewhat contradicted by the fines situation facing BP in the US. BP are going to pay, for the sake of argument, about one year’s profit in fines and compensation following the Gulf of Mexico leak. All of a sudden, BP has fewer billions in the bank. Thus to fund new projects, the company will be borrowing more money in the immediate future. I prefer that they borrow that money from conventional sources that provide oversight of the risk (financial and environmental), rather than being forced to sell off assets to less responsible companies.

@9 Richard W: “For example, the hated UK banks withdrew all banking services for the BNP a few years ago when they perceived allowing them accounts damaged their reputation.”

UK banks did and did not do this. Some banks made a fuss and said that they did not wish to provide accounts for the BNP and associated companies directly. My understanding is that the BNP still banks with a high street name.

There are also the 5,000 paying BNP members to consider (ignore the headline 10,000 membership number). Many of these will be paying into the BNP via direct debits or similar automatic payments.

So UK banks did not withdraw all banking services. The BNP have a discreet bank account somewhere and the majority of UK banks will have customers who pay party subs into that account.

HSBC, Barclays and I think the other was Santander certainly closed their accounts in 2004. It was my understanding that they had to go overseas and bank with a continental European bank.

According to Indymedia the BNP are with the Bank of Scotland (some interesting bits in that article too).

Richard W has a good point about prices – it’s one of the many ugly trade-off in this area. High prices discourage consumption, but encourage production. Does a environmentalist want high or low prices?

What we need is to drive a wedge between the two – high prices to consume, low prices (or high costs) to producers.

I wouldn’t say it’s completely silly to hope governments may simply outlaw certain egregious environmental practices – I don’t know what the likelihood is in Canada, I guess the chances are slim. Maybe direction action and other campaigns can shift the balance. Maybe we need to pay Canada not to do it, much like proposals to pay South American nations not to cut down rainforests.

Luis: What’s not consistent is to believe that raising the cost of finance will have large effects and that corporations make excess profits, which is the position I am (perhaps wrongly) attributing to you.

I haven’t focused on whether they’re making super-normal profits or not, at all. Sometimes such companies do go into bankruptcy and at other times they make massive profits.

When the price of oil was 10%, then Shell and others had problems getting cheap enough finance to justify exploring oil and extracting it – even though they make massive profits.

The point here is straightforward: the aim of direct action against these companies is to make the financing and the activity more costly, force political pressure so govts take action, and change public opinion against this sort of activity by highlighting the impact it has on communities. That alone can lead to all sorts of different outcomes.

In this case direct action works and the benefits (to the activists) outweigh the costs.

Sunny,

yes well obviously some companies make pots of money and other times they go bust – what matters for the question: “what effects will this have?” is: “are the actually existing companies engaging in oil & mining now making excess profits”? Or rather, what’s the distribution of profitability. How many are close to zero profit, how many are safely away from it? Evidently you’re “not focusing” on this point, I’m trying to suggest that you ought to be thinking about it. Nevermind, I’m clearly not going getting much traction with the idea that there’s something inconsistent about expecting increased financing costs to have big effects and having a typical left-wing view of the economy.

let’s agree that we both hope the indirect effects of these campaigns (political pressure, changing public opinion) may be large, even if the direct effects may not be.