In 2013, at a Climate workshop in Istanbul sponsored by Al Gore, a civil engineer named Delton Chen conceived of a new global currency that would drive greenhouse gas mitigation. The idea would become the foundation of the group Global4C, which wants to use public banks as an agent for this monetary conduit to climate justice.
Presently, the global marriage of strong markets and weak governments is not conducive to reducing emissions levels to facilitate climate mitigation, nor to building a just post-carbon economy. Market apologists (and sometimes even market critics) assume that business as usual can somehow be given a short memo to "fix this climate thing" and the global financial giants will assimilate that directive into their daily business. I'm struck by the apologists' inability to understand the nuances of Naomi Klein's critique of capitalism and climate. Jonathan Chait, (a leading anti-Sanders voice during the current presidential primary season), can't understand how big corporations can both oppose liberal reforms and be the beneficiaries of the same reforms.
"Klein insists . . . that liberal remedies that leave in place the underlying structure of the market economy do not, and cannot, work . . . Klein attacks the cap-and-trade bill for compromising with energy producers in order to neutralize their opposition. At one point, she mocks the bill as a giveaway to Big Energy . . . Two pages later, she mocks the bill for being opposed and defeated by those energy companies (who “made it abundantly clear that they had never stopped being its enemies”). Cap-and-trade is damned by evidence of energy companies supporting it, and it is also damned by evidence of energy companies opposing it.
The truth is that corporations routinely benefit from policies they publicly oppose. Often, they benefit from those policies precisely because they've gone on record as opposing them and governments want to placate them. Other times, it's in corporations' interests to spin a constant barrage of anti-regulatory, anti-limits BS, to keep pushing back so that watered-down giveaways and light regulations are as far as governments can reach.
The most reasonable interpretation of the facts suggests that markets as we conceive of them now cannot address the magnitude of human-induced climate change--and that centrist regulatory regimes cannot do it either. The resolution in Paris last year to keep temperature rise in this century to less than 2°C above (ideally 1.5° above) the pre-industrial level cannot actualize without major economic restructuring. Nations are in denial about this. Daniel Tanuro, the Belgian author of Green Capitalism: Why It Can’t Work, pointed out last month that, in a world where 80% of our energy supply is coal, oil, and natural gas, and where massive capital is "invested in fossil fuel reserves, conversion facilities, refining and distribution, as well as in the capitalist agro-forestry system, it is absolutely impossible to achieve while respecting capitalism’s need for profit, growth, competition and private ownership."
So, Tanuro says, the Paris negotiators dodged the economic question by focusing on questionable geoengineering policies: artificial trees, dumping lime into the oceans, bio-charcoal, carbon capture and sequestration. Many of these schemes are absurd and all of them would have unintended, and unpredictable environmental consequences. And they cost massive amounts of money--all the better, Tanuro says, to hold nations economically hostage rather than doing what needs to be done: rebuilding our productive base from the ground up, and re-thinking production and distribution entirely.
(Dennis and Elizabeth Kucinich, by the way, are the latest voices in the growing call to re-think and re-build. Check out their project here. I'm encouraged by it in some ways and skeptical in others, but would love to engage with them on it . . . )
We don't need a Leninist revolution to do this rebuilding and re-thinking, although we may need a political revolution to push back the resistance of big capital and big finance. One way to bypass that resistance is to design a new financial system bypassing the old one--a system in which democratic communities can leverage the creation-by-lending of money to develop new material bases of production and distribution. So it was fascinating to learn recently about Global 4C, which aims to do just that.
Global 4C was initiated by Dr. Delton Chen in June 2013 at Al Gore’s Climate Reality workshop in Istanbul, Turkey, and was conceived on the intuition that a new currency could be developed to globally finance greenhouse gas (GHG) mitigation. The project advocates a "Carbon Monetary Standard," an expanded theoretical framework for market-based environmental policy, a parallel currency and "green quantitative easing," and public banking to facilitate this.
A new political roadmap is created for a social-and-environmental movement, and to establish direct negotiations with the political elite and central bankers. Strategic selling points for the approach include a rational economic system for deep decarbonisation, refocusing our attention on financial rewards, and a new economic model for Public Banking that issues currency for fair work. Under the Global 4C policy, world mitigation markets will be incentivised with Solar Dollar rewards, and long-term financing will be provided by Central Banks using a new monetary policy for Green Quantitative Easing (GQE). The policy will help finance the decarbonisation of all economic sectors, and it will simultaneously regulate economic growth (or de-growth) so that the mitigation objectives specified at COP21 can be attempted.
The Solar Dollar will be a parallel world currency, issued as a "reward for carbon", and it will have units that allow the reliable recording of greenhouse mitigation. Carbon taxes are known as a “price on carbon” and have a units that record pollution. These two accounting systems are opposite in terms of their physics, and result in complementary policies with vastly different political pathways, social responses, and economic effects. A critical benefit of the Solar Dollar will be the ability to regulate global growth and greenhouse gas emissions through central bank coordination.
A digital network called "The World Tree" will coordinate "mitigation assessments, Solar Dollar issuance, and trading".
In a post entitled "Climate Change and Commercial Banking," the project writers argue:
The bigger issue that relates to the above climate and banking stories, is that of Public Banking and an urgent need to create global financial liquidity for mitigating greenhouse gas emissions and reforming the world economy. By avoiding climate science, governments and oligarchs are able to continue with ‘business as usual’ and avoid thinking about the ‘off the book’ carbon debt (that is the carbon debt of fossil fuel consumption, concrete manufacture, and deforestation).
Is there a policy solution to this ‘head in the sand‘ response of governments to climate change? Is there an alternative to debt-based banking and speculative finance? How about a policy for a world currency for climate mitigation that is supported by central banks and managed as public banking? In effect, this is what the Global 4C policy is all about. Global 4C is a policy for global public banking that is effective, decentralised, and transparent.
The authors also push back against recent "It's Our Money with Ellen Brown" guest Charles Eisenstein, author of Sacred Economics. Eisenstein is an advocate of economic change through the "trial-and-error" of human collective spontaneity and our gradual journey into deeper interconnectedness. From a climate standpoint, we just don't have the time. For Global 4C, public banks are attractive because they allow resolute deployment of money and a chartered mandate direction towards climate mitigation.
The group's strategy to ". . . direct negotiations with the political elite and central bankers . . . " is provocative, and invites discussion about how such negotiating strategies can succeed. My guess is that they would succeed only with a credible threat of mass uprising--not because all global leaders and central bankers are amoral, but because enough of them are. Having a good idea doesn't matter to either cynical or risk-averse leaders. But it does matter to leaders of good conscience, so the science behind the success of such tactics is always inexact. But in any case, you need a mass movement behind it.
We in the public banking movement have known all along that public banks are going to play a critical role in our transition from fossil fuels. Public banks can charter and direct resources to large-scale restructuring of the economy to not only clean and renewable energy, but also to new community structures across the board that could achieve 90-ish percent reductions in both carbon and other nonrenewable resource use. Public banking advocate and former PBI executive director Gwen Hallsmith drove home the potential of public banks to finance entire energy transitions in her speeches in Colorado in 2014. “In Germany, where there is public bank in every community, they have been leaders in the field of solarizing their electric grid and creating all sorts of green economic development and new job opportunities,” Hallsmith said at the time. There are already public-private partnerships, like energy banks, that combine public sector funds with private sector financing to make investment more attractive. Public banks can make those endeavors stronger and also (as I suspect will be necessary in many areas) mitigate or even structurally eliminate the misery of economic transitions in coal towns and oil cities. And public-private partnerships can wither or fall apart if the private sector shareholders decide they want bigger returns or don't like the constraints of the partnerships.
Of course, high interest is generally associated with the extraction of nonrenewable resources to run economies. That's why the elimination of shareholder value, the replacement of expectations of massive amounts of private profits with the expectation of large social dividends, and the ability to leverage public projects at zero or near-zero interest, are also tools in "slowing" the parts of economic activity that need to slow down so that we can stop extracting and exploiting both human labor and the resources of the natural world.
So the idea of public banks facilitating a new monetary system altogether, complete with digital currency to facilitate carbon mitigation and the development of sustainable energy (and, I would emphasize, the creation of entire sustainable communities) is very exciting. It represents an audacious application of financial democracy as a check against (and perhaps a structural alternative to) the free market's ossified ties to fossil fuels. I'll be watching Global4C, and hope for both dialogue and collaborative efforts to emerge.
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