Financing the Global Green New Deal
In case you thought it is impossible to finance the Global Green New Deal advocated by the United Nations, here is an article that will convince you of the feasibility of such a project.
The WorldWatch Institute indeed published last week a very long argumentation with seven points that will finish to persuade the most skeptical.
The money to create a more sustainable civilization can be found. I hope that our leaders which will meet in two weeks will hear these voices.
Here is an extract of this article:
(…) Can capital for a global green rescue effort be mobilized? Despite the global economic contraction, the answer may well be yes.
The $700 billion committed to the U.S. financial bailout, plus additional large sums marshaled by other countries, suggests that governments can raise sizable sums of capital in emergency situations.
Any number of large pools of capital might be tapped to fund a Green New Deal, if the right incentives were set in place. Here are a few ideas:
- Military spending – The Stockholm International Peace Research Institute reports that world military spending in 2007 ran to a record $1.3 trillion – 45 percent higher in real terms than a decade earlier. The United States alone is spending about $700 billion per year on maintaining the Pentagon and conducting wars in Iraq and Afghanistan. In a world with no major power conflicts, a substantial portion of these budgets would be better dedicated to a Global Green Deal.
- Sovereign wealth funds – Oil rich nations and governments with large trade surpluses held $2-3 trillion dollars in wealth in 2008. Why not design incentives for government holders of such capital to invest in a Global Green Deal?
- Tobin Tax – Trade in the world’s currencies amounted to $3.7 trillion daily in 2007. Why not institute a Tobin tax – a levy named for its earliest proponent, economist James Tobin – as a way to raise Green Deal revenue? Even a minimal tax on foreign exchange transactions could bring in many billions of dollars, as well as dampen destabilizing currency speculation.
- Fossil fuel subsidies – These are estimated at $150-$250 billion each year. Oil companies are highly profitable, and their product is toxic to climate stability. Why not remove government supports and pledge those funds to a Global Green Deal? And a tax on “windfall” oil profits, carbon taxes, or proceeds from the auction of carbon allowances could all serve the same dual purposes.
- Insurance industry – The cost of weather-related natural disasters is on the rise, and is considered a “strategic threat” to the insurance industry. Between 1980 and 2004, the cost of such events totaled $1.4 trillion, of which $340 billion were insured. The industry may have a strong incentive to contribute to the climate stabilization piece of a Global Green Deal.
- Treasury bonds – Bonds are commonly used for a variety of purposes, and could be dedicated to green investments. For instance, China’s government has supported hundreds of energy conservation projects since 2006 in part by issuing treasury bonds.
- Private Capital Flows – The energy industries alone invest several hundred billion dollars each year in fossil fuel-related projects; a share of that capital could be redirected to energy efficiency and renewable energy initiatives.
Moving a Global Green Deal agenda is not the work of a single leader or even a small group of governments.
Instead, it will require an overhaul of global governance at least as great as the one that occurred after World War II, when the United Nations and the Bretton Woods financial and economic institutions were founded to establish a new era of global stability.
Today, a new international policy architecture is needed that includes issues such as climate change and other environmental issues that are central to the health of the global economy.