In the last three months, government’s world over created 16 trillion dollars of debt. To put this in perspective, that is over 1000x more the annual foreign aid budget of the USA.
Central banks are printing money to buy government bonds and to simulate the economy. These central banks are lowering interest rates on these bonds and in the United States, the interest rate have hit zero.
There is a growing movement to allocate stimulus budgets towards a green economy in order to accelerate action on climate change. The recovery from this recession can save our planet, create jobs and usher in a new economic order that values the prevention and sequestration of carbon emissions. But how do governments do this effectively when interest rates are already at zero? And furthermore, how can different countries agree on a universal way of financing climate action?
These goals can be made possible with negative interest rate bonds issued by the central banks. Let’s call these bond Green Economy Bonds. The concept of a Green Economy Bond with a negative interest rate will be a new paradigm for central banks and governments. But, this new form of stimulus can create a fair and universal way for governments to collaborate on climate finance.
The concept is actually fairly straight forward. Central banks would issue these “Green Economy Bonds” with negative interest rates in the same way as they issue regular bonds, but with one fundamental difference. Green Economy Bonds must be used specifically to finance economic activity that reduces Co2 emissions. The interest rate with regular bonds are paid bank to the central banks in currency. With Green Economy Bonds, the negative interest rates would pay for the reduction of Co2 Emissions.
Without dramatic action, our C02 emissions will reach 450 PPM and climate will destabilize beyond the point of return. Humanity has only one inevitable course of action to save our climate. We must put a value on the reduction of Co2 emissions. For decades, the Convention of Parties ( COP ) have been working on this but to no prevail. However, in 2020 there is an opportunity to seize the moment because central banks are printing money and creating trillions of dollars for COVID stimulus. Humanity must use this opportunity to implement a negative interest rate Green Economy Bond and to put a universal price on the reduction of carbon emissions. This will while stimulating demand for a plethora of new industries and environmental services.
There is no limit to human innovation and we already have viable solutions for reducing Co2 emission that could flourish with financing from Green Economy Bonds.
For example, let's say an entrepreneur has developed a strategy for reducing 100 tonnes of Co2 and it costs 100 dollars per tonne to sequester or offset the carbon. Therefore the endeavor would requires 100,000 of carbon financing. If the business was issued a bond with a negative interest rate of 10%, this would mean that for every 100 dollars they borrow, the business only need to pay back 90 dollars. Therefore, a million dollars of Green Economy Bonds at -10% interest would result in 100,000 to pay for the confirmed reduction of Co2.
One of the ways industries can immediately reduce Co2 is by making the decision to switch from virgin plastic to recycled plastic. Replacing one tonne of virgin plastic with recycled plastic saves 2-3 tonnes of Co2. Recycling creates 8X jobs in comparison to land-filling and dumping. Green Economy Bonds can also be used to finance jobs in reforestation, win and solar etc, or direct from air carbon sequestration.
The government of Canada has regulated that companies must report their Co2 emissions in order to receive Covid stimulus.
In 1932, interest rates were also 0% in the aftermath of the great recession. The economic stimulus that followed lead to re-haul of global finance and a new world order followed.
Imagine a new paradigm that would enable countries could pay-down their national debt directly through the sequestering of carbon emissions.
In 2020 we must adjust the global financial system to value Co2 reduction. We need only 2-3 or the world’s largest reserve banks to cooperation in order to bring negative interest rate bonds into fruition. Achieving this would address the global debt crisis, the climate crisis and the Covid relief at the same time.
If we fail to act, the earth will treat humanity as a virus and heal itself with or without our human economy.
