Memorandum submitted by 3D Metrics
"GREEN CREDIT" FOR "GREEN
GROWTH" FINANCING ADAPTATION TO CLIMATE CHANGE ON LOCAL,
REGIONAL AND NATIONAL LEVELS IN THE POST-KYOTO CONTEXT
A. INTRODUCTION
1. This document is a response to the inquiry
of the Environmental Audit Committee regarding "Post-Kyoto:
The International Context for Progress on Climate Change"—published
on 8 January 2008.
2. Limits to Growth was published
by the Club of Rome in 1972 and examined five variables: world
population, industrialization, pollution, food production and
resource depletion. Beyond the Limits was published in
1993 and Limits to Growth: The 30-Year Update came out
in 2004.
3. The Growth Dilemma is one of the
chapters in the latest book Creating a World without Poverty—Social
Business and the Future of Capitalism by economics professor
Dr. Muhammad Yunus. He received the Nobel Peace prize in 2006
for creating the Grameen Bank which has reversed conventional
banking practice by removing the need for collateral.
4. Along this line of thinking, the Forum
for Stable Currencies responded to a Call for Concepts
by UNDP with Green Credit for Green Growth. This contribution
was input to the debate at the Bali conference in December 2007.
5. At home, Green Credit for Green Growth
was tabled as EDM 265 by Austin Mitchell MP on 11 November
2007.
6. It is our proposition that the challenge
of funding national needs for the adaptation to climate change
can be met at all institutional levels if only there was an attitude
of "we have the money" and "we want to fund initiatives
to stop and adapt to climate change".
7. This attitude should start with the Treasury
at the top of the pyramid of credit pr. The Role of the Treasury
was therefore a document sent to the Rt Hon Alistair Darling MP
after his speech at the RSA on 15 January 2008 on the Role of
the Treasury in 21st Century Britain. It summarises how the Forum
has advocated the use of "public" or "green"'
credit since 2002. One of its eight EDMs was tabled by David Chaytor
MP. The mechanisms are set out in detail under "description
of concept".
B. THE ISSUES
ADDRESSED BY
THE INQUIRY
8. Ad 5: There is no adequate support to
adapt to climate change in any country. Binding targets for funding
such support would be a beginning, but more efficient approaches
to actually solving the problem and not just talking about it
could easily be developed. However, this may require approaches
that arise from outside our current institutional framework. As
an example, our proposal for a "Climate Monitoring Project"
to DEFRA was rejected for lack of funding.
9. Ad 6: There is always enough money for
war, but never enough for health, education and the environment.
Dr Yunus points out in Chapter 1 of this book that our institutions
have failed us on all social issues, whether it is aid, development,
reducing poverty, protecting the environment or providing adequate
healthcare and nutrition. As soon as it is recognised that funding
determines the quality of the activities that take place, it should
be obvious that green funds for green activities would be the
most effective mechanism for funding R&D as well as environmental
businesses at all levels: local, regional, national and international.
10. Ad 8: There is no country without an
army and without unemployment. Tackling emissions from deforestation
should therefore be tackled by using either armies or the unemployed
or both to plant trees. Funding for this is to be generated by
Governments as "green credit"—thus creating "green
growth" in their economies.
11. Ad 10: Anybody who is using the internet
will appreciate that the transition from paper to screen is similar
to the transition from paying by cash or by cheque. Emission schemes
are "virtual screen transactions" that do not physically
reduce any emission. It would be wiser to generate money for "really
green projects" that employ people rather than more "virtual
trading schemes".
12. Contraction & Convergence establishes
a constitutional, global equal-rights-based framework for the
arrest of greenhouse gas emissions. Logically, it is based on
per capita measurements. Applying the same logic, per person figures
for income and national indebtedness should be used to address
and monitor the imbalances between North and South or developed
and developing countries.
C. DESCRIPTION
OF CONCEPT
13. Green Credit for Green Growth is
generic and applies to high income as well as developing countries:
13.1 The principle of Sovereignty and a
Nation's Money Supply:
13.1.1 As part of its sovereignty,
any nation state should control its money supply. The total supply
of money comprises interest-bearing credit from banks and financial
institutions and interest-free cash (notes and coins) from governments.
Interest-free cash can also be called "public credit".
13.1.2 Controlling and monitoring
the money supply should include watching the ratio between cash
and credit and between wholesale lending and retail lending.
13.1.3 For example, in the UK,
the cash share of the money supply has gone down from nearly 30%
to less than 3% since the late 60s. Since 1996, credit has been
split into wholesale and retail lending, with exceptional growth
in wholesale lending.
13.2 The principle of Seigniorage as a National
Source of Income:
13.2.1 In addition to taxing and
borrowing, any nation state should maximise its third source of
income: seigniorage, the balance between the face value of a currency
and the cost of printing money and minting coins.
13.2.2 Instead of increasing national
debts from one legislative period to the next, seigniorage can
be used to leverage interest payments.
13.3 National Financial Mechanisms for Adaptation
to Climate Change:
13.3.1 Public or green credit
would fuel the economy without causing inflation.
13.3.2 Public expenditure should
finance the five sectors identified in the framework of adaptation.
13.3.3 Public grants should
finance voluntary and commercial activities in the five sectors.
13.4 Monitoring Growth under the auspices
of UNDP:
13.4.1 The current "growth
through credit" is measured by the national debt per person.
13.4.2 The Cash: Credit ratio
would signal that business as usual, ie growth through credit,
is changing.
13.5 Defining, Measuring and Monitoring
"Green Growth":
13.5.1 To create the tens of billions
of dollars necessary for adaptation requires growth not in interest-bearing
investment from high income to developing countries, but in the
money supply of all nation states.
13.5.2 Whilst economic growth
is measured in GDP, "green growth" would be measured
by:
13.5.2.1 The Cash:
Credit ratio in the total annual money supply and per person.
— On a national scale, this ratio consists
of cash created by states versus credit created by banks
and financial institutions.
— On a per person level, according to "Money
Supply" in Wikipedia, the US cash : credit ratio is roughly
$4,5550 : $23,320.
13.5.2.2 The annual
reduction of CO2 emission per person.
D. CHALLENGES
ADDRESSED: SCARCITY
OF FINANCE
AND DEMOCRATIC
ACCOUNTABILITY
14. An overview of investment and financial
flows needed for adaptation is published on http://unfccc.int/cooperation_and_support/financial_mechanism/items/4053.php
Paragraph 485 says that "several tens of billions of dollars
of additional investment and financial flows will be needed for
adaptation to the adverse impacts of climate change".
15. By Governments assuming the power to
issue Green Credit, the remaining challenge lies in promoting
"green funds" and prioritising among the five sectors
that have been identified: Agriculture, forestry and fisheries;
Water supply; Human health; Coastal zones; Infrastructure.
16. Instead of competing for chronically
scarce money as credit, competition between nations could ensue
to be the one that spends most money on adapting to climate change.
17. By issuing green funds as green credit,
short-term political governments that are democratically accountable
but have lost credibility would talk responsibility for the tasks
at hand.
18. Democratically unaccountable financial
institutions would influence the real economy with less destructive
power. But in the ethical framework of "social business"
that Dr Yunus provides, they could make their contribution to
climate change, too.
E. GREEN CREDIT
FOR HIGH
INCOME AND
DEVELOPING COUNTRIES
19. The public credit approach addresses
parliamentary committees and statistical institutions that monitor
and oversee the economics of a country. It also addresses the
IMF, the World Bank and UN agencies that watch the financing of
adaptation, prevention and monitoring climate change.
20. Furthermore, it addresses the principles
of democratic governance and the legality of excessive debt and
extortionate interest.
21. And finally, it addresses the ethics
of "business as usual" while time is running out and
tipping points in our earth system need to be adapted with utmost
urgency.
F. PROPOSED FUNCTION,
DESIGN AND/OR
STRUCTURE: SOFTWARE
AND WEB
22. The function of Green Credit for
Green Growth is to provide public funds by States for governments,
companies, NGOs, voluntary organisations and individuals who want
to make a difference in whatever sphere of influence they may
be operating.
23. Announcing that funds are available
is the first step. Making them available in as attractive and
effective a manner is another. The obvious mechanism would be
accounting on-line by the respective Green Credit agencies
and monitoring Green Growth on-line.
G. ESTIMATED
VALUE OR
INFLUENCE
24. The degree of influence depends on the
fervour and commitment with which Green Credit for Green Growth
would be implemented. It can become a small or large percentage
of a nation's GDP—depending on the number of industry leaders,
the unemployed who could be mobilised, the NGOs that would participate
and the support of national media.
H. REMAINING
GAPS AND
QUESTIONS
25. A global understanding of "money",
its origins and the measures used to describe, measure and monitor
national economies.
26. An appreciation of "employment"
as a way of protecting either a military-industrial complex or
our planet with its delicate atmosphere.
27. An understanding of "democracy"
as being:
— political in terms of voting;
— economic in terms of income
per person; and
— ethical in terms of environmental
governance and our legacy to future generations.
I. KEY POINTS
FOR DISCUSSION
28. Which governments are willing commit
to Green Credit for Green Growth?
29. Which national agency makes Green
Credit available and monitors Green Growth in their
national economy?
30. Which UN agency builds and supervises
globally accessible software mechanisms?
31. How do the International Monetary Fund
and the World Bank respond to Sir Nicholas Stern's call to take
on a greater role in mitigating climate change?
J. LOCAL ACTION
FOR APPROPRIATE
SCALING
32. Following drafting advice regarding
the economic and legal challenge of climate change, the Forum
for Stable Currencies submitted Green Credit for Green
Purposes to the Treasury Select Committee of the Parliament
in the UK on 16 January 2007. This submission was a response to
an enquiry into climate change and the Stern report.
See http://www.publications.parliament.uk/pa/cm/cmtreasy.htm
for evidence given on 23 January 2007 and 6, 7 and 27 February
2007.
33. A supplementary memo highlighting the
ethical dimensions of climate change was submitted on 10 May 2007.
See www.greencredit.org.uk
34. Our submission is based on an in-depth
analysis of the on-line data base of the Bank of England as well
as the Treasury and the National Office of Statistics. The publication
of the Committee's report which should include our submission
is supposed to take place before Christmas 2007.
35. Eight Early Day Motions regarding the
general principle of "public credit for public purposes"
have been tabled since June 2002.
36. Contraction & Convergence illustrates
the processes necessary for the whole world to adapt to
climate change.
37. Echoing Contraction & Convergence,
Sovereignty & Seigniorage are the legal principle and
financial mechanism for individual nation states to finance
adaptation to climate change.
38. As a non-funded NGO, the Forum for Stable
Currencies continues to take legal advice for most effective participation
in the law making process via Parliament.
39. As a small company, 3D Metrics is collaborating
with the London Metropolitan University on a Climate Monitoring
Project to measure CO2 emissions in a novel way.
40. Independently, 3D Metrics will
be putting software on-line to allow for comparing multi-dimensional
data of complex systems and forecasting over short, medium and
long-term time periods. This will allow anybody on the web to
gain new perspectives on the economics of climate change.
29 April 2008
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