Day 3 at the COP and I must say that what I’m enjoying the most so far are the un-orchestrated conversations with random individuals that yield deep insight into really complex issues.
As I stood cold and freezing in the line to enter the conference center I yield to a big yawn only to catch the person behind me yawning as well. Turned out that the gentleman was Randy Hayes, Director of the World Future Council. Randy is promoting the idea that is similar to one used by governments to save the banking sector to finance the mitigation and adaptation efforts of developing countries. (http://www.worldfuturecouncil.org/new_money.html)
Basically the proposal is that Governments use their sovereign right to authorize the creation of new interest and debt free money to implement solutions to the unprecedented threats facing us. Central banks in several countries have recently been authorized to create new money to buy up government and private debt. This process can later be reversed to avoid the risk of inflation. The risk of inflation is only serious when demand exceeds productive capacity, so that too much money chases too few goods. The proposal suggests that the new money be only created against performance that is additional and critical to adaptation and mitigation activities. It also suggests that it be done on a global level via IMF issued SDRs, similar to the G20 agreement to support a new SDR allocation of 250 Billion. It shows that this is a possibility – and perhaps should be considered seriously?
The proposal is very similar to the Soros Proposal (http://news.bbc.co.uk/2/hi/science/nature/8405577.stm) that proposes a 150 billion dollar fund that doubles the amount of money that is on the table currently. The plan seems plausible but has to surmount a huge amount of political will. Soros envisages that developing countries could make money from their low-carbon investments from the SDR fund by selling carbon credits on the carbon markets. There is no long-term funding on the table so far, because rich countries do not see a way of contributing more from their current balance sheets.
Will there be an end to the Funding Deadlock?? India has proposed the World Climate Debt Fund which calls for another mechanism to finance the carbon debt of our planet…more on that soon.
Written by AMRITA.