Eco-Capitalism

Carbon Money, Climate Finance, and Sustainable Development

verfasst von: Prof. Robert Guttmann

Verlag: Springer International Publishing

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

Our planet faces a systemic threat from climate change, which the world community of nations is ill-prepared to address, and this book argues that a new form of ecologically conscious capitalism is needed in order to tackle this serious and rising threat. While the Paris Climate Agreement of 2015 has finally implemented a global climate policy regime, its modest means belie its ambitious goals. Our institutional financial organizations are not equipped to deal with the problems that any credible commitment to a low-carbon economy will have to confront. We will have to go beyond cap-and-trade schemes and limited carbon taxes to cut greenhouse gas emissions substantially in due time. This book offers a way forward toward that goal, with a conceptual framework that brings environmental preservation back into our macro-economic growth and forecasting models. This framework obliges firms to consider other goals beyond shareholder value maximization, outlining the principal tenets of a climate-friendly finance and introducing a new type of money linked to climate mitigation and adaptation efforts.

Inhaltsverzeichnis

Frontmatter

Chapter 1. The Challenge of Climate Change

Abstract

With Trump US voters elected a climate denier to the White House whose systematic dismantlement of Obama’s climate policies bucks a global trend to tackle this issue more seriously. Thanks to the work of the Intergovernmental Panel on Climate Change we have overwhelming evidence of rapidly growing atmospheric concentrations of greenhouse gases and their nefarious implications for the climate. Global warming, itself unevenly distributed, has already begun to intensify storms and droughts, make sea levels rise, melt glaciers, reduce biodiversity, and hamper agricultural yields. After a quarter of century of stop-go efforts to address this issue, the world community of nations finally decided in December 2015 at a meeting in Paris to address this issue in systemic fashion with a long-run plan for increasingly ambitious collective action—the Paris Climate Agreement.

Robert Guttmann

Chapter 2. Moving Toward an Ecologically Oriented Capitalism (“Eco-Capitalism”)

Abstract

The Paris Agreement’s goal of keeping the cumulative temperature increase below 2 °C implies steadily reducing greenhouse gas emissions to a point where the world achieves zero net carbon emissions by 2060. We are nowhere near such a transition to a carbon-neutral economy. To get there we have to phase out fossil fuels and replace these energy sources with renewables, improve energy efficiency greatly, move toward less polluting means of transportation, change many industrial processes, retrofit buildings, make cities more sustainable, transform the way we grow and consume food, and expand our planet’s carbon sinks (e.g., forests). These changes are tantamount to a different type of capitalism. But when looking at the long-term evolution of capitalism, we see that such systemic transformations follow a certain identifiable pattern which makes the transition to eco-capitalism conceivable.

Robert Guttmann

Chapter 3. The Global Emergence of Climate Policy

Abstract

When analyzing the climate policies of countries, as put forth in so-called Nationally Determined Contributions, we see that the world is nowhere near meeting its ≤ 2 °C objective. One striking example of policy failure is the USA, currently headed by a climate denier who has taken the largest per capita emitter of CO₂ out of the Paris Agreement. In contrast to Trump, California has reinforced its climate policies as model for the rest of the world. So have other climate-policy leaders, notably China and France. Companies too seek to contribute to the struggle against global warming, as exemplified by Microsoft’s global carbon fee, Tesla’s product development, or Google’s Sidewalk Labs planning the city of the future. These developments will be dwarfed by much more radical approaches to organizing, say, traffic, agriculture, or waste management in the not-so-distant future.

Robert Guttmann

Chapter 4. Rethinking Growth

Abstract

Climate change has intensified in recent decades thanks to a global growth pattern whereby a large chunk of the world’s population was brought into the world economy for the first time as a result of which greenhouse gas emissions have accelerated greatly. This pattern faced a systemic crisis in the late 2000s and early 2010s which has left the world economy mired in a state of secular stagnation. The kind of investment boom associated with the needed transition to a low-carbon economy may thus provide a welcome boost, the slow-growth biases of environmental economists notwithstanding. This question of “green” growth also points to the biases and limitations of standard growth models as well as recent efforts by heterodox macroeconomists to bring nature and environmental preservation back into (a new generation of) growth models.

Robert Guttmann

Chapter 5. Pricing Carbon

Abstract

Among the key climate-policy challenges we face is the need to price carbon appropriately without which our required transition to a low-carbon economy will not come about for lack of proper price signals and incentives. But how do we price an invisible pollutant like CO₂? That price is inversely related to the world community’s carbon budget imposed by the Paris Agreement’s objective of limiting the average temperature hike. One method would be to relate the carbon price to the so-called social cost of carbon as a pollutant damaging the environment. Another method to price carbon would be in relation to the marginal cost of abatement linked to climate-mitigating investment projects. Treating greenhouse gas emissions as just another negative externality, we have so far used traditional approaches of proposing either a market-oriented solution as in various cap-and-trade schemes or an emissions tax. But neither such carbon markets nor carbon taxes have proven adequate up to now, pointing to the need for stronger solutions in the near future.

Robert Guttmann

Chapter 6. Climate Finance

Abstract

The Paris Agreement already foresees finance becoming deeply implicated in the struggle against global warming. One reason is the need to fund a massive “green” infrastructure investment program which might require fairly massive involvement of public development banks. There is already much climate-related financial innovation evident, as manifest in the examples of green bonds or risk-transfer mechanisms such as catastrophe bonds. We also need to move away from shareholder value maximization as the dominant corporate governance paradigm, a challenge we are beginning to see materialize with the burgeoning movement toward environmental, social, and governance (ESG). Companies and financial institutions will soon have to adopt climate-related financial disclosure guidelines, which are already in the works. The very nature of climate mitigation investments—new risks, very long time horizons, and large social benefits—forces us to rethink key tenets of mainstream financial economics, most notably the need to use much lower discount rates than we typically bring to bear.

Robert Guttmann

Chapter 7. Carbon Money

Abstract

While we have made some recent progress in the direction of creating a new system of climate finance, the latter would be greatly boosted if linked to a new type of money directly funding carbon mitigation. We see first preliminary manifestations of such carbon money, notably three different kinds of international emission-reduction certificates issued under the Kyoto and Paris accords as a sort of carbon credit as well as privately traded carbon offsets. The booming trend toward cryptocurrencies, fueled by the transformative blockchain technology, opens the way for digital carbon tokens as a potentially useful new carbon-money category. But we can also envisage a much more deeply embedded system of carbon money at the center of eco-capitalism, by means of fully monetized carbon certificates entering the banking system. Such carbon money can fund mitigation investments, reward actors for keeping within their assigned carbon budgets, turn emission reductions into a source of revenues (as a new business model), and help liquidate “stranded” high-carbon assets.

Robert Guttmann

Chapter 8. Sustainable Development and Eco-Capitalism

Abstract

The transition to a low-carbon economy posits the challenge of how to transform finance-led capitalism into a more ecologically oriented economy. Major systemic transformations in the past have typically required a dual-sequence of structural crisis and political shifts. We may find ourselves once again in such a situation, especially if the acceleration of climate change brings about a panic-like reaction and an alternative political program capable of pushing through the reforms we need to move to eco-capitalism. Such a reform program requires a progressive vision of globalization, proposals for a new social contract, promotion of a “social and solidarity economy” beyond the market-state dichotomy, a profound rethinking of economics and finance in the face of climate change, incorporation of sustainable-development goals, and new cooperation mechanisms for the emerging multipolar world economy.

Robert Guttmann

Backmatter

Titel: Eco-Capitalism
verfasst von: Prof. Robert Guttmann
Verlag: Springer International Publishing
Electronic ISBN: 978-3-319-92357-4
Print ISBN: 978-3-319-92356-7
DOI: https://doi.org/10.1007/978-3-319-92357-4