During financial crises, banks and governments have been bailed out by printing hundreds of billions of Euros/Dollars. The same mechanism could be applied to overcoming the climate crisis. Climate bailouts have been proposed in different forms:
- The World Future Council originally proposed to focus central bank money which has been injected into economies with so-called quantitative easing programmes in a “blind” fashion, to finance the transition to 100% clean energy.
- The Next System Project in the US (see here, pages 19-21) has proposed to nationalize fossil fuel companies and shut them down in an orderly fashion, with a just transition for workers and in line with the climate targets of the Paris Agreement. For the United States it is estimated that buying up the top 25 oil and gas companies would cost half as much as the Iraq war had cost.
- The Pacte Finance-Climat has gathered high-profile supporters of the approach.
Bringing these strands together, the World Future Council designed the Climate Bailout Proposal, wherein central bank money is used to absorb potentially stranded assets from fossil fuel companies in exchange for money that must be invested in additional renewable energy capacity.
This an ingenious proposal!
- It offers fossil fuel investors a profitable way out of these investments with no long-term future.
- It generates additional and much needed capital for the swift transition to 100% clean energy.
- It could break the neck of the fossil fuel industry’s resistance to climate policies – the number 1 reason for climate policy failure (in other words, why we are still putting on more fossils while everyone can already see that the house is burning). If you hold significant investments in clean energy, you lobby for better conditions for renewables, not against them.
More work needs to be done on developing the approach and spreading the word. If you would like to get involved in pushing the #ClimateBailout forward, please get in touch.