I have already noted that Climate QE made it to the letters page of the Guardian this morning. It was also in the FT's letters page:
Sir, It is understandable that Narendra Modi, the prime minister of India, should point out that just because low carbon technology exists to tackle climate change it doesn't mean it is affordable and accessible (“Do not let the lifestyles of the rich world deny the dreams of the rest”, November 30). Indeed it has been estimated that to allow developing countries to tackle and cope with climate change could require around €3.5tn. However, to put this into perspective, when the global banking system was threatened the world's rich economies responded with programmes to print €7tn of quantitative easing: ie, twice that thought to be required to deal with climate change in poor countries.
The European Central Bank is still e-printing €60bn a month under its QE programme and is committed to doing so until September 2016. In our “Climate QE” paper we propose that to address the challenge of the kind posed by India's prime minister the ECB should allocate, say, €10bn a month from this QE programme. This could be used to buy climate change bonds from the European Investment Bank, which could then direct these funds to climate change programmes in developing countries. Such an approach could galvanise and put pressure on other rich countries to introduce their own climate QE initiatives.
Richard Murphy
Professor, City University, UK
Colin Hines
Convenor, Green New Deal Group
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These big numbers help to put everything into perspective.
Is it true that there is approx euro 70 trillion in total money supply (i.e. central banks have printed approx 10% new money since 2008)
Is it true nominal Gross World Product (total global GDP’s) is approx euro 80 trillion
Is it true total global debt is approx euro 200 trillion (and therefore can never be paid back even without interest?)
What will happen to all this excess unpayable debt?
Bank failure is the obvious answer to your last comment
Thanks
The “challenge” that Modi claims with respect to low carbon tech & financing is a false challenge. The facts are somewhat different. What follows covers events in Oct/Nov (I have Giga bytes of this stuff covering many years).
In India, US firm SunEdison won the entire 500MW of solar capacity on auction in the state of Andhra Pradesh with a record low tariff for India of INR 4.63/kWh (US7.1c/kWh). This was unsubsidised and is a lower price than generation using imported coal.
Second place went to Japanese firm Softbank which has already invested US$20 billion in India’s renewables market and is thought to have offered INR 4.80/kWh in the latest auction.
Other parties to beat the previous record (of INR 5.05/kWh) and bid below INR 5/kWh were Italian company Enel Green Power and Reliance Power. Reliance, the Indian power group, recently announced it was selling its coal mines to focus on PV.
So Indian companies are getting out of coal & into PV, on their own & without subsidy. I can give similar chapter & verse on Chile (for example).
Moving onwards & downwards, if you take a look at Africa &, for example electricity prices – almost without exception PV is viable with no subsidy. The reason why there is only modest investment (at the moment) is reflective of the political and institutional structures in African countries: extractive (political and instituional structures) vs inclusive. However, in some countries there are organisations investing which have steered well clear of all existing political structures and gone directly to village level (for example) where they provide electricity to locals who are very happy to pay German prices – on the basis that some elec is better than none. All done with no subsidies.
I support Climate QE on the basis that it means lower cost RES. But it would be a mistake to think that RES (renewable energy systems) are not price competitive – now – with conventional fossil systems. They are. Lack of investment in developing countries is often (mainly?) due to country risk. I’m looking at West Africa at the moment for a set of projects & the only reason they are likely to fly is the non-West African counter-party who is “bankable” as opposed to the local politicos, who ain’t.
In the case of India, do claimed prices for coal generated electricity include the cost of the grid needed to deliver it to all the villages? Or is that centrally funded and thus another subsidy? To me, distributed generation with a fractal architecture — clusters of clusters of clusters, solar electricity only travelling as far as it needs to find a load — is the totally obvious solution for India, and Africa.
I think we might call that fuel miles
Keith Fletcher “Is it true total global debt is approx euro 200 trillion (and therefore can never be paid back even without interest?)”
Surely this is true only if it is repayable within the year – much of it might be repayable within 20 years. So should therefore be theoretically repayable.
Also if there is world total GDP of €80trillion how is in that it’s €10 trillion adrift from the total money supply? It could be bartered I’m sure, but how then is it measured?
You are right to draw out the fallacy of comparin stocks and flows