This story was in The Times yesterday:
The essence of the story is that £15 billion of government backed bonds are to be made available, with the proceeds to fund solar and hydrogen projects.
First, an observation: I am told these bonds are not to be made available in ISAs. I do not know why.
Then, some thoughts. First, the Osborne 'granny bond' in 2015 raised £15 billion in almost no time because the interest rate was favourable. I hope it is good this time. But the article already says this would be a waste of taxpayer's money. How wrong can The Times be?
Second, it is shame that solar is to be a focus of this: money is easy to secure for solar right now. I believe that true for hydrogen as well. In that case what is this bond for?
Third, it is the tougher elements of environmental concern that need funding. Why isn't this money for retrofit? And why not for investment in new technology? Where is the investment in tidal power? Or new heat pump manufacturing capacity? And what about new, green, social housing? These would seem like a much better use of government-backed funds.
And, fourth, of course, the terms of the deal need to be known.
I am all for green bonds: I think they could revolutionise a Green New Deal. But this proposal seems some way short of what I would hope for right now. There is more to do.
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Retrofitting on diesel and petrol cars because emissions is much needed in my view – it really needs to happen. There is a market there surely that some bright spark could satisfy and it should be cheaper than scrapping loads of cars and would allow a less steep decline in usage.
Another thing – the other day I got stuck behind an old banger that obviously uses 4 star petrol. Why do we tolerate them? It stunk to high heaven – keep yer’ old bangers in the museum for goodness sake. They should be banned.
Petrol vehicles can be converted to H2 (cos they are spark ignition). Diesels can dual fuel (diesel + H2) a Liverpool based company (ULEM Co) offers such a conversion (but diesel still needs to be partly used (basically to make it all go bang). To make this happen (move to H2/conversion to H2) would require the gov’ to initiate action & act in a coordinating role. The current crew could not coordinate a childs tea party. That said, they are throwing money at fossil-H2.
I accept all your reservations…… but it IS some progress. The principle of direct sales of bonds to the public to fund Green initiatives is now accepted.
Now all we need to do is get the price and size of the offering right….. and direct the investment appropriately. That is no small task but it is a start.
I should be celebrating
I know of no one but me and Colin Hines who have been calling for this
Is your green new deal “shovel ready” ?
Yes
Hi Richard
I don’t know how you do it all
1. Re your Haldane comment – i say 4% of what? the Slump figures?
2. Bonds suck money out of the economy – pay interest (hopefully better, but not for me i would not touch them) and redeploy it to businesses, do they not?
When i think the answer might be what i now call “20-year money” at 1.5% with the 0.5% revenue allocated either by Gov or by the local branch bank to Green Good Purposes such as libraries, schools and Theatres, literature, anti-advertising, etc. bank gets the 1% towards the Eco-Officer at the branch who accepts first year interest as Deposit on Contract [20-years] on typical 40k “loan” or “advance” of created money which would end [as bank of england claims] after the 20 years. So £600 per year thereafter.
Householder doesn’t pay any more than existing on his/her bills which would be apportioned to see his/her savings alongside interest. Thats GreenDeal-Wise [in my follow-up to NEF they recommended Ring-fencing, so that is in there
Getting spending towards the right direction. Bonds, we have had them before
As i have said before.
The eco-fit roof, wind-tight and condensation free with solar panels over insulation and roof tiles back around. full-sheet insulation underneath as well
Ditto walls inside and out [Except feature areas of special brick].
Outer wall insulation dug in to foundation strata – minimising sideways losses
and underfloor interseasonal warmth=store with HWS intake wound around the new micro-cellar tank
Dont want to make it any longer on your site bu i am sure your readers can find me if they want an attachment. I am considering a Petition “20-year money at 1.5% for Grenfell , other Towers to give them big winter-gardens; and most homes and buildings’ Eco-Fit. What do You Think?
Right.
Its a con. A swindle. A way of misleading the public.
Firstly, The government doesn’t need our money to fund solar, or whatever. And it really knows this, after a years worth of furlough / covid. It’s blatantly obvious. How this happens, be it by orthodox MMT (the government just spending it) or popular MMT (with the government borrowing, spending, then repurchasing bonds), doesn’t matter. The fact is government has power of fiat currency. Doesn’t need a penny.
Secondly, The amount of money green bonds will raise is but a fraction of what the Bank of England has issued. the last 2 years.
So why do it? And why just 15bn? And why not part of the ISA Scheme?
Because, they want to fool the man on the street into thinking his savings money is being put to good work. They are banking (pun intended) on peoples morals to want to do the right thing. Instead of putting that in your 0.01% savings account at your highstreet bank, you can use it to buy green bonds at 0.05%. You win, the environment wins. What’s wrong with that? Well, you could be putting it into better investments and getting much more for your money. Why don’t they want people to do that? Because they want the more profitable investments to be taken up by investors who do have a clue what they are doing, and want to keep the returns high.
There will be lots of green investment over the next 10 years, you don’t want the plebs using that money flowing into the economy, to be competing with the big boys! No…you want it locked up in green bonds!
Are the government going to say “Oh, we didn’t sell enough, we don’t have the money to meet our commitments to co2 reduction?” . Of course not. Whatever is politically favourable, will always be funded. This scheme will be nothing more than a way of getting naive people to put their money somewhere, where they’ll get a paltry return, but with a warm fuzzy feeling that their money is now turned into a wind turbine.
Actually, ‘Green’ bonds is probably a good name for it.
In a sense all true
But you ignore spending without tax and bond issues creates viewing inequality
And that is not tackled by MMT
That is the problem
If I get the energy there will be a blog in the morning