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Dec
22

From impossible to possible

Post By gaia1 in Tierra Currency

Unpacking the contents and process of the Copenhagen Climate Conference during the 12 days in mid-December 2009 is not a question of days, but of months and even longer. However, one thing that stands out now, at least for me, is the fact that it is an important part of a century-long fight that humankind is going to be engaged in in restoring the Earth’s climate, the source of all life, human and otherwise.

It is within this time frame that I have been presenting in this blog and its website a transformational proposal that would have dramatic and beneficial impacts on both the economic and climate crises which, in greater or lesser severity, will be with us for many decades to come. It is a proposal of such radical (transformational) changes in international monetary, financial, economic and commercial systems that it will be characterized as impossible, fantastic, unworkable. Indeed, it may seem like that in the short term, but seen in the larger arc of international global governance, the proposal would infuse into the maelstrom of ideas an idea whose time has to come in the near or medium future.

In pursuing this very ambitious idea of restructuring the world’s monetary system and placing it in the service of funding of climate mitigation and adaptation measures I am inspired and motivated by the sentiment that early 20th century German sociologist Max Weber elaborated in  Politics as a Vocation. He considers politics to be astrong and slow boring of hard boards”, which takes both passion and perspective. “Certainly all historical experience confirms the truth—that man would not have attained the possible unless time and again he had reached out for the impossible.” Steadfastness of heart is needed, otherwise “men will not be able to attain even that which is possible today. Only he has the calling for politics who is sure that he shall not crumble when the world from his point of view is too stupid or too base for what he wants to offer. Only he who in the face of all this can say ‘In spite of all!’ has the calling for politics.”

Within this noble notion of politics that many professional politicians seem to have forgotten, I consider the TIERRA CAP&SHARE framework a manifestation of that noble notion of politics as it infuses into the political process an ambitious policy proposal that advocates a radical departure from present narrow national objectives to a firm international governance structure and process, starting in the monetary field.

 

Dec
21

The Copenhagen Accord and the TCS framework

Post By gaia1 in Climate crisis

 

Now that the Copenhagen conference has ended with its ups and downs and all its energy before and during its two weeks I want to assess it in respect to THE TIERRA CAP&SHARE framework that has been suggesting in this blog and the TIMUN website.

 

First of all, I believe in setting high policy goals as is evident in the monetary transformation framework that I have been developing for over a year. This policy ambition is wedded to the belief that you only loose when you give up. So, the enormity of the TCS framework is not to lead to paralysis, but a steadfast engagement, preferably with deadlines and guideposts.

 

Second of all, given the enormity of reaching a legally binding climate agreement among 193 nations, the Copenhagen Accord can be seen as an important step towards working together towards such agreement.

 

Thirdly, the following assessment can be made about the essential elements of the Accord and the TCS framework:

 

  • Capping: the Accord sets target below 2 degrees C—the TCS cap is to be set at 1.5 C or 350ppm, using Jim Hansen’s interpretation of the climate data. The intent of Measuring, Reporting and Verification of a nation’s target under that cap is essential.
  • Cap & Share approach: Accord did not go exclusively for the cap-and-trade approach, so TCS approach and other "Whole World" view approaches can still become realities, particularly if the UNEP Technical Review panel is going to subject them to a peer-reviewed scrutiny. Support for these approaches rather than the "nation by nation" or even “group by group” that was used during the Conference can be found in the reports the two working groups of the UNFCCC which advocate looking into different ways of negotiating.
  • Funding: promises of $100 billion annually by 2020, but only some $30 billion for period of 2010-12 were made. These are promises, not binding obligations. Adopting TCS framework means annual transfer of Tierras which would create as extra liquidity, so that nations with their present financial and economic problems need not use those scarce resources. These Tierra allocations would work somewhat like the SDR allocation proposal of George Soros.
  • Level of cooperation: notwithstanding major ups and downs during the two week conference the 190+ countries’ heads of state, ministers and especially the 25,000 CSO participants have recognized the problem and are willing to take action. Now one of the real challenges is to transform the international monetary system by basing its international reserve currency on a carbon reduction monetary standard and monetizing the carbon emissions permits that are allocated on an equal basis to all adults on the planet.

 

Fourthly, I consider positioning the TCS challenge in this ongoing climate change process in the following way.

 

  • Emphasize the TCS framework as a transformational monetary mechanism of funding for mitigation and adaptation measures and sustainable development. It requires a restructuring of the international monetary system that would update the Bretton Woods UN Monetary and Financial Conference of 1944 and respond to policy recommendations by the UN Stiglitz Commission of June 2009.    
  • Demonstrate that this TCS framework can be a workable version of Lord Keynes’ proposal of an International Clearing Union at the 1944 UN Monetary and Financial Conference at Bretton Woods.
    • Show the differences with Davidson’s Multilateral International Clearing Union, who, being one of the world’s preeminent interpreters of Keynes, also proposes an update.
    • Show how the Tierra international reserve currency of TCS framework is an option of a non-national international reserve currency replacing national ones such as the US dollar.
    • Show how the 7 functions of central banks as proposed by Frederic Mishkin can be exercised within the TCS framework
  • Suggest a workable deadline for the Tierra as a or the supranational international reserve currency in which nations begin to transfer their present reserve currencies in SDRs by 2012 and engage in the enormous political challenge of having those SDRs transferred into Tierras as part of a transformed international monetary system  that could start functioning under UN governance by 2020.
  • Emphasize the urgency to structurally deal with both the economic and climate crises by restructuring the international monetary system, which is the glue of the international financial, economic and commercial systems. Thus besides advocating dealing with the climate crisis economically by introducing a new green deal,  financially by funding the green technologies in both Northern and Southern countries and commercially by shortening and optimizing transportation distances the TCS framework would emphasize building into the international monetary system structures and processes that, institutionally, promote the reduction of GHG emissions and other climate forcings such as surface reflexivity associated with land-use.

 

 

Dec
14

Climate finance: A Transformational Way

Post By gaia1 in Climate crisis

 

CLIMATE FINANCE: A Transformational Way

An OPED

Submitted to the New York Times

14 December 2009

By

Frans C. Verhagen

 

During this second and last week of the Copenhagen conference on climate change the funding of mitigation and adaptation measures in developing nations is a central concern. While the EU has been leading industrialized nations with its promise of some $10 billion over the next three years, the need for some $200 billion by 2020 is still from being satisfied during these hard economic times in the industrialized world. The market approach of raising large amounts of funds via the cap-and-trade system will be illusory given that large amounts of carbon emissions permits are grandfathered rather than auctioned.

 

A transformational way of financing climate measures with the needed billions or even trillions by 2050 is the monopoly-like infusion of monetized carbon emissions permits. After setting the cap based upon the best science—the IPCC is still the best organization notwithstanding those 1000plus leaked email messages of the East Anglia Climate Research Unit—the permits would be allocated on an equal basis to all adults in the world. (Strictly speaking, nations in the South should be indemnified for the ‘atmospheric occupation’ of nations in the North for the last couple of centuries. However, Southern nations would agree to this fair allocation.) This sharing is like the distribution of equal amount of money at the start of the monopoly game.

 

The next step is to monetize this permits and make them part of the carbon account of a nation’s balance of payments, resulting in ecological debit accounts for the industrialized North and ecological credit accounts for the agricultural and industrializing South. This can be done by the introduction of a carbon-based international reserve currency that would replace the present reserve currencies of the US dollar and others. It is the existence of the major reserve currency country’s monetary policies and its Triffin dilemma that is one of the main reasons for the present economic imbalances anyway. It was also for this reason that the UN Stiglitz commission of June 2009 recommended shift to a non-national or even regional currency like the euro. By monetizing the allocated carbon emissions permits as a nation’s reserve currency in a transformed international monetary system, liquidity is introduced into climate finance. The volume of liquidity can be determined by the value that nations want to give to that carbon-based reserve currency which I have called the Tierra, Spanish for Earth.

 

By introducing this monopoly-like infusion of liquidity into the international monetary system funds for climate finance would become available as soon as the nations can agree on the monetary architecture of these Cap & Share Tierras that would administer the new monetary system. They could decide to establish an UN Commission on Monetary Transformation, leading to a Bretton Woods II Final Act in which Keynes’ International Clearing Union with its non-national reserve currency of Bancor would be updated for the needs of the monetary, financial, economic and commercial systems of the 21st century.

 

A major advantage of this infusion of liquidity by the Tierra Cap & Share (TCS) method—one of the 7 "Whole World" view approaches that are being considered to be peer-reviewed by a proposed UNEP Technical Panel—consists of avoiding the racket of a world-wide carbon market for which the large consolidated financial companies are lining up with their shadow economy of derivatives. By changing from a cap-and-trade to a carbon tax system the main beneficiaries are not banks, but the public. Another advantage of the TCS system is the reassertion of public control of the monetary system away from privately-owned banking systems which are competing in the public domain function of money creation that is not theirs to compete in. Even ignoring the financial collapse of 08-09 it is not advisable to have large private companies set the direction of the economy, both in a nation or in the international arena. Reformist bodies such as the Financial Stability Forum are more part of the problem than of the solution, because they maintain an unfair, unsustainable, and, therefore, unstable monetary system.

 

Infusion of these monetized carbon emissions permits need not cause inflation, given that these extra funds would be used for economically worthwhile programs without becoming part of a shadow economy that has caused such disruption.

 

 I agree with the Klima-Forum09 in Copenhagen who in statement 4 expresses “strong opposition to purely market-oriented and technology-centred false and dangerous solutions put forward by many corporations, governments, and international financial institutions. These include nuclear energy, agro-fuels, carbon capture and storage, Clean Development Mechanisms, biochar, genetically “climate-readied” crops, geoengineering, and reducing emissions from deforestation and forest degradation (REDD) as currently defined by the UNFCCC. These only produce new environmental threats, without really solving the climate crisis. Carbon trading and offsetting are also false and unjust instruments, because they treat a common planetary resource – the atmosphere – as a

commodity that can be owned and traded. So far, the system has not proven its merits, and by allowing rich countries to offset their reduction obligations, it has maintained this unjust and unsustainable system.”

 

Thousands of civil society organizations (CSOs) have signed its declaration entitled “System change – not climate change”. This proposed TCS approach proposes a system change in the international monetary system which, being the glue of the other international systems, would transform the present international system that still enriches the few, impoverishes the many and imperils the planet.

 

Frans C. Verhagen, M.Div., M.I.A., Ph.D. is a sustainability sociologist and founding president of International Institute of Monetary Transformation www.timun.net. His forthcoming book is entitled THE TIERRA CAP AND SHARE: A Transformative Monetary Approach to Deal with the Climate Crisis.

 

Dec
11

The Monopoly-like infusion of liquidity to finance climate measures

Post By gaia1 in Climate crisis

On December 9 I submitted to the Copenhagen conference my message to its leaders:

Let nations and parties to the COP15 agree to allocate carbon emissions permits on an equal basis and turn them into liquidity by creating a carbon account in their balance of payments. 

 

One of the most important elements of climate finance at the Copenhagen conference is the availability of funds for financing mitigation and adaptation measures. All parties are in need of more funds, even the richer parties in the global North. They are demanded to transfer funds from their weakened economies to assist the even weaker economies in the global South. Does the world carbon market going to provide those $200 billions by 2020 continue providing them on an annual basis there after?

 

If the private carbon market is supposed to be the main source of revenue as source of these funds as part of the cap-and-trade arrangements in the global North, the question arises whether this market route would deliver a fair, effective and reliable climate financing system in the short, medium and long term. Who would be the main beneficiaries of this carbon market system? How are nations in the South who are ecological creditors on account of past and present “atmospheric occupation” going to benefit?

 

Increasing amount of evidence shows that cap-and-trade fails to deliver significant GHG reductions. James Hansen’s OPED article in the New York Times of December 7 presents some strong reasons against cap-and-trade and in favor of “fee and dividend”. In a more popular fashion a recent 10 minute video of the cap and trade watch project of the Transnational Institute makes the same point. Its various publications provide documented background for the credibility of the video. So, cap-and-trade is not an effective carbon reduction methodology and, thus, those billions of dollars to finance cannot be reliably attached to the resolution of the climate crisis. A secondary reason is also the process and structure of this carbon market that is dominated by large financial corporations which are weakly regulated in existing financial products and services, let alone in an emerging market like the carbon one.

 

Enter the Tierra Cap & Share approach and its monetary architecture that is based upon a carbon-based international reserve currency. This approach starts out with a monopoly-like infusion of liquidity by allocating to every adult an equal amount of carbon emissions permits which become carbon reserve currency in a nation’s balance of payments. Note what happened if the COP 15, 16 or 17 parties were to adopt this monopoly-like infusion of liquidity as a public capital infusion to combat climate change.

 

Monetarily: it would introduce a new reserve currency, so that nations would not need to hold expensive dollars in their reserve systems, so they could use those dollars, euros for more productive purposes. Given the failure of the present floating exchange system, even acknowledged by the Economist (January 6, 1990) and the Financial Times (February 17, 1987), this dramatic infusion of liquidity cannot make this failed system more failed.

 

Economically: freed-up hard currency reserves can now be used for combating mitigation and adaptation measures without depending on the funds generated by the cap-and-trade systems, where, unfortunately, too great an amount of carbon permits were grandfathered rather than auctioned.

 

Financially: this infusion of limited liquidity—limited because of this carbon currency being a reserve currency—would escape the grip of the large international financial corporations which would be among the main beneficiaries of the private climate financing.

 

Ecologically: in one swoop which could be repeated annually under an ever tightening cap, climate change could be effectively combated.

 

Politically: agreeing to this infusion of these monetized carbon credits would show boldness and statesmanship towards monetary cooperation, that eventually may lead to a transformed international monetary system based upon an updated Bretton Woods Conference as proposed by Paul Davison in 2008 and Bill Lucarelli in 2009 or as proposed by the International Institute of Monetary Transformation which proposes a carbon account in a nation’s payments schedule with its Bancor2 carbon reduction methodology.

 

Socially: such major monetary step will build confidence in the future and comity among nations.

 

Ethically: the equal allocation of these monetized carbon permits would be a fair deal, though countries in the global South could demand additional permits given the atmospheric occupation of the industrialized countries during the last couple of centuries.

 

An article dealing with the What, Why and How of this Monopoly-like infusion of liquidity for climate finance will go into greater depth. Stay tuned.

 

 

 

THE MONOPOLY INFUSION OF LIQUIDITY

 

On December 9 I submitted to the Copenhagen conference my message to its leaders:

Let nations and parties to the COP15 agree to allocate carbon emissions permits on an equal basis and turn them into liquidity by creating a carbon account in their balance of payments. 

 

One of the most important elements of climate finance at the Copenhagen conference is the availability of funds for financing mitigation and adaptation measures. All parties are in need of more funds, even the richer parties in the global North. They are demanded to transfer funds from their weakened economies to assist the even weaker economies in the global South. Does the world carbon market going to provide those $200 billions by 2020 continue providing them on an annual basis there after?

 

If the private carbon market is supposed to be the main source of revenue as source of these funds as part of the cap-and-trade arrangements in the global North, the question arises whether this market route would deliver a fair, effective and reliable climate financing system in the short, medium and long term. Who would be the main beneficiaries of this carbon market system? How are nations in the South who are ecological creditors on account of past and present “atmospheric occupation” going to benefit?

 

Increasing amount of evidence shows that cap-and-trade fails to deliver significant GHG reductions. James Hansen’s OPED article in the New York Times of December 7 presents some strong reasons against cap-and-trade and in favor of “fee and dividend”. In a more popular fashion a recent 10 minute video of the cap and trade watch project of the Transnational Institute makes the same point. Its various publications provide documented background for the credibility of the video. So, cap-and-trade is not an effective carbon reduction methodology and, thus, those billions of dollars to finance cannot be reliably attached to the resolution of the climate crisis. A secondary reason is also the process and structure of this carbon market that is dominated by large financial corporations which are weakly regulated in existing financial products and services, let alone in an emerging market like the carbon one.

 

Enter the Tierra Cap & Share approach and its monetary architecture that is based upon a carbon-based international reserve currency. This approach starts out with a monopoly-like infusion of liquidity by allocating to every adult an equal amount of carbon emissions permits which become carbon reserve currency in a nation’s balance of payments. Note what happened if the COP 15, 16 or 17 parties were to adopt this monopoly-like infusion of liquidity as a public capital infusion to combat climate change.

 

Monetarily: it would introduce a new reserve currency, so that nations would not need to hold expensive dollars in their reserve systems, so they could use those dollars, euros for more productive purposes. Given the failure of the present floating exchange system, even acknowledged by the Economist (January 6, 1990) and the Financial Times (February 17, 1987), this dramatic infusion of liquidity cannot make this failed system more failed.

 

Economically: freed-up hard currency reserves can now be used for combating mitigation and adaptation measures without depending on the funds generated by the cap-and-trade systems, where, unfortunately, too great an amount of carbon permits were grandfathered rather than auctioned.

 

Financially: this infusion of limited liquidity—limited because of this carbon currency being a reserve currency—would escape the grip of the large international financial corporations which would be among the main beneficiaries of the private climate financing.

 

Ecologically: in one swoop which could be repeated annually under an ever tightening cap, climate change could be effectively combated.

 

Politically: agreeing to this infusion of these monetized carbon credits would show boldness and statesmanship towards monetary cooperation, that eventually may lead to a transformed international monetary system based upon an updated Bretton Woods Conference as proposed by Paul Davison in 2008 and Bill Lucarelli in 2009 or as proposed by the International Institute of Monetary Transformation which proposes a carbon account in a nation’s payments schedule with its Bancor2 carbon reduction methodology.

 

Socially: such major monetary step will build confidence in the future and comity among nations.

 

Ethically: the equal allocation of these monetized carbon permits would be a fair deal, though countries in the global South could demand additional permits given the atmospheric occupation of the industrialized countries during the last couple of centuries.

 

An article dealing with the What, Why and How of this Monopoly-like infusion of liquidity for climate finance will go into greater depth. Stay tuned.

 

 

 

THE MONOPOLY INFUSION OF LIQUIDITY

 

On December 9 I submitted to the Copenhagen conference my message to its leaders:

Let nations and parties to the COP15 agree to allocate carbon emissions permits on an equal basis and turn them into liquidity by creating a carbon account in their balance of payments. 

 

One of the most important elements of climate finance at the Copenhagen conference is the availability of funds for financing mitigation and adaptation measures. All parties are in need of more funds, even the richer parties in the global North. They are demanded to transfer funds from their weakened economies to assist the even weaker economies in the global South. Does the world carbon market going to provide those $200 billions by 2020 continue providing them on an annual basis there after?

 

If the private carbon market is supposed to be the main source of revenue as source of these funds as part of the cap-and-trade arrangements in the global North, the question arises whether this market route would deliver a fair, effective and reliable climate financing system in the short, medium and long term. Who would be the main beneficiaries of this carbon market system? How are nations in the South who are ecological creditors on account of past and present “atmospheric occupation” going to benefit?

 

Increasing amount of evidence shows that cap-and-trade fails to deliver significant GHG reductions. James Hansen’s OPED article in the New York Times of December 7 presents some strong reasons against cap-and-trade and in favor of “fee and dividend”. In a more popular fashion a recent 10 minute video of the cap and trade watch project of the Transnational Institute makes the same point. Its various publications provide documented background for the credibility of the video. So, cap-and-trade is not an effective carbon reduction methodology and, thus, those billions of dollars to finance cannot be reliably attached to the resolution of the climate crisis. A secondary reason is also the process and structure of this carbon market that is dominated by large financial corporations which are weakly regulated in existing financial products and services, let alone in an emerging market like the carbon one.

 

Enter the Tierra Cap & Share approach and its monetary architecture that is based upon a carbon-based international reserve currency. This approach starts out with a monopoly-like infusion of liquidity by allocating to every adult an equal amount of carbon emissions permits which become carbon reserve currency in a nation’s balance of payments. Note what happened if the COP 15, 16 or 17 parties were to adopt this monopoly-like infusion of liquidity as a public capital infusion to combat climate change.

 

Monetarily: it would introduce a new reserve currency, so that nations would not need to hold expensive dollars in their reserve systems, so they could use those dollars, euros for more productive purposes. Given the failure of the present floating exchange system, even acknowledged by the Economist (January 6, 1990) and the Financial Times (February 17, 1987), this dramatic infusion of liquidity cannot make this failed system more failed.

 

Economically: freed-up hard currency reserves can now be used for combating mitigation and adaptation measures without depending on the funds generated by the cap-and-trade systems, where, unfortunately, too great an amount of carbon permits were grandfathered rather than auctioned.

 

Financially: this infusion of limited liquidity—limited because of this carbon currency being a reserve currency—would escape the grip of the large international financial corporations which would be among the main beneficiaries of the private climate financing.

 

Ecologically: in one swoop which could be repeated annually under an ever tightening cap, climate change could be effectively combated.

 

Politically: agreeing to this infusion of these monetized carbon credits would show boldness and statesmanship towards monetary cooperation, that eventually may lead to a transformed international monetary system based upon an updated Bretton Woods Conference as proposed by Paul Davison in 2008 and Bill Lucarelli in 2009 or as proposed by the International Institute of Monetary Transformation which proposes a carbon account in a nation’s payments schedule with its Bancor2 carbon reduction methodology.

 

Socially: such major monetary step will build confidence in the future and comity among nations.

 

Ethically: the equal allocation of these monetized carbon permits would be a fair deal, though countries in the global South could demand additional permits given the atmospheric occupation of the industrialized countries during the last couple of centuries.

 

An article dealing with the What, Why and How of this Monopoly-like infusion of liquidity for climate finance will go into greater depth. Stay tuned.

 

 

 

 

Dec
08

financing at Copenhagen

Post By gaia1 in Modified balance of payments

The Climate Action Network (CAN), a coalition of some 500 CSOs, presents the following position about the financing of mitigation and adaptation measures in developing countries.

· Developing countries must be supported in their efforts to limit the growth of their industrial emissions, making substantial reductions below business-as-usual. The support for their efforts to adapt to the adverse effects of climate change must also be scaled-up immediately and substantially, and the fact that certain loss and damage from climate change can not be avoided must be recognized.

· Emissions from deforestation and degradation must be reduced to zero by 2020, funded by at least US$35 billion per year from developed countries.

·  Developed countries need to provide at least US$195 billion in public financing per year by 2020, in addition to ODA commitments, for developing country actions.

 

How are those billions of dollars going to be raised, leading up to some $230 billion by 2020? At what value of the dollar are commitments going to be made? How are they going to be distributed and by whom? How does the cap-and-trade systems in the EU and US deal with these financial obligations or should a global carbon tax system hold more promise? It seems that many of these financial questions are given far too little attention.

 

First of all, increasing amount of evidence shows that cap-and-trade fails to deliver significant GHG reductions. James Hansen’s OPED article in today’s New York Times presents some strong reasons against cap-and-trade and in favor of “fee and dividend”. In a more popular fashion a recent 10 minute video of the cap and trade watch project of the Transnational Institute makes the same point. Its various publications provide documented background on the video.

 

Second of all, these two main carbon reduction methodologies mostly deal with domestic climate change challenges and not with the financial requirements of the global system, particularly the necessary financing by industrialized countries for mitigation and adaptation measures in developing nations.

 

Given this insufficient attention to resolving the climate finance challenge the result will probably be that the World Bank will try to control the climate finance field with the assistance of the recently strengthened IMF. Thus, the present monetary, financial, economic and commercial systems will be kept in place, which caused the climate crisis in the first place. If Copenhagen decides to stick with the cap-and-trade-- the third phase of the EU-ETS runs up to 2015-- those systems will stay in place and they will continue to enrich the few, impoverish the many and imperil the planet.

 

What is needed is an institutional framework for climate finance that is based upon fairness, predictability, transparency and accountability. The Tierra Cap & Share approach is developing such framework. After capping the emissions at 350 ppm, equal allocations of carbon emissions permits are made to all adults everywhere, resulting in ecological creditor nations in the global South and ecological debtor nations in the global North. Basing the international monetary system on the carbon-based international reserve currency of the Tierra, climate finance becomes part of a nation’s carbon account in its balance of payments and accounts can be settled between Northern and Southern nations. Part of the Tierra architecture is a UN Tierra Monetary Board that is replacing the IMF. The World Bank will have become a part of an expanded UNDP.

 

Once cap-and-trade is abandoned in favor of a fee and dividend and once the need for fair global allocation is recognized as an essential element of an effective global climate change carbon reduction methodologies such as Cap & Share, Kyoto 2 and other "Whole World" view approaches will be given consideration. Presently, high level discussions are taking place with UNEP to have it engage in a peer-review technical study of those approaches. The Tierra Cap & Share, also called the Bancor2 approach after the reserve currency of the bancor the Bretton Woods Monetary and Financial Conference of 1944, would be part of such review.

 

For this institutional climate finance and carbon reduction scheme of the Tierra Cap & Share  to come into existence nations have to decide to cease greater monetary sovereignty to the UN monetary Board in the case of the Tierra as international reserve currency and to UN Central Bank in case of the Tierra as a vehicle currency. This monetary global governance cannot come about as long as privately owned banking systems are permitted to create money and as long as large financial corporations with the assistance of the IMF and WTO continue to control global finance within a weak regulatory structure. A paradigm shift have to take place away from the neo-liberalist philosophy on economics and governance towards a sustainability philosophy that integrates the social, political, ecological and economic dimensions of sustaining futures in the global North and South. A vision of such futures is represented in the integrated social and ecological values the Earth Charter, which is the ethical standard for the 21st century as was the Universal Declaration of Human Rights during the 20th century.

 

 

Dec
07

Carton trading, offsets, and derivatives

Post By gaia1 in Bioregional economics

CARBON TRADING, OFFSETS AND DERIVATIVES

7 December 2009

 

Research by Larry Lohmann and publications of the carbon watch organization show how the cap-and-trade system thinking emerged from the neo-liberalist philosophy in the 1990s. According to the former executive secretary of UNFCCC, Michael Zammit Cutajar, it is “not an exaggeration to brand the mechanisms of the Kyoto Protocol as ‘Made in the USA.’ . . . The sensitivity of the Protocol to the market was largely instigated by the negotiating positions of the USA”.

 

But it was not only the USA who pushed for the ineffective carbon reduction methodology. It was the OECD and UNCTAD who also played an important role. They both accepted the sulphur trading example as a successful model for emission trading notwithstanding their significant differences. They both set out the terrain for international negotiations. The OECD investigated the US SO2 emissions trading experience and considered the scope for international emissions trading.  UNCTAD, meanwhile, engaged in an extensive work programme to promote a global CO2 trading system. At the same time, the US-based NGO Environmental Defense Fund (which is now called Environmental Defense) was an early promoter of emissions trading, and published a 1991 study advocating emissions trading to protect the rainforest – a notion whose afterlife can be seen in current market-based proposals for Reducing Emissions from Deforestation and Degradation (REDD). The authors of this paper were UNCTAD consultants at the time, and had recent experience advising the US EPA on sulphur trading. It was the forerunner of the offsets program under the Kyoto Protocol, one of the so-called flexible mechanisms, that contributes very little in the reduction of emissions. It was in 1996 that this kind of ‘flexibility’ would be ‘the key requirement for accepting binding targets’ the U.S. government’s position.

 

It is not surprising that the Rio Earth Summit of June 1992, notwithstanding its being an important bench mark in the history of humanity and of the Earth, was also based upon that neo-liberalist philosophy. It defended an ‘open economic system’ based on economic

growth and it also considered TNCs as positive agents of ecological change – ‘promoting

sustainable development through trade liberalization’.

 

What is less well known is that several of those authors in the EDF and UNCTAD emission trade system became involved in the design of derivatives, the major cause of the financial crash of 2008.

 

 

Frank Joshua, head of greenhouse gas emissions trading at UNCTAD from 1991 to 2000,

went on to become global director for emissions trading services at Arthur Andersen,

the accountancy firm at the centre of the Enron scandal, before joining NatSource, an

environmental services firm specializing in emissions trading. In the early 1990s, Joshua

collaborated on an UNCTAD initiative entitled ‘Building a Global CO2 Emissions

Trading System’ with Richard Sandor, a former head of the Chicago Board of Trade,

and one of the originators of the interest rate derivatives. Sandor went on to head UNCTAD’s working group on carbon market design. He later set up the Chicago Climate Exchange (CCX), which today commands a small but growing segment of the carbon markets.

Alice LeBlanc, another key figure in the UNCTAD initiative, was an employee of

Environmental Defense at the time. She later joined Sandor at the Chicago Climate

Exchange, before becoming head of the climate change office of insurance firm AIG,

where she devised the firm’s carbon market investment strategy. Besides creating problems of conflicts of interests these interconnections of the revolving doors variety hint at broader links between the rule-setting process for carbon markets and the agencies that established the derivatives markets.

 

The urgency of both the economic and climate crises demand that a new sustainability philosophy be developed. The Tierra Monetary Paradigm with its two pillars of Cap & Share and its transformational monetary approach of a carbon-based international reserve currency wants to make a contribution to such sustainability philosophy that integrates economic, social and ecological challenges involved in both crises.

 

 

Dec
05

Climate justice, human rights, the Tierra and IFIs

Post By gaia1 in Climate crisis

Former UN Human Rights Commissioner Mary Robinson and her co-author Alice Miller write in   http://www.brettonwoodsproject.org/art-565686    the following.

“Using the lens of climate justice, and incorporating principles and tools of human rights to guide policy and practical responses to climate change, is an essential aspect of climate change policy work at the global and national level. Climate justice, moreover, is useful in evaluating the financial architecture necessary to support just and sustainable climate interventions. Ultimately, a justice and human rights framework can provide us with a compass to chart the course of climate change responses, and a set of tools that operate at all levels between and within nations.”

 

Agreeing with their value-based planning framework of climate justice and human rights I think the framework can be further extended by including a monetary dimension of a carbon-based international reserve currency, such as the Tierra or Bancor2. (Bancor1 was the non-national international reserve currency proposed by John Maynard Keynes at the UN Bretton Woods Conference of 1944.)  This extension would transform the funding for mitigation and adaptation measures and development by the creation of carbon accounts in nations’ balance of payments. Consequently, ecological debtor nations in the global North have to settle their carbon debts with the ecological creditor nations in the global South. The ecological debt or credit is determined by the equal allocation of carbon emissions permits under a Cap & Share approach.

 

If nations are unable to agree on a funding mechanism within the UNFCCC, the Worldbank will become the funding mechanism by default in the same way the IMF have became the default mechanism by not accepting the UN Global Economic Coordination Council proposed by the UN Stiglitz Commission in June 2009. In both instances, the privatizing trends of corporate globalization supported by the IMF/WB/WTO/BIS will continue to exert adverse pressures towards equitable, sustainable, and, therefore stable monetary, financial, economic and commercial systems. If these present international systems are not counteracted, they will continue to enrich the few, impoverish the many and imperil the planet.

 

Dec
03

US cap and trade and Tierra Monetary Approach

Post By gaia1 in American Monetary Matters

Cap-and-dividend and the TMA have in common, together with six other "Whole World" view approaches to climate crisis negotiations, that they provide alternative approaches to cap-and-trade and carbon taxes as carbon reduction methodologies.

 

While the EU and the USA have legislated cap-and-trade—the former’s stage 3 ends in 2015—of the 8 "Whole World" view approaches only cap-and-dividend has been translated into a short bill in the U.S. House of Representatives on April 1, 2009. Maryland Congressman Van Hollen found 4 co-sponsors for his legislation that is submitted to two House committees.

 

Cap-and-dividend is a carbon reduction methodology that pays eligible adults with a social security number an equal amount of dividend generated by the quarterly carbon auctions. It is directed towards the US situation, though its principles can used by other nations.

 

Its main connection with the world outside the USA is the carbon equivalency fee which can be” a tax, or other regulatory requirement that imposes a cost, on manufacturers of carbon-intensive goods located outside the United States, by reason of greenhouse gas emissions in the production of such goods by such manufacturers, approximately equal to the cost imposed by this subtitle on manufacturers of comparable carbon-intensive goods located in the United States.” Like the complicated ACES (American Clean Energy and Security Act) which is based upon cap-and-trade methodology it engages in legislating safeguards for maintaining competitiveness, which some consider protectionism and in violation of WTO rules.

 

The carbon reduction methodology of TMA takes a global and "Whole World" view approach. A nation’s allocation of carbon emissions permits is determined by a Cap & Share approach in which each eligible individual receives an equal share, leading to ecological creditor and debtor nations. Ecological debtor nations in the global North are to settle their debts with the ecological creditor nations in the global South by means of their carbon accounts in their balance of payments. Their trade balances are based on the carbon-based international reserve currency of the Tierra, the value of which is determined by the carbon standard.

 

Though this global monetary approach to carbon reduction is very different from the US cap-and-dividend approach, various elements in its legislation can be adopted in the administration of the US Tierra Administrative Board as, for example, its Healthy Climate Trust Fund. Also the many ways of increasing clean energy and energy efficiency as spelled out in ACES can be used by a US Tierra Climate Trust Fund which would also include private citizens in its membership.