subscribeTDF and the environmental finance community
Post By gaia1 in American Monetary Matters
The formation of the environmental finance community can be considered to have started
at the end of the 1990s when the Environmental Finance magazine was born. Its editor,
Mark Nicholls, looked back at a "decade of progress and a few pitfalls on the way" in the
magazine's 10th anniversary issue of October 2009.
He summarized the 10 years as follows: "Indeed, we were often asked at that time
whether the title wasn't a contradiction in terms. Sustainable banking was a niche pursuit,
there was no market for carbon credits, and renewable energy uptake was a fraction of
what it is today. Ten years on, I think it's safe to say we now have proof of concept. The
enormous increase in concern about environmental issues, especially climate change,
made concrete by government regulation and changing consumer preferences, has
permeated into nearly every corner of the financial sector and the businesses it serves.
....the past 10 years have, as we expected in the late 1990s, seen a sea change in how the
environment is perceived by the business and financial communities. In carbon, an
"environmental good" now appears on the balance sheets of literally thousands of
companies. An entire market, worth tens of billions of dollars, has been created to
channel finance to projects that reduce greenhouse gases."
Pitfalls were phased by him in the following way. "But the past decade hasn't been
without its ups and downs. While the Kyoto Protocol had been created two years before
our launch, its entry into force was to take another five years, severely testing the
business plans and financial reserves of early movers in that market. To this day,
regulatory uncertainty and political vicissitudes bedevil the market for carbon credits
more than perhaps any other."
In the view of this opinion maker climate change is seen to have substantially entered the
business world which is served by his financial community. It has entered that world as a
carbon market where money can be made, particularly with the buying and selling of
carbon credits. It is significant that in the magazine's October issue a summary appeared
on its website---the hard copy monthly magazine costs about $600--entitled 'US carbon
market will be inefficient-- banker". It mentions that "a leading carbon banker has
warned of the risk of inefficiencies in the looming US cap-and-trade market." Note the
reason that he gives for this inefficient US carbon market. "Proposed reforms to
derivatives trading in the US, including restricting derivatives to exchanges, would make
an emissions trading market inefficient and will raise transaction costs, said Abyd
Karmali, a managing director at Bank of America Merrill Lynch in London, at the
Carbon Finance 2009 conference on 20 October."
Given this mindset of a carbon market that is not to be regulated, but at the same time
wants is to be stable for investors to invest their funds, the introduction of the tri-partite
Tierra Fee & Dividend system faces at least three major challenges in respect to the
environmental financing community.
First, the environmental finance community is to be willing to abandon cap-and-trade
carbon reduction methodology for the Fee & Dividend carbon reduction methodology
and willing to focus on the other areas of environmental finance that are part of its
financing programs. This challenge is probably less arduous than the other two
challenges, because the tides may be shifting from cap-and-trade to a Fee & Dividend
system anyway.
Second, the environmental finance community may object to the increased governmental
role in the international monetary and financial system as proposed in the Tierra
International Clearing Union, and in phase 2 of the Tierra Fee & Dividend system, in the
Tierra International Monetary Union (TIMU), both of which would be part of the UN
system. Being located in the London financial center, the magazine seems to express its
agreement with a recent court rule in the following summary in its November issue,
entitled "UK Treasury wins first round of RBS environment case". The summary reports:
"A High Court judge has quashed an attempt by three NGOs to force the UK government
to apply stricter environmental and social criteria to investments made by RBS, one of
the banks nationalised during the credit crunch. However, the NGOs have vowed to
appeal the ruling. Legal action launched in July by the World Development Movement,
Platform and People & Planet has suffered an early setback, after an oral hearing failed to
secure the court’s permission for a judicial review.”
Third, the environmental finance community would presumably most strongly object to
making the reduction of carbon the basis of a new monetary standard for a transformed
international monetary system. This re-carboniazation monetary standard together with
its accounting unit of the Tierra, in either its reserve or vehicle phase, and the other
components of the Tierra Fee & Dividend system’s monetary architecture would turn
their views on carbon upside down. Instead of making money on carbon, they are to view
carbon reduction and the other greenhouse gas emissions as main ingredients for
successful businesses that they want to finance, but outside a carbon market. They also
are to place great emphasis on the Carbon Disclosure Program so that companies can be
evaluated on their environmental, particularly carbon, impacts. It is also this demand for
carbon disclosure that the three main institutional investor networks, i.e. IGCC, Investor
Network on Climate Risk, Investor Group on Climate Change and the UNEP Finance
Initiative emphasized in their “2010 Investor Statement on Catalyzing Investment in
Low-Carbon Economy” issued at the UN Headquarters on January 14, 2010. It is
significant that the statement of this community of fiduciary investors who control a pool
of over $13 trillion had as its subtitle “Investors Urge Policy Makers to Act Swiftly”,
indicating their view of the important role of governments in creating the right financial
conditions that can lead to fast, formidable and fair approaches to greenhouse gas
emissions.