Reinventing Scotland: Forget UN COP summits – here's the green idea

This is from a newsletter from Gordon MacIntyre-Kemp, called Reinventing Scotland - focusing on the wellbeing economy. Sign up here to receive it every Tuesday at 7pm. 

IN last week's Reinventing Scotland, I highlighted the necessity of a rapid transition to a wellbeing economy.

Our current trajectory will lead to economic and societal breakdown, huge swathes of the planet becoming uninhabitable, food-chain collapse and mass extinctions – possibly including the human race. Most people accept a less alarmingly worded version of that but few seem willing to make the sacrifices required to address the climate emergency.

The end of the (human) world is nigh

Every COP meeting fails. The Paris Agreement, Kyoto Protocol, every discussion on how to address the climate emergency is mired in compromise and political self-interest. No significant global climate target will ever be hit and no suitable solution will ever be agreed because neoliberal capitalism has negative outcomes for the planet hardwired into its core.

Environmental sustainability is core to Wellbeing Economics

Most suggested solutions have no more ability to turn back the tide than throwing pebbles into the ocean. We need a complete socioeconomic system change, a paradigm shift in the values, rules and social constructs that govern human existence. We need 100 years of change in two decades, a previously unimagined level of investment, intervention and global co-operation.

It's time to bail out the planet

The 2007 financial crisis broke the neoliberal model and required the biggest bailout in history, which amounted in a single year to between 1.5% and 3.2% of GDP for most developed nations and 3.4% in the US. Currency-issuing nations around the world collaboratively agreed to create enough new money to bail out the failed financial system.

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In the past few years, Covid-19 also required a massive bailout. The resulting stimulus packages are estimated to amount to around $19 trillion globally.

Creating new money to solve this new problem

Currency-issuing governments can, through their central banks, create new money. This is usually done via quantitative easing (QE), where central banks increase domestic money supplies by purchasing government bonds. This increases the liquidity of the banks, allowing them to refinance and lend more.

That bailed out the bank's shareholders (the rich) but not ordinary people, massively increasing inequality. While lending to businesses may have increased, that made businesses impacted even more dependent on the banks. Green QE is where the new money created funds lending to green infrastructure projects.

So, what's the big idea?

I, like many others, have been talking about bailing out the planet for years but there seems to be little progress in transitioning to a Green New Deal-style solution or even for Green QE. Neither the Bank of England nor the European Central Bank has purchased any bonds from renewable energy issuers. The lack of sufficient carbon emissions taxation means that dirty energy and dirty industry is still profitable, which holds back the development of green industries.

Jubilee 2000 was the campaign that led to the writing off of $130 billion of debt in developing nations between 2000 and 2015. We need a Jubilee 2000-style global climate intervention to push for a massive injection of new money into combating climate change.

McKinsey consultants estimated that a global transition to a net-zero economy would cost $275trn between 2021 and 2050. That’s a yearly average of $9.2trn but this spending would have to be front-loaded – accounting for as much as 8.8% of global GDP between 2026 and 2030.

If you still care about the numbers, a report by University College London (UCL) suggests that by the end of the century, global GDP could be between 37% and 51% lower due to climate change. It is wishful thinking to assume there will even be a functioning economy by 2100 if we don’t achieve that vital paradigm shift.

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Consider that the UCL report also predicts 1.2 billion people could be displaced due to climate and natural disaster-related causes by 2050 and that the UK Government is so short-sighted it thinks “stop the boats” is the solution.

How to make it happen

Are you sitting down? Every currency-issuer in the world will have to agree to create 9% of their GDP in new money, which will be ring-fenced into agreed strict spending criteria every year until a review in 2030. This can only be done via a new supranational financial body: a new Green World Bank.

Forget the unfulfilled promises and targets negotiated at COP meetings – this will have to become the great cause of our generation. These massive costs will in part be offset by sustainable green growth and massive tax revenue boosts.

There are huge barriers to be overcome.

Firstly, developed nations will have to contribute to a global levelling-up fund because 9% of a developing nation’s GDP isn't enough for them. There will be massive global skills shortages. Attempted corruption will be off the scale. The programme will have to be supplemented by significant carbon taxes to punish dirty industries and we will need measures to maintain equality. QE for the planet must also be QE for the people.

We also need a wholesale consumption mindset change. People will need to adopt more sustainable consumption practices, requiring a massive education and awareness campaign. This is linked to the whole system change to a Wellbeing Economic Approach. The good news is that those are intrinsically human values and so saving humanity only requires that we discover our humanity.

Gordon MacIntyre-Kemp is the chief executive of Business for Scotland and the founder of the Believe in Scotland campaign.