“That’s where the money is” was Willie Sutton’s reply when someone asked why he robbed banks. I’ve used his cool rejoinder before, but it’s especially apt when you think about the overwhelming problems coming: mitigating and adapting to what the world faces in global warming.
Bill McKibben talked about getting the big banks to just quit lending to the oil industry—which they fund to the tune of hundreds of billions of dollars a year. This seems about as likely as getting a junkie off fentanyl but, as he said, it’s kind of a Hail Mary pass.
Bernie Sanders’ grandiose climate proposals ($16.3 trillion) are just unrealistic when it comes to funding. Elizabeth Warren’s are only a bit more practical. The amounts for underwriting any kind of comprehensive Green New Deal are staggering. Great bags of money will be required to have any hope of success.
But it does seem right and proper, as Columbia’s Adam Tooze proposes, that “a decade after the world bailed out finance, it’s time for finance to bail out the world.” That is, it’s time for the world’s largest financial institutions to step up on climate change, which a few of them have already committed to do, the IMF being one. But the grand scale that will be required is something else again.
How would you get the central banks—like the Federal Reserve and the Bank of England—to cough up, or backstop, long-term loans? Tooze put it in terms of moral obligation and the threat of financial crisis:
Acting as a backstop to the issuance of a massive volume of publicly issued green bonds is certainly a novel role for the central banks. But after their exertions in the 2008 financial crisis, central bankers, of all public officials, can’t plausibly retreat into an insistence on the limits of their mandate. . . .
Decarbonization is a vastly more complex technical, economic, and social problem. But to embark on solving it we need to mobilize all the resources we can muster. The essential responsibility of the central banks is to ensure that money does not stand in the way.
The World Resources Institute projects the scale (for the short term, it seems) of public/private investment needed to remediate and adapt to what’s coming:
- The World Economic Forum projects that by 2020, about $5.7 trillion will need to be invested annually in green infrastructure, much of which will be in today’s developing world.
- This will require shifting the world’s $5 trillion in business-as-usual investments into green investments, as well as mobilizing an additional $700 billion to ensure this shift actually happens.
How is it possible to persuade the mercantile banking industry to get in on the action—and indeed make money doing it? A National Climate Bank has been proposed to sidestep the big banks and foster greenhouse gas reductions. Read more about that here. I’m not sure that will do the job; it’s mostly for smaller-scale projects.
What’s required is a Congress dedicated to transforming banking regulations to demand that a certain percentage of big commercial bank investments be made in wide-ranging, large green projects with commercial potential. Once again, like so much involving climate change, it’s a political problem. We are talking about trillions of dollars, folks, and Willie Sutton knew where that money was hiding.