Quantitative easing to fund climate change programmes?

finance murphy header

Colin Hines, co-founder of Localise West Midlands and Richard Murphy, Professor of Practice in International Political Economy, City University, London, warn that the Paris Climate talks are facing an enormous funding problem to which there is only one viable solution.

In a new report published by Finance for the Future, entitled ‘Climate QE For Paree’, they suggest that the measures to be put on the table in Paris will not go far enough to halt a disastrous global temperature rises of more than 2 degrees because no one has suggested how the enormous cost of tackling this issue is to be addressed, particularly at a time of global economic slowdown.

The paper offers a solution to this problem, using a variation on the idea of People’s Quantitative Easing that has received much attention during 2015:

The world has or is intending to print €7 trillion of quantitative easing to keep the financial system afloat​. In that case, why not use this mechanism in the form of Climate QE to save the planet?

The European Central Bank is already e-printing €60 billion a month under its QE [programme and is committed to doing so till September 2016.

If it allocated say €10 billion a month either from this QE programme, or from an additional QE commitment, it could use it to buy climate change bonds from the European Investment Bank. The EIB could then direct these funds to climate change programmes in both Europe and developing countries.

This could have a galvanising effect on other rich countries, putting pressure on them to introduce their own Climate QE initiatives and thus further bolster global funds towards the many hundreds of billions eventually needed to keep temperature rises at 2oC.

Importantly, since Climate QE involves one arm of the EU, the ECB, creating e-money and using it to buy assets from another arm of EU, the European Investment Bank (EIB), this will not increase Europe’s repayable debt levels. This would also hold true for countries like the United States and the UK, something that is crucial to making involvement in ‘Climate QE’ post Paris politically acceptable to all rich countries.

How the European Investment Bank Could Spend Climate QE

The EIB already invests around 10% of its funds in developing countries and prioritises climate change mitigation and adaptation (e.g. renewable energy, energy efficiency, urban transport and other projects that reduce CO2 emissions).

To achieve the goals likely to be set in Paris, Climate QE funding should be used by developing countries to fund low carbon emitting industrial and agricultural infrastructure and energy efficient buildings in cities. Such projects face difficulty attracting private finance, since the returns are harder to identify and the process of capturing and sharing them are more complex than normal investment programmes.

Rich Countries would benefit too

Colin Hines said:

‘Climate QE is not just for poorer countries. The economic and employment advantages of investing in energy efficiency and renewables is not only a way to generate economic activity in every city, town, canton and hamlet across Europe, but will also ensure our continent’s significant contribution to helping solve the biggest threat facing humanity, which is climate change.’

For further details contact:

Richard Murphy, Director of Finance for the Future LLP and Professor of Practice in International Political Economy, City University, London

Tel +44 (0) 1366 383500

Mobile +44 (0) 7775 521 797

And

Colin Hines, Convenor Green New Deal Group

Tel +44 (0) 20 8892 5051

Mobile +44 (0) 7738 164 304

Local development as a strategic alternative in Fife

Once again many will question the dependence on a global market economy as headlines shout, “China’s ‘Black Monday’ sends markets reeling”. For months, in a range of publications, Mohamed El-Erian, who chairs President Obama’s Global Development Council, has been forecasting the risk of a ‘perfect storm’, adding that considering ‘its destructive potential, it warrants serious attention by policymakers’, though China does not loom large in his list of contributing factors.

fifediet small family2

Mike Small (with family, above) is said to be ‘behind’ the Fife Diet local eating experiment, which aims to relocalise food production and distribution on a regional basis, as a response to globalisation and climate change. See a 2008 Telegraph article and more in depth on the Transition Culture website.

Remarkably, it is funded by the Scottish Government’s Climate Challenge Fund and has also received funding from Celebrating Fife, the Co-op Community Fund and Awards for All.

Over an eight year period the Fife Diet has developed from a simple idea framed around ‘local eating’ to a complex one about sustainable food, environmental justice, globalisation and culture. They set out to build a sustainable food movement that popularised eating healthy, local produce in Fife, starting from the understanding that there is something fundamentally wrong with the food system but also from the thought that they could, by acting collectively, do something about it.

They now believe that food has become central to the precarious economy. Real progress won’t be made until control is regained over the retail experience, and profiteers that benefit from products that fuel obesity are confronted.

In the Food Manifesto they are developing, they call for opportunities for the ‘right to grow’ and an expectation of quality healthy food in our public institutions, aiming eventually to become – as the Scottish government puts it, a ‘Good Food Nation’.

FAQ: “But what fruit do you eat?” Fife’s Pittormie fruit farm produce:

fife's pittormirefruitboxjuly091

Remarkable achievements listed on their site:

CELEBRATING OUR OWN FOOD CULTURE

When we started we were met by a mixture of incredulity and poorly-disguised scepticism. People really didn’t think that you could eat food from Fife, and survive at all. It was just unthinkable, unimaginable.

CARBON SAVINGS

In 2011-2012 we saved 1019 tonnes of C02e. Then, in a three year period (April 2012- March 2015) we saved a further 6976.37 tonnes of C02e. These are immediate savings, by diverting food waste from landfill thereby avoiding creating methane, for example, or by sequestering carbon and enriching soil with compost, but also by eating locally, growing our own food, eating organic, changing the meat we ate (and eating less of it).

OUTREACH

We held or attended over 500 outreach events over the three years, engaging with 15,520 people.

GROWING SPACES

We established a community food growing garden, a wildlife and forest garden and a vibrant volunteer and community group who are maintaining them. We hosted 57 events at the garden, including the children’s gardening club, large community lunches and volunteer sessions.

COMMUNITY ENGAGEMENT

We ran 79 weekly children’s gardening clubs (79 clubs over three years) and hosted 7 large-scale community events.

LEADING THE WAY

We were part of building a new food movement in Scotland that encompasses the right to food, championing small producers, insisting on sustainability as a measurement of quality in food production and celebrating food sovereignty.

NEW ORCHARDS

We planted 7 orchards around Scotland from Galloway to Sutherland with our Silver Bough tour (‘ a cultural conversation about apples’).

SCHOOL LUNCHES PILOT

We collaborated with Fife Council and the Soil Association in a pilot project exploring regionally sourced, healthy, sustainable and organic school lunches. See here.

INSPIRATIONAL PRINTED MATERIAL

We published a series of inspiring posters, postcards, booklets and other materials including recipe books, calendars, guides on native apple varieties and a booklet on gardening with kids. We also produced a free Ebook for our members of Collected Recipes from the life of the project.

BIRTHING THE ORCHARD COLLECTIVE

We curated and hosted the National Orchard gathering and helping the Orchard Collective into existence.

THE BIGGER PICTURE

We are proud to have been part of a wider movement and welcomed the collaborative work over the past eight years with such groups as Nourish, the Soil Association, Slow Food, Permaculture Scotland and Transition Towns.

Much more here: http://fifediet.co.uk/fife-diet-chronology/

*

End note: protect and rediversify local economies

pp hines logoAs LWM’s co-founder, Colin Hines, has written, there is growing opposition to a system which regards as inevitable the driving down of tax rates for higher income earners, worsens social and environmental conditions and kills local jobs and small business opportunities:

“Whistling in the dark to keep up the nation’s economic spirits by promising export-led growth in an era of rising Asian dominance is a ridiculous policy. The alternative to these dangerous and damaging dark alleys is to propose a set of practical measures for protecting and rediversifyng local economies. This is the only way to tackle the economic and environmental crises, return local control of the economy to citizens and provide a sense of hope for their future . . .”

=

LWM co-founder: rebuild and rediversify economies

euro memo group header

Last September, Colin Hines, co-founder of LWM, gave the final address (link to pdf here) at the 20th Conference on Alternative Economic Policy in Europe, at the Sapienza University in Rome (Department of Statistics), organised by the EuroMemo Group and jointly hosted with Economia Civile. His conclusion:

“A successful campaign to turn Treaty of Rome into a “treaty of home” would allow countries to cooperate to take back control of their borders for progressive goals, such as reducing inequality and rebuilding flourishing, sustainable local economies. This in turn could result in increased political support for a reformed Europe which actually gives citizens hope by providing economic, social and environmental policies which tackle the majority’s present fears for the future, rather than making them worse”.

Globalisation – the open trading system – is fragmenting

Philip Stephens, an associate editor, in the Financial Times: Globalisation – the open trading system – is fragmenting; it needs an enforcer – a hegemon, a concert of powers or global governance arrangements”.

Evidence: the collapse of the Doha, the demise of global free-trade agreements, and the emergence of regional coalitions and deals. The emerging economies are building south-south relationships and the Brics nations are setting up their own financial institutions.

Colin Hines, co-founder of LWM goes further – and deeper. He advocates the rebuilding and rediversifying of economies by limiting the entry of finance, goods and people from other countries, ensuring local provision of goods, finance and services and weaning themselves off export dependence. Depending on the context, ‘local’ goods would come from the nearest source, the region, the nation state or even a regional grouping of nation states – eg oranges from EU/Spain.

Domestic businesses and funding sources would then meet the needs of the majority in society in all countries. The prospect of such increasing economic security for the majority could gain widespread political support ranging from those on the left, the centre and the greens through to small ‘c’ conservatives.

In 2008, just before the economic collapse, as GND convenor, he presented a mechanism which would have enabled the Green New Deal to prosper. ‘Green Quantitative Easing’ would have made every building in the country energy efficient, and built hundreds of thousands of new, affordable and energy-efficient homes. A massive boost would have been given to economic activity, providing jobs on a living wage in every community in the UK, whilst reducing its environmental impact.

Later this month he will be speaking in Italy at a conference of left economists to float the progressive protectionism agenda and criticise the left, centre and greens for their support of open borders, leaving the extreme right in an ever more powerful position.

Relocalisation: an under reported issue in the French elections

 

In the French election, left wing socialist Jean-Luc Melenchon has stressed the need to relocalise Europe’s economy and to do so by limiting imports.

This has brought Melenchon increased votes in a country where 70% of the population favour some form of protection for domestic production from cheaper, lower waged competitors.

Colin guardian picThis French election trend prompts a call for a debate about the need for ‘progressive protectionism’ in the UK and Europe-wide

LWM’s co-founder Colin Hines explains that progressive protectionism rejects the call for open markets and the need to be internationally competitive.

Acceptance of these edicts as inevitable by the three main political parties has consequences:

  • it drives down tax rates,
  • worsens social and environmental conditions
  • kills local jobs
  • and reduces small business opportunities.

Whistling in the dark to keep up the nation’s economic spirits: promising hi tech export-led growth in an era of rising Asian dominance is the last colonial delusion

The alternative is to propose a set of practical measures for protecting and re-diversifying local economies by limiting what goods they let in and what funds they choose to enter or leave the country.

In the process they will wean themselves off of their export dependence. This will allow space for domestic funding and business to meet most of the needs of the majority in society.

Proposing policies that would result in the grounding of manufacturing, money and services here in the UK would enable politicians and activists to call the bluff of relocation-threatening big business and finance, who at present have the whip hand over all politicians who support open markets.

This is the only way to tackle the economic and environmental crises, return local control of the economy to citizens and provide a sense of security and hope for their future. If implemented it could play a crucial role in seeing off the rise of the extreme right, as this invariably flourishes when the sense of insecurity within the majority worsens.

 

Forthcoming book
Forthcoming book

Progressive protectionism can tackle this insecurity far more effectively than any of the policies offered – at present – by parties of any political hue

The money markets would ferociously destabilise the challenge posed to their present dominance of the world economy by introducing progressive protectionism in one country alone. Europe is facing huge threats from the forces of international finance, yet the continent would be a powerful enough bloc to implement a programme of progressive protectionism, particularly if the politically active started to campaign for it.

The time to start the debate is now.

Abridged from the Progressive protectionism website, written by Colin Hines. See another article on the subject here.

.

Rebuilding of local economies and local politics

.

It is fitting, as the last post paid tribute to LWM’s founding member George Morran, that this one takes up a theme related to the work George has undertaken for many years. LWM co-founder Colin Hines  recently wrote in response to Peter Wilby’s advice about creating:

Colin guardian pic“. . . a fairer Britain with a better balance between the returns to capital and labour . . . to build a common alternative to “the free market show” and to consider how the EU, currently a tool of international capital, can be turned into something better”.

Extract

“Site here to sell here” policies in every EU country, allied with “invest here to prosper here” constraints on cross-border money movements, would allow nation states to see off big business’s most potent threat – relocation.

Governments also need to be able to take back control of immigration in order to meet the democratic wishes of their people, to lessen pressure on social provision and to prevent the permanent loss of the brightest and the best from poorer EU countries.

Peter Wilby is right that no one country can protect its inhabitants from the ravages of open borders and that changes have to come at a European level. However, it is unreasonable to expect such courage from politicians alone. The politically active must get out of their issue-specific comfort zones – be they social policy, environmental protection or reducing inequality – and realise that their campaigns are rendered more difficult with open borders.

The protection and rebuilding of local economies and hence the re-establishment of local political control is the goal Europe must demand.

Full text: http://www.theguardian.com/world/2013/dec/12/eu-open-borders-hamper-fairer-uk

If the solution is not a Green New Deal then what is it?

 

Colin Hines, co-founder of Localise West Midlands, sends news of a report advancing a much-needed debate about how to move the UK out of the counterproductive politics of austerity and into the age of the Green New Deal.

GND anniversary cover 13He sees this as a matter of the utmost urgency and thinks that if it isn’t introduced rapidly, we are likely to enter another economic slump, adding:

“A Green New Deal could be implemented now if the political will existed. It calls initially for a £50 billion a year investment programme to boost economic activity, in a way which provides jobs on a living wage in every community in the UK, while reducing our ecological impact”.

The latest Green New Deal Group report published on September 10th proposes funding through the following measures:

  • tackling tax evasion and avoidance;
  • a programme of Green Quantitative Easing (QE), where the Bank of England ‘creates’ tens of billions of pounds to be used in a targeted fashion to fund a Green New Deal, generating jobs and economic activity that also transform the economy for the future. This is very different from any previous round of QE;
  • controls to ensure that banks that were bailed out by the taxpayer also invest in such a programme at low, sustainable rates of interest;
  • encouragement for pension funds and other institutional investors to invest in the Green New Deal;
  • buying out the private finance initiative (PFI) debt using Green QE and redirecting some of the otherwise huge repayments into funding green infrastructure.

This real Green New Deal would create employment, generating wages, salaries, profits and tax revenues – from both the public and private sectors. Tax revenues could then be used eventually to finance the economic deficit and pay down the national debt.

More than that, insulating every home and building in the UK, transforming our transport system for a low carbon future and ensuring maximum efficiency in the use and reuse of raw materials would create jobs across the country.

Investment in renewable energy could be targeted so that it would help to rebalance the economy away from London, while also providing reliable sources of clean energy and enabling the UK to show global leadership on climate change.

Larry Elliott of the Guardian ends his article by addressing the first reaction of many:

“In one sense, the timing could hardly have been worse for the new GND report. The economy is growing again. Memories are short. But ask the following questions. Do you think a recovery that currently requires households to get deeper into debt is for real? If it isn’t, how long before the age-old problems of the UK economy reassert themselves? Are we any closer to grappling with the triple crunch than we were five years ago? If the solution is not a GND then what is it?”

GND summary

An article on the subject by the economics editor of the Guardian may be read here.

 

Compass calls for a National Plan: “The moment demands nothing less”.

.

Compass, an ideas and action based pressure group, is discussing alternatives to the Government’s economic ‘Plan A’, which isn’t working, with over 50,000 members and supporters around the country.

Its original Plan B, one page summary here, includes elements advocated in the last post by LWM’s co-founder Colin Hines: “infrastructure programmes, such as more housing, making every building energy tight, diverse and locally orientated transport systems etc” – see a snapshot of the first section below:

.

compass plan b

.

Plan B was a response to a seminar question posed by MP Jesse Norman, whose book Compassionate Conservatism has been described as “the guide book to Cameronism“: “Where is the left on the economy?” The Observer records:

“Stirred by the chiding of the Tory MP for Hereford and South Herefordshire, Neal Lawson brought together an umbrella group of non-affiliated university-based academics, economists, political thinkers and experts. After six months of work – often conducted in a cafe opposite the TUC building on London’s Great Russell Street – Plan B was formulated”.

A year later, Compass launched its new publication, Plan B+1, which cites the work of Birmingham Energy Savers and can be downloaded here . It is seeking signatures for its petition (text below) which can be seen here:

.

compass petition text

.

Compass calls for a National Plan

“The moment demands nothing less”.

 

 

Face-to-face caring and infrastructural renewal will provide the backbone for a labour-intensive future

colin hines 6A Guardian article by LWM’s co-founder and convenor of the Green New Deal Group, Colin Hines, is summarised here.

The neoliberal export-led growth model, the increasingly discredited single currency and the utterly unchallenged single market are wrecking Europe which is facing a real nightmare: a shrinking full-time job market and hence lack of demand to keep the economy soldiering on.

The EU single market countries must reject the impossible dream of export-led growth and concentrate on their domestic economies. The much lauded “single market” is 20 years old and its emphasis on the free movement of goods, money and people is rarely recognised as being at the heart of the present European crisis.

It allowed German banks to lend to Greeks to import German cars they couldn’t afford, and the national debts that resulted are being dealt with by taking money from pensioners and the less well-off.

Meanwhile, the flow of migration and the inability of countries to control their borders under the single market are increasing tensions across the continent.

It is time for the rest of us to ask the fundamental question: what will all these European countries, newly invigorated with lower social conditions and declining domestic demand, be able to export, and to whom?

An alternative?

Transform the EU into a co-operative grouping of countries that provides a secure future for its people. Cross-border issues like climate change, pollution and crime require intra-European co-operation, but the flow of goods, money and people must be slowed dramatically to enable nations to take back control of their future and protect their citizens.

It’s time for Europe to reject the single market and prioritise the domestic market, ditching austerity in favour of encouraging activity within the member states to rekindle demand, generate jobs and allow an eventual level of taxation to reduce national debt.

Europe must reject the impossible dream of export-led growth and concentrate on domestic-led growth. Face-to-face caring and infrastructural renewal will provide the backbone for a labour-intensive future for most countries. The former can be paid for by the state, particularly once domestic and international tax dodging are tackled.

With some modest state pump priming, most of the funding for infrastructure programmes, such as more housing, making every building energy tight, diverse and locally orientated transport systems etc, can be provided by pension and insurance funds and from personal savings via bonds and ISAs.

The secure returns that can be earned from such investments are just what such funding sources need. The local jobs and business opportunities provided will help to rebuild the tax base and allow, at last, for a sustainable revitalisation of Europe’s economy.

 

Read the whole article here.

 

 

Achieving food security by relocalisation and building up the resilience of our agricultural resources – three voices

At a meeting of Hadlow College’s Rural Focus Group, their Sustainability Champion, Dr Howard Lee, noted that DEFRA is committed to food security in principle but not to food self-sufficiency.

The strategic contradiction is that succeeding governments have preferred to promote the export of agricultural and horticultural commodities.

Coventry University’s Dr Julia Wright recommends building up the resilience of our natural agricultural resource base

In the Fresh Produce Journal she says that the droughts and the floods we have experienced this year have been “exacerbated by the way we manage the hydrological cycle on farms and across landscapes”. Drawing on extensive drylands experience in Australia she advocates setting up appropriate-scale water-storage mechanisms, building more fertile soils with a greater soil-water retention capacity and introducing soil cultivation techniques that enable retention of groundwater. Read more in another article.

The ‘grow local, eat local’ message – Russ Grayson

Some years ago, Russ Grayson, in the Energy Bulletin, reported that the most visible manifestation of ongoing food relocalisation is the growing number of farmers’ markets that now dot our towns and suburbs:

“Farmers’ market organisers have promoted the “eat local” message ever since the markets started in this country, over a decade ago. The food in question is known as either “local” or “regional”. The terms are interchangeable but refer to food produced within relatively close proximity to the towns or cities where it is eaten.

“Eating local has always had the economic incentive of supporting local growers and food processors consequently boosting regional economies. This is one reason that people in rural towns like the idea and encourage farmers’ markets.

“Not all of our food can be produced locally, of course – climate prevents this – and staples such as grains are usually imported from further afield.

“The argument of the food relocalisers is that food that can be produced in a region should be substituted for imports from overseas”

The fact ‘food miles’ don’t always guarantee the lowest energy use has led thoughtful proponents, like local food pioneer Helena Norberg-Hodge, to say that the issue is the transportation of “like foods” that could be grown in the regions into which they are imported – as did another who thinks ‘ahead of her time’ – Caroline Lucas, with LWM’s co-founder Colin Hines, in STOPPING THE GREAT FOOD SWAP – RELOCALISING EUROPE’S FOOD SUPPLY.

Years ago the Telegraph reported research at the University of Essex and City University revealing that buying locally produced food would save the UK £2.1 billion in environmental and congestion costs. The report’s authors, Professor Jules Pretty and Professor Tim Lang, called for supermarkets to put food miles on product labels, so customers can make informed choices. To read more about the impact of internationally traded food moved by sea go to Grayson’s article.

Attempting to move the local food issue away from those relating to climate change, nutrition and good farming

Grayson remembers Australia’s Federal Agriculture Minister,Tony Burke, making “a poor attempt to reframe the local food issue to move it away from the global warming, human nutrition and Australian farming elements that lie at its core”. Local food advocates were also accused of “protectionism”, influencing consumers, so creating “a consumer-driven barrier to trade”.

Developing new markets and increasing farm viability

Russ Grayson concludes: “For farmers within reasonably close proximity to towns and cities, the growing preference for local food represents new markets and farm viability, especially for the smaller farmer and especially for the organic farmer whose sector is the fastest growing. This is true for the Sydney region market gardeners who supply the city with 90% of its fresh vegetables and almost 100% of its Asian vegetables and who, with the associated marketing and distribution sectors of the local food industry, generate an estimated $4.5 billion annually (Sydney Basin Industry Details, Gillespie, P, Mason, David NSW Agriculture, Orange 2003) . . .”#