key: cord-1033579-og10gtzi authors: Galvin, Ray title: Yes, there is enough money to decarbonize the economies of high-income countries justly and sustainably date: 2020-08-13 journal: Energy Res Soc Sci DOI: 10.1016/j.erss.2020.101739 sha: 2573cb55f249df9a436b01f1699bd9a82e019edb doc_id: 1033579 cord_uid: og10gtzi This year a number of factors have converged to substantially increase the impetus for a credible, effective programme to radically decarbonize the economies of high-income countries, particularly in the EU but also more broadly, in ways that would reduce economic inequality and are just and sustainable. These include the European Commission’s European Green Deal, Coronavirus Recovery Plan and revamped Hydrogen Strategy; international calls for a green, sustainable and just coronavirus recovery; a global revival of Keynesian supply-side economics; and increasing interest in direct central bank funding of government stimulus programmes. In this essay I offer a first attempt to draw these elements together to suggest what might be a coherent strategy for action, at least for countries with stable, resilient currencies. One of the key elements would be for central banks to finance their governments’ decarbonization programmes directly by buying government bonds and holding them in perpetuity as insurance against misallocation of funds. The losers in such a strategy would be elements in the finance sector which have come to rely on virtually free bailouts and handouts from central banks via quantitative easing programmes. Resistance to the proposed strategy would probably be fierce from these quarters. In this "Perspectives" paper I argue that there is no shortage of money for high-income countries to fund deep decarbonization of their energy and other sectors over the next few decades and to do so in ways that are sustainable, reduce inequalities, make for a more just society, and have positive long-run effects on productivity. I suggest that fundamental misunderstandings about the nature of money, where it comes from and how it is generated are inhibiting bold action in this regard. I also suggest these misunderstandings benefit a non-productive financial sector and lead to misallocation of public funds into their hands. I further argue that just this yearpartly due to the coronavirus crisis but not entirelya unique set of factors have come together, especially for EU countries, to provide an opportunity to shift gear and embark on a bold programme of decarbonization. The bones of my argument are: that countries' central banks can create as much money as they want to, out of thin air, without cost; that since the Global Financial Crisis of 2008, central banks have indeed created trillions of dollars (and other currencies) but have mostly passed it on to the non-productive financial sector which has thereby become substantially richer at the expense of the productive economy; that this pattern has re-emerged in central bank actions during the coronavirus crisis; that it does not have to continue, but instead central banks can put their newly-created billions into the hands of ministries of finance for governments to spend on worthy projects; that government spending on green, just and sustainable projects would likely boost the productive economy long-term, on balance, rather than dampen it; that the European Commission, especially in initiatives this year, is setting an example of developing a framework for bold action to decarbonize European economies via green, just and sustainable projects; that comparable frameworks are being developed by various actors in other countries, such as the US Green New Deal resolution of Congresswoman Ocasio-Cortez and Senator Markey; and that powerful, wealthy elements in the financial sector are likely to forcefully resist any move by central banks to direct their money towards governments rather than the financial sector. In Section 2 I summarize some basic things about money creation. In Section 3 I give a brief outline of central banks' money creation via "quantitative easing" over the past decade and its implications for government spending on decarbonization. In Section 4 I look at ways quantitative easing could provide more direct investment for a green, just, sustainable future. In Section 5 I add details to this and also outline the European Commission's recent initiatives to set a framework for a bold and comprehensive decarbonization programme for the EU. In Section 6 I draw on a recent global survey to highlight the positive economic benefits of massive investment in just decarbonization, and in Section 7 I conclude. In order to grasp how readily the world can afford to decarbonize, we need to gain a critical understanding of what money is. All money in the modern world is "fiat" money [1, 2, 3] : it is created out of nothing by command of a competent authority and can be dissolved back into nothing by the authority that created it 1 . Money should not be seen as a material commodity like gold or wheat that has to be obtained from an outside source. It can best be understood as a specific type of social relation [4, 5] , at one and the same time an entitlement and an obligation. The person creating the money does so by entering into an obligation to recompense the person to whom the money is paid, for the value of the money created. Meanwhile the person receiving the money gains an entitlement to be recompensed for this amount of value. The money retains its value as long as the obligation can be enforced, including physically if necessary. The "value" of the money is of course self-referential: issuing a $10 note to someone is equivalent to promising to pay them $10, but $10 is nothing other than a $10 note. However, money gains substance when the issuer is a government, because a $10 note issued by a government is the government's promise to accept that note in payment for $10 worth of taxes, therefore it is tradable throughout the economy [2] . There is a hierarchy of money, from "high-powered" money [6, 7] at the top end, to what may be called "junk money" at the bottom end. High-powered money is the money a government will accept as payment of taxes, fees and fines [2] . It is created by a country's central bank (sometimes called the "Reserve Bank"; and in the US the "Federal Reserve" or the "Fed") in consultation with the government's ministry of finance (often called the "Treasury"). This money is "high-powered" because it has the strongest backing available in the world, a sovereign government. The total amount of high-powered money in circulation usually equates to the portion of the money supply designated as "M1". Lower-powered forms of money include bank loans, which banks create out of nothing [8] , tradeable futures contracts, personal IOUs, shop-store vouchers, and an array of reasonably secure and not-so-secure financial instruments [9, 10] . Different combinations of the more secure forms of money are added to M1 to form what is designated as "M2", and other less secure forms are added to form "M3". I am only concerned in this paper with high-powered money, and in particular that which central banks create. For a fuller discussion of lower-powered forms of money see [5] and the Supplemental material to [11] . A stream of scholarship that looks at bank money creation in depth is "endogenous money theory" [12] . It might sound fanciful to say that money is simply created out of nothing. It goes against the grain of folklore ("money doesn't grow on trees"), while economics textbooks tend to avoid the issue [2, 10, 13, 14] . However, the assertion that money is created out of nothing is not only a compelling theory, but also a factual description of what actually happens in the 21st century. As a formal theory it is usually traced to the German economist Georg Friedrich Knapp's 1905 work The State Theory of Money, where it is called "chartalism". It was further developed in British economist John Maynard Keynes' writings and influence on monetary policy during the Great Depression and the Second World War [15, 16] . Recently a large literature has explored it further. In one stream of scholarship it is called "modern money theory" (e.g. [2, 3, 17, 18, 19, 20] ). For readers interested in a wider view of theories of money and how chartalism and fiat money relate to human and social interactions, Ingham's works are a must [4, 9, 19, 14] . Regardless of one's view of chartalism, Keynesianism and modern money theory, we see high-powered money being created right before our eyes regularly. For example, central banks' responses to the Global Financial Crisis of 2008 and the ongoing coronavirus crisis provide incontrovertible empirical evidence that unlimited amounts of money can be and are regularly created out of nothing. The European Central Bank, which serves the 19 Eurozone countries, created €2,535 billion between October 2014 and December 2018 (over and above its regular topping up of the money supply) to attempt to stabilize Eurozone economies in the wake of the Global Financial Crisis, in its "Asset Purchase Programmes". This was an average of €1.633 billion of newly created money per day for 1,552 days [21] . In concert with other central banks around the world it called this "quantitative easing". The money was created by being credited to the reserve accounts of the commercial banks that held the accounts of the corporations and other bodies whose financial assets it was buying. The commercial banks simultaneously credited these bodies' accounts with the same amounts of their own bank-created (lower-powered) money. Then on 18 March 2020 the European Central Bank began another round of quantitative easing in response to weakening economies due to the coronavirus crisis, in its "Pandemic Emergency Purchasing Programme". It initially planned €750 billion worth of purchases over the next two years but increased this to €1,350 billion on 04 June [22] . To glimpse the dimensions of this, the total amount of high-powered euro money in circulation (M1 of the Eurozone) in December 2019 was €9,500 billion. Hence the European Central bank's current round of quantitative easing will increase the Eurozone money supply by 14% within a two-year timeframe. In comparison, the Fed (the US Central Bank) created $2,290 billion via quantitative easing between 2008 and 2014. Further money creation brought the US's M1 to $5,044 billion by May 2020 [23] . Similarly, the central banks of other countries such as Australia, New Zealand, Canada and the UK created very large amounts of money out of nothing in response to the Global Financial Crisis and are doing so again in response to the coronavirus crisis. This has contributed to increases in the money supply M1 of these countries far out of proportion to the needs of the productive economy as measured by Gross National Product (GDP). For example, in the Eurozone, M1 increased by 564% from 1996 to 2019, but GDPthe sum total of economic activity in the economyincreased only by 114% [24] . The European Central Bank was creating money five times as fast as the productive economy was demanding it. Most of this money was ending up in the financial markets. It is therefore a simple, empirically verifiable fact that central banks create money out of nothing, and in fact, to my knowledge, no economist denies this. One could suggest that one of the biggest cons of modern times is the prevailing discourse that governments of currencysovereign countries have to get money from somewhere else before they can spend itthat money is exogenous to governments rather than endogenous. Of course, for much of recorded history there was always the problem of how to verify that money was genuine. Issuing gold coin as money partly solved this, but it also tied money creation to gold acquisition, through mining, piracy and theft from other people such as South Americans [4, 10, 13] . But since US President Nixon took the US off the gold standard in 1971, and because government-issued documents and electronic transactions have become very secure, there are no technical restrictions on how much money governments can make out of nothingand it is genuine money, not "as good as gold" but even better. Money creation was also common among western countries in the 1930 s-1940 s, largely due to Keynes' influence [25] . But in the 21st 1 The word "fiat" in this context comes from the Latin Vulgate translation of the Hebrew Scriptures, Genesis 1:3, "Dixitque Deus fiat lux et facta est lux" (And God said 'Let there be light', and there was light). It is as if a central bank president says: "Fiat pecunia!" (Let there be money!)and there is money. century central banks only began to act on the unlimited scope of their money creation powers in 2008, when the Global Financial Crisis threatened to derail their countries' economies. This episode in the history of banking is highly relevant to what tends to inhibit us from financing a green recovery from the coronavirus pandemic, because the practices and discourse that developed in that episode have tended to drive central bank approaches and discourse since then. The core of the crisis in 2008 was that the financial sector was in danger of collapse. The "financial sector" is a set of structures, practices and activities, which exists alongside the productive economy and that intersects with it at many points but is only loosely part of it. The productive economy consists of things like the building industry, education, the military 2 , governance, transport, electricity production, clothing factories, ICT manufacturing and sales, etc. The total amount of economic activity in a country's productive sector is its gross national product (GDP). We noted above that the Eurozone's GDP grew by 114% in 1996-2019 but that M1 grew five times as fast. This is largely because of rampant growth of the financial sector and the demands it makes on central banks for money creation. The bloating of the financial sector compared to the productive economy is a global phenomenon that has been happening since the liberalization of economies in the 1970 s and 1980 s. From 1980 to 2009 the number of people employed in the financial sector in 21 highincome countries 3 increased, on average, 3.33 times as fast as the number employed in these countries' productive sectors [26] . In that period and beyond, the income share of these countries' financial sectors, compared to incomes overall, also increased more or less steadily [27] . A raft of studies show that this excessive growth of the financial sector has a negative effect on GDP, i.e. on productivity, and that it leads to economic inequality (see reviews in [28, 29] ). As is well known, the Global Financial Crisis of 2008 and subsequent years was triggered by a collapse in value of particular types of financial instrument that were based on high-interest, precariously lowsecurity mortgages which were packaged together with more secure debt and sold on to investors as composite and untransparent financial instruments. These failures had a cascading effect that threatened a collapse of the banking system, as many bank customers defaulted on their mortgages and other loans. Banks therefore drastically reduced their lending to solvent households and productive businesses which rely on everyday rollover loans to operate. Good businesses started to fail, and otherwise solvent households defaulted on mortgage and other debt. The effect was that by June 2009 in the US, GDP (the value of the productive economy) had fallen by about 4.3%, while the value of financial assets had fallen by 17.3% [30, 31] , with comparable falls in other high-income countries [32] . Central bankers in the US, UK and other currency-sovereign countries like Australia, Canada and New Zealandwho knew full well that they could create as much money as they likedasked themselves and their countries' finance ministries, how they could save these businesses and households. They reasoned that to do so they should save the financial sector, in the hope that it would save the banks, in the hope that the banks would save the businesses and households. As the Bank of England noted, this strategy (quantitative easing) "works by making it cheaper for households and businesses to borrow moneyencouraging spending" [33] . The European Central Bank began its programme of quantitative easing some years later, delayed by the fiscal conservatism of powerful Eurozone members such as Germany [34, 35] . The success or otherwise of this approach has been the subject of much debate (e.g. [36, 37] ). Some have questioned why it was seen as morally unproblematic to put hundreds of billions of dollars, euros, pounds, etc. into the hands of financiers but morally questionable to put hundreds of millions into the hands of struggling households and businesses [38, 39, 40] . However, in 2020 the constellation shifted, with a different type of economic downturn in the coronavirus crisis. Here the trigger was not a failure in the financial system but a slump in real productive economic activity caused by lockdowns and people's (justified) fears of mixing with others in shops, theatres, the workplace etc. The wobbliness of financial markets during the crisis has been essentially a consequence of this, not a cause [41] . Many investors and others who play the financial markets began to withdraw large swathes of money from shares, stock options, credit default swaps, futures and other sophisticated financial instruments due to fear that the real economy underlying some of these would collapse. One would think a sensible way to address this kind of crisis would be to distribute the bulk of the rescue money directly to businesses and households, since their plight is the cause of the whole system's slump. To a relatively small extent governments have done this, with furlough payments for workers, etc., but the big money has gone to the financial markets, just as in the Global Financial Crisis [21, 22] . Once again, the rationale is that if the financial markets are supported, the banks, which are intricately interwoven with this sector, will have their balance sheets boosted and will more liberally lend to businesses and households [42] . As the European Central Bank expressed it, their rationale is "to counter the serious risks to the monetary policy transmission mechanism and the outlook for the euro area posed by the outbreak and escalating diffusion of the coronavirus, COVID-19" [22] (italics added by author). The result has been that, despite an initial plunge, the financial sector has come back strongly, while the real productive economy has continued to stagnate. The Standard and Poor's (US) share-market index, for example, at first fell from 3,373 on 20 February 2020 to a low of 2,236 on 23 March, but after the new US quantitative easing programme began it steadily rose again to 3,232 on 08 June and has hovered at about that level since then [43] . This is a net fall of only 4.2%. The German DAX share-market followed a similar trajectory, falling from its peak of 13,783 on 19 February to a low of 8,442 on 18 March and rising again to reach 12,845 by 05 June, a net fall of 6.8%. The UK FTSE index has followed almost the same trajectory. Comparing this with the productive economy, in the first quarter of 2020 in most OECD countries GDP was down by around 20%, and for the full 2020 year the OECD is forecasting falls of 11.4%-14.1% for France, 11.5%-14.0% for the UK, 9.1%-11.5% for the Eurozone and 7.3%-8.5% for the US [44] . Although it is problematic to compare a sixmonth change in share-market values with a 12-month forecast for the productive economy, it seems clear that the productive economy has not been rescued to anything like the same degree as the financial sector. The quantitative easing during the corona crisis has clearly been more beneficial to the financial sector than to the productive sector, even though the overtly stated aim of this round of quantitative easing has been to benefit the productive sector. Whatever the motives or pressures on central banks to rescue the financial sector rather than the productive sector, it seems fair to say that aiming hundreds of billions at the financial sector, when the productive sector is the primary area under siege, is at best a financially inefficient approach, at worst a catastrophic misallocation of public money. There is an alternative approach, namely for a central bank to fund its ministry of finance. The ministry can then direct the money where it is most needed in the productive economy, thereby bypassing the 2 Some would argue that the military is not a "productive" sector of the economy. However, in New Zealand, for example, the military is used almost exclusively for United Nations peace-keeping operations and is currently enforcing the quarantines of new arrivals into the country. 3 Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Korea, the Netherlands, New Zealand, Norway, Portugal, Sweden, Spain, Switzerland, UK and US. financial sector altogether. A straightforward way to do this would be for governments to issue bonds and the central bank to buy them and hold them in perpetuity [45] . This effectively gives the newly created money to the government rather than the financial sector. Since the central bank is owned by the government, the government is then only in debt to itself. This kind of approach would not only be a sensible response to the coronavirus crisis, it is precisely what would be needed to finance a massive, comprehensive decarbonization programme. There are of course inherent dangers in governments having access to unlimited money to spend, such as inflation and corruption, and there would need to be strict and effective controls and guarantees that the money would be spent on a properly worked out green, just, sustainable recovery plan [45] , a point I develop below. The idea of the central bank creating money for the government to spend is not an inherently controversial approach, as the UK's central bank, the Bank of England, did precisely that in 2009-2010 by purchasing over £100 billion of UK government bonds. The Bank of England was thereby effectively financing the UK government for free [46] (though it also bought swathes of financial assets on the open market). New Zealand is currently doing a watered-down version of this type of government funding. The central bank (the Reserve Bank of New Zealand) is currently creating $NZ60 billion and using it to buy New Zealand Government bonds and local government bonds ($NZ30 billion worth each) "on the secondary market", i.e. bonds the government and municipalities previously issued and which are currently held by other bodies such as commercial banks [47] . The orthodox side of this is that it puts more liquidity (hard cash) into the banking system. The less orthodox side is that the Reserve Bank of New Zealand can hold these government bonds in perpetuity or write them off, thereby effectively giving free money to central and local government. The arithmetic effect on government coffers would be the same if the Reserve Bank were to buy government bonds directly from the government, bypassing the financial markets altogether. In this context the relationship between the Ministry of Finance and the Reserve Bank of New Zealand is instructive. This was set out in an act of Parliament called the Public Finance Act 1989, but recently a memorandum of understanding was added which sets out the process by which the Bank and the Ministry communicate and agree to an asset purchase programme, such as the $NZ60 billion programme outlined above. The memorandum explicitly states that the Bank's economic objectives are "monetary policy's best contribution to the prosperity and well-being of New Zealanders, and to a sustainable and productive economy" [48] . There is nothing here about the economic health of the financial system itself. Instead the emphasis is on wellbeing and prosperity for New Zealanders together with a "sustainable" and "productive" economy. An alternative approach, which many countries are currently pursuing, is debt funding, where governments borrow money from the private sector by issuing bonds on the financial markets [45, 49, 50, 51] . The reasoning is that interest rates on government debt are currently very low. The US Congressional Budget Office, for example, expects interest rates on US government debt to remain at or below 1% until at least 2021 [52] . Leading economist Paul Krugman argues that borrowing therefore makes good economic sense, because if governments invest the money in the productive economy and this leads to GDP growth above the interest rate, this is a positive long-term investment [53] . Others such as Kenneth Rogoff warn, however, that we cannot rule out the possibility of interest rates going high in the medium-long term and saddling governments with increasing bills [54] . For example, the European Commission is currently borrowing €750 billion on the financial markets to part-finance its Corona Recovery Programme but not planning to pay the loans back until 2028-2058 [55] . A greater problem with this approach is that it feeds the financial shadow-economy. Because government debt is the most secure type of financial instrument available, it effectively undergirds more flaky financial markets and gives them a solid base to float their more exotic instruments on: their credit default swaps, futures contracts, junk bonds, etc. This "misallocation of funds" [51] to the financial markets enables that sector to continually expand, outpacing the productive economy, drawing financial resources away from productive investment, inflating housing markets and giving excessive power to corporations due to their huge and burgeoning fortunes [5] . It is one of the reasons the money supply has increased at 3-5 times the rate of the real productive economy over the past few decades. But the main problem with this approach for currency-sovereign countries like the UK, the US, Australia and Canada is that it ignores the most obvious, straightforward and safe way to get money: the central bank can create the money and lend it in perpetuity to the ministry of finance. For currency-sovereign countries such as the US, the UK, Canada, New Zealand, India, Australia and many others a way to proceed can be as follows (there are variations for the Eurozone, on which see below): (a) The government in consultation with stakeholders decides what needs to be done to decarbonise the economy in such a way that poverty is simultaneously eliminated, the wellbeing of citizens and residents is enhanced, and social and environmental sustainability are prioritised. (b) The resulted programme is costed and enshrined in legislation. (c) The government requests its central bank to supply the needed amounts of money in regular payment steps. Parliament might first need to modify the legislation that sets down the relationship between the central bank and the ministry of finance, to enable this to happen. (d) The central bank creates the money as needed (e.g. monthly) by crediting it to the ministry of finance's account at the central bank. The central bank demands government bonds in return, and these are held by the central bank in perpetuity as a form of surety that the government will use the money only for the agreed programme. (e) The government spends the money strictly according to the agreed programme. If it deviates from this significantly, the central bank has the legal option of ceasing to continue to fund the programme and/or starting to sell the bonds which were to be held in perpetuity, thereby putting the government in debt for the money it has misallocated. As this process is enshrined in legislation it would be subject to judicial review 4 . (f) The government monitors inflation throughout the programme. If inflation rises above an agreed threshold, the government withdraws money from the economy by (i) increasing the top tax rate on the highest earners and/or instituting a wealth tax on the largest fortunes; and/or (ii) asking the central bank to sell some of the government debt which it holds in perpetuity, to private citizens and residents only (not to banks, financiers or corporations). In both cases the incoming money is dissolved into nothing. It is important to note that governments do not need to raise taxes to get money, since their central banks can create it for them. Instead, one of the functions of taxation is to dampen inflation [11, 56] . For the Eurozone the procedure would be different, since these 19 countries have their own ministries of finance but only quasi-central banks. The European Central Bank is the one institution that can create 4 Hence I would definitely not support the position of many modern money theory advocates that central banks should be integrated more closely into the ministry of finance (see discussion in [74] ). It is important that a country's money-creating institution should has significant independence from everyday government. Energy Research & Social Science 70 (2020) 101739 and dissolve euros for them. A source of endless and ongoing controversy is that the Eurozone ministries of finance cannot therefore request a central bank to create euros for them when they calculate that they need extra funds [57, 58] . They can however issue bonds to borrow money on the financial markets, but only up to a certain limit. For step (a) above, a way forward would be for the Eurozone countries to first agree on a long-term strategy for decarbonizing justly and sustainably. They are already a step ahead in that the European Commission, which links to all 19 Eurozone countries plus the other 8 EU member states, announced its "European Green Deal" on 11 December 2019 [59] and began to fill out the details in a series of press releases and papers as from 11 January 2020 [55, 60, 61] . It expanded on this in its Coronavirus Recovery Plan on 27 May 2020 and in subsequent documents [62, 63, 64, 65] . It also proposed legislation for a greatly boosted version of the European Hydrogen Strategy [66] which had been gathering impetus over the past year [67, 68] . The hydrogen strategy is an essential link in its plan for decarbonizing the EU countries because there is now widespread support among key stakeholders, scientists and technology actors for moving ahead rapidly with the development of "green" hydrogen infrastructure as a basis for decarbonizing the electricity, transport, heating and chemicals sectors. It is not an exaggeration to say that this combination of packages represents a major breakthrough in the social and political momentum to move ahead into technically credible and feasible decarbonization of the productive economy in ways that are just and sustainable. An important criticism of the EU programme, however, it that the money allocated towards it is far from adequate [69] . Because the European Commission is not a sovereign government and has no facilities for money creation, it is relying on (a) a €7.5 billion increase in funding from EU member states; (b) a loan from the financial markets of €750 billion; (c) shifting of monies from existing EU funds to others; and (d) the private and governance sectors to invest their own monies in designated green projects with incentives and seed funding from the European Commission. A problem that will need to be addressed here is what is often called the "transition financing gap", whereby commercial banks are often reluctant to lend to decarbonization projects because they are less sure of the stability of framework conditions, due to possible swings in government policy, than they are of the stability of more traditional ventures [70, 71] . The uncertainties of indirect financing approaches such as these give weight to the view that direct government investment in decarbonization projects, funded by the central bank with newly created money, are by far the surest way to drive decarbonization. How much is it likely to cost, then, to decarbonize the EU's economies? In the US context, studies indicate that the US Green New Deal as proposed by Congresswoman Ocasio-Cortez and Senator Markey [72] would cost about $16 trillion over the next 15 years [11, 56] . Based on this and Storm's [69] critique of the European Green Deal and the population difference between the US and the EU, I would very roughly estimate that the decarbonization program proposed by the European Commission could cost about €1.3 trillion per year over 15 years. This is about five times the €260 billion allocated in the European Green Deal and several times as high as the total allocation for this and the Coronavirus Recovery Plan together, depending on when the €750 billion in loans will be repaid. The obvious solution would be for the European Central Bank to be the main funding source by creating money, at least for the 19 Eurozone members. Alternatively, a solution long advocated by leading French economist Thomas Piketty and others would be for the Eurozone to reform itself into something closer to a federal state, with a joint ministry of finance [57, 58] , though it would not be wise to make decarbonization depended on this ever happening. There are already successful moves to apportion some of the European Central Bank's own created money to member states, despite initial opposition from Austria, the Netherlands and to some extent Germany [73] . It is institutionally not so easy for the Eurozone but much more straightforward for currency-sovereign countries like the US, the UK, Australia, Canada, New Zealand and many others, plus of course the eight EU countries who do not use the euro and have their own central banks and sovereign currencies. Although the focus in this paper is on high-income countries with resilient currencies, the question arises as to whether such an approach could support or be used by developing countries and/or countries with less resilient currencies and thereby accelerate the achievement of sustainable development goals. Although such a discussion is beyond the scope of this paper, it is worth mentioning that work is already being done in this direction. Lagoarde-Segot [12] , for example, maps in some detail how an "endogenous money" approach could function here. A key emphasis is moving from loan moneys, with the huge risks these can bring for developing countries, to endogenous moneymoney created specifically for the investment at hand. Decarbonizing modern economies involves a raft of major projects in all major sectors, for example: • Electricity: transitioning to renewable electricity generation and upgrading the grid to cope with fluctuating renewables like wind and solar • Transport: shifting from fossil-based to green fuels like green hydrogen and green methanol, transitioning to electric vehicles and constructing a charging network • Mass thermal retrofitting of existing buildings to very high thermal standards • Agriculture: using green fuels in agricultural machinery, transitioning from meat to vegetable-based protein • Chemicals industry: transitioning to green hydrogen as a basic fuel source, developing catalysation for making liquid fuels from hydrogen These are all extremely ambitious if we are to fully decarbonize within the next 30 years; even more if our deadline is 2035. To gauge current expert opinion on likely economic implications of undertakings such as these, Hepburn et al. [45] recently surveyed 231 central bank officials, finance ministry officials, development bank officials and other economic experts from G20 countries, on how they rated the relative performance of 25 major fiscal recovery "archetypes" (i.e. funding actions that governments have undertaken for specific sectors and subsectors of the economy) across four dimensions: speed of implementation, long-run macroeconomic effect, climate impact potential, and overall desirability. The 25 "archetypes" included buildings upgrades, clean energy infrastructure, airline bailouts and worker retraining (see full list in footnote 5 ). The respondents had experience of quantitative easing and other forms of government or central bank-led bailouts and fiscal stimulus packages. From the respondents' replies the authors identified five policies "with high potential on both economic multiplier and climate impact 5 The complete list is: Temporary waiver of interest payments, Assisted bankruptcy, Liquidity support for large corporations, Liquidity support for households, startups and SMEs, Airline bailouts, Bailouts of not for profits, education, research and health institutions, Reduction in VAT, other goods and services taxes, Income tax cuts, Business tax deferrals, Business tax relief for strategic and structural adjustments, Direct provision of basic needs, Education investment, Healthcare investment, Worker retraining, Buildings upgrades (energy efficiency), Targeted direct cash transfers or temporary wage increases, Rural support policies, Traditional transport infrastructure investment, Projectbased local infrastructure grants, Connectivity infrastructure investment, Clean energy infrastructure investment, Green spaces and natural infrastructure investment, Disaster preparedness, capacity building, General R&D spending, Clean R&D spending. metrics: clean physical infrastructure, building efficiency retrofits, investment in education and training, natural capital investment, and clean R&D" (ibid: 3). They did this by combining their respondents' assessments of the long-run macroeconomic effects of each archetype; its potential climate impact; and the speed with which it could be implemented. Archetypes which scored high in both climate change mitigation impact and positive long-run macroeconomic effects were: clean energy infrastructure investment; clean and general R&D spending; connectivity infrastructure investment (e.g. E-car charging networks; 5G broadband networks); educational investment; healthcare investment; and worker retraining. Building energy efficiency upgrades and green spaces and natural infrastructure investment scored very high in climate change mitigation impact and modestly high in positive long-run macroeconomic effects. Direct provision of basic needs, and targeted direct cash transfers and temporary wage increases scored high on positive long-run macroeconomic effects but neutral on climate impacts, while liquidity support for households, start-ups and small-tomedium enterprises scored even higher on macroeconomic effects. Airline bailouts scored extremely negative on climate impacts and extremely low on positive long-run macroeconomic effects. Interestingly, liquidity support for large corporationswhich verges on propping up the financial sectorscored negative on climate impacts and low on long-run economic benefits. The authors also checked respondents' answers against their professions, which included finance and treasury ministry officials; G20 central bank officials; global development bank officials; and global leading academics. The differences were not particularly marked, though central bank officials perceived airline bailouts a little less negatively than others and were more positive about the long-run macroeconomic benefits of bailing out large corporations. This could partly explain why central banks so readily aim money at the financial sector while others criticize this approach. It is important to point out that "long-run macroeconomic effect" here means the long-term money value multiplier effect of a government spending action. When a government spends on a project, such as building a new bridge or creating jobs in the health service, this can result in GDP increasing by more than the amount the government spends. Hepburn and colleagues found that investment in green infrastructure developments often had multiplier effects of 2.5 to 3, meaning that each dollar spent on these brings a $2.50-$3.00 gain to the economy. This was more or less confirmed by the respondents in the survey. The value of this survey is that it taps into the accumulated knowledge of people who have been at the forefront of government-led investment in the productive sector as well as quantitative easing over the past decade, who have gathered statistics of this investment's effects and analysed and interpreted them. It gives confidence that the kinds of government investment that will be required to bring about a decarbonized, just and sustainable society are on balance positive for the economy. They boost the economy rather than being a drag on it. Further, because there is overall a strong macroeconomic money multiplier effect for climate friendly and socially progressive investment, this would put downward pressure on inflation. Each dollar spent results in more goods and services available, so we do not get the inflationary effects of more and more money chasing the same amount of goods and services. Of course, some of the needed projects have low multiplier effects and some could be inflationary, but overall we are not looking at a dangerously inflationary undertaking. The elements discussed above combine to provide an economic rationale for a just, sustainable, decarbonized economy. To begin with, the US government would need to spend some $16 trillion over the next 15 years, $1.07 trillion per year, to achieve this, equivalent to about 24% of the 2019 US Federal budget or 5% of GDP. The EU might need to spend €1.32 per year over 15 years, equivalent to about 7.8% of its GDP. The figure of 5-8% of GDP per year could be a useful rule-of-thumb for high-income countries but it will vary depending on their current progress in decarbonization and economic wellbeing, especially among their poorest people. Secondly, there is more or less a consensus among finance ministry and central bank officials, together with development bankers and leading academics in the field, that government investments in climatepositive, sustainable and socially just projects and mega-projects mostly have positive long-run macroeconomic effects: they build up the economy rather than dragging it down. By comparison, giving money to airlines and large corporations is bad for the climate and not as good for the economy. Thirdly, there is plenty of money available for such an undertaking. Governments do not have to borrow it from the private sector, thereby putting themselves deeper and deeper in debt to private and corporate financiers at the risk of future interest rate hikes and payback periods well into the future. Their central banks can make the required money out of thin air (as they do every day for other purposes) and lend it to their ministries of finance in perpetuity, with strict legislative caveats to protect against misuse, misallocation and corruption. Fourthly, if this approach leads to inflation, governments can increase the top tax rate on the highest earners, since it is today at historically low levels in almost all high-income countries. If that is not sufficient, there are the options of a wealth tax on the largest fortunes, plus government bonds issued to private citizens and residents, to claw back money and dampen spending. Note, however, that these taxes and bonds would not be implemented "to raise revenue", since currencysovereign governments have unlimited revenue at their disposal. Carbon taxes can have the double benefit of dampening inflation while disincentivizing climate-damaging activities, but these would have to be used cautiously because of their negative effects on low-income households [75] . Fifthly, there is currently renewed impetus for a serious, ambitious decarbonization programme, partly due to the European Commission's new initiatives, partly due to widespread calls for a green, just recovery from the coronavirus crisis, and probably also due to a lingering effect of recent movements such as Fridays for Future. These elements represent a confluence of factors which could at last lead to a credible and genuine decarbonizing of some of the world's leading economies. Finally, we cannot expect such a project to go forward without a fight. Financial markets have long benefited from free or almost free trillions of dollars that central banks have showered them with and are currently doing so again. Many financial market actors have enormous power due to their wealth and networking with banks and policymakers [76, 77] . Similar can be said about fossil fuel-based industries [40] . Aside from their lobbying power and influence, one of their most potent instruments is control of public discourse. As long as they can keep people thinking that money doesn't grow on trees, that free markets are the gospel truth, and that the only route to save the productive economy is to hyper-fund financial markets, decarbonizing is highly unlikely to happen. These are all untruths, and we need to confront them and dissolve them with sound and solid argument. 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