Can the World’s Bankers Really Save the Climate?

The Ministry for the Future (TMFTF) should be lauded for reimagining global climate governance. It recognizes what many climate scholars do not: climate change is in large measure, a problem of extreme wealth and wealth inequality. Thus, addressing the climate crisis requires discussing “potential alternatives to the global neoliberal order” (155). Moreover, the Ministry is keenly aware of the shrinking window for action. Addressing climate change is a race against time, rather than a “tragedy of the commons.” Thus, we should be less worried about getting everyone to participate in international agreements, and more worried about acting quickly, since delay will make climate problems harder to solve, and could result in irreversible changes. What follows from these two premises is nothing less than a wholesale reimagining of the global economy, as enacted through coordinated efforts by the world’s biggest central banks. However, the Ministry’s proposed technocratic solutions overlook the messiness of domestic politics, and the huge challenge of constraining powerful anti-climate interests.

In essence, TMFTF trades one technocratic solution for another – bankers instead of climate wonks, converting tons of carbon dioxide into “carbon coins.” Robinson acknowledges this, noting that “all central banks [are] undemocratic technocracies” (291). Indeed, the appeal of the Ministry’s proposal to the central bankers is precisely the extent to which it bypasses the politics of democratic decision-making.

There are three reforms that follow. First, banks will create a new “carbon coin” – essentially a form of green quantitative easing. Carbon coins will be backed by central banks and convertible to other currencies. Thus, not emitting carbon becomes a moneymaking endeavor. The coins will be securitized by long-term bonds with a guaranteed payout, to incentivize capital to “go long” on climate.

Second, blockchain technology will assign digital identification to each carbon coin. Everyone will know how many coins are in circulation and where. Combined with strict regulations, this would prevent currency speculation.

Third, as a result of fully trackable currencies, the use of tax havens to avoid taxes would no longer be possible. As the Ministry’s legal expert notes, “That’s maybe the best thing about blockchain for fiat money—we know where it is. There aren’t any hiding places left. If you do manage to hide it, it isn’t really money anymore. Only money on the books has any real value now” (403). This means that the world’s wealthy would actually pay their fair share of taxes, making tax regimes more progressive. Thus, “if you want to stay rich in the current moneyscape, it’s best to take the haircut and accept your fifty million and walk” (404). Compared to the trillions now estimated to be parked in tax havens, this would be a marked improvement. TMFTF further posits the possibility that a fully digital, trackable currency “could quickly stimulate rapid change in behavior and wealth distribution” (333), though it’s not entirely clear why.

Why would central bankers consent to such an approach? The linchpin of the TMFTF strategy is a threat of greater control over central banks. An International Credit Union, where individuals can trade carbon credits, would be an alternative to private banks. When private banks crash, as TMFTF predicts, they would be absorbed by central banks, but only on condition of more stringent oversight by legislatures. The Ministry thus plots a “double action” which reorganizes control over carbon capital. If plan A doesn’t work, then plan B would also create a credible threat to central banks: The Ministry could simply call upon allies in key governments to expand legislative control over central banks, curtailing their independence and enhancing their accountability.

This strategy stands in stark contrast with the current policy approaches in the Paris Agreement to the UN Framework Convention on Climate Change (UNFCCC): countries pledge to reduce emissions and ratchet up the ambition of those pledges every five years. These “Nationally Determined Contributions” aim to get every country to address climate change, no matter their carbon footprint. Every pledge is viewed as an important contribution to continued international cooperation. However, it is abundantly clear that this approach is failing in our race against the climate clock. Currently, countries’ collective pledges set us on a pathway to between 2 and 4 degrees of warming.

In addition, non-state actors are also invited to take voluntary actions to address climate change through the UNFCCC. The Marrakech Partnership was created to involve non-state actors more directly in the UNFCCC process, promoting cooperation between governments, cities, regions, businesses and investors. Along with 5 countries with net zero legislation, a growing number of corporations are increasingly pledging to go net-zero by 2050, in accordance with the goals set forth in the Paris Agreement.

But net-zero pledges and domestic regulations are constantly butting up against the structural power of those actors who stand to lose the most from decarbonization. These “climate-forcing asset holders” include fossil fuel and mining companies, electric utilities and heavy manufacturers among others. A recent study finds that of the 61% of global emissions and more than half the world’s population are now covered by a net zero pledge. Yet only 20% of these meet basic robustness criteria, such as outlining clear interim targets, publishing a clear plan and using a reporting mechanism.

And for these climate-forcing asset holders, climate policy has become existential – a profound threat to the value, and perhaps even the existence, of their assets. Decarbonization cannot be successful without addressing their obstructionism. The Ministry understands that real progress on decarbonization requires the power of the purse combined with the power of the state. TMFTF should be lauded for emphasizing the critical role of the state as the route to decarbonization.

Though we should not expect cli-fi to provide realistic roadmaps for policy reform, the book falls short in its political imagination of mobilization. Beyond the Children of Kali – the climate vigilantes who target the ultra-wealthy – there is no mass mobilization, no political demand for change from the citizenry. Indeed, any possibility of such mobilization is quickly dismissed: “Demonstrations are parties. People party and go home. Nothing changes” (156).

While the imaginary of the MOF actually gets much closer to the true sources of the climate crisis, it wishes away the obstructionism of the powerful through the magic of a new international banking system. Setting aside the real problems with creating a carbon coin (see current critiques and concerns about the performance of carbon pricing policies), there is little in the way of politics here. In the end, domestic interests will be the central component of any real efforts to meet the goal of the Paris Agreement of limiting warming to 1.5 degrees, and while TMFTF points us in the right direction, it doesn’t dig into the conflicts that continue to slow our race against the climate clock.