Green War Bonds

Some of the most effective – and beautifully executed – British propaganda of the Second World War concerned the selling of war bonds. A little boy and his toy crane were pictured above a caption that read: “Lend to defend his right to be free.” Another had a mother and daughter staring into a rising sun above a line which read: “The Dawn of Victory, worth fighting for – worth saving for.”

Collection points were everywhere and the country was urged to do its patriotic duty and dip into its own savings, however meagre, and lend to the Government. The money was specifically used for the war effort. By 1945 the total amount invested in UK war bonds stood at £1,754 million.

I hesitate to link the war against Nazism with the war against climate change but I believe that now is the time for the Government to consider, with urgency, the issue of bonds for another cause – reducing greenhouse gases in our atmosphere – while at the same time kick-starting the faltering economy.

Hmm, interesting idea. Rather counter-Keynesian of course, this idea that we might kick-start the economy by increasing the savings rate. In fact, according to the musings of the Noble Lord raising the savings rate is exactly what we really don\’t want to be doing at the moment. As in "Aaaargh, no you stupid bastard, anything but that" not want to raise the savings rate.

So how to pay for it, how do we find green investors? The answer we\’ve come up with working alongside the top environmental advisor Tom Burke is modelled on the war bond philosophy. We believe that a series of targeted bonds, with their proceeds ring-fenced for investment in tangible green infrastructure, could capture investors\’ attention whether they be individuals or institutions, such as pension funds looking, as they must, for financial return over many years.

The bonds could be fixed or index linked, offering low but stable rates of return over a long period of time, matching that of the assets into which the funds would be flowing. That is to say we would build things to last. They would have the backing of government and the expected cash flows from the projects themselves. These climate bonds would be a sensible way to finance the needed long-term investment in tangible assets that society should have to improve the quality of our lives.

Anyone remember what happened to those who invested in war bonds? No?

Yes, you at the back there, that\’s right. They got entirely fucked over by later governments.

But there\’s even more of a problem than this. Just where are these profits to pay the interest to come from? The schemes themselves will not be generating profits, that we know. For they are not profitable schemes. Only, and it\’s very much a stretch even then, if we add in "social profits" from the schemes can we even hope to see a profit. And such social profits, by their very nature, do not show up in the cash flows of the schemes. So they\’ll have to be subsidised out of the general tax revenue.

If, just as an example, clean coal costs twice not clean coal and that doubling is not covered by hte cost of carbon credits (as it currently isn\’t) then where is the profit to pay the investors?

Which, of course, leaves investors to be screwed over by later governments again.

 

3 comments on “Green War Bonds

  1. Rather counter-Keynesian of course, this idea that we might kick-start the economy by increasing the savings rate. In fact, according to the musings of the Noble Lord raising the savings rate is exactly what we really don’t want to be doing at the moment. As in “Aaaargh, no you stupid bastard, anything but that” not want to raise the savings rate.

    I’m not so sure. Banks do not have enough cash to lend, hence the shortage of credit for business[1]. Governments are also looking to borrow trillions of $. Where is the money going to come from, if saving is discouraged? Central banks should be raising interest rates, not lowering them.

    [1] Why any long established company should ever have to borrow money is another issue.

  2. Anything that is currently profitable (with or without subsidies) is already getting invested in.

  3. Hasn’t he heard of Venture Capital Trusts such as Ventus which invests in wind farms? UK taxpayers can get 30% tax relief for investing in “green” energy if they really think it is viable.

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