There are a whole host of ways that a government can take to encourage a shift to a greener economy. The Green Savings Bond, the latest idea from the Westminster Government, is not one of them.
Over the summer UK Chancellor Rishi Sunak announced a plan to direct £15B of funding towards green projects to help decarbonize the UK economy.
To achieve this he has chosen the good old Bond market, but with a wee twist, rather than using the traditional bond market where institutional investors look to hedge their riskier investments, by buying risk-free bonds from the government, he is after the publics’ savings.
Now £15B is not an insubstantial amount to direct towards greening the economy – that’s assuming the appeal ever did get to that amount.
This type of investment would positively impact the work of many projects. You can’t really deny that.
However, it is of course but a drop in the option of what is really needed to decarbonize the economy, never mind deliver all of the other components of a just economic system that isn’t killing the plant.
But should that amount of funding be realised, it would make a difference.
Now, before I get all dizzy by complementing the UK Treasury, it is becoming increasingly difficult to view with any sincerity the UK Government’s approach to the decarbonisation of the UK economy.
Right at the top of the charge sheet is the likely commissioning of the Cambo oil field just of Shetland.
We know that the Chancellor balks at the short-term costs of a net-zero economy. Hence this Green Savings Bond idea.
The Treasury does not prioritise medium and long-term goals and is insanely fixated on the deficit.
As ever, the UK Treasury just sees money being spent, rather than being invested.
Bonds are but smoke and mirrors, the window dressing of a financial system designed to reward those who have surplus wealth to invest.
As the currency issuer, the government can create the money it needs without borrowing any of it.
William Thomson’s detailed explainer of Westminster’s Green Savings Bond
So we are now into the detail of the Green Savings Bond.
Firstly, individuals have to choose to invest £15B of their own savings in decarbonizing the economy.
Then that money (whatever amount it is) will be released into the economy – via the Green Projects chosen by the Government.
Yes, you read this right.
You give your money to the UK Government and then they choose who to give money to. And why wouldn’t you do that? It worked so well for PPE-related contracts didn’t it during the pandemic?
In exchange, you get a guaranteed rate of return; because like all Bonds the Bond is a risk-free investment for those who have the wealth to invest.
So despite this being a consumer or retail Bond, it functions exactly the same as any Bond in the institutional bond market.
Setting the Green Deal aside, because that is what the UK Government has done, is there an alternative for the UK Government to find this £15B for green projects?
Of course, there is and it is a much simpler one.
The Treasury could simply ask the Bank of England to deposit money into the bank accounts of the projects it wants to support. It could deposit £15B. Or £20 billion. Or whatever amount it wants. In short, it could invest what was needed to really make a difference.
Once you understand that the government doesn’t need our money to spend or to invest a whole new world of possibilities opens up.
The sixth IPPC report says this:
“Pathways limiting global warming to 1.5°C with no or limited overshoot would require rapid and far-reaching transitions in energy, land, urban and infrastructure (including transport and buildings), and industrial systems. These systems transitions are unprecedented in terms of scale, but not necessarily in terms of speed, and imply deep emissions reductions in all sectors, a wide portfolio of mitigation options and a significant upscaling of investments in those options.”
You decide if grifting £15B from the public is the way to solve the climate crisis.
And while you think about that, also consider where Scotland and the rest of the UK finds itself right now: leaving the planet-saving decisions to a Conservative government that is more interested in conserving the status quo than it is saving the living world.