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Daniel Rossetto

Jul 4, 2014
09:02

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Dear crcsolutions.org, Thank you for your entry in the global plan contest! Please note that — unlike other Climate CoLab contests -- two central elements of this global contest is for authors to (1) link together proposals from other contests into an integrated plan for the world as a whole, and (2) complete the climate model for their proposal’s impact on climate change and our economic systems. Please revise your proposal to incorporate these two elements, or else your proposal is not likely to be rated highly in this contest. If you wish to submit an idea to the Climate CoLab without including other proposals and how they fit together into a larger vision, we recommend moving your proposal to another contest. Kind regards, Daniel

Gary Horvitz

Jul 14, 2014
11:35

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Delton, I appreciate your notice that you are linking to our proposal in the Carbon Pricing group. It might be interesting to explore the mechanics and possible synergies between the two. I did look at your very intriguing proposal in the Carbon Price group more than a month ago and left a comment/question that was never answered: "Just looked at your proposal. Very interesting. I'm not an economist, so perhaps you could educate me about a question I have. You are not entirely clear about what determines the price of your currency. You determine its intrinsic value in terms of carbon emission saved and the object of the whole enterprise is to create more currency. Intuitively I would guess that the more there is of something, the less its value. But since the marginal cost of emission reduction rises, then the value of marginal credits would become greater, yes? Then the accumulation of credits becomes more difficult. Who determines the value of a credit? Similarly, if I am understanding you properly, someone who wishes to accumulate credits might undertake reforestation, calculating the corresponding carbon sequestration added and thereby qualifying to 'buy' credits. So the higher the value of credits, the greater the incentive to perform this option. But on the flip side, how is the profit motive of someone engaged in DE-forestation overridden? (Indonesia, Brazil) What if they don't care about credits at all? They are not putting carbon into the atmosphere--unless they're burning the forest. Where's the penalty?" I'm still curious. Gary

Gary Horvitz

Jul 15, 2014
12:34

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Delton, it appears that you abandoned your original post in the Carbon Pricing group and have more fully developed the idea here. I intend to digest this in the next couple of days. Looks impressive.

Delton Chen

Jul 15, 2014
04:59

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Hi Gary, thanks for commenting. Sorry if I didn't answer your question previously. I must have missed something... I am answering your questions here: A.1 What will determine the price of 4C currency? This is not yet proven, of course, however my assumption is that the price would rise with strong upward bias for 50 to 100+ years because G20 governments will dominate the market with their strong buying bias (swapping out old reserve currencies for this new currency). The 4C system would be established by G20 with this as the intention and the design. So Global 4C will not exist without their approval of it and need for it. I would not attempt launching Global 4C without government endorsement. Global 4C is clearly intended as an international governmental tool. Of course this thinking is extraordinary, however I take this view because it is consistent with the fundamentals of the economic system and human nature. The target 4C prices will be set by climate science to avoid dangerous climate change - that is needed for 'survival'. So why not just use the carbon tax? Putting aside technical details, governments do not work in isolation from individuals and powerful groups, and many of these are biased towards (economic) growth (for self interest). It is this bias that creates political conflict with carbon taxes. The national acceptance of carbon taxes (e.g. Finland in 1990) represents to some extent a level of civility & ability to change priorities. So the 4C circumvents some fundamental causes of internal and external conflict for government - especially democratic style governments that change policies every 3-4 years. If the mechanics of Global 4C are understood (i.e. governments use monetary expansion to buy 4C to give it more value) then we can think about the possible future political story-lines for the next 50-100 years. If you have a good imagination, then you can come up with your own conclusions regarding the utility of Global 4C and whether you think it is a good idea. There is a great potential for social synergy, and so this is important. The positive social outcomes will be needed to create enough new social capital that we can resist the decay brought by climate disruption and possible loss of trust in authority as the climate pathway drifts further from from our ability control it. It is not a pleasant future we face. The physics that elegantly couples civilization with the economy (see Garrett work in references) does not paint a happy picture in all dimensions, and this is not even taking into account the arctic methane risk. So I am more inclined to go with Global 4C than not. The 4C creates a short-circuit (and systemic change) by directly coupling CO2-e emission reductions to central bank activity. It is a very direct coupling that you just can't create any other way. It takes out all of the middle-men and useless interferences. Moreover, it allows wealth transfer, which is the name of the game at the end of the day and just another way of looking at the same problem. A.2 The marginal cost of emission reduction rises, and this is why carbon taxes and 4C rewards will need to rise with time (see IPCC). The important psychological and sociological difference between a rising carbon tax and a rising 4C price, is that people crowd towards rising markets. So the more the G20 support 4C, the more people will buy it too. When the G20 do their buying of 4C, they will find that the market will actually pre-empt this and buy 4C in advance. So the 4C will be fluid and will have a derivatives market, which is also needed. The 4C will essentially define humanity's financial willingness to save itself from climate disaster. This is interesting, and a good thing, because the 4C has 'ethical' monetary rules and markets are currently decoupled from climate change. Penalties (taxes) and rewards (4C) complement each other, as two distinct social agreements. But rewards are financially helpful, taxes are a burden. A.3 Someone who wishes to accumulate 4C (these are not 'credits', as they are money) can undertake reforestation. They have their work assessed, and then they apply for the 4C, which they are awarded at no extra cost (or a service fee). They only have to satisfy the authority that they have actually performed the task as claimed. Work would have to be scaled up large enough to be statistically meaningful. A.4 Somebody who wants to make money with illegal logging, will continue to do so (e.g. Indonesia, Brazil) until the value of reforestation becomes viable and commercially attractive compared with logging. Other people who have vested interests in 4C will then compete with the loggers to retain forests. The market dynamics is no different to any other market, except that illegal logging is unregulated. If a tree is worth $1000 as averted deforestation (4C rewards) OR $800 as timber (illegal logging) then the market will sort itself out. The price of illegal wood will also rise as supply falls. So this is too complex for us to resolve with complex analyses. It is also the very important reason why we need a globalised price for 4C rewards, because the markets are most efficient at finding where/how sequestration is most cheaply undertaken. It may be that (for example) restoring peat bogs is more profitable for 4C - so that's where productivity shifts. In terms of forests, they have high biodiversity, and so I would hope that they receive a higher weighted reward. I hope my answers are satisfying, All the Best, Delton carbon into the atmosphere--unless they're burning the forest. Where's the penalty?'

Delton Chen

Jul 15, 2014
04:20

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P.S. Where is the penalty for burning forests? For that you need a government willing to enforce laws and apply penalties. A carbon tax in the U.S. has zero positive effect on illegal logging in Brazil, but Global 4C would make a difference. I like your questions because I can make references to Socrates! Who said that no man desires evil. Basically, Socrates is saying that illegal loggers compare options and then make a decision. In their eyes, they make a good decision and its not done out of evil. A culture of ignorance may be created by the illegal loggers, and that also needs to be overcome.

Chris Taylor

Jul 16, 2014
11:39

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Hi Delton, Great that you linked your proposal to mine. I think the main difference in how effective my Internalised Price on Carbon (IPC) is with other carbon pricing proposals is that an IPC would only require half the price to get the same result, the reason being that the price reduces the cost of low carbon generation as well as increases the cost of fossil fuels. I like the idea of steering society through a 4C rewards system rather than a penalty tax system because there should be no obvious opposition to lobby against it. However, by issuing 4C currency as rewards, you are increasing inflationary pressure on the 4C currency which would impact confidence in it. Confidence is key to ensure the stability of any new currency. Further, because the issuing of 4C currency would decrease its value, wouldn’t some political parties consider that a tax paid by everyone, to pay for the externalities of the few. Chris.

Delton Chen

Jul 16, 2014
12:55

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Dear Chris Sorry about lost threads. These websites can be confusing to newbies. HALVING PRICES: Yes I agree. I found the same thing, that rewards + taxes doubles the price signal, and so the curious thing is that by applying taxes/rewards 50/50 the net abatement cost can reduce significantly with the same/similar net price signal. POLITICS: Yes, our assumption is that rewards are politically less challenging. INFLATIONARY PRESSURE: Your comment on inflationary pressure & confidence isn't convincing, and perhaps you can expand on your point, but I can't really respond because its not a complete statement. I can say that our team (outside the MIT competition) includes 8 economists, one of whom is a professional monetary economist and does economic modelling. He has never made statements like yours. He has endorsed our policy proposal and we are writing the seminal paper publication and talking about a preliminary model/study. CONFIDENCE: Everybody would agree that confidence in a currency is important, similar to trust. In theory, if our proposal were executed as intended, we would have every G20 nation buying up 4C currency to force the price to rise to meet targets over 100 years. No other currency in human history has had that much backing, and confidence could therefore be very good. GLOBAL 4C: Externalities of the few - are you referring to the Polluter Pays Principle (PPP)? We have studied this issue, and we know that all sectors (except heavy industrial polluters of the non-energy supplying type) can be rewarded without conflict with the PPP. We have identified the issues for social equity, and we now know that the PPP is not universally applicable because the historical social cost of carbon can be EXCEEDED by the potential impacts of future climate change. On this topic, the IPC is also rewarding polluters, and so the IPC needs to be assessed for social cost. QUESTION 1 IPC: Is the IPC a closed market or open market? If the money is recycled, where is there open market competition? QUESTION 2 IPC: How does IPC force the enterprise to spend its money (tax rebate) on specific types of energy? Is this state control? Best regards Delton Chen

Chris Taylor

Jul 16, 2014
08:20

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INFLATIONARY PRESSURE Hi again Delton, You raised a few points, but I’d really like to concentrate on inflationary pressure for now, and really get to the bottom of what I think is a major flaw in an otherwise brilliant proposal. I would also like to make a suggestion of how you could get around this flaw. I’m not an economist and so my explanation will probably be a bit long winded, but as far as I can tell, your model does not take into account the weakening of the 4C currency (against other currencies) as it gets issued (as a reward). You appear to assume that the cost of issuing the rewards will be paid for by all the world currencies weakening against 4C. If 4C was fixed against other currencies (not allowed to float), that would be true, but you cannot fix 4C against all currencies, because that would mean all currencies would be fixed against each other, which is impossible. So lets do this one step at a time and assume that 4C is allowed to float. If 4C is issued, those holding 4C currency, on aggregate, will have more money, but still the same worth. (You cannot create worth by issuing money.) People selling goods and services will know that those who hold 4C currency have more money on aggregate, and so will put their prices up when accepting money in 4C currency. This is logical because if you know that people have, for example, twice as much money but still the same worth, you will understand that that particular money (currency) is now worth half of what it was. The situation is exacerbated because once that money has entered the economy, it doesn’t get used up on the first item it purchases, but gets ‘spent’ multiple times. The only thing which can be done to restore the value of the currency would be to withdraw some of the currency. You mention that the G20 could ‘sponsor’ 4C for 100 years. If by ‘sponsor’ you mean prop up through purchasing 4C currency at an artificially high price, then you’re opposing the markets, and the U.S. congress would never accept that. Further, no government acting individually would voluntarily purchase a currency expected to decrease in value over time. Of course, I might have misunderstood your proposal, and you fix the 4C currency against the US dollar (instead of floating it). That would mean, if the US government were to guarantee the value of 4C as a redeemable currency against the US dollar, then the US would end up paying to decarbonise the world. The only way I can see around this major flaw would be to abandon 4C altogether, and have the G20 countries pay for the rewards in their own currencies, in proportion to the size of their economies. It would still achieve the result that you wanted 4C to achieve. Finally, just stating that you have eight economists on you team is not an acceptable answer. How many of them envisioned the 2008 crash. They can all understand it with hindsight of course. The chances are is that I’m wrong, but you really need to get one of your economists to explain my misconception in plain English, just incase I really have found a major flaw in your thinking. Kind regards Chris.

Delton Chen

Jul 16, 2014
09:19

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Hello Chris, apologies if my replies are inadequate or too terse. I have been working late on three of these MIT proposals. Originally I contacted you to Skype, to talk about our proposals, because writing here is an inefficient mode of communication because there are too many issues that inter-link and become confusing. Even with the team (about 8) economists, we have to talk because writing does not always convey meaning. I am following your thread and I think I understand your questions, but talking first would save us both so much time. Also, with some irony, our proposals are similar in some key aspects. Are you on London time? Can you talk? My Skype is delton-chen Cheers Delton

Delton Chen

Jul 16, 2014
10:36

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Hello Again, I am just replying to the first specific question as best I can. My comments are in [] brackets. I’m not an economist [I am not an economist either!] and so my explanation will probably be a bit long winded, but as far as I can tell, your model does not take into account the weakening of the 4C currency (against other currencies) as it gets issued (as a reward). [we anticipate that the currency supply will increase, and this is the desired result, because more currency = more mitigation] You appear to assume that the cost of issuing the rewards will be paid for by all the world currencies weakening against 4C. If 4C was fixed against other currencies (not allowed to float), that would be true [we would not want to try fix the currencies, they are in the Forex market] , but you cannot fix 4C against all currencies [agreed], because that would mean all currencies would be fixed against each other, which is impossible. [agreed]. If the 4C is just a single currency (i.e. one flavour of 4C) then its pretty simple; each government that is party to the protocol would make a contribution to increasing the demand for 4C in the Forex market. They would have to buy 4C with their reserve currency or with new currency or some other option. So it is a coordinated buying arrangement. For the whole world there are many countries, and so to manage such a task we suggest that there is a need to have more than one 4C currency, and we suggest five of these, thus creating five Councils that represent different geographic regions. Now, with five 4C currencies, the prices of each will differ, but can be allowed to equilibrate considerably, by allowing enterprises to chose any combination of 4C currencies as their rewards. This creates a single market for 4C - and a globalised price - and the economic concept is called the "Law of One Price".

Delton Chen

Jul 16, 2014
10:48

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Answering the second question:- Chris wrote: "If 4C is issued, those holding 4C currency, on aggregate, will have more money, but still the same worth. (You cannot create worth by issuing money.) People selling goods and services will know that those who hold 4C currency have more money on aggregate, and so will put their prices up when accepting money in 4C currency. This is logical because if you know that people have, for example, twice as much money but still the same worth, you will understand that that particular money (currency) is now worth half of what it was. The situation is exacerbated because once that money has entered the economy, it doesn’t get used up on the first item it purchases, but gets ‘spent’ multiple times. The only thing which can be done to restore the value of the currency would be to withdraw some of the currency. " My general reply: We have placed the supply-demand curves in our proposal that answer this question (Figure 2). There will be a wealth transfer with issuing 4C as rewards. That's the intention, because ultimately we want to direct productivity into mitigation from all other sectors of the global economy. 4C could do this very effectively. With aggregate demand, the economists project that the global economy is going to grow over the next 40 years (in a big way) assuming that the primary energy supply is available to civilisation. So what we propose is to expand the money supply into 4C. The money supply will have to grow anyway. Moreover, the 4C can be managed in various ways to influence aggregate demand, but specifically in mitigation activities in the economy (when necessary). Keynesian stimulation with fiat would also trigger more aggregate demand, but the problem is more general consumption and thus more GHG emissions. As you said, the 4C money is spent many times and persists in the economy. Hence to sustain and increase the value (price) of 4C, it becomes logical and necessary to increase demand for 4C as a trading currency (to complement fiat and gold). Whilst the 4C supply grows, both the economy is growing, and 4C's popularity as an international trading currency should also grow too. From a monetary or political perspective, none of this would make any sense if Climate Change were not such a significant threat. Another time we might delve into the political theory: for example in Australia and Canada there is political opposition to carbon taxation. The origins of this proposal are also based on political and socio-economic story lines. The monetary aspects we have discussed are just one dimension. I hope this answers your question.

Delton Chen

Jul 16, 2014
10:35

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Final comments: Chris wrote: "The only way I can see around this major flaw would be to abandon 4C altogether, and have the G20 countries pay for the rewards in their own currencies, in proportion to the size of their economies. It would still achieve the result that you wanted 4C to achieve. Finally, just stating that you have eight economists on you team is not an acceptable answer. How many of them envisioned the 2008 crash. They can all understand it with hindsight of course. The chances are is that I’m wrong, but you really need to get one of your economists to explain my misconception in plain English, just incase I really have found a major flaw in your thinking." My comment: I don't think you found a major flaw. I am sorry if my explanations are not clear enough. I would rather explain these by Skype. There are economists who warned about the Global Financial Crisis, and they wrote in the Australian Financial Review and other places prior to the crash. The interesting thing is that prior to the crash nobody was listening to the warnings! When people are having a great time making a lot of money they are not interested in doomsday predictions. This is because the market has a herd mentality and there are vested interests. With the development of a Policy for climate change, its important to think ahead some 50-100 years.

Chris Taylor

Jul 17, 2014
08:39

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Hi Delton, Thanks for your explanations. You have made it very clear that governments will be asked to prop up the value of 4C. I guess a country the size of the USA might be expected to pay $60 bln/yr by 2070 (in real terms) for this. Compared to the cost of climate impacts at a four degree C warmer world, that sounds like a good deal, so I’ll give you my unreserved support. However, that $60 bln/yr would need to be collected as a tax and there would be no support from the conservatives in congress for this. You have argued that fiat currency expansion could be diverted to support 4C, but individual nations need their fiat currency expansion for themselves, to keep inflation ticking along healthily at about 1.8%. I’ll contact you on Skype later this evening. My Skype address is: itschrisnow. Kind regards, Chris

Gary Horvitz

Jul 17, 2014
04:53

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Delton, upon closer reading of the entire proposal, I must say I love this. The whole thing. I have not read your exchange with Chris Taylor, so I might be duplicating some of the conversation. If so, forgive me, but I have some observations: What you are proposing has major political implications even beyond the fact that you are attempting to overcome two deeply ingrained global practices. First, proposing to value a currency based on (instantaneously) internalized costs of carbon; and second, overcoming the dollar as a global reserve currency. Second, I am not an economist, but my understanding is that the dollar as the reserve currency is deeply rooted to the fossil fuel economy. Political power is derived from this association. So issuing g4c is a direct challenge to the dollar. This strikes me as a huge political obstacle since it implies the gradual replacement of US imperial power with a global model of distributed power. Third, the great majority (80%) of known global fossil fuel reserves are in the hands of sovereign governments. The issue of g4c with the programmed increased value over time will challenge them to directly undermine their own economies (and development, i.e "we want our [western] cookies too"). These are powerful nations. How are they induced, recruited, to participate and/or comply? Fourth, the implication of g4c is that the inertia of international agricultural development, driven by multinationals such as Monsanto, Syngenta, Cargill, DuPont, etc. and relying on patents, monoculture, fertilizers and long supply lines will have to be slowed, undermined and ultimately dismantled in favor of locally controlled, healthy production. These companies, aided by governments, will not go quietly into the night. I would love to buy into your vision, but these issues seem to be large. Am I missing something or do you have a view about this you can share? Gary

Delton Chen

Jul 18, 2014
02:47

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Hello Gary I am very happy to answer these questions. Your questions go to the very heart of the issue from the perspective of governments, power and policy. The rationale of Global 4C is based on helping governments establish long term control of goods and services in the economy. The political storyline, which is not presented on CoLab, indicates that a complementary currency can be used to transition away from dangerous goods+services to safe goods+services with minimal political conflict and 'positive' market outcomes. The original theory was for one nation/government, and it was then extended to the global situation using a digital currency to improve efficiency & scalability. So this policy is not an "off the shelf" package deal, it was developed piece by piece from fundamentals about human nature and the economy. The crypto-currency is a bit distracting because of social-political undertones, but these are not intentional and crypto is simply just a good idea for administration. The climate problem is classic because it leaves governments with almost no options. Either we strongly mitigate to <2C or we enter into a losers pathway, with the ultimate price being the loss of most ecological, social and resource capital. My personal bias and assumption is that warming of around 2 to 3 C will eventually cascade into 4 C and the collapse of civilisation. Maybe I have a poor imagination (?) but I cannot imagine humanity adapting to 4C warmer world. Climate feedbacks could occur around 2-3C and so the idea of a managing 3-4C warmer world seems ingenuous and conceptually misleading (i.e. methane clathrates). The carbon stock has been building for tens of millions of years and basically we are sitting on a lot of carbon (plus the carbon in fossil fuels). Currently it is not politically correct to talk about the situation in these terms, and so you have to dig a bit to find the overview: http://www.ecosanity.org/blogsanity/compilation-4c-2060s-or-sooner-catastrophic The above information sets some boundaries to the problem. When governments look at fossil fuels, they may see a prized commodity, but they also see that it is a trap. Government needs civilisation to kick an addiction - oil, coal and gas. This is not a recreational addiction, it is more of a fundamental addiction for growth and social stability (see Garrett's highly informative papers). The value of money (e.g U.S. dollars) to governments (e.g. U.S. Government) is primarily as a tool to do what they want/need to do to maintain control. Keeping the U.S. dollar system in good long-term condition is less important than actually using it for whatever purposes are popular at the time. Now that climate change is clearly visible, the existing stock of fiat money has less utility, because it is not on its own very effective for mitigation. The barriers to mitigation are political (and physical) and not strictly financial. So from a Government perspective, a tool is a tool is a tool. Global 4C currency is just another monetary tool. Can government use it to mitigate GHG emissions on a global scale? Yes it can, to a certain degree. Can government use U.S. dollars to mitigate GHG emissions? Yes it can, to a certain degree. Next I will give a hypothetical example of how Global 4C could work. But the limitation of all fiat currencies is that they are not such great tools for mitigation, because the money itself is too attractive to actors in the global economy. Everybody wants some fiat, for self interest, and so getting the fiat to do the work (mitigation and sequestration) is problematic at every step in the chain. The economy is very competitive and short-term, and it generally does not have 'feelings' or 'ethics' as such. However, if mitigation is profitable, then we have a completely different situation. The challenge is to make mitigation profitable. Carbon taxes are the 'stick' for polluting. The reward is the carrot. The stick is only a stick if it is legislated. The carrot does not need the same kind of legislation, because the 4C currency is a currency, and it is not a tax. Taxes are about laws and limits. Currencies are social agreements. So if the governments of the world sat down and created 4C international currencies (to be minted as a mitigation reward) then the global politics changes quickly, because wealth can be continuously and directly transferable from one tool (fiat) into another tool (4C) without the discrete legislative demands of taxes (so I assume). Hypothetical: Lets assume we are the supreme rulers of an oil rich country. What do we do? We can sell lots of oil and build defences to protect ourselves from 4C warming (risky ?). We can take actions in international politics and set an example by reducing emissions, but would we stop exporting our oil (I don't think so because its too valuable and we very much enjoy our lifestyles and air conditioning). So we have no serious options and we depend the G20 to do some serious negotiations. The G20 have political problems in passing new laws for rapid decarbonisation, so things look risky. G20 are in love with democracy, and so state control looks unlikely for the time being, and state control would also risk market inefficiency in a very complex system. So now Global 4C comes on to the scene. Governments say "Would you support 4C currency?". What's the deal? By exchanging national currency we raise 4C prices, and people everywhere mitigate emissions and sequester carbon. OK, that's exactly what we want them to do. Our oil rich nation is surrounded by other nations with antagonistic ideas and religious resentments. So we know that we can't cooperate on individual projects. But if we allow the 4C to become an international currency (cross-border) then we know that our neighbours can earn this money, so we know that they most likely will do just that. Hence we don't have to talk to our neighbours, we just buy up 4C on the market, and start using 4C in our economy. We, the supreme leaders, are not too concerned about selling our currency to buy 4C, because the protocol is that 4C will rise for the next 40-100 years. The guarantee is that without 4C all nations start to lose control because of climate change. So it is attractive to support 4C from day one, and give it a good try. How does 4C impact our oil sales? Well, actually, we need to find a replacement commodity in the long run. Two options for us: (A) massive solar thermal and high tech hydrogen batteries, and (B) oil from algae. The prices of these are not competitive with oil. Under 4C rules, we can earn money from 4C by substituting oil for A and B. So we look at the price of 4C, and do some calculations. We find that in the year 2025, the 4C rewards should help make A and B price competitive with oil. We know that the future 4C prices are reliable for global mitigation for <2C because the science+economic models tell us this is the case to 75% confidence. So we plan for that timetable. We don't do anything else because the rest of the world is doing their mitigation and earning 4C at much lower marginal costs than what we can do here in the hot desert. Conclusion: The new 4C currency is accepted by nations and is valuable because it offers a pathway to (i) avoid dangerous >2C, and (ii) makes mitigation profitable earlier. The costs of sponsoring 4C are diffused globally. All major currencies lose some relative value to 4C, but we also end up with a new international currency and this has advantages for trade. The world economy is growing, and so there is a need for more currency. Also, the total abatement cost of mitigation is about ~3% of GWP, and so I guess that 4C should aim for about 3% of all trade. But I am out of my field of knowledge. As you can see, my work is strategic & conceptual, and lacks quantitative evidence. This is why we would like to find a sponsor to do some economic modelling. I acknowledge that the above is complex and speculative. If you see a problem, please email me. Delton g4cm@emai.com The fundamental thermodynamic and human-nature drivers of growth and GHG emissions are covered by Garrett (2012) however his work doesn't get a lot of attention, and maybe it needs more review. But the physics of Garrett defines the basic relationships for civilisation's strong bias for growth and emissions. Whilst Garret may be correct, i take a simple view that Global 4C improves our chances of staying below 2C. Global 4C creates a short-circuit in the growth-emissions paradigm. Power and resources are linked, and in our modern world oil, coal and gas are important, but most especially oil. I will give an example from the perspective of an oil-rich country, and how it might deal with climate change using Global 4C as the preferred international policy. It is scientifically reasonable to assume that we need to stop using coal, and effectively reduce oil and gas use to very low levels. The alternative is to let the climate warm-up past 2C and somewhere between 2 and 4C. My intuition and reading tell me that after we commit to 2-3C it could be difficult or impossible to prevent 4C and then its game over.

Delton Chen

Jul 18, 2014
05:09

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Hello Gary, I needed some time to reply your last point. I reproduced your last paragraph: ---- "Fourth, the implication of g4c is that the inertia of international agricultural development, driven by multinationals such as Monsanto, Syngenta, Cargill, DuPont, etc. and relying on patents, monoculture, fertilizers and long supply lines will have to be slowed, undermined and ultimately dismantled in favor of locally controlled, healthy production. These companies, aided by governments, will not go quietly into the night. "---- Gary The scope of g4c is strictly for two things (i) mitigating GHG emissions and sequestering, and (ii) biodiversity protection. The biodiversity is not actually rewarded per se, it becomes a weighting in the distribution of 4c rewards for bio-sequestration. The 4c rewards will be coupled to kg CO2-e prevented from going into the air (or sequestered form the air). The rules are precise in this respect. The weightings for biodiversity are spatially distributed, the idea being that land management will be given more incentive to protect species and habitat. The multinationals with a reputation for undermining social capital and potentially damaging ecosystems - these activities fall outside the scope of g4c. Actually, g4c is a rewards only policy. It does not have the scope to apply penalties to anybody for any reason. We need laws and regulations and taxes for that. So g4c is a 'feminine' policy, founded on the Society Rewards Principle, whereas taxes are 'masculine' and founded on the Polluter Pays Principle. g4c is the 'carrot' and taxes are the 'stick'. They work together in synergy. It is a marriage. The problems with mono-agriculture and large scale commercial agriculture are reported in the media. My overall opinion is that such problems are not limited just to these multinationals, as there is a wholesale problem with the entire global economy and the entire system is not really focused on locally controlled 'healthy' production. 'Healthy' is subjective too, and a higher standard is better than a lower standard. I have thought about these problems before, and I only have intuition on this.... I feel that if the world adopts something like g4c, and survives climate change with a vibrant Earth remaining, then in my mind we have identified the core the problem. In my opinion the core problem is the currency system and the way that money (fiat) is very limited in its design and purpose. Money can be designed in an infinite number of ways, but fiat is very much financially based and creates debt that is good for banks. So we have an economy that is good for banks. Imagine a world in which money is not created by banks at all? Imagine it is created when people manage healthy productive land and provide education??? It would not be too difficult to do some design of monetary rules... But before we go crazy designing new money systems (which is very diverse now) my preference would be for some globalised currency systems such as g4c. We do need international trade because our world is integrated. So my preference is for perhaps three major international currencies that serve the core needs of humanity. I think its too early to talk seriously about this. But certainly the g4c concept is relevant today. Lets see what happens! Gary, thanks for the opportunity to answer your questions.

Gary Horvitz

Jul 19, 2014
04:52

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Delton, those were some pretty detailed responses there...They illustrate the complexities of introducing a reward system and overcoming entrenched political/monetary system. My choice of the agriculture example was not because I misunderstood g4c (at least I hope not), but because I thought it might be a good example of a clearly damaging international industrial practice that would be effected by g4c. If I am understanding this, the gradual widespread adoption of g4c will begin to have a financial effect on carbon intensive practices; namely, that people/commercial interests will wish to maintain the value of their g4c investments and be looking for future returns in order to buy more in order to, as you say, "continuously and directly [transfer wealth] from one tool (fiat) into another tool (4C) without the discrete legislative demands of taxes. Stipulating that neither of us in an economist, it appears to me that the increasing adoption of g4c has a deflationary effect on fiat, i.e. falling demand. So industries such as multinational carbon-intensive agriculture will have increasing difficulty accessing fiat capital to continue their operations. If this is correct, it's only one example of a powerful industry that buys access to government to influence the conditions in which they operate. You say that the G20 is in love with democracy, but in case you have not noticed, it's more like they are in love with the appearance of democracy. Financial interests dominate, financial paradigms rule, corporate interests to a large degree determine the legal framework of life. Separating the G20 from those interest to a degree sufficient to launch a new global currency will be no easy task. As I digest all of your comments, the understanding that emerges is that the out-of-the-box paradigm that you are proposing is a currency with a negative interest rate which is precisely what the civilization requires to restore the value of natural capital and to restore our thinking about our relationship to the biosphere. The engine of fiat currency --and global degradation--is the positive interest rate. G4C turns that inside out, turning currency into an engine of improved quality of life in which the rewards are not measured in monetary returns, but rather in deposits that are fundamentally different. You may be interested in a couple of books, or possibly know of them already. Sacred Economics, Charles Eisenstein: http://www.amazon.com/Sacred-Economics-Money-Society-Transition/dp/1583943978 in which he devotes a good deal of discussion to alternative currencies, negative interest rates as a vehicle of recovery from the damage that the current system has wrought on everything. In fact, I can contact him about your work here. He should see it. and Debt: The First 5000 Years, David Graeber: http://www.amazon.com/Debt-The-First-000-Years/dp/1612191290 I wish you great success, Delton. Press on. Gary.

Delton Chen

Jul 19, 2014
07:25

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Hi Gary Please contact Charles Eisenstein. Let him know that we would very much appreciate his advice on banking and currencies. In CoLab there wasn't room to explain the Class 1 & Class 2 rules for rewarding any enterprise (incl. agriculture) for reducing emissions. A pretty important rule no doubt. I left it out because it needs explanation. It divides the direct emissions (E) by operational costs, which is the GHG intensity of the operations (A). It then does a little bit of mathematics, by looking at the running-time-average (B) of the value A. Then by comparing A and B we see how much A is falling below average B. The ratio of (B-A)/B * E is then used to determine the rewards. Complex? Maybe, but its just a calculation and its intuitive when you see the plots. Rewards taper off when emissions stabilise. This approach is physically and economically consistent with the Kaya Identity for emissions. Significant? Yes, because this is a correct measure of emissions reductions for an enterprise in the global economy. It is a voluntary reward, so the participants hand over their data willingly. In the long run, as the mainstream of society wake up to the climate disaster unfolding, they will know about g4c and the mitigation data are publicly available so they can check on who is going green. Given that g4c actually provides money, I think as a system/paradigm it would be popular, and so I can believe that social networking around g4c would also influence consumer choices. Businesses that are going cleaner are also earning g4c and public support. With g4c the industries can't use greenwash because the rules are too honest. When government buys g4c with fiat, the fiat loses some value. Agreed. There is an interesting thing about inflation and g4c rewards. If the g4c currency reward price were programmed (via international protocol) to rise in value to match the projected price on carbon as presented by the IPCC (see Figure TS.12 WG III AR5) for the <2 degC pathway. I just checked their price again (its log linear) and it seems to be 4% per annum increase in real terms until about 2100. That's 4% when inflation is 2-3% (?). So if g4c rises in real terms ahead of inflation to mitigate climate change, where would people put their money? You can put it in the bank for 2-3% (?) or buy a new currency that is programmed to rise at 4% for the next 100 years. So as strange as it sounds, I have the feeling that if governments sponsored g4c, they would only have to promise to maintain the floor price and the market would buy g4c on the belief that it will rise. I don't have the reference, but I think that market 'sentiment' is traditionally assumed to be a major driver of prices (in standard economics). I am not an economist, that part IS certain ! ;-) Delton

Delton Chen

Jul 19, 2014
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Gary I have written a short essay here about BEING IN LOVE WITH CAPITALISM. I would like to use Figure 1 on the webpage as the metaphor. The picture of the couple in the car. https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300701/phaseId/1301101/planId/1307204 When we fall in love with a beautiful person, its often a bit superficial until we get to know them. When we learn more about their ethics, then we really get to know them. If their ethics are contrary to ours, then we can have a serious problem because the difference in ethics can end the relationship in a split second. The reason is that we (people) have our ethical foundations tied up in our first three chakras (how we relate to the world) and these are instinctive, and often non-negotiable. If our partner breaks our ethical rules then the energy stops flowing up through to the higher chakras and the mind, and instead flows downward into the lower chakras and the energy exchange between partners is disconnected. The relationship is on ice, and we have to go into emergency relationship management. With democracy its similar. The man driving is the government, and the woman is democracy. The driver can't control the speeding car and democracy is scared. The government tries to slow down with the foot break, but the engine and car's inertia is too strong. So government goes for the hand break (carbon tax) but the invisible hand of the market stops him using the hand break. Invisible hand? Who has an invisible hand? Its the kids in the back seat. They're putting their feet on the hand break and screaming go faster! faster! (we wan't growth and jobs). The kids spent their pocket money and want more. So they want to go faster (analogy speed=profit). The kids have borrowed money from the older kids at school and they need to pay back their debts and they are addicted to sugar. Meanwhile, the communication and cooperation between the husband (government) and wife (democracy) has a few problems. On one hand, they cooperate extremely well, and this is because they have a mortgage to pay, and if they don't keep working and cooperating they have to sell the house and lose money and security. Their relationship and communication is therefore coordinated quite well with the debt on loans, and the need to pay back interest. So they keep working on the relationship, but it is stressful. This runaway car problem could well end the relationship (i.e. with premature death). So government does the hard thinking. He's behind the wheel. He can't break effectively, his relationship is strained, the kids in the back seat are just little *&$$#$. So what now? Well the husband calls up his mechanic on the mobile. What can I do, the breaks are't strong enough and the engine won't slow down??? The breaking system is only as good as the designer intended, so it has limitations. It helps, so they try applying all the breaks. What next? How about this? We disconnect the exhaust pressure hose from the turbo charger, and reconnect it to a new breaking system independent of everything else. The more the engine pushes out pressure, the more it applies the new break. So the car slows down.(i.e. new break = g4c economic instrument). In the analogy between husband, wife and kids, what does this imply? The communication has changed because now they are cooperating for different goals. Before it was to pay off debts, now it is to mitigate and sequester carbon (the new g4c currency and new break). The kids can earn their pocket money by mitigating and sequestering, so they're happy. The car slows so she's happy and she trusts her husband more and their relationship improves. The whole family is better off, and this is because money is a social agreement within the family unit, and a new agreement was needed that defined the rules of behaviour.

Gary Horvitz

Jul 20, 2014
11:04

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Delton, The fact that g4c increases in value by 4% or whatever per year is about the same amount that banks consider to be a minimum for decent investment returns. If that were the only factor determining appeal, then a transition would appear to be, as we say in basketball, a slam-dunk. But since the marginal cost of mitigation is rising as well, possibly at a greater rate than the increasing value of g4c, then the effective return on g4c is less than 4% and falling. This is not a bad thing because the quality of life is improving along the way, the restoration of natural and social capital, as well as the behavior of the "family." There is also the issue, which I think you alluded to, which is the necessary gradual reduction in the amount of carbon to be sequestered. Just as with the carbon tax, the annual increase reaches a point where its effect on demand is so effective that the dividend begins to fall. Likewise with g4c, as the supply of carbon to be sequestered begins to fall, the increased value of g4c would not be enough to compensate for the rising cost of further sequestration. Hence, a falling interest rate. There are deeper issues as well, of course, such as the condition of cultural capital, the destruction of culture that has occurred to make way for the industrial growth machine, the homogenization that has occurred to satisfy the corporate agenda, the atomization of people from each other, becoming consumer units in pursuit of individual acquisition. It wouldn't be fair to lay all this on a new currency, but the currency would be a good start. The contest closes tonight. How would someone interested follow your continued progress?

Delton Chen

Jul 20, 2014
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Hi Gary, WIth respect to your first paragraph, I didn't fully understand everything but I didn't see a serious issue either. I will just clarify the fundamental macro-economic approach that I am suggesting. This is what I think the governments (of the world) could and should do: they will continue to support g4c (provide demand by buying it up when necessary) so that the g4c price rises, and this will stimulate more mitigation and sequestration in the market place. They will then do frequent analysis and modelling on the data they have collected, to update the 40 to 100 year price schedule for g4c so that the world can avoid dangerous climate change. They can update the price schedule weekly or monthly etc. Their analysis will include all relevant factors, such as climate science and feedbacks, existing taxes, economic conditions, political events etc. So the g4c price schedule is not really designed to meet a 4% annual rise, because the rise is simply whatever is needed to avoid dangerous climate change. It might rise 6% or 1% per annum. My impression is that it is more likely going to be at the high end, because some scientists claim that we need to decarbonise at 10-20%, which is incredible. Also, the IPCC possibly does not include the latest on positive feedbacks in their analysis (risks are high). And so I am assuming quite a high yearly increases and very much likely exceeding the rate of inflation by a big margin. The high yearly increase (lets say it is 6%) will be attractive to investors, and so this whole approach creates a positive reinforcing social response. It creates positive feedbacks in society, because i) we need to survive climate change, ii) it is ethical, and iii) it is profitable. These are 3 of the most powerful forces in society and the economy. I did some preliminary modelling of the g4c currency with a spreadsheet model. The impression I have is that the supply of g4c increases most quickly during the most active part of the industrial transition (the de-carbonization of the economy). This transition period has the characteristics of a rising g4c price and falling marginal cost of mitigation & sequestration (i.e. the new mitigation supply is racing to keep up with rising demand, and demand is rising exponentially to keep supply rising - it is a race). But the key thing is that nobody knows really the future marginal costs, because climate change itself will be a factor. When the planet warms, our efforts at mitigation become less effective in all sorts of ways (e.g. the IPCC models do not include political dynamics and clathrate leakage). So the g4c price is dynamic and always adjusts to the current knowledge and conditions. But in the long run, if we are successful at mitigation, then eventually we may not need to sustain a high price for g4c because the rate of mitigation (lets say in year 2100) may fall considerably. If this happens, then we have succeeded because that was the objective. The price and value of g4c after the year 2100 is almost irrelevant, because we have prevented irreversible climate damages and avoided collapse. The costs of the transition (de-carbonization) have to be carried by society anyway. Thats unavoidable. The g4c is just the tool that allows the transition - it is the mediator and the 'social agreement' that gets people working and cooperating via a transfer of wealth. It will also complement and synergy with taxes (that are also needed). WIth your second paragraph: I think i answered that above. Also, we should talk in terms of prices (or exchange rates) for g4c, and not interest rates. It is just a currency that is issued. There is no loan and no interest rate. THere is a rate of rising value, that we can express as an annual percentage. There is an inflation rate too, but we could also just talk about inflation adjusted terms to avoid that confusion. The world is now quite concerned about not achieving <2 degC target. Some respected scientists are saying that is is likely impossible to meet now (i.e. 10-20% de-carbnisation rate is needed). And so the world's problem and concerns are not a falling sequestration rate (in the future). If we reached that point we would all be celebrating! Our problem is that the sequestration rate is possibly unattainable. Human beings have never previously managed net sequestration. We have always produced GHGs. The fundamental problems are also not just physical, they are fundamentally about 'growth' and human motivations. According to Garrett's (2012) global analysis, growth is needed to maintain social stability. His work is thermodynamically based and is not optimistic in its conclusions. In other words, things are looking bad (quantitatively and qualitatively). Last paragraph: I have avoided those deeper issues you mention because they exceed the scope of g4c. My feeling is that humanity has the potential to make a breakthrough and reach a much higher quality of existence. But we are beholden to the existing currency system, and I believe it is this which is preventing us form taking the next major step of our social evolution. I have written on this topics about 6 months ago, but I stopped because its not helping me with this project. Thank you for the opportunity to answer your questions. I appreciate your questions a lot. Let me know if I missed something. Sincerely Delton

Jonathan Cloud

Jul 20, 2014
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With regard to question about following our continued progress after the end of this contest, I'd suggest keeping tabs on our G4CM site, http://g4cm.org. We'll also post some administrative updates from time to time at http://crcsolutions.org.

Climate Colab

Aug 20, 2014
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It’s a new framing, will penalize emitters, and it’s aligned with the recent trend of major actors from the financial sector (e.g. Tom Steyer, Hank Paulson) pushing back against members of the business sector who are climate change deniers. Engaging the investment sector has potential. Proposal could use more analysis of the barriers that must be overcome and more details on how it could be implemented. Adding additional money to the world economy could create inflation, and the proposal could do more to consider the potential monetary impact of the proposed actions. - The proposal is well articulated and convincing. The link with sub-proposals is clear and well argued. It could be improved by a more thorough analysis of potential barriers and how they will be addressed. The implementation framework at the global political level could be further expanded. Use of pricing system is a good idea, but a better comparison and articulation of taxes vs rewards is needed. Also the link macro/micoreconomics is needed (system implemented by States but taxes get paid by individual economic agents). How to make sure signals are right and governments do the right thing. Also deepen analysis of link between fiscal policy (tax/reward) at micro level and monetary policy. - Once the new currency is introduced it will be tradeable for normal money so this scheme does not avoid the costs of climate policy and to the extent the green investments have a lower rate of return, this could also slow down economic growth. However, if carefully designed such a system could help change the frame for the climate debate while used to also address some equity concerns. To the extent that key players in the financial community has now become pro climate policy (e.g., the Steyer, Bloomberg, Paulson 'Risky Business' project), something along the lines of this proposal may actually be doable especially if it is carefully linked to actors in the traditional financial and insurance systems.

Delton Chen

Aug 26, 2014
08:08

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Dear Judges, thank you for these general questions. It is very challenging to respond within the tight word limit of the MIT competition. So I have written a long reply here and a shorter reply in the competition. 1. Introduction Global 4C derives its utility from the integration of its physical, economic, political and social advantages. This is not about "taxes versus subsidies". We recommend a "carrot and stick"approach, and the carrot is Global 4C and the stick are national carbon taxes and caps. The "Tinbergen Rule" states that for every independent policy goal there must be an independent enabling policy instrument. If national carbon taxes are inadequate as a global instrument at the UNFCCC in Paris in 2015, then a new global instrument will be needed. Global 4C could be the international side of this new instrument. The other side are the national carbon tax instruments that the world is currently struggling with. TINBERGEN, J. (1952): On the Theory of Economic Policy. North Holland, Amsterdam, 1st edn. TINBERGEN, J. (1956): Economic Policy: Principles and Design. North Holland, Amsterdam. 2. Apolitical Commentary I do not aim to take sides with respect to political groups, fossil versus renewable industries, nations, etc. I am just stating things the way I see them, and I hope that this is within the spirit of the MIT competition. 3. Assumptions & Implementation Framework (1) The world's geo-political power is a hierarchy of domination. The hierarchy is self-reinforcing through the self-interest of its members. Those nearest the top of the hierarchy are affiliated with international banking. (2) Individuals nearest the top of the hierarchy will desire strong GHG mitigation to avoid a climate catastrophe that could collapse the hierarchy. They will be willing to establish a protocol for a Global 4C price schedule that will be based on the results of coupled climate-economic models. Global 4C is therefore a science based policy. (3 ) The target audience of this policy should be the international banking community. A grass-roots political approach is unlikely to be helpful. (4) A political framework like that shown in Table 1 can spread responsibilities amongst G20 nations. (5) Implementation of this policy will be politically feasible after some kind of social tipping point that demands a "reset" to the global order. Tipping points could include a financial crisis, a failure of the UNFCCC process, extreme weather disruption, government scandals; flashpoint between US-EU-JSI and BRICS blocks over economic, military and resource dominance. (6) A legally binding protocol can be ratified to ensure governments cooperate. The framework for five Global 4C councils is shown in Table 1. Table 1: http://2.bp.blogspot.com/-kUPJyWk-RXA/U_xxBpcab9I/AAAAAAAAAL0/ddU4Odfgqf4/s1600/Table1.jpg 4. Macro-Economic Paradigm Shift A paradigm shift is offered, because a new currency will created that is not based on debt, but instead is supply-pegged to the environmental benefits of GHG mitigation (per kg CO2-e). Hence Global 4C represents a step-change in the economic paradigm by directly connecting money creation with the environment. Three key changes are proposed: (i) non-debt currency as legal tender, (ii) an ethical currency for global trade, and (iii) capacity for governments to subsidise GHG mitigation by creating primary and secondary market demand for the 4C currency (i.e. not having to introduce new taxes). Primary market demand for 4C is created by governments by accepting 4C as payment for national taxation as shown in Figure J1. Secondary demanded is created by encouraging trade and investment with 4C a shown in Figure J2. The use of 4C for trade between geo-political blocks (e.g. US-EU-JSI and BRICS) is suggested as an application for improving global peace and security as shown in Figure J3. The 4C system will encourage states to purchase foreign imports with 4C, and this is because 4C in the domestic economy becomes a burden on the government budget. This principle will encourage 4C to be traded internationally. Developing countries may be allowed to trade with 4C without having to support its price. Producers of goods that are adversely affected by climate change will want to trade with 4C to help mitigation. Figure J1 http://3.bp.blogspot.com/-k06UmeptXyw/U_xxNSTT9_I/AAAAAAAAAMM/_dTgj9VsGC8/s1600/FigureJ1-g4cm.jpg Figure J2 and J3 http://2.bp.blogspot.com/-ZxKhlU-nB0Q/U_xxLqpj7bI/AAAAAAAAAME/wfKPkh64vi8/s1600/FigureJ2%2B3-g4cm.jpg Core Inflation: There is no 'free lunch' in decarbonising the economy. The time, resources and work required to decarbonise will create core inflation regardless of the policy adopted. Market based policies, such as Global 4C, are more efficient and will help minimise core inflation. Monetary Inflation: The Neutrality of Money idea states that the balanced increase in money supply will not cause a change to inflation adjusted prices. The new 4C currency is only given for mitigation, and so the mitigators will receive direct benefits of this monetary inflation (this is a key objective of the policy). The monetary inflation will stop when the mitigation rate stabilises. Other Causes of Inflation: There are many factors that can effect inflation besides Global 4C (e.g. taxes, demand pull, cost push, asset inflation, oil price). On the positive side, the 4C subsidies will encourage productivity and employment in the sustainable economy. 8. Favourable Micro-Economics The 4C price signal involves paying 4C as subsidies for cleaner energy substitution in power markets, subsidies for GHG abatement in any industry (e.g. Figure J4), and rewards for sequestration of GHG from the air. The micro-economic payments are and verification are feasible when payments are digital and via the Internet and mobile phones etc. Administration becomes the social network and a social positive feedback (not a cost burden as most economists assume). The equilibrium price changes is a lower a marginal production cost for cleaner energy, GHG abatement, and sequestration. Figure J4 http://3.bp.blogspot.com/-IpDw-J6NUvU/U_xxLImXz6I/AAAAAAAAAL8/Wx5e2JwTn3c/s1600/FigureJ4-g4cm.jpg For individual businesses, the 4C price signal aggregates with carbon tax signal but will also neutralise the carbon tax debt: the best of both worlds (see Figure J4). The paradigm shift goes further by creating positive feedbacks (social and political) because 4C provides finance for new projects, innovation and debt reduction. 4C will lay a pathway for oil/gas/coal investors to switch to a new profit frontier. 4C will be legal tender and protected by anti-counterfeit laws. 9. Political Barriers and Resolution Barrier for carbon taxes: (i) conservative politics, political lobbying, fossil energy becomes more expensive; (ii) potential loss of profits for powerful corporations; and (iii) high-level geo-political resistance because oil/gas/coal are strategic resources that underpin economic and military power. Barriers for Global 4C is that the timing of the policy is critical: (i) Conservative Politics: Global 4C is a policy option for international bankers concerned with currencies and climate change. Justification is the Beneficiary Pays Principle (BPP) and a need to minimise political delay that haunts the carbon tax. (ii) Potential Loss of Profits: Global 4C is favourable in terms of profitability. It pays (a) subsidies for cleaner energy substitution, (b) subsidies for reduced GHG emissions per operational cash flow, and (c) rewards for sequestration. 4C currency also becomes profitable in itself because it will have a rising price schedule. A key political advantage of Global 4C is that it requires no new taxes (i.e. only carrots). Carbon taxes and caps should be introduced at the national level as separate policies (i.e. the sticks). (iii) High-Level Geo-Politics: Global 4C should be introduced by the international banking community. The world economy cannot continue to grow as it has in the past 100 years because of falling EROEI, climate change and resource limits. Hence the monetary system needs a new currency that does not require limitless growth and debt servicing. It is also essential that we avoid military conflicts over remaining fossil energy resources, and so we must invest about 3% of GWP into GHG mitigation and cleaner energy (which is comparable to the amount spent on global military at 2.5% of GWP). Faithfully, Delton Chen

Enrique Posada

Aug 26, 2014
04:57

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This is a very well explained and argued proposal and I believe has real possibilities for implementation. On the other hand, it involves quite complicated and complex maneuvers and requires a lot of coordination and universal agreement. I wonder how could pilot projects be launched to demonstrate the affectivity of the proposed action plans, before embarking on ideas on a global scale.

Delton Chen

Aug 27, 2014
01:01

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Hello Eposadar, Thanks for taking an interest. There exists an example called www.solarcoin.com that has some similarities. My intention is to find support from well informed people. A pilot program would be an expensive exercise (without some kind of economic backing by a government or bank). Best regards, Delton

Osero Shadrack Tengeya

Aug 27, 2014
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Hi Delton, I quote, 'It is very challenging to respond within the tight word limit of the MIT competition. So I have written a long reply here and a shorter reply in the competition'. I have a suggestion for your proposal revision answers. Will you consider using imgur.com. This website have an option of creating your account and upload the answers on which you can share the link in your proposal. I tried to use it in my proposal due to limited space and i found it fascinating. Hope you find it helpful. Also, am aware that the judges will not be required to review in the comments than rather are directed to discussions only. That's why i feel it will be nice for you to copy and paste the answers in word, change them into pdf, and finally upload them to imgur.com, of which i found to be convenience.

Hemant Wagh

Sep 5, 2014
08:45

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If you could consider requesting your future clients to store throughout the year the seeds of fruits they eat at home and spread those seeds, after commencement of Mansoon, the rainy season, on to unused land in & around the city, town, village, as an activity that would help improve green cover! Rather than wasting the fruit seeds by letting decay, this would help grow fruit-bearing trees as well. Following is a link to such a proposal. https://www.climatecolab.org/web/guest/plans/-/plans/contestId/1300103/planId/1310401 This could help the decline in the value of your currencies. Besides there is no critical limiting barriers for this approach.

Climate Colab

Sep 12, 2014
12:02

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Thank you for your submission and revisions. This proposal was not chosen as a Finalist. The Judges are developing their comments and will be posting them shortly.

Climate Colab

Sep 15, 2014
12:38

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Comments from Judges: This is essentially a tradable credit system, one of the alternatives to an allowance system. Tradable credit systems are problematic because you have to create a baseline. But if this is what you want, it would be simpler just to do a cap and trade system. Calling the allowance a carbon currency adds a lot of complexity and conceals what’s really going on. The authors seem to believe this is a way of doing abatement without coercion, but the complexity creates more problems than it solves. The proposal calls for central banks to set an exchange rate for the newly issued currency and then be ready to exchange the nation’s currency for the new one. But most countries would end up eventually converting their carbon currency allotment into U.S. dollars, which would effectively require the U.S. Treasury to pay for all the abatement effort. I find this a fatal flaw. The Judges as a whole were very impressed by how this team responded to the first round of comments and we strongly encourage them to keep thinking about and developing their ideas.

Delton Chen

Sep 19, 2014
02:34

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To all those people who have supported our proposal so far, thank you. I have to make a clear statement about the judging of Global 4C, because this proposal may have merit for our collective future. The Global 4C Mitigation proposal is not a "tradable credit system" as claimed by the judges. The Global 4C proposal is fundamentally different to tradable credit systems and it is fundamentally different to "cap and trade" and all similar systems that put a price on pollution for the polluter. Global 4C also does not put any limits on pollution. This is Global 4C's strategic political advantage. Global 4C is actually a subsidy and reward system for mitigation, and as such it does not enable trading of pollution. Mitigating/sequestering emissions is the opposite of polluting. The master plan is to instigate a social transformation that can spearhead the carbon transition by gradually winning over the carbon intensive industries: by allowing the people with vested interests to divest in alternative business models and to culturally adapt. Global 4C will synergy with carbon taxes that should also be introduced as quickly as the politics allows. Global 4C should be applied globally, and the standard carbon taxes, fee-and-dividend and cap-trade etc. applied nationally. Confusion may arise because the Global 4C subsidies and rewards are issued as a new currency. After this new money is issued, it is basically just money for use in general trade, like any other money. Important, is that currencies have low transaction costs and can be quickly set-up in Forex markets. A globalised price signal is absolutely essential if we are to strongly mitigate climate change. The administration of this system is pragmatic, requiring a scientific approach. Engineers and scientists can manage the details. This is what people are good at: administration, innovation, working and improving the environment (i.e. when paid to do so). The financing of Global 4C could be described as a "negative tax", however the monetary approach that we have identified opens up various new financing options that are unorthodox. I expect that bankers and traders could design very effective monetary policies to appreciate the 4C currency as required for mitigation over the next 50-100 years. With some irony, it would be the bankers and currency traders who would save us from climate disaster. I am personally convinced that Global 4C is the missing link in the climate change conundrum. Others may disagree, however it is evident that this proposal and the innovations that it recommends have not been professionally assessed nor have they been tested in pilot studies. We had hoped that by entering Global 4C into the MIT CoLab, we would earn some publicity. Global 4C shows a glimmer of potential because it directly connects the economy, politics, and society with the physical world. The standard economic perspective is that subsidies are inefficient. But Global 4C is not a standard policy. It is very innovative and multi-disciplinary. Moreover, it uses the most powerful economic tool of all the tools, and that is 'money'. Money is the social agreement that everybody understands. Global 4C proposes new debt-free money. Global 4C also recommends the Internet and social networks as the knowledge and communication system. My view is that we need to look at the 'whole system', and not just the economic system. Global 4C is integral with the whole system, and it may allow us to discover hidden opportunities to create positive feedbacks that can couple human 'self interest' with the much needed mitigation of GHG emissions. We desperately need to identify these positive feedbacks and make maximal use of them. Moreover, we also need to develop policies that leaders in government and banking can promote and employ without exposing themselves to harsh political opposition and related risks. It is this strategic thinking that makes Global 4C special in my view. We should have all noticed that modern society has lost its balance. Society is currently operating in an overly masculine framework (i.e. penalties and base logic) and we need to balance this with the feminine (i.e. rewards and intuitive problem solving). Carbon Taxes = Yin, and Rewards for Carbon = Yang. Only such a balance can correct the disfunction. All the best, Delton Chen

Delton Chen

Oct 27, 2014
11:17

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Proposal
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Please accept this correction to my previous statement (refer above): Carbon Taxes = Yang (masculine), and Rewards for Carbon = Yin (feminine) It was a late night! Thank you, Delton

Arab Financial

May 25, 2019
10:18

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