Dylan September 20, 2024 The Global Carbon Reward: Innovating Climate Finance Discussing the Global Carbon Reward in Berlin Why do we need the Global Carbon Reward? Key Discussion Points Next Steps: Building Momentum “When it comes to the environment, the invisible hand never picks up the check.” – Kim Stanley Robinson, The Ministry for the Future, 2020. In The Ministry for the Future, Kim Stanley Robinson references a fictional new currency, the “carboni” or “carbon coin”, backed by central banks to incentivise greenhouse mitigation. The carboni is issued to organisations that remove carbon from the atmosphere or prevent further emissions, acting as the financial carrot that could help decarbonise the world. Science fiction has a track record of inspiring real-world innovations, while also borrowing cutting edge ideas from science, economics and philosophy to explore them in fiction. In The Ministry for the Future, Stanley references many real-world initiatives, grounding his novel in actual scientific and economic possibilities. Central among these ideas is the carboni, based on economic research by Dr Delton Chen and his team. Thus, academic research inspires climate fiction, which in turn raises awareness of the Global Carbon Reward—the real-world counterpart to the carboni. Discussing the Global Carbon Reward in Berlin After several discussions with Delton and a podcast on 177Pod, a diverse group of people gathered in TESOBE’s office in Berlin on September 5th, 2024, to learn about and discuss the Global Carbon Reward (GCR). Attendees came from a wide range of backgrounds – from academia and entrepreneurship to NGOs – reflecting the global interest in finding innovative solutions to climate change. Dr Delton Chen, the Founder of the GCR, had travelled to Germany from his native Australia to present the GCR at a banking conference. He decided to visit us in Berlin to explain how the GCR could introduce a new carbon asset for addressing the Paris Agreement. Delton is a civil engineer and geo-hydrologist by training, whose policy initiative synthesises carbon cycle science with economic theory. His approach addresses the need for humanity to responsibly manage the carbon cycle, lest we pass tipping points in the Earth’s climate and destabilise the biosphere. For more details, the full presentation can be found here: Why do we need the Global Carbon Reward? Current systems and policies have limitations that hinder their effectiveness in reducing carbon emissions. Carbon taxes and cap-and-trade systems have direct cost implications for industries, so they are often met with strong resistance. There are also serious concerns about the effectiveness of carbon offsetting. As explained by Dr Chen during his presentation, the Global Carbon Reward offers a compelling alternative by introducing a tradeable carbon currency (XCC), whose unit of account reflects the amount of carbon reduced, while its price floor would be guaranteed by central banks. The XCC serves as a store of value rather than a medium of exchange, meaning that it operates as a carbon-backed financial asset and not a traditional currency. The GCR directly incentivises carbon reduction and direct air capture (DAC) by making it profitable, thus aligning individual interests with broader societal goals. This new approach ensures that individuals and organisations acting in their own interest will also promote societal good, a concept that echoes economist Adam Smith’s famous notion of the “invisible hand”. “He intends only his own gain, and he is … led by an invisible hand to promote an end which was no part of his intention. By pursuing his own interest he promotes that of society more than when he really intends to promote it.” – Adam Smith, The Wealth of Nations, 1776 Founder of OBP, Simon Redfern, remarks, “The GCR is an acknowledgement that, just as nature’s carbon cycle has processes that capture and release carbon dioxide, we as humans must invest in processes and technologies that play similar roles. Recycling or degrowth just won’t be enough. We need policies that reward organisations for removing carbon from the atmosphere or reducing emissions. The GCR will be issued by a newly formed Carbon Exchange Authority—or “Ministry for the Future”, if you like—which will target large-scale projects eligible to receive the carbon currency in exchange for contracts that ensure carbon remains stored or avoided for at least 100 years. Central banks worldwide would support the GCR, maintaining a price floor in relation to fiat currencies and making it an attractive asset. The carbon currency is not a carbon credit, so energy companies like BP won’t be able to buy XCC to make its own mitigation efforts look better. ” Key Discussion Points The discussion highlighted several key points: The GCR could unlock over US $4 trillion for climate action; The mechanism takes into consideration long-term carbon removal, reductions, and avoidance over a 100-year period or more, ensuring that the mitigation is effective; Developing countries would be able to earn a financial asset backed by central banks, thus reducing their debt levels; Recipients of the reward could also be individuals, if it’s managed by a collective, extending the opportunity to a wider audience; The Global Carbon Reward is designed to be highly scalable. It can be implemented globally and can complement other policies and strategies. Enforcement will rely on standards and a central authority with strong legal frameworks. Next Steps: Building Momentum So what are the next steps? To move forward, the Global Carbon Reward requires broader awareness and support from key stakeholders. As Dr. Sven Vittorelli—Global Nature & Biodiversity Lead at AFRY and an avid supporter of the GCR—noted, “This idea is currently more famous among the science fiction community than it is within the sphere of people who should actually hear about it!” You are invited to engage with this initiative and be part of the ongoing conversation. What you can do today: Watch the recording of the event: Transforming Economics for Net-Zero Carbon Read the Working Paper Explore opportunities for partnering For accurate and up-to-date details please see here https://globalcarbonreward.org/