According to Ceres, the non-profit advocacy group dedicated to sustainability leadership, “In order to limit global warming to 2°C and avoid the worst effects of climate change, the world needs to invest an additional $44 trillion in clean energy—more than $1 trillion per year for the next 36 years.”
Financing these investments at a nominal rate of only 5.3 % interest over 30 years would double their cost, making many projects unaffordable. It seems self-evident therefore that the chances of avoiding the worst effects of climate change would be greatly enhanced were the transition to clean energy financed with zero interest loans.
I was surprised to learn recently that Canadian projects like Canada’s Second World War effort, the St. Lawrence Seaway, the Trans-Canada highway, as well as hospitals and universities across the country were all financed by the Bank of Canada interest free for 36 years.
The Bank of Canada, the nation’s central bank, was set up in 1935 to promote the economic and financial welfare of Canada and did this from 1938 to 1974 by providing interest-free loans to government to finance infrastructure investments.
This ended in 1974 however as a condition of the Bank of Canada becoming a member or the Bank for International Settlements, whose mission it is “to serve central banks in their pursuit of monetary and financial stability, to foster international cooperation in those areas and to act as a bank for central banks.” And as a consequence, according to economist Ellen Brown: By 2012, the Canadian government had paid C$1 trillion in interest — twice its national debt – to private international and domestic financial institutions providing them with enormous, absolutely risk free profits for almost four decades. And Canada is but one of the 60 countries whose central banks are members of the Bank of International Settlements.
The Committee on Monetary and Economic Reform is a group of Canadians concerned about the destabilizing effects current economic and monetary policies have had, and are having, on the citizens of Canada and other countries. It has brought a case in Federal Court aimed at returning the Bank of Canada’s lending practices to pre 1974 conditions because it claims private banks lending to government, contravenes the original act that established the Bank of Canada.
Canadian taxpayers hope and pray this case is successful but more importantly the operations of the Bank of Canada between 1938 and 1974 should serve as a template for how clean energy should be financed. No more important infrastructure investments are required and there is absolutely no reason for private international and domestic financial institutions to make enormous, absolutely risk free profits on the back of those investments over the next four decades.
The world runs on energy, not interest and that energy needs to come from clean sources. Surely creating a safe planet for ourselves and our children is no less of an imperative today than it was during the Second World War.
Photo Credit: Financing Sustainability and Reducing Risk/shutterstock