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Please cite this page as:
Chen, D. B, J. Cloud, J. van der Beek (2016). Global 4C – Monetary and Market Policy for Climate Change Mitigation. www.global4c.org
Youtube videos cited in this webpage do not imply endorsement of Global 4C by the people in those videos or anybody associated with those videos.
Main Terms of Reference
Global 4C Mitigation is a climate change mitigation policy that has emerged from monetary philosophy . This policy recommends Complementary Currencies for Climate Change (4C) that are based on a Carbon Monetary Standard . 4C are defined as new world currencies for generating global price signals for abating greenhouse gas emissions and sequestering greenhouse gases, and also as currencies for reforming the global economy with a structural change that appears to be both rational and supportive of public safety and welfare. The supply of the proposed 4C world currencies will be administratively coupled to recorded mitigation rates, and so 4C are defined as supply-pegged currencies. Given that miscellaneous greenhouse mitigation work may be collectively defined as an ecosystem service, the 4C currencies are termed service currencies, and here the word ‘service’ is used in reference to the policy’s goal of creating a worldwide currency system that is ‘in service of humanity and for the protection of the planetary ecosystem‘. In terms of 4C’s theoretical and practical significance, the deployment of 4C service currencies in the 21st century could be at least as important as the transition from commodity to fiat currencies in the 20th century. It is claimed here, and within the context of ongoing policy analysis, that there is a compelling scientific case for adopting Global 4C policy (or similar) for achieving deep decarbonisation of the global economy, and within a timeframe that could deliver the main COP21 goals that were established in Paris in 2015.
Figure 1. The main terms-of-reference for the Global 4C Mitigation policy and project.
We propose that, for cultural reasons, a suitable trading name for 4C currencies is the Solar Dollar. We also propose that, for cultural reasons, a suitable trading name for the global administrative system for 4C currencies is the World Tree. These trading names are not absolutely necessary for the policy to function effectively, but these trading names are desirable because they communicate the underlying economic mechanisms and in iconic ways that are likely to be understood by citizens in most countries and in many cultural settings. To help expand upon the policy theory, and to help explain the cultural significance of the proposed trading names, the ‘Solar Dollar’ and ‘World Tree’ trading names are used throughout this presentation and this website. The Solar Dollar refers to the proposed 4C currencies, and the World Tree refers to the proposed 4C administration system under the Global 4C Mitigation policy.
Global 4C is based on an expanded theoretical framework for money, markets, and systems . The theoretical framework is comprised of a coherent set of new ideas and will be explained in policy papers (currently unpublished and available in draft). The ideas that form the basis of the new theoretical framework, are as follows:
(i) definition of money (Triadic Logos of Money),
(ii) definition of three principal currency types (incl. service currency),
(iii) framework for market-based environmental policies with Platonic symmetry (Pigovian Family),
(iv) framework of complementary policy pairs for managing complex change (Market Policy Dualism),
(v) policy roadmap for self-reinforcing social feedbacks (scheduled bull market),
(vi) policy roadmap for avoiding political delay (monetary theory), and
(vii) policy roadmap for decentralised networks and market growth (tree analogue).
Figure 2. Monetary philosophy is the foundation of Global 4C.
Newly issued Solar Dollars will be issued as debt-free rewards for verified greenhouse gas mitigation, and the price signal created by the Solar Dollar will be managed to complement orthodox mitigation policies and to correct a market failure in greenhouse gas pollution. The Solar Dollar will be traded in world markets as parallel currencies, and so Global 4C is not a policy or a plan to replace national currencies, nor is it a policy or a plan to create a new world reserve currency. The emergence of any new reserve currencies in the world economy will likely depend on factors that are beyond the scope of the Global 4C policy.
Global 4C will generate profits for investors who build the World Tree administrative system, and it will provide commissions for auditors who assess the mitigation work and issue Solar Dollars. A profitable business model is included as part of the policy, and it is considered essential to the effective implementation of the policy. The profitability of Solar Dollar trading and World Tree administration are not the ‘end points’ of the policy, but rather these are outcomes that are deemed desirable to attract policy patrons and to create a socio-economic transformation that can move the global economy into a process of deep decarbonisation.
The policy roadmap involves implementing the Solar Dollar in stages, with each stage having a financial model for giving the Solar Dollar its market price. In the first stages, the Solar Dollar will be a ‘vehicle’ for a new social-and-environmental movement that will seek massive public support and to collect a digital petition for the policy. The petition will be written for and delivered to specific international institutions for global governance. In the final stages of implementation, the long-term finance for the Solar Dollar will be provided under a World Monetary Union for Climate Change Mitigation .
To give the World Monetary Union the capacity to macro-economically leverage currency prices, the World Monetary Union will be mandated to undertake internationally coordinated Green Quantitative Easing (GQE). GQE is recommended, under the policy, as a key long-term operational mechanism for managing the Solar Dollar price and guaranteeing future prices. Other macro-economic leveraging mechanisms may also be considered. Internationally coordinated GQE offers benefits, including an ability to generate an adaptive multi-decade Solar Dollar price schedule based on scientific principles. Internationally coordinated GQE is therefore presented as a macro-economic concept that is rational, feasible, and potentially critical for achieving the climate mitigation goals defined under Article 2 of the 2015 Paris Agreement (COP21).
GQE is further recommended on the basis that there could be a need to influence the rate global economic growth during the 21st century. The Global 4C policy does not make a priori conclusions about future rates of economic growth or degrowth, but the policy does provide a mechanism for influencing growth (or degrowth) should this be needed to achieve the policy’s main goals. Conceptually, it appears that GQE will be a practical and effective macro-economic mechanism for achieving the Solar Dollar price schedule and the climate stabilisation objectives of Article 2 of the 2015 Paris Agreement (COP21). Special to this policy, is the ability to influence the rate of global economic growth (or degrowth) when such actions may be necessary because certain economic characteristics of civilisation are constrained by the Laws of thermodynamics – given that these Laws will apply to the civilisation as they apply to any and all physical systems. The policy’s operational objectives will therefore be defined by the multi-decade Solar Dollar floor price schedule. This pricing schedule will be temporally adaptive to ensure a ‘reasonable’ statistical chance of achieving the climate mitigation goals defined by the Paris Agreement. The validity of this macro-economic approach is inherent to the approach because the Solar Dollar price will only rise to a level that is actually required to achieve the climate mitigation goals of the Paris Agreement. This feature of the policy yields a theoretical argument for claiming that the Solar Dollar price signal will be necessary ipso facto, and this in turn provides a legal argument for implementing the Global 4C policy.
As indicated above, an operational goal of the Global 4C policy is to manage the Solar Dollar supply and price so that the average rate of total greenhouse gases mitigated (by mass) can be determined and influenced. A benefit of the Global 4C policy will the reliable reporting of total mitigation through the Solar Dollar supply-pegging mechanism (i.e. the total supply of Solar Dollars will equate with the total reported mass of mitigated greenhouse gases). This supply-pegging mechanism can be reported continuously, and can be managed using data that are collected daily, weekly, monthly, three-monthly, annually, etc. The achieved rate of time-averaged global greenhouse mitigation is therefore a policy metric, and this metric will be used to define the policy’s performance over time. The proposed use of the Solar Dollar supply (i.e. total currency issued) as a metric for the total amount of greenhouse gases mitigated is scientifically robust, and therefore is a valid approach for globally managing greenhouse mitigation and addressing the objectives of the 2015 Paris Agreement.
The application of the supply-pegging mechanism for issuing Solar Dollars and financially rewarding greenhouse gas mitigation work, and for recording this work, has imperfections. Notably, the total recorded amount of mitigation work will be limited by the percentage of actors who decide to voluntarily participate in the Solar Dollar issuance scheme in order to receive the Solar Dollar reward. The Global 4C policy does not force actors to participate. With this approach, the total reported amount of mitigation work could under-represent the actual. A variable (less than 100%) participation rate for the policy does not operationally undermine the policy, because the policy can adjust the Solar Dollar price in relation to the recorded mitigation rate, and also to the observed atmospheric greenhouse gas (CO2-e) concentrations.
By coupling the Solar Dollar price to observed atmospheric concentrations of CO2-e, the policy can be used to establish an empirical relationship for reducing CO2-e concentrations (i.e. the truth cures – veritas curat). By coupling the Solar Dollar price to recorded rates of CO2-e mitigated in markets, the policy can be used to establish an empirical relationship for economic decarbonisation (i.e. a price-quantity relationship). The mitigation results can be compared with projections based on a more sophisticated economic models, but given the complexity of the whole system and the numerous variables, the empirical approach offers practical advantages. Overall, the Global 4C policy will have ‘currency’ by coupling the Solar Dollar prices (future, past, and present) to observable changes in the economy and the atmosphere.
Another imperfection of the supply-pegging mechanism for issuing Solar Dollars and financially rewarding greenhouse gas mitigation work, is that some market actors may misrepresent their true mitigation work or may produce uncertain mitigation results. These imperfections are inherent to the type of work that is involved, and these uncertainties will be monitored and accounted for scientifically under the Global 4C policy. The scientific approach that is recommended, is to estimate the actual greenhouse gas mitigation amounts (by mass) and the statistical uncertainty of these amounts. The assessments will be based on universal statistical assessment rules that will be instrumental in incentivising the desired mitigation outcomes across all markets, and they will also be complemented with supporting sector specific sub-rules, and technology specific sub-rules. The universal statistical rules and the various sub-rules will be designed to ensure reliable assessments and to satisfy due diligence on the part of the owners/shareholders of the World Tree. The Global 4C policy will require transparency of assessment rules, and scope to evolve the sub-rules and add new sub-rules over time. The universal statistical rules will be set as a defining feature of the Global 4C policy, or may be introduced as features that can only be modified under specific social agreements that are aimed at protecting the public good. The Global 4C policy will use statistical methods to manage the Solar Dollar issuance and contracts that will deal with issues such as free-riding, duration, permanence of sequestered amounts, and defaulting. Under the Global 4C policy, the Solar Dollar supply-pegging mechanism will include an ability to charge all holders of Solar Dollars a demurrage fee, and this fee will be used to globally reduce the total Solar Dollar supply in response to the aggregate of defaults on contractual obligations held by the awardees of mitigation rewards issued as Solar Dollars.
Internalisation of Mitigation Costs
The Global 4C policy of using GQE will spread mitigation costs globally as uniform inflation (an inflation tax) and with minimal impact on individual firms and citizens because the costs will be diffused. The operational requirements of the approach will be met with a sophisticated computer algorithm that can undertake the calculations necessary to instruct central banks to create fiat with GQE and to trade in Solar Dollars. This approach will be managed to ensure that national trade balances are not effected, and to ensure fair spreading of inflation to each national currency. The approach in its totality will result in globalised inflation, and this may be termed a global inflation tax that will internalise the costs of mitigation into the global economy. This global inflation tax is an invocation of the Beneficiary Pays Principle (BPP), and will be used as a complement to the Polluter Pays Principle (PPP) that is invoked by carbon taxation. The Global 4C policy is therefore aiming at introducing a combination of the BPP and PPP to trigger a social transformation for deep decarbonisation and for improving social welfare in the long-run.
In the above (YouTube) video, Dr. James Hansen argues that the world needs a price on carbon pollution that reflects to the true cost of the pollution to society. Hansen advocates the Fee-and-Dividend as a climate mitigation policy, but what Hansen does not fully realise is that Fee-and-Dividend is in effect a combined carbon tax and fiscal policy for cash payments to citizens. Both taxes and fiscal policies generally suffer political delay, and so the Fee-and-Dividend does not fundamentally alter the existing problem of political delay. The standard economic worldview is irrationally biased towards the costs of carbon pollution, and has not properly evaluated the positive value of carbon mitigation. The true value of mitigation is only revealed when the new political pathways are taken into account in addition to the price-synergy that will occur when markets experience a combination of regional penalties for pollution and global rewards for mitigation. The above videos on QE should also be consulted to understand that Green QE can be used to finance sustainable economic activity.
An important macro-economic outcome of the GQE will be a transfer wealth from the general economy directly into those sectors of the economy that complete effective mitigation work, and also into a Solar Dollar economy that will be created by the policy. The term ‘Solar Dollar economy’ is appropriate because Solar Dollars will continue to circulate as official currency after they are initially issued as a financial reward for verifiable mitigation work. A key feature of the Global 4C policy, is that it will create a rising currency asset (the Solar Dollar) that firms and people can purchase to preserve their wealth whilst the global economy goes through a transformation for deep decarbonisation. The purchasing power of the Solar Dollar will increase over time as the policy is implemented, and so the policy will effectively create a scheduled rising price (or floor price) for the Solar Dollar. This schedule of rising Solar Dollar prices will create a socio-economic response that is termed a scheduled bull market – a response that is typically understood using Dow theory.
The scheduled bull market implies that holders of the Solar Dollar will benefit from a rising Solar Dollar price (a rising exchange rate) over the period of the policy and especially during a multi-decade period of rising mitigation stringency that will likely be needed to achieve the policy’s objectives. Overall, this situation represents a transfer of wealth from the general economy into the hands of firms and citizens who happen to be holding Solar Dollars, and this is a feature of the Global 4C policy that is desirable in a wider context of how currencies can operate in society, and especially in terms of the social, political, and economic effects. The expected effect will be a significant and broad change in social attitudes towards mitigating technologies and opportunities at hand for undertaking mitigation work. This change in social attitudes will have flow-on effects in the political domain and self-reinforcing feedbacks as market actors make greater profits through mitigation work and trading Solar Dollars.
A key benefit to national governments and central banks, is that the scheduled Solar Dollar bull market will invite market actors to divest their liquid assets into the Solar Dollar to preserve their wealth, make a profit, and to support the policy’s goal of attracting growing market participation. The policy approach is to allow market actors to enjoy the benefits of the rising Solar Dollar as a new asset class. With this new investment option available in markets, the cost of GQE can be divested into the private sector under a guarantee provided by the World Monetary Union for Climate Change Mitigation that the Solar Dollar price schedule will be implemented.
The political roadmap of Global 4C is radically different to the roadmap for carbon taxes and cap-and-trade policies. It has two major stages: the first stage will introduce Solar Dollars as an unofficial currency and a digital petition for economic reform, and the second stage will involve high-level negotiations under the auspices of the United Nations (UN) for a World Monetary Union for Climate Change Mitigation. This new roadmap will avoid political delay because the policy will engage directly with the political elite and central bankers. The roadmap is historically consistent with most innovations in national currencies, and the roadmap will minimise political delay because it circumvents the ‘body politic’. This roadmap can be explained with monetary theory and philosophy, and in terms of why political delay is created in the first place. Common political delay originates as competition for authority over new social agreements that could influence fiscal budgets and the wealth of actors. Monetary philosophy tells us that the need for new authority is minimal when an official currency is introduced (or modified) because currencies are generally issued as rewards (not as penalties). This philosophical background is critical to understanding the history of currencies and taxes. Superficially, it may appear that currency innovations require new authority in a manner that is similar to tax innovations, but this is categorically incorrect. New currencies are issued as financial credits (i.e. as rewards) whereas taxes are issued as financial debits (i.e. as penalties); and so the two instruments are complementary and invoke complementary opposite social responses. Given that the long-term finance for the Solar Dollar will be provided by Green Quantitative Easing (GQE), the Solar Dollar mechanism will not penalise individual firms or citizens. Therefore the inherent political delay problem will be resolved (mostly) through existing authority – and not requiring new authority. Other encouraging features of the political roadmap are that (a) a broad public petition for the Solar Dollar will provide a social mandate to bring the Solar Dollar into formal discussions, and (b) a scheduled bull market can influence the sentiment of market actors (refer below).
Fiscal policies for carbon taxes, cap-and-trade, and regulations often attract political delay because they impose costs on market actors. Global 4C offers an alternative roadmap by inviting a global social-and-environmental movement (and the digital petition) as part of the policy’s implementation strategy. The alternative roadmap brings to light the possibility that Wall Street investors, and financial markets generally, will support the new policy because it offers a win-win situation for markets. For example, those firms and industry sectors that could suffer capital downgrades (due to stranded capital) may reevaluate their options given the Solar Dollar divestment vehicle. During the pre-negotiations stage of the Global 4C policy, there will be a tipping point upon which markets will switch from bear to bull over the Solar Dollar proposal. The elite planners and central bankers may be involved in influencing this shift from bear to bull, thereby creating the conditions necessary to bring negotiations to a rapid conclusion. Feasibility of this political roadmap is supported by monetary theory, monetary history, digital currency technologies, laws already established for digital currency and Bitcoin trading, technology trends in financial markets, and statements by banks and other institutions that acknowledge the importance of the Bitcoin blockchain technology.
(hypothetical example for illustrative purposes)
Figure 3. Politico-economic analysis suggests that (Top) the Solar Dollar and World Tree can be implemented quickly with a design-and-build approach because it invites decentralised authority, and (Bottom) the carbon price is challenging to introduce because it relies on centralised authority.
2. Money and Currencies
“Money is magic.”
Charles Eisenstein (Sacred Economics)
Most of the money in your pocket and bank account was created by commercial banks as loans. But Solar Dollars will be different, because it will be created as a reward for enterprises: a reward that is issued in proportion to greenhouse gases mitigated. This will require a world monetary union to authorise the transfer of mitigation costs into the economies of nations. Daily trade in currencies is at least 4 trillion USD or about 7% of world GDP. This shows that currencies are well suited to transferring wealth at the scale needed to strongly mitigate climate change. A new reserve currency has been discussed by the IMF , however Global 4C is not a policy for creating a world reserve currency, nor is it a policy for creating a one-world currency. A report by Bernard Lietaer et al. (2012) concludes that the “missing link” in the global economy is monetary innovation. Lietaer et al. (2012) proposed the ECO as an international currency and a carbon tax on wealthy firms. The main difference between this Global 4C proposal and the ECO proposal, is that Global 4C is based on rewards and the ECO is based on penalties.
“…our money system systematically encourages unsustainable behaviour patterns that may end up threatening human survival on this planet. In fact, this Report shows that the current money system is both a crucial part of the overall sustainability ‘problem’ and a vital part of any solution.”
What is Money?
In regular life, most people use the terms ‘money’ and ‘currency’ interchangeably. A classic definition of money is that it is a conceptual model (not a thing) that defines four essential functions:
“Money’s a matter of functions four, a Medium, a Measure, a Standard, a Store”
Milnes, Alfred (1919). The economic foundations of reconstruction. Macdonald and Evans. p. 55.
A classic definition of a currency is that it is a tool that is used in the real-world. A currency is therefore different to money, because currency is a tool whereas money is a blueprint. In other words, currencies bring money to life in the economy.
The literature shows that the word ‘standard’ and the phrase ‘standard of deferred payment’ have been used to describe money. A key feature of a standard is that it requires a social agreement to enforce the standard. Furthermore, all currencies require one or more social agreements whether they are defined explicitly (e.g. laws) or implicitly (e.g. ability to mine gold).
Table 1. Definition of money based on its primary functions
|Basic Definition||Classic Definition||Scientific Definition||Function Type (Topic)|
|(1) measure||(1) unit of account||(1) unit of account||logical (what is counted?)|
|(2) credits of account||logical (who is credited?)|
|(3) debits of account||logical (who is debited?)|
|(2) medium||(2) medium of exchange||(4) media of exchange||tangible (what is it?)|
|(3) standard||(3) social agreement||(5) relationships of exchange||tangible (how is it?)|
|(4) store||(4) store of value||(6) values in context||tangible (why is it?)|
A refinement of the classic definition of money is to define the three primary logical functions for money: unit of account, credits, and debits. The three logical functions are needed to process information that describe changes in ownership (e.g. on a ledger). Money therefore has three logical functions and three tangible functions. All six functions were combined by Chen, Cloud and van der Beek (2015) into one symbol that is called the Triadic Logos of Money (see Fig. 4). The Triadic Logos of Money is a robust and concise definition of money. It reveals that money is comprised of a triangular frame with three struts (the tangible functions) and three pins (the logical functions). If a tool can be built that satisfies the Triadic Logos of Money, then the tool can function as a currency. In practical terms, if any of the pins or struts is somehow broken, then the frame will collapse and the currency will be broken as a tool.
Figure 4. The Triadic Logos of Money is a symbol and blueprint for money (Chen at al. 2015 ).
Three Principal Currency Types
The unit of account is a formative idea that seeds all currency systems. The unit of account simply defines what we are counting when we count a currency. From philosophy we can state with confidence that there are only three types of discrete units of account, namely: things, actions, and virtual. Based on this logic, there are three principal types of currency, namely: (i) commodity currencies that count things, (ii) fiat currencies that count virtually, and (iii) service currencies that count actions.
Commodity currencies are well understood because their historical usage spans millennia, and because certain goods are useful as currency (e.g. silver). The word ‘fiat’ is Latin for “it shall be” – confirming that fiat currencies have units of account that are virtual. The unit of account of fiat has no direct relationship to specific goods or services, but fiat is appealing to nation states for important reasons, including: (a) to facilitate economic growth in the age of fossil fuels, (b) to protect the nation state with financial liquidity, and (c) to create flexible banking and financial models for the ruling class.
Service currencies are not yet recognised because there are no historical precedents for governments, and the service currency represents a potential new innovation. What is not generally understood is that the unit of account of the standard carbon tax is the opposite of the unit of account that defines a service currency for mitigating climate change. Also, the service currency’s unit of the Solar Dollar proposal already exists with carbon offset trading, but carbon offsets are a weak form of currency – weak because they do not have the social agreements and administrative systems for an official currency. Representative currencies are commodity currencies that have a medium of exchange that is different to the underlying commodity. If a unit of account was to denote a share of assets (e.g. commodities, fiat, financial investments) then this currency might be called a share currency, but the idea of a share currency is not considered a principal currency type.
Table 2. Three Principal Currency Types
|Type of Units||Type of Currency||Example|
|Commodity||Commodity Currency||Spanish Real (Silver)|
|Service||Service Currency  ||Solar Dollar|
(i) A representative currency is a commodity currency with a medium of exchange that differs from the unit of account.
(ii) A currency that has a unit of account representing a mixture of assets could be called a share currency.
3. Solar Dollar Blueprint
Unit of Account (The Key)
The Solar Dollar will have a unit of account of 100 kg of CO2-e verifiably mitigated. This is defined under a Carbon Monetary Standard. The Solar Dollar will be an official currency and will not be issued as a tradable pollution offset, credit, or a tax. The unit of account is ‘The Key’ because it seeds the logical framework for the entire policy. The choice of unit of account is critically important, because it defines what society is ‘counting’. By adopting ‘100 kg of CO2-e verifiably mitigated’ as the unit of account of an official currency, the currency can be used as a measure of greenhouse gas mitigation. An official currency based on this unit of account will also represent a major departure from the traditional monetary standards of commodity currencies (e.g. the gold standard) and fiat currencies (e.g. the floating exchange rate system).
Administrative System (The World Tree)
The Solar Dollar will be managed and delivered through a digital administrative system that will be implemented over the Internet, banking systems, and mobile phone communications. Technologies that enable decentralised currencies, programable digital currencies, and digital contracts may be used, and are likely to enable critical administrative tasks. We call the administrative system the World Tree. The purpose of the World Tree is to apply the monetary blueprint of the Solar Dollar, and that blueprint is represented by the Triadic Logos of Money shown in Figures 5. By some coincidence or special relationship, the three struts of the Logos are correlated with three well-known religious motifs, called the Tree of Life, the Tree of Knowledge, and the Kabbalah Tree of Life (see Fig. 5 and read below). This correlation of the World Tree blueprint with the story of Genesis is explained below with ontological reasoning. The reader is encouraged to consult Figures 4 and 5 and Table 1 when reading the following sections.
Figure 5. The Triadic Logos for the Solar Dollar, and the blueprint of the World Tree.
Medium of Exchange (Digital Tree of Knowledge)
Since the late 20th century, national currencies have been traded as digital records over computerised networks. These days only a relatively small percentage of national currencies actually exist as physical banknotes and coins. Modern currencies are therefore bits-and-bytes sent over networks and stored on computer systems. This has massively increased our capacity to associate currencies with other types of information and communications. The medium of exchange for the Solar Dollar is therefore an information and communications network. In this situation, we have not changed the definition of money, but we have realised that money can be integrated into the Internet, banking, and tele-communications networks.
Global 4C will utilise global digital networks to ensure that the Solar Dollar is available from the Internet and mobile communications. What this means philosophically, is that we will combine the concept of money and with the concept of decentralised intelligence. Given that a ‘tree topology’ is an effective architecture for network decentralisation, we may claim that the media of exchange for the Solar Dollar is in fact a ‘tree of knowledge’. This reference to a tree of knowledge correlates with the Tree of Knowledge as described in the book of Genesis.
Store of Value (Biological Tree of Life)
Fiat currencies, which are created mostly by fractional reserve banking, are ideal for rapid economic growth and financial speculation because the fiat supply is readily increased as new loans or by Quantitative Easing (QE). Plutocrats may have privileges provided by the banking model and currency markets, and this may contribute to wealth inequity. In any case, a currency’s value is always contextual, especially given that currencies are created for multiple purposes and stakeholders. Most national currencies are designed for the following common values:
• To provide citizens with a convenient tool for trade and investing (a personal benefit).
• To resolve the double coincidence of wants in markets (a social benefit).
• To build a nation state with economic vitality, stability, and geopolitical influence (a national benefit).
The above three common values do not specifically include the global context of the climate system, ecosystems, and human rights. Our existing currency systems are simply not designed to protect the climate, ecosystems, or agriculture, and nor are they designed to maintain peace and security. Global 4C introduces a new currency system, the Solar Dollar, that could create a fourth common value in a global context:
• To stabilise the climate system and protect the planetary ecosystem (a global benefit).
If the Solar Dollar is used to help protect the planetary ecosystem, then the store of value (i.e. its value in a global context) will include the biological tree of life. This reference to the tree of life correlates with the Tree of Life as described in the book of Genesis.
Social Agreement (Institutional Tree of Life)
To define the complete social agreement for the Solar Dollar, it is necessary to define the major new institutions to manage operational tasks (see Figure 6). The primary institution will be (1) an international agreement which may be called a World Monetary Union for Climate Change Mitigation. The other new institutions can be grouped into institutions for currency markets and mitigation markets.
The first group, for currency markets, includes (2) a monetary protocol for central banks to conduct Green Quantitative Easing (GQE) and to trade Solar Dollars with fiat currencies, and (3) a team of experts who will estimate the multi-decade floor price schedule for the Solar Dollar. These floor prices will be fed into the monetary protocol. The central banks will interact with (6) the Solar Dollar, and the world currency market (shown as a dotted circle in Figure 6).
The second group of institutions are those required to manage global mitigation markets. These may be grouped into (4) an institution to manage assessment rules for all types of greenhouse abatement; and (5) an institution to manage assessment rules for all types of greenhouse sequestration including bio-sequestration with land management. The other major institutions for mitigation include those for (7) verification to reduce free-riding; (8) mitigation assessments and auditing; (9) managing software, data, and physical networks; and (10) the global mitigation market. The entire ensemble of ten major new institutions and twenty-one major relationships has correlation with the Kabbalah Tree of Life.
Figure 6. The social agreement for Global 4C will require at least ten major new institutions for operational purposes (Chen at al. 2015 ).
4. World Monetary Union for Climate Change Mitigation
The Global 4C policy recommends the establishment of a World Monetary Union for Climate Change Mitigation. The main objective of the world monetary union will be to ratify the various social agreements that are needed to operationally apply the Global 4C policy, and to internalise mitigation costs into the global economy.
The world monetary union will ratify a protocol that can (semi-autonomously) transfer purchasing power from a large basket of national currencies into the Solar Dollar, and this will aim to create uniform inflation in the currency basket (i.e. an inflation tax) as the primary funding mechanism. This transfer process will require central banks to create more fiat currency with Green Quantitative Easing (GQE), and then trade this fiat for Solar Dollars in the open market. Central banks can keep Solar Dollars in their reserve accounts, and they will use their reserves to maintain smooth price rises in the Solar Dollar market. Their objective will be to lift the Solar Dollar exchange rate to meet a rising floor price schedule that is determined by an expert panel of scientists and economists for achieving mitigation goals. The expert panel can base their assessments on actual greenhouse gas concentrations and fluxes, and on the results of various computer models.
The world monetary union will raise the Solar Dollar price for however long is necessary to reduce greenhouse emissions – in an attempt to reach a specific mitigation target. Solar Dollar floor prices for the next 50-100 years will be ‘telegraphed’ to markets for forward planning, and this will create a long-term Solar Dollar bull market for investors and citizens (see Fig. 7). The rising value of the Solar Dollar will attract private finance (as people purchase the Solar Dollar) and this will result in growing patronage for the policy and a divestment of the costs from the central banks into the private sector. This divestment will be possible with a central bank guarantee under the World Monetary Union for Climate Change Mitigation. The overall effect of the Solar Dollar mechanism will be to create a new system that gains momentum through a self-reinforcing socio-economic feedback: commonly termed the ‘bull market’. This approach may circumvent the ‘profit motive‘ that often delays political progress on taxation, and it also satisfies a need for new robust institutions  for stabilising the climate.
Figure 7. Global 4C will create a scheduled ‘bull market’ in the Solar Dollar during the 21st century.
(hypothetical example for illustrative purposes)
5. This Changes Everything: But what about Keynes?
“We have procrastinated for so long and allowed carbon emissions to rise year after year so there are no non-radical options left on the table. We cannot do this without radical changes to our political and economic system. This was not always so.”
Naomi Kliene said that capitalism and Keynesian economics are not enough to deliver effective climate policy. But what is an effective economic policy for the climate? Ironically, John Maynard Keynes’s proposal at the 1944 Bretton Woods conference provides a clue. Keynes recommended a supranational ‘unit of account’ called Bancor. Bancor would have been used to track and clear international flows of wealth and to manage trade with incentives to avoid trade deficits or surpluses (refer Triffin Dilemma). Ideas and proposals for globally-coordinating supra-national currency systems are therefore not new, however a supranational unit of account for climate change mitigation is not discussed in the modern narrative on climate change economics. The reasons for not bringing these concepts into the mainstream narrative may be as simple as a lack of cross-disciplinary thinking. Global 4C policy is the product of bold cross-disciplinary analysis, and it is a policy that integrates monetary theory, natural sciences, economics, social psychology, and political science.
Many nations experienced sporadic and sometimes painful monetary innovations in response to two great wars, economic cycles/depressions and trade imbalances. Since about 1820, the important macro-economic trends have been linked to the availability of fossil energy (coal, oil and gas) because fossil energy is the primary feedstock for industrialisation, rising living standards and rising populations. However, since 1820, monetary policy has been limited to two key monetary approaches: (1) gold exchanges for currency convertibility, and (2) floating exchanges for economic expansion. Given that we have faced the climate emergency for several decades without an adequate global response, is now the time for innovating a new monetary system?
With Global 4C, we can move our attention away from the politics of capitalism versus socialism, and focus our attention on designing and building a service currency under a Carbon Monetary Standard (see Fig. 8, zoom to image). This is a scientific approach to economic reform, and a reason for inspiration and hope. The Carbon Monetary Standard may also reveal bold new ideas for evolving the economy beyond the neoliberal economic model, and for addressing other environmental and social problems that are the responsibility of our generation. For these and other reasons, the Carbon Monetary Standard is likely to be more important than the Gold Monetary Standard of yesteryear.
6. Key Terms
|Carbon Monetary Standard ||A unit of account defined as 100 kg CO2-e verifiably mitigated, and various social agreements that support it.|
|Commodity Currencies||A currency type based on a unit of account that records a commodity. It has economic value, and intrinsic value associated with a commodity.|
|Fiat Currencies||A currency type based on a unit of account that records virtually. It has economic value.|
|Service Currencies  ||A proposed currency type based on a unit of account that records a service. It has economic value, and intrinsic value associated with a service.|
|4C||Complementary Currencies for Climate Change (4C) is a proposed parallel world currency system based on the Carbon Monetary Standard.|
|Global 4C  ||The proposed Global 4C Mitigation policy that will implement 4C and manage the economy for strong climate mitigation.|
|Solar Dollar||The proposed trading name of 4C.|
|World Tree||The proposed trading name of the digital administrative system for managing 4C (i.e. Solar Dollars) over computer networks.|
|Platonic Economic Symmetry||A theory proposed here, which states that certain principal pricing instruments express natural symmetry in terms of their form and function, and that these instruments can be used in a complementary policy framework.|
|Pigovian Family ||A proposed classification system for market-based environmental policies. A family of policies is defined based on the unit of account and Platonic Economic Symmetry.|
Chen D., J. Cloud and J. van der Beek (2015). ‘Global 4C: World Monetary Union for Climate Change Mitigation’. 2015 Canberra Conference on Earth System Governance: ’Democracy and Resilience in the Anthropocene’. Delton B. Chen, Jonathan Cloud, Joel van der Beek (November 20, 2015).
Chen, van der Beek, Cloud, Jin, Borrego, (2015), World Currencies for Sustainability, World Economics Association (WEA) Conferences, No. 1 2015, Ideas towards a new international financial architecture?, 15th May – 20th July, 2015.
IMF (2010). INTERNATIONAL MONETARY FUND Reserve Accumulation and International Monetary Stability Prepared by the Strategy, Policy and Review Department In collaboration with the Finance, Legal, Monetary and Capital Markets, Research and Statistics Departments, and consultation with the Area Departments Approved by Reza Moghadam April 13, 2010.