Carbon Money

Abstract

While we have made some recent progress in the direction of creating a new system of climate finance, the latter would be greatly boosted if linked to a new type of money directly funding carbon mitigation. We see first preliminary manifestations of such carbon money, notably three different kinds of international emission-reduction certificates issued under the Kyoto and Paris accords as a sort of carbon credit as well as privately traded carbon offsets . The booming trend toward cryptocurrencies, fueled by the transformative blockchain technology, opens the way for digital carbon tokens as a potentially useful new carbon-money category. But we can also envisage a much more deeply embedded system of carbon money at the center of eco-capitalism, by means of fully monetized carbon certificates entering the banking system. Such carbon money can fund mitigation investments, reward actors for keeping within their assigned carbon budgets, turn emission reductions into a source of revenues (as a new business model), and help liquidate “stranded” high-carbon assets.