University of Warwick Economist Professor Andrew Oswald is to call for the introduction of innovative Global Warming Bonds that would financially reward companies and individuals that reduce emissions now but which would be paid for by taxes on those yet to be born.
At a policy briefing at the University of Warwick's London Office at 3 Carlton House Terrace at 10.30am on Wednesday 9th of February, Professor Oswald will argue that to save the planet we need a new kind of financial incentive. He will suggest a form of long-dated bond that would be valuable today even though it would not begin paying until around 2045. These bonds would be given out to reward those people and firms who reduce emissions today. Taxes on those yet to be born would fund the bonds - our children's children would thereby pay to solve global warming.
Professor Oswald will say:
"Carbon dioxide emissions now get more attention than ever, but the focus has been on getting lots of countries to attend meetings and sign up to treaties. That is useful but unlikely to make fast headway. What is required is an innovative way to allow unborn babies to vote with their wallets."
"In return for a cooler globe, our offsprings's offspring would pay more tax to the governments of their era. Future generations pass us down their money; in return we pass them up our low temperature. All generations gain. And this would be fair, because those future generations will be richer than we are, and they want us to alter our actions to help them."
"The people who today inhabit the globe receive almost no benefit from cutting back on greenhouse gases. All they get is inconvenience. Unborn voters of the next century do not have the same preferences as us. We like old sports cars and oil-fired central heating. They want us to have small new cars and use solar panels. Global Warming Bonds would provide people with a reason to change how they act."
"I believe that the problem of climate change is best tackled by inventing a new kind of long-dated government bond (a certificate that would pay out cash in the future) and giving those out as incentives to people who today reduce their emissions. Money is a great persuader - we should use financial incentives not complicated restrictions and rules."
"The world's nations would issue a new kind of government bond. These would pay a steady stream of income that would start paying one full generation away from today say around 2045. Firms, nations and individuals that cut back emissions today would be compensated with these bonds. The bonds would also be bought and sold. As they guarantee a future flow of income, they would have immediate value. Recipients would mostly promptly sell up for cash. Many bonds would be purchased by pension funds and organizations interested in long-term returns."
The briefing paper "Energy and Travel in the Future" is downloadable from Professor Oswald's website: www.oswald.co.uk
For further information contact:
Professor Andrew Oswald Professor of Economics,
University of Warwick
Tel: 02476 523510
IPeter Dunn, Press and Media Relations Manager, University of Warwick 024 76 523708 or 07767 655860 email firstname.lastname@example.org
PR7 9th February 2005