Contingent loans to reduce taxation and greenhouse gas emissions

The profits will produce taxes, part of which can then be used to repay the zero interest loans. This will reduce greenhouse gas emissions but without increasing the price of energy. It will remove the need to issue emissions permits as a way of increasing the cost of fossil fuel burning energy plants, which in turn encourages investment in renewable energy plants. It is likely that the cost of energy will drop with the consequent economic benefits flowing to the economy.

The zero interest loans feed into the regular economy after the money has created an asset. This means the government has a guaranteed way of increasing the money supply and at the same time knowing that the money is backed by a productive asset. This reduces the need for banks to create money through lending money they do not have.

This breaks the connection between debt and money for the Australian economy and so frees the monetary system from the destabilising positive feedback of debt. This may lead to a much more stable Australian financial market that may decouple Australian money from the excesses of foreign debt markets.

It is estimated that $20 billion of investments in renewables per year will reduce Australia's net greenhouse gas emissions to zero within 10 years.

The loans will be invested efficiently as they will be invested through a stable market place of investment opportunities.

The size of the loans criteria could also include an income criteria so that the poorer the person is, the higher the loan. This reduces the need to increase social security payments. As a person receiving a loan can sell the loan for unrestricted cash, it allows recipients to choose between immediate cash and the long term income from their investment.

Implementation and running costs

The cost of implementation and running the system would be covered by a transaction fee paid by merchants in the market place. For large amounts of money this would be as low as 1 per cent.

The system could be introduced and run for no cost to the government. The government, including the Treasury, could be paid for the cost of ensuring compliance from the merchant transaction fees.

How effective will it be in reducing greenhouse gas emissions?

Buyers and sellers as part of their terms and conditions would agree to provide ongoing information with respect to the effectiveness of the investments. The system can be tuned to favour those products and services that give greater emissions cuts for the same amount of money. It is likely that the system will reduce greenhouse gas emissions for the lowest cost.

Other infrastructure systems