Rethinking Economics for Managing the Systemic Risks of Climate Change
January 14
5:00 PM - 6:00 PM
Online
Dr Delton Chens discuss the concept of a “carbon reward”. This is a new market policy framed by a new theory called “carrot and stick carbon pricing”. Delton emphasizes that traditional market mechanisms and economic models fail to account for the systemic risks linked to greenhouse gases. The carbon reward will be used to drive capital flows into low-carbon projects at the volume required to address the Paris Climate Agreement.
The carbon reward introduces a new market tool and asset class for investors, called a “carbon currency”. The carbon currency will be used to develop bankable low-carbon projects in all economic sectors and geographic regions that need support, and it will align mitigation outcomes with the profit motive and fiduciary duties of the private sector. At a macro-financial level, the carbon currency will price systemic risk into the financial system. This includes filling the US $3 to $8 trillion per year gap in climate finance. This will be achieved by backing the carbon currency with central bank guarantees and inducing a voluntary reallocation of financial capital. The new policy will dissolve political gridlock by diverting costs away from the balance sheets of stakeholders.
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