Money, Markets and Climate Change

CONTEMPORARY ISSUES FOR HETERODOX ECONOMICS, Lynne Chester, Michael Johnson and Peter Kriesler, eds., December 2008

23 Pages Posted: 23 Nov 2008 Last revised: 4 May 2009

See all articles by Shann Turnbull

Shann Turnbull

International Institute for Self-Governance; Sustainable Money Working Group; New Garden City Alliance

Date Written: May 3, 2009


Climate change has been identified as “The biggest market failure the World has ever seen”, (Stern 2006). This paper identifies the cost of finance as an influential element of this market failure and how it can be removed. One approach would be to use a renewable energy backed currency to build a complementary more efficient, stable and resilient financial system. The equivalent investment cost per kilowatt-hour (kWh) of generating electrical power from renewable sources is typically a number of times greater than that from burning carbon. This makes the financing cost of renewable electricity generation a number of times greater. However, the operating costs of most renewable electricity sources are significantly less, as the cost of fuel is eliminated and labour costs reduced. The incentive for markets to allocate resources to burning carbon rather than to invest in renewable power would be reduced if the cost of finance for renewable electricity generation was eliminated. Two approaches are considered: (i) Selective monetary policies to introduce interest free Islamic Banking and/or (ii) The introduction of kWh vouchers to pay for renewable electricity that could be used to create an alternative decentralised global currency. The resulting renewable “Energy Dollars” would create a unit of value independent of any increases in the costs of coal, oil, gas or taxes on their consumption.

Keywords: Climate change, Demurrage currency, Energy money, Financial system, Islamic Banking, Market failure, Monetary policy, Seigniorage, Stamped script

JEL Classification: D49, E50, G28, N50, Q42

Suggested Citation

Turnbull, Shann, Money, Markets and Climate Change (May 3, 2009). CONTEMPORARY ISSUES FOR HETERODOX ECONOMICS, Lynne Chester, Michael Johnson and Peter Kriesler, eds., December 2008, Available at SSRN: or

Shann Turnbull (Contact Author)

International Institute for Self-Governance ( email )

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SKYPE: shann.turnbull

Sustainable Money Working Group ( email )

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New Garden City Alliance ( email )

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