World Future Council calls for the use of Special drawing rights by the IMF
Durban, Hamburg December 7th, 2011. Today the World Future Council called upon delegates of the UNFCCC summit in Durban to consider using the Special Drawing Rights currency of the International Monetary Fund (IMF) in an innovative way in order to help developing countries switch to renewable energy. According to the concept introduced at an official side event of the UN conference today, such an approach would break the funding deadlock of the Green Climate Fund. More than 100 states had committed in Cancun to establishing this fund, which would provide 100 billion dollars per year from the major CO2 emitters for developing countries to adapt to and mitigate climate change. During the last days of the climate conference in Cancun, however, delegates could not solve the question of where the money should come from.
“What we need is a new and global financial source able to generate at least $100 billion a year at once, without the imperative of redistributing existing funds,” says Jakob von Uexkull, founder of the World Future Council. This organisation, based in Hamburg, Germany, stresses that its proposal would not create new debts. Nor would it create inflation, since the new money would be paid only against performance: according to the WFC, new economic value and new green jobs (new wages and new revenue) would be created in developing countries by using the new money. The money would only pay directly for renewable energy infrastructure projects.
One possibility to fund climate solutions is to co-finance renewable energy “feed-in tariff” policies. The World Future Council called this policy the world’s best legislation to unleash the development of renewable energy. These policies provide much needed investor security and for all forms of renewable energy. It has been proven to be the fastest way to put the most gigawatts of renewable energy online.
The IMF has the ability to create new international reserve money in the form of its own book-keeping asset, the Special Drawing Rights currency (SDRs). Many financial experts assume that SDRs will play a greater role in the international monetary system in the near future. In April 2009, the G20 Summit authorised the IMF to reanimate the SDR currency and to issue new SDRs worth $250 billion to tackle the financial crisis. Stefan Schurig, Director Climate and Energy of the World Future Council said in Durban: “If SDRs are effective in bailing out banks and saving financial markets, this mechanism can be used to mitigate climate change, which is ultimately a bigger threat to human beings than the current economic crisis.”
According to the World Future Council the advantage of its SDR approach is that resources totalling $100 billion a year would be immediately available. No country would be required to overstretch its national budget. Additionally, given the typical underutilisation of global production capacities, no significant inflationary impulse would be anticipated from the new demand.
World Future Council
Director Climate and Energy
Tel: +49 177 25 100 19 in Durban