Funding of the Energy Transition by Monetary Sovereign Countries

Mark Diesendorf and Steven Hail
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Mark Diesendorf: Faculty of Arts, Design & Architecture, School of Humanities & Languages, UNSW Sydney, Sydney, NSW 2052, Australia
Steven Hail: Business School, Torrens University, Wakefield Street, Adelaide, SA 5000, Australia

Energies, 2022, vol. 15, issue 16, 1-14

Abstract: If global energy consumption returns to its pre-pandemic growth rate, it will be almost impossible to transition to a zero-emission or net-zero-emission energy system by 2050 in the absence of large-scale CO 2 removal. Since relying on unproven technologies for CO 2 removal is speculative and risky, this paper considers an energy descent scenario for reaching zero greenhouse gas emissions from energy by 2050. To drive the rapid transition from fossil fuels to carbon-free energy sources and ensure demand reduction, funding is needed urgently in order to implement four strategies: (i) technology change, i.e., implementing the growth of zero-carbon energy production, end-use energy efficiency and ‘green’ energy carriers, together with ongoing R&D on CO 2 removal; (ii) reducing climate impacts; (iii) reducing energy consumption by social and behavioural changes; and (iv) improving human wellbeing while increasing social justice. Modern monetary theory explains how monetary sovereign governments, with their own fiat currencies, can create the necessary funding without financial constraints, although constraints do result from the productive capacities of their economies. The energy transition could be part-funded by a significant transfer of resources from monetary sovereign countries of the global North to the global South, financed by currency issuance.

Keywords: energy transition; energy descent; renewable energy; energy consumption; steady-state economy; monetary sovereignty; modern monetary theory (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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