Using Public Banks to Finance Climate Solutions

 

David Cobb

 

Readers of the EcoNews know that we are in a climate crisis, so there is no need to convince you of that reality. The purpose of this writing is to describe how Public Banking could be used to finance solutions. (NOTE: I am not suggesting that Public Banking is the only way to finance climate solutions. In this issue a Municipal Bond for green infrastructure is also discussed.)

A recent report from “Project Drawdown” identified over 100 concrete solutions that could be implemented immediately if the political will existed to do so. If these solutions were all scaled together we would reach what the organization calls “drawdown”—the point where greenhouse gas levels in the atmosphere peak and begin to drop—as early as 2040. 

“We look at individual solutions to climate change that actually exist in the real world,” says Jonathan Foley, executive director of Project Drawdown. “They’re not just in the lab, they’re not a startup somewhere that’s talking about it, they actually exist in practice today. And we ask fundamental questions like, how big could it be? How effective at removing or avoiding greenhouse gas emissions would it be? What does it cost to build it and what does it cost to operate it?” It’s an updated version of an analysis that the organization did in 2017, leading to a best-selling book called Drawdown.

Why aren’t these practical solutions being deployed? Because they are not “financially feasible.” In fact, horrific fossil fuel infrastructure projects (including tar sands and fracking) are being financed by private Wall Street banks because they are profitable. Never mind that they are going to doom us all.

And that is the core of it — privately-owned banks operate to maximize shareholder profit.  They invest in projects that accelerate the climate climate crisis in pursuit of short-term profit. 

Public Banks are different — they operate in the public interest, and democratize public financial decision-making. So not only could such an institution finance climate change solutions, they can reduce taxes while doing so. That’s because they do not need to charge interest to themselves in an effort to provide shareholder profit. Eliminating interest (the privilege of borrowing money) can reduce the cost of any public infrastructure project as much as 40%.

In Oct 2019 Governor Newsom signed legislation that allows the creation of 10 local/regional Public Banks in CA over the next 7 years. The law requires that any public bank be organized as a nonprofit public benefit corporation and owned entirely by cities/counties, governed by independent boards of directors, and run by professional bankers.

Humboldt county is too small to capitalize a Public Bank, but we could become depositors in what will be the Public Bank of San Francisco. As could every city and town, every school district, fire district, and community services district in Humboldt County.

And the good news is that the San Francisco Board of Supervisors is considering creating a Task Force to apply for a Public Bank charter, and authorized $350,000 for the effort.

If you are interested in learning more, check out https://cooperationhumboldt.com/public-banking. If you want to help build the movement for Public Banking locally, contact David Cobb at davidkcobb@gmail.com.