The blockchain is the enigmatic technology that gave birth to Bitcoin and the cryptocurrency move... more The blockchain is the enigmatic technology that gave birth to Bitcoin and the cryptocurrency movement. By fate or by good fortune, carbon markets and cryptocurrencies face common problems: a need to find consensus on data, and a need to trade value between distrustful strangers. Could the blockchain ledger enable a consensus on carbon budgets, and deliver value for carbon mitigation services? Could blockchain technologies help to resolve the climate crisis? To answer these questions we need to examine the opportunities for decentralized ledgers in carbon and energy markets. Here we show that the blockchain offers a unique opportunity to improve accountability in carb¬on markets and to develop renewable energy micro-grids, but for the blockchain to reach its full potential—to be the game changer—it should be combined with macro-economic policies and macro-prudential regulatory frameworks that can finance a multi-trillion dollar transition.
Global 4C is a new international climate mitigation policy that adopts a risk management framewor... more Global 4C is a new international climate mitigation policy that adopts a risk management framework. Global 4C offers a financial reward for mitigation and aims to internalise a Risk Cost of Carbon (RCC) into the economy. Carbon taxes (i.e. carbon prices) are essential for internalising the Social Cost of Carbon (SCC), however a SCC-RCC duality is inferred with an epistemological method and is supported with a new hypothesis, called the Holistic Market Hypothesis. Based on the inferred SCC-RCC duality, a system of complementary market pricing is proposed as an effective response to emerging climate systemic risk and fat-tailed probability distributions for the Earth’s climate sensitivity.
The recommended policy instrument is a currency, called Complementary Currencies for Climate Change (4C). 4C should be priced in foreign exchange currency markets (Forex) to mirror the RCC and to incentivise a spectrum of mitigation services, including clean renewable energy and carbon sequestration. A public broadcast message for climate systemic risk should be made each year, in the form of a ‘100-year advance 4C price alert’, which is an assurance of reward prices for carbon mitigation (i.e. the 4C exchange rate) under a Carbon Exchange Standard (CES). The CES is a macro-prudential protocol for central banks to provide collective insurability against climate catastrophe and incentives for socio-ecological co-benefits.
The future viability of our civilization is in serious doubt because of Anthropogenic Global Warm... more The future viability of our civilization is in serious doubt because of Anthropogenic Global Warming (AGW) [3][5][6], chronic degradation of ecosystems [9][30][45], and risk of nuclear war [64]. These harms and risks are related to unchecked economic growth, fossil fuel usage, resource consumption, and militarization. Civilization is evidently in need of systemic change to avoid collapse and to build restorative networks [50][52].
We submit that a public policy has been overlooked that could facilitate a socio-economic transformation for stabilizing the climate. We call the policy Global 4C Mitigation, but because it is historically unprecedented, a new theoretical framework is derived to rationalize money-and-markets and to describe the policy. The framework recognizes that there are three primary currency options: commodity, fiat, and service currencies [10]. The framework also groups market-based environmental policies into Pigovian Families that have a common unit-of-account. Each family includes taxes (Father), tradable permits (Son), standard subsidy/reward schemes (Daughter), and ‘reward and service currencies’ (Mother).
Global 4C Mitigation is the Pigovian Mother of climate mitigation policy because it invokes the reward and service currency option for greenhouse gases. Recommended is a parallel world currency based on a Carbon Monetary Standard to create a truly global price. The new currency system is termed Complementary Currencies for Climate Change (4C), and 4C is to be issued for greenhouse mitigation and sequestration in a global reward scheme. 4C prices are to be scheduled to rise under monetary protocols that incentivize greenhouse gas mitigation in concert with carbon tax and cap-and-trade schemes. Rising 4C prices should be arranged with international Green Quantitative Easing (GQE) [21] and guaranteed by a World Monetary Union for Climate Change Mitigation.
A roadmap is available to fast-track 4C implementation. The first stage, called the ‘Seed’, requires raising financial capital to develop a secure Global 4C Digital Network for issuing and trading 4C over the Internet and mobile phones. This network should be decentralized, trusted, scalable, international, and available to enterprises and citizens in urban and remote regions. The roadmap involves a global social-and-environmental movement with a novel political pathway to initiate negotiations for the World Monetary Union. Global 4C Mitigation may well lead to genuine Earth System Governance [18] and a self-regulating economy that can lessen poverty, inequity, and debt over the long run.
North Stradbroke Island (NSI) is a large forested sand island that supports a variety of social a... more North Stradbroke Island (NSI) is a large forested sand island that supports a variety of social and economic activities. The island also contains a significant volume of potable groundwater that is of value to many stakeholders.
In 2003, the Queensland Government’s Department of Natural Resources and Mines produced a groundwater model and report for the North Stradbroke Island (Chen, 2003). This model has been called the ‘2003 model’. In 2013, the Department of Science, Information Technology, Innovation and the Arts released a report on a newer groundwater model, that is otherwise called the ‘2008 model’ (Leach and Gallagher, 2013). The ‘2008 model’ report was prepared for the Queensland Government’s Department of Natural Resources and Mines.
This discussion concerns the narrative contained in the technical reports for the 2003 and 2008 models. This is not a model review, but a commentary on the narrative of the 2008 model report and its inconsistencies with the literature.
The 2007-9 global financial crisis, the post-2009 Eurozone debt crisis, and growing inequality ar... more The 2007-9 global financial crisis, the post-2009 Eurozone debt crisis, and growing inequality are reasons to critique the world financial system. More disconcerting are scientific findings that civilisation’s impacts on the environment are approaching ‘planetary boundaries’ (Steffen et al., 2015) such as catastrophic climate change and ocean acidification. This paper presents a proposal for Complementary Currencies for Climate Change (4C) and it’s associated mitigation policy, called Global 4C Mitigation (G4CM), with the specific aim of achieving strong mitigation of climate change and improved economic conditions (Chen & Cloud, 2014).
4C is a market-and-monetary instrument that will complement the international financial architecture to help correct the existing market failure in environmental externalities associated with greenhouse gases (Stern, 2007). The unit of account of 4C is 100 kg CO2-e verifiably mitigated, and this unit of account is unique in terms of official money because it is based on services rather than commodities or fiat banking. 4C issuance will be administratively coupled to mitigation services, and 4C issuance will be delivered globally as proportional subsidies for the de-carbonisation of industrial and power installations, and as proportional rewards for carbon sequestration. We call this incentive mechanism Globalised Payments for Ecosystem Services (GPES) and it will be implemented under the Beneficiary Pays Principle (BPP).
The G4CM policy prescribes multi-decade 4C floor price schedules. To establish these floor prices, an international monetary protocol will be used to transfer purchasing power from a comprehensive basket of fiat currencies into 4C. This monetary approach will create a concomitant rate of inflation in the fiat basket, and it is hypothesised that this cost spreading will minimise political delay over the long run. Co-benefits will include new currencies for international trade, price signals that complement carbon taxes, stimulus for sustainable projects and employment, ecosystem protection, and improved social cohesion.
The proposed 4C world currency is a new type of official money that creates a price benchmark for climate stability. We give 4C a new monetary classification: the World Service Currency (WSC). The 4C world service currency is advocated on the basis that it can mitigate greenhouse gas emissions to the maximum amount using market forces and a new political pathway. Nations are invited to participate in a 4C system for mutual protection by ceding some fiscal sovereignty and monetary autonomy to the G4CM protocol. The political pathway to an agreement may begin with field trials using digital currencies, followed by contingency planning and negotiations.
Hydrogeological investigations at Heron Island (Chen & Krol, 1997; Chen, 2000) have encountered g... more Hydrogeological investigations at Heron Island (Chen & Krol, 1997; Chen, 2000) have encountered groundwater movement with tidal propagation patterns that differ markedly from patterns usually encountered in coastal aquifers. In the classic coastal situation the tidal signal propagates with exponentially smaller efficiency in relation to lateral distance from the shoreline (Ferris, 1951). The situation at Heron Island is very different, however, because the island is situated on a dual-aquifer: a hydrogeological model originally proposed for low atoll islands. The dual-aquifer at Heron Island involves a highly conductive lower-layer of Pleistocene-age limestone (Kh ˜ 3000; Kv ˜ 1000 m d-1) and a moderately conductive upper-layer of Holocene-age limestone and sediment infilling (Kv ˜ 3 to 80 m d-1). The lower layer rapidly transfers tidal forcing fro m the ocean to the Holocene-Pleistocene contact which underscores the whole island. Trends in tidal efficiency and lag in the upper layer are therefore related to vertical position and (a) tidal efficiency increases with depth, and (b) tidal lag decreases with depth.
Harmonic analysis of aquifer tidal propagation at Heron Island is undertaken in this study. The harmonic efficiencies are analysed with Chen’s (2000) analytical formula for vertical tidal unconfined groundwater flow (VTUGF) to estimate the aquifer vertical diffusivity. This study is undertaken to
publicise and validate the VTUGF formula by comparing the earlier estimates of Chen (2000) with the new estimates based on harmonic analysis. Chen (2000) based his original Heron Island diffusivity estimates on time -averaged tidal signals (an approximate approach) and on the actual tidal signals via
an accurate numeric approach. Chen’s (2000) solutions for VTUGF not only provide a ‘tidal method’ for estimating aquifer vertical diffusivity, but the formula may also be used to benchmark computerbased groundwater models and determine permeability of soil cores in the laboratory. The current study
introduces a non-dimensional Fourier number, NVTUGF, which simplifies the general relationship for VTUGF in non-deformable porous media. The theory predicts that a transition between ‘undrained’ and ‘fully drained’ flow occurs for NVTUGF between about 0.1 and 30.
IAH National Conference, Darwin, 12-17 May 2002, Balancing The Groundwater Budget
North Stradbroke Island is a large sand island with ground and surface waters that are extracted ... more North Stradbroke Island is a large sand island with ground and surface waters that are extracted for town supply
and for mining operations. As for many aquifers in Australia, a growing demand for groundwater needs to be managed in
such a way as to promote long-term sustainability. To assist the management process, a whole-of-island groundwater model
was developed to simulate unsaturated and saturated flow, water-levels, and the water-balance at the regional scale. Important
boundary conditions include rainfall recharge, surface drainage, ocean, groundwater pumping and mine seepage.
During the development of the model an attempt was made to estimate (1) average natural recharge, (2) aquifer hydraulic
conductivity, and (3) aquifer specific yield via model calibration. For this purpose PEST-ASP (Doherty, 2001), a non-linear
parameter estimator, was used to calibrate a number of MODFLOW (McDonald & Harbaugh, 1988) models with different
parameterisations. By applying PEST-ASP it was found that steady-state and transient water-table levels could be simulated
to closely match most of the field records for the period 1960-1999. A coarse uncertainty analysis was undertaken which
gave an average specific yield that was expected, but it also gave a higher-than-expected average recharge rate. The
estimation of recharge by inverse modeling was probably hampered by correlation between recharge and hydraulic
conductivity parameters and bias/error produced by the simplifying assumptions of the model. The results include a regional
water balance with confidence limits based on an initial estimate of recharge (0.6±0.2 m a-1) and a refined estimate of specific
yield (0.25±0.05).
Geodynamics is currently undertaking field development
activities to support a proposal for comm... more Geodynamics is currently undertaking field development
activities to support a proposal for commercial base-load
zero-emission electricity generation in the Cooper Basin,
Australia. The project will be based on Engineered
Geothermal System (EGS) technology and a plant design
will be chosen that is optimized for return-on-investment
during the first 20 years of operation. This paper presents
the key concepts of an integrated thermo-hydraulic and
economic model being developed for economic sensitivity
analysis and preliminary design optimization for conditions
specific to the Cooper Basin. The model is called the Basic
EGS Model in anticipation that other more sophisticated
models will be required for model validation, theoretical
studies, detailed design work, and managing plant
operations.
The Basic EGS Model is a ‘rapid-development’ model
based on analytical-empirical solutions, iterative methods,
and a number of simplifying assumptions to provide
estimates of geothermal power and net electrical power for
a range of operating conditions and well layouts. The major
design variables addressed by the model are well spacing,
well depth, well trajectory, well completion and the number
and location of stimulated fracture-zones. At the time of
writing, the veracity of model assumptions and
interpretations required further testing and validation.
Equations and mathematics are not provided in this
conceptual paper and the model was a work-in-progress.
In March 2009 Geodynamics completed its 'proof-of-concept' program for its hot-fractured-rock (HF... more In March 2009 Geodynamics completed its 'proof-of-concept' program for its hot-fractured-rock (HFR) project located near the
small town of Innamincka in South Australia. Thus Geodynamics achieved its first milestone, called "Stage 1", of the company's business plan. This brings the company a major step closer to economic extraction of heat from a non-volcanic granitic basement. The drilling of three Habanero wells into fractured granite and and subsequent Habanero closed-loop flow and tracer tests are of particular relevance to this proof-of-concept milestone. In this paper the basic fracture system is described, the aims and results of the closed-loop test are discussed and future research directions are suggested.
Understanding Risks and Uncertainties in Energy and Climate Policy, 2019
Standard market-based policies for addressing climate change mostly aim to internalize the Social... more Standard market-based policies for addressing climate change mostly aim to internalize the Social Cost of Carbon (SCC) into the economy with either carbon taxes or cap-and-trade schemes. Standard policies are failing to manage the systemic risk of dangerous-to-catastrophic climate change for a variety of reasons. In this chapter we clarify and expand on a market hypothesis that argues for a second externalized cost of carbon, called the Risk Cost of Carbon (RCC), as the appropriate solution to this risk problem.
The combination of the SCC and RCC creates a new paradigm of complementary market pricing for the dual objectives of improving market efficiency and managing systemic risk, respectively. Introducing the RCC addresses the problem of how to decouple gross world product (GWP) from carbon emissions and how to solve the paradox of time discounting under systemic risk. Subsequently the RCC could have major implications for climate change economics, public policy, and sustainability theory. The hypothesis is novel by taking into consideration both the entropy and the mass of the carbon budget.
The RCC is technically defined as the cost of imposing risk tolerances (%) on climate mitigation objectives, and it has units of USD per tonne of carbon dioxide equivalent (CO2e) mitigated. The RCC is internalized with a “global carbon reward” that manages a trade-off between market efficiency and climate certainty. The carbon reward is issued as a parallel currency and with an exchange rate that is managed by central banks over a rolling 100-year planning horizon. A key recommendation is to test the hypothesis with experiments.
The climate crisis brings complex challenges for economists, policy makers, and politicians. In r... more The climate crisis brings complex challenges for economists, policy makers, and politicians. In recent years the mandates of central banks, which tend to promote ‘sector neutrality’, have been scrutinised for not supporting a low-carbon transition. Here we propose that the mandates of central banks can be expanded based on a revision to the ‘standard model’ for externalised costs. The expanded model is comprised of two kinds of cost: the first is the Social Cost of Carbon (SCC), and the second is the Risk Cost of Carbon (RCC). The RCC is a relatively new concept, and it may be described as the monetisation of climate-related systemic risk. The RCC is equivalent to the cost of ‘preventative insurance’ against unwanted climate change. For example, the RCC can be estimated for the objective of avoiding 2°C of global warming with a 67% chance of success.
The RCC links to a game-changing monetary policy that can provide scalable climate finance and manage systemic risk. The policy is called a Global Carbon Reward, and the financial mechanism involves a long-term program of ‘carbon quantitative easing’ (CQE) and currency trading. CQE requires a currency instrument—called a Central Bank Digital Currency (CBDC)—to act as an international unit of account for carbon (i.e. 100 kg of CO2-e mitigated). A policy framework for internalising the SCC and the RCC into the economy is discussed in terms of barriers to change, social principles, market neutrality, and environmental and social governance (ESG). A recommendation is given for financial regulators to research the macroeconomics of CQE, and to consider a new macroprudential role for central banks in response to climate change.
The blockchain is the enigmatic technology that gave birth to Bitcoin and the cryptocurrency move... more The blockchain is the enigmatic technology that gave birth to Bitcoin and the cryptocurrency movement. By fate or by good fortune, carbon markets and cryptocurrencies face common problems: a need to find consensus on data, and a need to trade value between distrustful strangers. Could the blockchain ledger enable a consensus on carbon budgets, and deliver value for carbon mitigation services? Could blockchain technologies help to resolve the climate crisis? To answer these questions we need to examine the opportunities for decentralized ledgers in carbon and energy markets. Here we show that the blockchain offers a unique opportunity to improve accountability in carb¬on markets and to develop renewable energy micro-grids, but for the blockchain to reach its full potential—to be the game changer—it should be combined with macro-economic policies and macro-prudential regulatory frameworks that can finance a multi-trillion dollar transition.
Global 4C is a new international climate mitigation policy that adopts a risk management framewor... more Global 4C is a new international climate mitigation policy that adopts a risk management framework. Global 4C offers a financial reward for mitigation and aims to internalise a Risk Cost of Carbon (RCC) into the economy. Carbon taxes (i.e. carbon prices) are essential for internalising the Social Cost of Carbon (SCC), however a SCC-RCC duality is inferred with an epistemological method and is supported with a new hypothesis, called the Holistic Market Hypothesis. Based on the inferred SCC-RCC duality, a system of complementary market pricing is proposed as an effective response to emerging climate systemic risk and fat-tailed probability distributions for the Earth’s climate sensitivity.
The recommended policy instrument is a currency, called Complementary Currencies for Climate Change (4C). 4C should be priced in foreign exchange currency markets (Forex) to mirror the RCC and to incentivise a spectrum of mitigation services, including clean renewable energy and carbon sequestration. A public broadcast message for climate systemic risk should be made each year, in the form of a ‘100-year advance 4C price alert’, which is an assurance of reward prices for carbon mitigation (i.e. the 4C exchange rate) under a Carbon Exchange Standard (CES). The CES is a macro-prudential protocol for central banks to provide collective insurability against climate catastrophe and incentives for socio-ecological co-benefits.
The future viability of our civilization is in serious doubt because of Anthropogenic Global Warm... more The future viability of our civilization is in serious doubt because of Anthropogenic Global Warming (AGW) [3][5][6], chronic degradation of ecosystems [9][30][45], and risk of nuclear war [64]. These harms and risks are related to unchecked economic growth, fossil fuel usage, resource consumption, and militarization. Civilization is evidently in need of systemic change to avoid collapse and to build restorative networks [50][52].
We submit that a public policy has been overlooked that could facilitate a socio-economic transformation for stabilizing the climate. We call the policy Global 4C Mitigation, but because it is historically unprecedented, a new theoretical framework is derived to rationalize money-and-markets and to describe the policy. The framework recognizes that there are three primary currency options: commodity, fiat, and service currencies [10]. The framework also groups market-based environmental policies into Pigovian Families that have a common unit-of-account. Each family includes taxes (Father), tradable permits (Son), standard subsidy/reward schemes (Daughter), and ‘reward and service currencies’ (Mother).
Global 4C Mitigation is the Pigovian Mother of climate mitigation policy because it invokes the reward and service currency option for greenhouse gases. Recommended is a parallel world currency based on a Carbon Monetary Standard to create a truly global price. The new currency system is termed Complementary Currencies for Climate Change (4C), and 4C is to be issued for greenhouse mitigation and sequestration in a global reward scheme. 4C prices are to be scheduled to rise under monetary protocols that incentivize greenhouse gas mitigation in concert with carbon tax and cap-and-trade schemes. Rising 4C prices should be arranged with international Green Quantitative Easing (GQE) [21] and guaranteed by a World Monetary Union for Climate Change Mitigation.
A roadmap is available to fast-track 4C implementation. The first stage, called the ‘Seed’, requires raising financial capital to develop a secure Global 4C Digital Network for issuing and trading 4C over the Internet and mobile phones. This network should be decentralized, trusted, scalable, international, and available to enterprises and citizens in urban and remote regions. The roadmap involves a global social-and-environmental movement with a novel political pathway to initiate negotiations for the World Monetary Union. Global 4C Mitigation may well lead to genuine Earth System Governance [18] and a self-regulating economy that can lessen poverty, inequity, and debt over the long run.
North Stradbroke Island (NSI) is a large forested sand island that supports a variety of social a... more North Stradbroke Island (NSI) is a large forested sand island that supports a variety of social and economic activities. The island also contains a significant volume of potable groundwater that is of value to many stakeholders.
In 2003, the Queensland Government’s Department of Natural Resources and Mines produced a groundwater model and report for the North Stradbroke Island (Chen, 2003). This model has been called the ‘2003 model’. In 2013, the Department of Science, Information Technology, Innovation and the Arts released a report on a newer groundwater model, that is otherwise called the ‘2008 model’ (Leach and Gallagher, 2013). The ‘2008 model’ report was prepared for the Queensland Government’s Department of Natural Resources and Mines.
This discussion concerns the narrative contained in the technical reports for the 2003 and 2008 models. This is not a model review, but a commentary on the narrative of the 2008 model report and its inconsistencies with the literature.
The 2007-9 global financial crisis, the post-2009 Eurozone debt crisis, and growing inequality ar... more The 2007-9 global financial crisis, the post-2009 Eurozone debt crisis, and growing inequality are reasons to critique the world financial system. More disconcerting are scientific findings that civilisation’s impacts on the environment are approaching ‘planetary boundaries’ (Steffen et al., 2015) such as catastrophic climate change and ocean acidification. This paper presents a proposal for Complementary Currencies for Climate Change (4C) and it’s associated mitigation policy, called Global 4C Mitigation (G4CM), with the specific aim of achieving strong mitigation of climate change and improved economic conditions (Chen & Cloud, 2014).
4C is a market-and-monetary instrument that will complement the international financial architecture to help correct the existing market failure in environmental externalities associated with greenhouse gases (Stern, 2007). The unit of account of 4C is 100 kg CO2-e verifiably mitigated, and this unit of account is unique in terms of official money because it is based on services rather than commodities or fiat banking. 4C issuance will be administratively coupled to mitigation services, and 4C issuance will be delivered globally as proportional subsidies for the de-carbonisation of industrial and power installations, and as proportional rewards for carbon sequestration. We call this incentive mechanism Globalised Payments for Ecosystem Services (GPES) and it will be implemented under the Beneficiary Pays Principle (BPP).
The G4CM policy prescribes multi-decade 4C floor price schedules. To establish these floor prices, an international monetary protocol will be used to transfer purchasing power from a comprehensive basket of fiat currencies into 4C. This monetary approach will create a concomitant rate of inflation in the fiat basket, and it is hypothesised that this cost spreading will minimise political delay over the long run. Co-benefits will include new currencies for international trade, price signals that complement carbon taxes, stimulus for sustainable projects and employment, ecosystem protection, and improved social cohesion.
The proposed 4C world currency is a new type of official money that creates a price benchmark for climate stability. We give 4C a new monetary classification: the World Service Currency (WSC). The 4C world service currency is advocated on the basis that it can mitigate greenhouse gas emissions to the maximum amount using market forces and a new political pathway. Nations are invited to participate in a 4C system for mutual protection by ceding some fiscal sovereignty and monetary autonomy to the G4CM protocol. The political pathway to an agreement may begin with field trials using digital currencies, followed by contingency planning and negotiations.
Hydrogeological investigations at Heron Island (Chen & Krol, 1997; Chen, 2000) have encountered g... more Hydrogeological investigations at Heron Island (Chen & Krol, 1997; Chen, 2000) have encountered groundwater movement with tidal propagation patterns that differ markedly from patterns usually encountered in coastal aquifers. In the classic coastal situation the tidal signal propagates with exponentially smaller efficiency in relation to lateral distance from the shoreline (Ferris, 1951). The situation at Heron Island is very different, however, because the island is situated on a dual-aquifer: a hydrogeological model originally proposed for low atoll islands. The dual-aquifer at Heron Island involves a highly conductive lower-layer of Pleistocene-age limestone (Kh ˜ 3000; Kv ˜ 1000 m d-1) and a moderately conductive upper-layer of Holocene-age limestone and sediment infilling (Kv ˜ 3 to 80 m d-1). The lower layer rapidly transfers tidal forcing fro m the ocean to the Holocene-Pleistocene contact which underscores the whole island. Trends in tidal efficiency and lag in the upper layer are therefore related to vertical position and (a) tidal efficiency increases with depth, and (b) tidal lag decreases with depth.
Harmonic analysis of aquifer tidal propagation at Heron Island is undertaken in this study. The harmonic efficiencies are analysed with Chen’s (2000) analytical formula for vertical tidal unconfined groundwater flow (VTUGF) to estimate the aquifer vertical diffusivity. This study is undertaken to
publicise and validate the VTUGF formula by comparing the earlier estimates of Chen (2000) with the new estimates based on harmonic analysis. Chen (2000) based his original Heron Island diffusivity estimates on time -averaged tidal signals (an approximate approach) and on the actual tidal signals via
an accurate numeric approach. Chen’s (2000) solutions for VTUGF not only provide a ‘tidal method’ for estimating aquifer vertical diffusivity, but the formula may also be used to benchmark computerbased groundwater models and determine permeability of soil cores in the laboratory. The current study
introduces a non-dimensional Fourier number, NVTUGF, which simplifies the general relationship for VTUGF in non-deformable porous media. The theory predicts that a transition between ‘undrained’ and ‘fully drained’ flow occurs for NVTUGF between about 0.1 and 30.
IAH National Conference, Darwin, 12-17 May 2002, Balancing The Groundwater Budget
North Stradbroke Island is a large sand island with ground and surface waters that are extracted ... more North Stradbroke Island is a large sand island with ground and surface waters that are extracted for town supply
and for mining operations. As for many aquifers in Australia, a growing demand for groundwater needs to be managed in
such a way as to promote long-term sustainability. To assist the management process, a whole-of-island groundwater model
was developed to simulate unsaturated and saturated flow, water-levels, and the water-balance at the regional scale. Important
boundary conditions include rainfall recharge, surface drainage, ocean, groundwater pumping and mine seepage.
During the development of the model an attempt was made to estimate (1) average natural recharge, (2) aquifer hydraulic
conductivity, and (3) aquifer specific yield via model calibration. For this purpose PEST-ASP (Doherty, 2001), a non-linear
parameter estimator, was used to calibrate a number of MODFLOW (McDonald & Harbaugh, 1988) models with different
parameterisations. By applying PEST-ASP it was found that steady-state and transient water-table levels could be simulated
to closely match most of the field records for the period 1960-1999. A coarse uncertainty analysis was undertaken which
gave an average specific yield that was expected, but it also gave a higher-than-expected average recharge rate. The
estimation of recharge by inverse modeling was probably hampered by correlation between recharge and hydraulic
conductivity parameters and bias/error produced by the simplifying assumptions of the model. The results include a regional
water balance with confidence limits based on an initial estimate of recharge (0.6±0.2 m a-1) and a refined estimate of specific
yield (0.25±0.05).
Geodynamics is currently undertaking field development
activities to support a proposal for comm... more Geodynamics is currently undertaking field development
activities to support a proposal for commercial base-load
zero-emission electricity generation in the Cooper Basin,
Australia. The project will be based on Engineered
Geothermal System (EGS) technology and a plant design
will be chosen that is optimized for return-on-investment
during the first 20 years of operation. This paper presents
the key concepts of an integrated thermo-hydraulic and
economic model being developed for economic sensitivity
analysis and preliminary design optimization for conditions
specific to the Cooper Basin. The model is called the Basic
EGS Model in anticipation that other more sophisticated
models will be required for model validation, theoretical
studies, detailed design work, and managing plant
operations.
The Basic EGS Model is a ‘rapid-development’ model
based on analytical-empirical solutions, iterative methods,
and a number of simplifying assumptions to provide
estimates of geothermal power and net electrical power for
a range of operating conditions and well layouts. The major
design variables addressed by the model are well spacing,
well depth, well trajectory, well completion and the number
and location of stimulated fracture-zones. At the time of
writing, the veracity of model assumptions and
interpretations required further testing and validation.
Equations and mathematics are not provided in this
conceptual paper and the model was a work-in-progress.
In March 2009 Geodynamics completed its 'proof-of-concept' program for its hot-fractured-rock (HF... more In March 2009 Geodynamics completed its 'proof-of-concept' program for its hot-fractured-rock (HFR) project located near the
small town of Innamincka in South Australia. Thus Geodynamics achieved its first milestone, called "Stage 1", of the company's business plan. This brings the company a major step closer to economic extraction of heat from a non-volcanic granitic basement. The drilling of three Habanero wells into fractured granite and and subsequent Habanero closed-loop flow and tracer tests are of particular relevance to this proof-of-concept milestone. In this paper the basic fracture system is described, the aims and results of the closed-loop test are discussed and future research directions are suggested.
Understanding Risks and Uncertainties in Energy and Climate Policy, 2019
Standard market-based policies for addressing climate change mostly aim to internalize the Social... more Standard market-based policies for addressing climate change mostly aim to internalize the Social Cost of Carbon (SCC) into the economy with either carbon taxes or cap-and-trade schemes. Standard policies are failing to manage the systemic risk of dangerous-to-catastrophic climate change for a variety of reasons. In this chapter we clarify and expand on a market hypothesis that argues for a second externalized cost of carbon, called the Risk Cost of Carbon (RCC), as the appropriate solution to this risk problem.
The combination of the SCC and RCC creates a new paradigm of complementary market pricing for the dual objectives of improving market efficiency and managing systemic risk, respectively. Introducing the RCC addresses the problem of how to decouple gross world product (GWP) from carbon emissions and how to solve the paradox of time discounting under systemic risk. Subsequently the RCC could have major implications for climate change economics, public policy, and sustainability theory. The hypothesis is novel by taking into consideration both the entropy and the mass of the carbon budget.
The RCC is technically defined as the cost of imposing risk tolerances (%) on climate mitigation objectives, and it has units of USD per tonne of carbon dioxide equivalent (CO2e) mitigated. The RCC is internalized with a “global carbon reward” that manages a trade-off between market efficiency and climate certainty. The carbon reward is issued as a parallel currency and with an exchange rate that is managed by central banks over a rolling 100-year planning horizon. A key recommendation is to test the hypothesis with experiments.
The climate crisis brings complex challenges for economists, policy makers, and politicians. In r... more The climate crisis brings complex challenges for economists, policy makers, and politicians. In recent years the mandates of central banks, which tend to promote ‘sector neutrality’, have been scrutinised for not supporting a low-carbon transition. Here we propose that the mandates of central banks can be expanded based on a revision to the ‘standard model’ for externalised costs. The expanded model is comprised of two kinds of cost: the first is the Social Cost of Carbon (SCC), and the second is the Risk Cost of Carbon (RCC). The RCC is a relatively new concept, and it may be described as the monetisation of climate-related systemic risk. The RCC is equivalent to the cost of ‘preventative insurance’ against unwanted climate change. For example, the RCC can be estimated for the objective of avoiding 2°C of global warming with a 67% chance of success.
The RCC links to a game-changing monetary policy that can provide scalable climate finance and manage systemic risk. The policy is called a Global Carbon Reward, and the financial mechanism involves a long-term program of ‘carbon quantitative easing’ (CQE) and currency trading. CQE requires a currency instrument—called a Central Bank Digital Currency (CBDC)—to act as an international unit of account for carbon (i.e. 100 kg of CO2-e mitigated). A policy framework for internalising the SCC and the RCC into the economy is discussed in terms of barriers to change, social principles, market neutrality, and environmental and social governance (ESG). A recommendation is given for financial regulators to research the macroeconomics of CQE, and to consider a new macroprudential role for central banks in response to climate change.
Uploads
Papers by Delton B Chen
The recommended policy instrument is a currency, called Complementary Currencies for Climate Change (4C). 4C should be priced in foreign exchange currency markets (Forex) to mirror the RCC and to incentivise a spectrum of mitigation services, including clean renewable energy and carbon sequestration. A public broadcast message for climate systemic risk should be made each year, in the form of a ‘100-year advance 4C price alert’, which is an assurance of reward prices for carbon mitigation (i.e. the 4C exchange rate) under a Carbon Exchange Standard (CES). The CES is a macro-prudential protocol for central banks to provide collective insurability against climate catastrophe and incentives for socio-ecological co-benefits.
We submit that a public policy has been overlooked that could facilitate a socio-economic transformation for stabilizing the climate. We call the policy Global 4C Mitigation, but because it is historically unprecedented, a new theoretical framework is derived to rationalize money-and-markets and to describe the policy. The framework recognizes that there are three primary currency options: commodity, fiat, and service currencies [10]. The framework also groups market-based environmental policies into Pigovian Families that have a common unit-of-account. Each family includes taxes (Father), tradable permits (Son), standard subsidy/reward schemes (Daughter), and ‘reward and service currencies’ (Mother).
Global 4C Mitigation is the Pigovian Mother of climate mitigation policy because it invokes the reward and service currency option for greenhouse gases. Recommended is a parallel world currency based on a Carbon Monetary Standard to create a truly global price. The new currency system is termed Complementary Currencies for Climate Change (4C), and 4C is to be issued for greenhouse mitigation and sequestration in a global reward scheme. 4C prices are to be scheduled to rise under monetary protocols that incentivize greenhouse gas mitigation in concert with carbon tax and cap-and-trade schemes. Rising 4C prices should be arranged with international Green Quantitative Easing (GQE) [21] and guaranteed by a World Monetary Union for Climate Change Mitigation.
A roadmap is available to fast-track 4C implementation. The first stage, called the ‘Seed’, requires raising financial capital to develop a secure Global 4C Digital Network for issuing and trading 4C over the Internet and mobile phones. This network should be decentralized, trusted, scalable, international, and available to enterprises and citizens in urban and remote regions. The roadmap involves a global social-and-environmental movement with a novel political pathway to initiate negotiations for the World Monetary Union. Global 4C Mitigation may well lead to genuine Earth System Governance [18] and a self-regulating economy that can lessen poverty, inequity, and debt over the long run.
In 2003, the Queensland Government’s Department of Natural Resources and Mines produced a groundwater model and report for the North Stradbroke Island (Chen, 2003). This model has been called the ‘2003 model’. In 2013, the Department of Science, Information Technology, Innovation and the Arts released a report on a newer groundwater model, that is otherwise called the ‘2008 model’ (Leach and Gallagher, 2013). The ‘2008 model’ report was prepared for the Queensland Government’s Department of Natural Resources and Mines.
This discussion concerns the narrative contained in the technical reports for the 2003 and 2008 models. This is not a model review, but a commentary on the narrative of the 2008 model report and its inconsistencies with the literature.
4C is a market-and-monetary instrument that will complement the international financial architecture to help correct the existing market failure in environmental externalities associated with greenhouse gases (Stern, 2007). The unit of account of 4C is 100 kg CO2-e verifiably mitigated, and this unit of account is unique in terms of official money because it is based on services rather than commodities or fiat banking. 4C issuance will be administratively coupled to mitigation services, and 4C issuance will be delivered globally as proportional subsidies for the de-carbonisation of industrial and power installations, and as proportional rewards for carbon sequestration. We call this incentive mechanism Globalised Payments for Ecosystem Services (GPES) and it will be implemented under the Beneficiary Pays Principle (BPP).
The G4CM policy prescribes multi-decade 4C floor price schedules. To establish these floor prices, an international monetary protocol will be used to transfer purchasing power from a comprehensive basket of fiat currencies into 4C. This monetary approach will create a concomitant rate of inflation in the fiat basket, and it is hypothesised that this cost spreading will minimise political delay over the long run. Co-benefits will include new currencies for international trade, price signals that complement carbon taxes, stimulus for sustainable projects and employment, ecosystem protection, and improved social cohesion.
The proposed 4C world currency is a new type of official money that creates a price benchmark for climate stability. We give 4C a new monetary classification: the World Service Currency (WSC). The 4C world service currency is advocated on the basis that it can mitigate greenhouse gas emissions to the maximum amount using market forces and a new political pathway. Nations are invited to participate in a 4C system for mutual protection by ceding some fiscal sovereignty and monetary autonomy to the G4CM protocol. The political pathway to an agreement may begin with field trials using digital currencies, followed by contingency planning and negotiations.
Harmonic analysis of aquifer tidal propagation at Heron Island is undertaken in this study. The harmonic efficiencies are analysed with Chen’s (2000) analytical formula for vertical tidal unconfined groundwater flow (VTUGF) to estimate the aquifer vertical diffusivity. This study is undertaken to
publicise and validate the VTUGF formula by comparing the earlier estimates of Chen (2000) with the new estimates based on harmonic analysis. Chen (2000) based his original Heron Island diffusivity estimates on time -averaged tidal signals (an approximate approach) and on the actual tidal signals via
an accurate numeric approach. Chen’s (2000) solutions for VTUGF not only provide a ‘tidal method’ for estimating aquifer vertical diffusivity, but the formula may also be used to benchmark computerbased groundwater models and determine permeability of soil cores in the laboratory. The current study
introduces a non-dimensional Fourier number, NVTUGF, which simplifies the general relationship for VTUGF in non-deformable porous media. The theory predicts that a transition between ‘undrained’ and ‘fully drained’ flow occurs for NVTUGF between about 0.1 and 30.
and for mining operations. As for many aquifers in Australia, a growing demand for groundwater needs to be managed in
such a way as to promote long-term sustainability. To assist the management process, a whole-of-island groundwater model
was developed to simulate unsaturated and saturated flow, water-levels, and the water-balance at the regional scale. Important
boundary conditions include rainfall recharge, surface drainage, ocean, groundwater pumping and mine seepage.
During the development of the model an attempt was made to estimate (1) average natural recharge, (2) aquifer hydraulic
conductivity, and (3) aquifer specific yield via model calibration. For this purpose PEST-ASP (Doherty, 2001), a non-linear
parameter estimator, was used to calibrate a number of MODFLOW (McDonald & Harbaugh, 1988) models with different
parameterisations. By applying PEST-ASP it was found that steady-state and transient water-table levels could be simulated
to closely match most of the field records for the period 1960-1999. A coarse uncertainty analysis was undertaken which
gave an average specific yield that was expected, but it also gave a higher-than-expected average recharge rate. The
estimation of recharge by inverse modeling was probably hampered by correlation between recharge and hydraulic
conductivity parameters and bias/error produced by the simplifying assumptions of the model. The results include a regional
water balance with confidence limits based on an initial estimate of recharge (0.6±0.2 m a-1) and a refined estimate of specific
yield (0.25±0.05).
activities to support a proposal for commercial base-load
zero-emission electricity generation in the Cooper Basin,
Australia. The project will be based on Engineered
Geothermal System (EGS) technology and a plant design
will be chosen that is optimized for return-on-investment
during the first 20 years of operation. This paper presents
the key concepts of an integrated thermo-hydraulic and
economic model being developed for economic sensitivity
analysis and preliminary design optimization for conditions
specific to the Cooper Basin. The model is called the Basic
EGS Model in anticipation that other more sophisticated
models will be required for model validation, theoretical
studies, detailed design work, and managing plant
operations.
The Basic EGS Model is a ‘rapid-development’ model
based on analytical-empirical solutions, iterative methods,
and a number of simplifying assumptions to provide
estimates of geothermal power and net electrical power for
a range of operating conditions and well layouts. The major
design variables addressed by the model are well spacing,
well depth, well trajectory, well completion and the number
and location of stimulated fracture-zones. At the time of
writing, the veracity of model assumptions and
interpretations required further testing and validation.
Equations and mathematics are not provided in this
conceptual paper and the model was a work-in-progress.
small town of Innamincka in South Australia. Thus Geodynamics achieved its first milestone, called "Stage 1", of the company's business plan. This brings the company a major step closer to economic extraction of heat from a non-volcanic granitic basement. The drilling of three Habanero wells into fractured granite and and subsequent Habanero closed-loop flow and tracer tests are of particular relevance to this proof-of-concept milestone. In this paper the basic fracture system is described, the aims and results of the closed-loop test are discussed and future research directions are suggested.
Books by Delton B Chen
The combination of the SCC and RCC creates a new paradigm of complementary market pricing for the dual objectives of improving market efficiency and managing systemic risk, respectively. Introducing the RCC addresses the problem of how to decouple gross world product (GWP) from carbon emissions and how to solve the paradox of time discounting under systemic risk. Subsequently the RCC could have major implications for climate change economics, public policy, and sustainability theory. The hypothesis is novel by taking into consideration both the entropy and the mass of the carbon budget.
The RCC is technically defined as the cost of imposing risk tolerances (%) on climate mitigation objectives, and it has units of USD per tonne of carbon dioxide equivalent (CO2e) mitigated. The RCC is internalized with a “global carbon reward” that manages a trade-off between market efficiency and climate certainty. The carbon reward is issued as a parallel currency and with an exchange rate that is managed by central banks over a rolling 100-year planning horizon. A key recommendation is to test the hypothesis with experiments.
Drafts by Delton B Chen
The RCC links to a game-changing monetary policy that can provide scalable climate finance and manage systemic risk. The policy is called a Global Carbon Reward, and the financial mechanism involves a long-term program of ‘carbon quantitative easing’ (CQE) and currency trading. CQE requires a currency instrument—called a Central Bank Digital Currency (CBDC)—to act as an international unit of account for carbon (i.e. 100 kg of CO2-e mitigated). A policy framework for internalising the SCC and the RCC into the economy is discussed in terms of barriers to change, social principles, market neutrality, and environmental and social governance (ESG). A recommendation is given for financial regulators to research the macroeconomics of CQE, and to consider a new macroprudential role for central banks in response to climate change.
The recommended policy instrument is a currency, called Complementary Currencies for Climate Change (4C). 4C should be priced in foreign exchange currency markets (Forex) to mirror the RCC and to incentivise a spectrum of mitigation services, including clean renewable energy and carbon sequestration. A public broadcast message for climate systemic risk should be made each year, in the form of a ‘100-year advance 4C price alert’, which is an assurance of reward prices for carbon mitigation (i.e. the 4C exchange rate) under a Carbon Exchange Standard (CES). The CES is a macro-prudential protocol for central banks to provide collective insurability against climate catastrophe and incentives for socio-ecological co-benefits.
We submit that a public policy has been overlooked that could facilitate a socio-economic transformation for stabilizing the climate. We call the policy Global 4C Mitigation, but because it is historically unprecedented, a new theoretical framework is derived to rationalize money-and-markets and to describe the policy. The framework recognizes that there are three primary currency options: commodity, fiat, and service currencies [10]. The framework also groups market-based environmental policies into Pigovian Families that have a common unit-of-account. Each family includes taxes (Father), tradable permits (Son), standard subsidy/reward schemes (Daughter), and ‘reward and service currencies’ (Mother).
Global 4C Mitigation is the Pigovian Mother of climate mitigation policy because it invokes the reward and service currency option for greenhouse gases. Recommended is a parallel world currency based on a Carbon Monetary Standard to create a truly global price. The new currency system is termed Complementary Currencies for Climate Change (4C), and 4C is to be issued for greenhouse mitigation and sequestration in a global reward scheme. 4C prices are to be scheduled to rise under monetary protocols that incentivize greenhouse gas mitigation in concert with carbon tax and cap-and-trade schemes. Rising 4C prices should be arranged with international Green Quantitative Easing (GQE) [21] and guaranteed by a World Monetary Union for Climate Change Mitigation.
A roadmap is available to fast-track 4C implementation. The first stage, called the ‘Seed’, requires raising financial capital to develop a secure Global 4C Digital Network for issuing and trading 4C over the Internet and mobile phones. This network should be decentralized, trusted, scalable, international, and available to enterprises and citizens in urban and remote regions. The roadmap involves a global social-and-environmental movement with a novel political pathway to initiate negotiations for the World Monetary Union. Global 4C Mitigation may well lead to genuine Earth System Governance [18] and a self-regulating economy that can lessen poverty, inequity, and debt over the long run.
In 2003, the Queensland Government’s Department of Natural Resources and Mines produced a groundwater model and report for the North Stradbroke Island (Chen, 2003). This model has been called the ‘2003 model’. In 2013, the Department of Science, Information Technology, Innovation and the Arts released a report on a newer groundwater model, that is otherwise called the ‘2008 model’ (Leach and Gallagher, 2013). The ‘2008 model’ report was prepared for the Queensland Government’s Department of Natural Resources and Mines.
This discussion concerns the narrative contained in the technical reports for the 2003 and 2008 models. This is not a model review, but a commentary on the narrative of the 2008 model report and its inconsistencies with the literature.
4C is a market-and-monetary instrument that will complement the international financial architecture to help correct the existing market failure in environmental externalities associated with greenhouse gases (Stern, 2007). The unit of account of 4C is 100 kg CO2-e verifiably mitigated, and this unit of account is unique in terms of official money because it is based on services rather than commodities or fiat banking. 4C issuance will be administratively coupled to mitigation services, and 4C issuance will be delivered globally as proportional subsidies for the de-carbonisation of industrial and power installations, and as proportional rewards for carbon sequestration. We call this incentive mechanism Globalised Payments for Ecosystem Services (GPES) and it will be implemented under the Beneficiary Pays Principle (BPP).
The G4CM policy prescribes multi-decade 4C floor price schedules. To establish these floor prices, an international monetary protocol will be used to transfer purchasing power from a comprehensive basket of fiat currencies into 4C. This monetary approach will create a concomitant rate of inflation in the fiat basket, and it is hypothesised that this cost spreading will minimise political delay over the long run. Co-benefits will include new currencies for international trade, price signals that complement carbon taxes, stimulus for sustainable projects and employment, ecosystem protection, and improved social cohesion.
The proposed 4C world currency is a new type of official money that creates a price benchmark for climate stability. We give 4C a new monetary classification: the World Service Currency (WSC). The 4C world service currency is advocated on the basis that it can mitigate greenhouse gas emissions to the maximum amount using market forces and a new political pathway. Nations are invited to participate in a 4C system for mutual protection by ceding some fiscal sovereignty and monetary autonomy to the G4CM protocol. The political pathway to an agreement may begin with field trials using digital currencies, followed by contingency planning and negotiations.
Harmonic analysis of aquifer tidal propagation at Heron Island is undertaken in this study. The harmonic efficiencies are analysed with Chen’s (2000) analytical formula for vertical tidal unconfined groundwater flow (VTUGF) to estimate the aquifer vertical diffusivity. This study is undertaken to
publicise and validate the VTUGF formula by comparing the earlier estimates of Chen (2000) with the new estimates based on harmonic analysis. Chen (2000) based his original Heron Island diffusivity estimates on time -averaged tidal signals (an approximate approach) and on the actual tidal signals via
an accurate numeric approach. Chen’s (2000) solutions for VTUGF not only provide a ‘tidal method’ for estimating aquifer vertical diffusivity, but the formula may also be used to benchmark computerbased groundwater models and determine permeability of soil cores in the laboratory. The current study
introduces a non-dimensional Fourier number, NVTUGF, which simplifies the general relationship for VTUGF in non-deformable porous media. The theory predicts that a transition between ‘undrained’ and ‘fully drained’ flow occurs for NVTUGF between about 0.1 and 30.
and for mining operations. As for many aquifers in Australia, a growing demand for groundwater needs to be managed in
such a way as to promote long-term sustainability. To assist the management process, a whole-of-island groundwater model
was developed to simulate unsaturated and saturated flow, water-levels, and the water-balance at the regional scale. Important
boundary conditions include rainfall recharge, surface drainage, ocean, groundwater pumping and mine seepage.
During the development of the model an attempt was made to estimate (1) average natural recharge, (2) aquifer hydraulic
conductivity, and (3) aquifer specific yield via model calibration. For this purpose PEST-ASP (Doherty, 2001), a non-linear
parameter estimator, was used to calibrate a number of MODFLOW (McDonald & Harbaugh, 1988) models with different
parameterisations. By applying PEST-ASP it was found that steady-state and transient water-table levels could be simulated
to closely match most of the field records for the period 1960-1999. A coarse uncertainty analysis was undertaken which
gave an average specific yield that was expected, but it also gave a higher-than-expected average recharge rate. The
estimation of recharge by inverse modeling was probably hampered by correlation between recharge and hydraulic
conductivity parameters and bias/error produced by the simplifying assumptions of the model. The results include a regional
water balance with confidence limits based on an initial estimate of recharge (0.6±0.2 m a-1) and a refined estimate of specific
yield (0.25±0.05).
activities to support a proposal for commercial base-load
zero-emission electricity generation in the Cooper Basin,
Australia. The project will be based on Engineered
Geothermal System (EGS) technology and a plant design
will be chosen that is optimized for return-on-investment
during the first 20 years of operation. This paper presents
the key concepts of an integrated thermo-hydraulic and
economic model being developed for economic sensitivity
analysis and preliminary design optimization for conditions
specific to the Cooper Basin. The model is called the Basic
EGS Model in anticipation that other more sophisticated
models will be required for model validation, theoretical
studies, detailed design work, and managing plant
operations.
The Basic EGS Model is a ‘rapid-development’ model
based on analytical-empirical solutions, iterative methods,
and a number of simplifying assumptions to provide
estimates of geothermal power and net electrical power for
a range of operating conditions and well layouts. The major
design variables addressed by the model are well spacing,
well depth, well trajectory, well completion and the number
and location of stimulated fracture-zones. At the time of
writing, the veracity of model assumptions and
interpretations required further testing and validation.
Equations and mathematics are not provided in this
conceptual paper and the model was a work-in-progress.
small town of Innamincka in South Australia. Thus Geodynamics achieved its first milestone, called "Stage 1", of the company's business plan. This brings the company a major step closer to economic extraction of heat from a non-volcanic granitic basement. The drilling of three Habanero wells into fractured granite and and subsequent Habanero closed-loop flow and tracer tests are of particular relevance to this proof-of-concept milestone. In this paper the basic fracture system is described, the aims and results of the closed-loop test are discussed and future research directions are suggested.
The combination of the SCC and RCC creates a new paradigm of complementary market pricing for the dual objectives of improving market efficiency and managing systemic risk, respectively. Introducing the RCC addresses the problem of how to decouple gross world product (GWP) from carbon emissions and how to solve the paradox of time discounting under systemic risk. Subsequently the RCC could have major implications for climate change economics, public policy, and sustainability theory. The hypothesis is novel by taking into consideration both the entropy and the mass of the carbon budget.
The RCC is technically defined as the cost of imposing risk tolerances (%) on climate mitigation objectives, and it has units of USD per tonne of carbon dioxide equivalent (CO2e) mitigated. The RCC is internalized with a “global carbon reward” that manages a trade-off between market efficiency and climate certainty. The carbon reward is issued as a parallel currency and with an exchange rate that is managed by central banks over a rolling 100-year planning horizon. A key recommendation is to test the hypothesis with experiments.
The RCC links to a game-changing monetary policy that can provide scalable climate finance and manage systemic risk. The policy is called a Global Carbon Reward, and the financial mechanism involves a long-term program of ‘carbon quantitative easing’ (CQE) and currency trading. CQE requires a currency instrument—called a Central Bank Digital Currency (CBDC)—to act as an international unit of account for carbon (i.e. 100 kg of CO2-e mitigated). A policy framework for internalising the SCC and the RCC into the economy is discussed in terms of barriers to change, social principles, market neutrality, and environmental and social governance (ESG). A recommendation is given for financial regulators to research the macroeconomics of CQE, and to consider a new macroprudential role for central banks in response to climate change.