QWhat is there in common between the deartificialization of soils, the depollution of water, the collection of ocean waste, the creation of biodiversity reserves, the reestablishment of small railway lines, the aid to be provided so that all households access the transition, etc. ? These are all items of expenditure necessary for a just ecological transition, but devoid of financial return, which makes them impossible or almost impossible to finance with private funds. On a small scale, we will find many innovative forms of participatory finance or sponsorship, mobilizing private financiers more concerned with the ecological and social impact of their money than with financial profitability. But, on a large scale, such spending requires a lot of public funds.
Strangely, the available estimates of the financing needs of the transition pay little attention to the share of these unprofitable expenditures, which are nevertheless necessary for a non-truncated transition. However, this share is a priori massive. One of the rare figures comes from the firm McKinsey & Company, which estimated in a 2021 report that half, on average, of the 1,000 billion annual investments (for at least seven years) necessary in Europe to achieve neutrality carbon “did not present sufficient prospects of profitability for private investors”. Even if the said report aimed above all to obtain a relaxation of the regulatory framework and public aid for “viable” private investments, it actually demonstrates that the ecological transition will not take place without mobilizing a large share of public funds!
But traditional sources of public funding will not be enough either. The debt requires a financial return to be repaid: the increase in public debt, even if it were possible, will therefore not finance unprofitable things without running into a sustainability problem. As for taxes, their increase requires not only putting an end to the race to the lowest tax bidder, but continuing to grow the economy to the detriment of planetary limits. It is therefore towards a new form of monetary creation, without debt, that we must turn to finance the unprofitable essential.
Our monetary and financial system is based on the master institution of debt money, created and put into circulation by banks when they grant credits (we say that “credits make deposits”) under the aegis of the bank central. However, a mode of issue embedded in the debt market reserves monetary creation for financially profitable activities. When it was created by the banks as well as in the exchanges to which it is subject on the financial markets, debt money, the pillar of capitalism, goes to money to make money. This excludes from the benefit of monetary creation and these exchanges all investments that are socially or environmentally essential, but which do not prove profitable from a financial point of view.
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