NOTE: The following is the text to go with the Prezi presentation at

The video of the presentation with voice can be found at

Part 1 –
Part 2 –

Leave zero interest loan graphic up before the start of the presentation


In this presentation I will show how we can reduce the level of greenhouse gas emissions while becoming wealthier.


It is possible to make profitable investments in renewable energy without increasing the price of Energy. To show you how let us first look at the cost elements when we produce energy.

(Trip diagram)

Energy production is a capital intensive industry. The costs components of all forms of energy are Taxation, Repayments, Interest and Profits – or TRIP costs followed by running or production costs.

(show graph of proportion of cost of energy)

This diagram shows us the ratio of repayments (green), interest (red) and running costs (blue) to produce energy under today’s financial system.

For renewable energy almost all the costs are financial charges of interest and repayments. Running costs of burning fossil fuel are relatively higher because we have to pay for the fuel to burn.

(show graph of actual costs)

In this graph the vertical axis is cents per kwh. Unless we address the interest and repayment costs it is going to be very difficult to encourage investments in most renewables.

As finance costs are “man made” they can also be “man unmade” and we will now examine what effect reducing finance costs has on the profitability of renewables.

(slide of assumptions)

The following graphs are calculated with the following assumptions. To normalise variable output we calculate the capital cost for the equivalent continuous production of energy. An interest rate on loans of 6%. A one cent per kwh to cover maintenance and administrative costs and we assume we can sell the energy at the factory gate for 6 cents per kwh.

(show graph of zero interest for renewables)

This graph shows that if we eliminate interest costs and repay our loans over the life of the asset, renewables can be as profitable as fossil fuel energy. Once you have built a renewable energy plant it becomes a money making machine. If you reinvest your repayments it becomes a compounding money making machine – because the sources of renewable energy are large, the demand for high quality energy has no limit and the value of energy will never reduce. We will use as much as we can produce and we can keep the cost well above the cost of production and people will still buy.

(show graph comparing carbon tax)

The other way or increasing investment in renewables is to increase the price of energy by imposing a charge on the burning of fossil fuels. This can be done in many ways, It can be done with a carbon tax, with carbon credits or with emissions permits. Whatever way it is done it increases the price of all energy. These extra charges are included to cover the finance costs. The price of energy will have to at least double, (and probably triple) to encourage investors to develop large scale renewable energy sources.

To achieve a low cost, low carbon future ALL we have to do is to give zero interest loans to our citizens and require them to invest those funds to build new renewable energy plants and invest in ways to save energy. To find out how to do this we have to understand how we create money.

(graphic showing the creation of money. This will be headed “how we create money”. It will show banks monetising an existing asset. It will show part ownership of asset going to bank which charges interest on the use of the asset)

When we give a loan we create money by issuing credit.

Governments do it by issuing bonds to themselves and then selling those bonds. Banks do it by giving loans backed by monetisable assets.

When we monetise an existing asset, in effect, we sell part of the asset and the new owner, the bank, expects to get paid for the use of the asset.

This is done through interest on money. In Islamic countries it is done through rent on the asset.

If a bank creates money by monetising an asset it also destroys the money when the loan is repaid. Banks do not have to create money to lend. They can – if they wish lend money in accounts and not destroy the money when it is repaid.

We rarely create money by monetising future assets but there is no accounting reason for not monetising a future asset.

(graphic showing the creation of money by monetising a future asset. It will show banks monetising a future asset (which at the moment is worth zero so there should be no interest charge).

We can monetise future assets.

However, if we monetise future assets we cannot justify charging interest on the loan because the asset does not yet exist. Part ownership of the future asset goes to the bank. The bank issues money but the money should not earn interest on the money because the future asset is not yet earning and so cannot pay the interest.

In our present economic system monetizing future assets is achieved through equity. People save money and supply it to a company to build the asset. What this means is that new assets are financed from savings and not from loans. Finance equity is much much more expensive that finance from loans because there are fewer savings than there are potential loans, and because equity is a double charge – one for the interest on loan money and one to compensate the saver for not spending the money on consumption. Equity finance is 20%+ for most new projects. This means it is more expensive to build an asset than it is to buy exactly the same existing asset – not because of the risk – but because of the way we organise our monetary system.

We do not give equity loans let alone zero interest equity loans – but we could if we can solve the issues of trust, distribution and compliance.


For Zero Interest Loans to work – money must not earn interest until it is spent and loans must be repaid. For loans to be repaid they must return a profit.

There is no accounting or economic reason not to give zero interest loans to create new assets. The reasons we don’t are historical and because creating loans (and with it money) for non existent assets is easily abused.

Under the existing system the bank creates a loan and money at the same time and charges interest on the money immediately. With zero interest loans for equity the bank still creates a loan but the money is a special sort of money. The money is restricted while it is in the borrowers account and earns no interest. When the money is invested in ways to reduce greenhouse gas levels in the atmosphere it can then earn interest if the receiver of the money can find a bank to accept the money.

It is easy to set up a system where money does not earn interest. Investing the money appropriately is much much more difficult. To do this we need to create a system that will guarantee that most loans will be profitable and that borrowers will comply with the rules and restrictions on the money. Our existing banking system is complex and is highly regulated in an attempt to stop the creation of too much money. It has failed miserably as evidenced by the Global Financial Crisis. Any system to replace some of the creation of money through zero interest loans is going to be complex.

(show the diagram showing government, bank, market place)

This diagram outlines how we can safely and reliably create a system that enables us to build new assets and to give the public direct equity ownership of those assets.

On the left we decide the politically interesting question of who gets the zero interest loans. Banks could issue zero interest loans but it is better done by government as the issue is a distributional political one. For energy we suggest the rights to loans be distributed to the whole population in inverse proportion to their household consumption of mains electricity. Doing this rewards people for consuming less. We distribute the money as a right rather than as a loan because we can have a market in rights. This is important as it provides a way to see if we have created too many rights. If we give too many rights then the price of a right will go down because there will be few good investment opportunities. The price of rights gives the government a way of measuring and hence controlling the issue of rights.


The middle section shows the mechanics of issuing the loan money. It is important that money does not earn interest until it is invested. Transaction fees can be charged to cover operating costs plus a small profit. It is more convenient to use banks as they already have the right to issue loans – but other institutions could distribute loans.

The right hand section is the part that makes it efficient. It is a market place for investments. In the market place will be companies selling their own new shares, manufacturers of renewable energy selling systems like windmills and solar panels, research and development organisations selling their ideas that will lead to later commercialisation, insulation companies selling insulation, biochar companies selling biochar systems or training. All the products and ideas at this conference will be eligible to be sold through this market place. Note we do not sell energy in the market place.

(diagram giving what a supplier will show)

Each seller will have to specify how much ghg will be saved or removed from the atmosphere per dollar spent and the financial return on investment. They will specify how the buyer will pay back the loan and how much of the loan has to be paid back. (for example the government may allow basic research to be funded with zero interest loans that are paid back in small part). Each seller will specify how the buyers will report ghg saved. Against each seller will be their promises and their past results. This information will be public and transparent and will be continually monitored by buyers.

If a seller repeatedly misses their targets or does not save ghg then they will be banned from the market place. If a buyer colludes with a seller the buyer will never receive any more zero interest loans.

(slide about compliance)

Compliance through exclusion from access to the loans system will ensure the system will work.

(diagram showing that zero interest loans for new productive assets will not cause inflation)

A question that is often asked is – won’t the creation of money for zero interest loans cause inflation?

The answer is yes and no. Inflation is caused when there is too much money available to purchase too few goods. Governments in the past have printed money for particular purposes. Historically one reason has been to finance wars. Printing money to finance a war will almost certainly cause inflation.

Creating money to build new productive assets that generate more value than the money invested cannot cause inflation but will keep the currency stable as there is always more to buy than money available and so we will have to continue to create more money or increase the velocity of money so that we can purchase the goods.

(how much money is needed)

In Australia we can have net zero emissions within 10 years if we allocate $30 billion a year in zero interest loans. To put this in perspective each year Australia creates $200+ billion in interest bearing loans to buy second hand houses.

(emergent properties)

This approach to funding infrastructure and in particular renewable energy and energy saving technologies could be called Community Equity Loans.


The resulting system will stabilise the monetary system, reduce taxation, eliminate inflation, cause no government debt, make our finite resources sustainable, increase our wealth and give ownership of community infrastructure to the community it serves.

It will stabilise the monetary system. There will be no inflation because governments will increase the money supply in a controlled manner through the use of zero interest loans. Market based interest rates on existing money will regulate the flow of money.
There will be lower taxation. The distribution of rights to zero interest loans can be used to give more wealth to the disadvantaged and could replace some or perhaps all taxes.
There will be no government debt. The loans are given to the citizens – not the banks, nor the government nor any corporations.
The system will lead to sustainability of finite resources. Sustainability is doing more with less and finite resources can be developed by Rewarding those who consume less while requiring the Rewards to be spent increasing the resource.
Community wealth will increase. Wealth increases by investing so that the cost of investment is less than the wealth produced. A well run system of zero interest loans will do this.
There will be a change of ownership of infrastructure away from governments and external corporate entities towards community owned entities and individuals serviced by the infrastructure.
Please direct any questions to Kevin Cox at

I will leave you with this graphic on the comparison between zero interest loans and pricing carbon as alternative ways of encouraging investment in renewable energy projects.

One thought on “Zero Interest Loans for ghg mitigation

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