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Actually, the technical Framework does exist for deficit spending on a federal level. It's the European Investment Bank. It already issues "green bonds" which are outside the Maastricht national borrowing limits.

The scale of debt financing required for a genuine GND is several orders of magnitude greater than what the EIB currently deals in. Let's say 5% of EU GDP annually, for the sake of argument.

The political obstacle is that the EIB's governors are named by the member states.

Changes in policy are normally made using consensus but a double majority vote, based on the size of shares held, could also be an option if there is a clear split of opinion. Germany, France, Italy and the UK are the bank's biggest donors.

Basically, an honest-to-god GND (and not the debased parody being trumpeted by Timmermans and Vestager) would be politically possible if there were a German government which was capable of closing its coal mines. So what would that take? Would a new governing coalition with the Grünen replacing the SPD enable that?

It might, if that government were to be led by Merkel at the height of her powers...

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II

by eurogreen on Wed Sep 11th, 2019 at 08:58:44 AM EST
[ Parent ]
That would require not only a Merkel at the height of her powers, but a Merkel willing to take as much heat for a fiscally unorthodox approach as she took for her principled position on immigration. We might as well wish for Der Linke, Groen and SPD to form a coalition based on a joint will to reverse austerity and unify retirement benefits and health care over all of the Euro-Zone.

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Wed Sep 11th, 2019 at 06:27:43 PM EST
[ Parent ]
Two points about Germany and deficit spending :
  • It's the EIB, and not the nations, that would be issuing green bonds massively. Backed by the ECB.
  • There are strong signs that the German government will resort to deficit spending fairly soon : not on the massive scale required by the GND, but once you've admitted the principle of the thing... Schäuble and Weidmann will fight it, but it's coming.

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Thu Sep 12th, 2019 at 02:53:01 PM EST
[ Parent ]
EIB begins metamorphosis into climate bank
BIG MOVE: "updated lending policy which could see the EU bank stop funding fossil fuel projects"

Diversity is the key to economic and political evolution.
by Cat on Thu Sep 12th, 2019 at 08:03:46 PM EST
[ Parent ]
Los Angeles is going through a similar struggle regarding natural gas vs renewables. One big step towards renewables has been the approval of the Eland Project in the Mojave Desert.

The two sections of Eland will total 400 megawatts of solar power combined with up to 300 megawatts/1,200 megawatt-hours of energy storage. With storage, the effective capacity factor is in the 60 percent range, so it is able to power California for a big portion of the day and eat into peak load," said Colin Smith, solar analyst at Wood Mackenzie Power & Renewables.
The sweet aspect for rate payers is that the electricity provided under this contract will cost less than $40/MWhr. This project alone provides 1/6th of the renewable power/battery storage required to make Los Angeles DWP carbon free by 2030. The project also includes upgrades to the power switching and interconnect in Lonesome Valley that will also offer load, frequency and phase stability to the grid.

Similar Combined Solar + Battery Energy Storage systems are possible in southern Italy and in Spain. Were the EIB to fund such developments that could also constitute redistribution of wealth from northern investment to southern generation capacity and local income.

As in Los Angeles the struggle is between incumbent fossil fuel interests and the obvious cost advantages of solar + Battery Energy Storage. Unfortunately, in Europe natural gas fossil fuel infrastructure is still being built out.

"It is not necessary to have hope in order to persevere."

by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Fri Sep 13th, 2019 at 03:51:35 AM EST
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