Napoleon Bonaparte said: For war, we need three things-money, money, and more money.
Regarding climate protection, we can say the same.
The Stern Review proposes that one percent of global GDP per annum is required to be invested to avoid the worst effects of climate change. In June 2008, Stern increased the estimate for the annual cost of achieving stabilization between 500 and 550 ppm CO2 to 2% of GDP to account for faster than expected climate change. Otherwise, GDP will fall by 20% as a result of climate change. The only question is where to get this 1% of GDP. The annual global GDP is $ 779 865 481 million. One percent of this amount is "only" $ 779 865 481 000. The only question is where to get this money from. The current emissions trading system does not solve this problem. It requires that the CO2 emitter must first pay or get for free for emission allowances. Then invest in reducing CO2 emissions and only then earn on resale CO2 on the free market. It is a very complicated and capital-intensive process in itself.
The CAT idea in this field has a great advantage over the emissions trading system. The first source of financing the decarbonization of the economy will be state subsidies from CAT. The first, but certainly not the only one. The introduction of CAT means that fossil fuels will become uncompetitive. This is an incentive for CO2 emitters to look for alternative sources of financing to decarbonize the economy.
Issuers will be able to take loans from banks. Issuing shares on the stock exchange. It should be assumed that legal regulations regarding CAT will allow the purchase of shares and bonds on the stock exchange for investments that will 100% decarbonize the economy. Of course, you will only be able to invest in the primary market. There is another possibility the CO2 emitter invests subsidies obtained from CAT in shares on the primary market. Then he sells shares on the secondary market and receives a return on capital at an express rate.
Let's consider another example. Both Poland and Hungary are planning to build a nuclear power plant. Hungary is already building it because Vladimir Putin gave them a favorable loan. The construction of a nuclear power plant in Poland is still planned. No location has yet been selected. There is one more problem - money. Relations with Vladimir Putin are rather cold and we are unlikely to get a loan on terms like Hungary. There is also nothing to count on state subsidies because the budget is bursting at the seams. The alternative is to take out a loan abroad, but this means becoming dependent on foreign capital (see the example of Hungary) and increasing the already large budget deficit. A nuclear power plant is unlikely to be built for Polish money because our domestic private capital is only 25 years old and simply too weak to bear such a burden. Now imagine how the situation could change after the introduction of CAT.
PGE is the largest Polish electricity producer. The first source of investment would be subsidies that PGE would receive from the budget for coal burned in their power plant furnaces. PGE could issue shares for the construction of a nuclear power plant. The buyers of these shares could be other Polish entities looking for a way to invest money from CAT, for example, transport companies, small brickyards, chemical plants, LOT airlines, and other emitters. Of course, nothing prevents the shares from being bought on the stock exchange by other investors not necessarily related to the CAT system. In this way, we could build a nuclear power plant for completely Polish money.
An example of what the problem is for our native energy sector to raise capital for decarbonization is the example of wind energy. A significant part of Polish wind farms is not really Polish. In fact, they are owned by foreign capital. So if we can't afford wind farms, we can't afford a nuclear power plant in the current legal and economic realities.