Financing Elemental Energy
Green Bonds, Political Will & Monetary Economics in Practice
Preamble:
I feel compelled to write this essay in the face of policy-makers, the world over, making executive decisions—supposedly in the best interests of the constituency—where the logic and maths do not stack up.
Normally, as Karl Popper espoused, I would only argue for piecemeal social engineering, not a wholesale policy revolution. Alas, the green energy transition—known as the Energiewende in Germany—that has failed Europeans so miserably, demands a radical alternative.
Introduction: Big Problems Need Bold Solutions
The great challenges of our era demand great solutions, and none loom larger than the dual challenges of climate risk and energy insecurity. The global economy is groaning under the weight of rising energy costs, and the exponential growth of artificial intelligence (AI) will magnify demand for cheap, abundant power. Evidenced by Microsoft who are looking to reopen Three Mile Island to power its AI data centre. These pressures underscore the urgency of scaling elemental energy: nuclear power as the backbone of a reliable, low-carbon energy system.
The question, then, is not about the technology—we know nuclear power works—but about the financing. The objection we must overcome is the claim that it is too expensive. Accordingly, let's unpack how governments, corporations, and societies can marshal the resources needed for this transformation. The answer lies in an innovative policy proposal: green climate bonds. With maturities stretching up to the useful life of nuclear power plants, these bonds, coupled with carbon credits, tax amnesties, and a recognition of unconstrained government financing capacity; offer a bold but practical pathway to fund the future.
The Strategy: Green Climate Bonds
The Case for Long-Dated Bonds
Green climate bonds would be issued by advanced economies—the EU, US, UK, Canada, and Australia—and designed to mature over the lifespan of the projects they fund. For nuclear power plants, this could mean tranches with maturities of up to 100 years. Unlike traditional short-term debt instruments, these bonds would align repayment with the revenue-generating life of the assets.
The structure is as elegant as it is pragmatic: governments amortise the capital costs over decades, smoothing the fiscal impact and ensuring intergenerational equity. Investors, in turn, gain access to stable, ESG-compliant returns, anchored by the proven reliability of nuclear energy.
Incorporating Carbon Credits
Monetizing Environmental Benefits
A key innovation in this strategy is the integration of carbon credits into the bonds. Corporations purchasing these instruments could count them as offsets against their emissions, creating a dual incentive: financial returns and compliance with environmental regulations.
For this to succeed, stable carbon pricing is essential. Volatile or politically-driven markets would undermine confidence in the credits’ value. Governments must establish predictable frameworks, tying credits to measurable reductions in emissions from nuclear projects.
Unlocking Growth Through Carbon Markets
The monetisation of carbon credits represents an untapped economic multiplier. By tying these credits to green climate bonds, governments can effectively capitalise on the positive externalities of elemental energy, translating them into financial assets. This approach not only attracts corporate investment but also accelerates the transition to a lower-carbon economy.
Tax Amnesty: Incentivising Multinational Capital
Repatriating Trapped Capital
Multinational corporations hold trillions of dollars in offshore earnings, largely to avoid domestic taxation. A targeted tax amnesty could unlock these funds for green investment. Under this proposal, MNCs would be allowed to repatriate earnings tax-free, provided the funds are directly invested into green climate bonds.
This creates a virtuous cycle: corporations gain a financially attractive pathway to onshore their earnings, governments secure funding for energy infrastructure without increasing public debt, and the global economy benefits from a surge in productive investment.
Conditions and Safeguards
To prevent abuse, the amnesty would require strict conditions. Investments would need to be held for minimum durations, ensuring long-term capital commitment. Eligible projects would be limited to ESG-compliant energy infrastructure, reinforcing the program’s environmental objectives.
This approach aligns corporate incentives with public goals, demonstrating how innovative policy can leverage corporate and private wealth for collective progress.
AI & the Demand for Cheap Energy
Crypto & AI Demand Power Density
The rapid adoption of artificial intelligence will reshape the global economy, but it comes at a cost: insatiable energy demand. Data centers, the lifeblood of AI, already consume more energy than some small countries. As AI applications proliferate—from autonomous vehicles to generative models—the need for cheap, reliable power will grow exponentially. Particularly given the increasing energy intensity of crypto mining.
Nuclear energy is uniquely positioned to meet this demand. Its unparalleled energy density and 24/7 reliability make it the only viable candidate for powering an AI-driven future without exacerbating climate risks.
Amplifying Economic Growth
By addressing the energy needs of AI, nuclear power unlocks a second-order economic benefit: the acceleration of innovation. Cheap, abundant energy lowers barriers to technological adoption, enabling industries to scale faster and compete globally. This feedback loop—where energy drives innovation and innovation drives growth—underscores the transformative potential of nuclear investment.
Amortisation: Smoothing the Path Forward
The Mechanics of Cost Distribution
Amortisation spreads the cost of nuclear projects over their useful life, ensuring that the financial burden does not fall disproportionately on any single generation. This approach mirrors the benefits of the projects themselves, which provide low-cost, reliable energy for decades.
For governments, this means large-scale infrastructure projects can be undertaken without immediate fiscal strain. For bondholders, it ensures a steady, predictable return over the life of the bonds, backed by the robust economics of nuclear power.
Political Feasibility
Amortisation also addresses a critical political challenge: public resistance to large upfront costs. By framing nuclear investment as a long-term strategy, rather than a short-term expenditure, policymakers can build broader coalitions of support. There needn't be any objections to safe, abundant cheap energy from any party, or any industry's lobbyists. Further, the constituency ought to rejoice, since the economic trade-offs of the energy transition to intermittents alone, won't be undertaken. No more of the irrational, anti-humanistic, “degrowth” agenda. Instead, a positive commitment to human flourishing and overcoming through innovating out of it.
Unconstrained Government Financing Capacity
Lessons from Modern Monetary Economics
Modern Monetary Theory (MMT) teaches us that governments amongst advanced economies, with sovereign currencies, face no hard constraints on their ability to finance large-scale projects. Inflation, not insolvency, is the primary limiting factor. In the case of green climate bonds, inflationary risks are mitigated by the deflationary effects of cheap energy.
By lowering energy costs, elemental power reduces production expenses across the economy, offsetting potential price pressures. This dynamic ensures that the bonds remain a net positive for economic stability.
Rethinking Fiscal Orthodoxy
The success of green climate bonds depends on a shift in how we think about public finance. Rather than viewing “government debt” as inherently burdensome, we must see it as a tool for unlocking value. Even if money was created to fund productive assets like nuclear power, the “debt” becomes an investment in the future, and for a soverign issuer, there is no obligation of a future payment owed.
Building Political Will
Framing the Narrative
Political will is often the greatest obstacle to transformative policy. To succeed, proponents of green climate bonds must craft a compelling narrative that transcends ideological divides.
Whilst my last article was critical of intermittents, nuclear-elemental energy should be framed not as a competitor to them but as their indispensable complement. Together, these technologies form a resilient, diversified energy portfolio capable of meeting the world’s needs, when optimised for their achievable scales.
Mobilising Stakeholders
Building coalitions is essential. By aligning the interests of governments, corporations, and constituents, green climate bonds can become a unifying initiative. Tax amnesty for multinationals, carbon credit incentives, and the promise of economic growth all serve to broaden the base of support.
Conclusion: Financing the Future
The global energy transition demands bold, innovative solutions. Green climate bonds, with their unique combination of long maturities, carbon credit integration, and multinational tax incentives, represent a financing strategy equal to the challenge.
By leveraging the unconstrained financing capacity of sovereign governments, mobilising private capital, and meeting the energy demands of an AI-driven future, this approach offers a pragmatic path to sustainable prosperity.
The stakes are enormous, but so are the rewards. Cheap, reliable energy is the foundation of economic growth, technological innovation, and environmental stability. In financing elemental energy, we are not just building power plants—we are building the future. The question is not whether we can afford to act but whether we can afford not to.
Let's make it happen.
CHT
P.S. If you know Trump, his admin or Scott Bessent, send this to them. They could be responsible for two energy revolutions.