There’s always one. There you are, with your grand plan for making everything better, and everyone thinks it’s great.  Why not, everyone is beginning to think; why can’t we clean up the air and fix climate change and plant loads of trees and close the gap between rich and poor and give our kids a decent economy and a non-ruined planet to live on?

And then from the back of the room, up pops the hand. And you sigh because you know what the owner of that hand is going to say, because you’ve spent far longer than you’d like locked in rooms with those sort of hands: penny-pinching, knuckle-wringing, finger-wagging hands. What they’re going to say is this: all very well and good, and this sounds lovely, but how are we going to pay for it?  

Now. This is a perfectly valid question, and I’ll answer it in a bit. But it would be remiss not to point out two things. First, that the guy in charge of President Kennedy’s budget didn’t think the country could afford to put a man on the moon, and the UK Treasury didn’t want to build the Victoria Line (or set up a Green Investment Bank, as just one more contemporary example). Some people don’t want to pay for things, which is a very different thing from asking how we should pay for it. With the youth climate strikers ramping up their demands for radical climate action, and momentum building around a Green New Deal, it’s really important not to let this new movement get derailed by those who mean ‘I do not like this thing’, but who say ‘this thing is too expensive’.

Second, obviously we should pay for it. We are talking about the actual viability of human life on Earth. We cannot afford to ruin the only place in the universe we know we can live.

But now let’s take the question at face value, because we do indeed need to know how all that investment is in practice going to be marshalled. It doesn’t happen by itself, no-brainer or not. Initiatives such as the Stern Review or the economics of protecting “natural capital” have added a compelling economic case to the existing moral one for investment today to prevent environmental collapse. But that doesn’t necessarily magic up the cash to pay for it, nor marshal the appetite of those that hold the cash to part with it. We can assign an economic value to a tree in a field all we like, but that doesn’t mean anyone’s going to actually pay not to have it pummelled by a digger.

The good news is: we definitely can pay for it. The money is there, or could be. Much of it is being lavished on things we can’t really do any more, like prospecting for yet more fossil fuels, so we need to spend it on other stuff instead. We don’t properly make the polluter pay for the impacts that all of us end up paying for in flood defences or costs to the NHS from air pollution or heatwaves. And if we’ve learned one thing from the misadventures of the last twenty years, it’s that we can blinkin’ well pay for things on a massive scale, provided we actually want to.

1. Direct existing money to the right things

Ending the fossil fuel age in short order will require lots of money. But that’s OK, because there’s an awful lot of money around: global annual spend on all infrastructure is around $2.5tr, a vast amount of which is at best not doing anything useful for the planet, and a considerable chunk of which is actively helping to speed us towards climate breakdown. So before we even need to start thinking about ‘new’ money, it has to be the job of financial regulators, HM Treasury, and the Bank of England to ensure existing money flows out of the destabilising brown economy and into the green economy.

One way to do this it to change the way existing banks lend, or supersede them entirely by creating new banks. On the first of these, the Bank is slowly but surely recognising that climate breakdown is bad for the economy, but isn’t yet walking the talk on making sure its own lending doesn’t prop up fossil fuels. Leading by example is a precursor to a welter of other changes to the financial rules, such as introducing higher capital requirements (i.e. defining as ‘more risky’) investments in high-carbon assets. To get this all to happen faster the Treasury may need to get more directive regarding the Bank’s mandate, or at the very least expand its brief on financial risk to include risks from environmental change. Which itself means the Treasury will need to see environmental action as an absolute imperative.

But if things don’t move fast enough at the top, we don’t necessarily have to wait. NEF has long advocated for the Royal Bank of Scotland to be broken up into a network of local investment banks, tasked specifically with delivering the funds that are needed by the specifics of the region, people and assets that they serve – and such banks could also have a green mandate written into their investment missions as well. Locally responsive funding is also a critical part of helping deliver a just transition for the country’s very different patterns of high-carbon industry.

2. Tax things we don’t want to see to pay for things we do

One of the most eye-catching elements of Alexandria Ocasio-Cortez’s crowd-sourced Green New Deal manifesto is its focus on fairer taxes. We need these anyway – for example, the poorest 20 per cent of families in the UK pay a higher proportion of their income in tax than anyone else. A higher price on carbon, in some form, is likely to be a central part of any plan to rapidly get our economy off fossil fuels, not least to act as a further disincentive to high-carbon investment. But this or any other putative ‘green’ tax must be fair, and must be seen to be fair.

This is because a climate mission must be a national mission. In a democracy, social licence for rapid change is not a luxury, it’s essential. The related terrors of the ballot box and the tabloid press reduce ministerial aspirations to timid husks. And history, most recently the Gilets Jaunes protests in France, is riddled with examples of ostensibly ‘green’ taxes butting up hard against the court of public and tabloid attention, sometimes with good measure.

So care will need to be taken to consciously generate new sources of income in a way that helps actively correct the unfairness of our tax system. NEF’s proposed frequent flyer levy – which would replace Air Passenger Duty with a tax rate that increases the more you fly – is one such way to do that. And any new money raised must be specifically earmarked – ‘hypothecated’, in policy wonk parlance – for visible, socially progressive investments in the parts of the climate transition that make everyone’s daily lives better, particularly the less-well-off: world-class, reliable and ultra-affordable public transport, like buses; insulation for homes; vast tree planting schemes; and programmes to create new, lasting work in sustainable industries around the country.

3. Just borrow money, for heaven’s sake

If that sounds flippant, it shouldn’t. When governments decide they want to spend big, then they spend big. Propping up the banking sector cost an extraordinary £1tr, all in, including the unprecedented creation of money by central banks. When there’s a war to be fought, the money can be found. Austerity notwithstanding, we spend huge if insufficient sums on healthcare, social care and education, because we rightly see them as important and worth spending money on.

Austerity, however, does withstand. This has been a decade driven by an obsession with controlling the size of state spending. It has hollowed out the ability of the state to properly lead a green transition. So-called ‘fiscal rules’ – government targets for debt and borrowing – are cited as if they are the laws of physics. They need to change. Just as it is would be unjust to allow future generations to suffer the consequences of today’s unsustainable economy, so too is it unfair that today’s taxpayers are asked to shoulder 100 per cent of the costs. Borrowing allows repayment via tax to be spread fairly across all the generations who stand to gain from a cleaner economy. It is also hard to think of a better candidate for increasing public borrowing than the re-kitting of the economy to be modern, sustainable, healthy, and prosperous, via a huge state-led programme of green investment.

So look. The question is not how we can pay for it – there’s enough money, and precedent for just about all the things we’d need to do to marshal the cash – but whether we want to. Perhaps therefore we should pay less attention to Kennedy’s budget controller, baulking at the cost of sending a man to the Moon, and more to his then Vice President Lyndon Johnson: “would you rather have us be a second-rate nation, or should we spend a little money?”

David Powell is head of environment & green transition at the New Economics Foundation. He tweets @powellds.