Global central banks should consider a kind of quantitative easing to help fund and accelerate the net zero transition, according to a new proposal aimed at pricing carbon and rewarding its removal from the atmosphere.
Global Carbon Reward (GCR) is an initiative that wants to create a tradable carbon asset which it hopes will mobilise over US$3tn a year for efforts to cut emissions and remove carbon from the atmosphere.
It would rely on central banks to back a new funding mechanism to provide debt-free finance for green projects that qualify.
“The carbon tax is not working because this market failure is more extreme than a typical market failure,” said Delton Chen, GCR executive director and founder. “The carbon reward is the natural solution to this particular problem.”
Chen said the new asset – which GCR wants to register on foreign exchange markets under the ticker symbol XCR – would have to be issued by a new international carbon exchange authority, with demand initiated by central banks.
“The central bank’s role is essentially to buy it only when necessary to keep the spot price above a particular price so it has a minimum value over time and that’s called carbon quantitative easing,” Chen said.
In a working paper on the concept, Chen describes carbon quantitative easing as “an internationally coordinated monetary program for central banks that belong to a monetary-carbon alliance” that is “long term, strategic, and does not involve buying government bonds, green bonds, or other securities”.
Removing financial risk from the net-zero transition
The asset should create financial incentives to leave fossil fuel reserves in the ground. Chen said the system could mean that the reserves of a company like Exxon could be bought out at close to market value under a contract that would bind the company to use the proceeds to invest in renewable energy.
“We’ll swap out dirty energy in the ground and swap in renewables … so we’re essentially de-risking the whole transition for you by realising those costs and removing financial risk,” Chen said.
While the system has some similarities with carbon credits, one key difference is that it seeks to avoid the practice of offsetting. “If you’re offsetting what’s the point anyway because you’re just delaying actual mitigation,” Chen said.
Unlike the cap-and-trade system, which deals in emissions permits, this proposal describes itself as mitigate-and-trade, with the new asset offered to qualifying projects for greenhouse mitigation outcomes.
The unit of account for the carbon reward would be flexible enough so that it could account for $60 per tonne of carbon for a forestry project in the Amazon, for example, but award $150 per tonne for a coal plant transitioning to solar, Chen said.
He predicted that the inflation triggered by this kind of quantitative easing could be kept in check.
Based on the International Energy Agency’s prediction that the world needs to invest around $4.5tn a year in clean energy by the 2030s, Chen said his calculations suggested that the impact on inflation could be kept to about 1-2% annually.
Some experts have suggested that central banks need to shift to a more flexible system of monetary policy and adjust inflation targets upwards, in order to respond to the supply shocks that climate change will make more likely.
Most of the new asset should be bought by the private sector rather than by central banks, limiting its inflationary impact, Chen said.
“The beauty of this approach is that … we’d expect the private sector to buy and invest in the XCR, or the carbon reward, for a similar reason as why they are buying gold … thus we channel the cost and mitigation mostly into the private sector,” Chen said.
“When the private sector won’t buy any more, the rest of the cost is channeled into the balance sheets of the central banks through monetary expansion.”
Update, 15 January 2026: this article was amended to clarify the definition of carbon quantitive easing, and the proposed role of central banks in the carbon reward.
This page was last updated January 20, 2026
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Emma Thomasson is a British journalist, consultant and trainer based in Berlin. She is an expert in economics, politics, business and technology. She previously worked for Reuters as a correspondent and bureau chief in Germany, Switzerland, the Netherlands, South Africa and the UK.
