I think the key issue preventing MMT and Environmental Economics from being seen as compatible (which I think they ultimately are) is that it is extremely easy for Environmental Economics to fall into the position that what we need is thermodynamic accounting and that the fiat money system, which is by and large conflated with the fractional reserve banking system, is unable to properly incorporate thermodynamic accounting because money values are arbitrary (fiat). Therefore, a theromodynamic standard (energy, thermodynamic free energy, entropy, ore some similar quantity) for money is often proposed as the solution to all our economic woes. Anyone who takes MMT seriously will recognise that an energy standard is just as deflationary in terms of employment as a gold standard or any other commodity standard. The resolution of the dilemma is to point out that employment does not need to mean high-environmental-impact employment. Clearly employing people in personal services has a much lower environmental impact than employing the same people in resource extraction, energy-intensive manufacturing, etc. And the economy can "grow in nominal terms' while not growing in environmental impact by an adjustment in the mix of goods and services consumed, in the direction of lower resource intensity goods and services.

A lot of people come into Environmental Economics from engineering or natural science, and such a background predisposes one against social convention ("fiat" money, nominal accounting) and for objective measures (real accounting, hence commodity money, gold standards, and thermodynamic money standards). "Money as a thing" is one of the most engrained concepts in our culture and it dovetails with the engineer/scientist tendency to prefer a commodity standard for money.

At present, monetary austerity is being used as an argument for environmental business as usual ("we cannot afford the investment needed to transition to a green energy economy"). This is a conceptual mistake of mixing resource austerity with money austerity, but if you believe money should map resources, you can't break the link between money austerity and resource austerity. The fact is that MMT through "functional finance" provides a way to justify that yes, we do (if only we have the political will) have the money to mobilize the resources necessary for the massive investment involved in a wholesale transition to a green energy future. This is akin to Keynes' quip that

"Thus we are so sensible, have schooled ourselves to so close a semblance of prudent financiers, taking careful thought before we add to the `financial' burdens of posterity by building them houses to live in, that we have no such easy escape from the sufferings of unemployment".

We may in fact paraphrase Keynes: "Thus we are so sensible taking careful thought before we add to the financial burdens of posterity by building them windfarms to power their society, that we have no escape from the sufferings of environmental destruction".

To be sure, I personally agree that "a forward-looking, progressive macroeconomics - such as Modern Monetary Theory (MMT) - requires economic activity to be in balance with the natural environment", but I think it is really important, to address and break the easy conceptual link between Environmental Economics and Commodity Money.