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Energizing Money - Monetizing Energy. 1 st ISTC, Split 12/07/12 Josh Ryan-Collins and Ludwig Schuster new economics foundation. Introduction. Energy money / currencies / accounting : Multiple objectives Multiple scales High level of complexity - PowerPoint PPT Presentation
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nef (the new economics foundation)
Energizing Money - Monetizing Energy
1st ISTC, Split 12/07/12Josh Ryan-Collins and
Ludwig Schusternew economics foundation
nef (the new economics foundation)
Introduction
• Energy money/currencies/accounting:– Multiple objectives– Multiple scales– High level of complexity
• Communication and comprehension challenge• Moving beyond the niche
nef (the new economics foundation)
Report detail
• Nature and the economy• Nature and role of money• Taxonomy• Case studies:
– Basket of commodities– Single commodity– Emergy, WAT– ‘Debit-based models’– ‘Credit-based models’– Global complex models
• Conclusions & next steps• Appendix: 36 selected energy currency & accounting projects
with links
nef (the new economics foundation)
Money & economy: conventional, anthropocentric production process
nef (the new economics foundation)
Flaws of the monetary system
· ‘Virtual’ wealth – the problem of compound interest allowing monetary ‘wealth’ to diverge from the productive capacity of the economy
· Un-economic growth – structural drivers of monetary growth beyond ecological limits
· Dysfunction – conflict between store of value and means of exchange functions
· Discounting the future – undervaluing future wealth in economic decision-making
· Mis-allocation – lack of incentives for money to be created for investments that create ecological and social value
· Financial instability – the problem of money creation for speculative rather than productive use
nef (the new economics foundation)
Key findings
• Different objectives will require diff models: energy money can improve classical functions of money and drive the energy transition
• Need a new reference (unit of account) money linked to natural world - price in nature & make clear non-substitutability – Difficult, top-down reform.
• Stimulating local and regional energy transition: – Debit-energy currencies for stable store of value & encourage
sustainable consumption– Future redeemable credit-energy currencies to fund investment in
renewable energy– Sustainable energy banks to issue non-redeemable credit linked to
energy unit of account
nef (the new economics foundation)
Going forward: a research and action agenda• Encourage further innovation, local experimentation• Knowledge sharing & scaling up of successful models across
national boundaries and institutions
nef (the new economics foundation)
Richard Douthwaite “Without equitable, locally- and regionally-controllable monetary alternatives to provide flexibility, the inevitable transition to a lower-energy economy will be extraordinary painful for thousands of ordinary communities, and millions of ordinary people. Indeed, their transitions will almost certainly come about as a result of a chaotic collapse rather than a managed descent and the levels of energy use that they are are able to sustain afterwards will be greatly reduced. Their output will therefore be low and may be insufficient to allow everyone to survive. A total reconstruction of our money-issuing and financing systems is therefore a sine qua non if we are to escape a human, social and economic disaster.”
Douthwaite, R., (2011) ”Degrowth and the supply of money in an energy-scarce world”, Ecological Economics
nef (the new economics foundation)
When is energy money energy money at all?
• Three criteria qualify an energy unit to be money: („A-T-R“):– Accountable? (distinct units of account
= indispensable monetary function)– Transferable? (means of exchange =
crucial function to act as a currency)– Redeemable? (store of value = optional
function)
nef (the new economics foundation)
Energy monies – a taxonomyEnergy-related Money
Mon
eyEn
ergy
unit of account function
accounting / measuring means of exchange function store of value function
as a commodity
as an accounting value
primary energy
final/use energy
non-ren. renewable
consumed saved
nef (the new economics foundation)
Energy monies – a taxonomyEnergy-related Money
Mon
eyEn
ergy
unit of account function
accounting / measuring means of exchange function store of value function
as a commodity
as an accounting value
physically backed by
with reference to
redeemable for
primary energy
final/use energy
non-ren. renewable
consumed saved
nef (the new economics foundation)
Energy monies – a taxonomy
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
redeemable promissory notesfor future redemption against
nef (the new economics foundation)
Energy monies – a taxonomy
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
nef (the new economics foundation)
Energy monies – a taxonomy
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
ACCOUNTABLE
TRANSFERABLE
REDEEMABLE
nef (the new economics foundation)
Energy monies – a taxonomy
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
REDEEMABLE
nef (the new economics foundation)
Energy monies – a taxonomy
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
REDEEMABLE
HOARDING
INVESTMENT
FIAT CREDIT
nef (the new economics foundation)
Energy monies – a taxonomy
• Comparing (measuring) vs. allocating (transfering) – Pegged (referenced) vs. backed
• irredeemable vs. redeemable– energy debit (hoaring) vs. energy credit (investment)
» pre-saving vs. fiat credit creation (self-financing)
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Examples
HOARDING
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Examples
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
INVESTMENT
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Examples
INVESTMENT
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Examples
nef (the new economics foundation)
Boarderline Examples
• Borderline Examples: – Wörgler Sonnenscheine
(redeemable but not transferable)– Emergy
(to date, only accountable)
Table 5 . Emergy intensities for some common products (after Odum, 1996) Item Transformity Specific Emergy
(Sej/J) (Sej/g) Corn stalks 6.6 E4 Rice, high energy 1 7.4 E4 1.4 E9 Cotton 1.4 E5 Sugar (sugar cane) 2 1.5 E5 Corn 1.6 E5 2.4 E9 Butter 2.2 E6 Ammonia fertilizer 3.1 E6 Mutton 5.7 E6 Silk 6.7 E6 Wool 7.4 E6 Phosphate fertilizer 1.7 E7 Shrimp (aquaculture) 2.2 E7 Steel 2 8.7 E7 7.8 E9 1. After Brown and McKlanahan, (1996) 2. After Odum and Odum (1983)
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Boarderline Examples
INVESTMENT
nef (the new economics foundation)
as part of a basket of commodities
unit of account function
accounting / measuring means of exchange function store of value function
primary energy
final/use energy
non-ren.
as a commodity
as an accounting value
renewable
consumed saved
Energy-related Money
measured
traded
physically backed by
with reference to
redeemable for
Mon
eyEn
ergy
non-redeemable unitsused for accounting in form of
measuring value(comparison)
transferring value(allocation)
redeemable promissory notesfor future redemption against
stored/harvested production
(hoarding/stock-keeping)
projected /future production
(investment)
available today available in the future
Boarderline Examples
Table 5 . Emergy intensities for some common products (after Odum, 1996) Item Transformity Specific Emergy
(Sej/J) (Sej/g) Corn stalks 6.6 E4 Rice, high energy 1 7.4 E4 1.4 E9 Cotton 1.4 E5 Sugar (sugar cane) 2 1.5 E5 Corn 1.6 E5 2.4 E9 Butter 2.2 E6 Ammonia fertilizer 3.1 E6 Mutton 5.7 E6 Silk 6.7 E6 Wool 7.4 E6 Phosphate fertilizer 1.7 E7 Shrimp (aquaculture) 2.2 E7 Steel 2 8.7 E7 7.8 E9 1. After Brown and McKlanahan, (1996) 2. After Odum and Odum (1983)
nef (the new economics foundation)
Questions for further research
• Theory vs. praxis: scale implications in setup and management (implementation gap)
• ecological accounting – how to coin those units into a currency?
• Credit easing energy currencies – appropriate design & implementation?
• how to scale up and merge existing models into a new sustainable monetary framework?
nef (the new economics foundation)
Further information
• www.neweconomics.org• www.neweconomics.org/proj
ects/monetary-reform• www.moneta.org