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Energizing Money - Monetizing Energy

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

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Energizing Money - Monetizing Energy

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  1. Energizing Money - Monetizing Energy 1st ISTC, Split 12/07/12 Josh Ryan-Collins and Ludwig Schuster new economics foundation

  2. Introduction • Energymoney/currencies/accounting: • Multiple objectives • Multiple scales • High levelofcomplexity • Communication andcomprehensionchallenge • Movingbeyondtheniche

  3. 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

  4. Money & economy: conventional, anthropocentric production process

  5. Real world: non-substitutability of resources & wastes

  6. 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

  7. 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

  8. Going forward: a research and action agenda • Encourage further innovation, local experimentation • Knowledge sharing & scaling up of successful models across national boundaries and institutions

  9. Going forward: Engagement with natural partners

  10. Research legal & regulatory constraints

  11. 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

  12. Whenisenergymoneyenergymoneyat all? • Threecriteriaqualify an energyunittobemoney: („A-T-R“): • Accountable? (distinctunitsofaccount= indispensable monetaryfunction) • Transferable? (meansofexchange= crucialfunctiontoactas a currency) • Redeemable? (storeofvalue= optional function)

  13. Energymonies – a taxonomy Energy-related Money Money Energy

  14. Energymonies – a taxonomy Energy-related Money unit of account function accounting / measuring means of exchange function store of valuefunction Money as an accounting value as a commodity Energy primary energy final/use energy consumed saved non-ren. renewable

  15. Energymonies – a taxonomy Energy-related Money unit of account function accounting / measuring means of exchange function store of valuefunction Money with reference to physically backed by redeemable for as an accounting value as a commodity Energy primary energy final/use energy consumed saved non-ren. renewable

  16. Energymonies – a taxonomy unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money with reference to physically backed by redeemable for measured traded as an accounting value as a commodity primary energy final/use energy Energy consumed saved non-ren. renewable as part of a basket of commodities

  17. Energymonies – a taxonomy unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money measuring value (comparison) transferring value (allocation) with reference to physically backed by redeemable for measured traded as an accounting value as a commodity primary energy final/use energy Energy consumed saved non-ren. renewable as part of a basket of commodities

  18. Energymonies – a taxonomy unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money ACCOUNTABLE TRANSFERABLE REDEEMABLE redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money measuring value (comparison) transferring value (allocation) with reference to physically backed by redeemable for measured traded as an accounting value as a commodity primary energy final/use energy Energy consumed saved non-ren. renewable as part of a basket of commodities

  19. Energymonies – a taxonomy unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money REDEEMABLE redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  20. Energymonies – a taxonomy unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money REDEEMABLE FIAT CREDIT redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of HOARDING INVESTMENT Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future as an accounting value as a commodity primary energy final/use energy Energy consumed saved non-ren. renewable as part of a basket of commodities

  21. Energymonies – a taxonomy • Comparing (measuring) vs. allocating(transfering) • Pegged (referenced) vs. backed • irredeemable vs. redeemable • energydebit (hoaring) vs. energycredit(investment) • pre-saving vs. fiat creditcreation(self-financing)

  22. Examples

  23. Examples unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of HOARDING Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  24. Examples unit of account function accounting / measuring unit of account function accounting / measuring means of exchange function means of exchange function store of valuefunction store of valuefunction Energy-related Money Energy-related Money redeemable promissory notes for future redemptionagainst redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of non-redeemable units used for accountingin form of INVESTMENT Money Money measuring value (comparison) measuring value (comparison) transferring value (allocation) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) projected /future production (investment) with reference to with reference to physically backed by physically backed by redeemable for redeemable for measured measured traded traded available today available today available in the future available in the future Energy Energy as an accounting value as an accounting value as a commodity as a commodity primary energy primary energy final/use energy final/use energy consumed consumed saved saved non-ren. non-ren. renewable renewable as part of a basket of commodities as part of a basket of commodities

  25. Examples unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of INVESTMENT Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  26. Examples unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  27. BoarderlineExamples • BorderlineExamples: • Wörgler Sonnenscheine (redeemable but not transferable) • Emergy (todate, onlyaccountable)

  28. BoarderlineExamples unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of INVESTMENT Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  29. BoarderlineExamples unit of account function accounting / measuring means of exchange function store of valuefunction Energy-related Money redeemable promissory notes for future redemptionagainst non-redeemable units used for accountingin form of Money measuring value (comparison) transferring value (allocation) stored/harvested production (hoarding/stock-keeping) projected /future production (investment) with reference to physically backed by redeemable for measured traded available today available in the future Energy as an accounting value as a commodity primary energy final/use energy consumed saved non-ren. renewable as part of a basket of commodities

  30. Examples

  31. Questionsforfurtherresearch • Theory vs. praxis: scaleimplications in setupandmanagement (implementationgap) • ecologicalaccounting – howtocointhoseunitsinto a currency? • Crediteasingenergycurrencies – appropriate design & implementation? • howtoscaleupandmergeexistingmodelsinto a newsustainablemonetaryframework?

  32. Further information • www.neweconomics.org • www.neweconomics.org/projects/monetary-reform • www.moneta.org

  33. Thanks for listening! Josh Ryan-Collins and Ludwig Schuster for nef(the new economics foundation) and The 40 Foundation

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