Energy-Backed Currencies

Why it makes sense

From (http://transitionculture.org/?p=198

"once you have a company generating local energy, you have an asset that you can use to back up a local currency. The problem with many local currencies such as LETS is that they can’t be exchanged for things in shops, and are not much use to business. Lietaer said you have to start with the idea that the currency can be used by business, and then also by the community. A currency backed by energy achieves this. Then people can part pay their bills in the local money, which would liberate the workpower needed to start to implement localisation in other areas such as land use and community development. The currency would be of use to everyone, not just to people who want an aromatherapy massage, as can sometimes be the problem with LETS. It can be either a printed currency or an electronic one. The company could give favourable loans to business start-ups that are driving forward the Energy Descent Action Plan." (http://transitionculture.org/?p=198)

How to achieve it

From an excellent article on the site of the Schumacher Society by Robert Swann, called “The Place of a Local Currency in a World Economy”

URL = http://www.schumachersociety.org/newsletters/04jun18.html

"If we are to begin to design a local money system that would work for development of a local economy, what are the elements or characteristics for such a system? It would have to be simple to understand, but consistent with our experience of the present money system. That is: it would have to consist of both cash (or paper currency) as well as a checking system–or some other form of bookkeeping which utilizes the computer to simplify accounting.

Unlike our present money system, it would have to be redeemable (i.e. exchangeable) in some real value–not necessarily gold or silver, but real needs of everyday use such as energy. Without redemption system it will be difficult to convince people of its value–after all isn’t that exactly why the dollar so devalued–because it is not redeemable for real value from the primary issuer, the Federal Reserve. Most importantly, we would need to establish a measurement of value which would be as universal as possible and not subject to swings in value up or down as our present money system is. In other words, it would have to remain as constant in value as possible in order to establish a sense of permanency and security as well as make it more practical for exchange to take place. Such a method of measurement would be the most revolutionary element in the design and would be the key factor in making it possible for a universal system of money and banking–without the need of central banks or central governments becoming involved in money issue.

Once this standard of value had been arrived at, it could be monitored by the state or federal government just as the Bureau of Standards maintains and monitors other standards of measurement such as weights and units of space. But it would not require state intervention into the economic sphere, as is now the case. And finally, it would have to be organized at the local level and controlled by the community as a whole (i.e. each community would elect members of the board of the issuing bank which would preferable be a non-profit institution). Under such a structure as I am suggesting, banking would become more truly a profession, and bankers would be paid for their services, but the community would decide how and where its currency would be invested”.

Current Projects in Operation

The most advanced project on the ground appears to be Kilowatt Hours. From their website:

"Kilowatt Cards are gift cards that pay for 10 kilowatt-hours of electricity (including taxes and fees) to benefit any consumer electricity account when redeemed though this web site. The electric utility does not accept Kilowatt Cards - we do - and then send cash payment to the company at the rate it normally charges retail customers for electricity.

Because these gift cards may be redeemed by anyone to pay for electricity, they can also be used to barter for other things, anything, worldwide. Kilowatt Cards are issued by a non-profit corporation founded to demonstrate the idea that financial liabilites denoted in kilowatt-hours constitue a new asset class having stable value, and to provide fixed-value paper to those who want it." http://www.kilowattcards.com/template/index.cfm

Bitcoin (http://p2pfoundation.net/Bitcoin)would not be defined as an energy backed currency, but could be used to purchase energy products and services by anyone choosing to accept them as payment. A partial list of goods and services that can be purchased with bitcoin: https://en.bitcoin.it/wiki/Trade

Ideas + Theories

There are a number of theories about how an energy-backed currency could be developed and run. A brief highlight of each, taken from their website, below:

http://www.odemagazine.com/exchange/4085/renewable_energy_backed_p2p_currency and http://p2pfoundation.net/P2P_Social_Currency_Model

The P2P Energy Economy fuses the latest advances in SmartGrid technology, P2P trading and lending, and P2P energy production (from renewables) into an abundance-sustaining economy, including a new kind of currency designed to work with a small but growing category of goods and services that can be produced on abundant basis.

"The benefits of the P2P Energy Economy are summarized below:

   1. Provide an energy based currency that has a fixed work value and a use value that only increases over time. 

   2. Enable 'Fair Exchange' (which assures that producers recoup the cost in work energy it takes them to produce and deliver a given good or service plus a fixed reward margin.) 

   3. Direct the flow of money into higher production efficiencies for energy, goods and services. 

   4. Direct the flow of money towards socially, ecologically and environmentally intelligent producers of goods and services. 

   5. Enable a model of the economy where in order for peers to grow their revenue they have to share it with others through no-interest lending, i.e. “the more you share, the more you have.” 

   6. Enable increased autonomy through increased inter-dependence between equally empowered peers. "

http://www.smashwords.com/books/view/67291 - Non-fiction E-Book "The town went through an economic depression. The local manufacturing plant shut down. Money was leaving the community. Unemployment was over 10 percent and the jobs remaining were low paying. Most people in the town with mortgages owed more than the home was worth. Foreclosures were at a record high. The schools and the city budgets were deep in the red. In this environment, the town adopted alternative currencies. These currencies were backed by land, labor and energy. The town issued loans against future production to help entrepreneurs get a start. The people and town set up local energy systems and used electricity credits as money. People laid off from the factory found new jobs or set up workshops making small energy systems. People agreed to payment part in Federal Reserve dollars, and part in local currency backed by electricity production."

http://homepage.mac.com/forever.net/Sun/Moneytext.html "SunMoney - based on locally produced energy - addresses this. With this approach, the region's electricity provider is required to accept scrip for a percentage of their product and at a discount. The provider must then use the scrip to purchase labor, energy, and other supplies locally, financing the development of local energy autonomy and producing active local marketplaces in which everyone has the opportunity to participate."

http://neweconomicsinstitute.org/publications/essays/swann/robert/building-community-banking-system

http://eddiesblogonenergyandphysics.blogspot.com/2011/05/how-to-implement-electricity-backed.html

http://www.globalresearch.ca/index.php?context=va&aid=13120

http://www.theoildrum.com/node/5269

https://lirias.kuleuven.be/handle/123456789/297783

http://www.theperfectcurrency.org/implementation.htm

http://www.energybulletin.net/node/12504

http://www.capitalownership.org/lib/TurnbullSelectingACommunityCurrency.htm

http://www.gaianeconomics.org/pdf/ebcu.pdf

http://seekingalpha.com/article/129500-banking-on-energy-rather-than-currency-or-gold

http://www.cesc.net/adobeweb/scholars/shepherd/energycurrencies.pdf

http://ideas.repec.org/a/eee/enepol/v38y2010i4p1749-1758.html

http://www.sharingsustainablesolutions.org/hydrogen-monetary-system/

http://papers.ssrn.com/Sol3/papers.cfm?abstract_id=1802166

http://www.energybackedmoney.com/

http://www.sustainableswcolorado.org/local-ingenuity/windmill-renewable-energy

http://transition.putney.net/index.php?ID=124

Related Concepts+Possible Project Extensions

http://newgenerationenergy.org

Distributed Energy Grid

http://www.energymatters.com.au/carbon-trading/recs/index.php

http://p2pfoundation.net/Sparking_A_Worldwide_Energy_Revolution

http://fleeingvesuvius.org/index.php/2011/07/22/cap-share-simple-is-beautiful/

http://www.sharingsustainablesolutions.org/hydrogen-monetary-system/

Energy Conservation: Games and Reward Systems

http://marketinggreen.wordpress.com/2007/10/17/greener-simcity-virtual-world-as-channel-to-influence-real-world-behaviors/

http://www.joulebug.com/