energy futures

[Dennis Peterson]

Seems complicated...what is the advantage over a currency simply denominated in kilowatt-hours?

On Thu, May 19, 2011 at 10:41 AM, John Waters <john....@phonecoop.coop> wrote:

On 18/05/11 20:39, Dennis Peterson wrote:

> In this context, what are energy futures? Google just gave me futures
contracts for oil and such.

I have been using the term "Energy Futures" as a short form for a model
proposed by Shann Turnbull  (see Morehouse, Benello, Swann & Turnbull
"Building Sustainable Communities" 2e, TOES, 1997).  He has developed
the model a bit further since then, and others (some quite different but
still backed by energy) exist.

This ST model is useful both for bringing renewable energy generation
systems into community ownership and for creating a secondary
energy-based currency for local circulation.   Some time ago I attempted
a diagrammatic summary:
http://esrad.org.uk/projects/LCS/kWhF_flows_2.png and
http://esrad.org.uk/projects/LCS/kWhF_map.png

The model assumes a co-operative local banking service with sufficient
autonomy.  This is (apparently) not unrealistic in parts of the USA and
Australia but it's something we lack in the UK which is why (on several
occasions) I've thrown in the idea of formation of a secondary mutual to
provide UK-wide shared resources to enable CUs and CDFIs to provide the
necessary banking services.

John (:

--

John Waters

Robert Owen Community Banking Partnership

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[Steve Dekorte]

Wouldn't any energy currency effectively become worthless as soon as a cold fusion device appears?
Or at least become wildly volatile if frozen methane mining begins?

[Dennis Peterson]

Maybe, but you could just as well say that gold will become worthless as soon as fusion-powered rockets give us cheap asteroid mining.

To avoid that sort of risk, you have to go with a currency that's not backed by anything physical. Normally this introduces the risk of the currency controllers running amok.

New digital currencies introduce other possibilities. Bitcoins, being (sort of) backed by computation, fixes that risk by adjusting the difficulty level. (Coins aren't really backed by anything, but producing new coins takes a certain amount of computation.)

On the other hand, cold fusion probably wouldn't reduce the price of energy to zero. A cold fusion device generates heat, which you still have to use to run a steam turbine. There's a lot of cost associated with that, despite the absence of fuel costs. Focus fusion would probably be a good bit cheaper, since it produces a pulsed ion beam that you can just shoot through a coil to generate electricity. But even that would only reduce the cost to about ten percent of energy from coal. So you have pretty significant inflation, but there's a limit.

[Alex Rollin]

Bitcoins are also scarce.

--
Alex
werk: http://commoning.net
me: http://alexrollin.com
mob: +62 821 2530 5380
“It’s no longer possible for a country to collapse in isolation. Now
we all collapse.  The only path to stability is to equalize the
consumption rates of the first and developing world. Our dream is no
longer possible in the new world.” - Jared Diamond

[Steve Dekorte]

On 2011-06-06 Mon, at 06:54 PM, Dennis Peterson wrote:
> Maybe, but you could just as well say that gold will become worthless as soon as fusion-powered rockets give us cheap asteroid mining.

Sure, but with each you have to consider their likely hood and timing. I can imagine current fiat currencies loosing almost all value in 20 years, cold fusion happening in our lifetimes, and any practical form of interplanetary space flight not happening for at least several hundred years.

[Julian Woolford]

The end of energy constraint == the end of scarcity.

Therefore - A post currency world in effect.

On that basis - the energy scarcity == value == unit of currency is valid for so long as (energy scarcity == true).

JW.

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Kind Regards,

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[Alex Rollin]

At the point where energy scarcity is at an end (oh, if we only had
open patents for the new and most efficient solar converter in the
world) we can only speculate about what the new currency is. I think,
for my own part, and my own action, that this scarcity must be
addressed the world over, before we move on. Can I get a second on
that!?

https://share.sandia.gov/news/resources/releases/2008/solargrid.html

(totally buildable, btw)

--
Alex
werk: http://commoning.net
me: http://alexrollin.com
mob: +62 821 2530 5380
“It’s no longer possible for a country to collapse in isolation. Now
we all collapse.  The only path to stability is to equalize the
consumption rates of the first and developing world. Our dream is no
longer possible in the new world.” - Jared Diamond

[Steve Dekorte]

On 2011-06-06 Mon, at 11:26 PM, Julian Woolford wrote:
> The end of energy constraint == the end of scarcity.

I don't see how this is the case. Things whose cost is principally energy would become cheap, but I don't see how that even includes most things. e.g. good medical care is scarce but not AFAICS principally energy constrained.

[Julian Woolford]

Look globally - Those countries which have what attributes have a long life expectancy and good health.

Now contrast these with countries that have low life expectancies and poor health standards.

How many of the key attributes that feed into health are energy dependant?

JW

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[Alex Rollin]

On Jun 7, 2011, at 5:31 PM, Julian Woolford <in...@kimachi.com> wrote:

Look globally - Those countries which have what attributes have a long life expectancy and good health.

Now contrast these with countries that have low life expectancies and poor health standards.

How many of the key attributes that feed into health are energy dependant?

JW

Oh dear.  As if all the energy to make  electronics shipped to Sweden comes from Sweden.

We're all connected, one world.  I'm in Indonesia where people die and get sick with a greater regularity than I have ever experienced and most of these people can't afford more than 300 watts an hour for 8 hours per day. Period.  

Anyone have an open source design for a thermostatic valve for my solar water pasteurizer?  I can find a CNC here somewhere, maybe.  Well, mayne not.  Do you have a design that can be built with hand tools?

Alex

[Dennis Peterson]

The two are connected. The main expense for space travel is the immense cost to orbit of chemical rockets. Cheap fusion would change that. Polywell fusion, for example, would drop launch costs by a factor of 1000, and reduce cost and time to other planets by large factors as well:

http://nextbigfuture.com/2007/11/fusion-propulsion-if-bussard-iec-fusion.html

With that kind of a cost drop, all sorts of things that are prohibitively expensive right now suddenly become economical.

Focus fusion could be really near-term...experiments are going well, and it looks like things are scaling the way they expect. If things keep going so well could achieve breakeven within a year. If so they should have a commercial prototype within five. This could drop energy costs by an order of magnitude or two.

Cold fusion could turn out to be even closer. Rossi claims he'll have a power plant operating this fall. Here's a NASA chief scientist who think it's real:

http://www.evworld.com/evworld_audio/dennis_bushnell_part1.mp3

The neat thing is there's actually a theory of how cold fusion might work, which uses known laws of physics. It was published in 2006. Since then NASA’s been looking into it, and they’re about to start experiments.

Here's an interview with one of the theorists. The interviewer is kind of annoying but the scientist is really interesting.

http://www.blogtalkradio.com/sandy-andrew/2010/04/17/widom-larsen-theory--energy-revolution-with-lewis-

One of those guys said they worked out what a rocket using it would do, and it'd be cheaper than a fission rocket (which itself is a lot cheaper than chemical).

In any case, I wouldn't want to put much of my assets in an energy-backed currency with fusion possibly around the corner, but post-fusion it seems like a good idea again; a commodity currency that naturally tracks the size of the economy.

--

[Steve Dekorte]

On 2011-06-07 Tue, at 03:31 AM, Julian Woolford wrote:
> Look globally - Those countries which have what attributes have a long life expectancy and good health.
> Now contrast these with countries that have low life expectancies and poor health standards.

Ok, on life expectancy the US is 38th, though I would guess it has a higher energy consumption per capital that the top 37.

http://en.wikipedia.org/wiki/List_of_countries_by_life_expectancy

Also, Saudi Arabia is 85th. Is this not an odd place to be if your thesis is correct?

[Steve Dekorte]

On 2011-06-07 Tue, at 10:49 AM, Dennis Peterson wrote:
> The two are connected. The main expense for space travel is the immense cost to orbit of chemical rockets. Cheap fusion would change that. Polywell fusion, for example, would drop launch costs by a factor of 1000, and reduce cost and time to other planets by large factors as well:
> http://nextbigfuture.com/2007/11/fusion-propulsion-if-bussard-iec-fusion.html
>
> With that kind of a cost drop, all sorts of things that are prohibitively expensive right now suddenly become economical.

I've already agreed the price would drop, my point was about the timing not the price change.

> Focus fusion could be really near-term...experiments are going well, and it looks like things are scaling the way they expect. If things keep going so well could achieve breakeven within a year. If so they should have a commercial prototype within five. This could drop energy costs by an order of magnitude or two.

Indeed, that's what I've heard people say every five years for the last 30 years.

> Cold fusion could turn out to be even closer.

I think that's what I suggested, no? :)

> In any case, I wouldn't want to put much of my assets in an energy-backed currency with fusion possibly around the corner, but post-fusion it seems like a good idea again; a commodity currency that naturally tracks the size of the economy.

Post fusion, AFAICS, it would make as much sense as using a leaf or dirt backed currency.

[Dennis Peterson]

Yes I think we're in violent agreement on most things.

But why do you think it will take so long to get to space?

Bigelow's got a couple private space station prototypes in orbit right now, and Space X is two years away from a private human-capable heavy-lift rocket. They say it's big enough to get to Mars.

So then you just need a better rocket engine. We could have that right now if people were willing to use fission rockets, which we had operating in the 60s. A cold fusion rocket would be designed much the same way. All you really need is a good heat source that your reaction mass can run by.

I think Space X could design the rocket, the Bigelow would give them a near-term destination. Turning space tourism affordable would be a huge market. Profits from that would fund more ambitious goals...the Space X CEO has said that Mars has been his real goal all along, and Bigelow's ambition since before he made his hotel money has been to get mankind in space.

I hope you're right that energy would get that cheap. Rossi at least has a much higher estimate, at least initially...cheaper than coal, but not by that much. Focus fusion has really cheap estimates because it doesn't need a steam cycle.

You really should check out focusfusion.org...at least every month they post something about how their experiments are going, what went wrong, what went right. Last year they had huge problems with getting all their switches to fire at the same time. Right now they're fixing an issue with electrodes being not quite the same length, causing asymmetrical plasma. At the beginning of the year they got a paper published showing that they'd achieved the billion-degree temps needed for boron fusion. It's been fascinating to watch. They're the only fusion contender I know of who are so transparent.

(If no form of fusion works out, liquid thorium reactors seem like a pretty good alternative. There's some nuclear waste, but very little, it's only dangerous for 300 years, and the reactor can eat the waste we've got already. Can't melt down because the fuel's already liquid, and if it gets too hot a plug melts and it drains to a cooling tank. Operates at atmospheric pressure. We had one working in the 50s.)

To get back to my initial question...assuming electricity isn't too cheap to meter, would a simple currency redeemable for kilowatt-hours work? 

--

[Alex Rollin]

In a friendly neighbor to neighbor situation the bet thing about a kilowatt redeemable currency, or any redeemable currency, is that a village can use it to finance "user owned" infrastructure cooperative style.  For that reason, because of todays issues, such a kilowatt currency can be very useful with a "known good" project like a solar furnace.  

Indeed, what is the status of a smart card open siurce system that can support multiple issues of such currency with individual IDs for each note?  I'm working to build spare capacity with programmers to  build such an add on for Open transactioms that could leverage existing smart card reader technology, and I'll keep my eyes out for make-able hardware, too.  If we can lower the price of such a system there will always be a use for it because we will always want to bank something to suffice for capital later.  What is the current state of affairs with  the "most buildable and easiest to manage " system?

Alex Rollin

Http://alexrollin.com

[Steve Dekorte]

On 2011-06-08 Wed, at 04:58 AM, Dennis Peterson wrote:
> To get back to my initial question...assuming electricity isn't too cheap to meter, would a simple currency redeemable for kilowatt-hours work?

An ideal currency has a number of properties. It's scarce, fixed in supply, liquid, portable, anonymous, etc. Energy fails on many of these properties now, and even more of them in a world with cheap unlimited energy (or even one that tapped known frozen methane reserves), which would make it a very poor choice for a currency AFAICS.

[Dennis Peterson]

Fixed? A lot of people think it's better to have a currency supply that tracks the size of the economy. That way you get a stable value. If the economy doubles while the currency stays fixed, you have 50% deflation.

Nobody would trade "energy" directly, they'd trade vouchers issued by power producers, redeemable for kilowatt-hours. Those vouchers could be just as liquid, portable, and anonymous as any other form of cash.

There's a limit to how much energy people will care to use, so it seems to me that's a natural limit on how many vouchers will be produced. Since energy usage ties pretty closely to GDP, it seems like a pretty ideal currency to me.

--

[Anthony Di Franco]

To this description of the ideal currency and why energy vouchers might be ideal I would add that a basket of commodities and energy together would seem to have similar properties as the ones you mention here but with less volatility and better tracking of the size of the economy as explained in Bernard Lietaer's Terra proposals and roughly such an idea has been implemented in Hubculture's Ven.

And Hubculture's Ven seems in its main features to be pretty close to an ideal currency to me. Or at least an ideal currency-like asset that could benefit from more decentralized and anonymous infrastructure behind or around it to make trading in it better.

[Dennis Peterson]

I need to look into that more. Commodities and energy seem a bit different to me though, since energy is used once and it's gone. It's as if a gold mine constantly issued new gold certificates, and everyone soon redeemed them for the actual gold...and then threw away the gold.

Another possibility: carbon emission rights. To make it work, issue emission rights to anyone who verifiably absorbs carbon from the atmosphere. Collect them from major emitters (coal mines, oil companies).

[Steve Dekorte]

On 2011-06-08 Wed, at 11:34 AM, Dennis Peterson wrote:
> Fixed? A lot of people think it's better to have a currency supply that tracks the size of the economy.

Indeed, these are the people responsible for the currently collapsing economy.

> That way you get a stable value. If the economy doubles while the currency stays fixed, you have 50% deflation.

I think both they and you are confusing value with prices.

> Nobody would trade "energy" directly, they'd trade vouchers issued by power producers, redeemable for kilowatt-hours. Those vouchers could be just as liquid, portable, and anonymous as any other form of cash.

Which is to say easily over printed and prone to credit collapse.

[Steve Dekorte]

On 2011-06-08 Wed, at 11:46 AM, Anthony Di Franco wrote:
> To this description of the ideal currency and why energy vouchers might be ideal I would add that a basket of commodities and energy together would seem to have similar properties as the ones you mention here but with less volatility and better tracking of the size of the economy as explained in Bernard Lietaer's Terra proposals and roughly such an idea has been implemented in Hubculture's Ven.

The problem with any such scheme is that it's prone to abuse by the token issuers - something that can't happen with a currency like bitcoin where everyone actually holds their currency instead of promissory notes. This is why we have seen about 20 cases of hyperinflation world wide in the last 20 years and why the euro and dollar will soon fall into hyperinflationary collapse or credit collapse.

The lesson history has taught us over and over again government, corporation or other entity can be trusted not to cheat. Why does the public refuse to learn?

[Steve Dekorte]

On 2011-06-08 Wed, at 12:14 PM, Steve Dekorte wrote:

> The lesson history has taught us over and over again government, corporation or other entity can be trusted not to cheat. Why does the public refuse to learn?

Correction: *is that no government,...

[Dennis Peterson]

I think you're confusing me with a Keynesian. Actually I'm a Ron Paul campaigner and there's some gold in a vault with my name on it.

If our only product is widgets, we have 100 dollars and 100 widgets, then one dollar buys one widget. If we expand to 200 widgets, one dollar buys two widgets. That's the deflation.

I disagree with the people who think deflation is automatically bad. If the "deflationary spiral" were real, nobody should ever buy a computer. But I don't see anything wrong with a currency with naturally stable prices, either, as long as we're not trusting some political figure to make the adjustments.

If you've got vouchers for gold, and nobody ever redeems them, it's pretty tempting to print extra vouchers, knowing they won't be redeemed anyway. But I'm not convinced you can get away with that for energy. It gets redeemed all the time.

However, thinking about it some more, the main problem I see with currency denominated in kilowatt-hours is that it's impossible for the power company to adjust their prices in response to supply and demand.

--

[Ryan Fugger]

On Wed, Jun 8, 2011 at 12:48 PM, Dennis Peterson
<dennisb...@gmail.com> wrote:
> However, thinking about it some more, the main problem I see with currency
> denominated in kilowatt-hours is that it's impossible for the power company
> to adjust their prices in response to supply and demand.
>

Signals to consumers in response to changing supply and demand would be
taken care of automatically if the amount of base currency in
circulation is kept equal to the amount of energy available for use in
the economy, by issuing new currency whenever energy is made available
in an economically-useful form, and removing currency from circulation
whenever energy is consumed. (I would favour issuing new currency as
a basic income to all citizens, but that's a matter of taste.)

Power companies would charge the base amount for the energy content of
their product, which would be removed from circulation, plus a fee for
delivery, where they would make their profit. Energy producers would
basically be the new central banks.

Ryan

[Anthony Di Franco]

I myself agree with all of that, and I am all for unforgeable tokens.
I am just saying that backing is an indispensable factor in the usefulness of a currency and sacrificing it entirely, perhaps in the interest of unforgeability and regular rate of creation, isn't the optimal choice - it dooms the system to a brief life as a vehicle for unchecked speculation.
At the same time ven could probably benefit people more if it were more decentralized and transparent, of course.
I will have to elaborate more on this in another longer form; I am being drawn into making this point from many directions recently.

[Dennis Peterson]

That's how I'm thinking about it. The problem I see is that energy can't be stored that well. If people save up their vouchers, they could try to redeem more than available at a given time.

If we got all our energy from, say, giant dams with lots of excess capacity, it wouldn't be a problem. The lake just gets deeper when people save their vouchers. But if we're running power plants at full capacity sometimes, and just reducing their output when people don't redeem as much, we risk running into problems. People are saving vouchers but we're not saving energy to match, and there's a limit to how much we can produce at a given time.

--

[Steve Dekorte]

On 2011-06-08 Wed, at 12:48 PM, Dennis Peterson wrote:
> I disagree with the people who think deflation is automatically bad. If the "deflationary spiral" were real, nobody should ever buy a computer.

Exactly. The deflation reflects the reality. Producing more dollars only distorts prices via theft and results in mal-investment. You'll notice that those advocating printing never want to equally distribute the new money...

> But I don't see anything wrong with a currency with naturally stable prices, either, as long as we're not trusting some political figure to make the adjustments.

What is a "natural" price other than the price that would result from a fixed supply?
And who can be trusted to create more money - besides me and my own friends of course :)?

[Anthony Di Franco]

On Jun 8, 2011 2:35 PM, "Steve Dekorte" <st...@dekorte.com> wrote:
>
>
> On 2011-06-08 Wed, at 12:48 PM, Dennis Peterson wrote:
> > I disagree with the people who think deflation is automatically bad. If the "deflationary spiral" were real, nobody should ever buy a computer.
>
> Exactly. The deflation reflects the reality. Producing more dollars only distorts prices via theft and results in mal-investment. You'll notice that those advocating printing never want to equally distribute the new money...

If the new money were distributed on an equal basis (assuming we agreed on what exactly that means) would you object to printing? How generally would it change your views?

> > But I don't see anything wrong with a currency with naturally stable prices, either, as long as we're not trusting some political figure to make the adjustments.
>
> What is a "natural" price other than the price that would result from a fixed supply?
> And who can be trusted to create more money - besides me and my own friends of course :)?
>
>
>

[michael linton]

Many of the ideas in this thread are to substantial issues as the ideas of Jules Verne on space exploration are to those of NASA etc - more fantastic and fanciful than in any way workable.    Or so it seems to me.   

However ...

On Wed, Jun 8, 2011 at 1:06 PM, Ryan Fugger <a...@ryanfugger.com> wrote:

Signals to consumers in response to changing supply and demand would be
taken care of automatically if the amount of base currency in
circulation is kept equal to the amount of energy available for use in
the economy, by issuing new currency whenever energy is made available
in an economically-useful form, and removing currency from circulation
whenever energy is consumed.  (I would favour issuing new currency as
a basic income to all citizens, but that's a matter of taste.)

This does make real sense - energy accounting that is also a distribution system.   From 1940-50 in the UK, fuel, sugar, meat and much besides was handled this way and it worked.

See http://teqs.net for emerging possibilities.

[Steve Dekorte]

On 2011-06-08 Wed, at 03:16 PM, Anthony Di Franco wrote:
> > Exactly. The deflation reflects the reality. Producing more dollars only distorts prices via theft and results in mal-investment. You'll notice that those advocating printing never want to equally distribute the new money...
>
> If the new money were distributed on an equal basis (assuming we agreed on what exactly that means) would you object to printing? How generally would it change your views?

If it was completely equally distributed (including updating all existing wages, contracts, benefits, perceptions of prices, etc) it would AFAICS have absolutely no effect other than being an enormous waste of time and energy. Just as splitting shares of stock has no effect. The reason it's done with stock is (I suspect) that it was simpler to integrate with existing trading systems, laws and contracts than allowing fractional shares.

[Anthony Di Franco]

On Jun 8, 2011 3:23 PM, "michael linton" <michael...@gmail.com> wrote:
>
> Many of the ideas in this thread are to substantial issues as the ideas of Jules Verne on space exploration are to those of NASA etc - more fantastic and fanciful than in any way workable.    Or so it seems to me.   
>
> However ...

It is a central tragedy of our times, to continue the space analogy, that we must fly around in spaceships designed and built by Jules Vernes and have to figure out the real engineering for the problems as we go, and contend with the air-reclamation system owners blocking efforts to apply duct tape to the screen doors, and such. And it is hard to foresee anything like an Apollo or Manhattan project happening again for the sake of solving anything. But here we all are.

However…

> On Wed, Jun 8, 2011 at 1:06 PM, Ryan Fugger <a...@ryanfugger.com> wrote:
>>
>>
>> Signals to consumers in response to changing supply and demand would be
>> taken care of automatically if the amount of base currency in
>> circulation is kept equal to the amount of energy available for use in
>> the economy, by issuing new currency whenever energy is made available
>> in an economically-useful form, and removing currency from circulation
>> whenever energy is consumed.  (I would favour issuing new currency as
>> a basic income to all citizens, but that's a matter of taste.)
>
>
> This does make real sense - energy accounting that is also a distribution system.   From 1940-50 in the UK, fuel, sugar, meat and much besides was handled this way and it worked.
>
> See http://teqs.net for emerging possibilities.

However, this is what I had in mind when I asked Steve what he had in mind in mentioning equal distribution of new money. Or, to be precise, Albus' public dividend proposals from the 70s in the US. I was not aware it had been tried in substance before, and I will certainly look at that more closely.

[Dante-Gabryell Monson]

Some ( draft ) thinking in this direction I know of / interacted with ,

compiled by Marc Fawzi :

http://p2pfoundation.net/P2P_Energy_Economy

http://p2pfoundation.net/Talk:P2P_Energy_Economy

[Steve Dekorte]

On 2011-06-08 Wed, at 04:54 PM, Anthony Di Franco wrote:
> And it is hard to foresee anything like an Apollo or Manhattan project happening again for the sake of solving anything.

You mean it's hard to see the government stealing massive amounts of wealth from a public that is already drowning in debt (thanks to gov intervention in credit and money markets) in order to fund massive engineering projects which do nothing to increase the quality of life for the public?

[Dante-Gabryell Monson]

ps: on http://p2pfoundation.net/Talk:P2P_Energy_Economy ,

one can notice mention of 

"cpu hour" tokens

itself related to energy consumption,

which from my point of view can be related to Bitcoins

http://en.wikipedia.org/wiki/Bitcoin

also found more on the topic here :

"Energy Credits as a currency; P2P energy trading" 

http://forum.bitcoin.org/?topic=7182.0

[Ryan Fugger]

On Wed, Jun 8, 2011 at 1:59 PM, Dennis Peterson
<dennisb...@gmail.com> wrote:
> That's how I'm thinking about it. The problem I see is that energy can't be
> stored that well. If people save up their vouchers, they could try to redeem
> more than available at a given time.
> If we got all our energy from, say, giant dams with lots of excess capacity,
> it wouldn't be a problem. The lake just gets deeper when people save their
> vouchers. But if we're running power plants at full capacity sometimes, and
> just reducing their output when people don't redeem as much, we risk running
> into problems. People are saving vouchers but we're not saving energy to
> match, and there's a limit to how much we can produce at a given time.
>

The distribution charge would also play a factor here. If there was
that much demand, distributors could jack up their prices and the
profits would encourage new generation capacity.

Ryan

[Patrick Chkoreff]

On Mon, Jun 6, 2011 at 9:31 PM, Dennis Peterson
<dennisb...@gmail.com> wrote:
> Seems complicated...what is the advantage over a currency simply denominated
> in kilowatt-hours?

Agreed -- though at the risk of sounding pedantic, I want a currency
that is *redeemable* for kilowatt-hours, by contract with a reputable
energy producer or consortium. I might then allocate perhaps 10 to
20% of my net asset value into such a currency, and would certainly
offer my services for it.

-- Patrick