Please join me in an illustrative example of Dunning-Kruger as I propose a solution for the looming threats of climate change and wealth inequality as it relates to electricity generation in the United States.

In the age of automation the only just system is one in which energy distribution is democratized. Energy is the new vote and voice of the people.

What does that mean — democratized energy? In short, it suggests a system where energy required to power the automation, robots and computation is distributed based on the will of the people. In this way the labor efficiencies gained from these technologies can be more reasonably returned to the people. That is the entire point of technology, to make people’s lives better. Ideally this would be everyone, not just a small percentage at the top of the economic hierarchy.

Climate change and wealth inequality are arguably the two largest issues of our time, and I believe they are closely related. Wealthy corporations employ technology and automation powered by cheap and dirty carbon emitting energy. Generally their profits are reinvested back into the company, to develop greater technologies or to scale into new markets, thus demanding a greater amount of energy. This pursuit is fueled by a debt based currency that demands continuous growth.

Taken as a whole it is hard not to see it as dystopian nightmare, where the wealthy pilfer and enslave most of humanity while simultaneously destroying the planet. One would have a difficult time concocting a more insidious plan.

Whoever controls energy, controls productivity, quality of life, and the fate of future generations. Technocrats are placing a large gamble on a future breakthrough saving us from having to pay the mountain of carbon debt. I for one love the Kurzweil Kool-Aid, but I believe there are some strategies we can consider for making the world a more equitable place in the meantime.

An Overview of Energy in the United States

For this discussion we will consider two modes of carbon emission: first, electricity generation and second, as a byproduct of industry. For brevity, let us accept the Carbon Tax put forth by over 3000 economists as a solution for industry emissions, and focus on electricity generation emissions only.

The Lawrencee Livermore National Laboratory flowchart gives us a clear way to visualize the distribution of energy in the United States and illustrates how the 97.7 Quads of energy are consumed annually in the US during 2017. 97.7 Quads converted to a more familiar unit is 28.6 trillion kWh. From that 3.67 trillion kWh was converted into useful energy and residential customers consuming on average 10,399 kWh in 2017. Following from that according to the U.S. Energy Information Administration, the per capita is around 4,478 kWh.

In 2018 the U.S. Energy Administration listed the following energy distribution:

Fossil fuels 63.5% Nuclear 19.3% Renewables 17.1%

Energy as Currency

High Level Proposal

State governments account for energy production from each source Government earmarks energy required for its function, preferring green energy sources, this includes education, healthcare, transportation and all other social programs. Remaining energy is distributed to citizens, cost is paid for by government, with price controls instituted Excess energy after citizen distribution may be purchased by private entities which will pay a carbon tax Private entities compete for citizens delegation of energy via bids Private entities may build and develop green energy, a percentage of energy produced from these goes to government pool for: (2) and (3)

Carbon Energy Consumption Tax

Our society requires electricity to function so we must not impose limits on electricity generation. Instead, consuming electricity from carbon emitting sources should be accompanied with a tax paid for by the consumer. A portion of the revenue from this tax should contribute to developing green energy solutions. In this way consuming green energy becomes an economic incentive to avoid the tax. Charging the consumer for carbon emitting energy is an important distinction from charging the energy producer as we will see below.

Green energy producers may increase their rates to be comparable to the taxed price of carbon energy producers. With this larger profit margin, green energy would have access to greater opportunities for growth.

Energy Universal Basic Income

Energy is a unit of democracy.

Citizens should not buried under a mountain of energy debt during a transition to an energy currency. To protect all citizens, especially the most vulnerable, an energy basic income (UBI) is recommended. Energy UBI empowers citizens by democratizing how energy is distributed. This is accomplished by granting each citizen a 1,000 kWh stipend per month. The stipend is a use it or lose it resource (as it is energy). Initially, this energy will be sourced from both green and carbon energy. An important note is that this stipend is not a ration or a cap. Energy consumers would still be able to obtain energy beyond this point, but may be subject to the carbon tax.

The citizen’s energy stipend is a continuous supply, and cannot be accumulated or formulated to draw interest, it is not a fiat currency. As a result inflation of the U.S. Dollar may occur during the transition to energy credits. In order to protect citizens from such an inflation, a set of material commodities will be use to supplement the energy UBI. The commodities used to supplement the energy stipend are economic pegs, and include means to achieve basic nutrition with a low carbon footprint.

Pegs might be milk and potatoes. In today’s prices this may account for $200 USD/Month. So the total allocation per individual would be 1000kWh + $200. These pegs would likely represent average or a percentile cost in order to encourage citizens to live closer to food production and further decrease carbon footprint of food transportation. The true dollar cost of the peg can be can be calculated using a simple formula accounting for the energy required to produce the good or service plus the carbon footprint plus wages in human labor. Pegs would be simply instituted by paying the producers of the peg in energy credits from the government’s pool of energy.

Over time companies and institutions will encounter increasing carbon energy taxes, and there will be a limited supply of green energy initially. Energy UBI recipients may choose to lease a portion of their energy stipends to companies. Citizens choose where energy may be allocated, and they set the price of that energy. This capability allows them to form powerful unions and blocs to direct energy towards institutions and efforts that have their best interest in mind.

Infrastructure

As a result of this transition it may be the case that energy brokers will form to deal in the bundling of individual energy leases to sell to private entities. This will create another private sector similar to today’s home loan businesses. To prevent corruption and protect the citizens, it is advisable that a government agency be created to act in the broker role.

Critical infrastructure would not be subject to carbon energy surcharges. These would need to be defined more completely, but would likely include most government agencies, hospitals schools etc. To maximize green energy consumption these institutions should prefer to consume green energy first.

Practical Example

NOTE: The current average cost of electrical energy in the US is around $.02/kWh

The government has set a price control on carbon emitting energy at $.05/kWh, and instituted a carbon emitting energy consumption tax of $2.50, ultimately costing $2.55/kWh. Consequentially, green energy producers can set their price below this price and sell to companies or they can direct their green energy to their partners at a reduced rate to encourage growth.

Meanwhile, Bob Everyman does his best to conserve energy and has estimated he has 200kWh to spare. So he notifies an energy broker that he is willing to lease 200kWh with a minimum bid of $2.00/kWh. Companies can then bid on this 200kWh block that will likely be consolidated by the broker as a larger package. Bob secures a price of $2.20/kWh and is paid $440/month while his energy lease is active. Alternatively, Bob could sell his energy shares directly to a company, another individual, or donate them to a charity or non-profit.

Tax revenues are directed to providing the UBI commodity pegs to citizens and expanding the green energy infrastructure, thereby reducing the overall energy cost. As more green energy comes online that electricity will be first directed towards the citizens UBI, and public needs. Ultimately the citizens’ decisions regarding the energy distribution will determine which institutions and businesses are successful.

Conclusion

The U.S. Dollar as a fiat currency is insufficient for tackling today’s growing problems of wealth inequality and climate change. It is based on an obsolete and dangerous philosophy of infinite growth. Energy on the electric grid is finite, objectively measurable, and a requirement for today’s automation and technology to function. It is clear that energy should be directed by the will of the people, and not consumed indiscriminately by the powerful if we are to live in a sustainable and just world.