Excerpted from a proposal by Brian McConnell, designer of the Joule Standard:

“Metabolic currency, money denominated in or pegged to energy reserves, may make more sense in a highly mechanized economy because it’s rooted in the same physics that governs the machines. The inventor Buckminster Fuller first proposed the idea of a currency based on electricity, the Global Energy Grid, in 1969. More recently, Chris Cook proposed an international currency linked to energy reserves.

Sounds like science fiction, right? Except, we’re already on the Joule Standard without realizing it. We may keep our personal and government treasuries banked in Dollars, Euros or Renminbi, but in order for that money to do anything useful it has to be converted into energy to power the machines needed to build and deliver products and services. We can print as much money as we like, but economic output in a highly mechanized economy is ultimately determined by only two things: the energy supply and energy efficiency (energy consumed per unit of output).

During its early stages, this could be developed as an entirely private system, for example as the basis for an international payments network or as an alternate currency like Bitcoin. The conversion factors to translate Joules to and from various energy commodities are well known and can be independently verified. Private firms would issue notes denominated in Joules that are backed by corresponding amounts of energy commodities. These will be energy futures contracts, only denominated in metric units. Energy companies, commodities markets and technology entrepreneurs will be natural operators in this system. Most importantly, as projects like Bitcoin have demonstrated, this can be done by very small entrepreneurial companies in the early stages, allowing for rapid product development and innovation. There’s nothing stopping the person working on the next Paypal from doing this tomorrow.

Because these instruments can be developed and tested privately prior to larger scale uses, we can avoid the social engineering problems associated with experiments like the Euro. I am not suggesting that large countries will abandon their national currencies. What seems more likely is that the Joule could become an attractive way to store value for both public and private entities. Some countries, especially those that are energy independent, might eventually peg their currencies to their energy supplies if this proves successful. Meanwhile market based tests of private currencies will uncover best practices to be used in larger scale applications, as well as hazards to be avoided.

It is interesting to think about what would happen when a country’s money supply and energy supply are effectively merged, and how energy policy would drive a country’s fiscal policy and investment strategy. This would provide countries with a new toolbox with which to manage the economy, and would make it clear to policymakers that investing in energy technology and infrastructure is an investment in future economic progress.”