The world would clearly benefit from abundant access to carbon-neutral electricity. However, a significant obstacle lies in the basic economics of supply and demand. As electricity production increases, prices drop, which can periodically lead to sharp declines in investment for new power generation. This post explores a potential solution that could help make electricity inexpensive enough to enables transformative changes across industry, transportation, and everyday life.

Imagine a currency tied to carbon-neutral energy production. Here’s how it might work: if you contribute something that generates power to the grid without emitting CO₂—like solar panels on your roof, a share in a wind turbine, or a nuclear reactor—this new currency is created and awarded to you as that source produces electricity. The more carbon-neutral electricity you generate over time, the more currency you earn. Crucially, the reward is not tied to selling electricity, which remains tradable using conventional money. Instead, the currency is awarded purely for enabling carbon-neutral electricity production.

The only way to create more of this energy-backed currency (perhaps it could be called “power coins” or “e-coins”?) is to actively contribute to increasing or sustaining carbon-neutral, or even carbon-negative, electricity production.

This system could leverage technologies developed for cryptocurrencies but, in stark contrast to most, would mitigate environmental damage rather than exacerbate it. Unlike cryptocurrencies that depend on energy-intensive digital mining, this currency’s “mining” process would require the creation of sustainable electricity production—a tangible utility in the real world.

Tying a currency to carbon-neutral energy production would be a modern equivalent of the gold standard. Historically, monetary systems relied on gold reserves, an approach that eventually fell out of favor for several reasons. For one, the finite supply of gold limits governments’ ability to respond flexibly to economic crises. Moreover, gold—like many currencies and cryptocurrencies—is largely useless in practical terms. Its value stems from a mix of scarcity and shared human narratives, rather than from inherent utility.

In contrast, an energy-based currency would enable economies to “print money” by bringing more carbon-neutral electricity production online—something inherently useful.

The concept lends itself to a range of possible implementations. It could be adopted by national governments, much like a conventional currency; by decentralized communities, akin to a cryptocurrency; or by international organizations and non-profits acting in the public interest. Each model offers distinct advantages and drawbacks, and scaling up any of them introduces practical hurdles. For example, how can we reliably validate the energy production of “miners”? What kind of technology and regulatory frameworks would ensure trust and fairness? These are questions to solve. In what follows, I will address a few other, different questions.

• Who decides the wattage-to-coin exchange rates?

Ultimately, the market does. While the currency’s supply is tied to production of carbon-neutral electricity (as in the gold standard analogy), its relative value against other currencies would float. Traditional currencies rely on government backing, while many cryptocurrencies function like speculative assets or stocks. This new currency would represent a different kind of money—one whose supply is anchored in real-world power production (the literal ability to do work), but whose exchange rate still depends on market forces. It would be subject to speculation like any currency, yet remain grounded by a tangible, renewable resource.

• Why not just rely on subsidies to increase the desired electricity production?

Subsidies are often short-term fixes for long-term challenges, and many do not survive more than a single election cycle. By weaving the incentives to solve the energy crisis directly into our monetary system, we give them a better chance to endure, persisting long after fleeting political priorities fade.

• Will lack of control and continuous mining of this currency not cause high inflation?

At the very beginning, it might appear that inflation could run high, as the currency grows rapidly from a very small base. However, this initial phase is more akin to starting from zero and ramping up production capacity than a persistent inflationary spiral. Over the longer term, it’s helpful to compare this system to how governments manage conventional currencies. By setting interest rates, central banks target inflation at around 2–4%. Notably, this range aligns closely with the average growth in global electricity demand (2.4% in 2022, 2.2% in 2023, and a projected 3.2% through 2026). Although this similarity doesn’t guarantee a direct causal link, it reflects how electricity demand—and by extension, industrial productivity—tends to grow at a relatively steady pace. Because it takes time to bring new generation capacity online, a current-based currency can’t simply inflate without limit. It may not be regulated in the traditional sense, but it can still be guided. For instance, reducing power plant output effectively throttles the inflow of currency to the market. Conversely, if the economy needs stimulation, both electricity generation and currency supply can be increased together. In this way, the currency and energy production remain intertwined, maintaining balance rather than runaway inflation. Taxation could serve as an additional lever, allowing states to fine-tune the amount of currency in circulation and help maintain overall stability.

• Countries will never give up their own currencies, so why would this ever be realistic?

In practice, this idea can scale organically. It could start within a small community of enthusiasts, grow to serve as an auxiliary currency for a nation or region, and potentially evolve into a global standard. History shows that countries can abandon their currencies when offered a compelling alternative—for example, the European nations’ move toward a shared currency after World War II.

Before dismissing this idea, consider the alternatives. Conventional money exists only because of collective trust in a government, while speculative cryptocurrencies often demand enormous computational resources—using significant amounts of non-carbon-neutral electricity—to solve meaningless math problems. Surely, a currency tied to something real and beneficial, like carbon neutral electricity, makes more sense.

If you know someone interested in making this idea a reality, share it with them—and let me know what you think.

— Martin, December 7, 2024

(This idea was dreamt up about two years prior. But I’ve been busy—you know how it goes.)

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