The Joule Standard
Brian McConnell <bsmcconnell@gmail.com>
Brian McConnell is a software developer, author and technology entrepreneur based in San
Francisco. You can learn more about this proposal at www.joulestandard.com
We have automated nearly every aspect of the economy. Pick any industry, product or service.
You’ll find that the amount of work done by humans is dwarfed by the labor of machines.
The modern agricultural supply chain spends roughly ten times as much energy to deliver one
unit of edible energy to you1 . That energy is expended by machines, ranging from farm
equipment, to manufacturing chemical pesticides, to fueling refrigerated trucks. In other
industries, the ratio of machine effort to human effort is even greater, 100 to 1 or more. We have
surrounded ourselves with a vast mechanized economy. Indeed, we are dependent on it for our
survival.
This quiet transition to a robotic economy raises an interesting question about the nature of
money. The machines we’re so dependent on are paid in energy. They have no understanding of
human money, and they do not work for IOUs. We may direct them, like a man riding an
elephant, but the amount of work they can do is limited by physics. When 99% of the real work is
done by machines, would it make more sense to define currency in terms of energy? If so, how
might we make that transition, and what can we learn from the technology industry as we do so?
A central law of physics states that in any system, energy can neither be created or destroyed,
only converted from one form to another. A ball resting at the top of a ramp converts its potential
energy (the effort required to lift it against the force of gravity) to kinetic energy (motion) as it rolls
down. The amount of energy available within any system, whether it is a bacterial cell or an
economy, is finite. Unlike money, energy cannot be printed or counterfeited.
What exactly is energy?
Energy is the capacity to do a certain amount of work. It can be stored and transported in many
forms. The international unit of measure for energy is the Joule. The table below describes what
this equates to in real world terms.
1
http://openthefuture.com/cheeseburger_CF.html
Media
Energy
1 kg (2.2 pounds) of water behind a 100m (328 foot)
hydroelectric dam
980 Joules
iPhone 5 battery capacity
19,620 Joules
100 Watt light bulb, one hour of use
360,000 Joules
1 kg lithium­ion battery
760,000 Joules
1 soft drink (250 Calories)
1,000,000 Joules (1 MJ)
Typical person’s basal metabolic rate (per day)
8,600,000 Joules (8.6 MJ)
1 kg of sugar
17,000,000 Joules (17 MJ)
1 kg of wood
18,000,000 Joules (18 MJ)
1 kg of animal fat
38,000,000 Joules (38 MJ)
1 kg of diesel fuel
46,200,000 Joules (46.2 MJ)
1 kg of natural gas
53,600,000 Joules (53.6 MJ)
Typical household electricity consumption per day
72,000,000 Joules (72 MJ)
1 kg of hydrogen
141,800,000 Joules (141.8 MJ)
One hour of driving at highway speeds (30 mpg mileage) 334,000,000 Joules (334 MJ)
Plot of energy densities for variety of materials (source Wikimedia Commons)
It is interesting to note that, pound for pound, hydrocarbon fuels store vastly more energy in a
smaller space than man­made materials such as batteries. Only liquid hydrogen and nuclear
fuels, which are very difficult to handle, can store energy more compactly.
Energy storage is only one part of the equation. Every square meter of the earth’s surface
receives about 700 Watts in sunlight (700 Joules every second). The actual amount varies by
location, time of year and weather conditions, so this is a year­round average figure. This energy
drives the growth of green (photosynthetic) plants and the planet’s weather, both of which are
natural reservoirs we can tap into. This is precisely what biological systems do.
The Wrong Frame of Reference
The problem with our current system is that we are measuring the wrong things, and do not
measure significant parts of the economy at all. For example, do you know how much energy
was consumed to produce the shirt you are wearing? Measuring this involves metering energy
use at every step of the supply chain from the cotton farm to the transport system that brings the
finished product to your local store.
The basic issue is that we don’t measure energy use in a systematic and easy to comprehend
way, at home, at work or in many industries. Each industry has its own units of measure. Natural
gas is measured in cubic feet, therms or BTUs. Electricity is measured in kilowatt­hours. Oil is
measured by the barrel. Automotive fuels are measured in gallons or liters. Food energy is
measured in calories. Another way of explaining this is that we typically measure everything in
terms of money, which has no inherent physical value, and later translate this into energy. We
are using the wrong frame of reference for our measurements, like measuring the speed of a
passing train from a car traveling nearby.
One industry that pays exquisitely close attention to energy use is the aviation business.
Airplanes are uniquely sensitive to energy use. The heavier an airplane is, the more fuel it
requires to remain aloft, fuel which adds more weight, which leads to a vicious cycle. On the
other hand, a small decrease in weight or small increase in engine efficiency can have dramatic
effects on fuel efficiency, reduce the amount of fuel required, which in turn leads to a virtuous
cycle.
The aviation industry is also an example of a process called dematerialization, where the goal is
to continually reduce the amount of material and energy required to manufacture the finished
product. This has been applied to every aircraft component from wings to seat cushions and has
driven the long­term productivity gains in the industry since its beginnings. It should be applied
everywhere, and with the development of technologies like additive manufacturing, will have a
significant impact over the next 10 to 20 years.
We expect most food products to be consistently labeled with their ingredients and nutritional
content. We should do the same thing with most products and services, so that people
throughout the supply chain can see how much energy was used to produce something and
transport it to market.2 As a general rule, the more energy is used to produce something, the
more that item will cost relative to less energy intensive products. Consistently tracking energy
consumption at every step of production will enable people throughout the supply chain to find
the most energy efficient and low carbon alternatives. This alone should drive significant
efficiency gains, as well as promote energy literacy.
There is a widespread misunderstanding that conservation means sacrifice, but that’s not true. If
you’ve had a basic business education, you’re no doubt familiar with the concept of
compounding interest. This effect applies equally to conservation, as the example below
illustrates.
Just as compound interest causes your credit card bill to balloon, small year over year
improvements in efficiency produce similarly striking results, especially over long time periods.
This trend is currently well underway in the solar power industry, where the cost of solar
photovoltaic equipment has been dropping an average of 7% per year for the past 30 years,
2
http://openthefuture.com/cheeseburger_CF.html
leading to a nearly ten­fold decrease in unit costs during that period3 . Or put another way, it has
lead to a nearly ten­fold increase in watts (energy output) per dollar, the same sort of exponential
curve we see in computing power, albeit over a longer doubling time frame.
The important point is that even small improvements in efficiency can produce large results over
the long term. It doesn’t matter if the growth in units of product produced are due to growing the
inputs (growth paradigm), or due to shrinking the amount of materials and energy consumed to
produce them (steady state economy). The net result to the end customer in terms of utility or
value delivered is identical.
Coming from the technology industry, I’ve learned that breakthrough technologies are rare, and
often take decades to make their way into products. Nearly all of the progress in the technology
industry is the product of many small innovations that are gradually incorporated into products
and their manufacturing processes. Progress may seem slow when viewed up close, but over
long time frames, compounding effects take over. This is why a computer that would have
occupied an entire building in the 1980s now fits in your pocket.4
There are two things we can do today that will accelerate this process. One is to define a
standard unit of measure for energy across industries. The Joule has been the standard unit of
measure for scientific measurement since the 1800s. It makes sense to make it the standard for
commercial measurement. A simple way to start is to display the prices for energy commodities
and futures contracts in terms of dollars or euros per gigajoule (one billion Joules), a trivial
software modification to programs that track energy commodity and futures prices.
A second step is to phase in requirements for companies to measure the amount of energy
consumed in each step of the supply chain and to report this information in a standard format.
This requirement is not especially onerous because any well run company already tracks its
resource and energy usage. Companies are simply measuring energy use inconsistently. Some
measure energy use in terms of money. Others in terms of industry specific measures, such as
therms or gallons of diesel. Firms will save money and resources by tracking their energy use
more consistently, so this will be a good business practice as well as good policy.
Let’s consider your monthly utility bill as an example. A typical utility bill displays your usage in a
hodge podge of measures, kilowatt hours for electricity, therms or BTUs for natural gas, and so
on. If your bill instead graphed your energy usage in Joules, you would be able to see and
compare, for example, how much energy you consume in any form. Electricity usage figures are
also misleading because they omit the energy that was burned in fossil fuel powerplants to
generate that electricity, typically at relatively low efficiency. Utility companies already have all of
3
http://blogs.scientificamerican.com/guest­blog/2011/03/16/smaller­cheaper­faster­does­moores­law­apply­to­
solar­cells/
4
http://www.phoronix.com/scan.php?page=news_item&px=MTE4NjU
the data they need to generate easy to understand reports like this (and could also show
transmission losses, how they are phasing in low carbon energy sources in their portfolio, etc).
Companies like OPower, which generate usage reports for major utility companies’ customers
could easily do so as well.
Metabolic Currency
This system could also lead to new financial instruments that would augment or eventually
replace today’s fiat currencies, a new gold standard of sorts. Fiat currencies have value only in
respect to other currencies and commodities. 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 reserves5 .
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 Bitcoin6 . 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
5
6
http://seekingalpha.com/article/129500­banking­on­energy­rather­than­currency­or­gold
http://www.bitcoin.org
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.
Learn more about the Joule Standard and metabolic currency at www.joulestandard.com