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LOCAL CURRENCY + LOCAL ECONOMY = LOCAL SUSTAINABILITY
LOCAL CURRENCY + LOCAL ECONOMY = LOCAL SUSTAINABILITY -- The formula for local failure is to give your purchasing power over to the Boards of Directors of the Nation's mega-corporate empires. By Jim Miller
There are, at the local level, many hopeful signs that a shift toward sustainability is beginning. But there are also many discouraging signs that large political and economic institutions will resist change in that direction. Seeing the latter signs and the immensity of the challenge before us, we can easily drift into discouragement and inaction. Is it too late? Are recommendations for a peaceful energy transition hopelessly unrealistic?
Am I being fatalistic? Or simply realistic? Our cultural obsession with good news, promises, and hope is humanly understandably, but there comes a time when the best thing to do is to accept that a bad situation has developed and find intelligent ways to manage it.
-- Richard Heinberg. The Party's Over – Oil, War and the Fate of Industrial Societies, p. 236.
So....., how do we “localize” our economy, our collective decision making, and our local sustainability? First we plan, then gather the physical and human resources, hit the start button, and get underway. Governments are mired in planning, “paralysis by analysis”. Like the generals, they are are always planning to fight the next war with ideas and tools used to fight the last one.
Oregon has an energy plan – a lengthy, touch every button, plan, which has several localizing components, but avoids the most serious inquriy: how to change the mindset of our folks on the need to live at a much lower energy level. Implied in the report is that the good ideas will be recognized as such and adopted by the general population. Alas, such is not likely to be the case. Until energy costs and energy deprivation really cuts to the bone, the general population will have to learn the hard way, by bad experience rather than from intelligent instruction as suggested by Heinberg.
Correspondence on this subject with the Oregon Department of Energy fell on hot rocks with the final blow-off: just attend meetings and submit your comments. How can one have an “intelligent” discussion with the appropriate state official if that official does not want to hear?
Oregon Governor Theodore Kulongoski directed the Department of Energy to develop an Oregon Energy Plan. His instructions included a section on bioenergy:
Biofuels. The Governor has begun developing legislation that will capitalize on Oregon’s emerging “bio-energy” markets, particularly in the biodiesel and ethanol markets. The plan includes developing biomass energy projects in Oregon. The legislative package will focus on policies and incentives to create markets for agricultural production and feedstock as energy resources. It will also promote the production of biofuels in Oregon. The Governor already has directed his state vehicle fleet administrators to meet the targets for biodiesel and ethanol use set out in his Renewable Energy Action Plan.
The Department of Agriculture has signaled some persistent limitations to production of bioenergy in Oregon:
Factors inhibiting Oregon's biodiesel industry
- Feedstock and other input costs. Over the past year, feedstock prices have skyrocketed. Canola prices have doubled since 2006, and soybean prices have nearly doubled. Methanol has also tripled in price since last fall.
- Lack of infrastructure. There is now minor crushing capacity in Oregon, along with the single processing facility. However, it will require larger processing plants to ensure growers of a market to grow feedstock crops.
- Low demand due to lack of consumer awareness of the benefits of biodiesel.
- Processing and manufacturing that relies on incentives that create market pull and provide price justification to cover costs of production
- Challenges in siting and permitting
- No standard legal framework or templates for growers to use in structuring ownership and financing.
Several efforts are underway to address these barriers. Research and industry efforts in the Pacific Northwest, supported by state and federal policies and programs, are developing new strategies and technologies to overcome barriers to production. One focus is aimed at producing higher value co-products and establishing optimized business models. Attention will be also focused on more efficient uses of the seed meal, the crop fiber, and, glycerin -- a lower value by-product of biodiesel production. Biolubricants and other biobased products are also the focus of development and market efforts.
The Department of Energy issued its 2007-2009 Biennial Energy Plan. While they did address the Peak Oil Issue, little is found to give comport that the OR DOE has any hard, specific plans to develop bioenergy. Beyond platitudes, only vague hope that technology will partly solve the energy needs of Oregonians.
While alternatives will be used, they are unlikely to fully replace oil and natural gas. Oil and natural gas have been cheap and easy to produce, but the alternatives will be difficult and expensive to produce. As a result, more capital and energy will have to be allocated to produce alternative sources. In addition, many of the alternatives produce electricity rather than liquid transportation fuels. It could take decades to replace a significant amount of declining oil and natural gas reserves.
In addition to alternative supplies, it will be necessary to increase the efficiency of the energy used. With the peak of world oil production approaching, major improvements in the energy efficiency of cars, homes and buildings, lights, appliances, and industrial processes are needed. In addition, major savings can be achieved by walking and bicycling more often, changing land use patterns to reduce transportation needs, and investing more in long-distance rail and mass transit. Id. at 27.
In fairness to the report, it did mention specific sources of renewable energy, including wave power, wind, geothermal, and solar energy. While these forces exist to be harnessed for human use, the enormous quads of joules from renewable energy sources is nowhere on the immediate horizon. These subjects have been explored in depth by such as authors as Richard Heinberg in The Party's Over, and Michael Bates in The Post-Petroleum Survival Guide and Cookbook
Bush, in his 2007 State of the Union speech, extolled the virtues of renewable energy, which echoed similar statements on many occasions. On the day after his speech, the Office of Management and Budget cut 25 million from the budget of USDA's National Renewable Energy Laboratory's budget; after a huge protest, OMB restored five million. So much for the national leadership's interest in renewable energy.
Planning to prevent the coming economic meltdown is not for the faint hearted or lame duck officials. If there is any hope of developing local sources of renewable energy, it will be based on citizen participation, not only in the planning, but in the financing of the early start-ups which are exploring new sources of renewable energy and improving on existing sources.
My field of science and engineering is in biodiesel, specifically algal oil from the 25 micron Chlorella vulgaris algae. Growing algae is no great trick. Making biodiesel from algal oil is old science. The serious limitation has been on the extraction of the algal oil. The state of this technology is explored by my paper, the PROSPECTS FOR THE BIODIESEL INDUSTRY, wherein the solution to extracting the algal oil on a low energy, high scale basis is posited. This article follows my major paper exploring how to grow algae when its minus 28 degrees F. outside: MONTANA SYNERGY, LLP BUSINESS PLAN FOR COMMERCIAL PRODUCTION OF ALGAE FOR FOOD AND FUEL USING PHOTOBIOREACTOR TECHNOLOGY
The issue of localization is resolved by creating an algae farmers' cooperative which offers its members template plans for constructing the covered ponds and instructions on how best to grow and harvest Chlorella vulgaris. The co-op members fund the construction of the extraction plant and the biodiesel plant. The members can draw on off-road (red dyed) biodiesel for their farm engines and profit from the sale of on-road (amber) biodiesel. This arrangement provides for local control and avoids a huge cost in hauling fossil fuel from the bottom of the well bore in the Middle-east to the farmer's land in Oregon.
While I have discovered the method which allows for a low energy, high yield of extraction of algal oil, I have not discovered any source of funding for the pilot plant, a necessary step prior to scale-up. Bankers will not touch any business such as proposed by my paper, because the process is “unproven”, “novel”, “not a safe business risk...” and so on. I understand; their only interests are in the cash flow to the bank for interest and return of principal, not in saving the world. Of course, the banks will sink the same as the rest of us, when the hole in the bottom of the ship gets large enough.
No mind the banks; how about venture capitalists? The only interest they have is making a big financial killing using their “exit strategy”-- roughly translated – sell the business to a mega-corporation with which has a mountain of spare cash. This approach clashes directly with our goal of local production, local consumption and local ownership of the means of production.
So... how does a community finance a start-up venture, based on “unproven”, but potentially very profitable and doable technology? How about a credit union – a “Locavore Community Credit Union”? Here's how to start one (very summary – but a point of beginning).
In order to become sustainable, our community needs, inter alia, a strong, local, economic base, especially in food and energy. In order to have that base, such businesses and individuals need to generate sufficient income to have savings. The savings offer these services: (a) Reserves against economic down turn, accidents, theft of assets by insiders, and (b) funds for expansion of services/products.
In order to have savings, the enterprises must be profitable, yet offer a high ratio of value to price to their customers/members of local green products and services.
Profits by these businesses, in terms of cash, can be placed in a credit union and draw interest/dividends. The credit union exists to serve the financial transaction needs of the enterprises and their workers as well as the general membership.
Credit unions are supervised by states or the feds. In Oregon, the supervision is by DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, DIVISION OF FINANCE AND CORPORATE SECURITIES. Memberships and equity subscriptions are not considered corporate securities, which avoids a huge expense in complying with the Oregon public issue, securities laws.
Many credit unions have been formed by poor folks and have succeeded. See: NCMSC SUPPORT CENTER. There is no reason why we cannot follow the same path laid down by the credit unions mentioned in the article.
I recently read an article that one of the major banks created an exclusively online bank. There is no reason why we cannot start our credit union as an exclusively online bank. All we need is a server, some computers, an office or garage, some heat, light, office equipment (used), and a coffee pot, a refrigerator and microwave. We will also need telephone service and DSL.
When those are in place or at hand, I can do the paperwork and apply for all of the permits and licenses. We will need a name, a location and a Board of Directors (3 or 5). We also need a Council of Advisors of about 25 folks to act as our outreach team and vet the Board's proposals. The 25 will become our first members when our permits are issued.
We can the issue debit cards which are really our own currency. The card will allow local merchants to honor the credit union and its members by affording us discounts on locally produced items and local services. In return, our membership chooses to do business with the local merchants and service companies, thus avoiding the Big Boxes and national corporations and their franchisees. The card would need to be shown to the cashier, but not necessarily used for payment. Thus the CU can drive customers to each member merchant, who also will have as page off our wikiweb or a link to the merchant's website, or both.
Over time, the Credit Union will have profits it can use for small, mini-equity investments. The members' deposits can be loaned, but, under the prudent person rule, probably cannot be used for equity funding small, start-up innovative businesses. I am also against buying listed stocks and bonds of "blue chip" companies. Those companies are seldom truly "local" and the point of the CU is on businesses which are "local".
So, now the CU has a line of equity investments to monitor. To do so, it will need volunteer "monitors" who are appointed to work with the small business in which the CU has an equity stake. This is how KIVA works. Thus, we keep the small business in view at all times and can help out when needed with loans or advice.
We can also act as a source of information for our members on what companies are "green" by publishing their data on our wikiweb and getting feedback from the customers/members of the CU. Thus we keep in touch with our members who constantly "vet" each merchant member. This will keep our losses down -- and there will be equity and some loan losses for which we need to prepare and attempt to prevent.
We can get started anytime we can get a steering committee together. I suggest we meet at a local coffee house and discuss some of the matters mentioned in this memo. Basically we need:
- A decision that we need a green credit union to serve as part of our sustainability drive for the community.
- A name.
- A definition of the community which, because of our online status, could be all of Oregon
- Membership qualifications
- A physical, rent free location until we get our permits
- Office furniture and equipment, including software.
- Bylaws which meet the Oregon Revised Statutes
- Initial Board of Directors.
- A website
- The initial formation of the Council of Advisors.
- Selection by the Board of the members who will operate and manage the CU (we will use the limited liability partnership as a model and thus all working in the CU are “partners” not employees, thus no FICA, no UI, no Work Comp.)
- Eventually, the CU could sponsor a 501.c.3 for educational and charitable purposes, receive donations any apply for grants.
Jim Miller jimmiller5417@yahoo.com October 12, 2008 By Jim Miller
There are, at the local level, many hopeful signs that a shift toward sustainability is beginning. But there are also many discouraging signs that large political and economic institutions will resist change in that direction. Seeing the latter signs and the immensity of the challenge before us, we can easily drift into discouragement and inaction. Is it too late? Are recommendations for a peaceful energy transition hopelessly unrealistic?
Am I being fatalistic? Or simply realistic? Our cultural obsession with good news, promises, and hope is humanly understandably, but there comes a time when the best thing to do is to accept that a bad situation has developed and find intelligent ways to manage it.
-- Richard Heinberg. The Party's Over – Oil, War and the Fate of Industrial Societies, p. 236.
So....., how do we “localize” our economy, our collective decision making, and our local sustainability? First we plan, then gather the physical and human resources, hit the start button, and get underway. Governments are mired in planning, “paralysis by analysis”. Like the generals, they are are always planning to fight the next war with ideas and tools used to fight the last one.
Oregon has an energy plan – a lengthy, touch every button, plan, which has several localizing components, but avoids the most serious inquriy: how to change the mindset of our folks on the need to live at a much lower energy level. Implied in the report is that the good ideas will be recognized as such and adopted by the general population. Alas, such is not likely to be the case. Until energy costs and energy deprivation really cuts to the bone, the general population will have to learn the hard way, by bad experience rather than from intelligent instruction as suggested by Heinberg.
Correspondence on this subject with the Oregon Department of Energy fell on hot rocks with the final blow-off: just attend meetings and submit your comments. How can one have an “intelligent” discussion with the appropriate state official if that official does not want to hear?
Oregon Governor Theodore Kulongoski directed the Department of Energy to develop an Oregon Energy Plan. His instructions included a section on bioenergy:
Biofuels. The Governor has begun developing legislation that will capitalize on Oregon’s emerging “bio-energy” markets, particularly in the biodiesel and ethanol markets. The plan includes developing biomass energy projects in Oregon. The legislative package will focus on policies and incentives to create markets for agricultural production and feedstock as energy resources. It will also promote the production of biofuels in Oregon. The Governor already has directed his state vehicle fleet administrators to meet the targets for biodiesel and ethanol use set out in his Renewable Energy Action Plan.
The Department of Agriculture has signaled some persistent limitations to production of bioenergy in Oregon:
Factors inhibiting Oregon's biodiesel industry
- Feedstock and other input costs. Over the past year, feedstock prices have skyrocketed. Canola prices have doubled since 2006, and soybean prices have nearly doubled. Methanol has also tripled in price since last fall.
- Lack of infrastructure. There is now minor crushing capacity in Oregon, along with the single processing facility. However, it will require larger processing plants to ensure growers of a market to grow feedstock crops.
- Low demand due to lack of consumer awareness of the benefits of biodiesel.
- Processing and manufacturing that relies on incentives that create market pull and provide price justification to cover costs of production
- Challenges in siting and permitting
- No standard legal framework or templates for growers to use in structuring ownership and financing.
Several efforts are underway to address these barriers. Research and industry efforts in the Pacific Northwest, supported by state and federal policies and programs, are developing new strategies and technologies to overcome barriers to production. One focus is aimed at producing higher value co-products and establishing optimized business models. Attention will be also focused on more efficient uses of the seed meal, the crop fiber, and, glycerin -- a lower value by-product of biodiesel production. Biolubricants and other biobased products are also the focus of development and market efforts.
The Department of Energy issued its 2007-2009 Biennial Energy Plan. While they did address the Peak Oil Issue, little is found to give comport that the OR DOE has any hard, specific plans to develop bioenergy. Beyond platitudes, only vague hope that technology will partly solve the energy needs of Oregonians.
While alternatives will be used, they are unlikely to fully replace oil and natural gas. Oil and natural gas have been cheap and easy to produce, but the alternatives will be difficult and expensive to produce. As a result, more capital and energy will have to be allocated to produce alternative sources. In addition, many of the alternatives produce electricity rather than liquid transportation fuels. It could take decades to replace a significant amount of declining oil and natural gas reserves.
In addition to alternative supplies, it will be necessary to increase the efficiency of the energy used. With the peak of world oil production approaching, major improvements in the energy efficiency of cars, homes and buildings, lights, appliances, and industrial processes are needed. In addition, major savings can be achieved by walking and bicycling more often, changing land use patterns to reduce transportation needs, and investing more in long-distance rail and mass transit. Id. at 27.
In fairness to the report, it did mention specific sources of renewable energy, including wave power, wind, geothermal, and solar energy. While these forces exist to be harnessed for human use, the enormous quads of joules from renewable energy sources is nowhere on the immediate horizon. These subjects have been explored in depth by such as authors as Richard Heinberg in The Party's Over, and Michael Bates in The Post-Petroleum Survival Guide and Cookbook
Bush, in his 2007 State of the Union speech, extolled the virtues of renewable energy, which echoed similar statements on many occasions. On the day after his speech, the Office of Management and Budget cut 25 million from the budget of USDA's National Renewable Energy Laboratory's budget; after a huge protest, OMB restored five million. So much for the national leadership's interest in renewable energy.
Planning to prevent the coming economic meltdown is not for the faint hearted or lame duck officials. If there is any hope of developing local sources of renewable energy, it will be based on citizen participation, not only in the planning, but in the financing of the early start-ups which are exploring new sources of renewable energy and improving on existing sources.
My field of science and engineering is in biodiesel, specifically algal oil from the 25 micron Chlorella vulgaris algae. Growing algae is no great trick. Making biodiesel from algal oil is old science. The serious limitation has been on the extraction of the algal oil. The state of this technology is explored by my paper, the PROSPECTS FOR THE BIODIESEL INDUSTRY, wherein the solution to extracting the algal oil on a low energy, high scale basis is posited. This article follows my major paper exploring how to grow algae when its minus 28 degrees F. outside: MONTANA SYNERGY, LLP BUSINESS PLAN FOR COMMERCIAL PRODUCTION OF ALGAE FOR FOOD AND FUEL USING PHOTOBIOREACTOR TECHNOLOGY
The issue of localization is resolved by creating an algae farmers' cooperative which offers its members template plans for constructing the covered ponds and instructions on how best to grow and harvest Chlorella vulgaris. The co-op members fund the construction of the extraction plant and the biodiesel plant. The members can draw on off-road (red dyed) biodiesel for their farm engines and profit from the sale of on-road (amber) biodiesel. This arrangement provides for local control and avoids a huge cost in hauling fossil fuel from the bottom of the well bore in the Middle-east to the farmer's land in Oregon.
While I have discovered the method which allows for a low energy, high yield of extraction of algal oil, I have not discovered any source of funding for the pilot plant, a necessary step prior to scale-up. Bankers will not touch any business such as proposed by my paper, because the process is “unproven”, “novel”, “not a safe business risk...” and so on. I understand; their only interests are in the cash flow to the bank for interest and return of principal, not in saving the world. Of course, the banks will sink the same as the rest of us, when the hole in the bottom of the ship gets large enough.
No mind the banks; how about venture capitalists? The only interest they have is making a big financial killing using their “exit strategy”-- roughly translated – sell the business to a mega-corporation with which has a mountain of spare cash. This approach clashes directly with our goal of local production, local consumption and local ownership of the means of production.
So... how does a community finance a start-up venture, based on “unproven”, but potentially very profitable and doable technology? How about a credit union – a “Locavore Community Credit Union”? Here's how to start one (very summary – but a point of beginning).
In order to become sustainable, our community needs, inter alia, a strong, local, economic base, especially in food and energy. In order to have that base, such businesses and individuals need to generate sufficient income to have savings. The savings offer these services: (a) Reserves against economic down turn, accidents, theft of assets by insiders, and (b) funds for expansion of services/products.
In order to have savings, the enterprises must be profitable, yet offer a high ratio of value to price to their customers/members of local green products and services.
Profits by these businesses, in terms of cash, can be placed in a credit union and draw interest/dividends. The credit union exists to serve the financial transaction needs of the enterprises and their workers as well as the general membership.
Credit unions are supervised by states or the feds. In Oregon, the supervision is by DEPARTMENT OF CONSUMER AND BUSINESS SERVICES, DIVISION OF FINANCE AND CORPORATE SECURITIES. Memberships and equity subscriptions are not considered corporate securities, which avoids a huge expense in complying with the Oregon public issue, securities laws.
Many credit unions have been formed by poor folks and have succeeded. See: NCMSC SUPPORT CENTER. There is no reason why we cannot follow the same path laid down by the credit unions mentioned in the article.
I recently read an article that one of the major banks created an exclusively online bank. There is no reason why we cannot start our credit union as an exclusively online bank. All we need is a server, some computers, an office or garage, some heat, light, office equipment (used), and a coffee pot, a refrigerator and microwave. We will also need telephone service and DSL.
When those are in place or at hand, I can do the paperwork and apply for all of the permits and licenses. We will need a name, a location and a Board of Directors (3 or 5). We also need a Council of Advisors of about 25 folks to act as our outreach team and vet the Board's proposals. The 25 will become our first members when our permits are issued.
We can the issue debit cards which are really our own currency. The card will allow local merchants to honor the credit union and its members by affording us discounts on locally produced items and local services. In return, our membership chooses to do business with the local merchants and service companies, thus avoiding the Big Boxes and national corporations and their franchisees. The card would need to be shown to the cashier, but not necessarily used for payment. Thus the CU can drive customers to each member merchant, who also will have as page off our wikiweb or a link to the merchant's website, or both.
Over time, the Credit Union will have profits it can use for small, mini-equity investments. The members' deposits can be loaned, but, under the prudent person rule, probably cannot be used for equity funding small, start-up innovative businesses. I am also against buying listed stocks and bonds of "blue chip" companies. Those companies are seldom truly "local" and the point of the CU is on businesses which are "local".
So, now the CU has a line of equity investments to monitor. To do so, it will need volunteer "monitors" who are appointed to work with the small business in which the CU has an equity stake. This is how KIVA works. Thus, we keep the small business in view at all times and can help out when needed with loans or advice.
We can also act as a source of information for our members on what companies are "green" by publishing their data on our wikiweb and getting feedback from the customers/members of the CU. Thus we keep in touch with our members who constantly "vet" each merchant member. This will keep our losses down -- and there will be equity and some loan losses for which we need to prepare and attempt to prevent.
We can get started anytime we can get a steering committee together. I suggest we meet at a local coffee house and discuss some of the matters mentioned in this memo. Basically we need:
- A decision that we need a green credit union to serve as part of our sustainability drive for the community.
- A name.
- A definition of the community which, because of our online status, could be all of Oregon
- Membership qualifications
- A physical, rent free location until we get our permits
- Office furniture and equipment, including software.
- Bylaws which meet the Oregon Revised Statutes
- Initial Board of Directors.
- A website
- The initial formation of the Council of Advisors.
- Selection by the Board of the members who will operate and manage the CU (we will use the limited liability partnership as a model and thus all working in the CU are “partners” not employees, thus no FICA, no UI, no Work Comp.)
- Eventually, the CU could sponsor a 501.c.3 for educational and charitable purposes, receive donations any apply for grants.
Jim Miller jimmiller5417@yahoo.com October 12, 2008
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