This document discusses how prepaying for energy through the sale of energy credits can help fund investment in renewable energy infrastructure. It proposes that energy producers sell undated credits to investors, which can then be used to prepay for future energy needs. This locks in prices for both producers and consumers and provides capital for producers. The document argues this model could help transition economies to low carbon solutions while providing returns to investors. It even presents a thought experiment where Greece issues energy credits as a dividend to citizens to help resolve its fiscal issues through taxes on land and carbon fuels.

1. Back to the Future
21st
Century Energy Finance
Chris Cook
Athens Energy Forum
11 March 2015

2. 21st
Century problems cannot be solved with 20th
century solutions.........

3. The Burning Question
Question – how can the necessary $/€ trillions of
investment in 21st
Century low carbon energy be
funded?
Since 2008 the conventional 'least $/€/£ etc cost'
economic principle no longer provides answers
But there is another way
Least Carbon Fuel Cost Principle - minimise carbon fuel
system input for given electricity, heat or power output

4. The Answer - Prepay
Taxation

5. Energy Prepay – What it is
What it is
- Undated prepay credit issued & sold by energy
producers
- returnable by a holder in payment for energy use
What it is not
- Debt – holder has no right to demand payment
- Derivative – holder has no right to demand delivery
- Equity – holder has no right to a dividend

6. Energy Prepay – Value Propositions
Producer
- sells energy forward and locks in price
- interest-free Energy Loan until credit returned against
supply
Consumer
- prepays for energy and locks in price
Investor
- 'Inflation hedge' - an energy return on investment
- Liquidity - consumers buy credits from Investors at
best price below physical price & return against use

7. Energy Prepay and Dark Inventory
Enron
- defrauded investors and creditors who were unaware
of prepay obligations lurking 'off balance sheet'
Global Oil Market
- for over a decade prepay funding has been used by
producers to support global oil market price
- even traders – never mind public - have been aware
of Dark Inventory of oil leased by passive investors
- end of QE led to collapse of the oil price – as I
predicted from late 2011 onwards that it would

8. Energy Prepay – the Transition Trade
Transition Trade
- exchange of value of knowledge & knowhow for value
of carbon fuel saved & renewable energy
- the higher the price of carbon fuel, the higher the
returns from investment in saving & substituting energy
- Energy Loans invested directly in flows of value of
renewable energy and energy savings

9. Energy Prepay – Into the Light
Renewable Energy
- assets financed through selling energy credits to buy
equipment or by production sharing
Energy Efficiency – energy loan repaid from energy
savings by buying back energy credits
Energy Dividend
- countries increase carbon fuel price dramatically,and
then issue an energy dividend of energy credits
- Part of dividend funds energy loan investment in
renewable energy & energy efficiency

10. Energy Prepay – Conventional Energy
Carbon Fuelled Energy
- if a carbon fuelled generator uses prepay funding he
has a problem if the carbon fuel price rises
Solution is an Energy Swap – a production sharing
agreement with a carbon fuel supplier
Outcome – oil & gas are no longer sold as a commodity
but are swapped for prepay electricity, heat or power
credits – oil & gas as a service

11. Greek Refinery
or Generator
Consumers Manager
Service Providers
%
Producers
(eg Iran, Russia)
Energy
Credits
Gasoline
Oil Gas
Electricity

12. Funding the Transition
Q. So who will fund the € trillions necessary to fund the
Transition to a low carbon economy?
A. Anyone currently getting zero or negative interest
rates on conventional investment in financial assets.

13. Finally : a Thought Experiment
Q. How can Greece resolve fiscal & monetary € crisis?
Step 1: return carbon fuel prices to $120/bbl levels
Step 2: pay all Greeks an 'Energy Dividend' of energy
credits in their electricity bill
Step 3: introduce a Location Benefit Levy on land values
(not buildings)
Step 4: pay all Greeks a Land Dividend again in energy
credits
Owners use dividend for levy: renters pay rent with it
Net transfer from Greeks with more land to those with less

14. What a crazy idea...it could never work
Tax evasion is so bad in Greece that property taxes
have had to be collected through the electricity bill........
Greece may then simply exchange € debt with foreign
creditors for energy credits returnable in payment for
Greek carbon fuel & location levies

15. …....21st
century solutions pre-date modern finance