Energy Credit Obligations and other sorts of money laundering
This is an ingenious scheme dreamt up by the Iranians, who have lots of experience in using barter (non-cash swapping transactions in respect of two separate commodities) to evade international banking sanctions.
We wish to emphasize that although some people seek to promote the policyworthiness of the following ideas by associating then with renewable energy or reducing carbon emissions, they are nothing to do with that. What is proposed is a legal structure, of a kind; and you cannot promote climate change goals simply by inventing a new legal structure. To achieve climate change goals requires either progressive taxation and sibsidies (progressive in the broadest meaning of the word), or regulation of carbon-emitting industries; or both.
What is being proposed here is neither of these. It is just a new way of packaging up the financing for conventional hydrocarbon industries, and nothing more. Do not let the 'Green Lobby' mislead you into thinking that these ideas promote their cause. They may think that they do; but that is because they have been bamboozled by science and they do not actually understand what this scheme is all about.
We begin with text straight from the horse's mouth, from one of the gurus of Energy Credit Obligations whose identity we keep secret for reasons of professional courtesy:
It's a levy/pool/dividend method applied to renewable energy production & a shared savings model ( energy as a service) applied at the RETAIL price. cf James Watt 1778 'pumping as a service' smart swap of a flow of IP use for coal saved at the price it cost to deliver coal to Cornwall.
The key innovation is that these flows of energy value are packetised/voucherised (very much like the way the Internet Protocol packetises data) into the assignable IOUs/UOIs I call credit obligations (eg energy credit obligations).
So distributions/ dividends are made within the agreement in kind/value and not in external fiat denominated claims over value.
These credit obligations are issued in exchange for value received from acceptors & will be accepted by other issuers under 'clearing union' agreements of mutually assured acceptance. They are recorded in the shared market ledger which I invented 24 years ago.
The energy outcome is an 'energy treasury' - a community of place where local residence & business operation is DEFINED by energy use - of associated sovereign individuals.
The active service provider/steward role (ie 'Mint' quality control function cf Trial of the Pyx 🙂 ) also administers the communication system and shared ledger database which is an Exchequer in local decentralised form.
Nothing new under the sun is there?
And of course, the key point is that neither (corporate) state Treasuries & Central Bank agents nor private banks can print energy.
My experience is that the associative agreements involved involved are an order of magnitude simpler than the adversaial creations of statute and (worse) common law which they make redundant.
Distilled to the essence we are deconstructing fiduciary relationships into the passive (custodian) & active (service provider/steward) as a partner with the innovation that neither the commons user nor the commons investor in prepaid utility have dominant power over the steward.
The power of this quadripartite agreement when compared to conventional tripartite intermediated or fiduciary arrangements is phenomenal.
Difficult to explain. Must be experienced.
To an experienced person, this is bullshit. To a person without experience in hydrocarbons financing, it might just be persuasive if confusing. But what underlies it is quite insidious.
Essentially what these sorts of scheme involve is barter of hydrocarbons for hydrocarbon infrastructure. This means that sanctioned hydrocarbons revenues (for example, from Russia or Iran) can end up being laundered through the profits generated by domestic energy infrastructure in any jurisdiction willing to go along with it.
Another way of looking at it is that hydrocarbon rich countries under sanctions making it difficult for them to receive hard currency for the hydrocarbon products being sold take a more or less obscure equity paper in exchange for their hydrocarbons, representing some proportion of the net revenues of making electricity for the jurisdiction in question, that equity paper paying out into a western bank laundered money whose origins is sanctioned hydrocarbon economies.
The reason a jurisdiction would be willing to go along with it is because their energy costs are high; and the prospect of buying discounted sanctioned Russian / Iranian hydrocarbons is attractive to them.
We know of two such jurisdictions in which this is being attempted (both small and hence easily bought; and with rocketing energy prices): Niue (a New Zealand island in the Pacific) and Sark (an island in the Channel Islands close to Guernsey). Both these jurisdictions are extremely remote. Hence their attractiveness for sanctions busters: nobody is paying attention.
These jurisdictions, and the entire anti-money laundering global community, should be on the lookout for schemes like this. Any scheme for selling hydrocarbons without using banks is a form of sanctions evasion. There is no other reason to do it. It is not more efficient to eliminate banks and barter infrastructure for hydrocarbons without reference to money. Money was invented in lieu of barter, thousands of years ago, precisely to avoid such inefficiencies. Banks were the natural corollary. Banks are efficient ways of creating liquid markets; barter economies are not.
This is a silly idea - unless you are trying to find ways around sanctions and to launder money.
The PALADINS Organization
At your service to uncover intellectual frauds.