The notion is based on a first principle: all work requires energy. A second principle is: ALL that humans do, including thinking, is physical work and requires energy. If you don't believe this try to stop eating for a while.

Setting the value of money, that is fixing the worth of a dollar, in terms of energy works like the gold standard. Namely the amount of currency in circulation must relate to the amount of stored free energy (water behind dams, fuels in stocks, etc.). Like the gold standard this puts money back on a stable basis. You can measure energy just as you can gold. It has the advantage of making the value of goods and services completely transparent and it takes into account so-called externalities since it takes energy to process wastes.

Unlike the gold standard, though, this standard has intrinsic meaning. Money really is a token representation of work. It really does represent energy, or it should. We have abstracted the notion of what money is so much that we really have a hard time remembering how it came into being in the first place and what it meant. The fractional reserve banking system has distorted the meaning of monetary value badly. So have speculations in markets that once existed to provide liquidity, but have now become legalized gambling.

The importance of this proposal is underscored in an era when net energy gain, the energy you have to spend on consumption after you subtract off the energy used to get a unit of energy, is starting to decline. Each new unit of energy produced, regardless of the source, is taking more of our discretionary free energy leaving us with less to produce real wealth. In such a situation it becomes critical for us to know exactly what things cost in energy so that we can make informed decisions about where we will invest our remaining excess above consumption (if there is any) energy to create sustainable energy in the future. As an example of poor choices (even if the physicists were pointing this out years ago) consider corn ethanol. This looks like a negative net energy gain or negative energy return on energy investment (EROI) making us collectively less wealthy, even while a few reap the profits. Had the full energy accounting been done before launching this travesty, perhaps the policy makers, who are generally NOT physicists, would have been a little more careful about recommending subsidies to corn growers and fermenters.

I have been blogging about this subject in a series of fundamental questions that reframe a number of classical (and neoclassical) economics theories. I am starting work on an analysis of what an energy standard for money might mean for the economy as a whole. You can read up on this at:
http://questioneverything.typepad.com/ - Question Everything.

Some of my work on Energy Systems Engineering (the systems part includes economics) is available at:
http://faculty.washington.edu/gmobus/ - my academic web site.

Unfortunately, classical economics is deeply embedded in our culture and our politics. Political sentiments lean toward practices and positions that have proven disastrous, and yet people are generally convinced that things like growth in GDP are good things. Converting our money to a real currency (energy) basis might be difficult and painful. But I suspect it is the only way we are ever going to see reality and reconcile our human-built world with nature.

George Mobus, Associate Professor, Institute of Technology, University of Washington Tacoma, and Professional Student for Life

http://seedmagazine.com/news/2007/10/the_climate_crucible ...

The decade-long crippling drought down under has forced not only some drastic behavioral changes, but a fundamental shift in the way Australians are valuing their resources.

One can't help but think that if D.C. and New York City got as hot and crispy as Melbourne and Perth, we'd be seeing more movement on the climate front.

"I just read the piece, "A Shift in the Debate Over Global Warming," which focused on technological innovation with respect to climate change. Many people are talking about a Manhattan project on the supply side, but I have been saying, for some time, that we cannot get there from here unless we also have a Manhattan project on the demand side. A lot of capital and focus is on the supply side for myriad and obvious reasons. But demand is the fastest way to create "new" energy. In the US, for every 100 units of energy that we put into our economic system, more than 98 units are wasted accordng to the National Academy of Engineering. Detroit is sitting on more oil than Iraq if it converted to hyperlight, hypersafe, carbon-fiber cars. It would be so much less expensive to invest in America than desert oil. Demand reduction makes new renewable sources of energy, which may be more expensive in relation to carbon-based energy, more affordable because overall energy costs would be going down, not up. Demand is not as sexy as giant wind turbine platforms being towed out to sea or strung up on steel kites into the upper atmosphere, but demand side effciences are faster, less costly, and more effective."

   Not that you(we) shouldn't try. But past experience indicates it will be very difficult to make substantial progress.

http://feww.wordpress.com/2008/04/08/keeping-co2-under-45 ...

if you can't get people motivated to improve their own personal health who is going to give a rats dam about global warming?

plus for most people its still a theory. its unlikely that the worlds population will embrace the reality until more negative affects are felt first.

New technology is likely to reduce some of the costs of abatement, but it is certainly not sufficient in itself to address the problem.

a sibilant intake of breath

http://www.sindark.com/2008/02/09/will-technology-save-us ...

a sibilant intake of breath

So that makes your first question a sort of strawman  and irrelevant, inconsequential distraction.

Even if, hypothetically, 100% of politicians had a change of heart RIGHT NOW, and adopt the means to deploy technology as fast as possible, I'd rather know or evaluate within some parameter of confidence, whether technology is even sufficient "to stop global warming," or bring us back to the levels that Hansen recommends.

That answer might be yes, but it certainly informs decisions about whether to invest limited efforts and funds into changing the hearts and minds of politicians.

Two, we are already paying the price...our incomplete economic theories just doesn't capture or measure it.  So I'm unconvinced of the effectiveness of merely moving to a holistic, full-price assessment.  At the end of it, is destruction, impoverishment and horrific realities.  In some ways, we're already there, the play written, but just not acted out, as with polar bears.  So just accurately recording costs of climate change probably is the eventual refuge of climate deniers.  Just like with life cycle assessment, Nature and its consequences and complications...WE JUST DON'T UNDERSTAND and therefore cannot accurately measure.  But it should be sufficient to understand viscerally that things will be bad, for everybody in very tangible personal ways, that we're already experiencing.

Third, well, this to me should come first.  But I've rambled enough, so I'll leave it at that.

I know you are talking about carbon pricing and trading.  Because you (and every other expert in this area) believe that the only way to really get the move to renewables and conservation done is to use market forces.

And you all believe that the only way to move markets is to get corporate leadership to go along.  And the only way to do that is to give them a bottomline reason, because that is the only motivation in the corporate world.

Corporate greed is neither good or bad, but it is reality?  Isn't that how the argument proceeds?  Corporate control of our economy and government is the reality and it will never change.

I think it is possible to generate that bottomline reason without opening up yet another venue for corporate control and hedge fund trading.

Simple subsidy diversion prices carbon.  The big energy corporations will go along eventually.  

Of course you will say it is politically impossible to take subsidies away from energy corporations (and their manufacturing adjuncts, that make  autos, power plants, appliances, homes, food) and direct them to we the people.

And on the other hand, carbon trading already has the support of a lot of CEOs.  But why do they support it?  Because it's another tactic that they can game.

http://amazngdrx.blogharbor.com/blog

http://neinuclearnotes.blogspot.com/2008/04/call-your-bro ...

However, following the money when it comes to companies investing in nuclear energy and its infrastructure seems to be paying dividends lately. Here is Bloomberg reporting on Toshiba's stock rise...

Re: your three points -

1. Do we need political change?  Absolutely, in the sense that anyone who even smells like Inhofe is a part of the problem, and so we need new leadership.  But I think it is idealistic to assume that a different party or ideology would change the underlying political realities, in which electoral pressures will always make it difficult for locally-elected politicians to effectively address global problems.  Every 100 years or so we get a Jefferson, or a Marshall plan, but in any era, the odds are that the most inspiring politicians are going to have a hard time passing any policy that shifts wealth out of their district.  (See: Obama's waffling on coal as just one recent example.)  What we can do though is at the grass roots level, coming up with creative ways to solve those global problems that don't force the fallible mortals we elect to choose between the global good and their electoral chances.  In other words, the onus is to some degree on the green community to empathize with those politicians and give them good solutions.  (One of my favorite DC aphorisms is that a congressman is only as smart as his lobbyists allow him to be...)

2.  Yes, but I'd put it less punitively.  We simply need to price in the externalities of pollution.  

3. Re: behavioral change, I agree, except that it may not be conscious.  Regulation plays a role here.  When smoking was banned on planes, it was hard to imagine how much cleaner the air would be... but if you've ever been in a third-world airport (or, God forbid, a third-world airline), it is striking how much that one particular behavioral change is now taken for granted.  If we put a price on carbon emissions, mandate higher fuel economy standards, etc. we will also induce behavioral changes that will not always be obvious to the person changing.  In my experience, people are way more malleable than regulatory theory believes.