https://www.dcceew.gov.au/about/news/consultation-nev-opens
Recommendation
It is recommended governments establish a regulatory framework for Local Communities to Own Vehicles (LCOV). An LCOV owns the vehicles, while individual members have custody of specific vehicles. Custody gives the same responsibilities and privileges of ownership. The custody approach halves the capital cost of ownership and distributes savings between investors and consumers. As well, collective ownership facilitates asset sharing.
Background to Local Capital
Community (Local) Capital, like traditional Building Society financing, is an efficient form of Capital. However, the Capital cost reduces further if the Community organisation takes ownership of the assets and individuals who live in the dwellings take custody. LCOVs will do the same for vehicles.
The cost of running a vehicle includes Capex and Opex plus a profit. Investors and consumers in one organisation keep the Capital and profit from Capital inside the LCOV. The direct benefits are saving the interest cost, removing the ownership transfer costs, and adding the profit from investing the savings. Indirect savings come from the pressure to reduce operating and administrative expenses by Custody holders and the desire to reduce costs by increasing vehicle use.
One form of Community Capital is prepaying for vehicle use. Assuming that the vehicle will last for 20 years and costs $50,000, the investor wants a return of $5,000 yearly for the next 20 years, and the custodian pays $100 weekly. The investor wants to keep their $2,500 in Capital, and the custodian wants the Capital they purchased. To satisfy these requirements each year, the LCOV invests $5,000 in more vehicles or some other Capital of value to the members, such as charging stations. The LCOV has $5,000 in new Capital and shares the new Capital at the time money changes hands. The arrangement could be that the investor and the Custodian each receive $2,500 of new Capital.
If the investor or the custodian does not need the new Capital they receive, they can sell it to another member or investor, but the Capital remains in the LCOV.
Sharing the profits from the Capital at the time of payment eliminates the cost of renting, transferring, and risking Capital. It doubles the productivity of Capital by reducing costs of transfer and increasing the investment rate. Investing the new Capital in lowering operating costs means an ongoing reduction in operating costs.
Removing Fossil Fuels with Methanol
There are 17 million Petrol Cars in Australia, and buyers add another 900,000 each year. There is a vast infrastructure of Petrol stations that will become redundant. Methanol from green Hydrogen is a substitute for fossil fuels and could use that Capital. The amount of Capital in Petrol Cars at a value of $15,000 each is 255 billion dollars. If we could decarbonise petrol engines, we would have more time to replace petrol vehicles with electric ones.
It makes economic sense to build a local methanol industry around green hydrogen because methanol can be converted to other uses long after petrol vehicles have gone. Small factories colocated with green hydrogen facilities could likely produce methanol locally. Finding ways to decarbonise petrol and diesel engines with alternative fuels should be part of the National Electric Vehicle Strategy.
Similarly, finding ways to transport methanol with existing fuel transport used for petrol and diesel could be another part of the Strategy as this will use fuel tanks and petrol stations.
From Rentier Capitalism to Community Capital
Community Capital provides a socially acceptable method of spreading new wealth without impacting existing stores of wealth. We turn Rentier Capital into active Capital and transform the economy incrementally. Chapter 8 of the Club of Rome’s “Earth for All” is titled “From Winner takes all Capitalism to Earth4all Economies” and describes the problem of Rentier Capitalism. Rentier Capitalism occurs because owners of Capital do not share the profits with consumers. The Earth4All chapter gives possible ways to share after the problem has occurred. Community Capital prevents the problem from occurring in the first place.
If we prevent most Rentier Capitalism from happening, then the five changes described in “Earth4All” will evolve if we put constraints on the use of Community Capital. Community Capital outcomes are:
- Capital will localise, with most remaining in local communities.
- Capital becomes widely distributed as consumers gain Capital when they consume.
- Economies work towards lower costs and efficient production because that rewards investors and consumers.
- Efficient production reduces resource demands by producing more value (products) with fewer resources.
- Exponential technologies like electricity production will drop the price of products with a high energy component by 15%, with each doubling of sales.
- Localisation of finance means most goods will be locally produced, especially food.
Governance of local Commons
A local community owns an asset, with members taking custody. Those with custody behave as if they own the assets. Custodians and consumers share the profits; as time passes, consumers take more responsibility until they become the primary custodians.
A way to make this idea scalable is to replace a little Equity Capital with Community Capital. Community Capital is prepaying for goods and services produced by Community Assets. When consumers purchase goods and services, they share the Community Capital component in the price of goods and services. The return on investment of Community Capital can be a discount on the payment, or it could be more Community assets. Notably, the approach automates sharing of new Capital between Custodians and Consumers and profits come from reducing production costs.
Automating sharing leads to significant savings because the financial system becomes more efficient — meaning we need less Capital for the same quantity of investment. Capital moves between investors and consumers without any middlemen, and the Capital is reinvested, not spent on consumption. No middlemen remove the need to monetise assets saving the cost of renting money. Significantly, Custodians invest in reducing costs rather than making more money.
Existing markets operate without change but previously agreed profit targets set prices that consumers and investors adjust according to market conditions. Monopolies set fair prices because custodians seek ways to reduce costs. The approach removes the need for Capital Markets to set the price of Capital, resulting in significant savings and preventing asset inflation.
Modern technologies allow separate local communities for each product or service, creating alternatives to increase the rate of social, knowledge, and environmental evolution. The local communities share across groups by people moving from one group to another, bringing expertise and Capital.
Community Capital coexists seamlessly with Equity Capital because they use the payments system to move value. Community Capital costs little to implement as it is a small addition to the payments system; it happens in small discrete steps and does not require separate expensive Capital Markets.
