Readers be forewarned, this is going to be a bit of a different (ie: useless) post from the usual…
I was reading an Andrew Revkin column today, where he poses the question about what unintended consequences might result if the energy tech revolution succeeds in making “solar panels as cheap as paint,” or to paraphrase:Â “What happens if energy is virtually free?”
Talk about your deep thoughts, it sounds like the premise of a Neal Stephenson novel, not your typical NYT type of thing. But at the risk of pontificating outside of my investment horizon, I thought it was an interesting question, hearkening back to my days at an environmental economic thinktank (way back before cleantech was cool, even before it was “cleantech”).
What Andrew is asking is, what would go WRONG if energy is no longer a limiting factor for human population growth? Would we somehow end up worse off?
The obvious answer is to simply look at the last couple of centuries, when for much of the developed world energy really hasn’t been the limiting factor. As we’ve bled off our global stockpiles of non-renewable energy sources, we haven’t had free energy, but it’s been artificially inexpensive, to be sure.
With artificially cheap (ie: prices not incorporating all externalities such as damages from climate change, etc.) energy, the U.S. in particular has seen dramatic population growth, expansion of population into new territories putting significant pressure on species and habitats, and significant withdrawal of non-energy natural resource stocks.
So with artificially low energy prices, that’s what happened. Thus, to be flip, if we have artificially low energy prices, that’s what what will happen. But what Revkin is really asking, I suppose, is what happens if energy is even LESS expensive than that historically suppressed level.
But I would argue that it’s a flawed question. Energy will never be free or close to it. Revkin mentions the possibility of synthesizing food. If energy is cheap enough, we will use it to address scarcity of other natural resources. We already have learned just how much all of what we consumed is in reality some other form of consumed energy. Corn-based ethanol isn’t very net-energy-positive because of all the energy-derived fertilizer we pour into the ground to grow the corn. The entire “Green Revolution” in some ways is really about the use of cheap energy to grow food. Same story with water—the embodied energy in water (the energy used to withdraw it, purify it, and transport it) is huge. Food is mostly embodied energy. Water is mostly embodied energy. By the time we consume them (factoring in extraction, treatment, transportation, etc.) just about all materials are mostly embodied energy.
Walk through the logical chain here: If virtual energy is free, Revkin’s fear is the potential for dramatic population expansion, putting more pressure on natural resources. But if natural resources are under pressure, they will get more expensive. Given the inherent interlinkages between all the material we consume and the embodied energy, over the long run we would find new ways of supplementing those resources with some solution that would essentially be a huge consumption of energy transmogrified into supplied demand for materials. And so we would end up with what happened over the last two centuries—a significant increase in Earth’s carrying capacity for humanity, a dramatically expanded population, but nothing like a crash in standards of living, etc. Energy almost always has been, and almost always will be, the limiting factor for human population growth. The second law of thermodynamics says so.
EXCEPT: That’s a very long-run, economics-education-based perspective. The problem with the long-run is that it ignores near-term inefficiencies. To whit: If there is a time gap between the provisioning of virtually-free energy and solutions to turn that surplus into substitutes for other material resources, during that gap (which, as we’re seeing in the painfully slow transition from the Oil Age) we could expect very dramatic impacts on natural resource stocks and non-human habitats. And, based as well upon history, that’s likely what would happen.
So is there a scenario where all our efforts to find ways to make clean energy dirt-cheap end up having negative unintended consequences? Of course! And the above is just one path where that might happen, there are others (more concentrated wealth among the energy “Haves”, more economic power clustered in places where renewable resources are more readily available, etc., to name a couple).
But look, that’s a really long-term question, the answer of which is effectively moot for you and me. Energy is not going to be virtually free anytime soon. It takes energy to make solar panels. It takes energy to make paint! Basically, because it’s so central to EVERYTHING, the cheaper energy is, the more we will consume it, thus bringing back up prices in a typical economic cycle. And we’re definitely an awful, awful long way from any period where clean energy generation technologies are significantly cheaper than the subsidized fossil fuel based energy prices we’re already used to.
But we can dream, can’t we? Solving climate change, and then having unintended problems because of a surplus of clean energy supplies… Boy, that would sure be nice.
Rob Day is a Boston-based cleantech venture capital investor and entrepreneur, and is also the President of the Renewable Energy Business Network (REBN). The views expressed on this blog are those of Rob and his friends and colleagues, not necessarily the views of REBN or Greentech Media or any other group. Contact Rob Day at: (JavaScript must be enabled to view this email address)
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