Our future in an energy abundant world: Future of Energy P6

<span>Our future in an energy abundant world: Future of Energy P6</span>
IMAGE CREDIT:  Quantumrun

Our future in an energy abundant world: Future of Energy P6

    If you’ve come this far, then you’ve read about the fall of dirty energy and the end of cheap oil. You’ve also read about the post-carbon world we’re entering, led by the rise of electric cars, solar, and all the other renewables of the rainbow. But what we’ve been teasing at, and what you’ve been waiting for, that’s the topic of this final part of our Future of Energy series:

    What will our future world, filled with nearly free, limitless, and clean renewable energy, really look like?

    This is a future that’s inevitable, but also one that humanity has never experienced. So let’s take a look at the transition before us, the bad, and then the good of this new energy world order.

    A not so smooth transition to the post-carbon era

    The energy sector drives the wealth and power of select billionaires, corporations, and even entire nations across the world. This sector generates trillions of dollars annually and drives the creation of many more trillions in economic activity. With all this money at play, it’s fair to assume there are a lot of vested interests who aren’t much interested in rocking the boat.

    Presently, the boat these vested interests are protecting involves energy derived from fossil fuels: coal, oil, and natural gas.

    You can understand why if you think about it: We’re expecting these vested interests to throw out their investment of time, money, and tradition in favour of a simpler and safer distributed renewable energy grid—or more to the point, in favour of an energy system that produces free and limitless energy after installation, instead of the current system that generates continuous profits by selling a limited natural resource on the open markets.

    Given this option, you can probably see why a CEO of a publicly traded oil/coal/natural gas company would think, "Fuck renewables."

    We’ve already reviewed how established, old school utility companies are trying to slow the expansion of renewables. Here, let’s explore why select countries might be in favor of those same backward, anti-renewable polities.

    The geopolitics of a de-carbonizing world

    The Middle East. The OPEC states—especially those situated in the Middle East—are the global players most likely to fund opposition to renewables as they have the most to lose.

    Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Iran, and Iraq collectively have the world’s largest concentration of easily (cheaply) extractable oil. Since the 1940s, this region’s wealth has exploded due to its near monopoly on this resource, building sovereign wealth funds in many of these countries in excess of a trillion dollars.

    But as fortunate as this region has been, the resource curse of oil has turned many of these nations into one trick ponies. Instead of using this wealth to build developed and dynamic economies based on diverse industries, most have allowed their economies to depend entirely on oil revenue, importing the goods and services they need from other nations.

    This works fine when the demand and price of oil remain high—which it has been for decades, the last decade especially so—but as the demand and price of oil begins to decline over the coming decades, so too will those economies that depend on this resource. While these Middle East nations aren’t the only ones who struggle from this resource curse—Venezuela and Nigeria are two obvious examples—they do also struggle from a unique grouping of challenges that will be difficult to overcome.

    To name a few, we see a Middle East faced with the following:

    • A ballooning population with a chronically high unemployment rate;
    • Limited personal freedoms;
    • Disenfranchised female population due to religious and cultural norms;
    • Poor performing or uncompetitive domestic industries;
    • An agricultural sector that cannot meet its domestic needs (a factor that will steadily worsen due to climate change);
    • Rampant extremist and terrorist non-state actors that work to destabilize the region;
    • A centuries-long feud between two dominant denominations of Islam, currently embodied by a Sunni bloc of states (Saudi Arabia, Egypt, Jordan, United Arab Emirates, Kuwait, Qatar) and a Shiite bloc (Iran, Iraq, Syria, Lebanon)
    • And the very real potential for nuclear proliferation between these two blocs of states.

    Well, that was a mouthful. As you can imagine, these aren’t challenges that can be fixed anytime soon. Add declining oil revenues to any one of these factors and you have the makings of domestic instability.

    In this region, domestic instability generally leads to one of three scenarios: a military coup, a deflection of domestic public anger to an outside country (e.g. reasons for war), or a total collapse into a failed state. We’re seeing these scenarios play out on a small scale now in Iraq, Syria, Yemen, and Libya. It will only get worse should Mideast countries fail to successfully modernize their economies over the next two decades.

    Russia. Much like the Middle East states we just spoke about, Russia also suffers from the resource curse. However, in this case, Russia’s economy is dependant on revenues from natural gas exports to Europe, more so than exports of its oil.

    Over the past two decades, revenues from its natural gas and oil exports have been the bedrock of Russia’s economic and geopolitical revival. It represents over 50 percent of government revenue and 70 percent of exports. Unfortunately, Russia has yet to translate this revenue into a dynamic economy, one that’s resistant to swings in the price of oil.

    For now, domestic instability is controlled by a sophisticated propaganda apparatus and vicious secret police. The politburo promotes a form of hypernationalism that thus far has insulated the nation from dangerous levels of domestic criticism. But the Soviet Union had these same tools of control long before current day Russia did, and they weren’t enough to save it from collapsing under its own weight.

    Should Russia fail to modernize within the next decade, they may enter a dangerous tailspin as demand and prices for oil begin their permanent decline.

    However, the real problem with this scenario is that unlike the Middle East, Russia also has the world’s second largest stockpile of nuclear weapons. Should Russia fall again, the risk of these weapons falling into the wrong hands is a very real threat to global security.

    The United States. When looking at the United States, you’ll find a modern empire with:

    • The world’s largest and most dynamic economy (it represents 17 percent of global GDP);
    • The world’s most insular economy (its population buys most of what it makes, meaning its wealth isn’t excessively dependant on external markets);
    • No one industry or resource represents the majority of its revenue;
    • Low levels of unemployment relative to the world average.

    These are just a few of the US economy’s many strengths. A big but however is that it also has one of the biggest spending problems of any nation on Earth. Frankly, it’s a shopaholic.

    Why is the US able to spend beyond its means for so long without much, if any, repercussions? Well, there are a number of reasons—the biggest of which stems from a deal made over 40 years ago at Camp David.

    Then President Nixon was planning to move off the gold standard and transition the US economy towards a floating currency. One of the things he needed to pull this off was something to guarantee demand for the dollar for decades to come. Cue the House of Saud who made a deal with Washington to price Saudi oil sales exclusively in US dollars, while buying up US treasuries with their surplus petrodollars. From then on, all international oil sales were transacted in US dollars. (It should be clear now why the US has always been so cozy with Saudi Arabia, even with the huge gulf in cultural values each nation promotes.)

    This deal allowed the US to keep its position as the world’s reserve currency, and in so doing, allowed it to spend beyond its means for decades while letting the rest of the world pick up the tab.

    It’s a great deal. However, it’s one that’s dependant on continued demand for oil. So long as demand for oil remains strong, so too will the demand for US dollars to buy said oil. A dip in the price and demand for oil will, over time, limit US spending power, and ultimately place its standing as the world’s reserve currency on shaky ground. Should the US economy falter as a result, so too will the world (e.g. see 2008-09).

    These examples are just a few of the obstacles between us and a future of limitless, clean energy—so how about we switch gears and explore a future worth fighting for.

    Breaking the death curve of climate change

    One of the obvious benefits of a world run by renewables is breaking the dangerous hockey stick curve of carbon emissions we’re pumping into the atmosphere. We’ve already spoken about the dangers of climate change (see our epic series: Future of Climate Change), so I’m not going to drag us into a lengthy discussion about it here.

    The main points we need to remember are that the majority of emissions polluting our atmosphere comes from burning fossil fuels and from methane released by the melting Arctic permafrost and warming oceans. By transitioning the world’s power generation to solar and our transportation fleet to electric, we’ll move our world into zero carbon emission state—an economy that meets its energy needs without polluting our skies.

    The carbon we’ve already pumped into the atmosphere (400 parts per million as of 2015, 50 shy of the UN’s red line) will stay in our atmosphere for decades, maybe centuries, until future technologies suck that carbon out of our skies.

    What this means is that the coming energy revolution won’t necessarily heal our environment, but it will at least stop the bleeding and allow the Earth to begin healing itself.

    End of hunger

    If you read our series on the Future of Food, then you’ll remember that by 2040, we’ll enter a future that has less and less arable land due to water shortages and rising temperatures (caused by climate change). At the same time, we have a world population that will balloon to nine billion people. The majority of that population growth will come from the developing world—a developing world whose wealth will skyrocket over the coming two decades. Those larger disposable incomes are predicted to lead to an increased demand for meat that will consume global supplies of grains, thereby leading to food shortages and price spikes that could destabilize governments the world over.

    Well, that was a mouthful. Luckily, our future world of free, limitless, and clean renewable energy might avoid this scenario in a number of ways.

    • First, a large chunk of the price of food comes from fertilizers, herbicides, and pesticides made from petrochemicals; by reducing our demand for oil (e.g. transitioning to electric vehicles), the price of oil will collapse, making these chemicals dirt-cheap.
    • Cheaper fertilizers and pesticides ultimately reduce the price of grains used to feed animals, thereby reducing the costs of all manner of meats.
    • Water is another big factor in the production of meat. For example, it takes 2,500 gallons of water to produce a single pound of beef. Climate change will deep six much of our water supply, but through the use of solar and other renewables, we can build and power huge desalination plants to turn seawater into drinking water cheaply. This will let us water farmland that no longer receives rainfall or no longer has access to useable aquifers.
    • Meanwhile, a transportation fleet powered by electricity will cut the cost of transporting food from point A to point B in half.
    • Finally, if countries (especially those in arid regions) decide to invest in vertical farms to grow their food, solar energy can power these buildings entirely, cutting the cost of food even further.

    All these benefits of limitless renewable energy may not protect us entirely from a future of food scarcity, but they will buy us time until scientists innovate the next Green Revolution.

    Everything becomes cheaper

    In reality, it’s not just food that will become cheaper in a post-carbon energy era—everything will.

    Think about it, what are the major costs involved in making and selling a product or service? We’ve got the costs of materials, labor, office/factory utilities, transportation, administration, and then the consumer-facing costs of marketing and sales.

    With cheap-to-free energy, we’ll see huge savings in many of these costs. Mining raw materials will become cheaper through the use of renewables. The energy costs of running robot/machine labor will fall even lower. The cost savings from running an office or factory on renewables are pretty obvious. And then the cost savings from transporting goods via electrically powered vans, trucks, trains, and planes will cut costs that much more.

    Does this mean everything in the future will be free? Of course not! The costs of raw materials, human labor, and business operations will still cost something, but by taking the cost of energy out of the equation, everything in the future will become much cheaper than what we see today.

    And that’s great news considering the unemployment rate we’ll experience in the future thanks to the rise of robots stealing blue collar jobs and super intelligent algorithms stealing white collar jobs (we cover this in our Future of Work series).

    Energy independence

    It’s a phrase politicians around the world trumpet whenever an energy crisis emerges or when trade disputes pop up between energy exporters (i.e. oil-rich states) and energy importers: energy independence.

    The goal of energy independence is to wean a country off of a perceived or real dependence on another country for its energy needs. The reasons why this is such a big deal are obvious: Depending on another country to provide you with the resources you need to function is a threat to your country’s economy, security, and stability.

    Such a dependence on foreign resources forces energy-poor countries to spend excessive amounts of money importing energy instead of funding worthwhile domestic programs. This dependence also forces energy-poor countries to deal with and support energy exporting countries that may not have the best reputations in terms of humans rights and freedoms (ahem, Saudi Arabia and Russia).

    In reality, every country around the world has enough renewable resources—collected through solar, wind or tidal—to power its energy needs entirely. With the private and public money we’ll see invested in renewables over the next two decades, countries around the world will one day experience a scenario where they no longer have to bleed money to energy-exporting countries. Instead, they will be able to spend the money saved from once importing energy on much needed public spending programs.

    Developing world joins the developed world as equals

    There’s this assumption that in order for those living in the developed world to continue leading their modern consumerist lifestyles, the developing world cannot be allowed to reach our standard of living. There’s just not enough resources. It would take the resources of four Earths to meet the needs of the nine billion people expected to share our planet by 2040.

    But that kind of thinking is so 2015. In the energy-rich future we’re heading into, those resource constraints, those laws of nature, those rules are thrown out the window. By fully tapping into the power of the sun and other renewables, we’ll be able to meet the needs of everyone born in the coming decades.

    In fact, the developing world will reach the developed world’s standard of living much faster than most experts might think. Think about it this way, with the advent of mobile phones, the developing world was able to leapfrog over the need to invest billions into a massive landline network. The same will be true with energy—instead of investing trillions into a centralized energy grid, the developing world can invest much less into a more advanced decentralized renewable energy grid.

    In fact, it’s already happening. In Asia, China and Japan are beginning to invest more in renewables than traditional energy sources like coal and nuclear. And in the developing world, reports have shown a 143 percent growth in renewables. Developing countries have installed 142 gigawatts of energy between 2008-2013—a far larger and faster adoption than wealthier countries.

    The cost savings generated from a move towards a renewable energy grid will open up funds for developing nations to leapfrog in many other areas as well, like agriculture, health, transportation, etc.

    The last employed generation

    There will always be jobs, but by mid-century, there’s a good chance most of the jobs we know today will become optional or cease to exist. The reasons behind this—the rise of robots, automation, big data powered AI, substantial decreases in the cost of living, and more—will be covered in our Future of Work series, to be released in a few months time. However, renewables could represent the last huge bumper crop of employment for the next few decades.

    The majority of our roads, bridges, public buildings, the infrastructure we rely on every day was built decades ago, particularly the 1950s to 1970s. While regular maintenance has kept this shared resource functioning, the reality is that much of our infrastructure will need to be rebuilt completely over the next two decades. It’s an initiative that will cost trillions and will be felt by all developed countries the world over. One big part of this infrastructure renewal is our energy grid.

    As we mentioned in part four of this series, by 2050, the world will have to entirely replace its aging energy grid and power plants anyway, so replacing this infrastructure with cheaper, cleaner, and energy maximizing renewables just makes financial sense. Even if replacing the infrastructure with renewables cost the same as replacing it with traditional power sources, renewables still win—they avoid national security threats from terrorist attacks, use of dirty fuels, high financial costs, adverse climate and health effects, and a vulnerability to wide-scale blackouts.

    The next two decades will see one of the biggest job booms in recent history, much of it in the construction and renewables space. These are jobs that can’t be outsourced and that will be desperately needed during a period when mass employment will be at its peak. The good news is these jobs will lay the groundwork for a more sustainable future, one of abundance for all members of society.

    A more peaceful world

    Looking back through history, much of the world’s conflict between nations arose due to campaigns of conquests led by emperors and tyrants, disputes over territory and borders, and, of course, battles for control of natural resources.

    In the modern world, we still have empires and we still have tyrants, but their ability to invade other countries and conquer half the world is over. Meanwhile, the borders between nations have largely been set, and aside from a few internal secessionist movements and squabbles over small provinces and islands, an all-out war over land from an outside power is no longer in favor among the public, nor profitable economically. But wars over resources, they are still very much in vogue.

    In recent history, no resource has been as valuable, nor indirectly brought about as many wars, as oil. We’ve all seen the news. We’ve all seen behind the headlines and government doublespeak.

    Shifting our economy and our vehicles away from oil dependence won’t necessarily end all wars. There are still a variety of resources and rare earth minerals the world can fight over. But when nations find themselves in a position where they can completely and cheaply satisfy their own energy needs, allowing them to invest the savings into public works programs, the need for conflict with other nations will diminish.

    On a national level and on an individual level, anything that moves us away from scarcity to abundance minimizes the need for conflict. Moving from an era of energy scarcity to one of energy abundance will do just that.


    The slow death of the carbon energy era: Future of Energy P1

    Oil! The trigger for the renewable era: Future of Energy P2

    Rise of the electric car: Future of Energy P3

    Solar energy and the rise of the energy internet: Future of Energy P4

    Renewables vs the Thorium and Fusion energy wildcards: Future of Energy P5

    Next scheduled update for this forecast


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