By Noah Smith, Bloomberg View
The fight to develop renewable energy is a battle of good against evil, and the future of humanity hangs in the balance.
No, I’m not talking about climate change (though that is certainly important). I’m talking about the distribution of wealth and power across the whole planet. The question of who will reap the benefits of future growth hinges on whether we discover new, better sources of energy.
The story of our species goes like this. For thousands of years, humanity’s energy budget was basically fixed—we got energy from our own bodies, from animals and from wood. All of those came from land—whoever had the land controlled the energy. Since technological progress was slow, the best way to get rich was to take someone else’s land. So for thousands of years, war was the normal state of affairs, and whoever was best at war—Roman and Chinese emperors, barbarian warlords or Mongol khans— was the richest. It was a brutal, zero-sum world.
Then two things happened to turn the old zero-sum world on its head. Technological progress accelerated dramatically, and we discovered how to extract energy from fossil fuel. These two processes fed each other, and the result was an increase in human well-being like nothing the world had ever seen. Suddenly, great fortunes were made from inventing new things and organizing people for productive activity, rather than from seizing land from the neighbors. It became a positive-sum world, much more peaceful as well as much richer.
Most of us would like that positive-sum world to continue. There’s just one problem— there is a very limited supply of fossil fuel energy on our planet. In the 2000s, those limits started making themselves apparent—many thought we were on the verge of peak oil, standing on the precipice of a new dark age. Human ingenuity battled back, and gave us shale gas and tight oil, which have sent energy prices back down—but not down to where they were before the middle of the last decade. Fracking shale is expensive, and it’s going to get more so as time goes on. It’s a stopgap—a bulwark against the onslaught of scarcity, but not a long-term solution.
Meanwhile, prices have stayed high, feeding the coffers of autocratic regimes such as those of Vladimir Putin’s Russia, Saudi Arabia, Iran and Venezuela. Consider Putin. Here is a man whose power derives from the fact that his predecessors conquered a huge tract of land by military force, which later happened to have a lot of oil under it. Putin’s more recent predecessors managed to defend that oil-rich land, and used the oil wealth to build up one of the world’s largest militaries. The military defends the land, the land provides the wealth to pay for the military, and Putin and his friends skim a little off the top. As U.S. Senator John McCain said, Russia is indeed a gas station, but it’s a gas station with ICBMs.
If we don’t find a better source of energy than oil and gas, Putin’s militarized gas station represents the future of our planet. We won’t run out of fossil fuels for at least a century, but high-tech extraction costs will rise and rise, giving windfalls to whoever sits on the land with the lowest extraction costs, whether it's the rulers of Russia, Saudi Arabia or Iran. We won’t go all the way back to the zero-sum world, where land is the most important source of wealth, but we will slide back in that direction.
Against this grim future stand the forces of good—human ingenuity and smarts. If we can come up with new energy sources that are better than oil and gas, then we can get back on the positive-sum path. And if those new energy sources are things that don’t run out in a century or two, then the positive-sum world can last basically forever.
There are two potential energy sources that could let us escape the zero-sum world. The first is fusion energy. The second is solar energy.
Fusion, the ultimate energy solution, has long been a pipe dream, but researchers continue to push ahead with new ideas. Lockheed Martin has announced breakthroughs in compact fusion reactors, and startups such as Helion Energy and General Fusion are attracting attention and money.
Solar, meanwhile, has seen stupendous price declines. A new Deutsche Bank report says that even if government subsidies for solar power are slashed from the current 30% to only 10%, solar electricity will be cheaper than fossil-fuel electricity in 36 states by 2016. Plunging costs are being driven by new technology, by economies of scale and improvements in the solar-panel manufacturing process, and by drops in “balance of system” costs. Meanwhile, battery storage costs have been falling steadily as well, though at a frustratingly slow rate.
So renewable energy is a moral crusade. If human ingenuity wins, we remain in a world where new ideas and productive effort are the main determinants of prosperity. If technology loses—if fusion doesn’t pan out, batteries never become viable, and solar costs stop falling or go back up—then more and more of the world’s wealth and power will flow into the hands of violent men who seize land with force. I know who I’m rooting for.
2023-12-26 - American Electric Power and PNM Resources plans to sell 15 solar projects totaling 625 megawatts to Exus for approximately $230 million.
2024-01-10 - U.S. Energy Corp.’s non-core asset divestitures report no change to the company’s existing $20 million borrowing base.
2024-01-18 - EQT plans to offer 5.75% senior notes to repay some borrowings used in the acquisition of Tug Hill and XcL Midstream, the company said.
2023-12-28 - Kinder Morgan’s acquisition of NextEra Energy’s assets in South Texas solidifies its pipeline network in South Texas.
2023-12-15 - The new block comes out of Bid Round 2022-2023 for what Staatsolie refers to as the Demerara Acreage.