Sustainability as driver of the new technology driven economic era

SUMMARY:

Sustainability sounds like an unlikely candidate for acting as the spark that kick-starts the next generation of economic growth. Here is an argument for that, based upon the historical underpinning previously outlined.

peak oil sustainability
Hubbert peak oil – 2017

Of all the disruptions that you might expect to lead the next economic wave, you wouldn’t expect the topic of sustainability to be top of mind. After all, the tech market is still red hot with evolving solutions in IoT, analytics, cloud platforms, mobile systems, networking, and integrated supply chains and a lot more.

But for reasons elaborated in the last story, these technologies don’t pass muster as paradigm drivers.

Sustainability is the likely candidate. It seems to be coming from nowhere, but this story will hopefully encourage you to consider it.

Sustainability driven energy

The cluster of innovations that add up to the next disruptive innovation includes solar panels and wind turbines, but especially photovoltaics or PV’s as the panels are known. PV’s are based on some of the same silicon chip technology that powered the information age, and they are beneficiaries of Moore’s Law. PV’s are being deployed on domestic rooftops as well as in industrial grade formations by electric utilities.

Wind turbines are utility grade today too and in the US, Texas and Oklahoma, homes to two of the greatest climate deniers, Rick Perry, secretary of energy, and Scott Pruitt, EPA administrator, are leaders in wind generation. Go figure.

This kind of disconnect is about what you’d expect when the free market takes over from a belief system at variance with reality. We can expect that profits will fix the belief systems in a short time. The inevitable conclusion: the free market is in control of the climate/energy challenge now for reasons that free markets do anything, the opportunity to make and save money.

Add geothermal wells to this mix, and you have a new energy paradigm that will supply an excessive amount of renewable power to drive sustainability’s many facets. Much like we developed uses for rapidly increasing compute power in the current economic wave, we’ll discover and create new uses for an abundance of renewable energy. If you are skeptical, and you should be, consider what the power would be dedicated to and why it’s needed.

Demand

First, consider the challenges associated with our current energy paradigm. It’s polluting the planet sufficiently to change the climate and trigger mass extinctions this century. If you don’t believe that, humor me for a few more sentences.

Alone you could debate the point, many people do. But also consider that we’re running out of the energy sources the human use of which are causing the pollution, and you end up with a Hobson’s choice—running out or choking, two alternatives that suck equally.

In short, we need to replace the current fossil fuel paradigm for multiple good reasons.

The free market is making significant strides. Ford, GM, and Volvo, as well as some Japanese and German carmakers, have each announced electric vehicle programs on aggressive timetables that will begin delivering fleets of electric cars to showrooms as soon as the next 18 months.

Emerging—ecosystem services

Although you can draw a straight line between renewables and transportation, that’s not enough to call a disruptive innovation that will drive the economy for the next half-century. To understand what else factors into the calculus consider global population.

In the 1950s earth’s population was less than 3 billion, but by 2050 it’s likely to be 10 billion or more. The significant challenge of our time will be feeding, housing, educating and providing a decent life for all of them. There are billions of people today who do not have sufficient resources to support a good quality of life. More than 700 million, the poorest of the poor, live on less than $2 per day. To these numbers add a population bubble of nearly 2.5 billion people, and you can see that without action now the middle of this century will be a time of great strife as billions of people seek the necessities of life.

This dramatic population increase strains natural resources to the breaking point. There was adequate farmland, water, and other resources for most of the 20th century though in the last 20 years we used more than we had and we’ll need to supplement those services soon to assure adequacy tomorrow. Consider the following,

By 2025 as many as 1.8 billion people could be living in areas plagued by water scarcity. In China, between 25 percent and 33 percent of people do not have access to potable water.

So we already don’t have enough water, and as climate changes, absent any effort to reverse the trend, the situation only gets worse. Renewable energy sources could do a lot to help work through the resource crunch now happening but only if we think big and don’t stop at replacing transportation fuels. We need to apply new energy sources to all kinds of ecosystem support programs and making available more freshwater is just one example.

Disruptive innovation in the energy sector will drive massive construction efforts as we seek to rebuild and enhance the electric grid, electrify roads, rebuild and extend public transportation and shore up mechanisms for delivering ecosystem services. Such services will include farming and ocean management to both to generate more food and actively absorb carbon from the environment.

A good example in infrastructure comes from a recent New York Times article that notes that the U.S. Army Corps of Engineers keeps an inventory of 90,000 dams across the country and that 70 percent of dams in the country will be more than 50 years old by 2020. Almost 2,000 state-regulated, high-hazard dams in the US were listed as being in need of repair in 2015.

My take

Sustainability has the earmarks of a new economic era starting.

Demand for clean energy that will support ground transportation needs and many of the ecosystem needs we take for granted now will be necessary drivers. There will be a strong infrastructure construction component in all of this.

Paying for it will require innovation. Today, the Climate Leadership Council, led by veterans of government service including James A. Baker and George P. Schultz, both former secretaries of state, has proposed a carbon tax beginning at $40 per ton of carbon released into the environment.

That’s not a massive amount of money for a family of 4 generating about five tons of carbon per year. But the aggregate effect of such a tax could pay for numerous projects. It’s not a perfect solution since revenues would decline with declines in carbon use, but it’s a good start.

All of this and more is why we’re at an economic turning point. We’re at the start of disruptive innovation in energy that will permeate much more than the energy markets.

The disruption will take decades to diffuse throughout the economy and will create massive construction projects and the jobs that go with them. Further, these projects will require innovation in civil engineering, farming, and urban planning just for starters. The scale is breath-taking. So is the need.

Image credit - via Hubberts

Disclosure - Denis Pombriant is the author of The Age of Sustainability.

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