The energy revolution needs more than renewables

During the summer, energy markets in Europe collapsed. Our voracious appetite for energy had collided with a series of intractable phenomena. Geopolitical chaos, the climate crisis and the limitations of existing technology have placed an order to stop energy supplies. When economic agents no longer trusted the market to balance supply and demand, prices exploded.

The European Commission eventually stepped in, announcing new price caps on renewables and a levy on the revenues of fossil fuel companies. Britain has opted for price limits for consumers. But across Europe, the underlying problem of energy scarcity remains unsolved.

Europeans have now realized that the transition to renewable energy is less like flipping a switch and something more like regime change. For decades, the military and financial might of the United States has been in the service of securing a dense network of energy extraction and flows around the world. Today, a reliable sign of the US imperial decline is the growing tension on that network. One after another, the big energy producers – Venezuela, Russia, Iran – are becoming international marginalized, excluded from the dominant world order.

[See also: The future world order will be decided by the war over semiconductors]

For Europe this is catastrophic because the continent remains dependent on global flows of fossil fuels and, since the Suez crisis in 1956, is unable to direct them. As for renewables, their limits have been painfully highlighted by the current crisis: a record 12% of electricity in the EU this summer was generated by solar, but over the same period it remained below 16. % coming from coal.

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It is no coincidence that the limits of US power are being tested at a time when fossil fuel reserves are running out. Taken individually, oil and natural gas stocks may last for a few more centuries, but this is the wrong way to look at the problem. What we have consumed is not gas or oil, but degrees of heating due to the combustion of fossil fuels. When you have used up all the degrees that humanity can endure, the energy supply is depleted.

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The share of energy in total production costs has traditionally been very small, so economists tend to overlook its key role. Its contribution has been overshadowed by the overall share of capital (about 25 per cent of production costs in recent decades) and by that of labor (about 70 per cent). But the impression of abundance of energy is always the product of a previous energy regime. The main reason why a permanent flow of energy is often taken for granted is our tendency to adapt our economic expectations to the available energy supplies. It is only in times of crisis that we realize that energy is central to the economic process. The economy as a whole could be seen as an engine that uses energy to transform inputs into outputs.

For the moment, we are still living with the fundamental legacy of the energy revolution of the late 19th and early 20th centuries. Advances in that period include, above all, large-scale electricity generation and the use of innovations such as internal combustion engines and electric motors. As environmental scientist Vaclav Smil convincingly shows, most of these advances are still with us, not as irrelevant survivors of a bygone era, but as the foundation of our industrial civilization. The only new primary energy source that made a substantial commercial difference in the 20th century was nuclear fission, and its impact remains limited, well below initial hopes that it would be transformative.

[See also: As countries transition to green energy, a deadly race for global power begins]

From here two ways seem possible: economic and social stagnation, or an energy revolution. We may be forced to accept that energy revolutions are rare episodes in human history. Perhaps we will be forced to live with the decaying structures of the previous energy regime. Renewable energies will mitigate some of the impact of climate change, but the geopolitical conflict to control energy sources will intensify and everyone will have to adapt to a world of energy scarcity.

The alternative – perhaps following this new painful reality – is that the sense of impending crisis instigates a new energy revolution. Technological revolutions are not the product of free market processes. They are the product of historical forces, resulting from the way societies deal with acute crises and the conscious need to overcome them. In the late 19th and early 20th centuries, the second industrial revolution in the United States, for example, was a way to build a continental economy and manage social conflict in a great democracy.

We hear about all kinds of miraculous solutions to reignite economic growth: lower taxes and higher taxes; investment in education or a radical reform of the education system; economic nationalism and economic globalization. I can plausibly imagine how these solutions could work, but none would be comparable to a technical-economic breakthrough that would change everything. I have in mind the discovery of a truly inexhaustible source of energy, such as nuclear fusion. Energy would replace labor and capital as the sole engine of production, as any type of machine could be built and used in a world of genuine abundance of energy.

Tackling climate change will force us to replace our existing energy system, but that system is the foundation of modern civilization. It is utopian to hope that it can be completely transformed by renewables in their current form, with energy sources that often have lower densities and efficiencies than fossil fuels. You cannot replace something with its negation. You replace it with a successor, a higher synthesis.

[See also: Russia’s threat to the global financial order is also our chance to build a new one]

This article appears in the September 21, 2022, issue of the New Statesman, Going all the time

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