The future of energy is being shaped by many converging forces, among them:
- Fast-moving multifaceted innovation;
- The geophysical and human health need for clean energy;
- Sustained and expanding growth-potential for low-carbon investments;
- Urban planning, energy-efficient building, and utility reform;
- Financial innovation, including integration of Earth science insights;
- The COVID-19 pandemic disruption.
The COVID-19 pandemic emergency has imposed massive, complex, and compounding disruption on economies of all sizes, around the world. An immediate, and highly visible effect of stay-at-home orders has been reduced air pollution in cities, and the newfound enjoyment of cleaner air. New Delhi, for instance, now has blue skies, an experience that had become a rarity.
Another result of this shock trend in reduced personal and commercial travel is the collapse of oil prices. Oil is traded through futures contracts, which require eventual delivery of the hard commodity. Most speculative investors have no interest, and no capacity, to store or deliver the oil; they hope to buy into and then sell out of the contracts, making short-term gains. With an oil-producer trade-war going on, which means serious overproduction, the steep decline in demand has resulted in bizarre scenes of oil tankers gathering offshore, as floating storage facilities.
The price of oil crashed so severely that West Texas Intermediate (WTI) crude oil prices fell below $0.00 for the first time in history. That meant holding the contract was so unfavorable a situation, and oil was of so little use to the global economy, contract-holders had to pay others to take the oil off their hands. There are many lessons to be learned from what has happened in oil markets this year, but the most significant and obvious lesson is that hydrocarbon molecules for combustible fuel are not as efficient or agile as was thought.
Put more simply: Electricity would not suddenly lose all of its value, if people stopped traveling to stop the spread of a pandemic.
As such, electrons are better positioned to provide the adaptive management and day-to-day agility required in a globally connected world. There is no reason the total store of electrons at any time should come predominantly from combustible fuels. There are many cleaner, smarter, more adaptive ways to manage the flow of electrons, and these will win out, in time.
Then, there is the question of accessibility. Can we actually deliver energy to everyone? Can all people everywhere, including the poorest, gain access to energy? If we can, we stand a much better chance of making progress on all of the Sustainable Development Goals. The COVID-19 disruption is also making clear that societies that cannot perform well on these 17 global goals (human development) are themselves more prone to suffer serious harm from sudden shocks; they are less resilient.
We are moving toward a paradigm of increasing decentralization, with lateral integration through intelligent, user-focused networks, becoming the high-value integration function. What does that mean? It means vertical integration and monopoly control, the feudal economy of hoarding scarce resources and compelling others to pay what is effectively a tax for the right to access them, will steadily lose power in the next 20 years.
We will emerge from the COVID-19 emergency in good health, with a chance at resilient prosperity, only if we can make sure energy is not a driver of unnecessary economic hardship and loss, when we need to address future emergencies. Small-scale, interconnected, modular, and compounding energy systems, including detached, self-powering handheld devices, will eventually displace the heavy grids of the mid-twentieth century.
We will not prosper by focusing on how much short-term wealth can be extracted from pollution-heavy activities. Instead, we should build back better from the COVID-19 crisis, by making sure energy systems are better designed for the interconnected, user-empowering, everyone-has-value 21st century, where sustainable development is very much all of our business.
The Poet Economist 