Energy transformations depend on major advances in both technology and infrastructure. The possibility of ‘steam power’ was recognised in Roman Egypt but the steam engine only came into its own with the Industrial Revolution. Batterypowered cars were developed at the end of the 19th Century but the electric motor is only now becoming a viable alternative to the internal combustion engine.
The fossil fuel transformation
While energy evolutions can be slow-moving, they can nevertheless trigger revolutions in human organisation: without fossil fuels, cities would be much smaller, international trade much lower and people much poorer. Fossil fuels – effectively the energy stored from the sun’s rays since the Carboniferous period – have transformed living standards over the past 200 years. The Malthusian constraints that had condemned the vast majority of our ancestors to grinding poverty were finally lifted.
From the natural battery to the man-made alternative
Fossil fuels, however, are dirty. Further technological advance and political pressure in response to climate change are triggering another energy evolution. We won’t wean ourselves off fossil fuels entirely but there are likely to be big changes in electricity production and transportation. In effect, the Earth’s fossil fuel ‘battery’ is being replaced by man-made batteries fuelled by renewables.
The infrastructure revolution
To succeed, however, there needs to be a major shift in energy infrastructure. The current electricity grid is simply not designed to cope with, for example, a world of driverless electric vehicles. Providing the economic incentive to add to capacity – or even to go ‘off grid’ – is, however, likely to prove a major challenge given financial losses associated with previous ‘capacity’ investments outside the energy realm.
Meanwhile, although some of the world’s diversified net energy-consuming nations stand to benefit significantly from the current energy transformation, the same cannot be said for some of the net energy producers. Not all nations, however, find themselves in the same bucket. Notably, those with large sovereign wealth funds, low debts and the ability to diversify stand to do much better than others.