The End of the Era of Abundance

What if you had to choose between turning on the lights or charging your phone? What if you had to pay more for water than for gasoline? What if you had to live in a world where energy is scarce and expensive?

We often think about abundance in terms of how much money we have or can earn from a job or an investment. Growth is key. More is better. But will that work for future generations?

Government Budgets - “A billion here, a billion there, pretty soon, you're talking real money.” (It is trillions or tens of trillions now) Although often quoted, it seems Senator Everett Dirksen (R – Illinois 1896-1969) never actually said this. The Dirksen Congressional Research Center made an extensive search when fully 25% of enquiries to them were about the quotation. They could find Dirksen did say "a billion here, a billion there", and things close to that, but not the "pretty soon you're talking real money" part. They had one gentleman report to them he had asked Dirksen about it on an airplane trip and received the reply: "Oh, I never said that. A newspaper fella misquoted me once, and I thought it sounded so good that I never bothered to deny it."

Other People’s Money: 2Q 2023 Federal Reserve Bank of New York statistics: US credit card debt rose to US$ 1.03 Trillion, (a little over half of this debt is help of people who pay their monthly balances regularly) but hold an addition US$3.6 trillion in credit availability. US household debt rose to record US$17.06 trillion; interest rate of credit cards rose to 22.2% (or higher), auto loan balance roses to US$1.58 trillion and exceeded student loan debt for first time since 2000 (new auto loans including leases stands at US$170 trillion, student-loan balance fell to US$1.57 trillion. Household mortgage debt is a US$10.4 trillion. The old saying my dad told me “If you don’t have the money son, don’t buy it” does not seem to hold anymore. Can money supply dry up? (But not if you are the government and can print more)

But there is more to abundance than just financial dealings. The western US is concerned about the water supply along the Colorado River Basin (just because we had a wet 2022-23 winter does not mean that drought has gone away). The same goes for the water availability on the Texas Edwards aquifer with the growing population in San Antonio, Austin, and Dallas-Fort Worth. Yes, water supply can go from abundance to shortage. Even the supply of land for cities and agriculture can get pretty tight with growing populations.

The Role of USC Ershaghi-Center for Energy Transition

This is a brief introduction (there will be other articles later) to a new project I got involved with this summer. The project is a podcast series sponsored by the new Ershaghi- Center for Energy Transition from the Viturbi School of Engineering at the University of Southern California. Hidden agenda – I have known Dr. Ershaghi at USC for several decades and he asked me to work with several USC graduate students to put together this project. My podcast partners are Paulina Lanz, Justine Huang and Abhi Kumar.

Most of us take energy availability for granted until the light switch does not work or the power is out after a hurricane passes by. I have lived through that experience a couple of times in Houston and New Orleans. Why the energy transition is important and what are the main challenges and opportunities involved are the subject off our podcast. The drivers of energy transition are many and varied, including climate change, population growth, poverty, technological innovation, and geopolitical factors.

What about Energy Abundance and the Energy Transition:

We have grown up with the idea that energy will always be there. Just flip the light switch and the lights come on. ?As we look at the many, many elements of the energy transition theme, the idea of what would a world look like when energy use may have to be rationed. This would not be a new idea to the many billions of people on our planet who have never had access to affordable, reliable energy (or clean water for that matter). We will have an episode on Just Transition/Energy Poverty for more with Dr. Kelly Sanders (or check out the energy switch alliance website from Dr. Scott Tinker).

Energy Supply and Demand

In our second episode, Dr. Don Paul provides his insights on how the concept of energy abundance has shaped the western developed economies. Lower costs of gasoline and federal subsidies that created the US interstate highway system brought us suburbs and the Route 66 lifestyle (Americans own 278 million cars, we will compare that with the rise in EV sales in another episode of electrification of transportation). That put families in the station wagon for two weeks for a summer holiday to visit distant relatives and US National Parks when I was growing up. My family was one of those, my dad loved to just get in the car and drive. The destination did not matter. I think my family started the saying – “are we there yet?” Most popular vehicle sales are gas-guzzlers (Ford F-150 pickup trucks and SUVs). Modern homes are air conditioned to deal with the summer heat waves (but not my mom’s 1950s era home).

Remember we are starting off in an energy ecosystem that is almost 80% based on fossil fuels. Sure, the sun shines and the wind blows, but that does not mean renewable energy is free. Citizens of western developed nations have a much higher “per capita energy use” than the rest of the world. Growth and prosperity used to be closely linked. But the rest of the world is jealous and would like access to a similar lifestyle. But if it was based on fossil energy, there goes the climate. Do we just want to replace fossil fuels with renewables (wind and solar)? If so, we need even more energy and more land use, more critical minerals and mining (another interesting episode) and other infrastructure, like energy storage due to energy density, energy intermittency and other nasty side effects of the laws of thermodynamics.

But can we reprogram our culture to place value on quality of life and energy efficiency, rather than just more of stuff? Despite the rapid growth of wind and solar energy in the past several years, 2022 was the highest use of coal on record (mostly China and India) and the highest CO2 emissions. Right now, we are on a path of “addition” where the growth of renewables is just about meeting the growing energy needs of the global population (that is different in different parts of the world) but use of fossil energy is staying roughly the same (check out IEA or UNIPCC data is you wonder where I got these numbers). (By the way we will have a podcast episode on the Cost of Going Green as well).

Would we want to try a path of re-imaging energy.

As our excellent speakers (Lauren Bridges and Zane Cooper points out we are still working with a 19th century view of energy where we produce a unit of energy and then move it around to create value (a ton of coal goes the factory to produce a ton of yarn for textile manufacturing or a thousand barrels of crude oil is transported by pipeline to a refinery to produce fuels and petrochemicals). Zane asked us to consider energy as a relationship between nature and our human culture. Could you wrap your mind around that? With planned obsolesce or products these days, wasting is almost a part of every process, not recycling.

The good news is that the energy transition is giving all of us an opportunity to re-think our use of energy, or critical minerals (critical to whom, our speaker asks) and of relationships with nature. The bad news is that we must rethink almost everything and we will need a lot more aspirin for all the headaches that question brings. We cannot leave that critical question only to the climate experts and politicians. We need to get involved. In many ways we are learning that the Energy Transition is a much of a demand issue as it is a supply issue. The energy transition will depend on you.

Energy Transition Talk podcast coming soon (September 17th). Check us out on Youtube and several other audio podcast channels. I will send you more about the first episode and a link to the podcast next time.