Thursday, December 17, 2015

Cheap Energy = High Growth?

Interesting article from Next Big Future asking whether building cheap energy sources will usher in rapid economic growth. The author challenged readers to come up with ways this might happen and I thought of:

  1. More computing power because of lower thermal/efficiency constraints. High performance computing is limited because of efficiency/power costs and form factor issues. For instance, a high performance desktop (let alone a high performance computing cluster) can draw several hundred watts. Running a 1.2kW machine continuously costs $1,000/year with a typical $0.10/kWh fee. If electricity was nearly free, we would expect to see even more powerful machines in widespread use. However, dissipating that kind of heat would require dedicating cooling infrastructure; it's an order greater cost to an already impractically expensive system but easily negated if electricity is cheap enough. All this extra computational power means faster progress with chemical simulations and protein folding among other applications.
  2. Increased agricultural output. I'd been looking at grow lights and even with LEDs, it is not economically sensible because of electricity prices. 
  3. Desalination. 
The article covered many of the biggies like cheaper aluminum, heated roads, massive terraforming. One I thought about but couldn't really explain was a kind of virtuous circle of 3D printing, self replication, and material extraction - all to trend towards nanotechnology, robotics, and biotech proliferation. Consumer 3D printers use crappy plastics but with nearly free energy, metalworking becomes doable and higher precision 3D printers/CNC machines become possible. The minerals composing the Earth's Crust are: Silicon, Aluminum, and Iron. The cost to extract aluminum made it on par with the cost of silver; now it's in foil and cans and is basically disposable. Just a few minutes think about it and the imagination goes into overdrive. 

There are many synergies that come about with cheaper energy. Another way to put it is that cheaper energy means higher energy consumption. And higher energy consumption is strongly correlated to higher income.

Electricity Use vs Income (log-log)

Oil User vs Income (log-log)

Some might argue that correlation is not causation and that in this case, higher incomes were responsible for higher energy consumption. However, if Say's Law is true, higher production necessarily means higher consumption and, mathematically based on the definition of GDP, higher income per person.

There are other factors involved in economic growth, sed ceteris paribus, greater energy production will drive economic growth since most, maybe even all, economic activity requires it.*

* It might be possible to make a praxeological argument for it along the lines of: unease leads to attempts to remove that unease. Cheaper energy will often allow new superior options to remove that unease. If and when someone does scratch that itch ... hmm, I probably need to reread Human Action

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