I recently caught up with Paul Frankel, Managing Director at Califronia’s Clean Energy Fund. As we discussed Renewable Energy and the greater economy he referred the paradigm shift that places a premium on and a natural incentive towards “Sustainability and Responsibility” Largely for the same reasons I’m discussing in this series, we agreed that will be a move away from unsustainable and irresponsible business practices in every business sector.
You may recall (and if you don’t you can read) that I suggested that CleanTech was not an industry, but that all industries were going to be forced to adopt clean technologies and sustainable practices. They were all going to forced to do this because of environmental necessity, energy constraints and international cooperation and legislation. Last week I discussed the environment and today I plug why energy constraints will drive all clean technologies.
Energy ties all industries together, because transportation, moving water, construction and the production of just about everything requires it. Businesses are about profit, and since the adoption of ‘money‘ the limiting constraint for growth, so long as the business model was sound, has been capital. Thanks to Bond Street’s demand and Wall Street’s ingenuity, raising capital in the developed world for viable business projects has been greatly facilitated, resulting in an unprecedented global economic boom. The abundance of cheap energy has allowed this boom to thrive, this energy has been cheap largely because we have failed to incorporate the lasting costs of using them; it is universally accepted that the widespread use of fossil fuels must be tempered for reasons of general pollution, climate change and limited supply. What will then increasingly limit the world’s economic success is the cost and the amount of energy that we can generate sustainably.
All industries are united by recognizing energy as a raw material. As we recognize and are forced to use less fossil fuels and we falter to bring renewable energy systems on line, energy becomes a limiting factor, because energy used in one process will diminish the energy available for another. As the world’s population makes the move to more efficient plug-in/electric vehicles, the energy we use on the road is energy that can no longer be used to light our buildings or build more cars. As demand increases for constrained electrical energy it becomes economical for humans to live and work in structures that consume less energy. Those same economic forces will prompt companies to produce cars more efficiently and they will gain market share by delivering vehicles that that consume less of our sustainably generated energy. Similarly by reducing waste and overall consumption rates of scarce water resources, less energy will be devoted to pumping water around the world’s water infrastructure. By recycling our raw materials efficiently energy spent mining and transporting raw materials can be diverted elsewhere.
Electrical energy is lost in transmission and it has had the unfortunate characteristic of needing to be used as it is produced. Accordingly energy storage technologies, smart meters, distributed power generation and the smart grids that link all of this together become increasingly important to match variable demand and a potentially intermittent supply of sustainably derived ‘clean’ energy.
Incorporating renewables is a critical component to the equation, unfortunately the immediate adoption of renewable energy is not feasible. We have been seduced by cheap and accessible fossil fuels for too long to replace that demand instantaneously, in the meantime energy efficiency becomes a tool to leverage the capacity we have to produce sustainable energy.
The world’s people are expected to use about 500 quadrillion Btus (British thermal units) of energy (http://www.eia.doe.gov) this coming year. How we derive that energy and how efficiently we use it to generate units of happiness is critically important to our future.