What If America Had Cheap, Clean, Unlimited Energy?

By James Pethokoukis

In This Issue

• The Essay: What if America had cheap, clean, unlimited energy?
• 5QQ: 5 Quick Questions for … economist Alex Tabarrok on American innovation
• Micro Reads: climate models, the metaverse, autonomous trucks, Elon Musk’s Boring Company, and more …

Quote of the Issue

“This reservoir can scarcely be other than the subatomic energy which, it is known, exists abundantly in all matter; we sometimes dream that man will one day learn how to release it and use it for his service. The store is well nigh inexhaustible, if only it could be tapped.” – British physicist Arthur Eddington, lecturing in 1920 on how the speculative stellar fusion process might benefit humanity

The Essay

⚡ What if America had cheap, clean, unlimited energy?

It wasn’t just Hollywood in the 1960s — through TV shows such as The Jetsons and Star Trek — that was churning out visions of a techno-optimist, radical Up Wing future for America. In 1964, the influential RAND Corporation think tank published a sweeping “long-term forecasting” study for the US government based on expert opinion in six areas: scientific breakthroughs, population growth, automation, space progress, probability and prevention of war, and future weapon systems. Policymakers thought technological progress was advancing so quickly that it was imperative Washington identify and understand key macro-trends and their possible impacts.

From the study: “Because of the ever more explosive rapidity with which new technological developments are apt to take hold, it becomes increasingly important to foresee the advent of such impact to prepare for their social consequences and to avert possible calamities.” 

Here are the technological developments seen as at least possible around the 2020s (but also maybe a bit earlier or maybe decades later):

The RAND report is a good example — though hardly the only one — of the sweeping nature of postwar techno-optimism, even among the academic expert elite. It extended to all areas of human endeavor: biology, energy, transportation, and what we today call information technology. And there’s no doubt that cheap, abundant energy — generated by nuclear fission, nuclear fusion, geothermal, or maybe even space-based solar — was a key part of that vision. Humanity was surely going to use a lot more energy in the future. Indeed, that was the only way such a glorious tomorrow was possible.

But that didn’t happen. Why not? Let’s start with these three charts on US energy use:

The charts tell a story of plateauing per capita energy use in the early 1970s — beginning with that decade’s oil price shocks — and plateauing overall use in the 2000s. The top chart is popular among pro-progress or Up Wing types, as well as some in the venture capital community, specifically. It comes from Where Is My Flying Car? by J. Storrs Hall. The Henry Adams Curve (derived from something the historian wrote about coal and energy more than a century ago) illustrates a relatively steady rise in US per capita energy consumption until the 1970s.

It’s Hall’s contention that a lack of energy intensity is a big reason that many half-century-old forecasts fizzled out. What happened? Consider this thesis: In addition to geopolitics, the emerging environmental movement spread an eco-pessimist message of out-of-control pollution, overpopulation, and resource scarcity that led to an anti-growth regulatory regime (and Down Wing cultural attitude) in the US. Coinciding with this regulatory overcorrection was a decline in federal funding for R&D that could have helped advance energy tech. (Perhaps the “new” Apollo program could have been one centered around advanced nuclear fission, fusion, or geothermal rather than space.)

Anyway, we learned to do more with less when we should have been doing more — much more — with more. I like how Jason Crawford (Roots of Progress) puts it: “All else being equal, energy efficiency is great. But there’s no reason to believe that flatlining or declining resource usage is optimal for progress. A large part of progress is harnessing ever-more resources and putting them to productive use.” In this case, it seems that much innovation bandwidth went into energy efficiency rather than other areas. Take aviation, for instance. Hall writes:

We would already be up an extra factor of 2 or 3 by now if we had only continued the energy trajectory we were on before 1970. And we might just have had flying cars, space travel, and the rest before 2062. … The extent to which a technology didn’t live up to its Jetson’s-era expectations is strongly correlated with its energy intensity. The one area where progress continued most robustly—Moore’s Law in computing and communications—was the one where energy was not a major concern. … There has been considerable advance in aeronautical engineering since then, but it hasn’t shown up in faster, roomier airliners or flying cars. Most of that considerable effort and ingenuity has gone to energy efficiency. We now have small, sleek private planes that use half the fuel per mile that my old Beechcraft does. What we don’t have, but could have had instead with the same amount of work, would be flying machines that were somewhat less efficient for pure flying because they also were cars. … Planes are made lighter by the highest-tech carbon fiber composites, and therefore more fuel-efficient—but also much more expensive.

Does the upward-sloping red line of the Henry Adams Curve lead to a high-energy utopia of nuclear-powered flying cars among marvels so far seen only in sci-fi? I wouldn’t go that far. Yes, energy — how it is generated and how it is used — is tremendously important. The steam engine was one of the crucial technologies of the initial Industrial Revolution. And in the 20th century, widespread electrification transformed the economy “by dramatically improving the distribution of power in manufacturing and by making possible the widespread introduction of consumer appliances,” explains the Congressional Budget Office in a neat 2013 report on the history of US productivity growth.

What’s more, we know how the sudden lack of energy can undermine modern economies. In his 2004 paper, “Retrospective on the 1970s Productivity Slowdown,” Nobel laureate economist William Nordhaus finds that the 1970s productivity downshift in the US economy was “primarily centered in those sectors that were most energy-intensive, were hardest hit by the energy shocks of the 1970s … In a sense, the energy shocks were the earthquake, and the industries with the largest slowdown were near the epicenter of the tectonic shifts in the economy.”

The energy lessons of the 1970s are being relearned today, especially by Germany and Japan. Both countries chose to begin denuclearizing their economies after the 2011 Fukushima nuclear reactor meltdown. Without nuclear, Japan has little chance of meeting its goal of carbon neutrality by 2050. In Germany, there are concerns that Russia’s invasion of Ukraine could eventually lead to a full-scale stop to Russian hydrocarbon imports. That could cripple much of the country’s industry, some fear. (A fun political tidbit on Germany’s energy crunch in the Financial Times: “It would be suicide for the Greens to say we were wrong about nuclear power,” said Thomas O’Donnell, a Germany-based energy analyst and nuclear physicist. “So they’re forced to continue with the old battle plan.”)

But we shouldn’t overemphasize what that deviation from Henry Adams Curve has meant to the US economy and its technological progress. Many of those unfulfilled 1960s dreams from the RAND report can’t be blamed on a retreat from energy abundance. I’m not sure how stalled energy intensity directly explains why we aren’t already living to 120, regrowing limbs, downloading new skills via direct brain-computer interface, or vacationing on the Moon or Mars. Not mention raising animal IQs. (Indirectly, of course, it all represents a broader Down Wing, anti-progress shift.)

Some of those goals proved more technically difficult than first thought (such as regrowing limbs) or we simply made a societal choice to spend our resources differently, such as the NASA budget cuts that ended manned space exploration. We don’t lack a nationwide high-speed rail system because of energy issues. (And to be honest, most flying cars in sci-fi aren’t glorified, atomic-powered helicopters but rather superscience anti-gravity vehicles, including the famous Blade Runner spinner.)

Blade Runner spinner

Even the notion that pricey energy undermined 1970s productivity growth “fails to account for the lack of a similarly strong slowdown in other countries or for the failure of TFP growth to recover after energy prices declined in the 1980s,” according to that CBO report. Yet I also don’t want to underestimate the importance of cheap, unlimited, carbon-free energy. Not at all. It’s certainly worthwhile to have an innovation ecosystem — including regulation and R&D — that’s friendly to progress in nuclear fission/fusion and geothermal. As a 2015 Physics Today commentary on energy abundance points out:

Processes that currently consume too much energy to be cost-efficient could become widespread and beneficial. For example, the desalination of seawater would relieve Earth’s water shortages. Trash could be recycled on a massive scale to extract valuable trace elements, such as rare earths. Carbon dioxide could be sucked out of the atmosphere to mitigate climate change. People could live comfortably in Earth’s polar regions.

And here is Tyler Cowen on the same theme in 2021 in Bloomberg Opinion:

Maybe nuclear fusion cannot be used to fly a jet plane, but perhaps it could be used to produce relatively clean hydrogen fuel, which could then be deployed in ways fusion could not. A chain reaction would occur, eventually bringing cheap, clean energy across the economy.

As an inveterate traveler, my first thought is that I would be able to get everywhere much more quickly. How about a supersonic or perhaps suborbital flight from Washington to Tokyo? A trip to Antarctica would no longer seem so daunting. Many remote places would be transformed, one hopes for the better.

People sometimes ask, such as on social media, “What is the point of progress?” But, when you think about it, what is the point of that question? A (far) higher-energy planet, enabled by tech progress, seems likely to be an obviously better one.

5QQ

💡 5 Quick Questions for … economist Alex Tabarrok on American innovation

Alex Tabarrok is the Bartley J. Madden Chair in Economics at the Mercatus Center and a professor of economics at George Mason University. He and Tyler Cowen founded Marginal Revolution, where Alex blogs about innovation, economic growth, and other topics of interest to Faster, Please! readers. Throughout the pandemic, Alex has been writing insightfully about vaccines, technological advancement, and pro-progress culture, so I reached out to him with a few questions just for paid subscribers.

1/ In 2012 you wrote that “We like to think of ourselves as an innovation nation, but our government is a warfare/welfare state. To build an economy for the 21st century we need to increase the rate of innovation and to do that we need to put innovation at the center of our national vision.” Ten years later, is America more or less of an innovation nation?

It’s hard to keep a running tab on cultural change on a year to year or even decade to decade basis, but I have yet to see an “innovation first” national agenda. There have, of course, been technological innovations including mRNA vaccines. But look how our society reacted to vaccines — instead of mass celebrations and dancing in the streets, the way we celebrated the creation of the polio vaccine — we somehow coded vaccines politically and many Americans ended up not taking vaccines as a political statement. It really is mind-boggling that hundreds of thousands of people died who would have lived had they taken a free vaccine available at every WalMart, CVS and local pharmacy in the country. More generally, the decline of trust in the United States is worrying because it means we can’t even agree on growth, innovation, and America as a shining beacon on the hill.

2/ American political debates are generally more interested in redistribution than long-term investment for future innovation. What are the incentives creating that problem and can they be fixed?

A big part of the incentive problem is that future people don’t have the vote. Future residents don’t have the vote, so we prevent building which placates the fears of current homeowners but prevents future residents from moving in. Future patients don’t have the vote, so we regulate drug prices at the expense of future new drug innovations and so forth. This has always been true, of course, but culture can be a solution to otherwise tough-to-solve incentive problems. America’s forward looking, pro-innovation, pro-science culture meant that in the past we were more likely to protect the future.

We could solve many more of our problem if both sides stowed some of their cultural agendas to focus on areas of agreement. I think, for example, that we could solve the climate change problem with a combination of a revenue neutral carbon tax and American ingenuity. Nuclear, geothermal, hydrogen — these aren’t just clean fuels they are better fuels! Unfortunately, instead of focusing on innovation we get a lot of nonsense about plastic straws and low-flow showers. There is a wing of the environmental movement that wants to punish consumerism, individualism, and America more than they want to solve environmental problems so they see an innovation agenda as a kind of cheating. Retribution is the goal of their practice. In contrast, what I want is for all of us to use more water, more energy and yes more plastic straws and also have a better environment. That’s the American way.

3/ Are you bullish on the case that the pandemic will make the US more appreciative of innovation (like MRNA vaccines) and more willing to invest in future advances (like new Operation Warp Speeds)?

OWS was a tremendous achievement — perhaps a million or more Americans owe their lives to Gustave Perna and Moncef Slaoui. Where is the ticker tape for these heroes and for Bob Kadlec, Peter Marks, Alberto Bourla, Ugur Sahin, Stéphane Bancel and the many others who made it possible to develop vaccines at a record pace? Could one in a thousand Americans name the people who saved their lives? Perna and Slaoui got the job done and then disappeared, like modern day Cincinnatuses, but with less recognition of what they had accomplished. 

So I hope that the success of OWS makes us more willing to invest in future advances but, in fact, we can’t even pass a pandemic preparedness act. The pandemic was a completely predictable and predicted event. We were warned time and time again that it was coming and yet when it came, we weren’t prepared. Sad as that is, I can understand it. What I can’t understand is that having lived through a pandemic we are still not investing in preparing for the next pandemic let alone the next emergency.

4/ You have also written that the “Operation Warp Speed for X” framework is overblown. Why are you skeptical of the enthusiasm, and what should we learn from OWS?

I think I have made it clear that I am a fan of OWS! (A number of economists including myself and Nobel prize winner Michael Kremer pushed an OWS plan to the White House before it became OWS and later advised the World Bank and other governments around the world.) It’s going to be difficult, however, to duplicate the speed of OWS. OWS didn’t make any scientific breakthroughs, the science of mRNA was already in the journals and the labs at Moderna and BioNTech. OWS was about rapidly scaling up testing, production and distribution.  You can do things in emergencies that you can’t do in normal times and OWS should be considered, like the Manhattan Project, as an emergency.  Now, that doesn’t mean we shouldn’t invest in science — in fact, it means that we should invest more in basic science so we are ready to scale when the next emergency happens!

The lesson that should be taken from OWS is that what I call the American model is very powerful. The American model is about using the power of the Federal government to amplify the power of America’s incredibly deep and entrepreneurial private sector. To get the invisible hand and the visible hand to work together. OWS wasn’t a government program to manufacture and distribute vaccines. OWS bought vaccines and then they used FedEx, UPS, CVS and Walgreens to distribute the vaccines. The American model can work very well especially during an emergency.

5/ What do you make of the argument that China’s recent industrial success, particularly in tech, points to a more viable industrial strategy than America’s current approach?

Every generation launches a new competitor to America and the people who don’t like capitalism and America’s individualist, free market economy trumpet that now the American way is being left in the dust. In the progressive era it was the Germans (how did that work out?), then it was the Russians (remember Sputnik?), then it was the Japanese (buying up Rockefeller center! the horror!), then it was the Chinese (look at those high speed rail lines!). My message to Americans is to double down on America. Double down on immigration, entrepreneurship, innovation, building for tomorrow, free markets, free speech and individualism and America will take all new competitors as it has taken all comers in the past. The world should be more like America not the other way around.

Bonus: Is there a film or TV show that you think does a good job of inspiring or portraying a techno-solutionist, pro-innovation culture?

The best pro-innovation, pro-technology, pro-reason movie I have seen in recent times was hands down The Martian. The Martian reminded me of Ayn Rand and the Apollo program. Rand wrote that the Apollo 11 mission “conveyed the sense that we were watching a magnificent work of art – a play dramatizing a single theme: the efficacy of man’s mind.” The Martian is a magnificent work of art that also dramatizes the efficacy of man’s mind. The Martian was a triumph for Ridley Scott and the author, Andy Weir. Now let’s make it real!

Micro Reads

☀ Use of ‘too hot’ climate models exaggerates impacts of global warming – Paul Voosen, Science | “Scientists need to get much choosier in how they use model results, a group of climate scientists argues in a commentary published today in Nature. Researchers should no longer simply use the average of all the climate model projections, which can result in global temperatures by 2100 up to 0.7°C warmer than an estimate from the Intergovernmental Panel on Climate Change (IPCC). ‘We need to use a slightly different approach,’ says Zeke Hausfather, climate research lead at payment services company Stripe and lead author of the commentary. ‘We must move away from the naïve idea of model democracy.’ Instead, he and his colleagues call for a model meritocracy, prioritizing, at times, results from models known to have more realistic warming rates.”

🥽 Metaverse may be $800 billion market, next tech platform – Matthew Kanterman and Nathan Naidu, Bloomberg Intelligence | “The Metaverse market may reach $783.3 billion in 2024 vs. $478.7 billion in 2020 representing a compound annual growth rate of 13.1%, based on our analysis and Newzoo, IDC, PWC, Statista and Two Circles data. As video game makers continue to elevate existing titles into 3D online worlds that better resemble social networks, their market opportunity can expand to encapsulate live entertainment such as concerts and sports events as well as fighting for a share of social-media advertising revenue. The total Metaverse market size may reach 2.7x that of just gaming software, services and advertising revenue.”

🚚 Locomation poised to start rolling out autonomous trucking technology at scale in 2023 – Ashley Coker, FreightWaves | “Locomation has three bonafide contracts to deliver over 2,600 autonomous truck systems starting in 2023. In the meantime, fleets and their shipper customers are implementing the route optimization service today to start gaining efficiencies while ensuring they are prepared to launch their autonomous trucking services when the systems are installed.”

🚄 Elon Musk: The Boring Company’s plan for high-speed travel is off to a slow start – Lex, FT | “In 2013, Musk proposed a tube that would carry passengers at 700 miles per hour. In 2017, he proposed plans for a hyperloop between New York and Washington DC. But deals struck so far are for short, inner-city trips at slow speeds. The 1.7 miles of tunnels created in Las Vegas transports passengers in manned vehicles at 35 miles per hour. The Boring Company remains set on high-speed travel. Morgan Stanley posits the potential for 1,800 miles of tunnels built in major US cities. If networks are widespread the possible integration with autonomous Tesla electric vehicles could lift sales across Musk’s companies. Results may take another decade, but improving transportation would make the wait worthwhile.”

🌐 Disrupting science: How remote collaboration impacts innovation – Carl Benedikt Frey, Giorgio Presidente, VoxEU | “Face-to-face interactions are critical for the cross-fertilisation of ideas. Yet, the share of geographically distributed teams in scientific research has steadily risen since the 1960s and accelerated with the ICT revolution of the 1990s. … Remote collaboration negatively impacted breakthrough discoveries [between 1961 and 2010], but the effect reversed after 2010, likely due to improvements in technologies that support effective remote collaboration at distance. … The debate on the future of economic growth is ongoing . One view is that productivity growth tends to follow a J-curve as complementary investments and organisational changes are required to realise the benefits of new technologies, making a productivity resurgence likely, as happened with electricity and steam power. We agree. Our findings suggest that harnessing the benefits of the ICT revolution for remote collaboration similarly required complementary investments in technologies that support remote work. The COVID-19 pandemic has sparked a marked acceleration in patenting related to remote work technologies. It might well also spark a revival of disruptive science and faster productivity growth.

⚡ This company wants to use carbon dioxide to store renewable power on the grid – Casey Crownhart, MIT Tech Review | “Energy Dome thinks carbon dioxide could have a role to play. The company says its demonstration plant, where it has designed and begun trials, will soon be able to safely and cheaply store energy using carbon dioxide sourced from commercial vendors. Compressing gases to store energy isn’t new: for decades, a few facilities around the world have been pumping air into huge underground caverns under pressure and then using it to generate electricity in a natural gas power plant. But Energy Dome turned to carbon dioxide because of its physics.”