Have we become energy blind?

We live in truly troubling times. If it were not for suicidal economic decisions (in Germany, and Europe more broadly), and geopolitical instability due to an incompetent hegemon (the US), and revisionist powers (China, Russia, and Iran), as well as states with huge potential that are unfortunately politically failing (Venezuela), the world could be entering a period of unprecedented prosperity.

This is because the world would have access to an ever larger amount of energy, and energy is the key to prosperity — always and everywhere. We just have forgotten about this, so let's take a closer look.

The history of economic development is not only a story of institutional innovations and reforms that enabled free markets. It is also a story of constant progress in finding and creating ever more efficient energy sources, culminating in the Industrial Revolution of the 18th century.  The Industrial Revolution was in many ways an energy revolution, characterised by the shift away from wood, animal, and human labour to the first industries powered by machines and hydrocarbons (coal, oil, and gas). 

At every step along energy’s evolution, human beings became more prosperous — having more energy freed up the time and capacity to do additional things. Once the task of grinding cereals into flour is no longer done manually but by wind or watermills, it frees up both time and energy for other activities. And we still end up with more flour than before. The emerging calorie surplus allows you to have people engaging in activities like science and medicine, because they can be fed, despite not contributing directly to food production itself. This allows societies to become ever more productive and live longer lives.

The current yearly energy use of the world is close to the equivalent of 100 billion barrels of oil, about the same amount of energy created by 500 billion human workers.  The energy content of a barrel of oil is 5,700,000 British Thermal Units (BTUs, the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit) or 1700 kWh of work potential. For comparison, it would take the average person 4.5 years to generate the same amount of work as one barrel of oil.

The transformation from manual labour to machines did not just multiply industrial output: it also made economic models based on slavery and forced labour uncompetitive. It is no coincidence after the Industrial Revolution that Great Britain also became the leading force in abolishing slavery. Or that during the American Civil War, it was the industrialised North that fought against, and defeated, the slave-holding South. Certainly, the energy-driven industrialisation had its downsides as well, especially in exploiting the new urban working class. It remains important, however, to put this into perspective as well. It took humanity millennia to abolish slavery, but a few centuries to transform an impoverished working class into a prosperous middle class.

It also allowed more and more people to move from the agricultural sector to other sectors of the economy, as industrialised farming produced more crops with less labour. This freed up human capital for other endeavours, allowing human beings to make a living based on skills other than physical labour. Between 1800 and 2020, the required labour to produce one kilogramme of grain dropped by more than 98 per cent. Corn yields in the United States rose from 2 tons per hectare in 1920 to 11 tons per hectare in 2020.  This trend happened worldwide: as agriculture became more energy intensive, outputs increased significantly. Since 1961 cereal production and cereal yields have grown by over 200 per cent worldwide.  In the 100 years between 1900 and 2000, the global population grew approximately 400 per cent, compared to an expansion of available farmland of only about 40 per cent.

The energy used in agriculture has grown by a factor of 90, due to the widespread use of energy embedded in agrochemicals and fuels directly consumed by machinery. From food to material comforts, an abundant and steady supply of energy makes all of it possible. It is the master resource that ultimately decides the level of prosperity a society can maintain.

However, western societies have become totally hostile to the concept of energy (particularly from fossil fuels). Both the public and policymakers seem to believe our current standards of living can be maintained even as energy becomes a scarcer and more expensive resource.

Once we start remembering energy's importance, maybe we can get the world back on track to harness the still untapped potential for growth and future prosperity.