Lure of plenty – The transition in the energy system
The future of energy beckons with a seductive vision: a digital world of electrification and abundance replaces the industrial world of oil and scarcity. But what will be needed in such a society the day after tomorrow?
This text is based on an excerpt from the study "A New World of Energy" of the GDI, which can be downloaded from our website for free.
Over the course of the 21st century, the global energy system will transform from a system of scarcity to one of abundance. Not only will sufficient energy be available whenever and wherever it is needed, it will also come entirely from non-fossil sources. The old industrial world of oil will be succeeded by the new digital world of electricity. But what will be needed in such a society the day after tomorrow?
No crystal ball can tell us the answer to this question. It will emerge in that transitional society that lies between today’s scarcity and the abundance of the future. Just like the energy system progresses along a string of transitional technologies, this transitional society will have to emerge. It will experience, advance and, ultimately, facilitate the transition.
State institutions will play a leading role in our transition for three key reasons. The first reason is purely material: in an electrified world, the nation state will become more important, as globally most power grids are state-owned. The second reason is economic: who will invest in an energy system from which ultimately no profit can be made? The third reason is political: the development towards a society of abundance will happen mainly through crises and upheaval. In such situations, even the most liberal societies call on the state for help almost automatically.
Every shift in the energy industry is an opportunity for action, no matter if it is caused by humans or nature. It is a change to make our energy system more resilient and sustainable.
But these areas also look different than before. In the past, control of the big players was the most efficient instrument available to state institutions. Big business and big government were “frenemies”, so to speak. This will change radically in the transitional society. Hundreds of thousands of new producers will enter the market; prices and quantities will fluctuate wildly; technical standards will struggle to keep up with technological change; opportunities to manipulate the system will increase in sophistication and diversity. Regulation will have to become faster and more flexible, without neglecting the basic need for energy security.