Technology, Innovation, and Renewable Energy

Technology and innovation drive our economy -- now it’s time for renewable energy

BLOG POST- March 21, 2018

Throughout the history of human evolution the driving force behind economic growth has been science and technology. Even the earliest humans who were successful in mastering the art of agriculture witnessed the dramatic growth of settlements, trade and prosperity due to that one fundamental fact.

To be sure, the industrial revolution was fuelled by the discovery of new energy sources that lended themselves to mass production, transportation, and commercialization. This in turn paved the way toward rapid industrialization and globalization, especially for countries that had reliable access to resources, fossil fuels in particular, which drove these economies toward global domination. Without discovering new and better ways to extract, refine and transport fossil fuels, the industrial revolution would not have occurred.

Similarly, other major technological innovations have dramatically impacted society; while at the same time introducing unprecedented opportunities in entirely new business sectors. The most recent example is the Internet, which in the last two decades has produced some of the world’s largest corporations, including Facebook, Amazon, Google, and Netflix. To say the least these companies have massively disrupted what were once dominant industry players, many of which are now either extinct or heading in that direction.

The introduction of these innovations can all be tied to a case of necessity. For early humans, living a nomadic life had inherent risks, the least of which were access to secure food supplies and protection over life and limb. The nomadic existence didn’t support collective security, trade, and commerce, and eventually education and further innovation. Large scale agriculture made sense in the same way access to new markets makes sense to a modern capitalist society.

By almost any measure, the cost of industrialization, in combination with globalization, has been high in terms of environmental degradation. Importing Mexican supplied strawberries, for example, is more economical than buying locally because the environmental impact is not factored into the product price when the strawberries finally reach grocery store shelves thousands of miles away.

Ironically, those who support the idea of “bringing jobs home” should be in favor of carbon taxes if for no other reason than they level the playing field for local producers. If the environmental cost of transporting strawberries is greater than the lower economies of scale typically experienced by your local farmer then suddenly the latter is significantly more competitive. This is better for both the economy and the environment.

Putting a price on carbon emissions therefore changes fundamentally the costs of production, rewriting the rules that once dictated international trade. The incentive, by necessity, will be to achieve minimal environmental impact in order to be competitive. Logically, the market has already responded with the dramatic growth of alternative energy. Eventually these technologies will be commoditized and become pervasive. This is true of any massively disruptive technology, including cellphones, smart TVs, home computers and other technological devices that are now part of most people’s daily lives.

This, of course, makes mute the discussion over the validity of man-made global warming. Even for those who deny its existence there is no debate over the fact that this entirely new technology represents enormous economic opportunities in the magnitude of the fossil fuel industry and its relationship to the industrial revolution. If history provides any guidance whatsoever, alternative energy will therefore be the next major driver of economic growth, regardless of one’s perspective on global warming.