The original source of energy for all economic activity was the perfectly placed nuclear fusion reactor in the sky, also known as the sun. The nuclear fission reactor in the earth’s core that provides over half of the earth’s heat is critical too, of course. Through photosynthesis, sunlight generates vegetative growth, which powers the food chain, and ultimately human muscle power, which is the starting point for economic growth. An overwhelming majority of economic growth throughout history has been a direct or indirect result of increased energy consumption and improved energy efficiency.
Prior to the Industrial Revolution, economic growth was essentially zero (other than the increase in economic activity due to population growth). People burned wood for heat and cooking and relied on muscle power, wind and water mills to grind grain. Agriculture technology harnessing animals to plows added energy above and beyond what humans could supply themselves to food production. Wind power and shipbuilding technology allowed that production to be moved from place to place efficiently over water. The economic output grew very slowly, and this growth mostly allowed for population growth. Savings were essentially non-existent because almost everything produced was quickly used and life didn’t change much from generation to generation.
Growth began to happen rapidly in the mid-1700’s with the invention of the coal powered steam engine that powered manufacturing facilities (think textile mills) and long-distance travel over land (trains). Because of this usage of the new source of efficient power, productivity growth exploded. And along with productivity growth, standards of living began improving rapidly. The key element was that finding, mining, and burning coal allowed each human to use vastly more energy than before. This meant that capital could grow from savings (the difference between production and consumption) because less energy went into the finding, mining, and transportation of coal than the energy produced by the burning of that coal. As coal use and and production increased the cost of producing it fell and more technologies using it were developed. Coal’s share of global energy usage grew from 1.7% in 1800 to 47.2% in 1900.
The concept of investing a smaller amount of energy into building a power plant and producing the fuel for that plan in order to get a larger amount of produced energy out of the plant is known as Energy Return on Energy Invested (EROEI). EROEI has powered most economic growth. As humans have been able to invest energy in the production of more energy standards of living have increased. In 1859 the first commercial oil well was was built in Pennsylvania. The internal combustion engine lead to automobiles and the small-scale deployment of this massively efficient energy source. The invention of the Bunsen burner created new opportunities to use natural gas. Pipelines were built and gas took over more and more power market share in home heating and cooking. The development of electricity and the power grid allowed for efficient real-time transfer of power from one location to another. But importantly, electricity isn’t a source of energy but rather a form of energy that allows for long-range and almost instantaneous transmission of energy. This is sometimes overlooked in our current infatuation with electric vehicles (EV). EVs use electricity, but that electricity must be produced. Often that production is anything but green.
Returning to energy driven economic growth, most real economic growth (the per capita increase in productivity) can be explained by the substantial increase in energy return on investment. It's likely the most underappreciated concept in all of economics.
A high EROEI means that we don't have to reinvest much energy in order to get more energy. The massive surplus in energy results in accumulated wealth in society, namely capital. Energy return on energy literally drives our capitalist economic system. Human power is roughly 100 Watts. When agriculture and domesticated animals were first employed, that 100 Watts turned into 700 Watts per animal. But when steam powered tractors arrived and were soon replaced with 700 horsepower tractors, a mind-boggling improvement in productivity resulted.
Energy based productivity resulted in in excess savings. The excess savings could then be reinvested into more tractors, more machinery. Innovation and economic growth took off. This exponential ramp in economic growth is something that we modern homo sapiens take for granted. It's why we think our investments should earn a return. It's why we anticipate wealth compounding and expect leisurely retirements. It's all about the productivity miracle that energy return on invested energy allowed. But it's only a modern phenomenon and definitely not something we should take for granted.
There is a concept relating economic growth to harnessing more and more dense forms of energy. This is referred to as "climbing the energy density ladder". Consider the improvements of shipbuilding as the power source transitioned from oars (muscle power), to wind powered ships, to coal powered ships, to oil powered ships, and then ultimately to nuclear aircraft carriers and submarines. Successful energy transitions have always climbed the energy density ladder. The graphic below demonstrates both the concept of energy density and also the astonishing superiority of nuclear energy by comparing the various "amount of stuff" with the same amount of energy among different fuel sources.
Environmental goals are generally the reduction of CO2 and other greenhouse gasses along with less detrimental impact of all kinds on our natural environment (pollution, impact on various species, unsightly and intrusive industrial installations). Let's put all politics aside and consider these as generally worthy goals. The problem is that we simply won't get there without some incredibly sophisticated energy policies. It's not enough to just wring our hands over CO2 emissions and pretend we can all just make do with less energy. If we want to put coal out of business, we need to build natural gas pipelines, not block them. If we want to put natural gas out of business, we need to build nuclear.
Of course, we ultimately need many sources of energy and will for a long time. Renewables have their place and natural can play a key role in leveling the flow of electricity when renewables vary. But every wasted campaign and every malinvested dollar brings us farther away from the goal of smart, environmentally-friendly and economically-pragmatic energy production. Historically, if you put policies in place that make people poorer, they vote people into office that reverse those policies. Moving toward much less energy density makes people poorer. Some low carbon technologies (e.g. burning biomass) have a horrible pollution side affect with massive health costs.
Usage and wastage of land and materials to create energy must be a key consideration as well. To produce 1,000 megawatts, a solar plant would need ton host about 3 million solar panels deployed over 75 square miles. Since the sun needs to be shining, solar plants operate only about 25% of the time. A 1,000 megawatt windfarm requires 430 massive wind turbines filling 360 square miles (and the wind must be blowing, so these only operate about 34% of the time). A 1,000 megawatt nuclear facility can be built on less than 1 square mile and can run at capacity over 92% of the time regardless of weather.
I've admittedly spent few words on the drawbacks of nuclear energy. Critics of nuclear power point to the challenges of safe plant operation and waste disposal. Perhaps a topic for a future newsletter, but while I certainly acknowledge that these are big political and public perception problems right now, I do not believe either are technological problems. Nothing is perfect nor perfectly safe, but nuclear energy has demonstrated a remarkable safety record and even the worst possible accidents at nuclear plants were less destructive than other industrial accidents. Nuclear energy actually releases less radiation into the environment than any other major energy source and the entirety of nuclear waste produced over the past 60 years could be contained in a football field sized area approximately ten feet deep. Scientists now estimate that about 90% of that nuclear waste could be recycled.
The current arguments and disagreements about nuclear power, whether it is safe, and whether it is environmentally friendly, are both the challenge and the opportunity. I think it is likely that nuclear power (fission first and then ultimately fusion), will be the answer we are looking for and will power environmental improvement and economic growth in the coming decades and centuries. I think we're going to figure out how to demonstrate safety and environmental benefits that will become increasingly obvious. After all, hasn't nuclear energy shone down on us every morning and warmed healing hot springs since the dawn of time? Nuclear is the answer. It always has been.
References:
https://www.world-nuclear.org/information-library/energy-and-the-environment/energy-return-on-investment.aspx
https://blogs.scientificamerican.com/observations/nuclear-fission-confirmed-as-source-of-more-than-half-of-earths-heat/
https://www.thegwpf.org/content/uploads/2018/05/Paunio-EnergyLadder.pdf
https://www.energy.gov/ne/articles/infographic-how-much-power-does-nuclear-reactor-produce
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