Revolutions used to be few and far between. James Watt’s steam engine, developed in 1781, set the stage for the first industrial revolution. But it wasn’t until a century later that the widespread adoption of electricity and the internal combustion engine brought about the second industrial revolution.
The information age didn’t really get going until the 1970’s and that’s led to what to what many are now calling the new industrial revolution, which incorporates computer aided design and advanced fabrication techniques like 3D printing. However, the next revolution, in energy, is already underway.
While the drop in price for fossil fuels has grabbed most of the headlines lately, Citibank predicts that the shale boom will merely serve as a bridge to get us to a new era of renewable energy. This revolution, if anything, will be more far reaching than the others. While the earlier revolutions empowered large enterprises, this one might very well undo them. ...
... The last century was in large part driven by scale advantages. The bigger you were, the more efficient you would become. Those efficiencies would enable enterprises to own and control more resources, which would increase bargaining power and enhance the dominance of the firm.
Initially, information technology bolstered these trends. Only large organizations were able to afford computer systems that could help them administer resources by tracking accounting, maintenance and human resources. However, with the rise of personal computing and the Internet, that began to change. ...
Most of the populist support for renewable energy comes from concern over climate change. I am not someone who is persuaded that apocalyptic doom is certain without swift and radical restructuring of the global economy. I am persuaded that increasing CO2 at present rates has the potential to create highly undesirable, but imprecisely understood, consequences down the road. I see CO2 as a risk management issue. All things being equal, changes that minimize risk are a good thing. But since things are not equal, other considerations must be weighed as well.
Equally important to me, if not more so, is human freedom and well-being. Decentralized renewable energy would create enormous opportunity around the world while simultaneously reducing much of the geopolitical strife that emerges from the energy sector. Expanded opportunity has a way of translating into greater prosperity. Prosperous people are better equipped to handle climate change adaptations that may be required. Decentralized renewable energy both reduces the amount of CO2 emitted while improving the chances of smooth adaptation to changes in climate.
Critics are prone to look at renewable energy - and I'll add new generation nuclear power - as incapable of having a significant impact for many decades if at all. Yet I keep imaging myself in 1895 looking at expanding U.S. cities and the problem of horse transportation. There is a guy welding a frame between two bicycles and motorizing the contraption so he can become auto-mobile. How many would have predicted what transportation would look like in 1920 and later?
Prior to the industrial revolution, economies of scale were usually marginal or nonexistent. The Industrial Revolution made centralization, and the economies of scale that come with it, possible. The Information revolution is decentralizing the economy in some fundamental ways, but it is a networked decentralization. That is why I am skeptical of the doomsayers about the world 50 and 100 years into the future. We tend to overestimate how much change can happen in the near term - say five years - but radically underestimate what can happen in twenty years.