Amy Myers Jaffe, the Managing director of Climate Policy Lab and research professor at Tufts University Fletcher School, brings her enviable experience in the field of energy to bear in her revealing, relevant and rousing book, “Energy’s Digital Future.” In an era where the conventional concept of the term energy is almost turning out to be anachronistic, Jaffe’s book is all about the perils of creating path dependencies that may lock in the world in lock step with a set of infeasible alternatives, and the solutions that policy makers, individuals and institutions can employ to extricate the world from such path dependencies. Although primarily written from an American perspective, “Energy’s Digital Future” finds universal bearing across the globe, in so far as its core propositions are concerned.
Jaffe informs her readers that the concept of electric cars, that is assuming so much of traction these days, was birthed as early as in the 1900s when electric cars, taxis and trolleys were commonplace in the United States. General Electric even developed a charging hydrant called the “electrant” for these vehicles. In fact, Henry Ford and the inveterate inventor Thomas Edison were close to collaborating on a technology involving batteries. However the First World War put paid to the pioneering efforts of the two visionaries. The first path dependency on gasoline was created when in 1921, Thomas Midgley discovered the anti-knock properties of tetraethyl-leaded gasoline. Since then we have created an energy world with inter linked path dependencies that has seen trillions of dollars being sunk into pipelines, and behemoth oil and gas infrastructures.
But as the pitfalls of fossil fuels and the dangers of climate change are becoming all too real, the world is seeing a revolutionary and paradigm shift towards digital energy. We are moving towards what the late Nobel Prize winning chemist, Richard Smalley termed, ‘new basis for energy prosperity.’ Transformational technologies such as on-demand travel services, automated vehicles and robot taxis, data and GPS assisted logistics, decentralized electricity microgrids and 3-dimensional printing all pose significant challenges to the entrenched concept of traditional energy. Even though some of these technologies are extremely exorbitant, it is only a matter of time before the advantages bestowed by economies of scale would start kicking in making these novel technologies common.
However as Jaffe illustrates, the United States seems to be exhibiting a degree of lethargy in embracing this change. From opting out of the Paris Climate Accord (at the time of writing, President Joseph Biden has rescinded his predecessor’s decision, thereby reinstating the US back into the Paris Agreement) to scrimping on Research & Development, the world’s foremost superpower seems to be ceding miles and acreage to China, in the rapidly evolving spread of Digital Energy. Quoting Robert Atkinson, President of the Technology and Innovation Foundation, a nonpartisan think tank, “to the extent the United States continues to lose technological capabilities to China, US technological advantage in defense over China will diminish, if not evaporate, as US capabilities wither and Chinese strengthen.” A classic case in point being the Digital collaborations being proposed by Xi Jing Ping under his grandiose Belt and Road Initiative, a gargantuan scheme that proposes to lock in a greater part of the world in a “China-dependent trap”.
Russia currently delivers 500,000 barrels of crude oil a day to China via the East Siberia-Pacific Ocean (“ESPO”) crude oil pipeline. These oil deliveries are a “payoff” for a whopping $25billion Chinese loan to the Russian pipeline entity Transneft and state oil monolith Rosneft. As acclaimed author, Bruno Macaes writes in his book, Belt And Road Initiative: A Chinese World Order, “in December 2017, Sri Lanka formally handed control of Hambantota port to China in exchange for writing down the country’s debt. Under a $1.1 billion deal, Chinese firms now hold a 70 percent stake in the port and a 99 year lease agreement to operate it.”
Whether it be in the realm of Solar Power, Artificial Intelligence, Robotics or Drone Technologies, China’s ambitions are untrammeled and unrestrained. However, such technologies represent dual-use capabilities, that is they can be employed for enhancing both civilian and military capabilities. Hence as Jaffe educates her readers, the aspersions cast over and the trepidations associated with Chinese firms such as ZTE and Huawei Technologies. The latter firm in particular, with a 15% global market share over 5G technology has been rumoured to be a state sponsored vehicle for aiding and abetting Intellectual Property (“IP”) theft.
However it is not all gloom and doom for the US. This is where the meticulous, measured and methodical research of Jaffe finds resonance in the book. One can find inspiration in the innovation ecosystem that was incubated by DARPA that spawned revolutionary advances in the field of Science and Technology. With the burgeoning discoveries of shale in the Permian basin, the US has even become a net exporter of oil, thereby negating the doomsday prophesies of geologists and commentators such as Colin Campbell, Kenneth Deffeyes, Marion King Hubbert and the rest. Hence the US now needs to focus attention on “peak” demands rather than “peak” supplies. The single most important economic concept in the dynamics of climate change, according to the Yale Economist William Nordhaus is the “social cost of carbon.” This represents “cost in dollars of the long-term damage done by one ton of carbon dioxide in a given year.” This makes Carbon Capture Utilization and Storage (“CCUS”) technologies critical.
Jaffe provides a set of recommendations which the US can mull about in gaining ascendancy over China and the rest of the world in a new Digital Energy future:
- Creating public-private energy R&D partnerships modeled on the likes of Sematech (Semi-Conductor Manufacturing Technology). Sematech represented a consortium of 14 American semi-conductor manufacturers, and was instituted to counter the threat of Japanese expertise in the field of semi-conductor technology;
- The US policy with respect to technologies such as AI, AVs and drones etc must take into account the potential of these technologies to reduce carbon emissions in sectors such as transportation, electricity and manufacturing;
- Permitting utilities to share in revenue gains and cost savings from installing storage that can balance supply and demand on the grid and optimize system performance;
- Facilitate utilities and owners to be “prosumers”, that is treating them as both owners and integrators of range of power suppliers;
- Transparency on the part of autonomous fleet providers and owners in so far as collection and use of passenger data is concerned; and
- A more nuanced policy in so far as ties with China are concerned in the areas of carbon capture and sequestration, Direct Air Capture, clean water technologies, health and food supplies
Alexander Karsner , a Senior Strategist at X, the innovation lab of Alphabet Inc describes an inflection point by using the phrase “Kodak Moment.” The United States might just be on the verge of such a Kodak Moment in so far, as the future and success of Digital Energies are concerned.
Amy Myers Jaffe’s timely and essential book might just have brought us a ticket for a ringside view of such an inflection point.
(Energy’s Digital Future: Harnessing Innovation for American Resilience and National Security by Amy Myers Jaffe is published by Columbia University Press, and will be released on the 13th of April, 2021)