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Energy Realism, Energy Optimism: Julian L. Simon Memorial Award Remarks

“I might add a prediction—that the hydrocarbon energy age could still be young, even quite young. The much-hyped emergence of a new renewable energy era by mid-century is less our energy future than our energy past…”

I am honored to receive the [2002] Julian Simon award tonight. My thanks go to the Simon family and the Competitive Enterprise Institute for having this annual award to recognize and encourage new contributions in the “sustainable development” field that Simon pioneered.

My appreciation also goes out to a number of groups within the classical liberal “structure of production” that have supported my intellectual development over the last quarter century, and in particular the Institute for Humane Studies at George Mason University, the Cato Institute, and the Atlas Economic Research Foundation.

Julian Simon was very interested in energy and energy-environmental issues. I have identified six of his themes in this area:

  • Energy is “the master resource” because energy is pervasive in industrial activity, and energy allows us to transform resources into more valuable goods and services (such as turning salt water into drinking water, a very energy-intensive process)
  • Natural resources originate from the mind, not the ground, and therefore are not depletable. Thus energy can be best understood as a pyramid of increasing substitutability and thus supply and not a “bell curve” with any particular hydrocarbon energy.
  • The average person in market settings creates (transforms) more inanimate energy than he or she consumes.
  • The average person in market settings improves the natural environment more than he or she despoils it.
  • Anthropogenic (or man-made) climate change has benefits, not only costs, and human ingenuity can accentuate the positives and mitigate the negatives.
  • Virtually every economic and environmental indicator of human welfare related to energy is positive when viewed over time, and these trends can continue indefinitely if the right institutional incentives can unleash the ultimate resource. And Julian Simon would bet on it!

The conclusion from the Simon worldview is that the energy Malthusians are wrong. The hydrocarbon-based energy economy is sustainable and becoming more so in market settings around the world.

I might add a prediction—that the hydrocarbon energy age could still be young, even quite young. The much-hyped emergence of a new renewable energy era by mid-century is less our energy future than our energy past when, indeed, renewables dominated the inanimate energy market. The next energy period is most likely to be the enhanced hydrocarbon era, marked by a technological progression whereby a variety of hydrocarbon energies have become almost perfect substitutes for each other in cleaner and cheaper ways.

The recent commercialization of oil sands and orimulsion is creating a whole new competitive field for crude oil. Uneconomic natural gas reserves can now be upgraded into super-clean oil products. Add this to new combustion technologies lowering emissions and innovations such as the hybrid (gas/electric) vehicles, and the renewable, hydrogen-based energy economy seems as remote today as it was decades ago.

Progress has been made in the very contentious energy debate, thanks in part to the intellectual and marketing efforts of Julian Simon. Paul and Ann Ehrlich in their 1996 book, Betrayal of Science and Reason, admitted that “depleting” energies were not becoming scarcer and the air was growing cleaner. The Ehrlichs’ also stated that global cooling was not the problem Stephen Schneider and others once thought. The problem now was officially global warming.

Yesterday, the high profile energy debate was between Julian Simon and Paul Ehrlich. Today, the high profile debate is between Bjorn Lomborg and John Holdren. Holdren is the eminent Harvard Professor who is upset that he and his fellow “scientists” have lost valuable time by having to refute Dr. Lomborg’s claims made in The Skeptical Environmentalist. (Check for yourself—http://www.sciam.com). Holdren now says that inquiry about oil depletion is “asking the wrong question.” He says that the debate is not about “running out of energy” but “running out of cheap energy” and “running out of environment.” Say what? We are not running out of cheap energy and we are not running out of environment, according to the facts.

Holdren, who once advocated “de-developing” the United States to reduce energy usage, now says, “Affordable energy in ample quantities is the lifeblood of the industrial societies and a prerequisite for the economic development of the others.” This is the high ground that must be seized with energy and energy-environmental policy. The energy-is-good view gives a new urgency to the views of Julian Simon and the energy realist school—those individuals and institutions that support affordable, plentiful, reliable energy for not only the energy rich but also the 1.6 billion energy poor.

Conclusion

Ideas have consequences, and facts do too. And facts are what Julian Simon always brought to the fore. The energy realists are winning the intellectual war with energy sustainability whether or not the old-school depletionists or new-school climate alarmists realize it. New forms of hydrocarbon energies are sprouting up for the 21st century and far beyond, and the human influence on climate is simply not producing the crisis signs that the alarmists warn us about.

The political war concerning energy sustainability is another matter. Many battles remain, but with the legacy of Julian Simon and organizations such as the Competitive Enterprise Institute, I am confident that we can win intellectual war and triumph in many more political battles than are lost. This is good news indeed given society’s growing need for and expectations of the “master resource.”

——————

These comments were given on May 22, 2002, at the Capital Hilton, Washington, D.C. in Washington, DC at the annual CEI dinner. Bradley is author of Julian Simon and the Triumph of Energy Sustainability (ALEC: 2000).

3 comments

1 Eddie Devere { 02.14.13 at 11:51 am }

It’s good that there have been people like to Julian Simon to debunk peak oil (and peak food, coal, etc…) thinkers, but I think that it’s important state things as scientifically as possible. So, I’d like to comment on some of the bullet points in the article.

Bullet#1: Exergy is the master resource…absolutely correct. We use exergy to find more exergy, which allows us to find more exergy.
Bullet#2: Exergy is not a creation of the human mind. Bacteria were using coal,oil & natural gas for their exergy source long before humans were around. The human mind doesn’t create the resource. The human mind creates devices that allows us to turn the existing exergy source into growth of life. (But so do other life forms.) Before the invention of the device (such as a coal boiler), the coal was still a resource. It’s just that we would have likely spent more useful work mining the coal than we would have generated in the coal boiler/steam turbine.
Due to the Second Law of Thermo, exergy decreases with time. So, while we use exergy to find more exergy, there will ultimately be a point in time in which there is no exergy left. (But this is trillions of years away, and not of concern to us today.)
Bullet#3: “The average person in market settings creates (transforms) more inanimate energy than he or she consumes.” This statement is correct if you replace “inanimate energy” with the term “useful work.” (Which is probably what you mean to say, it’s just that being a nit-picky physicist, I like make sure that people are using the term energy correctly.) The 1st Law of Thermo states that “energy is conserved.” What “useful life forms” do is to grow the capability to generate “useful work”, such as electricity.
Bullet#4: “The average person in market settings improves the natural environment more than he or she despoils it.” What is your definition of improvement for the natural environment? My definition of an improved environment is an environment with more life forms with more capability to do useful work. Some people do this, and some people destroy more life forms and useful work than they create.
Bullet#5: In the short-term, according to the 14 studies as of 2008, the benefits of warmer nights and warmer winters will outweigh the cost of slightly warmer days and summers and the cost of higher sea levels. But in the long run, the costs exceed the benefits.
Eventually, we will need to regulate CO2 emissions because (a) it is a green house gas, (b) it is an acid gas, and (c) it is a toxic gas at levels near 5000 ppm (in the same way that H2S is toxic at lower ppm levels.)
Oil field workers who use CO2 for Enhanced Oil Recovery are trained in the hazards of working with carbon dioxide. CO2 is a lot more dangerous than N2. My gut feeling is that 600 ppm of CO2 may be a safe level. 1000 ppm of CO2 makes me nervous. I see no need to return to 300 ppm. (Though, I understand 600 ppm makes a lot of people nervous who live near the coast or in a desert.)
Bullet#6: We should be optimistic about the future. There are still so many useful devices left to invent. Over time, we will grow and exergy is the ultimate source of that growth.

2 Energy Realism, Energy Optimism: Julian L. Simon Memorial Award Remarks » coalitionoffreedom.com { 02.17.13 at 9:21 pm }

[...] Energy Realism, Energy Optimism: Julian L. Simon Memorial Award Remarks18 Feb 2013JonBy rbradley [...]

3 Jon Boone { 02.18.13 at 11:49 am }

Eddie DeVere’s comments here generally add to the value of this post. As he implies (and as Einstein showed), energy is everything and in all things. But it is “useful energy,” which the term exergy captures, that can be converted (and not created) by machines (and all organized matter should be considered machines) to create power–the ability to do work over time. The idea of energy density also is a useful way to think about spatially concentrated forms of exergy that provide more bang for the buck, which today allows us to fuel power dense systems integrated and convergent in space and time. This integrated convergence is the hallmark of cultural modernity, literally lighting the dark and raising all boats.

DeVere’s fourth bullet, the one in which he rightly questions how humanity impacts the “natural environment,” is really what is at issue. Humanity is of course part of the natural world. But what, in a dynamic, always changing environment, should a “proper” relationship between culture and wild nature be? This is ALWAYS the question…. And its answer should be the foundation of energy policy.

Bullet Five, which focuses upon “healthy “notions of CO2 dosage both to individuals and the world generally, contains ideas worth considering. But those who do so should carefully separate their inquiry from the cant and sloganeering invoked by climatism.

Finally, I’m agnostic about the future. If political culture generally embraces inculcating civil ideas about freedom and enterprise, and better understands the way exergy, power, and productivity can combine to unleash human creative potential (which is real measure of productivity–not fashionable and quickly disposable gadgets), allowing substantial choices in how people “spend” their time, then, yes, this is a future devoutly to be wished…. But such a future is not at all assured. Few should be “optimistic,” given the shriveled state of world politics today.

Nonetheless, I love the contrails that flow out from myriads of niche markets–from dog shows (just think about the cascading numbers of groomers, trainers, nutritionists, ad campaigners, convention halls, etc, etc, involved in this one “small” multibillion dollar niche market). The productive range of such niches seems infinite, each self sustaining.

This is the real wealth of the world, as Adam Smith knew.

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