Each great phase of economic and social advance requires a new era in energy availability. Some go far further than this. The great Ian Morris concluded that “energy capture determines values” and that our whole world view is predicated on fossil fuels or expanded slightly that “the sources of energy available to a society set the limits on what kind of values can flourish”. Energy capture not culture, religion or moral philosophy explains our mentalities and values.
Whatever we may make of such a fundamentalist version of our society what seems to us to fall into the category of the well-nigh inevitable is that the age of fossil fuels is drawing to an end. No, we cannot tell anyone precisely when this will happen and no, of course it doesn’t mean that events, political or economic will not permit a last hurrah in hydrocarbon pricing. Surely we’ve all learnt that predicting the Middle East is imprudent.
...what seems to us to fall into the category of the well-nigh inevitable is that the age of fossil fuels is drawing to an end
But in anything other than the shortest of horizons this matters not a jot. The pricing of renewables is continuing to fall so convincingly and the increase in the installed base is rising so sharply that this is becoming acutely embarrassing for traditional forecasters such as the International Energy Agency (IEA).
These developments are now structurally encouraging for reasons that we have previously touched on and have seen as critical for investment cogency. As The Santa Fe Institute hypothesises the best prediction about future prices is contained in past price progress... So if nuclear costs rise rather than fall most years then it’s better not to bet on trend inversion. The opposite applies for solar and wind power. The trend of price declines and performance gains has been sufficiently persistent and exponential, so that what once seemed forlorn green posturing is now emergent economic reality. Further progress will make this clear even to the most jaundiced oil obsessive. This is backed by the Kurzweil Law of exponential doubling: seven doublings from 0.01% take us to 1% and seven more to 100%. We are at one percent now.
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