On Energy Independence Day: a Digest essay

In the United States today, it is the 4th of July, it is Independence Day, but around the world perhaps we could celebrate something just as important, Energy Independence Day or, even more, Energy Security Day.

For, as we have learned with the invasion of Ukraine, none of us are energy secure until we are all secure. No matter where molecules are made or found, the price of molecules is an international commodity. In markets, supply interruption leads to price crisis. For the developed world, the rollercoaster of prices can tip an economy into recession. For the developing world, it brings crises that wreck economies, de-rail development, and strain the local currency in a tsunami of demand for dollars needed to pay for molecules whose price is on the rise.

The answer to the pressure of foreign prices is domestic production, and it’s one of the reasons that I have never shared the enthusiasm of most people for free and unfettered trade — because trade is never free, rarely fair, hardly unfettered, and especially so in energy. Domestic energy production can be stimulated, should be protected. If only to protect economies from the ruinous swings of international energy prices and the high cost of hedging.

And, the bioeconomy will provide the lungs of the molecule economy for some time to come. Yes, electricity can make methanol from water and air, and from methanol we can make many, many things — but we are better off developing organisms that can make things from bioeconomy feedstocks, for the sun and plants have given us a set of feedstocks which are much more favorable, thermodynamically, from which to start. Not everything is made easier pushing up a hill.

Yes, petroleum gives us cheap molecules, and petroleum will be with us a little longer. But, please, I think we know the dangers now of depending on some dangerous supply chain simply because it is cheap. Lot of companies have re-thought their off-shoring for on-shoring, for this reason — not in a search for low costs, but for reliability and low-impact. 

And, when it comes to reliability and low-impact, a right-sized bioeconomy really shines. There’s been far too much talk and debate over the use of international commodity flows to supply molecules for the world — and there’s nothing wrong with a certain amount of import and export, but the future of molecules is not about vast opportunities in the north of Brazil or the unused acreage of Indonesia. It ought to be about making more at home to replace the use of petroleum and accelerate its decline as fast as can be done.

If we had been sensible in the 1990s and reduced petroleum then, we wouldn’t be in such a time squeeze now. Billions are going out in subsidies, expensive mandates, tax credits, carbon offsets and so forth in a giant- planet-wide game of catch-up after the leaders of the previous generation stood idly by consumers complained about their dislike for higher prices. Leadership is not about pandering to the crowd and their narrow short-term sense of self-interest.

Leadership is about demonstrating and convincing people as to where their true interests lie, and building the desire to move in an aligned fashion towards new and important goals. Today the goals are so bold because the leadership of the past was so timid.

What will the bioeconomy produce in the long-term and short? For now, the opportunities are broad — fuels for air, sea and land; molecules for chemistry and materials; even opportunities in the vastness of space where petroleum does not exist and every rocket-ship needs a ride home.

We expect that in just a few years those opportunities will shift away from some forms of transport as electric vehicle fleets grow. That’s not bad news for the bioeconomy — the demand for molecules at this time vastly outstrips the ability of the bioeconomy to produce them (and affordably and sustainability).

The appearance of trillions and trillions of dollars of addressable markets has not always been the bioeconomy’s friend — there’s been a diffusion of focus, a push back on scale-up in the face of mature demand and immature supply-chains. There can be such a thing as too much diversity, as anyone who has ever heard a chorus of four-year olds trying to sing together can attest. In the future, the markets will still be vast, yet more focused.

So, the opportunities for domestic production are great. But we have to unleash ourselves from counting the cost of molecules and instead counting the costs of consequences. That’s what counting carbon intensity is all about, as realized in carbon prices. These are not subsidies, they are a means of internalizing the externalities – it is a subtle but vital difference that our leaders must persuade consumers and markets of. 

The actual (American) Independence Day was not just a story of causes and effects, forces and feelings. It was a story of leadership, of leaders willing to get out over their skis and persuade the great majority of some difficult, long, costly action for which their could be no certainty in the prospects for a quick win. 

It’s a long walk to freedom, as Nelson Mandela used to say and George Washington would have found nothing untrue in that phrase.

Leadership has been wanting because leaders have been unwilling, they have too long enjoyed the perquisites of office without taking on the real demand of the job, which is to do door to door, if that is what is required, to convince a hard-working, hard-pressed, distracted and worried middle class that the long walk to freedom is well worth the effort, because all will come right in the end.

So, happy Independence day, and as you wave your sparklers and enjoy the crack and flash of the town and city fireworks — as John Adams encouraged us to do in remembrance of the hard days of the Revolution and the spectacular outcome — look around.

We always talk about the future being about a what, or a when, or a how. But the future is also about the who. So, look around for leaders who have the right ideas about domestic energy production and security, who are willing and able to tackle the hard conversations about internalizing the externalities, and elect them as your leaders, and support them in the dark days, for nothing great comes without dark days.

If you follow well, they might lead well, and splendid indeed will be the celebrations of the future when we have made ourselves independent of feedstocks that betray us in the end, and a dependance on an international commodity system to deliver us from our trouble, which it has never done and never will.