Energy's Digital Future

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)

Amy Myers Jaffe is an influential energy consultant at the geopolitics level, focusing on global energy policy. This new title looks into the future of America’s energy demand and supply. It is the world of post-oil, clean energy, distributed energy systems utilized by autonomous vehicles.

The book starts with a historical episode: At the beginning of the 20th century, there were nearly no combustion engines in urban areas. Eletrical cars, vans, and urban trains were established with a working infrastructure. There was a good chance that a cooperation by Ford and Edison could have shoved the upcoming combustion engines out of the market. But then came WWI and electrical cars were soon forgotten.

It only took us another hundred years to get back to that state. But things are changing, and they are changing fast. The author even talks about a “digital energy revolution”, looking mostly at China for a strong political strategy, and also at the European Green New Deal.

The U.S. have to find back their way to innovation and implementation in the area of digital energy.

Now, one would really like to know: What exactly is digital energy? Given that it is used 74 times over 207 pages of content, one would expect a concise statement or even a definition of the term. Not so in this book. One can only guess, approaching its meaning via the term of “digital energy innovation” which is hardly described by “the convergence of artificial intelligence, big-data analytics, and automation” (p.42) of by “digital energy technologies” which is something like “on-demand travel services, self-driving vehicles, electricity storage, and the internet of things” (p.23).

I found that the book is in desperate need of a competent editor who gets rid of at least a third of the meandering text. Also, the massed repetitions of buzz words should be reduced just like repetitions of enumerations like “convergence of automation, artificial intelligence, big data, and the internet of things,” appearing twice on the same page.

The book’s highlight is clearly in the discussion of geopolitical consequences of a time nearing and passing the peak of demand for oil. Military presence in Saudi Arabia or Venezuela aren’t as important anymore and wars for oil aren’t to be exected. If you’re interested in that topic, then you’ll have a thoughtful and great lecture with many insights.

But I was expecting something else, namely a book addressing a mid-term prediction of digitalization in the scope of energy. This book utterly fails to deliver here. The author is clearly not in her comfort zone regarding digitalization. The most important example which she dives into are self-driving vehicles, but that’s mostly about it. It doesn’t manage to discuss digitalization of energy supply. And it fails to bring a broader discussion of other demand sectors than transport, which is only a smaller part of the energy demand cake.

Most importantly, the book doesn’t talk about the direct energy use of information and communication itself, which will be outrageous in the coming years considering the scaling of data centers and communication devices.

If you’re interested in those topics, you will find a well-structured and good overview in IEA’s 2017 Digitalization and Energy report which is free for all.

This book brings a heavily U.S. biased geopolitical view with political recommendations but not so many insights in the are of digitalization where the author is clearly not up to the task. A high price is called for the book which I don’t recommend for a broader audience.