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Aug. 13, 2004 – Since humans started to use fossil fuel, we’ve treated it the way hunter-gatherers treated wild game: Hunt it down and consume it as you find it. When you run out of game here, move on to a new area.
Human history began when people settled down to farm, and invented writing, money, and civilization. Let’s create our future by learning from those early farmers and seeding our own energy supply where we need it.
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We have an energy problem. We’re using it faster than we’re finding it, and a lot of the oil we buy comes from unfriendly regimes.
The Organization of Petroleum Exporting Countries (OPEC) members Saudi Arabia, Iran, Iraq, Venezuela, Kuwait, Qatar, Libya, Indonesia, United Arab Emirates, Algeria, Nigeria, and associate Gabon are no friends of liberal democracy.
Cartel pricing strategy is to maximize long-term profits, but control prices as necessary to eliminate threatening competitors.
Now think about China’s 1.3 billion people getting an urge to drive, or even to plug in a refrigerator. Where’s their energy going to come from? If there is more demand than supply, prices will rise. It could get ugly if rising prices don’t spark more supply. We have not found a major new oil field in decades.
Some people look to government to solve this developing crisis, but the politics of energy seem to be “do more of what we did before, only get a better result this time.”
I took an interest in energy policy after reading that estimated in the late ’90s we were spending $30 billion to $60 billion per year defending Mideast oil fields, but only importing $10 billion of oil a year from them. We’re spending a lot more these days, but still don’t have a sustainable energy policy.
Energy is really an economic problem, not a political problem. Government’s role should be to fund some of the basic research, get the market incentives right, unleash competition, and stay the course against OPEC’s reaction.
Government can seed the market by buying new energy-efficient products that have long-term paybacks.
Many of us see nanotechnology helping to solve our global energy problem. Energy efficiency, solar-to-electric conversion, designed catalysts for oil refining, and storage devices such as fuel cells or batteries are all improved by nanotech.
How can we structure an R&D program to quickly deliver good, affordable solutions? Rick Smalley says we should invest in science education and research, and the breakthroughs will come.
I’m an entrepreneur who studies economics, and think we’ve also got to come up with a market-based business approach to assure any such research is applied and commercialized.
How can we do this without creating a university welfare system, a corporate welfare system, a government bureaucracy, or all three?
Private sector funding is more efficient than government funding, but the private sector won’t fund this alone. Our private sector has a short payback horizon across the spectrum, from angels to venture capitalists to corporate R&D to public stock markets.
The high cost of infrastructure investments, long time to payback, and heavy geopolitics make energy an unattractive area for serious investors. We’re seeing a few investments into energy, but the problem is massive, and current funding tiny.
Would you invest your personal money into a risky long-term science project of which someone else is likely to capture the benefits? I wouldn’t.
The keys to an effective energy program are competition, measurement, and determination. Cooperation has a role, too; it takes visionary leadership to break out of today’s academic, government, and industry silos and work together to solve this problem. We should demand such vision and teamwork from those who want to lead this effort.
Market competition solves problems better, faster, and cheaper than regulation or big government programs.
Ingenuity is limitless, and the chance to get rich or famous is a powerful motivator. Let’s unleash our entrepreneurial spirit on this problem. We can seed hundreds of new businesses that will pay taxes and create high-value jobs. Competitive government funding for tech transfer, from research to production, is one way to launch this program.
Measurement is vital when allocating funding. Markets measure against expectations constantly, and are quick and often brutal in their assessments. Companies measure themselves against their own benchmarks and their competitors.
Well-run companies invest more in their winners, and cut off their losers as quickly as they can identify them. Universities and government agencies measure their inputs (staff, budgets), but lack market feedback to measure outputs. Good investors evaluate the effectiveness of their money by measuring outputs.
Determination is the final piece. If we change direction with the political winds, or cave in to a predatory oil price drop and give up this program, our economic competitors are likely to come sweep up the pieces, finish the job we started, and sell us our own technology.
Why don’t we stop tweaking old approaches, and define a bold new clean and green energy program, based on science and economics? Tell your elected officials you’re looking for a real energy policy. Let’s focus our nanotech R&D on creating new energy prosperity.