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The Abundance Agenda: Energy, the Master Resource
Abundant energy will make everything else in our economy cheaper and more plentiful
By Richard Morrison
The idea of an abundance agenda in American law and policy is generating an increasing amount of interest from Americans across the political spectrum, and it’s no surprise, given the number of topics on which abundance-themed policies could have a positive impact. Housing, transportation, education, agriculture and more are implicated in the decision to shun scarcity. But all of these rest on an even more fundamental—though perhaps less obvious—foundation. Energy abundance is actually the key to them all.
Resource economist Julian Simon famously wrote that energy isn’t just one resource among many, it is the “master resource” that makes everything else possible. All of the necessities of daily life in modern society require energy to produce, from the clothes we wear and the food we eat to the homes we live in. The rest of today’s economy rests on that base layer of access to reliable and affordable energy. The Industrial Revolution, which gave us the mass prosperity that characterizes the modern developed world, was based on the inventiveness and hard work of human beings, but it was fueled by energy-dense and affordable coal. It’s impossible to imagine the rising living standards and civilizational advances of the 19th century without it.
Thus, to the extent that energy in any given place suddenly becomes more expensive or less reliable, that change affects everything built on top of it—in other words, everything. We’ve seen quite recently what happens when energy prices spike, even in the wealthiest and most developed countries. Due to supply interruptions and subsequent price increases related to Vladimir Putin’s invasion of Ukraine, many countries across Europe saw energy prices skyrocket, with both households and businesses bearing the burden. A key benchmark price for natural gas rose from about €20 per megawatt hour in early 2021 to a breathtaking level of almost €350 toward the end of summer last year. That alarming swing in prices put much of the continent into a panic, with emergency measures rolled out by governments to both conserve energy and allow the rapid construction of new natural gas infrastructure in order to dramatically increase imports from new sources.
The energy industry managed to keep the lights and heat on without the sort of catastrophic breakdown some were predicting, but largely because they got lucky with warmer than usual temperatures over the last several months. Even then, the efforts to minimize use and conserve supplies were not the kind of win-win scenario energy conservation advocates like to promote. High prices led to a massive productivity downturn, lowering economic output and causing widespread disruptions. Last June, The Wall Street Journal reported that, from Spain to Germany, factories producing “chemicals, fertilizer, steel and other energy-intensive goods” were simply shutting down and suspending production altogether.
This was no mere marginal inconvenience borne just by the people who happen to own (or work at) those particular facilities—it was a decline that made the entire continent poorer. Every laborer who needed to buy tools made of steel and every farmer who was going to use that ammonia-based fertilizer now faces higher costs. The people who hire the laborers using the tools and the people who eat food grown by the farmer are, of course, also affected. Even in places where there was a government intervention to shield households from the rising costs, there will still be a price to pay. The U.K.’s energy price guarantee program will likely cost British taxpayers almost £40 billion, with a previous proposed version having been predicted to cost as much as £89-140 billion. Remember that these costs need to be absorbed by a nation with a GDP roughly only one-eighth the size of the U.S. That fiscal impact will be borne by taxpayers and consumers going forward in the form of higher taxes, fewer public services and slower economic growth.
Imagine now the impacts on people in less developed countries who spend a higher proportion of their incomes on energy already. When energy prices get too high—or the supply becomes too unreliable—things simply stop working. South Africa, for example, has attracted a lot of unfortunate attention in recent years because of its increasingly unreliable electrical grid, which is plagued by power cuts, both planned and unplanned. Despite being one of sub-Saharan Africa’s most successful economies, South Africa continues to struggle with providing reliable electricity for its millions of residents.
People in places like the United States might remember a time when they’ve lost residential power themselves for a day or two and nod in sympathy, but what is experienced in the developed world is scales of magnitude different from the impact felt in countries with dramatically fewer resources. Just the disruption and lack of ability to make long-term plans is itself a major drag on national prosperity. Imagine building a factory in a place where you can’t be sure you’ll be able to operate it each day? Economists at the consulting firm Oxford Policy Management suggest that the economic losses due to power interruptions cost between 1% and 5% of the entire GDP of countries across sub-Saharan Africa. (A GDP cost of 5%, by the way, would be almost $1.2 trillion in the current U.S. economy.)
But the impact of energy poverty is even more dramatic than those lost billions of dollars in wealth and opportunity. In his recent book “Fossil Future,” energy expert Alex Epstein recounts the story of Kathryn Hall, an American medical volunteer in Gambia. Hall wrote a short but moving blog entry in 2007 about the hospital where she was working at the time. On a Saturday afternoon doctors had to care for two pregnant mothers—one needing an emergency Cesarean section and one who delivered a severely underweight baby. Both of these infants would likely have been safe in the United States, where staff would have had access to ultrasound machines and incubators to provide the proper care.
Unfortunately, in the Gambian hospital, they could only perform ultrasounds when power was available, which was not the case soon enough to avoid complications in the first birth. The hospital didn’t even consider owning an incubator, as it would be useless without continuous, reliable power. Because of those deficiencies, both babies died. Those deaths were attributable not just to poverty in general, but were made more likely by energy poverty in particular.
That is the cost of energy scarcity—only a lack of food and resulting famine is a worse disadvantage to a society seeking health and safety. But the flip side to that brutal reality is a far more optimistic future—one in which we encourage energy abundance and the entire world reaps the rewards. Because energy is the master resource that everything else in the modern world is built on, it acts as a sort of universal ingredient in progress. If we make energy less expensive, we make almost everything else—food, clothing, shelter, transportation—more affordable by definition. And when the things we currently consume become significantly less expensive, that means we can afford more things. Yesterday’s luxuries become tomorrow’s everyday amenities of life. Creating a future of cheap energy is the closest we will ever come to changing the physical constants of the universe, like shifting gravity or changing the power of electromagnetic attraction.
Eli Dourado and Austin Vernon, writing for the Center for Growth and Opportunity at Utah State University last year, described what such a world might look like. They envisioned a future of energy “superabundance” in which energy is both cleaner and dramatically less expensive than it is today. Contrary to the assumptions of some environmentalists and “degrowthers,” they see a world with dramatically more energy use, a larger U.S. and global economy, and a much improved quality of life for all. This superabundant future would feature major improvements in transportation, for example, including a convenient fleet of regional electric airplanes, taking advantage of many of the 18,000 landing facilities in the U.S. that are often underused. We would see vertical-takeoff-and-landing (VTOL) aircraft, vacuum tube hyperloops, supersonic flights and even suborbital rocket travel that takes passengers from New York to Shanghai in under an hour.
But the implications of energy abundance are far greater than that. Cheaper energy would allow us to operate more indoor farming facilities with growing conditions controlled for maximum output and minimum waste and spoilage. And alongside new water technologies, energy abundance will make desalination and reclamation easier, with water condensed directly out of the air in some places. Cheaper energy also will reduce the need for both capital and labor in construction projects, making for more affordable buildings. All of these things will make new and improved cities possible.
Dourado and Vernon point out that modern Phoenix would not exist without the energy necessary to air condition its buildings most of the year. Just as modern Phoenix would have been impossible in the 19th century, we could see a new generation of urban developments that would be impossible today. Those future cities won’t necessarily be as fanciful as living under water or on the moon, but superabundant energy will mean that cities will be able to transcend existing limits on growth and provide amenities for residents that are not possible today. Las Vegas could solve its long-term water access problems. Families could also relocate to anywhere in a metro area while still having access to big city lifestyle perks with faster and more efficient transportation options.
Perhaps most importantly, the energy superabundance of tomorrow won’t just make a new Phoenix possible—it will make our lifestyle in the U.S. increasingly possible in places like South Africa and Gambia. The social and political hurdles to operating large, high-maintenance infrastructure systems, so common in the developing world, can be worked around with smaller, decentralized system built on solar panels, irrigation pumps and battery storage. You don’t need to depend on a national government agency to manage the electric grid when there is no grid.
Some of these predictions may sound like science fiction and only possible with massive government support. As with many other topics under the abundance agenda umbrella, however, we don’t necessarily need huge new government taxing and spending programs to advance these goals. In many cases, regulatory reform can move us a long way forward on its own. When it comes to increasing the supply of a commodity that’s always in demand, we can follow the advice of my colleague Fred L. Smith Jr., who likes to say, “You don’t have to teach the grass to grow—you just have to move the rocks off the lawn.” Which rocks we decide to move first will make a big difference in the outcomes we see.
According to the U.S. Energy Information Administration, our 2021 energy mix in the United States was approximately 80% fossil fuels (coal, petroleum and natural gas), 12% renewables and 8% nuclear. Many people would like to see those shares shift away from fossil fuels and toward renewables because of concerns about climate change—and it’s likely such a shift will happen—but obviously we can’t dispense with over three-quarters of our current energy mix overnight without causing dramatic dislocations to our standard of living. That’s why it’s vital for the U.S. Energy Information Administration to embrace an “all of the above” (AOTA) approach to energy—that is, allowing and encouraging growth of all available sources to meet our needs.
The AOTA approach has a distinguished bipartisan pedigree: Donald Trump embraced such a policy during the 2016 campaign and during his presidency. And a 2014 report from President Obama’s Council of Economic Advisers proclaimed that all-of-the-above was “a path to sustainable economic growth.” George W. Bush endorsed AOTA via the 2005 Energy Policy Act, among other policies. Ballotpedia documents explicit calls for AOTA among policymakers going back to at least 2000, when Rep. Benjamin A. Gilman (R-N.Y.) delivered a speech on the floor of the House urging such an approach. And even before that our long history of mixed government support for both hydrocarbon and renewable sources yielded a de facto all-of-the-above agenda.
In addition to keeping all of our options on the table, we especially need to liberalize the rules by which new nuclear power facilities get permitted and built. Many people are aware that France is the global leader in nuclear power generation, with almost 70% of the country’s energy coming from fission plants. There’s no reason why a country like the United States couldn’t get a similar proportion of our own energy from nuclear facilities. In a time when there is a high level of concern about greenhouse gas emissions, nuclear is ideal in that it doesn’t throw off climate-related emissions during power generation and doesn’t suffer from the low density and intermittency that afflicts wind and solar. On top of those advantages, nuclear advocates like Matthew Wald have documented the “boring truth” about nuclear waste—that is, it is far less of a threat and easier to manage in the long term than many Americans realize.
Advanced nuclear reactor designs employ passive safety systems so that potentially dangerous material is contained automatically even if other equipment malfunctions. This is light years ahead of the technology that was employed by the Soviet Union at facilities like Chernobyl or in the U.S. at Three Mile Island. Even at current facilities, waste products from nuclear facilities are sealed up in above-ground concrete casks that are stored on site. Not only do you not need to bury that waste a mile deep beneath a mountain, you can relax on your next facility tour by leaning up against a storage cask for an extended period of time with no fear—storage of this kind is perfectly safe for human (and animals) to be around. Unfortunately, however, the U.S. Nuclear Regulatory Commission seems stubbornly resistant to approving permits for new facilities. That needs to change.
We also need to liberate the potential of geothermal heat as an energy source. Erik Olson of the Breakthrough Institute, for example, has described the potential of new “enhanced” geothermal systems (EGS). While current output for geothermal is small, an expanded footprint of EGS facilities and projects will likely bring down the cost per unit of output dramatically, as we’ve seen happen with wind, solar and other generation technologies over time. That’s an engineering problem that simply needs more investment in research. But the other thing standing in the way of broader EGS deployment is that many of the most promising locations for geothermal drilling in the U.S. are in the Mountain West states, where the federal government is a major landowner. Olson emphasizes that delays in the federal land permitting process are a major barrier to geothermal development. That can and should also change.
If we reform our land use policies and government permitting rules in the United States, we can take big strides toward a future of greater energy abundance. And that will be a boon for everyone, not just the energy companies of tomorrow. Decreasing the cost of energy even marginally would be a huge gift to the health and well-being of the most vulnerable, both at home and abroad. Billions of people around the world spend far too much of their income on energy as it is—whether that’s paying the heating bill in a developed country or spending multiple hours a day gathering wood and animal dung—to burn for heat and cooking in a very poor country.
While climate change will remain an important concern, efforts to rush the net-zero transition could become a threat to the prosperity that we’re hoping abundance will bring. Indeed, without that prosperity, climate change is likely to accelerate, since many more people will be forced to burn the cheapest and often dirtiest fuels they can find—such as coal and wood—in order to survive. That’s just one of many reasons why we need an all-of-the-above menu of options so that we can navigate a future that is abundant, affordable and reliable.