Will The Simple Act Of Building Cheap Energy Make Possible Superrapid Economic Growth?

A guest article by Joseph Friedlander

Neil Craig back in 2012 made a few posts on direct correlation of energy + economic growth that made the astonishing assertion, IIRC that simply building enough energy sources would generate very rapid economic growth.

Alas, I can no longer email him to find out more details as he has passed on. https://g1rm.wordpress.com/2014/08/10/neil-craig-the-owner-of-glasgows-first-sfcomic-shop-has-passed-away/

He was a remarkable man, IIRC he worked with Bob Shaw, the science fiction writer and some of Neil Craig’s writings are indexed here. http://neilsindex.blogspot.co.il/

A memory of his thesis disturbed me the other day so I looked up the three posts and am reproducing part of them here to see if I understand what he is saying.

The Americanized version of such a statement might be, “If you build it (increased cheap energy supply), nerds will come (and build up the economy).”

Obviously implied if not stated

  • A cooperative government.  Adam Smith’s old quote that “Little else is requisite to carry a state to the highest degree of opulence from the lowest barbarism, but peace, easy taxes, and a tolerable administration of justice; all the rest being brought about by the natural course of things. All governments which thwart this natural course, which force things into another channel, or which endeavour to arrest the progress of society at a particular point, are unnatural, and to support themselves are obliged to be oppressive and tyrannical.”

(To translate to modern audiences: Peace then (in the sense of the King’s Peace) meant freedom from foreign aggressor and domestic criminal; Easy taxes meant not only low rates but unobtrusiveness to the conduct of business and no forms to fill out, and a tolerable administration of justice probably would not include confiscation of assets under color of law, court sanctioned administrative decrees causing massive paperwork headaches for small businesses and so on, so implied from all that is that we are headed to the lowest degree of barbarism from the highest degree of opulence.)
Since the ability to destroy is about 4,000 times easier than the ability to build (Cost of making a home uninhabitable via slegehammer or explosive vs building a new one) no productive business that actually wants to actually get anything done AND serve its’s customers well can possibly fight a government that makes a hostile environment around it. See Charles Hugh Smith on this:   http://charleshughsmith.blogspot.co.il/2015/08/our-government-destroyer-of-jobs.html The government assumes private enterprise will jump through an endless number of hoops to operate a business, and that there is an endless supply of willing entrepreneurs who will volunteer to put themselves at risk of bankruptcy.

  • Access to capital, tools, and other necessities for starting businesses. (This feeds into the assumption above– if  taxes or mandated expenses such as health care suck up all available self-invested funds; if customs interferes with importing needed parts, if one of the millions of laws or regulations interferes with the conduct of the business sufficiently there can and will be no boom because they have no actual ability to use energy not being able to stay in business or at best treading water but with no energy using growth. (Actually from the point of view of conservationist taxing authorities this is a feature, not a bug).

OK, supposing those conditions are met. Will simply making cheap energy available make possible superrapid economic growth? And if so, what could be the cause?

  • First we need to define cheap. If you say current power rates for electricity are 10 cents a kilowatt hour, and coal or natural gas half a cent  to a cent a kilowatt hour for thermal,  obviously if we could get 10 times cheaper power and heat it would open up many many new markets. If you have examined your utility and fuel bills lately it is obvious this would require a near total elimination of taxes on fuel which alone could put this article in the fantasy category, (particularly since powerful political forces have never met an energy tax they didn’t like since they have a near-religious urge to force cuts in energy use by higher ‘administered’ prices)
  • Second, we need to define rapid growth, but Neil Craig’s postulated rate in the excerpts below would certainly serve here. Look at China in the last 3 decades. Chart their energy growth. (He does.)  But chicken or the egg?  Enterprises or the energy to power them?  I suspect it was a mutual booting event.
  • Thirdly it would be helpful to imagine sample applications for huge amounts of cheap energy (nearly the opposite of the conservation mindset with the proviso that we don’t actually want to be wasteful needlessly. But waste is sometimes in the eye of the beholder. I see government waste, the guy working there sees a vital public good and himself as a public benefactor. Why shouldn’t the same courtesy hold as to the entrepreneur’s use of really cheap energy?)  
  • A possible mechanism of economic growth is savings of capital by cheaper ways of doing things (that are energy extravagant). I remember a World War 2 system to disperse fog by burning large amounts of fuel.  https://en.wikipedia.org/wiki/Fog_Investigation_and_Dispersal_Operation

    FIDO in operation at RAF Graveley, May 1945

    History and development of FIDO https://www.rti.org/pubs/bk-0003-1109-chapter13.pdf

    • I remember Chicago in 1967 melting snow by putting it into a giant snow melter that poured the liquid into the sewer (clearing 20″ of snow off downtown streets)  So planes could land immediately, so businesses could open their doors in those two cases.  The saved capital recycles and boosts the economy.
    • A first person account of using extravagant energy in that great snow in 1967 to keep a factory running http://searchwarp.com/swa421465.htm  Had energy conservation been the highest value (enforced by fines or high energy prices) the factory would have been closed for about 3 days.
      It was a surreal job as the very hot water really did cut through the snow but before long we were like coal miners as we actually were walking along digging tunnels in the snow. 

    The hot exhaust from the jet engine can be steered to a degree by the movable air funnel placed behind it. The engine produces 140 decibels of noise. If one is standing beside it one must wear double ear protection: plugs and ear muffs. If one only has ear plugs one can only come to within 100 feet of it as the noise level is already at 120 decibels at that point.

    I don’t know, this one is the one I’d rather have come by around midnight in case of a storm 

    but the idea is which cheap enough energy we could equip streets themselves with heating elements and the snow would never pile up (in fact the street would be bone dry in the morning as the melt ran into the sewer and then the street evaporated dry. No hard commute, no accidents, no health care needed)  If you have a sufficiently good defense you never notice an attack is going on.

    • A possible mechanism of economic growth would be the inventing of new things to do with all that energy that would never be tried at current prices.  This would make possible new applications or in rarer cases entire new industries that would boot up transaction chains across the economy.  For example, if aluminum whose price is dictated by energy costs http://www.indexmundi.com/commodities/?commodity=aluminum were 10 times cheaper,  or even 100 times cheaper, I can see using it in many applications that it would be insane to use it today. Can you imagine  instead of  1600 a ton it were 160 or even 16 a ton. (Pea gravel itself is only around $30 a ton) It could be used instead of cement to make concrete with 2 parts of sand and 4 of gravel for each part aluminum. You could build your house with “aluminum concrete” with about a minute cooling time, not hours to days of drying time. If you kept the materials flowing you could build a skyscraper structural core in about 3 days. (you would need to put on insulator panels and steel plates –also presumably cheaper–) for fire protection because aluminum softens in case of fire. ) That would be a huge savings. It might enable a new class of structures, and cheap sealable against water underground structures for even cheaper housing.
    Concrete: 1:2:4 (1 cement: 2 sand: 4 aggregate) is the ideal ratio of concrete mixture. Brick mortar  mixture ratio should be 1:6 (1 cement: 6 sand) for a wall of 9 inches thickness.
    If you don’t like that example, comments are below, add your own! Will simply making cheap energy available make possible superrapid economic growth? And if so, what could be the cause?

    Possible huge uses of sufficiently cheap energy

    • The fusion torch or plasma torches for massive recycling and mining of garbage, toxics, sub-ores.  See my post here for details. https://www.nextbigfuture.com/2012/03/lunar-silicon-vs-helium-3.html but this is the key part  Around 1969-1971 there was an idea called “The Fusion Torch” by Eastlund and Gough that involved fusion vaporizing rocks or garbage and pretty much doing what I listed above–separating compounds, dissociating and separating them, and reclaiming the elements.
      Google “energy waste and the fusion torch”

      This is the report about the fusion torch– warning, LaRouche political site, no endorsement intended, but they are hosting data on the fusion torch.

      Fusiontorch.com papers 

      The key takeaway from this is that temperatures above 4000 K can basically vaporize all rocks, 6000K (Solar surface temperature) breaks up nearly all compounds except things like silicon fluoride and cyanogen, 8000K breaks up basically all compounds. Basically 16000K will ionize everything but extensive ionization occurs in some species between 4 and 6 thousand K.

      The point of ionization of course is that you can deflect different species selectively like a mass spectrometer. It gives huge control
    • The use of the same for road building, erosion fighting and mining by literally melting and fusing the ground (and annealing it).  Around the same time people were using crushed glass in place of gravel with bitumen to make ‘glasphalt’ roads which allegedly were very durable –makes sense because silicon dioxide is quite hard wearing. But imagine melting the ground to lava to make a road (not necessarily along the path of drainage) https://upload.wikimedia.org/wikipedia/commons/4/45/Lava_flow_at_Krafla,_1984.jpg
    • or using a M shaped cutter to melt drainage ditches that were glassy and proof against soil leakage
    • or massive non-melting energy use to tunnel, dig or even explode shapes into the ground and fusing them for the foundation of a building.
    • With cheap enough energy liquid oxygen and coal or even powdered metals becomes economical. You could have Plowshare  https://www.nextbigfuture.com/2015/12/the-4-plowshare-conferences-and-lost.html#more like nuclear engineering (kiloton level) with  liquid oxygen explosives.  If energy was 10 times cheaper they might be used routinely. (Presumably the economic growth would come from the fact that it was 10 times cheaper to build structures. This begs the question <if regulations could be eliminated how cheaply could structures be made?> but this article is less science fiction like  than that one would be so let’s leave it for now)
    • Cheap thermite would be able to melt vast spaces underground into caverns for leakproof storage.
    • The energy cost of commutes heating your house etc would drastically drop and if taxes would let it be that money might be accumulated until you had enough to risk on a small business.  That too would help the economic growth rate.
    • More frequent travel to drum up business or even a mobile civilization https://www.nextbigfuture.com/2011/12/mccarthys-skywire-system-and-future-of.html that would enable flash communities to form (ala Burning Man) like flash mobs do today but hopefully for entrepreneurial purposes.
    • Growing tropical crops in heated greenhouses in winter works in Iceland, and it might even work for the home gardener in that case. That could cut store food expenses drastically because how else could you grow pineapple in winter in Pittsburgh? But it would work even better on the commercial scale.  This would result in greater regional self sufficiency.
    • We could use Professor A.A. Bolonkin’s idea about refrigeratable pykrete like insulated floating ice structures for seasteading, cheap housing, anything we use expensive land for today. 
       What kills it is that the price of energy to cool them is about 10 times too high (It’s really not that bad but the acid test is, during a 5 year economic downturn if you can’t rent the thing can you pay the power bill with no rent income coming in? If not your investment literally melts away. If cheap energy is there– you can. Boom results). The paper is here.  http://arxiv.org/ftp/arxiv/papers/0804/0804.0754.pdf
    • Come up with ideas of your own in the comments below. Or, if you agree or disagree with Neil Craig’s thesis, give your ideas why.

    Here are excerpts from the three Neil Craig articles that inspired this post (originals at the links below)


    Wednesday, February 08, 2012


    Energy Production’s Direct Correlation With National Wealth part I

       OK here is a pdf on the complete correlation in America between energy production and GDP from 1900 (before which we don’t exactly have a big electricity industry) and 1970 (after which “environmental” regulation severely and artificially depressed power production.

       In economics, being at least as much art as science, let alone engineering, you simply do not expect to find such mathematically precise relationships. From page 20/21

    Summary and conclusions

    In the `standard’ model a forecast of GDP requires a forecast of labor L, capital stock K and the Solow multiplier – multifactor productivity or technical progress — A(t). We have shown that introducing energy and/or material resource (i.e. exergy) inputs does not significantly improve the explanatory power of traditional production functions. A time-dependent Solow-multiplier is still needed.

    However a much better explanation of past economic growth can be obtained by
    introducing exergy services (useful work) as a factor of production, in place of exergy inputs.
    Exergy services can be equated to exergy inputs multiplied by an overall conversion efficiency
    which, of course, corresponds to cumulative technological improvements over time. Based on
    this hypothesis economic growth from 1900 to 1975 or so is explained almost perfectly, except for wartime perturbations



    Thursday, February 09, 2012

    Energy Production’s Direct Correlation With National Wealth part II

        Yesterday, in Part I of this, I discussed a particular paper showing the very close correlation between growth inn energy use, particularly electrical, and in GDP in America.

        However science requires results to be repeatable, particularly difficult with economics. But here are 5 separate examples:

    1 – The original – that from 1900 to 1975 American energy use and GDP rose in almost precise lockstep.

    2 – The original variant – that after 1975 GDP rose faster than energy use, at a time when energy production was being artificially restrained by the authority of an increasingly anti-technology government. I have previously described how, had political authority not been restraining the building of nuclear power plants and the previous trend continued we would have roughly 2.4 times more electrical capacity than we do. Note that though Americangrowth was faster post 1975 than electricity production it was slower than it had been in the 1950s and 1960s.

    3 – China’s growth has been almost exactly 10% on average since 1980. As the graph under shows electricity production went up from 240 TWH to 2400 TWH between 1980 and 2005 – a rate of 9.64% annually. That correlation over that period of time is remarkable by any standards. China during this period has become a distinctly free market economy, unforced or restrained by overgovernment.
    File:Electricity production in China.PNG

    4 – From 1927 – 37 the Soviet electricity supply grew at an eye watering rate of 23% annually. The economy grew at a rate of around 10% annually, a level at that time almost unheard of in the world. It may be that other energy sources grew less fast but I suspect that the main reasons the economy did not reach 23% annually are the inherent inefficiencies of a command economy, even a newly formed command economy where the bureaucracy is not yet deeply entrenched, and that 23% was an even more astonishingly high target then, when basic technology was not growing as fast as it is today. This is therefore an example of government artificially pushing up the natural market rate of power production (at a horrifying cost in famine) and, again, the GDP growth rate following the power supply rate but not matching 100%.

    5 – Tim Worstal not only making a case that electricity use worldwide, as shown by electric light emitted, very closely correlates with GDP but says that it does so better than official, GDP figures do. Not really possible to get a much better correlation than that

       That evidence being accepted,  the conclusion seems inevitable

       That in a free market there is an almost exact correlation between energy use and in particular electricity use (it being the most flexible and high entropy supply of energy yet developed and thus the most useful).

       That government can greatly promote or restrain GDP by promoting or restraining the power supply. This does not exercise a complete one to one correlation, but it does work far more effectively, in both directions, than than the fiscal or even entrepreneurial encouragements or restraints it controls. This is exactly what we would expect if power production is not the sole vehicle of growth but is the predominant one, probably producing around half the total cause of growth. Thus the Soviet economy grew at just under half the rate of electricity growth (probably over half the rate of total power growth)  while, until the last few years the British economy has managed some growth, in good years 2.5% or half the world average, while electricity supply was actually being made to slightly fall.

    Saturday, February 11, 2012 http://a-place-to-stand.blogspot.co.il/2012/02/energy-productions-direct-ciorrelation.html

    Energy Production’s Direct Correlation With National Wealth – part III

       So if promoting energy production promotes growth but government redirection of of economic resources is normally a very inefficient way of running an economy how do we go about it.

    1 – Set a target. I have previously given the calculations that showed a maximum theoretical sustainable growth rate of 23.8%. To achieve that would obviously require a minimum of that rate of increase in energy usage. In practice one would want more than that and suggest we should be prepared to support a growth rate 1 1/2 times that ie 35%.

       We use an average of 40GW per hour  Call it 50 to cover normal variation.

       So we should be wanting to produce 67.5 (increase of 17.5%) after 1 year.; 90 ((inc 22.5) after 2; 120 (30 inc) in the 3rd; 160GW (inc 40) in the 4th; 215 (55 up) in the 5th; 290GW (75 up) in the 6th; and 390GW (100 up) in the 7th.

      In fact, since it takes some time to build reactors I assume we would not get those increases in the first 3 years. However if a mass production reactor factory is involved able to turn out 100 Gigawatt reactors a year, at a flat rate, the production in years 3,4 & 5 should sufficiently exceed the target to catch up.

      However simply ending the subsidy of windmills would reduce prices immediately and investors, knowing that the increased supply/reduced prices were online, would start investing and growing the economy immediately.

       Up till now the normal assumption has been that it takes 3 years to build a new reactor so with building a factory mass producing them one would expect somewhat longer. However there are 2 alternatives. Firstly an X_prize for early completion and secondly the new Westinghouse SMR which is 1/4 GW but designed for mass production & easy delivery within 18 months – it is 1/4 the size but takes up only just over 1/4 the space of a traditional reactor, 1/4 the cost and presumably could be mass produced 4 times as fast.

       With mass produced reactors costing £800 million per GW retail I would expect such a factory, producing 100 GW a year , would cost not more than £200 billion – I’m assuming Westinghouse are expecting  that of the £80 billion they will make a year in turnover, 1/2 will be marginal profit giving them a 20% return on capital – highly profitable but by no means outstanding for a new product. A massive investment indeed but at 4% of GDP, not much to get an economy growing at 24%. In fact it would be in national surplus in a year if we only got it growing at 4.1%.

        It is also close to what the government insist they want to spend on windmills, for no obvious beneficial effect, so clearly they think we can afford.

       That is assuming government has decided they want the ownership and long term profits of the business If government decided it was happy to keep only about 20|% of ownership it could arrange this simply by providing Westinghouse with land, instant planning permission, the end of all unnecessary regulations, ministerial support in negotiating international loans, a guarantee to support purchasers in adding the power to the grid and a holiday on VAT & other taxes for the first 3 years. This would obviously cost virtually nothing since not collecting taxes on an industry which is currently not intended to be allowed to exist, is not a cost.

        I suspect the optimum would be somewhere between government paying the lot and owning it all and government paying nothing and owning 20%.

      A few other ideas which are less hands on:

    • Planning permission to be decided for any power project in a matter of days and to go through unless they are very strong reasons against.
    • Tax holidays or rebates for the entire industry so long as it isn’t growing faster than the target rate.
    • A state guarantee a minimum purchase price for up to the target amount of electricity which they then resell at whatever price the market will bear. This could be expensive if demand is seriously overestimated but it does greatly reduce the business risks of  investing in such expansion. (this idea is derived from a similar proposal for orbital launch cargoes and was used by me in a proposal to encourage the modular housebuilding industry.
    • Strong programme of cutting unnecessary nuclear regulations.
    • A constitutional right to demand the suspension of any regulation that imposes a heavier cost/safety ratio on one industry than comparable regulations in another.Again something previously advocated. With 5 people having died in Britain from windmills in the last 5 years and only 2, because of reactors, anywhere in the world, over the last 20, while nuclear produces orders of magnitude more power, it cannot honestly be argued that we have a level regulatory field.
    • Government providing loans at the normal government borrowing rate.
    • An X-Prize for the completion of the first new reactor. Smaller ones for 2nd & so on.
    • Improving the national grid so that it can handle as much new power as wanted.
    • X-Prize for the first commercial thorium reactor. This is based on what the Saltire prize is supposed to be doing for sea-turbines.
    • Building links for an International Grid based on high voltage DC current (HVDC). Once such links are in place we have an export market ready to hand. One of the few things government appears to be able to do cost effectively is to improve transport infrastructure and since facilitating transport of electricity, while technically entirely different, follows the same economic arguments as those for facilitating the transport of lorries, this is something government can properly do.

    And a number of X-Prize proposals to encourage other methods of power production not involving nuclear electricity. They may not be immediately competitive but good researchalways pays off, even in unexpected ways. 

    • Algal oil. The potential for producing oil grown from algae is virtually unlimited if done from mid ocean plants using nutrient heavy water from the ocean depths. Substantial prizes for early successes in developing this should work.
    • The Saltire prize. I don’t think it will work because i don’t think ocean energy i has the necessary energy density to ever be competitive. But if the prize is properly run it will do no harm and might even prove me wrong. If it doesn’t no prize is awarded. This is only part of the “renewable” industry that might prove worthwhile
    • X-Prize for improved efficiency of solar power. Solar power units are dropping fast in price along with other electronic goods. At some stage, possibly quite soon, they may become cheaper than the electricity we now use. Of course our current prices are far above what they could be.
    • X-Prizes for developments in the field of “conventional” fusion
    • X-prizes for development in the field of low energy nuclear reactions (LENR) the more respectable & more accurate name for cold fusion.
    • X-prizes for development of solar power satellites.
    • Funding nuclear pulse launches – anything that can put 10,000 tons in orbit cheaply in one go can quickly fill the sky with solar power satellites .

      Over decades (or millenia if NASA and ESA do it) solar power satellites can produce more power than we can ever want. The radius of geosynchronous orbit is about 8 times the radius of the Earth. That means that the total energy available is 8^2 at least doubled to cover the light stopped by our atmosphere ie 120) times all the sunlight that reaches the planet’s surface. SPS also have the advantage of being unaffected by weather and having few if any moving parts and can thus keep delivering power at around zero cost for at least millenia without repair.

       When energy is available in those quantities it will no longer be a limiting factor in growth. Perhaps something else will be. Perhaps wealth will cease to be an issue when we all have everything wealth can supply.

       And if demonstrating that, here and in part 1 and part 2 doesn’t get me a Nobel in Economics nothing will 😉

    Thus far Neil Craig. But if you have a comment on the title question of this post please share it in the comments below.

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