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Burning Down the House: The Shocking Economics of Energy

Imagine if Mitt Romney’s sons burned through their entire family fortune in less time than it takes to watch Titanic in 3D. That would be crazy, right?

But that’s exactly what we’re doing when it comes to energy: we’re burning our inheritance instead of collecting our income.

We don’t normally see it expressed in these terms. Yet a quick look at the most basic facts about energy make it clear that we’re getting the fundamental economics here horribly wrong.

How Fast Are We Burning Our Solar Inheritance?

Turns out, over 94 percent of the energy that powers the world economy each year is originally solar. No surprise, as the sun is an enormous nuclear fireball a million times larger than earth that’s been heating the entire planet for billions of years and sustaining all life, right?

This solar energy comes in two forms. Our solar income is the amount of energy we get from the sun each year in various ways: solar, wind, hydropower, biomass, etc. Our inheritance is the accumulated solar energy living creatures have collected over eons that have now become fossil fuels: coal, oil, natural gas.

Plants and animals absorb solar energy directly by photosynthesis, and indirectly by eating plants or other animals. The Department of Energy says fossil fuels were formed over 300 million years or more as that solar energy was squeezed out under enormous pressures, turning carbohydrates into hydrocarbons.

But if it took 300 million years to store all this energy and we burn it all in 300 years – then we’re literally burning through our inheritance a MILLION times faster than it was created.

To understand how insane this is, imagine if it happened to your family.

Burning Down the House

Imagine your great-grandparents and their children worked hard to build a successful family business. They passed it to your parents, who grew the business into an empire, and built an enormous mansion for you to grow up in. Imagine you took over the family business and through years of hard work accumulated a massive inheritance for your children. Imagine you took that wealth, painstakingly collected by your family over 100 years, and passed it to your children.

Now imagine your kids threw a massive party and burned through their entire inheritance in a single hour.

There’s no way anybody would call this good financial planning or responsible stewardship. But it’s exactly what we’re doing.

Even worse, not only did your kids burn down the beautiful mansion your ancestors built, but their giant bonfire polluted the atmosphere, fouled the water, killed off the animals, drove their neighbors from their homes and poisoned their neighbor’s children.

And the cruelest irony of all, is that to make this metaphor complete, you also gave your children an enormous income large enough to satisfy their every desire dozens of times over. Because according to Scientific American the amount of solar income “readily available for generating renewable power” is a whopping 35 times more energy than the roughly 16 Terawatts we need to power the entire global economy. Here’s a few recent studies showing this would only cost around  one to two percent of GDP.

The Shocking Economics of Energy

So on the one hand, we’ve got an enormous income that comes in a variety of forms we can harvest – wind, sun, hydropower, biomass. On the other, we’ve got an irreplaceable inheritance that belongs to our children and grandchildren as much as it belongs to us.

The basic science here is neither complicated nor controversial. But the basic economics are shocking: we’re burning through our inheritance so fast it’s literally like a bomb going off on a global scale.

The truth is there’s nothing conservative about “Drill Baby, Drill.” When Congress votes to give tax breaks to profitable oil companies instead of clean energy, they’re getting the basic economics staggeringly wrong. When we subsidize fossil fuels by hundreds of billions of dollars a year, we’re literally paying bonuses to wealthy companies to destroy our children’s future.

Irreplaceable Gifts

The Founding Fathers believed we are endowed with inalienable rights. I believe we are also endowed with irreplaceable gifts. The only responsible way to use these gifts is to invest some of our massive solar inheritance in building a sustainable energy income for future generations. To secure a prosperous future for our children, we must build an economy powered by harvesting fresh fuels not burning fossil fuels.

Consuming an inheritance we didn’t create, while neglecting an income we desperately need is not only crazy, it’s unsustainable. We don’t just need economists and politicians to understand this. It’s something we must all understand.

Andy Mannle is a writer and consultant dedicated to exploring sustainable policy, innovations, and solutions. He has helped numerous organizations craft and communicate their sustainability strategies and initiatives. He currently serves as communications director for Adam Capital. Find out more at AndyMannle.com, or follow @AndyMannle on Twitter.

Andy Mannle
Andy Mannle is a writer and consultant dedicated to exploring sustainable policy, innovations, and solutions. He is the Education Director for West Coast Green, and an adviser to New Leaf America, UrbanGreen, Adam Capital and others.
 
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10 thoughts on “Burning Down the House: The Shocking Economics of Energy

  1. Very good article. Recommend this article go viral so maybe those who just don’t understand it can have another analogy that may make sense and help them make better decisions politically and personally. We in the western hemisphere are wasteful in so many ways, energy being just one of them.

  2. Good article, but I hope those of you who take it to heart will also act on your convictions. You should immediately switch your home’s energy to renewable sources either by installing a solar PV system or by switching to your utility’s renewable energy program.

    The second step is to buy an electric car. Once you do these two things, you eliminate virtually all of the pollution you are responsible for. As an added bonus, you no longer give the oil companies money. You can instead give some of that money to progressive causes to help make the world a better place.

  3. Interesting to note.
    What I also find interesting is the amount of energy required to sequester an energy resource and make market ready. Historically, oil and natural gas have always given us more energy then they have required to mine, refine and deliver to the market. As we drill deeper and more remotely, this is starting to change. Solar power has a tough time with this point of view. Wind does okay, sometimes. Hydroelectric does okay.
    The fundamental task is to violate the laws of thermodynamics… ie get something for nothing. That is why we are burning our “inheritance”.
    Humans like easy.

  4. Great analogy and well done. It’s a great way to get the point across and not seem “political” (now, why that’s a bad word is for another day. . .). Thanks!

  5. If the solar energy landing every year is “he amount of solar income “readily available for generating renewable power” is a whopping 35 times more energy than the roughly 16 Terawatts we need to power the entire global economy”, then there is no worry about burning through all the fossil fuels, is there? Even if we burn through all the fossil fuels available, we’d still have 35 times as much power as we need coming from the sun every day.

    Moreover, what is the purpose of saving the inheritance if we never use it because we fully convert to solar?

    Electric cars, unless solar powered, just move the pollution to wherever the power plant is.

  6. Thanks for the great comments everybody.

    John – to your point. The energy is readily available, but we still have to harvest it. In other words, paychecks are falling on our heads, but we still have to go to the bank to cash them. We must use our limited, valuable fossil fuels to build the clean energy infrastructure that will power the global economy for centuries to come. So that’s the first piece. The 2nd is that burning fossil fuels isn’t good for life on the planet, so the “purpose of saving it” is so we have a nice planet to live on.

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