Energy Consumption Per Capita – Part 5

Cycles And Energy Transition

Contents

1. Introduction

2. Background

3. Concluding Remarks

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Bitesize Edition

• In exploring energy consumption per capita and quality of life, I started to consider what cycles and frameworks could support the ideas I’ve been presenting.

• The Big Cycle from Ray Dalio details the relationship between short-term debt cycles, which over time, contribute to the long-term debt cycle, occurring over 75 years, with 50 years give or take at either side. The important aspect to take away when exploring quality of life is that productivity always rises.

• One contributing factor to rising productivity is technological innovation. We’re seeing this right now with AI. The time between these defining eras is shrinking. The agriculture era lasted millennia, the industrial era centuries, the internet era decades, and now we’re seemingly on the cusp of a new artificial intelligence era. Hence, technology is innovating at an exponential rate.

• By superimposing the Big Cycle on the technological innovation curve, we get a steeper and steep productivity rise. Underdeveloped countries find themselves in the agricultural era while developing countries are in the industrial or internet eras. We can use the combination of these cycles and frameworks to help explain why nations exist in the environments they do, and how it will take more time and effort to get out of the earlier eras.

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Introduction

Over the last few weeks, I’ve explored energy consumption per capita and quality of life in Somalia, India, and the United States. This got me thinking about cycles. I’m a huge fan of the cyclical nature of many aspects of our lives. The business cycle makes recessions and economic downturns inevitable. The full moon cycle is seen unfolding before our eyes every night. Weather cycles, with El Nino and La Nina, ensure different weather patterns emerge from year to year. The cycles that interest me more are the long-term cycles.

Ray Dalio’s Big Cycle involves the long-term debt cycle and lasts around 75 years with a 50-year expansion zone at either side. The end of a long-term debt cycle usually involves some aspect of a changing monetary system, be it from a hard-backed currency system like the Gold Standard, for example, to a free-floating system like the fiat system we live in today. There are advantages and disadvantages to each system, but as time progresses, the flaw in each system is realised and grows. The crises that emerge at the end of these long-term debt cycles come in various forms, but due to the cyclical nature, these crises will come.

You might be questioning how this long-term cycle is connected to the different stages of energy transition that underdeveloped, developing and developed countries find themselves in today. Well, if we merge this long-term cycle with the technological innovation cycle, we find some interesting points we can take away. I’ll dive into those points, and general strategies each category of nation can adopt in its processes to improve energy consumption per capita, and as a result, quality of life.

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Background

Ray Dalio’s Big Cycle is one I refer to frequently. It describes the way the world works, but more specifically the countries within the world. Those at the developing stage are in the best position.

But does technological innovation, evolution, and productivity grow at an exponential rate?