Friday, August 8, 2014

Energy Policy and Disruption:

Managing Change

Two items hit my mailbox yesterday, both of which relate in some way to the issue of the disruption that can be caused by technological transitions.  Therefore, although I addressed issues related to the evolution of energy technologies only a few weeks ago, I decided there were more dimensions to the problem that merited further examination.

The first of the two articles actually doesn't relate specifically to energy supply and demand.  However, it points out that the concerns about disruptive technologies are not limited to the energy arena, and are not limited to the historic changes I gave as examples in my last blog.  The more modern example that I can cite is the possibility of robots replacing human labor in more and more ways.

This is not a blog about robots, so I won't dwell on this, but we all know that we have been interacting with increasing frequency with machines instead of humans (think ATMs instead of bank tellers), and we can all see still more such interactions in our future (think driverless cars).

In the article, Vint Cerf, who is considered one of the fathers of the Internet (and who I've had the pleasure of meeting) is quoted as saying, "Historically, technology has created more jobs than it destroys and there is no reason to think otherwise in this case.  Someone has to make and service all these advanced devices."  This is probably true, although it may be difficult for people whose jobs are affected to take the long view.

The second article is from the U.S. Energy Information Administration (EIA), and includes a graph showing that mining and related activities constitute a large part of the economies of several states.

This graph reveals a dimension I had not thought about too much before, and that is how profoundly some of the anticipated changes in our energy supply might affect some states.

Up until now, my thinking has been much like Vint Cerf's thinking--I assume that new jobs will replace the old ones, and I have regarded that as the main consideration.  I have always realized that argument is not as simple as it sounds.  At a minimum, people will need to be retrained for the new jobs.  There are also issues of whether the pay will be the same, whether the working conditions will be as attractive, etc.  In addition, people may need to move for the new jobs, and although we are a mobile society, moving is disruptive, especially if you feel you are being forced to move against your will.

But, what I hadn't thought about was to what extent there might be a large net migration of jobs out of some states.

At first glance, today's situation does not seem that different from technological and other transitions made throughout the course of history.  The types and distribution of jobs have not remained static in the past.  If they had, we would have remained mired in the Stone Age. 

And as job opportunities and other things have changed, people have moved.  That is also nothing new.  The United States was shaped by people who moved for better opportunity (or for other reasons, but this is not a sociological blog), whether it was out of other countries and to the US, or from the East Coast to the Midwest and West.

These moves have had profound consequences.  Cities prospered or declined due to the fortunes or misfortunes of the industries they harbored and the movement of people to or from their jurisdictions.

In the past, I don't think people could predict these transitions well, and both individuals and municipalities struggled as a result.  What is different today is that we understand better what the potential impacts of various actions and decisions may be.  And we have the time to act.  We will need to replace existing coal and other fossil fuel plants with cleaner technologies, which costs money and takes time.  This should allow time for individuals and states to adapt.

States and companies can continue to challenge new requirements--that, after all, is the American way--but they should also be looking to help promote other uses of coal products and cleaner coal technologies, to attract the development of replacement energy technologies, and to attract other industries.  When they lobby the Federal government, they should not simply fight all change, but they should lobby for ways to make the changes work for them.

I realize that this is easier said than done, and not everything states may try will succeed.  It may, therefore, seem easier just to try to keep things as they are, but that is a temporary solution anyway.  The argument for preserving jobs is a powerful one, but it is up against a more powerful argument of effects on public health and the environment.  Change is inevitable, whether it comes sooner or later, and the states and companies that anticipate that and start to position themselves will stand the best chance of surviving the transition--and perhaps even of improving their lot. 


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