Abundance vs Scarcity

Much of what's been written on this blog over the past 60 days has dealt with two visions of the future. In one, there is abundance with new sources of energy, food and clean water. In the other, there is scarcity creating competition for a dwindling supply of resources. 

The abundance vs scarcity question is a fairly common issue when looking at future scenarios and many others have written on it. What I would like to stress is that the hemisphere shouldn't view either vision as being imposed on it by some outside force. It should be investing in science, technology and education to try to build that future of abundance. It should be looking at government policies and private sector investments that can help eliminate problems of scarcity. We should plan for the worse of the two scenarios. I wouldn't want to avoid planning for potential scarcity in the future. But we should be working and investing to build the better of the two, because if we have a choice, it's certainly the better future to live in.

Build some batteries

Well over a majority of the world's known lithium reserves are in South America, centered in Chile, Bolivia and Argentina. If the future of batteries is lithium, then those countries are sitting on a big pile of money. If the future of batteries goes in another direction, then few are going to invest in the process of extracting it and it's going to get a low price.

Understanding the lithium extraction can be a difficult and expensive process, it's still disappointing that none of these countries has decided to build the battery technology on their own. Waiting for outside firms to enter the market simply continues the cycle of dependency that exists in much of the region. This is a rare opportunity to build an industry in the region that uses local resources to manufacture a well developed product to world markets.

Bolivia has tried to find a middle route, insisting that any outside firm investing in local lithium must build a battery plant in the country and transfer the technological knowledge. It's a reasonable condition, but it's still waiting on someone else to help.

Take the risk, spend government R&D funds, build some batteries, create the domestic industry now rather than wait on some other country or corporation to come create it and profit from it. Outside firms should be allowed to invest in the industry, but waiting on them to do so shows a lack of initiative.

Let's be honest, the first batteries are likely to be bad. It's unlikely Chile or Argentina or Bolivia is going to match current technology in their first attempt. It's going to take years of developing the science and technology skills to bring the batteries to a level that they can be exported. However, it will be a worthwhile process to create the skills in the country. The risk is that the country will lose financially if they cannot pull it off. The potential gains are quite high if they do manage it.

Solving power outages

Last year, a power outage struck the entire country of Nicaragua and I had to go to the bank. So, I decided to call the bank to see if they were open on generator power. Conversation:

Me: Hey, are you open?
Bank: Of course. Why wouldn't we be?
Me: Well, the power is out in the entire country.
Bank: Oh, I didn't know that.
Me: So are you running on generator power?
Bank: Must be, I don't really know. 

I'm fortunate enough to have a backup generator, as are most banks, hospitals and major businesses. I was still struck by the fact that the bank tellers didn't even know that there was a nationwide power outage or that they were running on generator power right at that moment.

The poor and businesses without much capital just have to suffer through the constant power outages. They certainly know when the power is off for hours at a time.

There are two ways to solve this problem. The first is to build a better national power system including generators and grids. It's a big investment that requires national political will. It would help productivity nationally and reduce costs lost to power outages and gas-fuel generators.

Alternatively, we can wait for generator and battery technology to drop in price and move more towards solar and other renewables so that far more people can afford backup power when the national grid goes offline. This is a decentralized solution that doesn't require the same big political effort and would produce a more resilient system.

I'm not sure which solution is better. Both come with benefits and drawbacks.

Micro or macro power generation

The trend in Latin America has been towards large power generation projects including giant hyropower projects. Countries are working to improve cross-border energy transfers.

What if that's all wrong and the future of energy is a much smaller scale of power generation? It's possible that instead of generating power for regions and sharing power across borders, countries should be focused on developing the technology and infrastructure to manage power neighborhood by neighborhood. As new technology is more widely available, the smaller power generation projects should prove possible and economically viable.

At the same time, Latin America as a region may be economically locking itself into these larger infrastructure projects now in a way that will cause them to miss out on potential new technology a decade down the road.

Then again, is there another way? It would be difficult and probably even irresponsible for a country to say they will skip over large scale projects now in the hopes future technology will work out.