Creative destruction “is the essential fact about capitalism,” wrote the great Austrian economist Joseph Schumpeter in 1942. New technologies and processes continuously revolutionize the economic structure from within, “destroy the old continuously, and emerge incessantly a new one.”
Change happens faster and more creatively in times of economic crisis. Accelerate innovations that meet material and cultural needs. Structures that prevent new, more efficient technologies, weaken. When the old economy collapses, “innovate” innovations to become the core of the new economy.
In the past three centuries, there have been five major “waves” of economic disruption and clustering. The first was driven by the use of hydropower, the second by steam power, the third by coal and electricity, the fourth by oil and gas, and the fifth by digital transformation.
[Read: 5 reasons why autonomous cars still aren’t on our roads]
We are now at the beginning of the sixth big wave, driven by sustainable energy combined with electromobility and smart-city technology.
Although 2020 will be a difficult year for the entire economy, these technology trends are much better than the energy sector. In the long run, the economic constraint of COVID-19 should accelerate the wave.
Renewable energy
In renewable energy, solar photovoltaics and offshore wind are now the most economical new form of electricity generation for at least two-thirds of the world’s population, according to energy research provider BloombergNEF.
In Australia, the latest analysis of costs for electricity production by the Australian Energy Market Opera and CSIRO shows solar photovoltaics and wind are already cheaper than coal and gas. Solar PV costs are also forecast to fall sharply in the next decade, reducing production costs from around A $ 50 per megawatt hour to A $ 30 by 2030.
The following graph for consumption of renewable energy and coal in the United States shows that the acceleration towards sustainable is well under way.
Statistics published last week by the US Energy Information Administration show coal production will fall to its lowest level since 1978. In 2020, coal production is projected to fall to 1960s levels.
Across all member states of the Organization for Economic Co-operation and Development (including Australia), the International Energy Agency’s recent monthly statistics show that coal production in April was 32% in April 2019. Electricity production of all non-sustainable was down by 12%. But the generation from sustainable housing was up 3%.
Electromobility
Electromobility includes electric vehicles including cars, buses, and railroad trams. Globally, BloombergNEF projects electric cars to account for 3% of new passenger car sales in 2020, 10% in 2025, 28% in 2030, and 58% in 2040.
The lead of the charge is Europe, where sales of electric cars actually increased by 7.5% in the first quarter of 2020, leading to the global downturn for electric cars and the sector in general.
The only major automaker to increase sales was Tesla, which sold 88,496 cars. Second-quarter sales of 90,650 cars were down just 5% from a year ago, compared to falls of about 25% for other manufacturers. Tesla’s booming stock price saw Toyota catch up in May to become the world’s most valuable carmaker.
Smart-city technology
Smart-city technology includes the use of sensors, machine learning, artificial intelligence, blockchain, and the “Internet of Things” to improve the efficiency of infrastructure. They have grown in use for transportation, energy, and housing.
Road sensors can help traffic managers coordinate traffic signals to reduce congestion or to guide fast electric buses and untrained trams through traffic. Apps help us navigate cities, and to know exactly when buses or trains are delayed.
In energy networks, smart technology can be used to balance electricity supply and demand and to create low cost and localized electricity markets.
In housing, smart systems can improve all aspects of the energy and environmental performance of a home.
Curtin University has partnered with the Western Australia Land Development Bureau to integrate these technologies into the East Village housing project in Fremantle. It will use blockchain technology to power photovoltaics, batteries, electric cars, and water heating in a microaster that delivers 100% sustainable power to a community of 36 homes. These clusters of innovations are modular, allowing developers to experiment and then scale up.
Brake or accelerate
The economic and cultural benefits of generating sustainable energy, electromobility, and technologies for smart cities are clear. They will lead to a cleaner, greener economy with many more new jobs.
Together, I estimate that they have the potential to reduce fossil fuel use by 80% in a decade.
Eliminating the last 20% – gas and coal used in industrial processes such as steel production and mineral processing, and fossil fuels used for long-distance road, sea and air transport – will be harder.
But hydrogen made with renewable energy can replace potential fossil fuels in all of these applications, although developing and commercializing the technology and necessary infrastructure is likely to take a decade or more.
Australia is already a global leader in solar generation and battery storage. We also do well with smart city technologies. But we are slow in electromobility, and we will have to invest more in hydrogen research, development and deployment.
The only thing that will hold back on these technologies that will become the core of the new economy sooner rather than later are backward-looking government policies that seek to support an outdated fossil fuel economy.
This article was republished from The Conversation by Peter Newman, Professor of Sustainability, University of Curtin under a Creative Commons license. Read the original article.
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