The key to understanding our energy future is to have a clear understanding of our energy past, asserts Jesús Fernández-Villaverde, professor of economics in Penn’s School of Arts and Sciences. And this is why he is writing a book on global economic history—with several chapters dedicated to the history of energy. A Kleinman Center grant is helping support that research.
“I’m very interested in understanding the innovations in energy,” says Fernández-Villaverde, whose book will cover energy transitions over the past six millennia, including the introduction of fossil fuels, which spurred the industrial revolution, as well as renewables, and the recent shale gas revolution.
From an economic perspective, he is most interested in how energy drives production and how we measure that productivity. In the past, he has worked on data-driven projects that measure the economy through electricity usage or road congestion. These studies prove that higher consumption is directly related to higher economic productivity.
“The main constraint for the output of goods and services is energy,” he explains. This is a concept he has been teaching his students for years as part of his economic history class at Penn.
In class, he asks students to imagine themselves as farmers before the industrial revolution. “The main constraint is how to harness energy. You have your own body, but the most energy you can produce is 3 to 4 horsepower. You may have horses or buffalo, but they are costly to maintain. You have to feed them. Maybe you can use a little bit of wood to create some energy…”
Humans have lived with minimal energy resources for the bulk of their existence (and more than a billion still do). Yet, during the past 300 years, that scenario changed dramatically.
With fossil fuels, “we have produced a lot of stuff,” says Fernández-Villaverde. “But we have been relying on energy that nature has accumulated for the last millions of years.” These fossil fuel resources are limited and using them has major climate ramifications.
“Now we need to move beyond economy that is fossil fuel driven,” he says.
While his book will not prescribe that future, Fernández-Villaverde hopes his historic overview of our energy economy will inform students, researchers, and policy makers to design better solutions for the future.