Of Norway, Quebec, Iceland, Siberia and British Columbia: The Political Questions behind Energy and Aluminum around the World.

Once upon a time, there was a nice hydropower plant nearby an isolated community. Thanks to cheap energy, energy intensive industries had built plants (an aluminum smelter, ferro-alloys, foundries, paper and cement mills, steel mini-mills…) and created jobs. The power plant had been built by visionaries of politics and engineering some 50 years ago.

Thnaks to cheap energy and heavy industries, infrastructures had been built: roads, bridges, tunnels, better connecting the community to the world. Thanks to these industries, skills had accumulated. Schools and technology institutes had attracted students, scientists and teachers. The technology environment thus created had incited ideas for new processes, and machinery manufacturers were born to exploit these ideas, who began exporting. Other industries, less energy intensive but hiring more skills, had moved in, attracted by the manufacturing environment. And all the range of subcontractors and service businesses had followed. A new, diversified economic region was born called Kitimat (British Columbia), Bratsk (Siberia), Ardal (Norway), Grenoble (France), Reykjavik (Iceland), Steg (Switzerland), Washington State, Quebec, etc.

Then something good happened: The energy market became more global thanks to deregulation and lower cost technologies for high Voltage transmission. It became possible to transport energy from the hydropower plant to a far away country with a big population that lacked generation capacity and where energy prices were climbing sky-high. Meanwhile, the local government followed the trend and privatized its hydropower plant. The new owners became aware of the opportunity to make higher profits selling energy on the export market and increasing rates for the local market. The mother lode of human development called energy went dry. The country had forgotten to pay the piper. The piper marched away, playing his kW run flute, and all the enterprise geniuses followed him. Businesses closed down one after the other. Unemployment raised its ugly head.

What is the piper’s lesson? I asked him. He said:

“Free enterprises and free markets are good. Set them free, and you will prosper. But don’t forget what the enlightened father of capitalism, Adam Smith, said of the Invisible Hand of the Market that guides each individual to benefit the public interest by pursuing his own selfish goals: His goals are within his own lifetime. He agrees to contribute to prosperity if he witnesses his own gains soon: today, or this year, or maybe at most 5 years down the road. Adam Smith wrote this over two hundred years ago. Since then, stock options were invented and the time perspective ruling managers today is the next quarterly, not beyond… And these managers are telling their children to study law and accounting, not engineering: they see where the money is going when the next quarterly becomes the thin line on the horizon and when Profit and Competitiveness become synonymous in their minds. Energy capacity is a 30-year investment. So are the basic industries that need cheap, abundant energy. These are investments for our children, our future as a community, a people, a civilization. They can be managed by market guidelines, but they must be incited by political will. And that political will must sell a clear vision to the people: let’s show we can invent our future, so that our own children will naturally learn to invent theirs one day; instead of waiting for the geniuses of the market to come and decide our own future by sending us to the unemployment agency when it is thirty years too late to react.”