By Joe Kindt
A nation’s economic development is tethered to its ability to produce energy. From the English industrial revolution, triggered by coal-fired steam engines, to today’s Chinese economic boom, backed by the construction of one coal-fired power plant per week, economies have long been concerned with harnessing greater production power. A nation with a sound energy policy that promotes sustainability will foster a healthy business economy.
Although there are many examples of energy’s impact on an economy, most apparent today is the cost of oil and its impact on the transportation of goods around the world. As transportation costs have increased, the prices of goods and services have risen, while companies’ profits have fallen. While an economy tends to correct itself over time, these shocks will affect a company’s profits, employment, and overall strategy in the coming years. Fiscal growth is stunted. Navigating these economic shocks can be quite difficult and disruptive for business leaders.
The economic goal of a national energy policy should consequently be to promote stability and growth. The ecological impact of energy production and distribution must be considered as foreseeable future shocks to an economy. The eventual disappearance of fossil fuels will affect energy prices if an economy is unprepared for their absence.
Energy policy is the political foundation on which a nation’s businesses and industries grow. Governments around the globe must concern themselves with crafting sound energy policies that focus on avoiding and smoothing the shocks that limited and potentially harmful resources can cause. Countries that understand and address the linkage between energy and the economy will thrive, while those that do not will be jolted by instability. (Peter Fairley, Technology Review, January 1, 2007)
Joe Kindt is a second-year MBA candidate at the Mendoza College of Business. His specialization is in energy marketing and strategy, and he is on the Core Leadership Team of GreeND.
This article appears as part of a 10-day series titled Perspectives on Sustainable Energy. Subscribe for updates "here.":/stay-involved/