Why Behind Energy

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Behind Energy: understand the true cost of energy

The Behind Energy project was born out of our years of experience as investors in various sectors and around 10 years in the energy business. As time has gone by, we have realised that the field of energy is marked by a lack of transparency, especially if you want to understand what the real costs and impacts of the sector are.

In coming years global population growth will inevitably drive energy consumption higher, especially if we think that today there are still huge swaths of people who have no or little access to electricity. Energy supply and energy independence have become critical and topical issues, the subject of debate by governments, scientific institutions, the media, precisely because they are pre-requisites for humanity’s economic and social development.

Fossil fuels have brought incredible opportunities for growth over the course of the 20th Century but at the same time have created negative externalities for the entire human race, climate change above all.

Economics textbooks talk about externalities right from the opening pages. The concept is defined as any positive or negative effects that the production or consumption activities of any economic agent generate on the production or consumption activities of another agent, without this effect being reflected in the price paid by the consumer.

To simplify, we talk about externalities when an economic activity produces positive or negative effects that are not part of the price paid. Pollution is a classic example of a negative externality: if producing a certain good results in pollution of the surrounding environment, it generates costs for others (the cost of cleaning up that pollution or treating illnesses that may arise from it) that should in some way be directly included in the economic transaction that occurs when that good is sold, but is not. One cost that is not usually considered when people talk of energy, for example, is war over energy sources, which perhaps should at least in part be blamed on companies in this industry.

The question of direct subsidies is also often discussed when talking about the true costs of energy. The sector as a whole has received trillions of dollars over the years, almost 1% of the global economy. Nevertheless, discussions about energy subsidies most of the time is limited to those in favour of renewable energy sources, which in fact account for only a small part of total subsidies.

A resource centre for transparency in energy

These basic notions of economics often get forgotten when we talk about energy. Almost all the textbook examples of externalities relate to the energy sector. And yet the majority of economists and analysts who cover the sector seem to forget to analyse the relative cost of different energy sources.

– What logic do people use to examine this question?
– Who is responsible for bearing the clean-up costs if energy production pollutes our environment?
– Is it factored into the price at which energy is sold or is it a cost that society in general has to pay for, whether through taxes or the “cost” to our health, our environment?

Behind Energy wants to fill that gap and provide more transparency in this sector. By providing information, we want to try and answer simple questions such as:

– What are the true costs of different energy sources (not just their economic costs)?
– How much does it actually cost to produce a barrel of oil o a kilowatt-hour of solar power?

That’s why we’ve organised Behind Energy as a kind of hub where you can find a collection of documents and other information that grapple with these issues.

Our mission: enable an informed, balanced discussion

The availability of energy perhaps represents the biggest critical issue for the 21st Century and discussions will revolve around:

– For how long can humanity continue to satisfy energy demand growth from traditional sources?
– Will it be possible in the near future for all the world’s inhabitants to have access to energy on a level enjoyed today in the most developed countries?
– Can we really let that happen without creating ever-greater externalities?

As Ludwig Boltzmann, the Austrian physicist and mathematician, said: “Available energy is the main object at stake in the struggle for existence and the evolution of the world.” What we should be asking ourselves is: at what cost?

Behind Energy is an implicit call for having a wide-ranging discussion about our energy system starting precisely with the question of externalities, in the hope of defining a more complete picture that takes into consideration not only production costs but also the (economic) effects of pollution, energy security and health, etc.

Our aim is to get away from a one-sided viewpoint, one that divides the world into “good” and “bad”, into “right” and “wrong”, between proponents and opponents of various sources of energy. We want to shift the discussion about energy supply from the ethical dimension to a pragmatic, economic one (so long as it includes all those costs that aren’t currently part of our calculations).

We are convinced that this is the only way to deal with the problem. And we hope our initiative will inform, illuminate and maybe even surprise you a little.