As predictability has gone down, governments and firms need to find ways to be more nimble. They need organizational forms that are flexible and flat. They need policies and business practices that can be adjusted quickly in light of new information. While the watchword is uncertainty, a few things are coming into focus. One is that fossil fuel resources are abundant, and the main effect of technological change has been to make them even more abundant and cheap. That means that governments traditionally reliant upon export revenues will need to reform—a process, often politically painful, that is underway from Russia to Saudi Arabia to Alaska. Increasingly, the rate at which these suppliers reform
might have big impacts on the supply and price of oil—price formation may become less a physical economic phenomenon and more the result of political economy.
Another area of growing certainty is the need to decarbonize energy systems. For years it was thought that a more digital and nimble energy system was one that probably would also make decarbonization easier. That’s true, to some extent, because these systems are more efficient, and also better able to integrate renewables like solar and wind into power grids. But it is clear, already, that tsunamic innovation won’t fix the carbon problem automatically. Extra policies—like carbon taxes—are needed, and, on that front, the world is still making slow progress.
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