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Robert McGarveyAlberta is changing. It has a new NDP government, a scary new fiscal ‘reality’ with $60 oil and a millennial generation coming of age with a new lease on life.

But Alberta is also linked to the past and a very particular set of economic assumptions. Alberta’s economic strategy remains solidly industrial, predicated on oil and gas. Most Albertans expect oil prices will recover and that demand for oil will remain solid for decades. Albertans of all political stripes are united in the belief that the royalties we receive from this commodity are necessary to support our fiscal future.

Unfortunately, these assumptions could be completely wrong.

The future of energy is changing and – regrettably – the past is not a reliable guide to the future. The past was oil’s golden age. Oil has been a vital commodity for more than a century, tied to the industrial world’s dependence on the internal combustion engine. But it’s also clear that we’re in the final stages of the industrial economy.

Over the past 30 years, a silent revolution has overtaken western developed economies. Today, factories and machines do not drive our economy but new ideas, network applications, software and other forms of creative assets.

Value and productivity are defined much differently in the modern economy. Value is more ethereal; it’s found in intellectual property, in the collected ‘data’ mined from the everyday activities of millions of people, in (ghost like) digital phenomena such as software or in networks of collaborating individuals who have never met in person.

Futurist Ray Kurzweil predicts, “We will have the requisite hardware to emulate human intelligence with supercomputers by the end of the decade, with software models of human intelligence by the mid-2020s.”

Older style machines are dying today, being replaced by super-intelligent automation, whose creative destruction is devastating industry after industry.

There are sweeping implications for Alberta. How long do you think it will take this technological wizardry to solve the energy storage problem? Once that is solved, it will end the age of oil and gas.

Technological advances in solar and wind power are accelerating exponentially and will soon create viable electrical generation capacities for renewable – green – power.

The technical hitch that prevents a green revolution from happening is reliability of supply. Both solar and wind power are intermittent in their generation. If the wind is blowing there’s wind power; if the sun is shining there’s solar power. But what happens on a cloudy, windless day?

Now imagine a world in the not-too-distant future when we’ve developed super-efficient energy storage devices.

Imagine a world where every household has its own localized green energy system. Electricity is generated in the home from recycled household waste, tiny but super-efficient rooftop wind turbines and solar collectors.

Although the generation of electrical power will still be sporadic, depending on the availability of sunshine or wind, the energy will be stored in household storage systems. They will consistently light and heat the house, fuel the greenhouses we use to grow most of our food (year round) and charge our electric cars.

Once the capital cost is paid off, electrical power is basically free. When all this happens, power will be locally generated, green, cheap and plentiful – as it should be.

We won’t need gasoline-powered internal combustion engines. There won’t be a need for large-scale coal or natural gas powered electrical generation plants. We won’t need a vast network of high-powered transmission lines creating havoc up and down the grid.

Although there will always be a market for oil and gas, oil’s dominance of the economy will be a thing of the past.

This energy revolution will not happen overnight, but it will certainly happen in the lifetime of Albertans alive today. Preparing for the end of oil is not something that can be ignored.

For good or ill, it is the strategic future for Alberta.

Robert McGarvey is an economic historian and former managing director of Merlin Consulting, a London, U.K.-based consulting firm. Robert’s most recent book is Futuromics: A Guide to Thriving in Capitalism’s Third Wave.

Robert is a Troy Media contributor. Why aren’t you?

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