This blog post examines whether shale gas can replace renewable energy as the main energy source in the Third Industrial Revolution, exploring the reasons and possibilities.
The time for revolution has arrived. Amid worsening economic conditions due to the U.S. financial crisis and Europe’s fiscal crisis, coal and oil prices are mockingly tracing steep upward curves. Change is necessary. To predict what kind of change is needed, we must look back at similar experiences from the past.
In the late 18th century, the advent of coal sparked the First Industrial Revolution, driven by steam engines powered by this fuel. Railroads were needed for steam locomotives to move, and iron was needed for the railroads. Building railroads required capital on a scale incomparable to spinning mills, ships, or canals, leading to the emergence of large, centralized railroad companies. A century later, in the late 19th century, the discovery of oil sparked the Second Industrial Revolution, fueling the development of the automobile industry, chemical industry, and electrical industry. During this period, oil remained the primary energy source, necessitating large-scale capital and favoring vertical economies of scale. The highest values then were centralized structures, efficiency, and hard work.
Thus, through the First and Second Industrial Revolutions, we can infer that shifts in energy sources drove industrial revolutions. So, what energy source will the Third Industrial Revolution require?
Jeremy Rifkin, the author of this book, views renewable energy as the primary energy source for the Third Industrial Revolution. Unlike centralized sources like coal or oil, this energy is distributed renewable energy (solar, wind, hydro, geothermal, biomass, tidal, etc.) and can be obtained anywhere. Since most of these resources—the daily sun, frequent wind, and underground heat—are essentially free, the author believes the Third Industrial Revolution will be organized around renewable energy. Because renewable energy is inherently decentralized, it does not fit the existing centralized hierarchical structure and requires a collaborative mechanism. The author speculates that the combination of internet communication technology and renewable energy will spark the Third Industrial Revolution.
In the 21st century, hundreds of millions of people will produce green energy directly in their homes, workplaces, and factories, sharing it with each other through an intelligent, distributed power network—the ‘intergrid’. The author presents the following five elements as the core components of the Third Industrial Revolution:
1. Transition to renewable energy.
2. Transform buildings on every continent into mini power plants capable of producing renewable energy on-site.
3. Deploy hydrogen storage technology and other storage solutions throughout all buildings and infrastructure to preserve irregularly generated energy.
4. Utilize internet technology to transform the power grids of every continent into energy-sharing intergrids operating on the same principles as the internet.
5. Replace transportation with plug-in and fuel cell vehicles, enabling the buying and selling of electricity on continent-wide bidirectional smart power grids.
In other words, the argument is that a new energy system—comprising the power plantification of buildings, storing a portion of energy as hydrogen, distribution via smart grids, and plug-in zero-emission transportation—will open the door to the Third Industrial Revolution.
However, I believe shale gas, not renewable energy, will be the primary energy source driving the Third Industrial Revolution. Shale gas is gas trapped within shale layers—rock formations where organic matter transforms into oil—and is widely distributed rather than concentrated in a single location.
First, when the author wrote this book, Europe’s financial crisis had not yet occurred. Therefore, he overlooked the importance of shale gas and our current attitude toward renewable energy (especially in Europe), leading to an inaccurate prediction of the future. The author viewed countries with decentralized systems, like Spain and Italy, as exemplary models for the Third Industrial Revolution, rather than those with centralized structures like the US, UK, and Germany. However, Spain and Italy are now struggling with financial crises.
Second, no matter how infinite and eco-friendly renewable energy may be, it cannot match conventional fuels in terms of energy efficiency and density, and it often suffers from intermittent supply. Shale gas has higher energy efficiency than representative renewable energies like solar (15% efficiency under optimal conditions) and wind (25%).
Third, shale gas reserves are substantial. Global recoverable shale gas reserves, based on 2011 world natural gas consumption, are sufficient for the next 60 years. With the more efficient shale gas available, there is little reason to use renewable energy. Furthermore, shale gas can be used for power generation in existing gas power plants, requiring minimal additional equipment costs. Conversely, renewable energy generation requires everything from site selection to the necessary components for installation, entailing substantial costs.
For these reasons, I believe shale gas is the next-generation energy source that can replace oil facing depletion, nuclear power with safety concerns, and renewable energy with low energy efficiency relative to cost. The Third Industrial Revolution must shift to a decentralized system, using shale gas as the primary energy source, moving away from the existing centralized model.
If the First Industrial Revolution fostered dense urban centers, apartment complexes, townhouses, skyscrapers, and multi-story factories, and the Second Industrial Revolution created flat suburban housing areas and industrial complexes, the Third Industrial Revolution will transform all existing buildings into dual-purpose spaces serving both as residences and mini power plants. For instance, it would be feasible to construct small power plants alongside apartment buildings during their construction. Small gas turbines capable of controlling only the necessary amount of power could become a promising industry, potentially including LNG transport ships or LNG base construction. This is because shale gas is bulky and difficult to transport. For a shale gas-driven Third Industrial Revolution to occur, gas must be convertible into an energy source. This requires the advancement of GTL (Gas-To-Liquid) technology, which liquefies gas into a liquid state.
The Third Industrial Revolution is already upon us. I believe, as Professor Jeremy Rifkin argues, that an era of energy supply and demand through distributed grids is coming. However, I believe shale gas, not renewable energy, will be the driving force. South Korea must also invest in shale gas, which the International Energy Agency (IEA) has even termed an ‘energy revolution,’ to lead the Third Industrial Revolution.
