In my previous post on the debt, a commenter made the important point that there are limits to economic growth. USCD physicist Tom Murphy has some thoughtful posts on the topic (see here and here). If energy use scales with economic activity then there will be a limit to economic growth because at some point we will use so much energy that the earth will boil to use Murphy’s metaphor. Even if we become energy efficient, if the rate of increase in efficiency is slower than the rate of economic growth, then we will still end up boiling. While I agree that this is true given the current state of economic activity and for the near future, I do wish to point out that it is possible to have indefinite economic growth and not use any more energy. As pointed out by Rick Bookstaber (e.g. see here), we are limited in how much we can consume because we are finite creatures. Thus, as we become richer, much of our excess wealth goes not towards increase consumption but the quality of that consumption. For example, the energy expenditure of an expensive meal prepared by a celebrity chef is not more than that from the local diner. A college education today is much more expensive than it was forty years ago without a concomitant increase in energy use. In some sense, much of modern real economic growth is effective inflation. Mobile phones have not gotten cheaper over the past decade because manufacturers keep adding more features to justify the price. We basically pay more for augmented versions of the same thing. So while energy use will increase for the foreseeable future, especially as the developed world catches up, it may not increase as fast as current trends.
However, the main reason why economic growth could possibly continue without energy growth is that our lives are becoming more virtual. One could conceivably imagine a future world in which we spend almost all of our day in an online virtual environment. In such a case, beyond a certain baseline of fulfilling basic physical needs of nutrition and shelter, all economic activity could be digital. Currently computers are quite inefficient. All the large internet firms like Google, Amazon, and Facebook require huge energy intensive server farms. However, there is nothing in principle to suggest that computers need to use energy at all. In fact, all computation can be done reversibly. This means that it is possible to build a computer that creates no entropy and uses no energy. If we lived completely or partially in a virtual world housed on a reversible computer then economic activity could increase indefinitely without using more energy. However, there could still be limits to this growth because computing power could be limited by other things such as storage capacity and relativistic effects. At some point the computer may need to be so large that information cannot be moved fast enough to keep up or the density of bits could be so high that it creates a black hole.