Today’s geopolitical landscape is increasingly defined by divergence of alliances largely enabled by the energy and energy technology landscape. Geopolitics and geoeconomics is largely about one country, or an alliance of a few countries, asserting social power and rules upon those not part of the alliance. This social power, to a large degree, derives from the control and the ability to both extract energy from the environment and convert that energy into useful work as characterized by thermodynamic energy efficiencies. One insight from this thermodynamic perspective of the economy is that the work output of machines is nearly proportional to gross domestic product (GDP), explaining why increasing efficiency promotes growth.

With this backdrop, what can macroeconomic models say on the question of allocating investment in a world of shifting national rivals and in the context of transitioning to a low-carbon energy supply? Because of a lack of physical principles, macroeconomic models should be able to say more than they usually do. With better integration of physical principles into economics, we can better explain history (the 1970s oil crises triggered changes leading to Global Financial Crisis) and project future economic scenarios (e.g., a low-carbon energy transition).

This one-day conference convenes investment portfolio managers, chief investment and strategy officers, philanthropies, and subject matter experts in energy and macroeconomic modeling to address a critical blind spot in how we understand important energy-finance-economy interdependencies that are critical to explain industrial and economic capacity, geopolitical strength, and the capability to engage in a low-carbon energy transition.

• Session 1: Understanding the role of energy in economic transitions: lessons from the 1970s to today 
• Session 2: The geoeconomic turn of the energy transition: energy security, energy affordability and energy imperialism.
• Session 3: The macrofinancial turn of the energy transition: stranded assets, cost of capital and balance of payment instabilities
• Session 4: Building scenarios for the mid-transition period: what can the models tell us?

Sponsors:

• Energy Institute of The University of Texas at Austin
• Cynthia and George Mitchell Foundation
• Fields Institute for Research in Mathematical Sciences

Conference Organizing Team:

• Transition Macroeconomics Consortium
  • Carey W. King (University of Texas at Austin, Austin, TX; careyking@mail.utexas.edu)
  • Matheus Grasselli (McMaster University, Hamilton, Ontario)
  • Matthew Heun (Calvin University, Grand Rapids, MI)