3FOOD

Third Industrial Revolution Consulting Group
sewer systems, and public school systems. The Depression and World War II slowed the effort,
but after the war the laying down of the interstate highway system and the completion of a
nationwide electricity grid and telecommunications network provided a mature, fully integrated
infrastructure. The Second Industrial Revolution infrastructure advanced productivity across
every industry, from automobile production to suburban commercial and residential building
developments along the interstate highway exits.
During the period from 1900 to 1980 in the United States, aggregate energy efficiency—the
ratio of potential to useful physical work that can be extracted from materials—steadily rose
along with the development of the nation’s infrastructure, from 2.48 percent to 12.3 percent.
The aggregate energy efficiency leveled off in the 1990s at around 14 percent with the
completion of the Second Industrial Revolution infrastructure. 5 Despite a significant increase in
efficiency, which gave the United States extraordinary productivity and growth, nearly 86
percent of the energy we used in the Second Industrial Revolution was wasted during
transmission.
Even if we were to upgrade the Second Industrial Revolution infrastructure, there will be only a
limited effect on aggregate efficiency, productivity, and growth. Fossil fuel energies have
matured. And the technologies designed and engineered to run on these energies, like the
internal-combustion engine and the centralized electricity grid, have exhausted their
productivity, with little potential left to exploit.
Needless to say, 100 percent thermodynamic efficiency is impossible. New studies, however,
including one conducted by our global consulting group, show that with the shift to a Third
Industrial Revolution infrastructure, it is conceivable to increase aggregate energy efficiency to
60 percent or more over the next 40 years, amounting to a dramatic increase in productivity
beyond what the economy experienced in the 20 th Century.
A 2015 McKinsey report suggests that the build out and scale up of an Internet of Things
infrastructure will have a 'value potential' of between $3.9 trillion to $11.1 trillion per year by
2025. 6 A General Electric study published in November 2012 concludes that the efficiency gains
and productivity advances induced by a smart industrial Internet could resound across virtually
every economic sector by 2025, impacting “approximately one half of the global economy.” 7 A
5 John A. “Skip” Laitner, Steven Nadel, R. Neal Elliott, Harvey Sachs, and A Siddiq Khan, “The
Long-Term Energy Efficiency Potential: What the Evidence Suggests,” American Council for an
Energy-Efficient Economy, January 2012, http://www.garrisoninstitute.org/downloads/ecology
/cmb/Laitner_Long-Term_E_E_Potential.pdf, 2
6 See: http://www.mckinsey.com/business-functions/digital-mckinsey/our-insights/the-internet-of-things-thevalue-of-digitizing-the-physical-world
7 See: https://www.ge.com/docs/chapters/Industrial_Internet.pdf
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