Debates that have preoccupied and in some cases paralyzed growth in the US energy sector could be overshadowed by the development of a single megatrend at the heart of the global economy: the transition to electric drives in machines of all kinds.

While electric vehicles are the most visible aspect of that change, and with roughly 250 million cars on the road any switch from gasoline to electric is significant, the switch from motors driven by their own internal combustion devices to significantly more efficient electric systems is already occurring in many parts of the economy where the infrastructure and the focus on cost reduction already exists.

Debates about renewable energy versus fossil fuels and about emissions legislation versus job growth are potentially short-lived side shows amid the broader transition of the industrialized economy from the motors with their roots in the steam engines of the Industrial Revolution to electricity usage and reliance across the energy delivery chain. With most of the money spent in the energy sector going on moving it from origin to customer, the savings could be enormous and the spin-off innovations transformative.

“Market forces have propelled the progressive electrification of factories, offices and homes for over a century,” Manhattan Institute senior fellow Peter Huber writes in a report “Broadband Electricity and the Free-Market Path to Electric Cars.”

“Electric motors and associated systems that convey and control the electricity they need…have likewise displaced mechanical alternatives in locomotives and monster trucks. High-power semiconductors developed in the 1980s are now being deployed inside cars to electrify water and oil pumps, radiator-cooling fans, brakes, throttles, steering systems, shock absorbers and engine valves,” Huber writes.

“These trends point toward the last great leap…Electric drives are much cheaper to manufacture, and they convey far more power in much smaller, lighter conduits…As drivetrains are progressively electrified, everything shrinks, everything gets lighter and every aspect of performance improves.”

Huber makes the argument for deregulation of the last mile of the electricity grid as a motivation to promoting the use of electric cars, with a focus on the dynamics of the electric vehicle battery. His larger point, of the ever-increasing importance of electricity in the economy and the inability of the current regulatory and fuel delivery structure to deal with that transformation, emerged in a separate appearance on a panel at the Platts Global Energy Outlook Forum in New York this week.

Huber at first struck an odd note on a panel devoted to the green economy, starting out his remarks by declaring the idea that developing countries would develop green energy infrastructure instead of fossil fuel power plants as “preposterous and fanciful.”

“The Chinese are happy to sell cheap solar panels to Germany the same way [Europeans] were happy to sell opium to China [in the nineteenth century],” he said, dismissing the economics of green energy in its current form.

Where hope for the world’s energy economy emerges for Huber is in the “massive trend toward electrification.” Citing his experience in the telecoms industry, he noted the similarities in the current structure of the grid, calling its inability to move power from high-priced to low-priced regions the result of “mistaken federal policy and disastrous regulation.”

New electricity infrastructure made possible through deregulation of the sector underpinned both Huber’s attention-getting comments at the Forum and in his Electric Cars report. Current regulations keep the industry hidebound and make the old technology cheaper to the individual consumer; each participant in the energy market is acting rationally on their own behalf, but the system itself warps the results.

“New investment in an infrastructure needed to power electric cars will be especially risky. Without a significant stake in the upside, utilities have good reason to let buyers of electric cars take the lead before rolling out a new battery-charging grid infrastructure,” he writes in the Manhattan Institute report. “But many potential buyers who could benefit from making the switch probably won’t do so without a charging infrastructure in place.”

Echoing comments heard throughout the day at the forum and in discussions Breaking Energy has had with industry executives, even some at major oil producers, Huber says: “The stage is thus set for an ‘after you’ waiting game played out between electric companies and car buyers, with oil companies the likely winners.”

Photo Caption: Activists from the environmental group ‘’ prepare to plug a giant power plug into a mock solar panel in front of the Brandenburg Gate in Berlin on October 10, 2010 to symbolise the switch to renewable energy. Communities across Europe joined what they branded as the world’s biggest day of climate action ever, with more than 7000 events in 188 countries as a part of the 10/10/10 Global work party.