[Posted at Huffington here]

It's pretty clear that the business world is facing dramatic change driven by environmental concerns. Over the coming years and decades, we're going to change the entire energy system and find new ways to design, make, ship, sell, and consume things. While it's uncertain if quality of life will suffer (and I hope not), the quantity of resources used will change dramatically - e.g., using a lot less energy, or at least carbon-driven energy, to power our lives.

And this change is becoming a business imperative regardless of whether you buy the climate change argument (and I really don't want to open that can of worms from my last post ). Just looking at the high price of everything from metals to food to fuels, the case for being radically more resource efficient is getting clearer every day. What's also clear is that the world can't currently provide for what will be nine or ten billion people who all want our lifestyle (the government of China has set a goal of moving half its population into the middle class by 2020 - that's 600 million people; if they all use oil at our rate, China alone will need more than the world produces by 2030 or so). At current technologies and modes of production, there isn't enough stuff. So there's a business need and a system overload requirement that we innovate and do more with less.

But don't just take my word for it.

The Wall Street Journal ran a stunning article recently that I've been mulling over for awhile and needed to get my head around. It was titled, "New Limits to Growth Revive Malthusian Fears." The shocking part of this article was the fact that it didn't malign the idea that we may run out of things, which Milton Friedman-esque business people have been laughing at for 200 years (since Thomas Malthus first drew an exponential population chart plotted against a geometric resource growth chart and said we'd all starve). Yes, those doomsayers have been very wrong in critical ways, mainly related to our ability to innovate and substitute out of products when we found new options (like from whale oil to kerosene to oil).

But the Journal was deadly serious, talking about resources like water that we can't substitute our way out of. The related point was that there's really nothing left to substitute to -- we know where pretty much everything is. Two quotes were fascinating: "Record highs in the prices for oil, wheat, copper...are signs of a lasting shift in demand as yet unmatched by supply". The "as yet" is a big qualifier, but it feels a bit like wishful thinking, especially given the second quote from ConocoPhillips CEO James Mulva: "I don't think we are going to see the [oil] supply going over 100 million barrels a day, and the reason is: Where is all that going to come from?" So even the oil CEOs are telling us there's not enough stuff.

So what does this mean for business and how is it connected to the green movement? First, rising prices for nearly everything mean we're entering the big leagues. Whether you call it "green" or "eco-efficiency" doesn't matter; either way, all the efficiency tools we have - such as total quality, lean manufacturing, six sigma - are going to be put to the test. If your company has a knack for cutting out waste and reducing resource use, it will survive and thrive. If you can't reduce your reliance on fossil fuels in your whole value chain - from sourcing to manufacturing to distribution - you may be in trouble.

Second, if you can offer a new "supply" to help bolster that side of the Econ 101 curves, you will have a giant market to satisfy (those billions of consumers). And I'm talking about smart supply growth, not the corn ethanol kind that actually exacerbates all of our problems. I'm talking new low-carbon energy, water saving technologies and processes, good design principles, building efficiency, and on and on.

The mad race for renewable energy technologies and the dramatic shift in car offerings are good examples. The venture capital money flowing to new technologies easily recalls the Internet boom. But is this one a bubble? It might be, but these entrepreneurs are working to satisfy existing multi-trillion dollar energy and resource markets, not trying to create new markets or needs. So money from the biggest, smartest names in Silicon Valley is flowing freely. This is a very good thing. There will be a shakeout, but some winners will win big.

As demand for resources outstrips supply, the Journal worried, what if countries just try to grab what's left in a big resource fight? Companies might go down a biggest is best path as well. But won't the best companies profit much more if they just find a way to need less? And won't the competitors that help their customers use less do extremely well?

Everybody in the world should read a new Fortune article about Matt Simmons, the oil analyst turned peak-oil prophet. As a lifelong Republican, Bush campaign and energy policy contributor, and Houston-based oil guy, he's an unusual leader of the peak oil theorists. Simmons has become convinced that Saudi Arabia and others don't have as much in reserve as they say.

Simmons is not alone. T. Boone Pickens, oil billionaire, has been making a lot of noise about how we can't drill our way out of this...and he's building the world's largest wind farm to demonstrate his commitment. Not a commitment to the environment, but to making money and enhancing national security.

Just to clarify: peak oil doesn't mean we've run out. It means we've hit the peak of production. There's still a lot in the ground, but it's harder and harder to get out. It's not just analysts warning about this. We're at 85 million barrels per day now globally, but clearly the world is growing. So can we supply the 100 million barrels and more we'll need in short order? Well, let's listen to James Mulva, CEO of Conoco Phillips earlier this year: "I don't think we are going to see supply going over 100MM barrels a day...Where is all that going to come from?"

So supply is a problem, but it's not actually the biggest one. My college days, when not spent on other pursuits, included a degree in economics. I can't claim to remember that much, but I do know one Econ 101 basic fact. If demand grows, and supply is "inelastic" (meaning it's really hard to change the amount), the price will rise, and sometimes very, very fast.

As much as supply is certainly inelastic - you know how hard it is to get oil from Canadian oil sands or from 5 miles under water? - the real story is demand. It's almost trite to say, but the growth of India and China is impossible to grasp and will drive prices of everything up and up. The highly respected business strategist, CK Prahalad, recently talked about some trends in India. Every minute 30 people move to the city, meaning India will need hundreds of new cities over the next 20-30 years. As these people desire more middle class lifestyles, consumption will rise. Just one example: If they all add a bit of chicken protein to their diet, Prahalad says, we'll need to double current global agricultural output to feed them. A lot of oil goes into agriculture, and that's just to satisfy India. China statistics are just as crazy (another Fortune article recently described a nice little Cleveland-sized community going up outside of Shanghai - and it's one of ten suburbs being built).

But in the end, the debate is almost moot. The problem is not just that it's harder to get oil - it's that we're all in deep trouble if we do actually get it and burn it all. Climate change and environmental damage are going to push us away from fossil fuels long before we get through it all. This is a hard reality for an industry to take, but we're going to have to leave a trillion barrels in the ground - or at least only take it out to make stuff from it (those molecules are really useful for chemicals, plastics, etc). Burning it is the problem.

Peter Schwartz, the futurist (a job that I absolutely love -- but how do you really know if you're good at it?), says some very wise things along these lines. He says the peak oil guys are wrong and couldn't possibly know how much is left, but he says it doesn't really matter:

"We are not going to run out of oil before the issue of climate change drives change. It'll be costly oil. But it'll be climate change catastrophes [such as sudden, unexpected displacement of large numbers of people, and massive property damage], and more expensive oil, not the fact that we're running out of oil, that will drive change."

I agree. But take your pick - constrained supply, rising demand, and climate change. All are pretty good indications of one fundamental reality: Energy will never be cheap again. There will be some incredible pain coming for people, companies, and countries that don't use energy wisely. Getting lean will not be only one element of a good, sustainable business - it may be the only thing that matters.

[This first appeared on Huffington Post]