We Could Be Witnessing the Death of the Fossil Fuel Industry—Will It Take the Rest of the Economy Down With It?

24 04 2016


Nafeez Mosaddeq Ahmed

Originally published on Alternet’s website, this compelling article by Nafeez Ahmed supports much of what has been published on Damnthematrix…..

It’s not looking good for the global fossil fuel industry. Although the world remains heavily dependent on oil, coal and natural gas—which today supply around 80 percent of our primary energy needs—the industry is rapidly crumbling.

This is not merely a temporary blip, but a symptom of a deeper, long-term process related to global capitalism’s escalating overconsumption of planetary resources and raw materials.

New scientific research shows that the growing crisis of profitability facing fossil fuel industries is part of an inevitable period of transition to a post-carbon era.

But ongoing denialism has led powerful vested interests to continue clinging blindly to their faith in fossil fuels, with increasingly devastating and unpredictable consequences for the environment.

Bankruptcy epidemic

In February, the financial services firm Deloitte predicted that over 35 percent of independent oil companies worldwide are likely to declare bankruptcy, potentially followed by a further 30 percent next year—a total of 65 percent of oil firms around the world. Since early last year, already 50 North American oil and gas producers have filed bankruptcy.

The cause of the crisis is the dramatic drop in oil prices—down by two-thirds since 2014—which are so low that oil companies are finding it difficult to generate enough revenue to cover the high costs of production, while also repaying their loans.

Oil and gas companies most at risk are those with the largest debt burden. And that burden is huge—as much as $2.5 trillion, according to The Economist. The real figure is probably higher.

At a speech at the London School of Economics in February, Jaime Caruana of the Bank for International Settlements said that outstanding loans and bonds for the oil and gas industry had almost tripled between 2006 and 2014 to a total of $3 trillion.

This massive debt burden, he explained, has put the industry in a double-bind: In order to service the debt, they are continuing to produce more oil for sale, but that only contributes to lower market prices. Decreased oil revenues means less capacity to repay the debt, thus increasing the likelihood of default.

Stranded assets

This $3 trillion of debt is at risk because it was supposed to generate a 3-to-1 increase in value, but instead—thanks to the oil price decline—represents a value of less than half of this.

Worse, according to a Goldman Sachs study quietly published in December last year, as much as $1 trillion of investments in future oil projects around the world are unprofitable; i.e., effectively stranded.

Examining 400 of the world’s largest new oil and gas fields (except U.S. shale), the Goldman study found that $930 billion worth of projects (more than two-thirds) are unprofitable at Brent crude prices below $70. (Prices are now well below that.)

The collapse of these projects due to unprofitability would result in the loss of oil and gas production equivalent to a colossal 8 percent of current global demand. If that happens, suddenly or otherwise, it would wreck the global economy.

The Goldman analysis was based purely on the internal dynamics of the industry. A further issue is that internationally-recognized climate change risks mean that to avert dangerous global warming, much of the world’s remaining fossil fuel resources cannot be burned.

All of this is leading investors to question the wisdom of their investments, given fears that much of the assets that the oil, gas and coal industries use to estimate their own worth could consist of resources that will never ultimately be used.

The Carbon Tracker Initiative, which analyzes carbon investment risks, points out that over the next decade, fossil fuel companies risk wasting up to $2.2 trillion of investments in new projects that could turn out to be “uneconomic” in the face of international climate mitigation policies.

More and more fossil fuel industry shareholders are pressuring energy companies to stop investing in exploration for fear that new projects could become worthless due to climate risks.

“Clean technology and climate policy are already reducing fossil fuel demand,” said James Leaton, head of research at Carbon Tracker. “Misreading these trends will destroy shareholder value. Companies need to apply 2C stress tests to their business models now.”

In a prescient report published last November, Carbon Tracker identified the energy majors with the greatest exposures—and thus facing the greatest risks—from stranded assets: Royal Dutch Shell, Pemex, Exxon Mobil, Peabody Energy, Coal India and Glencore.

At the time, the industry scoffed at such a bold pronouncement. Six months after this report was released—a week ago—Peabody went bankrupt. Who’s next?

The Carbon Tracker analysis may underestimate the extent of potential losses. A new paper just out in the journal Applied Energy, from a team at Oxford University’s Institute for New Economic Thinking, shows that the “stranded assets” concept applies not just to unburnable fossil fuel reserves, but also to a vast global carbon-intensive electricity infrastructure, which could be rendered as defunct as the fossil fuels it burns and supplies to market.

The coming debt spiral

Some analysts believe the hidden trillion-dollar black hole at the heart of the oil industry is set to trigger another global financial crisis, similar in scale to the Dot-Com crash.

Jason Schenker, president and chief economist at Prestige Economics, says: “Oil prices simply aren’t going to rise fast enough to keep oil and energy companies from defaulting. Then there is a real contagion risk to financial companies and from there to the rest of the economy.”

Schenker has been ranked by Bloomberg News as one of the most accurate financial forecasters in the world since 2010. The US economy, he forecasts, will dip into recession at the end of 2016 or early 2017.

Mark Harrington, an oil industry consultant, goes further. He believes the resulting economic crisis from cascading debt defaults in the industry could make the 2007-8 financial crash look like a cakewalk. “Oil and gas companies borrowed heavily when oil prices were soaring above $70 a barrel,” he wrote on CNBC in January.

“But in the past 24 months, they’ve seen their values and cash flows erode ferociously as oil prices plunge—and that’s made it hard for some to pay back that debt. This could lead to a massive credit crunch like the one we saw in 2008. With our economy just getting back on its feet from the global 2008 financial crisis, timing could not be worse.”

Ratings agency Standard & Poor (S&P) reported this week that 46 companies have defaulted on their debt this year—the highest levels since the depths of the financial crisis in 2009. The total quantity in defaults so far is $50 billion.

Half this year’s defaults are from the oil and gas industry, according to S&P, followed by the metals, mining and the steel sector. Among them was coal giant Peabody Energy.

Despite public reassurances, bank exposure to these energy risks from unfunded loan facilities remains high. Officially, only 2.5 percent of bank assets are exposed to energy risks.

But it’s probably worse. Confidential Wall Street sources claim that the Federal Reserve in Dallas has secretly advised major U.S. banks in closed-door meetings to cover-up potential energy-related losses. The Federal Reserve denies the allegations, but refuses to respond to Freedom of Information requests on internal meetings, on the obviously false pretext that it keeps no records of any of its meetings.

According to Bronka Rzepkoswki of the financial advisory firm Oxford Economics, over a third of the entire U.S. high yield bond index is vulnerable to low oil prices, increasing the risk of a tidal wave of corporate bankruptcies: “Conditions that usually pave the way for mounting defaults—such as growing bad debt, tightening monetary conditions, tightening of corporate credit standards and volatility spikes – are currently met in the U.S.”

The end of cheap oil

Behind the crisis of oil’s profitability that threatens the entire global economy is a geophysical crisis in the availability of cheap oil. Cheap here does not refer simply to the market price of oil, but the total cost of production. More specifically, it refers to the value of energy.

There is a precise scientific measure for this, virtually unknown in conventional economic and financial circles, known as Energy Return on Investment—which essentially quantifies the amount of energy extracted, compared to the inputs of energy needed to conduct the extraction. The concept of EROI was first proposed and developed by Professor Charles A. Hall of the Department of Environmental and Forest Biology at the State University of New York. He found that an approximate EROI value for any energy source could be calculated by dividing the quantity of energy produced by the amount of energy inputted into the production process.

Therefore, the higher the EROI, the more energy that a particular source and technology is capable of producing. The lower the EROI, the less energy this source and technology is actually producing.

A new peer-reviewed study led by the Institute of Physics at the National Autonomous University of Mexico has undertaken a comparative review of the EROI of all the major sources of energy that currently underpin industrial civilization—namely oil, gas, coal, and uranium.

Published in the journal Perspectives on Global Development and Technology, the scientists note that the EROI for fossil fuels has inexorably declined over a relatively short period of time: “Nowadays, the world average value EROI for hydrocarbons in the world has gone from a value of 35 to a value of 15 between 1960 and 1980.”

In other words, in just two decades, the total value of the energy being produced via fossil fuel extraction has plummeted by more than half. And it continues to decline.

This is because the more fossil fuel resources that we exploit, the more we have used up those resources that are easiest and cheapest to extract. This compels the industry to rely increasingly on resources that are more difficult and expensive to get out of the ground, and bring to market.

The EROI for conventional oil, according to the Mexican scientists, is 18. They estimate, optimistically, that: “World reserves could last for 35 or 45 years at current consumption rates.” For gas, the EROI is 10, and world reserves will last around “45 or 55 years.” Nuclear’s EROI is 6.5, and according to the study authors, “The peak in world production of uranium will be reached by 2045.”

The problem is that although we are not running out of oil, we are running out of the cheapest, easiest to extract form of oil and gas. Increasingly, the industry is making up for the shortfall by turning to unconventional forms of oil and gas—but these have very little energy value from an EROI perspective.

The Mexico team examine the EROI values of these unconventional sources, tar sands, shale oil, and shale gas: “The average value for EROI of tar sands is four. Only ten percent of that amount is economically profitable with current technology.”

For shale oil and gas, the situation is even more dire: “The EROI varies between 1.5 and 4, with an average value of 2.8. Shale oil is very similar to the tar sands; being both oil sources of very low quality. The shale gas revolution did not start because its exploitation was a very good idea; but because the most attractive economic opportunities were previously exploited and exhausted.”

In effect, the growing reliance on unconventional oil and gas has meant that, overall, the costs and inputs into energy production to keep industrial civilization moving are rising inexorably.

It’s not that governments don’t know. It’s that decisions have already been made to protect the vested interests that have effectively captured government policymaking through lobbying, networking and donations.

Three years ago, the British government’s Department for International Development (DFID) commissioned and published an in-depth report, “EROI of Global Energy Resources: Status, Trends and Social Implications.” The report went completely unnoticed by the media.

Its findings are instructive: “We find the EROI for each major fossil fuel resource (except coal) has declined substantially over the last century. Most renewable and non-conventional energy alternatives have substantially lower EROI values than conventional fossil fuels.”

The decline in EROI has meant that an increasing amount of the energy we extract is having to be diverted back into getting new energy out, leaving less for other social investments.

This means that the global economic slowdown is directly related to the declining resource quality of fossil fuels. The DFID report warns: “The declining EROI of traditional fossil fuel energy sources and its eventual effect on the world economy are likely to result in a myriad of unforeseen consequences.”

Shortly after this report was released, I met with a senior civil servant at DFID familiar with its findings, who spoke to me on condition of anonymity. I asked him whether this important research had actually impacted policymaking in the department.

“Unfortunately, no,” he told me, shrugging. “Most of my colleagues, except perhaps a handful, simply don’t have a clue about these issues. And of course, despite the report being circulated widely within the department, and shared with other relevant government departments, there is little interest from ministers who appear to be ideologically pre-committed to fracking.”

Peak oil

The driving force behind the accelerating decline in resource quality, hotly denied in the industry, is ‘peak oil.’

An extensive scientific analysis published in February in Wiley Interdisciplinary Reviews: Energy & Environment lays bare the extent of industry denialism. Wiley Interdisciplinary Reviews (WIRES) is a series of high-quality peer-reviewed publications which runs authoritative reviews of the literature across relevant academic disciplines.

The new WIRES paper is authored by Professor Michael Jefferson of the ESCP Europe Business School, a former chief economist at oil major Royal Dutch/Shell Group, where he spent nearly 20 years in various senior roles from Head of Planning in Europe to Director of Oil Supply and Trading. He later became Deputy Secretary-General of the World Energy Council, and is editor of the leading Elsevier science journal Energy Policy.

In his new study, Jefferson examines a recent 1865-page “global energy assessment” (GES) published by the International Institute of Applied Systems Analysis. But he criticized the GES for essentially ducking the issue of ‘peak oil.”

“This was rather odd,” he wrote. “First, because the evidence suggests that the global production of conventional oil plateaued and may have begun to decline from 2005.”

He went on to explain that standard industry assessments of the size of global conventional oil reserves have been dramatically inflated, noting how “the five major Middle East oil exporters altered the basis of their definition of ‘proved’ conventional oil reserves from a 90 percent probability down to a 50 percent probability from 1984. The result has been an apparent (but not real) increase in their ‘proved’ conventional oil reserves of some 435 billion barrels.”

Added to those estimates are reserve figures from Venezuelan heavy oil and Canadian tar sands, bringing up global reserve estimates by a further 440 billion barrels, despite the fact that they are “more difficult and costly to extract” and generally of “poorer quality” than conventional oil.

“Put bluntly, the standard claim that the world has proved conventional oil reserves of nearly 1.7 trillion barrels is overstated by about 875 billion barrels. Thus, despite the fall in crude oil prices from a new peak in June, 2014, after that of July, 2008, the ‘peak oil’ issue remains with us.”

Jefferson believes that a nominal economic recovery, combined with cutbacks in production as the industry reacts to its internal crises, will eventually put the current oil supply glut in reverse. This will pave the way for “further major oil price rises” in years to come.

It’s not entirely clear if this will happen. If the oil crisis hits the economy hard, then the prolonged recession that results could dampen the rising demand that everyone projects. If oil prices thus remain relatively depressed for longer than expected, this could hemorrhage the industry beyond repair.

Eventually, the loss of production may allow prices to rise again. OPEC estimates that investments in oil exploration and development are at their lowest level in six years. As bankruptcies escalate, the accompanying drop in investments will eventually lead world oil production to fall, even as global demand begins to rise.

This could lead oil prices to climb much higher, as rocketing demand—projected to grow 50 percent by 2035—hits the scarcity of production. Such a price spike, ironically, would also be incredibly bad for the global economy, and as happened with the 2007-8 financial crash, could feed into inflation and trigger another spate of consumer debt-defaults in the housing markets.

Even if that happens, the assumption—the hope—is that oil industry majors will somehow survive the preceding cascade of debt-defaults. The other assumption, is that demand for oil will rise.

But as new sources of renewable energy come online at a faster and faster pace, as innovation in clean technologies accelerates, old fossil fuel-centric projections of future rising demand for oil may need to be jettisoned.

Clean energy

According to another new study released in March in Energy Policy by two scientists at Texas A&M University, “Non-renewable energy”—that is “fossil fuels and nuclear power”—“are projected to peak around mid-century … Subsequent declining non-renewable production will require a rapid expansion in the renewable energy sources (RES) if either population and/or economic growth is to continue.”

The demise of the fossil fuel empire, the study forecasts, is inevitable. Whichever model run the scientists used, the end output was the same: the almost total displacement of fossil fuels by renewable energy sources by the end of the century; and, as a result, the transformation and localisation of economic activity.

But the paper adds that to avoid a rise in global average temperatures of 2C, which would tip climate change into the danger zone, 50 percent or more of existing fossil fuel reserves must remain unused.

The imperative to transition away from fossil fuels is, therefore, both geophysical and environmental. On the one hand, by mid-century, fossil fuels and nuclear power will become obsolete as a viable source of energy due to their increasingly high costs and low quality. On the other, even before then, to maintain what scientists describe as a ‘safe operating space’ for human survival, we cannot permit the planet to warm a further 2C without risking disastrous climate impacts.

Staying below 2C, the study finds, will require renewable energy to supply more than 50 percent of total global energy by 2028, “a 37-fold increase in the annual rate of supplying renewable energy in only 13 years.”

While this appears to be a herculean task by any standard, the Texas A&M scientists conclude that by century’s end, the demise of fossil fuels is going to happen anyway, with or without considerations over climate risks:

… the ‘ambitious’ end-of-century decarbonisation goals set by the G7 leaders will be achieved due to economic and geologic fossil fuel limitations within even the unconstrained scenario in which little-to-no pro-active commitment to decarbonise is required… Our model results indicate that, with or without climate considerations, RES [renewable energy sources] will comprise 87–94 percent of total energy demand by the end of the century.

But as renewables have a much lower EROI than fossil fuels, this will “quickly reduce the share of net energy available for societal use.” With less energy available to societies, “it is speculated that there will have to be a reprioritization of societal energetic needs”—in other words, a very different kind of economy in which unlimited material growth underpinned by endless inputs of cheap fossil fuel energy are a relic of the early 21st century.

The 37-fold annual rate of increase in the renewable energy supply seems unachievable at first glance, but new data just released from the Abu Dhabi-based International Renewable Energy Agency shows that clean power is well on its way, despite lacking the massive subsidies behind fossil fuels.

The data reveals that last year, solar power capacity rose by 37 percent. Wind power grew by 17 percent, geothermal by 5 percent and hydropower by 3 percent.

So far, the growth rate for solar power has been exponential. A Deloitte Center for Energy Solutions report from September 2015 noted that the speed and spread of solar energy had consistently outpaced conventional linear projections, and continues to do so.

While the costs of solar power is consistently declining, solar power generation has doubled every year for the last 20 years. With every doubling of solar infrastructure, the production costs of solar photovoltaic (PV) has dropped by 22 percent.

At this rate, according to analysts like Tony Seba—a lecturer in business entrepreneurship, disruption and clean energy at Stanford University—the growth of solar is already on track to go global. With eight more doublings, that’s by 2030, solar power would be capable of supplying 100 percent of the world’s energy needs. And that’s even without the right mix of government policies in place to support renewables.

According to Deloitte, while Seba’s forecast is endorsed by a minority of experts, it remains a real possibility that should be taken seriously. But the firm points out that obstacles remain:

“It would not make economic sense for utility planners to shutter thousands of megawatts of existing generating capacity before the end of its economic life and replace it with new solar generation.”

Yet Deloitte’s study did not account for the escalating crisis in profitability already engulfing the fossil fuel industries, and the looming pressure of stranded assets due to climate risks. As the uneconomic nature of fossil fuels becomes evermore obvious, so too will the economic appeal of clean energy.

Race against time

The question is whether the transition to a post-carbon energy system—the acceptance of the inevitable death of the oil economy—will occur fast enough to avoid climate catastrophe.

Given that the 2C target for a safe climate is widely recognized to be inadequate—scientists increasingly argue that even a 1C rise in global average temperatures would be sufficient to trigger dangerous, irreversible changes to the earth’s climate.

According to a 2011 report by the National Academy of Sciences, the scientific consensus shows conservatively that for every degree of warming, we will see the following impacts: 5-15 percent reductions in crop yields; 3-10 percent increases in rainfall in some regions contributing to flooding; 5-10 percent decreases in stream-flow in some river basins, including the Arkansas and the Rio Grande, contributing to scarcity of potable water; 200-400 percent increases in the area burned by wildfire in the US; 15 percent decreases in annual average Arctic sea ice, with 25 percent decreases in the yearly minimum extent in September.

Even if all CO2 emissions stopped, the climate would continue to warm for several more centuries. Over thousands of years, the National Academy warns, this could unleash amplifying feedbacks leading to the disappearance of the polar ice sheets and other dramatic changes. In the meantime, the risk of catastrophic wild cards “such as the potential large-scale release of methane from deep-sea sediments” or permafrost, is impossible to quantify.

In this context, even if the solar-driven clean energy revolution had every success, we still need to remove carbon that has already accumulated in the atmosphere, to return the climate to safety.

The idea of removing carbon from the atmosphere sounds technologically difficult and insanely expensive. It’s not. In reality, it is relatively simple and cheap.

A new book by Eric Toensmeier, a lecturer at Yale University’s School of Forestry and Environmental Studies, The Carbon Farming Solution, sets out in stunningly accessible fashion how ‘regenerative farming’ provides the ultimate carbon-sequestration solution.

Regenerative farming is a form of small-scale, localised, community-centred organic agriculture which uses techniques that remove carbon from the atmosphere, and sequester it in plant material or soil.

Using an array of land management and conservation practices, many of which have been tried and tested by indigenous communities, it’s theoretically possible to scale up regenerative farming methods in a way that dramatically offsets global carbon emissions.

Toensmeier’s valuable book discusses these techniques, and unlike other science-minded tomes, offers a practical toolkit for communities to begin exploring how they can adopt regenerative farming practices for themselves.

According to the Rodale Institute, the application of regenerative farming on a global scale could have revolutionary results:

Simply put, recent data from farming systems and pasture trials around the globe show that we could sequester more than 100 percent of current annual CO2 emissions with a switch to widely available and inexpensive organic management practices, which we term ‘regenerative organic agriculture’… These practices work to maximize carbon fixation while minimizing the loss of that carbon once returned to the soil, reversing the greenhouse effect.

This has been widely corroborated. For instance, a 2015 study part-funded by the Chinese Academy of Sciences found that “replacing chemical fertilizer with organic manure significantly decreased the emission of GHGs [greenhouse gases]. Yields of wheat and corn also increased as the soil fertility was improved by the application of cattle manure. Totally replacing chemical fertilizer with organic manure decreased GHG emissions, which reversed the agriculture ecosystem from a carbon source… to a carbon sink.”

Governments are catching on, if slowly. At the Paris climate talks, 25 countries and over 50 NGOs signed up to the French government’s ‘4 per 1000’ initiative, a global agreement to promote regenerative farming as a solution for food security and climate disaster.

The birth of post-capitalism

There can be no doubt, then, that by the end of this century, life as we know it on planet earth will be very different. Fossil fueled predatory capitalism will be dead. In its place, human civilization will have little choice but to rely on a diversity of clean, renewable energy sources.

Whatever choices we make this century, the coming generations in the post-carbon future will have to deal with the realities of an overall warmer, and therefore more unpredictable, climate. Even if regenerative processes are in place to draw-down carbon from the atmosphere, this takes time—and in the process, some of the damage climate change will wreak on our oceans, our forests, our waterways, our coasts, and our soils will be irreversible.

It could take centuries, if not millennia, for the planet to reach a new, stable equilibrium.

But either way, the work of repairing and mitigating at least some of the damage done will be the task of our childrens’ children, and their children, and on.

Economic activity in this global society will of necessity be very different to the endless growth juggernaut we have experienced since the industrial revolution. In this post-carbon future, material production and consumption, and technological innovation, will only be sustainable through a participatory ‘circular economy’ in which scarce minerals and raw materials are carefully managed.

The fast-paced consumerism that we take for granted today simply won’t work in these circumstances.

Large top-down national and transnational structures will begin to become obsolete due to the large costs of maintenance, the unsustainability of the energy inputs needed for their survival, and the shift in power to new decentralized producers of energy and food.

In the place of such top-down structures, smaller-scale, networked forms of political, social and economic organization, connected through revolutionary information technologies, will be most likely to succeed. For communities to not just survive, but thrive, they will need to work together, sharing technology, expertise and knowledge on the basis of a new culture of human parity and cooperation.

Of course, before we get to this point, there will be upheaval. Today’s fossil fuel incumbency remains in denial, and is unlikely to accept the reality of its inevitable demise until it really does drop dead.

The escalation of resource wars, domestic unrest, xenophobia, state-militarism, and corporate totalitarianism is to be expected. These are the death throes of a system that has run its course.

The outcomes of the struggles which emerge in coming decades—struggles between people and power, but also futile geopolitical struggles within the old centers of power (paralleled by misguided struggles between peoples)—is yet to be written.

Eager to cling to the last vestiges of existence, the old centers of power will still try to self-maximize within the framework of the old paradigm, at the expense of competing power-centers, and even their own populations.

And they will deflect from the root causes of the problem as much as possible, by encouraging their constituents to blame other power-centers, or worse, some of their fellow citizens, along the lines of all manner of ‘Otherizing’ constructs, race, ethnicity, nationality, color, religion and even class.

Have no doubt. In coming decades, we will watch the old paradigm cannibalize itself to death on our TV screens, tablets and cell phones. Many of us will do more than watch. We will be participant observers, victims or perpetrators, or both at once.

The only question that counts, is as follows: amidst this unfolding maelstrom, are we going to join with others to plant the seeds of viable post-carbon societies for the next generations of human-beings, or are we going to stand in the way of that viable future by giving ourselves entirely to defending our ‘interests’ in the framework of the old paradigm?

Whatever happens over coming decades, it will be the choices each of us make that will ultimately determine the nature of what survives by the end of this pivotal, transitional century.

Nafeez Ahmed is an investigative journalist and international security scholar. He writes the System Shift column for VICE’s Motherboard, and is the winner of a 2015 Project Censored Award for Outstanding Investigative Journalism for his former work at the Guardian. He is the author of A User’s Guide to the Crisis of Civilization: And How to Save It (2010), and the scifi thriller novel Zero Point, among other books.

Limits to growth: policies to steer the economy away from disaster

21 04 2016

Samuel Alexander, University of Melbourne

If the rich nations in the world keep growing their economies by 2% each year and by 2050 the poorest nations catch up, the global economy of more than 9 billion people will be around 15 times larger than it is now, in terms of gross domestic product (GDP). If the global economy then grows by 3% to the end of the century, it will be 60 times larger than now.

The existing economy is already environmentally unsustainable. It is utterly implausible to think we can “decouple” economic growth from environmental impact so significantly, especially since recent decades of extraordinary technological advancement have only increased our impacts on the planet, not reduced them.

Moreover, if you asked politicians whether they’d rather have 4% growth than 3%, they’d all say yes. This makes the growth trajectory outlined above all the more absurd.

Others have shown why limitless growth is a recipe for disaster. I’ve argued that living in a degrowth economy would actually increase well-being, both socially and environmentally. But what would it take to get there?

In a new paper published by the Melbourne Sustainable Society Institute, I look at government policies that could facilitate a planned transition beyond growth – and I reflect on the huge obstacles lying in the way.

Measuring progress

First, we need to know what we’re aiming for.

It is now widely recognised that GDP – the monetary value of all goods and services produced in an economy – is a deeply flawed measure of progress.

GDP can be growing while our environment is being degraded, inequality is worsening, and social well-being is stagnant or falling. Better indicators of progress include the Genuine Progress Indicator (GPI), which accounts for a wide range of social, economic and environmental factors.

Cap resources and energy

Environmental impact is driven by demand for resources and energy. It is now clear that the planet cannot possibly support current or bigger populations if developing nations used the same amount of resources and energy as developed nations.

Demand can be reduced through efficiency gains (doing more with less), but these gains tend to be reinvested in more growth and consumption, rather than reducing impacts.

A post-growth economy would therefore need diminishing “resource caps” to achieve sustainability. These would aim to limit a nation’s consumption to a “fair share” of available resources. This in turn would stimulate efficiency, technological innovation and recycling, thereby minimising waste.

This means that a post-growth economy will need to produce and consume in far less resource-intensive ways, which will almost certainly mean reduced GDP. There will of course be scope to progress in other ways, such as increased leisure time and community engagement.

Work less, live more

Growth in GDP is often defended on the grounds that it is required to keep unemployment at manageable levels. So jobs will have to maintained in other ways.

Even though GDP has been growing quite consistently in recent decades, many Westerners, including Australians, still seem to be locked into a culture of overwork.

By reducing the average working week to 28 hours, a post-growth economy would share the available work among the working population. This would minimise or eliminate unemployment even in a non-growing or contracting economy.

Lower income would mean we would have less stuff, reducing environmental impact, but we would receive more freedom in exchange. Planned degrowth is therefore very different to unplanned recession.

Redirect public spending

Governments are the most significant player in any economy and have the most spending power. Taking limits to growth seriously will require a fundamental rethink of how public funds are invested and spent.

Among other things, this would include a swift divestment from the fossil fuel economy and reinvestment in renewable energy systems. But just as important is investing in efficiency and reducing energy demand through behaviour change. Obviously, it will be much easier to transition to 100% renewable energy if energy demand is a fraction of what it is today.

We could fund this transition by redirecting funds from military spending (climate change is, after all, a security threat), cutting fossil fuel subsidies and putting an adequate price on carbon.

Reform banking and finance

Banking and finance systems essentially have a “growth imperative” built into their structures. Money is loaned into existence by private banks as interest-bearing debt. Paying back the debt plus the interest requires an expansion of the monetary supply.

There is so much public and private debt today that the only way it could be paid back is via decades of continued growth.

So we need deep reform of banking and finance systems. We’d also need to cancel debt in some circumstances, especially in developing nations that are being suffocated by interest payments to rich world lenders.

The population question

Then there’s population. Many people assume that population growth will slow when the developing world gets rich, but to globalise affluence would be environmentally catastrophic. It is absolutely imperative therefore that nations around the world unite to confront the population challenge directly.

Population policies will inevitably be controversial but the world needs bold and equitable leadership on this issue, because current trends suggest we are heading for 11 billion by the end of this century.

Anyone who casually dismisses the idea that there is a limit to how many people Earth can support should be given a Petri dish with a swab of bacteria. Watch as the colony grows until it consumes all of the available nutrients or is poisoned by its own waste.

The first thing needed is a global fund that focuses on providing the education, empowerment and contraception required to minimise the estimated 87 million unintended pregnancies worldwide every year.

Eliminating poverty

The conventional path to poverty alleviation is the strategy of GDP growth, on the assumption that “a rising tide will lift all boats”. But, as I’ve argued, a rising tide will sink all boats.

Poverty alleviation must be achieved more directly, via redistribution of wealth and power, both nationally and internationally. In other words (and to change the metaphor), a post-growth economy would eliminate poverty not by baking an ever-larger pie (which isn’t working) but by sharing it differently.

The richest 62 people on the planet own more than the poorest half of humanity. Dwell on that for a moment, and then dare to tell me that redistribution is not an imperative of justice.

So what’s stopping us?

Despite these post-growth policy proposals seeming coherent, they face at least four huge obstacles – which may be insurmountable.

First, the paradigm of growth is deeply embedded in national governments, especially in the developed world. At the cultural level, the expectation of ever-increasing affluence is as strong as ever. I am not so deluded as to think otherwise.

Second, these policies would directly undermine the economic interests of the most powerful corporations and institutions in society, so fierce resistance should be expected.

Third, and perhaps most challenging, is that in a globalised world these policies would likely trigger either capital flight or economic collapse, or both. For example, how would the stock markets react to this policy agenda?

Finally, there is also a geopolitical risk in being first to adopt these policies. Reduced military spending, for instance, would reduce a nation’s relative power.

So if these “top-down” policies are unlikely to work, it would seem to follow that if a post-growth economy is to emerge, it may have to be driven into existence from below, with communities coming together to build the new economy at the grassroots level.

And if we face a future where the growth economy grows itself to death, which seems to be the most likely scenario, then building up local resilience and self-sufficiency now will prove to be time and energy well spent.

In the end, it is likely that only when a deep crisis arrives will an ethics of sufficiency come to inform our economic thinking and practice more broadly.

The Conversation

Samuel Alexander, Research fellow, Melbourne Sustainable Society Institute, University of Melbourne

This article was originally published on The Conversation. Read the original article.

The problem is obedience

19 04 2016

How “Green” is Lithium?

17 04 2016

Originally published on the KITCO website in 2014….. interesting how this makes no mention of NiFe batteries, they are simply ‘under the radar’……


The market for battery electric and hybrid vehicles is growing slowly but steadily – from 0.4% in 2012 to 0.6% in 2013 and 0.7% in 2014 (year-to-date) in the United States alone.

Consumers buy these vehicles despite lower gas prices out of a growing conscience and concern for the environment. With this strong attraction to alternative energy, grows the demand for lithium, which is predominantly mined and imported from countries like Bolivia, Chile, China and Argentina.

Within the U.S., only Nevada, future home of Tesla’s new “Gigafactory” for batteries, produces lithium. However, the overall ecological impact of lithium ion batteries remains somewhat unclear, as does the “well-to-wheel” effort and cost to recharge such batteries.

To fully grasp the relevance and environmental impact of lithium it is important to note that lithium ion batteries are also found in most mobile phones, laptop computers, wearable electronics and almost anything else powered by rechargeable batteries.

Dozens of reports are available on the ecological impact of lithium mining. Unfortunately, many of them are influenced by the perspective of the organizations or authors releasing them. Reducing the available information to studies carried out by government bodies and research institutes around the world, a picture emerges nonetheless:

  • Elemental lithium is flammable and very reactive. In nature, lithium occurs in compounded forms such as lithium carbonate requiring chemical processing to be made usable.
  • Lithium is typically found in salt flats in areas where water is scarce. The mining process of lithium uses large amounts of water. Therefore, on top of water contamination as a result of its use, depletion or transportation costs are issues to be dealt with. Depletion results in less available water for local populations, flora and fauna.
  • Toxic chemicals are used for leaching purposes, chemicals requiring waste treatment. There are widespread concerns of improper handling and spills, like in other mining operations around the world.
  • The recovery rate of lithium ion batteries, even in first world countries, is in the single digit percent range. Most batteries end up in landfill.
  • In a 2013 report, the U.S. Environmental Protection Agency (EPA) points out that nickel and cobalt, both also used in the production of lithium ion batteries, represent significant additional environmental risks.

A 2012 study titled “Science for Environment Policy” published by the European Union compares lithium ion batteries to other types of batteries available (lead-acid, nickel-cadmium, nickel-metal-hydride and sodium sulphur). It concludes that lithium ion batteries have the largest impact on metal depletion, suggesting that recycling is complicated. Lithium ion batteries are also, together with nickel-metal-hydride batteries, the most energy consuming technologies using the equivalent of 1.6kg of oil per kg of battery produced. They also ranked the worst in greenhouse gas emissions with up to 12.5kg of CO2 equivalent emitted per kg of battery. The authors do point out that “…for a full understanding of life cycle impacts, further aspects of battery use need to be considered, such as length of usage, performance at different temperatures, and ability to discharge quickly.”

Technology will of course improve, lithium supplies will be sufficient for the foreseeable future, and recycling rates will climb. Other issues like the migration of aging cars and electronic devices to countries with less developed infrastructures will, however, remain. As will the reality of lithium mining and processing. It is therefore conceivable that new battery technologies (sea water batteries or the nano-flowcell, for instance) will gain more importance in years to come, as will hydrogen fuel cells.

We will report about the pros and cons of each of these alternatives in future issues of Tech Metals Insider.

Bodo Albrecht,

No Way to Slow Down: Silence Howling in Antarctica

11 04 2016

rickyroodRicky Rood is a professor at University of Michigan and leads a course on climate change problem solving. His articles often come from and contribute to the course.

This article was originally published here.


I am nearing the end of the tenth time I have taught my climate change class. This year we focused on climate change science and the Paris Agreement. In particular, we thought about how climate science would contribute to the execution of the Paris Agreement. Towards the end of class, I do what I call a strategic summary and organize some resources to provide memory cues on how to think about climate change and our responses. At the end of that summary, I present my personal analysis. Here are the bullets.

* It will be difficult to avoid a world that is four degrees warmer.
* We have, in fact, underestimated the impacts of warming.
* We have some control over how fast and how far the warming will go.
* We are committed to irreversible changes, for example, sea-level rise.
* We can “cope” with this. We must. There is opportunity.

This list has been largely the same since 2010, and the class analysis of the Paris Agreement did little to change the list.

Realizing the consistency of the list over the years, I went on a search for another list that I made at the end of 2008. We had a presidential transition in the works, and someone working on that transition asked me what I thought the strategic climate-science issues would be for the new president. Here is the list I put together in late 2008.

1) Land (and sea) ice is melting faster than predicted in the IPCC Assessment Report 4. This is due to the over simplification of the melting of ice in previous models. (Things Going Fast)

2) Because of the underestimation of ice melt, sea level rise has been underestimated. We are committed to sea level rise, and we need to plan accordingly.

3) The terrestrial and ocean sinks of carbon dioxide are likely to be less effective than previously stated.

4) The acidification of the ocean is likely to be more disruptive sooner than expected.

Eight years later, I am satisfied that that was a good list. Also, I am shocked that it has been eight years, but that’s a more existential issue. Going into the Conference of the Parties in Paris, I felt that one of the most defining new science-based results was the evidence of loss of some of the West Antarctic Glaciers. (A brief mention in my September 2014 blog) Loss, here, means that we have reached a point where these glaciers will continue to melt, and there is no identified physical mechanism that will stop this melting.

The primary paper mentioned in the excellent NASA press release is by Eric Rignot et al. Widespread, rapid grounding line retreat of Pine Island, Thwaites, Smith, and Kohler glaciers, West Antarctica, from 1992 to 2011. (I don’t see any reference to the actual paper in an otherwise excellent press release, so I assume this is the correct paper.) Rignot and his research colleagues have many excellent publications on both Greenland and Antarctic ice sheets. I also bring attention to a paper by lead author Jeremie Mouginot entitled, Sustained increase in ice discharge from the Amundsen Sea Embayment, West Antarctica, from 1973 to 2013.

It has long been known that some of the glaciers in West Antarctica are “unstable.” This is, primarily, due to the fact that these glaciers are grounded below sea level. Basically, the glaciers extend into the sea. They can extend to the rock surface at the bottom of the sea; they are grounded on bedrock. Alternatively, they can float in water; that is they have water below them. If there is water below the glacier it melts faster. The combination of warming ocean water and a grounding line below sea level, well, that’s a prescription for continuous melting – instability. Flowing warm water is always available to accelerate melting. Here is an explanation from AntarcticGlaciers.org on Marine Ice Shelf Instability.

At the core of these 2014 papers is the study of the bedrock topography; that is, what is the elevation of the rock surface at the bottom of the sea and the bottom of the glaciers. The bedrock topography is measured with space- and air-based radar. For the glaciers to be stable requires that there be some structure in the bedrock that acts, perhaps, like a dam. A conclusion of Rignot et al. paper is, “Upstream of the 2011 grounding line positions, we find no major bed obstacle that would prevent the glaciers from further retreat and draw down the entire basin.”

This brings me to two recent papers that have gotten coverage. The first is Contribution of Antarctica to past and future sea-level rise. The authors are Robert DeConto and David Pollard. This paper concludes that if emissions continue on their current path, then past evidence suggests more than a meter of sea-level rise by 2100. The second paper is Ice melt, sea level rise and superstorms: evidence from paleoclimate data, climate modeling, and modern observations that 2 °C global warming could be dangerous. In this paper Hansen et al. conclude that we can see “nonlinearly growing sea level rise, reaching several meters over a timescale of 50–150 years.” These conclusions come from examination and analysis of observations of the climate at past times when the temperature was determined to be comparable to the 2-degree goal that is the policy definition of avoided dangerous climate change. (See also No Way to Slow Down) Both of these papers come with some controversy; however, taken in concert with alignment of present-day observations, theory, and modeling paint a picture of rising sea-level rise that will be measured in feet over the next several decades and continue into the next century. More than the specifics of these papers, there is little evidence of any moderating influences that slow the melting of ice, and the Earth is far more likely to be set up for rapidly melting ice.

In Things Going Fast, I documented other papers that suggested that the effects of warming had been underestimated than in our consensus climate assessments. My last summary bullet from class, above, is that we can and must cope. Here is how I think of this. We know that sea level is going to rise, and there is increasing knowledge that suggests that sea level will rise at or above the highest levels suggested in assessment reports. This rise will be on the time-scale of decades, and after a few decades, the rise will continue, not stabilize. As we make plans and take actions in the next few decades we will collect more knowledge, improve our predictions, and know how our energy portfolio changes. We are moving into a time where we will be required to consider climate change as an essential part of planning and management. In the best of circumstances, the societal impacts will be enormous. What frightens me more than the technological challenges or the cost of adaptation is the inability of governments and societies to take on new approaches to our valuation and use of resources, property, and services. I suspect that our motivations will ultimately follow from a series of increasingly costly weather disasters and the accumulation of smothering evidence of the impacts of a changing climate.

Here are some useful links on our melting ice.

Glaciers and Global Warming: A video by my faculty colleague Jeremy Bassis

Antarctic Glaciers . org: A comprehensive collection of information on the Antarctic’s ice.

Marine Ice Sheet Instability at AntarcticGlaciers.org

Figure 1: The Washington Post published this excellent graphic on melting of ice sheets, based on DeConto and Pollard, 2016. For description see Why some Antarctic glaciers are disappearing faster than we thought.

NASA Graphics on Melting of Antarctic Glaciers

NASA Discussion of Unstable Ice Sheets

It’s Cider Season……

11 04 2016

The apple harvest is well underway, the neighbours have been busy with their army of pickers; truckloads of bins have been hauled away to Willie Smith’s for sale, while I (and the wwoofers) have 20160408_094832been busy…….. fencing.  Without a working permaculture plan, nearly all my apples will again go to waste this year.  One day, the surplus will be fed to pigs and goats and cows, in the meantime  I just have to accept that these things take time, and hopefully next year I will be on top of things.

It’s been blowing a gale again.  I was warned Arve Road was like a wind tunnel, and they were right.  We had one gust to 85km/h (over 50 MPH).  You may recall me mentioning my windytractorgeese escaping from their tractor a few weeks ago….. well I think I’ve worked out why now.  The night that happened was even windier than now, and I simply could not understand how they had escaped, though suspecting the wind had something to do with it, not least freaking them out.  Today, I am certain the wind was involved!  I found said tractor one windrow downwind, upside down this morning!  And getting it back on its wheels will be fun, I am certain…..  This is a problem I will have to solve, because the plan is to get some Muscovy ducklings soon, and they’ll have to live in that tractor until they are big enough  to be as raptor proof as any duck can be.

Weighing it down with nesting boxes, and lopping the top off are options I will have to look into…..

Fortunately, not all the apples are going to waste, Annéa has been trying out every apple dessert recipe she knows, fueling Simon’s hard work!  Even though I feel like my kitchen is way too crude, I think she’s enjoying having the facilities to apply her chemistry to good use.  In fact, the pair of them love cooking too, and it’s a nice change for me to enjoy someone else’s for a change.

20160319_125220Last month, Matt and I made some cider from those apples I harvested from the Far East, in his shed, hoping to process at least some of his apples as well, using the equipment I inherited from Werner in Charlotte Cove…. but even with Matt’s idea of chopping up the apples with a sharpened stainless steel spade, the whole process was far too slow to do his cider as well as mine.

No doubt now he’s (mostly) finished with his harvest, I’ll be called upon to return the time invested in our cider to make some of his too!

Annéa harvested another lot of Geeveston Fannies, as she and Simon were very interested to experience some good old fashioned apple crushing.

As the last brew, now more than three weeks old, was happily bubbling away in the shed, they went to work chopping and scratting apples while I crushed.  It took 3 ½ hours to produce 25 litres of yummy apple juice, which was somewhat sweeter than I remember the last batch to be……  It’s entirely possible that three weeks between pickings could have an effect on the apples’ sweetness and therefore resulting cider too.



Happiness is a full fermenter….!  I’m sticking my neck out with this one, hoping to make the cider using the wild yeast that should exist on the apples to begin with.  I’m told the results can be either disastrous, boring, or truly exciting.  Only time will tell, fingers crossed.

There is also the possibility that I might have made an exciting discovery of sorts.  I’m obviously new at this, and one of the things I didn’t realise (but should have) is that good cider, like good wine, is the result of much blending of different fruit varieties.  Some of the apples that go into cider, you would never eat, so bitter and or sour are they…… and the other day, while walking the fence to plan how to redo them for keeping birds in and cattle out, I found one single apple on the ground, of a variety I had not seen anywhere else in the entire orchard.

It was much bigger than any of the apples here, and yellow.  I took it to Matt, who cut a piece off the side that hadn’t yet started to rot, and the floury texture of the fruit plus its bitterness got him all excited, because, he thinks, it just might be a cider apple that could make all the difference between ordinary cider and great cider……  Matt’s always smiling, but this time, it was a different smile.  He told me to go straight back and mark the tree, because we have work to do next season!  He wants to graft sticks of that tree so we can propagate more of those apples, and we can’t even be sure that they are indeed an interesting cider variety….. because when he took it to Willie Smith’s for identification, they had no idea what sort of apple it was.  Hopefully, we’re onto something big, and after all, one can only live in hope……  especially when it comes to drinking good cider!

Another update…….

6 04 2016

20160331_153000Life on the Fanny Farm is moving apace, thanks largely to ‘the Viking’, my big and strong Danish wwoofer, ably assisted by his French girlfriend….. the timing of these guys’ arrival could not have been better, especially if the sawmill arrives soon, followed by the batteries and MPPT I have bought off eBay.

The exterior of the power station is now finished; all the PV modules are up and running, and I have finally put my whirlybird in 20160404_095255the roof.  I’ve opted for a polycarbonate one that allows light into the end of the container opposite the doors, and the amount of extra light exceeds all my expectations.  Its location will also help vent the hydrogen gas that the batteries will offgas, and I know already this will work because the fuel smell from the chainsaws I store there has already disappeared.  And what a relief too, it was a real stink in there on warm days!

I had a wake up call with my Victron inverter…… my bad, I didn’t do my research properly, but as it is called an inverter/charger, I assumed that the output from the PVs could be simply hooked up to the inverter to charge the battery bank.  However, this is not the case, because it charges batteries from the grid only!  I therefore now needed a Maximum Power Point Tracker (MPPT), units often built into inverters these days, just not this one.  As the seller of the inverter told me, the beauty of doing it this way is that you get a state of the art inverter made by a company specialising in inverters, and a state of the art MPPT made by a company that does nothing else too.

In case you’re wondering what a MPPT does, here is a quick explanation…… PV modules Midnite_Classicnowadays produce voltages that are incompatible with battery voltages.  My PVs, for instance, produce 38V Open Circuit, much too high for 12/24V, but not enough for 48V (our nominal voltage).  At the very least, I would have to connect two together (76V) which would be too high for a 48V system, but almost doable with Nickel Iron batteries, though they would be ‘boiling’ most of the time, and I would rather not do that.

Before MPPTs were invented (late 1990’s), charge controllers would reduce this voltage to something that would not destroy your batteries, but in the process some significant amount of power was lost, causing unwanted inefficiencies to creep in.  As it turns out, the Midnite Classic I have bought operates at 150V, the very top of the open circuit range of four of my panels connected in series (two strings), and will process it down to suitable voltage for the Nickel Iron batteries (for which the MPPT can be programmed…), at full power.  And they look so cool, pity no one will see it in the container!


Because, I presume, the previous owners never built somewhere to live here, the property was never zoned properly.  Unlike them, I have a plan, and I have started zoning the Fanny Farm, beginning with the orchard.  As I don’t believe anyone, me included, will be able to cut the grass that grows there with fossil fuels in the future, I’m planning to use birds to eat it down for me.  Matt tells me an orchard needs one bird per tree to do this; I find this extraordinary to be honest, because with about a thousand trees planted in the orchard, that’s an awful lot of birds to deal with!


How to buy gates: $310 for the lot at closing time at the small farm expo!

I was banking on more like 200, and maybe as many as 400, diversifying with chooks, Muscovy ducks, and geese, all grass eating animals.  Will they do the job?  I don’t know either…… but the future has no other alternative, so I’m rolling with it.

Since the geese escaped a month ago, it was clear that I jumped into this too soon, needing a decent bird proof fence around the orchard.  Lots and lots of wing clipping will also be the order of the day, which is why the idea of managing 1,000 birds is mind boggling…..

A local business (the one that sold me gates for peanuts at closing time at the small farm


The gate to nowhere.. for now.

expo) was offering fencing material the other day for 20% off, so I bought 300m of chicken wire and 100 star pickets.  Matt, who is pulling out literally thousands of treated pine poles out of his massive orchard offered me ‘as many as I want’ (the payoff being I will have to assist him over winter in doing so) and Simon and I took the ute over and filled it up with poles…….

20160404_155223The fencing here needs a lot of attention, but the basics are there for the job to be doable.  I’m just not used to fencing on this scale, the ‘drawback’ of having a large farm.  Thank goodness for wwoofers!

Then, out of the blue, I mentioned to the Viking that I would really like to relocate the steel power pole that sits atop our dam, but that it might be too hard to do.  That was just too much for him, “let’s have a crack at it” said he!

Only trouble is, the bottom of the pole, we discovered, is encased in maybe 300kg of concrete, and even pulling it with the ute, which Annéa yelled out was bending the pole, proved too much….  Matt has now offered to pull it out with his excavator after the apple season is over.  Ah, men and their toys…..!

Never a dull moment around here, let me tell you……