Reading The News On America Should Scare Everyone, Every Day… But It Doesn’t

22 07 2017

Whilst this is Amero-centric, make no mistake, it also applies to Australia in bucket loads…….

Authored by Raul Ilargi Meijer via The Automatic Earth blog,

Reading the news on America should scare everyone, and every day, but it doesn’t. We’re immune, largely. Take this morning. The US Republican party can’t get its healthcare plan through the Senate. And they apparently don’t want to be seen working with the Democrats on a plan either. Or is that the other way around? You’d think if these people realize they were elected to represent the interests of their voters, they could get together and hammer out a single payer plan that is cheaper than anything they’ve managed so far. But they’re all in the pockets of so many sponsors and lobbyists they can’t really move anymore, or risk growing a conscience. Or a pair.

What we’re witnessing is the demise of the American political system, in real time. We just don’t know it. Actually, we’re witnessing the downfall of the entire western system. And it turns out the media are an integral part of that system. The reason we’re seeing it happen now is that although the narratives and memes emanating from both politics and the press point to economic recovery and a future full of hope and technological solutions to all our problems, people are not buying the memes anymore. And the people are right.

Tyler Durden ran a Credit Suisse graph overnight that should give everyone a heart attack, or something in that order. It shows that nobody’s buying stocks anymore, other than the companies who issue them. They use ultra-cheap leveraged loans to make it look like they’re doing fine. Instead of using the money/credit to invest in, well, anything, really. You can be a successful US/European company these days just by purchasing your own shares. How long for, you ask?

There Has Been Just One Buyer Of Stocks Since The Financial Crisis

 As CS’ strategist Andrew Garthwaite writes, “one of the major features of the US equity market since the low in 2009 is that the US corporate sector has bought 18% of market cap, while institutions have sold 7% of market cap.” What this means is that since the financial crisis, there has been only one buyer of stock: the companies themselves, who have engaged in the greatest debt-funded buyback spree in history.


 Why this rush by companies to buyback their own stock, and in the process artificially boost their Earning per Share? There is one very simple reason: as Reuters explained some time ago, “Stock buybacks enrich the bosses even when business sags.” And since bond investor are rushing over themselves to fund these buyback plans with “yielding” paper at a time when central banks have eliminated risk, who is to fault them.

More concerning than the unprecedented coordinated buybacks, however, is not only the relentless selling by institutions, but the persistent unwillingness by “households” to put any new money into the market which suggests that the financial crisis has left an entire generation of investors scarred with “crash” PTSD, and no matter what the market does, they will simply not put any further capital at risk.

So that’s your stock markets. Let’s call it bubble no.1. Another effect of ultra low rates has been the surge in housing bubbles across the western world and into China. But not everything looks as rosy as the voices claim who wish to insist there is no bubble in [inject favorite location] because of [inject rich Chinese]. You’d better get lots of those Chinese swimming in monopoly money over to your location, because your own younger people will not be buying. Says none other than the New York Fed.

Student Debt Is a Major Reason Millennials Aren’t Buying Homes

 College tuition hikes and the resulting increase in student debt burdens in recent years have caused a significant drop in homeownership among young Americans, according to new research by the Federal Reserve Bank of New York. The study is the first to quantify the impact of the recent and significant rise in college-related borrowing—student debt has doubled since 2009 to more than $1.4 trillion—on the decline in homeownership among Americans ages 28 to 30. The news has negative implications for local economies where debt loads have swelled and workers’ paychecks aren’t big enough to counter the impact. Homebuying typically leads to additional spending—on furniture, and gardening equipment, and repairs—so the drop is likely affecting the economy in other ways.

As much as 35% of the decline in young American homeownership from 2007 to 2015 is due to higher student debt loads, the researchers estimate. The study looked at all 28- to 30-year-olds, regardless of whether they pursued higher education, suggesting that the fall in homeownership among college-goers is likely even greater (close to half of young Americans never attend college). Had tuition stayed at 2001 levels, the New York Fed paper suggests, about 360,000 additional young Americans would’ve owned a home in 2015, bringing the total to roughly 2.9 million 28- to 30-year-old homeowners. The estimate doesn’t include younger or older millennials, who presumably have also been affected by rising tuition and greater student debt levels.

Young Americans -and Brits, Dutch etc.- get out of school with much higher debt levels than previous generations, but land in jobs that pay them much less. Ergo, at current price levels they can’t afford anything other than perhaps a tiny house. Which is fine in and of itself, but who’s going to buy the existent McMansions? Nobody but the Chinese. How many of them would you like to move in? And that’s not all. Another fine report from Lance Roberts, with more excellent graphs, puts the finger where it hurts, and then twists it around in the wound a bit more:

People Buy Payments –Not Houses- & Why Rates Can’t Rise

 Over the last 30-years, a big driver of home prices has been the unabated decline of interest rates. When declining interest rates were combined with lax lending standards – home prices soared off the chart. No money down, ultra low interest rates and easy qualification gave individuals the ability to buy much more home for their money. The problem, however, is shown below. There is a LIMIT to how much the monthly payment can consume of a families disposable personal income.


 In 1968 the average American family maintained a mortgage payment, as a percent of real disposable personal income (DPI), of about 7%. Back then, in order to buy a home, you were required to have skin in the game with a 20% down payment. Today, assuming that an individual puts down 20% for a house, their mortgage payment would consume more than 23% of real DPI. In reality, since many of the mortgages done over the last decade required little or no money down, that number is actually substantially higher. You get the point. With real disposable incomes stagnant, a rise in interest rates and inflation makes that 23% of the budget much harder to sustain.



In 1968 Americans paid 7% of their disposable income for a house. Today that’s 23%. That’s as scary as that first graph above on the stock markets. It’s hard to say where the eventual peak will be, but it should be clear that it can’t be too far off. And Yellen and Draghi and Carney are talking about raising those rates.

What Lance is warning for, as should be obvious, is that if rates would go up at this particular point in time, even a lot less people could afford a home. If you ask me, that would not be so bad, since they grossly overpay right now, they pay full-throttle bubble prices, but the effect could be monstrous. Because not only would a lot of people be left with a lot of mortgage debt, and we’d go through the whole jingle mail circus again, yada yada, but the economy’s main source of ‘money’ would come under great pressure.

Let’s not forget that by far most of our ‘money’ is created when private banks issue loans to their customers with nothing but thin air and keyboard strokes. Mortgages are the largest of these loans. Sink the housing industry and what do you think will happen to the money supply? And since inflation is money velocity x money supply, what would become of central banks’ inflation targets? May I make a bold suggestion? Get someone a lot smarter than Janet Yellen into the Fed, on the double. Or, alternatively, audit and close the whole house of shame.

We’ve had bubbles 1, 2 and 3. Stocks, student debt and housing. Which, it turns out, interact, and a lot.

An interaction that leads seamlessly to bubble 4: subprime car loans. Mind you, don’t stare too much at the size of the bubbles, of course stocks and housing are much bigger issues, but focus instead on how they work together. As for the subprime car loans, and the subprime used car loans, it’s the similarity to the subprime housing that stands out. Like we learned nothing. Like the US has no regulators at all.

Fears Mount Over a New US Subprime Boom – Cars

It’s classic subprime: hasty loans, rapid defaults, and, at times, outright fraud. Only this isn’t the U.S. housing market circa 2007. It’s the U.S. auto industry circa 2017. A decade after the mortgage debacle, the financial industry has embraced another type of subprime debt: auto loans. And, like last time, the risks are spreading as they’re bundled into securities for investors worldwide. Subprime car loans have been around for ages, and no one is suggesting they’ll unleash the next crisis.

 But since the Great Recession, business has exploded. In 2009, $2.5 billion of new subprime auto bonds were sold. In 2016, $26 billion were, topping average pre-crisis levels, according to Wells Fargo. Few things capture this phenomenon like the partnership between Fiat Chrysler and Banco Santander. [..] Santander recently vetted incomes on fewer than one out of every 10 loans packaged into $1 billion of bonds, according to Moody’s.

If it’s alright with you, we’ll deal with the other main bubble, no.5 if you will, another time. Yeah, that would be bonds. Sovereign, corporate, junk, you name it.

The 4 bubbles we’ve seen so far are more than enough to create a huge crisis in America. Don’t want to scare you too much all at once. Just you read the news again tomorrow. There’ll be more. And the US Senate is not going to do a thing about it. They’re too busy not getting enough votes for other things.

The green car myth

28 06 2017

How government subsidies make the white elephant on your driveway look sustainable

And this comes on top of this article that describes how just making electric cars’ battery packs is equivalent to eight years worth of driving conventional happy motoring.

I have written before about the problems with bright green environmentalism. Bright greens suggest that various technological innovations will serve to reduce carbon dioxide emissions enough to avoid catastrophic global warming and other environmental problems. There are a variety of practical problems that I outlined there, including the fact that most of our economic activities are hitting physical limits to energy efficiency.

The solution lies in accepting that we can not continue to expand our economies indefinitely, without catastrophic consequences. In fact, catastrophic consequences are in all likelihood already unavoidable, if we believe the warnings of prominent climatologists who claim that a two degree temperature increase is sufficient to cause significant global problems.

It’s easy to be deceived however and assume that we are in the process of a transition towards sustainable green technologies. The problem with most green technologies is that although their implementation on a limited scale is affordable, they have insufficient scalability to enable a transition away from fossil fuels.

Part of the reason for this limited scalability is because users of “green” technology receive subsidies and do not pay certain costs which users of “grey” technology have to shoulder as a result. As an example, the Netherlands, Norway and many other nations waive a variety of taxes for green cars, taxes that are used to maintain the network of roads that these cars use. As the share of green cars rises, grey cars will be forced to shoulder increasingly higher costs to pay for the maintenance of road networks.

It’s inevitable that these subsidies will be phased out. The idea of course is that after providing an initial gentle push, the transition towards more green driving will have reached critical mass and prove itself sustainable without any further government subsidies. Unfortunately, that’s unlikely to occur. We’ve seen a case study of what happens when subsidies for green technologies are phased out in Germany. After 2011, the exponential growth in solar capacity rapidly came to a stop, as new installs started to drop. By 2014, solar capacity in Germany had effectively stabilized.1 Peak capacity of solar is now impressively high, but the amount of solar energy produced varies significantly from day to day. On bad days, solar and wind hardly contribute anything to the electricity grid.

Which brings us to the subject of today’s essay: The green car. The green car has managed to hide its enormous price tag behind a variety of subsidies, dodged taxes and externalities it has imposed upon the rest of society. Let us start with the externalities. Plug-in cars put significant strain on the electrical grid. These are costs that owners of such cars don’t pay themselves. Rather, power companies become forced to make costs to improve their grid, to avoid the risk of blackouts, costs that are then passed on to all of us.

When it comes to the subsidies that companies receive to develop green cars, it’s important not just to look at the companies that are around today. This is what is called survivorship bias. We focus on people who have succeeded and decide that their actions were a good decision to take. Everyone knows about the man who became a billionare by developing Minecraft. As a result, there are droves of indie developers out there hoping to produce the next big game. In reality, most of them earn less than $500 a year from sales.2

Everyone has heard of Tesla or of Toyota’s Prius. Nobody hears of the manufacturers who failed and went bankrupt. They had to make costs too, costs that were often passed on to investors or to governments. Who remembers Vehicle Production Group, or Fisker automotive? These are companies that were handed 193 million and 50 million dollar in loans respectively by the US Federal government, money the government won’t see again because the companies went bankrupt.3 This brings the total of surviving car manufacturers who received loans from the government to three.

To make matters worse, we don’t just subsidize green car manufacturers. We subsidize just about the entire production chain that ultimately leads to a green car on your driveway. Part of the reason Fisker automotive got in trouble was because its battery manufacturer, A123 Systems, declared bankruptcy. A123 Systems went bankrupt in 2012, but not before raising 380 million dollar from investors in 2009 and receiving a 249 million dollar grant from the U. S. department of energy back in 2010.

Which brings us to a de facto subsidy that affects not just green cars, but other unsustainable projects as well: Central bank policies. When interest rates are low, investors have to start searching for yield. They tend to find themselves investing in risky ventures, that may or may not pay off. Examples are the many shale companies that are on the edge of bankruptcy today. This could have been anticipated, but the current financial climate leaves investors with little choice but to invest in such risky ventures. This doesn’t just enable the growth of a phenomenon like the shale oil industry affects green car companies as well. Would investors have poured their money into A123 Systems, if it weren’t for central bank policies? Many might have looked at safer alternatives.

One company that has benefited enormously from these policies is Tesla. In 2008, Tesla applied for a 465 million dollar loan from the Federal government. This allowed Tesla to produce its car, which then allows Tesla to raise 226 million in an IPO in June 2010, where Tesla receives cash from investors willing to invest in risky ventures as a result of central bank policies. A $7,500 tax credit then encourages sales of Tesla’s Model S, which in combination with the money raised from the IPO allows Tesla to pay off its loan early.

In 2013, Tesla then announces that it has made an 11 million dollar profit. Stock prices go through the roof, as apparently they have succeeded at the task of the daunting task of making green cars economically viable. In reality, Tesla made 68 million dollar that year selling its emission credits to other car companies, without which, Tesla would have made a loss.

Tesla in fact receives $35,000 dollar in clean air credits for every Model S that it sells to customers, which in total was estimated to amount to 250 million dollar in 2013.4 To put these numbers in perspective, buying a Model S can cost anywhere around $70,000, so if the 35,000 dollar cost was passed on to the customer, prices would rise by about 50%, not including whatever sales tax applies when purchasing a car.

We can add to all of this the 1.2 billion of subsidy in the form of tax exemptions and reduced electricity rates that Tesla receives for its battery factory in Nevada.5 The story gets even better when we arrive at green cars sold to Europe, where we find the practice of “subsidy stacking”. The Netherlands exempts green cars from a variety of taxes normally paid upon purchase. These cars are then exported to countries like Norway, where green cars don’t have to pay toll and are allowed to drive on bus lanes.6

For freelancers in the Netherlands, subsidies for electrical cars have reached an extraordinarily high level. Without the various subsidies the Dutch government created to increase the incentive to drive an electrical car, a Tesla S would cost 94.010 Euro. This is a figure that would be even higher of course, if Dutch consumers had to pay for the various subsidies that Tesla receives in the United States. After the various subsidies provided by the Dutch government for freelance workers, Dutch consumers can acquire a Tesla S at a price of just 25,059 Euro.7

The various subsidies our governments provide are subsidies we all end up paying for in one form or another. What’s clear from all these numbers however is that an electric car is currently nowhere near a state where it could compete with a gasoline powered car in a free unregulated market, on the basis of its own merit.

The image that emerges here is not one of a technology that receives a gentle nudge to help it replace the outdated but culturally entrenched technology we currently use, but rather, of a number of private companies that compete for a variety of subsidies handed out by governments who seek to plan in advance how future technology will have to look, willfully ignorant of whatever effect physical limits might have on determining which technologies are economically viable to sustain and which aren’t.

After all, if government were willing to throw enough subsidies at it, we could see NGO’s attempt to solve world hunger using caviar and truffles. It wouldn’t be sustainable in the long run, but in the short term, it would prove to be a viable solution to hunger for a significant minority of the world’s poorest. There are no physical laws that render such a solution impossible on a small scale, rather, there are economic laws related to scalability that render it impossible.

Similarly, inventing an electrical car was never the problem. In 1900, 38% of American cars ran on electricity. The reason the electrical car died out back then was because it could not compete with gasoline. Today the problem consists of how to render it economically viable and able to replace our fossil fuel based transportation system, without detrimentally affecting our standard of living.

This brings us to the other elephant, the one in our room rather than our driveway. The real problem here is that we wish to sustain a standard of living that was built with cheap natural resources that are no longer here today. Coping with looming oil shortages will mean having to take a step back. The era where every middle class family could afford to have a car is over. Governments would be better off investing in public transport and safe bicycle lanes.

The problem America faces however, is that there are cultural factors that prohibit such a transition. Ownership of a car is seen as a marker of adulthood and the type of car tells us something about a man’s social status. This is an image car manufacturers are of course all too happy to reinforce through advertising. Hence, we find a tragic example of a society that wastes its remaining resources on false solutions to the crisis it faces.

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Ugo Bardi on the end of cars…..

25 05 2017

The Coming Seneca Cliff of the Automotive Industry: the Converging Effect of Disruptive Technologies and Social Factors

This graph shows the projected demise of individual car ownership in the US, according to “RethinkX”. That will lead to the demise of the automotive industry as we know it since a much smaller number of cars will be needed. If this is not a Seneca collapse, what is? 

Decades of work in research and development taught me this:

Innovation does not solve problems, it creates them. 

Which I could call “the Golden Rule of Technological Innovation.” There are so many cases of this law at work that it is hard for me to decide where I should start from. Just think of nuclear energy; do you understand what I mean? So, I am always amazed at the naive faith of some people who think that more technology will save us from the trouble created by technology (the most common mistake people make is not to learn from mistakes).

That doesn’t mean that technological research is useless; not at all. R&D can normally generate small but useful improvements to existing processes, which is what it is meant to do. But when you deal with breakthroughs, well, it is another kettle of dynamite sticks; so to say. Most claimed breakthroughs turn out to be scams (cold fusion is a good example) but not all of them. And that leads to the second rule of technological innovation:

Successful innovations are always highly disruptive

You probably know the story of the Polish cavalry charging against the German tanks during WWII. It never happened, but the phrase “fighting tanks with horses” is a good metaphor for what technological breakthroughs can do. Some innovations impose themselves, literally, by marching over the dead bodies of their opponents. Even without such extremes, when an innovation becomes a marker of social success, it can diffuse extremely fast. Do you remember the role of status symbol that cell phones played in the 1990s?

Cars are an especially good example of how social factors can affect and amplify the effects of innovation. I discussed in a previous post on Cassandra’s Legacy how cars became the prime marker of social status in the West in the 1950s, becoming the bloated and inefficient objects we know today. They had a remarkable effect on society, creating the gigantic suburbs of today’s cities where life without a personal car is nearly impossible.

But the great wheel of technological innovation keeps turning and it is soon going to make individual cars as obsolete as would be wearing coats made of home-tanned bear skins. It is, again, the combination of technological innovation and socioeconomic factors creating a disruptive effect. For one thing, private car ownership is rapidly becoming too expensive for the poor. At the same time, the combination of global position systems (GPS), smartphones, and autonomous driving technologies makes possible a kind of “transportation on demand” or “transportation as a service” (TAAS) that was unthinkable just a decade ago. Electric cars are especially suitable (although not critically necessary) for this kind of transportation. In this scheme, all you need to do to get a transportation service is to push a button on your smartphone and the vehicle you requested will silently glide in front of you to take you wherever you want. (*)

The combination of these factors is likely to generate an unstoppable and disruptive social phenomenon. Owning a car will be increasingly seen as passé, whereas using the latest TAAS gadgetry will be seen as cool. People will scramble to get rid of their obsolete, clumsy, and unfashionable cars and move to TAAS. Then, TAAS can also play the role of social filter: with the ongoing trends of increasing social inequality, the poor will be able to use it only occasionally or not at all. The rich, instead, will use it to show that they can and that they have access to credit. Some TAAS services will be exclusive, just as some hotels and resorts are. Some rich people may still own cars as a hobby, but that wouldn’t change the trend.

To have some idea of what a TAAS-based world can be, you might read Hemingway’s “Movable Feast”, a story set in Paris in the 1920s. There, Hemingway describes how the rich Americans in Paris wouldn’t normally even dream of owning a car (**). Why should they have, while when they could simply ride the local taxis at a price that, for them, was a trifle? It was an early form of TAAS. Most of the Frenchmen living in Paris couldn’t afford that kind of easygoing life and that established an effective social barrier between the haves and the have-nots.

As usual, of course, the future is difficult to predict. But something that we can say about the future is that when changes occur, they occur fast. In this case, the end result of the development of individual TAAS will be the rapid collapse of the automotive industry as we know it: a much smaller number of vehicles will be needed and they won’t need to be of the kind that the present automotive industry can produce. This phenomenon has been correctly described by “RethinkX,” even though still within a paradigm of growth. In practice, the transition is likely to be even more rapid and brutal than what the RethinkX team propose. For the automotive industry, there applies the metaphor of “fighting tanks with horses.”

The demise of the automotive industry is an example of what I called the “Seneca Effect.” When some technology or way of life becomes obsolete and unsustainable, it tends to collapse very fast. Look at the data for the world production of motor vehicles, below (image from Wikipedia). We are getting close to producing a hundred million of them per year. If the trend continues, during the next ten years we’ll have produced a further billion of them. Can you really imagine that it would be possible? There is a Seneca Cliff waiting for the automotive industry.

(*) If the trend of increasing inequality continues, autonomous driven cars are not necessary. Human drivers would be inexpensive enough for the minority of rich people who can afford to hire them.

(**) Scott Fitzgerald, the author of “The Great Gatsby” is reported to have owned a car while living in France, but that was mainly an eccentricity.

CARS: the video……..

12 05 2014

Whilst interesting, this video shows how many resources are needed to build the world’s cars, and associated emissions.  It assumes car numbers will grow to 2050 (we of course know better than that!) and does not take into account the possibilities of the growth in EVs in the future.

EVs actually need more resources than conventional cars, mainly because of the batteries, but also they need bigger tyres to deal with the extra weight.  The emissions caused by future cars are of course totally imaginary, there will be NO cars in 2050…….  but it’s still worth watching.

The 5 key elements of sustainable transport

13 04 2014

The 5 key elements of sustainable transport, or rather ‘so called’ sustainable transport makes for interesting reading.  Some of this info doesn’t really make much sense to me…. like the C intensity of different flights (business and economy, short and long) as a function of emissions per kilometre.

Interestingly, the difference between a ‘small car’ (a car that can only do 35MPG is NOT a small car!  But then, this is written in/for the USA….) and a grid charged electric car is only 15g CO2e/km, or just 9%.  By that measure, the Suzuki Alto I drove in Tasmania emits far less than an electric car, unless that car is 100% solar recharged.  And then I’m doubtful, because since we now know solar has a shockingly low ERoEI, it might be even closer than we think.  I’m also surprised cycling’s numbers are as high as they are shown here.  Does a cyclist really consume a whole lot more food than a motorist?

The article also states “People who live in cities have lower transport emissions.  Fuel economy may be lower in city traffic but that is more than made up for by the fact that city dwellers drive far less.”  Well that depends……  since moving from the city to the country, I’ve actually halved how much I drive!  Then it continues with “In 1950 less than 30% of the world’s population lived in cites, by 2010 that figure was over 50%, and by 2030 it is expected to surpass 60%. This natural trend to urbanization is a huge opportunity to for lowering both distance travelled per person and the carbon intensity of that travel.”  Whoever wrote this has obviously no idea cities will eventually be abandoned for being too far from their food sources, and due to the fact that when grids go down, none of the lifts will work!  Nor the sewerage……..

Shrink That Footprint


Transport is responsible for around a seventh of greenhouse gas emissions globally. Of these emissions almost two thirds are the result of passenger travel while the rest is due to freight.

So passenger travel is a big deal for climate.

In the chart above, which comes from our new eBook Emit This, we compare carbon intensity of different types of passenger transport on a per passenger kilometre basis.  Using it we can explain some elements important to the development of a sustainable transport system.

1) Fuel Economy

Our chart today compares the carbon intensity of different transport modes, per passenger kilometre.  The better fuel economy gets the lower emissions go.  If you just look at the cars you’ll see the large car (15 MPG) has emissions almost three times that of the hybrid car (45 MPG).

By improving fuel economy we can get the same mileage while generating fewer emissions.  Something that is achieved by making engines more efficient, vehicles lighter and bodies more aerodynamic.  But even then combustion engines remain relatively inefficient and produce emissions at the tailpipe, so improving them is really just a stop-gap en-route to sustainable transport.

2) Occupancy

The cheapest and simplest way to lower the carbon intensity of a passenger kilometre is to stick more people in the vehicle.  In each of the figures above car occupancy is assumed to be an average of 1.6 passengers (including the driver).  But most cars are designed for 5 people.

If you take a look at the bus examples the importance of occupancy becomes even more stark.  The local bus example has emissions seven times higher than the school bus.  While there routes may vary a little they are both diesel buses.  The main difference is that the school bus has very high occupancy.

With notable exception of flying public transport tends to have quite low carbon emissions, due largely to having relatively high occupancy.

3) Electrification

In the absence of breakthroughs in second generation biofuels electrification is the most important pathway to low carbon transport.

Electric cars using low carbon power have footprints less than half that of the best hybrid, even after you account for their larger manufacturing footprint.  Right down the bottom of our chart is the high-speed EuroStar rail which used low carbon French electricity. Though not on our chart the lowest carbon transport on earth is probably electrified public transport in a place like Norway where electricity generation is almost carbon free.

While there is a natural tendency to obsess about the electrification of cars, there are lots of interesting innovations occurring in the electrification  of rail, motorbikes, scooters and bikes.

4) Pedal power

They may be a bit low tech for some, but when it comes to carbon emissions bicycles are pretty cutting edge.  Even when you account for the foodprint of excess energy used when cycling, the humble bike is incredibly low carbon.

Bikes have obvious limitations around speed and distance, but for short trips in places with good infrastructure they are hard to beat in terms of carbon. They also have a great synergy with public transport systems like intercity rail.

5) Urbanization

Each of the first four elements we have described above refers to improving the carbon intensity of transport.  But emissions are a function of both how we travel and how far we travel.  One thing that tackles both of these issues is the trend towards urbanization.

People who live in cities have lower transport emissions.  Fuel economy may be lower in city traffic but that is more than made up for by the fact that city dwellers drive far less.  Electrification of public transport is more economic and practical in cities.  Occupancy on public transport systems is much higher.  And access to infrastructure for both cycling and walking is often better.

In 1950 less than 30% of the world’s population lived in cites, by 2010 that figure was over 50%, and by 2030 it is expected to surpass 60%. This natural trend to urbanization is a huge opportunity to for lowering both distance travelled per person and the carbon intensity of that travel.

Those are our five elements of sustainable transport: fuel economy, occupancy, electrification, pedal power and urbanization.

Check out our free new eBook Emit This for more ideas on getting more life out of less carbon.

Source: Shrink That Footprint. Reproduced with permission.

Carbon bubble toil and trouble

27 03 2014

There has been of late quite a few articles on the blogosphere about the potential for a Carbon bubble.  A bubble about to burst.  That this will occur is utterly undeniable, but the outcomes featured by different writers are a bit off the mark in my opinion……

First, let me start with Paul Gilding.  I have a lot of time for Paul.  I’ve even published some of his writings here; but his optimism often leaves me flabbergasted…….

In Carbon Crash Solar Dawn, published in Cockatoo Chronicles 

I think it’s time to call it. Renewables and associated storage, transport and digital technologies are so rapidly disrupting whole industries’ business models they are pushing the fossil fuel industry towards inevitable collapse.

Some of you will struggle with that statement. Most people accept the idea that fossil fuels are all powerful – that the industry controls governments and it will take many decades to force them out of our economy. Fortunately, the fossil fuel industry suffers the same delusion.


Paul Gilding

I don’t think the oil industry is under any such delusion.  Unable to make a profit with oil floundering around $100 a barrel, a price the market forces on them to accept, that industry is taking to selling its assets to prop up its bottom line, even borrowing money to pay shareholders’ dividends….

The only idea I struggle with Paul, is that “renewables, electric cars and associated technologies build the momentum needed to make their takeover unstoppable“.

Take here in Australia for instance; the coal fired power lobby has twisted the politicians’ arms (I don’t think much twisting was required either…) to thwart any further growth in the development of renewables.  In Queensland where I still live, the Newman government has indicated that the paltry 8c feed in tariff that the poor beggars who installed PVs on their roofs after the frankly overgenerous 44c feed in tariff was terminated, will become a zero FiT after July 1.  We who are on the overgenerous 44c FiT are ‘safe’ (until TSHTF that is – then all bets are off), because we are on a contract that lasts until 2028….. but everyone else misses out.  Why are they doing this?  It’s all explained very well here on The Conversation, but basically it’s to protect the dinosaur industries’ shareholders.  There’s no way they are borrowing to pay their shareholders like Shell had to do….  Money rules, and f*** you the consumer.

Paul also further writes:

I think it’s important to always start with a reminder of the underlying context. As I argued in my book The Great Disruption, dramatic economic change is not a choice we get to make it, but an inevitable result of physical science. This is because business as usual, with results like ever increasing resource constraint or a global temperature increase of 4 degrees or more, would trigger economic and social collapse. So the only realistic outcomes are such a collapse or an economic transformation that prevents it, with timing the only big unknown. I argued transformation was far more likely and, to my delight, that’s what we see emerging around us today – even faster than I expected.

In parallel, we are also seeing the physical impacts of climate change and resource constraint accelerating. This is triggering physical, economic and geopolitical responses – from melting arctic ice and spiking food prices to the Arab Spring and the war in Syria. (See here for further on that.) The goods news in this growing hard evidence is that the risk of collapse is being acknowledged by more mainstream analysts. Examples include this commentary by investment legend Jeremy Grantham and a recent NASA funded study explained here by Nafeez Ahmed. So the underlying driver – if we don’t change in a good way, we’ll change in a very bad way – is gathering acceptance.

Hang on……..  is he saying the Arab Spring is about people demanding “renewables, electric cars and associated technologies”?  Because collapse is exactly what is happening in Egypt and Syria.  Collapse does not begin in boardrooms, it begins in the streets when people run out of food, water, and petrol….

And where is the debt problem mentioned in this “dramatic economic change“?  How exactly will the “renewables, electric cars and associated technologies” be paid for?  More growth?  Has he never heard the saying “the best way to get out of a hole is by not digging any deeper”?

Over at Nature Climate Change, I found this too……

…major players in the financial markets are becoming increasingly uneasy about the extent of the impact of future climate policies on power companies. A supposition — fostered by the Carbon Tracker Initiative — is that fossil fuels may be nowhere near as profitable in the future as they have been so far. This is not simply because the costs of prospecting and drilling for oil, for example, are increasing, or that the fossil fuel resources that give the oil, coal and natural gas companies their value are about to run out — they are not. The problem is more that a large portion — perhaps as much as 80 per cent — of these reserves will have to be left untouched if society has any chance of limiting global temperature rise to 2 °C this century.

So, pray tell, what will we build the new energy system with…?  Let me remind you of just how many resources it takes to build wind turbines… or a solar thermal power plant

Paul ends his article with:

So, as I see it, the game is up for fossil fuels. Their decline is well underway and it won’t be a gentle one. Of course they won’t just be gone in few years but once the market and policy makers understand what’s happening, it will become self-reinforcing and accelerate rapidly. Markets come into their own in situations like this. They rarely initiate change, but once they’re racing down the hill, it’s time to jump on board or get out of the way. It’s an ugly and brutal process for those involved, but it gets the job done quickly.

When that occurs, we may find that those forecasts by myself and others like Tony Seba from Stanford University, that the oil, coal and gas companies will be all but obsolete by 2030, might turn out to be conservative after all. Interesting times indeed.

Yes, it is game over.  But not for the fossil fuel industries alone.  When they go down, everyone goes down.  Even the central bankers, to whom the global debt which has soared more than 40 percent to $100 trillion since the first signs of the financial crisis, will go down….. why do so few people see the big picture…….?  For someone who claims to understand the “inevitable result of physical science” as the driver of economic change, Paul truly puzzles me.

10 Ways to Prepare for a Post-Oil Society

21 03 2014

kunstlerI first came across James Howard Kunstler in that classic old Peak Oil movie, The End of Suburbia…..  I liked his style immediately, dry humour, classic one liners, you know what I’m talking about if you’ve ever read any of his work…

Normally known as an Uber Doomer, it is rather unusual for Kunstler to write something like this……  it’s about solutions, even hopium; of sorts.

I’m too busy painting stuff around the house to write anything at the moment….  so enjoy this piece.



The best way to feel hopeful for the future is to prepare for it.

The best way to feel hopeful about our looming energy crisis is to get active now and prepare for living arrangements in a post-oil society.

Out in the public arena, people frequently twang on me for being “Mister Gloom’n’doom,” or for “not offering any solutions” to our looming energy crisis. So, for those of you who are tired of wringing your hands, who would like to do something useful, or focus your attention in a purposeful way, here are my suggestions:


1. Expand your view beyond the question of how we will run all the cars by means other than gasoline.

This obsession with keeping the cars running at all costs could really prove fatal. It is especially unhelpful that so many self-proclaimed “greens” and political “progressives” are hung up on this monomaniacal theme. Get this: the cars are not part of the solution (whether they run on fossil fuels, vodka, used frymax™ oil, or cow shit). They are at the heart of the problem. And trying to salvage the entire Happy Motoring system by shifting it from gasoline to other fuels will only make things much worse. The bottom line of this is: start thinking beyond the car. We have to make other arrangements for virtually all the common activities of daily life.

2. We have to produce food differently.

The Monsanto/Cargill model of industrial agribusiness is heading toward its Waterloo. As oil and gas deplete, we will be left with sterile soils and farming organized at an unworkable scale. Many lives will depend on our ability to fix this. Farming will soon return much closer to the center of American economic life. It will necessarily have to be done more locally, at a smaller-and-finer scale, and will require more human labor. The value-added activities associated with farming — e.g. making products like cheese, wine, oils — will also have to be done much more locally. This situation presents excellent business and vocational opportunities for America’s young people (if they can unplug their iPods long enough to pay attention.) It also presents huge problems in land-use reform. Not to mention the fact that the knowledge and skill for doing these things has to be painstakingly retrieved from the dumpster of history. Get busy.

3. We have to inhabit the terrain differently.

Virtually every place in our nation organized for car dependency is going to fail to some degree. Quite a few places (Phoenix, Las Vegas, Miami …) will support only a fraction of their current populations. We’ll have to return to traditional human ecologies at a smaller scale: villages, towns, and cities (along with a productive rural landscape). Our small towns are waiting to be reinhabited. Our cities will have to contract. The cities that are composed proportionately more of suburban fabric (e.g. Atlanta, Houston) will pose especially tough problems. Most of that stuff will not be fixed. The loss of monetary value in suburban property will have far-reaching ramifications. The stuff we build in the decades ahead will have to be made of regional materials found in nature — as opposed to modular, snap-together, manufactured components — at a more modest scale. This whole process will entail enormous demographic shifts and is liable to be turbulent. Like farming, it will require the retrieval of skill-sets and methodologies that have been forsaken. The graduate schools of architecture are still tragically preoccupied with teaching Narcissism. The faculties will have to be overthrown. Our attitudes about land-use will have to change dramatically. The building codes and zoning laws will eventually be abandoned and will have to be replaced with vernacular wisdom. Get busy.

4. We have to move things and people differently.

This is the sunset of Happy Motoring (including the entire US trucking system). Get used to it. Don’t waste your society’s remaining resources trying to prop up car-and-truck dependency. Moving things and people by water and rail is vastly more energy-efficient. Need something to do? Get involved in restoring public transit. Let’s start with railroads, and let’s make sure we electrify them so they will run on things other than fossil fuel or, if we have to run them partly on coal-fired power plants, at least scrub the emissions and sequester the CO2 at as few source-points as possible. We also have to prepare our society for moving people and things much more by water. This implies the rebuilding of infrastructure for our harbors, and also for our inland river and canal systems — including the towns associated with them. The great harbor towns, like Baltimore, Boston, and New York, can no longer devote their waterfronts to condo sites and bikeways. We actually have to put the piers and warehouses back in place (not to mention the sleazy accommodations for sailors). Right now, programs are underway to restore maritime shipping based on wind — yes, sailing ships. It’s for real. Lots to do here. Put down your iPod and get busy.

5. We have to transform retail trade.

The national chains that have used the high tide of fossil fuels to contrive predatory economies-of-scale (and kill local economies) — they are going down. WalMart and the other outfits will not survive the coming era of expensive, scarcer oil. They will not be able to run the “warehouses-on-wheels” of 18-wheel tractor-trailers incessantly circulating along the interstate highways. Their 12,000-mile supply lines to the Asian slave-factories are also endangered as the US and China contest for Middle East and African oil. The local networks of commercial interdependency which these chain stores systematically destroyed (with the public’s acquiescence) will have to be rebuilt brick-by-brick and inventory-by-inventory. This will require rich, fine-grained, multi-layered networks of people who make, distribute, and sell stuff (including the much-maligned “middlemen”). Don’t be fooled into thinking that the Internet will replace local retail economies. Internet shopping is totally dependent now on cheap delivery, and delivery will no longer be cheap. It also is predicated on electric power systems that are completely reliable. That is something we are unlikely to enjoy in the years ahead. Do you have a penchant for retail trade and don’t want to work for a big predatory corporation? There’s lots to do here in the realm of small, local business. Quit carping and get busy.

6. We will have to make things again in America.

However, we are going to make less stuff. We will have fewer things to buy, fewer choices of things. The curtain is coming down on the endless blue-light-special shopping frenzy that has occupied the forefront of daily life in America for decades. But we will still need household goods and things to wear. As a practical matter, we are not going to re-live the 20th century. The factories from America’s heyday of manufacturing (1900 – 1970) were all designed for massive inputs of fossil fuel, and many of them have already been demolished. We’re going to have to make things on a smaller scale by other means. Perhaps we will have to use more water power. The truth is, we don’t know yet how we’re going to make anything. This is something that the younger generations can put their minds and muscles into.

7. The age of canned entertainment is coming to and end.

It was fun for a while. We liked “Citizen Kane” and the Beatles. But we’re going to have to make our own music and our own drama down the road. We’re going to need playhouses and live performance halls. We’re going to need violin and banjo players and playwrights and scenery-makers, and singers. We’ll need theater managers and stage-hands. The Internet is not going to save canned entertainment. The Internet will not work so well if the electricity is on the fritz half the time (or more).

8. We’ll have to reorganize the education system.

The centralized secondary school systems based on the yellow school bus fleets will not survive the coming decades. The huge investments we have made in these facilities will impede the transition out of them, but they will fail anyway. Since we will be a less-affluent society, we probably won’t be able to replace these centralized facilities with smaller and more equitably distributed schools, at least not right away. Personally, I believe that the next incarnation of education will grow out of the home schooling movement, as home schooling efforts aggregate locally into units of more than one family. God knows what happens beyond secondary ed. The big universities, both public and private, may not be salvageable. And the activity of higher ed itself may engender huge resentment by those foreclosed from it. But anyone who learns to do long division and write a coherent paragraph will be at a great advantage — and, in any case, will probably out-perform today’s average college graduate. One thing for sure: teaching children is not liable to become an obsolete line-of-work, as compared to public relations and sports marketing. Lots to do here, and lots to think about. Get busy, future teachers of America.

9. We have to reorganize the medical system.

The current skein of intertwined rackets based on endless Ponzi buck passing scams will not survive the discontinuities to come. We will probably have to return to a model of service much closer to what used to be called “doctoring.” Medical training may also have to change as the big universities run into trouble functioning. Doctors of the 21st century will certainly drive fewer German cars, and there will be fewer opportunities in the cosmetic surgery field. Let’s hope that we don’t slide so far back that we forget the germ theory of disease, or the need to wash our hands, or the fundamentals of pharmaceutical science. Lots to do here for the unsqueamish.

10. Life in the USA will have to become much more local, and virtually all the activities of everyday life will have to be re-scaled.

You can state categorically that any enterprise now supersized is likely to fail — everything from the federal government to big corporations to huge institutions. If you can find a way to do something practical and useful on a smaller scale than it is currently being done, you are likely to have food in your cupboard and people who esteem you. An entire social infrastructure of voluntary associations, co-opted by the narcotic of television, needs to be reconstructed. Local institutions for care of the helpless will have to be organized. Local politics will be much more meaningful as state governments and federal agencies slide into complete impotence. Lots of jobs here for local heroes.

So, that’s the task list for now. Forgive me if I left things out. Quit wishing and start doing. The best way to feel hopeful about the future is to get off your ass and demonstrate to yourself that you are a capable, competent individual resolutely able to face new circumstances.


James Howard Kunstler is a leading writer on the topic of peak oil and the problems it poses for American suburbia. Deeply concerned about the future of our petroleum dependent society, Kunstler believes we must take radical steps to avoid the total meltdown of modern society in the face of looming oil and gas shortages.

Further Reading: