Dick Smith on growth; emphatically yes…and no

16 08 2017

tedtrainer

Ted Trainer

Another article by my friend Ted Trainer, originally published at on line opinion……

The problems of population and economic growth have finally come onto the public agenda, and Dick Smith deserves much of the credit…but he doesn’t realise what’s on the other end of the trail he’s tugging.

For fifty years a small number of people have been saying that pursuing population and economic growth on a finite planet is a very silly thing to do. Until recently almost no one has taken any notice. However in the last few years there has emerged a substantial “de-growth” movement, especially in Europe. Dick Smith has been remarkably successful in drawing public attention to the issue in Australia. He has done more for the cause in about three years than the rest of us have managed to achieve in decades. (I published a book on the subject in 1985, which was rejected by 60 publishers…and no one took any notice of it anyway.) Dick’s book (2011) provides an excellent summary of the many powerful reasons why growth is absurd, indeed suicidal.

Image result for dick smith

Dick Smith

The problem with the growth-maniacs, a category which includes just about all respectable economists, is that they do not realise how grossly unsustainable present society is, let alone what the situation will be as we continue to pursue growth. Probably the best single point to put to them is to do with our ecological “footprint”. The World Wildlife Fund puts out a measure of the amount of productive land it takes to provide for each person. For the average Australian it takes 8 ha of to supply our food, water, settlement area and energy. If the 10 billion people we are likely to have on earth soon were each to live like us we’d need 80 billion ha of productive land…but there are only about 8 billion ha of land available on the planet. We Australians are ten times over a level of resource use that could be extended to all people. It’s much the same multiple for most other resources, such as minerals, nitrogen emissions and fish. And yet our top priority is to increase our levels of consumption, production, sales and GDP as fast as possible, with no limit in mind!

The World Wildlife Fund also puts the situation another way. We are now using resources at 1.4 times the rate the planet could provide sustainably. We do this by for example, consuming more timber than grows each year, thereby depleting the stocks. Now if 10 billion people rose to the “living standards” we Australians would have in 2050 given the 3% p.a. economic growth we expect, then every year the amount of producing and consuming going on in the world would be 20 times as great as it is now.

Over-production and over-consumption is the main factor generating all the alarming global problems we face is. Why is there an environmental problem? Because we are taking far more resources from nature, especially habitats, than is sustainable. Why do about 3+ billion people in the Third World wallow in poverty? Primarily because the global economy is a market system and in a market resources go to those who can pay most for them, i.e., the rich. That’s why we in rich countries get almost all the oil, the surpluses produced from Third World soils, the fish caught off their coasts, etc. It’s why “development” in the Third World is mostly only development of what will maximise corporate profit, meaning development of industries to export to us. Why is there so much violent conflict in the world? Primarily because everyone is out to grab as many of the scarce resources as they can. And why is the quality of life in the richest countries falling now, and social cohesion deteriorating? Primarily because increasing material wealth and business turnover has been made the top priority, and this contradicts and drives out social bonding.

Dick has done a great job in presenting this general “limits to growth” analysis of our situation clearly and forcefully, and in getting it onto the public agenda. But I want to now argue that he makes two fundamental mistakes.

The first is his assumption that this society can be reformed; that we can retain it while we remedy the growth fault it has. The central argument in my The Transition to a Sustainable and Just World (2010a) is that consumer-capitalist society cannot be fixed. Many of its elements are very valuable and should be retained, but its most crucial, defining fundamental institutions are so flawed that they have to be scrapped and replaced. Growth is only one of these but a glance at it reveals that this problem cannot be solved without entirely remaking most of the rest of society. Growth is not like a faulty air conditioning unit on a house, which can be replaced or removed while the house goes on functioning more or less as before. It is so integrated into so many structures that if it is dumped those structures will have to be scrapped and replaced.

The most obvious implication of this kind is that in a zero growth economy there can be no interest payments at all. Interest is by nature about growth, getting more wealth back than you lent, and this is not possible unless lending and output and earnings constantly increase. There goes almost the entire financial industry I’m afraid (which recently accounted for over 40% of all profits made.) Banks therefore could only be places which hold savings for safety and which lend money to invest in maintenance of a stable amount of capital stock (and readjustments within it.) There also goes the present way of providing for superannuation and payment for aged care; these can’t be based on investing to make money.

The entire energising mechanism of society would have to be replaced. The present economy is driven by the quest to get richer. This motive is what gets options searched for, risks taken, construction and development underway, etc. The most obvious alternative is for these actions to be come from a collective working out of what society needs, and organising to produce and develop those things cooperatively, but this would involve an utterly different world view and driving mechanism.

The problem of inequality would become acute and would not only demand attention, it would have to be dealt with in an entirely different way. It could no longer be defused by the assumption that “a rising tide will lift all boats”. In the present economy growth helps to legitimise inequality; extreme inequality is not a source of significant discontent because it can be said that economic growth is raising everyone’s “living standards”.

How would we handle unemployment in a zero-growth economy? At present its tendency to increase all the time is offset by the increase in consumption and therefore production. Given that we could produce all we need for idyllic lifestyles with a fraction of the present amount of work done, any move in this direction in the present economy would soon result in most workers becoming unemployed. There would be no way of dealing with this without scrapping the labour market and then rationally and deliberately planning the distribution of the (small amount of) work that needed doing.

Most difficult of all are the cultural implications, usually completely overlooked. If the economy cannot grow then all concern to gain must be abandoned. People would have to be content to work for stable incomes and abandon all interest in getting richer over time. If any scope remains for some to try to get more and more of the stable stock of wealth, then some will succeed and take more than their fair share of it and others will therefore get less…and soon it will end in chaos, or feudalism as the fittest take control. Sorry, but the 500 year misadventure Western culture has had with the quest for limitless individual and national wealth is over. If we have the sense we will realise greed is incompatible with a sustainable and just society. If, as is more likely we won’t, then scarcity will settle things for us. The few super privileged people, including Australians, will no longer be able to get the quantities of resources we are accustomed to, firstly because the resources are dwindling now, and secondly because we are being increasingly outmanoeuvred by the energetic and very hungry Chinese, Indians, Brazilians…

And, a minor point, you will also have to abandon the market system. It is logically incompatible with growth. You go into a market not to exchange things of equal value but to make money, to get the highest price you can, to trade in a way that will make you richer over time. There are “markets” where people don’t try to do this but just exchange the necessities without seeking to increase their wealth over time e.g., in tribal and peasant societies. However these are “subsistence” economies and they do not operate according to market forces. The economies of a zero-growth society would have to be like this. Again, if it remains possible for a few to trade their way to wealth they will end up with most of the pie. This seems to clearly mean that if we are to have a zero-growth economy then we have to work out how to make a satisfactory form of “socialism” work, so that at least the basic decisions about production, distribution and development can be made by society and not left to be determined by what maximises the wealth of individuals and the profits of private corporations competing in the market. Richard Smith (2010) points this out effectively, but some steady-staters, including Herman Daly and Tim Jackson (2009) seem to have difficulty accepting it.

Thus growth is not an isolated element that can be dealt with without remaking most of the rest of society. It is not that this society has a growth economy; it is that this is a growth society.

So in my view Dick has vastly underestimated the magnitude of the changes involved, and gives the impression that consumer-capitalist society can be adjusted, and then we can all go on enjoying high levels of material comfort (he does say we should reduce consumption), travel etc. But the entire socio-economic system we have prohibits the slightest move in this direction; it cannot tolerate slowdown in business turnover (unemployment, bankruptcy, discontent and pressure on governments immediately accelerate), let alone stable levels, let alone reduction to maybe one-fifth of present levels.

This gets us to the second issue on which I think Dick is clearly and importantly mistaken. He believes a zero growth economy can still be a capitalist economy. This is what Tim Jackson says too, in his very valuable critique of the present economy and of the growth commitment. Dick doesn’t offer any explanation or defence for his belief; it is just stated in four sentences. “Capitalism will still be able to thrive in this new system as long as legislation ensures a level playing field. Huge new industries will be created, and vast fortunes are still there to be made by the brave and the innovative.” (p. 173.) “I have no doubt that the dynamism and flexibility of capitalism can adjust to sustainability laws. The profit imperative would be maintained and, as long as there was an equitable base, competition would thrive.” (p. 177.)

Following is a sketch of the case that a zero growth economy is totally incompatible with capitalism.

Capitalism is by definition about accumulation, making more money than was invested, in order to invest the surplus to have even more…to invest to get even richer, in a never-ending upward spiral. Obviously this would not be possible in a steady state economy. It would be possible for a few to still own most capital and factories and to live on income from these investments, but they would be more like rentiers or landlords who draw a stable income from their property. They would not be entrepreneurs constantly seeking increasingly profitable investment outlets for ever-increasing amounts of capital.

Herman Daly believes that “productivity” growth would enable capitalism to continue in an economy with stable resource inputs. This is true, but it would be a temporary effect and too limited to enable the system to remain capitalist. The growth rate which the system, and capitalist accumulation, depends on is mostly due to increased production, not productivity growth. Secondly the productivity measure used (by economists who think dollars are the only things that matter) takes into account labour and capital but ignores what is by far the most important factor, i.e., the increasing quantities of cheap energy that have been put into new productive systems. For instance over half a century the apparent productivity of a farmer has increased greatly, but his output per unit of energy used has fallen alarmingly. From here on energy is very likely to become scarce and costly. Ayres (1999) has argued that this will eliminate productivity gains soon (which have been falling in recent years anyway), and indeed is likely to entirely stop GDP growth before long.

Therefore in a steady state economy the scope for continued capitalist accumulation via productivity gains would be very small, and confined to the increases in output per unit of resource inputs that is due to sheer technical advance. There would not be room for more than a tiny class, accumulating greater wealth very gradually until energy costs eliminated even that scope. Meanwhile the majority would see this class taking more of the almost fixed output pie, and therefore would soon see that it made no sense to leave ownership and control of most of the productive machinery in the hands of a few.

But the overwhelmingly important factor disqualifying capitalism has yet to be taken into account. As has been made clear above the need is not just for zero-growth, it is for dramatic reduction in the amount of producing and consuming going on. These must be cut to probably less than one-fifth of the levels typical of a rich country today, because the planet cannot sustain anything like the present levels of producing and consuming, let alone the levels 9 billion people would generate. This means that most productive capacity in rich countries, most factories and mines, will have to be shut down.

I suspect that Dick Smith is like Tim Jackson in identifying capitalism with the private ownership of firms, and in thinking that “socialism” means public ownership. This is a mistake. The issue of ownership is not central; what matters most is the drive to accumulate, which can still be the goal in socialism of the big state variety (“state capitalism”.) In my ideal vision of the future post-capitalist economy most production would take place within (very small) privately owned firms, but there would be no concern to get richer and the economy would be regulated by society via participatory democratic processes.

So I think Dick has seriously underestimated the magnitude of the change that is required by the global predicament and of what would be involved in moving to a zero-growth economy. The core theme detailed in The Transition… is that consumer-capitalist society cannot be fixed. Dick seems to think you can retain it by just reforming the unacceptable growth bit. My first point above is that you can’t just take out that bit and leave the rest more or less intact. In addition you have to deal with the other gigantic faults in this society driving us to destruction, including allowing the market to determine most things, accepting competition rather than cooperation as the basic motive and process, accepting centralisation, globalisation and representative big-state “democracy”, and above all accepting a culture of competitive, individualistic acquisitiveness.

The Transition… argues that an inevitable, dreadful logic becomes apparent if we clearly grasp that our problems are primarily due to grossly unsustainable levels of consumption. There can be no way out other than by transition to mostly small, highly self-sufficient and cooperative local communities and communities which run their own economies to meet local needs from local resources… with no interest whatsoever in gain. They must have the sense to focus on the provision of security and a high quality of life for all via frugal, non-material lifestyles. In this “Simpler Way” vision there can still be (some small scale) international economies, centralised state governments, high-tech industries, and in fact there can be more R and D on important topics than there is now. But there will not be anything like the resources available to sustain present levels of economic activity or individual or national “wealth” measured in dollars.

I have no doubt that the quality of life in The Simpler Way (see the website, Trainer 2011) would be far higher than it is now in the worsening rat race of late consumer-capitalism. Increasing numbers are coming to grasp all this, for instance within the rapidly emerging Transition Towns movement. We see our task as trying to establish examples of the more sane way in the towns and suburbs where we live while there is time, so that when the petrol gets scarce and large numbers realise that consumer-capitalism will not provide for them, they can come across to join us.

It is great that Dick is saying a zero-growth economy is no threat to capitalism. If he had said it has to be scrapped then he would have been identified as a deluded greenie/commie/anarchist out to wreck society and his growth critique would have been much more easily ignored. What matters at this point in time is getting attention given to the growth absurdity; when the petrol gets scarce they will be a bit more willing to think about whether capitalism is a good idea. Well done Dick!





EV transition…. what EV transition…?

15 08 2017

It’s raining again, and all work outside has been temporarily suspended. Well that’s my excuse for hitting the keyboard again. And the more I delve into the future of this supposed transition to EVs techno utopians continually go on about, the less I believe it will occur. No one gets limits to growth, and therein lies the problem. I also found this neat document my readers might like to download. If you’ve been hanging out on this blog for some time. you probably already know what’s in it, but there are a lot of newbies joining DTM these days, this is for you…

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I have already exposed how limits to Lithium and Cobalt and other resources needed to implement a transition away from oil powered happy motoring is going to give manufacurers (and share holders) headaches in the future; but obviously the fans of electric motoring do not understand the disruptive effects of such an industry nor how it will decimate the oil industry, which itself will kill off the EV sector….

At first glance, getting rid of polluting cars sounds like a great idea.  The billions of such vehicles around the world that pump out noxious gases and CO2 are, we know, are major contributors to climate change.  Banning them at the earliest opportunity, then, must surely be a good idea. But, there’s always a but………

If the world is going to make the switch to electric vehicles, we are going to need a massive infrastructure spend to create the fast charging systems without which the country is going to grind to a halt.

For most journeys – those of less than 10km – charging up at home overnight will do the trick.  But, Australia in particular.  is a nation of commuters who average around 1500km a month.  I know people who commute even further from where we used to live in Queensland….. Anyone driving more than about 70km to get to work is going to need somewhere to charge up before going home; and anyone driving more than 160km is going to need a fast charging station somewhere along their commute.  On the few times a year that many of us make far longer journeys (such as on long weekends) we would have to be able to stop several times to recharge – Australia is a big country. It’s either that, or we won’t be going away…..

And all of those other holiday drivers will all want to use the same “fast” (they currently take 20-30 minutes) chargers. I see melting circuit breakers…….

Add to this the fact that new oil discoveries have been plummeting and, without prices north of $200 per barrel, unlikely to bounce back, and it tells us one highly unpleasant thing… petrol and diesel prices are going to bounce back a few years from now, once the current glut is over.

That is great news if you work for an oil company or if you are a government that depends upon the taxes from oil exports to pay your debts.  But if you are a country whose oil industry is in terminal decline – like Australia that will have almost certainly totally run out of oil by 2020 – then you are about to find yourself competing for dwindling oil supplies against far richer countries like the USA and China.

Back in the real world, coal plants are shutting down, nuclear companies are going bust, the so-called ‘shale revolution’ is teetering on the cliff edge of collapse, and there is simply no way given the current state of technology for renewables to take up the slack.  What we are facing today is figuring out how to maintain the current supply of electricity, and the last thing anyone needs is the massive increase in demand that will inevitably accompany the mass consumption electric cars.

Electricity shortages may, however, prove to be the least of our worries.  Too many electric cars could trigger a global economic collapse.

Few pundits now doubt the benefits to consumers of electric cars compared to petrol (gasoline) powered ones.  A recent article in The Economist observes:

“Compared with existing vehicles, electric cars are much simpler and have fewer parts; they are more like computers on wheels. That means they need fewer people to assemble them and fewer subsidiary systems from specialist suppliers…

“With less to go wrong, the market for maintenance and spare parts will shrink. While today’s carmakers grapple with their costly legacy of old factories and swollen workforces, new entrants will be unencumbered. Premium brands may be able to stand out through styling and handling, but low-margin, mass-market carmakers will have to compete chiefly on cost.”

Sounds like job losses to me….. and who will buy EVs if they don’t have a job?

What would mass ownership of EVs do to the already struggling global oil industry?

The existential threat posed by electric cars is simply that they might force the price of petrol (gasoline) to zero.

In 2014, the world burned 41,235,000 barrels of petrol (gasoline) every day!  If no one wants the stuff,  and as there is no obvious alternative use for it with maybe the exception of some power tools and hobby engines, cars and light vans are the only place where petrol is consumed, why would the industry make petrol?

“Great,” I hear the greenies shout, “just stop producing the filthy, environment-destroying stuff.”  If only it were that simple.  The trouble is, as Michael Schirber at Live Science reminds us, oil is a chemical potpourri:

“Petroleum is not a single molecule but a mix of thousands of molecules, the most important of which are hydrocarbons. These are chains or rings of carbons atoms surrounded by hydrogen atoms.

“Although gasoline comprises nearly half of all petroleum production in the United States, a wide range of fuels and specialty oils come out of a modern-day oil refinery. The petroleum is first heated in a boiler to separate the smaller hydrocarbons with low boiling points from the larger hydrocarbons with high boiling points.”

Oil refineries can’t simply stop producing petrol (gasoline) without also ceasing production of all of those other far more useful products…. like those used to manufacture tyres, and bitumen roads..!  Both required by the EV revolution…. Lighter gases are used in such things as paints, cleaning agents and as chemical feedstock.  Heavier products include the kerosene that fuels jet aircraft; diesel for our heavy machinery and trucks; lubricating oils and greases for industry; and solids like the aforementioned bitumen.  One assumes that, like the rest of us, the greenwashers would quite like all of these other petroleum products – and the things they do for us – to be available after petrol has gone away.

And therein lies the conundrum; because petrol effectively subsidises the price of all those other products.  Even the pro-electric car Economist article concedes that:

“The internal combustion engine has had a good run—and could still dominate shipping and aviation for decades to come…”

Except of course, the oil industry is on its knees, and once it goes, so does the dream of happy electric car motoring……





Environmentalists didn’t kill the nuclear power industry, economics did.

10 08 2017

One of Nicole Foss’ standout statements for me when I last saw her speak all those years ago now, was that an economic collapse can and will occur much fater than the other crises humanity is facing, like peak oil and climate change…..  and I see signs of economic collapse every day now; not least this one.

Our friend Eclipse Now will probably blow his top and would probably post his usual rubbish here, but I saw the sense of Alice Friedemann’s blocking him from her site, I have done the same now too. After all, how can you take seriously anyone who believes in terra forming Mars and even giving that planet a flag…..?

An interesting article turned up on my feed today.

South Carolina Electric and Gas Co. and partner Santee Cooper abandoned work on two new nuclear reactors this week, not because of public protests, but because the only way to pay for them was to overcharge customers or bankrupt both companies.

The decision comes after the main contractor, Westinghouse, has completed a third of the work at the V.C. Sumner Nuclear Station. Of course, the project has already bankrupted Westinghouse due to missed deadlines and costs spiraling out of control. Westinghouse parent Toshiba Corp. had to pay $2.7 billion to get out of its contract.

Electricité de France too is in trouble. EDF could be heading towards bankruptcy, as it faces the perfect storm of under-estimated costs for decommissioning and waste disposal. Hinkley C power station (in Somerset, England) has just bumped up £1.5bn, and its completion date slipped 15 months.. Meanwhile income from power sales is lagging behind costs, and 17 of EDF’s reactors are off-line for safety tests. Yet French and UK governments are turning a blind eye to the looming financial crisis.

What the nuclear industry really needs is the new technology Eclipse is always banging on about. Scientists are working on these smaller reactors that are less dangerous, but none of them are ready for commercial deployment…..  starting to sound like fusion.

There could be a future for nuclear power in the United States, but only if the technology can compete on cost with renewable sources and natural gas. That is the real challenge for the nuclear power industry.

In any case, I firmly believe that the cost of decommissioning the 400 odd reactors that are now well beyond their use by date will finish off the industry before anything worthwhile happens on this front. The energy cliff is still on its way.

UPDATE.

Since publishing this, Alice Fridemann pointed out she has written this article on her own website…….

Nuclear power too expensive. In 2013, 37 reactors predicted to shut down, 16 already have

[ Since this article was published in 2013, 10 of the 37 at risk plants Cooper listed have been or are scheduled to close down (in red) : Diablo CanyonClintonFitzpatrickFt. CalhounIndian PointOyster CreekPilgrimQuad CitiesThree Mile IslandVermont Yankee.  Plus four plants he didn’t list are scheduled to shut down as well: San Onofre 2 & San Onofre 3, Diablo Canyon 1 & Diablo Canyon 2. In addition, not long before this article was written, Kewaunee (2012) and Crystal River (2009) closed for financial reasons.

Here are the remaining plants Cooper listed that have yet to close: Browns Ferry, Callaway, Calvert Cliff, Commanche Peak, Cook, Cooper, Davis-Besse, Dresden, Duane Arnold, Fermi,  Ginna, Hope Creek, LaSalle, Limerick, Millstone, Monticello, Nine Mile Point, Palisades, Perry, Point Beach, Prairie Island, Robinson, Seabrook, Sequoyah, South Texas, Susquehanna, Turkey Point, Wolf Creek

After spending $9 billion dollars on the two reactors of the Virgil C. Summer Nuclear Generating Station, with only 40% completion, and expected final price tag of $25 billion, it was shut down in 2017 (Plumer).  The only new nuclear plant being built in the U.S. now is in Georgia.

Cooper leaves out the cost of nuclear waste storage, which makes the economics of nuclear plants even worse than in the article below (see his testimony before the Nuclear Regulatory Commission).

One of the costs Cooper mentions are Post-Fukushima updates. Five years after the accident at Fukushima in Japan resulted in three reactor meltdowns, the global nuclear industry is spending $47 billion on safety enhancements mandated after the accident revealed weaknesses in plant protection from earthquakes and flooding. The median cost per nuclear power reactor is $46.7 million (Platts).

“New reactors at Georgia Power’s Vogtle plant were initially estimated to cost $14 billion to build; the latest estimate is $21 billion. The first reactors at the plant, in the 1970s, took a decade longer to build than planned, and cost 10 times more than expected. In France, a new plant is running around six years behind scheduled and likely to cost around $8 billion more than planned. Even keeping old reactors running may not make financial sense. In California, for example, extending the life of the Diablo Canyon plant will require new cooling towers that cost around $8 billion. It may also need billions in earthquake retrofits, because engineers realized after the project was built that it’s on a fault line” (Peters).  2016 update: this is one of the reasons they’re going to be shut down.

There are only 61 commercially operating nuclear power plants left (of 90) in the United States

MORE @ http://energyskeptic.com/2017/nuclear-power-never-econ-viable-never-will-be/





What’s really driving the global economic crisis is net energy decline

3 08 2017

And there’s no going back. So let’s step into the future.

By Jonathan Rutherford

Source: Doug Menuez

Published by INSURGE INTELLIGENCE, a crowdfunded investigative journalism project for people and planet. Support us to keep digging where others fear to tread.

In the fifth contribution to our symposium, ‘Pathways to the Post-Carbon Economy’, Jonathan Rutherford explores the fundamental driver of global economic malaise: not debt; not banks; but a protracted, slow-burn crisis of ‘net energy decline.’

Cutting through the somewhat stale debate between advocates and critics of ‘peak oil’, Rutherford highlights some of the most interesting and yet little-known scientific literature on the intimate relationship between the global economy and energy.

Whatever happens with the shift to renewables, he argues, we are moving into an era in which fossil fuels will become increasingly defunct, especially after mid-century.

The implications for the future of the global economy will not be pretty — but if we face up to it, the transition to more sustainable societies will be all the better for facing reality, rather than continuing with our heads in the sand (or, as per the image above, stuck up the bull’s behind).


As argued in more detail by Ted Trainer in this symposium the best hope for transition to a ‘post carbon’ — or, better, a sustainable society (a much broader goal) — lies in a process of radical societal reconstruction, focused on the building, in the here and now, of self-governing and self-reliant settlements, starting at the micro-local level.

The ‘Simpler Way’ vision we promote, in my view, is an inspiring alternative that we can and should work for. The hope is that these local movements — which have already begun to emerge — will network, educate and scale up, as the global crisis intensifies.

In what follows, I want to complement this view, by sketching why I think the global economy will inevitably face a terminal crisis of net energy in coming years. In making this prediction, I am assuming that global transnational elites (i.e. G7 elites), as well as subordinate national elites — who manage the globalised neoliberal economy — will pursue economic growth at all costs, as elites have done since the birth of the capitalist system in Britain 300+ years ago.

That is, they will not voluntarily pursue a process of organised ‘degrowth’. In my view, at best, they will vigorously pursue ‘green’ growth, i.e. via the rapid scaling up of renewable energy and promoting efficiency etc., but with no intention of actively reducing the overall level of energy consumption — indeed, most of the mainstream ‘green growth’ scenarios assume a doubling of global energy demand by 2050 (for a critical review of one report, see here).

I am focusing on energy but, of course we can, and should, add to this picture the wider multidimensional ecological crisis (climate change impacts, soil depletion, water stress, biodiversity loss etc) which, among other things, means that an ever increasing proportion GDP growth takes the form of “compensatory and defensive costs” (See i.e Sarkar, The Crisis of Capitalism, p.267–275) to deal with past and expected future ecological damage.

Energy and GDP Growth

Axiom 1: As the biophysical economists have shown global economic growth is closely correlated with growth in energy consumption.

Professor Minqi Li of Utah University’s Department of Economics, for example, shows that between 2005 and 2016:

‘an increase in economic growth rate by one percentage point is associated with an increase in primary energy consumption by 0.96 percent.’

GDP growth also depends on improvements in energy efficiency — Li reports that over the last decade energy efficiency improved by an average of 1.7% per annum.

One of the future uncertainties is how rapidly we are likely to improve energy efficiency — future supply constraints are likely to incentivise this strongly, and there will be scope for significant efficiency improvements, but there is also to be diminishing returns once the low hanging fruit has been picked.

Axiom 2: Economic growth depends not just on increases in gross energy consumption and energy efficiency, but the availability of net energy. Net energy can be defined as the energy left over after subtracting the energy used to attain energy — i.e. the energy used during the process of extraction, harvesting and transportation of energy. Net energy is critical because it alone powers the non-energy sectors of the global economy.

Without net energy all non-energy related economic activity would cease to function.

Insight: An important implication is that net energy can be in decline, even while gross primary energy supply is constant or even increasing.

Below I will make my case for a probably intensifying global net energy contraction by discussing, first, broad factors shaping the probable trajectory of global primary energy growth, followed by a discussion of overall net energy. Most of the statistics are drawn from Minqi Li’s latest report which, in turn, draws on the latest BP’s Statistical Review of World Energy.

Prospects for Gross Energy Consumption

Over the last decade, world primary energy consumption grew at an average annual rate of 1.8 percent. It’s important to note, however, as Jean- Jancovici shows, that in per-capita terms the rate of energy growth has significantly slowed since the 1980s, increasing at an average annual rate of 0.4% since that time, compared to 1.2% in the century prior. This is mainly due to the slowing growth in world oil supply, since the two oil shocks in the 1970s.

There are strong reasons for thinking that the rate of increase in gross energy availability will slow further in coming decades. Recently a peer reviewed paper estimated the maximum rate at which humanity could exploit all ultimately recoverable fossil fuel resources. It found that depending on assumptions, the peak in all fossil fuels would be reached somewhere between 2025–2050 (a finding that aligns with several other studies see i.e Maggio and Cacciola 2012; Laherrere, 2015).

This is highly significant because today fossil fuels make up about 86% of global primary energy use — a figure that, notwithstanding all global efforts to date, has barely changed in three decades. This surprising early peak estimate is substantially associated with the recent radical down-scaling of estimated economically and technically recoverable coal reserves.

The situation for oil is particularly critical, especially given that it is by far the world’s major source of liquid fuel, powering 95% of all transport. A recent HSBC report found that, already today, somewhere between 60–80% of conventional oil fields are in terminal decline. It estimated that by 2040 the world would need to find four Saudi Arabia’s (the largest oil supplier) worth of additional oil just to maintain current rates of supply and more than double that to meet 2040 projected demand.

And yet, as the same report showed, new oil discoveries have been in long term decline — lately reaching record lows notwithstanding record investments between 2001–2014. Moreover, new discoveries are invariably smaller fields with more rapid peak and decline rates. The recent boom in US tight oil — a bubble fueled by low interest rates and record oil industry debts — has been responsible for most additional supply since the peak in conventional oil in 2005, but is likely to be in terminal decline within the next 5–10 years, if it has not already peaked.

All this, as Nafeez Ahmed has argued, is generating the conditions within the next few years (once the current oil glut has been drawn down) for an oil supply crunch and price spike that has the potential to send the debt-ridden global economy into a bigger and better global financial crisis tailspin. It may well be a seminal event that future historians look back as marking the beginning of the end for the oil age.

An alternative currently fashionable view is that peak oil will be effectively trumped by a near-term voluntary decline in oil demand (so called ‘peak demand’), mainly due to the predicted rise of electric vehicles. One reason (among several), however, to be skeptical of such forecasts is that currently there is absolutely no evidence that oil demand is in decline — on the contrary, it continues to increase every year, and since the oil price drop in 2014, at an accelerating rate.

When peak oil does arrive, there are likely to be powerful incentives to implement coal-to-liquids or gas-to-liquids but, apart from the huge logistical and infrastructure problems involved, a move in this direction will only accelerate the near-term peaking of coal and gas supply, especially given the energetic inefficiencies involved in fuel conversion. Peak oil will also likely incentivise the acceleration towards electrification of transport and renewable energy, to which I will now turn.

Given peak fossil fuels, the prospects for increasing, or even just maintaining, gross energy depends heavily on how fast renewable energy and nuclear power can be scaled up. Nuclear energy currently accounts for 4.5% of energy supply, but globally is in decline and there are good reasons for thinking that it will not — and should not —play a major role in the future energy mix (see i.e Our Renewable Future, Heinberg & Findlay, 2016, p132–135).

In 2016, all forms of renewable electricity (i.e. excluding bio-fuel) accounted for about 10% of global energy consumption in 2016, but a large portion of this was hydroelectricity, which has limited potential for expansion. Wind, Solar PV and Concentrated Solar Power (CSP) are generally agreed to be the major renewable technologies capable of a large increase in capacity but, notwithstanding rapid growth in recent years, in 2016 they still accounted for just 2.2% of world primary energy consumption.

Insight: In recent years many ‘green-growth’ reports have been published with optimistic renewable energy forecasts — one even claiming that renewables could supply all world energy (not just electricity) by 2050. But, it should be recognised that this would require a very dramatic increase in the rate of growth in renewable capacity.

In the last six years, new investment (including government, private sector etc) in all forms of renewable energy has leveled off at around the $300 billion a year. Heinberg and Finlay (p.123) estimate that this rate of investment would have to multiplied by more than a factor of ten and continued each year for several decades, if renewable energy was to meet current global energy demand, let alone the projected doubling of demand in most mainstream energy scenarios.

In other words, it would require an upfront annual investment of US$3 trillion a year (and more over the entire life cycle). By comparison, in 2014 the IEA estimated that global investment for all energy supply (i.e fossil fuels and renewables etc) in 2035 would be US $2 trillion per year. In addition, if fossil fuel capacity is to be phased out entirely by 2050, it would require much premature scrapping of existing capital — depriving investors of making full returns on their capital — which can be expected to trigger fierce resistance from large sections, if not the entire, transnational capitalist class.

Currently both oil and gas supply, if not coal, are growing much faster than all renewables, at least in absolute if not percentage terms. No wonder that the most ambitious IPCC emission reduction scenarios assume continued large scale use of fossil fuels through to 2050, and rely instead on highly uncertain and problematic ‘net emission’ technologies (i.e Carbon Capture and Storage, massive planting of trees etc).

Based on current trends, Minqi Li’s recent energy forecast predicts that the growth of renewable energy will, at best, offset the inevitable decline in fossil fuel energy over coming decades. He forecasts that a peak in gross global energy supply (including fossil fuels and renewables) will be reached by about 2050.

This of course does not include the very real possibility of serious energy ‘bottlenecks,’ resulting, for example, from the peak in oil — for which no government is adequately preparing — and with no alternative liquid fuel source, on the scale required, readily available.

The Net Energy Equation

The foregoing has just been about gross energy, but as mentioned above, the real prospects for the growth-industrial economy depend on net energy, which alone fuels the non-energy sectors of the economy. This is where the picture gets really challenging.

With regards to fossil fuels, EROI is on a downward trajectory. The current estimate (in 2014) for global oil & gas is that EROI is about 18:1. And while it’s true that technological innovation can improve the efficiency of oil extraction, in general this is being overwhelmed by the increasing global reliance on lower EROI unconventional oil & gas sources — a trend which will continue from now until the end of the fossil fuel age.

Axiom 3: What is often overlooked, is that declining EROI will exacerbate the problem of peak fossil fuels.

As Charles Hall explains, declining EROI will accelerate the advent of peak fossil fuels, because more energy is needed just to maintain the ratio of net energy needed to fuel the economy. And when, inevitably, we begin to move down the other side of Hubbert’s peak, things will get even more challenging. At this point, decreasing gross supply will be combined with ever greater reliance on lower EROI supplies, rapidly reducing the amount of net energy available to society.

The situation would be improved if the main renewables could provide an additional source of high net energy (i.e EROI). But, while this question is the subject of much current scholarly debate, and is quite unsettled, it seems highly likely that any future 100% renewable energy system (as opposed to individual technology) will provide far less net-energy than humanity — or at least, the minority of us in the energy rich affluent regions — has enjoyed during the fossil fuel epoch. This is for the following theoretical reasons outlined by energy experts Moriarty and Honnery in a recent paper:

  • Due to the more energy diffuse nature of renewable energy flows (sun and wind), harvesting this energy to produce electricity, requires the construction of complex industrial technologies. Currently, this requires the ‘hidden subsidy’ of fossil fuels, which are involved in the entire process of resource extraction, manufacturing and maintenance of these industrial technologies. As fossil fuels deplete, this subsidy will become costlier in both financial and energy terms, reducing the net-energy of renewable technologies.
  • The non-renewable resources (often rare) needed for construction of renewable technologies will deplete over time, and will thus take more energy to extract, again, reducing net energy.
  • Due to the intermittency of solar and wind, a 100% renewable energy system (or even a large portion of renewable energy within the overall mix) requires investment in either large amounts of redundant capacity (to ensure there is security of supply during calm and cloudy weather) or, alternatively, large amounts of (currently unforeseen on the scale needed) storage capacity — or both. Ultimately, either option will require energy investment for the total system.
  • Because the main renewable technologies generate electricity, there will be a large amount of energy lost through conversion (i.e. via hydrogen) to the many current energy functions that cannot easily be electrified (i.e. trucks, industrial heating processors etc). In fairness, the conversion of fossil fuels to electricity also involves substantial energy loss (i.e. about 2/3 on average), but given that about 80% of global primary energy is currently in a non-electrical form, this appears to be a far bigger problem for a future 100% renewable system.
  • As renewable energy capacity expands, it will inevitably have to be built in less ideal locations, reducing gross energy yield.

Axiom 4: Regardless of the net energy that a future 100% renewable energy system would provide, it is important to recognize that attempts to ramp up renewable energy at very fast rates — far from adding to the overall energy output of the global economy — will inevitably come at a net energy cost.

This is because there would need to be a dramatic increase in energy demand associated with the transitional process itself.

Modelling done by Josh Floyd has found that in their ‘baseline scenario’ (described here) — which looks to phase out fossil fuels in 50 years — net energy services for the global economy would decline during that transition period by more than 15% before recovering.

This would be true of any rapid energy transition, but the problem is particularly acute for a transition to renewable technologies due to their much higher upfront capital (and therefore energy) costs, compared to fossil fuel technologies.

Conclusion

The implication of the above arguments is that over the coming decades, the global economy will very likely face an increasing deterioration in net energy supply that will increasingly choke off economic growth. What will this look like for people in real life?

Economically, it will likely be revealed in terms of stagnating (or falling) real wages, rising costs of living, decreasing discretionary income and decreasing employment opportunities — symptoms, as Tim Morgan argues, we are already beginning to see, albeit, to varying extents across the globe — but which will intensify in coming years.

How slow or fast this happens nobody knows. But given capitalism is a system which absolutely depends on endless capital accumulation for its effective economic functioning and social legitimacy, this will prove to be a terminal crisis, from which the system cannot ultimately escape.

We therefore have no choice but to prepare for a future economy in which net energy is far lower than what we have been used to in the industrial era.

Insight: To be clear, crisis by itself, will not lead to desirable outcomes — far from it. Our collective fate, as Trainer explains, depends largely on the rapid emergence of currently small scale new society movements — building examples of the sane alternative in the shell of the old — and rapidly multiplying and scaling up, as the legitimacy of the system declines.


Jonathan Rutherford is coordinator of the new international bookshop, Melbourne Australia. He is involved in various local sustainability projects where he lives in Belgrave.





Book review of Failing states, collapsing systems biophysical triggers of political violence by Nafeez Ahmed

6 06 2017

I have written at length about the collapse of Egypt over the years, and Syria too. I’ve also discussed Nafeez Ahmed’s views on the unraveling now happening in the Middle East, and my most recent item here from the Doomstead Diner has attracted a lot of attention….. including from Alice Friedemann who pointed out to me that she has published an extensive review of Ahmed’s new book “Failing states, collapsing systems biophysical triggers of political violence”. It’s a long read (the references alone are almost as long as the article and would keep you busy for weeks!), but I was totally riveted by it and felt the compulsion to republish it here as it needs to be read as widely as possible. In fact, this review is so good, you may not need to buy the book……. as I’ve been saying for a very long time now, 2020 is when things start to get really ugly, all the way to 2030, by which time it’s likely the state of the world will be unrecognisable.

The overview of biophysical factors table below is alone really telling……

If after reading this latest piece you are not convinced collapse is indeed underway, then there’s no hope for you….!

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

alice_friedemann[ In this post I summarize the sections of Nafeez’s book about the biophysical factors that bring nations down (i.e. climate change drought & water scarcity, declining revenues after peak oil, etc.) The Media tend to focus exclusively on economic and political factors.

My book review is divided into 3 parts: 

  • Why states collapse for reasons other than economic and political
  • How BioPhysical factors contribute to systemic collapse in Syria, Yemen, Iraq, Saudi Arabia Egypt, Nigeria
  • Predictions of when collapse will begin in Middle East, India, China, Europe, Russia, North America

In my opinion, war is inevitable in the Middle East where over half of oil reserves exist.  Oil is life itself.  If war happens,  collapse of the Middle East, India, and China could happen well before 2030.  If nuclear weapons are used, most nations collapse from the nuclear winter and ozone depletion that would follow.   Indonesia blew up their oil refineries to keep Japan from getting oil in WWII. If Middle Eastern governments or terrorists do the same after they’re attacked, that brings on the energy crisis sooner.  Although this would leave some high EROI oil in the ground, the energy to rebuild refineries, pipelines, oil rigs, roads, and other infrastructure would lower the EROI considerably.

Alice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Ahmed, Nafeez. 2017. Failing States, Collapsing Systems BioPhysical Triggers of Political Violence. Springer.

1) Why states collapse for reasons other than economic and political

Since the 2008 financial crash, there’s been an unprecedented outbreak of social protest: Occupy in the US and Western Europe, the Arab Spring, and civil unrest from Greece to Ukraine, China to Thailand, Brazil to Turkey, and elsewhere. Sometimes civil unrest has resulted in government collapse or even wars, as in Iraq-Syria and Ukraine- Crimea. The media and experts blame it on poor government, usually ignoring the real reasons because all they know is politics and economics.

In the Middle East, experts should also talk about geology.  Oil-producing nations like Syria, Yemen, Egypt, Nigeria, and Iraq have all reached peak oil and declining government revenues after that force rulers to raise the prices of food and oil.  This region was already short on water, and now climate change (from fossil fuels) is making matters much worse with drought and heat waves causing even greater water scarcity, which in turn lowers agricultural production.  Many of these nations have some of the highest rates of population growth on earth at a time when resources essential to life itself are declining.

The few nations still producing much of the oil – Russia, Saudi Arabia, and the U.S. are about to join the club and stop exporting oil so they can provide for their domestic population.

Ahmed points out that “because these and other factors are so nested and interconnected, even small perturbations and random occurrences in one can amplify effects on other parts of the system, sometimes in a feedback process that continues.  If thresholds are reached, these tipping points can re-order the whole system”.  These ecological and geological factors result in social disorder, which makes it even harder for government to do anything, such as putting more money into water and food production infrastructure, which accelerates climate change and energy decline impacts, which leads to even more violence at an accelerating rate until state failure.

2) How BioPhysical factors contribute to systemic collapse in Syria, Yemen, Iraq, Saudi Arabia Egypt, Nigeria

 

Table 1. Overview of biophysical factors (water scarcity, peak oil, population) for nations Ahmed discusses in this book

The UN defines a region as not having water scarcity above 1700 cubic meters per capita (green).  Water stressed nations have 1000 to 1700 cubic meters per capita (yellow).  Water scarcity is 500-1000 per capita (orange) and absolute water scarcity 0-500 (red).  Countries already experiencing water stress or far worse include Egypt, Jordan, Turkey, Iraq, Israel, Syria, Yemen, India, China, and parts of the United States. Many, though not all, of these countries are experiencing protracted conflicts or civil unrest (Patrick 2015).

SYRIA

The media portray warfare in Syria as due to the extreme repression of President Bashar al-Assad and the support he receives from Russia.  Although there has been awareness that climate change drought played a role in causing conflict, there is no recognition that peak oil was one of the main factors.

Here’s a quick summary of how peak oil and consequent declining revenues from oil production, rising energy and food prices, drought, water scarcity, and population growth led to social unrest, violence, terrorism and war.

It shouldn’t be surprising that peak oil in 1996 triggered the tragic events we see today.  After all, the main source of Syrian revenue came from their production of 610,000 barrels per day (bpd).  By 2010 oil production had declined by half. Falling revenues caused Syria to seek help from the IMF by 2001, and the onerous market reform policies required resulted in higher unemployment and poverty, especially in rural Sunni regions, while at the same time enriching and corrupting ruling minority Alawite private and military elites.

In 2008 the government had to triple oil prices resulting in higher food prices. Food prices rose even more due to the global price of wheat doubling in 2010-2011. On top of that, the 2007-2010 drought was the worst on record, causing widespread crop failures. This forced mass migrations of farming families to cities (Agrimoney 2012; Kelley et al. 2015). The drought wouldn’t have been so bad if half the water hadn’t been wasted and overused previously from 2002 to 2008 (Worth 2010). All of these violence-creating events were worsened by one of the highest birth rates growth on earth, 2.4%.  Most of the additional 80,000 people added in 2011 were born in the hardest-hit drought areas (Sands 2011).

Rinse and repeat.  Social unrest and violence led to war, oil production dropped further, so there is even less money to end unrest with subsidized food and energy or more employment, aid farmers, and build desalination plants.

Syria, once able to feed its people, now depends on 4 million tonnes of grain imports at a time when revenues continue to drop.  Syrian oil production didn’t really take off until 1968 when there were 6.4 million people.  Since oil revenues allowed their population to explode, another 13.6 million have been born.

IRAQ

Like Syria, Iraq’s agricultural production has been reduced by heat, drought, heavy rain, water scarcity, rapid population growth, and the inability of government to import food and provide goods and services as oil revenues decline.  ISIS has worsened matters and filled in the gaps of state-level failure.  Peak oil is likely by 2025.  Or sooner given the ongoing war, lack of investment to keep existing production flowing, and low oil prices (Dipaola 2016).

YEMEN 

Like Syria, Iraq, and Iran, Yemen has long faced serious water scarcity issues. The country is consuming water far faster than it is being replenished, an issue that has been identified by numerous experts as playing a key background role in driving local inter-tribal and sectarian conflicts (Patrick 2015).

Yemen is one of the most water-scarce countries in the world. In 2012, the average Yemeni had access to just 140 cubic meters of water a year for all uses and just three years later a catastrophic 86 m3, far below the 1000 m3 level minimum requirement standards.    Cities often only have sporadic access to running water— every other week or so.  Sanaa could become the first capital in the world to run out of water (IRIN 2012).

Yemen reached peak oil production in 2001, declining from 450,000 barrels per day (bpd) to 100,000 bpd in 2014, and will be zero by 2017 (Boucek 2009).   This has led to a drastic decline in Yemen’s oil exports, which has eaten into government revenues, 75% of which had depended on oil exports. Oil revenues also account for 90% of the government’s foreign exchange reserves. The decline in post-peak Yemen state revenues has reduced the government’s capacity to sustain even basic social investments. When the oil runs out … the capacity to sustain a viable state-structure will completely collapse.

Yemen has 25 million people and an exorbitantly high growth rate and predicted to double by 2050. In 2014 experts warned that within the next decade, these demographic trends would demolish the government’s ability to meet the population’s basic needs in education, health and other essential public services. This is already happening to over 15 million people (Qaed 2014).  Over half the Yemeni population lives below the poverty line, and unemployment is at 40% (60% of young people).

To cope, too many people have turned to growing qat (a mild narcotic) on 40% of Yemen’s irrigated land, increasing water use to 3.9 billion cubic meters (bcm), but the renewable water supply is just 2.5 bcm. The 1.4 bcm shortfall is made up by pumping water from underground water reserves that are starting to run dry.

Energy, overpopulation, drought, water scarcity, poverty, and a government unable to do much of anything without oil revenue is in a downward loop of social tensions, local conflicts and even mass displacements.  This in turn adds to the dynamics of the wider sectarian and political conflicts between the government, the Houthis, southern separatists and al-Qaeda affiliated militants.

Violence undermines food security, feeding back into the downward spiraling loop.  Making matters worse is that rain-fed agriculture has dropped by about 30% since 1970, making Yemen ever more food import dependent at a time when revenues are shrinking. The country now imports over 85% of its food, including 90% of its wheat and all of its rice (World Bank 2014). Most Yemenis are hungry because they can’t afford to buy food, which also rises in price when global prices rise.  The rate of chronic malnutrition as high as 58%, second only to Afghanistan (Arashi 2013).

Epidemic levels of government corruption, mismanagement and incompetence, have meant that what little revenue the government receives ends up in Swiss bank accounts.  With revenues plummeting in the wake of the collapse of its oil industry, the government has been forced to slash subsidies while cranking up fuel and diesel prices. This has, in turn, cranked up prices of water, meat, fruits, vegetables and spices, leading to fuel and food riots (Mawry 2015).

Is Saudi Arabia Next?

Summary: Within the next decade, Saudi Arabia will become especially vulnerable to the downward feedback loop of peak oil.  The most likely date for peak oil is 2028 (Ebrahimi 2015). But because the Saudi exports have been going down since 2005 at 1.4% a year as their own population rises and consumes more and more, world exports could end as soon as 2031 (Brown and Foucher 2008).

Saudi revenues will decline to zero, so the Saudis will be less able to buy their way out of food shortages.  Their own food production will drop as well from drought and water scarcity — the kingdom is one of the most water scarce in the world, at 98 m³ per inhabitant per year.

Most water comes from groundwater, 57% of which is non-renewable, and 88% of it goes to agriculture. Desalination plants produce 70% of the kingdom’s domestic water supplies. But desalination is very energy intensive, accounting for more than half of domestic oil consumption. As oil exports run down, along with state revenues, while domestic consumption increases, the kingdom’s ability to use desalination to meet its water needs will decrease (Patrick 2015; Odhiambo 2016).

According to the Export Land Model (ELM) created by Texas petroleum geologist Jeffrey J Brown and Dr. Sam Foucher, the key issue is the timing of when there will be no more exports because the domestic population of oil producing nations is using it all for domestic consumption.   Brown and Foucher showed that the tipping point to watch out for is when an oil producer can no longer increase the quantity of oil sales abroad because of the need to meet rising domestic energy demand.

Saudi Arabia is the region’s largest energy consumer. Domestic demand has increased 7.5% over the last 5 years, mainly due to population growth. Saudi population may grow from 29 million people now to 37 million by 2030, using ever more oil and therefore less available for export.

Declining Saudi peak oil exports will affect every nation on earth that imports Saudi oil, especially top customers China, Japan, the United States, South Korea, and India.  As Saudi oil declines, there will be few other places oil for importing nations to turn to, since other exporting nations will also be using their oil domestically.

A report by Citigroup predicted net exports would plummet to zero in the next 15 years. This means that 80% of money from oil sales the Saudi state depends on are trending downward, eventually terminally (Daya 2016). In this case, the peak oil production date could happen well before 2028, as well as violent social unrest, since so far, Saudi Arabia’s oil wealth, and its unique ability to maintain generous subsidies for oil, housing, food and other consumer items, has kept civil unrest at bay. Energy subsidies alone make up about a fifth of Saudi’s gross domestic product. But as revenues are increasingly strained by decreasing exports after peak oil, the kingdom will need to slash subsidies (Peel 2013).  Even now a quarter of the Saudi’s live in poverty, and unemployment is 12%, especially young people who have a 30% unemployment level. [Saudi Arabia recently started taxing fuel at the bowsers]

Saudi Arabia is experiencing climate change as temperatures rise in the interior and far less rainfall occurs in the north.  By 2040, local average temperatures are expected to increase by as much as 4 °C at the same time rain levels are falling, resulting in more extreme weather events like the 2010 Jeddah flooding when a year of rain fell in 4 hours.  The combination could dramatically impact agricultural productivity, which is already facing challenges from overgrazing and unsustainable industrial agricultural practices leading to accelerated desertification (Chowdhury 2013).

80% of Saudi Arabia’s food requirements are purchased through heavily subsidized imports.  Without the protection of oil revenue subsidies, and potential rises in the global prices of food (Taha 2014), the Saudi population would be heavily impacted. But with net oil revenues declining to zero—potentially within just 15 years—Saudi Arabia’s capacity to finance continued food imports will be in question.

EGYPT

Like Syria, Egypt has had increasing problems paying for food, goods, and services after peak oil in 1993 while at the same time population keeps growing.   Worse yet, there are no oil revenues at all, because since 2010 the population has been using more oil than what is produced and has had to import oil, with no oil revenues to pay for food, goods, and services.  Two-thirds of Egypt’s oil reserves have likely been depleted and oil produced now is declining at 3.4% a year.

Nor are there revenues coming from natural gas sales made up for the loss of oil revenues.  Over the past decade domestic use nearly doubled to consumption of nearly all the production (Kirkpatrick 2013a).

The Egyptian population since 2000 has grown 21% to 88 million people and isn’t slowing down, with 20 million more expected over the next 10 years.  A quarter are children half of them living in poverty and unemployed  (EI 2012) at the same time the elites have grown wealthier from IMF and World Bank policies.

In the 1960s there were 2800 cubic meters of water per capita, now just 660 – well below the international standard of water poverty of 1000 per person (Sarant 2013).   Water scarcity and population growth lave led to tens of thousands of hectares of farmland to be abandoned.  There is some water that can be obtained, but most farmers can’t afford the price of diesel fuel to power pumps  (Kirkpatrick 2013b)

Egypt was self-sufficient in food production in the 1960s but now imports 70% of its food (Saleh 2013). One of the many reasons Mubarak fell was the doubling of wheat prices in 2011 since half of Egypt’s people depend on food rations.  But the democratically-elected Muslim Brotherhood party and their leader Morsi couldn’t alleviate declining government revenues due to the biophysical realities of food, water, and energy shortages either.  Morsi desperately tried to get a $4.8 billion IMF loan by slashing energy subsidies and raising sales taxes, but the economic crisis made it hard to make the payments and wheat imports dropped to a third of what was imported a year ago.

This led to Morsi being ousted by army chief Abdul Fateh el-Sisi in a coup.  Like his predecessors, El-Sisi has also been unable to meet IMF demands for increased hydrocarbon production and has resorted to unprecedented levels of brutal force to crush protests. He has also rationed electricity, which led to key industries cutting production, leading to further economic losses, declining exports and foreign reserves.  Without more money, energy companies can’t be paid, so energy production continues to drop, and debt goes up, reducing the value of Egyptian currency and higher costs for imports and shortages of energy for industrial production. Egypt’s energy and economy find themselves caught in an amplifying feedback loop (Barron 2016).

How Boko Haram arose in Nigeria

Nigeria’s climate change has led to water and land shortages from desertification, which in turn has led to illness, hunger, and unemployment followed by conflict (Sayne 2011).

Perhaps the Boko Haram wouldn’t have arisen, if the Maitatsine sect in northern Nigeria hadn’t been hit so hard by ecological disasters.  To survive they fanned out to search for food, water, shelter, and work (Sanders 2013).  Niger and Chad refugees from drought and floods also became Boko Haram foot soldiers, some 200,000 displaced farmers and herdsmen.

In northern Nigeria, where Boko Haram is from, about 70% of the population subsists on less than a dollar a day. As noted by David Francis, one of the first western reporters to cover Boko Haram: “Most of the foot soldiers of Boko Haram aren’t Muslim fanatics; they’re poor kids who were turned against their corrupt country by a charismatic leader” (Francis 2014)

The Nigerian military sees a correlation between regional climatic events, and an upsurge in extremist violence: “It has become a pattern; we saw it happen in 2006; it happened again in 2008 and in 2010. President Obasanjo had to deploy the military in 2006 to Yobe State, Borno State and Katsina State. These are some of the states bordering Niger Republic and today they are the hotbeds of the Boko Haram” (Mayah 201).

Drought caused desertification is decreasing food production, in turn leading to “economic decline; population displacement and disruption of legitimized authoritative institutions and social relations.” The net effect was an acceleration of the attractiveness of groups like “Boko Haram and other forms of Jihadi ideology,” resulting in escalating “herder-farmer clashes emanating from the north since 1980s” (Onyia 2015).

The rapid spread of Boko Haram also coincided with Lake Chad’s shrinking from 25,000 square km in 1963 to less than 2500 square km today, mainly due to climate change. At this rate, Lake Chad is will dry up in 20 years, and has already caused millions of people to lose their livelihoods.

The government has exacerbated problems by cutting fuel subsidies, which led to fuel shortages, angering the public who engaged in civil unrest  (Omisore 2014).

A senior Shell official said that crude oil production decline rates are as high as 15–20%.  But Nigeria doesn’t have the money to explore to find more oil to offset this high decline rate. Nigeria’s petroleum resources department said that Nigeria had reached a plateau of production in the Niger Delta and were already going down (Ahmed 2014).

About $15 billion of investment is required just to maintain current production levels and compensate for a natural decline in production of about 250,000 b/d each year. A 2011 study by two Nigerian scholars concluded that “there is an imminent decline in Nigeria’s oil reserve since peaking could have occurred or just about to occur (Akuru and Okoro 2011). A 2013 report backs this up, finding that Nigeria’s crude oil production has decreased since its peak in 2005, largely due to the impact of internal conflicts, leading to the withdrawal of oil companies and lack of investments. Since then production has fluctuated along a plateau. The UK Department for International Development report noted that new offshore fields might bring additional oil on-stream, surpassing the 2005 peak—but also noted that rising domestic demand “at some point in the future may cut into the amount of oil available for export” (Hall et al. 2014).

POPULATION. With Nigeria’s population expected to rise from 160 to 250 million by 2025 and oil accounting for some 96% of export revenue as well as 75% of government revenue, the state has resorted to harsh austerity measures. Sharp reductions in public spending, power cuts, fuel shortages and conditional new loans will probably widen economic inequalities and further stoke the grievances that feed groups like Boko Haram in the North. With domestic oil production decline undermining Nigeria’s oil export revenues and consequent fuel subsidy cuts, the public grows poorer and increases the number of young men more likely to join Islamist terrorist groups.

3) Predictions of when collapse will begin in Middle East, India, China, Europe, Russia, North America

When will  Middle-East oil producing nations fail?

Ahmed says that so far after peak oil production, Middle-Eastern economies have declined as revenues declined, leading to systemic state-failure in roughly 15 years, more or less, depending on how hard hit a nation was by additional (climate-change) factors such as drought, water scarcity, food prices, and overpopulation.

Saudi Arabia, and much of the rest of Arabian Gulf peninsula, may experience state-failure well within 10 to 20 years. If forecasts of Saudi oil depletion are remotely accurate, then by 2030 the country will simply not exist as we know it. Coupled with the accelerating impacts of climate-induced water scarcity, the Kingdom is bound to begin experiencing systemic state-failure at most within 20 years, and probably much earlier.

Marin Katusa, chief energy strategist at Casey Research, reports that “many Middle Eastern countries may stop exporting oil and gas altogether within the next few years, while some already have” (Katusa 2016). Oil analysts at Lux Research estimate that OPEC oil reserves may have been overstated by as much as 70%. True OPEC reserves could be as low as 429 billion barrels, which could mean a global net export crunch as early as 2020 (Lazenby 2016).

The period from 2020 to 2030 will see Middle East oil exporters experiencing a systemic convergence of energy and food crises.

When will India & China collapse?

India and China are widely assumed to be the next superpowers, but at this stage of energy and resource depletion, can’t possibly mimic the exponential growth of the Western world.

India, South Asia, and China face enormous ecological challenges Irregularities in the pattern of monsoon rains and drought are likely to lower food production and increase water scarcity, while higher temperatures will increase the range of vector-borne diseases such as malaria and become prevalent year-round (DCDC 2013). As sea levels rise, millions of people will be displaced permanently.

These impacts will unravel regional political and economic order well within 20 years and manifest at first as civil unrest.  Depending on how the Indian and Chinese states respond, it is likely that these outbreaks of domestic disorder will become more organized, and will eventually undermine state territorial integrity before 2030.  Near-term growth will further undermine environmental health and deplete resources, making these nations even more vulnerable to climate and food crises.

European and Russian collapse timeframe

Within Europe, resource depletion has meant that the European Union as a whole has become increasingly dependent on energy imports from Russia, the Middle East, Central Asia and Africa. Yet exports from these regions will become tighter as major oil producers approach production limits.

The geopolitical turmoil that has unfolded in Ukraine provides a compelling indication that such processes are rapidly moving from the periphery of the global system into the core. For the most part, the Euro-Atlantic core—traditionally representing the most powerful sections of the world system—has insulated itself from global crisis convergence impacts by diversifying energy supply sources. However, there is only so much that diversification can achieve when the total energetic and economic quality of global hydrocarbon resource production is declining.

Post-2030–2045

Faced with these converging crises, the Euro-Atlantic core will continue to see the creation of cheap debt-money through quantitative easing as an immediate solution to generate emergency funds to stabilize the financial system and shore-up ailing industries. This will likely play out in one of these business-as-usual scenarios:

  1. The lower resource quality (EROI) of the global energy system may act as a fundamental geophysical ceiling on the capacity of the economy to grow. It may act as an invisible brake on growth in demand, so fossil fuel prices would remain at chronically low levels, endangering the profitability of the fossil fuel industries. This would lead to an acceleration of the demise of the fossil fuel industries, which could lead to debt-defaults across industries in the financial system. Declining hydrocarbon energy production would cause a self-reinforcing recessionary economic process. This would escalate vulnerability to water, food and energy crises and hugely strain the capacity of European and American states to deliver goods and services to even their own populations, and other nations dependent as much on importing food as they are oil.
  2. Scarcity of net exports on the world market may raise oil prices and provide some sectors of ailing fossil fuel industries to be profitable again. But previous slashing of investments and cutbacks in exploration will mean that only the most powerful sections of the industry would be able to capitalize on this, which means production is unlikely to return to former high levels. Price spikes would trigger economic recession, causing a drop in demand, while lower production levels would exacerbate the economy’s inability to grow substantially, if at all. In effect, the global economy would likely still experience a self-reinforcing recessionary economic process.

In both scenarios, escalating economic crises are likely to invite the Euro-Atlantic core to respond by using debt-money to shore-up as much of the existing core financial and energy industries as possible. Prices spikes and shortages in water, food and energy would be experienced by general populations as a dramatic lowering of purchasing power, leading to an overall decrease in quality of life, an increase in poverty, and a heightening of inequality. This would undermine their internal cohesion, giving rise to new divisive, nationalist and xenophobic movements, and lead states into a tightening spiral of militarization to police domestic order. As instability in the Middle East and elsewhere intensifies, manifesting in further unrest, political violence and terrorist activity, states will also be drawn increasingly into short- sighted military solutions. In particular, scarcity of net oil exports on the world market will heighten geopolitical and military competition to control and/or access the world’s remaining hydrocarbon energy resources. With the Middle East still holding the vast bulk of the world’s reserves, the region will remain a central flashpoint for such competition, even as major producers such as Saudi Arabia approach systemic state-failure due to reaching inevitable production declines.

It is difficult to avoid the conclusion that as we near 2045, the European and American projects will face escalating internal challenges to their internal territorial integrity, increasing the risk of systemic state-failure. Likewise, after 2030, Europe, India, China (and other Asian nations) will begin to experience symptoms of systemic state-failure.

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EROI explained and defended by Charles Hall, Pedro Prieto, and others

29 05 2017

Yes, another post on ERoEI……  why do I bang on about this all the time…?  Because it is the defining issue of our time, the issue that will precipitate Limits to Growth to the forefront, and eventually collapse civilisation as we know it.

There are two ways to collapse civilisation:
1) don’t end the burning of oil
2) end burning oil

And if that wasn’t enough, read this from srsroccoreport.com 

While the U.S. oil and gas industry struggles to stay alive as it produces energy at low prices, there’s another huge problem just waiting around the corner.  Yes, it’s true… the worst is yet to come for an industry that was supposed to make the United States, energy independent.  So, grab your popcorn and watch as the U.S. oil and gas industry gets ready to hit the GREAT ENERGY DEBT WALL.

So, what is this “Debt Wall?”  It’s the ever-increasing amount of debt that the U.S. oil and gas industry will need to pay each year.  Unfortunately, many misguided Americans thought these energy companies were making money hand over fist when the price of oil was above $100 from 2011 to the middle of 2014.  They weren’t.  Instead, they racked up a great deal of debt as they spent more money drilling for oil than the cash they received from operations.

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alice_friedemannAlice Friedemann   www.energyskeptic.com  author of “When Trucks Stop Running: Energy and the Future of Transportation”, 2015, Springer and “Crunch! Whole Grain Artisan Chips and Crackers”. Podcasts: Practical Prepping, KunstlerCast 253, KunstlerCast278, Peak Prosperity , XX2 report ]

Questions about EROI at researchgate.net 2015-2017

Khalid Abdulla, University of Melbourne asks:  Why is quality of life limited by EROI with renewable Energy? There are many articles explaining that the Energy Return on (Energy) Invested (EROI, or EROEI) of the sources of energy which a society uses sets an upper limit on the quality of life (or complexity of a society) which can be enjoyed (for example this one).  I understand the arguments made, however I fail to understand why any energy extraction process which has an external EROI greater than 1.0 cannot be “stacked” to enable greater effective EROI.  For example if EROI for solar PV is 3.0, surely one can get an effective EROI of 9.0 by feeding all output energy produced from one solar project as the input energy of a second? There is obviously an initial energy investment required, but provided the EROI figure includes all installation and decommissioning energy requirements I don’t understand why this wouldn’t work. Also I realise there are various material constraints which would come into play; but why does this not work from an energy point of view?

Charles A. S. Hall replies:  As the person who came up with the term  EROI in the 1970scharles-hall (but not the concept: that belongs to Leslie White, Fred Cotrell, Nicolas Georgescu Roegan and Howard Odum) let me add my two cents to the existing mostly good posts.  The problem with the “stacked” idea is that if you do that you do not deliver energy to society with the first (or second or third) investment — it all has to go to the “food chain” with only the final delivering energy to society.  So stack two EROI 2:1 technologies and you get 4:2, or the same ratio when you are done.

The second problem is that you do not need just 1.1:1 EROI to operate society.  We (Hall, Balogh and Murphy 2009) studied how much oil would need to be extracted to drive a truck including the energy to USE the energy.  So we added in the energy to get, refine and deliver the oil (about 10% at each step) and then the energy to build and maintain the roads, bridges, vehicles and so on.  We found you needed to extract 3 liters at the well head to use 1 liter in the gas tank to drive the truck, i.e. an EROI of 3:1 was needed.

But even this did not include the energy to put something in the truck (say grow some grain)  and also, although we had accounted for the energy for the depreciation of the truck and roads,  but not the depreciation of the truck driver, mechanic, street mender, farmer etc.: i.e. to pay for domestic needs, schooling, health care etc. of their replacement.    Pretty soon it looked like we needed an EROI of at least 10:1 to take care of the minimum requirements of society, and maybe 15:1 (numbers are very approximate) for a modern civilization. You can see that plus implications in Lambert 2014.

I think this and incipient “peak oil” (Hallock et al.)  is behind what is causing most Western economies to slow or stop  their energy and economic growth.   Low EROI means more expensive oil (etc) and lower net energy means growth is harder as there is less left over after necessary “maintenance metabolism”. This is explored in more depth in Hall and Klitgaard book  “Energy and the wealth of Nations” (Springer).

Khalid Abdulla asks: I’m still struggling a little bit with gaining an intuition of why it is not possible to stack/compound EROI. If I understand your response correctly part of the problem is that while society is waiting around for energy from one project to be fed into a second project (etc.) society needs to continue to operate (otherwise it’d all be a bit pointless!) and this has a high energy overhead.  I understand that with oil it is possible to achieve higher external EROI by using some of the oil as the main source of energy for extraction/processing. Obviously this means less oil is delivered to the outside world, but it is delivered at a higher EROI which is more useful. I don’t understand why a similar gearing is not possible with renewables.  Is it something to do with the timing of the input energy required VS the timing of the energy which the project will deliver over its life?

Charles A. S. Hall replies: Indeed if you update the QUALITY of the energy you can come out “ahead”.  My PhD adviser Howard Odum wrote a lot about that, and I am deeply engaged in a discussion about the general meaning of Maximum Power (a related concept) with several others.  So you can willingly turn more coal into less electricity because the product is more valuable.   Probably pretty soon (if we are not already) we will be using coal to make electricity to pump out ever more difficult oil wells….

I have also been thinking about EROI a lot lately and about what should the boundaries of analysis be.  One of my analyses is available in the book “Spain’s PV revolution: EROI and.. available from Springer or Amazon.

To me the issue of boundaries remains critical. I think it is proper to have very wide boundaries. Let’s say we run an economy just on a big PV plant. If the EROI is 8:1 (which you might get, or higher, from examining just the modules) then it seems like you could make your society work. But let’s look closer. If you add in security systems, roads, and financial services and the EROI drops to 3:1 then it seems more problematic. But if you add in labor (i.e. the energy it takes to make the food, housing etc that labor buys with its salaries, calculated from national mean energy intensities times salaries for all necessary workers) it might drop to 1:1. Now what this means is that the energy from the PV system will support all the purchases of the workers that are building/maintaining the PV system, let’s say 10% will be taken care of, BUT THERE WILL BE NO PRODUCTION OF GOODS AND SERVICES for the rest of the population. To me this is why we should include salaries of the entire energy delivery system (although I do not because it remains so controversial). I think this concept, and the flat oil production in most of the world, is why we need to think about ALL the resources necessary to deliver energy from a project/ technology/nation.”

Khalid Abdulla: My main interest is whether the relatively low EROI of renewable energy sources fundamentally limits the complexity of a society that can be fueled by them.

Charles A. S. Hall replies: Perhaps the easiest way to think about this is historical: certainly we had lots of sunshine and clever minds in the past.  But we did not have a society with many affluent people until the industrial revolution, based on millions of years of accumulated net energy from sunshine. An affluent king, living a life of affluence less than most people in industrial societies now, was supported by the labor of thousands or millions of serfs harvesting solar energy.  The way to get rich was to exploit the stored solar energy of other societies through war (see Plutarch or Tainter’s the collapse of complex societies).

But most renewable energy (good hydropower is an exception) are low EROI or else seriously constrained by intermittency. Look at all the stuff required to support “free” solar energy. We (and Palmer and Weisbach independently) found EROIs of about 3:1 at best when all costs are accounted for.

The lower the EROI the larger the investment needed for the next generation: that is why fossil fuels with EROIs of 30 or 50 to one have led to such wealth: the other 29 or 49 have been deliverable to society to do economic work or that can be invested in getting more fossil fuels.  If the EROI is 2:1 obviously half has to go into the next generation for the growth and much less is delivered to society.   One can speculate or fantasize about what one can do with some future technology but having been in the energy business for 50 years I have seen many come and go.  Meanwhile we still get about 75-80% of our energy from fossil fuels (with their attendant high EROI).

Obviously we could have some kind of culture with labor intensive, low energy input systems if people were willing to take a large drop in their life style.  I fear the problem might be that people would rather go to war than accept a decline in life style.

Lee’s assessment of the traditional  Kung hunter gatherer life style implies an EROI of 10:1 and lots of leisure (except during droughts–which is the bottleneck).  Past agricultural societies obviously had a positive EROI based on human labor input — otherwise they would have gone extinct.  But it required something like a hectare per person.  According to Jared Diamond cultures became more complex with agriculture vs hunter gatherer.

The best assessment I have about EROI and quality of life possible is in:  Lambert, Jessica, Charles A.S. Hall, Stephen Balogh, Ajay Gupta, Michelle Arnold 2014 Energy, EROI and quality of life. Energy Policy Volume 64:153-167 http://authors.elsevier.com/sd/article/S0301421513006447 — It is open access.  Also our book:  Hall and Klitgaard, Energy and the wealth of nations.   Springer

At the moment the EROI of contemporary agriculture is 2:1 at the farm gate but much less, perhaps one returned for 5 invested  by the time the food is processed, distributed and prepared (Hamilton 2013).

As you can see from these studies to get numbers with any kind of reliability requires a great deal of work.

Sourabh Jain asks: Would it be possible to meet the EROI goal of, say for example 10:1, in order to maintain our current life style by mixing wind, solar and hydro? Can we have an energy system various renewable energy sources of different EROI to give a net EROI of 10:1?

Charles A. S. Hall replies:  Good question.  First of all I am not sure that we can maintain our current life style on an EROI of 10:1, but let’s assume we can (Hall 2014, Lambert 2014).  We would need liquid fuels of course for tractors , airplanes and ships — I cannot quite envision running those machines on electricity.

The problem with wind is that it tends to blow only 30% of the time, so we would need massive storage.  To the degree that we can meet intermittency with hydro that is good, although it is tough on the fish and insects below the dam.  The energy cost of that would be huge, prohibitive with respect to batteries, huge with respect to pumped storage, and what happens when the wind does not blow for two weeks, as is often the case?

Solar PV may or may not have an EROI of 10:1 (I assume you know of the three studies that came up with about 3:1: Prieto and Hall, Graham Palmer, Weisbach — but there are others higher and certainly the price and hence presumed energy cost is coming down –but you should also know that many structures are lasting only 12, not 25 years) — — this needs to be sorted out ).  But again the storage issue will be important.   (Palmer’s rooftop study included storage).

These are all important issues.  So I would say the answer seems to be no, although it might work well for let’s say half of our energy use.   As time goes on that percentage might increase (or decrease).

Jethro Betcke writes: Charles Hall: You make some statements that are somewhat inaccurate and could easily mislead the less well informed: Wind turbines produce electricity during 70 to 90% of the time. You seems to have confused capacity factor with relative time of operation.  Using a single number for the capacity factor is also not so accurate. Depending on the location and design choices the capacity factor can vary from 20% to over 50%.  With the lifetime of PV systems you seem to have confused the inverter with the system as a whole. The practice has shown that PV modules last much longer than the 25 years guaranteed by the manufacturer. In Oldenburg we have a system from 1976 that is still producing electricity and shows little degradation loss [1]. Inverters are the weak point of the system and sometimes need to be replaced. Of course, this would need to be considered in an EROEI calculation. But this is something different than what you state. [1] http://www.presse.uni-oldenburg.de/download/einblicke/54/parisi-heinemann-juergens-knecht.pdf

Charles A. S. Hall replies: I resent your statement that I am misleading anyone.   I write as clearly, accurately and honestly as I can, almost entirely in peer reviewed publications, and always have. I include sensitivity analysis while acknowledging legitimate uncertainty (for example p. 115 in Prieto and Hall).  Some people do not like my conclusions. But no one has shown with explicit analysis that Prieto and Hall is in any important way incorrect.  At least three other peer reviewed papers) (Palmer 2013, 2014; Weisbach et al. 2012 and Ferroni and Hopkirk (2016) have come up with similar conclusions on solar PV.  I am working on the legitimate differences in technique with legitimate and credible solar analysts with whom I have some differences , e.g. Marco Raugei.  All of this will be detailed in a new book from Springer in January on EROI.

First I would like to say that the bountiful energy blog post is embarrassingly poor science and totally unacceptable. As one point the author does not back his (often erroneous) statements with references. The importance of peer review is obvious from this non peer-reviewed post.

Second I do not understand your statement about wind energy producing electricity 70-90 percent of the time.  In England, for example, it is less than 30 percent (Jefferson 2015).

Third your statement on the operational lifetime of actual operational PV systems is incorrect. Of course one can find PV systems still generating electricity after 30 years.  But actual operational systems requiring serious maintenance (and for which we do not yet have enough data) often do not last more than 18-20 years, For example Spain’s “Flagship ” PV plant (which was especially well maintained) is having all modules replaced and treated as “electronic trash” after 20 years : http://renewables.seenews.com/news/spains-ingeteam-replaces-modules-at-europes-oldest-pv-plant-538875    Ferroni and Hopkirk found an 18 year lifespan in Switzerland.

Pedro Prieto replies: The production of electricity of wind turbines the 70-90% of time is a very inaccurate quote. Every wind turbine has a nominal capacity in MW. The important factor is not how many hours they move the blades at any working regime, but how many EQUIVALENT peak hours they work at the end of the year. That is, to know how much real energy they generate within one year. This is what the industry uses as a general and accurate measurement and it is the load factor or capacity factor.

Of course, this factor may change from the location or the design choices, but there is an incontrovertible figure: when we take the total world installed wind power in MW (435 Gw as of 2015) from January 2004 up to December 2015 and the total energy generated in Twh (841 Twh as of 2015) in the same period and calculate the averaged capacity factor, the resulting figure slightly varies around 15% AT WORLD LEVEL. This is REAL LIFE, much more than your unsupported theoretical figures of 20 to over 50% capacity factor in privileged wind fields for privileged wind turbines.

Interesting enough, some countries like the US, United Kingdom or Spain have capacity factors reaching 20% in the last years, but the world total installed capacity has not really improved so much in the last ten years, despite of theoretically much more efficient wind turbines (i.e. multipole with permanent magnets), very likely for the reasons that good wind fields in some countries were already used up. Other countries like China, India or France show, on the contrary very poor capacity factors even in 2015.

 

With respect to the lifetime of the PV systems, nor Charles Hall neither myself have confused the inverter lifetime with the solar PV system as a whole. The practice has not shown that modules have lasted more than 25 years in general over the world installed base. The fact that one single system is still working after more than 30 years of operation, if it was carefully manufactured with high quality materials, and was well cared, cleaned and free from environmental pollutants, like several modules we have also in Spain, does not mean AT ALL that the massive deployments (about 250 GW as of 2015) are going to last over 25 years.

I have to clarify also a common mistake: almost all main world manufacturers guarantee a maximum of 25 years (NOT 30) to the modules, but this is the “power” guarantee. This means that they “guarantee” (assuming they will be still alive as companies in 25 years from the sales period, something which is rather difficult for many of the manufacturers that went out of business in shorter periods of time than the guarantee of their modules. Of course, this guarantee is given with the subsequent module degradation specs over time, which in many cases has been proved be higher than specified.

But not only that. Most of the module manufacturers have a second guarantee: the “material’s guarantee”. And this is offered for between 5 and 10 years. This is the one by which the manufacturer guarantees the module replacement if it fails. Beyond that date, if the module fails, the buyer has to buy a new one (if still being manufactured, with the same specs power and size), because the second guarantee SUPERSEDES the first one.

Last but not least, there is already quite a large experience in Europe (Germany, France, Switzerland, Spain, Italy, etc.) of the number of faulty modules that have been decommissioned in the last years (i.e. period 2010-2015) as for instance, accounted by PV-Cycle, a company specialized in decommission and recycling modules in Europe. As the installed base is well known in volumes per year, it is relatively easy to calculate, in a very conservative (optimistic) mode the percentage over the total that failed and the number of years that lasted in this period and the average years for that sample that died before the theoretical 25-30 years lifetime and make the proportion on the total installed base.

The study conducted by Ferroni and Hopkirk gives an approximate lifetime for the installed base of lower than 20 years. And this is Europe, where the maintenance is supposed to be much better made than in the rest of the developing world. And the figures of failed modules given by PV-Cycle did not include the many potential plants that did not deliver their failed modules to this company for recycling

What it seems impossible for some academic people is to recognize that perhaps the “standards” they adhered to (namely IEA PVPS Task 12 in this case) and through which they published a big number of papers, should be revisited, because they lacked some essential measurements that could help to understand why renewables are not replacing fossils at the required speed, despite having claimed for years that they reached grid parity or that their Levelized Cost of Electricity (LCOE) is cheaper than coal, nuclear or gas. 

I am afraid that peer reviewed authors are not immune to having preconceived ideas even more difficult to eradicate. Excessive pride, lack of humility, considerable distance between the academy (i.e. imagined solar production levels versus real data from actual solar PV plants and lack of a systemic vision due to an excess of specialization are the main hurdles. Of course in my humble opinion.

References

  • Hall, C.A.S., Balogh, S., Murphy, D.J.R. 2009. What is the Minimum EROI that a Sustainable Society Must Have? Energies, 2: 25-47.
  • Hall, Charles  A.S., Jessica G.Lambert, Stephen B. Balogh. 2014.  EROI of different fuels  and the implications for society Energy Policy Energy Policy. Energy Policy, Vol 64 141-52
  • Hallock Jr., John L., Wei Wu, Charles A.S. Hall, Michael Jefferson. 2014. Forecasting the limits to the availability and diversity of global conventional oil supply: Validation. Energy 64: 130-153. (here)
  • Hamilton A , Balogh SB, Maxwell A, Hall CAS. 2013. Efficiency of edible agriculture in Canada and the U.S. over the past 3 and 4 decades. Energies 6:1764-1793.
  • Lambert, Jessica, Charles A.S. Hall, et al.  Energy, EROI and quality of life.  Energy Policy




How Do You Degrow an Economy, Without Causing Chaos?

16 05 2017

An article written by a Facebook friend of mine, Jonathan Rutherford, who is Coordinator of the New International Bookshop and a ‘Simpler Way’ activist. Originally published at the Resillience website.  The real challenge for those in charge is not ‘jobs and growth’, it is how to best manage the looming contraction……

‘Houston, we have a problem’. On the one hand, there is growing acceptance among environmentally conscious people that rich nations and affluent regions of the global economy must dramatically reduce overall resource and energy consumption levels – that is, undergo a process of ‘degrowth’ – if humanity is to bring about a sustainable world order. On the other hand, we have a growth economy that cannot go two steps in this direction without causing huge economic and social problems.

If you doubt the first part of this statement (i.e. the need for ‘degrowth’), consider just one metric – the material footprint (MF) indicator. This measures consumption of all natural resources (biomass, fossil fuels, metal ores and minerals) extracted from the environment. Humanity’s current MF is about 70 billion tonnes – a figure that has more than trebled since the 1970s. As we know, already this rate of consumption is generating waste, pollution and land-use change that are driving environmental problems such as global warming and species extinction. But now consider the fact that the per capita rich nation (i.e OECD) MF is about 30 tonnes. If the 9+ billion humans expected to be living on earth by 2050 rose to this level, we would need 270 billion tonnes per annum – that is, four times the present rate, which is unsustainable. Using similar figures in the 1990s Friedrich Schmidt Bleek estimated that rich nations need to make ‘factor 10’ reductions in overall resource use (renewable and non-renewable), if we are to move down to a globally fair share and at sustainable levels. And that estimate, it should be noted, does not factor in the likely increase in MF that, recent history suggests, will inevitably result from the continuous pursuit of economic growth by all nations, included the wealthiest.

Many people hope that we can make ‘factor 10’ reductions via technological advance and efficiency gains alone, without having to make cut overall rates of production, consumption (i.e. GDP). But, as argued in a recent peer reviewed article by Giorgos Kallis there are strong reasons to think that this will not be viable. Few want to admit it, but the kind of radical reductions we need to make will require GDP contraction i.e. de-growth.

But if we in the rich world need to degrow the economy, as it appears we do, how is that done without causing utter social chaos and breakdown?  The problem was recently illustrated in a series of articles run by the ABC. The first article highlighted the trend among some young Australians to adopt relatively frugal lifestyles of reduced income expenditure and increased savings. A follow up article, however, asked: what would happen to the economy if everyone did this? The answers were revealing, and implicitly revealed fundamental flaws in our existing economic system.

The article cited data which suggest every year Australians spend $955 billion on all forms of consumption. Of this about $416 billion (44%) is made up items such as ‘food, clothing, housing, utilities, health, transport, insurance’ which the article defined as ‘necessities’ (note: one, of course, may question whether i.e. all clothes consumption are truly ‘necessities’!). The other $523 billion was made up what the article defined as discretionary items. Economist, Saul Eslake pointed out that, even if we exclude from this discretionary figure the $100+ billion worth of imported goods & services, if  all Australian households ceased all the remaining discretionary spending, GDP would be immediately reduced by 25 per cent. But, as Eslake pointed out, the impact on the economy would eventually be far greater than this, due to knock-on effects. The reduced spending, for example, would result in firm bankruptcy and thus laid off workers which, in turn, would further reduce aggregate demand in a cycle of downward depression familiar to students of economic history.

But while all this is entirely correct, reducing societal consumption – degrowing the economy – need not necessarily result in chaotic economic breakdown, as the ABC article implicitly assumed. This is indeed an inevitable outcome within our present economic system, but possibly not others.

Our present system – both in Australia and now most of the world – is, of course, the capitalist market economy. This 500-year-old system has certain defining features that mark it out as unique compared to other economic systems humans have devised.  It is a system in which a) most (if not all) the major means of production are privately (these days corporately) owned by a small minority of the population; and b) where the fundamental economic problems (what, how, and for whom to produce) are solved “automatically”, through the price mechanism, rather than through conscious social decisions.

Importantly, for this discussion, the system is characterised by a growth compulsion. Due to competition, all firms – particularly large shareholder firms – are under constant pressure to invest in new techniques, methods of production and products, to improve competitiveness and their sales figures. If they fail to do this, they not only risk profits margins but also eventually being taken-over by other firms, or made bankrupt. Since no firm wants to perish, and since all must expand if they want to continue to exist, a general growth compulsion arises, not just for individual firms, but for the macro economy as whole. So, while almost everyone wants growth, it is also true that the system needs growth for its basic functioning.

In fact, the system cannot possibly tolerate even a slow-down in the rate of growth, let alone a contraction. Richard Smith points out that even when capitalism approaches a ‘steady state’ of zero GDP growth, such as what happened in the USA in the wake of the GFC, the outcome for society at large is ugly. The situation is characterised by “capital destruction, mass unemployment, devastated communities, growing poverty, foreclosures, homelessness and environmental considerations shunted aside in the all-out effort to restore growth.” Obviously, nobody wants this, including advocates of degrowth.

What then would be required to contract the economy, in an orderly and fair way? The influential ‘Steady-State’ theorist Herman Daly argues that we can do so, while retaining a basically capitalist system, on the condition that the state steps in to play a far more active regulatory role than at present. Among other policy suggestions, Daly proposes that the state impose escalating resource depletion quotes, that can be traded in a market, while retaining private enterprise and the market system.

An emerging school of eco-socialists argue, however, that this will not work. Saral Sarkar points out three flaws with Daly’s plan.

“1) The contraction of the economies of the world must occur in an orderly way. Otherwise there will be unbearable breakdowns of whole societies. An orderly contraction can only take place in a planned economy, not in a capitalist market economy. 2) Only a socialist political order can achieve, by means of egalitarian distribution of the costs and benefits, a broad acceptance of the necessary contraction, 3) Only in a planned socialist economy can the problem of unemployment be solved, which would otherwise become more and more acute in a contracting economy. To this end, a planned economy can consciously use labor-intensive technologies and methods, which, in addition, result in less use of resources.” (Sarkar, 2012, 325)

Let me just briefly elaborate on the first reason given by Sarkar (for greater detail see Sarkar 1999) – the idea that contracting the economy within a capitalist market system would result in chaotic breakdown. Sarkar points out that the famed ‘efficiency’ of the market system only works well (if at all) when there is a buyers’ market, leading to strong competition between suppliers to meet customer demand. But in a contractionary scenario, most markets would be ‘suppliers’ markets, as there would be, in general, a shortage of supply relative to demand. This would mean even poorly run, high cost firms would be able to survive. And, as with any market economy, you would still have a situation where increasingly scarce resources were tended to be allocated to meeting the money backed demands of the already wealthy, rather than to meeting the vital needs for all – a recipe for social chaos in a context of heightened scarcity.

For these reasons, and as unfashionable as it is today, Sarkar argues that a socialist economic framework will be necessary if we are to contract the economy in an orderly, peaceful and socially just way. This would involve a process in which the state nationalises and/or shuts down most large-scale firms in the economy and actively plans the process of contraction via mechanisms such as quantitative controls, price controls, a quota system etc. But what about smaller firms and co-ops, operating at the local level? Here, it is plausible that a quasi-market economy – albeit operating within a very different no-growth culture and firmly under social control –  would be viable. Another eco-socialist Richard Smith elaborates:

“In arguing for large-scale industrial planning, I’m not saying that we should nationalize family farms, farmers’ markets, artisans, groceries, bakeries, local restaurants, repair shops, workers’ cooperatives, and so on. Small producers aren’t destroying the world. But large-scale corporations are. If we want to save the planet, the corporations would have to be nationalized, socialized, and completely reorganized. Many will need to be closed down, others scaled back, others repurposed. But I don’t see any reason why small-scale, local, independent producers cannot carry on more or less as they are, within the framework of a larger planned economy.”

Eventually the goal will be to move to a situation in which most (if not all) people live and work within highly localised economies, using local resources to meet local needs. As Ted Trainer argues, this is not optional if we want to reduce our ecological footprint to sustainable one planet levels that all can share. Gladly, there is a case that the quality of life could be very high within such communities.

But herein lies a problem for the eco-socialist, and wider degrowth movement. Trainer points out that these new local communities will not work well unless they are based on the active participation and cooperation of most, if not all, ordinary citizens in the locality. This will be necessary to ensure that all are provided for and the economy works within local eco-system limits. Active and inclusive participation by all (or at least most), Trainer argues, is ‘the crucial prerequisite… that will be needed if ordinary citizens are to eventually run highly self-sufficient local communities well.’ Widespread civic participation and cooperation simply cannot be imposed ‘top-down’ via states, even if they wanted to. In any case, Trainer argues, only if movements for localism and simpler living emerge first, is there any chance of building the eventual political will that will make a process of societal degrowth at the national and global levels possible.

For this reason, we ‘Simpler Way’ advocates tend to see the eco-socialist state directed process described above as ‘only’ a final, albeit necessary, step in a long multi phased transition towards sustainability. The first (and hardest) phase of the revolution happens when ordinary citizens, not states or corporations, take it upon themselves to start building today, even in small ways, the new self-reliant economies in the towns and suburbs where they live.

Having said that, the above sets a parallel challenge for participants within existing localist movements such as Transition Towns, eco-village, permaculture, simpler living etc. For it is equally true that we will not make a successful transition to sustainability – and the new local communities and economies will not function well – unless participants within these movements become aware of, and begin advocating for, the eventual need for an orderly process of ‘de-growth’ – a process that, for reasons mentioned briefly above, is only likely to go well within an eco-socialist framework. Ultimately, unless both these local and national-global processors occur, will not make a successful transition to a sustainable society.

Of course, today, across the world we are miles away from the necessary political and cultural awareness needed for such a transition. It is likely that the coming oil crunch and global financial contraction will aid our cause and encourage more people to see the sense in localism and de-growth – but, until then, activists must doggedly go on raising awareness wherever they can. Even if it does not feel like it, every conversation counts!

Reference:

Saral Sarkar, Eco-Socialism or Eco-Capitalism? – A Critical Analysis of Humanity’s Fundamental Choices. London: Zed Books. 1999.