Is peak everything just around the corner?

15 01 2019

What Happened in 2015 that Changed the World? Peak Civilization, Maybe?

“Peak Cement” may have taken place in 2015, stopping the exponentially growing curve that would have led us to turn the Earth into a bowling ball, similar to the fictional planet Trantor, Galactic capital in Isaac Asimov’s series “Foundation” (image source).

Signs of economic slowdowns are everywhere now….. last night in the news, Alan Kohler showed a chart describing how Chinese car sales flipped from growing at 10% to shrinking at 10%, in just three months, and evidence od Chinese economic collapse are even on mainstream news now…. Retail sales in Australia are taking a hit too.  And now this from Ugo Bardi’s Cassandra’s Legacy…

When giving an example of an exponentially growing production curve, I used to cite cement production. Look at the data up to 2013: a beautiful growing curve with a doubling time of — very roughly — 10 years. Then, if we assume that the current concrete covered area in the world is about 2%  (an average of the data by Schneider et al., 2009and the Global Rural-Urban Mapping Project, 2004) then we would get to Trantor — bowling ball planet — in some 50 years. Of course that wasn’t possible, but it was still a surprise to discover how abrupt the change has been: here are the most recent data (the value for 2018 is still an estimate from cemnet.com)

Impressive, right? Steve Rocco, smart as usual, had already noticed this trend in 2017, but now it is clearer. It looks like a peak, it has the shape of a peak, it gives the impression of a peak. Most likely it is a peak — actually, it could be the start of an irreversible decline in the global cement production. 

Now, what caused the decline? If you look at the disaggregated data, it is clear that the slowdown was mainly created by China, but not just by China. Several countries in the world are going down in terms of cement production — in Italy, the decline started in 2010.

My impression — that I share with the one proposed by Rocco — is that this is not a blip in the curve, nor a special case among the various mineral commodities produced nowadays. It is a symptom of a general problem: it may be the clearest manifestation of the concept of “peak civilization” that the 1972 “Limits to Growth” study had placed for some moment during the 1st or 2nd decades of the 21st century.

Peak Cement is not alone another major peak was detected by Antonio Turiel for diesel fuel in 2015.

And, of course, we know that another major commodity went through a global peak in 2014: coal. (data from bp.com)

So, are we really facing “peak civilization”? It is hard to say. On a time scale of a few years, many things could change and, in any case, you don’t expect peaking to take place at the same time for all mineral commodities, everywhere. A strong indication that the whole world system is peaking would come from the behavior of the global GDP. Rocco had proposed that also the GDP had peaked in 2015, but the data available at present are insufficient to prove that. 

In any case, it has been said that we would see the great peak “in the rear mirror”and this may well be what we are seeing. Whatever is happening it will be clearer in the future but, if it is really “the peak“, expect the Seneca cliff to open up in front of us in the coming years. And maybe it won’t be such a bad thing(*): did we really want to turn the Earth into a bowling ball?

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2019: World Economy Is Reaching Growth Limits; Expect Low Oil Prices, Financial Turbulence

10 01 2019

Posted on January 9, 2019 by Gail Tverberg

Another incisive self explanatory article by Gail Tverberg explaining the recent volatility and what outcomes we can expect from that this coming year (and next) MUST READ.

Financial markets have been behaving in a very turbulent manner in the last couple of months. The issue, as I see it, is that the world economy is gradually changing from a growth mode to a mode of shrinkage. This is something like a ship changing course, from going in one direction to going in reverse. The system acts as if the brakes are being very forcefully applied, and reaction of the economy is to almost shake.

What seems to be happening is that the world economy is reaching Limits to Growth, as predicted in the computer simulations modeled in the 1972 book, The Limits to Growth. In fact, the base model of that set of simulations indicated that peak industrial output per capita might be reached right about now. Peak food per capita might be reached about the same time. I have added a dotted line to the forecast from this model, indicating where the economy seems to be in 2019, relative to the base model.

Figure 1. Base scenario from The Limits to Growth, printed using today’s graphics by Charles Hall and John Day in Revisiting Limits to Growth After Peak Oil with dotted line at 2019 added by author. The 2019 line is drawn based on where the world economy seems to be now, rather than on precisely where the base model would put the year 2019.

The economy is a self-organizing structure that operates under the laws of physics. Many people have thought that when the world economy reaches limits, the limits would be of the form of high prices and “running out” of oil. This represents an overly simple understanding of how the system works. What we should really expect, and in fact, what we are now beginning to see, is production cuts in finished goods made by the industrial system, such as cell phones and automobiles, because of affordability issues. Indirectly, these affordability issues lead to low commodity prices and low profitability for commodity producers. For example:

  • The sale of Chinese private passenger vehicles for the year of 2018 through November is down by 2.8%, with November sales off by 16.1%. Most analysts are forecasting this trend of contracting sales to continue into 2019. Lower sales seem to reflect affordability issues.
  • Saudi Arabia plans to cut oil production by 800,000 barrels per day from the November 2018 level, to try to raise oil prices. Profits are too low at current prices.
  • Coal is reported not to have an economic future in Australia, partly because of competition from subsidized renewables and partly because China and India want to prop up the prices of coal from their own coal mines.

The Significance of Trump’s Tariffs

If a person looks at history, it becomes clear that tariffs are a standard response to a problem of shrinking food or industrial output per capita. Tariffs were put in place in the 1920s in the time leading up to the Great Depression, and were investigated after the Panic of 1857, which seems to have indirectly led to the US Civil War.

Whenever an economy produces less industrial or food output per capita there is an allocation problem: who gets cut off from buying output similar to the amount that they previously purchased? Tariffs are a standard way that a relatively strong economy tries to gain an advantage over weaker economies. Tariffs are intended to help the citizens of the strong economy maintain their previous quantity of goods and services, even as other economies are forced to get along with less.

I see Trump’s trade policies primarily as evidence of an underlying problem, namely, the falling affordability of goods and services for a major segment of the population. Thus, Trump’s tariffs are one of the pieces of evidence that lead me to believe that the world economy is reaching Limits to Growth.

The Nature of World Economic Growth

Economic growth seems to require growth in three dimensions (a) Complexity, (b) Debt Bubble, and (c) Use of Resources. Today, the world economy seems to be reaching limits in all three of these dimensions (Figure 2).

Figure 2.

Complexity involves adding more technology, more international trade and more specialization. Its downside is that it indirectly tends to reduce affordability of finished end products because of growing wage disparity; many non-elite workers have wages that are too low to afford very much of the output of the economy. As more complexity is added, wage disparity tends to increase. International wage competition makes the situation worse.

growing debt bubble can help keep commodity prices up because a rising amount of debt can indirectly provide more demand for goods and services. For example, if there is growing debt, it can be used to buy homes, cars, and vacation travel, all of which require oil and other energy consumption.

If debt levels become too high, or if regulators decide to raise short-term interest rates as a method of slowing the economy, the debt bubble is in danger of collapsing. A collapsing debt bubble tends to lead to recession and falling commodity prices. Commodity prices fell dramatically in the second half of 2008. Prices now seem to be headed downward again, starting in October 2018.

Figure 3. Brent oil prices with what appear to be debt bubble collapses marked.

Figure 4. Three-month treasury secondary market rates compared to 10-year treasuries from FRED, with points where short term interest rates exceed long term rates marked by author with arrows.

Even the relatively slow recent rise in short-term interest rates (Figure 4) seems to be producing a decrease in oil prices (Figure 3) in a way that a person might expect from a debt bubble collapse. The sale of US Quantitative Easing assets at the same time that interest rates have been rising no doubt adds to the problem of falling oil prices and volatile stock markets. The gray bars in Figure 4 indicate recessions.

Growing use of resources becomes increasingly problematic for two reasons. One is population growth. As population rises, the economy needs more food to feed the growing population. This leads to the need for more complexity (irrigation, better seed, fertilizer, world trade) to feed the growing world population.

The other problem with growing use of resources is diminishing returns, leading to the rising cost of extracting commodities over time. Diminishing returns occur because producers tend to extract the cheapest to extract commodities first, leaving in place the commodities requiring deeper wells or more processing. Even water has this difficulty. At times, desalination, at very high cost, is needed to obtain sufficient fresh water for a growing population.

Why Inadequate Energy Supplies Lead to Low Oil Prices Rather than High

In the last section, I discussed the cost of producing commodities of many kinds rising because of diminishing returns. Higher costs should lead to higher prices, shouldn’t they?

Strangely enough, higher costs translate to higher prices only sometimes. When energy consumption per capita is rising rapidly (peaks of red areas on Figure 5), rising costs do seem to translate to rising prices. Spiking oil prices were experienced several times: 1917 to 1920; 1974 to 1982; 2004 to mid 2008; and 2011 to 2014. All of these high oil prices occurred toward the end of the red peaks on Figure 5. In fact, these high oil prices (as well as other high commodity prices that tend to rise at the same time as oil prices) are likely what brought growth in energy consumption down. The prices of goods and services made with these commodities became unaffordable for lower-wage workers, indirectly decreasing the growth rate in energy products consumed.

Figure 5.

The red peaks represented periods of very rapid growth, fed by growing supplies of very cheap energy: coal and hydroelectricity in the Electrification and Early Mechanization period, oil in the Postwar Boom, and coal in the China period. With low energy prices,  many countries were able to expand their economies simultaneously, keeping demand high. The Postwar Boom also reflected the addition of many women to the labor force, increasing the ability of families to afford second cars and nicer homes.

Rapidly growing energy consumption allowed per capita output of both food (with meat protein given a higher count than carbohydrates) and industrial products to grow rapidly during these peaks. The reason that output of these products could grow is because the laws of physics require energy consumption for heat, transportation, refrigeration and other processes required by industrialization and farming. In these boom periods, higher energy costs were easy to pass on. Eventually the higher energy costs “caught up with” the economy, and pushed growth in energy consumption per capita down, putting an end to the peaks.

Figure 6 shows Figure 5 with the valleys labeled, instead of the peaks.

Figure 6.

When I say that the world economy is reaching “peak industrial output per capita” and “peak food per capita,” this represents the opposite of a rapidly growing economy. In fact, if the world is reaching Limits to Growth, the situation is even worse than all of the labeled valleys on Figure 6. In such a case, energy consumption growth is likely to shrink so low that even the blue area (population growth) turns negative.

In such a situation, the big problem is “not enough to go around.” While cost increases due to diminishing returns could easily be passed along when growth in industrial and food output per capita were rapidly rising (the Figure 5 situation), this ability seems to disappear when the economy is near limits. Part of the problem is that the lower growth in per capita energy affects the kinds of jobs that are available. With low energy consumption growth, many of the jobs that are available are service jobs that do not pay well. Wage disparity becomes an increasing problem.

When wage disparity grows, the share of low wage workers rises. If businesses try to pass along their higher costs of production, they encounter market resistance because lower wage workers cannot afford the finished goods made with high cost energy products. For example, auto and iPhone sales in China decline. The lack of Chinese demand tends to lead to a drop in demand for the many commodities used in manufacturing these goods, including both energy products and metals. Because there is very little storage capacity for commodities, a small decline in demand tends to lead to quite a large decline in prices. Even a small decline in China’s demand for energy products can lead to a big decline in oil prices.

Strange as it may seem, the economy ends up with low oil prices, rather than high oil prices, being the problem. Other commodity prices tend to be low as well.

What Is Ahead, If We Are Reaching Economic Growth Limits?

1. Figure 1 at the top of this post seems to give an indication of what is ahead after 2019, but this forecast cannot be relied on. A major issue is that the limited model used at that time did not include the financial system or debt. Even if the model seems to provide a reasonably accurate estimate of when limits will hit, it won’t necessarily give a correct view of what the impact of limits will be on the rest of the economy, after limits hit. The authors, in fact, have said that the model should not be expected to provide reliable indications regarding how the economy will behave after limits have started to have an impact on economic output.

2. As indicated in the title of this post, considerable financial volatility can be expected in 2019if the economy is trying to slow itself. Stock prices will be erratic; interest rates will be erratic; currency relativities will tend to bounce around. The likelihood that derivatives will cause major problems for banks will rise because derivatives tend to assume more stability in values than now seems to be the case. Increasing problems with derivatives raises the risk of bank failure.

3. The world economy doesn’t necessarily fail all at once. Instead, pieces that are, in some sense, “less efficient” users of energy may shrink back. During the Great Recession of 2008-2009, the countries that seemed to be most affected were countries such as Greece, Spain, and Italy that depend on oil for a disproportionately large share of their total energy consumption. China and India, with energy mixes dominated by coal, were much less affected.

Figure 7. Oil consumption as a percentage of total energy consumption, based on 2018 BP Statistical Review of World Energy data.

Figure 8. Energy consumption per capita for selected areas, based on energy consumption data from 2018 BP Statistical Review of World Energy and United Nations 2017 Population Estimates by Country.

In the 2002-2008 period, oil prices were rising faster than prices of other fossil fuels. This tended to make countries using a high share of oil in their energy mix less competitive in the world market. The low labor costs of China and India gave these countries another advantage. By the end of 2007, China’s energy consumption per capita had risen to a point where it almost matched the (now lower) energy consumption of the European countries shown. China, with its low energy costs, seems to have “eaten the lunch” of some of its European competitors.

In 2019 and the years that follow, some countries may fare at least somewhat better than others. The United States, for now, seems to be faring better than many other parts of the world.

4. While we have been depending upon China to be a leader in economic growth, China’s growth is already faltering and may turn to contraction in the near future. One reason is an energy problem: China’s coal production has fallen because many of its coal mines have been closed due to lack of profitability. As a result, China’s need for imported energy (difference between black line and top of energy production stack) has been growing rapidly. China is now the largest importer of oil, coal, and natural gas in the world. It is very vulnerable to tariffs and to lack of available supplies for import.

Figure 9. China energy production by fuel plus its total energy consumption, based on BP Statistical Review of World Energy 2018 data.

A second issue is that demographics are working against China; its working-age population already seems to be shrinking. A third reason why China is vulnerable to economic difficulties is because of its growing debt level. Debt becomes difficult to repay with interest if the economy slows.

5. Oil exporters such as Venezuela, Saudi Arabia, and Nigeria have become vulnerable to government overthrow or collapse because of low world oil prices since 2014. If the central government of one or more of these exporters disappears, it is possible that the pieces of the country will struggle along, producing a lower amount of oil, as Libya has done in recent years. It is also possible that another larger country will attempt to take over the failing production of the country and secure the output for itself.

6. Epidemics become increasingly likely, especially in countries with serious financial problems, such as Yemen, Syria, and Venezuela. Historically, much of the decrease in population in countries with collapsing economies has come from epidemics. Of course, epidemics can spread across national boundaries, exporting the problems elsewhere.

7. Resource wars become increasingly likely. These can be local wars, perhaps over the availability of water. They can also be large, international wars. The timing of World War I and World War II make it seem likely that these wars were both resource wars.

Figure 10.

8. Collapsing intergovernmental agencies, such as the European Union, the World Trade Organization, and the International Monetary Fund, seem likely. The United Kingdom’s planned exit from the European Union in 2019 is a step toward dissolving the European Union.

9. Privately funded pension funds will increasingly be subject to default because of continued low interest rates. Some governments may choose to cut back the amounts they provide to pensioners because governments cannot collect adequate tax revenue for this purpose. Some countries may purposely shut down parts of their governments, in an attempt to hold down government spending.

10. A far worse and more permanent recession than that of the Great Recession seems likely because of the difficulty in repaying debt with interest in a shrinking economy. It is not clear when such a recession will start. It could start later in 2019, or perhaps it may wait until 2020. As with the Great Recession, some countries will be affected more than others. Eventually, because of the interconnected nature of financial systems, all countries are likely to be drawn in.

Summary

It is not entirely clear exactly what is ahead if we are reaching Limits to Growth. Perhaps that is for the best. If we cannot do anything about it, worrying about the many details of what is ahead is not the best for anyone’s mental health. While it is possible that this is an end point for the human race, this is not certain, by any means. There have been many amazing coincidences over the past 4 billion years that have allowed life to continue to evolve on this planet. More of these coincidences may be ahead. We also know that humans lived through past ice ages. They likely can live through other kinds of adversity, including worldwide economic collapse.





Big Picture article

14 12 2018

It’s so nice reading an article that joins the dots….  I get so sick of people concentrating on one issue or another, ignoring everything else troubling civilisation.  From Consciousness of Sheep, who else….?

Britain has – apparently – been thrown into crisis overnight.  Meanwhile across the channel, French president Macron is desperately trying to extinguish the flames of another weekend of mass protests that have now spread to Belgium and Holland.  In Eastern Europe the hard-right are gaining support; even undermining the previously untouchable Angela Merkel’s power base in the former East Germany.  Across the Atlantic meanwhile, the lines between deranged Democrats and MAGA nationalists are being drawn in readiness for America’s second civil war.  We are surely living through the greatest crisis in modern history.

Well, yes indeed we are.  But everything set out in the first paragraph is no more than the froth on the beer.  These political spasms are merely the outward manifestation of a human catastrophe that has been decades in the making.

Two far greater symptoms of our predicament have gained at least some public traction this year.  First was an all too visible plastic pollution crisis that is increasingly difficult to ignore now that China has ceased acting as the West’s rubbish dump.  Second is the somewhat less visible insect apocalypse that has seen the near extinction of a raft of pollinating insect species; without which we humans are doomed to starvation.  Interestingly, while these two symptoms are only tenuously related to climate change, they have tended to be included under that shorthand heading.  Plastic certainly damages the environment, but its build up owes far more to the ongoing power of the petrochemicals industry and the myth of recyclingthan to changes in climate.  The same goes for the insects.  While there may have been some climactic impact on migrations and reproduction, the main cause is the vast quantities of chemical insecticides required by an industrialised agriculture tasked with feeding 7.5 billion humans on a planet that could barely feed one seventh of that without fossil fuels and agrochemicals.

In the affected areas, local populations have been stunned by a series of “red tide” events that result in the mass deaths of fish and other marine creatures.  Climate change is indirectly involved in these events because of the increased rainfall from warmer storms.  But once again it is our industrial agriculture that is the primary cause – the giant oxygen-free zones beneath algae and phytoplankton blooms that form because of artificial fertilisers washed off the land when it rains.  When marine creatures stray into these oxygen-free zones (which are pinkish-red in colour due to concentrated hydrogen sulphide) they suffocate before they can swim to safety.

Off most people’s radar is the ongoing sixth mass extinction, as we lose thousands of species every year.  Again, while some of this is directly due to the changing climate, the larger part is due to human activities like agriculture, deforestation and strip mining simply chewing up natural habitats to make way for the creation of the various resources – including food – required to sustain a human population that is projected to reach 10 billion by mid-century.

The use of the term “climate change” to describe these catastrophes is deceptive.  If we were looking at our predicament in totality, we would include these crises alongside climate change as a series of (often interacting) sub-sets of a much greater problem… let’s call it the “human impact crisis.”

Crucially, by focussing solely on a changing climate, we can exercise a form of psychological denial in which human civilisation is able to continue chasing infinite growth on a finite planet while yet-to-be-invented technologies are deployed to magically heal the damage that our over-consumptive lifestyles are having on the human habitat.

The focus on climate change also permits us to avoid any examination of those human activities that increasingly stand in the way of the bright green technological future we keep promising ourselves.  Shortages in a range of key resources, including several rare earths, cobalt, lithium, chromium, zinc, gold and silver are very likely to materialise in the next decade if Western countries get anywhere close to their targets for switching to renewable electricity and electric cars (even though even these are just a fraction of what would be required to decarbonise the global economy).

Energy is an even bigger problem.  For the first time since the dark ages, humanity is switching from high-density energy sources (nuclear, coal, gas and oil) to ultra-low density energy sources (tide, wind, wave and solar).  We are – allegedly – choosing to do this.  However, because we have depleted fossil fuels on a low-hanging fruit basis, it is costing us more in both energy and money to maintain the energy needed to power the global economy.  As more of our energy has to be channelled into energy production (e.g. the hugely expensive Canadian bitumen sands and the US fracking industry) ever less energy is available to power the wider economy. This has forced us into a crisis I refer to as “Schrodinger’s renewables,” in which the technologies being deployed supposedly to wean us off fossil fuels end up merely being added in order to maintain sufficient economic growth to prevent the entire civilisation collapsing.

This, of course, brings us back to the increasingly heated debates in the US Congress, the UK Parliament and the streets of 100 French towns and cities.  Economic growth is the fantasy that almost everyone is buying into as a solution to our predicament.  Sure, some call it “green growth,” but it isn’t.  In reality it is, and always was central bank growth.  Why?  Because every unit of currency in circulation in the West was created with interest attached.  In such a system, we either grow the economy or we inflate the value currency back to something more in line with the real economy.  The former is impossible and the latter is devastating… which is why central bankers around the world have been quietly panicking for the best part of a decade.

To be clear, since 1980 the western economic system has inflated a series of asset bubbles, each of which has subsumed and outgrown its predecessor.  In the 1980s companies bailed out failing companies to save themselves.  In the 1990s stock markets bailed out companies to save stock markets.  In the 2000s banks bailed out stock markets and then states and central banks bailed out banks.  Next time around it will be states and currencies that need bailing out.  And in the absence of space aliens, it is not clear who is going to be riding to the rescue.  What that means, dear reader, is that everything you depend upon (but didn’t know it) for life support – inter-bank lending systems, letters of credit and freight insurance, international trade arrangements, employment, state pensions, etc.  – is going to go away (at least until some kind of debt-write-off (either directly or via “helicopter money”) and a new currency system can be put into place.

The other legacy from this period of debt-based asset inflation is a series of grossly unequal societies; divided, ultimately, between those who get to spend the (uninflated) debt-based currency first and those (the 99 percent) who only get the currency after its value has been inflated away – primarily those who depend upon a wage/salary from employment rather than an income from shares and other investments.  Most people accept some inequality.  However a lack of economic growth (outside banking and tech) has created deep hostility to those political parties that cling to the pre-2008 neoliberal orthodoxy.  The result has been a growth in populist movements claiming to know how to restore the economy to rates of growth last seen in the 1990s.  Political economist Mark Blyth summed up the difference between the left and right wing variants of populism thus:

  • The right says neoliberalism ruined the economy and immigrants took your jobs
  • The left says neoliberalism ruined the economy and capitalists took your jobs.

Needless to say – as the boy Macron is learning to his cost – now is not a happy time to be a neoliberal politician.  The broader problem, however, is that the proposed solutions from the populists are no more likely to result in another round of economic growth simply because western civilisation is already well past the point of overshoot.  China – the place where most of the jobs went and where most of the stuff we consume is made – already consumes half of the world’s coal, copper, steel, nickel and aluminium.  It also consumes nearly two-thirds of the world’s concrete.  To grow at just 3.5 percent would require that China consume all of the world’s reserves of those resources by 2038 – at which point it would also be consuming a quarter of the world’s oil and uranium and half of the world’s grain harvest.  The impossibility of this is what people mean when they use the word “unsustainable” to describe our situation.

Nevertheless, even supposedly green parties cling to the promotion of economic growth as an electoral strategy.  Rather than admit the impossibility of further growth, however, they reach instead for some mythical “green growth” that will supposedly follow the industrial scale deployment of non-renewable renewable energy harvesting technologies like wind turbines and solar panels that require fossil fuels in their manufacture , and for which the planet lacks sufficient material reserves.  Promising de-growth is, however, politically toxic in the current climate.

Most green growth advocates imagine a switch from extraction and manufacturing to (largely digital) services that will somehow decouple resource and energy growth from GDP.  That is, we can all continue to prosper even as our use of planetary resources falls back to something like the amounts consumed in the 1750s.  Writing in Resilience, Jason Hickel gives the lie to this:

“This sounds reasonable on the face of it. But services have grown dramatically in recent decades, as a proportion of world GDP — and yet global material use has not only continued to rise, but has accelerated, outstripping the rate of GDP growth. In other words, there has been no dematerialization of economic activity, despite a shift to services.

“The same is true of high-income nations as a group — and this despite the increasing contribution that services make to GDP growth in these economies. Indeed, while high-income nations have the highest share of services in terms of contribution to GDP, they also have the highest rates of resource consumption per capita. By far.

“Why is this? Partly because services require resource-intensive inputs (cinemas and gyms are hardly made out of air). And partly also because the income acquired from the service sector is used to purchase resource-intensive consumer goods (you might get your income from working in a cinema, but you use it to buy TVs and cars and beef).”

And, of course, without the income derived from making all of that stuff for service providers to consume, nobody can afford to buy the services and the economy will collapse.  Not that anyone has noticed this for now, as we are descend into the politics of blame in which widening inequality and poverty at the bottom is blamed on one or other of a culture’s preferred out groups – Tories, Democrats, socialists, libertarians, migrants, the banks, the European Union, Israel, Angela Merkel, the Rothschild family, Donald Trump… choose your favourite pantomime villain; but don’t expect to be going anywhere but down.

Politics matter, of course.  In a future of economic contraction it is far better to be governed consensually by people who understand the predicament and who plan a route to deindustrialisation that has as few casualties as possible on the way down… one reason not to keep voting for parties that dole out corporate welfare at the top while driving those at the bottom to destitution.  That road tends to end with guillotines and firing squads.

For all of its passion and drama, however, the role of politics in our current predicament is somewhat akin to the choice of footwear when setting out to climb a mountain.  Ideally you want to choose a pair of stout climbing boots; but nobody is offering those.  For now the choice is between high heels and flip-flops to climb the highest mountain we have ever faced.  If we are lucky, the political equivalent a half decent pair of training shoes might turn up, but while the world is focussed on economic growth; that is the best we can hope for… and we still have to climb the mountain whatever shoes we wear.





Why Growth Can’t Be Green

14 09 2018

jason hickelBy Dr Jason Hickel, an anthropologist, author, and a fellow of the Royal Society of Arts.

Warnings about ecological breakdown have become ubiquitous. Over the past few years, major newspapers, including the Guardian and the New York Times, have carried alarming stories on soil depletion, deforestation, and the collapse of fish stocks and insect populations. These crises are being driven by global economic growth, and its accompanying consumption, which is destroying the Earth’s biosphere and blowing past key planetary boundaries that scientists say must be respected to avoid triggering collapse.

Many policymakers have responded by pushing for what has come to be called “green growth.” All we need to do, they argue, is invest in more efficient technology and introduce the right incentives, and we’ll be able to keep growing while simultaneously reducing our impact on the natural world, which is already at an unsustainable level. In technical terms, the goal is to achieve “absolute decoupling” of GDP from the total use of natural resources, according to the U.N. definition.

It sounds like an elegant solution to an otherwise catastrophic problem. There’s just one hitch: New evidence suggests that green growth isn’t the panacea everyone has been hoping for. In fact, it isn’t even possible.

Green growth first became a buzz phrase in 2012 at the United Nations Conference on Sustainable Development in Rio de Janeiro. In the run-up to the conference, the World Bank, the Organization for Economic Cooperation and Development, and the U.N. Environment Program all produced reports promoting green growth. Today, it is a core plank of the U.N. Sustainable Development Goals.

But the promise of green growth turns out to have been based more on wishful thinking than on evidence. In the years since the Rio conference, three major empirical studies have arrived at the same rather troubling conclusion: Even under the best conditions, absolute decoupling of GDP from resource use is not possible on a global scale.

Even under the best conditions, absolute decoupling of GDP from resource use is not possible on a global scale.

A team of scientists led by the German researcher Monika Dittrich first raised doubts in 2012. The group ran a sophisticated computer model that predicted what would happen to global resource use if economic growth continued on its current trajectory, increasing at about 2 to 3 percent per year. It found that human consumption of natural resources (including fish, livestock, forests, metals, minerals, and fossil fuels) would rise from 70 billion metric tons per year in 2012 to 180 billion metric tons per year by 2050. For reference, a sustainable level of resource use is about 50 billion metric tons per year—a boundary we breached back in 2000.

The team then reran the model to see what would happen if every nation on Earth immediately adopted best practice in efficient resource use (an extremely optimistic assumption). The results improved; resource consumption would hit only 93 billion metric tons by 2050. But that is still a lot more than we’re consuming today. Burning through all those resources could hardly be described as absolute decoupling or green growth.

In 2016, a second team of scientists tested a different premise: one in which the world’s nations all agreed to go above and beyond existing best practice. In their best-case scenario, the researchers assumed a tax that would raise the global price of carbon from $50 to $236 per metric ton and imagined technological innovations that would double the efficiency with which we use resources. The results were almost exactly the same as in Dittrich’s study. Under these conditions, if the global economy kept growing by 3 percent each year, we’d still hit about 95 billion metric tons of resource use by 2050. Bottom line: no absolute decoupling.

Finally, last year the U.N. Environment Program—once one of the main cheerleaders of green growth theory—weighed in on the debate. It tested a scenario with carbon priced at a whopping $573 per metric ton, slapped on a resource extraction tax, and assumed rapid technological innovation spurred by strong government support. The result? We hit 132 billion metric tons by 2050. This finding is worse than those of the two previous studies because the researchers accounted for the “rebound effect,” whereby improvements in resource efficiency drive down prices and cause demand to rise—thus canceling out some of the gains.

Study after study shows the same thing. Scientists are beginning to realize that there are physical limits to how efficiently we can use resources. Sure, we might be able to produce cars and iPhones and skyscrapers more efficiently, but we can’t produce them out of thin air. We might shift the economy to services such as education and yoga, but even universities and workout studios require material inputs.

We might shift the economy to services such as education and yoga, but even universities and workout studios require material inputs.

Once we reach the limits of efficiency, pursuing any degree of economic growth drives resource use back up.





Sustainability lost…….

30 07 2018

Two weeks ago, I left my cocoon in Geevo and flew to Queensland for the first time in over two years…  and no, I will not be driving back in another ute!  Glenda was supposed to join me in Tasmania around now, but, as they say, life puts paid to the best laid plans, and her mother now aged 94 had a fall, breaking her wrist and fracturing her pelvis, never a good idea at such a ripe old age.

My flight was delayed for over an hour, and I didn’t arrive in Brisbane until past 11PM, then Virgin put my luggage on the wrong carousel, while my son was waiting outside to take me to his new place he shares with his partner and one other in a new apartment near the river. I’d heard all about this apartment, especially the bit about going from student poverty to working man riches…. but the view is so stunning, I had to pinch myself to make sure it wasn’t all a dream! I never thought I’d think of our son as “how the other half lives”!

IMG_20180714_110732

He might as well enjoy it while he can I guess, they have to live somewhere, and it’s sited unbelievably close to public transport.

I brought the cold weather with me it appeared, my first morning there was the coldest Queensland had experienced in a very long time; mornings were actually several degrees less cold in Geeveston, though of course it never warmed up to 20 degrees at the Fanny Farm.

The hustle and bustle of “the big smoke” always shocks me after the quiet life in Southern Tasmania, even though I lived in Brisbane for decades, and I of all people should not be shocked after writing reams about the unsustainability of our civilisation…. but it nevertheless brings it all home to me.

What was also brought home to me is the unsustainability of keeping old people alive, using world best practice technology of course….. This is, like population, a very ticklish issue that nobody talks about. I’m almost thirty years younger than my mother in law, and I have already come to grips with the fact my days are numbered, even if they are not quite as numbered as hers, but the amount of resources, money, and energy spent on keeping her alive for what may not be more than three months is staggering…….

How anyone measures what is or is not appropriate to keep a very old person comfortable is anyone’s guess. Can anyone even pass judgement? We do what we do, as my old friend Bruce once said to me, because we can. It’s how I flew up at short notice. Speaking of noticing, airfares have gone up 50% since last time I did this….

The flurry of activity since Betty’s return from hospital is amazing. A new ramp that probably cost $3000 has been built so her wheelchair can accommodate the single step difference between the house floor and the ground outside. We’ve had physios, occupational therapists and a social worker call to assess the situation. Tomorrow, ‘a builder’ is coming to install a hook for Betty’s shower, presumably so she can be showered sitting down….. and I have no idea who’s paying for all this.

A couple of days ago, she suddenly became quite ill, an ambulance was called, and I had to follow it all the way to Nambour Hospital (and of course return), a 100km trip. Luckily, she was transferred to Noosa which is just ten minutes away, but all the same, the amount of driving I am currently undertaking as the nominated driver is amazing. It’s a good thing Glenda’s little car runs on the smell of fumes because this amount of driving is easily four times as much as I am used to!

Trained as I am by my INTJ personality to only see the amount of energy and resources needed to achieve these results, I feel like I have actually flown to a different planet. Then there’s the traffic…..  and it’s not just me, friends I have since spoken to agree that congestion around Noosa is definitely on the up, and every second car is a SUV…. This place used to be a sleepy village, but no more.

I also feel like I have lost control of what I eat. I haven’t managed to find a decent loaf of bread yet. Everything I buy is cheaper than what I’m used to, but it’s all wrapped in plastic…. and I hate it. I’ve even put on two kilos since largely going off my high protein diet to fit in with everybody else and eating cake and biscuits with visitors celebrating the old lady’s 94th birthday……

But I had to do this, my poor wife is carrying quite a burden, and she needed the moral support, and by doing things around the place to keep the show running, she has more time to spend nursing her mother……

Since leaving Geevo, the weather has been doing its Tasmanian winter thing, lots of rain, mud everywhere, unlike here which is just like a Tasmanian summer; it’s unlikely I would have been able to do much around the farm anyway. Plus it stops me working on the house before my concrete reaches maximum strength… and building roofs in the rain is problematic at best.monster house

While here, I watched some stupid TV show about “Extreme Homes” that featured Far North Queensland houses, all so far over the top I was stunned….  but one in particular stood out.  Here I am, feeling guilty about the 80 m³ of concrete I have now poured into Mon Abri, and this place comes up boasting, wait for it, 15,000 m³ of concrete……. I’m actually really really hoping it’s misreporting, and that maybe it was tonnes (each m³ of concrete weighs 2.5 tonnes). This monster house has apparently no timber whatever in it and is capable of withstanding category 5 cyclones. With 18kW (!) of PVs on its roof, the program classified it as zero energy house……. never mind the fact that this much concrete would emit nearly 20,000 tonnes of CO2 or 2000 years worth of emissions from your average Australian.

When stupidity like this is spread on TV to people who will certainly believe it, what chance have we got? This will make more and more people, probably, aspire to building some similar monument to unsustainability…..

world on fire

Meanwhile, the Earth is burning, or where it’s not burning, it’s flooding, like Japan which just finished dealing with floods and landslides and is now facing a severe typhoon….

climate variability.jpg

This diagram of how the climate statistics are changing just came up in my news feed. It pays to understand standard distribution curves I guess, but it’s a good explanation of what we’ll be facing in the future.

I may stay in Queensland for another two weeks, but any longer will make me go mad. At least in Tassie I can sort of pretend I won’t be affected, and stick my head back in the sand. Everybody else is doing it….

 

 





Well Gosh…….

27 06 2018

 

simon_michauxI just came out of a meeting with two ministers of Finland. One was the Director of Ministry of Economic Affairs and Employment of Finland. We were to discuss how to develop the battery industry in Finland. They openly discussed concepts like peak oil, hyperinflation, EU currency reset, Break up of EU into something else and the projection that we don’t have nearly enough minerals to make the desired quantity of batteries and solar panels. They even knew what ERoEI was.

Somebody pinch me!!!

Even though I’ve never met Simon face to face, we have become friends over that FB platform and have discovered that we are actually very similar in our senses of humour and outlook for the future…..  Simon is an Australian mining engineer whose work I featured on DTM many moons ago, and is currently working for the Finnish Government in a high power position to determine Finland’s future energy and resources position. The header of this post is by Simon; he posted it on the FB Peak Oil group I follow….. I just had to share it, because it’s obvious that there are plenty of people in goverments (all over the world?) who must know what is going on, and yet do not have the guts to come out and say it like it is.

How much longer will we have to wait before reality makes an appearance in Australia?

If you haven’t seen it yet, here’s a presentation by Simon on peak mining….





I told you so………

15 03 2018

At this rate, it’s going to take nearly 400 years to transform the energy system

Here are the real reasons we’re not building clean energy anywhere near fast enough.

“Is it possible to accelerate by a factor of 20?” he asks. “Yeah, but I don’t think people understand what that is, in terms of steel and glass and cement.” 

by James Temple  Originally published at Technology Review

windhelicopter

Fifteen years ago, Ken Caldeira, a senior scientist at the Carnegie Institution, calculated that the world would need to add about a nuclear power plant’s worth of clean-energy capacity every day between 2000 and 2050 to avoid catastrophic climate change. Recently, he did a quick calculation to see how we’re doing.

Not well. Instead of the roughly 1,100 megawatts of carbon-free energy per day likely needed to prevent temperatures from rising more than 2 ˚C, as the 2003 Science paper by Caldeira and his colleagues found, we are adding around 151 megawatts. That’s only enough to power roughly 125,000 homes.

At that rate, substantially transforming the energy system would take, not the next three decades, but nearly the next four centuries. In the meantime, temperatures would soar, melting ice caps, sinking cities, and unleashing devastating heat waves around the globe (see “The year climate change began to spin out of control”).

Caldeira stresses that other factors are likely to significantly shorten that time frame (in particular, electrifying heat production, which accounts for a more than half of global energy consumption, will significantly alter demand). But he says it’s clear we’re overhauling the energy system about an order of magnitude too slowly, underscoring a point that few truly appreciate: It’s not that we aren’t building clean energy fast enough to address the challenge of climate change. It’s that—even after decades of warnings, policy debates, and clean-energy campaigns—the world has barely even begun to confront the problem.

The UN’s climate change body asserts that the world needs to cut as much as 70 percent of greenhouse-gas emissions by midcentury to have any chance of avoiding 2 ˚C of warming. But carbon pollution has continued to rise, ticking up 2 percent last year.

So what’s the holdup?

Beyond the vexing combination of economic, political, and technical challenges is the basic problem of overwhelming scale. There is a massive amount that needs to be built, which will suck up an immense quantity of manpower, money, and materials.

For starters, global energy consumption is likely to soar by around 30 percent in the next few decades as developing economies expand. (China alone needs to add the equivalent of the entire US power sector by 2040, according to the International Energy Agency.) To cut emissions fast enough and keep up with growth, the world will need to develop 10 to 30 terawatts of clean-energy capacity by 2050. On the high end that would mean constructing the equivalent of around 30,000 nuclear power plants—or producing and installing 120 billion 250-watt solar panels.

Energy overhaul
What we should be doing* What we’re actually doing
Megawatts per day 1,100 151
Megawatts per year 401,500 55,115
Megawatts in fifty years 20,075,000 2,755,750
Years to add 20 Terrawatts 50 363
Sources: Carnegie Institution, Science, BP *If we had started at this rate in 2000 Actual average rate of carbon-free added per day from 2006-2015

There’s simply little financial incentive for the energy industry to build at that scale and speed while it has tens of trillions of dollars of sunk costs in the existing system.

“If you pay a billion dollars for a gigawatt of coal, you’re not going to be happy if you have to retire it in 10 years,” says Steven Davis, an associate professor in the Department of Earth System Science at the University of California, Irvine.

It’s somewhere between difficult and impossible to see how any of that will change until there are strong enough government policies or big enough technology breakthroughs to override the economics.

A quantum leap

In late February, I sat in Daniel Schrag’s office at the Harvard University Center for the Environment. His big yellow Chinook, Mickey, lay down next to my feet.

Schrag was one of President Barack Obama’s top climate advisors. As a geologist who has closely studied climate variability and warming periods in the ancient past, he has a special appreciation for how dramatically things can change.

Sitting next to me with his laptop, he opened a report he had recently coauthored assessing the risks of climate change. It highlights the many technical strides that will be required to overhaul the energy system, including better carbon capture, biofuels, and storage.

The study also notes that the United States adds roughly 10 gigawatts of new energy generation capacity per year. That includes all types, natural gas as well as solar and wind. But even at that rate, it would take more than 100 years to rebuild the existing electricity grid, to say nothing of the far larger one required in the decades to come.

“Is it possible to accelerate by a factor of 20?” he asks. “Yeah, but I don’t think people understand what that is, in terms of steel and glass and cement.”

Climate observers and commentators have used various historical parallels to illustrate the scale of the task, including the Manhattan Project and the moon mission. But for Schrag, the analogy that really speaks to the dimensions and urgency of the problem is World War II, when the United States nationalized parts of the steel, coal, and railroad industries. The government forced automakers to halt car production in order to churn out airplanes, tanks, and jeeps.

The good news here is that if you direct an entire economy at a task, big things can happen fast. But how do you inspire a war mentality in peacetime, when the enemy is invisible and moving in slow motion?

“It’s a quantum leap from where we are today,” Schrag says.

The time delay

The fact that the really devastating consequences of climate change won’t come for decades complicates the issue in important ways. Even for people who care about the problem in the abstract, it doesn’t rate high among their immediate concerns. As a consequence, they aren’t inclined to pay much, or change their lifestyle, to actually address it. In recent years, Americans were willing to increase their electricity bill by a median amount of only $5 a month even if that “solved,” not eased, global warming, down from $10 15 years earlier, according to a series of surveys by MIT and Harvard.

It’s conceivable that climate change will someday alter that mind-set as the mounting toll of wildfires, hurricanes, droughts, extinctions, and sea-level rise finally forces the world to grapple with the problem.

But that will be too late. Carbon dioxide works on a time delay. It takes about 10 years to achieve its full warming effect, and it stays in the atmosphere for thousands of years. After we’ve tipped into the danger zone, eliminating carbon dioxide emissions doesn’t decrease the effects; it can only prevent them from getting worse. Whatever level of climate change we allow to unfold is locked in for millennia, unless we develop technologies to remove greenhouse gases from the atmosphere on a massive scale (or try our luck with geoengineering).

This also means there’s likely to be a huge trade-off between what we would have to pay to fix the energy system and what it would cost to deal with the resulting disasters if we don’t. Various estimates find that cutting emissions will shrink the global economy by a few percentage points a year, but unmitigated warming could slash worldwide GDP more than 20 percent by the end of the century, if not far more.

In the money

Arguably the most crucial step to accelerate energy development is enacting strong government policies. Many economists believe the most powerful tool would be a price on carbon, imposed through either a direct tax or a cap-and-trade program. As the price of producing energy from fossil fuels grows, this would create bigger incentives to replace those plants with clean energy (see “Surge of carbon pricing proposals coming in the new year”).

“If we’re going to make any progress on greenhouse gases, we’ll have to either pay the implicit or explicit costs of carbon,” says Severin Borenstein, an energy economist at the University of California, Berkeley.

But it has to be a big price, far higher than the $15 per ton it cost to acquire allowances in California’s cap-and-trade program late last year. Borenstein says a carbon fee approaching $40 a ton “just blows coal out of the market entirely and starts to put wind and solar very much into the money,” at least when you average costs across the lifetime of the plants.

Others think the price should be higher still. But it’s very hard to see how any tax even approaching that figure could pass in the United States, or many other nations, anytime soon.

The other major policy option would be caps that force utilities and companies to keep greenhouse emissions below a certain level, ideally one that decreases over time. This regulations-based approach is not considered as economically efficient as a carbon price, but it has the benefit of being much more politically palatable. American voters hate taxes but are perfectly comfortable with air pollution rules, says Stephen Ansolabehere, a professor of government at Harvard University.

Fundamental technical limitations will also increase the cost and complexity of shifting to clean energy. Our fastest-growing carbon-free sources, solar and wind farms, don’t supply power when the sun isn’t shining or the wind isn’t blowing. So as they provide a larger portion of the grid’s electricity, we’ll also need long-range transmission lines that can balance out peaks and valleys across states, or massive amounts of very expensive energy storage, or both (see “Relying on renewables alone significantly inflates the cost of overhauling energy”).

Million tonnes oil equivalentA renewables revolution?Despite the wide optimism surrounding renewables like wind and solar, they still only represent atiny and slow growing fraction of global energy.NuclearHydroAll RenewablesCoalNatural GasOil2000200120022003200420052006200720082009201020112012201320142015201605k10k15kSource: World consumption of primary energy consumption by source. BP

The upshot is that we’re eventually going to need to either supplement wind and solar with many more nuclear reactors, fossil-fuel plants with carbon capture and other low-emissions sources, or pay far more to build out a much larger system of transmission, storage and renewable generation, says Jesse Jenkins, a researcher with the MIT Energy Initiative. In all cases, we’re still likely to need significant technical advances that drive down costs.

All of this, by the way, only addresses the challenge of overhauling the electricity sector, which currently represents less than 20 percent of total energy consumption. It will provide a far greater portion as we electrify things like vehicles and heating, which means we’ll eventually need to develop an electrical system several times larger than today’s.

But that still leaves the “really difficult parts of the global energy system” to deal with, says Davis of UC Irvine. That includes aviation, long-distance hauling, and the cement and steel industries, which produce carbon dioxide in the manufacturing process itself. To clean up these huge sectors of the economy, we’re going to need better carbon capture and storage tools, as well as cheaper biofuels or energy storage, he says.

These kinds of big technical achievements tend to require significant and sustained government support. But much like carbon taxes or emissions caps, a huge increase in federal research and development funding is highly unlikely in the current political climate.

Give up?

So should we just give up?

There is no magic bullet or obvious path here. All we can do is pull hard on the levers that seem to work best.

Environmental and clean-energy interest groups need to make climate change a higher priority, tying it to practical issues that citizens and politicians do care about, like clean air, security, and jobs. Investors or philanthropists need to be willing to make longer-term bets on early-stage energy technologies. Scientists and technologists need to focus their efforts on the most badly needed tools. And lawmakers need to push through policy changes to provide incentives, or mandates, for energy companies to change.

The hard reality, however, is that the world very likely won’t be able to accomplish what’s called for by midcentury. Schrag says that keeping temperature increases below 2 ˚C is already “a pipe dream,” adding that we’ll be lucky to prevent 4 ˚C of warming this century.

That means we’re likely to pay a very steep toll in lost lives, suffering, and environmental devastation (see “Hot and violent”).

But the imperative doesn’t end if warming tips past 2 ˚C. It only makes it more urgent to do everything we can to contain the looming threats, limit the damage, and shift to a sustainable system as fast as possible.

“If you miss 2050,” Schrag says, “you still have 2060, 2070, and 2080.”