By Ugo Bardi: Are We Decoupling?

energygdp2017

http://cassandralegacy.blogspot.ca/2017/12/are-we-decoupling-not-really-but-happy.html

When driving at speed towards a brick wall should you accelerate or brake? The laws of physics prevent you from going through the brick wall, but you can influence the condition of your health at the brick wall.

This essay by Ugo Bardi shows that our standard of living is totally dependent on non-renewable resources that emit carbon. If we continue with monetary strategies to maintain business as usual we will experience a brick wall at speed when debt accumulates to a level that makes it ineffective at supporting the extraction of high cost fossil energy, and prior to the crash, we will continue to push the climate from an already unsafe state to something worse.

A wise society would acknowledge its denial of a dire predicament, set a goal to maximize well-being at the brick wall, and step on the brake to manage a fair and civil contraction of the economy via population reduction, austerity, and conservation.

Decoupling looks like an obvious idea, isn’t it? After all, isn’t that true that we are becoming more efficient? Think of a modern LED light compared with an old lamp powered by a whale oil. We are now hundreds of times more efficient than we were and we also saved the whales (but, wait, did we…..?). So, if we can do the same things with much less energy, then we could grow the economy without using more energy, solving the climate problem and also the depletion problem. It is part of the concept of “dematerialization” of the economy. Then we paint everything in green and all will be well in the best of worlds.
But there has to be something wrong with this idea, because it is just not happening, at least at the global scale. Just take a look at the above image.
In the end, society needs energy to function and the idea that we can do more with less with the help of better technologies seems to be just an illusion. If we reduce energy consumption, we’ll most likely enter a phase of economic decline. Which might not be a bad thing if we were able to manage it well. Maybe. Calling this “a challenge” seems to be a true euphemism, if ever there was one. But, who knows? Happy 2018, everybody!

By Tim Morgan: The Way Ahead

Perfect Storm

Tim Morgan, author of the seminal report Perfect Storm: Energy, Finance and the End of Growth, from which I extracted the above image, just published a nice year end essay.

I’ve highlighted in red Morgan’s references to denial, although I don’t think he is yet aware of Varki’s MORT theory.

https://surplusenergyeconomics.wordpress.com/2017/12/28/116-the-way-ahead/

What we know

Based on the SEEDS platform, and helped enormously by reader input, we’ve reached a point at which our understanding of issues is very comprehensive, and can be considered leading-edge in providing interpretations unavailable to conventional methodologies. The system has proved itself a very effective predictor – so much so that some very general projections are made later in this discussion.

First, though, it’s well worth reminding ourselves quite how much we now know.

We know that the economy is an energy system, with a parallel financial economy attached to it in a subservient role. Most of us had long suspected that this might be the state of affairs, but we have now gone a long way towards demonstrating it. We can claim that our ability to predict has become superior to that of conventional thinking. The much-vaunted V-shaped recovery after 2008 hasn’t happened, and massive stimulus hasn’t restored robust growth. The surplus energy perspective always suggested that neither of these consensus expectations was likely to be proved right.

We have known for some time that, in the developed economies of the West, prosperity is deteriorating, something about which the consensus view is still in deep denial. Some of the consequences of waning prosperity have already become apparent, most notably in politics, where events such as “Brexit” and the election of Donald Trump were wholly predictable on the basis of adverse trends in prosperity. Some other logical consequences, in business and finance as well as in politics, are eminently predictable, even though they still lie in the future.

Energy-based analysis, and recognition of the proxy nature of the financial system, have enabled us to understand policy, and its failures, over an extended period. We know that real or “organic” growth began to fade after 2000, and, because we understand energy dynamics, we know why this happened.

We can identify two phases in a process of denial-response to this basic reality. The first was the period of credit adventurism, a policy of unfettered and irresponsible debt creation between 2000 and 2008.

The second, beginning in 2008-09 and still ongoing, is monetary adventurism, and comprises the addition of the recklessness of ‘cheap money’ to the debt recklessness of the earlier chapter.

Just as credit adventurism led to the 2008 banking crash, monetary adventurism is highly likely to create a second and an even more serious (and potentially existential) financial crisis, this time extending far beyond banking, and into the fiat currency system. We know that this must have political and social as well as economic and financial consequences, and we know that the destruction of pension viability – a direct consequence of the crushing of returns on capital – will play a big part as this unfolds. Just as importantly, the conventional thinking which didn’t see 2008 coming is now in blissful ignorance about what is likely to happen next. This ignorance isn’t simply hubris or blinkered thinking. It reflects the breakdown of established paradigms.

Finally – for now – we know that the case for “sustainable development”, as it is generally understood, lacks demonstrated viability, and is a matter of assumption rather than analysis. In short, it is wishful thinking. We know this because energy-based economics, with its distinction between the real and the purely financial, requires us to understand the dynamics of credit, money and “growth”. This process strips away the claims made for growth upon which, in turn, are predicated assumptions about climate change.

 

Looking ahead

From this body of understanding, backed up by statistics, we are able to make some projections with high levels confidence about predictive accuracy. This article isn’t the place for detailed predictions, but there are a number of broad outlines which are worth noting.

Critically, prosperity in the developed economies will continue to deteriorate. This trend appears irreversible and, in some countries, is being exacerbated by mistaken policies. ‘Prosperity’, in this context, means average discretionary incomes – that is, the spending power of individuals and households, after the cost of essentials has been deducted from their resources.

We also know that this waning prosperity will be accompanied by further balance sheet deterioration, meaning that debt will continue to increase faster than economic output, and that provision for the future (most obviously, pensions) will continue to be undermined. The “global pension time-bomb”, for example, cannot be defused without the adoption of policies which would have crippling near-term effects. It seems highly likely that the public will, sooner rather than later, come to understand that their chances of enjoying a comfortable retirement are being destroyed. This recognition is likely to become a political factor of immense importance.

In a political climate characterised by deteriorating prosperity, worsening insecurity and growing resentment over perceived unfairness, the centre-right can expect to get the blame, and it can only make its defeat all the more comprehensive if it argues for more, rather than less, of failed policies like privatisation and deregulation. “Popular” or “populist” politicians can expect to make further gains, though this does not mean that their policies will always be implemented. Donald Trump’s budget, and the growing likelihood of “BINO” – meaning “Brexit In Name Only” – illustrate the determination of the elites to frustrate popular demands. These are promising conditions for the political Left, once it has purged its ranks of the “new” or “centrist” wings perceived by activists to have “sold out” to “liberal” economics in the recent past.

All of this has profound implications for business and finance. The established model, which remains built around the promotion of volume expansion despite deteriorating consumer circumstances, is going to come under increasing pressure. Any business whose strategy is founded on low wages, reduced security of employment, globalisation or the deregulation of consumer and employee protections is in urgent need of a “plan B”. Meanwhile, the near-certainty of a second financial crisis requires a rethink from financial institutions, whose assumptions about another taxpayer bail-out are, very probably, dangerously complacent.

Finally, public tolerance of wealth and income inequalities seems certain to deteriorate still further. Sooner rather than later, either Left or “populist” leaders are going to start asking quite how much money any individual actually needs. The ultra-wealthy might need to dust-off those plans for flight, though it seems increasingly likely that they can forget about New Zealand as a bolt-hole.

By Brian Davey: Limits to Economic Growth?

These notes from a lecture recently given by Brian Davey are a very nice primer and refresher on limits to growth.

The most interesting thing about limits growth is that it is, by far, the most important issue we should be discussing as a species, yet it is pretty much the only issue that we never discuss.

Denial is amazing!

http://www.feasta.org/2017/12/07/limits-to-economic-growth-2/

 

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This diagram by Charles Hall (and reproduced in my book Credo) can be thought of as illustrating the idea of the techno-fix transition if it were possible. It shows two diagrams of the economy and energy system in 1970 and 2030. There are no figures – the point of the pictures are to show the way that more energy is extracted out of the global system and then used in the global economic process between the two dates – and to show the different proportions in which the global economic output is divided up. Although more energy is being used at the later date a much higher proportion of the output of the society has to take the form of investment goods – machinery, equipment and infrastructure – with a smaller proportion in the form of final consumer goods. The higher machinery, equipment and infrastructure has to be applied to extracting energy because more resources are needed for pollution and waste control, for reducing greenhouse gases, for coping with the depletion of energy minerals, for investing in energy sources like solar or biofuels that give a very low energy return on energy invested and to cope with intermittency. In other words – the higher investment in energy does not mean higher output of energy – it is necessary to cope with the declining efficiency, declining returns of the energy system past the limits to growth.

Since a large proportion of total production is being devoted to investment goods to cope with depletion and pollution, less is left over for consumer goods and particularly for discretionary consumer goods – luxuries, the goodies of a consumer society. But what consequences would this have? As people have to pay more for clean energy they would have less for the knick-knacks on sale in the luxury shops in airport lounges, if indeed people could any longer afford to fly. The argument here is that this would be crushing to a consumer society and there would be a permanent recession in the consumer goods sectors – indeed there would be a political crisis in such a society.

In summary, the theorists of 1972 argued that growth would run out as more and more resources would have to be devoted to the work arounds and techno-fixes to deal with depletion and pollution. They did not deny that techno-fixes would be available – what they were drawing attention to was that adopting them would take resources away from growing production to fixing the problems. Eventually fixing the problems would become too expensive so industrial production and food production would turn downwards. They were right. That’s exactly what is happening…

Dam Denial

Site C Dam Contruction aerial.

The Site C dam in my province of British Columbia has been approved and our leaders who approved it are not even aware of the issues they should have weighed in the decision.

The effect of this decision will be to keep our planet destroying population and lifestyles going for a little longer, as other non-renewable energy resources deplete.

I do not know if the dam will be good or bad for climate change, but I suspect bad given the CO2 that will be released building it, and its short (20-30 year) operating life due to the need for diesel to maintain it and the grid.

No consideration was given to the correct policies of population reduction, austerity, and conservation.

Denial is amazing!

By Jacob Freydont-Attie: The Cross of the Moment

TheCrossoftheMoment2016260051JF1U_f

This excellent 2015 documentary is a series of bright minds discussing the human predicament from different insightful perspectives.

Most of the big issues like over-population, fossil energy dependence, climate change, and species extinction are discussed with honesty and an absence of denial.

I particularly like how the director Jacob Freydont-Attie set the ominous tone by opening with a discussion of the Fermi Paradox.

A couple of participants made the common uniformed claim that we can easily continue business as usual without emitting carbon, and no one commented on how odd it is for such an intelligent species to deny it’s predicament, but on balance I think this is one of the best documentaries I’ve seen on human overshoot.

Thanks to GailZ for bringing this to my attention.

Here is some information from the home site:

A deep-green, deep-time, highly cerebral discussion of the environmental crisis, The Cross of the Moment attempts to connect the dots between Fermi’s Paradox, climate change, capitalism, and collapse. Interviews with top scientists and public intellectuals are woven together into a narrative that is challenging, exhausting, and often depressing as it refuses to accept the easy answers posited by other overly-simplistic climate change documentaries. No fancy graphics or distracting introductions detract from what is essentially an 80 minute constructed conversation among a group of highly informed experts on the most important topic in human history; will our species survive catastrophic climate change?

The film is divided into seven chapters that start from the widest perspective, why do we appear to be alone in the galaxy, and slowly narrows its focuses through a series of topics including Rare Earth Theory, human impact on the biosphere, potential solutions, structural barriers to implementation, the possibility of the collapse of civilization, and a final call for immediate engagement at all levels of society.

Interviewees are Don Brownlee, Roger Carasso, Robin Hanson, Mark Jacobson, Derrick Jensen, David Klein, Bill McKibben, Guy McPherson, Bill Patzert, Gary Snyder, Jill Stein, Peter Ward, and Josh Willis. Some of these are household names, other are more obscure scientists working in academia or for government institutions such as NASA. What they all share is a pressing concern for the future of our planet. Certainly more demanding on its audience than similar films, there is also present here a layer of humor and, more importantly, a deep sense of humanity. By the end the audience has not just explored our current crisis from a variety of thoughtful perspectives, but also become acquainted with these highly original intellectuals as people seeking truth as we all are.

The film takes its title from a stanza of W. H. Auden’s poem The Age of Anxiety, published in 1947.

 

On Winning the Game

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Gail Tverberg in her latest essay uses an airplane video game as a nice analogy for the world economy and concludes that there is no way to win the game.

Gail’s implicit definition of “win” is to maintain or improve our standard of living. I agree with Gail there is no possibility of winning this game and our standard of living will fall dramatically in the not too distant future.

Where we might disagree is that I think we should use a different definition of “win”. We are in a severe state of overshoot. Nothing can be done to avoid a permanent economic contraction. Given this reality we should redefine “win” as achieving the best possible outcome for a plane that is running low on fuel.

Criteria for “best possible outcome” should include:

  • Population reduction policies.
  • Austerity and conservation policies designed to manage our descent in a civil and humane manner, rather than resisting the inevitable with debt and money printing that will cause a much worse uncontrolled crash.
  • Taxation policies to ensure the wealth gap does not widen to a level that causes dangerous social unrest or revolution.
  • Programs to use what surplus wealth remains to protect ecosystems and to build infrastructure needed at our destination.
  • Policies to prevent wasting surplus wealth on things that will have no value at our destination.
  • Educating citizens on what is happening to avoid despots, false blame, and war.

How to implement this new definition of “win” is of course the big question.

It is discouraging that even the Green Party is unable to whisper the word overshoot, let alone offer appropriate overshoot policies.

As always, I return to the core issue:

Reality denial enabled the powerful brain that is central to our success;

AND

Reality denial threatens our existence by preventing us from acknowledging and acting on our overshoot predicament.

It is encouraging that by understanding other genetic traits, like our susceptibility to nicotine addiction, and our brain’s inability safely drive while texting, we have made some progress via government policy to reduce these threats.

The first step to redefining “win” must be to increase awareness of Varki’s Mind Over Reality Transition (MORT) theory.

With awareness, a portion of the population might be able to override their genetic tendency to deny reality, and to influence elections to redefine “win”.

 

Here are a few excerpts from Gail Tverberg’s essay however it’s worth your time to read in entirety.

By Gail Tverberg: A Video Game Analogy to Our Energy Predicament

https://ourfiniteworld.com/2017/11/28/a-video-game-analogy-to-our-energy-predicament/

The way the world economy is manipulated by world leaders is a little like a giant video game. The object of the game is to keep the world economy growing, without too many adverse consequences to particular members of the world economy. We represent this need for growth of the world economy as being similar to making a jet airplane fly at ever-higher altitudes.

What Happens As Coffin Corner Limits Are Reached in the Economic World?

What do world leaders do, as the world economy hits limits? One temptation is for the world leaders in Figure 1 to take their foot off the throttle that is operated by low interest rates and more debt, because they don’t seem to be providing very much benefit anymore. The leaders fear that if more debt is added at low interest rates, it risks creating “asset bubbles” that are easily disturbed if any little bump to the economy occurs. If a big bubble pops, there is a significant risk that the economy could fall down to a much lower level. This is like stalling the jet at high altitude.

World leaders can also use approaches that create situations more like “making the wings come off” the economy. These approaches involve favoring one group over another. For example, a government can give big tax breaks to businesses, but raise taxes on individual citizens. Businesses will ultimately be harmed by this approach, because they depend on individual citizens for their sales. The result is like tearing the wings off the airplane.

Another approach that would tear the wings off the economy involves actions by a different group of world leaders than those shown in Figure 1, namely the leaders from OPEC and Russia. These leaders have different video game screens and different game controllers. They can manipulate the world economy by reducing the supply of oil they provide. With this approach, they hope to increase the price of oil, and thus obtain a larger share of the world’s goods and services through higher tax revenue.

Raising the oil price would benefit oil exporters, but would make goods and services more expensive for oil importing countries. Ultimately, this approach would lead to recession in oil importing nations. The result would likely be worse than the 2008-2009 recession–another way to make the wings come off the economy.

[5] The real enemies of continued economic growth are (a) diminishing returns with respect to oil and other energy production, (b) continued population growth, and (c) increasing wage and wealth disparity. 

We seem to be playing a video game where the players don’t understand who the real enemies are.

Diminishing returns with respect to oil and other energy production have to do with the cost of energy extraction rising ever-higher, as more resources are extracted. There are a lot of resources that we can “see,” but that we cannot economically extract, unless prices rise to very high levels.

Continued population growth is a problem because it is really “energy per capita” that matters. Each individual needs food, transportation, and housing. All of these things take energy. Many years ago, when most of the workers were farmers, it was necessary to create ever-smaller farms, as population rose. This clearly would lead to lower food production per farmer, unless some sort of technological breakthrough was taking place at the same time. Today, we have a parallel issue.

Increasing wage disparity tends to be associated with the rising use of technology. When most labor is hand labor, workers truly do “pay each other’s wages.” All wages can be fairly equal. With increased technology, some workers have specialized training; others do not. Some workers are supervisors; others are laborers. Unless the overall output of the economy is rising very rapidly, non-elite workers find themselves increasingly unable to afford the output of the economy. It is this falling “demand” (really affordability) that tends to pull an economy downward.

[8] In fact, since 2014, the selling prices of oil, natural gas, and coal have all fallen below the cost of extraction.

It is popular to think that the reason why oil prices are too low is because of overproduction by the United States or Saudi Arabia. When a person stops to realize that essentially the same situation arises for all three fossil fuels, a person begins to understand that there likely is an affordability issue underlying the low prices for all three fuels. The affordability issue, of course, arises because energy supply is not rising quickly enough because (at over $20 per barrel), it is too expensive to be truly affordable. The “atmosphere is too thin” at today’s high cost of energy extraction.

[11] The whole “game” has been confused by a lot of not-quite-correct pronouncements from academic circles.

A lot of well-meaning people have tried to solve our energy problems, but haven’t gotten the story right.

Economists have gotten the story pretty much 100% wrong. Energy is very important for the economy. Furthermore, energy prices don’t rise endlessly.

Peak Oilers have confused matters by talking about oil, coal and natural gas being determined by the amount of technically recoverable resources in the ground. This might be true if energy prices could rise endlessly, but clearly they cannot. By following the wrong views of economists, Peak Oilers have led world leaders to believe that far more resources are available to be extracted than really is the case.

People who call themselves Biophysical Economists haven’t really gotten the story correct either. The Biophysical Economists realized that there was a need for a measure for diminishing returns. They put together a measure which they called Energy Returned on Energy Invested. The measure, unfortunately, only “sort of” works. It gives a lot of wrong answers. It does not suggest that oil prices above $20 per barrel are a problem. It also does not suggest that substitutes for oil that are priced above $20 per barrel are a problem. It tends to give a lot of “false positives” when it comes to the question of whether renewables can be substituted for fossil fuels. It seems to suggest that a particular ratio is important, when it is really the total quantity of an energy product available at a very low price that is important.

I should not pick on the Biophysical Economists. There are many others with academic credentials who produce metrics that really aren’t very helpful. Energy payback time is not a very helpful metric, especially from the point of view of deciding whether or not to use a particular device. It is not the energy that the economy must pay back; it is the full cost of manufacturing the device that needs to be recovered, including human labor costs and taxes. In some applications, the cost of mitigating intermittency may also need to be considered.

Even the standard Levelized Cost of Energy calculations can give misleading indications, if they are used on intermittent renewables without taking into account the cost of mitigating the intermittency.

With all of these issues, it is not surprising that world leaders have difficulty playing the energy and economy game. In fact, it is hard to see any winning strategy.

One of the issues that makes the game impossible to win is the fact that all sides must win. A solution that cuts out the oil exporters is a problem for an economy dependent on oil. Any solution that cuts out the workers is a problem, partly because businesses need workers as consumers, and partly because governments need workers as taxpayers.

The reason I have not included any discussion of renewables is because at this point in time, we do not have any renewables that are sufficiently inexpensive and sufficiently scalable to represent a solution.

By Respect Silence: Blight for Naught: Wind Turbines and the Rationalized Desecration of Nature

Someone named Respect Silence posted a comment with a link to an essay he/she wrote on the environmental damage caused by wind turbines.

As I read this wise and well written essay I saw a recurring theme of reality denial and so thought it appropriate to repost.

https://evilnoisypeople.wordpress.com/2016/08/29/windturbineslandscapes/

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Being an engineer this quote resonated with me:

Engineers are generally not stupid people, so they’re either lying to themselves or have chosen to disrespect nature.

I once “lied to myself” on all matters concerning the environment. I now understand my old behavior to be inherited reality denial, which is a subconscious form of lying.

Here are a few more noteworthy extracts, however I recommend you read the entire essay.

Reason and restraint were once central to ecological thinking and one wonders if younger environmentalists really understand what “the environment” is, beyond AGW.

Unsettling numbers of environmentalists fail to see that wind turbines are enemies of nature posing as saviors. Ruining the countryside with obscenely large towers is a continuum of the “build, build, build!” mentality that’s destroyed nature throughout history. It’s the towering, spinning version of “drill, baby, drill!” and supply-side ideology. Wind energy promoters are desperate to believe that their emperor isn’t an ungainly giant who cuts down trees, blasts ridges, kills airborne animals and tortures ground-based ones with blight and noise. They claim to be environmentalists but they’re mainly about non-fossil energy and new income streams. The presumption that nothing is workable unless someone’s profiting is a big part of the problem. Austerity and conservation are anti-revenue concepts that don’t sit well with a greedy populace.

Windnuts share many traits with the wingnut climate deniers they claim to despise; always pushing for more gigawatts and construction projects. Instead of protecting nature from people, now it’s about sustaining what people built with fossil fuels, using much weaker forms of energy that require vast acreage. If landscapes must be trashed for the “greener good,” they’re fine with it. Way to go, you soulless idiots! Pursuing a nature-wrecking technology in the name of environmentalism is dystopian irony at its worst. Wind power just escalates Man’s historical plundering of nature and the Manifest Destiny mindset. It squanders our last chance to conserve and downsize per countless warnings about carrying-capacity overload.

True green = small footprint. But unless people practice restraint and use more birth control, our long-term existence on this planet won’t be guaranteed by any technology. Fossil fuels built this whole mess and it will be hard to sustain without them. The whole notion that there “must be a solution” is countered by historical evidence of human greed and shortsightedness.

End note: This author isn’t a global warming denier but wind power should not be a linchpin of climate strategy. It’s taking us in the opposite direction of conservation, restraint and humility. We need a degrowth/steady-state plan vs. the same unsustainable growth rebranded as green. Nature’s been telling us to downsize and a wise species would pay attention.