Folks,
I am pleased to announce that I have a new gig, writing for a family of investing newsletters. Their support will enable me to continue my efforts, beyond this blog, and with a much wider readership. They’re totally hip to peak oil (in fact, they’ve built several of the newsletters around it), they’re young and smart and insightful, and I’m honored to join their crack team of investors and pundits.
The company, Angel Publishing, publishes seven free “e-letters” on investing in various niches, and eight premium subscription letters, packed with stock tips and valuable insights. See their whole list of newsletters and prices here.
I am currently writing for two of the free e-letters, Wealth Daily and Energy and Capital, as well as a premium e-letter, Green Chip Stocks. I am writing two or three pieces a week, and I will repost some of that material to the blog, as time and permission allows.
Here is the first piece I wrote for them. It’s a high-level view of everything that this blog is about, and much of what I’m about, and will probably serve as a guide to topics I will be exploring in depth for the newsletters. It’s long, but hopefully, worth your while. Print it out, check it out, pass around to your friends, and most importantly, send me your feedback.
Stay tuned to this space, and to the abovementioned sites, for much, much more!
–C
The Great Awakening (or, Slouching Toward Sustainability)
By Chris Nelder
Nov. 11, 2006
This is the way the world ends
Not with a bang but a whimper
- T.S. Eliot
Earlier this week
the Cambridge Research Energy Association (CERA) and its high priest Daniel
Yergin put out a press release taking Peak Oil theory and its believers to
task.
In a nutshell, CERA
believes that technology will save the day….that it will find oil where it
can’t be found today, and produce oil that can’t be produced today. And all at a
rate that we haven’t seen for decades! Essentially, they see technology
magically producing exactly as much oil as our economic projections
require.
This exemplifies why
trying to understand the global energy situation is so difficult. Not only is
there a vast amount of industry propaganda and deliberate misinformation being
foisted on the public, but there is also a dearth of reliable data about actual
supplies. Or, for that matter, a common methodology for comparing resources and
opinions.
We are beginning to
learn about the major aspects of this tangled web—peak oil, climate change,
resource overuse, environmental destruction, terrorism—but few people are able
to view them all at once, as a coherent whole. And this is our tragic flaw. For
all our advancement, for all our technology, all our history, our modern
achievement of global, liquid, and trusted markets, and our ever-deepening
knowledge about the world, we remain mostly ignorant of how all the parts fit
together. We are specialists, not holists.
We’re content to
tinker with the controls, but don’t bother us with all the “externalities,”
like the cost of extracting resources from the environment, the emissions from
manufacturing, the environmental impact of using oil or the cost of disposing of
it. Indeed, to even suggest that we should worry about these things smells of
environmentalist dogma to your average capitalist.
But, as we shall
see, we have now reached a “great moment” in human history, a crucial turning
point where this whole great experiment in industrial civilization seems poised
either to explode into a new heights of technological advances, burgeoning
population, and an unprecedented level of global prosperity, or keel over of
its own sheer bulk.
Who are the
harbingers of this change?
This
week, in its biannual Living Planet Report, the World Wildlife Fund said the
natural world was being degraded “at a rate unprecedented in human history,”
that since 1970 the population of some 1,313 separate species of fish,
amphibians, reptiles, birds and mammals from around the world has declined by
30%. Humanity’s “ecological footprint,” our demand for food, timber, shelter,
and ecosystem services (such absorbing pollution) exceeded the earth’s
biocapacity by 25% in 2003, they said, and if demand continues at the current
rate, two more planets would be needed to meet global demand by 2050.
Also
this week, a new study published in the journal Science said that given current
trends, 100%—that’s right, all—of the
ocean’s species will collapse by 2048. The study found that ocean fish, seafood
and plant species that have already “collapsed” reached 29 percent in 2003, up
from about 13 percent in 1980.
Severn Suzuki, daughter of famed environmentalist and author
Dr. David Suzuki, launched this scathing indictment of modern society at the
U.N. 1992 Earth Summit:
In my life, I have dreamt of seeing
the great herds of wild animals, jungles and rainforests full of birds and
butterflies, but now I wonder if they will even exist for my children to see.
Did you have to worry about these
little things when you were my age?
All this is happening before our
eyes and yet we act as if we have all the time we want and all the solutions.
I’m only a child and I don’t have all the solutions, but I want you to realize,
neither do you!
You don’t know how to fix the holes
in our ozone layer.
You don’t know how to bring salmon
back up a dead stream.
You don’t know how to bring back an
animal now extinct.
And you can’t bring back forests
that once grew where there is now desert.
If you don’t know how to fix it,
please stop breaking it!
She was 12 years old at the time.
At
a luncheon in Portland
last month, John Hofmeister, president of Shell Oil Co., made this unequivocal
statement: “The ease with which we all lived in the last 50 years, with cheap
energy, is coming to a close. The next 50 years cannot be like the last 50
years [. . .] The oil demand-and-supply equation now constantly flirts with
crisis. Americans need to develop a sense of privilege rather than entitlement
when it comes to energy use.”
Matthew Simmons, the
world’s top investment banker in the oil industry and a top energy advisor to
President Bush, recently said this: “There is just no way—with the limitation
we have of oil rigs compared to projects—to keep supply growing: That’s an
impossibility.” Further, he called for an “end to globalization.”
Think about that for
a minute. The top oil investment banker in the world, a man who is deeply
committed to business and to global oil commerce, has called for an end to
globalization. Even while the rest of the world’s business and political
leaders are pouring their energies into promoting it.
Last year, Chevron spent an estimated $40 million on an ad
campaign proclaiming that “the era of easy oil is over.” It acknowledged that
while it took 125 years to burn through the first trillion barrels of oil,
we’ll burn through the next trillion in 30—a surprisingly candid statement.
In 2004, a leaked Pentagon report predicted that rapid
climate change may well set off global competition for food and water supplies
and, in the worst scenarios, spark nuclear war. We need not revisit here all
the numbers and models for climate change; we all know what a very serious
threat it is. But consider this: It is estimated that if we were to cease all
greenhouse gas emissions today, completely, worldwide, the emissions that are
already in the atmosphere will continue to change the global weather patterns
for some 100 years or more. Yet we do not even have an elementary framework for
understanding and predicting global weather patterns, as meteorology is still
very much an infant science. We have already had an impact on the planet that
we have no way to understand, let alone control.
And
again this week, in a rare concession to reality, the International Energy
Agency (IEA) has admitted that the world will need to spend an extra $3
trillion on energy by 2030, and even then there is “no guarantee” the effort
would succeed in meeting demand. (If that cost were distributed proportionately
to consumption, the U.S.,
being the consumer of 25% of the world’s energy, would have to spend $200 billion a year for the next 25 years).
“The energy future we are facing today is dirty, insecure and expensive” they
warned, and called Big Oil’s increased capex “to a large extent illusory”
because it’s “blunted” by rising costs for labor and equipment. They also
projected that the world’s demand for oil will increase by 1.7% next year.
Meanwhile, the drain on OPEC will increase in Q4 of this year by 1.6 million
barrels a day over Q3, because non-OPEC producers aren’t keeping up. These
statements are in stark contrast to the relatively sunny projections to which
we have become accustomed from the IEA.
The
world’s foremost authority on peak oil[1], the
Association for the Study of Peak Oil, has modeled all the known and
anticipated oil fields in the world and determined that the peak in global
production will likely occur around 2010–2012, at which point it will begin a
terminal, remorseless decline, tailing off to negligible amounts about 50 years
later. We do not know how the supply gap can be filled.
In
public statements, Saudi Arabia assures the world that they can increase their
production to 13.5 million b/d by 2012, but their actual output appears to be
dropping, and the “water cut” from their fields is approaching the point where
it will no longer be economical to harvest the field. The Saudis, along with
the rest of OPEC, are where the world must turn for more oil, again because the
non-OPEC producers are either past their peaks or unable to bring any
significant new supply to market—mostly for intractable geopolitical reasons.
U.S.
Rep. Roscoe Bartlett, in his 2005 Energy Conference, puts the problem in good
perspective: “Eighty-five percent of the energy we use comes from fossil fuels.
That will wind down and by and by, we’re going to have to live on that 15
percent and hopefully we can grow it above the 15 percent that it is now. But
that is the dimensions of the challenge that we face. “
An
incisive paper published last month by the Energy and Resources Group at U.C.
Berkeley titled “Risks of the oil transition” demonstrates that the economic,
security, and environmental problems that come with oil depletion must be
solved in concert. If they are not, then the loser will be the environment, for
the simple reason that immediate economic and security concerns will trump
long-term concerns about climate change, resulting in a vast increase in
greenhouse gas emissions. “Because of the large environmental and security
externalities involved, markets alone will not respond to this problem, so
government policies to manage all three risks of the oil transition are needed
now.”[2] Or,
perhaps more accurately, because of our inability to recognize the externalities
involved, human self-interest cannot be trusted to solve these interrelated
issues.
As
we all know, these are but a few of the warning signals we have received.
Energy, food, species extinction, and global warming are just the most
prominent issues. We are also seeing a host of other warnings, from every
corner of the globe: wars erupting over water; infectious diseases that spread
around the world like wildfire; actual wildfires that burn out of control
because the forests are unhealthy; entire ecosystems and coral reefs on the
verge of collapse due to pollution and destruction; huge “dead zones”
developing in the ocean; the stunningly rapid retreat of the glaciers and the
polar ice packs; the hole in the ozone layer; and a nauseating litany of other
planetary plagues that we all know all too well.
All
this, despite our best efforts to increase our harvests of natural resources.
Despite more intensive drilling for oil than ever before, with the best
exploration technology ever developed, we are finding fewer prospects, drilling
more dry holes, and working harder for less oil every year. Likewise, despite
the enormous advances of the Green Revolution, and harvests increased by orders
of magnitude through the heavy use of modern fertilizers and pesticides (made
from natural gas and petroleum), the world will grow less food this year than
it eats, for the sixth time in the past seven years. The world’s food stocks
have shrunk to about 57 days’ worth[3], about
the same duration of stocks as there are in the world’s oil reserves.
Now,
let’s step back from these trees. What do they have in common? It is a dawning
realization that, simply put, what we’ve been doing so far is leading us to
ruin, and that we must take a different course. When people with a deep vested
interest in the way things are, like Matthew Simmons and the president of
Shell, are suddenly getting religion about energy depletion, we know that a
very significant change is happening.
Most
prognosticators about energy, food supplies, global warming, and other related
issues use about a 50-year window, and within that window, they see Big
Trouble. Why? Because in 50 years, we’ll have 9 billion people on the planet,
50% more than we have today. And that is the bottom line. That is the
fundamental driving force behind all of these interrelated problems. It’s
nothing more, and nothing less, than a classic case of ecological overshoot.
Are Humans Smarter than Yeast?
In
circles where peak oil and “petrocollapse” are discussed, one often comes
across the basic question, are humans smarter than yeast? This refers to the
classic study of bacteria populations in a Petri dish. (For more on the
subject, see also Jared Diamond’s Collapse: How Societies Choose
to Fail or Succeed.)
Dr.
Albert Bartlett, of the University of Colorado at Boulder,
has spent a lifetime lecturing about the mathematics of population growth and
energy supplies. Both are examples of exponential growth rates, but he
complains that very few people understand the implications of this “simple
arithmetic” for even modest growth rates. By way of example, he notes that if
our current 1.3% per year rate of population growth “could continue, the world
population would grow to a density of one person per square meter on the dry
land surface of the earth in just 780 years, and then the mass of people would
equal the mass of the earth in just 2400 years.”[4]
Here
is Dr. Bartlett’s classic example about the bacteria populations:
Bacteria grow by doubling. One bacterium divides to become
two, the two divide to become 4, become 8, 16 and so on. Suppose we had
bacteria that doubled in number this way every minute. Suppose we put one of
these bacterium into an empty bottle at eleven in the morning, and then observe
that the bottle is full at twelve noon. There’s our case of just ordinary
steady growth, it has a doubling time of one minute, and it’s in the finite
environment of one bottle. I want to ask you three questions.
Number one; at which time was the bottle half full? Well,
would you believe 11:59, one minute before 12, because they double in number
every minute.
Second Question; if you were an average bacterium in that
bottle at what time would you first realize that you were running of space?
Well let’s just look at the last minute in the bottle. At 12 noon it’s full,
one minute before it’s half full, 2 minutes before its ¼ full, then 1/8th,
then a 1/16th. Let me ask you: at 5 minutes before 12, when the bottle is only
3% full, and 97% is open space just yearning for development, how many of you
would realize there’s a problem?
If
the name of the game is sustainability, then, what are we trying to sustain?
Putting a finer point on it, Bartlett
defines the first law of sustainability thusly: “Population growth and/or
growth in the rates of consumption of resources cannot be sustained. That’s
simple arithmetic. It’s intellectually dishonest to talk about saving the
environment, which is sustainability, without stressing the obvious facts that
stopping population growth is a necessary condition for saving the environment
and for sustainability.”
Assessing the Alternatives
For
the last five years, recognizing the enormity of the threat that peak oil poses
to life as we know it, I have made an intensive study of the options. What
mitigation measures might work, and to what extent? How much additional energy
might we hope to produce, from any and all sources? What new technologies might
come to our rescue?
What
I have found is this: as long as current population trends persist, and as long
as all of the world’s major economies depend on constant growth, then all the energy
alternatives, together, add up to about fifty cents on a one-dollar tab. It
just isn’t there. First and foremost, our immediate problem is a shortage of
liquid fuels, but most renewable energy technologies produce electricity. (And
converting our existing liquid fuel-based infrastructure to one that runs on
electricity just isn’t feasible—there isn’t even enough energy, let alone raw
materials, available to remanufacture all that stuff and still provide for
daily needs!) In my wildest dreams—and I say this as one who has made my living
in retail solar for several years now—I don’t see solar and wind together
achieving more than perhaps 15% of our total global energy mix in the next 30
years.
Biofuels
are promising, but as soon as we start producing them at scale, we run straight
up against food supply. Consider this statistic: to produce enough ethanol to
fill the tank on a big 4WD SUV, you would need enough grain to feed one person
for an entire year.[5]
Nowhere in the world is there enough unneeded, arable land and water to grow
the requisite feedstock for the immense volume of biofuels we will need, no
matter which feedstock you choose, and the energy returned on energy invested
(EROI) is so low that in most cases, it’s simply not worth doing. As Dr. Tad
Patzek of U.C. Berkeley, one of the top experts on the feasibility of biofuels,
has said:
[The] vision is to capture in real time most of net growth of
all biomass in the US, while at the same time mining soil, water, and air over
72 percent of our land area, including Alaska, Hawaii, and Puerto Rico. This
biomass would then be devoured to feed our inefficient cars. We would have
little food production, as well as little wood for paper and construction. In
effect, the new brave US
economy would be dedicated to feeding cars, not people. This vision has been
enthusiastically embraced by some in the US science and industrial
establishment.
According
to Patzek, the EROI figures in the oft-cited DOE/USDA report of 2005 are
“laughable,” requiring impossible crop yields and impossible levels of residue recovery,
adding sardonically, “To utilize all residues, I suggest to also process fresh
corpses into biofuels.”[6]
Another
trenchant commentator, Robert Hirsch (more about him later), has famously
quipped that making ethanol from corn is a process by which a certain amount of
energy in the forms of natural gas and diesel fuel are used to create an
equivalent amount of energy in the form of ethanol, with the primary output
being money from government subsidies.[7]
The
well-known alternative ways of producing liquid fuels, such as coal-to-liquids
and gas-to-liquids, are neither ready to scale to the huge volumes we need, nor
likely to attract the immense capital needed for such an undertaking, in the time
frame we need it, due to the uncertainties and risks of the global commodities
trade. (“The ability and willingness of major oil and gas producers to step up
investment in order to meet rising global demand are particularly uncertain,”
according to the IEA report.)
Further,
even if those problems could be addressed somehow, there would remain the
problems of how to keep all that additional carbon out of the air, and how to
mitigate the horrific environmental cost of massively upscaled coal mining. And
don’t think that the carbon sequestration technologies are going to solve those
problems. “Clean coal” is strictly for sound bites; don’t expect to see it
happen in real life. If making our coal plants clean today is deemed too
expensive, when the economy is healthy and energy prices are high, what will
make it seem affordable tomorrow?
More
recent and exotic alternatives for producing liquid fuels include recovering
usable hydrocarbons from oil shale and tar sands. Unfortunately, there are
immense hurdles to making either resource accessible in any real volumes. Oil
shale is still very much in the research and testing phase, but it is clear
that the energy invested will be very high, and there are many technical
challenges that remain to be solved. The tar sands of Alberta are currently
producing about 1 of the world’s 85 million (b/d) of oil production, but “as
North America runs short on natural gas to cook the tar out of the sands and
water to move the mess to processing plants, very large increases in production
from the tar sands seems less and less likely no matter what the price of oil.”
And this assumes that Canadians will continue to tolerate the enormous
environmental destruction that tar sands operations entails. Suffice to say
that it’s unlikely that either of these lesser quality sources of hydrocarbons
will ever achieve more than a few percent of the global mix.
Nuclear
energy, likewise, is neither the right solution for the problem, because it
doesn’t create liquid fuels, nor is it feasible. Nuclear power has earned the
support of environmentalists who recognize the benefits of its lack of
greenhouse gas emissions, but it has been estimated that if we were to meet our
anticipated electrical needs over the next 30 years with nuclear power, we
would have to build some ten new plants each year in the U.S. alone—a highly
unrealistic outcome. And in the same way that we are about to pass peak oil, we
are past peak uranium.
All
the other approaches to our energy dilemma, from tidal energy to biofuels from
algae, are either so far off in the future that they don’t matter, or just not
scalable enough.
In
short, there are no supply-side solutions
that will allow us to continue with our way of life. The solutions, such as
they are, are all on the demand side: increasing efficiency, to stretch out the
remaining fossil fuels we’ve got, and reducing overall demand, both through
reducing consumption per capita (e.g., growing local food instead of shipping
it halfway around the world), and through reducing our population.
No Magic Bullets
One
of the most persuasive and holistic studies about mitigating peak oil was done
by Robert Hirsch and Roger Bezdek, in a now-infamous paper with the wonky title
“Peaking of World Oil Production: Impacts,
Mitigation & Risk Management” but known in peak oil circles simply as
“the Hirsch Report.”[8]
The study was commissioned by the Department of Energy, and the authors are
highly respected researchers with decades each of experience, working for the
likes of RAND Corp. and SAIC. Their conclusion? If we start intensive
mitigation scenarios—and by that they mean the likes of the Apollo Project plus
the Manhattan Project multiplied by 10—twenty years before the peak, then we
have a chance of averting serious pain, because we’ll have some time to switch
to alternatives and invest in efficiency. If we start at the peak, then we have
a definite, unavoidable shortfall of energy for about 20 years, with a lot of
chaos. And if we start 20 years after the peak, well…nobody wants to think
about that. Let’s just say it’s ugly. As Bezdek puts it, “There are no magic
bullets, only poison pills.” [9]
But what of the cornucopians? What of the reports issued by
the USGS and EIA that show ample energy supplies for hundreds of years in the
future? What of the predictions of the likes of CERA, who claim that the market
will sort everything out? What of the abiotic oil theory? Isn’t there over 150
years’ worth of oil locked in the vast oil shale deposits of the American West?
What about the even more vast supply of methane clathrates deep under the
ocean? What of the assurances of Saudi Arabia, that it can meet the
world’s needs for oil for at least 100 years to come?
We need not get too deeply into the details for the purpose
of the present analysis, but generally speaking, the cornucopian case comes
down to everything but solid,
credible numbers. Most cornucopians refuse to address the hard scientific work
that has been done by the geologists of the ASPO. Those who are willing to go
toe-to-toe on the numbers rely on extremely optimistic and unrealistic
assumptions. (For example, this week Exxon asserted that “we are not peak oil
people” because, according to them, we have only consumed 1 trillion barrels
and there are still 4 trillion barrels left. However, such assertions are based
on data known to be flawed and on assumptions that have long been regarded as
impossibly unrealistic.[10])
And then there are the non-technical economists, who don’t
even attempt to do any math about actual energy supplies. Instead they simply
point backward to the successful application of neoclassical economic theory, and
assert a priori that our economic
science will continue to work as it has in the past. For such prognosticators,
it really comes down to an article of faith that the market will sort everything
out.
In short, I have yet to find a single cornucopian whose
projections are based on science, and whose science bears up to regular
scientific peer review. Most are merely apologists for business as usual. And
none have even attempted to describe how they think all this can be sustained
for another 100 years, let alone 1000, or what life might look like if it
could.
Coming Clean
With all of the available good scientific knowledge firmly
in hand, then, where are we now? How much time have we got? For that matter, what
time is it?
By Bartlett’s
watch, it’s one minute to twelve. By ASPO’s, it’s about five years till peak. By
Hirsch’s, it’s 15 years too late to avoid several decades’ worth of serious
pain and upheaval. And by the environment’s, it’s do or die: either Gaia shrugs
off her parasite, or it kills her. Once we can see the forest and not just the
trees, the promises of future abundance made by the likes of Aramco, Exxon and
ADM start to sound pretty hollow.
So
let’s rise to Bartlett’s
challenge, and try a little intellectual honesty instead. Let’s admit that we
simply cannot continue to increase our numbers and still expect to enjoy food,
shelter, and the sort of resource-intensive lifestyles to which we have become
accustomed. Let’s admit that we will, without a doubt, willingly or
unwillingly, experience zero or negative growth in both our populations and our
economies, and that both will happen starting in the next decade. Instead of
quibbling about the exact date of the peak, let’s realize that we’re headed
into a whole new reality in which today’s “business as usual” can no longer
exist.
There is nothing more difficult to take in hand, more
perilous to conduct, or more uncertain in its success than to take the lead in
the introduction of a new order of things.
- Niccolo Machiavelli, The Prince,
1532
For
most people who have a vested interest in business as usual, this is a very
difficult pill to swallow. Their knee-jerk response is to try to argue the
problems away, one by one: we can increase our crop yields, increase the
efficiency of our oil harvesting, deploy more green power generation, sequester
all our carbon, cut back on our ocean harvests, and so on. But this is just
dissembling, a vain attempt to explain away each problem individually, so that
we don’t have to admit that we have a serious, structural, and systemic
problem. There are no piecemeal solutions to wholesale overshoot! Nor can we
hold out hope for a techno-fix. The only
solution, in the long run, is to reduce our ecological footprint, by changing
our habits, and reducing our numbers.
Before
you object, consider this: there is no guarantee, and there never was, that the
way the man-made world was when we were growing up would continue. We all tend
to assume so, for there has been little to make us think otherwise, but it’s
really an unexamined assumption. The fact is, these 150 years of
industrialization and immense economic growth have been made possible only, and
entirely, by our harnessing of the fossil fuels that are about to peak. It is
little more than a grand experiment, and it’s about to enter its final act.
Even in the paltry, 10,000-year history of civilized man, 150 years is nothing.
A mere blink. An off-the-hook party, but now the punch is gone and most of the
guests are getting a headache.
This
is the Great Awakening. This is the time when humanity starts to realize, in a
very concrete and immediate, unintellectual way, that everything is in fact
connected. That there are no “externalities,” and we can’t throw anything away,
because there is no “away.”
We
realize that, along with the Biblical promise of dominion over the Earth, we
also bear the burden of stewardship. We realize that having a child is more
than a personal choice, it is a global act. We start to enlarge the time frames
of our thinking and our decisions, far beyond our current decision horizons. We
start to truly care for future generations, rather than just paying them lip
service and getting ours while the getting is good.
Only
we’re not having this awakening because we stood at the dawning of the Age of
Aquarius with open arms; it’s being imposed on us by the hard and fast limits
of our spaceship Earth, much as sensitivity to others increases the minute one
is crammed into a train full of people.
It’s
time to tell the unmentionable truth, to acknowledge the pink elephant in the
room: terrorism is all about energy, global warming is all about energy, energy
is all about population, and population is all of us. It’s all of a piece, and
there is no honest way to separate oneself from any of it, no matter what selfish
rationalizations you want to dream up. I fill up my tank with petroleum; I
support terrorism. I buy cheap Chinese goods; I support exploitation and erode
the value of the dollar just a little more. Just as there is no “away,” there
is no “out.” We’re all in.
And
don’t even get me started about that colonizing space crap. I won’t hear a word
of it until we demonstrate that we can manage one planet without destroying it.
Steven Hawking has been thinking about space far too long, and home for far too
little.
Let’s
take a minute to set some more facts straight, about the so-called “global war
on terror.” Most intelligent folks know that it’s just a sound bite, and a bad
one at that, because you can no more have a war on terror, which is a tactic, than
you can on, say, flanking maneuvers.
The
actual war we’re in is a war for resources. If you take a map of where the
world’s energy supplies are located, and you overlay a map of where the U.S.’s troops
are deployed, you’ll find they’re substantially the same. And the stated reason
that al Qaeda has given for attacking the U.S. is not because we’re free, or
because they hate us for our way of life, or any of that other nonsense.
Osama
bin Laden has said, very clearly and on more than one occasion, that his struggle
is all about trying to rid Mecca of U.S. military forces, forces that are there
for one main reason: because that’s where the oil is. And under the Carter
Doctrine, we have pledged to protect it as our vital national security
interest. The war on terror is a war for resources; it’s not about ideology. And
unless we admit that, and take strong action to reduce our need for those
resources, we can expect the conflicts to intensify.
The Way Forward
What,
then, can business do? What are the investment opportunities, in this future?
Where can we apply ourselves to the best effect?
One
key principle to bear in mind is that the right solutions going forward will be
a multiplicity of small solutions.
With 150 years of industrialization at our backs, we instinctively imagine big
projects: massive farms for biofuels, hundreds of new nuclear plants, hundreds
of new coal plants, new oil fields in the deep ocean and at the poles; massive
tar sands operations, and so on. And all of these approaches will be wrong.
A
key part of changing our consciousness will be realizing that, as EF Schumacher
famously titled his series of books, “Small Is Beautiful.”
In first chapter of ‘Small Is
Beautiful’, The Problem of Production, Schumacher points out that our economy is unsustainable. The natural resources (especially fossil fuels), are treated as expendable income, when in fact they should be treated as capital, since they are not renewable and
thus subject to eventual depletion.[11]
So,
instead of thinking about hundreds of megaprojects, we should be thinking about
millions of small ones. Back in the early days of America’s farming history, many
farms had wood-fired generators that also provided heat. That’s the right idea.
Generation capacity—solar, wind, gasified wood, whatever the local resource
is—should be located as close as possible to every user and fuel source.
Instead
of one giant solar plant in Nevada and one
giant wind farm in North Dakota
providing our power, it should be millions of small plants. Instead of giant
agribusiness farms in Iowa trying to figure out how to convert its abundant
corn into biofuels and then ship it to the Gulf for blending and distribution (transport
is a major cost barrier for biofuel), we should be looking at each region’s own
resources, and producing as much of that region’s needs as possible locally.
So
the first, and most obvious trend, will be toward relocalization. That is the
path toward robustness, sustainability, and security. All manner of food
production, energy production, material goods manufacturing, and nearly everything
else needed for daily life will have to be produced locally, as the ability to
outsource manufacturing to the cheapest labor markets in the world is
completely overshadowed by the cost and diminishing availability of fuel. Once
again, we may look forward to seeing not only “Made in the USA” stamped on our widgets, but “Made in California, by
Californians, and for Californians” or even better, made by Mr. Smith down at
the shop in town, who makes everybody’s stuff around these parts. (An excellent
resource for those interested in joining local efforts toward relocalization is
the Post Carbon Institute, www.postcarbon.org)
But
relocalization extends well beyond manufacturing and commodities. We will also
need local banking, local scrip programs, and local services of every kind. Local,
micro-financing will slowly eat up market share formerly held by the big centralized
banks, particularly in financing small businesses and individuals.
We
will need to reconfigure our communities, so that they are a manageable and
sustainable size. The nearly abandoned small towns of rural America will need to be rebuilt repopulated,
and the giant megacities of the coasts will have to be depopulated. In time,
the nameless, endless wasteland of cookie-cutter mall suburbia will be
transformed into something more like the network of ancient farming hamlets of Europe.
Imagine
the dust bowl migration of the 30s, only in reverse. Large, global, mega-corporations
will fail, and a million small businesses will take their place. The huge
corporate farms of today will be once again replaced by small family farms
(ideally; instead, we might well see a whole new generation of sharecroppers in
a thrall of debt to corporate farm owners). The concrete jungles of LA will be
abandoned, the asphalt and concrete that has stifled the earth ripped up, and
the verdant abundance of Orange
County will be restored. (And
the guy who figures out how to bust up and reuse several cities’ worth of
unwanted concrete will become insanely wealthy.)
In
order to enable these transformations, we will have to reinvent our economic systems.
We will leave the neoclassic economics of Adam Smith behind, and replace it
with a new economics, one based on natural capital[12]. We
will learn to mimic nature by reforming our markets and our accounting
principles, so that there are no externalities, and our markets receive
unimpeded feedback, both positive and negative. When emissions go into the air,
and soil and water is fouled, it will incur a real monetary cost, and when
businesses reduce waste and pollution, it will improve their bottom lines.
Reforming
our economic theory will make it possible to reform the markets, and put market
forces to work in addressing our myriad challenges. An improved and
restructured market in carbon credit trading, for example, could actually reduce
emissions, not just greenwash company images. It could naturally, and without
the distortion of subsidies, intelligently select the best and greenest power
generation technologies. And, as has been done very successfully in countries
like New Zealand and Sweden,
waste can be largely eliminated, by requiring companies to assume complete
responsibility for their products, not from cradle to grave, but from cradle to
cradle.
Third,
we will embark on a serious and deliberate program to reduce our consumption of
oil and our production of greenhouse gases, the “powerdown” strategy described
by Richard Heinberg, because there is no serious alternative. One laudable
proposal for a practical way down, originally proposed by ASPO founder Colin
Campbell, is the Oil Depletion Protocol, a simple formula by which oil
producing nations can gradually reduce their output in accordance with the
depletion rate of their oil fields, and that oil consuming nations can likewise
scale down their demand in accordance with availability.
We
will also embark on many projects to increase energy supplies, to be sure, and
we’ll need all of them. Solar, wind, biofuel, geothermal, nuclear, coal, tar
sands, exotic and heavy oil, methane hydrates, you name it, we’ll do them all.
But it’s crucially important to realize that these projects will not be the
first of many on a continuing path of growth, but rather, a final push, to buy
ourselves just a bit more time to adjust to a future of declining energy
availability. (For this reason, among others, I do not believe that we will
ever see a large scale “hydrogen economy.”)
These
efforts will enable us to reduce our greenhouse gas emissions to acceptable
levels. The Kyoto
Protocol? Pfft! Child’s play, and it hasn’t worked anyway. We need to set our
sights much, much higher, and eliminate somewhere around 70% of our current
emissions, to get back down to the point where the environment can absorb and
reprocess it.
And
finally, we will reimagine ourselves, and our destiny. We’ll set the Marshall
Plan aside as a source of inspiration, and focus instead on how we can coexist
peacefully with others who don’t think like we do. Instead of aspiring to ever-greater
empire—which has proved repeatedly that continual growth eventually leads to
depleting oneself to the point of terminal decline—our new models will be those
civilizations who have learned sustainable practices, like the Native Americans
and the Amish.
We
will come to see that, since we are indeed citizens of one shared world, that
none of us can have peace until all of us have justice. We will make these serious
objectives. We will support the effort now under way to create a Department of
Peace, and expect it to work hard to bring peace. We will remove the unfair
burdens placed upon the developing world by entities like the World Bank and
the IMF, and work toward each nation’s self-sufficiency, for in a shared world,
the stronger each of us is, the stronger we all are.
We
will leave behind the individualistic, hero-warrior mythos, and reinvent our
cultures around sustainable values. We’ll swing away from the stern father
model, and back toward the nurturing parent model. We’ll stop marching in a
straight line, and start dancing in a circle, just like the rest of the natural
order does.
If
we hold out any hope for our future, it is in making these kinds of serious,
structural reforms. We can, and will, do all of the above, and we’ll deploy
every kind of clean tech we can muster. But it will probably be a long, and
messy, transition, marked by chaos and disruption, martial law, even large
scale dieoffs. Nearly every sober and dispassionate expert, in every field, can
tell you that while all is not yet lost, it is very unlikely that we will
manage any sort of soft landing, or a smooth transition. All see a great deal
of pain and suffering along the way. Perhaps that is why Hawking believes that
going off-planet is humanity’s only hope.
Well,
I’m not going to give up on Spaceship Earth that easily. I believe that we can
clean up this mess, learn the error of our ways, and learn to live in a
sustainable fashion (hopefully with a lot fewer of us, and enough discipline to
keep it that way).
But
we have a lot of work to do. It is
nothing less than the wholesale revision of our culture, a reforming of our
religious beliefs, a reimagining of our identity and our destiny as a species,
and a remaking of our entire economies and our way of life. A very tall order.
Which
is why I like to look at the bright side. As I’m fond of saying, I’m not
apocalyptic, I’m epoch elliptic. That
is, I recognize that we are in a moment of time in a much larger cycle of human
development, which is about to turn from its Apollonian extreme back toward the
Dionysian. From the lofty heights of our technological achievement, we’re about
to get refocused on the basic elements of life: earth, air, fire, and water. I
doubt very much that I’ll be around to see it, but I think that at the end of
this sea-change, after this awakening, we may find ourselves with a far more
beautiful, fair, just, and balanced world, one that I would be pleased, not
ashamed, to pass on to the ones who come after me. We have a daunting challenge,
but they are inspiration enough.
