Energy and the Economy–Basic Principles and Feedback Loops

Does a fish know that its nose is wet? Probably not. It swims in water, and assumes that is the only way any animal lives.

We live in an economic world. Economic models that were developed years ago were created based on observations of how the economy seemed to work at the time. As time goes on, it is becoming clear that early economists missed important connections. The most important of these is the role of energy and its connection to the economy. It takes energy to make anything, from a piece of steel to a loaf of bread. It takes energy to transport anything. Humans need energy in the form of food to continue to live. Clearly, energy should have a place in economic models.

In this post, I explain some of the basic principles as I see them:

1. Humans have evolved to be dependent on external energy.

2. Humans now supplement their own limited energy supply with external energy of various types. In general, the more external energy used, the more humans are able to control their environment.

3. Over the 1 million+ years during which humans have been able to control fire, humans have generally been in situations with favorable feedback loops, due to increasing efficiency in producing goods and services required to meet basic needs. Such loops allowed continued population growth and economic growth.

4. We are now reaching limits on these feedback loops. The result is feedback loops that are changing from favorable feedbacks to contraction.

5. Part of the change in feedback loops relates to the cost of energy sources, such as oil. A rise in the price of oil tends to reduce salaries of workers (because of layoffs) as well as reduce discretionary income (because of higher price of food and commuting), contributing to the trend toward contraction.

All of this is very concerning, because in the past, adverse feedback loops of this type  seem to have led to collapse.

The Many Types of Energy

The most basic type of energy, at least from a human perspective, is human energy. This is the energy we as humans have that allows us to move our own bodies and allows us to think. Each of us is given approximately the same amount of energy, with males having somewhat more energy for lifting and pushing objects, and females having the special ability to give birth to new humans.

In order to use human energy, humans need to eat food of appropriate kinds. Most of this food is from plants and animals that we process in some way for this purpose. (This processing normally requires some type of energy.) The only food that is not from plants and animals is mother’s milk. Women need to increase their own intake of food from plant and animals, in order to produce enough milk for their babies.

Humans are able to leverage their own energy with many types of external energy. One very old source of external energy is burning wood and other plant matter. Such energy is used in keeping warm, cooking food, making sharper tools, and warding off predators. Another very old source of external energy is energy from dogs, trained to help with hunting, and from draft animals, trained to help with plowing and grinding tasks.

Humans have learned to harness various other forms of other energy, such as wind, water, and geothermal energy. In the last 200 years, the use of fossil fuels (coal, natural gas, and oil) has greatly expanded the amount of external energy available to humans.

Fossil fuels are important, not just because they can be burned directly, but because they enable the use of electricity from a wide range of sources—including hydroelectric, nuclear, and solar photovoltaic. While we think of these latter sources as non-carbon fuel sources, they are today available only within a system powered by fossil fuels. It takes fossil fuels to create metals in the quantity needed for electrical transmission; it takes fossil fuels to make and transport the type of concrete used in hydroelectric dams and wind turbines; it takes fossil fuels to purify silicon and other materials used in making solar PV.

While people talk about a system that does not require fossil fuels, no one has mapped out how the world could in fact transition from a system that uses fossil fuels to capture these types of energy to a system that would work without fossil fuels. The best we can hope for within the next 100 years is to use fossil fuels more sparingly.

One specialized form of energy is embedded energy that has been stored up in goods for the long term. Examples of early embedded energy includes heat-sharpened stone ax blades, used by hunter gatherers, and clothing, whether made by hand or machine. Today, there is much embedded energy in roads, pipelines, and electrical transmission systems. The vast majority of today’s embedded energy is derived from fossil fuels.

External Energy as a Human Need

Most animals seem to get along fine without external energy, other than the sun’s rays. They live in the parts of the world where they are adapted. They more or less live in balance with their predators. The number of a given species may rise for a while, but if the number grows too much, the species will exhaust its food supply, leading to population decline.

Humans have moved to a different model. The change came when humans (or predecessors to humans) first learned to control fire, over 1,000,000 years ago. Being able to control fire gave humans many advantages over other animals. Humans were able to cook part of their food. This had many advantages: It greatly reduced chewing time, allowing time for other activities, such as making tools and clothing. It improved nutrition, by making food more digestible. It allowed the human body to evolve in ways that used more energy for brain development, and less for chewing and digestion. [i]

The way the natural order works is that each species gives birth to far more offspring than is needed to survive to adulthood. “Natural selection” determines which of these offspring will survive. If humans had been like apes, chimpanzees, or gorillas, total population might have reached a plateau of perhaps 3,000,000, (based on historical animal populations). This limit would be reached because of competition with other species, and because climate is less hospitable outside of a narrow range.

With the help of external energy, such as the controlled use of fire and the use of dogs for hunting, humans were able to gain an advantage over other species and spread to all areas of the globe. This is what allowed population to grow, and continues to help it grow.

The natural order assures that far more human offspring are born than are needed to survive to adulthood. If humans are intelligent, they desire to extend their own lives and the lives of their offspring. The result of this dynamic is that there tends to be continual upward pressure on population.

There is a second dynamic as well. Because of humans’ intelligence, humans have the ability to over-consume at least some of the wildlife in the areas. For example, we learned on our recent visit to Iceland that when Vikings first discovered the island, there were both walruses and the flightless bird, the auk, on the island, but both disappeared soon after humans moved to the island.

Because of these dynamics, there has been tendency to need more food, and more energy supplies of other types, over time. To meet the need for greater food supply, humans began using agriculture about 10,000 years ago. With the advent of agriculture, the amount of human food available per acre was greatly increased.

The availability of agriculture added to the two dynamics noted previously for hunter-gatherers. As before, (1) population tended to increase, because the natural order provides for far more births than are needed for replacement, and because humans, with their intelligence, now had a way to provide more food per acre. Also, (2) there was a tendency of the amount of food available from a given acre of land to degrade over time, because the methods used for agriculture were less than perfect. Erosion was a problem, especially when planting was done on slopes. If irrigation was used, salt deposits often became a problem. Rising population combined with degrading resources led to a need recurring need for additional energy, since supplemental energy could indirectly add to food supply. In situations when additional energy was not found, populations had a tendency to collapse after many years of growth.

Besides the two basic dynamics of rising population and degrading resources leading to a need for additional resources, there were other forces that tended to add to the need for increasing amounts of energy:

a. Cheapest resources used first. Soon after agriculture began, humans began to use resources of other types, such as wood from forests and metals such as iron and bronze. With any of these resources, there is a tendency to use the “cheapest” (easiest to extract, closest at hand, highest ore concentration) first. If extraction is to continue, increasing amounts of energy per unit extracted are likely to be required for later extraction.

b. Increased disease transmission when population is packed more closely together. This issue can be overcome with techniques that kill germs and that keep humans separated from waste products of other humans. The need for these techniques adds to the need for external energy.

c. Deforestation. Without fossil fuels, there was a severe tendency to overuse forests. Deforestation occurred as early as 4000 B. C. E., according to Sing Chew. Historian Norman Cantor writes, “By 1500 Europe was on the edge of a fuel and nutritional disaster [from] which it was saved in the sixteenth century only by the burning of soft coal and the cultivation of potatoes and maize.” The use of coal allowed more energy per person, and took pressure off of limited forest resources.

d. Pull of Technology. The availability of fossil fuels, starting around 1800, has allowed much of what we now call “technology.” Without fossil fuels, our ability to make materials such as metals and glass is severely restricted. Without fossil fuels, we are also lacking for the basic building blocks for plastics, synthetic fabrics, and even modern medicines. Technology provided ways to use fossil fuel resources in ways that helped overcome many human limits. The desire to use more technology led to increasing use of fossil fuels in the 19th and 20th centuries.

Hunter-Gatherer Economies

There were no doubt many different types of economies in the over one million years when humans and pre-humans were hunter-gatherers. One documented approach is the gift-economy. With this approach, those who killed animals shared what they obtained with others in their group. Status was gained based on how much an individual was able to provide to others in the group. Members of the group played different roles—some were involved with caring for children, or too old to work, but what was available was shared with the group as a whole.

In the days of hunter-gatherers, the function of the economy was not too complicated. There was little need to “save for tomorrow,” because it was difficult to carry anything during travels. The amount of food an individual could eat was pretty much limited by appetite, so having “more food” for one individual wasn’t particularly helpful. If one person was the leader, he (or she) might have special adornment.

If population rose too high, relative to resources, this may not have been apparent in “normal” times—when weather was good, and when a particular hunter-gatherer group had an area to itself. But if there was a major weather problem or an encounter with another group needing space as well, population pressure could lead to a crisis. It seems likely that die-offs occurred from time to time, especially during natural “bottle-necks.”

A Simple Agricultural Economy

Thinking about a simple agricultural society gives us some insight as to how early economies must have operated.

Consider a simple economy in which some members produce barley; others produce fish. The fish can be salted and dried, so both the fish and the barley can be stored, if desired. The big issue in such a system is how efficient the barley and fish operation is. If in order to feed the group, half of the group must work full time growing barley, and half of the group must work full time catching, salting, and drying fish, then no matter what kind of economic system is in place, the result will simply be trading fish for barley. Everyone will continue to have to work at either producing fish or barley. The economic system will simply move some of the fish to the barley producers, and some of the barley to the fish producers.

Let’s suppose instead that the barley and fish producers are much more efficient. Suppose that with 10% of the population working at barley production and 10% of the population working at fish production, the population can provide enough food for the full population, leaving 80% of the population (100% – 10% barley producers – 10% fish producers) to pursue other activities. How the remaining 80% of the population will spend its time will depend on resources available and the desires of the citizens. Perhaps 30% of the citizens would make goods of various types (build homes, make clothing, and make furniture) and 20% of the citizens would provide services of various types (education, health, artwork, and hair cutting). This would leave 30% for government and finance. The government portion would include pay for government officials and police and transfer payments to the elderly and disabled.

The total wealth of the community is then the sum of all of the goods and services in this community. The financial system will redistribute the goods and services produced among the members of the community, perhaps allowing some “savings” for future consumption. Those producing goods and services will expect to be included in the redistribution, but so will others, if this has been the tradition in the community.

If the economy operates without fossil fuels, the quantity produced is limited by the speed with which biomass regrows. Thus, unless the community is willing to live with deforestation, it can’t use much wood each year. This puts a severe limit on the amount of goods produced. Printing more money does not change this dynamic.

In the example above, I suggested an efficient economy might need only 20% of its population for food production. In fact, the percentage of the population involved in food production varies greatly across economies. Before fossil fuels use, typically 80% of the population of a country was involved in agriculture. With so many involved in agriculture, the number who were involved in manufacturing and services of all types (including government services) was necessarily very limited, because they needed to be “squeezed into” the remaining 20% of the economy.

Figure 1. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

Figure 1. Percent of Workforce in Agriculture based on CIA World Factbook Data, compared to Energy Consumption Per Capita based on 2012 EIA Data.

If, in our hypothetical community, population rises because more children live to maturity, this adds a new dynamic. There is a need for more food, clothing, and housing for the growing population. Unless land area keeps increasing, there becomes a need to grow more barley per acre. In a world without fossil fuels, increasing grain yields becomes difficult. More farmers can be added to a given plot, but the additional yield for additional manual effort (perhaps picking off insects that might eat the crop) is not very high. This dynamic tends to lead to what we think of as falling wages of the common worker, when population becomes high relative to resources available. As I have mentioned in previous posts, based on the book Secular Cycles by Turchin and Nefedof, collapse often occurs in such situations. Governments have promised significant services, but it becomes difficult to collect enough taxes to pay for these services, with falling wages of the common worker.

The dynamic is similar if energy supplies of types other than food (such as oil and coal) does not rise as fast as population. The amount of goods produced using these energy supplies will tend to fall, unless technology advances are able to offset the decline in energy consumption per capita. Such technology is normally fossil fuel dependent. If goods per capita falls, this will be reflected in what we think of as falling inflation-adjusted wages, since it is not possible for workers to have more than what is produced.

Adding Fossil Fuels

Figure 2. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

Figure 2. World Energy Consumption by Source, Based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects and together with BP Statistical Data on 1965 and subsequent

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

Figure 3. Per capita world energy consumption, calculated by dividing world energy consumption (based on Vaclav Smil estimates from Energy Transitions: History, Requirements and Prospects together with BP Statistical Data for 1965 and subsequent) by population estimates, based on Angus Maddison data.

If metal tools can be used—say metal plows—these metal tools can greatly ramp up efficiency of farming, allowing fewer people to work in the agricultural sector. If we think about the result in the last section, this situation allows a greater proportion of the population to be employed in producing discretionary services, and thus more wealth for the community as a whole.

The problem with making metals such as iron using renewable resources is that huge amounts of charcoal are needed to make even small amounts of iron. If one wants reasonable quantities of metal, or modern alloys such as steel used in plows and trucks, a person needs fossil fuels.

If a person wants to add fossil fuels and the things that fossil fuels can make to a community that does not have fossil fuels, the question becomes how to pay for the new goods using fossil fuels. As an extreme example, if farmers have always planted barley with a stick, the amount of barley each farmer produces is tiny, and the population is likely mostly farmers. If a farmer can use a new tractor, with the latest equipment, a single farmer can perhaps feed the whole community. The tractor will provide the improved efficiency needed to free up a whole community of workers for other purposes.

The secret to adding fossil fuels (or any kind of energy source that can improve efficiency, and allow fewer people to produce essential goods and services) is debt. While the farmer cannot pay for the new tractor with his earnings from growing barley using a stick, the farmer can indeed pay for the tractor with all of the goods and services that the whole community can produce, as the result of the tractor handling work that now takes many workers to do. By growing much more grain, and selling that grain to all of the workers who are now freed up to provide discretionary services, the farmer will have enough funds in the future to repay the loan for the equipment which will allow much greater efficiency. (The problem is that the tractor requires a huge amount of embedded energy from fossil fuels. Workers who have been working without fossil fuels will not be able to earn enough to pay for this embedded energy without debt.)

Salaries of Workers

In my imaginary simplified economy, there is only one country. In such a country, the amount of salaries that workers receive then is closely related to the amount of goods and services that the economy produces. There will be part of the production that goes to the owners of factories, farms, and other sources of production, but they cannot eat any more than anyone else, or sleep in more than one place at a time. If they get paid much more than others, some of it must be in the form of “paper income” that they can theoretically use at some time in the future, but does not involve current consumption.

In general, the more goods and services produced relative to the population, the more workers will receive in inflation-adjusted salary. If the economy is so distorted that most of the goods are made with machines, the government must play a much bigger role, providing transfer payments to those who cannot find employment (unless the government is prepared to handle uprisings by citizens). If workers are not receiving adequate wages to pay the taxes, taxes will need to come from some other source–possibly from the owners of the sources of production.

To see how a rise in oil prices will affect the economy, lets consider what can be expected to happen to a manufacturing company. Suppose that for a particular manufacturer, costs are distributed as follows (the actual percentages aren’t important–just the point that wages tend to be a big piece of the total):

  •  Wages 40%
  • Oil products 10%
  • Electricity 5%
  • Raw Materials other than Oil 20%
  • Rent 15%
  • Profit 10%

If the cost of oil doubles and the manufacturer is not able to raise prices, the higher cost will wipe out profits. In fact, the cost of other raw materials is likely to rise as well, because oil is used in extracting and transporting raw materials. This will make the impact on profit even worse than the oil-only comparison would suggest.

To “fix” the problem, the manufacturer has to make some sort of adjustment, and the adjustment will almost certainly lead to less dollars being paid for wages. One such approach is to “make a smaller batch,” with the amount produced equal to what can be sold at the higher price. If this is done, the manufacturer will employ fewer workers. It will also cut back on oil consumption, other raw materials, electricity consumption, and rent. The result will look like recession.

Thus, a rise in oil prices, such has happened since the early 2000s, can be expected to affect feedback loops for countries that use very much oil.

Figure 4. World crude oil production and Brent spot oil price, both based on EIA data.

Figure 4. World crude oil production and Brent spot oil price, both based on EIA data.

The Positive-Feedback Loop

When can an economy grow? If an economy can grow in efficiency—that is, fewer and fewer people employed creating the basic requirements for life, then more of the population can be employed in providing discretionary services. In total, the wealth of the economy will grow. Historically, this has happened as increasing amounts of fossil fuel energy is added to supplement human energy.

If an economy can increase its debt, and that debt can finance equipment or infrastructure that will allow greater efficiency in producing basic services, this will also allow an economy to grow.

In economic analyses, increases in population are counted as part of economic growth. The problem with population growth is that it leads to more population per acre available for cultivation, and more population relative to external energy sources of all types. This sets up a competition: can enough external energy be added to maintain (and even increase) goods and services per capita?

Economies of scale are also important as producing positive feedback loops. Once an energy investment, such as a road, is made, it can be used for an increasingly large population, often without much additional cost. Businesses also find growth beneficial, since they can build a factory, and operate it more hours, with little additional cost.

The combination of all of these favorable feedbacks leads to the pattern of growth that economists seem to think always occurs.

What Can Go Wrong?

The big “oops” that takes place happens when we start hitting natural limits:

1. The cost of oil extraction goes up, because we pulled the easy-to-extract oil out first. This means that workers start having less discretionary income, rather than more, because they now needed to spend more on commuting to work and on food. Wages tend to stagnate or decline, for reasons described above. A larger percentage of the population needs to work in oil extraction, and more fossil fuels of various types must be used in oil extraction, leaving fewer workers and less energy supplies for other purposes.

2. The economies of countries consuming large amounts of oil are disproportionately affected by rising prices, and oil consumption begins to drop in these countries, even though world oil consumption in total is still rising.

Figure 5. Oil consumption based on BP's 2013 Statistical Review of World Energy.

Figure 5. Oil consumption based on BP’s 2013 Statistical Review of World Energy.

3. Debt added to produce oil tends to produce fewer and fewer barrels of oil per dollar invested, as the cost of oil extraction rises. With fewer barrels of oil produced per dollar of investment, less goods are transported per dollar invested. If other energy products also rise in cost of extraction, or if the cost of making metals increases, we reach a situation where increasing debt, in general, starts adding a smaller and smaller quantity of goods per dollar of investment. (Substituting a different high-cost source of energy does not fix the situation.) Eventually, so little benefit is gained from additional debt that huge defaults occur. These huge defaults are likely to lead to higher interest rates and more layoffs.

Of course, during favorable feedback loops, the economic growth that comes with increasing energy consumption plays a major role in permitting debt to be paid back with interest. If energy consumption, in fact, starts contracting, this contraction will contribute to debt defaults.

4. As the economies of individual countries got richer and richer, the natural tendency was to add more government services. Pensions and health care were promised, based on what looked possible when the economy was growing rapidly. Now, the economy is not growing as rapidly, and increasing wage disparity is occurring. There is no way to tax the common people enough to pay for the benefits promised to people. People become very unhappy when told that the government cannot pay promised pension benefits. The tendency is toward increasing unhappiness with government status quo, perhaps even leading to new (cheaper) forms of government.

5. Because of energy limits, we find a need to conserve, but in the process discover that we are inadvertently hitting “diseconomies of lack of scale” instead of “economies of scale”. Instead of continually adding new jobs based on construction of new infrastructure, job opportunities for young people start to disappear. This adds to the dynamic of contraction, even if changes are planned.

6. All the time, natural forces are eroding the huge amount of infrastructure that has been built. Hurricanes and earthquakes cause destruction that must be fixed, if the current system is to be maintained. Lesser forces, such as freezing and thawing and roots of trees growing tend to ruin roads over time, and cause buildings to need repairs. While this has always happened, if the government is poorer, the cost becomes an increasing burden.

______

As a result of these influences, the natural feedback loop is now changing to contraction, instead of continually adding a positive increment. This is an unknown situation relative to what we are used to. There is no “reverse gear” on the economy.

We know that in the past, economies that have hit these adverse feedback loops have tended to collapse. The situation is indeed worrisome.


[i] Despite evolving in the direction of requiring external energy, there is still a possibility that a few individuals in particularly advantageous parts of the world might be able to “get along” without external energy. These individuals would probably live in areas where raw fish is available for food, and where predators are not particularly a problem. If these individuals are able to use stored energy in the form of modern knives, shoes, and clothing, such stored energy may take the place of other external energy that ancient people normally required.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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315 Responses to Energy and the Economy–Basic Principles and Feedback Loops

  1. I sent the following message to Gail T., on 7/20/13:

    Dub has almost caught up with Brent (http://oil-price.net/) – what’s been going on, lately?

    She replied:
    Lots of pipelines coming into play, so the two can compete directly. The divergence was strange, not the fact that they are back together.

    Gail

    I do wish I had more info, about this.

  2. timl2k11 says:

    It is interesting that despite the recent “resurgence” of US oil production, it had not seem to be having any positive effect on our economy. This suggests to me we are getting very little return on our investment in shale oil. I wonder if Canada is getting an economic lift from tar sands production?
    It might not seem like much is changing day by day, but we are definitely on a slow, inexorable decline.

    • Ron Whitehand says:

      The problem you mention is because the cost of extracting shale oil or of fraking is so high that there is little margin left to bolster the economy in the way that ‘old fashioned’ nodding donkey type oil wells did. Gail does point this out but does not over emphasise it.
      See Tullett Proben’s ‘Perfect Storm’ report for lots of back up detail and a good explanation http://www.tullettprebon.com/Documents/strategyinsights/TPSI_009_Perfect_Storm_009.pdf

    • I should look into the question. Basically, Canada has been getting very low prices for its crude oil, especially the oil sands crude, for all of 2011, 2012, and the first part of 2013. It has continued to import oil, but at Brent prices. It would be doing a lot better, if it could be subject to sort of similar prices for what it exports compared to what it imports.

  3. Scott Walker says:

    Gail came out with a new one today which I have not read yet which the group will be discussing soon, too tired to read it tonight after our in depth discussions of the after world.

    Great talk Chris, more soon.

    Have a good day tommorow,

    Scott

    ________________________________

  4. Dear Gail,

    what Oyu are describing here has been formulatet das a theorie, or a scientific heuristic, in anthropology by Marvin Harris in the 60s and is calle Cultural Materialism.

    http://www.cultural-materialism.org/

    Marvin Harris has been a great inspiration for me. I can recommend reading him.
    regaards
    alienObserver

    • Thanks! I was trying to figure out exactly what Marvin Harris is saying. Wikipedia has an entry about Cultural Materialism. It says: “To Harris, cultural materialism ‘is based on the simple premise that human social life is a response to the practical problems of earthly existence’.” According to the article, “cultural materialism argues for what is referred to as the principle of probabilistic infrastructural determinism. The essence of its materialist approach is that the infrastructure is in almost all circumstances the most significant force behind the evolution of a culture.”

      Recently, Thomas Love sent me a book called, “Cultures of Energy: Power, Practices, Technologies“. According to the book description on Amazon,

      This path-breaking volume explores cultures of energy, the underlying but under-appreciated dimensions of both crisis and innovation in resource use around the globe. Theoretical chapters situate pressing energy issues in larger conceptual frames, and ethnographic case studies reveal energy as it is imagined, used, and contested in a variety of cultural contexts. Contributors address issues including the connection between resource flows and social relationships in energy systems; cultural transformation and notions of progress and collapse; the blurring of technology and magic; social tensions that accompany energy contraction; and sociocultural changes required in affluent societies to reduce dependence on fossil fuels. Each of five thematic sections concludes with an integrative and provocative conversation among the authors. The volume is an ideal tool for teaching unique, contemporary, and comparative perspectives on social theories of science and technology in undergraduate and graduate courses.

      The above book has a variety of interesting articles, including discussion about what actually happens when energy changes are made to an economy. One article I found interesting was, “Space, Time, and Sociomaterial Relationships: Moral Aspects of the Arrival of Electricity in Rural Zanzibar.” It talks about how the arrival of electricity, and in particular the arrival of television, changes the relationships between husbands and wives, in down-to-earth, practical ways.

  5. Julian Bond says:

    Please see http://www.newscientist.com/data/images/archive/2846/28462101.jpg
    (Repeat ad nauseam) It’s important that economic models are rich enough and include enough factors. The Limits to Growth people are still one of the few to actually do this.

    • As I see it, the big problem with “Limits to Growth analyses” is that they does not consider financial factors. In particular, they look at the oil issue as an “oil supply” problem. Thus, the issue is one of spacing out the huge amount of oil supply still seen to be in the ground. This is part of the reason why Jorgen Randers is now concerned about climate change, rather than oil limits. The analysis back in 1972 was better, because at least then, the amounts were fairly close to reasonable, and the lack of financial feedbacks was not such a problem.

      The big thing the Limits to Growth analyses miss is the fact that issue is not an oil supply problem, it is an oil demand problem. Workers are not rich enough to afford the high priced oil that is being put on the market. It is actually the lack of demand that causes the feedbacks that we see. Lack of demand comes from the fact that we are talking about an economic concept–a person who is unemployed has no demand for oil, or for that matter, food and water. Of course, in the real world, such people riot when there is not enough food and water, indirectly because of lack of oil. So the economic concept does not explain the physical reality that people need food (even if grown using oil), whether or not they can pay for it.

      There are also many other feedback loops. We are now very dependent on debt. Without economic growth (coming from ever-increasing oil supply), it is very difficult to repay debt with interest. Once debt defaults start in earnest, it is hard to maintain demand for oil.

      • Gail,
        Although I have gained some insight from reading Jorgen Rander’s latest book 2052, I also found assumptions (blind spots) that I would attribute to some of the same thinking you describe above.
        In his discussion of new costs arising in the next 40 years and their impact on GDP, he says the following on p.81.
        “Over the next forty years global society will need extra investment money to:
        1. develop and implement substitutes for scarce resources…
        2. develop and implement solutions for dangerous emissions…
        3. replace ecological services that formerly were free…
        4. repair accumulated damage from past human activity…
        5. protect against future climate damage…
        6. rebuild real estate and infrastructure destroyed by extreme weather…
        7. maintain armed forces to fight off immigration, defend resource supplies, and provide manpower during more frequent emergencies.”
        He calculates that the additional cost of these investments would be between 1% to 6% of current GDP.

        The belief that we can “develop and implement” any of these solutions is questionable to me. The belief that we will have a functioning economy with anything near today’s GDP is also questionable. These two questionable assumptions make it difficult for me to take the rest of his book very serious.
        Jody

        • I didn’t buy the book. I argued by e-mail with folks who were putting assumptions into the models. They didn’t understand the financial problem. If you model the wrong problem, your solution won’t work.

          • Good point and something we often forget.
            I recall a test paper returned to me in college. I lost 25% of the points because of my answer to just one essay question. The professor commented in the margins “Good answer but to the wrong question.” I had to reread the question several times before I understood what he was really asking.

      • Auntiegrav says:

        Banks create money not out of thin air with debt, but by getting people to promise to use energy and other resources in the future. The current debt load is collectively promises to burn up a thousand times as much oil as is available to create the wealth to pay the debts.
        Gail, I’ve enjoyed your commentary in the past, but you kinda went off on more tangents than I could follow in this one, and missed the tax system as part of the economic feedbacks. All of the manipulations of income tax are basically positive feedback mechanisms (along with debts) designed to accelerate the impossible idea of perpetual growth by deceiving people into taking on more and more debt (promises to produce/consume in the future).
        We have spent the last 100 years making people valueless as producers in favor of the energy and technology becoming the driving producer in the economy (witness agriculture, especially). This has detached any concept of actual thought from the decision process, which is basically robotic logic run on spreadsheets rather than any human concern for the welfare of populations or the planet. Civilization itself is a means of isolating humans from the risks/needs of their nurturing natural environment, and the people born into Civilization don’t know how to maintain one (civilizations are built by barbarians who get tired of living like barbarians). Economics, then, when used as a decision-making body, is a detachment from a detachment: a lost cause.

        • Scott says:

          Any thoughts on this Gail?

          It seems banks have several ways of creating money – depending on whom they want to give it to.

          They will fight to keep the bond market bubble alive…

          The first: is giving funds to the banks at near zero interest which has been big lately.

          The second is to loan the money and that multiplies the money and will increase inflation. Like we saw during the real estate bubble.

          We have yet to see much of this lately but they are up to this again it seems.

          If the banks start handing out easy money again like they did during “sub prime”. They have started doing so again with programs like student loans and other gov. loans though.

          My point is they seem to have the ability to inflate if they wish. Money can come in the mail etc. Therefore, although they are fighting deflation, we could first see inflation with these actions by government banks.

          So perhaps we will see inflation and then Deflation and then the discontinued items after.

          • Banks don’t have the ability to create jobs for people, and this is what is critical. All of the money banks create makes it into investment circles, but never makes it into the “real world”. Loaned money, to the extent it is invested, tends to create bubbles (such as in home prices and land prices), that then blow up and collapse. Inflation comes in these bubbles, but only for the particular asset class that is “run up”. This asset class inflation is offset by debt defaults and low salaries of workers, which tends to keep “demand” for oil products low. Ultimately, the issue is discontinuities.

        • Readers come from a lot of different backgrounds. If you are coming from a modeling background, and understand that the simplest models are best, the article makes perfect sense. I got some very nice e-mail comments from people working in the field, who think about things from my perspective. I am showing how current economic assumptions are wrong. If you come from a different background, my comments probably sound strange–not quite understandable. Sorry about that!

          Civilization involves substituting external energy for human energy. This can result in people being unemployed, and being treated as if they don’t matter. Governments have traditionally been they ones to “even out” what goes wrong, partly by making rules for businesses to operate under, and partly by using the tax system for redistribution of funds. But at this point, they are becoming increasingly powerless. Their tax revenue is increasingly coming from wages, because businesses have escaped to overseas tax havens, and because the tax code has been written to reduce tax rates for non-wage income. At the same time, wages of the common worker are falling (when one considers unemployed plus those with low wage jobs).

          Governments have figured out that increased debt can in some ways substitute for lack of wages–for example, if you get a loan for a new car you really can’t afford, you can buy it. Since the government doesn’t have any other way to fix the system, they are trying to fix it in ways they can–holding down interest rates, giving government backed loans for things like higher education, and keeping the mortgage interest deduction in the tax code.

          Economics may be a lost cause, but I am afraid we are stuck with it. In this article, I am showing some particular areas where it is going wrong.

          • Auntiegrav says:

            Thanks for taking so much time to be nice and not say “you’re not an economist, so you can’t understand my models”.
            I’ll go with two points: Wendell Berry, when addressing the agronomists’ view that there were too many farmers and that’s why the family farms were dying, said “The agronomists say there are too many farmers, but you won’t hear an agronomist say there are too many agronomists.”
            Second point is that what makes a human being a human being IS their ability to make a model of the universe and move the ego into that model, avoiding reality at all costs. The simplest models are the ones that least reflect the actuality of the universe, and in doing so, they work well for a specific purpose but fail in the complexities of nature.
            The simplest nature model is going to be one that considers what it is that allows a species to exist or go extinct, and THAT is the model of its usefulness to its own future vs. its consumption of resources. Prior to civilization, we can safely say that humans were a cooperative part of the environment, and their activities added something net useful or they would have gone extinct instead of persisting (however harsh that existence was).
            How can economists apply this idea of a species being generous to its environment rather than consumptive of it AND justify it to a civlization that is making all of its decisions with money (basically an artificial symbol of detachment from real usefulness)?
            In another tack, we have spent the last 100 years or so replacing the usefulness of people on the land with petroleum and pesticides so that less than 1% of the population produces all of the food. Meanwhile, that same “efficiency” has allowed the 99% to become too fat and stupid to produce their own food. It is an irreversible process of evolutionary laziness and denial.
            I didn’t mean to be at all disparaging to your wonderful attempts to show the wrongs inside the economic models. I am just trying to push a little toward the outside of the money and bullying box that capitalism has used to encapsulate and homogenize civlization. The question that should be asked along with all of the other questions related to what is good for civlization is “Should everyone be civilized?” I submit that the land says “no”, and the actual “middle” class should be somewhere between the ‘uncivilized’ land dwellers and the civilized money slaves. Right now, we have two classes: those who have to work themselves to death in order to eat, and those who never have to worry about eating. Excluded are the somnambulant public that doesn’t know it is working itself to death or extinction via the use of “efficient” energy products.
            If you’ve made it this far, thank you for reading. I’ve said my piece.

            • With respect to your comment, “Prior to civilization, we can safely say that humans were a cooperative part of the environment, and their activities added something net useful or they would have gone extinct instead of persisting (however harsh that existence was),” I think the evidence is that the only way human population could grow is by populations of other species shrinking, and in many cases becoming extinct. In that respect, the population of man is acting like a cancer, relative to the earth’s ecosystem.

              I wrote an article that touched on this issue back in 2011: European Debt Crisis and Sustainability. It starts out:

              What would humans have to do to really live sustainability with the world’s ecosystems?

              I got a shock when I read about the pattern of species extinctions which is taking place that form a part of what is called the “Sixth Mass Extinction.” It turns out that man’s adverse influence on ecosystems didn’t start a few hundred years ago, when we started using fossil fuels. Instead it started way back, when man was still a hunter-gatherer, and there were fewer than 100,000 people on earth.

              According to Niles Eldridge, in describing the Sixth Extinction:

              Phase One began when the first modern humans began to disperse to different parts of the world about 100,000 years ago.
              Phase Two began about 10,000 years ago when humans turned to agriculture.

              If humans ever had a better track record, I would be more optimistic about our living sustainably with the rest of the universe. The record seems to indicate that as soon as humans moved into new territory, they wiped out the most vulnerable animals, and often burned down trees, changing the ecosystem immensely.

            • Christopher Johnson says:

              Auntiegrav,

              You appear to have a distinct North American bias. I’m quite sure an agronomist in Southeast Asia — or just about anywhere other than the USA — would not question agrarian cultures being overpopulated, for a very good reason: what else are all those people going to do? What did our forebears of a few hundred years ago do to survive? Are those skills beyond us?

              That 1% stat that people bandy about regarding population involved in agriculture also might be a tad misleading. Perhaps (probably??) it’s true that less than 1% of the USA population is directly engaged in food production. But how many are involved in transport, temporary storage, handling and distribution of foodstuffs? It could be at least another 1%, no? And does that original 1% include temporary labor, without which the system cannot operate?

              Some commentary about population downsizing raises spectres of mass starvation. That might occur, but not necessarily. A generation ago 70% of China’s population lived in rural areas — not comfortably but they survived just as they had for centuries. Ditto other Asian and African traditional societies. I’m not at all comfortable with your use of such concepts as ‘civilization’ and ‘middle class’ in that context, because you appear to imply that peasants are not or cannot be civilized. That, IMHO, is a bad place to start any analytical exercise.

              People in less luxurious locales survived, because the human animal is really pretty good at survival. It’s not at all remarkable how quickly novices can learn proper hoeing techniques, etc., when well motivated. Even ‘city-slickers’ can do it. And at the same time, one important civilization asset that will get all of us and our progeny through the crises will be education. So let’s remember to resist the calls to burn books, and maybe even save a printing press or two.

              Cordially, Chris

  6. Welcome Back Gail!

    I’d like to let the OFWers know that we recently got up the first 2 of a 3 Part Series with David Korowicz of FEASTA, author of the paper Trade Off: Financial system supply-chain cross contagion – a study in global systemic collapse and more recently Catastrophic Shocks in Complex Socio-Economic Systems—a pandemic perspective on Diner Podcasts.

    http://www.doomsteaddiner.net/blog/podcasts/

    Many aspects of Systemic Feedback Loops in the Monetary System and Industrial Economy are discussed in these Podcasts. The final part will be released in the next week or two, after we get up a Podcast by John Michael Greer of the Archdruid Report as well as the last installment of the marathon Podcast with George Mobus of Question Everything. Upcoming also is another quite long one recently completed with Ugo Bardi of the Cassandra’s Legacy Blog.

    Stop by the Diner OFWers to listen in on the latest in Collapse! 🙂

    RE

  7. Pingback: Historia y razones de nuestro hundimiento | Rema y Calla

  8. I would like to add a different point of view-

    “The Many Types of Energy – The most basic type of energy, at least from a human perspective, is human energy.”

    I don’t think you will find a modern day economist in our modern day economy consider humans as energy. I believe you would find humans better described in our economic system as machines who consume energy, produce products and expel waste, or better known to the wealthy as slaves or assets. We or at lease I don’t eat or burn humans for there energy content.

    “Each of us is given approximately the same amount of energy, with males having somewhat more energy for lifting and pushing objects”

    Again, humans without fuel (food or energy) can not lift anything. Which is going to be a lot like your car when Our Finite World runs out of oil, nothing- no go. Humans process the food (energy) that fuels the muscles to lift an object. Humans are an economic machine. One person may be a 5 ton hydraulic jack and the other a 10 ton jack, but without the input of energy neither is lifting anything.

    “The only food that is not from plants and animals is mother’s milk”

    Humans from a science point of view are animals. Which would make “mother’s milk” an animal product produce by the human machine. Just like a cow and it’s milk. Not some magical substance which is not plant or animal. I would also like to note that the religious right believes life starts at conception which would make the male just as special as the female because it takes two to start a life together. I would call it routine because it’s been done over 7 billion times in less than 100 years. Now, humans walking on the moon or driving 55mph because it would lengthen the use of resource in Our Finite World is special.

    A different point of view

    • My point is that the “standard” way of looking at things causes a person to miss important relationships.

      You and I can make things, without added external energy, but this is a very expensive way of doing things.

      Woman making rope in India

      Above: Woman making rope in India.

      In fact, if we don’t have fossil fuels, this is the way we go back to making things. Economists talk about productivity of labor, but they miss the fact that it is the fossil fuels providing the productivity.

      All fossil fuels do is leverage our own limited abilities. Light bulbs allow us to see for more hours of the day. Automobiles allow us to move faster, with more protection from the elements. We could use a bicycle, instead. Here, we are using embedded energy in making the bicycle, but it is our human energy that powers it.

      • Gail, you are wrong.

        “You and I can make things, without added external energy, but this is a very expensive way of doing things.”

        You and I can’t produce anything without external energy. We eat external energy (food)daily and store amounts in our bodies. Without this food fuel we will die and not be able to produce anything. This also holds true in your example of riding a bicycle. It’s the fuel from the food we eat that powers the bike. You might want to try a little experiment on yourself. Try not eating(external energy) for a month and than try writing your next blog post. We will see what happens to your productivity. You are a machine in need of external energy.

        “Economists talk about productivity of labor, but they miss the fact that it is the fossil fuels providing the productivity.”

        Your wrong again, productivity is the ratio of output to inputs in production; it is a measure of the efficiency of production. Fossil fuels are inputs to production providing the energy for productivity. Economist understand the importance of energy and do not “miss the fact’ of it in the production equation. Read attached article:

        http://greentechadvocates.com/2013/02/14/goodbye-energy-efficiency-hello-energy-productivity/

        “You and I can make things, without added external energy, but this is a very “expensive” way of doing things.”

        definition of expensive – Requiring a large expenditure; costly. Marked by high prices: expensive stores.

        I would say this makes you wrong again. I would say time consuming but not expensive. I really don’t think your rope maker has spent any money which would not make her production expensive.

        On the positive side, I do believe your comments justifies my belief that within Our Finite World using fossil fuel for personal transportation is a crime to humanity and should be stop as soon as possible. The first step to this process would be a 55mph speed limit.

        That my view and opinion and I’m sticking to it.

        • Adam says:

          “You and I can’t produce anything without external energy. We eat external energy (food)daily and store amounts in our bodies. Without this food fuel we will die and not be able to produce anything.”

          “I would say time consuming but not expensive. I really don’t think your rope maker has spent any money which would not make her production expensive.”

          But time is money – the more time you spend on doing something, the more external energy you need. How many meals did the rope maker consume during the making of her product? Food may not be expensive to you, but it is to her – expense is relative, you see. And all from your own logic – hoist with your own petard!

          As the TV star advertising expensive watches said: “If you’ve got the money, I’ve got the time!”

          • Hi Adam,

            “the more time you spend on doing something, the more external energy you need.”

            This statement is not true more than I think you might believe. Most of time in transportation slowing down a little can be a lot more efficient. Let’s start with that 80,000 pound highway tractor trailer rolling down the interstate at 70mph @ 5.5mpg vs. 55mph and getting 7mpg. The country has excess of labor looking for good paying jobs and a shortage of limited fossil fuel resources to power the highway tractor. But for the transportation company who is trying to maximize their profits 70mph works best at todays fuel and labor rates. But for the citizens of the country 55mph will maximize overall quality of life. Regulations that makes all transportation maximize efficiency and a level playing field for transportation companies is best. BAU is not acceptable.

            Failing to plan is a plan to fail

          • Adam says:

            Hi ChiefEngineer,

            “This statement is not true more than I think you might believe.”

            You are right about the case you state, but not about the one I cited, regarding the rope maker. Keeping an open mind, tempered by discernment and a little scepticism, is more important than always being right. 🙂

          • Yes Adam, I do believe your right about the rope lady until she gets hand cramps at the Adams rope factory for not making her quota. That’s when your workers comp insurance doubles and puts you out of business. Then you can go into the trucking business and really loose some money. That highway tractor trailer would also get better mileage at 15mph than 10 also. A little better ?

        • This is only a classification problem. I am putting food into a different category than other external energy, since food is something every animal must eat, and we can get that by gathering, if we live like other primates. I am simply making a distinction between what we can do as a primate, and what we can do because of the additional external energy that we have added.

  9. Leo Smith says:

    “While people talk about a system that does not require fossil fuels, no one has mapped out how the world could in fact transition from a system that uses fossil fuels to capture these types of energy to a system that would work without fossil fuels. The best we can hope for within the next 100 years is to use fossil fuels more sparingly.”

    I sent you some scribblings on that very matter Gail. It very much is my extension on your premises. Namely that we wont actually run out of fossil fuel, simply that it will price itself out of the energy market. That leaves plenty for the chemical industry.

    Working on my own premise, than renewable energy is overall far far more expensive than nuclear, and cannot actually be constricted operated and maintained without huge use of fossil energy in portable maintenance that it needs. that leads to a gradual and natural translation to more or less all nuclear as the dominant source of primary energy over the next 50 years.

    Anything that can be done with electricity will be, and anything that can’t – well in the limit one can synthesise hydrocarbon fuels, albeit at a price that makes them pointless as a source of *primary* energy, but a very useful energy-dense and portable way of *storing* energy for (mainly portable) applications.

    That plus the possible development of lithium air batteries, which also are potentially just good enough to be used for transport off grid, looks likely to be the only way we will preserve society at anything like its current levels.

    The final conclusion I reached, is that there is really no need to panic. Stripped of government interference and green lunacy, we will continue to burn fossil until it becomes uncompetitive with nuclear, at which point investment in nuclear will happen naturally – as it is doing in some developing and oil rich (but not for long) states.

    Japan is a case in point: they simply cannot afford to NOT have a healthy nuclear powered economy. The massive effect on their balance of payments caused by switching off the entire nuclear fleet post Fukushima is worse than the cost of the minor cleaning up left to do.

    And the costs will come down as the volume goes up..especially in the matter of waste disposal and fuel reprocessing.

    http://www.templar.co.uk/downloads/Beyond_Fossil_Fuels.pdf

    (apologies for the UK centric perspective of the paper. It was conceived with a national audience in mind).

    • Ert says:

      Nuclear cheaper than renewables?

      Minor cleanup in Fukushima?

      That sounds like very warped and bold statements to me. Nuclear has approx 1-2$ per Kw/h cost. Yes 1-2$! You have to factor the whole chain… from getting the uranium to deconstruct the reactor and find a save storage for 1000 millennia. Nuclear is cheap until the reactors are put out out commission or explode… but deconstruction and storage of currently 500 reactors will bancrupt many companies and states.

      Only Finland works on a “final” nuclear storage site – with the option to recover all and put it to another place if something happen through the years. And this still adds big cost and opens the question how to store “money” for the future to pay the watchmen for the next 10.000 to 1.000.000 years.

      40% of US Freshwater are used to cool powerplants. In France their have problems in hot summers to cool their nuclear power-plants… nuclear power is not elastic and is only usable as exchange for coal. France basically needs the European power network to cover their peak-loads and needs their street-lighting to get rid of their power by night.

      Get real – Fukushima is far from over, TEPCO is bankrupt. Full cleanup is impossible – because their is no place to put the dirt, then to clean something up – you have to make something dirty. But you can make everything dirty – without cleaning up anything.

      In Germany, where I live, there we have two “accidential” nuclear waste storage sides. One (Morsleben) is from the old eastern part – where the West under Mrs. Merkel dumped more “West” stuff then the eastern part.. and then sealed it by concrete. The second was a “test” facility (Asse II)… their dumped the stuff basically unrecoverable. Now everything is leaking and the top of the mountain is collapsing. Even the government says that atomic waste will be pressed within the next 100 years to the surface ground water – if the atomic waste is not recovered. But the time is running out… and also Morsleben is not secure.

      Nuclear is far to costly and not controllable, especially when controlled by profit oriented companies.

    • Thanks for the new link to your paper.

      I would agree that if a way around our current problem exists, it has to be outside of the standard wind power–solar PV view of the future. Ideas that theoretically might work include nuclear and space solar, if the many issue of building it cheaply could be worked out.

      The problem with nuclear is that (rightfully or wrongly) people are afraid of it. An approach using thorium is in the works, but not here yet. Even if it were here, it would not immediately solve our liquid fuel problem. It would be possible to make some sort of liquids using electricity, but this would be time-consuming. If the cost of nuclear did not come down quite a bit, the cost of liquids would be very high.

      The other issue is that we seem to be hitting limits right now. The amount we can add in a given year is limited by
      1. The amount we can pay for, and
      2. The amount of resources that we can pull out of the ground

      Normally, we can switch to new energy sources, only very slowly, as old plants wear out, because of the high cost of replacing plants before they exceed their normal lifetime. At this point, we are not even replacing nuclear plants as the wear out. How are we ever going to ramp up the number of new plants, over and above replacement plants?

      If governments are poorer, they are not going to be able to pay for all of this “stuff”. This leave electric utilities to buy this new equipment on its own. I know here in Atlanta, we are already playing for the new nuclear plant Vogtle in our electric bills, even though it is not expected to be finished until 2017 or 2018. People are reporting that the cost is high relative to other sources of electricity. This may reflect regulation, and lack of experience building new nuclear plants.

      • Leo Smith says:

        whilst we still have relatively cheap fossil and a massively anti-nuclear regulatory system, we don’t need to/won’t find it economic to build nuclear.
        I suspect we have around 30-50years of unconventional gas to run electric generating sets off.And 5 years more of renewables to arrive at the conclusion they are not a viable solution.

        Having run the numbers, I think that really we barely need to talk about the issues. Governments can distort markets, but not forever.

        In the end there is only one generic replacement for fossil, and that’s nuclear of one sort or another. Nations who fail to rise to the challenge will be economically disadvantaged and ease to be globally significant.

        The USA is sitting on vast reserves of coal. It need not worry. Where the USA is however far more vulnerable is its utter dependence on the automobile. Coal to gasoline is not cheap. And the distances involved in the USA make it dependent on cheap long distance transport, and it lacks rail infrastructure of any quality.

        A huge social transition away from car use will therefore have to take place, unless cheap safe reliable long lived and high capacity batteries can be developed. I wont be holding my breath though.

        But there is no need to panic. I see the transition away from fossil as a gradual thing taking 30-50 years to happen, with many false alleys explored before the inevitable transition to the only real alternative happens.

        Panic helps the rent seekers push their snake oil solutions, but that is in the end just commercial froth on the tide that is sweeping us away from where we are to a less known future.

        The transition from coal to oil was really a 50 year process in the UK, with the first cars appearing at the turn of the century, the first aircraft a decade later, and then a period of rapid development of a petroleum based economy really achieving maturity in the 1960s when the last steam locomotives were decommissioned and mostly scrapped.

        Remember that nuclear power was a by product of military developments of nuclear weapons. To cook up plutonium generated a lot of heat, and using that to generate electricity was an obvious solution. Which is why the communist inspired hard left was always so anti-nuclear of course. That movement morphed into the Green movement, or at least infiltrated it and took it over. Ecology was an ideal way to promote the agenda of the Big State and a centralised command and control approach to economic management.

        But in the end, as the collapse of the USSR demonstrated, you can’t run a command and control economy as efficiently as a free market one. There are too many and too diverse a set of variables to cover them all efficiently by a centralised decision making process. Political pragmatism that allow local solutions to local problems are in the end, better.

        Europe is slightly ahead of the curve here, with a tremendous experiment in what amounts to a neo communist state being constructed, and huge investment in ‘5 year plans’ of renewable energy., but the writing is already on the wall – huge sums spent, huge profits made, no effective reduction in fossil fuel usage. Whilst the French experience of 80% nuclear and lower electricity prices than most places, stands as te ideal counter example.

        Even here, in the bastion of renewable fluff and BS, the EU is being forced to re-think its strategy as too many member countries need or want active nuclear programs.

        http://www.world-nuclear-news.org/NP-EU_open_secret_on_nuclear_subsidies-2207137.html

        The UK’s admittedly insane ‘carbon plan’ document calls for no less than more nuclear power than the entire UK grid capacity at the moment, and three times as much renewable capacity as that, by 2050. (This is to reach the almost 100% incompatible targets of a ‘zero carbon’ nation, and ‘30% of that by renewable energy’. The total insanity of spending a fortune on nuclear, which could do the job alone, and then spending the same amount three times over, in order to make it have a ‘renewable’ component, is never addressed ).

        I am less interested in arguing with committed ideologues about this or that. These days I write it down, show the premises on which the arguments are based, and the logical extrapolations of those arguments.

        When the mist trouble ridden nuclear plant ever, in Finland, is still on target to beat, gigawatt for gigawatt, the latest and most lauded offshore windfarm in the UK, in terms of cost per megawatt *capacity*, and when you then understand that it will last three times longer and produce in its life more than ten times the power without needing backup from fossil plant, its not hard to refute the proposition that nuclear is more expensive than renewable energy.

        It’s still twice as expensive as coal, though. And with the climate change agenda in tatters as the climate stubbornly refuses to actually change at anything like an alarming enough rate to justify the enormous sums being spent on not making the slightest difference to emissions, its more than likely that coal will be the US backbone of power generation for the next 50 years.

        In Europe we do not have that luxury.

        • Ert says:

          Thanks for your in-depth and thoughtful reply.

          Do not understand me wrong – but nuclear, as far the predominant designs are considered (pressure, breeder, etc.) are no option. Those designs are all inherently flawed and produce much to much waste.

          You mentioned Thorium. I also see LFTR as only viable technology within the nuclear sector – but I know no one in Germany that discusses those. In every forum I brought LFTR up, I got no reply.

          Still – I am also of that opinion, that everything will be tried until nothing goes anymore and everything may be polluted or used up.

          In 2008 the world used approx. 144PW/h (Petawatt-hours) of fossil and nuclear. Thats approx 16,5 TW/h of constant production and probably at least 30TW/h to cover elastic demand. If we want to get rid of fossil, that would equate to approx. 30.000 1GW nuclear LFTR Reactors (net production, not thermal!) if we stay at 2008 consumption.

          Currently 40% of US Freshwater is used to cool the coal and nuclear power plants – and I don’t know where all the batteries for the cars shall come from. That does not even consider how we want to build thousands of LFTR reactors and cool them.

          Solar and wind are nice, but in Germany we run out of places for wind. The solar efficiency in the winter time is disastrous and battery storage worsens the EROEI big time.

          That all will be a rough ride – even if LFTR works and a viable battery technology is developed within the next 20 years. But all there infrastructure projects need resources and a big upgrade of the grid… even more challenges…

        • A person would think that the insanity of the renewable plans would become apparent pretty quickly. I understand from an e-mail from Pedro Prieto that Spain is in the process of dismantling its support of solar PV. This is a recent article I found about the situation in Spain.

          Nuclear had indeed worked a whole lot better, but it has a lot of uncertainties attached, especially with respect to the spent fuel. People tend to be more afraid of nuclear radiation, than they are of harm that kills people one at a time. Pollution from coal emissions is clearly harmful (unless very well scrubbed), but people aren’t as worried about these emissions.

          • xabier says:

            Gail

            Large job-losses in the wind turbine making firms in Spain, too. These were meant to lead job-creation…….

            • Surprise! If an idea really doesn’t work very well, it can only be covered up so long. If nothing else, Chinese wind turbines are a lot cheaper.

  10. Don Stewart says:

    Gail
    For completeness, I suggest a few more feedback loops.

    1. Both natural evolution and human thinking can foster the phenomenon we observe and call The Constructal Law. That Law is described in Adrian Bejan’s book Design In Nature: How the Constructal Law Governs Evolution in Biology, Physics, Technology, and Social Organization. I’ll just quote two jacket blurbs:

    Scott Turner: The most amazing thing about life is that it exists at all. The second most amazing thing about life is that living things eem to be so very good at it. In his bold new book Bejan asks why, and his answer cuts to the very core of what life is–organized flows of heat, electricity, matter, and energy. From this deceptively simply idea, Bejan takes us on an incredible expedition through life’s vast scope, from the tiniest cell to organism to societies to ecosystems to the entire planet. It is a bracing journey.

    Steven Vogel: Thought provoking! Thermodynamics may determine where you’re going: here’s a rule that tells how you get there. And so simple–the more efficient the pathway, the more likely is its persistence, whatever the mechanism behind that persistence. This is science at its biggest and boldest.

    So the first feedback loop is the continual tinkering by the natural world and also by human intelligence to find a more efficient path. As an example, modern computers would not be possible with 1960s heat dissipation technology. Bejan has been one of the leading innovators designing new ways to disperse the heat from chips.

    2. Humans are motivated primarily by hormones (which Bejan ignores). We want to feel good (e.g., flood our bodies with oxytocin). Economies as we understand them today are quite crude machines in terms of producing favorable hormonal outcomes. I recommend the Sara Gottfried, MD book The Hormone Cure: Reclaim Balance, Sleep, Sex Drive & Vitality, Naturally With The Gottfried Protocol.

    This can be seen as another example of The Constructal Law, but the implications are so huge I think it deserves its own entry. Why do we need to ‘reclaim’ all those good things that Dr. Sara asserts that we have lost? Well…it’s because we live the way we do. If we are going to reclaim them, then we have to find more efficient ways to manage those hormones. As examples, she urges stress reduction, pesticide free food, a life without endocrine disrupters (e.g., BPA), and more practice of some of the aspects of Positive Psychology.

    So one revolutionary possibility is that humans learn that hormonal balance is really what it is all about, that Corporations and the Global Economy give us only the illusion of hormonal balance, and that much simpler living arrangements will give us much more payoff.

    3. Finally, and building on Bejan and Gottfried, we may learn to appreciate the world as it is rather than as we initially think we would like for it to be. For example, Thoreau at Walden Pond spent quite a bit of time stretched out on the ice covering the pond and closely observing it. It is hard to imagine a TV show where the host of a party tells the invited guests to ‘dress for some ice examination on the pond’. Yet Thoreau’s 175 year old idea may be quite efficient in terms of generating the sort of positive hormonal feedback loops that we desire.

    The Constructal Law is fundamentally destructive of existing structures and methods. So if one starts with the assumption that ‘we have to keep everything just as it is’ (Jody Tishmak’s Law), then we will continue to do everything the hard way. We will continue to tax people to support governments which administer terribly inefficient solutions to give us things we think we want but which are actually quite harmful. We will continue to patronize corporations which peddle faux solutions. We will continue to design our built environment in inefficient ways. And we will continue to destroy the natural world which can provide us with endless entertainment.

    My guess is that it takes a collapse to select those few who can combine the practical skills necessary for survival in a much simpler world plus the wisdom to manage their hormones intelligently. I doubt that sermons can do it.

    Don Stewart

    • Thanks for your thoughts.

      It seems like your thoughts are devoted to the issue of, “What comes next?” It is pretty clear to me that we are going to have a hard time saving the 7 or 8 or 9 billion. But perhaps there is a way forward for some smaller number. I am not sure I am the best one on leading the way in that direction. You seem to have done more research in that area than I have. I will have to admit life as a concept is pretty miraculous, and we as humans have been able to keep going for a very long time, despite rising obstacles.

    • Charles Justice says:

      the concept of “efficiency” does not refer to any objective thing. It is a functional term that is relative to point of view. One should always ask: Efficient for whom? Who benefits from the efficiency? Industrial agriculture is more efficient for corporations but picking an apple off a tree is more efficient for someone standing underneath the tree.

      • Auntiegrav says:

        Nice.
        James Howard Kunstler puts it this way: “Efficiency is: the straightest road to Hell.”

        • I like that quote. Efficiency allows no redundancy, so if anything goes wrong, you are stuck.

          • xabier says:

            Gail

            There’s efficiency, and there’s also parsimony: the old craftsman who taught me emphasised the latter – ie the minimal use of the resources available to get the job done.

            After many years of implementing his policy, I am left with large reserves of materials which I can often use to complete commissions.

            This is the old, pre-fossil fuel way of thinking and planning.

            • I have heard that the only part of the pig that wasn’t used was the squeak. My children always accuse me of being cheap. For example, I drive a car which was inexpensive to begin with, and now is several years old.

    • Don,
      If your going to name this law after me, I think it should read “We DON’T have to keep everything just the way it is.” Otherwise it sounds the opposite.

      I agree with your reflections and the things you’ve been reading. All the discussion above about our energy future, nuclear or renewable, just reminds me how much people are still clinging to the idea that life must continue on as it is.

      It makes sense to continue using roads and cars because our society has invested a lot in its current infrastructure (embedded energy). To throw them away is to waste all that energy. But a future with less or without oil will be local not global, and when our roads can no longer be fixed we will walk rather than drive. Will this make our future worse off? Very doubtful. Walking provides good exercise and time to think and reflect. Something we all could use more of to readjust our hormones. Will I miss the all the things I can’t get locally? I’m sure for a time, but if I don’t cling to the idea that I must have them, life will go on.

      Jody

      • Don Stewart says:

        Jody
        I can’t think of exactly the right name for your law. Tishmack’s Mistake? no Tishmack’s Delusion? no. Tishmack’s Principle of the Herd? too abstruse. Tishmack’s Commentary on Newton’s Laws of Motion as Applied to the Delusions of Crowds? too long.

        Perhaps reformulate the Law:
        Sometimes its just plain stupid to keep doing things the way we have been.

        How does that sound?
        Don Stewart

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