How Renewable Energy Models Can Produce Misleading Indications

The energy needs of the world’s economy seem to be easy to model. Energy consumption is measured in a variety of different ways including kilowatt hours, barrels of oil equivalent, British thermal units, kilocalories and joules. Two types of energy are equivalent if they produce the same number of units of energy, right?

For example, xkcd’s modeler Randall Munroe explains the benefit of renewable energy in the video below. He tells us that based on his model, solar, if scaled up to ridiculous levels, can provide enough renewable energy for ourselves and a half-dozen of our neighbors. Wind, if scaled up to absurd levels, can provide enough renewable energy for ourselves and a dozen of our neighbors.

There is a major catch to this analysis, however. The kinds of energy produced by wind and solar are not the kinds of energy that the economy needs. Wind and solar produce intermittent electricity available only at specific times and places. What the world economy needs is a variety of different energy types that match the energy requirements of the many devices in place in the world today. This energy needs to be transported to the right place and saved for the right time of day and the right time of year. There may even be a need to store this energy from year to year, because of possible droughts.

I think of the situation as being analogous to researchers deciding that it would be helpful or more efficient if humans could change their diets to 100% grass in the next 20 years. Grass is a form of energy product, but it is not the energy product that humans normally consume. It doesn’t seem to be toxic to humans in small quantities. It seems to grow quite well. Switching to the use of grass for food would seem to be beneficial from a CO2 perspective. The fact that humans have not evolved to eat grass is similar to the fact that the manufacturing and transport sectors of today’s economy have not developed around the use of intermittent electricity from wind and solar.

Substituting Grass for Food Might “Work,” but It Would Require Whole New Systems 

If we consider other species, we find that animals with four stomachs can, in fact, live quite well on a diet of grass. These animals often have teeth that grow continuously because the silica in grass tends to wear down their teeth. If we could just get around these little details, we might be able to make the change. We would probably need to grow extra stomachs and add continuously growing teeth. Other adjustments might also be needed, such as a smaller brain. This would especially be the case if a grass-only diet is inadequate to support today’s brain growth and activity.

The problem with nearly all energy analyses today is that they use narrow boundaries. They look at only a small piece of the problem–generally the cost (or “energy cost”) of the devices themselves–and assume that this is the only cost involved in a change. In fact, researchers need to recognize that whole new systems may be required, analogous to the extra stomachs and ever-growing teeth. The issue is sometimes described as the need to have “wide boundaries” in analyses.

If the xkcd analysis netted out the indirect energy costs of the system, including energy related to all of the newly required systems, the results of the analysis would likely change considerably. The combined ability of wind and solar to power both one’s own home and those of a dozen and a half neighbors would likely disappear. Way too much of the output of the renewable system would be used to make the equivalent of extra stomachs and ever-growing teeth for the system to work. The world economy might not work as in the past, either, if the equivalent of the brain needs to be smaller.

Is “Energy Used by a Dozen of Our Neighbors” a Proper Metric?

Before I continue with my analysis of what goes wrong in modeling intermittent renewable energy, let me say a few words about the way Munroe quantifies the outcome of his energy analysis. He talks about “energy consumed by a household and a dozen of its neighbors.” We often hear news items about how many households can be served by a new electricity provider or how many households have been taken offline by a storm. The metric used by Munroe is similar. But, does it tell us what we need to know in this case?

Our economy requires energy consumption by many types of users, including governments to make roads and schools, farmers to plant crops and manufacturers to make devices of all kinds. Leaving non-residential energy consumption out of the calculation doesn’t make much sense. (Actually, we are not quite certain what Munroe has included in his calculation. His wording suggests that he included only residential energy consumption.) In the US, my analysis indicates that residential users consume only about a third of total energy.1 The rest is consumed by businesses and governments.

If we want to adjust Munroe’s indications to include energy consumed by businesses and governments, we need to divide the indicated number of residential households provided with energy by about three. Thus, instead of the units being “Energy Consumed by a Dozen of Our Neighbors,” the units would be “Energy Consumed by Four of Our Neighbors, Including Associated Energy Use by Governments and Businesses.” The apparently huge benefit provided by wind and solar becomes much smaller when we divide by three, even before any other adjustments are made.

What Might the Indirect Costs of Wind and Solar Be? 

There are a number of indirect costs:

(1) Transmission costs are much higher than those of other types of electricity, but they are not charged back to wind and solar in most studies.

A 2014 study by the International Energy Agency indicates that transmission costs for wind are approximately three times the cost of transmission costs for coal or nuclear. The amount of excess costs tends to increase as intermittent renewables become a larger share of the total. Some of the reason for higher transmission costs for both wind and solar are the following:

(a) Disproportionately more lines need to be built for wind and solar because transmission lines need to be scaled to the maximum output, rather than the average output. Wind output is typically available 25% to 35% of the time; solar is typically available 10% to 25% of the time.

(b) There tend to be longer distances between where renewable energy is captured and where it is consumed, compared to traditional generation.

(c) Renewable electricity is not created in a fossil fuel power plant, with the same controls over the many aspects of grid electricity. The transmission system must therefore make corrections which would not be needed for other types of electricity.

(2) With increased long distance electricity transmission, there is a need for increased maintenance of transmission lines. If this is not performed adequately, fires are likely, especially in dry, windy areas.

There is recent evidence that inadequate maintenance of transmission lines is a major fire hazard.

In California, inadequate electricity line maintenance has led to the bankruptcy of the Northern California utility PG&E. In recent weeks, PG&E has initiated two preventative cut-offs of power, one affecting as many as two million individuals.

The Texas Wildfire Mitigation Project reports, “Power lines have caused more than 4,000 wildfires in Texas in the past three and a half years.”

Venezuela has a long distance transmission line from its major hydroelectric plant to Caracas. One of the outages experienced in that country seems to be related to fires close to this transmission line.

There are things that can be done to prevent these fires, such as burying the lines underground. Even using insulated wire, instead of ordinary transmission wire, seems to help. But any solution has a cost involved. These costs need to be recognized in modeling the indirect cost of adding a huge amount of renewables.

(3) A huge investment in charging stations will be needed, if anyone other than the very wealthy are to use electric vehicles.

Clearly, the wealthy can afford electric vehicles. They generally have garages with connections to electrical power. With this arrangement, they can easily charge a vehicle that is powered by electricity when it is convenient.

The catch is that the less wealthy often do not have similar opportunities for charging electric vehicles. They also cannot afford to spend hours waiting for their vehicles to charge. They will need inexpensive rapid-charging stations, located in many, many places, if electric vehicles are to be a suitable choice. The cost of rapid-charging will likely need to include a fee for road maintenance, since this is one of the costs that today is included in fuel prices.

(4) Intermittency adds a very substantial layer of costs. 

A common belief is that intermittency can be handled by rather small changes, such as time-of-day pricing, smart grids and cutting off power to a few selected industrial customers if there isn’t enough electricity to go around. This belief is more or less true if the system is basically a fossil fuel and nuclear system, with a small percentage of renewables. The situation changes as more intermittent renewables are added.

Once more than a small percentage of solar is added to the electric grid, batteries are needed to smooth out the rapid transition that occurs at the end of the day when workers are returning home and would like to eat their dinners, even though the sun has set. There are also problems with electricity from wind cutting off during storms; batteries can help smooth out these transitions.

There are also longer-term problems. Major storms can disrupt electricity for several days, at any time of the year. For this reason, if a system is to run on renewables alone, it would be desirable to have battery backup for at least three days. In the short video below, Bill Gates expresses dismay at the idea of trying to provide a three-day battery backup for the quantity of electricity used by the city of Tokyo.

We do not at this point have nearly enough batteries to provide a three-day battery backup for the world’s electricity supply. If the world economy is to run on renewables, electricity consumption would need to rise from today’s level, making it even more difficult to store a three-day supply.

A much more difficult problem than three-day storage of electricity is the need for seasonal storage, if renewable energy is to be used to any significant extent. Figure 1 shows the seasonal pattern of energy consumption in the United States.

Figure 1. US energy consumption by month of year, based on data of the US Energy Information Administration. “All Other” is total energy, less electricity and transportation energy. It includes natural gas used for home heating. It also includes oil products used for farming, as well as fossil fuels of all kinds used for industrial purposes.

In contrast with this pattern, the production of solar energy tends to peak in June; it falls to a low level in December to February. Hydroelectric power tends to peak in spring, but its quantity is often quite variable from year to year. Wind power is quite variable, both from year to year and month to month.

Our economy cannot handle many starts and stops of electricity supply. For example, temperatures need to stay high for melting metals. Elevators should not stop between floors when the electricity stops. Refrigeration needs to continue when fresh meat is being kept cold.

There are two approaches that can be used to work around seasonal energy problems:

  1. Greatly overbuild the renewables-based energy system, to provide enough electricity when total energy is most needed, which tends to be in winter.
  2. Add a huge amount of storage, such as battery storage, to store electricity for months or even years, to mitigate the intermittency.

Either of these approaches is extremely high cost. These costs are like adding extra stomachs to the human system. They have not been included in any model to date, as far as I know. The cost of one of these approaches needs to be included in any model analyzing the costs and benefits of renewables, if there is any intention of using renewables as more than a tiny share of total energy consumption.

Figure 2 illustrates the high energy cost that can occur by adding substantial battery backup to an electrical system. In this example, the “net energy” that the system provides is essentially eliminated by the battery backup. In this analysis, Energy Return on Energy Invested (EROEI) compares energy output to energy input. It is one of many metrics used to estimate whether a device is providing adequate energy output to justify the front-end energy inputs.

Figure 2. Graham Palmer’s chart of Dynamic Energy Returned on Energy Invested from “Energy in Australia.”

The example in Figure 2 is based on the electricity usage pattern in Melbourne, Australia, which has a relatively mild climate. The example uses a combination of solar panels, batteries and diesel backup generation. Solar panels and backup batteries provide electricity for the 95% of annual electricity usage that is easiest to cover with these devices; diesel generation is used for the remaining 5%.

The Figure 2 example could be adjusted to be “renewable only” by adding significantly more batteries, a large number of solar panels, or some combination of these. These additional batteries and solar panels would be very lightly used, bringing the EROEI of the system down to an even lower level.

To date, a major reason that the electricity system has been able to avoid the costs of overbuilding or of adding major battery backup is the small share they represent of electricity production. In 2018, wind amounted to 5% of world electricity; solar amounted to 2%. As percentages of world energy supply, they represented 2% and 1% respectively.

A second reason that the electricity system has been able to avoid addressing the intermittency issue is because backup electricity providers (coal, natural gas, and nuclear) have been forced to provide backup services without adequate compensation for the value of services that they are providing. The way that this happens is by giving wind and solar the subsidy of “going first.” This practice creates a problem because backup providers have substantial fixed costs, and they often are not being adequately compensated for these fixed costs.

If there is any plan to cease using fossil fuels, all of these backup electricity providers, including nuclear, will disappear. (Nuclear also depends on fossil fuels.) Renewables will need to stand on their own. This is when the intermittency problem will become overwhelming. Fossil fuels can be stored relatively inexpensively; electricity storage costs are huge. They include both the cost of the storage system and the loss of energy that takes place when storage is used.

In fact, the underfunding issue associated with allowing intermittent renewables to go first is already becoming an overwhelming problem in a few places. Ohio has recently chosen to provide subsidies to coal and nuclear providers as a way of working around this issue. Ohio is also reducing funding for renewables.

 (5) The cost of recycling wind turbines, solar panels, and batteries needs to be reflected in cost estimates. 

A common assumption in energy analyses seems to be that somehow, at the end of the design lifetime of wind turbines, solar panels and batteries, all of these devices will somehow disappear at no cost. If recycling is done, the assumption is made that the cost of recycling will be less than the value of the materials made available from the recycling.

We are discovering now that recycling isn’t free. Very often, the energy cost of recycling materials is greater than the energy used in mining them fresh. This problem needs to be considered in analyzing the real cost of renewables.

 (6) Renewables don’t directly substitute for many of the devices/processes we have today. This could lead to a major step-down in how the economy operates and a much longer transition. 

There is a long list of things that renewables don’t substitute for. Today, we cannot make wind turbines, solar panels, or today’s hydroelectric dams without fossil fuels. This, by itself, makes it clear that the fossil fuel system will need to be maintained for at least the next twenty years.

There are many other things that we cannot make with renewables alone. Steel, fertilizer, cement and plastics are some examples that Bill Gates mentions in his video above. Asphalt and many of today’s drugs are other examples of goods that cannot be made with renewables alone. We would need to change how we live without these goods. We could not pave roads (except with stone) or build many of today’s buildings with renewables alone.

It seems likely that manufacturers would try to substitute wood for fossil fuels, but the quantity of wood available would be far too low for this purpose. The world would encounter deforestation issues within a few years.

(7) It is likely that the transition to renewables will take 50 or more years. During this time, wind and solar will act more like add-ons to the fossil fuel system than they will act like substitutes for it. This also increases costs.

In order for the fossil fuel industries to continue, a large share of their costs will need to continue. The people working in fossil fuel industries need to be paid year around, not just when electrical utilities need backup electrical power. Fossil fuels will need pipelines, refineries and trained people. Companies using fossil fuels will need to pay their debts related to existing facilities. If natural gas is used as backup for renewables, it will need reservoirs to hold natural gas for winter, besides pipelines. Even if natural gas usage is reduced by, say, 90%, its costs are likely to fall by a much smaller percentage, say 30%, because a large share of costs are fixed.

One reason that a very long transition will be needed is because there is not even a path to transition away from fossil fuels in many cases. If a change is to be made, inventions to facilitate these changes are a prerequisite. Then these inventions need to be tested in actual situations. Next, new factories are needed to make the new devices. It is likely that some way will be needed to pay existing owners for the loss of value of their existing fossil fuel powered devices; if not, there are likely to be huge debt defaults. It is only after all of these steps have taken place that the transition can actually take place.

These indirect costs lead to a huge question mark regarding whether it even makes sense to encourage the widespread use of wind and solar. Renewables can reduce CO2 emissions if they really substitute for fossil fuels in making electricity. If they are mostly high cost add-ons to the system, there is a real question: Does it even make sense to mandate a transition to wind and solar?

Do Wind and Solar Really Offer a Longer-Term Future than Fossil Fuels?

At the end of the xkcd video shown above, Munroe makes the observation that wind and solar are available indefinitely, but fossil fuel supplies are quite limited.

I agree with Munroe that fossil fuel supplies are quite limited. This occurs because energy prices do not rise high enough for us to extract very much of them. The prices of finished products made with fossil fuels need to be low enough for customers to be able to afford them. If this is not the case, purchases of discretionary goods (for example cars and smart phones) will fall. Since cars and smart phones are made with commodities, including fossil fuels, the lower “demand” for these finished goods will lead to falling prices of commodities, including oil. In fact, we seem to have experienced falling oil prices most of the time since 2008.

Figure 3. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

It is hard to see why renewables would last any longer than fossil fuels. If their unsubsidized cost is any higher than fossil fuels, this would be one strike against them. They are also very dependent on fossil fuels for making spare parts and for repairing transmission lines.

It is interesting that climate change modelers seem to be convinced that very high amounts of fossil fuels can be extracted in the future. The question of how much fossil fuels can really be extracted is another modeling issue that needs to be examined closely. The amount of future extraction seems to be highly dependent on how well the current economic system holds together, including the extent of globalization. Without globalization, fossil fuel extraction seems likely to decline quickly.

Do We Have Too Much Faith in Models? 

The idea of using renewables certainly sounds appealing, but the name is deceiving. Most renewables, except for wood and dung, aren’t very renewable. In fact, they depend on fossil fuels.

The whole issue of whether wind and solar are worthwhile needs to be carefully analyzed. The usual hallmark of an energy product that is of substantial benefit to the economy is that its production tends to be very profitable. With these high profits, governments can tax the owners heavily. Thus, the profits can be used to aid the rest of the economy. This is one of the physical manifestations of the “net energy” that the energy product provides.

If wind and solar were really providing substantial net energy, they would not need subsidies, not even the subsidy of going first. They would be casting off profits to benefit the rest of the economy. Perhaps renewables aren’t as beneficial as many people think they are. Perhaps researchers have put too much faith in distorted models.


[1] This is my estimate, based on EIA and BP data. With respect to electricity, EIA data shows that in the US, residential users consume about 38% of the total. With respect to fuels that are not used for transportation and not used for electricity, US residential users consume about 19% of these fuels. Combining these two categories, US households use about 31% of non-transportation fuels.

With respect to transportation fuels, the closest approximation we can get is by looking at petroleum use, divided between gasoline and other products. According to BP data, on a worldwide basis, 26% of petroleum is burned as gasoline. In the United States, about 46% of petroleum consumption is burned as gasoline. Of course, some of this gasoline usage is for non-residential use. For example, cars used by police and sales representatives are typically powered by gasoline, as are small trucks used by businesses.

Furthermore, the US is a major importer of manufactured goods from China and other parts of the world. The embodied energy in these imported goods never gets into US energy consumption statistics. In theory, we should add a little energy consumption by foreign manufacturers to supplement total reported US energy consumption.

The selection of “about a third” is based on these considerations.










1,605 thoughts on “How Renewable Energy Models Can Produce Misleading Indications

  1. This is just Entertaining….
    In protests around the world, one image stands out: The Joker
    By Harmeet Kaur, CNN
    Updated 12:20 PM EST, Sun November 03, 2019

    (CNN)In cities around the world, among the sea of demonstrators who have taken to the streets, one image has stood out: the stark white face and creepy red grin of the Joker.
    Artists in Lebanon and Iraq invoked the character on posters or edited him into images on social media.
    Someone spray-painted “we are all clowns” onto a statue in Santiago, Chile
    And in Hong Kong, protesters dressed as the Joker as an act of protest in itself, defying a government ban on face masks and face coverings during public gatherings.
    Their causes are different, their grievances varied. Proposed austerity measures. Threats to democratic freedoms. Deepening inequalities between ordinary citizens and the ruling elite.
    So why are some protesters in Lebanon, Iraq, Chile, Bolivia, Hong Kong and Spain taking inspiration from a psychopathic killer from a controversial film?

    Art imitates Life…or the other way around

    • When I was a kid, I got a water based tattoo in some product and put it on my arm. A mother of two friends of mine said, “You have to leave and never come back. Do not play with my boys any longer.” I said it’ll wash off, but she wouldn’t budge and I never saw those guys again. Great buddies too. The stigma of tattoos at one time was huge! How that changed so much is a mystery, at least to me.

      • When visiting Japan a couple of years ago, we were told that no one with a tattoo would be allowed to visit Japanese baths. We don’t have tattoos, so it wasn’t an issue for us. But this issue does seem to be of very great concern to some cultures/religions.

    • I hope this information about tattoos being bad for health gets around.

      The current tattoo fad seems to provide employment to quite a few artists who might have difficulty getting good-paying jobs elsewhere. Indeed estimates that the average salary for Tattoo Artists is $52,173 per year.

    • The airline industry is basically being asked to do the impossible. The automobile industry is as well. Somehow, this cannot end well. Either prices rise too high for consumers, or safety fails, (or possibly both). Another possibility (seen especially in Germany) is cheating. Too many delusional regulators!

      • Here in the UK, Labour wants planes to run on liquid biofuel from bio-crops or waste food sources under their GND.

    • Global Warming Policy Forum. Funded by am anti science think tank that is itself funded largely by oil companies. So all those people were not killed by Boeing; they were killed by eco freaks. Shame, I cry Shame.

      I am a climate change skeptic, in the sense that I believe the climate is changing, but that Nature is a far bigger driver than man. But these people are beyond the pale of either rational or morally defensible discourse.

      • I am afraid I don’t have a problem with this. All the “Global Warming Policy Forum” has done is post an excerpt from an editorial by a regular New York Post writer named Miranda Devine, with a link back to the original.

        You seem to be questioning the right to have an organization called the “Global Warming Policy Forum.” I don’t think a person has to be anti-science to question climate change models. I can see that the fossil fuel estimates going into these models are absurd. They are also based on absurd relationships between the use of energy and the way the economy functions.

        If the climate change model were simply a “science” model, the story would be different. The climate change model needs to be understood as a combination model using some science pieces together with some pieces that basically contradict science. I think people should question them. Otherwise, all we hear is the idiotic Greta views, based on a misunderstanding of what renewables can do. And many people seem to think the renewables story is based on science as well.

        • Gail, I apologise for not being clearer. First, I am not against any “forum”. I am against organisations that publish biased articles yet refuse to reveal who is funding those publications. That is one of the key differences between information and propaganda.

          Secondly, I have no problem with climate change skeptics. My main point (and I apologise again for making it so badly) was this: I intended to point out that attempting to move the blame from Boeing to anyone else was more than bad faith, it was moral evil. The choice of scapegoat was not the issue. It was disrespecting the memory of the dead and bereaved, by abusing them in the service of a political agenda.

        • Even climate scientists sometimes question some of the climate change models but one certainly has to be anti-science to question the facts that science has shown about the surface temperature increase, the link to greenhouse gases and the increase of those gases being the result of fossil fuel burning, among other human actions.

          Robert Firth believes that nature (that is, factors uninfluenced by humans) is a far bigger driver than humans but the science does not support this at all. I do wonder why some people believe things that are the opposite of what the science shows. However, he is right that the GWPF is not a reliable source of information.

          • I believe that we humans and our economies are dissipative structures. We have no power to cut back substantially on our energy consumption, without the economy and the population collapsing dramatically. I probably believe more strongly than Robert Firth that there is essentially nothing that humans can do to fix our climate change problem. It is baked into the cake, so to speak. Whether or not the population of humans had anything to do with causing the run up in CO2 is irrelevant. We cannot go back and fix the situation. We cannot fix the situation going forward, short of starting WWIII to wipe out everyone on the planet or something equivalent. The Green New Deal is no help whatsoever.

            Fortunately, or perhaps not so fortunately, nature has its own solution. It will be causing the world economy to collapse in some way, which we don’t entirely understand. It looks like this will happen within the next five years. It may take out some economies sooner than others. We are already seeing the rising discord among countries and political parties.

            I don’t think I believe something opposite of “what the science shows.” I think that models, based heavily on relationships that economists believe to be true, but which are not supported by the laws of physics, are not to be considered reliable. They give false indications. If it were possible for scientists to put together a model without economic nonsense being thrown in (leading to far more fossil fuel extraction than is actually possible), then we could talk about a scientific model. If we could extract all of the coal from under the North Sea and in equally unlikely areas, at economic prices, the assumptions of the climate model would be correct.

            If there is anything we can do, it likely has nothing to do with fuels. Eating less meat, for example. Geoenegineering.

            • Climate models have proven pretty accurate, so probably have a good basis in real physics. I agree that they do not capture financial aspects of future fossil fuel use but then most of the world believes that technology will find a way to keep fossil fuel use growing forever.

              So future projections are much harder, of course. This is where it becomes uncertain except for the certainty that continuing to increase the atmospheric concentration of greenhouse gases will have the expected result on surface temperature.

              I agree that humans can do nothing about it, but for reasons related to human nature. As a species, we can’t alter our characteristic behaviour, so will do nothing significant to mitigate any of the environmental damage we do.

              But you do continue to imply that the basic science is wrong (“Whether or not the population of humans had anything to do with causing the run up in CO2 is irrelevant”) and I don’t know why you seem to regard the basics of climate science as possibly being wrong. It may be irrelevant but there is no question about it.

            • Even if climate models have proven pretty accurate, it doesn’t mean that they can give accurate advice regarding what we humans should do in the future.

              The way they model the future is absurd, as far as I can see. We are up against limits, and they are ignoring this fact. They are assuming that vast amount of fossil fuels can be extracted in the future, when collapse appears to be close at hand. They assume that the economy can continue to grow without growth in energy supplies, when it cannot. They assume that there is something we can do, when there is essentially nothing we can do.

              It seems to me that politicians are hoping to find solutions that might work two ways–save us if fossil fuels leave us (which I see happening in the near term) or save us if somehow fossil fuel consumption grows forever. It is telling that Europe is especially on the Climate Change bandwagon. Europe has major fossil fuel problems, which politicians would like to hide from their citizens if they can. Talking about climate change serves as a distraction. The cooked up story that we can live without fossil fuels makes it sound like the people in Europe will be perfectly OK with a small amount of renewables. This is simply nonsense. Look at the negative interest rates there now. Europe is already in deep trouble.

              If the climate models were accompanied by a sensible story–we need to adapt, for example, or one pointing out limits to future fossils and fresh water–I would have less objection to them.

            • Gail, I still sense a bias, with phrasess such as “even if climate models have proven pretty accurate” or “Climate Change bandwagon”. There is no “if”; the models have proven pretty accurate. Of course the future is a bit more tricky and, here, the models are heavily influenced by the inputs of future fossil fuel use. Several scenarios are modelled, which is why models show many different projections. One could argue that all of those scenarios are unrealistic but that is not the fault of the models. Note that I’m not saying the models are perfect but they seem to be fairly good.

              Now, as you (and others) have shown, the fantasies dreamed up by some environmentalists are just that, fantasies. Again, this isn’t the fault of climate science or the climate models. Perhaps someone with the resources could configure a more realistic scenario of how future fossil use will be and run the models accordingly. That would be an interesting exercise. However, most people act as though there are no serious imminent issues, globally, which might impact their medium or long term futures, so it’s not the kind of exercise which might occur.

            • “I believe that we humans and our economies are dissipative structures. We have no power to cut back substantially on our energy consumption, without the economy and the population collapsing dramatically

              I agree. It does seem possible to increase energy consumption by going to renewables, since the amount of sunlight the planet receives is way more than that humans manipulate. But there are certainly problems, for example, you have to find a way to use energy when you have it and make a storeable form of energy such as synthetic oil.

              Until very recently, there were no proposals to solve the problems that made physics or economic sense. There *might* be one now. (It wasn’t particularly inspired to notice what can be done with really inexpensive PV power, even if it is intermittent.)

              It is still possible, perhaps even likely that the population will crash. But at least there seems to be a way out of the FF and carbon problems if we want to take it.

              BTW, the Chinese are watching these conceptual developments.

            • Climate models accurracy are not really proven by these examples. It shows that the models, which to some degree surely have parameters calibrated to historical data, decently can replicate the history. But this is of course hardly a feat. The models also do pick up the the general upward trend of the temperatures and they fit quite well, but this is also not very amazing given that an upward trend of course is a prerequisite of any climate model and the fact that the historical data already showed an upward trend. If you get some derivatives of this process right you get a decent fit for a while. We still would’t be able to separate a natural origin of the heating from CO2…

              Much of the actual dynamics of the climate of our planet aren’t that well known, plenty of assumptions are far from sure. If the underlying dynamics of the climate were well known and the graphs of temp vs time were produced solely from these first principle most climate change sceptics/deniers would be convinced.

            • A volcanic eruption like the one in 536 CE would sure prove that point.

              How does that prove the point that “nature” is a far bigger driver than humans for the climate change we’ve seen since the pre-industrial era (indeed, for thousands of years)? Of course, some events can have a short term effect, but climate is not short term, it’s medium to long term.

          • I also wonder why people believe the opposite of what science shows. So what does science show?

            In both Devonian and Eocene eras, the Earth was 14C warmer than the 1950 baseline. In the Permian it fell, briefly, to 4C below. Though most of the Pleistocene it was 4C to 6C below, the time of the Ice Ages.

            So science shows that Nature has changed the Earth’s temperature by 20C in the past. And the 2C of claimed anthropogenic warming is somehow more important? Science, done properly, is an excellent guide to the past. Done properly, it can also be a fairly reliable guide to the future. Science with a well funded political agenda, on either side of this debate, is worthless.

            As, for example, the “science” of the Intergovernmental Panel on Climate Change, which simply deleted from history the Mediaeval Warm Period (900 to 1300) and the subsequent cold spell (1300 to 1900), both of which are amply confirmed by the historical record, as well as a few thousand peer reviewed and published papers. That, again, is a temperature change of 2.5 to 3.0C, all within the memory of our civilisation, as shown for instance in the painting “Winter Camp with Skaters” (1608).

            • Well, those vast changes in the past occurred over deep time. Humans have warmed the planet much faster than any past period. For humans, the current warming is particularly significant, its being warmer than at any time in the history of modern humans or their predecessors, and the warming is quicker than in any other period that humans have inhabited.

              So every warming has a cause. Prior to humans, the main reasons included orbital changes and solar insolation changes. Greenhouse gases were also a big factor over immense periods of time. If the current 1.2C of warming had occurred over hundreds of thousands (or even just thousands) of years, rather than just a couple of hundred, then I doubt it would be as much of an issue as it is.

              The so-called MWP was not “simply deleted from history”, though the PAGES2K work may have been too late for the lat IPCC report. The MWP and LIA were not global phenomena.

              When I refer to believing the opposite of what the science shows, I’m referring to the fact that the planet’s surface temperature is warming quickly, the cause of that warming is human behaviour (responsible for the equivalent of all of the warming since 1950), and that the rate of warming is having significant impacts to our climate and our ecosystems.

            • I’m not thinking of that basic human behaviour like that. Burning fossil fuels and deforesting huge tracts of land are two behaviours which influence warming. These are the main drivers for the warming we’ve seen in the last couple of centuries, particularly in the last few decades.

            • Population rise is certainly making damage worse. But it is fossil fuels that have enabled such a rapid rise in population over the last couple of hundred years.

            • Good point. Disconnecting the making of iron from the speed with which trees grew was critical in being able to produce the amount of iron an industrial society needs. If we think about the number of people in the world today compared to the number in 1709 (7.7 billion versus 0.6 billion), we now need more than 10 times as much, just to keep up with population.

            • We cannot eat without fossil fuels. We cannot pave roads without fossil fuels. We cannot build buildings other than simple hand made structures without fossil fuels. Epidemics would become common without fossil fuels. Population would fall rapidly without fossil fuels. Likely 90%+ of us would not make it through the bottleneck.

            • I’m well aware of what fossil fuels have enabled, and how we’ve become dependent on them. But even if they didn’t cause such environmental destruction, they will go away at some point (at least on the scale we’re used to), so, to some extent, it doesn’t matter what fossil fuels enable us to do. If we have to get off them for resource reasons, why not get off them to try to minimise the damage they have caused and will cause?

              By the way, I’m not so sure about the epidemic claim. Certainly, without fossil fuels, the widespread travel we’ve come to regard as normal, will no longer happen and that will have an impact on how diseases are picked up and spread.

            • “an impact on how diseases are picked up and spread.:”

              It doesn’t take much travel. Consider the Black Death.

              I wonder how long vaccines would hang around in such a world?

            • The world population is way too dense now for our current population level without a lot of water and sewage treatment plants and antibiotics. In fact, microbes are constantly mutating away from the antibiotics we have. We need refrigeration to keep immunizations.

              You can see what a problem the African Swine Fever virus has become for pigs, even with fossil fuels.

              If people’s nutrition goes downhill, they will be even more susceptible to viruses going around.

            • “water and sewage treatment plants”

              It’s hard for non-engineers/scientists to grasp how important this is. The water system has largely failed in Venezuela. I have not heard much about cholera yet, but you can expect it sooner or later.

              ” African Swine Fever virus”

              This has killed a substantial fraction of the pig population in China. There is a considerable concern that it will come to the US (in a pork sandwich). But I expect someone is working on a vaccine.

            • “We cannot eat without fossil fuels

              Or an acceptable substitute. This may, or may not, be possible.

              ” roads . . . buildings . . . Epidemics . . . Or an acceptable substitute.

              “Likely 90%+ ”

              Agreed. Part of the problem is that we don’t have the skills needed anymore for a low tech world. The skills died out with my parents’ generation.

            • Part of the problem is that we don’t have the skills needed anymore for a low tech world. The skills died out with my parents’ generation.

              This is a crucial point, Keith. We’re now reliant on modern technology for almost every activity in our lives. Though there may be a few isolated communities that do have the skills, most who survive will have to learn them afresh, probably dying before they do.

            • ” learn them afresh”

              Yes, and it is not easy. I have done every step from planting wheat to eating bread I baked myself. Even with that experience, and the land with enough rain, depending on bread I was responsible for would be a chancy business.

            • I agree. I’ve also done every step for making bread but I didn’t use a stone to make the flour; used a hand mill instead. However, on the bread front, I’m not sure that’s going to be a good use of time and energy, in the future and humans probably only started making bread fairly recently (in the 200,000 year history of our species).

            • I used a hand mill too.

              During the time I was baking bread I raised and butchered around a thousand rabbits. Homemade bread goes well with fried rabbit.

          • A big part of my objection to the whole process of looking at climate change data and then producing actions that supposedly will fix these problems is the fact that historically, the solutions that have been chosen are approximately 180 degrees from ones that would actually work.

            The folks putting these models together somehow believe that the connection between energy consumption and economic growth either doesn’t exist, or can easily be manipulated to our liking. With this false assumption, they have been able to come up with policy recommendations that make no sense, if the real goal is reducing CO2 emissions.

            If policymakers had understood what was really going on, (and had had the political will to fix the situation), they would have said, “Our big problem from growth in energy consumption in the future is likely to come from today’s lesser developed countries. The way we can prevent this growth is by actively discouraging the development of trade with these countries. Henceforth, countries will be rated on their ability to keep foreign trade with these countries to a minimum.”

            Capping local emissions and encouraging countries to outsource production to countries with large coal resources was an incredibly stupid approach, in my opinion, if the real intent was to hold down world emissions. It was completely counterproductive.

            Without growing emissions, the developed countries are no position to help those lesser developed countries. So, this assumption by policy makers makes no sense either. I cannot blame Donald Trump for wanting to pull out of any Climate Accord.

            I sometimes think that policymakers would have been better off if they had concluded that we should start teaching rain dances in school.

            Or perhaps, we should simply be thankful for counterproductive nature of the climate change actions put together by these groups to date. They have helped keep economies from collapsing in a way that would not have happened without the changes in policy purporting to prevent climate change, but in fact doing precisely the opposite.

            • Thank you, Gail: an analysis with which I can find no fault. Please let me add only this: the major proponents of climate change “action” do not believe their own analyses. They urge CO2 reduction, but themselves have a carbon footprint some 50 to 100 times bigger than the peasants who are supposed to cut back. They claim that rising sea levels will inundate our coastlines, and then buy multi million dollar waterfront properties. And all paid for by money robbed from those same peasants.

              It is not about climate change, or saving the earth, or any such convenient meme. It is about the issue that has always obsessed the ruling class: control. And not the control of our environment and our lives, as Francis Bacon proposed; it is about control of us.

              “Control is never a means to any useful end. It is a means only to more control.”

            • You are right. One of the big messages that the climate change model gives, the way it is currently set us, is, “We policy makers are in control. There is nothing to worry about.” It is not true, but it is one of the doctrines of the new religion that has been established.

            • Again, you aren’t characterising the climate models accurately. In what way do the models give a message that the politicians are in control?

            • They keep saying that we can fix the situation. We cannot, without killing off our population. They also say that the wind and solar will be helpful and deserve subsidies. If they were truly helpful, they would be so inexpensive that there would be no need for subsidies. They could pay high taxes, to support the rest of the economy. That is what energy sources can be expected to do.

            • Sorry, Gail, but you must be referring to something other than the climate models I’m thinking of. They show how warming is influenced by a number of factors and what may happen in certain scenarios (e.g. with emission curves). Can you point to climate models which say wind and solar will be helpful or that we can fix the situation? Certainly, a few climate scientists may answer questions regarding their opinions on how we approach mitigation but the climate models are not their opinions.

            • The scenarios that the IPCC puts together are nearly all impossible scenarios. (The lowest scenario is somewhat possible, IIRC.) I remember that Al Bates presented a study he did on the impossibility of these scenarios, which he presented at a recent Biophysical Economics conference.

              These Scenarios are only made possible by absurd economic models that are made part of the IPCC models. The scientist looking at the IPCC models know nothing about how the economy operates, so they assume that the scenarios are possible. Unfortunately, the scenarios defy the laws of physics.

            • Right, so you have an issue with the scenarios or RCPs. Not all climate scientists are happy with them, either, and so there is constant discussion on how to improve them. Maybe we’ll see some changes there for the next IPCC report. However, the climate models themselves are good.

            • The climate models themselves do not directly show that wind and solar will be helpful. Instead, the assumptions about how the economy can grow without fossil fuels seems to be based on the assumption that some method will allow the impossible. The closest we have is wind and solar.

              The belief that wind and solar can save us seems to be an outgrowth of numerous academic analyses as well as “Levelized Cost of Energy Studies” done by industry. The issue that they have is “too narrow boundaries.” I have been closely involved with some to the groups looking at the EROEI of wind and solar, for example, and can see this issue from the front lines, so to speak. They really are not feasible without a huge upgrade to the grid and an unbelievable amount of battery storage. These additional costs have not been included, making wind and solar look far more helpful than they really are.

            • They would be so inexpensive that there would be no need for subsidies.”

              Yes. Which makes me wonder about 1.69 cents per kWh of which there seem to be a few examples. Is that cost for power based on the cost to install the PV farm? Or are there subsidies involved? It’s a really important question as well as the question “will it go even lower?”

              At some price for power, we can use even intermittent power by converting the energy to synthetic oil. Carbon neutral oil at that.

            • They urge CO2 reduction, but themselves have a carbon footprint some 50 to 100 times bigger than the peasants who are supposed to cut back. They claim that rising sea levels will inundate our coastlines, and then buy multi million dollar waterfront properties.

              This is clearly untrue. Of course, it may be true for some proponents of action but your claim does not differentiate. I propose more action but I don’t fit into either of your characterisations.

              What scientists around the world have learned about current climate change is not about control. How those who want to exercise control use that information is not the fault of the science.

            • So will you be posting on how to reduce greenhouse gas emissions to zero over the next few decades?

              Many statements from the COPs have included the notion of “equity”. Developed nations have already emitted most of the greenhouse gases and (for their economies, rather than their ecosystems) have reaped the benefits of those. So requiring the main cuplrits to penalise the countries that have contributed the least to warming, seems iniquitous. However, requiring all countries to report consumption based emissions, rather that territorial emissions, may have the effect you seek.

              Again, the models are good. The scenarios for future energy use, plugged into those models may not encompass the most realistic but that is not the fault of the models.

            • Climate models have proven to be fairly accurate, so I’m not sure how they can be characterised as complete nonsense. However, I’m more interested in whether you might think about expanding on your ideas for reducing emissions.

            • The way to reduce emissions is collapse. Remove higher levels of government organizations, like EU, United Nations, World Trade Organization, NATO, and IMF. Remove international trade. This is nature’s way of fighting collapse. Follow the lead of the Soviet Union in 1991: disband.

              The suggested approaches by the IPCC work in precisely the opposite direction: offshore your manufacturing to less developed countries. Building up international trade, rather than tearing it down. They lead to more CO2, rather than less. They assume that today’s think tanks will provide increasingly complex solutions. But nature dictates that complexity is what gets us into trouble.

            • The way to reduce emissions is collapse

              So you advocate for collapse, Gail? I get that most of your posts show that collapse is inevitable in the short term (say, within a decade), but I’m not sure if you actually want collapse.

              Governments around the world, and most of the people, are pretty much ignoring calls for action to mitigate climate change, so advocating for a switch to renewables is having little impact. Do you think advocating for collapse instead is likely to gain more acceptance?

              By the way, I agree with you that eliminating global trade would be a big help with emissions.

            • “eliminating global trade”

              Some production methods such as semiconductors chips don’t make sense with less than a globla market. At least not at the current state of the art.

            • Gail, thank you for all your wisdom and clear thinking. However, I have decided to walk away, at least temporarily, from this debate. Differences of opinion are good, especially what supported by reasoned argument, but when one participant keeps moving the goalposts, progress is impossible.

              We had the assertion that humans are having a greater effect on the environment than Nature. I posted the data that showed Nature had in the past driven ten times as much climate change. But that doesn’t count, because it happens much more slowly. Again, not true: at the end of the Mediaeval Warm Period we saw a 2C cooling in fifty years. And the Younger Dryas, in about 13000 BC, tipped most of the Northern Hemisphere into a 4C cooler ice age in less than ten years.

              I also remarked that the IPCC Report was about control, not climate. What does that have to do with politicians? The fact that the summary report, the one released to the press that started the hysteria, was written entirely by politicians, with no independent review by anybody.

              So we are left with one last weak reed: climate models closely match the past data. Well, given enough fudge factors, you can produce a model that matches any set of past data; the question is, can it predict the future. As just one example, the model predicted the end of the polar ice in 2022 (James Anderson of Harvard University). But the Arctic ice is diminishing at less than one tenth the predicted rate, and the Antarctic ice is currently increasing.

              I suspect the root cause is that climatologists do not understand the physics (which happens to be my area of expertise). They assume the climate is stable, essentially in homeostasis, and its response to perturbations is therefor linear. Not so: the climate is metastable; it is a system far from thermodynamic equilibrium, and the properties of such systems were explored in detail by Ilya Prigogine many decades ago. One property is this: even a small perturbation, of the right parameter in the right direction, can cause a phase change to a new, different metastable state. But we still do not know enough to predict when, why, or how such a change might happen.

              Best wishes, and please keep your good comments coming.

            • Robert, I pointed to science that showed the MWP and LIA were not global events that were occurring almost everywhere at the same time. There have been multiple reconstructions of surface temperature over the last 1000-2000 years which don’t show any of the global changes you claim. I have not moved the goalposts. The climate change debate is about what is happening now, why it’s happening and what can be done about it. There is little argument over the first two.

              Climate scientists do not assume that the climate is stable; indeed longer term reconstructions show explicitly the opposite. The Holocene has seen a fairly stable climate, however, and that has enabled civilisations to arise. Something unusual (relative to past changes) is happening now and that is the crux of the matter.

            • The world ecosystem takes care of itself through collapses of civilizations. This is not considered in climate models.

              What humans can do to fix the economy, short of collapse, is pretty minimal, as far as I can see. Wind and solar are not solutions. Natural gas substituted for coal might be somewhat helpful, if methane losses do not contribute to too much to global warming gases. Rich nations helping poor nations is not a solution. Rich nations trying to get poor nations to hold their populations down doesn’t seem to work either, as long as trade is carried on with these nations.

              There are easy ways to collapse the economy, if that is what a person wants to do. Raising interest rates would do it; cutting off international trade would as well. Stopping paving roads and building buildings would do it. Stopping building transportation vehicles is another approach. These solutions could have been done back when we first discovered a CO2 problem. Of course, world population would fall dramatically, but that is what is needed to get CO2 levels down, if that is the real goal. But persuading others to go along with such a plan is unlikely to find followers.

              Humans and pre-humans lived through past ice ages. A person would assume some humans can survive climate change, whatever it may be.

            • A person would assume some humans can survive climate change, whatever it may be.

              Oh yeah, that seems like a reasonable assumption. It depends on when collapse happens (quickly enough to limit warming to something that is survivable in some areas). But I doubt some humans surviving will give us much comfort.

            • What else can a person really hope for? Are you trying to suggest that there is something we can do to fix climate change, that would also keep populations going? Perhaps if some of Keith’s ideas work out in the very short term, but otherwise I am afraid we are back to a population the world can support, with our current level of subsistence farming or hunting and gathering. Basically, not a whole lot. Probably in the thousands, not millions or billions.

            • It’s hypothetically possible for humans to mitigate climate change but it’s not really possible as our species can’t change its characteristic behaviour (though some individual behaviours might be at odds with that). At least not until it is too late to avoid catastrophic change (if it not already too late). For me, the constant downplaying of climate change is both frustrating and expected. It seems true, to me, that all of the “solutions” proposed by mainstream environmentalists are just a form of denial but that doesn’t mean I’m going to suddenly start to believe in some mythical alternative science that is 180 degrees oppositite to what we’ve learned over the last few decades. If I see false characterisations of the science, I’ll call that out. If I see re-hashing of irrelevant or long-debunked denialist points, I’ll also call those out. I used to be a fervent climate change denier, until a friend persuaded me to look at the science – it was a quick turnaround after that. No matter what I would like to happen or what I’d like the situation to be, I’m keen to understand what the actual situation is and what is actually possible. Whether economics gets us or environmental damage gets us first, I can’t see much that humans can realistically do to avoid collapse, though I still like to hope that future generations of all species will inherit a liveable planet.

            • I used to think that climate change was a huge problem and believed the IPCC reports. I later figured out that the models don’t really look very closely at important variables. Their assumptions about carbon emissions are just plain misleading. Their forecasts about the future are at best unreliable and at worst, misleading.

              We have a lot of world organizations with a major aim of “helping poor countries.” These organizations sponsor the IPCC report. Inadvertently (or perhaps not so inadvertently), these reports are being used to advance the welfare and populations of the poor counties. It tends to be population, more than welfare, that is increased, however, leaving the world worse off.

            • Gail, you keep repeating that the climate models are wrong and make assumptions about emissions. As the models have been shown to be quite accurate so far and the assumptions are not in the models but in the scenario inputs to the models, I don’t know why you keep mischaracterising the models.

            • The models as presented include the Scenario Input. These are indeed wrong. This is all that readers are able to see.

              I would not make a bet on whether the model without the Scenario Inputs is very realistic. I think its reliability is greatly overstated, at a minimum.

              We are dealing with something that is basically the output of a political process, not one designed to give the best model for forecasting the future. The same forces that allowed the ridiculous Scenarios to be input are no doubt are influencing the rest of the model. A major reason for the climate change model seems to be to give “cover” to political leaders around the world, so that they don’t need to explain that the real reason why we are leaving fossil fuels is because they are leaving us. A second reason for the model is to try to transfer wealth from the rich countries to the poor countries. A third goal seems to be to enhance the stature of those involved in overseeing the whole process, including the meteorologists preparing the reports. Also, the many other winners based on the recommendations. Just think how funding for climate change and renewable energy has grown!

              With these political goals in mind, it would be a wonder if the model were really helpful.

            • I don’t see why the input would be “influencing the rest of the model”. The model, by the way, is not a “climate change model” but a climate model. Given the inputs, the model shows us how surface warming evolves. The inputs in the past have been quite reasonable as the outputs from the model have been a fairly good approximation to the warming that has occurred. So we can say that the model is a fairly reliable model. As we try to project into the future, the inputs become more and more uncertain, and, as you say, the scenarios used so far are probably not all that realistic. However, no-one knows just how emissions are likely to unfold in the future. So, given that the model is fairly good, your beef is with the inputs.

              It would be interesting to see what the model outputs would be with more believable scenarios about fossil fuels. The thing is, almost no-one thinks that economies will collapse or that resources will become too scarce to drive the world’s economies as currently constituted. So inputs that imply an imploding economy would probably not be believed. In this situation, what is to be done? On the one hand, we have ridiculous input scenarios which, nevertheless, appear to suggest a future global economy that most would like to believe in. On the other hand, more reasonable scenarios would imply a collapsing economy that most would think is a ridiculous notion.

            • Gail, I’ve shown that the models have been fairly good predictors of warming, so far. Why do you continue to claim they are rubbish? It’s the input scenarios that run well to the future that are inadequate. I have acknowledged that. I have not been taken in by any story; I have been questioning your lumping the inputs together with the model to claim that the model is bad. This isn’t true. The models aren’t perfect, but they’re not bad.

              As for predictive power, the scenarios show what is likely to happen to surface temperature if emissions follow certain trajectories. Since most people can’t seem to imagine a collapsing economy, the model runs should give them pause for thought that following most of those scenarios could result in climate catastrophe.

            • Many long term patterns look like straight lines, if a person looks at a short enough segment of history and uses that to project forward. The output of the IPCC models do in fact look a lot like straight lines. Even if the models do an adequate job of short term prediction, we can have no confidence that they really do an adequate job going forward for long periods, such as until 2100. Very often bends take place over the longer term. One of the pieces that may be inadequately treated is Milankovitch cycles, for example. The length of historical data limit the testing modelers can do with the models.

              The economic part of the model is just plain wrong. It claims that we can somehow have an adequate growing economy with significantly less energy. This part is
              wrong. It contradicts the physics of the system. This is why we hear the claim, “If we change our ways, we can hold the increase in temperatures to only ____ degrees C.”

            • OK, Gail, I guess I’ve tried to explain the difference between the models and the inputs but I don’t think I can put it any other way. By all means ignore the climate models, if you want to.

            • If the world could ignore the climate models, that would be the best outcome.

              Gail, how would you propose that we estimate how much warming we might get in the future, for different emissions scenarios?

            • ” hypothetically possible ”

              Maybe. It takes enormous amounts of energy to make synfuels or sequester CO2. The energy has to be cost-effective. It’s possible that the cost of electricity from PV has fallen to the level this is possible.

              And then again, perhaps not.

            • No electorate will ever vote a political party that is properly serious about addressing our ecological predicament into power because that would mean less of everything humans like – stuff, choice, novelty, comfort, convenience, good health, travel etc. The ‘gillet jaunes’ riots in France were initially sparked by a carbon tax.

              And, even if such a party were voted into power, there is zero chance that it would be able to implement such a de-growth agenda without totally crashing the global economy.

              Instead we have the political left narrowly focusing on reduced carbon emissions (in a dishonest, localised context) and advocating for a fantasy, prosperous greentopia powered by wind, solar etc., so that they can push forward an infinite growth agenda whilst pretending to be the good guys. And meanwhile, the cynical right simply pretends there isn’t even an ecological predicament to address.

            • You got that right. It’s impossible for parties advocating to do something serious about climate change to get in, or impossible for them to do anything about it if they do get in. All parties advocate growth and so the situation will always get worse. Until collapse.

      • “General Electric’s recent decision to freeze retirement benefits for 20,000 employees provides the latest unwelcome illustration of the problems confronting millions of US workers battling to secure a decent income in old age.

        “GE’s pension obligations stood at $91.8bn at the end of last year, significantly higher than the industrial conglomerate’s $66bn market value on December 31…

        “The strains on US corporate defined benefit pension plans are likely to intensify, due in part to the steep decline in long-term interest rates that are used to measure (discount) the value of future obligations to employees.”

          • One thing Wolf points out is the big difference between the published “Annual Deficit” and the “Growth in the National Debt,” where the Growth in the National Debt is always higher.

            Part of the difference is the increase in the government sponsored student loans. The government disburses funds on these, but sets up a receivable on them, expecting to get paid back with interest. They add to government debt, but don’t add to the budget deficit, at least until the loans start getting written off, I expect.

        • Warning: article is behind a paywall. So GE is technically bankrupt: its liabilities exceed its assets. But modern monetary theory doesn’t count pension promises as liabilities, because promises to the future are not binding. Which is why most of these hapless workers will have no future.

      • It is interesting how the WSJ spins the issue. Its article from four days ago is called Better-Than-Expected Earnings Ease Growth Fears—for Now: Corporate profits haven’t waned as much as analysts had predicted

        It then shows a chart of earnings relative to expectations, by industry group. Energy comes in last, relative to expectations. It does, eventually show a quarterly earnings growth chart, and the latest quarter is indeed shown to the down 2.7%. But the forecast is for a quick rebound, with the downtrend stopping next quarter.

        • As a current affairs connoisseur, I have noticed that focusing on performance versus forecast rather than purely on performance is one of the media’s favourite ways of spinning bad news. It’s even more common than blaming poor national data on meteorological oddities.

          • “The basic tool for the manipulation of reality is the manipulation of words. If you can control the meaning of words, you can control the people who must use the words.”

            — Philip K. Dick (1928-1982)

            • “For words are wise men’s counters—they do but reckon by them; but they are the money of fools, …”
              Thomas Hobbes (1588 to 1679)

        • Sigh. Spot on, as usual. The WSJ looks at the vertical, the individual sectors, but not at the horizontal, the relationships between them. But if the energy sector is in trouble, how can any other sector prosper?

  2. “Global trade volumes shrank 1.2 per cent in August compared with the same month last year, the third consecutive monthly annual fall and the longest stretch of contraction since the global financial crisis more than a decade ago…

    “Nearly 100 countries — including South Korea — saw the value of their exports shrink in the first half of the year according to an FT analysis of IMF data, up from 33 last year. Exports of machinery and transport equipment were particularly severely hit…”

    • “…it is far from clear that a policy of negative interest rates would be effective in stimulating the economy, normally the main reason for cutting interest rates.

      “In Japan and the eurozone there is evidence that negative rates have eroded business and consumer confidence, rather than restoring it. When the central bank takes such a dramatic and unusual step it can heighten the sense of worry about economic prospects, rather than allaying it.”

      • “The Swedish central bank, the Riksbank, “pioneered” the use of negative interest rates after the financial crisis, charging banks for keeping excess reserves with it from as early as 2009. In early 2015, it cut its main policy rate, which eventually sunk as low as –0.5%.

        “The bank’s goal was to prevent the Swedish krona from becoming too strong, thus hurting growth. But its drastic action also fuelled a housing bubble, which has driven private debt in Sweden to extraordinary heights…”

        • The Riksbank article shows this chart:

          Note that Sweden is by far the smallest country shown and also only country with rising private sector debt. Even China has leveled off. Without rising debt, worldwide, the economy has a major problem.

          • Household debt continues to increase a steady $€200/month per person (including babies, unemployed and isis warriors), month after month. Or in other words: at a rate of 5% per year.

            Meanwhile “the wealth”, ie homes have flatlined in price since a few years.

            For how long can debts continue to increase 5%/year when what it is borrowed against lies flat?

        • “The bank’s goal was to prevent the Swedish krona from becoming too strong, thus hurting growth.”

          I shall never be an economist. If the currency is stronger, what happens? Imports become cheaper, benefiting the ordinary people who consume them and the manufacturing companies who bring them in, add value, and offer them to the market. Is that not good news?

          But the downside is this: they make exports more expensive, and so reduce their growth. In other words, the Riksbank sees its task as enabling as much value as possible to LEAVE the country and enrich others. Sweden is on the periphery of the global economy, to be looted to feed the centre.

          Modern monetary theory in one lesson.

      • On the whole, the psychological truth is that people can live with big economic problems, provided that savings seem more or less secure and there is some chance of making a living, inheriting, etc, but the suspicion that everything is about to go down the tubes – the message that ZIRP and NIRP clearly send out to anyone who thinks – is much more damaging and can lead to an economic seizure, a total collapse of consumer confidence.

        • Xabier, I believe that is exactly what sustained the feudal system of Mediaeval Europe: everybody had a stake in, and a faith in, the future. the peasant’s son would inherit his small plot of land; the duke’s son would inherit the duchy, … And the savings were not money savings, but the pruning of hedgerows, the fertilising of the land, the planting of trees, the building of watermills, … and they would endure.

          I believe one of the most important attributes of our species is our time binding ability: our ability to envision, value, and plan for, the future. The mediaeval world understood this, and fostered it (see Johann Huizinga’s marvellous treatise). Our modern world does not understand this, and is unwittingly but systematically destroying it.

    • Fine words for a woman who has no doubt accumulated several defined benefits pensions in her various roles…..

      People want safe savings and a bloody job!

      She is the kind of privileged bureaucrat who serenely tells people it’s ‘all for the common good’ while starvation takes grip.

      Hmm, why do I feel a bit…..Revolutionary? 🙂

    • The first quote continues as follows:

      “We should be happier to have a job than to have our savings protected,” says incoming ECB President Christine Lagarde. That line came as Lagarde was criticizing Germany and the Netherlands for the sin of having a government budget surplus.

      In other words, governments need to keep increasing their debt. If private borrowers don’t borrow, perhaps governments can continue their investment in non-economic enterprises, and that way perhaps they can add a few jobs, and continue all the payments on entitlements that they have promised.

    • “Westpac is hoping to raise $2.5 billion in capital from its investors after a “disappointing year” saw its cash profit plummet.

      “Australia’s second largest bank requested a trading halt from the ASX on Monday morning as part of the announcement after revealing its profit tumbled 15 per cent to $6.85 billion in the 12 months to September — its worst result since the Global Financial Crisis.”

      • Wikipedia says,

        Banking in Australia is dominated by four major banks: Commonwealth Bank of Australia, Westpac Banking Corporation, Australia and New Zealand Banking Group, and National Australia Bank. There are several smaller banks with a presence throughout the country, and a large number of other financial institutions, such as credit unions, building societies and mutual banks, which provide limited banking-type services and are described as authorised deposit-taking Institutions. Many large foreign banks have a presence, but few have a retail banking presence. The central bank is the Reserve Bank of Australia (RBA). Since 2008 the Australian government has guaranteed deposits up to $250,000 per customer per institution against banking failure.[1]

        It also claims:

        Australia’s financial services sector is the largest contributor to the national economy, contributing around $140 billion to GDP a year. It is a major driver of economic growth and employs 450,000 people.

        The Media Release says that the bank also plans to cut its dividend. A small part of its problem seems to be rising delinquencies on home mortgages, both on a 30 day and 90 day past due basis. Derivative valuation adjustments are also mentioned.

        Increased need for capital seems to be partly related to regulatory changes. (RBNZ and APRA capital changes.) This sounds like regulators hurting banks more than helping them, to me.

        The plan is to consolidate 61 branches (lay off lots of workers, I expect) and close many ATMs.

  3. Pingback: Odds and Ends | al fin next level


    “Iran has taken further steps away from its crumbling nuclear deal with world powers by announcing it is doubling the number of its advanced centrifuges, calling the move a direct result of the United States’ withdrawal from the agreement last year. As well as operating TWICE as many advanced centrifuges banned by the 2015 accord, Tehran is working on a prototype that is FIFTY times faster than those allowed by the deal, Akbar Salehi, the head of the Atomic Energy Organisation of Iran, said on Monday.”


    Just passed 23T in US debt, having passed 22T on Feb. 13th, 2019

    That’s a bit less than 9 months to raise debt 1T?!

    Donald Trump Says Tax Plan Could Lift GDP Growth to 6%

    Actual GDP from that last link: 2nd quarter 2% & 3rd quarter 1.9%

    • The year in which corporate profits were primarily helped by the tax cuts was 2018. We are now in the year after. This is the year that company profits have dropped as I showed previously (WSJ chart):

      I know that there was supposedly some follow-on effect. The number of jobs in the US seems to have continued to grow, but it is hard to see that there is a profits impact.

      My fear was that GDP would drop farther, faster after the tax cuts were over. We don’t have China and India pulling the world economy forward in the way that they were before, either.

Comments are closed.