Do the World’s Energy Policies Make Sense?

The world today has a myriad of energy policies. One of them seems to be to encourage renewables, especially wind and solar. Another seems to be to encourage electric cars. A third seems to be to try to move away from fossil fuels. Countries in Europe and elsewhere have been trying carbon taxes. There are also programs to buy carbon offsets for energy uses such as air travel.

Maybe it is time to step back and take a look. Where are we now? Where are we really headed? Have the policies implemented since the Kyoto Protocol in 1997 had any positive impact?

Let’s look at some of the issues involved.

[1] We have had very little success in reducing CO2 emissions.

CO2 emissions for all countries, in total, have been spiraling upward, year after year.

World CO2 Emissions

Figure 1. Carbon dioxide emissions for the world, based on BP’s 2019 Statistical Review of World Energy.

If we look at the situation by part of the world, we see an even more concerning pattern.

Figure 2. Carbon dioxide emissions by part of the world through 2018, based on BP’s 2019 Statistical Review of World Energy. Soviet Empire is an approximation including Eastern Europe and the Former Soviet Union, based on the BP report. It would not include Cuba and North Korea.

The group US+EU+Japan has been able to reduce its CO2 emissions by 5% since 2005. Emissions were slowly rising between 1981 and 2005. There was a dip at the time of the Great Recession of 2008-2009, followed by a downward trend. A person might get the impression that CO2 emissions for the EU tend to rise during periods when the economy is doing well and tend to fall when it is doing poorly.

The “star” in emissions reductions is the former Soviet Union and its Eastern European satellites. I refer to this group as the Soviet Empire. Emissions fell around the time of the collapse of the central government of the Soviet Union in 1991. This big decrease in emissions seems to be related to huge changes that took place at that time. Instead of one country with a single currency, the individual republics were suddenly on their own.

The high point in CO2 emissions for the Soviet Empire came in 1990, the year before the collapse of the Soviet Union central government. By 1999, emissions had fallen to a level 37% below their 1990 level. In fact, even in recent years, emissions for this group of countries has stayed low. Much industry collapsed and has never been replaced.

The group that has more than doubled its emissions is what I call the Remainder Group. The group includes many countries, including China and India, that ramped up their manufacturing and other heavy industry in the late 1990s and early 2000s, when the World Trade Organization added members. The Remainder Group also includes many countries that suddenly found new export markets for their raw materials, such as oil, iron ore, and copper. The Remainder countries became richer; they became more able to pave roads and build more substantial homes for their citizens. With all of this GDP-related activity, CO2 emissions increased rapidly.

[2] Population growth has followed a pattern that is in some ways similar to CO2 growth. 

Figure 3. Population from 1965 to 2018, based on UN 2019 population estimates.

In Figure 3, we see that population has been virtually flat in the former Soviet Empire (2% growth between 1997 and 2018). With the economy not doing well, young people emigrate to countries that seem to provide better prospects.

Population in the US+EU+Japan Group grew by 11% between 1997 and 2018.

The group that is simply outstanding for population growth is the Remainder Group, with 35% growth between 1997 and 2018. A big part of this population growth comes from improved sanitation and basic medical care, such as antibiotics. With these changes, a larger percentage of the babies that are born have been able to live to maturity.

It is hard to see any bend in the trend lines, which would indicate that recent actions have actually changed the course of activity from the way it was headed previously. Of course, the trend is only “linear,” implying that the percentage growth is gradually slowing over time.

This rapidly growing population feeds into the CO2 problem as well. The many young people would all like food, homes and transportation. While it is possible to obtain some version of these desired products without fossil fuels, the version with fossil fuels tends to be vastly improved. Most people prefer homes with indoor plumbing and electricity, if given an opportunity, for example.

[3] Deforestation keeps growing as a world problem.

Figure 4. Chart showing World Bank estimates of share of world forested by economic grouping.

High Income Countries keep pushing the deforestation problem to the poorer parts of the world. Heavily Indebted Poor Countries are especially affected. Worldwide, deforestation continues to grow.

[4] With respect to fossil fuels, there is a great deal of confusion with respect to, “What do we need to be saved from?” 

Do we have a problem with too much or too little fossil fuel? We hear two different stories.

Figure 5. Author’s image of two trains speeding toward the world economy.

Climate modelers keep telling us about what could happen, if indeed we use too much fossil fuel. In fact, the climate currently is changing, bolstering this point of view.

It seems to me that there is an equally great danger of collapse, accompanied by low energy prices. For example, we know that energy production in the European Union has been declining for many years, without the countries being able to do anything about it.

We also know historically that many civilizations have collapsed. The Soviet Empire collapsed in 1991, illustrating one type of collapse. The Soviet Union was an oil exporter. Its collapse came after oil prices were too low to allow adequate investment in new oil fields for an extended period of time. The Great Recession of 2008-2009 offers a much smaller, temporary version of what collapse might look like.

Another example of low prices accompanying collapse comes from Revelation 18: 11-13, warning of possible collapse like that of ancient Babylon. The problem was inadequate demand and low prices; even the energy product of the day (human beings sold as slaves) had little value.

11 The merchants of the earth will weep and mourn over her because no one buys their cargoes anymore— 12 cargoes of gold, silver, precious stones and pearls; fine linen, purple, silk and scarlet cloth; every sort of citron wood, and articles of every kind made of ivory, costly wood, bronze, iron and marble; 13 cargoes of cinnamon and spice, of incense, myrrh and frankincense, of wine and olive oil, of fine flour and wheat; cattle and sheep; horses and carriages; and human beings sold as slaves.

What we have been seeing recently is falling prices and prices that are too low for producers. Such a result can lead to collapse if too many energy producers go bankrupt and quit.

Figure 6. Inflation adjusted weekly average Brent Oil price, based on EIA oil spot prices and US CPI-urban inflation.

If we are in danger of collapse from low prices, renewables would not seem to be of much assistance unless they (a) are significantly less expensive than fossil fuels and (b) can be scaled up sufficiently rapidly to more than replace fossil fuels. Neither of these seems to be a possibility.

[5] Early studies overestimated how much help renewables might provide, especially if our problem comes from too little energy supply rather than too much.

Renewables look like they would be great from many points of view, but when it comes down to the real world situation, they don’t live up to the hype.

One issue is that while wind, solar, hydroelectric, geothermal, and other devices for capturing energy are called “renewables,” they are really only available through the use of the fossil fuel system. They are made using fossil fuels. If a part breaks, or if insects eat away the insulation on wires, replacements need to be made using the fossil fuel system and transported using the fossil fuel system. At best, renewables should be considered fossil fuel extenders, using less fossil fuels than conventional electricity generation. They are also dependent on other resources, which may eventually deplete, but which are not a problem at this time.

A second issue is that it is extremely difficult to do a proper cost-benefit analysis on renewables because they can only be used as part of a larger system. They tend to look inexpensive, when viewed in isolation. But when total system costs are viewed, they often are quite expensive.

One difficulty in a proper cost-benefit analysis is the fact that renewables are often sited at quite a distance from where electricity is to be used, leading to the need for a significant number of long distance transmission lines. Furthermore, if renewables provide intermittent power, they need to be sized for the maximum output, not their average output. All of these long distance lines need to be properly maintained, or they tend to cause fires. In some instances, burying the lines underground at significant cost is the only solution. Somehow, these higher costs need to be recognized as part of the cost of the system, but this is rarely done.

Another difficulty in a proper cost-benefit analysis is the fact that renewables’  intermittency must be overcome, if the electricity is to be of benefit to a modern economy that requires electricity 24/7/365. In theory, we could greatly overbuild the renewables system and the transmission. This might work, but we would end up with a large percentage of the system that is not used most of the time, greatly adding to costs.

Batteries can be added, but the cost tends to be high. One commenter on my site recently observed:

EIA reports the average cost for utility scale battery systems to be about $1500 per kWh. At that rate the batteries needed for backing up a solar or wind facility for three days cost around 30 times as much as the RE facility. But wind is often unpowered for more like seven days, during huge stagnant high pressure episodes. Thus the backup battery cost is more like 100 times the wind farm cost. Batteries are not feasible.

The major intermittency problem is season-to-season, especially saving up enough for winter. We do not have a way, today, of storing energy from one season to another, short of making it into a liquid (such as ammonia), and storing the liquid from season to season. This would be another way of driving up costs of the overall system. It has not been included in anyone’s cost calculations.

For the time being, we are forcing nuclear and fossil fuel to provide backup electrical services to intermittent renewables without adequately compensating them for their services. This tends to drive them out of business. This is not an adequate solution either.

A third issue is that renewables really need to be “economic” to work. In other words, they need to generate a profit for their owners, when comparing the unsubsidized costs with the benefits of the system. In fact, their owners need to be able to pay fairly substantial taxes to governments, to cover their share of governmental costs as well. If renewables truly were providing substantial benefit to the system, their use would tend to “take off” on their own, because they would be providing “net energy” to the system. Instead, renewables tend to act like “energy sinks.” They need endless subsidies. They can never substitute for fossil fuels. In fact, they can’t even pay their own way.

A related issue is that, because of the high total costs (as well as their lack of true net energy benefits), it is almost impossible to ramp up the quantity of renewables such as wind and solar very high. The EU has been a big supporter of renewables other than hydroelectric. Figure 7 shows a chart of the EU’s own energy production, together with its energy imports.

EU Energy by Type and Whether Imported

Figure 7. EU energy by type and whether imported, based on data of BP’s 2019 Statistical Review of World Energy. Renewables are non-hydroelectric renewables such as wind, solar, and geothermal.

After at least 20 years of subsidies, the EU has been able to increase renewables (other than hydroelectric) to about 10% of its total energy supply. The EU’s oil imports are roughly level, and its natural gas imports have been increasing. Even with rapid growth in non-hydro renewables, the EU has been experiencing a decrease in total energy consumption.

[6] Looking at the actual outcomes, a person might ask, “What in the world were policymakers really thinking about?”

We are told that the reason policymakers made the decisions they did was because they thought that they could reduce CO2 emissions in this way. Really? If a person really wants to reduce CO2 emissions, it is easy to see how to do it. A person simply has to take steps in the direction of reducing global co-operation. One step would be to reduce international trade. Another would be to get rid of umbrella organizations such as the World Trade Organization, the United Nations and the European Union. In fact, within individual countries, the top level of government could be removed, leaving (for example) the provinces of Canada and the states of the United States. In other words, policymakers could push economies in the direction of collapse.

Another way collapse could be encouraged would be by rapidly raising interest rates or cutting off credit. With less purchasing power, the world would be pushed into recession.

At the time of the Kyoto Protocol, policymakers moved in precisely the opposite direction of pushing the economy toward collapse. They moved in the direction of adding international trade and more debt to enable the growth. The countries with greater trade had huge coal resources that had not been used. With the help of this coal, the world economy was able to continue to grow. This approach only made sense if the real problem at the time of the Kyoto Protocol in 1997 was too little energy resources, not too much. The economy needed the stimulation that more low-cost energy and more debt could provide.

It is now more than twenty years later. The coal resources of China are starting to deplete. Coal is also causing serious ground-level pollution problems, both in China and India. Without growing coal production, world GDP growth starts slowing. We are again facing low oil prices and other commodity prices–a problem similar to the one present when the government of the Soviet Union collapsed. The world economy seems again to be headed toward having some of its governmental organizations collapse from inadequate energy. Political parties are becoming more extreme; countries are enacting new tariffs. If we go back to Figure 5, the concern should again be collapse, on the left side of the figure.

[7] The scenarios considered by the IPCC climate model need to be revisited.

A climate model looks to the past and tries to forecast what would happen in alternative “scenarios.” The concern I have is that the scenarios evaluated are not realistic. To get to the level of CO2 that would produce the most extreme scenarios, coal production would need to continue at a high level for many, many years. This seems unrealistic because world coal production has been fairly flat for several years, and prices tend to be lower than producers require if they are to stay in business. The likely direction for coal production seems to be down, rather than up.

Figure 8. World Energy Consumption by Fuel, based on data of 2019 BP Statistical Review of World Energy.

In order for coal production to grow as much as the higher emission scenarios assume, there needs to be a major turnaround in the situation. World coal prices would need to rise substantially. In fact, coal in very difficult locations for extraction, such as under the North Sea, need to become profitable to extract. This situation seems very unlikely.

It seems to me that climate modelers should be considering more realistic scenarios regarding CO2 emissions from fossil fuels. One scenario which should be considered is the possible near term collapse of several governmental organizations, such as the European Union, World Trade Organization, and the governments of several oil exporting countries.

[8] The push toward renewables makes little sense without a firmer foundation than currently exists.

Early studies looked only at the cost of renewables themselves, without the cost of extra long-distance grid transportation and battery storage. Such an estimate makes renewables look far more valuable than they really are.

We now have enough experience that we can see what goes wrong. A hydroelectric plant that operates during the wet season in a tropical country may be of little practical use, for example, if there is no fossil fuel energy available to provide backup electricity production during the dry season. The total cost of the overlapping systems needs to be taken into consideration, including the need to hire staff year around for both the fossil fuel and hydroelectric facilities. Electricity transmission will likely be needed for both types of generation.

There are many other real-world examples that can be examined, before blanket “use renewables” recommendations should be issued. If renewables are not truly very inexpensive (around 2 cents per kWh or less), without subsidies, they are likely not to be long-lasting. Subsidies become more and more difficult to maintain, as a system scales up.

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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1,380 Responses to Do the World’s Energy Policies Make Sense?

  1. rjsigmund says:

    this part clarifies why i’ve been saying Trump is the best president for the environment since Nixon:

    [6] Looking at the actual outcomes, a person might ask, “What in the world were policymakers really thinking about?” – If a person really wants to reduce CO2 emissions, it is easy to see how to do it. A person simply has to take steps in the direction of reducing global co-operation. One step would be to reduce international trade. Another would be to get rid of umbrella organizations such as the World Trade Organization, the United Nations and the European Union. … In other words, policymakers could push economies in the direction of collapse.

    • Lets be real though, there will be likely a brief phase of shock during which people would opt to keep heat, food, .. by whatever means burning what ever low quality combustible – accessible in close proximity (plus the factor of unchecked large scale forest – steppe fires etc). Soon after the humanoid pop number overhang drops (for lack of energy-food-medicine-…) the environment will likely “get better”, there I agree with you..

      • Tim Groves says:

        I know that you put “get better” into quotation marks for a reason. Is it because you think it is difficult to judge what state of the environment is “better” or “worse”, or because you think that such judgements are subjective and dependent on one’s perspective?

        • Frankly I meant chiefly the latter, but the first option you raised is valid vector of questioning as well. Anyway, the humanoids as agents of terraforming influenced most of the preexisting biomes to such large extent even before fossil fuels age proper (past ~100k-1M yrs) that “better/worse” are kind of spongy targets anyway..

          • Xabier says:

            An environment that is neither poisoned nor poisoning – by the pollution caused by human industrial activity – would be a good result of the decline of our species.

            Unfortunately, we have shown a remarkable talent for creating dead-zones, even before industry, all the way back to the great collapsed cities and their degraded surroundings, Ozymandias, etc.

            • Robert Firth says:

              Ah yes:

              “My name is Ozymandias, King of Kings,
              Look on my works, ye mighty, and despair”

              Percy Bysshe Shelley, was it not. And Ozymandias
              is Usr Maat Ra (“strong in the truth of Ra”), known
              to us a Rameses II.

              But the Egyptians were very protective of their environment,
              because they knew all Egypt was the gift of the Nile. They
              built the Nilometer in about 3000 BC, to measure the height
              of the annual flood, and were careful to plant their crops in
              proportion to the amount of water.

              Even the Romans, the famous desert makers, were careful
              to nurture Egypt, since it provided most of their corn. Until
              Theodosius closed all the pagan temples, which also closed
              their hospitals, which had been managed by the priests ever
              since their introduction by Imhotep (“I come forth satisfied”)
              in 2650BC. But the society survived.

              No, Xabier, it was the Moslem conquest that ruined Egypt;
              the Arab and the goat: the one tore down everything; the
              other ate everything. Sic transit gloria mundi.

            • it will be interesting to watch what happens when the Renaissance dam is brought into use in Ethiopia.

              “We only want to use the water for hydro—then we’ll pass it down to you”

              hydro makes lakes, lakes grow food, food delivers more people, more people demand more water.

              oops. The White Nile gets turned off

              Egypt runs seriously short of water just as their pop gets towards 150m

            • Tim Groves says:

              Egypt runs seriously short of water just as their pop gets towards 150m

              Bob Geldof organizes another Band Aid concert inviting all his pop star friends who can still strut their funky stuff.

  2. Davidin100millionbilliontrillionzillionyears says:

    Trump discussed “negative interest” with Powell:

    https://www.zerohedge.com/markets/fed-says-powell-unexpectedly-met-trump-mnuchin-monday-morning

    “Just finished a very good & cordial meeting at the White House with Jay Powell of the Federal Reserve. Everything was discused including interest rates, negative interest, low inflation, easing, Dollar strength & its effect on manufacturing, trade with China, E.U. & others, etc.”

    I wonder what Powell really thinks about the various countries and their negative rates…

    I think it’s rare to see honest answers…

    • Trump must like the unofficial QE that is being done now.

      • Dan says:

        This is pretty much what the US economy looks and feels like to the average person.

        • Dan says:

          Don’t know my link was for a Saudi tourist add. I was trying to show the scene from Deer Hunter where they play Russian Roulette.

          Nobody will be going on trips or taking vacations. The only trips to Saudi Arabia will be to fight for oil so the elites can have some.

    • Xabier says:

      In politics and finance, public honesty is simply rather bad taste. And almost certain to detonate a career…….

  3. adonis says:

    i think they are going to go onto negative interest rates permanently which may give us a staircase type collapse what are your thoughts finite worlders is this reality possible or is this “delusistani” hyperbole ?

    • Yoshua says:

      Everything is getting so complicated that I no longer have a clue of what’s going on and how this will unfold.

      Darkness has no information.

    • As self admitted member of the broader cascading scenario club (to a final wall then hitting Seneca cliff) – I dare to say you are onto reasonable probability outcome at least for next two – three decades.. Also the profile might vary between (semi-)core IC hubs and real third world locations..

      However, that doesn’t mean these swings won’t be still quite volatile, impoverishing billions and affecting movement of hundreds of $T through these partial sequenced events..

      • Christopher says:

        Two-three decades sound like to much, exept perhaps for the lucky few regions. Western Europe will have to be pretty satisfied with even one decade.

        There seems to be a stair-step collape of decent magnitude in the pipe-line, appearing pretty soon I’m afraid. This will likely impoverish many people around the world but maybe hitting western europe disproportionally. We are increasingly energy starved, many areas are already economically distressed and any social cohesion is lost from many reasons, one is dysfunctional immigration but also the internal disagreement concerning migration seems to polarize as well.

        • Harry McGibbs says:

          I think we are already in a stair-step collapse now, as central banks run out of ammo, protectionism takes hold and protests erupt around the world. I see us hitting the Seneca cliff considerably sooner than WoH but then I have learnt the hard way not to make time-specific predictions.

          Understanding the energy and resource-constraints that are, for the most part covertly, defining this era can make one feel like the keeper of rare and privileged knowledge, which is of course hugely inflating to the ego. Fortunately we have the impossibility of predicting the timing to keep us humble. 😀

          • The self-organizing system seems to be able to figure out ways to keep the economy going. We see an example in my post. Even though leaders seemed to be concerned about CO2, the actions they took had precisely the opposite effect. The leaders effectively said, “We want to send our manufacturing and heavy industry to you. Go ahead and pollute as much as you want. However you can do this inexpensively will be great. We will not compete with you.”

            • Harry McGibbs says:

              Right. And nations like Brazil and Australia, even though they are facing increasingly alarming environmental challenges, have voted into power governments that pretend there are no environmental limits.

              We should be thankful for the adaptability and native cunning of the self-organised system, I suppose, given that we are its dependants.

            • Tom says:

              Figure 2 is disingenuous for this very reason. We have externalized resource extraction and manufacturing while increasing importation of goods produced offshore. This makes it appear as if we are not responsible for the environmental degredation created by our consumption of these products. Our shipping of waste to third world countries instead of dealing with it ourselves is an analogous comparison.

            • We also cut down other people’s trees, instead of our own.

              Today’s economic thinking seems to be, “How do we appear to be doing something, while moving the problem elsewhere?” Also, “How can financial types make money off of this new arrangement?”

            • Xabier says:

              In some ways it’s the realisation of the plan someone had in the 1930’s, to send all of Britain’s dirty industries abroad to the Colonies, thereby making Britain itself greener, less polluted and more pleasant (but not the colonies!).

              The Green credentials of Europe are largely bogus.

          • Christopher says:

            You are right, of course, plenty of small stair-steps recently. I meant that there seems to be a sudden significantly higher step lurking in the shadows biding it’s time. Timing is as you say is hard, but nonetheless I dare to guess there will be a higher step within a year. Just a gut-feeling and to some extent I guess that all of these small stair-steps accumulate into something more potent in the background.

  4. Harry McGibbs says:

    “By all the main advertised yardsticks of success, the flotation of Saudi Aramco can be called a failure even before the shares have started trading.

    “Once upon a time, the word’s most profitable company was going to be worth $2tn (£1.5tn), the number coveted by the Saudi Arabian crown prince, Mohammed bin Salman. That’s not happening.”

    https://www.theguardian.com/business/nils-pratley-on-finance/2019/nov/18/saudi-aramco-flotation-is-a-failure-before-it-has-even-begun

    • Harry McGibbs says:

      But I’m sure the tourists will flock there in droves. Butchering a dissident in a foreign consulate is a surefire way of attracting overseas visitors.

      • Xabier says:

        They are spending a lot on advertising, all most unconvincing. Don’t they do their torturing in hotels, albeit luxury ones?

        Maybe they just want lots of western hostages to hold in the event of some crisis?

        Spain has sun, deserts, mountains and women you can actually see, and have a drink with, so I’ll pass on Saudi for now.

        • Robert Firth says:

          Yes indeed. I remember my student from Barcelona, such a difference between her and the women of Pennsylvania. I think the girls of Occitania are the most beautiful, courteous, and gentle in all Western Europe. The tradition of courtly love, of convivencia, still runs strong in their blood.

          • Xabier says:

            A potent and beguiling mix of Greek, Roman, Celtic, Iberian, Phoenician, Arab and Jewish blood; mountains, the olive and good wine. What more could one ask for?

            Beats the pale Britfats waddling around the shopping mall here…….

    • As the article points out, “Pitching Aramco to an international audience has been filed under ‘too difficult for now.'”

      A person wonders whether the price will simply fall after it is sold, if they can actually get the initial valuation they are hoping for.

      • Kowalainen says:

        It is hard to sell an oil company based on lies and fudged numbers. That Yemen thing they got going certainly won’t help much either.

        If the US would seize the means of production from the Saudis and then sell it off, why not. A few thousand M1A2 Abrams with infantry support circling the wagons around the oil assets would make it more convincing.

  5. Harry McGibbs says:

    Yet another nation erupting into protests:

    “Police in riot gear on Monday clashed with anti-government demonstrators outside the Parliament buildings in the Georgian capital, Tbilisi. Water cannons were fired on the crowds as authorities attempted to break up a second day of wide-spread rallies.”

    https://www.euronews.com/2019/11/18/georgia-protests-crowds-gather-outside-parliament-buildings-thecube

    • I looked up the Republic of Georgia in the CIA World Fact Book. It says,

      Georgia’s main economic activities include cultivation of agricultural products such as grapes, citrus fruits, and hazelnuts; mining of manganese, copper, and gold; and producing alcoholic and nonalcoholic beverages, metals, machinery, and chemicals in small-scale industries. The country imports nearly all of its needed supplies of natural gas and oil products. It has sizeable hydropower capacity that now provides most of its electricity needs.

      Georgia has overcome the chronic energy shortages and gas supply interruptions of the past by renovating hydropower plants and by increasingly relying on natural gas imports from Azerbaijan instead of from Russia. Construction of the Baku-Tbilisi-Ceyhan oil pipeline, the South Caucasus gas pipeline, and the Baku-Tbilisi-Kars railroad are part of a strategy to capitalize on Georgia’s strategic location between Europe and Asia and develop its role as a transit hub for gas, oil, and other goods.

      I also found an May 2, 2019 article that says Why Georgia’s hydropower plants are causing nation-wide protests.

      The project would build a hydropower plant near the village of Birkiani, and stretch out over approximately 4.5 kilometers, redirecting approximately 90 percent of the water of the Alazani River via a pipeline.

      Locals are concerned that a decrease in the volume of water in the river will affect pastures, important because most of the population makes a living in cattle breeding and livestock.

      In addition, there are fears that the hydropower plant will exacerbate the already serious issue with drinking water in several villages in the region, as well as hinder the development of tourism.

      The republic of Georgia generates 80% of its electricity using hydroelectric, but this electricity is very seasonal. From April to August it is an exporter of electricity; from September to March, it is an importer. The reason why new hydroelectric plants are needed is to provide better electricity security during the winter.

    • Chrome Mags says:

      I found the following as part of a post on another site:

      “The malaise that is striking the world’s economy is a clear indication that the age of fossil fuels is coming to its conclusion. Tinkering with an obsolete monetary system to stimulate economic activity is an exercise in futility. It clearly ignores the simple fact that all economic activity requires energy to be performed, and that needed energy supply is getting ever more constrained. The world’s economy is dying of energy starvation, and its failing strength is being treated with doses of digital dollars.”

      Or is it the attempt to continually drive economic growth, that the math simply fails when stretched too far? I ask that because it still seems like there is plenty of FF at cheap prices even if it isn’t enough for some suppliers.

      • el mar says:

        shortonoil on peak oil

      • There is a debt (and other promises) part of the story as well. We are, in effect, building a Ponzi Scheme. The problem is that we need to keep adding more and more debt at lower and lower interest rates to keep pulling the economy forward, because the additional debt can be used to hire additional workers and to allow those workers to buy goods such as cars and homes.

        But the system isn’t really working well enough. There is too much wage disparity, so not enough workers can afford cars and homes, after they have taken on huge debt for advanced education. Interest rates are about as low as they can go. Prices for FF are staying too low, giving producers a problem in the future, even if not immediately.

  6. Harry McGibbs says:

    “Central banks in developed economies “are very close to being out of bullets,” Donald Amstad, head of Asian investment specialists at Aberdeen Standard Investments, tells me.

    “Having saturated markets with printed money and slashed interest rates, in some cases to below zero (meaning investors pay to lend), there seems to be little left in the arsenal with which to slay the next downturn.”

    https://www.cityam.com/the-economy-is-slowing-can-central-bankers-fight-the-next-downturn/

    • Harry McGibbs says:

      “Europe will be struck by an even larger wave of debt defaults in the next downturn compared to the financial crisis after a surge in junk-rated companies, Moody’s has predicted.

      “The credit ratings agency warned that the proportion of B3-rated companies, those graded as “speculative” quality, has doubled in Europe over just three years. The deterioration means the region will see “a much larger number of downgrades and defaults during the next cyclical downturn compared with the crisis in 2008-09”, Moody’s said.”

      https://www.telegraph.co.uk/business/2019/11/18/next-crash-will-hit-europe-much-harder-financial-crisis-warns/

    • Everyone has to see a silver lining. Here is seems to be,

      A silver lining for the global economy is that developing economies, particularly in Asia, seem better-placed to deal with the next crisis. Amstad, who has worked in Singapore for 12 years, says: “There will be firepower here to be put to work in the event of a downdraft.”

      .

      Given how poorly auto sales are doing in China and India and the problems S. Korea is having, I am skeptical about this. Perhaps he means that their interest rates can fall further.

  7. Harry McGibbs says:

    “Slowing shale-drilling activity is the latest damper on U.S. manufacturers that had come to rely on a booming domestic energy market.”

    https://www.wsj.com/articles/manufacturers-face-new-threat-from-fracking-slump-11574083303

    • Harry McGibbs says:

      “Western Canada is currently facing uncertain times not witnessed since… 1983.

      “And with no resolution in sight for the five-year-long rout in oil and natural gas prices, things are going to get a lot worse before they get better.”

      https://business.financialpost.com/investing/investing-pro/alberta-is-facing-a-full-blown-economic-crisis-and-it-needs-support-not-condescension

      • The low oil prices for Alberta are causing a huge problem. It is not that oil production is down, more than a bit. Its highest amount was in November 2018. Its problem is definitely low prices. This is a chart based on EIA data. Canada has some regular oil, some shale, and some bitumen. I don’t have a breakdown in this data.

        • Robert Firth says:

          Gail, why is Alberta producing more oil when the price is falling? That makes no economic sense whatsoever. Market price is a signal; when you see the signal and do the opposite, you are surely on a hiding to nothing.

          • Chrome Mags says:

            Could they be trying to make up for lower price with higher volume?

            • “trying to make up for lower price with higher volume?”

              That could be as well. If a company wants to stay in business, it has to pay its workers somehow. It needs to extract more oil to afford to pay its workers.

          • Harry McGibbs says:

            Their production has declined since the graph ends. Mandatory production cuts were imposed on Alberta due to limited pipeline capacity and to reduce the glut.

            • I looked up when the oil production cuts started. A December 5, 2018, article says:

              The Western Canadian province of Alberta this week announced mandated temporary oil production cuts, a rare move aimed at bolstering sagging crude prices caused by rising production that has outstripped pipeline capacity and led to a glut in storage.

              WHY MANDATE PRODUCTION CUTS?

              Alberta Premier Rachel Notley said the mandated 8.7 percent cuts, some 325,000 barrels per day (bpd), are needed to draw down near-record volumes of crude in storage in Western Canada and bring relief to sagging Canadian crude prices. Once storage volumes return to more normal levels, the forced cuts will be reduced to 95,000 bpd. The cuts will be spread among companies producing at least 10,000 bpd, based on average production.

              So this happened, back about December 2018, right after the very high month of November 2018. Canadian oil production bounces around enough that it is hard to see it in the “noise” in the graph. It is not a very big cut, and it is temporary.

              When I look at the Canadian data, there was indeed a dip after the peak production period (for everyone, worldwide) of November 2018. But the dip has mostly gone away now. And the dip is completely reflected in the chart I provided.

              The most recent data in the Canadian data I downloaded https://www.cer-rec.gc.ca/nrg/sttstc/crdlndptrlmprdct/stt/stmtdprdctn-eng.html shows bitumen production back up again. In fact, I am wondering if there is a bottleneck of some sort building again, because mined bitumen seems to be growing faster than Upgraded+Non-Upgraded bitumen.

          • Investment was started years ago and the incremental cost is often low. Also, people assume that “certainly” oil prices will rise in the future.

            Oil companies know that prices will be variable. They will hang in there as long as there are investors willing to invest and workers willing to work. To some extent, Canada (and most countries) cut back taxes that they require when oil prices are down. Taxes are often an oil company’s biggest expense. If there is a loss, tax policies can help cushion the loss.

            I tried looking at some Canadian oil data. https://www.cer-rec.gc.ca/nrg/sttstc/crdlndptrlmprdct/stt/stmtdprdctn-eng.html A small share of the increase seems to come from growing Alberta light oil, which I would presume is tight oil from shale. Also, production of “raw mined bitumen” (from open mines) has grown while “raw in situ bitumen” has recently declined a bit. Raw mined bitumen must be cheaper to extract.

          • jarvis says:

            I have a few family members working the Alberta oil patch. One works at a billion dollar SAG recovery(steam assist gravity recovery?) Once this operation is started it can’t stop the bitumen will freeze up and a billion dollar investment is lost. Syncrude investigated shutting down and restarting and it was cheaper to keep the operation going with low prices .

  8. Harry McGibbs says:

    A little light amidst the gathering darkness:

    “Poor neighbourhoods of Istanbul have been visited by an anonymous benefactor paying off debts at grocery stores and leaving envelopes of cash on doorsteps, at a time when desperation at the spiralling cost of living has been blamed for recent suicides.”

    https://www.theguardian.com/world/2019/nov/18/call-me-robin-hood-mystery-patron-pays-debts-of-istanbul-poorest

  9. adonis says:

    thank you finite worlders for your words of wisdom and insight I truly appreciated them just finished a long shift of driving trams so it felt good reading the latest comments this place is my escape from “fantasyland” which is populated by the “blind” they are blind to the real story they think the future will be rainbows and unicorns

  10. Dennis L. says:

    Population, growth and old age:
    https://www.zerohedge.com/personal-finance/indefensible-conclusions-why-social-security-far-worse-advertised

    We are seeing clashes all over the world, different cultures most seemingly in the streets, in the US in the political arena. Is it perhaps a clash of generations? If the young can have nothing, perhaps seeing the older generation have nothing is a psychic comfort. Contrary to popular opinion, for many of us SS is a pretty good deal, Medicare an even better deal; the young don’t have such good deals.

    For those of us who are older, it would appear we don’t have the resources to employ many of the young in jobs that no longer exist, who in turn cannot pay the taxes to pay the old; too many of us, too few of them.

    A note on a different area of youth. I go to school, calculus(local CC), there are young highschool students in this class and at the end of this year they will have the knowledge and mental discipline of mathematics to skip a full year of traditional college level calculus and move on. Maybe half of the US population lacks the skills to balance a checkbook, the divide between the classes will only widen. These students have the self discipline to sit quietly, take notes, do homework and take difficult examinations. It is not only knowledge, it is developing social skills, study skills and learning skills. It is on one hand a very optimistic trend and on the other a realization that for many the door for a better tomorrow has already closed, they are behind and will never catch up, compound interest again.

    Dennis L.

    • Somehow, I missed this post earlier. This link is to a Chris Hamilton post about how ridiculous the birth rate assumptions underlying the Social Security and Medicare projections are. They keep assuming that the birth rate will somehow turn back up again.

      Clearly, Medicare is pretty much a pay-as-you-go plan. Social Security is supposed to be mostly funded by young people. When you put together the combination of how few young people there are and how poor they are, they will never be able to support all of the older folks. A person wonders what in the world the actuaries working on this were thinking of (perhaps how much extra funding would be needed, and how unpopular that would be). No politician wants to touch the problem.

      Chris Hamilton talks about the growing intra-governmental debt, but I don’t think that that is really the issue. The intra-governmental debt is money that has been collected for something (like Social Security) and has really been spent for something else (the latest war, for example). US debt must be substituted for the missing previously collected funds. The issue is that very shortly, the annual S.S. benefit payments will escalate, without funds being there, except through taxes other than SS. This is a terrible situation. About all that can be done is cut back benefits, or give the SS and Medicare programs to the states to fund. It seems like other countries will be in similar or worse bad shape.

      • John Doyle says:

        In a nutshell, Gail this article is concrete evidence that the Federal* government will have to accept liability for all the costs the demographic collapse will entail. It needs no new theories. It is already able to do what is necessary, just as MMT points out

        The decision is entirely political.The economics is already in place. Existing economics is well structured, rational, and capable. It is the political and idealogical mess around it that has to change. They just don’t work. In fact they are counterproductive to all but a tiny rich minority.

        * Monetary sovereign

        • Over and over, the pattern we see in collapse is one of central governments failing. Sometimes lower level governments continue. Individual citizens, if they have suitable skills and the collapse is sufficiently narrow in scope, can often move elsewhere.

          You are saying that more debt can push the problem over to weaker countries, in some sense, and somehow governments of these “monetary sovereign” countries can persist. Globally, resources per capita don’t really change, but the greater debt and greater spending power of the people of the monetarily sovereign countries with the ever-rising debt can allow these countries to (perhaps) outlast the other countries.

          Perhaps this is, in fact, what happens, but I am not sure I would want to endorse this system. The strong taking advantage of the weak has always happened. At some point, interest rates go below zero, because there is nothing to invest in.

          We know that in a finite world, all economies must eventually fail. Promises of Social Security and Medicare must go away. It is only very rich economies that can afford programs such as these. Bad models are what allow us to think that the system can continue indefinitely.

      • MG says:

        It is already happening that young people can not support the parents who all of sudden become disabled or ill and dependent on the 24/7 care of others. The larger family or the state have to provide assitance and take care of these people.

        • Robert Firth says:

          The “state” in the UK has found a solution to this problem. It is called the “Liverpool Care Pathway”. Old people no longer able to care for themselves are taken to hospital, given no medical treatment, and sedated until they die. Officially they must have a “terminal disease”, which of course means nothing, because we all have such a disease; it’s called Life.

          This is a way of getting rid of people who would otherwise be a burden on the State. Another State, not so far away and not so long ago, described such people as “Lebensunwertes Leben”.

          • a ”burden on the state” means all your bodily functions becoming the responsibility of someone else (who are paid by the state)

            Which is what your parents did for you at the start

            do you really want this in old age?

            I certainly don’t

            life is very sweet right now, I hope I will have the sense to know when it isn’t

    • Ed says:

      Survival of the fittest. Some people just are not fit.

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