(Climeworks. 2021. The world’s largest CCS [carbon capture and storage] plant, ‘Orca’, in Iceland).

Responses: 1. Classical Economics and Business as Usual

Section
8. Assist Energy Descent and Transition
Page
8.4

Predominantly, this is the response to resource limitations and climate change around the world at the moment. After fierce resistance to the notion of climate change, and that fossil fuels were at all limited or a major cause of climate disruption, it could be said that we have moved on to a second position whereby at least some limitations to the supply of fossil fuels is accepted, and some occurrence of climate change is accepted, but it is confidently asserted that these problems can be solved through traditional measures and structures: namely, capitalism, technology, and classical economics.

This triumvirate is said to be already in operation – and increasingly will be in operation – to address any ‘problems’ of our current energy use via a number of almost automatic processes which classical economics states come into play once the signals of resource (fossil fuel) scarcity and cost are received by the rest of the economic system. We will examine whether these responses are indeed occurring and whether they are truly addressing the problem.

(i) Efficiency

Scarcity and price should drive resource-use efficiencies which, if not solving the problem, should at least buy time until alternatives are brought into play. I addressed this in Section 3.3 when examining the whole de-coupling question, i.e. whether growth can be de-coupled from environmental damage, and I will summarise the discussion here as it is directly relevant to energy use and pollution.

From Section 3.3 ‘De-coupling Growth from Environmental Impact’:

“Ward, et. al., in the journal PLOS One, 20161, concluded:

The argument that human society can decouple economic growth – defined as growth in GDP – from growth in environmental impacts is appealing. If such decoupling is possible, it means GDP growth is a sustainable societal goal…The simple model is compared to historical data and modelled projections to demonstrate that growth in GDP ultimately cannot be decoupled from growth in material and energy use (my underline). It is therefore misleading to develop growth-oriented policy around the expectation that decoupling is possible.” Is Decoupling GDP Growth from Environmental Impact Possible? (plos.org)

Further in 3.3, I comment: “Despite the overwhelming incidences of growth being firmly coupled to environmental decline, there have been cases where this relationship has been weakened and brought below a simple 1:1 ratio. As environmental economist Tim Jackson of the UK’s Sustainable Development Commission notes2: ‘the amount of primary energy used to produce every unit of economic output has indeed declined quite steeply – by around a third-in the past thirty years or so…material intensities have also been reduced in the advanced economies, and emissions intensities have followed suit in most cases. Global carbon intensity, for example, fell almost a quarter, from about one kg per dollar to just under 770 grams. This ‘relative decoupling’ has been a long-term feature of advancing industrial economies and perhaps underlies the technological optimism so prevalent in mainstream economics’. But, ‘gross material throughputs continued to increase, even in advanced economies’ and ‘global downward trends in energy intensity have reversed since 2009 and begun to rise again’.

“What this shows is that we can be more efficient” (energy efficiency improvements of output versus input by about a third, and carbon emissions per unit of output have decreased also by about a quarter, are impressive and should be lauded)…, “but ultimately we can’t de-couple growth from impact because of the laws of physics, and because capitalism insists that efficiency gains be ‘coupled’ directly to more growth, thus wiping them out. These can be elaborated thus:

  • The Second Law of Thermodynamics establishes that as energy is transferred or transformed (‘used’), more and more of it is wasted. Entropy increases and less is available to us for ‘work’, products, food, etc…In other words, we can reduce the ‘waste’, but cannot eliminate it, and if we are determined continually to grow, then after an initial period of efficiency gains, we will hit physical limits and the relationship between growth and consumption/environmental degradation will return closer to a 1:1 ratio. Ward, et. al.1, showed this in their PLOS One paper (Fig.5 reproduced here), where (a) is GDP, (b) is final energy demand (my underline), and (c) is material extractions. As GDP grows, energy and material use either flattens out, or even, in the case of materials, reduces slightly through efficiency gains until around 2040-2050 when physical limits are approached, then rises more closely to mirror the GDP curve to 2100. As Ward et. al. say: ‘we conclude that decoupling GDP growth from resource use, whether relative or absolute, is at best only temporary. Permanent decoupling (absolute or relative) is impossible (my underline) for essential, non-substitutable resources because the efficiency gains are ultimately governed by physical limits.
  • “Most importantly of all, the capitalist religion invokes its Growth God, thereby demanding ever-increasing population growth and consumption. Growth is not an optional extra or a side-product, it is absolutely central to the process and belief system. The whole edifice is constructed by and for ‘growth’, so that even if all the caveats and problems and limitations mentioned above could be overcome, we couldn’t and wouldn’t implement them because the belief system demands otherwise.

“This religiously essential practice manifests itself here through the Jevons Paradox. (Ironically, this paradox was discovered by neoclassical economist William Jevons in the mid-1800s; for more on Jevons see 9.5 and 3.3). It brings to light the ambiguous benefits of technical (or any) efficiencies brought to the system. As Higgs3 explains: ‘Significant gains in efficiency do not moderate consumption but rather facilitate expansion’, and, ‘For example, the carbon intensity of production has declined for almost a century, while the rate of carbon emissions has continued to grow exponentially. Indeed, it is arguable that there is no real paradox here. As engineer Michael Huesemann notes4, ‘technological innovation has never been used to stabilize the size of the economy; [its] main role has always been exactly the opposite, namely the enhancement of productivity, consumption, and economic growth’.

“So, sadly, it seems that no matter what ‘gains’ we may make, what lessened impact and degradation we may – temporarily – achieve, this will be swamped by the relentless drive for growth, because the ‘system’ demands that these gains must be fed back into the system to make it bigger. No amount of technological innovation or substitution or cleverness can trump this.

“In summary, Huesemann(ibid) says that it is the root causes that must be addressed and that these are: ‘society’s obsession with economic growth…driven by an excessive desire for affluence and a lack of limits on population’. These are not technological issues, but social, moral, and ethical, and are not affected by efficiency gains which, if achieved, serve only to postpone a ‘socially and economically disruptive day of reckoning’. We are a society, and increasingly, a world, of ‘running away’, and the harder we run and the more we postpone it, the closer we come to that which we are fleeing from: reality.”

(ii) Technology

Technology is seen in the modern world as the saviour, the ‘get-out-of gaol-free card, the handmaiden of innovation, substitution, and efficiency. Whenever a problem occurs, be it in pollution, or cost, or lessening demand, technology will ‘save’ us and enable the continued running of the consumptive, capitalist growth system. This belief is so welded onto large sections of modern society that it can only be understood as sort of cult, or even a religion, such is the rapture displayed by many in its embrace. I well remember the arrival of one of the new editions of an iphone at my place of work some years back. There was a palpable air of excitement in the office as staff gathered in knots around computer screens showing the launch of the new phone at Midnight, and when a staff member actually arrived at work with the new machine, well, The Second Coming wouldn’t have been received so enthusiastically, such was the laughter, exclamation and joy as everyone started grabbing and surging towards this glorious talisman of the new! This attitude was summed up by Australia’s ex Prime Minister when he said5 : “World history teaches one thing: technology changes everything. That is the game changer”; and then went on to say, “Focusing on political solutions won’t solve this problem. Focusing on technology solutions will.”

The shiny cleverness of our technology makes it hard to get a perspective on its place withing the modern economic and social system, but Tim Jackson has again2 helped us by returning to the famous I = PAT equation (see Section 2, ‘Consumption’) and teasing out what role technology would have to play if ‘I’ (Impact) were to remain constant, i.e. no further environmental impact, while P (Population) and A (Affluence/Consumption) continue to increase. Higgs3 summarises his findings as follows:

“While the standard argument in neoclassical economics holds that technology will create the space needed (for growth without further impact), Jackson, focusing on carbon emissions, observes that increasing population and affluence will, under business as usual, increase CO2 emissions by 80% by 2050, leading to atmospheric concentrations far beyond those considered tolerable, let alone safe. To neutralize this trend, ‘T’ would have to improve by approximately 7 percent per year – ten times faster than at present (my underline; a doubling period of 10 years). Even that unlikely level of innovation does not address global equity problems, so performance would need to be better than this.”

To believe that this level of technological innovation will occur, or is even possible, is bordering on believing in magic. But, as we know from Section 3, this is the new world religion, and we are, apparently, god-like, so we shouldn’t be surprised when economists like Beckerman, Socolow and Simon (as cited in Higgs (ibid.)) make the fantastical statements that “economic growth can continue for another 2,500 years”, that “a population of 3.5 trillion can be supported”, and that “copper and oil come out of our minds” (in other words, the only limitation is our imagination). U.S. President Ronald Reagan once said6, “There are no such things as limits to growth, because there are no limits to the human capacity for intelligence, imagination, and wonder.” There is a comic-book-like frame to this childish dogma, that is so far beyond the realms of reality and a proper embracing of our condition and position alongside the splendours of the earth that there is nothing serious that can be said in response.

(iii) Carbon capture and storage

In addition to improving energy efficiency and the emissions of CO2 per unit of energy, it has been suggested that the levels of CO2 in the atmosphere could be considerably reduced by carbon capture and storage. There are many camps on this issue, from tree and soil capture groups, to algae and seaweed groups, to industrial storage underground in mines or similar groups. Similarly, there are widely differing levels of enthusiasm for its application, with people such as Heinberg largely sceptical, whereas those such as Randers are very positive.

Heinberg7 says that most of the carbon sequestration technologies – with the exception of natural ways to sequester carbon in soils and trees – are: “theoretical, unproven, or unscalable”; and that “machine-based carbon removal and sequestration methods work well in the laboratory, but would need staggering levels of investment in order to be deployed at a meaningful scale”, let alone the power to run them8, “and it is unclear who would pay for them. The best carbon capture-and sequestration responses appear instead to consist of various methods of ecosystem restoration and soil regeneration. These strategies would also reduce methane and nitrous oxide emissions. But they would require a near-complete rethinking of food systems and land management” (and run the risk of carbon being re-released through bushfire, drought, or changed land use; MF/HdeC note).

Randers9 is conspicuously more upbeat and devotes a whole boxed ‘side bar’ in his book ‘2052’ to ‘The Potential in CCS’, reproduced here. Note 1

I am insufficiently expert in the field to make judgement on these differing opinions, but most examples of CCS I have seen require so much energy, even if biofuel energy (as per Randers), as to make it seemingly impossible that the environmental disbenefits from obtaining and burning this energy could be outweighed by the environmental benefits of removal of a portion of CO2. Like hydroelectricity, I think it looks environmentally attractive only when highly selective parameters are applied that eliminate most damages, and highlight benefits: low carbon emissions and renewability. For example, it’s hard to see how CCS can be powered while GDP is growing, even slowly; e.g. powering CCS with biofuels will require the conversion of earth’s last forests to plantations and, if growth continues, converting agricultural land to biofuel production.

The largest CCS facility built to date is the Orca plant in Iceland which has the benefit of geothermal energy to power it and ready availability of water and porous basalt for capture. Despite these advantages, the plant cost $US 10-15 million to build and captures ‘only’ 4,000 tonnes of CO2, equivalent to the emissions of 870 cars in a year10. This is $3,125/t. Assuming no efficiencies of scale, if enough plants were built to capture 1 billion tonnes of CO2 (~1/40th of yearly emissions now), the cost would be $3.125 trillion. The global economy in 2021 was worth US$93.86 trillion, so to capture all 38 billion tonnes or so of current emissions we would need to spend US$118.75 trillion, which is 126.5% of current annual global GDP if all of the required plants were to be built in one year. And that is assuming there are enough suitable geological formations, close to ‘free’ energy on earth, to do so. Clearly, there is still a long way to go here before this technology can make a meaningful contribution.

(Climeworks. 2021. The world’s largest CCS plant, ‘Orca’, in Iceland).

 

(iv) Substitute fuels (non-renewable fuels)

Even if it is admitted by traditional proponents of the existing system of energy use and growth that some restriction in availability will occur either through policy, depletion, cost, or a combination of all three, then the classical-economics answer given to this problem is that by then alternative fuel sources will have been located and at competitive cost and therefore some substitution, at least, will occur. The only real candidate for this role at this stage is nuclear power.

As with CCS, nuclear power has an array of strong advocates and detractors, but a good summary of the situation is provided by Jonathon Porritt in Randers’ ‘2052’9, and accordingly, I have scanned the entire ‘glimpse’ (5-2) here.

It seems that the numerous problems of nuclear power are just too great for it to be a genuine substitute fuel for fossil fuels, and this is without considering that it is also non-renewable (current reserves at current rates of use are estimated at anything from 30, to 80, to 90 years11 and 12. Note 2). Substitution here seems likely to be limited, at best.

In conclusion, business as usual is not a solution to the real problems of depletion of fossil fuels and greenhouse gas pollution. Yes, clever technology and price pressures can and should improve efficiency and reduce pollution levels per unit of energy, but unless the Jevons’ Paradox re growth is addressed, as well as the ultimate incompatibility of continual growth in use of finite fuel resources, and the material and cost limits to the reduction of CO2 emissions, then all this effort – and sometimes obfuscation – will come to nought.

 

 

1 Ward, J. et.al. 2016. Is Decoupling GDP Growth from Environmental Impact Possible? Oct. 14th, Plos One.

2 Jackson, T. 2009. Prosperity Without Growth: Economics for a Finite Planet. Earthscan, Abingdon, UK.

3 Higgs, K. 2014. Collision Course: Endless Growth on a Finite Planet. The MIT Press, Cambridge, U.S.

4 Huesemann, M. 2003. The Limits of Technological Solutions to Sustainable Development. Clean Technologies and Environmental Policy, 5 (1).

5 McHugh, F./The Canberra Times. 2021. Scott Morrison Claims Technology will ‘Change Everything’ after Damning IPCC Report’. August 10.

6 Reagan, R. Ronald Reagan – There are no great limits to growth… (brainyquote.com) .

7 Heinberg, R. 2021. Power: Limits and Prospects for Human Survival. New Society Publishers, Gabriola Island, Canada.

8  Post Carbon Institute Episode 9 – They’ll Think of Somethingisms: Is Technology Really the Answer to Overshoot? – Post Carbon Institute .

9 Randers, J. 2012. 2052 – A Global Forecast for the Next Forty Years. Chelsea Green Publishing, White River, USA.

10 United Nations. 2021. Iceland: Carbon Capture Plant Operational. <Iceland: Carbon Capture plant operational – United Nations Western Europe (unric.org)>

11  Better Meets Reality. 2022. https://bettermeetsreality.com/how-much-uranium-is-left-in-the-world-on-land-in-oceans-when-will-we-run-out/#:~:text=On%20land%2C%20some%20estimates%20say%20we%20have%20about,uranium%20at%20today%E2%80%99s%20consumption%20rate%20for%20undiscovered%20uranium.

12 Murphy, T. 2021. Energy and Human Ambitions on a Finite Planet. eScholarship/UCA, San Diego, USA.

Note 1 There appears to be considerable disparity between Randers’ figures for emissions: 9 billion t/p.a. for 2052 and today, but actual emissions now are ~ 38 b t/p.a. – ?

Note 2 Porritt fails to mention the amount of usable U235 left on Earth. Estimates range from 30 years to 90 years, as Tom Murphy states in his book, ‘Energy and Human Ambitions on a Finite Planet’12. “Proven uranium reserves would last 90 years at the current rate of use, so really it is in a category fairly similar to that of fossil fuels in terms of finite supply. To be fair, proven reserves are always a conservative lower limit on estimated total resource availability. And since fuel cost is not the limiting factor for nuclear plants, higher uranium prices can make more available, from more difficult deposits. Still, even a factor of two more does not transform the story into one of an ample, worry-free resource.”

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