Tags: collapse* + eroi* + downshifting*

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  1. 10,000 years ago, a hunter-gatherer needed about 5,000 kcal per day to get by. A New Yorker today, once all the systems, networks and gadgets of modern life are factored in, needs about 300,000 kilocalories a day That’s a difference in energy needed for survival, between simple and complex lives, of 60 times – and rising. Does that sound like a resilient trend?

    The world is not in danger of running completely out of oil. A lot of oil and gas remain in the ground and under the sea. But those reserves cannot drive growth with the same gusto as before. Today’s thermo-industrial economy grew using oil that, if it did not literally gush out of the ground, was easily extracted using oil-powered machines. In 1930, for the investment of one barrel of oil in extraction efforts, 100 barrels of surplus or net energy were obtained for economic use. Since then, that happy ratio has declined ten-fold or more.

    The calamitous decline in net energy is one reason renewables are not the solution. Green energy strategies suffer from an existential flaw: They take ‘global energy needs’ as a given, calculate the quantity of renewable energy sources needed to meet them – and then ignore the fact that it takes energy to obtain energy. In Spain, for example, the Energy Return On Energy Invested (EROI) of their huge solar photovoltaic intallations is a very low 2.45 despite that country’s ideal sunny climate.

    Our capacity to think clearly about energy is further handicapped by driving blind. In most economic activities, the energy that you can measure – such as the electricity used by buildings, or in an industrial process – is only one part of the picture. A new technique called Systems Energy Assessment (SEA) estimates the many energy uses, that businesses rely on, that are hidden. Phil Henshaw, who developed SEA, describes as “dark energy” the four fifths of actual energy useage that conventional metrics fail to count.

    Eighty percent at five percent

    When pressed, technical experts I have spoken to tell me that for our world to be ‘sustainable’ it needs to endure a ‘factor 20 reduction’ in its energy and resource metabolism – to five percent of present levels. At first I believed, doomily, that Factor 20 was beyond reach. Then, by looking outside the industrial world’s tent, I realised that for eighty per cent of the world’s population, five per cent energy is their lived reality today – and it does not always correspond to a worse life.

    Take as an example, healthcare. In Cuba, where food, petrol and oil have been scarce for of 50 years as a consequence of economic blockades, its citizens achieve the same level of health for only five per cent of the health care expenditure of Americans. In Cuba’s five percent system, health and wellbeing are the properties of social ecosystems in which relationships between people in a real-world local context are mutually supportive. Advanced medical treatments are beyond most people’s reach – but they do not suffer worse health outcomes.

    Another example of five per cent systems that sustain life is food. In the industrial world, the ratio of energy inputs to the food system, relative to calories ingested, is 12:1. In cities, up to 40 percent of their ecological impact can be attributed to their food and water systems – the transportation, packaging, storage, preparation and disposal of the things we eat and drink .

    In poor communities, where food is grown and eaten on the spot, the ratio is closer to 1:1.

    My favourite five percent example – a recent one – concerns urban freight. In modern cities, enormous amounts of energy are wasted shipping objects from place to place. An example from The Netherlands: Of the 1,900 vans and trucks that enter the city of Breda (pop: 320,000) each day, less than ten percent of the cargo being delivered really needs to be delivered in a van or truck; 40 percent of van-based deliveries involve just one package. An EU-funded project called CycleLogistics calculates that 50 percent of all parcels delivered in EU cities could be delivered by cargo bike.

    According to ExtraEnergy’s tests over several years, an average pedelec uses an average of 1kWh per 100km in electricity. Once all system costs are included, a cargo cycle can be up to 98 percent cheaper per km than four-wheeled, motorised alternatives. Some e-bikers reckon that electric bikes can have a smaller environmental footprint even than pedal-only bicycles when the energy costs of the food needed to power the rider are added.
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  2. The system acts as if whenever one pump dispenses the energy products we want, another pump disperses other products we don’t want. Let’s look at three of the big unwanted “co-products.”

    1. Rising debt is an issue because fossil fuels give us things that would never have been possible, in the absence of fossil fuels. For example, thanks to fossil fuels, farmers can have such things as metal plows instead of wooden ones and barbed wire to separate their property from the property of others. Fossil fuels provide many more advanced capabilities as well, including tractors, fertilizer, pesticides, GPS systems to guide tractors, trucks to take food to market, modern roads, and refrigeration.

    The benefits of fossil fuels are immense, but can only be experienced once fossil fuels are in use. Because of this, we have adapted our debt system to be a much greater part of the economy than it ever needed to be, prior to the use of fossil fuels. As the cost of fossil fuel extraction rises, ever more debt is required to place these fossil fuels in use. The Bank for International Settlements tells us that worldwide, between 2006 and 2014, the amount of oil and gas company bonds outstanding increased by an average of 15% per year, while syndicated bank loans to oil and gas companies increased by an average of 13% per year. Taken together, about $3 trillion of these types of loans to the oil and gas companies were outstanding at the end of 2014.

    As the cost of fossil fuels rises, the cost of everything made using fossil fuels tends to rise as well.

    3. A more complex economy is a less obvious co-product of the increasing use of fossil fuels. In a very simple economy, there is little need for big government and big business. If there are businesses, they can be run by a small number of individuals, with little investment in capital goods. A king, together with a handful of appointees, can operate the government if it does not provide much in the way of services such as paved roads, armies, and schools. International trade is not a huge necessity because workers can provide nearly all necessary goods and services with local materials.

    The use of increasing amounts of fossil fuels changes the situation materially. Fossil fuels are what allow us to have metals in quantity–without fossil fuels, we need to cut down forests, use the trees to make charcoal, and use the charcoal to make small quantities of metals.

    Once fossil fuels are available in quantity, they allow the economy to make modern capital goods, such as machines, oil drilling equipment, hydraulic dump trucks, farming equipment, and airplanes. Businesses need to be much larger to produce and own such equipment. International trade becomes much more important, because a much broader array of materials is needed to make and operate these devices. Education becomes ever more important, as devices become increasingly complex. Governments become larger, to deal with the additional services they now need to provide.

    f an increasing share of the output of the economy is funneled into management pay, expenditures for capital goods, and other expenditures associated with an increasingly complex economy (including higher taxes, and more dividend and interest payments), less of the output of the economy is available for “ordinary” laborers–including those without advanced training or supervisory responsibilities.

    As a result, pay for these workers is likely to fall relative to the rising cost of living. Some would-be workers may drop out of the labor force, because the benefits of working are too low compared to other costs, such as childcare and transportation costs. Ultimately, the low wages of these workers can be expected to start causing problems for the economic system as a whole, because these workers can no longer afford the output of the system. These workers reduce their purchases of houses and cars, both of which are produced using fossil fuels and other commodities.

    Ultimately, the prices of commodities fall below their cost of production. This happens because there are so many of these ordinary laborers, and the lack of good wages for these workers tends to slow the “demand” side of the economic growth loop. This is the problem that we are now experiencing.

    The Two Pumps Are Really Energy and Entropy

    Unlike the markings on the pump (gasoline and ethanol), the two pumps of our system are energy consumption and entropy. When we think we are getting energy consumption, we really get various forms of entropy as well.

    The first pump, rising energy consumption, seems to be what makes the world economy grow.

    The second pump in Figure 3 is Entropy Production. Entropy is a measure of the disorder associated with the extraction and consumption of fossil fuels and other energy products. Entropy can be thought of as a loss of information. Once energy products are burned, we have a portion of GDP in the place of the energy products that have been consumed. This is why there is a high correlation between energy consumption and GDP. As energy products are burned, we also have an increasing pile of debt, increasing pollution (that our sinks become less and less able to handle), and increasing wealth disparity.
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  3. my core prediction for 2016 is that all the things that got worse in 2015 will keep on getting worse over the year to come. The ongoing depletion of fossil fuels and other nonrenewable resources will keep squeezing the global economy, as the real (i.e., nonfinancial) costs of resource extraction eat up more and more of the world’s total economic output, and this will drive drastic swings in the price of energy and commodities—currently those are still headed down, but they’ll soar again in a few years as demand destruction completes its work. The empty words in Paris a few weeks ago will do nothing to slow the rate at which greenhouse gases are dumped into the atmosphere, raising the economic and human cost of climate-related disasters above 2015’s ghastly totals—and once again, the hard fact that leaving carbon in the ground means giving up the lifestyles that depend on digging it up and burning it is not something that more than a few people will be willing to face.

    Healthy companies in a normal economy usually have P/E ratios between 10 and 20; that is, their total stock value is between ten and twenty times their annual earnings. Care to guess what the P/E ratio is for Amazon as of last Friday’s close? A jawdropping 985.

    At that, Amazon is in better shape than some other big-name tech firms these days, as it actually has earnings. Twitter, for example, has never gotten around to making a profit at all, and so its P/E ratio is its current absurd stock value divided by zero. Valuations this detached from reality haven’t been seen since immediately before the “Tech Wreck” of 2000, and the reason is exactly the same: vast amounts of easy money have flooded into the tech sector, and that torrent of cash has propped up an assortment of schemes and scams that make no economic sense at all. Sooner or later, as a function of the same hard math that brings every bubble to an end, Tech Wreck II is going to hit, vast amounts of money are going to evaporate, and a lot of currently famous tech companies are going to go the way of Pets.com.

    my best guess at this point is that photovoltaic (PV) solar energy is going to be the next big energy bubble.

    Solar PV is a good deal less environmentally benign than its promoters like to claim—like so many so-called “green” technologies, the environmental damage it causes happens mostly in the trajectory from mining the raw materials to manufacture and deployment, not in day-to-day operation—and the economics of grid-tied solar power are so dubious that in practice, grid-tied PV is a subsidy dumpster rather than a serious energy source. Nonetheless, I expect to see such points brushed aside, airily or angrily as the case may be, as the solar lobby and its wholly-owned subsidiaries in the green movement make an all-out push to sell solar PV as the next big thing.
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  4. The impossibility of continuing our industrial civilization cannot be expressed in a single indicator or a few sentences. Declining EROEI comes close, but as Gail often points out, EROEI is not the whole story. You have to be willing to look at the whole picture and the various ways we are running into diminishing returns, which is something very few people can be bothered with. You have to understand concepts such as Liebig's law of the minimum, White's law, Jevon's paradox, the Constructal law, the concept of dissipative structures, the Maximum Power Principle and the Seneca cliff. You have to understand that life is in the business of entropy maximization, and now doing such a fabulously good job at it that the party will inevitably be over soon.

    The meaning of life (at the level of physics, which rules biology) is to produce entropy. We are dissipative structures who came into being because entropy is created faster by our existence, considering the whole system. Dissipative structures arise in response to energy differentials. Our economy is also a dissipative system, whose function is to create entropy out of fossil hydrocarbons, which represent the greatest energy differential known to man. That is the only thing our economy knows how to do at this point, and when it fails to grow anymore it will collapse. Once again, you have to learn more about all these concepts to understand why it MUST collapse. Then you will understand that we need to preserve the whole industrial system to have any of it, which requires exponential growth since the whole thing is built on debt. Growth is no longer possible due to diminishing returns, so our economy must collapse.
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  5. In a finite world, we are reaching many limits besides fossil fuels:

    Soil quality–erosion of topsoil, depleted minerals, added salt
    Fresh water–depletion of aquifers that only replenish over thousands of years
    Deforestation–cutting down trees faster than they regrow
    Ore quality–depletion of high quality ores, leaving us with low quality ores
    Extinction of other species–as we build more structures and disturb more land, we remove habitat that other species use, or pollute it
    Pollution–many types: CO2, heavy metals, noise, smog, fine particles, radiation, etc.
    Arable land per person, as population continues to rise

    Green technology (including renewables) can only be add-ons to the fossil fuel system.

    A major reason why green technology can only be add-ons to the fossil fuel system relates to Pitfalls 1 through 3. New devices, such as wind turbines, solar PV, and electric cars aren’t very scalable because of high required subsidies, depletion issues, pollution issues, and other limits that we don’t often think about.

    A related reason is the fact that even if an energy product is “renewable,” it needs long-term maintenance. For example, a wind turbine needs replacement parts from around the world. These are not available without fossil fuels. Any electrical transmission system transporting wind or solar energy will need frequent repairs, also requiring fossil fuels, usually oil (for building roads and for operating repair trucks and helicopters).

    The problem we have is that statements about green energy are often overly optimistic. Cost comparisons are often just plain wrong–for example, the supposed near grid parity of solar panels is an “apples to oranges” comparison. An electric utility cannot possibility credit a user with the full retail cost of electricity for the intermittent period it is available, without going broke. Similarly, it is easy to overpay for wind energy, if payments are made based on time-of-day wholesale electricity costs. We will continue to need our fossil-fueled balancing system for the electric grid indefinitely, so we need to continue to financially support this system.
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  6. The EROI that has fueled our development so far will soon be gone as fossil fuels deplete and decline in quality, and we cannot make up the difference by substituting renewables. What’s even more troubling, though, is that EROI does not appear to decline in a linear fashion.

    The implications of this analysis are troubling to say the least.

    Globally, the net return on our prevailing energy staples oil and gas1 has declined into the range of 20:1 – 30:1. A look at the state of global development today suggests that this is an EROI that makes it difficult for societies to achieve a high quality of life. The EROIs of renewable technologies fall at or below this range.

    Now look at what happens in an EROI range of 10:1 – 20:1. The exponential EROI function begins to drop off sharply. This is termed the “net-energy cliff.” A society moving through this range of declining EROI becomes increasingly less able to support high levels of techno-social complexity. We in the affluent West have come to take the fruits of this complexity for granted as the sine qua non for a high standard of living as well as our birthright in perpetuity.

    This analysis has two take-home messages for E4C readers and everyone involved in engineering for global development. First, it is unlikely that the developing world will ever "develop" as such. And second, the affluent developed world will face catabolic “de- development,” as energy sources dwindle and eventually fail to support the upper levels of the hierarchy of energy needs. Catabolism occurs when a society depletes its resources, can no longer grow and begins to dissassemble its infrastructure to consume it for energy, as John Michael Greer explains.

    The first priority should be to gain more experience developing technologies that are scaled to the resource constraints of the future. And we need to do this not simply out of moral obligation to the world's poor, but also because, in short order, we are going to need those same technologies ourselves.

    To set appropriate targets for this innovation, we have to accept the probability that the developed world of the future will look a lot more like the developing world of today, and not the reverse as has traditionally been assumed in the development sector.
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  7. With the coming of the industrial revolution, both of the lines shifted substantially from their previous position, as shown in the second chart. Obviously, the torrent of cheap abundant energy gave the world’s industrial nations access to an unparalleled wealth of resources, and this pushed the dividing line between what was affordable and what was unaffordable quite a ways over toward the right hand side of the chart. A great many things that had been desirable but unaffordable to previous civilizations swung over from category C into category A as fossil fuels came on line. This has been discussed at great length here and elsewhere in the peak oil blogosphere.

    Less obviously, the dividing line between what was useful and what was useless also shifted quite a bit toward the bottom of the chart, moving a great many things from category B into category A. To follow this, it’s necessary to grasp the concept of technological suites. A technological suite is a set of interdependent technologies that work together to achieve a common purpose. Think of the relationship between cars and petroleum drilling, computer chips and the clean-room filtration systems required for their manufacture, or commercial airliners and ground control radar. What connects each pair of technologies is that they belong to the same technological suite. If you want to have the suite, you must either have all the elements of the suite in place, or be ready to replace any absent element with something else that can serve the same purpose.

    What makes this relevant to the charts we’ve been examining is that most support technologies have no value aside from the technological suites to which they belong and the interface technologies they serve. Without commercial air travel, for example, most of the specialized technologies found at airports are unnecessary.

    Once energy and resource use per capita peak and begin their decline, though, a different reality comes into play, leading over time to the situation shown in the third chart.

    It’s habitual in modern economics to insist that such bottlenecks don’t exist, because there’s always a viable alternative. That sort of thinking made a certain degree of sense back when energy per capita was still rising, because the standard way to get around material shortages for a century now has been to throw more energy, more technology, and more complexity into the mix. That’s how low-grade taconite ores with scarcely a trace of iron in them have become the mainstay of today’s iron and steel industry; all you have to do is add fantastic amounts of cheap energy, soaring technological complexity, and an assortment of supply and resource chains reaching around the world and then some, and diminishing ore quality is no problem at all.

    It’s when you don’t have access to as much cheap energy, technological complexity, and baroque supply chains as you want that this sort of logic becomes impossible to sustain. Once this point is reached, bottlenecks become an inescapable feature of life. The bottlenecks, as already suggested, don’t have to be technological in nature—a bottleneck technology essential to a given technological suite can be perfectly feasible, and still out of reach for other reasons—but whatever generates them, they throw a wild card into the process of technological decline that shapes the last years of a civilization on its way out, and the first few centuries of the dark age that follows.

    The crucial point to keep in mind here is that one bottleneck technology, if it becomes inaccessible for any reason, can render an entire technological suite useless, and compromise other technological suites that depend on the one directly affected.

    All this has immediate practical importance for those who happen to live in a civilization that’s skidding down the curve of its decline and fall—ours, for example. In such a time, as noted above, one critical task is to identify the technological suites that will still be viable in the aftermath of the decline, and shift as much vital infrastructure as possible over to depend on those suites rather than on those that won’t survive the decline. In terms of the charts above, that involves identifying those technological suites that will still be in category A when the lines stop shifting up and to the left, figuring out how to work around any bottleneck technologies that might otherwise cripple them, and get the necessary knowledge into circulation among those who might be able to use it, so that access to information doesn’t become a bottleneck of its own

    That sort of analysis, triage, and salvage is among the most necessary tasks of our time, especially for those who want to see viable technologies survive the end of our civilization, and it’s being actively hindered by the insistence that the only possible positive attitude toward technology is sheer blind faith.
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  8. "People will never see the connection to oil. They will assume the issue is all financial, and can be fixed with a new financial system."

    Energy consumption is integral to “holding our own” against other species.

    All species reproduce in greater numbers than need to replace their parents. Natural selection determines which ones survive. Humans are part of this competition as well.

    In the past 100,000 years, humans have been able to “win” this competition by harnessing external energy of various types–first burned biomass to cook food and keep warm, later trained dogs to help in hunting. The amount of energy harnessed by humans has grown over the years. The types of energy harnessed include human slaves, energy from animals of various sorts, solar energy, wind energy, water energy, burned wood and fossil fuels, and electricity from various sources.

    Human population has soared, especially since the time fossil fuels began to be used, about 1800.

    Because the world is finite, the greater use of resources by humans leads to lesser availability of resources by other species. There is evidence that the Sixth Mass Extinction of species started back in the days of hunter-gatherers, as their ability to use of fire to burn biomass and ability to train dogs to assist them in the hunt for food gave them an advantage over other species.

    Also, because of the tight coupling of human population with growing energy consumption historically, even back to hunter-gatherer days, it is doubtful that decoupling of energy consumption and population growth can fully take place. Energy consumption is needed for such diverse tasks as growing food, producing fresh water, controlling microbes, and transporting goods.

    We began an economic growth cycle back when we began using fossil fuels to a significant extent, starting about 1800. We began a stagflation period, at least in the industrialized economies, when oil prices began to spike in the 1970s. Less industrialized countries have been able to continue growth their growth pattern longer. Our situation is likely to differ from that of early civilizations, because early civilizations were not dependent on fossil fuels. Pre-collapse skills tended to be useful post-collapse, because there was no real change in energy sources. Loss of fossil fuels would considerably change the dynamic of the outcome, because most jobs would become obsolete.

    Most models put together by economists assume that the conditions of the growth period, or the growth plus stagflation period, will continue forever. Such models miss turning points.

    we cannot ramp up all of the physical infrastructure needed (pipelines, steaming equipment, refining equipment) without badly cutting into the resources needed to “grow” the rest of the economy. A similar problem is likely to exist if we try to ramp up world oil and gas supply using fracking.

    he link between energy and the economy comes both from the supply side and the demand side.

    With respect to supply, it takes energy of many types to make goods and services of all types. This is discussed in Item 2 above.

    With respect to demand,

    (a) People who earn good wages (indirectly through the making of goods and services with energy products) can afford to buy products using energy.

    (b) Because consumers pay taxes and buy goods and services, growth in demand from adequate wages flows through to governments and businesses as well.

    (c) Higher wages enable higher debt, and higher debt also acts to increase demand.

    (d) Increased demand increases the price of the resources needed to make the product with higher demand, making more of such resources economic to extract.

    11. We need a growing supply of cheap energy to maintain economic growth.

    12. Oil prices that are too low for producers should be a serious concern. Such low prices occur because oil becomes unaffordable. In the language of economists, oil demand drops too low.

    A common belief is that our concern should be oil prices that are too high, and thus strangle the economy. A much bigger concern should be that oil prices will fall too low, discouraging investment. Such low oil prices also encourage civil unrest in oil exporting nations, because the governments of these nations depend on tax revenue that is available when oil prices are high to balance their budgets.

    The issue we are now seeing is the reverse–too low oil prices for oil producers, including oil exporters. These low oil prices are contributing to the unrest we see in the Middle East. Low oil prices also contribute to Russia’s belligerence, since it needs high oil revenues to maintain its budget.
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  9. Many of us intuitively recognize that we’ve constructed a ginormous Rube Goldberg machine which for a number of reasons may not continue to crank out goods and services for the next 30-40 years. We blame this and that demographic for our declining prospects – the Republicans, the environmentalists, the greedy rich, the lazy poor, the immigrants, the liberals, etc. We blame this and that country or political system – evil socialists, heartless capitalists, Chinese, Syrians, Europeans, etc. We watch TV and internet about the latest ‘news’ influencing our world yet are not entirely confident of the connections. But underlying all this back and forth are some first principles, which are only taught piecemeal in our schools, if at all. Below is a short list of 20 principles underpinning today’s global ‘commerce’. I should note, if I was a 25 year old starting business school, eager to get a high paying job in two short years, I wouldn’t believe what follows below, even if I had time or interest to read it, which I probably wouldn't.
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  10. Defying risk of redundancy, I will hammer home the point: cheap, abundant energy is the prerequisite for the Techno-Anthropocene. We can only deal with the challenges of resource depletion and overpopulation by employing more energy. Running out of fresh water? Just build desalination plants (that use lots of energy). Degrading topsoil in order to produce enough grain to feed ten billion people? Just build millions of hydroponic greenhouses (that need lots of energy for their construction and operation). As we mine deeper deposits of metals and minerals and refine lower-grade ores, we’ll require more energy. Energy efficiency gains may help us do more with each increment of power, but a growing population and rising per-capita consumption rates will more than overcome those gains (as they have consistently done in recent decades). Any way you look at it, if we are to maintain industrial society’s current growth trajectory we will need more energy, we will need it soon, and our energy sources will have to meet certain criteria—for example, they will need to emit no carbon while at the same time being economically viable.

    These essential criteria can be boiled down to four words: quantity, quality, price, and timing. Nuclear fusion could theoretically provide energy in large amounts, but not soon. The same is true of cold fusion (even if—and it’s a big if—the process can be confirmed to actually work and can be scaled up). Biofuels offer a very low energy return on the energy invested in producing them (a deal-breaking quality issue). Ocean thermal and wave power may serve coastal cities, but again the technology needs to be proven and scaled up. Coal with carbon capture and storage is economically uncompetitive with other sources of electricity. Solar and wind are getting cheaper, but they’re intermittent and tend to undermine commercial utility companies’ business models. While our list of potential energy sources is long, none of these sources is ready to be plugged quickly into our existing system to provide energy in the quantity, and at the price, that the economy needs in order to continue growing.
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