Averting Collapse Is No Longer Profitable
How the past 75 years of infrastructure development has created a massive predicament for industrial nations and what comes next
A Japanese truck driver was trapped in a sinkhole created by a corroded wastewater pipeline early last week, 10 days ago at the time of writing. Needless to say, the hope of saving him fades with every passing day. This event reminded me that even the most technologically advanced societies have to face the stark reality of a crumbling infrastructure. The conundrum, we as an ageing high tech civilization have navigated ourselves into, has its roots in economics. While building new power lines, roads and water pipes costs very little compared to the benefit they bring, maintaining them, on the other hand, comes with no added benefits, only ever increasing costs.
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Let’s go back in time into the early 1950’s, into the post-WWII boom. When all that new infrastructure (roads, bridges, tunnels, water systems, the electric grid, landlines and much more) were built, they brought along an enormous increase in prosperity to the people. Electricity, paved roads, water and sewage meant that new factories could be built and jobs could be created in previously “undeveloped” regions. New housing could be built with drinking water flowing from the tap and electricity in every room. Household appliances could be bought and installed. Economic growth suddenly became tangible, even if it had come at the cost of environmental destruction.
The only thing that mattered then that people were lifted out of poverty, and the middle class (and with it consumption) could finally meaningfully grow. The ever increasing complexity and interconnectedness of the system has created a virtuous cycle: not only by attracting businesses, but by encouraging people to have larger families on the back of high wages and salaries. More kids meant even higher consumption and an even higher demand for consumer goods, appliances, clothes, cars, houses etc.. As long as the system had all the necessary inputs (cheap energy and raw materials) to continue expanding in this exponential fashion the infrastructure just kept on growing and growing and growing.
In terms of grid expansion the first oil shock in the early 1970’s flew past by almost unnoticed. Of course the price of energy (both oil and electricity) rose significantly, but it did not matter as long as energy could be provided in adequate quantities. Consumer and corporate borrowing provided the necessary financing for growth, so why bother? But then, as the housing bubble burst in 2008 all hopes of financing infinite growth on a finite planet has vanished. Oil prices rose above a hundred bucks a barrel, and stayed there till 2014. Since all the activities needed to mine, harvest, dig, build and transport all the raw materials and finished products required vast quantities of diesel fuel, the end of cheap conventional oil was in a way an end to (real) economic growth, too. And that meant an end to infrastructure expansion as well. The much touted shale revolution was unable to put an end to this stagnation, even as oil prices dropped significantly after 2014. The steady erosion of the real purchasing power of wages, the outsourcing of manufacturing activities together with stagnant real economic output has made the return to growth all but impossible. In the meantime the vast amount of infrastructure built so far has quietly continued to age.
From the States to Europe and Japan, bridges, pipelines, dams, and a good portion of the electric grid has become a liability. While half-a-century ago when most of these systems were built, they bought an increase in prosperity to the region they served, now their maintenance budget looks like a bottomless pit. And while spending money, energy and raw materials on them is absolutely necessary to keep them in good working condition, these expenditures will not increase the economic output of the region by an iota. Replacing an ageing water pipe under main street comes with road closures, noise and pollution, reducing the attractiveness of nearby businesses. Sure, renovations does add to GDP (at least nominally) but how is that different — economically speaking — to cleaning up a major oil spill?
If the capacity of the infrastructure in question has not been increased in the process, maintenance of this kind actually detracts value. Hence the reluctance of municipalities (and corporations) to fund such projects willingly — either by raising taxes or by paying higher utility bills. Instead, all sorts of workarounds are implemented (like lining rusty old tubes with plastic from the inside), or if the neighborhood has become deindustrialized and derelict enough, letting things rot in place.
In the meantime drinking water keeps seeping into the ground, raw sewage spills into rivers and power lines overgrown by vegetation cause wildfires and outages on a regular basis. This is why US infrastructure scores a C- year after year. Let’s take water for example. Out of the 39 billion gallons of drinking water pumped into the system daily, 6 billion is lost, while only 1–5% of pipelines get replaced annually. According to the scorecard the rating of the sewage system is even worse, scoring a D+.
“Nationwide, the drinking water and wastewater pipes in the ground are on average 45 years old, while some systems have components more than a century old. The typical lifespan expected for wastewater pipes is 50 to 100 years. As collection systems age and decline in condition, groundwater and stormwater enter the networks through cracks, joints, or illicit connections as inflow and infiltration. When collection systems are overtaxed, sanitary sewer overflows can occur.”
Sounds like a ticking time bomb? Expect the unfortunate case of the Japanese truck driver to become more frequent. The state of the electric grid in the US (and by the way across much of the Western world) is not a tad bit better:
“Electricity delivery in the U.S. depends on an aging and complex patchwork of power generation facilities, 600,000 miles of backbone transmission lines (240,000 miles of which are considered high-voltage lines or ≥ 230 Kilovolts), and around 5.5 million miles of local distribution lines that operate within federal, state, tribal, and local regulatory jurisdictions. […] The majority of the nation’s grid is aging, with some components over a century old — far past their 50-year life expectancy — and others, including 70% of T&D lines, are well into the second half of their lifespans.”
Overhauling such a ginormous and immensely complex system is no simple task. The amount of resources (copper, aluminum) as well as energy (diesel fuel) needed is well beyond the US economy’s production capacity… Not to mention the fact that none of this could be financed on the basis of real economic output: when it comes to real industrial production both the US and most Western economies are now in a recession for years now. At the same time GDP growth and the stock market boom provided nothing but a dangerous delusion, masking the inflection from a decade of stagnation to decline. Western industrial societies are literally living on borrowed time.
Most of our existing infrastructure of pipelines, transmission lines, dams, bridges, roads and tunnels were built during the post war economic boom (that is before the 1970’s) and thus most of them are now approaching the end of their planned lifespan. This doesn’t mean that everything will collapse all at once in a few years time, but that utilities will find themselves increasingly overwhelmed by the task of keeping everything in a working condition. It’s thus not terribly risky to say, that things will rather be left to deteriorate than repaired throughout much of the old industrial nations. (Newly industrialized societies, such as China will face the same issue 20–30 years down the line.)
Curiously enough pushing anything more than a tiny amount of “renewables” onto the grid only exacerbates the problem. ‘But, but, but how?! These are the shiny saviors of civilization [ahem, sorry, the climate], right?!’ Whoa… Not so fast. Look at things through the eyes of nearby businesses and utilities. From their perspective — excluding climate related concerns, to which wind and solar are no panacea anyway — a massive investment in electric infrastructure is needed, storage needs to be built, capacity must be increased, interconnectedness improved etc. All this to provide the same old 24/7 electricity, to the same old consumers who are producing the same old stuff. So, what gives?
Is it any wonder that taxes have to be raised, together with the price of electricity to finance all this? Or that without massive subsidies and tax breaks installing “renewables” and buying electric vehicles makes little sense? Again, don’t get me wrong here, I’m not saying that reducing CO2 output is not important or would not benefit the climate. All I’m trying to point out here that thanks to their intermittency, and their hundreds of times lower energy density compared to oil, wind and solar are neither a replacement for fossil fuels, nor sustainable. At all.
“Greening” the electric grid is not a one time activity either. “Renewables” and their related infrastructure consisting of batteries, pumped hydro storage, inverters, smart meters, extra power lines etc. are all built up from real materials: all mined, processed and transported by fossil fuels. And since neither solar panels nor wind turbines have a higher rated lifespan than two decades, and contain tons of non-recyclable materials, all this investment spree must be repeated over and over and over again, at least until the economically available portion of the needed minerals and fossil fuels enabling their extraction last.
Sure, we might save a lot of carbon emissions in the process, but from an economic and physics perspective this idea is a non-starter. We are talking about an increase in the tune of several orders of magnitude when it comes to material flows, with all the massive increase in environmental destruction, traffic, manufacturing activities and pollution involved. Businesses and citizens will thus not only have to endure this, but will have to keep financing this immensely more complex and more material intensive electric grid forever and more. And if you add that these customers are now not only lighting and operating some of their machinery with electricity, but also would like to charge their vehicles, besides fully automating and electrifying the rest of their manufacturing processes (1), simple grid maintenance will not cut the mustard. In order to accommodate this increased demand for electricity the grid must expanded to multiples of its original size, while the economic output of the companies operating in the region remains exactly the same. They will keep producing the same vacuum cleaners, the same toothbrushes, the same bottled ketchup, only this time with a green leaf-like label slapped on it. Again, I must ask, what gives? Profits? Wages payed to workers? Or perhaps prices payed by customers? Or all of the above, as the entire economic model based on cheap energy and raw materials crumble?
The alternative — i.e. burning more fossil fuels — on the other hand, is not even a short term fix. (Especially considering the mounting environmental costs and the pollution they come with…) The inevitable rise in the energy and material cost of their extraction will make maintaining our existing oil infrastructure of wells and pipelines an impossible task. As rich and easy-to-get resources slowly deplete and give way to ever costlier, ever more energy intensive ways of drilling and digging, more and more pipes and other materials will need to be cemented into oil wells and built into the ever more complex machinery extracting the black liquid. You see previously drilled and piped oil wells, for example, do not only need constant maintenance, but also require re-fracturing, ever more pumping applied, more CO2 injected, more wastewater (brine coming up with oil) taken care of etc.. Depletion is a dirty and awful long process, leading to a steady increase in the energy invested into getting more energy, not a sudden event upending civilization from one day to the next.
Just like adding low-return “renewables” to the grid, drilling more and more wells and investing in ever more complex extraction technologies will create no added value in the end. All this extra activity, material and energy investment will get us in the end is the same amount of oil products (gasoline, diesel, jet fuel etc.), creating the same value as products made from cheap and abundant conventional oil used to do. These more expensive-to-make fuels will be filled into the same machines producing and delivering the same amount of raw materials to the same factories, manufacturing the same amount of vacuum cleaners, toothbrushes and ketchup. (This time, though, without that green leaf-like label.) Again, I must ask, what gives? Profits? Wages payed to workers? Or perhaps prices payed by customers? Or all of the above, as the entire economic model based on cheap energy and raw materials crumble?
‘So what’s the solution?’ — I hear people ask eagerly. Small modular nuclear (perhaps breeder) reactors? Maybe hydrogen fusion, or all of the above? Well, pray tell, how any of these technologies could help us escape the predicament described above? Will they magically repair the grid, plug the holes and reduce losses in the system? (2) Or will they recreate cheap, easy-to-mine resources? Will they solve our coming transport fuel crisis due to a lack of affordable oil? The answer to both of these question is ‘Of course, not.’ These technologies would have to be built from the same old materials (steel, concrete and various metals), mined and delivered with the same old diesel engines, and smelted with coal just like components to the old energy infrastructure they aim to replace. This time, though, they would have to be built from an already fast depleting resource base, where all the cheap easy-to-access minerals are gone. Meanwhile all they would be doing, at the end of the day, is boiling water to make steam and to generate electricity (3)…
What if there was NO technofix solution to the predicament we have navigated ourselves into? Why, how could a civilization — built entirely on non-renewables stocks of easy-to-get minerals and fossil fuels — last forever? You see, only problems have solutions, while predicaments have nothing but outcomes. Such as lower consumption, lower energy use, less products made, sold and bought, or less travel for that matter. This is not the end of the world, however, and certainly not from one day to the next. Infrastructure degradation together with running out of affordable energy will look much like a classical economic decline, where a small part of society continues to thrive, while the vast majority of population will have to find alternative ways to take care of their needs. This could include massively increasing self-reliance, providing community support and implementing low-tech, DIY solutions to everyday problems. (Just take a look around on your favorite video sharing platform how people from South-East Asia, for example, perform daily tasks, or even manufacture complex pieces of machinery without the massive energy and infrastructure subsidy enjoyed by Westerners.)
Down-scaling is not, was not and never will be a question of choice for society as a whole, though, much rather a necessity expressed in higher costs and/or lower incomes. Human economic systems have all evolved to tap into the easiest-to-get resources first, suck them dry, then to move onto the next best option. In the meantime they develop road networks and shipping lanes (and as of late pipelines and transmission wires) to handle the resulting material and energy flows… Only to left all of these behind when they slowly run out of all affordable options, and grudgingly realize that there is no infinite growth on a finite planet (only when it is already too late).
Although many would like to believe that civilizational collapse usually happens in a matter of days, it actually takes several decades, with its tail end lasting a century or more. Civilizations, be them agricultural or industrial in nature, all have their own lifecycles. Just like living organisms their primary goal is to convert energy and materials into copies of themselves, “civilizing” and populating as much land as possible. As they grow and eventually begin to age, however, their maintenance requirements begin to pile up and slowly start to overwhelm the system. After a certain point their energy intake stops growing, they start to show signs of ageing and their infrastructure begins to crumble. Note how all of this is perfectly normal. It has happened to every single civilization before ours, from the Sumer with their irrigation canals, to Romans with their sophisticated road networks and aqueducts. Our civilization is no exception. And if you think ageing and decline sucks, ask the elders in your family why the happiest years of their life have arrived at the very end.
Until next time,
B
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Notes:
(1) AI and automation both point towards this direction: replacing human labor (both white and blue collar) with electricity from the grid. Jevons paradox, turbocharged with another economic paradox: who will buy the products made by machines and developed by AI? Not the machines, for sure.
(2) To illustrate how immensely — and inherently — wasteful the grid as an energy distribution network is, and to understand how incredibly important fossil fuels are to the economy, take a look at this chart below. (Source: EIA monthly)
(3) Besides, nuclear reactors (be them small modular or hydrogen fusion types) would face the same issue as “renewables”: the grid would need to be massively overhauled, and its capacity multiplied in order to accommodate them. Even if you distribute these reactors evenly across a country, they would have to serve multiple economic purposes to at least lessen our dependence on oil. Thus a lot more, much higher capacity wires and transformers would have to be installed even in a small town to accommodate the sudden increase in energy supply/demand.
