Inching closer

Putting energy into perspective

Why does this matter?

  1. In order to make this huge amount energy available to the economy we still need to burn fossil fuels (more than 80% of our energy comes from these sources — see the chart above).
  2. Burning fossil fuels causes climate change — no questions. We need to stop using them within a couple of decades to avoid reaching a catastrophic level of global heating.
  3. It is impossible to replace these fuels with human labor, neither from a physical, nor from an economical standpoint… Unless you can melt steel with your gaze, carry three hundred metric tons of rock on your back, or plough ten acres (four hectares) a day on your feet. “Renewables” simply cannot make up this vast difference either.
  4. Fossil fuels are finite, non-renewable resources. Due to geological reasons their depletion starts soon after we have eaten up roughly half of the total reserves ever discovered. This means, production (ahem, extraction) cannot be expanded further after this point, unless an unreasonable amount of energy is spent during the process; making the whole undertaking unprofitable in the end. It looks like we have already reached this point — meaning that extraction will first slowly, then ever more drastically decrease in the coming decades. And not because of the lack of demand.
  5. When a resource becomes scarce its price starts to increase. This is what we see today with all fossil fuels, and as a result with the price of electricity — and everything else. Yes, there is a spill over at the money printing machine too — but consider this: if energy supplies could be readily expanded this should not be a problem. If traditional economic theory were true, supply would magically appear shortly and all would be fine — except for the carbon pulse caused by this sudden burst of growth. Thing is, this money printing gimmickry never worked on the large scale. It only worked in the last decade, when enough investors could be fooled to believe in the shale oil miracle — a business which was never really cash flow positive and which failed to replicate in places other than the US. Result: sluggish growth do to the lack of exponential expansion of the underlying energy-base to support it. In the real world there is no way to print cheap and easy to access energy. Once you burn the good stuff, laid down several hundred million years ago, it’s gone forever… It is now back in the atmosphere where it is now doing it’s job restoring the tropical conditions which made it’s deposition possible in the first place.
  6. Rising energy prices will first stop, then eventually kill businesses. Usually the most energy intensive ones will go first (e.g.: fertilizer production) which then causes a range of other businesses (the entire agriculture and food sector) to struggle. This plays out in many fields (e.g.: mining and metallurgy) similarly, until finally the chain breaks at the weakest link — then off we go with another Merry-go-around of recession and slow recovery… with industrial output never reaching previous levels again.
  7. Since fossil fuels still account for more than 80% of our energy consumption, their decline will inevitably force us to give up 80% of the economy, including critical industries like steel, concrete, mining, or large scale agriculture… feeding 8 billion of us. Then, without heavy machinery and high heat processes to support it, the remaining 20% will go as well — leaving us nothing with, but wood and hay to burn. The industrial age has used up its cheap fuels and now it must face its own demise. It will be a long, slow — and very much necessary — goodby to this planet-wrecking lifestyle of ours.

The end of Growth

In search for answers

  1. Capital restraint. Capital somehow managed to refrain from being invested into dirty energy sources. Investors were afraid buying into assets which might go stranded (i.e.: forced to stand idle before paying back the investment). OK, but why is that so?
  2. Green energy. “If the greening of energy production goes according to plan, who will then buy oil?” — goes their argument, but this is magical thinking in many ways. First electricity generation is only a mere 20% of total energy use in itself. Western countries started to utilize more and more “renewable” sources, that is true, but the process is still decades away from completion… Presuming, that we have the resources (which we don’t) and are able to solve the intermittency problem without fossil fuels on a hundred thousand trillion watt-hour scale (which we can’t). Second, we would still need oil, gas and coal for “hard-to-electrify” businesses (the remaining 80% of our energy use). Like high heat applications requiring 1000°C or higher temperatures (e.g.: steel and cement production) and transportation of goods around the globe (using aircraft, container ships, large trucks etc.), not to mention mining equipment (dumpers, excavators)… OK, let’s assume that investors were misled on the quick and easy advent of green-energy. Most of them — unfortunately — does not give a rat’s hind leg about our green future however, and would be eager to invest in anything provided there is a profit to be realized. Why are fossil fuel investments drying up still?
  3. Carbon-tax. Because of bad policy!” — true, governments around the western world are trying to use the “free-market” to “encourage” the use of “renewables” by taxing emissions from fossil fuels. Note, however how this is a last attempt to prop up failing government revenues and tax something which is no longer taxable.
  4. Regulations. Methane is a potent greenhouse gas — regulating it’s emission is of utmost importance to slow climate change. Obeying these tighter regulations however costs money, equipment — and you guessed: energy… making fossil fuel extraction even more expensive and less profitable.

The d-word

The rest of the economy

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A critic of modern times - offering ideas for honest contemplation.

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