In his recent Quarterly Essay, Man-made world: choosing between progress and planet, economist Andrew Charlton presents technological innovation as the solution to climate change and the route to unbounded economic growth.
He argues that technology will allow existing resources to meet future energy demands with lower CO₂ emissions. But he ignores the material realities of our energy resources.
Although noting technology “often arrives unpredictably, after hundreds of failures, decades of wasted effort and mountains of lost treasure”, Charlton nevertheless assumes we can rely on innovation “to break through the planetary constraints on our progress”. As Jared Diamond has demonstrated, not all civilisations got so lucky.
Charlton calls for yet more energy research, but ignores the enormous efforts already made. Take the billions spent over decades researching nuclear fusion. Energy breakthroughs are hard won. Commercial fusion reactors were just a few decades away in the 1970s. Now the running joke is they are still forty years away … and always will be. We cannot rely on technological solutions arriving just-in-time.
Charlton misleadingly uses the famous wager between Julian Simon and Paul Ehrlich to dismiss concerns over resource constraints. Ehrlich lost his 1980 bet that over ten years five common metals would increase in price, but he was not wrong about the long-term trends in declining ore grades and increasing costs of extraction. To borrow a phrase from energy economist Ferdinand Banks, the wager was a case of “quantifiable nonsense being rated far above non-quantifiable plausibility”.
The conventional explanation for Ehrlich’s loss is that is technological innovation will always extend resources and reduce prices through efficiency gains and substitution. There are three problems with this: firstly, Jevons’s paradox: in practice, increased efficiency leads to increased consumption; second, efficiency gains are rapidly absorbed through economic growth; finally, substitution is not always possible.
For fossil energy resources there is a further constraint: they can never be fully exploited. When we reach the point where the energy input required exceeds the energy obtained from extracting and refining them - that is, when the ratio of energy returned on the energy invested (EROI) is less than or equal to 1:1 - we have struck a thermodynamic limit, and gain no return from our efforts.
Extending that concept to industrial societies it is estimated that for their oil-based transportation systems to function, a minimum EROI of 3:1 is required. The EROI for US crude oil production has declined from 100:1 in the 1930s to about 17:1 today. Corn ethanol could never substitute for oil since its EROI is very close to 1:1.
The available energy supply – sunshine hours, silos of wheat, or barrels of oil – and the energy cost of obtaining it, are fundamental physical constraints setting limits to human activity.
The oil plateau
It is easy to take false comfort from the size of oil stocks while ignoring their capacity to deliver. Extracting and processing tar sands and oil shales requires much more energy than conventional oil and massive quantities of water. EROI for tar sand is only about 5:1, and for most shales, 1.5:1 – 4:1.
According to the International Energy Agency (IEA), conventional oil production peaked in 2006. Oil discoveries peaked in the 1960s. Declining conventional production is being compensated for by non-conventional oil: expensive tar sand and deep-sea wells. Today, we consume about three barrels for every new barrel found.
The IEA’s chief economist stated that “in order to stay where we are in terms of production levels … we have to find and develop four new Saudi Arabias.” Oil supply and demand dynamics are complex, but it is certain that “the age of cheap oil is over” and there is an emerging consensus that world oil production will plateau within a few decades.
Charlton remains unconcerned because he believes technology will increase the amount of oil that can be extracted from existing reserves. However, the last 30 years of technological development saw a mere 3% improvement in recovery rates. Ultimately it is the physics of oil fields that determine their production rates, not price signals.
Economic output is directly linked to energy consumption. It has been calculated that global economic production consumes energy resources at a constant rate of almost 10 milliwatts per inflation-adjusted 1990 US dollar. Thus sustained economic growth requires increasing energy consumption ad infinitum. Unlimited economic growth on our finite planet is simply impossible.
The cost of energy as a percentage of GDP is an important indicator for industrial societies. Broaching a threshold value – estimated between 8% and 10% – leads to economic instability. The cost of oil is especially important since oil-dependent technologies underpin all modern transportation, cancelling out geography and enabling extensive just-in-time global supply-chains.
High oil prices may force their reconfiguration. For example, increased transportation costs from oil’s 2005 - 2008 price hike equated to a 9% tariff on international trade. It effectively wiped out decades of trade negotiations. Some US multinationals contemplated bringing off-shored manufacturing home.
Doing the math on “clean coal”
Charlton regards carbon capture and storage as one possible technological solution to increasing energy supply while reducing CO₂emissions. He complains that Green campaigners “haven’t done the maths” on renewables, but neither has he on “clean coal”. Others have.
To sequester one-third of the CO₂emitted from the world’s coal-fired power stations in 2010 would have meant burying a volume of the compressed gas exceeding by 70% the total global crude oil production for that year. The scale of the required infrastructure would be vast.
Furthermore, an MIT study shows this technological fix reduces the generating efficiency of power plants by some 27–36%. This increases both coal consumption and the volume of CO₂ to be sequestered. “Doing the maths” suggests clean coal is a most unlikely contender for significantly reducing greenhouse gas emissions.
By privileging economics and technology, and ignoring physics and thermodynamics, Charlton is seduced by our apparent mastery of nature. Like Icarus, we ignore the constraints of material reality at our peril.
There are times in the history of our nation when our very way of life depends upon dispelling illusions and awakening to the challenge of a present danger. In such moments, we are called upon to move quickly and boldly to shake off complacency, throw aside old habits, and rise, clear-eyed and alert, to the necessity of big changes. Those who, for whatever reason, refuse to do their part must either be persuaded to join the effort or asked to step aside. This is such a moment. The survival of the United States as we know it is at risk. And even more—if more should be required—the future of human civilization is at stake.
Our economy is in terrible shape and getting worse. Gasoline prices have been increasing. Jobs are being outsourced. Home mortgages are in trouble. Banks, automobile companies, and other institutions we depend upon are under growing pressure. The war in Iraq continues, and now the war in Afghanistan appears to be getting worse.
Meanwhile, the climate crisis is growing more dire—much faster than predicted. Scientists with access to data from Navy submarines traversing beneath the north polar ice cap have warned that there is now a good chance that within five years it will completely disappear during the summer months. And by the way, our weather sure is getting strange, isn’t it?
Yet when we look at these seemingly intractable challenges, we can see the common thread running through them. Our dangerous overreliance on carbon-based fuels is at the core of all of these challenges—the economic, environmental, and national security crises. We’re borrowing money from China to buy oil from the Persian Gulf to burn it in ways that destroy the planet. Every bit of that’s got to change.
If we grab hold of that common thread and pull it hard, all of these complex problems will begin to unravel and we will find that we’re holding the answer to all of them right in our hands. The answer is to end our reliance on carbon-based fuels.
Scientists have confirmed that enough solar energy falls on the surface of the earth every 40 minutes to meet 100 percent of the entire world’s energy needs for a full year. Enough wind power blows through the Midwest corridor every day to meet 100 percent of US electricity demand. Geothermal energy is capable of providing enormous supplies of electricity.
But to make this exciting potential a reality, we need a new start. That’s why I’m proposing a strategic initiative designed to regain control of our own destiny. It’s not the only thing we need to do. But it’s the linchpin of a new strategy to repower America. I challenge our nation to commit to producing 100 percent of our electricity from renewable energy and truly clean carbon-free sources within 10 years. This goal represents a challenge to all Americans, in every walk of life: political leaders, entrepreneurs, innovators, engineers, and every citizen.
A few years ago, it would not have been possible to issue such a challenge. But the sharp cost reductions beginning to take place in solar, wind, and geothermal power—coupled with the recent dramatic price increases for oil and coal—have radically changed the economics of energy.
Of course there are those who will tell us this can’t be done. Some are the defenders of the status quo, those with a vested interest in perpetuating the current system, no matter how high a price the rest of us will have to pay. But even those who reap the profits of the carbon age have to recognize the inevitability of its demise. As one opec oil minister observed, the Stone Age didn’t end because of a shortage of stones.
We should speed up this transition by insisting that the price of carbon-based energy include the costs of the environmental damage it causes. I have long supported a sharp reduction in payroll taxes with the difference made up in CO2 taxes. We should tax what we burn, not what we earn. This is the single most important policy change we can make.
America’s transition to renewable energy sources must also include adequate provisions to assist those Americans who would unfairly face hardship. We should guarantee good jobs in the fresh air and sunshine for any coal miner displaced by impacts on the coal industry.
To those who argue that we do not yet have the technology to accomplish these results: I ask them to come with me to meet the entrepreneurs who will drive this revolution. To those who say the costs are still too high: I ask them to remember that when demand for oil and coal increases, the price goes up. When demand for solar cells increases, the price often comes down. To those who say the challenge is not politically viable: I suggest they go before the American people and try to defend the status quo. Then bear witness to the people’s appetite for change.
A political promise to do something decades from now is universally ignored because everyone knows it is meaningless. But 10 years is about the time that we as a nation can hold a steady aim and hit our target. When President John F. Kennedy challenged our nation to land a man on the moon and bring him back safely in 10 years, many people doubted we could accomplish that goal. Eight years and two months later, Neil Armstrong and Buzz Aldrin walked on the surface of the moon.
That was 39 years ago, and since then, many Americans have begun to wonder whether we’ve lost our appetite for bold policy solutions. Folks who claim to know how our system works these days have told us we might as well forget about our political system doing anything bold, especially if it is contrary to the wishes of special interests.
I’ve got to admit, that seems to be the way things have been going. But I’ve begun to hear different voices in this country from people who are tired of baby steps and special interest politics. So I ask you to join with me to call on every candidate, at every level, to accept this challenge—for America to be running on 100 percent zero-carbon electricity in 10 years. This is a generational moment. We need to act now.