WAKE UP - THIS IS (Y)OUR ONLY HOME !

In spite of the 'Inconvenient Truth' warning, we are believing a 'Reassuring Lie' put to us by shortsighted* leaders, who do not understand reality, who tell us that growth can go on forever. With wind and solar power so ubiquitous, surely we can easily power an economy of literally any size if only we try hard enough? Here is an explanation whether Physics & Chemistry support this idea or not.

Is the Antropocene already ending ?

The International Union of Geological Sciences is about to decide to officially name a new geological period attributed to us humans – the Anthropocene, starting in 1945. When looking at how much we have changed and are still changing the face of our planet since WWII, this label might be well justified. We are leaving our mark in so many ways. With vast cities, transportation networks and farmed land, our planet looks entirely different even from space than it ever did before. That change is most impressive during the night, when most advanced economies and big cities worldwide stick out as islands of light in the dark.

This change is the result of a success story without precedent in human history. The period since 1945 saw – except for the years of the “Great Recession” in 2008 and 2009 – a growing global economy every single year, more than quadrupling the size of inflation-adjusted Gross World Product within only 70 years[1]. Within the same period, the number of humans on our planet tripled from roughly 2.45 billion in 1945 to 7.4 billion in 2015[2].

Another doubling until 2050 ?

Even the most conservative growth predictions of 2% annually for the next 35 years[3] expect at least a further doubling of the world economy until the year 2050, and another 2 billion humans on the planet.

At the same time, we are making big plans for curtailing the use of fossil fuels, for making our economies greener and more cyclical. There is talk that “free solar energy” will soon replace coal, oil and natural gas at scale, making the ambitious objectives of the Paris COP21 climate treaty[4] a breeze to accomplish, with benefits for everyone.

But is it really that easy? Were we to double the world economy again in the next 35 years, the changes we have seen since 1945 would pale in comparison. Even more and larger cities, more infrastructure, more energy and resource needs, more farming would be the consequence, and much more wealth for everyone.

...Most People Think Otherwise

Yet when you ask people in advanced economies if they think that their children will be economically better off than their parents, a clear majority says “no”[5]. In the US, a country just coming off electing a president suggesting to “Make America Great Again”, 60% expect their children to be poorer. In the UK, the country “Brexiting” the EU, 68% said the same, and in France, where a populist presidential candidate made it to the final round, a full 85% expect a bleaker economic future for their children. Even more than 70% of Germans, when asked if their pensions are safe, have doubts[6].

There seems to be a discrepancy between those forecasts painting an economically and environmentally bright future and people’s sentiments, and populists all over the map are actively exploiting this gap. They deny climate change, blame immigrants, the media and the “establishment” for growing worries about the future, and promise simple solutions that solve all problems.

Unfortunately, a thorough review of the data confirms people’s gut feeling: Since the years 1995 in Japan, 2000 in the U.S., and 2009 in Europe, incomes have stagnated or declined for a large majority of households. Un- or underemployment, particularly for young people, is still a problem in many places after 8 years of a heavily assisted recovery since the financial crisis. All that stimulus, deficit spending, quantitative easing, and those explicit and implicit guarantees for countries and corporations in trouble have done remarkably little to lift the economy. On a global scale, there is no shortage of labor, nor a shortage of capital – the supposed key drivers of most economic modelling[7] – yet the growth dynamics of the 20th century seem to break as we fully embrace the 21st.

Our current economic model is no longer fit for the 21st Century

When we take the period since 1945, for guidance, there is no surprise we come up with the idea that the economy will double again during the next 35 years, even while we wean ourselves off fossil fuels. Humans are wired to look at the recent past for guidance, and throughout most of our 200’000-year history of slowly changing environments, that has been good advice. But maybe, this time we should look a little further back - and not be so shortsighted* - to understand what was and is really happening.

During the last century, economic science has come up with a view that sees economic output as a result of labor and capital availability, and improving productivity of the two. This eliminated a key parameter from older models: land availability and land productivity, standing for our human ecosystem’s ability to extract and convert the necessary planetary resources into economic output. They were inherently limited by the size of planet Earth. Following this removal, subsequent economic models became literally limitless.

Fig 1: Prevailing Economic Theories historically follow changes in the Energy Mix

A closer look at what powered society explains why we suddenly dropped land and its productivity from that picture. The shift coincided with the rapid ascent of fossil energy. As their name suggests, fossil fuels - like coal, oil and natural gas - are the result of geological processes that “cooked” ready-to-burn high-density energy sources by compressing and heating the residuals of 500 million years of plant growth. Or, differently put: fossil fuel is essentially prehistoric solar power. During the past 200 years, we have burnt what our planet took 200-250 million years to produce[8]. On average we consumed 1 million years of prehistoric solar power per calendar year! This finite stockpile of prehistoric energy, and only that, enabled a “seemingly limitless” economic system with the growth we experienced. Since fossil energy consumption is still increasing, we currently, we are burning 4.5 million years’ worth of stored fossil biomass per calendar year[9]. In other words in 2016 alone, we consumed the prehistoric solar power of a period that is 22 times longer than the time our species has been on this planet.

Burning the candle on both ends : cheap energy & cheap credit

Unfortunately, our energy and natural resource reserves are deteriorating fast. This doesn’t only apply to fossil fuels, where we are resorting to increasingly difficult-to-extract sources like off shore, deep water, oilsands and shale oil. More difficult means : it takes more energy to produce the energy. The economic benefit is declining.

Equally, most other essentials of industrial societies share the same predicament. Copper ore grades, for example, went from 2% at the beginning of the 20th century to around 0.5% in 2015; to get to the same amount of copper - needed for electrification - we now need to excavate, move, crush and process four times as much rock as we used to around 100 years ago. It is not hard to imagine how bad ore grades we will be if we wanted to further grow the world economy. And contrary to common belief, the size of the economy and its resource use have been tied together at the hip for all of human history, and there is no reason to believe this will change significantly during the next decades[10].

The consequences are straightforward: the efforts needed to make the same amount of energy and natural resources available to mankind are increasing, and the economic benefits measured as investment and consumption are decreasing. This can already be felt all over the world. During the past two decades, we have started to compensate for the disappearance of “cheap energy from the past” with “cheap credit from the future”. With interest rates below inflation, we no longer pay the real price of resource extraction and conversion, giving our economic system a temporary new lease of life[11]. But with credit expansion slowing down in a growing number of places, that “easy money” story is ending quickly[12].

When looking at the scientific evidence, it is much more likely that the global economy will be half the size of today in the year 2050, as we are running out of affordable inputs. That would deal a serious blow to the idea of an ever-lasting “Anthropocene” and a shock to those political leaders who think they need economic growth, to stay in office. But when we take a thoughtful step back: how could this really surprise anyone, given that we live on a planet of finite dimensions? Infinity cannot exist in a finite environment.

Fig 2: Shortsighted* back-view prevents us from seeing upcoming tipping point

Looking back beyond one's own lifetime, is different from personal experience. Yet people alive now, have experienced an era that has in many respects been exceptional. To mistake this historic abnormality, as reference for what is normal, is a dangerous form of shortsightedness that prevents us seeing that we are reaching a tipping point.

Free Solar isn’t Free !!!

But wouldn’t the unavoidable return to renewable energy provide yet another growth opportunity? Aren’t wind and sunlight so ubiquitous that we could easily power an economy of literally any size if we only tried hard enough? Unfortunately, the biggest misconception in our bright plans for a future is to think that renewable energy will one day compare favourably to the cheap fossil fuels that have served us the last 200 years and made the industrial revolution and the “Anthropocene” possible. Physics and chemistry do not support this.

It has become fashionable in some circles to believe that human innovation will always triumph and that population, with its inevitable needs for food, space and waste disposal, may therefore expand indefinitely...

...Archaeologists of the future may find this belief in infinite bountiful technology as quaint and touching as magical faith in divine kings. [13]   

With fossil fuels, the only things we need to do is unearth them, transport them, refine them, bring them to their place of final use and burn them at our leisure. We can compare this to a ready-made microwave meal that we can prepare quickly anytime we like, at relatively low cost and effort. With renewable energy, the analogy is different. About 2-3 billion people worldwide are almost fully dependent on wood and grasses serving their energy needs; and that makes them the poorest on the planet. Indeed poor people depending on renewable energy have to plant (or wait for nature to grow) their energy sources, harvest and collect them seasonally, dry them, and store them to have heating and cooking energy when needed. Meaning less time and effort is available for other value creating economic activities. That is why their economies are smaller and why they are poor. This is obviously not the life we envisage when talking about a renewables-driven future for our advanced economies.

However, in the advanced world of combustible high-quality fuels and electricity at our fingertips, renewable inputs in 2015 globally accounted for only 4-5%[14]. About 60% of that originated from hydropower, a source of very limited scalability[15], about 0.7% from biomass, with equal limits[16]. Wind and solar power only represent 0.5% each in today's energy mix. In certain countries, their share is higher[17], but all those places have one thing in common: they are largely de-industrialized advanced economies that have out-sourced/off-shored most of their energy intensive extraction and conversion efforts to economies dominated by fossil energy. Essentially their energy mix statistics are an accounting error. The fossil energy consumed - and CO2 emitted - to produce pressed steel in China for European cars, should be allocated to the statistics of those European countries, just like the steel is part of their GDP.

A Different View driven by Natural Sciences

The reason behind their limited share, of 0.5% each, is not the availability of sunlight and wind. Over the course of one hour, the sun provides energy equivalent to one year of consumption. It also is not the price of the technology. Solar industry fans like to attribute the lower price of solar to increased photovoltaic conversion efficiency. They forget that the main driver of lower costs - besides the application of industrial best practices - has been the relocation of the manufacturing of PV panels from Germany to China. Thus Germany's high labour cost, high environmental compliance standard and expensive energy (because of the large share of renewables) have been substituted by China's lower labour costs, lower environmental standards, subsidies and cheap energy from coal. The latter means that the period these PV panels need to earn back the CO2 emitted for their production has become longer. Inspite of occasionally occuring claims, solar with a reasonable amount of storage, can nowhere compete with grid prices without significant subsidies. The claim that solar power, one day will be abundant and free is not supported by physics & chemistry. Try frying an egg in the sun.

What is the size of our challenge to substitute our annual consumption of 4.5 mio years of prehistoric solar power (fossil) with current solar power (today about 0.5% of supply)? Because of day/night alteration and day/night length-variation (21 June vs 21 Dec), we have to build significant over-capacity. Weather variation itself (more and less sunny days) means even more over-capacity. For 1 unit of desired output, experts think between 5-10 units of capacity need to be build. Obviously they will have to be at different locations and connected to the grid, requiring extra redundant use of copper.

Here’s a back-of-an-envelope calculation using the best-case scenarios provided by key organizations in energy planning. They expect global average energy demand to grow to 18.5 TW (from today’s 15 TW), a very optimistic assumption[18]. If we wanted to generate 20% of that total energy need by solar by the year 2050, we would need to have roughly 18.5 TW of solar capacity by that time to supply 20% of demand. That means a capacity of 100 times more than exists today. To accomplish that, we would have to manufacture and install 330 times the solar panels we mounted in 2015. Producing those, using today’s best technologies, would require about 15% of global sheet glass production capacity for each of the next 35 years, and 40% of today’s silicon capacity, assuming a 35-year life span of each panel[19]. This is highly unlikely to happen, but theoretically possible.

The resulting problem however is that the output of a solar PV cell is not what we want and need to power an advanced economy. Our current economic model is premised on energy demand driven availability - energy at our fingertip when we want it. Prior to the industrial revolution, our much simpeler economy ran on 100% renewables. Our economic model was based on energy supply driven availability. The windmill milled the grain when the wind was blowing and ships sailed only when the trade winds blew in the right direction.

Like biomass, solar PV (or wind, or concentrated solar power) is delivered seasonally and intermittently, and, to make matters worse, requires complex storage and demand management efforts unless we consume the output immediately (as in energy supply based economy). Even compared to biomass, solar & wind are at a significant disadvantage, as wood or grass become more suitable for burning when stored in a dry space, while electricity doesn’t. 

That imaginary increase of 0.5% to 20% share of solar in the electricity mix, within the geographical range where we can meaningfully transport electricity, will provide more than 150% of overall energy needs[20] at certain times, and 0% at others. As of today, there are no feasible mitigation and storage solutions available to handle that economically. If we added wind power to supply another 20% of our energy needs, there will be times when solar and wind complement each other, but more often than we would hope, solar and wind together will deliver close to 250% of energy needs at one time, and close to 0% at another.

Both for the solar & wind capture capacity, a huge amounts of natural resources will be needed, which have been significantly depleted. (Ref copper example). It will have more environmental impact due to the larger/deeper areas to dig up and will require more energy & effort to the same amount of resource than 100 years ago. And energy itself will be harder to get (either more difficult fossil or difficult renewable).

Our energy-demand driven economic model is only 150 years old, but if we want to stick to it, with a significant share of renewable energy in the mix, colossal battery capacity will need to be built to store and release the power according to our needs. Huge amounts of natural resources will be needed, which have been significantly..... etc, etc, as above.

To understand the potential and the implications of introducing renewable energy sources at scale into our complex energy delivery systems requires complex systems thinking and the modelling of all key components. When doing so, a strikingly simple answer results: it is possible, but the efforts required (for generation capacity, storage and demand management) will be enormous. We will experience the same effect, when we would continue with ever more difficult fossil fuels: our economies will shrink.

The Consequence : an Economically Smaller Future

Fig 3: A smaller economic future due to Difficult Fossil & Difficult Renewables

To summarize the above: no matter if we try to extend the lease of life of fossil energy powering our societies, or force a transition to renewables, marginal benefits to our economic systems are decreasing. And as soon as we run out of the cheap credit options that temporarily allow us to pretend we can still afford what we buy today, reality will pull us back. Like it already has pulled back a large number of people all around the world in the past decades. But leaders seem to find it difficult to grasp this.

A Message for Leaders, Policy-makers and Responsible Citizens

1. Get real - about reality : we cannot regulate physics. Develop realistic policies.
2. Get honest - about communicating/educating society : to prevent societal collapse.
3. Get on - with the required transformation, before populists get to power by further exploiting the growing dissatisfaction of the population.

The prevailing ignorance - also among many leaders - about something as essential as energy, as the foundation of all the 'stuff' we make and do, is further exacerbated by the rise of fake news threatening both Truth & Trust. These are existential ingredients for democratic societies to function. Societies only function properly when leaders take well-informed decisions. Democracies only function if voters can make well-informed choices. Once we lose the ability to "know" and "understand", democracies will erode and ultimately disappear, as votes get ‘bought’ by the people with the largest budgets who can afford to define their version of "truth" and societies may collapse.

In his book 'Collapse'[21] Jared Diamond describes the characteristics of societies that are about to collapse.

 … the main lesson to be learned from the collapses of past societies is that a society's steep decline may begin only a decade or two after the society reaches its peak numbers, wealth, and power. The reason is simple: maximum population, wealth, resource consumption, and waste production mean maximum environmental impact.

Does this sound familiar ? Does this look like the situation we are in now ?

Two crucial choices distinguish societies that survive, from those that collapse :

• They dare to take long term precautionary measures when problems manifest themselves, but have not yet taken on crisis proportions, and have the preparedness to rethink core assumptions.
• They proactively decide which traditional values can be maintained under the evolving circumstances and which have to be let go and be replaced by others.

A unique opportunity - if we seize it. Now !

There is some good news though: First, economic output is not correlated to happiness above $8,000 - $10,000 average GDP per capita, from there, people’s life satisfaction[22] doesn’t grow, we only add (resource) consumption with limited marginal utility. We can use a simple household example to illustrate that: Living without a proper stove (gas or electricity) and without a washing machine would be a real burden for anyone, but many additional devices we use, such as hairdryers, dishwashers, toasters, etc. add much less benefit; we could easily be happy without them.

What is most surprising: A vast majority of people seems to intuitively understand that our economic future will be smaller than today’s, and scientific evidence is available to back that gut feeling. By acknowledging this new reality, we could start discussing how to shape a future where we distribute a smaller amount of resources in a way to ensure a good and meaningful life for everybody, and even introduce renewable energy sources to support that smaller economic footprint.

Yet there is no broad discussion on how that future should look like, because there is no consensus on the scientific facts. Instead, politicians from far-left to far-right are pretending they have a recipe to fix the “growth engine”, and that with their approach, growth for everyone will again be possible. If we continue down that path and follow leaders that do not understand reality and are not honest in communicating (and educating) about reality, and embark in desperate trying, fighting, and blaming, the “Anthropocene” will be over before this century is out, as Stephen Hawkins[23] forecast earlier this year. Because infinite growth can not exist on a finite planet.

The greatest shortcoming of the human race is its inability to understand the exponential function.

[Alfred Bartlett, Mathematician]

Some hyped industry leaders, gurus and even some Nobelprize winners, are claiming either abundant free energy or that we can (and should) move to another planet, suggesting this would be easier than sorting things out on this planet. These preposterous proposals are a serious detraction to common sense and (y)our future wellbeing. Physics & chemistry do not support their ideas. And when both cheap energy and cheap credit come go an end, their plans will fade.

Let's face it, this is (y)our only home. For this planet to stay the home of (y)our species, the appropriate framework conditions that (y)our form of life depends on, must be preserved. In using the unique treasure-trove that the stockpile of concentrated prehistoric solar power is, we have triggered existential changes to the framework conditions on this planet, that are not suitable to our species. Therefore things will need to change and we need to think sySTEMically on how to plan a future without the support of convenient prehistoric solar power.

Hans van der Loo is Chairman of the Advisory Board of the Institute of Integrated Economic Research (IIER). He studied at Nyenrode Business School in Breukelen, ESCP in Paris, Oxford and Düsseldorf and at Sophia University in Tokyo. He has had a 30 year career working for McKinsey, Royal Dutch Shell and WBCSD. He has lived in 9 countries and worked in some 50 countries all over the world. He has authored several articles and co-authored a book about 'Resilience'. He is a frequently asked speaker at international fora such as the Bilderberg Conference, the COP21 Paris, the European Business Summit, the World Economic Forum and lectures at various Universities.

He is an advisor to the European Commission on promoting STEM Education www.stemcoalition.eu to strengthen sySTEMic thinking in society, non-executive director of a number of companies, Chairman of a Family Foundation in Munich and is member of the Advisory Board of the Sieboldhuis-Japan Museum in Leiden.

Institute for Integrated Economic Research (IIER) is a non-profit research organization focused on developing an unbiased view of global economic processes. IIER tries to re-focus economic research away from individual subsystems, towards a broader understanding of the larger forces driving overall progress or retreat. The global economic crisis that began in 2008 is a good example of why this is necessary - traditional economic science neither provided the ability to predict the current downturn, nor does it sufficiently explain the mechanisms at work. For more information : www.energyandstuff.org

IIER is an academia-type (and -related) institution, without a political or economic agenda, bound to science rather than opinion. It has built an economic model that works, and is building tools that can be used by society as we speak. It has been right about almost everything in economics during the past 10 years, including resource/energy price dynamics and the rise of extreme parties. It is now starting to launch a more public outreach campaign. www.verimedia.org

IIER organises briefings to help policy makers, industrial and societal leaders gain systemic insight to deepen understanding of reality and possible futures.

If you like to support IIER use this link to donate using PayPal or any credit card.

[1] https://www.ggdc.net/maddison/maddison-project/home.htm              

[2] https://www.un.org/en/development/desa/news/population/2015-report.html

[3] https://www.ipcc.ch/ipccreports/sres/emission/index.php?idp=14   

[4] https://www.dhirubhai.net/pulse/cop21-new-years-resolutions-hans-van-der-loo

[5] https://www.pewglobal.org/2015/07/23/global-publics-economic-conditions-are-bad/

[6]https://www.faz.net/aktuell/politik/inland/allensbach-umfrage-die-rente-ist-sicher-oder-12774145/infografik-die-12774217.html

[7] https://economicpoint.com/production-function/cobb-douglas   

[8] IIER calculations & Peakoil calculations   

[9] It is assumed that a total of 1000Gt Carbon is available in the form of gas, oil and coal reserves that can be produced and that thus far some 400Gt Carbon has been used. Currently the world consumes 9.1 Gt Carbon/year, or 1.1% of total available fossil reserves. As the total reserves were built up over 500mio years (since the Cambrian era) this means that each year, we consume an amount of energy that required 4.5 mio years of prehistoric photosynthesis.

[10] https://www.grida.no/graphicslib/detail/declining-copper-ore-grades_f309# https://minerals.usgs.gov/minerals/pubs/commodity/copper     

[11] https://unep.org/documents/irp/16-00169_LW_GlobalMaterialFlowsUNEReport_FINAL_160701.pdf   

[12] https://www.mckinsey.com/global-themes/employment-and-growth/debt-and-not-much-deleveraging   

[13] Fagan, Floods, famines and emperors, xvii.   

[14]https://www.iea.org/publications/freepublications/publication/renewables-information---2016-edition---excerpt---key-renewables-trends.html 

[15] Study hydropower feasibility   

[16]   https://www.iea.org/newsroom/news/2014/september/how-solar-energy-could-be-the-largest-source-of-electricity-by-mid-century.html   

[17] Denmark, Germany

[18] Based on recent efficiency improvements in energy efficiency, a doubling of the world economy would require growing energy inputs by 90%, this assumption of only 23% is likely overly optimistic

[19] Typical life expectancy of a panel is between 20 and 30 years, often with an 80% performance guarantee after 20 years

[20] A sunny and cool June late morning that falls on a Sunday, where overall energy needs are low

[21] Jared Diamond - How Societies choose to fail or succeed

[22] https://worldhappiness.report/   

[23] https://futurism.com/stephen-hawking-humanity-only-has-100-years-left-on-earth-before-doomsday/