The wealth of nations

Climate change is eroding the value of the planet's wealth. We can still save the planet. It's not too late. All we need to do is two things:

1. All the things we've already thought of.
2. Some additional things we haven't thought of yet.

Of course, rather than "saving the planet," it would perhaps be more accurate to say "desist from killing the planet." That is perhaps a rather more alarming way of putting it. But we should be scared.

"Item 2" is necessary because we probably passed the point of no return five years ago. How can we tell?

When different biological processes fix carbon in methane, they sometimes do so with different relative abundances of its isotopes. The different mechanisms for the release of methane into the atmosphere, which release different proportions of methane fixed by these different processes, can be reflected in the relative abundances of these isotopes in atmospheric methane. These relative abundances have been fairly stable for a long time. This suggests that, although the level has been rising, the mechanism has been fairly consistent.

However, in the last five years we can see a shift in the isotopic composition of carbon in atmospheric methane. This suggests previously locked up deposits of methane may be being released, such as those in permafrost, sediments, and ocean depths. The release of methane is a significant positive feedback mechanism for global warming, along with other effects such as shifts in albedo.

To illustrate the seriousness of the situation let's consider some numbers. Methane has 86 times the 20-year GWP (global warming potential) of CO2 (IPCC, 2013). Burning 1 tonne of methane produces 2.74 tonnes of carbon dioxide (the ratio of their molar masses). So if we used green hydrogen generated by, for example, hydrolysing water using electricity generated from renewable energy, to methanise atmospheric carbon dioxide, or carbon dioxide that is a combustion product that would otherwise be released into the atmosphere, we only need to leak 3.4% of it to cancel out all the benefit of capturing the carbon that way. We already leak half that amount anyway from the gas distribution infrastructure into which we would inject that methane (EPA).

Roughly 20% of global warming is due to methane. So far. Most of that comes from gas leaks. Another important contribution is agriculture. So we could all do with doing less fracking and eating fewer hamburgers. But that is nothing compared to the volume of methane locked up in permafrost and sediments. Until now.

This is on top of the global warming we know about due to carbon dioxide emissions. This requires urgent attention. The IPCC15 report last year made clear that our 2050 targets must be 2030 targets. I get quite impatient with people who dispute this. "2030 is not a realistic timescale for the sort of deployment of countermeasures that would be required," they say. Yeah, well it's less realistic to wait to destroy an asteroid until after it hits the Earth than before it hits the Earth.

Since the publication of the IPCC15 report, however, the analysis of the shift in the isotopic composition of the carbon in atmospheric methane over the last five years that I mentioned was published ...

... you know that bit at the end of the disaster movie where they destroy the asteroid and everyone is saved and rejoices and perhaps reflects on hard lessons learned? Well imagine, instead of being saved, instead of celebrating, what happens is they see, once the debris clears, that there's an even bigger asteroid that was concealed behind the first one, and it is too late to do anything about it. That's methane, that asteroid. That's those isotopic abundance numbers. That's how I felt when I read about them. An indigestable ball of dread in the pit of my stomach keeping me awake at night.

So, as I said earlier, that would come under "Item 2" in the list in the original post at the top of this thread.

This now seems like a good point to turn to "Item 1". We're on more familiar turf here. We can look at how social collapse occurs historically and, you know, try not to repeat that, given the stakes, given we're now "all in" as a species, as it were.

What we see now - environmental degradation and increasing inequality - is a classic signature of social collapse. This is common throughout human history and prehistory. It's nothing to do with ideology. Marx won't save you. The asteroid doesn't care about your dialectic. This pattern is evident during periods where the details of that kind of analysis would be unrecognisable and inapplicable. What's the hieroglyphics for proletariat? How did they discuss class warfare in neolithic Orkney? This is something that happened even during periods of primitive Utopian communism of the sort Engels entertains. What is helpful is seeing why those societies collapsed, and this is best understood in terms of what we mean by wealth.

Wealth is the word we use to describe something that is generated and accumulated to confer and preserve privilege. We quantify it. We have bank balances and portfolios of assets. But wealth is not quantifiable in any static sense because there is no permanent way to represent wealth. All ways of generating the kind of wealth that can serve the stories we tell ourselves to justify the levels of privilege and poverty we tolerate undermine its own preservation.

Value is eroded by technological innovation and environmental impacts. All forms of wealth become either obsolete or unsustainable (or, of course, both). Assets are stranded. People are left holding warehouses of things no-one wants anymore, or can no longer afford because the damage they cause has finally been factored into their cost.

So a healthy society continuously transforms the way wealth is represented from forms that are gradually becoming obsolete or less sustainable to more innovative and sustainable forms. This is why we pay scientists to do research and development. It's not to probe the mysteries of the cosmos (although that is a nice by-product). It's to rescue wealth invested in one deteriorating form and transform the way it is represented into something shiny and new to which people can still attach some value.

Why is this necessary, fundamentally? Wealth embodies the extent to which we have removed ourselves from the natural world and set ourselves up in competition with it. It is an abacus of atrocity, in which habitats and ecosystems are mutilated and eradicated to create human systems producing commodities that inevitably perish because they are nothing more than the output of the abattoir we have erected on the site of the ancient forests in which we once hunted. The wealth of nations is the death of nature. It is continuously depleted by a process of decay. Talking about economic growth in this context is as ridiculous as a bunch of maggots who trade the carcass they inhabit talking about economic growth.

When this process of wealth renewal falters, such that wealth is not rescued from an unsustainable or obsolete way of representing it, and the illusion of growth cannot be maintained, oligarchs must make unprecedented asset grabs to preserve their privilege. This leads to an uptick in inequality. Social unrest then occurs while the root cause is neglected. Social collapse ensues. It will not have escaped your attention that recent political developments suggest we are currently in the latter stages of a worldwide oligarchic coup that has been underway for decades motivated by precisely these considerations.

We avoid this by restoring the process of wealth transformation, from unsustainable to sustainable representations (I say "representation" because "wealth" is fundamentally a fiction).

So, at this moment in time, the most productive thing to do is not to overthrow the evil corporations. We'll get to that eventually, but just now we need to use market mechanisms as the only tools available that can do what we need to do in the short space of time available. Ideology and politics at this point is an unhelpful distraction. We don't have time for a revolution. We only have time to use market mechanisms to transform wealth into a sustainable form.

It is worth pointing out at this juncture that over the last 10 years more has been achieved in terms of reducing emissions by reducing the cost of renewable energy through innovations and deployments at scale that impact the bottom line than any policy initiative. This has attracted institutional investors as well as utilities due to the business case, and insurance companies due to the risk profile, resulting in commitments to divest $6 trillion from fossil fuels & reinvest in renewables. So the necessary wealth transformation is already underway exactly when needed!

So we are in a place where share holder value is not about the simple arithmetic of wealth anymore. We must value companies on a differential basis now: how well do they rescue the wealth of our society from the oblivion of obsolescence & environmental irresponsibility? We tolerate the concept of shareholder value only if it is a mechanism that transforms wealth from damaging to safe representations, only if it preserves the procedures for doing so. If not, it is stagnant and must fall.

So, to continue: wealth is a fiction we tell ourselves to maintain privilege. In a healthy society this fiction is accepted: privilege is seen as a reward for being socially useful in some way. This consensus is threatened if the processes of value erosion mentioned above, without a process of transformation to change the assets which represent wealth, mean wealth must be expropriated to maintain privilege, leading to perceptions of inequality.

Now the good news. Item 1 at the top of this thread, and the process of transformation necessary to achieve it, has a massive helping hand from one thing that makes renewables immediately attractive. Not zero emissions, but zero incremental cost. We are currently witnessing the stage where renewables begin to undercut other methods of generating power as a consequence. This will only continue, pulling investment away from unsustainable methods of generation. Ultimately low energy costs will drive a more general transformation as they propagate through all activities reducible to energy costs. It won't be Utopia, but it won't mean the end of civilisation.

We need to understand prosperity not in terms of growth but in terms of societies that successfully transform how wealth is represented into sustainable assets and share that wealth in a way that satisfies a consensus about fairness.

As is often the case, we have the wrong end of the stick. The narrative should not be about achieving growth but averting shrinkage that occurs through inevitable erosion of the value of wealth formulated in a static way due to its obsolescence and environmental impacts. If we don't change the narrative, the reaction to shrinkage and stagnation is exactly as described - unwarranted expropriation of wealth by oligarchs driving perceptions of inequality while ignoring environmental consequences - and social collapse is the outcome.

Returning to Item 2, it is natural to ask "what is to be done?" There seems little point if the problems leading to methanocalypse remain unresolved. I cannot provide a detailed prospectus at this point, but I can make a hopeful observation.

Before I became involved in the wind industry, I was involved in research that used diamonds in nuclear physics experiments. I became aware of something that had happened in the '50s that most people are not aware of. The world's consumption of industrial diamond abrasive grits was reaching a critical level, when demand was about to outstrip supply. The consequences of this are difficult to appreciate, but so many industries depend in one way or another on diamond abrasives that the shortfall in supply would have precipitated a significant economic crisis.

However something else happened. The first commercially viable diamond synthesis techniques came online. The growing demand could be satisfied with the additional supply of synthetic diamond grit. Crises averted, without anyone realising.

My point is, as I have said elsewhere, that "most challenges are met by solutions that emerge without explicit co-ordination or acknowledgement. They emerge from our general unexpressed awareness. What is necessary is that the conditions for solutions to emerge are preserved. These include well informed participants in society sharing their experiences on the basis of common concerns. They include the understanding that our interests are both individual and collective. Our fates are geared in secret, where we cannot interrogate them, in hidden hinterlands of thought where our intentions and anxieties overlap and intertwine. When our salvation is announced, even though it may seem miraculous, it is mundane."

So I am hopeful that, although in many way the situation seems bleak, there is a way to avert catastrophe, and that a solution will emerge from the "hidden hinterland" where "our fates are geared in secret". As far as the wealth of nations is concerned, this is the real "hidden hand".

We need companies that future-proof wealth by putting it to work for future generations. In a world of accelerating technological obsolescence and intensifying environmental constraints, the time to rescue assets is now. As institutions disinvest in assets destined to become stranded by climate change, and technology eliminates the cost of production and erodes the addition of value possible through established business models, it is necessary to manage the process of protecting wealth by configuring it in a way that survives change. This can only be achieved by effectively financing the future.

It is necessary to invest in projects like

• Decarbonisation of global shipping through the integration of hydrogen propulsion with marine renewables
• Solar powered electrosynthesis of hydrocarbons from atmospheric carbon dioxide. Technologies are now emerging with efficiencies that outstrip the photosynthesis that has powered life for the last billion years
• Infrastructure projects that address ethical and environmental concerns and are embraced by all stakeholders
• Innovations that pass from blue sky to practical reality through the hands of a constallation of project participants, each able to guide them through all the stages from infancy to maturity
• Instruments such as power purchase agreements that manage the risks of investment in renewables and secure the best possible returns
• Partnerships that align the capabilities of our biggest enterprises and the requirements of our most ambitious undertakings to move us forward together towards a sustainable highly inter-dependent circular economy in which conflict profits no-one 

Renewables will come to dominate our energy supply in the 21st century. The low incremental cost will drive down the cost of everything else that relies on energy, from the extraction and processing of materials to the distribution of finished goods. This will make renewables the only viable source, even before we start to consider the elimination of carbon emissions necessary to stabilise our climate.

Our energy supply will finally be traceable to solar irradiance over the same timescales as its use, rather than requiring the extravagant and irresponsible consumption of energy accumulated in fossil fuels over hundreds of millions of years without considering that integration time in the way it is costed. 

This places human civilisation firmly and securely on the Kardashev scale for the first time, ready to take its next steps into space. Currently global energy consumption corresponds to around 0.7 on the Kardashev scale, a logarithmic scale on which 1 corresponds to using all the energy incident upon a planet from the star it orbits, and 2 to using all the energy from that star. However that number, 0.7, is illusory, as the energy we use on the basis of consuming fossil fuels represents the gradual accumulation of energy over hundreds of millions of years by natural processes capturing solar irradiance at efficiencies around 1% (through photosynthesis). When that time interval is taken into account, and our energy consumption divided by the time taken to accumulate it, we find we are not a Kardashev type 0.7 civilisation at all, but have a much more modest rating. 

However, once the same energy demand is satisfied by means traceable to solar irradiance accumulated over timescales of the same order as those associated with the consumption of that energy, that Kardashev rating will finally be an accurate representation of human activity on this planet. 

Although we have landed on the Moon already, we are imposters at space travel. A truly space-faring society does not have to rely on geological timescales to accumulate the energy necessary to fuel its rockets. It consumes energy at the rate it receives it from solar resources. 

Before we terraform anywhere else, first we must terraform our home: we must bring processes that impact our climate under control. That includes our own economic activity. Only then will it be possible to establish a true and sustainable calculus of wealth.