production – Olduvai.ca

Civilization may need to “forget the flame” to reduce CO2 emissions.

Just as a living organism continually needs food to maintain itself, an economy consumes energy to do work and keep things going. That consumption comes with the cost of greenhouse gas emissions and climate change, though. So, how can we use energy to keep the economy alive without burning out the planet in the process?

In a paper in PLOS ONE, University of Utah professor of atmospheric sciences Tim Garrett, with mathematician Matheus Grasselli of McMaster University and economist Stephen Keen of University College London, report that current world energy consumption is tied to unchangeable past economic production. And the way out of an ever-increasing rate of carbon emissions may not necessarily be ever-increasing energy efficiency—in fact it may be the opposite.

“How do we achieve a steady-state economy where economic production exists, but does not continually increase our size and add to our energy demands?” Garrett says. “Can we survive only by repairing decay, simultaneously switching existing fossil infrastructure to a non-fossil appetite? Can we forget the flame?”

Thermoeconomics

Garrett is an atmospheric scientist. But he recognizes that atmospheric phenomena, including rising carbon dioxide levels and climate change, are tied to human economic activity. “Since we model the earth system as a physical system,” he says, “I wondered whether we could model economic systems in a similar way.”

He’s not alone in thinking of economic systems in terms of physical laws. There’s a field of study, in fact, called thermoeconomics. Just as thermodynamics describe how heat and entropy (disorder) flow through physical systems, thermoeconomics explores how matter, energy, entropy and information flow through human systems.

…click on the above link to read the rest…

How much oil remains for the world to produce? Comparing assessment methods, and separating fact from fiction

July 16, 2022

Abstract

This paper assesses how much oil remains to be produced, and whether this poses a significant constraint to global development. We describe the different categories of oil and related liquid fuels, and show that public-domain by-country and global proved (1P) oil reserves data, such as from the EIA or BP Statistical Review, are very misleading and should not be used. Better data are oil consultancy proved-plus-probable (2P) reserves. These data are generally backdated, i.e. with later changes in a field’s estimated volume being attributed to the date of field discovery. Even some of these data, we suggest, need reduction by some 300 Gb for probable overstatement of Middle East OPEC reserves, and likewise by 100 Gb for overstatement of FSU reserves. The statistic that best assesses ‘how much oil is left to produce’ is a region’s estimated ultimately recoverable resource (URR) for each of its various categories of oil, from which production to-date needs to be subtracted. We use Hubbert linearization to estimate the global URR for four aggregate classes of oil, and show that these range from 2500 Gb for conventional oil to 5000 Gb for ‘all-liquids’. Subtracting oil produced to-date gives estimates of global reserves of conventional oil at about half the EIA estimate. We then use our estimated URR values, combined with the observation that oil production in a region usually reaches one or more maxima when roughly half its URR has been produced, to forecast the expected dates of global resource-limited production maxima of these classes of oil. These dates range from 2019 (i.e., already past) for conventional oil to around 2040 for ‘all-liquids’. These oil production maxima are likely to have significant economic, political and sustainability consequences…

…click on the above link to read the rest of the article…

Central Planners At Work

August 25, 2020

Central Planners At Work

Consumption without Production

“Every man is a consumer, and ought to be a producer”, observed 19th century philosopher Ralph Waldo Emerson. “He is by constitution expensive, and needs to be rich.”

Ralph Waldo Emerson (May 25, 1803 – April 27, 1882), who inter alia opined on consumers and the need to not only consume, but also produce. The latter activity has recently become even more severely hampered than it already was. And yet, government is spending like a drunken sailor. [PT]

These days Emerson’s critical insight is being taken to its extreme. Consumers, many whom lost their jobs due to government lockdown orders, no longer produce. Yet they still consume. They are expensive. Not rich.

What’s more, this consumption is not funded through personal savings. Nor is it funded through government transfer payments. Rather, it is funded via the printing press.

Emerson, no doubt, was lacking in the unique perspective we are presently granted. He did not have the special opportunity to watch his government destroy the economy in short order. Perhaps if he had, he would have penned a neat axiom to distill the essence of what happened.

The world today looks nothing like Emerson’s day. The 19^th century was an age of honest money. Central bankers did not roam the land.

Printing money to buy bonds and stocks, and to sprinkle on people, would have been quickly dismissed. The experience of the Continental Congress during the American Revolution, and their over-issuance of paper “continentals”, had shown that resorting to the printing press was an act of suicide.

Promises, promises… “not worth a continental” became a saying after this early experience with paper money. [PT]

Currently, printing press money is considered enlightened central banking policy. Inflation targets, zero interest rate policy (ZIRP), direct bond purchases, twisting the yield curve, unlimited credit. This is merely a partial list of the trouble central bankers are up to.

…click on the above link to read the rest of the article…

There Will Be No Recovery Without Production

May 21, 2020

THERE WILL BE NO RECOVERY WITHOUT PRODUCTION

Through most of the coronavirus crisis, those who have made the case for stay-at-home, reduce or stop work, and narrow the range of retail shopping to assure “social distancing” to reduce the spread of the virus have accused their critics of being more interested in preserving livelihoods than “saving lives.” But there is no preservation of any lives if people are not able to produce and work, without which none of the necessities and other wants of any members of society can be fulfilled.

Listening to many politicians and political pundits, and even some “economists,” you could easily think that 250 years of economic understanding had never happened. One of the oldest of economic fallacies is that money is wealth; that is, the notion that if you create pieces of paper, put some kind of government stamp on it announcing that it is “money,” and spread it around among the members of society, you thereby conjure up from nothing actual material and other forms of wealth.

Money is a medium of exchange, some commodity or other useful thing that is found widely advantageous to use as a convenient intermediary to better facilitate the exchange of other goods and services one for the other when more direct barter transactions are found to be impossible to arrange or more costly to carry out.

Printing Money Does Not Magically Create Goods

But increasing the number of units of the particular item used as money does not, in itself, increase the physical quantities of all the other goods that people want to acquire through exchange to satisfy their wants and desires. These other goods that people actually want must be produced, manufactured, transported and made ready in the forms and at the places desired by members of society.

…click on the above link to read the rest of the article…

Chinese Debt Could Cause Emerging Markets to Implode

May 13, 2020

CHINESE DEBT COULD CAUSE EMERGING MARKETS TO IMPLODE

The novel coronavirus has brought the world economy to a grinding halt. Global growth is set to fall from 2.9 percent last year into deep negative territory in 2020—the only year besides 2009 that this has happened since World War II. Recovery will likely be slow and painful. Government restrictions to prevent the virus from resurging will inhibit production and consumption, as will defaults, bankruptcies, and staffing cuts that have already produced record jobless claims in the United States.

But not all countries will bear the pain of the global recession equally. Low-income countries suffer from poor health infrastructure, which inhibits their ability to fight off the coronavirus, and many of them had dangerously high debt levels even before the pandemic necessitated massive emergency spending. Foreign investors are now withdrawing capital from emerging markets and returning it to the rich world in search of a safe haven. As a result, countries such as South Africa, Kenya, and Nigeria are seeing their currencies plummet in value—making it difficult, if not impossible, for them to service foreign loans.

Faced with the threat of financial ruin, poor countries have turned to multilateral financial institutions such as the International Monetary Fund and World Bank. The IMF has already released emergency funds to at least 39 countries, and by the end of March more than 40 more had approached it for help. The World Bank has fast-tracked $14 billion for crisis relief efforts. Yet even as they offer extraordinary amounts of aid, the IMF and World Bank know that these sums won’t be nearly enough. For that reason, they called on Group of 20 creditor nations to suspend collecting interest payments on loans they have made to low-income countries. On April 15, the G-20 obliged: all of its members agreed to suspend these repayment obligations through the end of the year—all members except one, that is.

…click on the above link to read the rest of the article…

Is an Increase in Demand Key for Economic Growth?

January 11, 2019

IS AN INCREASE IN DEMAND KEY FOR ECONOMIC GROWTH?

Whenever the so-called economy shows signs of weakness most experts are of the view that what is required to prevent the economy sliding into recession is to boost the overall demand for goods and services.

If the private sector fails to increase its demand then it is the role of the government to fill this void.

Following the ideas of Keynes and Friedman, most experts associate economic growth with increases in the demand for goods and services.

Both Keynes and Friedman felt that the great depression of the 1930’s was due to an insufficiency in aggregate demand and thus the way to fix the problem was to boost aggregate demand.

For Keynes, this could be achieved by having the federal government borrow more money and spend it when the private sector would not. Friedman on the other hand advocated that the Federal Reserve pump more money to revive demand.

There is however never such a thing as insufficient demand as such. We suggest that an individual’s demand is constrained by their ability to produce goods. The more goods that an individual can produce the more goods he can demand i.e. acquire.

Note that the production of one individual enables him to pay for the production of another individual. (The more goods an individual produces the more of other goods he can secure for himself. An individual’s demand therefore is constrained by his production of goods).

Observe that demand cannot stand by itself and be independent – it is limited by production. Hence, what drives the economy is not demand as such but the production of goods and services.

In this sense, producers and not consumers are the engine of economic growth. Obviously, if he wants to succeed then a producer must produce goods and services in line with what other producers require ie. consume.

…click on the above link to read the rest of the article…

How to Be a Producer In a Nation of Consumers

December 31, 2018

How to Be a Producer In a Nation of Consumers

In this world, there are two kinds of people. You can be a consumer or you can be a producer.

Neither one is inherently good or bad – these are just descriptive terms. You can produce 100% of your own food and have a terrible heart, one that rejoices in the misfortune of others. You can never produce a single thing in your whole life and be kind and generous. This article isn’t meant to demonize consumers or set producers up on a pedestal.

Really, most of us are a combination of each type. But we should strive to tip the balance toward producing whenever possible because when bad things happen to an economy, when long-term disasters strike, and when everything changes, it is the producers who survive.

I talk about consumers and producers a lot, and recently a person in the comments asked me to clarify the concepts and share some ideas on how to become a producer.

So…here’s what it means to be a consumer or a producer.

The Consumer

Consumers are just what they sound like – people who consume. They purchase things they did not make, eat things they did not cook, and use up resources without replacement.

The terrifying thing is that we have become a nation of consumers who produce hardly anything.

Even our workforce these days rarely produces. The workforce cleans up after others, provides services, and spends their days in cubicles behind keyboards. Most of them do not go home after a long day at work having created something of value. They go home exhausted after a day of wrangling people or data, too tired to have a vegetable garden or perform productive tasks.

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The Transition Towns Movement … going where?

June 7, 2018

The Transition Towns Movement … going where?

The global predicament cannot be solved other than through a Transition Towns movement, and the emergence of such a movement has been of immense importance. But I fear that the present movement is not going to do what’s needed. Four years ago I circulated reasons for this view. I recently made an effort to get current information from various people in the movement and I fear the case for doubt is even stronger today. Here is a brief indication of my main concerns.

I take it for granted we agree that the global situation requires massive system changes, including scrapping the growth economy, de-growth down to far lower per capita levels of production and consumption than rich countries have today, and the market must be prevented from determining our fate. These things cannot be done unless there is transition to a basic social pattern involving mostly small, highly self sufficient and self governing and collectivist communities that maximise use of local resources to meet local needs … and which are content with very frugal material lifestyles. Only settlements of this general kind can get the per capital resource rates down sufficiently while ensuring ecological sustainability and a high quality of life for all. (Those rates will probably have to go down to 10% of their present levels: For the reasoning see TSW: 2017a.) This does not mean deprivation or hardship or abandoning high tech, universities, sophisticated medical facilities etc. (For the detail TSW 2018a.)

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Globalization is Poverty

October 16, 2017

Globalization is Poverty

Marc Riboud Zazou, painter of the EIffel Tower 1953Central bankers have never done more damage to the world economy than in the past 10 years. One may argue this is because they never had the power to do that. If their predecessors had had that power, who knows? Still, the global economy has never been more interconnected than it is today, due mostly to the advance of globalism, neoliberalism and perhaps even more, technology.

Ironically, all three of these factors are unremittingly praised as forces for good. But living standards for many millions of people in the west have come down and/or are laden with uncertainty, while millions of Chinese now have higher living standards. People in the west have been told to see this as a positive development; after all, it allows them to buy products cheaper than if they had been made in domestic industries.

But along with their manufacturing jobs, their entire way of life has mostly disappeared as well. Or, rather, it is being hidden behind a veil of debt. Still, we can no longer credibly deny that some three-quarters of Americans have a hard time paying their bills, and that is very different from the 1950s and 60s. In western Europe, this is somewhat less pronounced, or perhaps it’s just lagging, but with globalism and neoliberalism still the ruling economic religions, there’s no going back.

What happened? Well, we don’t make stuff anymore. That’s what. We have to buy our stuff from others. Increasingly, we lack the skills to make stuff too. We have become dependent on nations half a planet away just to survive. Nations that are only interested in selling their stuff to us if we can pay for it. And who see their domestic wage demands go up, and will -have to- charge ever higher prices for their products.

…click on the above link to read the rest of the article…

Perfect storm heads for fossil fuel assets

November 27, 2015

Perfect storm heads for fossil fuel assets

A natural gas refinery next to a cemetery in New Mexico, US. Image: Christina Xu via Flickr

Coal, oil and gas sectors warned that trillions of dollars of assets could be stranded if a global agreement on limiting climate change is reached at the UN summit in Paris.

LONDON, 25 November, 2015 – The fossil fuel industry may waste as much as US$2.2 trillion (£1.45 tn) in the next decade if it persists in pursuing projects that prove uneconomic in a world beginning to turn its back on carbon.

An independent thinktank, the Carbon Tracker Initiative (CTI), says the industry faces “a perfect storm” of factors, including international action to limit global average temperatures to 2˚C above their pre-industrial level, and rapid advances in clean technologies.

The CTI report says there will be no need for new coal mines, oil demand will peak around 2020, and growth in gas will disappoint industry expectations if world leaders agree and then implement the policies needed to meet the UN commitment to keep climate change below 2˚C − the threshold agreed by most governments.

Next week’s UN climate change conference in Paris will be trying to reach such a global agreement.

Excess of supply

The report warns: “If the industry misreads future demand by underestimating technology and policy advances, this can lead to an excess of supply and create stranded assets. This is where shareholders should be concerned.”

James Leaton, CTI’s head of research and co-author of the report, says: “Too few energy companies recognise that they will need to reduce supply of their carbon-intensive products to avoid pushing us beyond the internationally-recognised carbon budget.

“Clean technology and climate policy are already reducing fossil fuel demand. Misreading these trends will destroy shareholder value. Companies need to apply 2˚C stress tests to their business models now.”

…click on the above link to read the rest of the article…

Sustainability for Whom?

March 7, 2015

Sustainability for Whom?

The mission of UPSTREAM (formerly Product Policy Institute) is “sustainable production and consumption and good governance.” Sometimes I feel like we’re swimming against the tide in advocating a role for government action in ensuring sustainable production and consumption.

Big brands like Wal-Mart, Nestle, Procter and Gamble can effect rapid, systemic change in their global supply chains when it suits them. The Cradle to Cradle Products Innovation Institute and Ellen MacArthur Foundation’s Circular Economy Initiative are doing great work by partnering with industry to redesign products.

Governments, on the other hand, are mired in political stalemate and often produce weak regulations when they act at all, especially in the international arena inhabited by the multinational corporations that produce the products we buy. Why even bother with public policy? Some government actors settle for “co-regulation” with corporate actors, or defer to voluntary corporate initiatives. For their part, foundations often support NGOs to conduct “market” campaigns targeting companies, or to partner with companies; in both cases the strategy is to access the power of corporations to effect swift, large-scale change.

What is the appropriate role for organizations that look out for the public interest – governments and nonprofits – in advancing sustainability in an environment in which the power balance has shifted dramatically to the private sector?

…click on the above link to read the rest of the article…

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