Limits to growth: Environmentalist’s efforts vs. nature’s own restrictions Peak oil, EROI and our financial futureCharles Hall and Stephen Balogh SUNY Environmental Science and Forestry, Syracuse N. Y.
There are many calls from environmentalists of various stripes to reduce or make negative the growth of the U.S. economy or at least its fuel use: • Bryan Czech: Steady state economy • Mathis Wackernagel : Ecological Footprint • Most obvious: IPCC Carbon release & Kyoto Accord
The Bad News: • It ain’t happening • Even Kyoto, which was too little too late, is being dismembered by Copenhagen and Durban
Why? • For every one who wants environmental constraint there are a hundred(?) who want to: “grow the economy” And how do you grow the economy?
What then about restricting growth…? Well the good news (if it is): It’s happening anyway
While the U.S. economy is at more or less its highest inflation-corrected level ever right now… …and despite some modestly encouraging issues there seems to be little question that the U.S. Economy is faltering relative to the past . Why?
Can we learn anything from ecology? Lots of resources, Initial rapid growth Eventual cessation of growth Does this relate to human economies?
Are we approaching the Limits to Growth ? Revisiting the Limits to Growth After Peak Oil Charles A. S. Hall and John W. Day, Jr. 2009 American Scientist, Volume 97: 230-237
The Evidence: Declining Growth Rate of U.S. GDP
--Stagnation in middle class incomes --Decline in per capita GDP
WHY? • Why is this the case? • Why is the economic growth in the U.S. (and OECD and maybe the world) slowing down?
Rising Energy Costs Price Trend Line http://econ.worldbank.org
Declining Use of Non-Renewable Natural Resources (NNR) From Chris Clugston Contact: email@example.com
Hypothesis: Declining Non-renewable Natural Resource Input Declining Economic Output (GDP) Declining Societal material well being (Material Living Standards)
Are we just in an economic downturn (A) or are we on a slope (B)? Hypothesis B ? ? Hypothesis A
If it is a slope (and it seems to be) what might be the cause of that? My candidates: • Peak Oil (or rather declining rate of oil use) • Declining EROI Economic production is a work process ….. But… There is no longer cheap energy to feed the beast
The important thing (so far) is NOT peak oil but cessation of growth in oil (and energy)
King Hubbert • Geophysicist at the Shell lab in Houston, Texas • In 1956, he wrote a paper with predictions for the peak year of US oil production
U.S. Natural Gas Production Forecast by Type Source: Bryan Sell (2010)
Peak oil? Peak petroleum? (Courtesy of Colin Campbell) 1960-1980s: Steep linear growth ? 2000-2010: Minimal to no growth 1900-1960s: exponential growth 1980-2000s: Shallow linear growth
DEFINITION of EROI (Sometimes EROEI) Energy return on investment for an activity: Energy delivered to society EROI = Energy put into that activity Usually consider energy invested from society
Best First Principle • Humans use high quality, low cost resources before low quality, high cost resources • (Ricardo) • Best-to-worst ordering of resource exploitation
In Summation • We’ve presented a lot of data consistent with the hypothesis that we are nearing a steady state economy / limits to growth • This is in spite of, or independent of, or despite our economic policies over the past several decades • Over this period, we have decreased our energy intensity (units of energy consumed per dollar of GDP), yet growth continues to slow
Current US and Global • Energy Situation 40 ? 30 Most of our economic and financial theories were derived here What economic theories and policy are appropriate here? Production, 109 Barrels per Year 20 10 1975 1950 2000 2025 2050 Year C. Hall and D. Murphy
- My final professional goal Neoclassical economics
THE END Thanks to the Santa Barbara Family Foundation and DFID-UK