Wealth And Energy Consumption Are Inseparable

Today we will briefly explore the work of atmospheric sciences researcher Tim Garrett. I first wrote about his work in my study Economic Growth And Climate Change — No Way Out? I concluded that there is no way out —you can't have economic growth and mitigate anthropogenic climate change by reducing CO₂ emissions. If we make reasonable assumptions about the future, you can do one or the other (XOR, exclusive or).

This conclusion is contrary to the commonly accepted "wisdom" that we can have our cake (economic growth) and eat it too (reduce emissions). I must confess that this discussion is becoming more and more academic because there is overwhelming evidence telling us that humankind is not going to do anything about global warming in any case, i.e. humans will not substantially change their behavior. See my posts What Will The Humans Do?,  For Humans, The Economy Is Everything and How To Think About The Future. Economic growth, if it is achievable, will always be the preferred path.

In addition to his work in the Aerosol-Cloud-Climate-Systems Group at the University of Utah, Tim has also done some groundbreaking work in helping us to understand the link between the global economy and energy consumption. Using reasonable assumptions—for example, we can not build the equivalent of about one new nuclear power plant per day as we de-carbonize—Garrett arrived at the same conclusions (exclusivity) about economic growth and mitigating climate change which I arrived at in my No Way Out? article, which is why I originally cited his work.

I'm going to keep this as simple as possible in so far as the degree of difficulty for the non-mathematician/non-physicist in Tim's published studies is extreme. Perhaps the best introduction to his first paper (Garrett, 2011) can be found in the first part of the abstract of his second paper No Way Out? The double-bind in seeking global prosperity alongside mitigated climate change.

In a prior study (Garrett, 2011), I introduced a simple economic growth model designed to be consistent with general thermodynamic laws. Unlike traditional economic models, civilization is viewed only as a well-mixed global whole with no distinction made between individual nations, economic sectors, labor, or capital investments. At the model core is a hypothesis that the global economy's current rate of primary energy consumption is tied through a constant to a very general representation of its historically accumulated wealth. Observations support this hypothesis, and indicate that the constant's value is λ = 9.7 ± 0.3 milliwatts per 1990 US dollar. It is this link that allows for treatment of seemingly complex economic systems as simple physical systems.

This graph is from Tim's website and illustrates the relationship λ (lambda) between the world't total accumulated wealth (C, the integral) and our ever-accelerating energy consumption rate (a, measured in 10²¹ joules per year). λ = 9.7 ± 0.3 milliwatts per 1990 US dollar. That's how much energy is required to increase the world's economic wealth as measured in 1990 dollars. The growth rate 1.87% for energy consumption is an average for the period 1970-2006. The average growth rate for the total accumulated wealth was 1.82% over that period. Note that this an empirical result and thus stands outside any particular theory or framework, although it falls out of Garrett's hypothesis (thermodynamic model) that some constant like λ must exist.

This is a fundamental result, a finding whose singular importance can not be overstated. Here's how Tim put it in an e-mail.

A consequence of global wealth being tied to its current capacity to consume primary energy reserves is that the inflation-adjusted GDP at global scales is tied to how fast civilization is able to accelerate its rate of energy consumption. This means that, if growing our primary energy consumption rate becomes too difficult, either due to reserve depletion or accelerating environmental disasters, then the GDP will necessarily fail. All our efforts to sustain real production will be more than offset by inflation and decay. This does not mean that energy consumption won't continue. In fact, it may even be higher than it is today. But declining energy consumption necessitates a collapse of the fiscally measurable exchanges that we account for in the GDP.

There are indications that decreasing oil consumption is already occurring, and this may presage a decline in other sources of fuel as well. In the past, Europe sustained its growth by replacing wood with coal. Perhaps in the future oil will cede to natural gas or nuclear power. But if so, these alternative sources will have to more than offset the decline in oil in order to sustain a positive inflation-adjusted GDP.

Bogus claims are made all the time that if we just use energy more efficiently or switch to "renewable" energy sources as we go, the global economy will continue to grow and grow. On the contrary, here is some of the fallout from Tim's linkage of the economic and physical worlds. This text is from Tim's website (cited in the text accompanying the graph above). I have reproduced it verbatim.

1. If the global economy is able to achieve gains in energy efficiency or energy productivity, it will accelerate energy consumption by accelerating healthy civilization growth into new energy reserves. Efficiency gains create a “super-exponential” acceleration of energy consumption and carbon dioxide emissions while growing the GDP. Expressed in terms of economic demand, this effect has been termed “backfire” or “Jevons’ Paradox”.

2. Growing global wealth requires increasing global emissions of carbon dioxide because both are linked to energy consumption rates. The two go hand in hand ... unless we change civilization’s fuel mix.  If we are to simply stabilize CO₂ emissions at current growth rates, this would require building the equivalent of about one new nuclear power plant per day.

3. If global warming becomes so severe that it causes civilization collapse despite our best efforts to avoid it, it will manifest itself economically through hyper-inflation.

4. Stabilizing atmospheric CO₂ concentrations below a level of 450 ppmv that might be considered dangerous requires civilization to begin a collapse of its wealth almost immediately.

This is all very bad news for those making standard assumptions about economic growth in the 21st century. However, Garrett's use of the terms collapse (decay) and hyperinflation should not be understood as they are in textbook economics or in common usage. A "positive inflation-adjusted GDP" is possible in Tim's model only if energy consumption is rising at a sufficient rate. What would actually happen on the ground if humans fail to grow primary energy at the rate required is not well defined.

For example, Garrett is modeling the global economy. What might happen in one locale on Earth might differ considerably from what would happen in other places. Tim's model (as currently constituted) does not fully explain what happens during recessions when GDP shrinks and energy consumption falls off. (He tells me this may be a time-scale problem—recessions are relatively short, intra-decadal events.)

In a peak oil scenario—for example, the one outlined by former IEA analyst Olivier Rech in which the global liquids supply enters an inevitable, inexorable decline during the latter part of this decade—and assuming that substitutes (coal-to-liquids, gas-to-liquids, electric or natural gas transportation) do not come to the rescue, Garrett predicts that we will enter a phase of "hyperinflation and decay."  This scenario directly implies a shrinking global economy (total wealth, as measured in cumulative GDP).

Does this constitute a collapse? I know some of you are very fond of that word, and no doubt a few will take the EOTWAWKI ball and run with it without fully understanding Garrett's difficult work. My own view is that the end of world as we know it (at least here in America) has already occurred. I expect to see further decay, although this deterioration may play out in ways we don't fully understand now.

I will finish up by quoting again from the abstract of Tim's second paper.

Extending the model to the future, the model suggests that the well-known IPCC SRES scenarios substantially underestimate how much CO₂ levels will rise for a given level of future economic prosperity. For one, global CO₂ emission rates cannot be decoupled from wealth through efficiency gains. For another, like a long-term natural disaster, future greenhouse warming can be expected to act as an inflationary drag on the real growth of global wealth. For atmospheric CO₂ concentrations to remain below a "dangerous" level of 450 ppmv (Hansen et al., 2007), model forecasts suggest that there will have to be some combination of an unrealistically rapid rate of energy decarbonization and nearly immediate reductions in global civilization wealth.

And on that happy note, I bid you adieu.

Bonus Video — Tim's 3-part lecture on his work in the first study. I've included Part I here. You can also watch Part 2 and Part 3. The video quality is not as good as we might hope.

 

Comments

[Dan]

Thanks Dave,

This is of the utmost importance; even if it will be ignored, there's a strange calming satisfaction in more accurately gauging where we are headed.

[John D]

On a smaller scale, logic says that saving a dollar on energy costs by turning off lights is technically not 'green', as you will do something else with the dollar you saved. You may use it to buy gas for your car, you may spend it on something that uses energy. If you don't spend that dollar and save it instead, that money will be used by a bank to invest in some form of economic growth. The only way you can techically be green is to make and spend less money.

[Dave Cohen]

@John D

> The only way you can techically be green is to make and spend less money

Well said. And I have achieved it! (although I did not go down voluntarily, at least not at first).

1. You can't win.
2. You can't even break even.
3. You can't get out of the game.

-- Dave

[RobM]

Thank you for continuing to shine light on Garrett's work. I read a lot in my quest for understanding and I think Tim Garrett's work is the most important and profound I have encountered. It continues to surprise me how little recognition his work has received, given that it explains "everything".

There seems to be a link between Steve Keen's credit impulse and Garrett's energy consumption acceleration. Both are apparently required for growth. I consider debt to be a claim on future physical resources we expect/hope will be produced. Perhaps debt is more accurately linked to something to do with energy flows. I encourage you to tackle this topic if you are so inclined.

Another topic that would be interesting to explore is what would happen if we succeeded by some magic to change human behavior to desire to consume less stuff. I agree with you that this will never happen, but if it did, could we avoid a die off? I ask because I sometimes wonder if leaders who refuse to take action against climate change have an intuition that to do so would collapse our civilization. Perhaps these leaders are actually doing the right thing without understanding the math and physics behind their decisions?

Finally, check out Eric Smith's work on Inevitable Life for hints that, given our planet's stores of fossil energy, our predicament is highly probable and aligned with the "expectations" of the universe.
http://fora.tv/2007/04/18/Inevitable_Life

Maybe overshoot is inevitable. Maybe there is no solution to overshoot, only a choice between pain now or more pain later.

[Zeke Putnam]

I've watched all this coming for 2-3 decades. Read a lot to this day. Way down in the core of my being is early life experiences. I grew up in "days of old". My dad trapped for a living, had a cow for milk, etc, garden, hunted for meat, that type of thing. One thing I remember very clearly. Periodically the population one animal or another would suddenly explode due to a particular set of circumstances. They would out run the supply of food, water, whatever and die off. I figure this applies to humans also. We are way, way past the natural (without energy based power, fertilizer, etc) resource base. For me, it's as inevitable as the rain, humans are in for a mass die off. Just like a rabbit, we'll plunge merrily on until the last blade of grass is gone.

Since we are a fairly brutal animal with little sympathy for anything other than our own wants, this die off will be a nasty affair. To me, it already is. Millions are already starving so we can have ethenol. If invading country after country, dislocating untold millions, slaughtering the country's population, stealing their resources, supporting brutal dictators and the long list of other activities the US, let alone other countries, are involved in, is not nasty, I don't know what is.

I was a pilot during Vietnam. As us old heads watched the Air Force drastically lower their standards and shove ever less capable people through training, we grew to call them "cannon fodder". Today we are all cannon fodder. To our leaders we are simply numbers they need for election, make millions off of and play with like one would with as a doll. Frankly, I believe it was this way from the get go. Pessimist or realist? Your choice.

[xraymike79]

Zeke,
Your comment pretty much says it all. The utter corruption and immorality of the "system" becomes ever more apparent with each passing year, yet the "system" rolls on like a creaking, rusty megalithic machine crushing everything in its way until it reaches the inevitable cliff.

Fossil fuels have become so entrenched in our daily lives that we simply take them for granted like the rising and setting of the sun. How can we walk backwards when fossil fuels have been the only way we have known to walk forwards.

What I find most interesting are the elaborate fairy tells we spin for ourselves in order to believe that the party will never end and that we (the developed countries) hold the moral high ground.

Dave said he'd post this video I made, sometime in the future. I'll post it here since I know you'll enjoy it:

Graffiti Philosophy