Nafeez Ahmed — Inside the new economic science of capitalism’s slow-burn energy collapse

Game-changer?

INSURGE intelligence - Medium
Inside the new economic science of capitalism’s slow-burn energy collapse
Nafeez Ahmed

Nafeez Ahmed — How global economic growth will drown in Trump’s oil glut after 2018

Précis of Nafez M. Ahmed's new book, Failing States, Collapsing Systems: BioPhysical Triggers of Political Violence (Springer 2017).

"It's the energy, stupid."

About oil.

But not just about oil

When a complex adaptive system is particularly challenged by its environmental conditions, it enters a stage of crisis. The crisis challenges the existing structures, the existing relationships and patterns of behaviour in a system. If the crisis intensifies, it can reach a threshold that undermines the integrity of the whole system. Eventually, either the system adapts by re-structuring, leading to a ‘phase shift’ to a new system, a new equilibrium — or it regresses.

In a civilisational context, the capacity to process information in such a way that it is distributed effectively across the system to contribute to resilient relationships is crucial to the system’s ability to survive, and adapt. The media institutions and processes that drive our behaviour are, in this sense, an interesting barometer of the health of the ‘DNA’ of our civilization.

The state of information overload and polarisation we are now experiencing therefore speaks to the fact that we are rapidly approaching a crisis threshold. The crisis has overwhelmed the existing structures of the global system. Our prevailing institutions and systems of power are in informational disarray as they struggle to make sense of what appears to be an overload of information signalling this systemic crisis.

At this point of threshold, the system faces a crisis of information overload, and an inability to meaningfully process the information available into actionable knowledge that can advance an adaptive response. Hence, for instance, the increasingly toxic polarisation of all political discourse....

Rather than an adaptive response based on a whole systems understanding, information overload — along with a deeply inadequate approach to understanding global systemic crises — allows short-sighted reactionary thinking to take the lead. Thus, the blame falls on particular groups of people identified as ‘the problem’, rather than diagnosing the structures of the system itself.

Rather than a transformative systemic response into a new adaptive ‘phase-shift’, we see a powerful cross-sector political economic faction with vested interests in the current structure of the global system engaged in efforts at systemic consolidation.

Their reaction is based on the erroneous view that the ‘crises’ now escalating are external to the system in question — in this case, these externalities are constructed simply as problematic group identities, perceived as having a parasitical impact on an otherwise optimal system.

In reality, this narrow reaction, by reinforcing the very deep structures that are escalating the processes of global system failure described, escalates the threshold of crisis. This maladaptive response represents a serious systemic regression, that heightens the risk of crisis and collapse....

INSURGE intelligence - Medium
How global economic growth will drown in Trump’s oil glut after 2018
Nafeez Ahmed | Visiting Research Fellow at the Global Sustainability Institute at Anglia Ruskin University’s Faculty of Science and Technology

Brian McConnell — Solar Energy : This Is What A Disruptive Technology Looks Like

Medium.com
Solar Energy : This Is What A Disruptive Technology Looks Like

Brian McConnell
(h/t Energy Bulletin)

Brad Plumer — Peak oil isn’t dead: An interview with Chris Nelder

The pesky details.

The Washington Post — Wonkblog
Peak oil isn’t dead: An interview with Chris Nelder
Brad Plumer

(h/t Kevin Fathi via email)

Vermont Siting Commission — An EROEI Primer

Societies with access to energy sources with a large net energy surplus have an economic advantage over societies that use lower quality energy sources. A lower net energy means that more of a society's productive resources must be devoted to energy delivery, and thus cannot be used to produce nonenergy goods and services. It is the high net energy that has been available to contemporary society over the past several decades that has supported a powerful military, abundant food choices, growth of the arts, enabled modern healthcare, provided ample leisure opportunities, investment growth, retirement, and much more that is now take for granted.

That's now changing.

Vermont Siting Commission
An EROEI Primer

(h/t Peak Oil News)

Book review: "Energy and the Wealth of Nations"

The book is based on the premise that the capture of excess energy supports all the functions of life....

Human civilization began when agriculture led to enough excess storable food (derived from solar energy, via plant life) to support non-producing groups of priests, soldiers, royalty, artists and others. Technology gradually allowed the capture of wind and water power (other forms of solar energy) for trading, simple manufacture and other purposes....

Something remarkable happened late in the 18th century – people discovered how to obtain and use vast new forms of stored solar energy, such that they were no longer dependent on the energy received in a single season or a few years. Those new energy sources – fossil fuels – came from vast new supplies of concentrated and portable energy – first coal, then oil, then natural gas. The challenge was on, both to find and extract more of these energy stores and to find new ways to use them....

Conventional economics and history texts rarely notice the essential role of cheap and plentiful resources on the massive changes of the past two centuries, preferring to focus on inventions, political changes, and new economic forms. While these were all important, it all started with energy.

Hall and Klitgaard show that the correlation between energy use and economic activity (and population levels) has been very high throughout this period. Most academic economics considers production to be a function of capital and labor alone, but including energy makes the analysis work much better. Cheap energy, more than anything else, has facilitated new technologies and fostered the creation of a true global economy.

This would be merely an interesting observation were it not for a nagging problem – energy (starting with oil, soon to be followed by coal and natural gas) has started becoming more expensive, harder to find, and absolutely scarce in many parts of the world. The authors say that the amount of net energy (the amount left after the energy cost of production) available has stopped growing, or is about to. Since economic growth depends on growing amounts of net energy (especially at the global level), flat energy supplies will lead to the end of economic growth and that will come sooner, not later. 

This is something for which no one is prepared.

The key analytic concept, which Hall developed over the last 40 years, is EROI – the energy return on energy invested – the best measure of net energy.....

Stated differently, it used to take 1% of the ultimate output to extract our energy supplies, but now it can take 6% to 20%. EROI is independent of the monetary cost or price of energy-- due to subsidies, something can make investment sense but not energy sense. Most EROI estimates for corn-based ethanol, for instance, are between 0.9 and 1.9, so energetically this supposedly renewable fuel barely breaks even. Since the economy is ultimately grounded in energy, not finance, Hall and Klitgaard argue, the energy return is more important than the financial return on an energy project and energy system....

That’s a brief overview of the book’s first theme: We have not paid adequate attention to the real drivers of economic activity and change, or to their future availability. The second theme explains why – the bankruptcy of economics....

These are handy assumptions for creating mathematical models, but not for creating something that reflects reality....

We are not surprised when answers in biology, geology, and physics turn out to be very complicated. But we expect economics, which combines the biophysical aspects of all three with the equally complicated issues of human behavior and intention to be easily explained by a few straightforward equations and understood by politicians when presented between market updates on CNBC. Hall and Klitgaard argue that, far from this forced simplicity, what economics needs is to be consistent with the real world, both in physical and behavioral terms. The book includes chapters on the science and mathematics needed to proceed with this work.

Read it at Energy Bulletin
Book review: "Energy and the Wealth of Nations"
by Richard Vodra, J.D., CFP® | President of Worldview Two Planning of McLean, VA

A Dynamic Function for Energy Return on Investment

Abstract: Most estimates of energy-return-on-investment (EROI) are “static”. They determine the amount of energy produced by a particular energy technology at a particular location at a particular time. Some “dynamic” estimates are also made that track the changes in EROI of a particular resource over time. Such approaches are “bottom-up”. This paper presents a conceptual framework for a “top-down” dynamic function for the EROI of an energy resource. This function is constructed from fundamental theoretical considerations of energy technology development and resource depletion. Some empirical evidence is given as corroboration of the shape of the function components.Keywords: EROI; net energy; energy-return-on-investment

Read it at Sustainability

A Dynamic Function for Energy Return on Investment
by Michael Dale , Susan Krumdieck, and Pat Bodger
(h/t Oil Drum)