#118: Good idea, bad idea


Whilst there seems no limit to the new and valuable insights that can come from looking at the economy through the lens of surplus energy, there are limits to the time and resources than can be applied to following up these leads.

This is making selection of subjects an increasingly tricky task. The preceding analysis of the American economy is a case in point. Data exists to apply the same treatment to the United Kingdom, and can be obtained for the Euro Area. But these are not being pursued, because the critical point has, it is hoped, been made. Essentially, ‘growth’, being geared towards residually-priced services which we can sell only to each other, is adding very little real value to the Western economies in return for the trashing of their balance sheets.

Some time ago, it was recognised that the topics of renewable energy and electric vehicles (EVs) needed to be discussed here. The following assessment condenses a great deal of analysis into a format that, it is hoped, will explain, succinctly, why conclusions on these issues are starkly different.

In short, whilst the case for maximising renewables seems irrefutable, the logic supposedly backing conversion to EVs is hopelessly flawed. We need to start by looking at why renewable energy is such a good idea, before turning to why EVs are such a bad one.

An existential imperative

The case for maximising the development of renewables (such as solar and wind power) is wholly compelling. Failure to do this would condemn the world economy to stagnation in the near-term, with prosperity deteriorating steadily in the developed world whilst making little progress in the emerging economies. In the longer term, continued reliance on fossil fuels would be a recipe for economic disaster.

This conclusion is dictated by an appreciation of two critical issues. The first is the umbilical linkage between energy access and economic output. The second is the accelerating rate at which the costs of energy access are rising across the fossil fuel mix that continues to deliver the vast majority of the global energy slate.

Put at its simplest, investing in solar and wind power is imperative, and is one of the most important issues that society needs to address. It ranks in importance alongside tackling climate change, and raising living standards in emerging economies.

Renewables are vital because they offer the only plausible way of escaping the economic trap posed by the rising energy costs of fossil fuels. We’re not about to “run out of” oil, gas or coal, but the value that these energy sources contribute to prosperity is already coming under severe pressure.

The ECoE trap

What really matters to prosperity isn’t how much energy we can access, but how much energy is consumed in the process of accessing it. This is measured here as ECoE (the energy cost of energy).

Some figures will illustrate the nature of this trap. For starters, the ECoE of the existing energy mix is rising exponentially, because it remains biased overwhelmingly towards oil, gas and coal. Over the fourteen years between 2002 and 2016, the estimated trend ECoE of fossil fuels rose from 4.4% to 8.4%, but this increase is just a mild foretaste of what’s to come – over the next fourteen years, fossil fuel ECoEs are set to rise to over 13%.

This represents a huge qualitative as well as quantitative change. In recent years, rising ECoEs have rendered economic growth all but impossible in the developed world, leading to the use of credit and monetary adventurism to fake an expansion in prosperity that is no longer possible. Even in the emerging economies, sustaining growth in the face of increasing ECoEs has required a growing recourse to debt.

Put very simply, when higher ECoEs collide with growth imperatives, ‘something has to give’ – and that ‘something’ is futurity, where we are destroying pension capability as well as racking-up ever larger amounts of debt.

Meanwhile, the environmental downside of rising ECoEs is that, to maintain net quantities of energy at any given level, we have to keep increasing the gross quantities that we access. As we have seen, this upwards trend is already more than sufficient to cancel out efforts to use energy more efficiently.

Looking ahead, further rises in ECoEs aren’t just going to act as a road-block to growth, but, in the developed world at least, are going to put growth into reverse. Credit and monetary exercises in denial are creating an enormous bubble, and it’s likely that supply constraints in energy will burst this one, just as the surge in oil prices (from $20/b to a peak of $147/b) was the real trigger for the previous crash. After the burst, reality will begin to dawn on anyone who believed in a ‘recovery’ based on cheap debt, cheap money, and residually-priced ‘activity’ that inflates recorded GDP whilst very little real value to economic output.

The energy equation

To see what rising ECoEs mean, it’s necessary to compare total (gross) energy consumption with surplus (net-of-ECoE) amounts. The split here is that the ECoE component of gross energy pays for energy access, whilst the net-of-ECoE surplus pays for everything else.

Between 2002 and 2016, the gross amount of fossil fuel energy accessed increased by 35%, from 8.4 bn tonnes of oil equivalent (toe) to 11.4 bn toe. Adjusted for the 17% rise in the world population over the same period, this equated to growth of 15% in the gross quantity of fossil fuels consumed per person.

But the increase in the ECoEs over that same fourteen-year period translated a 35% increase in gross supply into a rise of only 29% at the net-of-ECoE level. That difference may not seem huge, but it’s already had a big impact in per capita terms. Whereas gross fossil fuel consumption per person increased by 15% over that period, net fossil fuel energy use grew by only 10%.

Perhaps most tellingly of all, fossil fuel supply per person has already peaked (in 2013).

Looking ahead, the exponential upwards trend in fossil fuel ECoEs is poised to cripple surplus energy access, but for two main reasons, not one. Obviously, rising ECoEs are undermining the net (surplus) energy available from any given gross quantity.

Less obviously, energy availability at the gross level is likely to be depressed as well, because higher ECoEs simultaneously undercut the viability of production whilst increasing the cost to the consumer. In petroleum, we are already reaching a situation where any price high enough for producers is too high for consumers. A recent report by the China University of Petroleum forecast an imminent switch from oil to coal consumption in China, citing deteriorating EROEIs (energy returns on energy invested) as a key factor. This issue won’t be confined to China – and neither will it be confined to oil.

Quantifying the trap

Here are some illustrative numbers for what is likely to happen over the next fourteen years. First, gross supplies of fossil fuels, which increased by 35% between 2002 and 2016, are unlikely to rise at all looking out to 2030.

Gas availability is likely to increase further, but not by enough to offset a probable decrease in supplies of oil. Output from low-cost ‘legacy’ fields is declining at between 7% and 8% annually. New discoveries, required to offset this decline, are at record lows, whilst a combination of price and cost pressures continues to restrict development. By 2030, meanwhile, shale production will be well past its peak. Energy from coal is likely to diminish slightly, not least because the energy content per tonne mined is continuing to deteriorate.

In per capita terms, the implications of these trends are stark. Comparing 2030 with 2016, gross access to fossil fuels per person is projected to have declined by 14%. Higher ECOEs, of course, will exacerbate this problem at the net level – fossil energy per person, available for all purposes other than energy supply, is likely to be 19% lower by 2030 than it was in 2016.

Two final statistics are necessary to put this into context. First, fossil fuels continue to account for 86% of primary energy supply – hardly changed at all over two decades, from 87% in 1996 – whilst renewables still deliver only 3.2% of the total. (The remaining 11% comes from nuclear and hydroelectricity).

Second, 97% of all transport continues to be fuelled by petroleum, with the only significant exception (electrified rail) delivered, overwhelmingly, by gas- and coal-fired generation, not renewables.

Electricity – a yawning gap

Even without large-scale adoption of EVs, demand for electricity is growing more rapidly than our use of primary energy. Between 2002 and 2016, when total energy consumption increased by 37%, electricity use rose by 52%, with the result that we now consume 28% of all energy as electricity, compared with 25% in 2002, and only 22% back in 1996. Perhaps more tellingly, the proportion of all coal, gas and oil supply used for power generation has risen from 26% to 36% over that same period.

Looking ahead – and ignoring, for now, EVs – demand for electricity is rising at about 2.5% annually, well ahead of the rates at which either population numbers or total energy consumption are increasing. By 2030, we are likely to need 35,000 terawatt hours (TWH), an increase of 41% compared with 2016 (24,800 TWH).

The critical question is where that extra 10,200 TWH is going to come from. Between them, nuclear and hydro may contribute 19% of the required increment, though that might be a hard target to hit. About 45% of the increase in demand might be met by renewables, with output likely to rise from 1,854 TWH in 2016 to 4,600 TWH in 2030.

That still leaves us needing to source 3,700 TWH, or 36% of the required increase, from fossil fuels. These projections would mean that renewables would contribute 18% of electricity (and 10% of all primary energy) by 2030, compared with 7% of electricity (and 3% of all energy) in 2016.

Of course, there are some who believe that renewables output can grow a lot more rapidly than the 3.5-fold increase projected here. In support of this, some cite annual rates of growth, which, for all renewables, was 14.4% in 2016.

But this rate of growth is already slackening – from 19.7% in 2011, and 17.7% in 2013 – for the simple and obvious mathematical reason that rates of growth from an extremely low base are neither indicative nor sustainable. In 2011, renewables output increased by 148 TWH on a base of just 752 TWH. In 2016, the increase was a lot bigger (234 TWH), but so was the base number (1,621 TWH). By 2020, we are likely to be adding renewables output at rates of over 300 TWH annually, a number that is projected to increase to 475 TWH by 2030. These equate to projected annual rates of growth of 11% in 2020 and 8% in 2030.

A more fundamental reason for caution about the rate at which renewables output can grow is that these technologies are derivatives of fossil fuels. Building wind turbines and solar panels requires the use of materials which can be accessed only by courtesy of existing fuel sources, most importantly oil. Everything from humble steel and copper to many of the more sophisticated components relies on fossil fuel energy, all the way from extraction and processing to manufacture and delivery.

This consideration reinforces the case for developing renewables as rapidly as possible, because we need to use our dwindling legacy resources of net energy to create the alternative sources of the future. But it also adds to the bottlenecks likely to be encountered in the development process.

A further twist here is that, to the extent that they are derivatives of a fossil fuel set whose ECoEs are rising, there is likely to be upwards pressure on the ECoEs of renewables themselves. Thanks to two main factors – early-stage technical improvement (“low hanging fruit”), and economies of scale – we have become accustomed to declining unit costs in the development of renewables. Costs are likely to continue to fall, but at a decelerating rate, as the scope for ‘easy’ technical improvement diminishes, economies of scale benefits reach plateau, and the ECoE of inputs rises.

Finally, on this score, we need to note that, by 2030, renewables supply would need to multiply, not by the 3.5x projected here, but by 5.5x, just to keep the fossil fuel requirement for power generation constant at current levels. Delivering enough additional power from renewables to start reducing hydrocarbon-based generation looks extraordinarily difficult – and that’s even before we start adding to electricity demand by switching to EVs.

EV – the wrong road

As we have seen, realistic assessment of the outlook for expansion in renewables supply suggests that growing demand for electricity is likely to require increases, not decreases, in the amount of fossil fuels needed for power generation. If we add EVs into the mix, the increase in the need for oil, gas and coal for electricity supply escalates dramatically.

Many in government and industry seem to think that society can make a complete transition of road transport from internal combustion (IC) power to EV by 2040. The assumption made here is that, for this target to be met, switchover will need to have reached 66% by 2030. If we remain a long way short of two-thirds conversion by then, the target date of 2040 is unlikely to be met, requiring a rethink of the objective.

Accomplishing 66% conversion to EV by 2030 would reduce annual petroleum consumption by 1,670bn toe over that period. But the corresponding increase in electricity demand would be 7,350 TWH. Now, instead of requiring additional generating capacity of 10,160 TWH (+41%) by 2030 just to meet growing baseline demand, we would need to find extra capacity totalling 17,500 TWH (+71%).

The base case (ex-EV) used here already includes maximised development of renewables, so conversion to EV isn’t going to create additional incentives (or capital) for a purpose that is already imperative. Therefore, of the greatly-increased increment required by EV conversion, renewables are likely to supply only 26%, with a further 11% coming from nuclear and hydro. All the rest – 63%, or 11,060 TWH – would have to come from fossil fuels.

EVs and renewables – a false linkage

At this point, we need to note a number of mistaken assumptions which are sometimes made in creating a false relationship between EVs and renewables.

First, and as we have noted, EVs are not an essential driver for investment in renewables – this investment will (and must) happen anyway, even if EVs prove a blind alley.

Second, expansionary investment in renewables is not going to make EVs an appropriate strategy. Just like nuclear in an earlier era, renewables are not going to supply energy in such abundance that it will be “too cheap to meter”. We are going to need every KWH of renewable output just to keep up with growth in the baseload (non-EV) need for electricity.

Third, and unlike renewables, EVs are not going to make a positive contribution, let alone a major one, to stemming climate change. The fossil fuel currently burned in IC-powered transport will simply be displaced from vehicle engines to power stations. Battery technologies raise their own pollution and emissions issues, and some of today’s ultra-optimistic expectations for the life efficiency of batteries are already starting to look somewhat questionable.

Wisdom and folly

If it is accepted that EVs are as bad an idea as renewables are a good one, an inescapable conclusion has to be that EVs are likely to divert both effort and capital in ways that are wasteful. This risk would intensify were governments to allow themselves to be talked into subsidising EVs.

If the case for EVs is so flimsy (and, at the least, is so very far from proven) the question which remains is this – why are industry and government so determined to push ahead with conversion?

Beyond the human fascination with the new, the shiny and the technological, the reasons why we are likely to invest huge sums of our scarce energy-legacy capital into pursuing the chimaera of EVs are simple enough.

First, leadership in government and business still fails to recognise the challenge posed by the mounting cost pressures jeopardising the energy (and hence) economic future.

Second, EVs are a form of denial over the really pressing need, which is to readdress and redesign patterns of travel and habitation that are being rendered unsustainable by energy pressures.

Before the Second World War, and despite the efforts of Henry Ford in America and Volkswagen in Germany, cars were a luxury item, affordable only by the wealthy, and often more expensive to purchase than a house. Since 1945, we have pushed ahead, from the target of one car per household to something pretty close to one car per person. Efforts to tackle the energy, pollution and congestion consequences of the proliferation of car ownership have been half-hearted at best.

Whole patterns of work and habitation have been shaped by mass vehicle ownership, in much the same way that living and employment structures were transformed by railways in the Victorian era. The norm has become suburban and exurban sprawl, rather than the greater housing densities of earlier times. If we were ever forced to put the spread of car ownership into reverse, we would – quite apart from selling the idea to the public – have to redesign working practices and the structure of habitation.

These are issues that, for wholly understandable reasons, the public, government and industry have been extremely unwilling to confront. But the logic of rising ECoEs, climate change and a faltering energy-based economy is that we will have to face these challenges, whether we want to or not.

This implies that the push for all-out conversion to EVs is an exercise in denial, along much the same lines as the economic denial implicit in debt proliferation, pensions destruction and monetary adventurism.

We may not – yet, anyway – need to adopt a ‘one car per household’ strategy along the lines of China’s “one child” policy. But, at the very least, we need to be rethinking housing and transport patterns, and investing in incremental automotive technologies.

Leaner-burning engines, tighter (and strongly-enforced) emissions restrictions, hybrids, the increased use of engineering plastics and the imposition of a limit of, perhaps, 1.5 litres on engine sizes might be a better idea than building a new generation of heavyweight vehicles designed to harness an abundance of electricity which simply isn’t going to happen.



151 thoughts on “#118: Good idea, bad idea

  1. Well I’ve moved most of the family money out into NS&I savings accounts – not that Government accounts really provide a safe haven if things go really awry.

    From what I’ve read I would assume the UK Government may have to invoke emergency measures in a few years time with fuel severely rationed for ordinary motorists.

    • That’s about all you can do, I think, unless you hedge by holding overseas currencies, or physical gold.

      We’re at a bit of a crux right now. Actually, the signals are there, for anyone willing to look. If the economy is doing OK:

      – why are wages still being outpaced by inflation?
      – why are the costs of essentials rising markedly again?
      – why are the NHS, defence, etc – you name it – struggling for resources?
      – why are so many companies struggling (Carillion et al)?
      – why has household debt (especially unsecured) increased so much?
      – why are consumers committed to the absurd electricity price of Hinkley Point?

      Not that this is a purely British problem, however.

    • Additionally, measures of hardship are worsening.

      Of course, those with rose-tinted spectacles will point at house prices. But what happens if even 10% of homeowners try to turn those values into cash?

  2. Further to the comments on the M,Dittmar paper, the focus on physical limits to oil production does generate a few scenarios that may not be obvious from an ECOE perspective. Assuming Dittmar is correct in his forecast that the hard oil production limit will be obvious by 2020, (with which Tim agrees) we can expect the following.
    1. A hard oil supply shock with a spike in oil prices and a resulting global recession which the authorities will attempt to combat with monetary policy. The result is Stagflation, with cost push inflation and negative economic growth, an especially difficult economic predicament to get out of.
    2. A collective realization that intermittent renewables are no solution. Just think about it; will producing solar panels and wind turbines be the highest best use of the remaining oil especially when energy prices have spiked? If renewables aren’t economic today with government subsidies, how will they fare when subsidies aren’t affordable?
    3. The US will open up all public lands for oil exploration and we will all cheer them on because of the obvious consequences of the oil supply crunch.
    4. Growing conflict with China for access to ME oil
    5. The EU is toast. The North will be unable to bail out the South any longer since they have slid into the same predicament.
    6. Large infrastructure projects such as the ones that the US built post war will be a dream and no longer affordable.
    7. A migration crisis resulting from the economic collapse of Latin America.
    8. Climate change will march on because of the co2 that is already in the atmosphere, except now we cannot afford to rebuild. Think Puerto Rico on steroids.

    • Good points, but there’s one I would add – financial system crash, as/when participants realise that debt service and repayment is becoming impossible, whilst expectations for growth in corporate earnings can no longer support equities prices.

      It’s worth remembering that oil prices spiked from $20/b in 2001 to a peak of $147/b, whilst other energy and commodities prices surged too. That’s what really triggered the 2008 crash.

      We’re also seeing the return of much of the complacency that was so striking immediately ahead of the GFC.

    • Interesting perspective does it include taking the punch bowl away from the frackers leading to an immediate 5% decline in oil production combined with multiple pension fund bankruptcies. How many fronts can the government cover at once? In 2008 it was just liquidity because of speculative growth coming home to roost. This time the problem will be scarcity. Can’t plaster over scarcity it has its own feedback loop. It’s called scarcity.

    • This is interbank (‘financial sector’) debt, not included in the total debt numbers I use here, though I sometimes mention it. It is excluded because, theoretically, it nets-off, only becoming significant if banks cannot meet their obligations to each other.

      The chart shows much less interbank debt in the US since the GFC, though of course it has soared in China.

    • This answer comes from Gail Tverberg, someone asked the same question:

      You are right; that chart is concerning. There was a big drop in interbank lending during the 2008 crisis. Wikipedia has an article giving a couple of explanations for it, namely “increase in counter-party risk” and “liquidity hoarding.” This is an article looking back at detail data, after the fact.

      Now the situation seems to be happening again. Are banks concerned about the solvency of other banks, and reflecting it this way? This is an article asking this question:
      It points out the massive increase in required reserves of depository institutions in recent years. Could this be part of it?

      The gradual increase in required reserves above seem to be related to requirements under Basel III, which of course is intended to help solvency. I wonder if increased Basel requirements in 2017 are having an adverse impact on lending. This article (which isn’t about the current situation) points out:

      Since the advent of Basel III in 2010, banks have been under considerable pressure to improve their capital ratios. . .Looking back at our original example, when the bank replaces $10m of reserves with a $10m commercial loan asset, risk assets increase and the capital ratio reduces. Putting banks under pressure to increase their capital ratios is thus a significant disincentive to lend at risk. This might explain why banks seem to have substituted safe assets (Treasury and Agency securities as well as reserves) for risky ones.

      There seem to be new tweaks to the system that are now being added. They are internally being referred to as Basel IV. (They are really an update to Basel III.) According to a January 8, 2018, Deutsche Bank article:

      The proposals announced recently, referred to as ‘Basel IV’, include updates to the ways banks calculate their capital requirements with the aim of making outcomes more comparable across banks globally. . . One principal feature is the way banks calculate risk weighted assets or RWAs. The BCBS proposes that a calculation of a bank’s RWAs using internal models should not fall below 72.5% of the calculation using standardised models. This lower limit is known as an “output floor”. In addition, when computing RWAs based on internal models, input parameters must not fall below certain minimum levels, so called “input floors”.

      I wonder with these new rules (just announced now), banks are “running scared.” They don’t dare make more loans until they can figure out how this new rules apply to themselves. Basel III rules seem like a place to start looking–they don’t really prevent bank failure, even though they look like they would. At some point, they squeeze lending. Squeezing banks with new Basel rules, at the same time interest rates are going up and the Federal Reserve is selling QE securities does not sound like a good idea.

  3. So on your figures will be able to increase PV production to at least 25% of energy production (250TWH) by 2030 (at current rates of increase it may well achieve that by 2025).
    Canada alone could produce 10x the amount by the same date if it wished and should be significantly more efficient than Japan (longer hours of sunshine, colder average temperatures).
    Early (e.g. 2011 & 2012) production was massively inefficient but cost and more importantly energy efficiency have dropped massively since then. According to one friend investing there, costs are 1/5 of what they were in 2012 and energy efficiencies are more than double. It would be worth you checking up to date (i.e. 2017) ECoE I think you will be rather surprised.

    • Quotes from the article your link led to :

      ‘Meanwhile the market is mispricing perennial structural challenges, in particular mounting and unsustainable global debt and a dim fiscal outlook, particularly in the US, where the price of this recovery is a growing deficit. In other words, short-term economic gain is being supported by policies that threaten to sink the economy in the longer term’

      ‘As 2018 progresses, business leaders and market participants should – and undoubtedly will – bear in mind that we are moving ever closer to the date when payment for today’s recovery will fall due. The capital market gyrations of recent days suggest that awareness of that inevitable reckoning is already beginning to dawn’

      Exactly what you’ve been telling us. Looks like another perfect storm is on its way.

      I’ve noted your comment on the website too.

    • Dambisa Moyo is brilliant. I recommend her book “How the West was Lost”. Not only is her analysis excellent, but she has a gift for making things clear to non-experts.

    • I’ll be watching news on the various stock markets with interest. The penny must now of dropped for some. I’ll look up the book.

    • Three immediate thoughts.

      For a start, you’d have to be convinced by reported inflation.

      Second, you’d have to accept that inflation doesn’t include asset prices.

      Third, you’d have to believe that there is no likelihood, medium term, of energy costs rising.

  4. Thanks Dr Morgan, I was sceptical that this ‘theory’ offered a crumb of comfort in our present predicament. How long before the cheap money that has inflated assets spills out and starts to affect the RPI inflation index…is that when the dirt hits the fan ?

  5. Tim – with an impending energy crisis don’t you think that leaving the EU is a terrible mistake – none the least due to the extra cost of transport that will be required to export and import goods to and from distant ‘new’ trading partners.

    • Ah! I try to steer a little clear of the “Brexit” debate.

      This said, I did predict the outcome of the vote. My view – sourced from SEEDS, but readily supportable from “conventional” information – is that prosperity in the UK has been deteriorating for more than a decade. This same deterioration helps explain political developments in other countries, too, including the US, France and Italy.

      Deteriorating prosperity fuels anti-elite sentiment, exacerbated, of course, when the incumbent elite misunderstands the issues, and follows seriously faulted policies. Politically, I might add that Labour is likely to win the next election – by which I really mean that the Conservatives seem determined to lose it.

      The British economy, as I see it, is in a parlous state, and, if (or rather, when) the next financial crash occurs, will be less equipped to “dodge a bullet” than it was in 2008. In that eventuality, I do not see how the EU could help, as it’s likely to have enough problems of its own.

      None of Britain’s economic malaise is recent enough to be blamed on “Brexit”. Leaving the EU doesn’t necessarily make the fundamentals worse, but it certainly won’t fix them. I fail to see, from any political party, any preparedness to fix the real problems.

      My reading is that the establishment will try to deliver as little “Brexit” as it thinks it can get away with. The phrase for this is “Brexit In Name Only”, or “BINO”.

      But the British people did vote for Brexit. I know the Leave campaign has been accused of misleading voters, but politicians always do this – Mr Farage and Mr Johnson didn’t invent “spin”, after all. Planning a second referendum, and wheeling out people like Blair to support it, won’t wash.

      So the battle will be joined over “how much Brexit” is delivered. Britain might be able to stay in the single market and customs union, but I read free movement as a red line with voters. Will M. Barnier and others concede a tailor-made deal?

      What I hope for is fundamental reform aimed at addressing perceived unfairnesses, combined with tackling structural weaknesses. But I won’t be holding my breath waiting for that, whether from Mrs May or Mr Corbyn.

    • Hi thanks for your reply. My own thoughts were simply to ensure goods can still be sourced relatively locally (meaning the EU) to reduce the energy needed for transport.

      If BINO does occur then I think they’ll be a need for another Channel tunnel.

    • Though “Brexit” grabs most of the attention, there are other things I’d fix first, if I had a magic wand. They’re not confined to Britain, but are particularly striking imn the UK and the US.

      Top of my list would be anger, together with mistrust and resentment. It’s economically (as well as socially and politically) corrosive. It’s a sort of vague feeling that others are out to screw you unless you maintain constant vigilance, and preferably screw them first.

      It’s relevant to “Brexit”, in that I think the public mistrust the elite, so don’t trust the authorities to deliver the best solution for the population as a whole, if there’s an alternative variant that suits the establishment better.

      I don’t think the establishment really “gets” this. I’m just not seeing, especially from the Conservatives, or from business for that matter, the willingness to compromise, or to “meet the public half way”, that can bridge this gap. That’s why I think Jeremy Corbyn will take a lot of stopping, electorally.

    • Tim

      ‘Top of my list would be anger, together with mistrust and resentment. It’s economically (as well as socially and politically) corrosive. It’s a sort of vague feeling that others are out to screw you unless you maintain constant vigilance, and preferably screw them first’

      I think this would take a long time to achieve as getting rid of the ‘Me first’ attitude is hardwired in some. Regarding resources – if and when they become scare – I remember round about 2009 /10 we had a long cold winter there was a bread shortage in one of my local supermarkets.

      I read that a fight broke out as to who got the remaining loaves with people pushing and shoving to get to the shelves.

      If the predictions of 2020 with oil in short supply come true then I can imagine the same happening but for all types of produce.

  6. Energy and Population Density

    I found this description of Kaifeng, China, year 1017, while reading The Patterning Instinct by Jeremy Lent. Page 251.

    ‘King Canute is being crowned in London, a modest city of roughly 30,000. Half a world away,, the emperor of China’s Song dynasty, Zhenzong, is celebrating the New Year’s Festival from a lavishly decorated hall on top of the Gate of Displayed Virtue, a massive construction more than 300 meters wide. With music playing and top-ranking officials sitting in curtained boxes, Zhenzong surveys the glory of Kaifeng stretched out before him. The largest city in the world, Kaifeng contains about a million people. It is a city that never sleeps, with first-class restaurants and countless markets specializing in garments, pearls, gold and silver, incense, drugs, brothels, and every kind of food and drink imaginable. In the words of one denizen, ‘Here one can stay all day and never become aware when evening falls.”

    China at that time had printing, munitions, shipping, and navigation far in advance of anything in Europe. And:

    ‘Inland, they transported agricultural and industrial commodities through an extensive 55,000 kilometer canal network.’

    I just want to call attention to the importance of transport. Kaifong had neither electricity nor internal combustion engines. And yet they could assemble a million people in one place and some of them could enjoy a luxurious existence (by the standards of the time) because of the water transportation network. It may very well be true that the most direct threat to our current civilization is the loss of internal combustion engines to provide transport over road networks….because we have spread to canal unfriendly topography and have neglected the canals which previously provided the backbone of our transport. We might survive the loss of electricity, or a drastic cut in the quantity of electricity available, more easily than the loss of trucks.

    Don Stewart

    • This is fascinating stuff. I’ve read studies which attribute the collapse of the Western Roman Empire to the energy equation turning adverse, and found them persuasive. From recollection, population numbers fell by 95% during the decline.

      On another (but related) tack, how we cope with challenges, ranging all the way from energy decline and climate change to massive debt and a breakdown in trust, will depend on the rationality of choice. And I don’t get the feeling, looking around, that there’s all that much rationality around.

  7. One more sobering thought about transportation. The Grand Canal connected the food growing areas in the South with the Capital in the North of China. According to Jeremy Lent, page 299:

    ‘involved more than 5 million conscripted peasants guarded by 50 thousand police. It is estimated that about half the workers died on the job before the project was finished.’

    If the first lesson is to understand the importance of transportation, the second is to understand how much cannon fodder the Powers That Be are willing to sacrifice in order to gain the advantages to the wealthy afforded by transportation.

    Don Stewart

    • ‘On another (but related) tack, how we cope with challenges, ranging all the way from energy decline and climate change to massive debt and a breakdown in trust, will depend on the rationality of choice. And I don’t get the feeling, looking around, that there’s all that much rationality around’

      I would argue that population growth needs to be included in Dr Morgan’s list – my view is that it is not given enough attention because it’s not PC to talk about the problems.
      For example the population of Cape town has increased by 80% since 1994 and t is now suffering severe water shortages.


  8. Pingback: #120: The need for new ideas | Surplus Energy Economics

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