#247: The Surplus Energy Economy, part 2



As we have seen in part one of this series, underlying or ‘clean’ economic output, known here as C-GDP, has correlated remarkably closely with primary energy consumption over a period of more than forty years. This means that we cannot “de-couple” the economy from energy use. This conclusion is wholly logical, given that nothing which has any economic value whatsoever can be supplied without the use of energy.

In part two, our aim is to assess the outlook for the supply and cost of energy, because this will determine the prospects for economic output and prosperity. We conclude that, despite their unquestionable importance, alternative energy sources cannot provide a complete or like-for-like replacement for the energy value hitherto sourced from oil, natural gas and coal.

As is apparent in Fig. 4 – charts in this series are being numbered consecutively – there has been a direct correlation between the exponential increases in, on the one hand, the use of energy and, on the other, population numbers and the economic means of their support. The exponential trends in both series started in the late eighteenth century, which was when the Industrial Revolution began, its symbolic commencement being James Watt’s landmark completion of the first truly efficient heat-engine in 1776.

In short, Fig. 4A provides the clearest possible demonstration of the fact that the economy is an energy system, and that exponential expansion in population numbers and economic output was the direct result of discovering how to harness fossil fuel energy.

A second turning-point can be seen in the years after the Second World War. For much of the period since then, energy use (measured in billions of tonnes of oil-equivalent) has expanded even more rapidly than the population has increased.

This has meant that consumption of energy per capita has risen markedly, as shown in Fig. 4C. But the likelihood now is that the availability of energy will decline, both in aggregate (Fig. 4D) and in per capita terms. If this is what is happening, it means that both economic output and material prosperity have started to contract.

Fig. 4

Cost – the critical role of ECoE

The second of the three ‘first principles’ set out in part one is that energy is never ‘free’. Whenever energy is accessed for our use, some of that energy is always consumed in the access process. This ‘consumed in access’ component is known here as the Energy Cost of Energy, or ECoE.

Trend ECoEs are on a relentlessly rising trajectory, and this is the primary cause of a process of deterioration which has seen growth in economic prosperity decline, stagnate and – now – go into reverse. Overall ECoEs (from all sources of energy) have risen from 2% in 1980 to 4% in 2000, and 10% now. The high-maintenance industrial economy cannot cope with double-digit ECoEs – and there’s worse to come.

If ECoEs had stayed at 2%, the economy would still be growing robustly on the basis of abundant low-cost energy, and we wouldn’t have stretched the financial system to breaking-point by piling on vast quantities of debt and other liabilities in pursuit of the chimera of credit-fuelled “growth”.

If they had stuck at, say, 5%, growth would have been over in the West, but would be continuing in less complex EM (emerging market) countries. As it is, ECoEs have reached levels at which global economic contraction has become inescapable.

It’s vital, then, that we understand ECoE, the factor which, whilst it is ignored by orthodox economics, goes further than any other to explain why prior economic growth has gone into reverse. How do ECoEs evolve, and what effects do they have?

Coal, oil and natural gas are the sources of energy on which the modern economy has been constructed, and they continue to account for more than four-fifths of primary energy supply. This is where our consideration of ECoE needs to start.

Although data for earlier periods is not available, it’s clear that the ECoEs of fossil fuels declined during most of the industrial era, probably reaching their nadir in the quarter-century after 1945.

Our use of fossil fuels began with small deposits, largely discovered on a happenstance basis, which were extracted, processed and delivered using rudimentary technologies.

Three processes contributed to a subsequent long decline in ECoEs.

First, as the energy industries expanded, they reaped continuing economies of scale. The relationship between fixed and variable costs dictates that a large oil, gas or coal field is less expensive to develop and operate in unit terms than a smaller one, and this applies to processing and distribution systems as well.

At the same time, the global search for lowest-cost energy supplies reduced ECoEs through the process of geographic reach. A notable milestone in this progression was the discovery and development of the vast petroleum resources of the Middle East. Despite the hopes that have been vested in various basins in more recent times, the industry has never found anything on a scale which compares with the enormous oil wealth of the Middle East. Whilst we cannot rule out the possibility that reserves of comparable size might yet be found elsewhere, we do know that any such discoveries would be remote, and technically challenging, meaning costly to access.

The third factor which has driven fossil fuel ECoEs downwards over time has been technical progress, at every stage of the chain from extraction to processing and distribution. This process has been gradual and, in an era in which excessive faith is often vested in technology, we need to remind ourselves that the capabilities of technology are limited by the laws of physics.

The ‘shale revolution’ is a case in point. The technological advances in fracturing made the extraction of shale energy more cost-effective than the extraction of those same resources would have been at an earlier time. But it did not – and could not – turn American oil and gas resources into the equivalent of Saudi Arabia, an outcome precluded by the differing characteristics of the resources in question. This is why shale has not been hugely profitable, despite many expectations to the contrary.

Technology accelerated the downwards trend in ECoEs, and can mitigate the upwards trajectory driven by depletion, but is limited by the physical characteristics of resources.

Once the benefits of scale and reach had been exhausted, a new factor became the driver of ECoEs. This factor is depletion, a term which describes the natural process whereby lowest-cost resources are used first, leaving costlier alternatives for later. Unlike reach and scale, depletion pushes trend ECoEs upwards rather than downwards.

We need to be clear that we are not going to ‘run out of’ oil, or, for that matter, gas or coal. Rather, what we are experiencing is a relentless increase in costs, as older (and generally larger and simpler) deposits are exhausted, and are replaced by resources which are higher-cost, and are often smaller, more remote and more technically challenging than previous sources.

The broad ECoE situation is illustrated in Fig. 5. It must be emphasised that the left-hand diagram (Fig.  5A) is a stylized, explanatory representation of the “ECoE parabola”, illustrating how ECoEs, initially driven downwards by scale and reach, then turn upwards as a result of depletion, with technology moving from an accelerating to a mitigating role.

Fig. 5

The central chart (Fig. 5B) shows the projection that, with the ECoEs of fossil fuels on a sharply rising trajectory, neither renewables, nor increased contributions from nuclear and hydroelectric power, are likely to do more than moderate the rising trend in overall ECoEs.

In SEEDS analysis, ECoE defines the difference between economic output and material prosperity. As energy supply becomes more challenging, whilst ECoEs continue to increase, prosperity is in the process of declining more rapidly than output measured as C-GDP (Fig. 5C). These are issues to which we shall return.

Matters at issue

At a later stage in this series, we’ll look at the evolution of prosperity in detail, but it’s helpful at this point to remind ourselves of what is at stake. The charts in Fig. 6 are designed to put this into context. For comparison, each is indexed, with 2021 set at 100.

Conventional data informs us that GDP, generally – though mistakenly – assumed to measure economic output and prosperity, was 101% higher in real terms in 2021 than it had been back in 2001 (Fig. 6A). Population numbers increased over that period but, nevertheless, GDP per capita rose by 62% between those years (Fig. 6B). Both of these positive trends are, we are told, capable of continuing indefinitely.

Energy-based interpretation, conducted using the SEEDS economic model, presents a completely different picture. Growth in aggregate prosperity did occur between 2001 and 2021, but SEEDS puts this at only 32% (Fig. 6C), meaning that the world’s average person was only 6%, rather than 62%, more prosperous in 2021 than he or she had been back in 2001 (Fig. 6D).

Fig. 6

Needless to say, this average person’s share of the world’s aggregate debts has increased dramatically, real debt per capita having expanded by 125% between those years – and even this doesn’t cover the broader liabilities embodied in the financial system.

More important still, SEEDS projects that aggregate prosperity is close to its point of inflexion, whilst prosperity per person has already turned down.

Here, then, is the point of contention. In stark contrast to the perpetual growth promised by orthodox economics, energy-based analysis informs us that prosperity can only expand, or even be maintained at current levels, if two conditions can be satisfied.

If aggregate prosperity is to be maintained, aggregate energy supply must not decrease, and we must find a way to stop further increases in trend ECoEs. Unless both conditions can be met, the economy gets smaller, with consequences that will be examined later in this series.

The outlook for supply

The ECoEs of fossil fuels are rising relentlessly, and will continue to do so. This means that volumetric supply of fossil energy is destined to contract.

This can be explained in terms of pricing which, for any energy source, has to meet two tests. First, it must cover suppliers’ costs. Second, it must be affordable for the consumer.

This can be said of any product or service, but the difference with energy is that the affordability of the consumer is determined by the energy to which he or she has access. This isn’t, then, the same kind of supply and demand equation that we might apply to non-energy products and services.

A person might or might not buy a cup of coffee or a refrigerator at its current price, but being unable or unwilling to make these purchases doesn’t reduce his or her income. This is where energy is profoundly different – a reduction in the supply of energy makes the economy poorer.

When ECoEs rise, not only do suppliers’ costs increase, but there is a simultaneous decrease in the prosperity (and hence in the affordability) of the consumer.

When costs are low, price-arbitraging the needs of producers and consumers is straightforward, because the available value margin is wide enough to satisfy both.

As costs rise, though, a point is reached at which volumes contract, because the costs of producers rise at the same time as the affordability of consumers declines. Far from being driven upwards by scarcity, fossil fuel prices might well decline in accordance with the decreasing prosperity (and hence affordability) of the user. This means that energy markets cannot be relied upon to give us advance warning about economic deterioration.

The SEEDS model uses a set of projections which sees the aggregate of fossil fuel supply falling by 18% between 2021 and 2040. Unless offset by increases from non-fossil sources, this would reduce total primary energy supply by 15% over that period.

It’s certainly possible that the supply of nuclear power will increase, but this is expensive, and would require a major resource investment commitment from an economy which, from now on, isn’t growing. The big problem here is scaling. As of 2021, the nuclear sector supplied only 4.5% of the world’s primary energy and, taking not just resource needs but construction times as well into account, it’s extremely unlikely that we can double, treble or quadruple nuclear generation in a comparatively short period of time. Nuclear fusion is plausible in theory, but has remained twenty-five years in the future throughout the lifetime of anyone reading this article.

Scenario assessment

What this means is that practical hopes for replacing dwindling fossil fuel energy are vested in renewables, with wind and solar power the renewable energy (RE) categories deemed to be capable of rapid expansion. In Fig. 7, we look at the demands that REs will be required to meet under four different scenarios.

In each instance, the focus is on the combined supply of energy from wind and solar power, which is shown in orange. For simplicity, it is assumed in all scenarios that fossil fuel supply declines by 18% between 2021 and 2040, and that there are modest increases in the availability of energy from nuclear and hydroelectric power.

In the first scenario (Fig. 7A), there is no increase in wind and solar from the 675 mm toe (tonnes of oil-equivalent) supplied in 2021. On this basis, and despite incremental contributions from nuclear and hydro, total primary energy availability is 12% lower in 2040 than it was in 2021.

In the second scenario, the aim is to see what needs to happen to keep the total supply of energy unchanged throughout the forecast period (Fig. 7B). For this to happen, and with all other parameters unchanged, supply from wind and solar has to be 250% higher in 2040 than it was in 2021. This might be feasible – we’ll look at the challenges shortly – but energy supply per capita would fall markedly, and the economic situation would be worsened by continuing increases in overall ECoEs.

If prosperity is to stand any chance of being maintained at current levels – taking into account rising ECoEs – aggregate energy supply needs to grow by at least 1.5% annually (Fig. 7C). For this to happen, we would need a 900% increase in the supply of energy from wind and solar power. This is roughly the set of projections which corresponds to the lower end of consensus expectations, and we’re not jumping too far ahead if we state here and now that this is extremely improbable.

The final scenario (Fig. 7D) is the one actually used in SEEDS analysis. By 2040, fossil fuel supplies are 18% lower than they were in 2021. Wind and solar power, taken together, have increased by 90%. There has been a 21% rise in the combined contribution of nuclear and hydroelectricity, and a modest increase from renewable sources other than wind and solar.

In this scenario, the aggregate supply of primary energy falls by 8%, and energy availability per capita is 20% lower in 2040 than it was in 2021.

Fig. 7

The limits to transition

Simply stated, the consensus view is that the supply of energy from wind and solar power will increase so dramatically in the coming decades that we can reduce or even eliminate the use of climate-damaging fossil fuels without experiencing any contraction in the economy. There can be no question about the importance of the environmental imperative contained in this view.

But the orthodox line doesn’t just postulate the attainment of environmental sustainability through like-for-like transition to renewables, let alone suggest that we can attain sustainability by making some economic sacrifices, which might be a reasonable point of view.

Rather, it holds out the bold promise of “sustainable growth”.

We’re told, for instance, that most of the world’s vehicles – totalling close to 2 billion, and including 1.1 billion cars – can be replaced with electric vehicles (EVs). The aggregate of global prosperity will carry on growing indefinitely, perhaps by between 3% and 3.5% annually, meaning that the economy will be somewhere between 75% and 90% bigger, in real terms, in 2040 than it was in 2021. Needless to say, there won’t have to be significant sacrifices made by the public, who will carry on driving, flying and consuming at ever-increasing rates.

All of this depends absolutely on dramatic expansion in the energy supplied by renewables, which really means by wind and solar power, as these are the two categories which are capable, at least according to the orthodox narrative, of major increases in scale. The ability of these sources of supply to increase is not a matter of dispute. The question is whether they expand by enough to take over from fossil fuels.

It has to be said that the consensus scenario of seamless transition owes almost everything to assumption, and virtually nothing to a realistic appraisal of what is achievable within available resources and the parameters set by the laws of physics. The latter is a good place to start an investigation of what might be possible for energy transition.

There are, broadly speaking, two ways in which the supply of any material product can be increased. One of these is to increase the technical efficiency of the supply process, and the other is to expand production capacity. If a manufacturer wants to double his output of widgets, he can either find machinery which is twice as efficient as what he is using now, or double the size of his factory.

Where efficiency is concerned, the harnessing of energy is subject to the laws of physics, which set limits to what is possible. This is certainly true of renewables. The potential efficiency of wind power is determined by Betz’ Law, which states that a maximum of 60% of the kinetic energy of wind can be captured by a turbine. The equivalent for solar is the Shockley-Queisser Limit, which is 34%.

For practical purposes, two observations need to be made here. First, we cannot expect to lift conversion efficiency all the way to the Betz and Shockley-Queisser maxima, because no technology can attain perfect theoretical efficiency.

Second, and more importantly, current best practice is already close to theoretical maxima. The conversion ratios of solar panels (where the limit is 34%) already exceeds 26%. The efficiency of wind energy conversion, where the maximum is 60%, is already above 40%.

In short, and whilst technical progress is likely to continue, there can be no quantum leap in conversion efficiencies, a conclusion well stated here.

If we are to attain very large increases in the supply of wind and solar power, the heavy lifting will have to be done by capacity expansion.

The cost of transition to renewables has been calculated, and is known to be enormous, well in excess of USD 100 trillion. What matters, though, isn’t the financial cost, but what that cost means in terms of the material inputs to be purchased with it.

Rapid expansion (and maintenance) of wind and solar generating capacity and distribution will require vast amounts of concrete, steel, copper, plastics, lithium, cobalt, nickel, graphite, rare earths and numerous other raw materials. It is by no means clear that these materials even exist in the requisite quantities – and the environmental and ecological effects of accessing them are likely to be severely adverse.

On one point there is no scope for dispute – making these raw materials available on a huge scale will require the use of correspondingly vast amounts of energy.

Two further considerations exacerbate the input problem. The first is the intermittency of wind and solar power, and the second is the intrinsic difficulty of storing electricity when compared with the storage of fossil fuels. In the absence of fossil fuel back-up, intermittency requires both surplus capacity (for use when the sun is shining and the wind is blowing) and large and efficient methods of storage.

Both of these considerations leverage the necessary quantities of material inputs. Battery weight is about 60X higher than the weight required for the storage of an energy-equivalent quantity of fossil fuels, and between 50 and 100 tonnes of raw materials are needed for each tonne of batteries produced. In some applications, hydrogen might be a viable alternative storage technology, but hydrogen does not exist in its natural state, and its manufacture is energy-intensive.

This is why systemic capacity for the storage of electricity remains very small indeed. Inventories of petroleum are customarily recorded in days, weeks or months, but electricity reserves are calculated in minutes. In the report cited above, it was stated that “[t]he annual output of Tesla’s Gigafactory, the world’s largest battery factory, could store three minutes’ worth of annual U.S. electricity demand. It would require 1,000 years of production to make enough batteries for two days’ worth of U.S. electricity demand”.

It needs to be noted, too, that capacity expansion targets need to take account of the ageing and replacement, not just of batteries, but of wind turbines and solar panels as well.

The second compounding factor is the shape of planned application. It is, for example, one thing to use renewable electricity to power trams or electric railways, but quite another to supply huge numbers of EVs.

What we are trying to do is to transition vehicles – and numerous other systems created on the basis of fossil fuels – to a completely different source of energy. This isn’t how energy-using technologies develop. The Wright Brothers didn’t invent the aeroplane and then sit around waiting for someone to discover petroleum.

Rather, technologies need to be developed in accordance with the energy available. But there is no preparedness to accept that trains and trams might make more sense than cars in a transport system powered by electricity rather than by petroleum. Even the humble bitumen used in road surfaces is sourced from oil.

Serious though these problems are, we have yet to come to the clincher on seamless transition. Even if we assume that all necessary materials for renewable transition exist in the required quantities, they still need to be extracted, processed, manufactured and delivered, and this requires massive quantities of energy that can only come from the legacy energy of fossil fuels. This, in turn, ties the ECoEs of renewables to those of oil, gas and coal.

Even if supplies of fossil fuel energy could be relied upon to continue at current levels, nobody has yet postulated the current uses of this energy that will be relinquished to free up energy for the purposes of transition. Are we prepared to drive less, fly less or consume less, in order to make energy available for the extraction and processing of steel, copper, lithium and cobalt?

A rocky road ahead

The situation, in summary, is that (a) fossil fuel supplies can be expected to decrease more rapidly than alternatives can be expanded, and (b) that the material connection between renewables and fossil fuels makes it implausible that the relentless rise in ECoEs can be stemmed, still less reversed, by renewables expansion. As we have seen, decreasing energy availability reduces economic output, whilst rising ECoEs leverage the adverse consequences for prosperity.

The Surplus Energy Economics project concentrates on the analytical rather than the prescriptive, and the foregoing should not be taken as disputing the imperative of transition to renewables.

On the contrary, renewables offer our best chance of mitigating economic decline. If we decided to stick with fossil fuel energy and back-pedal on renewables, the economy would contract under the combined pressures of decreasing energy supply and relentlessly rising ECoEs.

There is not, as is so often assumed, any necessary contradiction between our economic and our environmental best interests, which means that transition is imperative for economic as well as environmental reasons. If we tried to carry on with reliance on fossil fuels, we might wreck the environment but would definitely wreck the economy, as supplies of fossil energy decline, and their ECoEs soar.

But there really is no justification for techno-optimism around transition, and claims that “sustainable growth” is assured are starkly at odds with reality. The fact of the matter is that fossil fuels offer energy density, flexibility and portability that no other source of primary energy can match.

We cannot circumvent the laws of physics, nor sever the necessary connection between energy use and economic output. Neither can we reverse the rise in ECoEs by switching to lower-density sources of energy supply.

With this understood, we can move on to assess the outlook, first for economic prosperity, and then for the financial system.

93 thoughts on “#247: The Surplus Energy Economy, part 2

  1. Sobering post.

    I remember some months ago some comments by Biden that we would have to transition to full electrical or full renewables within a short span of time (something to that tune, can’t remember the words exactly).

    I found it unnerving for two reasons.

    First, I don’t think governments care about the environment that much, much less to risk annoying people to no end with mitigating measures, nor do I expect politicians to understand any of this. The real reason is not clearly stated, either. So, who is really in charge? What plans do they have?

    Second, knowing that the renewable transformation with current standard of living is a fairy tale, those comments were confirmation that our current economic model is about to break. I knew that on a theoretical level, but if peak oil leaves the tiniest room for doubt, mostly about timing, stating the intention to go full electrical for the US president to parrot to me means that the collapse or partial collapse is imminent.

    • Thank you. I don’t recall any particular statement, but he has introduced legislation providing enormous financial support for renewables.

      Governments may care about the environment, but care more about re-election!

      On your second point, yes, I think there’s a dawning recognition that there is real and immediate economic trouble. It doesn’t have to mean collapse, but it could unless we – including governments – get our act together.

  2. Tim,
    Did you combine the increasing ECoE with the declining supply of fossil fuels in your analysis for the results in Fig 7?

    • Those are gross supply projections. SEEDS produces alternative surplus energy (ex-ECOE) versions of those charts, but I thought that would risk over-complicating things.

  3. Thank you, again, Tim for another important and insightful post. I look forward to the coming one on prosperity including, I hope, giving insights into the difference between “prosperity”, “material prosperity” and “economic prosperity,” each of which appears in this blog, and maybe also other forms of prosperity that weren’t mentioned here.

    An area I hope will also be addressed in the series is the role of deliberate energy savings (via lower-energy-intensive societies and/or improved design). Amory Lovins of the Rocky Mountain Institute has some striking things to say about its potential vis a vis the expansion of renewables (e.g. at https://medium.com/solutions-journal-spring-2019/the-invisible-energy-bonanza-1e06301c83a5 ).

    • You are welcome, and I hope you’ll find the coming instalements equally helpful.

      “Prosperity”, “material prosperity” and “economic prosperity” are interchangeable as used here. SEEDS defines “prosperity” as economic output minus ECoE. The definition is: ((energy use X conversion ratio) = output) – ECoE = prosperity.

      I hope to look at deliberate energy saving later in the series.

  4. If you live in a capital city like London it is almost possible to imagine the transition to electric as car ownership is already prohibitively expensive and public transport if not cheap is readily available. A quick trip out to the suburbs jolts one back into reality as you see drive after drive filled with 2 or 3 cars as aside from recreation/exercise everybody who can drives everywhere. Public transport is infrequent and expensive and used by school kids and those to poor to own a car. In short the economy outside of London and other capital cities is a petrol car economy. No government has the nerve to tell all those voters that this is not going to last.

    • It’s not hard to see how human activity will need to base itself around sources of energy as fossil fuels provide a level of portability that cannot be easily substituted. Taking a more optimistic view we currently waste an awful lot of resources so it must be possible through better practice and technological progress to become more efficient. The Jevons paradox may become invalidated as we hit physical limits to energy availability and are forced to use less. The process will no doubt be painful. Personal car ownership will have an energy cost too expensive to be mitigated by fuel efficiency. Moving a single person in a 2 ton vehicle is incredibly inefficient no matter how convenient.

  5. Insightful and sobering reading as always Tim, many thanks.
    I recently heard about an effort to convert the oil (drilling) industry to becoming a geothermal power industry, given that you can do this anywher if you drill deep enough ( 2000 metres in many cases) – it does not require rare earth metals, uses existing equipment and know how – can produce lithium as a by product and could be a perment source of energy in human terms.
    It won’t stop us all having to learn how to collectively live a less energy intensive life though.

  6. Nice work Tim.

    What do mean exactly by renewable transition in your series? Is it something similar to what the techno utopians claim or does it relate to something else?

    In my mind ‘renewable’ means something like building with rotation planted wood or growing a vegetable garden, not any of the solar panels and wind turbines that are a product of the fossil fuel powered industrial economy, rather than any replacement for it.

    I can’t see how there can possibly be an argument that these technologies are ‘renewable’. Even if it were possible to manufacture them without fossil fuels, the resultant price (due to energy costs) would be absolutely ridiculous. Therefore the manufacture of these technologies will always tend to occur in places that continue to have access to (relatively) cheap fossil fuels, which means they are worse than useless for ‘weaning’ ourselves off fossil fuels. They are just another layer of complex dependence on the very thing they claim to replace.

    • Thanks.

      I use renewables in what I think of as the generally accepted sense. The main ones are wind and solar, but biofuels and some other technologies are included within the definition. I treat hydro as a separate category.

      There’s a difference between what makes sense and what may happen. Renewables cannot be expanded on a dramatic scale without enormous quantities of materials, which can only be made available, if at all, using correspondingly enormous amounts of energy, for which the only feasible source is fossil fuels. This makes renewables derivatives of fossil fuels, meaning that they cannot deliver disconnected or dramatically lower ECoEs.

      Despite this, many decision-makers in government and beyond are committed to this transition, so quite a lot of expansion may happen even if the calculations are faulty. Part of this is unrealistic expectations for technology. The scope of technology is bounded by the laws of physics.

      I’m not ‘against’ renewables, but ultra-sceptical about their ability to replace fossil fuels. A sustainable economy might be possible if we accept that it will also be a smaller economy.

  7. Albert Bates: Initial Steps into what became Permaculture
    Here is 7 minutes which traces Albert’s early history (1972) to today as he and the other people at The Farm in Tennessee learned to apply the principles of permaculture or agroecology or green energy, etc. to the problems of daily life.

    This will be interesting to those who think that:
    *the decline is going to be pretty severe as the decades unfold
    *photosynthesis, gravity, rain, sun, air circulation patterns, etc. will become very important factors in our lives
    *a village is an excellent place to begin
    Don Stewart

  8. Interesting tidbits on this evening’s ITV news:

    1. FTSE 100 today reached a 40 year high
    2. McVities are shrinking the size and quantity of their biscuits

    The former is based upon the excess financialisation of the UK economy (fake wealth); the latter is based upon the nature of the UK economy as it really is (i.e. declining purchasing power).

    Sadly Britain is finished. No turning back.

    • I can’t disagree with your conclusion, and here’s what really worries me – non-bank credit expansion.

      Households are increasing their indebtedness for two main reasons. First, simply to get by. Second, to carry on with non-essential purchases that their disposable incomes can no longer support. ‘High Street’ (retail) banks don’t provide loans to those with little chance of paying them back. But other credit providers clearly are.

      I won’t go into what I think the mechanisms are, but I see no evidence that the authorities are concerned about, or even aware of, non-bank credit escalation.

      I have given up trying to figure out what the UK economic plan is.

    • “I have given up trying to figure out what the UK economic plan is.” I think it is to keep their fingers crossed, hope things keep staggering on and then engineer a feel good, mini boom just before the next election (give away some money). After that they have no idea what to do, but they may have won an election and that is all that counts.

    • That may be the political plan, but it isn’t any kind of economic one!

      The UK economic model, such as it is, has failed. Cheap credit inflates property prices, which provides confidence and collateral for debt-funded consumption. The resulting trade deficit is offset using asset sales, but, even before there are no more assets left to sell, the outflow of returns on capital creates a steadily worsening current account gap.

      Looked at realistically, hardly anything seems to work nowadays – rail, hospitals, ambulances, border controls, etc – the govt can’t afford to give inflation-matching pay increases. They’re in a box – increase spending, or cut taxes, and the resulting deficit panics the markets, threatens to put up inflation, and forces the BoE to raise rates. On the other hand, raise taxes or cut spending and the result is an austerity hit to the economy.

      The financial system is ultra-fragile. Lending to households from non-bank sources seems to be out of control. We’ll see more of this, right up until the moment of crash.

      The fact that the government seems clueless disguises, though it also worsens, the dire economic fundamentals.

    • McVities are a definitely a discretionary in our house!

      Great article DrTim. I’ve forwarded this one on to some friends who are still living in “eco-optimism” mode. I hope the bursting of their bubble isn’t too painful.

      On a slight aside, I’ve been playing around with thermal electric generators (TEGs) on my wood burning stove.
      Trying to generate a modest DC voltage.
      So, the question to the collective here is……. “If you could generate a small amount of electricity via a wood burner, what would be your top priority for its use???”.

      I’ve decide that powering some LED lights is mine. Not sitting in the dark on those long winter nights!!!

  9. Gail Tverberg Analyzes the Current Energy Trends

    Much attention to the trends in electricity production. Less attention to transportation and thermal industrial processes.

    Some hints as to why EROEI can mislead in terms of deploying wind and solar. (This harks back to Howard Odum’s assertion that a university professor with a chalk board was one of the most energy expensive occupations in the world.)

    Don Stewart

    • Many thanks, @Don Stewart, for your comments and link to Gail Tverberg’s work. While her blogs include some fascinating insights, in my view they also struggle with unresolved questions around standardisation/harmonization of the ways we measure EROEI (or ECoE or …).

      She thus highlights the lack of factoring say transport and distribution into EROEI, and there are several recent papers highlighting the same type of boundaries concerns, and proposing say an “EROEIpou” (Point of use) as a standard, partly for the reason she describes, partly because currently it is otherwise very risky to compare EROEIs of different energy carriers because their EROEI calcs may vary widely in methodology (e.g. oil at the wellhead vs. electricity delivered to a user’s premises.) e.g. David Murphy et al “Energy Return on Investment of Major Energy Carriers: Review and Harmonization” (Murphy’s paper has other aspects that concern me, but it is a useful study of this aspect).

      However I suggest it doesn’t stop there: Tverberg also notes the failure to factor in distribution distorts optimistically the usefulness of some energy sources for society. Two further matters come to mind in that regard that I don’t see her factoring in:

      a) EROEIsoc (the EROEI needed for a flourishing society) needs to also be harmonised into the same system, and if currently accepted figures for EROEIsoc (are there any? 12.5 was mentioned in a post on Tim’s blog 246) were established against the seemingly inadequate/distorted EROEI that concerns Gail, then some sort of parity might have been restored (I’m not backing that argument, but it is a possibility); and
      b) The greatly improved energy recovery from energy input into an electrified system of usage vs that for a fossil fuel-powered system – say 3:1 – also has a great bearing on the viability of an energy source to sustain society. This then goes beyond even the point of use and into the equipment – EV/industrial boiler etc. I am not yet aware of an integrated system that allows that to be properly accounted for on a societal basis.

      Best wishes,


  10. Efficiency is all.
    A wood fire in a cave is about 5% efficient: the vast majority of the heat is lost, and the people breathing in the smoke might be lucky to survive past 50 years of age.
    A modern windmill generating electricity to heat your well-insulated home is far more efficient: it is even possible to insulate your home so well that it can keep warm simply by the heat of the people who live there.
    Yes, we can envisage electric cars like mine that are run on wind and solar power alone, and homes with thick thermal insulation such as turf or packed car tyres, or adobe, or peat, or mud.

    • Efficiency is certainly important, and energy pressures might prompt more action on issues like insulation. But have you considered scaling issues? The global car fleet, not including commercial vehicles, is about 1.1 billion. Powering that lot, or even a sizeable proportion of them, requires a lot of solar panels and wind turbines, plus storage and distribution systems. This in turn means vast amounts of steel, concrete, copper, cobalt, nickel and other raw materials, which require correspondoningly vast amounts of energy to make them available.

    • Beware of unintended consequences in the drive for efficiency. For years we’ve been urged to seal up all the draughts in our homes, and insulate to the maximum. Then what happens? You notice fungus growing in the corners of your rooms. Condensation and black mould problems are massively on the increase in the UK, and not just in the appalling slums that some people are forced to live in.

      Solution to the fungus problem? Try all sorts of cheap and cheerful countermeasures, and then finally accept that something more substantial has to be done. This usually means the purchase and installation of a PIV (positive input ventilation) system in the property, to reduce high levels of relative humidity. Ouch! High installation cost, plus high annual running costs and of course and an energy saving own goal.

      The problem is that governments (certainly in the UK) launch these campaigns on a piecemeal basis, looking at a single issue; in this case, heat loss through the building fabric. What they don’t do, is to look at it from a systems viewpoint, to consider what might be the consequences of retrofitting dwellings that were designed and built differently than today’s building standards would permit.

      The true opportunity for vastly improved thermal efficiency is with new build. I have visited dwellings built to “passivhaus” standards, and seen what is possible. There’s no conventional heating system, and a vital component of the “dwelling system” is some kind of mechanical ventilation system with heat recovery. Why is every new house not being built to passivhaus standards? I don’t know for sure, but from what I’ve seen it comes down to cost and lack of skills. This is an area where government support could make a real difference.

      The latest (UK) government crusade is for retrofitting old housing stock with heat pumps. Once again, heat pumps could be very beneficial in new build, but retrofit is a different matter. This will in many cases, end up with unintended (adverse) consequences just as the “seal up and insulate” initiative has. Why? Knee jerk reaction to “do something” and a lack of systems thinking. Normal stuff for a government you might say.

    • Dr Tim, If I were to dump the correct quantity of steel, concrete, copper, cobalt nickel and other raw materials on the footpath out the front, it would produce nothing, it would just be a pile of junk, yet the energy imbedded in all these items is how every energy industry wants to ‘cost’ the energy input to build solar, wind, nuclear etc.

      The real energy cost is not in the production of the materials, it’s in the careful, design and fabrication of all the items in the correct order and places to make the unit produce energy. The engineers and designers, concreters, electricians et al, must all be well trained, experienced and available at the correct time to make an electricity producing machine happen. This takes an enormous amount of energy, yet no-one wants to count it as ‘energy invested’. They just go to the Gj/t of ‘steel’ or ‘concrete’ etc.

      There is a collective failure to work out the true energy cost as the true energy cost becomes an inconvenient truth. The reality is we would be better off not building any of these renewables (and nuclear), saving the fossil fuels to slowly burn over time, instead of the mad rush to burn a lot more now building these energy machines. We would likely have MORE energy available overall by just burning the FF slowly instead.

      What building all these renewable energy machines does, is promote further growth in the present. We need to mine more, build more new factories for solar panels, wind turbines, more trucks to transport it all etc. All this building while pretending to be green is just more of the same growth we’ve had for over 200 years. It’s the only approach modern economics and all politicians know. Promote growth or lose out..

      It will all come to an end when it simply can’t continue, with accusations flying between large groups in the world pointing fingers at each other as the reason why the brave new renewable world is not working, all while denying reality in that it never could work in the first place.

    • @neill61

      As individuals we can make changes, such as building a passive house. But to replace the existing housing stock with passive houses, is not possible. (I realise that you weren’t suggesting this).

      Switching to heat pumps is laughable, when people can’t even pay their existing energy bills (and are having their homes broken into, to have smart meters installed) never mind retrofitting heat pumps.

      There are ways of making energy savings but they all require initial energy inputs.

      The existing infrastructure was built with FFs. It’s impossible to maintain without FFs.

  11. @ Hideaway,

    I see your point about hidden energy costs, and can’t disagree with that, but I think there’s another side to the argument. If the energy wasn’t expended in the production of renewable energy and nuclear power system, would it really be used prudently? I think not. I suspect that much of it would be used to churn out more unnecessary, short lifespan “stuff”.

    At least producing renewable energy systems provides an essential utility for future years. Also, if the engineers you refer to were not engaged in the design, manufacture and installation of energy systems, they would be employed in the design, manufacture, (and sometimes installation) of other “stuff”. This stuff is unlikely to provide much in the way of future benefits, other than to those employed in the landfill industry.

    • @Neill.

      Just as a hypothetical, let’s suppose that all agriculture has been relocalised, and transitioned to Regenerative-Agroecological practices, let’s also suppose that all usage of hydrocarbons has been completely dedicated to the production, maintenance, and decommissioning/recycling of, ‘rebuildables’ , as a conduit for electrification.

      In energy terms, what has been gained?, the primary energy source is still hydrocarbons, and the ‘rebuildables’ – due to the fact that they cannot self replenish and replicate – are still an energy sink, if that’s the case, then, why do it?

    • 25 years ago we built a house to nearly Passive House standards – not quite airtight. It was good and now needs to be replaced at £15,000. With declining prosperity, will future generations be able to afford to replace today’s investment?

  12. With Regard to Investing Now for the Future
    I suggest that those pondering the question might profitably read Just Enough: Lessons from Edo Japan.

    Edo Japan had no fossil fuels at all until Admiral Perry sailed into Tokyo Bay and forced the country to open to the West. There was a lot to dislike about the Edo regime in terms of individual freedom…if your father farmed, you farmed. And most of the people did farm. But if we look at some of the infrastructure which the Edo civilization built, it is remarkable. The city of Edo (now Tokyo) had a far better city sanitation system than London or Paris. They had reliable roads when the US Congress waited until the end of mud season to assemble in Washington, DC.

    If one reads Albert Bates’ recollections from 1972 and immediately thereafter, one gets a sense of what can be done without fossil fuels. It’s very sophisticated engineering. It’s just not what we train engineers to do now with abundant fossil fuels. It’s a lot more like biology…and biology knows a hell of a lot about the use of energy. Study human metabolism and think about the countless oxidative stress injuries induced every day and the fantastic repair job our body does when we feed it right and do the right amount of physical work.

    I think most of us need to start over and look at Edo, or Aborigine food systems in Australia, or (insert your own favorite indigenous culture). There are plenty of engineering challenges, but the tool kit will be very different.

    Don Stewart

    • Great comments @Don Stewart. Many thanks. the inherent message in ” It’s just not what we train engineers to do now with abundant fossil fuels” bears applying far more widely than just engineers!

  13. @Barry, on which planet can you replace a Passive House for £15,000,
    or £150,000 for that matter?

    • @ Dr Tim,

      The prepayment meter scandal has been well publicised in the UK, but there’s other cynically manipulative behaviour going on with the energy utilities that’s much less talked about. I will tell the story, which will take be a longer posting than I would usually consider.

      Customers of UK Energy Supply Companies are being plagued with emails, texts and phone calls in an attempt to coerce them into having smart meters fitted. If you want a smart meter in your home, that’s fair enough, but not everyone does. Many of us with Solar panels are very wary of them, as there have been plenty of instances of the technologies not being compatible, resulting in customers being overcharged after smart meters were installed. Also it’s one of the ways that your energy company can impose its will on you, regarding prepayment. Smart Meters can be remotely switched to forcibly impose a prepayment tariff.

      My own energy supplier harassed me for months to have a smart meter fitted, and just wouldn’t take no for an answer, until I threatened to report them to the energy watchdog.

      They have been even more scurrilous with my 73 year old next door neighbour, informing him that his conventional meter is obsolete and no longer accurate enough, so he must have a smart meter fitted. Fortunately, although in his 70’s, my neighbour can handle himself, and threatened his energy supplier with prosecution for trespass if they set foot on his property. He’s also quite capable of forcibly throwing then off his premises. I’m afraid this is the state of Britain today. Why? TYRANNY BY TARGETS is largely to blame. The Government has a target to complete the changeover to Smart Meters by the end of 2025, and the roll-out is falling short of this. To achieve the 2025 goal, they have mandated energy supply companies to accelerate the changeover as part of their License To Operate. Wow! That’s a quite a big government stick that’s beating up the energy suppliers. Just think about it. License To Operate is conditional on being part of the Smart Meter rollout, and on hitting installation targets. Should companies fail to hit annual targets, then penalties can be imposed.

      The following statement has been copied from the website of UK energy regulator, Ofgem:-

      “In January 2022 a new 4-year smart meter rollout obligation began which suppliers must comply with. The obligation will run until the end of 2025, and it ensures suppliers are subject to binding annual installation targets.
      The first year of the new obligation has now ended and Ofgem is currently assessing suppliers’ end of year performance reports. We are aware that some suppliers appear to have failed to achieve their 2022 smart meter installation targets in line with their licence obligations. Ofgem will consider whether to take enforcement action in respect of any supplier which appears to have breached its licence conditions, in line with our Enforcement Guidelines.
      Should Ofgem decide to take enforcement action, further details will be published on our website.”

      Here’s the bind for the energy supply companies. It isn’t compulsory for homes to have one of these smart meters fitted. Yet government targets compel the ESP’s to make it happen by end of 2025. So what do they do when us “hold-outs” tell them we don’t want one? They (ESC’s) resort to underhand tactics like telling you that your energy meter is no longer accurate and your only option is to have a new Smart Meter fitted. Although this behaviour is not as bad as vulnerable people having their house broken into to fit per-payment meters, it stinks nevertheless.

      Smart Meters are just another element of the Governments ill-conceived and ill executed energy policy to achieve net zero. It’s also another element of the creeping suppression of Civil Liberties and the lurch towards an authoritarian state. I can hardly believe this is Britain I’m talking about.

      Forgive me for this rather long post, but you opened up a very serious issue that needs to be properly aired. While Mr. Shapp’s (The Energy Secretary) might play to the camera in being disgusted at the authoritarian behaviour of British Gas, ultimately, it’s his government that’s been leading the UK in the direction of a totalitarian state, for some years now.

    • No problems with this as a one-off, but let’s not get too deeply into UK-specific issues as readers from elsewhere might not be all that interested.

      Having family and friends living in Britain, I’m obviously concerned about this. The erosion of civil liberties has been a continuing and depressing process. From an economic perspective, hitherto I’ve tried to look at this in two ways – first, what’s going wrong? and, second, what ought to be done? There has ceased to be much point in doing this, because (a) I very much doubt if anyone wants to know what’s going wrong, (b) there’s little or no chance, for various reasons, of effective policies being adopted, and (c) it’s now too late anyway.

    • It seems that, at present, the mode of energy distribution in the UK is going to be via “money “.

      If you have the money, you get the energy. If you don’t have the money, you don’t get the energy.

      I’m not sure how sustainable this is going to be long term? As more and more people fall into the ‘”can’t pay” category, the clamour for a more equitable distribution of energy will rise.

      This is why I am interested in Stage 5 of the blog series, Dr Tom.

      What Happens Next!?!!

    • Thanks John.

      With this series, my plan has been to publish the first article once the second one was finished, and so on. So part three (prosperity) is complete but won’t be posted until I’ve finished part four (finance). There will certainly be part five, in fact I’m looking forward to that one myself!

  14. I agree that Britain is in a pretty bad state but I don’t agree that rejoining the EU (which has enormous problems of its own, especially Germany) would make a positive difference. The opposite in fact, despite what those articles are saying. They also seem to be advocating a huge increase in public spending and uncontrolled immigration. I thought we had been trying those policies for the last twenty years?

    • My view is that there are a number of issues involved in the UK situation. Rather than “pretty bad”, I’d call it ‘terminal’. I have to say, bluntly, that Britain is travelling in a direction that can have only one outcome. Leaving the EU isn’t the cause of these problems, and it’s likelier that the causation is reversed, i.e. that these problems led to “Brexit”. Rejoining wouldn’t be a fix, seems politically implausible, and couldn’t restore the previous terms of membership.

      There’s something intrinsically self-destructive in the UK. The balance of power (between interest groups) is faulty and antagonistic. The economic model is a busted flush, but is adhered to because it is of benefit to some sectoral interests. The doctrine of self-interest – frankly, of greed – has taken over. The public has been duped into, or has sleep-walked into, acceptance of the shoddy.

  15. Nothing to disagree with in your last paragraph, Tim. But the vested interests are fighting tooth and nail to preserve their advantages, while pretending otherwise. It’s no comfort but Germany looks much the same to me, although the economic weaknesses and vested interests are different.

  16. “There’s something intrinsically self-destructive in the UK. The balance of power (between interest groups) is faulty and antagonistic. ”

    I think Dr Tim’s analysis is shudderingly accurate. It seems that we have lost our sense of collective identity and purpose, to the extent that large swathes of the UK don’t even want it to exist anymore.

    The politics of resentment has been gathering pace with the Scottish Nationalists for decades, and it’s never disappeared from Northern Ireland, in spite of the peace process.

    With the accelerating economic decline fuelling this smouldering resentment, it’s hard to see the UK holding together over the next decade. It’s very a worrying thought that dissolution of the union might not be a civilised and peaceful affair. This is not the stuff of fantasy. If the second Scottish independence vote is denied by London, the Scots might opt for UDI (unilaterally declared independence). If current Post-Brexit tensions in Northern Ireland aren’t resolved, the Nationalists (who are now in the Majority), might be tempted to take a chance on UDI. These scenarios aren’t without precedent. The Irish republic did it to Britain in 1919, and going back a lot further, a certain large world power did this to Britain in 1776.
    These things rarely happen without bloodshed. In 2014 the Donetsk People’s Republic and the Luhansk People’s Republic announced UDI from Ukraine. Look what happened since then.

    During times of rising economic prosperity, ethnic and cultural disagreements can be swept under the carpet, but in times of hardship, they tend to rise up with nationalistic doctrine.

    It’s not only the UK that has these kind of fault lines (USA anyone?), but the fractures in Britain are perpetuating like metal fatigue in a worn out airliner. .

    The unthinkable is only unthinkable until it happens.

    • I take the point about nationalists and UDI, though there are a number of severe hazards that the UK faces and may not, on current indications, be able to resolve.

      There is a familiar pattern in history where a powerful minority group pursues polices which are (a) beneficial to the group itself, but (b) detrimental to the country as a whole. This is the path that the UK has been treading for a long time. If you combine this with a seriously mistaken economic model, and at the same time excessively financialize the economy, you are heading for trouble. I’m not sure the extent to which the UK elite feels embattled, but the erosion of civil rights suggests significant worry.

      In the past, such tensions often ended in unrest, but this is not – repeat, not – the primary risk now faced by the UK in the 21st century. The greatest dangers are economic and, even more so, financial. The pensions crisis after the ‘mini-budget’ showed the tip of the iceberg of interconnected financial vulnerability.

      The broader danger is one of economic implosion. The economy is malfunctioning to the extent that increasing numbers struggle to afford the essentials. If, as a mathematical exercise, you assumed CPI-matching pay rises for public sector employees, you would see either (a) a very big black hole in the public finances, or (b) the need for substantial tax increases. The groups on which these tax rises would necessarily fall have enough influence to prevent this from happening.

    • I feel that the situation in the UK has been unavoidable. It’s the long drawn out process of the end of empire.

      Without being accused of being “woke”, our property was built on exploitation on a global/industrial scale. It should be no surprise that the loss of empire would/will lead to a loss of prosperity.

      We have kicked the can down the road by sucking up to the USA and by being the world’s money launderers. Finance capitalism has run it’s course and there are no other options.

      What we are seeing is the result of a rising EcoE and de-growth. We will be hit hard, but so will the rest of the developed world.

      It is inevitable.

      I think that the jokers in No. 10 are particularly incompetent, but I can’t think of any other politicians in my lifetime that could navigate us through the coming storm???🤔

      Politics isn’t capable of dealing with the crisis. The system is about keeping the public ignorant and manipulation public opinion. As the saying goes…”We are all mushrooms. Kept in the dark and fed on shit”!

      The only hope is to explain the reality and then the options. Only then will people be able to accept the decline in their material prosperity.

      The concepts are not difficult to understand, as Dr Tim has layed out on these blogs. Most people will be able to grasp the concepts even if they don’t like what they are being told.

      But all we get is a promise of more growth.!!!!

    • Neill:

      It’s remarkable how little debate there is about government itself. The media is full of politics, but this is dominated by the party political (‘could party A govern better than party B’?) or the politics of personality (‘will Mr X be a better leader than Mr Y?’).

      Hitherto, the economic task of government has been sharing out the benefits of growth between interest groups. Where growth itself is concerned, there’s comparatively little that governments can do about it. Governments did a ‘dash for growth’ from the late 1990s, and that ended with the GFC. They, like we, are boxed in by material realities, such as rising ECoEs.

      I agree about the UK incumbency being jokers, but part of the problem is that they have mistaken objectives. They want to deliver “growth”, which isn’t possible, and they hope that “growth” will push away the issue of distributional necessity. Mrs May identified part of the problem with the “JAMs” – the “just about managing” – but her party was, and is, resolutely opposed to asking for sacrifices from some to ease the predicaments of others.

      As you say, the issues aren’t difficult to understand, but it does require a willingness to understand, and ‘there’s the rub’.

    • I wonder if governments would do better with a more technocratic leadership structure? Cabinets would be made up of officials not necessarily affiliated to any political party, but selected for their technical knowledge. That’s one way to get around the tendency for over-representation in government from lawyers, spin doctors, and journalists. All professions adept at promulgating selective truths, and who probably don’t know a volt from a vault.

      It might be at odds with the long established democratic discourse, but democracy is being hollowed out from the inside anyway.

    • @neill.

      Just to add, the union between England and Scotland was born out of imperial ambitions.

      Scotland had tried to go it alone with a failed colony in Central America which bankrupted the country.

      England wanted to concentrate on colonial expansion and didn’t want a hostile Scotland on its boarder.

      Now that empire has gone, it is no surprise that the Union is coming into question.

    • That colony was the Darien project, a total disaster for Scotland.

      Also, back in those days, Scotland was often allied with France, at a time when France and England were often at loggerheads.

      I often wonder whether Scots nationalists have no problem with ‘the English’ as such, but resent the power of the London-centred elites.

  17. Britain vs. the US
    The US is still experiencing strong jobs growth, and wages are not keeping up with inflation but are also rising. What sustains the US bubble, while Britain is unable to do the same? I believe it comes down to the petro-dollar and control of international money movements. So long as the US can essentially force everyone else in the world to finance its deficits, the US will do much better than average.

    Why would the US shoot down a Chinese weather balloon rather than capture it? Because it looks stupid to stir up international tensions over a weather balloon? Perhaps. But the way I look at it, it is just one more piece of evidence that the US will create problems for any country that tries to evade the petro-dollar and monetary transfer system. We see what has happened to Russia when it attempted to help a minority in Ukraine separate from that dysfunctional state. And now we see evidence for the Chinese leadership that the US can create lots of trouble for China if it stages any more love-fests with Saudi. I don’t have the figures in front of me, but in the last 5 years US public opinion has turned strongly against anything Chinese. It’s not like the Chinese changed…it’s a choreographed propaganda campaign using all the usual suspects. It’s really “anything oriental”, as a leader in South Korea labeled the US Congress as “idiots” for their protectionist stance on electric vehicles.

    So I see the story in the US as military/political until and if that breaks, exposing the financial rifts.

    Don Stewart

    • the 500 MILLION gallons per day of oil production helps the USA just a little bit.

    • Regarding the chinese balloon, I read that it’s not the first one over America.

      There have been lots of them.

      It’s just that the US authorities have decided to make this one public.

      Read what you will into that.

    • The thing that I find hard to understand is what anyone can expect to learn from a balloon that can’t already be learned by satellite surveillance – in other words, ‘what’s the point?’

      Something may be happening, politically, in China, though speculation is pointless. SEEDS indicates that growth in Chinese prosperity per capita may come to an end this year, and my interpretation is that China faces severe economic challenges. So there may be Chinese as well as American politics and choices involved in this event.

    • “And now we see evidence for the Chinese leadership that the US can create lots of trouble for China if it stages any more love-fests with Saudi. I don’t have the figures in front of me, but in the last 5 years US public opinion has turned strongly against anything Chinese. It’s not like the Chinese changed…”

      Like you need to use that as an example. Remember when neighbors were frothing at the mouth to not let others use grocery stores due to them not doing what they were told? Good Germans indeed.

    • @Dr Tim.

      From what I’ve heard, the balloon was at 60 kilometres, a satellite is at 200 kilometres.

      The balloon may have been listening in on electronic traffic rather than taking pictures. Something a satellite can’t do.

    • I think that ‘capturing’ a balloon is quite difficult. Also can you imagine the outcry if the US flew a balloon over China? It wouldn’t last five minutes.

  18. Meanwhile from the US, an interesting manifestation of the struggle to afford even the essentials:


    “The National Retail Federation, the nation’s largest retail trade group, said its latest security survey of roughly 60 retailers found that inventory loss — called shrink — clocked in at an average rate of 1.4% last year, representing $94.5 billion in losses.

    The greatest portion of shrink — 37% — came from external theft, including products taken during organized shoplifting incidents, the trade group said. It also noted retailers, on average, saw a 26.5% uptick in organized theft incidents last year.”

    But this isn’t watches and jewelry they’re talking about–it’s deodorant and laundry detergent.

    • @Fidra
      But this isn’t watches and jewelry they’re talking about–it’s deodorant and laundry detergent.
      Semi-organised crime groups establishing black markets? Perhaps this can be seen as a component of ‘shadow banking’? In the US, is the ‘rust belt’ expanding? I’m also reminded of the 2002 Brazilian film, ‘City of God’.

  19. Believability
    If we are going to try to follow some leader to help us solve our multiple problems, then the leader has to establish some believability. This news on the global warming front:
    “Mt. Washington in New Hampshire just recorded a windchill value of -109°F (-78°C), which sets the lowest windchill value ever observed in the USA (including Alaska).”

    Does this sound like steadily warming up with the usual fluctuations around the trend line? I’m not disputing that some scientists insisted that we were at the “end of stability” after 10,000 years of a human friendly climate. But the “official” message was a consistent warming trend.

    I think it will be very difficult to convince most people that the governments actually know what they are doing.

    Don Stewart
    PS. Sabine Hossenfelder explains the real story of “the greenhouse effect”. It’s not very much like a greenhouse, or a parked automobile in the sun:

  20. Interesting:


    BP partying all the way to the bank until the oil is gone. Thought this snippet was rather telling:

    “bp now expects to sustain EBITDA from resilient hydrocarbons at around $33 billion a year to 2025 and aims to maintain it in a $30-35 billion range to 20301, even while oil and gas production is expected to decline 40% from 2019 levels by 2030”

    BAU? lol!

  21. this is interesting,

    a chap from the Manhattan Institute doing a presentation to investors, he points out the huge amount of mineral resources required for a WEF style GND,
    it rather leaves the listener to draw his own conclusions,

  22. @ Dr Tim,

    I made a posting early this morning which has disappeared into the ether. Strangely I received an email notifying me that someone had responded to it, yet it doesn’t appear on the blog. How very strange. Could this be a technical hitch, or has the posting been censored?

    • Actually, that post referenced an issue excluded from discussion here, so was held for moderation, and then deleted.

      There are two such excluded subjects – the Ukraine war, and covid. If discussion of these were allowed here, I fear we’d be deluged with them, and our topics of interest could get drowned out. To maintain a focus on energy, the economy and finance, we have to set some limits to what is ‘on-topic’, hence those two exclusions.

  23. @ Dr Tim,

    I understand the rationale for excluding these two subjects. Some of the conspiracy theories around them have been driving most of us nuts. However, in this case, I was responding to a posting by one of the other contributors, who had also mentioned Ukraine, and his posting obviously hadn’t been excluded. At the time, I thought that my posting was fine, because its focus was on energy and economic matters connected to that conflict, rather than the conflict itself.

    The need for moderation is understood and supported, but a bit like VAR in football, consistency is all important. I’m still baffled as to how one of the other readers of the blog viewed my excluded posting and responded to it, as per the email alert I received.

    • The VAR point is easily explained. My initial thought was to let your comment through, as a one off’ and I posted a reply along the lines of ‘this is an excluded topic;’. Within moments, though, I decided that ‘rules must be rules’, and pulled both your comment and my reply.

      I’m glad you appreciate my reasons for excluding the two subjects – if they were not excluded, I fear we’d be deluged with conspiracy theories, and our discussions on serious issues around energy and the economy would be drowned out.

  24. Thanks Tim Morgan. These exclusions are unfortunately indispensable . I have stopped learning commentaries on Gail Tverberg’s blog . No enough time in a life…….

    • @Dino

      I had a scroll through the comments section on Gail Tverberg’s blog a while back.

      Decided that it wasn’t for me.

      Too many rabbit holes.

      Glad that Dr Tim is putting a filter on comments here. (even if some of my comments fall foul of it.🤣🤣🤣)

    • Thanks John.

      The way I see it is that we’re trying to explore specific and important issues here – what we might call the nexus of energy, the economy and finance. We could all too easily get side-tracked if we don’t have some definition of ‘on-topic’. There are numerous other sites where issues excluded here can be discussed. I never comment on how others manage their sites.

  25. The Cost of food in Britain, choices to be made, and the surplus energy perspective

    It would take volumes to analyze all the angles in this talk. Fortunately, I’m not in the volumes business today. I will summarize by saying that everything is going to have to change, and looking at the sector as an aggregate isn’t likely to be very insightful.

    I think it is useful to have the medical perspective. In terms of cooking one’s own food. One anecdote. About 15 years ago I invited a dozen health conscious people to come to my house for the joint preparation of a “healthy meal”. I let people bring whatever they wanted to eat…because my experience had taught me to eat what you have, not what you bought to satisfy some recipe. I also specified that everyone bring a sharp knife. To cut to the chase, I had the only sensible, sharp knife in the whole crowd. People could NOT reasonably chop some greens. And these were well above average income in the US and in the elite category for the world.

    Don Stewart

  26. Good to see we remain ‘on track’ on the comments section and contain our comments with the substance of what’s being dealt with. For those of us conversant with Limits of Growth, which obviously underscores much of what Dr. Morgan highlights, Nate Hagens latest Great Simplification You Tube channel had a very special guest, one who updated many of the findings of the original Limits of Growth book issued in 1972 – I can highly recommend Gaya Herrington’s original research paper, which here she summerises for our benefit:

    • Thanks Christopher. I too am glad that we are staying ‘on topic’.

      Gaya Herrington has been mentioned here before. What she has done is to revisit and update the modelling undertaken in LtG. Her work demonstrates that the authors of the original LtG got it right. Her concluding scenarios essentially indicate that the ending of growth projected by LtG is likely to occur during the current decade.

      There are two points to be noted about LtG. First, its conclusions are stated over a long time-scale, which is 1900 to 2100. Second, its components are non-financial, comprising material metrics such as food supply, industrial production, population numbers and “pollution” (the term used in the original LtG in 1972).

      This has enabled the authorities to side-step the undoubtedly prescient conclusions of LtG. Politicians can dismiss anything that lies ‘decades in the future’, and economists can dismiss anything that isn’t expressed in terms of money.

      SEEDS provides shorter-horizon indicators, and expresses them in financial language. SEEDS is thus complementary to the aims and conclusions of LtG. SEEDS conclusions agree with those of LtG.

  27. How Does the Real World Function?
    (and can we move the needle?)

    LTG looks at the world through the lens of producing physical output, with the inevitable production of waste. SEEDS looks at the world primarily through the lens of producing a financial outcome through the mechanism of using depletable energy. Depletion, over time, reduces the amount of energy available for use by anything other than producing more energy.

    But the world is larger than either LTG or SEEDS, and the boundaries of that larger world are in flux (at least in the scientific community).

    Looking first at the brain:

    “Most brain-imaging studies make 3 questionable assumptions: mental events are localizable, map uniquely to dedicated brain circuitry, & are independent of larger context. These 19th-century views need an update.”

    You can find a PDF link on Lisa Feldman Barrett’s twitter account. There will also be responses over time from others in the field.

    Part of the motivation was the fact that studies of mental phenomena don’t replicate very well. This is somewhat reminiscent of dietary studies which struggle to find significance, even with statistics based on the (obviously wrong) assumption that events are independent. Results such as those in neural experiments and dietary experiments suggest to me that we really don’t understand all of the causal factors involved.

    So what Feldman and her co-authors are suggesting is that the field of neural studies needs to broaden its perspective beyond 19th century physics and look at the whole brain and the significance of the environment and possibly even just chance that some largely independent factors will coalesce to cause a specific reaction.

    Looking second at physical health, which turns out to be entangled with the brain:

    The interview is between Dr. Rupy Aujla, family practice medical doctor in the UK, and Dr. David Hamilton, a drug researcher who became obsessed with the elusive placebo effect (being more effective than placebo has always been a high hurdle for drugs). The take-home message here is that what people think is far more influential than most hard-nosed physical scientists have been willing to admit. This is one of the reasons I keep talking about propaganda.

    There are many other boundaries we have drawn to constrain out models that likely need careful attention. Something like Kate Raworth’s diagrams may be useful.

    IMHO, LTG and SEEDS both tells us that things have to change. Which direction we want to try to steer that change is up in the air. What we don’t need is Mrs. Thatcher the Second telling us TINA. What we do need is some Real World Modeling with a very broad scientific perspective.

    Don Stewart

  28. Once a source of hope for maintaining our modern lifestyle, renewables are close to hit diminishing returns (i.e.: providing less and less benefit to society with every addition of a new solar panel or wind turbine). For the record: fossil fuels have long passed the same point, where drilling another well or opening a new mine eats up exponentially more resources and energy than the previous one — not to mention kicking CO2 levels even higher. The question is: can we continue high tech civilization now based on renewables, or are we about to hit the same limitations as with every other technology we have used in the past?

    2. In order to make up for this inherent flaw, some sort of storage must be attached. As you could expect this would increase costs by 30–40% at least, making the whole proposition to install solar on your roof to fend off increasing electricity prices preposterous. Adding battery storage to a family home would push the payback period well beyond ten years, or the practical lifetime of many parts of the installation. The situation is not at all much different when it comes to large national grids neither. Lion Hirth in his 2013 study titled: The Market Value of Variable Renewables — The Effect of Solar and Wind Power Variability on their Relative Price has found that adding wind above 30% of the total electricity produced and solar above 15% effectively halves their market value (reducing it to 50–80%) — exactly because of the additional investments needed to maintain grid stability… At least until the next level is reached where utilities would need to invest further still in ever more sophisticated and complicated equipment and storage. Thus the statement that solar and wind is cheaper than fossil fuels is only true so far as they are kept well balanced by the old and polluting technologies they aim to ‘replace’.


    • You’ve posed the right question in “can we continue high tech civilization now based on renewables?” and the answer is likely “not the way we presently use energy.” However we’re so profligate with energy we do have some other options worth trying before we abandon “high tech”.

      You are also right that many renewables need storage to buffer them, and that such storage comes with a monetary cost. However two crucial financial questions that are almost never asked are a) “cost over what time scale?” (100 years will give a vastly different answer to 3 years etc.) and b) “what is the cost of not taking that action?” (In terms of climate strategies the answer is almost invariably “much more.”)

      There is also an energy cost to storage, as @davidinamillionyears highlights, and that pushes the ECoE equation further in the wrong direction. However, pretty well everything downstream of a primary energy source is an energy sink to some degree – transport, decaying firewood, transmission losses etc. and not only as well losses via storage by batteries, hydrogen, pumped hydro and the like.

      Isn’t the issue to recognise those losses and factor them into the strategic energy planning that we all hope will one day soon be based around the ECoE?

    • @Red

      Thanks for the link.

      Kinda sums up the renewables option.

      Watching Planet of The Humans was the initial wake up call for me.

      I too hoped for a renewables utopia before reality was explained to me.

    • I have solar voltaic panels here in UK and they are great for me as I am paid for the electricity that goes into the grid – during sunny days – during the summer. Unfortunately as we move away from fossil fuels the major need for electricity will be in the winter. And from experience I can say that solar panels are next to useless in winter in UK. At quite some expense I could have battery backup and use my daytime solar during the evening, but there was no way the costs worked out. The idea of using battery backup from solar for winter use is a non starter. Even battery back up from wind to cover more than a day or two is fanciful. And there are periods of days when there is not enough wind.

  29. No-one has ever bothered to work out exactly how much energy a country or the world as a whole would need from electrical sources, if everything must be made from electricity, starting at the mining phase.

    There is a very good reason for this, the numbers simply don’t add up. Everyone with a green bent or thinking of how to power the future, assumes solar, wind and nuclear can all continue to be obtained cheaply from China, that burns an increasing amount of coal in their industrial processes. The world hit 8 billion tonnes of coal use for the first time in 2022, with over half being used in China, which has plans for `another 270Gw of coal plants to be built in the next few years. This alone will add another 750 million tonnes of coal use per annum, and enable China to keep producing cheap solar, wind and battery components.

    We simply don’t get the cheap components needed for the renewable future unless China continues to burn cheap coal.

    The unpalatable reality is that modern civilization as we know it, is clearly not sustainable in any shape or form. Once fossil fuels have become too expensive to mine, in energy terms, then the only type of civilization possible will be what we had before the use of fossil fuels, but from a position of a much harsher environment, much harder to obtain metals, depleted soils and over 8 billion people (for a short time anyway).

    Despite over 30 years of knowledge about the damage to the environment by increasing CO2 and methane levels in the atmosphere, despite 27 COPs and half a dozen IPCC reports highlighting the climate problems, no-one anywhere makes any energy production equipment from renewable electricity alone. Nor is anyone even trying to do this.

    Again there is a clear reason for this, it’s too expensive to do!! All the new battery technology designed to help save the climate, as an example, is being built with fossil fuels.

    As a new industry designed to save the climate from fossil fuel emissions, using fossil fuels in every stage of production seems so hypocritical, unless it’s just not possible to build this without fossil fuels.

    Because governments are spending hundreds of billions in subsidies for renewables, then surely it should have been spent all the way along the process path, unless it simply wasn’t ever possible, and the powers that be know it..

    Instead of building a future based on renewables, we are pretending to do it, which allows business as usual to keep going until it can’t. Growth in the developed world is kept up by building all these new gadgets and selling them to the population as ‘necessary’, all while continuing to use and develop new fossil fuel deposits when found.

    We have one example in the world where renewable energy is being used to create synthetic fuels, the Haru Oni plant in Chile. It cost $74m to build (all by fossil fuels plus transport by same), operates at a theoretical process efficiency of 5.8% (from their own numbers and not yet proven to be accurate), and will never produce enough energy needed to build a replacement for itself. If we allowed for the operating and maintenance energy expenditure, it probably has a negative operating efficiency, but those numbers have not been released.

    The entire Haru Oni plant is a scam as the fuel used by the workers just getting to work every day probably uses more fuel than the plant produces. If anyone had bothered to count all the diesel used in the construction of the plant, it would also never repay itself.

    The world is in a state of complete denial about the future with all the existing energy use and damage to the environment only benefitting a small proportion of the overall population. Belief in fairies at the bottom of the garden has more hope of providing the world’s population a modern technological civilization than renewables, nuclear, EVs and batteries..

    • It seems that the UK government has come up with a cunning plan to resolve the energy conundrum. In the time honoured tradition, Prime Minister Sunak has shuffled the pack, and created a new government department. We now have a Department for Energy Security and Net Zero, headed by Grant Shapps. Incidentally, Shapps was the shortest serving Home Secretary ever. He lasted 6 days.

      Hmm…energy security and net zero. Didn’t anyone tell Rishi that those two goals are mutually exclusive? Or maybe he knows that already, and just hates Shapps enough to hand him this poison chalice.
      Still, at least the government seem to have woken up to realise that we have a pressing energy security issue, and the “Green Growth” brigade will applaud the Net Zero in Mr Shapps job title.

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