Sunday, September 21, 2014

Taking a short break--No post this week or next

I'm taking a short break this week and next and expect to post again on Sunday, October 5.

Sunday, September 14, 2014

Are we on the path of 'Limits to Growth'?

Probably the most important thing you need to know about the 1972 book entitled Limits to Growth is that it makes no predictions. Rather, the much maligned study provides scenarios for thinking about the future of resource use, pollution, population, food, and industrial production.

Limits to Growth detailed three scenarios originally, one of them called business-as-usual or BAU. Since then, countless scenarios have been run using the same model--called World3--and some of them are discussed in updates to the book, the most recent published in 2004. Many of the scenarios including BAU result in a collapse of industrial production and population some time this century.

What has surprised those reviewing the model used by Limits to Growth researchers is how closely reality has tracked the original BAU scenario. A recent review suggests that the signs of societal collapse may be around the corner based on the observed trends. But the components of that model have yet to turn in deleterious directions which would suggest trouble.

The review says that if those indicators follow the path suggested by the BAU scenario, we should begin to see the signs of decline by next year with per capita industrial production falling (but not necessarily total production). The knock-on effects in agriculture and services would result in a rise in the death rate from 2020 onward and a decline in world population starting in 2030.

No one can know whether such a scenario will unfold. There are many reasons to believe it will be delayed, perhaps considerably. One of the Limits to Growth authors believes that a collapse will occur only after 2050.

According to the review referenced above entitled "Is Global Collapse Imminent?" the thing to watch is the amount of capital we must spend to get resources:

Until the non-renewable resource base is reduced to about 50 per cent of the original or ultimate level,
the World3 model assumed only a small fraction (5 per cent) of capital is allocated to the resource sector, simulating access to easily obtained or high quality resources, as well as improvements in discovery and extraction technology. However, as resources drop below the 50 per cent level in the early part of the simulated 21st century and become harder to extract and process, the capital needed begins to increase.

As the authors point out, that's just what we've seen with oil. Bernstein Research has noted that major oil companies now say it is costing them $92 a barrel to produce new oil from the highest cost fields. That's way up from 10 years ago and indicates a rise of 14 percent PER YEAR from 2001. Oil is priced based on the marginal barrel of supply. The Saudis can produce oil from their fields for far cheaper, but you won't find them offering it at lower prices!

As capital costs mount for extracting other resources, we'll find that society doesn't have as much wealth left over for everything else including maintenance of the current infrastructure and industrial plant. And, that's what the authors of Limits to Growth are talking about. The economy doesn't grow because the infrastructure and industrial plant that growth depends on cannot be properly maintained.

As the review explains, the Limits to Growth authors also understand one very important thing that their critics don't. The review uses oil and natural gas to explain:

But the protagonists of oil and gas gluts have not understood a crucial point. They have essentially confused a stock with a flow. The key, as the LTG [Limits to Growth] modelling highlights, is the rate at which the resource can be supplied, i.e. the flow, and the associated requirements of machinery, energy and other inputs required to achieve that flow.

So, here is a key conclusion:

Oil and gas optimists note that extracting unconventional fuels is only economic above an oil price somewhere in the vicinity of US$70 per barrel. They readily acknowledge that the age of cheap oil is over, without apparently realising that expensive fuels are a sign of constraints on extraction rates and inputs needed. It is these constraints which lead to the collapse in the LTG modelling of the BAU scenario.

What's important about the Limits to Growth model is not any precise dates which we might get from running a scenario. What's important are the markers described by the researchers as harbingers of limits. Those harbingers have begun to appear.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.

Sunday, September 07, 2014

The more uncertain we are, the more careful we should be

It is a staple of apologists for the chemical and fossil fuel industries to say, "We have no proof that what you are talking about is dangerous." Let me restate that in probabilistic terms: "We are highly uncertain about the harm of what you are talking about."

When stated in probabilistic terms, uncertainty about harm becomes much more alarming. Nassim Nicholas Taleb has added to a working paper which I discussed last week entitled "The Precautionary Principle: Fragility and Black Swans from Policy Actions." As I suggested in last week's piece, climate change is an obvious candidate for the precautionary principle because climate change involves the risk of systemic ruin.

In his addendum Taleb explains that climate change deniers who criticize climate models for their uncertainty don't have the slightest clue what that implies. Rather than suggesting that we should ignore such models, the uncertainty suggests that we should be even more diligent about mitigating climate change since the high uncertainty means, probabilisticly speaking, that we have larger exposure to catastrophic outcomes.

Statistically, this is explained as an increase in the scale of the distribution which leads to an increase in the size of the tails associated with the probability curve. It means that the system we are dealing with is MORE fragile and thus more subject to catastrophic outcomes. Tails represent rare, but highly impactful events and in this case, a ruinous result. If rare becomes a lot less rare (fat tails), then the risk of ruin is greatly increased.

Let's look at other cases where the risks are likely to be greater than widely assumed. U.S. Department of Energy forecasts for energy supplies, particularly oil and natural gas, are treated as gospel by companies and governments across the globe. But the caveats that the Energy Department includes show that such forecasts are highly fragile, indeed, the entire oil and natural gas supply system is fragile in that it may not deliver what we want it to deliver. Here is a sample from an Energy Department discussion of forecast model uncertainty in reference to the presumed renaissance in U.S. oil and natural gas resulting from the exploitation of deep shale resources:

Estimates of technically recoverable tight/shale crude oil and natural gas resources are particularly uncertain and change over time as new information is gained through drilling, production, and technology experimentation. Over the last decade, as more tight/shale formations have gone into production, the estimate of technically recoverable tight oil and shale gas resources has increased. However, these increases in technically recoverable resources embody many assumptions that might not prove to be true over the long term and over the entire tight/shale formation. For example, these resource estimates assume that crude oil and natural gas production rates achieved in a limited portion of the formation are representative of the entire formation, even though neighboring well production rates can vary by as much as a factor of three within the same play. Moreover, the tight/shale formation can vary significantly across the petroleum basin with respect to depth, thickness, porosity, carbon content, pore pressure, clay content, thermal maturity, and water content. Additionally, technological improvements and innovations may allow development of crude oil and natural gas resources that have not been identified yet, and thus are not included in the Reference case.

It turns out that a forecast that many people assume is all-but-certain is admittedly quite shaky according to its creators. The forecast is fragile and subject to catastrophic failure with the possibility that actual production will be significantly below the forecast in the next few decades. A similar failure in current optimistic worldwide oil and natural gas forecasts would carry grave consequences if we were to make no preparations for a surprise on the downside.

But precisely because so many people believe these optimistic oil and natural gas forecasts to be facts rather than speculation, THEY MAKE NO PREPARATIONS FOR AN ALTERNATE AND POSSIBLY DISASTROUS OUTCOME! And, that is the problem with forecasts that are widely accepted and used for planning and policy purposes.

Keep in mind that a forecast is nothing but a model of something over time in the future. It isn't and cannot be based on actual knowledge of the future. Most models, particularly financial and resource models, really only extrapolate the past into the future which is actually a naive approach.

As for genetically modified crops, we are told that there is no evidence of harm from ingesting these crops. Long-term animal feeding studies have been made all-but-impossible by the companies that own the patents to the seeds. So, the lack of evidence is partly intentional. But LACK OF EVIDENCE IS NOT THE SAME AS LACK OF RISK. We did not have any evidence that the drug thalidomide, used to treat morning sickness in pregnant women, would cause deformities in human fetuses. But that didn't mean there was no risk. Wikipedia notes: "At the time of the drug's development, scientists did not believe any drug taken by a pregnant woman could pass across the placental barrier and harm the developing foetus." Why investigate risks to the fetus when you already believe there are none! Likewise, if you've already decided that genetically modified foods pose no greater risk than traditional foods (as the U.S. Food and Drug Administration has), you will not investigate the risks.

Finally, we see a don't-worry-be-happy attitude about the worldwide electrical grid. We have known for many years about the threat of an electromagnetic pulse or EMP. Such a pulse, if widespread enough, could bring down the electrical grid worldwide. Because so many processes in the modern world, especially information technology, must have continuous inputs of electricity, the result would indeed be a wipeout for modern civilization since there is currently no capability to repair such widespread damage. (For more on this, see my piece "Solar storms, EMP and the future of the grid.")

An EMP can be produced by a high-altitude explosion of a nuclear weapon. This is why much military hardware has been shielded from EMP. But it is the natural source of EMPs, the Sun, that should concern us more. If a solar storm similar to the Carrington Event, which hit Earth in 1859, were to occur today, we would very likely face ruin.

What we don't know is the frequency of such high-intensity storms hitting the Earth. And, it is our very ignorance which subjects us to heightened risk. Not knowing whether we might have thousands of years or just a few to prepare for such an event creates that risk. Once again, lack of evidence is not the same as lack of risk.

Our assumptions may be wrong. Our observations or data faulty. Our information woefully incomplete. Knowing this we would be wise to put large margins of safety into the systems we build and the practices we initiate. We would be wise to forego new practices that clearly run the risk of widespread and systemic ruin. Instead, we all too often close our eyes to risk; and, all too often the reason is immediate profit for a few. Meanwhile, the rest of us suffer the consequences.

Kurt Cobb is an author, speaker, and columnist focusing on energy and the environment. He is a regular contributor to the Energy Voices section of The Christian Science Monitor and author of the peak-oil-themed novel Prelude. In addition, he has written columns for the Paris-based science news site Scitizen, and his work has been featured on Energy Bulletin (now Resilience.org), The Oil Drum, OilPrice.com, Econ Matters, Peak Oil Review, 321energy, Common Dreams, Le Monde Diplomatique and many other sites. He maintains a blog called Resource Insights and can be contacted at kurtcobb2001@yahoo.com.