Aweh dearly beloved fellow ruminants & groupies
Next week I start teaching a course on decarbonisation and earlier this year I taught a course on sustainability. This has allowed me to ruminate deeply on these two related topics and I can now pontificate verbosely and annoy you with my blog. The whole idea behind the topic of sustainability is that our current way of life on earth is not sustainable and that we need to change our ways. The industrial revolution based on fossil fuel energy ushered in a period of unprecedented economic and population growth that has allowed humanity to dominate the planet. 96% of the mammal biomass on the planet is now humanity, its livestock, and pets.
One of the most prominent problems relates to energy and climate change. The burning of fossil fuels is releasing the greenhouse gas, carbon dioxide into the atmosphere which is driving climate change and global warming and the global consensus is that we need to phase out fossil fuels. Current thinking and consensus is that we should aim to decarbonise and reach net zero carbon emissions by 2050.
The scale of this challenge is such that it is the most daunting project ever undertaken by humanity. A McKinsey study estimates that the net zero transition will cost USD $275 trillion which is 2.7 times global GDP in 2022.
The purpose of today’s blog is not to critique the 2050 net zero ambition or how it will be done or whether it is realistic. Those are topics for a separate discussion. The focus of today’s discussion relates to the core thinking around the concept of sustainability and decarbonisation.
We have recognised that exponential population growth cannot continue and population growth is declining and current forecasts suggest that the human population should stabilise somewhere between 9 and 12 billion by 2100.
But what about economic growth? This is essential to our current way of life. Relative prosperity and a significant middle class is a very recent achievement that distinguishes the last 10 or 20 generations from all our ancestors. From 1870 to 2018 real GDP per person in the U.S. economy has grown on average at 1.67 percent per year with only very short deviations from this very steady trend. Because this trend has persisted for 150 years it is tacitly assumed that it will continue indefinitely. For everyone alive today this is all we have ever known, and it is embedded in conventional economic theory which is also a relatively new discipline.
The bulk of the literature on sustainability looks to 2050 and 2100 at most and is relatively silent on what happens then. If we decarbonise, can we then carry on with business as usual and look forward to centuries of further economic growth? Does Nirvana await us?
Economic growth is an exponential function. By our very nature, we humans are linear thinkers. We evolved to estimate the distance from the predator or to the prey, and advanced mathematics is only a recent evolutionary addition. This is why it’s so difficult even for a modern man to grasp the power of exponentials. 40 steps in a linear progression is just 40 steps away; 40 steps in an exponential progression is a cool trillion (with a T) – it will take you 3 times from Earth to the Sun and back to Earth.
The featured graph extrapolates the growth of the US economy for the next seven centuries at 1.67% real growth per year. I have chosen the USA because here in South Africa we are busy with an experiment to see what effect insufficient basic utilities like electricity and water have on economic growth. Surprisingly we are discovering that this is eliminating growth and may even cause negative growth.
Sometime after 2700, the real US GDP would be more than 100 000 times bigger than it is today. We have already acknowledged that the population will have stabilised so everyone will be incredibly wealthy. Multiply your current net worth by 100 000 and think about that. Billionaires will be a dime a dozen and there will be trillionaires and quadrillionaires. Will mere billionaires not be able to afford a house in the most fashionable areas? There will still be a pecking order and dominance hierarchy and there is only so much space in the best parts of Manhattan. One of the benefits of wealth is preferential treatment and that will presumably still apply.
Currently, economic growth, energy use, and consumption are linked. There is only so much one can consume and there are limits to consumption on a finite planet. We cannot consume 100 000 times more than we do today.
Will the current economic model break down at some point? The argument that we cannot sustain our current economic growth is not new and the limits to growth (LTG) were published by MIT in 1972. This work has been severely criticised and discredited because it did not consider technological progress. The MIT work made bold and specific predictions that did not occur. At the time the very hint of global limitation was met with disbelief and rejection by businesses and economists.
But is the basic thesis of LTG wrong? The specific predictions of resource availability in the LTG study lacked accuracy but its basic thesis that unlimited exponential growth on a finite planet is impossible is ultimately correct.
I would be very hesitant to make predictions regarding when our current economic growth model will break down because it is true that continuing technological progress is potentially going to allow us to delay the breakdown of economic growth perhaps for a century or more. In the long run, however, I would suggest that it is not a question of if our economic growth model will break down but a question of when. The nature of continuing exponential growth is so overpowering that ultimately technological progress can only do so much.
Some people like to moralise that our economic growth model is immoral. I am not one of them. Before the industrial revolution life was nasty brutish and short and the last 150 years have brought unprecedented prosperity and improvement in human living conditions. I am very grateful for that. Our current economic model is however a temporary phase in our history, and we will transition to something different whether we like it or not.
My generation (old farts approaching retirement or already retired) are completely dependent on our current economic model. Our retirement funding and income require and assume economic growth. The more the better.
I would tentatively suggest the current sustainability literature and thinking is only thinking rather short term. To the extent that we have serious short-term problems, this is understandable but more thinking about the coming centuries is perhaps warranted because we are potentially sowing the seeds for even bigger problems in the future.
South Africa could become a role model for the USA in terms of transitioning to a no-growth model. All you need to do is stop maintaining your infrastructure and then start rationing utilities like electricity and water. If you grease the process by allowing corruption simultaneously, it is very effective. But then again perhaps there is a better way.
Thank you for all the ideas and comments. I really appreciate them and please keep them coming.
Regards
Bruce
Ruminant Pink Friday 