The Editor's conclusions: So little time and so much to do

by Richard Douthwaite

It is crucially important to make massive investments towards bringing about the switch to renewables now, before oil and gas production peaks, so that enough fossil energy is available. Waiting a few years could condemn millions to misery.

Where did humanity go wrong? When did we take a path which, because 'one path leads to another' in Robert Frost's phrase, inexorably led us to becoming totally dependent on a grotesquely unsustainable energy system? To put this another way, why is our way of life under threat from the way we generate our livelihoods?

The story of humanity's relationship with energy records a progression rather than progress, although if we stick with the latter term, the qualifier 'rake's' comes to mind. Its key feature over many centuries is that people have moved from simple ways of organising themselves and supplying their needs to much more complex ones. For example, the shift 10,000 years ago from hunter-gathering to depending on settled agriculture was obviously a step from a simple to a more complex way of life. It was also a step that, in turn, allowed even more complex ways of living to develop. It led to towns and cities, to specialists and priesthoods, to the development of the notion of private property, and, as a result of that notion, to the rule of the many by the few. With settlement came crafts such as pottery, and then literature, science, most music and art, each an example of greater complexity.

Complexity can be measured. One way is to count the number of roles that people play. Hunter-gatherer societies are said1 to contain no more than a few dozen distinct social personalities, while modern European censuses recognise 10,000 to 20,000 unique occupational roles, and industrial societies may contain more than a million different kinds of social personalities overall. Another way of measuring is to count the number of different artifacts in daily use. Compare, for example, the number of lines sold in a typical shop in an Indian village - salt, sugar, rice, beedis, matches and very little more - with that in a modern European or North American supermarket which could well have 15,000 different products on display. Sainsbury's flagship store on the Cromwell Road in London sells 40 different types of apple, six varieties of caviar, 50 different teas, and 400 forms of bread. "Someone came in on Christmas Eve and asked for banana leaves," a keen young manager told a journalist 2 recently, "and you know something? We had them."

The transition from one level of complexity is always marked by an increase in energy use. In earlier days, this usually meant that people had to work harder. Farmers had to spend more time growing food than hunter-gatherers had had to spend on collecting it. Bushmen apparently3 only had to collect food every third or fourth day.

There's no evidence that the transition from hunter-gathering to settled agriculture was the fatal mistake we are looking for in the sense of it marking the start of a system that would have eventually proved unsustainable. After all, it did survive for thousands of years anyway, despite many local unsustainabilities along the way, such as the steady decline of irrigated farming yields in Mesopotamia because of the increasing salt content in the soil. (The lower crop yields caused by the salt meant that the human energy required to run the complex system could not be maintained. There was too little food to operate the Sumarian bureaucracy and, more importantly, its army, which led to the state's conquest and collapse4.)

It can be argued that the wrong turn was taken in England in the 16th Century as the population began to recover from the Black Death. The increased numbers - a rise from 1.6 million to 5 million in less than 200 years - naturally put greater pressure on resources and caused communities to have problems living within the limits imposed by their local environments. In 1631, Edmund Howes described how this had forced them to start to burn coal:

Within man's memory it was held impossible to have any want of wood in England. But Šsuch hath been the great expence of timber of navigation, with infinite increase of building houses, with great expence of wood for household furniture, casks and other vessels not to be numbered, and of carts, wagons and coaches, besides the extreme waste of wood in making iron, burning of bricks and tiles, that at this present, through the great consuming of wood as aforesaid, and the neglect of planting of woods, there is so great scarcity of wood throughout the whole kingdom that not only the City of London, all haven towns and in very many parts within the land, the inhabitants in general are constrained to make their fires of sea-coal or pit coal, even in the chambers of honourable personages and through necessity which is the mother of all arts, they have in late years devised the making of iron, the making of all sorts of glass and the burning of bricks with sea-coal and pitcoal.5

That was it. The thin end of the wedge. The slippery slope. For the first time, humanity was starting to depend on a non-renewable, and hence unsustainable, energy source for its comfort and livelihood. It was understandable that it did. Which of us would have worried about the long-term consequences of burning black stones collected from beaches in Northumberland, or which had been dug out of shallow holes in the ground?

As the demand for coal increased, the easiest, shallowest mines were soon exhausted, and deeper and deeper pits had to be dug. This posed enormous problems since, if a shaft is sunk below the water table, it floods and a pump has to be installed to keep things reasonably dry. The early pumps consisted of rags or buckets on continuous chains which were turned by horses or, if a stream was handy, a water wheel. However, the deeper a shaft went, the longer the chain had to be and the more friction the horse or the wheel had to overcome. As this placed a real limit on how deep a mine could go, mine-owners were keen to find other ways of powering their pumps. Around the time Edmund Howes was writing, coal-fired steam power began to be used for the first time for pumping water out of mines. In a somewhat incestuous way, coal energy was being used for mining coal.

The first steam engines just moved a piston back and forth, which was all that was required to work a cylinder-type pump. It was only during the following century that the piston was attached to a crank to turn a revolving shaft, an innovation in response to a demand for rotary power from cotton mills unable to find additional sites for their waterwheels. This was the type of engine, of course, that powered the industrial revolution and led with an alarming inevitability to the problems we have today. It was steam power, in fact, which made the widespread use of machines both necessary and possible.

The essence of industrialisation is that it produces lower-cost goods by using capital equipment and external energy to replace the skilled, and thus relatively expensive, labour used in hand crafts. Since less labour is used per unit of output, unemployment develops unless sales expand. The mechanisation of sock and lace production in the English midlands led to such widespread job losses that riots broke out in 1811 and 1812. Troops were sent to the area to stop the Luddites, as the bands of destitute working men were called, from breaking into the new factories and destroying the machines. Indeed, had the Napoleonic War not ended in 1815 allowing the factories to increase their sales in Europe and elsewhere, the disturbances might have become serious enough to kill off the industrial revolution. Without wider markets, firms using powered machinery would have either consumed themselves in a competitive frenzy, or seen their technologies banned as a result of popular unrest.

Eventually, British imports put most continental craft producers out of business and left the remainder with no alternative but to adopt more fossil energy-intensive methods too. In some cases, the surviving producers received state grants to help them re-equip, such as those given to the ironworks and engineering companies owned by the Cockerills in Belgium after that country became independent from France in 1830. More generally, however, governments, or leading public figures, helped them acquire the new technology by organising - and sponsoring - demonstrations of the latest British equipment. Tariff barriers were maintained to allow the new continental industries to build themselves up until they could not only compete with their British rivals but had acquired export markets in which to sell themselves. It was the need for exclusive external markets to solve the problem of mass unemployment at home that led the European powers to scramble to assemble competing empires and eventually to confront each other in the First World War.

A TECHNOLOGY PYRAMID

The early participants in a sales pyramid get rich because they receive commission on the goods they sell to people whom they have persuaded to become dealers too; dealers who, in turn, can earn a commission from others they induce to join the pyramid as dealers later on, who themselves recruit and stock further dealers. And so it goes on, setting up a situation in which everyone in the pyramid can only fulfill their income aspirations if the pyramid does the impossible and expands indefinitely, eventually involving infinitely more people than there are in the world.

The fossil-fuel-based production system became dominant by expanding on exactly the same lines. Just as British factories had needed to take over the markets previously served by craft-scale manufacturers in Europe to survive, industrial Europe had to oust artisanal producers elsewhere in the world, and the British sold them the machinery to do so. As each successive group of countries was forced to adopt mechanised production methods themselves in the hope of escaping poverty, so those who had mechanised earlier sold them the equipment. And so the industrial pyramid grew and grew until it reached the point some years ago when there were no more markets supplied by craft producers to take over. This left firms in the pyramid with no one to displace but each other, and since then, international competition has become much more intense.

Firms have adopted two strategies to survive: one is to automate, eliminating the need for human labour almost entirely. The other is to move production to countries where labour is cheap. The combined result of the two is that the share of industrial revenues being paid in wages and salaries has fallen rapidly and larger and larger numbers of people are being left without the financial means to buy many manufactured products. In more than 100 countries, average per capita incomes are lower today than they were 15 years ago, and more than a quarter of humanity - 1.6 billion people - is worse off now than it was then. In Britain, the proportion of national income being paid in wages and salaries fell from 72% in 1974 to only 63% in 1995, an unprecedented fall in so short a time.

In short, the machine-based production system is proving itself to be unsustainable on two counts. One is that, because manufacturing companies are racing against each other to achieve ever-lower costs, the system is progressively denying its worker-customers the incomes they need to buy its products. It is thus curtailing its own markets and imploding. With surplus production capacity in almost every sector, the world is now poised on the brink of an economic collapse more serious than that in the 1930s. It is not that there is no demand for the additional products the factories could produce. The potential market is huge. It is just that because of the low wages and high levels of unemployment, those who would like to consume more do not have the income to express their demand.

The second source of unsustainability is the topic of this book. It is that the fossil energy which made mechanisation and globalisation possible will soon begin to get scarce. As John McMullan shows in his paper, there is still plenty of the fuel that powered the Industrial Revolution in the ground. However, the amount of energy required to sink a mine, extract the coal and then turn it into useful heat, light or power has climbed and climbed. It has been calculated that American strip-mined coal only produces 2.5 times the amount of energy required to mine it when it is burned in a power station if scrubbers are fitted to remove sulphur dioxide from the smoke so as not to cause acid rain.

The same is true for oil - the amount of energy required to find and extract it is taking an increasing share of the energy it delivers. This is the reason that Colin Campbell expects the world's oil production from conventional sources to peak within the next five or six years. Output, he thinks, will then fall away so that by 2050 it will be just over half its 2010 level, as Figure 8A1 shows.

Even if the serious environmental problems with unconventional oil sources like the Athabaska tar sands can be overcome and the energy in/energy out ratio can be greatly improved, it would only ease supplies for a few more years. With gas, world output is expected to peak around 2040 and then go into a steep decline, as Figure 8A2 illustrates.

If we put the two graphs together to show the total amount of energy that oil and gas can be expected to deliver over the next century we get Figure 8A3. This shows that the rising amount of energy available from gas will be unable to compensate for the declining amount from oil after 2015 or thereabouts. After that, in roughly twelve years' time, the overall decline will begin.

In fact, the amount of oil being consumed by the average person around the world began declining in 1979 although in some countries, notably the US and China (and Ireland) the amount per person was still increasing until very recently. This means that many countries are already adjusting to having less energy available and the slower rates of economic growth and higher levels of unemployment they have experienced compared with the 1950s and 1960s, when per capita energy use was growing fast, are symptoms of this. But their adjustments are tiny compared with those that every country will have to make to avoid complete breakdowns in the future. All the fossil-energy intensive systems of production and distribution that have been built up over the past two centuries are going to have to be radically changed, and, as we discussed in the Introduction, there is only a limited amount of usable fossil energy left that can be diverted to bring this about. The key question is, then, how should the fossil energy that can be made available be used? In what types of energy supply projects should it be invested? There are four alternatives. Tar sands, coal, nuclear and renewables. Let's look these in turn.

We'll take tar sands and coal together. In my view, expanding the output of these fuels would be a mistake for two reasons.

  1. Both contribute seriously to global warming and the Intergovernmental Panel on Climate Change has warned that carbon dioxide emissions and consequently fossil fuel use needs to be cut by around 80% to prevent a possibly catastrophic climate change. It would therefore be madness to develop energy sources which would increase these emissions, to go further up a dangerous cul de sac which we know we need to leave as quickly as we can. The fact that John McMullan could report that world coal use has gone up 47% in the past 25 years is very worrying indeed. It means that humanity is heading rapidly in the wrong direction. This is not to say that the type of super-efficient, ultra-high temperature and pressure coal-burning power stations that he discusses should not be built, but, if they are, it should be as part of a programme to reduce coal consumption rather than to increase it. Of course, sequestration might enable the output of both these fuels to be increased while simultaneously cutting carbon dioxide emissions. However, this would require both the use of more energy as capital to build the equipment, and also the expenditure of energy as an input to compress the gas before pumping it down an oil well or into the sea. The net energy gain from the combustion of both fuels would be seriously reduced, making other sources more attractive.
  2. Even if the serious environmental downside to the development of both fuels could be overcome, we ought to reject their expansion anyway because, quite simply, they already give a very poor return for the energy we would have to invest in producing them and sequestration could only make matters worse. The situation without sequestration is shown clearly in Figure 8A4, which comes from the Quebec Hydro website already mentioned by Dave Elliott.

    Source: Luc Gagnon, Hydro Quebec, April 2000. Contact: [email protected]

    It shows that an investment of energy in coal will only give 11-25 times the amount of energy out, whereas an investment in hydro will give 205 times the amount of energy and an investment in wind or nuclear will give you 15 times. Basically the same information is given in the table below and, of course, in the much more extensive one compiled by Ian Hore-Lacy in his paper.

So if we heed the figures in the three tables and reject investing energy in developing coalmines and building the plants required to extract oil from tar sands because of their poor rate of return and the effect their exploration would have on the gobal climate, that leaves us with two possibilities - nuclear and renewables. Nuclear power has the big advantage over the leading renewable, wind, because the electricity it produces is always available, not just when the wind blows. To make wind comparable, some way of storing the electrical energy a turbine captures has to be provided. This, as Werner Zittel said, is where the hydrogen economy comes in, but providing the additional equipment for that does require the investment of more energy as capital. So, in energy investment terms, nuclear power apparently gives more bang for your buck.

And it might do just that, too. I think nuclear has to be rejected on five grounds:

  1. The risk factor. The nuclear industry is unable to get commercial insurance cover and governments have had to step in, taking on the burden instead. This is a massive subsidy.
  2. The type of society that would be created. Nuclear reactors make wonderful targets for terrorists. Just having them could lead to a police state. There is also the problem of providing the materials for the proliferation of nuclear weapons.
  3. The need for the long-term care of the waste. We don't know that our descendants will have the capacity to provide it continuously for the next 10,000 years.
  4. Uranium is in very limited supply, as Hore-Lacy pointed out, and the use of fast breeder reactors does not get around the problem very convincingly. They entail considerably higher energy investments but could, theoretically increase the energy available by a factor of 60. But as the UK Atomic Energy Authority wrote in 1989, 'In practice, it is now not clear how [the use of fast breeders] would be achieved on an expanded global scale without encountering basic plutonium shortages, not to mention serious problems with waste disposal, power plant decommissioning and nuclear weapons proliferation."
  5. The number of nuclear stations that would be required is too large to be feasible as Folke Günther pointed out. 1,700 nuclear stations would be required just to make up the decline in oil and gas output between 2015 and 2040 and if we wished to provide the capacity for world economic growth to continue at 2% beyond 2015, that would take another 5,000 stations. So, over the 25 year period, between 6,500 and 7,000 stations would have to come on stream - that's five every week. There would be real problems in finding suitable sites outside earthquake zones where the cooling water would not harm the marine environment. And given that most stations take ten years to build, work would have to start now.

ARE RENEWABLES ADEQUATE?

Rejecting the nuclear option just leaves us with wind and the other renewables. Let's consider the size of the task we are setting them. We not only want them to make up for the declining amount of energy that oil and gas will start to deliver in around twelve years' time but also to provide the increasing amounts of energy required to raise incomes - in other words, for economic growth if not in the wealthy countries then in the poorer parts of the world.

Figure 8A5 shows the very close relationship between the annual increase in energy consumption (expressed as industrial CO2 emissions) in OECD countries and the annual increase in their incomes.

Roughly 50% of all energy used around the world is invested in trying to generate economic growth and then more energy has to be spent as income on a continual basis to work the new systems. The rate at which a country's economy can grow, if it does not use extra energy, is equal to the rate at which it can increase energy productivity and that might not be very fast because energy is needed to make and install the equipment required to take advantage of whatever energy-saving technologies come along. In other words, just as an energy scarcity will limit the pace at which we can develop additional supplies of renewable energy, it will also limit the pace at which we can introduce technologies to conserve it and the pace of economic growth.

Renewables currently supply only 0.6% of the world's traded energy so their rate of expansion is going to have to be very rapid to prevent an overall decline in the world's energy supply and a consequent fall in the level of economic activity. That's a major task in itself but will it be possible to expand them even more rapidly still to enable the extra amount of energy required for, say, a 2% rate of economic growth to be produced as well? If not, no other energy source can do so either because coal and tar sands take more energy to develop than renewables.

In view of the magnitude of the task, it should not be surprising that the papers by David Crane and Laurence Staudt, Olaf Hohmeyer and David Fleming all conclude that renewables will not be able to supply enough energy for economic growth to be able to continue at anything like the current rate. This means that the OECD countries will no longer be able to say to the rest of the world 'Open up your economy to international investment, work hard and you too can be like Ireland, doubling your income (and hence your rate of resource consumption) in less than ten years.' The energy to permit that just isn't going to be there. Moreover, if the wealthy countries continue to use fossil energy from the limited supply to try to grow themselves, they will be denying the use of that energy to other, poorer, people, thus keeping them in poverty. Growth therefore needs to be abandoned as a developed-country aim. This would allow half of the energy saved to be invested in renewable energy generation projects or in increased energy efficiency and the balance freed up for use in other parts of the world.

Growth might not be achievable anyway if, as I suggested earlier, the world is on the brink of a depression of similar depth to that in the 1930s. If a depression develops, investment will stop and energy use will fall but, as it will not fall to zero, we'll still be eating into potential energy capital and spending it as income. With low oil prices in a buyers' market, excess generating capacity and very little money about, a situation could easily arise in which no-one will either want, or find it commercially feasible, to invest in renewable power.

CURING A DEPRESSED ECONOMY

The only way to get a seriously depressed economy moving again is to restart investment but firms are not going to plough funds into building more plants producing conventional goods until their existing capacity is taken up - in other words, until demand reaches the level it was before the depression began. That situation might take many years to develop because there's a chicken-and-egg situation here - without investment there won't be demand, and without demand there won't be investment. New products are therefore needed to create the new demand. Towards the end of the 1930s, the demand for arms restored full employment and got investment moving again. This time, the new demand could - should - be connected with achieving energy sustainability. There will both be the manufacturing capacity and the need - at least from the sustainability perspective if not from the supply side - to make investments in renewable energy supply systems. And we will never have such abundant supplies of fossil energy to be able to do so on the same scale again.

If we let the chance to make massive renewable energy investments slip, when the world eventually moves out of the depression, oil and gas output will be declining and, as demand strengthens, both fuels will become come increasingly expensive. Two scenarios are possible then. One is that the wealthy parts of the world use their wealth to commandeer bio-energy resources from the economically weaker parts, just as they already do on a large scale. Indeed, as I will mention later, the EU is already planning to do so and talking about the benefits that the new trade opportunities will bring to developing countries. If this goes ahead, besides the plantations and ranches that already grow food, beverages, raw materials, flowers and animal feedstuffs for export to the EU and other parts of the wealthy world, more land will be taken up producing vegetable oil for fuel and industrial inputs to replace petrochemical ones. Those displaced from their land by this change will move to the cities to join the millions already living in hardship there because the higher energy prices that scarcity will bring will have pushed up the cost of their food.

The second scenario is that, as the world economy recovers from the depression, the five big OPEC producers - Saudi Arabia, Kuwait, Iraq, Iran, and the United Arab Emirates - take advantage of their growing share of the world's oil production and put up prices sharply. This could give them such a huge increase in their earnings that they will be unable to spend it all on additional imports. If so, as in 1973, they would have no option but to lend their surplus back to the countries from which it came by depositing it in western banks. The problem with this is that the money might stay in those banks rather than being lent out again because, unless countries and corporations can see some prospect of being able to repay additional loans, they will not take them on. Interest rates might be cut to encourage them to do so but, as Japan has shown in the past five years, even zero rates might not be low enough to make extra borrowing attractive. Without the extra borrowing, however, the global money supply would contract, returning the world to the depression from which it had just emerged, while simultaneously cutting oil demand and bringing its price down.

In other words, under a business-as-usual scenario, there is a real chance that the level of global economic activity will contract in step with the decline in oil supplies. Constant contraction and depression could be the norm. Even the oil producers would not do well out of this because for a lot of the time, their output would be being sold in depression conditions. There might be no way that the free market could break out of this cycle once it started because the peak oil price - the level that tipped the world into depression - might not be high enough or maintained for long enough to encourage investment in renewable energy sources. Then, once the depression had begun, oil would be cheap again and the market would provide no incentive to countries to reduce dependence on the fuel, at least on a significant scale. The world could descend into chaos and misery, unable to help itself.

If such a scenario is a possibility then the energy markets need to be modified in some way so that they can deliver a better result. How? Well, what does a group of dishonest antique dealers do before an auction? They decide who is to bid for each item and the maximum he or she is to pay and then, afterwards, they hold a private auction among themselves to determine who actually gets what. The point of this ploy is to ensure that the extra money which would have gone to the vendor if the dealers had bid against each other in the original auction stays within the group and does not leak away unnecessarily to a member of the public. Something similar could be done for oil. A buyers' ring could be set up to prevent excess money going to fossil fuel producers in times of scarcity and plunging the world into an economic depression.

CONTRACTION AND CONVERGENCE

A digression is necessary to explain how this might work. If a country is to enjoy the maximum sustainable level of economy activity, it needs to decide which scarce resource places the tightest constraint on its economy's development and expansion. It should then adjust its systems and technologies so that they automatically observe the limits imposed by that constraint. In terms of our discussion so far it might seem that oil and gas were the scarcest factors of production at present but I don't think that's true. Labour and capital are not the critical factors either. There is unemployment in most countries and, in comparison with a century ago, the physical capital stock is huge and under-utilised. On the other hand, the natural environment is grossly overused especially as a sink for human-made pollutants with the result that a runaway global warming is a real possibility. In other words, the Earth's capacity to remove greenhouse gases from the atmosphere is the scarcest resource and the economic system should be adapted accordingly.

Contraction and Convergence (C&C) is a way of doing so. It is a plan for reducing greenhouse gas emissions developed by the Global Commons Institute8 in London that involves the international community agreeing how much the level of the main greenhouse gas, carbon dioxide (CO2), in the atmosphere can be allowed to rise. There is considerable uncertainty over this. The EU considers a doubling from pre-industrial levels to around 550 parts per million (ppm) might be safe while Bert Bolin, a former chairman of the IPCC, has suggested that 450 ppm should be considered the absolute upper limit. Even the present level of roughly 360ppm may prove too high because of the time lag between a rise in concentration and the climate changes it brings about. Indeed, in view of this lag, it is worrying that so many harmful effects of warming such as melting icecaps, dryer summers, rougher seas and more frequent storms have already appeared.

Whatever CO2 concentration target is chosen automatically sets the annual rate at which the world must reduce its present greenhouse emissions until they come into line with the Earth's capacity to absorb the gas. This is the contraction course implied in the Contraction and Convergence name.

Once the series of annual global emissions limits have been set, the right to burn whatever amount of fuel this represents in any year would be shared out among the nations of the world on the basis of their population at an agreed date - 1990, perhaps. In the early stages of the contraction process, some nations would find themselves consuming less than their allocation, while others would be consuming more, so under-consumers would have the right to sell their surplus to more energy-intensive lands. This would generate a healthy income for some of the poorest countries in the world and give them every incentive to continue following a low-energy development path. Eventually, most countries would probably converge on similar levels of fossil energy use per head.

But what currency are the over-consuming nations going to use to buy extra CO2 emission permits? If those countries with reserve currencies such as the dollar, the pound sterling and the euro were allowed to use them, they would effectively get the right to use a lot of their extra energy for free because much of the money they paid would be used to provide liquidity for the world economy rather than purchasing goods from the countries which issued them. To avoid this, Aubrey Meyer of GCI and Feasta9 devised a plan10 under which a new international organisation, the Issuing Authority, would assign Special Emission Rights (SERs, the right to emit a specified amount of greenhouse gases and hence to burn fossil fuel) to national governments every month according to their entitlement under the Contraction and Convergence formula.

SERs would essentially be ration coupons, to be handed over to fossil-fuel production companies in addition to cash by their customers - electricity producers, oil refineries, coal distributors and so on. An international inspectorate would monitor producers to ensure that their sales did not exceed the number of SERs they received. This would be surprisingly easy as nearly 80 per cent of the fossil carbon that ends up as man-made carbon dioxide in the earth's atmosphere comes from only 122 producers of carbon-based fuels11. The used SER coupons would then be destroyed.

Such a system is not an impossibility. Considerable work has already been done towards the development of an international trading system in carbon dioxide emission rights both at a theoretical level and in practice.

AN ENERGY-BACKED CURRENCY

Besides the SERs, the Issuing Authority would supply governments with a new form of money, emissions-backed currency units (ebcus), on the same per capita basis. It would announce that it would always be prepared to sell additional SERs at a specific ebcu price. This would fix the value of the ebcu in relation to a certain amount of greenhouse emissions and make holding the unit very attractive as other monies have no fixed value and SERs are going to become scarcer year by year.

The ebcu issue would be a once-off, to get the system started. If a power company actually used ebcus to buy additional SERs from the Issuing Authority in order to be able to burn more fossil energy, the number of ebcus in circulation internationally would not be increased to make up for the loss. The ebcus paid over would simply be cancelled and the world would have to manage with less of them in circulation. This would cut the amount of international trading it was possible to carry on and, as a result, world fossil energy consumption would fall. On the other hand, there would be no limit to the amount of trading that could go on within a single country using its national currency provided it kept its fossil energy use down.

Governments could auction their monthly allocation of SERs from the Issuing Authority to major energy users and distributors in their own country and then pass all or part of the national currency they received to their citizens as a basic income. (Something along these lines would be necessary as the price of energy would go up sharply and the poor would be badly hit) They could also sell SERs abroad for ebcus. The prices set by these two types of sale would establish the exchange rate of their national currency in terms of ebcus, and thus in terms of other national currencies.

The use of national currencies for international trade would be phased out. Only ebcu would be used among participating countries and any countries which stayed out of the system would have tariff barriers raised against them. Many indebted countries would find that their initial allocation of ebcu enabled them to clear their foreign loans. In subsequent years, they would be able to import equipment for capital projects with their income from the sale of SERs, thus helping the depressed world economy to revive.

Setting up this type of dealers' ring would ensure that, rather than a lot of money being paid to the producer-countries for scarce oil and gas as a result of competitive bidding between prospective purchasers, it would go instead to poor countries after an auction for their surplus SERs. This money would not have to be lent back into the world economy as would happen if the energy producers received it. It would be quickly spent back by people who urgently need many things which the over-fossil-energy-intensive economies can make.

So, rather than debt growing, demand would, constrained only by the availability of energy. Suppose it was decided to cut emissions by 5% a year, a rate which would achieve the 80% cut the IPCC urges in thirty years, the sort of goal we need to adopt. Cutting fossil energy supplies at this rate would mean that the ability of the world economy to supply goods and services would shrink by 5% a year minus the rate at which energy economies became possible and renewable energy supplies were introduced. Initially, energy savings would take the sting out of most of the cuts - there's a lot of fat around - and as these became progressively difficult to find, the rate of renewable energy installations should have increased enough to prevent significant falls in global output.

The global economy this system would create would be much less liable to a boom and bust cycle than the present one for two reasons. One is that, as the shape of every national economy would be changing rapidly, there would be a lot of investment opportunities around. The other is that the supply of the world's money, the ebcu, would not fluctuate up and down as happens now, magnifying changes in the business climate. Their amount would be stable or, if the demand for fossil fuels rose so much that the emissions target was threatened, in slow decline.

Under C&C, investors in renewable energy projects could be sure of keen demand. The poorer parts of the world would get the resources they need to follow low-energy development paths. And the spreading out of purchasing power would open new markets for manufacturing companies. Everyone, even the fossil fuel producers, would benefit from the arrangement and, as far as I am aware, no other course has been proposed which tackles the problem in a way which is both equitable and guarantees that emissions targets are met. What is certain is that the unguided workings of the global market are unlikely to ensure that fossil energy use is cut back quickly enough to avoid a climate crisis in a way that brings about a rapid switch to renewable energy supplies.

MODIFYING MARKET MECHANISMS

As C&C is a world solution, it will take several years to put into effect. Until it is, Europe must not rely on the market to decide whether or not it should invest in renewables and, if so, which ones, on what scale and where. We - the people of Europe - have to decide what we want to do and then design the legislative framework within which the market can then be allowed produce the desired results.

The only sustainable target for the EU would involve it achieving energy sustainability within its own borders and not meeting its energy needs through imports, whether of fuels or products which took a lot of energy to make. As Hohmeyer's paper shows, this goal can be achieved by 2050 and enough energy delivered to enable all the people of the 15 current member states of the EU to live at the present Northern European level.

Ireland's role in such a Europe should be to become a net exporter of wind, wave and tidal energy to its partners because it has a much better resource base than most. The EU is slowly forcing the country to move in that direction. A particularly hefty push came in October 2001 when the directive requiring 20% of all the Community's electricity to be produced from renewable sources by 2010 was passed by the Council of Ministers. Another shove came in April 2003 when the Council of Ministers approved the Biofuels Directive, which envisages 20% of all transport fuel coming from non-oil sources by 2020.

The electricity directive has already forced the Irish government to raise its sights. Its 1998 Green Paper on Sustainable Energy suggested that only 5.6% of electricity would come from renewables by 2010. However, in the table below which accompanied the directive, the European Commission says that Ireland's target is now 13.2%. This 240% increase must have been offered by (or at least extracted from) the government.

Even so, it is still aiming far below the EU average of 22% and Austria's target is an amazing 80% of its electricity from renewables by the end of the decade. The low goal is due in part to the fact that rapid economic growth rates have caused electricity demand to rise by around 6.5% a year for several years and it is assumed that this will carry on. If that turns out to be correct, the amount of electricity generated from renewables would have to increase by the same percentage just to maintain its present market share. The sector would have to run to stand still.

While the renewable electricity directive can be welcomed wholeheartedly, the Biofuels Directive is a serious mistake for three reasons. The first is that it will do little to achieve its own objectives because it will neither lead to a significant reduction in greenhouse gas emissions nor will it do much to reduce the EU's dependence on imported oil. The second is that it is likely to increase world hunger. And the third is that it will require resources that would be better employed developing other ways of powering vehicles.

In the documentation accompanying the directive, the Commission projects that biofuels will provide 8% of the fuel for the EU's road vehicles by 2020 and that a further 5% will come from hydrogen, perhaps produced using electricity from the wind. Thus the transport system will remain almost entirely dependent on oil which, as the Commission points out, will be supplied in 2020 almost entirely from the perennially unstable Middle East. This level of dependence is too high for the Commission's liking and it wants to reduce it by a further 10% by having more vehicles powered by natural gas. In 2020, however, gas will be largely sourced from equally unstable places like Algeria and the countries around the Caspian Sea.

Biofuels suitable for transport include methane from the digestion of organic wastes, ethanol from the fermentation of sugar beet and oil from crops like rape. Unfortunately when crude oil is $25 a barrel they cost about 0.3 euro per litre more to make than oil-based fuel so the Commission suggests that governments compensate by lowering the tax road users have to pay. At present, users pay the same tax whatever the fuel type. The tax reduction would essentially be a subsidy liable to produce the same waste of fossil energy that we noted in the Introduction had happened in Minnesota.

Another serious objection to the directive is that the rich who want fuel for their cars will start competing for arable land with the poor who need food for their stomachs. Food prices will go up, so that people already struggling will be able to buy even less. The document supporting the directive even talks about the possibility of using cereals for fuel. The directive itself does not stipulate that biofuels must come from EU sources to qualify for the proposed tax breaks. Quite the contrary - the supporting material talks about the new trade opportunities that will be created for 'developing' countries. Almost inevitably, this means that biofuel production for the EU will increase hunger in the rest of the world.

Because it is uncertain whether fossil energy would actually be saved by growing crops to turn into biofuels, the only clear advantage of switching part of the transport sector from imported oil to domestic biofuel is that it would create fifty times as many jobs, mostly in rural areas, as would be required to process the same amount of energy in an oil refinery. Policies to mimimise the need for transport could do far more to improve energy security and cut greenhouse emissions.

The Commission states that biofuels can never provide more than a fraction of the energy required for the transport system. In other words, they are merely a stop-gap until the switch to hydrogen-powered vehicles can be made. And, if that is the case, wouldn't the tax reliefs proposed to encourage biofuels be better spent on encouraging the production of hydrogen using renewable energy? "Go straight for goal" as Jack Charlton says in his television advertisement for a used car dealer.

Official Ireland's reluctance to develop renewable energy is incomprehensible. The country has the second best wind regime in Europe (after Scotland) from a power generation perspective. An Irish university is a world leader in the development of wave power. Its coastline offers enormous potential for tidal power, generated not by environmentally-damaging barrages but by turbines anchored to the seabed. Wood chips from short rotation forestry, regular forestry waste, and biogas from animal dung and vegetable waste, all offer excellent potential for producing heat and electricity combined. Even solar energy could play an important role.

A report assessing the amount of electricity Scotland could generate from renewables was published in 2002 by the Scottish Executive. It looks at how much would be available, where it would be generated and how much it would cost given current technologies. Agricultural and forestry wastes, energy crops and gas from municipal rubbish are all explored but dismissed as minor sources. Land-based wind turbines have the ability to deliver much more power at a lower price. They could produce 125% of the country's current electricity consumption for less than 2p (Sterling) a kilowatt hour.

Offshore wind kicks in next and could produce three times Scotland's current electricity output for around 4p a unit. Wave power could become as important as onshore wind at prices above 4.5p, the same price as required for electricity from tidal streams and from energy crops. All told, Scotland could produce 5.6 times as much electricity from renewables as it is using at present, and twice the amount used in the entire UK, if the price to producers was about 4.5p/kwh. The Scottish report can be downloaded from www.scotland.gov.uk/who/elld/energy/srs2001vol1.pdf. A similar one is badly needed for Ireland.

THE CASE FOR INVESTING NOW

There are five reasons for calling for massive, immediate investments in renewable energy systems. There is the environmental one - we need to limit climate change. There are two practical ones - first, that oil and gas are running short and we won't have the fossil energy so readily available to invest in the transition ever again, and secondly, that renewables - wind and biomass - give out more energy for each unit of energy invested than either nuclear power or coal. There is the economic reason - we need new products, or new ways of producing old ones, like electricity, if we are to get the economy out of the looming depression. And finally, there is the moral one - we need to free up resources for use by poorer countries and succeeding generations.

A return to a renewables-only powered economy would put the world back on the sustainable path it so mistakenly abandoned when the British began to burn coal four hundred years ago. If a determined start is made on restructuring the energy economy now, while oil and gas are still relatively abundant, renewables have the potential to take us to a sophisticated, sustainable world with a high degree of equality and complexity. If we delay the change, however, even by just a few years, it will remove most of our choices and make life for the majority of people in future terribly simple. And nasty, brutish and short. Taking the right path now is therefore vitally important.

ENDNOTES

1. J.A. Tainter, The Collapse of Complex Societies, Cambridge: Cambridge University Press, 1988. See also R. H. McGuire, 'Breaking down cultural complexity: inequality and heterogeneity' in Advances in Archaeological Method and Theory, Volume 6, ed. Michael B. Schiffer, pp. 91-142. New York: Academic Press, 1983.

2. Andrew O'Hagan, The Guardian, 26 March, 2001.

3. Richard G. Wilkinson, Poverty and Progress, London: Methuen, 1973, p42.

4. See Clive Ponting, A Green History of the World, London: Sinclair-Stevenson, 1991, for a detailed account.

5. Quoted by Wilkinson, p115.

6. John Gever, Robert Kaufmann, David Skole and Charles Vorosmarty, Beyond Oil, Ballinger, Cambridge (Mass.) 1987.

7. MuseLetter 135, May 2003, downloaded from http://globalpublicmedia.com/ARTICLES/richardheinberg.museletter.petroleumplateau.2003-05.php

8. See www.gci.org.uk

9. See www.feasta.org

10. What next for slowing climate change? Feasta Review, No. 1, Dublin, 2001, pp 158-173

11. Kingpins of Carbon: How Fossil Fuel Producers Contribute to Global Warming, Natural Resources Defense Council and others, New York, July 1999.

13. Voss A. 2002, 'LCA & External Costs in comparative assessment of electricity chains' Proceedings, Nuclear Energy Agency, Paris.

This is one of almost 50 chapters and articles in the 336-page large format book, Before the Wells Run Dry. Copies of the book are available for £9.95 from Green Books.

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