The End of Doom (10 page)

Evidently, Grantham and others alarmed about the possibility of running out of fertilizer did not look very hard for satisfactory answers to worries about peak phosphorus and potash. The USGS estimates that current reserves of phosphate rock will last 300 years at current rates of production. The estimated total resources of phosphate rock would last over 1,300 years. Similarly, known supplies of potash would last 101 years at current rates of usage. Total world estimates of potash resources would last 7,000 years. And finding and applying more phosphorus is not the only way to boost yields.

Biotechnologists are exploring ways to design crop plants that greatly increase the efficiency with which they use phosphorus. In recent low-phosphorus experiments biotech-enhanced soybeans produced nearly fifty more seeds than conventional varieties. The development of such nutrient-efficient crops would substantially reduce the volume of fertilizer needed to grow a given amount of food, and ease whatever pressures there might be on reserves of the minerals. The invention of resource-sparing technologies is a pervasive feature of the modern economy, empowering people to get ever more value out of less material.

Other peak prognosticators focused their attention on lithium. Lithium is the element at the heart of the batteries that green-energy enthusiasts hope will spark an electric car revolution. But in 2007, William Tahil, a researcher with the France-based consultancy Meridian International Research, fueled the “peak lithium” meme with his report, “The Trouble with Lithium.” Tahil's analysis alarmingly concluded that there is “insufficient economically recoverable lithium available in the Earth's crust to sustain electric vehicle manufacture in the volumes required.” Tahil added, “Depletion rates would exceed current oil depletion rates and switch dependency from one diminishing resource to another.” Is Tahil right?

Looking once again at USGS reserve and resource assessments, one finds that the agency estimates that at current production rates the reserves of lithium would last 371 years and the estimated resources would last 1,142 years. Of course, if demand for electric vehicles takes off, production would have to increase significantly. Perhaps a good way to think about future demand for lithium is to consider that 9 kilograms (about 20 pounds) of it goes into the Tesla Model S 990-pound battery pack. The Tesla can go about 250 miles on a single electric charge. A ton of lithium is enough to produce 111 Tesla batteries, and in 2013 the world produced 35,000 metric tons of lithium. Current lithium production could therefore notionally supply batteries to power just under 3.9 million Tesla Model S cars. In 2013, US-based automakers produced just over 11 million vehicles. Assuming that all used the same batteries as the Tesla Model S implies a consumption of about 100,000 metric tons of lithium annually. At that rate, reserves would last 123 years, and estimated resources 380 years.

A 2011 study on global lithium availability by researchers at the University of Michigan and Ford Motor Company estimated that the cumulative twenty-first-century demand for lithium would likely range between 12 and 20 million tons, depending on assumptions regarding economic growth and recycling rates. “Even with a rapid and widespread adoption of electric vehicles powered by lithium-ion batteries, lithium resources are sufficient to support demand until at least the end of this century,” concluded the researchers. Similarly, a 2011 study of future lithium demand and supply by researchers at the University of California at Berkeley concluded: “Eventually, on the order of 1 billion 40 kWh Li-based EV batteries can be built with the currently estimated reserve base of lithium.”

In this supposed “century of declines,” it is child's play for peddlers of the limits-to-growth meme to seize on any hike in the price of some raw material and solemnly declare that it signals “peak whatever.” And so it was when the prices of rare earth metals like neodymium and dysprosium began to ascend. Let's look specifically at neodymium. It is used extensively to produce permanent magnets found in everything from magnetic disk readers and cell phones to wind turbines and automobiles. For example, the magnets that drive a Prius hybrid's electric motor use more than two pounds of neodymium. Interestingly, neodymium magnets were invented in the 1980s to overcome the global cobalt supply shock that occurred as the result of internal warfare in Zaire. Because China can more cheaply produce neodymium than any other country in the world, that country is the source of about 90 percent of the world's neodymium. In 2010, China's government warned that it would begin restricting exports of neodymium (and other rare earth metals) in order to ensure supplies for its own manufacturers.

The announcement of China's intended export restrictions unsurprisingly excited peakists into spreading alarm about peak rare earths. To counteract the supposedly impending global shortages, Rep. Mike Coffman (R-CO) introduced in March 2010 his Rare Earths Supply-Chain Technology and Resources Transformation (RESTART) Act. The RESTART Act would offer federal loan guarantees to mining and refining companies to re-create in five years a domestic rare earth minerals industry. Rare earth minerals independence, if you will. The bill apparently died from lack of action in 2011, perhaps because the prices of rare metals fell fast. “Global market forces are leading to positive changes in rare earth supply chains and a sufficient supply of most of these materials likely will be available to the defense industrial base,” noted a comprehensive review of industrial raw materials supplies by the Department of Defense in late 2013. The report further observed, “Prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011.” Why did prices fall? As the DOD review reports, “One factor contributing to reduced demand is the substitution of other materials for rare earth materials.” For example, Tesla Motors installs induction motors that do not use rare earths; LumiSands in Washington State has developed LED lights that replace rare earths with abundant silicon.

In addition, China's threat to create a rare earths cartel provoked exploration and the opening of new mines around the world, including in the United States, Australia, and Malaysia. “There are over 400 rare earth projects under review globally, approximately four dozen of which may be considered in advanced stages of development in over a dozen countries worldwide,” notes the DOD review. This is exactly the response that one would expect to higher prices. By January 2015, rare earth prices were 8 percent below their 2011 highs.

Kudos must be given to tireless and imaginative peakists for their astonishing ability to foment alarm about the future availability of rare earth metals. The USGS estimates that at current levels of consumption, the known reserves of rare earths will last 1,272 years. The agency doesn't bother with providing figures for the ultimately recoverable resource base, simply noting that “undiscovered resources are thought to be very large relative to expected demand.”

Proponents of peak depletion get it wrong because they treat natural resources as fixed stocks, failing to take into account the inherent dynamics of market forces and technological innovation. Amazingly, some still claim that the era of cheap resources is over, when in point of fact nearly all resources in the past were much more expensive than they are today, even taking into account the current super-cycle.

Resources are defined by advancing human knowledge and technology. A deposit of copper is just a bunch of rocks without the know-how to mine, mill, refine, shape, ship, and market it. “Innovation has arguably been the dominant force in determining the path of real prices for primary commodities over the past three and a half centuries,” assert economists Harry Bloch and David Sapsford. They add, “The influence of innovation has been sufficient to result in negative trends in real prices for numerous individual commodities and for aggregate indexes of commodities. The negative trends occurred in spite of massive increases in output with growth in the world economy.”

Richer Means Cleaner

The folks who put together
The Limits to Growth
back in 1972 concluded that if humans were somehow able to overcome all other “limits,” pollution would still do us all in. “Virtually every pollutant that has been measured as a function of time appears to be increasing exponentially,” read the report. It turns out that they were making this exponentialist prediction just as a wealthier United States was reaching the per capita income thresholds at which citizens begin to demand better environmental quality. Happily, once again, the new Malthusians had things exactly backward.

Consider that the EPA reports that between 1980 and 2011, US gross domestic product increased 128 percent, vehicle miles traveled increased 94 percent, energy consumption increased 26 percent, and the US population grew by 37 percent. During the same time period, total emissions of the six principal air pollutants dropped by 63 percent.

Why does pollution peak and then fall? More than two decades ago, economics scholars noted that when incomes begin to rise, pollution gets worse—until it doesn't. Income and pollution data from around the world have revealed that there are various per capita income thresholds at which air and water pollutants begin to decline. This discovery has been dubbed the Environmental Kuznets Curve (EKC). The Environmental Kuznets Curve hypothesis posits that environmental conditions initially deteriorate as economic growth takes off, but later improve when citizens with rising incomes demand better quality environmental amenities. There is still considerable debate over the empirical reality of this hypothesis, but a 2011 meta-analysis based on 878 observations from 103 empirical EKC studies (1992 to 2009) reports that its results “indicate the presence of an EKC-type relationship for landscape degradation, water pollution, agricultural wastes, municipal-related wastes, and several air pollution measures.” The best evidence backs the notion that increasing wealth from economic growth correlates with a cleaner natural environment—that is to say, richer becomes cleaner.

While levels for many pollutants are falling in rich developed countries, it must be acknowledged that globally, pollution from industrial and agricultural production continues to rise. When can we expect this beneficial dynamic to take hold in other countries?

Recent data suggests that sulfur dioxide emissions even from rapidly industrializing China may have peaked in 2006 and have begun declining. Earlier studies cite evidence for a pollution turning point at which people begin to demand reductions in sulfur dioxide emissions when their per capita annual incomes reach a threshold of around $10,000 (purchasing power parity). The researchers in that study concluded, “One important lesson here is that it is possible to reduce emissions that are by-products of a modern economy, without sacrificing long-term growth.”

In the face of the overwhelming evidence to the contrary, why do so many Americans still believe that air pollution is getting worse? When crime rates fall, mayors, police chiefs, and district attorneys are eager to spread the news and take the credit. But when pollution levels fall, environmentalists and environmental bureaucrats show a peculiar reluctance to cheer. The difference is that the environmental movement uses scare stories to raise money for their campaigns: no crisis, no money, no movement. In other words, Americans believe that air pollution is getting worse, as cynical as it sounds, because activists make a living peddling fear.

Doing More with Less

Jesse Ausubel, head of the Program for the Human Environment at Rockefeller University, and his colleagues point out: “If consumers dematerialize their intensity of use of goods and technicians produce the goods with a lower intensity of impact, people can grow in numbers and affluence without a proportionally greater environmental impact.” In fact, that is happening. Modern economic growth is generally the result of constantly figuring out how to do more with less.

University of Manitoba natural scientist Vaclav Smil points out that modern technology enables humanity to create ever more value using less and less material. For example, the amount of energy it takes to produce goods has dropped steeply. Today it takes only 20 percent of the energy it took in 1900 to produce a ton of steel. Similarly, it now takes 70 percent less energy to make a ton of aluminum or cement and 80 percent less to synthesize nitrogen fertilizer than it did in 1900. In addition, technologist Ramez Naam shows that the amount of energy used to heat an average house in the United States is down 50 percent since 1978. The amount of energy needed to desalinate a gallon of water has plunged 90 percent since 1970. LED lights use about ten times less energy than incandescents. Humanity has gotten richer over the past couple of centuries not chiefly by doing more of the same old things, but by developing better recipes.

Excluding construction materials, Smil calculates that in the United States it once took about 10 ounces of materials back in 1920 to produce a dollar's worth of value, but that is now accomplished using only about 2.5 ounces, yielding a 75 percent decline in material intensity.

With regard to energy consumption, the American economy between 1970 and 2010 has wrung ever more value out of each kilowatt-hour and gallon of gasoline. A 2013 study by the green lobby group the Alliance to Save Energy reported, “Over the past forty years, the United States made significant gains in energy productivity. U.S. economic output expanded more than three times since 1970 while demand for energy grew only 50%.” The ASE study also cited data from the energy conservation think tank the Rocky Mountain Institute suggesting that “if energy productivity had remained constant since 1970 [when about 68 quadrillion Btu (Q or quad) were consumed], the U.S. would have consumed 207.3 quadrillion Btu in 2007, when it actually only consumed 101.6 quads.” A quad is roughly equivalent to 170 million barrels of oil.

While the ever more efficient use of energy and materials results in relative dematerialization—less stuff yielding more value—the overall trend has been to extract more and more materials from the earth and the biosphere. “There can be no doubt that relative dematerialization has been the key (and not infrequently the dominant) factor promoting often massive expansion of material consumption,” writes Smil. “Less has thus been an enabling agent of more.” For example, the 11 million cell phones in use in 1990 each bulked about 21 ounces for total overall mass of 7,000 tons. By 2011 cell phones averaged about 4 ounces, but the total weight of all 6 billion had increased a hundredfold to 700,000 tons.