The End of Growth: Adapting to Our New Economic Reality (51 page)

11. See, for example, “Iron Ores,” Highbeam Business, 2011.
business.highbeam.com/industry-reports/mining/iron-ores
; and Chanyaporn Chanjaroen, “Escondida Copper Production Will Decline Up to 10% on Ore Grades, BHP Says,” Bloomberg, posted August 25, 2010.

12. Ugo Bardi, “The Universal Mining Machine,” The Oil Drum, posted January 24, 2008,
europe.theoildrum.com/node/3451
.

13. The difficulties of rapid adaptation to fuel supply shortfalls are explored in more depth in the Hirsch Report. Robert L. Hirsch, Roger Bezdek, and Robert Wendling, Peaking of World Oil Production: Impacts, Mitigation, & Risk Management, Report for the US Department of Energy, February 2005,
netl.doe.gov/publications/other_toc.html
.

14. Thanks to Mats Larsson, personal communication.

15. See for example Benjamin S. Cheng, “An Investigation of Cointegration and Causality Between Energy Consumption and Economic Growth,” Journal of Energy and Development. 21, no.1 (Autumn 1995). However, see also Jaruwan Chontanawat, Lester C. Hunt, and Richard Pierse, “Does Energy Consumption Cause Economic Growth?: Evidence From a Systematic Study of Over 100 Countries,” Journal of Policy Modeling 30, no.2 (2008).

16. US Energy Information Administration, “Annual Energy Outlook 2010 with Projections to 2035,”
eia.doe.gov/oiaf/aeo/otheranalysis/aeo_2010analysispapers/intensity_trends.html
.

17. In recent years, the Chinese government has set a goal of increasing the energy efficiency of the nation’s economy (producing more GDP growth per unit of energy); it has accomplished this at least partially through draconian power cuts to cities and factories. Leslie Hook, “China’s Energy Drive: Back On Track,” Beyondbrics, posted November 25, 2010,
blogs.ft.com/beyond-brics/2010/11/25/chinas-energy-efficiency-drive-back-on-track/
.

18. See Cutler J. Cleveland, “Energy Quality,” The Encyclopedia of Earth,
eoearth.org/article/Energy_quality#gen11
.

19. David Stern, “Energy Mix and Energy Intensity,” Stochastic Trend, posted April 17, 2010,
stochastictrend.blogspot.com/2010/04/energy-mix-and-energy-intensity.html
.

20. Cutler J. Cleveland, “Energy Quality, Net Energy and the Coming Energy Transition,” in Frontiers in Ecological Economic Theory and Application, Jon D. Erickson and John M. Gowdy, eds. (Cheltenham, UK: Edward Elgar, 2007), pp. 268–284.

21. Cleveland, “Energy Quality, Net Energy, and the Coming Energy Transition,” 7; Kenneth S. Deffeyes, chapter 3 in Beyond Oil: The View From Hubbert’s Peak (New York: Hill and Wang, 2005); David I. Stern, “Energy and Economic Growth in the USA: A Multivariate Approach,” Energy Economics 15, no.2 (1993), pp. 137–150.

22. Cleveland, “Energy Quality,” The Encyclopedia of Earth (online).

23. In 2009, the US imported nearly $300 billion in consumer goods from China. For information on the trade balance between the two nations see US Census Bureau, Foreign Trade Statistics, census.gov/foreign-trade/balance/. 24. Cleveland, “Energy Quality, Net Energy, and the Coming Energy Transition.”

25. David Murphy and Charles A. S. Hall, “EROI, Insidious Feedbacks, and the End of Economic Growth,” pre-publication, 2010.

26. Ernst von Weizsacker, Amory Lovins, and L. Hunter Lovins, Factor Four: Doubling Wealth, Halving Resource Use — The New Report to Rome (Sydney, AU: Allen & Unwin, 1998).

27. Paul Hawken, Amory Lovins, and L. Hunter Lovins, Natural Capitalism: The Next Industrial Revolution (London: Earthscan, 2000).

28. Apsmith, “What’s Wrong With Amory Lovins?,” SciScoop Science, posted September 17, 2005; Robert Bryce, “Green Energy Advocate Amory Lovins: Guru or Fakir?” Energy Tribune, posted November 12, 2007; Robert Bryce, “An Interview With Vaclav Smil,”
robertbryce.com
, posted July 2007.

29. This is known as the Jevons Paradox or the Khazzoom-Brookes postulate. In one sense, the Jevons Paradox has fading relevance in a world of declining energy resource availability: in the future, efforts to increase efficiency will probably not lead to declining resource prices, merely to prices that are not rising as fast as they would without such efforts. However, another, somewhat analogous trend will come into play: In order for society to save large amounts of energy through efficiency, very large investments in new and more energy efficient infrastructure are required (railroads, electric cars, etc.). This build-up of new energy efficient infrastructure requires energy for the construction and production, which will increase the need for energy. William Stanley Jevons, The Coal Question (London: Macmillan, 1866); Harry D. Saunders, “The Khazzoom-Brookes Postulate and Neoclassical Growth,” The Energy Journal (October 1, 1992).

30. Wikipedia, “Luminous Efficacy,” accessed January, 2011; Wikipedia, “Light-Emitting Diode: Efficiency and Operational Parameters,” accessed January 2011.

31. Alan S. Drake, “Electrified and Improved Railroads,” in An American Citizen’s Guide to an Oil-Free Economy: A How-To Guide For Ending Oil Dependency, posted on
aspousa.org
, October 25, 2010.

32. Richard Heinberg and Michael Bomford, The Food and Farming Transition, Post Carbon Institute, 2009, available online at
postcarbon.org/food
.

33. Mats Larsson, The Limits of Business Development and Economic Growth: Why Business Will Need to Invest Less in the Future (New York: Palgrave Macmillan, 2004).

34. Larsson, The Limits of Business, p. 121.

35. Larsson, The Limits of Business, p. 5.

36. Larsson, The Limits of Business, p. 2.

37. Larsson, The Limits of Business, p. 133.

38. However, Larsson more than made up for these omissions in his later book, Global Energy Transformation: Four Necessary Steps to Make Clean Energy the Next Success Story (New York: Palgrave Macmillan, 2009).

39. Mats Larsson, personal communication.

40. For a discussion of limits to Moore’s law see Brooke Crothers, “Moore’s Law Limit Hit by 2014?” cnet news, posted June 16, 2009.

41. “Current and projected rates of innovation might not be sufficient to improve or even maintain living standards in the face of still rapidly growing population, global warming, and other challenges of the 21st century,” according to Canadian economist James Brander. Barrie McKenna, “Has Innovation Hit a Brick Wall?” The Globe and Mail, December 26, 2010.

42. Martin Lowson, “A New Approach to Sustainable Transport Systems,” presented at the 13th World Clean Air and Environmental Congress, London, August 22–27, 2004; The conversion is: 0.55 MJ = 521.6 Btu; 1.609 km = 1 mi; therefore, 521.6 × 1.609 = 839; US Department of Energy, “Transportation Energy Data Book,” 2007.

43. Rick Jervis, “Pipes, Pumps Trouble Big Easy,” USA Today, posted December 16, 2010.

44. US Government Accountability Office, Global Positioning System: Significant Challenges in Sustaining and Upgrading Widely Used Capabilities, Report No. GAO-09-670T, May 7, 2009.

45. Vernon W. Ruttan, Is War Necessary for Economic Growth?: Military Procurement and Technology Development (New York: Oxford University Press, 2006).

46. In The Party’s Over, I discussed these strategies by which humanity has enlarged its carrying capacity, summarizing a longer seminal discussion in William Catton’s brilliant 1980 book Overshoot. Richard Heinberg, The Party’s Over (Gabriola Island BC: New Society Publishers, 2003), pp. 14–33; William Catton, Overshoot: The Ecological Basis of Revolutionary Change (University of Illinois, 1980).

47. For an unrealistically optimistic view of what division of labor has achieved, see John Kay, “Why You Can Have an Economy of People Who Don’t Sweat,” Financial Times, Oct. 20, 2010.

48. Adam Smith, The Wealth of Nations (New York: Oxford University Press, World’s Classics Edition, 2008).

49. Economists frame the advantages of increased trade in terms of a concept called “comparative advantage.” Technically, comparative advantage means that each country will specialize in what it is good at, even if another country does everything better, and the result is that all countries benefit from trade. However, this assumes that capital can only be invested domestically. If instead capital can be invested anywhere, which is actually the case, then it will go to whichever country has an absolute advantage. The net result is even greater output than a world based on comparative advantage, but one in which not all countries benefit. Even in the comparative advantage model, economists recognize that some sectors in a country can lose out while others gain. In world of absolute advantage, the sectors that gain need not be in the same country as the sectors that lose. Herman Daly has made this point, but apparently Ricardo also recognized that comparative advantage depends on capital being invested domestically, which was the case in his day.

50. Frances Berdan, “Trade and Markets in Precapitalist States,” in Economic Anthropology, Stuart Plattner, ed. (Stanford, CA: Stanford University Press, 1989).

51. Jeff Rubin, Why Your World Is About To Get a Whole Lot Smaller: Oil and the End of Globalization (New York: Random House, 2009).

52. Jeff Rubin, “Oil and the End of Globalization,” transcript and video of a presentation at 2010 ASPO-USA, The Oil Drum, posted November 8, 2010,
theoildrum.com/node/7095#more
.

53. Julian Lincoln Simon, The Ultimate Resource (Princeton, NJ: Princeton University Press, 1996).

54. Herman Daly, “Ultimate Confusion The Economics of Julian Simon,” Social Contract Journal 13, no.3 (Spring, 2003).

55. Bjorn Lomborg, The Skeptical Environmentalist (Cambridge: Cambridge University Press, 2001); Bjorn Lomborg, “Cool It:” The Skeptical Environmentalist’s Guide to Global Warming (New York: First Vintage Books, 2007); Cool It, movie by Ondi Timoner and Terry Botwick, 1019 Films, 2011.

56. The literature on the collapse of civilizations includes materials ranging widely in terms of quality of analysis. The best-selling recent book on the subject is Jared Diamond, Collapse: How Societies Choose to Fail or Succeed (New York: Viking, 2005).

57. Joseph A. Tainter, The Collapse of Complex Societies, New Studies in Archaeology, (Cambridge UK: Cambridge University Press, 1988).

Chapter Five

1. “Super Efficient Crew Builds 15-Story Chinese Hotel in Just SIX DAYS,” The Huffington Post, posted November 12, 2009.

2. Richard Heinberg and David Fridley, “The End of Cheap Coal,” Nature 468 (November 18, 2010), pp. 367–369.

3. Zaipu Tao and Mingyu Li, “What Is the Limit of Chinese Coal Supplies — A STELLA Model of Hubbert Peak,” Energy Policy 35, no.6 (June, 2007).

4. Werner Zittel and Jorg Schindler, Coal: Resources and Future Production, EWG-Paper 1/07 (Ottobrunn, Germany: Energy Watch Group, March 28, 2007).

5. Tadeusz W. Patzek and Gregory D. Croft, “A Global Coal Production Forecast with Multi-Hubbert Cycle Analysis,” Energy 35 (2010).

6. Don Miller, “Uranium Prices Surge on China’s $511 Billion Investment in Nukes,”
MoneyMorning.com
, posted December 7, 2010.

7. Elisabeth Rosenthal, “Nations That Debate Coal Use Export It to Feed China’s Need,” The New York Times, November 21, 2010.

8. This section draws heavily on the article “The Japan Syndrome” by Ethan Devine. However, see also the work of Chalmers Johnson on “the developmental state.” Ethan Devine, “The Japan Syndrome,” Foreign Policy, September 30, 2010; Chalmers Johnson, MITI and the Japannese Miracle: The Growth of Industrial Policy, 1925–1975 (Stanford, CA: Stanford University Press, 1982).

9. Devine, “The Japan Syndrome,” Foreign Policy.

10. From a social standpoint, Japan handled its economic transition away from high growth rates well: throughout the 1990s, the Japanese unemployment rate was about three percent, only half the US rate at the time. The Japanese also maintained universal healthcare, and had low wealth inequality, low rates of infant mortality, crime and incarceration, as well as the highest life expectancy. Steven Hill, “Reconsidering Japan and Reconsidering Paul Krugman,”
Truth-out.org
, posted December 12, 2010.

11. Devine, “The Japan Syndrome,” Foreign Policy.