I’ve been mulling over this quote from John Quigggin in last Thursday’s Fin Review:
“But for anyone who takes mainstream economics seriously, the idea that a physical resource like oil or coal is essential to prosperity must be regarded as fallacious. Economic theory teaches, and economic history has repeatedly shown, that when one resource becomes scarce, others are substituted to take its place.”
At one level he may be right, energy, and not the form in which it is embodied, is essential to our present prosperity, so we are not per se dependent on oil or coal. But if he’s suggesting that more expensive energy wouldn’t significantly decrease our standard of living, which he does, then he’s wrong. Which is not to say that we couldn’t sustain a good standard of living at much higher energy costs, but it wouldn’t be the same standard of living.
Quiggin suggests that we can lower the impact by using public transport, driving smaller cars and living closer to town, and so we can, but I suspect the costs of that are much higher than he projects. For example, if everyone moved closer to town, who would buy our houses from us, and where would the new multi-story dwellings be built, and and what would be the cost of the total sale and repurchase process? If leisure time is part of my standard of living, how much would I lose by using public transport?
While economics can be seen as the science of managing scarcity, it tends to assume that while specific commodities may become scarce there is no such thing as what I will call “systemic” scarcity. In other words, while individual components may become scarce, there will never be any overall scarcity, something else will be substituted for the scarce commodity.
But in fact the world is not a system where there will always be an new energy resource to replace the ones we have used up. The total energy available is finite, (although it may be massive if we can tap into terrestrially based nuclear fusion). All fossil fuels are essentially stored solar energy and our present standard of living is predicated on using up millions of years of stored solar energy over the course of a few centuries.
All replacement energy sources, with the exception of nuclear and geothermal, are also essentially solar. Solar panels, windpower, biofuels and hydro all draw their energy from the sun. So, we can fairly easily calculate the potential total energy that is available from these sources – it’s equivalent to the amount of sunshine that falls on the earth. Which puts in perspective the difficulty of the task of maintaining our standard of living on the alternative technologies now available. We will only capture a small amount of the available solar energy, and it is meant to replace stored solar energy representing millions of years of capture by now-fossilised plants. No wonder nuclear energy is coming back into favour, even within the environmental movement.
The challenge can be fairly dramatically visualised by the idea of the “ecological footprint” (and I owe the links and some of the information here to Trevor McAllister on last Saturday’s The Science Show. The idea is that your ecological footprint equals the amount of the earth it takes to sustain a person. The world average is 1.8 hectares.
Actually, the concept has a lot of methodological problems – for example the total biological footprint is only 25% of the earth’s surface because it looks at what it sees as the “biologically productive” area of the earth, as though the other 75% were just lazing around in the sun. It also appears to measure the footprint of energy by measuring the amount of biosphere required to eliminate CO2 from fossil fuel emissions, and it converts nuclear energy into the same measure so that a unit of nuclear energy makes something similar to the same footprint as a unit of coal-fired energy. If you want to know more about the methodology, it is outlined in this paper (PDF 380kb).
Still, it’s a useful attempt to see how sustainable our present standard of living is, given present technologies. You can do a quizz at this site (http://www.footprintnetwork.org/index.php)which will show you how large your ecological footprint is. It will also show you that, with current technologies, it isn’t sustainable at anything like this level if everyone else in the world were to live at the same level as we do.
As Trevor Macallister details on The Science Show, it is also quite difficult, given the way we live as a community, to make much difference to the size of your footprint by making changes to your lifestyle. In fact, the footprint concept has another methodological problem, which comes from the inventors of the concept not being economists. It assumes that if you consume less personally, that will result in a smaller footprint, without taking account of what else you might do with the money that you thereby save. This calculator at least corrects for that error.
Another error that the concept corrects is that Australia is on the brink of ecological collapse. This spreadsheet gives a set of world accounts, and breaks it down into countries. It turns out that Australia has the third “best” result with a surplus of 11.5 global hectares per person. So, if everyone had population levels similar to ours, there would be no need to worry. (The countries with the “worst” results are Kuwait, United Arab Emirates, Israel, USA, Netherlands, UK, Greece, Switzerland, Belgium and Portugal.)
So, the basic issue isn’t whether we will suffer reduced living standards by cutting energy consumption, but how we are going to find enough energy resources when the rest of the world enjoys a standard of living even vaguely similar to our own. There is no future in pretending that it is going to be easy.