Thursday, October 11, 2012

Framing the future - the end of growth?

Richard Heinberg from the US Postcarbon Institute sees an inevitable end to the exponential growth we have seen in GDP per capita, population and energy consumption since the start of the industrial revolution.  He sees the present global financial crisis with its unsustainable debt levels signalling a sobering new economic reality. 

In considering the impossibility of continued growth, he examines three major factors: energy, debt and climate change. 

Developed countries spend only 10% of their GDP on energy, but everything in the modern world depends on it: as he notes, once you’ve turned off the petrol pumps and cut off the electricity, everything stops in first world countries. Since the start of the industrial revolution we have substituted the use of renewable sources of energy with the use of immensely energy–rich but unrenewable fossil fuels, on which we rely for transport, trade, and this has generated the ensuing “economic growth” we have all been led to believe is essential. 

More people plus more consumption leads to more energy use which is unsustainable.   Spikes in oil prices are usually followed by recession which then chokes economic growth.   We are faced with a Catch-22 situation in which, because oil is becoming increasingly difficult to extract, the industry needs high prices (over $100 US per barrel) to justify its continued production. However, if the oil price stays over $100 US per barrel, economic recession results, as transport is affected and trade slows or stops.  

He regards global debt as a direct consequence of the oil boom which allowed mass production of all kinds of “stuff” at cheap rates. In order to sell the products, artificial needs and systems to support the fulfilment of these needs were created: advertising, planned obsolescence and consumer credit.  In order to support the interest payments on the growing debt, endless economic growth became a necessity. 

Richard gave a graphic illustration of the impossibility of sustaining growth indefinitely. He cited the “impossible hamster” example. Hamsters double their body weight on a weekly basis in infancy. If a hamster continued to do this for the whole first year of its life, it would weigh several billion tons by the end of the year as a result of its exponential growth. Until recently, China’s economy has been growing by 10% per year. This represents a doubling time of 7 years. In other words, in seven years, China would need twice as many resources as it does now. In fourteen years, it would need four times as many. Played out in every world economy, the impossibility of sustaining this on one finite planet becomes very obvious. 

We are now facing the limits of cheap oil and debt.    Water is increasingly becoming the true ‘blue chip’.  We are seeing increasing inequality which in some countries is already leading to social instability.   

Heinberg regards GDP as a perverse indicator of economic success as it measures consumption which may be detrimental to the environment and could be the result of war or natural disaster.  Sovereign Assurance is developing a well-being index for New Zealand which better measures aspects such as environmental impact.  

Climate change is linked to our dependence on non-renewable fossil fuels with GHG emissions continuing to increase. Global warming is well documented and there is an increasing incidence of severe weather events, with all their associated costs to society.  

So this is the global picture which will impact on New Zealand -  and Hamilton - over the next few years.   

What might we do to anticipate the future  - to be proactive rather than reactive? 

We should be developing economic resilience to absorb shocks: a ‘steady state’ economy.  This would involve a move away from the long supply chains of globalisation towards more local and more dispersed systems. We should use our renewable energy sources wisely and reduce our reliance on non renewable energy.  

·         As fewer people are able to drive cars due to cost and unavailability of fuel, we will need walkable cities and public transport systems.

·         We need to encourage the building of homes and commercial buildings that heat and cool themselves – passive structures that need little or no external  energy input. 

·         We should be developing small-scale local food systems, and training our citizens in the arts of food production and preservation. 

·         We should be encouraging alternative currencies, worker cooperatives, and any other options that produce stronger, more self-sufficient communities.  

We have many positives to draw on, including our innovative can-do approach, community spirit, creative people, and temperate climate.  

Questions from the large and attentive audience included querying the government’s lack of leadership and action on these issues.