I’ve compiled many of my ‘go to’ news feeds into a helpful newspaper format (you can subscribe for daily emails) for those who are interested in reading around the issues I’m blogging about. You can access it via the link: Southern Energy and Resilience – News Feeds in paper format
Category Archives: Who
‘sustained economic recovery’? Not by any sane assessment. Printing money is illegal at home for good reason. The same ought to be true of QE, as it has a worse effect, even just considering its scale, but also as the ‘trickle down’ effect that the policy is predicated on (in theory, restarting banks lending to SME’s) is clearly not real (http://bit.ly/1lQRv6r), and worsens inequality (http://bit.ly/TNgZqn). And never mind that we’re all indebted up to our eyeballs, and the SME’s and general public have no appetite for further indebtedness…
Public confidence is an illusion, as is control, and will evaporate sooner or later, as the ability to direct and manage the financial crisis with ‘more of the same’ thinking is shown to be unsustainable. “We cannot solve our problems with the same thinking we used when we created them.” – Albert Einstein
I wouldn’t wish the obvious challenges of the next term of government on my worst enemy. The sooner we accept growth is dead, and there is a fundamental shift under way, the better for everything and everyone. It’ll become obvious in the next few years to even the dullest of career politicians, lets just hope it galvanises them into asking the right fundamental questions. I feel these are:
Q1 – Why do we need growth? A: To service interest payments on money lent into existence as debt. http://bit.ly/1rfcumz
Q2 – Why is the economy moribund? A: Because we’ve hit diminishing returns on capital and energy in many spheres, as the expansion in economic activity and natural resource throughput of the last couple of centuries bumps up against planetary boundaries. http://bit.ly/1qhWoXB
Q3 – What is a realistic view of the future? A: De-growth of economic activity, energy consumtion, natural resource exploitation rates, population, until we get back inside the sustainable capacity of the planet. http://bit.ly/1qhWluX and http://bit.ly/1z69MSK
It’s the basic maths of (exponential) growth, and people shouldn’t be allowed to govern nations until they’ve externalised this basic and fundamental concept: http://bit.ly/1rfc6Ve or review the talk given by Professor Albert Bartlett here: http://bit.ly/1vtJk0L
Not convinced? Further resources worth a look:
- Limits to Growth–At our doorstep, but not recognized: http://bit.ly/1sVx3X0 – I’d actually recommend all Gail Tverberg’s writing at her blog ‘Our Finite World’ http://bit.ly/1qDeFgB
- The Next Global Meltdown Is Baked In: Connecting the Dots Between Oil, Debt, Interest Rates and Risk: http://bit.ly/1m6WvmW
So what about positive alternatives, Nathan..?
The lower net energy future that we’re looking at makes certain activities more or less worthwhile, notwithstanding the probable disruption coming due to shortages in fundamental needs, primarily food (http://bit.ly/1pUDHHi) and water (http://bit.ly/1lxmYpr).
Do I think all growth in economic output is bad? No. Southland as a region has to grow in some respects, as we will have to provide more for ourselves going forward, if we want to sustain a human presence in the province. This will be a result of ever more expensive transportation costs. In a practical sense, the seas will again expand (http://bit.ly/1pI2Eu1), but also the effort for the trip to Dunedin, or even Invercargill… As we look to a more local future, we’ll recognise more the inter-dependence with our closer neighbours, and we’ll have to reconfigure food and water supplies, finance, business, politics to suit this new reality. It’s why I’m interested in the Transition Towns movement: http://bit.ly/1iSSfsq, and Transition Engineering: http://bit.ly/transitionengineering and why I support the Wise Response appeal: http://bit.ly/wiseresponse, submitted to parliament, which posits that:
A risk assessment is the first step in determining the nature, urgency and interrelationship between potential threats to New Zealand’s future economic social and environmental security. The World Economic Forum’s Global Risks 2014 report is an example of such an assessment. A report for New Zealand would provide a firm basis from which to engage the public and businesses in identifying practical ways to respond.
This petition therefore calls on Parliament as a whole to see funds allocated for an assessment of NZ’s critical risks in 5 key areas:
1. Economic / Financial Security: the risk of a sudden, deepening, or prolonged financial crisis.
2. Energy and Climate Security: the risk of continuing our heavy dependence on fossil fuels.
3. Business Continuity: the risk exposure of all New Zealand business, including farming, to a lower carbon economy.
4. Ecological / Environmental Security: the risks in failing to genuinely protect both land-based and marine ecosystems and their natural processes.
5. Genuine Well-Being: the risk of persisting with a subsidised, debt-based inequitable economy, preoccupied with maximising consumption and GDP.
I made a recent submission to the Venture Southland draft business plan 2014 (http://bit.ly/1lxqCQb), outlining what I feel are some alternatives to the directions the region is currently looking:
Relating to: statement that “significant growth opportunities” exist.
● Given: Vision and Mission Statement
● Given: increased environmental impacts from ‘growth’ at odds with the Vision and Mission statement
● Question: Does VS believe that ‘growth’ in the commonly accepted ‘GDP increase’ from increased levels of economic activity (which automatically creates increased throughput of natural capital and therefore increasing environmental impacts) is actually desirable?
Relating to: “Major Initiative: International Marketing Alliances”
● Missing category of potential migrants is people looking to relocate to an area with the following characteristics:
○ Nonnuclear (serious question marks exist over decommissioning of commercial nuclear power plants in a high price oil future e.g. no long term waste storage facilities currently fully commissioned, anywhere in the world).
○ Low population density and high food production capacity.
○ Projected to be less affected (low lying coastal areas excluded) by global warming than most other parts of the world.
○ Abundant fresh water resources huge catchment area above the plains, and natural storage in the lakes.
● Market to them on the basis of the above advantages. The people who are aware of these factors and have a desire to relocate are likely to be of a desirable demographic (affluent, educated, motivated to help with transition to a lower carbon, more strongly sustainable economy).
○ Idea: why not create a strategic plan for encouraging new sustainable communities with similar characteristics to http://bit.ly/1om4rRJ
Relating to: “Major Initiative: Rural Community Engagement”
● Community owned distributed power capacity wood gasification, with short rotation coppice, biogas, etc. Leverage global open source initiatives such as http://bit.ly/1mMFNp4 can be locally manufactured job creation… Would also provide an alternative and probably cost effective alternative to the existing renewables proposals. There will be significant manufacturing capacity available when the smelter winds down.
● Further reading: ‘Power from the People’ http://bit.ly/1lQCXE7 - I have a copy for loan.
● Link this to the marketing to the demographic mentioned in my previous comment. Why can’t Southland Market itself of the basis of the highest number / density of off grid settlements in the world? It’d save on all the grid infrastructure maintenance that must be a significant proportion of the standing charges rural communities pay. Do the maths on whether this makes sense.
Relating to: “Major Initiative: Events Promotion and Development”
● Given Southland’s geographic location and rising energy / transportation costs, this should be viewed from the perspective of community building around ‘worthwhile’ activities based on what will be affordable from an energy / travel perspective in the longer term in this light, the ‘crank it up’ day is probably the most worthwhile event in Southland…
Relating to: “Major Initiative: Landuse opportunities”
● I’m a founder of Love Local a charitable trust, set up to provide locally sourced fruit and vegetables from the
○ Opportunity: create a food hub or hubs for Southland on a ‘not for profit’ (or ‘for benefit’ as it’s more appropriately termed) basis, to provide a direct grower to market pipeline that can bring small / medium size local producers into the market.
○ Opportunity: Use the blueprint designs from the likes of Open Source Ecology http://bit.ly/1w0LJSE as the basis for a local manufacturing industry geared to supplying the needs of these small scale farmers. Many other tools for low carbon agriculture exist which could be locally fabricated. There will be significant manufacturing capacity available when the smelter winds down.
○ Further reading: the blog posts I’m writing on behalf of Love Local for the sustainablesouthland.co.nz website. To date: http://bit.ly/LLSustSthlndBlog1, http://bit.ly/LLSustSthlndBlog2, with more in draft.
● Why not look into Bamboo and Hemp as well, both have huge potential for the local economy and a large, existing export market for products that local industries could adapt to service: sawmills for bamboo, bamboo and hemp as a biomass coppice source for biomass energy projects (higher biomass production per acre by far than forestry, and a lot faster to realise a return).
Sorry if these comments are a bit rushed / terse. I didn’t realise this was out for comment in time to put more effort into it. I hope the above is helpful!
I’m speaking to my submission on the 14th. It’s a public meeting. Want to have some discussion on this..? Call me or come along: 03 221 7487 – the meeting is at the Venture Southland offices at 143 Spey Street in Invercargill, and submission hearings start from 1pm for an hour and a half.
Oil is not scarce. We’re nowhere near running out. What we are seeing however is diminishing returns on investment for the extraction of oil. I’m not sure if you’ve seen the news regarding the oil major’s profit warnings recently. Oil extraction has been the most profitable business in the history of the earth, but has in recent months been issuing profit warnings, with major players such as Shell having to sell assets (like drilling leases) to pay their dividends (https://www.google.co.nz/search?q=oil+majors+profit+warning) – effectively ‘eating their seed corn’ of future profitability.
Like all good businessmen, the oil majors went after low effort profits first, in the form of easy to extract reserves. Once these were depleting, they ploughed profits back into improved technology to go after the next easiest reserve, and so on. In the 1930’s in Texas for example, you could get 100 barrels of oil out for every 1 barrel you put to extraction effort. This 100:1 ‘Energy Return on Energy Investment’ (EROEI, or often EROI) gave fantastic profits. As these reserves are now declining in production, and they are having to go for reserves with much higher effort (and therefore lower EROI) to extract such as tar sands (Canada), oil sands (Venuzuala), fracking and deep sea drilling (Global), there is a decreasing profit, as the marginal cost of production (the amount it costs to extract a barrel, in both energy and monetary terms) climbs. The net result is lower profits, and lower ‘net’ energy available to society to power our current way of life. See chapters 1&3 of this book: http://www.postcarbon.org/end-of-growth-chapters/ – free to read online – for more detail.
From a recent Guardian article:
…a leaked email from Shell’s head of exploration to the CEO, Phil Watts, dated November 2003:
“I am becoming sick and tired of lying about the extent of our reserves issues and the downward revisions that need to be done because of far too aggressive/ optimistic bookings.”
Leggett reports that after admitting that Shell’s reserves had been overstated by 20%, Watts still had to “revise them down a further three times.” The company is still reeling from the apparent failure of investments in the US shale gas boom. Last October the Financial Times reported that despite having invested “at least $24bn in so-called unconventional oil and gas in North America”, so far the bet “has yet to pay off.” With its upstream business struggling “to turn a profit”, Shell announced a “strategic review of its US shale portfolio after taking a $2.1bn impairment.” Shell’s outgoing CEO Peter Voser admitted that the US shale bet was a big regret: “Unconventionals did not exactly play out as planned.”
…Despite “soaring drilling rates,” US tight oil production has lifted “only around a million barrels a day.” As global oil consumption is at around 90 milion barrels a day, with conventional crude depleting “by over four million barrels a day of capacity each year” according to International Energy Agency (IEA) data, tight oil additions “can hardly be material in the global picture.” He reaches a similar verdict for shale gas, which he notes “contributes well under 1% of US transport fuel.”
…”Shale-gas drilling has dropped off a cliff since 2009. It is only a matter of time now before US shale-gas production falls. This is not material to the timing of a global oil crisis.”
In an interview, he goes further, questioning the very existence of a real North American ‘boom’: “How it can be that there is a prolonged and sustainable shale boom when so much investment is being written off in America – $32 billion at the last count?”
…The 2015 oil crunch forecast, Leggett writes, is corroborated by the Industry Task Force report:
“In this report we updated the evidence that defines global oil reserves and extraction rates, and concluded that the global peak production rate for oil would likely occur within the decade, very likely by 2015 at the latest – at a value no higher than 92 million barrels per day.”
Based on flow rate data, the report found that “increases in extraction would be slowing down in 2011–13 and dropping thereafter.” From then on, global oil production would drop “at 1% a year from 2015. If the then IEA forecast of demand rising to 105 million barrels a day in 2030 were to prove correct, supply would fall short in 2015.”
[For more on the problems with projected shale oil and shale gas output via fracking (mainstream projections are almost always from organisations with vested interests and reasons to talk up their investments), please review the free to view online serialisation of the book by Richard Heinberg (author of the much respected ‘Museletter‘): ‘Snake Oil‘ and a longer and more in depth technical report by David Hughes, ‘Drill Baby Drill‘.]
Additional to the above issues with energy supply, we’re close to the end of the most recent 7(ish) year cycle in global financial terms. I’d just like to point out a few facts:
– The global financial crisis was in a large part the result of the aforementioned reducing net energy available to society. There are a few different ways to say this. Lacking space and time to really summarise well this here, here are a few links: For the views of a Wharton School of Economics Professor and advisor to the EU: https://www.youtube.com/watch?v=9e0UofNMzKM (I’d only watch the first 12 minutes or so, he goes on a bit about technological fixes that I have doubts about after that), or a well known commentator with impressive credentials (http://www.financialsense.com/contributors/nicole-m-foss) http://vimeo.com/66770756#at=0, or an Actuary http://ourfiniteworld.com/2014/03/21/oil-limits-and-the-economy-one-story-not-two/, or a Professor of Engineering at Canterbury University http://www.youtube.com/watch?v=KZ5Lb_ySIEg
– We’ve done nothing to fix the underlying problems of economics. In fact, we’ve rewarded banks globally for failed business models through QE, et al, allowing them to assume a larger, and therefore more threatening role in this current cycle. For more (readable, rather than hugely technical) commentary on this to further your understanding if my statement is at all controversial, I’d highly recommend this blog’s economics posts.
– Given that they have a literal ‘license to print money’ (http://www.theguardian.com/commentisfree/2014/mar/18/truth-money-iou-bank-of-england-austerity) and that they should be insanely profitable, banking must be restructured, because they can’t even remain profitable with the cards stacked FOR them…
Why am I pointing all this out? I guess my concern is that whilst I agree with the likes of Dave Kennedy that we need to remain positive, and work towards more renewables, etc, there’s a piece missing from the story. In light of the risks I’ve outlined above, which are not discussed very much in public debate in Southland, I think we’ve got to make some choices about what our priorities are going forward.already linked to above) that that infrastructure needs maintaining too, and that infrastructure maintenance generally requires fossil fuels at many parts of the supply chain for replacement parts, etc.
What the current popular focus on renewable energy masks, is the far more pressing need to deal with basics of survival such as water and food, particularly in light of probable failures in supply chains as a result of cascading failures in Finance, Commerce and Government that seem very likely in the coming decade, and possibly the earlier part of it…
My feeling currently is that we have got to get back to basics, producing food locally (in Southland there are a few different efforts underway to do something about this, such as ‘Love Local Charitable Trust‘ and the Farmers Market, Community Markets, etc), figuring out how drinking water supply works (hint – rainwater storage tanks…) if grid electricity becomes unreliable or unavailable (yes, Southland has Manapouri, but even that is reliant on fossil fuels for maintenance, and what about maintenance of the grid infrastructure, or even god forbid a major alpine fault earthquake, and the probable long term effects on grid electricity transmission lines in a transport fuel scarce future?), etc.
Discerning the future and responding appropriately is a very difficult task, and it’s why I’m involved with the ‘Wise Response‘ appeal, which asks government to perform a broad spectrum risk assessment, aiming to help New Zealand as a nation come to terms with the global risk environment and shape appropriate policy response. Have you given your support to the Wise Response appeal yet?
Deep Sea Oil Drilling in NZ : just who is crazy?
I think the time has come to ask the question just who is crazy, regarding exploring for oil off the NZ coast? The numbers coming from climate change scientists vary from being very scary to the “oh shit it’s too late” variety. The very scary numbers suggest that we have around two decades to completely decarbonise the world’s economy. This decarbonisation must be done while there are over 1000 large coal fired power stations on the world’s drawing boards, non-conventional tight oil and gas are being exploited by fracking and the deep ocean scoured for new resources. The “too late” variety include NASA scientist Jim Hansen, who has researched the earth’s past climate to obtain a safe limit of 350 ppm of CO2 in the atmosphere. We are now close to 400ppm and so according to Hansen’s numbers we should stop all CO2 emissions immediately and then start sequestering carbon by tree planting and burying biomass as carbon in the soil.
The main task in ensuring a habitable climate for future humanity and at the same time providing energy for our continued social existence is to stop carbon dioxide emissions and transition to a sustainable energy economy. With the present (unsustainable) world economy so closely linked to fossil fuel use it would be clearly very difficult to stop all emissions immediately. Even Jim Hansen realises this and so some years ago he suggested a transition program which envisaged developed countries closing down all coal fired power plants by 2020 and developing countries doing the same by 2030. In addition Hansen is opposed to any further exploration or exploitation of non-conventional hydrocarbons and has been arrested several times for opposing the pipeline to transport oil from Canadian tar-sands to the US. There is of course no evidence that his advice is being followed.
I have been looking at this problem for some years now and it has made me very pessimistic as to our future. Why are people not waking up to the situation and trying to do something about it? How can people go on with their normal everyday lives, ignoring the profound and catastrophic implications of not making an urgent transition away from fossil fuels? Is there something wrong with the way the human mind is constructed that they can see the problem but be paralyzed in terms of action? My pessimistic reputation in this regard led to a group of students at the University of Otago running a lecture titled “Cheer up Bob” in which they tried to prove to me that change was possible and that the young people of the city of Dunedin were up to the challenge. This year Greenpeace NZ, together with concerned residents of New Zealand, formed a consortium called “The Oil Free Seas Flotilla” to challenge the exploration for deep sea oil and or gas by Anadarko and Shell in NZ waters. The deep sea oil and gas that they are looking for are not part of the world’s known reserves and so by all scientific accounts cannot be used if we are to keep our climate habitable.
The Oil Free Seas Flotilla group are thus trying to preserve the climate of the earth for future generations. They want an orderly transition to sustainable energy sources that don’t emit the greenhouse gas carbon dioxide. They are not wanting to shut down the world economy by preventing all existing emissions, they are not protesting the existing extraction of known resources in Taranaki . They realise that there needs to be clear market signals that a transition away from fossil fuels is the only way to go. That NZ should be investing in wind energy, solar energy and its biomass resources. One of my recent students found for instance that it is currently economic to put solar PV on your rooftop in nearly all parts of NZ.
The opposition to deep sea oil drilling does not want to stop conventional oil from being exploited especially for uses that don’t emit carbon into the atmosphere. In fact the best use of remaining oil reserves may well be to use them for construction materials, pharmaceuticals, fertiliser production and lubricants. Future generations may suggest to their parents on past use of oil “you actually used to burn this valuable stuff?”
In terms of the possible discovery of gas instead of oil, it is true that natural gas is a lower greenhouse gas emitter than coal by weight, so its use in power stations is to be preferred, but if this means that world gas use will increase, as it is at present, then a 50% improvement in emissions reduction will be wiped out in a mere ten years and such a substitution will not send the right signals in terms of a transition to sustainable energy sources in the time available, which is also of the order of ten years. In addition such a substitution will deliver profits to the very companies, such as Anadarko, that will use the money to search for yet more oil and gas and so again deliver more CO2 into the atmosphere. Finally the delivery of the gas is likely to come just too late. We have to stop the cycle of fossil fuel dependence, not extend it. The gas transition argument is just not valid.
So is the protest against oil drilling a crazy objective or is it that the people ignoring the climate change problem that are crazy? That is the serious question that must be answered by the residents of New Zealand. Are short term profits for a few worth the incredible risks involved? Certainly vested interests want to continue the status quo, that is using all the oil, gas and coal until the earth is wrung dry by fracking, deep sea oil and gas extraction and mining the dirtiest coal that can be obtained from the ground. The two thirds or so of existing fossil fuels that cannot (should not) be extracted add up to hundreds of trillions of dollars of profits. But what do profits mean when the earth is uninhabitable? Or more to the point what do dollars mean when there is nothing to spend them on?
While the visible signs of global warming are increasing every year, world governments are obviously incapable of acting to mitigate climate change. Why? – Due to their focus on economic growth and their subservience to the fossil fuel lobby. Thus unless the general population of all countries, including NZ, express their concern by protesting and trying to stop the insanity, governments will continue not to act. It may be that to just sit on your backside vaguely contemplating the problem and not protest is crazy.
Guest post by Associate Professor Bob Lloyd. He is Director of the Energy Studies and Energy Management degrees in the Physics Department, Otago University, Dunedin.
That’s at least 2 Dunedin City Councillor’s who get the situation we’re in… Encouraging!
A highly recommended reading list – The Documents released to date by the Post Carbon Institute: