Tag Archives: ecological economics

How Economic Growth Fails

Another great piece from Gail Tverberg, particularly important when it comes to understanding the depressed commodity prices affecting the NZ economy and other export dependent nations globally:

Our economy is like a pump that works increasingly slowly over time, as diminishing returns and other adverse influences affect its operation. Eventually, it is likely to stop.

As nearly as I can tell, the way economic growth occurs (and stops taking place) is as summarized in Figure 3.

overview-of-our-predicament

Figure 3. Overview of our economic predicament

As long as (a) energy and other resources are cheap, (2) debt is readily available, and (3) “overhead” in the form of payments for government services, business overhead, and interest payments on debt are low, the pump can continue working as normal. As various parts of the pump “gum up,” the economic growth pump slows down. It is likely to eventually stop, once it becomes too difficult to repay debt with interest with the meager level of economic growth achieved.

Commodity prices are also likely to drop too low. This happens because the wages of workers drop so low that they cannot afford to buy expensive products such as cars and new homes. Growing purchases of products such as these are a big part of what keep the economic pump operating.

Our Finite World

We all know generally how today’s economy works:

Figure 1 Figure 1

Our economy is a networked system. I have illustrated it as being similar to a child’s building toy. Ever-larger structures can be built by adding more businesses and consumers, and by using resources of various kinds to produce an increasing quantity of goods and services.

Figure 2. Dome constructed using Leonardo Sticks Figure 2. Dome constructed using Leonardo Sticks

There is no overall direction to the system, so the system is said to be “self-organizing.”

The economy operates within a finite world, so at some point, a problem of diminishing returns develops. In other words, it takes more and more effort (human labor and use of resources) to produce a given quantity of oil or food, or fresh water, or other desirable products. The problem of slowing economic growth is very closely related to the question: How can the limits we are reaching be expected to play…

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Tony Seba’s ‘exponential increase’ in technology will save us – a rebuttal (of sorts)

World renown techno-utopian idealist, and singularitarian, Tony Seba was recently brought to Southland by Venture Southland and Callaghan Innovation to talk to business leaders about the current rate of change in technology and how this is a highly disruptive force to be reckoned with… I didn’t attend the rather expensive seminar, however I do keep coming across links to his talks, etc.

I’ve reviewed a couple of his talks, and I feel I need to put some stuff into writing:

Firstly, what I’m NOT saying:

  1. I’m not saying he’s wrong about the impressive pace of technological change ongoing (although I do think there must be diminishing returns to increases in technological complexity somewhere in there…)
  2. I’m not denying that the idea of being able to continue to do more, but with less, is attractive. It’s just plain and simple NOT POSSIBLE. The future we face from this point forward is doing LESS with LESS (although it can be more fulfilling and finally free up that social / leisure time that technology originally promised us) as I’ve written about here: http://bit.ly/14oMDiO
  3. Having said that, the type of disruption that Tony envisages, IF we can keep our techno-industrial civilisation going in the face of declining net energy available, and through the upcoming GFC MK2 (which again is partially attributable to declining energy profit as a root cause http://bit.ly/1Ips07m) would certainly help with sustainability in any foreseeable future.

Secondly, the rebuttal, in the form of some thoughts and estimates on the potential for renewable electricity generation to replace liquid fossil hydrocarbons as a way to move us and our stuff around (based on what he presents here: https://youtu.be/dUEBDVGXeTE and here: https://youtu.be/lKTHr4diXoc ):

Tony Seba’s thesis that solar’s costs are decreasing exponentially is unfortunate, as he misses (ignores) several key constraints on solar (taking NZ as an example):

1.) Liquid fuel for transport’s declining ROI is leading to a disastrous situation brewing in oil supply, something that has been known for a very long time, and which the current depressed price per barrel is bringing about that bit quicker: http://on.wsj.com/1et7tmb

2.) Solar and EV’s is not liquid fuel for transport, and there are no electric mine trucks, HGV’s, etc as the battery tech is not good enough. You could say well we can at least electrify personal transport, and you’d be right, but we can’t do this for heavy goods vehicles, which comprise 40%ish of NZ’s fuel consumption (See page 25: http://bit.ly/1VIF5OP), and all of the inputs that industry across the globe relies on to produce all the tech that we use the electricity to power.

3.) I question given point 1, and its concomitant deleterious effects on the economy, whether we have sufficient potential profitability to be able to make a wholesale replacement of our vehicle fleet (even only 20% of it, if you subscribe to his arguments on reducing requirements for vehicles) going forwards, never mind the huge investment in infrastructure to power them. Solar requires a lot of material inputs and the input costs will expand rapidly as other limits affect overall industrial productivity and EROI of extraction activities. These blog posts from Gail Tverberg have lots of highly illuminating points in that direction: http://bit.ly/1uEfevy http://bit.ly/1qDeFgB http://bit.ly/1kS6L2o http://bit.ly/TOXvkL http://bit.ly/11nLEOw

4.) All hydro electricity generation in NZ is only 14.5 kWh/person/day (84.2 PJ/annum 2012 figures from IEA: http://www.iea.org/Sankey/index.html#?c=New Zealand&s=Balance) and in the same year our energy consumption for transport from fossil fuel was 32.6 kWh/person/day (189.6 PJ/annum), never mind that the hydro generation capacity is mostly spoken for for other uses.

5.) Can we make up the balance with solar? Our potential for solar energy generation (using the estimation methodology here: http://withouthotair.com/c6/page_38.shtml). NZ population 2012 was 4.4M (https://www.google.co.nz/search?q=nz+population+2012) and 1 petajoule = 277,777,778 kilowatt hours so our fossil fuel liquids consumption was:
189.6 [PJ/annum] /365 = 0.5194520548 [PJ/day]
277777778 [kWh/PJ] => 144292237.558356 [kWh/day]
4433000 population => 32.55 [kWh/person/day] for Transport energy use.
We can get around 8-9 kWh/p/day PV generation based on this estimate for NZ: http://hot-topic.co.nz/wp-content/uploads/2009/11/ScaddenEnergyNZ.pdf. Add another 15% of the 84.2PJ of hydro if Tiwai Point shuts down, which equates (using the same calculation as above) to another 2.17 [kWh/person/day]
So the potential energy deficit to be met from another very low carbon emission source is around 32.55-11 which is approx 21.55 kWh/person/day… 

6.) At best solar is a fossil fuel extender, and it’s potential in terms of being a fossil fuel replacement is routinely and systemically overestimated, as most methodologies don’t account for the energy required to replace it at the end of its useful life: http://bit.ly/TOUHnN

Here’s some food for thought from a more believable source: Nate Hagens on Energy

Edit: This also from Nafeez Ahmed:

As oil prices have slumped over the last few years due to both the shale gas and Saudi oil gluts, the decline in profitability has forced oil majors to slash investments and shut down costly operations.

US industry experts now forecast that these events are setting the world up for an oil price spike, which could begin in the next six months to two years. There can be little doubt that the US government is aware of the industry’s fears.

Robert Hirsh, a former senior energy programme advisor for government contractor Science Applications International Corporation, wrote a major report on peak oil for the US Department of Energy in 2005.

He predicts a likely global oil shock by 2017, accompanied by a stock market crash, inflation, and unemployment.

He also points out that the Pentagon recognises the risk.

As oil production decreases due to the cost-cutting contraction of industry operations, along with declines from aging fields, the International Energy Agency predicts an increase in demand growth by the end of this year.

As demand rises, the question is how quickly existing oil and gas wells can increase global output in the face of this rapidly diminishing spare capacity.

The answer is not very. Over the next two years, around 200 major international oil and gas projects have been scheduled for final investment approvals. But due to the price collapse – and with it the collapse in profitability – the vast majority of them face postponement, or cancellation.

According to Tim Dodson, executive vice president for exploration at Statoil ASA, the industry is “struggling big-time to replace their oil resources and reserves”.

This is part of a wider pattern over the last decade. Oil majors like Royal Dutch Shell, British Petroleum, ConocoPhillips, ExxonMobil and Chevron have all seen their production fall year-over-year by 3.25 percent. Oil and gas extracted last year has not been replaced by new reserves.

The business model of the shale gas industry is so shaky, according to legendary US hedge-fund manager James Chanos, that when prices do rebound as demand growth hits the limits of declining supply, the oil majors will still be in trouble.

The end of oil, the next crash

With insufficient oil available amidst a price rebound, markets will be massively incentivised to flee expensive fossil fuels, empowering cheaper, alternative energy forms.

Oil majors, still facing high production costs and huge debt obligations, will have to grapple with further borrowing to kick-start costly investments in new production projects. But in the corresponding climate of a new economic recession triggered partly by oil price spikes, how likely is this?

Like Hirsh, Charles Maxwell, a senior energy analyst at Weeden & Co., forecasts a price spike in the next few years. “That’s going to bite us big time. 2019 is going to be hell.”

Five years ago, Maxwell told Forbes that “around 2015, we will hit a near-plateau of production around the world, and we will hold it for maybe four or five years. On the other side of that plateau, production will begin slowly moving down. By 2020, we should be headed in a downward direction for oil output in the world each year instead of an upward direction, as we are today”.

That prediction in 2010 appears to be transpiring today.

“And at around 2015, we will be unable to produce the incremental barrel in the global system. So a tightness of supply will begin to be felt,” Maxwell warned Forbes. “Let’s say in 2013, we may produce 1 percent more oil than we did the year before and then if we have a demand growth of 1¼ percent in 2013, we’ll be very slightly tightening the system. The difference between supply and demand is not going to be very much at first. It would not normally cause a big rise in price. On the other hand, in 2014, that tightness begins to grow and it is now a trend. By 2015 perhaps we’re only able to produce 0.50 percent more with about 1.25 percent higher demand, so that we’re 0.75 percent short.”

The next global recession, though, is likely to begin as oil prices bottom out further, potentially forcing many oil companies to virtually shut down production, facing the prospect of further write-downs and bankruptcies that could make the 2008 sub-prime mortgage crisis look a like a walk in the park.”

– See more at: http://www.middleeasteye.net/columns/iran-deal-about-staving-coming-oil-shock-1366649799#sthash.yTne8Z31.HkuJwopG.dpuf

Further Reading:

  • “Peak oil turned out to be a more complex phenomenon than theorists originally anticipated. It has not been experienced as a precise ‘moment’ or ‘event’, but rather as a dynamic interplay between various forces that have provoked some adaptive adjustments (such as demand destruction or increased investments) in incremental and multidimensional ways. There may never be a ‘shock moment’ of peak oil’s arrival; instead, peak oil may continue to play out as a gradual, unplanned transition to a new set of energy and consumption patterns that are less oil dependent, giving rise to social, economic, and ecological impacts that no one can predict with any certainty. The evolving interrelationship of geological, geopolitical, economic, cultural, and technological variables has continued to surprise analysts – both the ‘cornucopians’, who claim there is nothing to worry about, and the ‘doomsayers’, who think collapse is imminent, as well as everyone in between. No doubt there will be more twists still to come in this energy tale.But what seems clear is that the consequences of peak oil are not going away. Whether the next twist arrives in the form of a new war or financial crisis, a new technology, a bursting shale bubble, or perhaps a radical cultural shift away from fossil fuels in response to climatic instability, intellectual integrity demands that analysts continue to revise viewpoints asfurther evidence continues to arrive. This issue is too important to be governed by ideology.”
    6 page academic paper on the economics of oil: The New Economics of Oil: Alexander, S. 2014 Melbourne Sustainability Issues paper No. 2, Melbourne Sustainable Society Institute http://bit.ly/1HXWhsj
  • In a new book (March 2014), former oil geologist and government adviser on renewable energy, Dr. Jeremy Leggett, identifies five “global systemic risks directly connected to energy” which, he says, together “threaten capital markets and hence the global economy” in a way that could trigger a global crash sometime between 2015 and 2020. http://bit.ly/1HXWQmb
  • The Energy Policy paper “Global oil risks in the early 21st century”, previously referenced in my submissions to Long Term Plans earlier in the year:
    The combination of increasingly difficult-to-extract conventional oil combined with depleting super-giant and giant oil fields, some of which have been producing for 7 decades, has led the International Energy Agency (IEA) to declare in late 2010 that the peak of conventional oil production occurred in 2006 (IEA, 2010). Conventional crude oil makes up the largest share of all liquids commonly counted as “oil” and refers to reservoirs that primarily allow oil to be recovered as a free-flowing dark to light-colored liquid (Speight, 2007). The peak of conventional oil production is an important turning point for the world energy system because many difficult questions remain unanswered. For instance: how long will conventional oil production stay on its current production plateau? Can unconventional oil production make up for the decline of conventional oil? What are the consequences to the world economy when overall oil production declines, as it eventually must? What are the steps businesses and governments can take now to prepare? In this paper we pay particular attention to oil for several reasons. First, most alternative energy sources are not replacements for oil. Many of these alternatives (wind, solar, geothermal, etc.) produce electricity— not liquid fuel. Consequently the world transportation fleet is at high risk of suffering from oil price shocks and oil shortages as conventional oil production declines. Though substitute liquid fuel production, like coal-to-liquids, will increase over the next two or three decades, it is not clear that it can completely make up for the decline of oil production. Second, oil contributes the largest share to the total primary energy supply, approximately 34%. Changes to its price and availability will have worldwide impact especially because alternative sources currently contribute so little to the world energy system (IEA, 2010).Oil is particularly important because of its unique role in the global energy system and the global economy. Oil supplies over 90% of the energy for world transportation (Sorrell et al., 2009). Its energy density and portability have allowed many other systems, from mineral extraction to deep-sea fishing (two sectors particularly dependent on diesel fuel but sectors by no means unique in their dependence on oil), to operate on a global scale. Oil is also the lynchpin of the remainder of the energy system. Without it, mining coal and uranium, drilling for natural gas and even manufacturing and distributing alternative energy systems like solar panels would be significantly more difficult and expensive. Thus, oil could be considered an “enabling” resource.

    Oil enables us to obtain all the other resources required to run our modern civilization.

    Peak oil is the result of a complex set of forces that includes geology, reservoir physics, economics, government policies and politics.”

    http://bit.ly/1IIyHCv

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Submission to Venture Southland’s ‘Draft Business Plan’ 2015.

I made a submission again this year on the ‘big picture’ issues relating to the draft Venture Southland business plan. The full submission is available below, and under this para, my presentation to the committee which tries to summarise the main theme, which in itself can be summarised as follows: A probable future is one of much lower economic activity, particularly in export industries and tourism, and this will come about as a direct result of declining ‘net energy’ available to us as a result of global trends that have a root in bio-physical limits that we’re hitting.

The future we face is ‘not the future we ordered’…

Spoken Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 08/06/15

Submission to VS Draft Business Plan 2015 consultation:

Nathan Surendran: 22/05/15

I would like to speak to my submission.

I strongly support the CEO’s statement’s as follows:

International influences such as global oils prices, US dairy exports, international competition for our exports, international debt in Europe, and the growing economies in South East Asia will affect our economy. Continual awareness is critical to ensure that we capture all the opportunities, and proactively manage challenges, and any threats that are ahead of us.”

Our region, our resources and our environment offer the “X” factor many people are seeking domestically and internationally. This is our point of difference – this is our future – and together with our stakeholders, business, and the Southland people we aim to achieve and facilitate projects and initiatives that will enhance the prosperity and quality of life of Southland communities.”

Questions regarding these statements:

  1. What specific work is Venture undertaking to maintain ‘continual awareness’ (other than my submissions regarding limits), particularly of the threats to the growth agenda?
  2. In line with the ‘X factor’ of the region, what specific planning is being done to ensure that future migrants to the region have good quality, resource and energy efficient housing, resilient infrastructure, etc? As I stated at the time of its release, I believe that the thinking behind the “Southland Region Labour Market Assessment” is flawed, being modelled using assumptions regarding the future being a continuation of ‘business as usual’ that are not aligned with bio-physical reality. My full thoughts on this are appended as Appendix 1 and available online here: http://bit.ly/1DmgwgS
  3. Did you receive the follow up to my oral presentation last year? I sent for circulation following comments made in the discussion following the presentation a blog post that I created outlining that the ‘Limits to Growth’ modelling I referenced in my submission which was challenged by Mayor Shadbolt is in fact not ‘disproved’. Specifically, the ‘world3’ model predicting overshoot and collapse is in fact correlating well with real world data accourding to updated research in recent years. The full post is available as Appendix 2 and is also online here: http://bit.ly/1oWDPVY. I never received any acknowledgement that this information had been circulated.

Suggested changes to the wording of the Priority Projects that VS must report upon, including reasoning for the changes suggested:

  • Increase in regional Gross Domestic Product. Remove this priority.I recently ‘discovered’ via the Southland Times, the ‘Regional Development Strategy’ workstream from the ‘Mayoral Forum’. In correspondance with the chairman Graham Cooney, the terms of reference for this particular strategy appear to be focused wholly towards maintaining ‘growth in GDP‘. I continue to disagree with this approach for the reasons I stated in this and my other recent submissions on an economic, energy and environmental basis. These physical constraints will ‘overrule’ your attempts to continue growth, and will untimately waste time and effort that would be far better directed towards adaption to, and mitigation of future challenges.

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Submission to Environment Southland’s Long Term Plan consultation

Submission to ES LTP consultation: Nathan Surendran: 20/05/15

I would like to speak to my submission.

In summary:

Ensure that a probable rather than ‘hoped for’ future is the basis for planning towards the long term for Southland. Come up with a plan that actually addresses the long term changes indicated by the specific ‘Big 3’ risks posed by the ongoing global financial crisis, ‘peak conventional oil’, and climate change.

General Points:

When thinking long term, it is the responsibility of the council to be proactive in understanding the ‘risk environment’ that will shape the future. The specific decisions I seek from the council with respect to the consultation document are as follows:

  1. Ensure that the Long Term Plan complies with the council’s legal obligation under the RMA Section 5 which contains the requirement to consider future risks (as I’ve outlined later in my submission) regarding the “reasonably foreseeable needs of future generations”.

  2. Ensure that the evidence I present is properly accounted for in a risk analysis that should form the basis of the Long Term Plan 2015-2025. I suggest using a risk management methodology, such as outlined in the recently adopted Southland District Council ‘Risk Management Policy’ (Accepted: Item 7.1, Record No: R/14/11/17732 http://bit.ly/1EtYZGv and Policy from Page 5 onwards: http://bit.ly/1EtZeBq), to demonstrate how the consequent impact (high) from these certain events (high) is addressed in the draft Land Transport Plan.

  3. Ensure that the risks identified and accepted by council in documents they have published are properly accounted for in the risk analysis that must form the basis of the Land Transport Plan [Refer to appendix to this submission for excerpt from “Pressures and Risks facing land transport in Otago – 2011” as referenced on page 127 of the “Draft Otago Southland Regional Land Transport Plans 2015-2021”: Source: http://bit.ly/1EtWPH1 ].

  4. Address how, in light of the evident I present, your budgets meet the requirements of the LGA 2002 (amendment 3):

    1. section 14(1)(g) which states: “(g)a local authority should ensure prudent stewardship and the efficient and effective use of its resources in the interests of its district or region, including by planning effectively for the future management of its assets; and”

    2. section 101B Infrastructure strategy which states: “(1)A local authority must, as part of its long-term plan, prepare and adopt an infrastructure strategy for a period of at least 30 consecutive financial years.

      (2)The purpose of the infrastructure strategy is to—

      (a)identify significant infrastructure issues for the local authority over the period covered by the strategy; and

      (b)identify the principal options for managing those issues and the implications of those options.

      (3)The infrastructure strategy must outline how the local authority intends to manage its infrastructure assets, taking into account the need to—

      (a)renew or replace existing assets; and

      (b)respond to growth or decline in the demand for services reliant on those assets; and

      (c)allow for planned increases or decreases in levels of service provided through those assets; and

      (d)maintain or improve public health and environmental outcomes or mitigate adverse effects on them; and

      (e)provide for the resilience of infrastructure assets by identifying and managing risks relating to natural hazards and by making appropriate financial provision for those risks.

Defining the probable future as a basis for effective policy making. A summary of the challenges we face:

We’re in breach of many of the boundaries surrounding the ‘doughnut’ [Humanity’s 21st century challenge is to ensure that every person has the resources they need to meet their human rights, while collectively we live within the ecological means of this one planet. The ‘doughnut’ of planetary and social boundaries is a playfully serious approach to framing that challenge. http://www.kateraworth.com/doughnut/]:

doughnut_full_white400x400

I’m a member of the ‘Wise Response’ Incorporated Society, which is advocating for a non-partisan ‘broad spectrum’ risk assessment with central government, to try and gain insight into the global risk environment within which the New Zealand economy (and regional / territorial council budgets) exist. We are looking for evidence based answers to the question: As demand for growth exceeds earth’s physical limits, causing unprecedented risks, what knowledge and changes do we need to secure New Zealand’s future wellbeing?

Rather than offer a long narrative, I am going to summarise the major risks that we face in a few sentences, and point you to a number of more comprehensive resources providing references to the peer reviewed science that is behind the assertions that I’m going to make. I have chosen to focus on my own ‘Big 3’ – three major risks to simplify my argument, however, the full risk spectrum needed is much broader than this (refer to the Wise Response appeal for more detail: http://bit.ly/wiseresponse).

  1. Ongoing economic crisis:

    1. This ongoing crisis is probably the factor with the highest near term risk (0-2 years).

    2. What happened in 2008 is that “Extend and Pretend” became the consensus government strategy, based on reliance in economic theories equating market logic with natural law. Psychology was seen as not only capable of gaining infinite extensions, but susceptible to manipulation by mass media. Keynesians assured governments that you can buy your way out of recession using flawed models such as DGSE with a proven inability to give predictions aligned with reality. Central government data is used worldwide to present a rosy picture of the economic performance of an economy, as national politicians of all ilks try to show they are in control of a ‘recovery’. The reality of a weakening long term outlook for commodities prices has significant implications for our export driven economy (refer to my comments on the ‘peak conventional oil’ section below).

    3. public discussions of economic matters are full of confusion, much of which comes from a failure to distinguish between money and the real things money stands for. Our emphasis is placed on the physical economy, the real things to which the earths limits apply, not the money economy, which is a social invention not constrained by the physical laws of the planet.” [Institute and Faculty of Actuaries, UK: Resource constraints: sharing a finite world. The evidence and scenarios for the future Author: Aled Jones et al Publication date: 15 January 2013: Source: http://bit.ly/1Hr4epA]

    4. “Most analysts think that the economy has stubbed its toe and has a headache, rather than recognizing that it has a serious underlying illness.

      …Models that seemed to work before are no longer appropriate.

      We take models like the familiar supply and demand model of economists and assume that they represent everlasting truths. Unfortunately, as we get close to limits, things change. Both wage levels and debt levels have an impact on demand; the quantity goods available is also affected by diminishing returns. The model that worked in the past may be totally inappropriate now.

      Even a complex model like the climate change model being used by the IPCC is likely to be affected by financial limits. If near-term financial limits are to be expected, IPCC’s estimate of future carbon from fuels is likely to be too high. At a minimum, the findings of the IPCC need to be framed differently: climate change may be one of a number of problems facing those people who manage to survive a financial crash.”

      [Actuary Gail Tverberg’s analysis: “Why We Have an Oversupply of Almost Everything (Oil, labor, capital, etc.)” http://bit.ly/1Hrowzh]

    5. An inability at the policy level to recognise this structural shift as we hit global bio-physical limits, and prioritise a shift away from a focus on GDP/GNP growth as the primary measure of economic health, is severely hampering efforts to prioritise a long term sustainabiity / resilience focus over shorter term profitability concerns.

    6. What is not commonly understood is why this shift in focus is hard. There are a number of major commonly misunderstood reasons including:

      1. Humans ‘discount’ the future. “The corporate world plots to dynamite democracy for the sake of a few more years (months, weeks?) of fictional profitability (externalising all future costs, of course)…” http://bit.ly/1xfpycu

      2. We have many unaccounted for ‘external costs’ in environmental terms in our current accounting practices. In a recent paper investigating the extent of the issue, a report by environmental consultancy Trucost on behalf of The Economics of Ecosystems and Biodiversity (TEEB) program sponsored by United Nations Environmental Program concluded that:

        Of the top 20 region-sectors ranked by environmental impacts, none would be profitable if environmental costs were fully integrated. Ponder that for a moment: None of the world’s top industrial sectors would be profitable if they were paying their full freight. Zero.

        That amounts to an global industrial system built on sleight of hand. As Paul Hawken likes to put it, we are stealing the future, selling it in the present, and calling it GDP.” [http://bit.ly/1AkwL0a]

      3. 97% of money in the modern economy is created by private banking institutions as interest bearing debt. This is as stated by the Bank of England (http://bit.ly/1rfcumz), the Federal Reserve (http://bit.ly/1A2XZ5u), the International Monetary Fund (http://bit.ly/1KwEnku), and the Reserve Bank of NZ (http://bit.ly/1A2YRay and http://bit.ly/1A2Z1yB)

        As the debt must be repaid with interest, this creates an imperative for ever more lending, which drives the need for ‘growth’ in industrial output (real GDP) in order to service the debt. This growth in debt over time is exponential, leading to multiple claims on underlying real weath, as financial instruments are ‘rehypothecated’ against a pool of real assets that are only slowly increasing in quantity, even as they are depreciating in value over time. [http://bit.ly/1LQslDc]

    7. I do not think that the currently popular DSGE models pass the smell test. They take it for granted that the whole economy can be thought about as if it were a single, consistent person or dynasty carrying out a rationally designed, long-term plan, occasionally disturbed by unexpected shocks, but adapting to them in a rational, consistent way… The protagonists of this idea make a claim to respectability by asserting that it is founded on what we know about microeconomic behavior, but I think that this claim is generally phony. The advocates no doubt believe what they say, but they seem to have stopped sniffing or to have lost their sense of smell altogether.’” [Robert Solow, Professor Emeritus MIT submission, to the “House Committee on Science and Technology” – “Subcommittee on Investigations and Oversight” statement to Congress, July 2010 http://bit.ly/1HrmIpQ]

    8. economics as a discipline is just not placed to adapt to the real world in time to save it: “Outdated and economically irrelevant concepts still fill the pages of introductory textbooks. From there they fill the minds of each new generation of students, who pass on these ideas to the next generation of students, and across society more broadly. Breaking the feed- backs in this system is necessary to transform the discipline.””

      http://bit.ly/1vZ5wjh

  1. Peak conventional oil:

    1. This simmering crisis is probably the factor with the highest medium term risk (0-20 years).

    2. Global oil risks in the early 21st century. Energy Policy, Vol. 39, Issue 12” makes the following relevant statements:

    1. The combination of increasingly difficult-to-extract conventional oil combined with depleting super-giant and giant oil fields, some of which have been producing for 7 decades, has led the International Energy Agency (IEA) to declare in late 2010 that the peak of conventional oil production occurred in 2006 (IEA, 2010). Conventional crude oil makes up the largest share of all liquids commonly counted as “oil” and refers to reservoirs that primarily allow oil to be recovered as a free-flowing dark to light-colored liquid (Speight, 2007). The peak of conventional oil production is an important turning point for the world energy system because many difficult questions remain unanswered. For instance: how long will conventional oil production stay on its current production plateau? Can unconventional oil production make up for the decline of conventional oil? What are the consequences to the world economy when overall oil production declines, as it eventually must? What are the steps businesses and governments can take now to prepare? In this paper we pay particular attention to oil for several reasons. First, most alternative energy sources are not replacements for oil. Many of these alternatives (wind, solar, geothermal, etc.) produce electricity— not liquid fuel. Consequently the world transportation fleet is at high risk of suffering from oil price shocks and oil shortages as conventional oil production declines. Though substitute liquid fuel production, like coal-to-liquids, will increase over the next two or three decades, it is not clear that it can completely make up for the decline of oil production. Second, oil contributes the largest share to the total primary energy supply, approximately 34%. Changes to its price and availability will have worldwide impact especially because alternative sources currently contribute so little to the world energy system (IEA, 2010).”

    2. Oil is particularly important because of its unique role in the global energy system and the global economy. Oil supplies over 90% of the energy for world transportation (Sorrell et al., 2009). Its energy density and portability have allowed many other systems, from mineral extraction to deep-sea fishing (two sectors particularly dependent on diesel fuel but sectors by no means unique in their dependence on oil), to operate on a global scale. Oil is also the lynchpin of the remainder of the energy system. Without it, mining coal and uranium, drilling for natural gas and even manufacturing and distributing alternative energy systems like solar panels would be significantly more difficult and expensive. Thus, oil could be considered an “enabling” resource.

      Oil enables us to obtain all the other resources required to run our modern civilization.”

    3. Peak oil is the result of a complex set of forces that includes geology, reservoir physics, economics, government policies and politics.

      There are a number of physical depletion mechanisms that affect oil production (Satter et al., 2008). Depletion-driven decline occurs during the primary recovery phase when decreasing reservoir pressure leads to reduced flow rates. Investment in water injection, the secondary recovery phase, can maintain or increase pressure but eventually increasingly more water and less oil is recovered over time (i.e. increasing water cut). Additional equipment and technology can be used to enhance oil recovery in the tertiary recovery phase but it comes at a higher price in terms of both invested capital and energy to maintain production.

      The situation is similar to squeezing water out of a soaked sponge. It is easy at first but increasingly more effort is required for diminishing returns. At some point, it is no longer worth squeezing either the sponge or the oil basin and production is abandoned.”

    4. Another way to explain peaking oil production is in terms of predator-prey behavior, as Bardi and Lavacchi (2009) have done. Their idea is that, initially, the extraction of “easy oil” leads to increasing profit and investments in further extraction capacity. Gradually the easiest (and typically the largest) resources are depleted. Extraction costs in both energy and monetary terms rise as production moves to lower quality deposits. Eventually, investments cannot keep pace with these rising costs, declining production from mature fields cannot be overcome and total production begins to fall.

      Hubbert (1982) wrote: There is a different and more fundamental cost that is independent of the monetary price. That is the energy cost of exploration and production. So long as oil is used as a source of energy, when the energy cost of recovering a barrel of oil becomes greater than the energy content of the oil, production will cease no matter what the monetary price may be.

      …Attempts to disprove peak oil that focus solely on the amount of oil available in all its forms demonstrate a fundamental, and unfortunately common, confusion between how much oil remains versus how quickly it can be produced.”

    5. Friedrichs (2010) also cautions that after peak oil countries have several sociological trajectories available to them: they can follow predatory militarism like Japan before WWII, totalitarian retrenchment like North Korea, or, ideally, socioeconomic adaptation like Cuba after the fall of the Soviet Union. Given the recent century of conflict and the extensive weapon stocks and militaries held by modern nations (especially the United States, which spends on its military almost as much as the remaining countries of the world combined (SIPRI, 2011), there is simply no guarantee that the relatively peaceful period currently experienced by developed nations that is conducive to rapid energy source transitions will continue much longer.

      A further challenge is that, strictly speaking, for the last 150 years we have not transitioned from previous fuel sources to new ones — we have been adding them to the total supply. We are currently using all significant sources (coal, oil, gas and uranium) at high rates. Thus, it’s common but incorrect to say that we moved from coal to oil. In fact, we are using more coal now than we ever have (IEA, 2010). We never left the coal age. The challenge of moving to alternative energy sources while a particularly important source is declining, in this case oil, should not be underestimated.”

    6. Other mitigation efforts like increased solar, wind and geothermal production may not be prioritized since they do not help the situation — they produce electricity and the world’s 800 million transportation, food production (i.e. tractors and harvesters) and distribution vehicles require liquid fuel.

      A contracting economy presents governments with a host of problems that are not easy to resolve. Promises made to the citizenry, some in the form of social welfare programs, pensions and public union contracts, will be impossible to keep as the energy base of the economy declines. Downward wage pressure and reduced business activity will lower tax revenue. With lower revenues and greater demands in the form of social welfare support by an increasingly poorer citizenry, it is difficult to see how the accumulated (and growing) government debt can be paid back without rampant inflation. Though it is still unclear whether the government response will be hyperinflation (to minimize the debts) or extensive and massive debt defaults (deflation) — or both — it is not likely that business as usual will continue as oil production declines.

      Some governments may also have to contend with food and fuel riots as they did in 2007 and 2008. Other forms of crowd behavior, namely hoarding of fuel and food, may exacerbate the situation and governments should prepare accordingly.”

    7. A significant benefit of cheap oil was that distance was relatively inexpensive. It is possible now to manufacture goods using far-flung operations. However, as oil declines, distance will, once again, become increasingly expensive, and oil price may begin to act as a trade barrier for many products. Another risk as oil production declines is the possibility of oil supply disruptions. If this should occur, much modern manufacturing may be impacted. Just-in-time manufacturing systems in which warehoused parts are minimized through the frequent replenishment of parts by parts suppliers — sometimes with multiple deliveries a day— have little tolerance for delivery delays.”

      1. Note: this part of the paper’s argument is questionable. My current reading of the situation is that the current low oil price is likely to lead to declining supply and possibly shortages in the near term [], and contribute to depressed commodity prices [Source: http://bit.ly/1Hrowzh]

    8. [Fantazzini, Dean; Höök, Mikael; Angelantoni, André. 2011. Global oil risks in the early 21st century. Energy Policy, Vol. 39, Issue 12: 7865-7873”: Source: http://bit.ly/1IIyHCv ]

  1. In “The Paradox of Oil: The Cheaper it is, the More it Costs”, the authors state that:

    1. In this article I outline and analyse various explanations for why the price of oil has fallen so dramatically in recent months and present some considered but tentative hypotheses about what we can expect from the oil markets in coming years. I also hope to challenge the naive conclusion – drawn all-too-hastily in the mainstream media – that the drop in price somehow debunks the analytical framework of the ‘peak oil’ school (see, e.g., Sakya, 2015). Although it may sound counter-intuitive, cheap oil is actually a complicated function or symptom of peak oil dynamics, and far from solving oil problems, the drop in price is merely creating new problems of equal or greater weight, in ways that will be explained. Those who claim that the effects of cheap oil are ‘clearly positive’ are at best being simplistic and are at worst just plain wrong (see, e.g., The Economist, 2014a).

      The main conclusion defended below is that so-called ‘cheap oil’ (at ~$50 per barrel) is just as problematic as expensive oil (at $100+ per barrel), but for very different social, political, economic, and environmental reasons. Just as expensive oil suffocates industrial economies that are dependent on cheap energy inputs to function, cheap oil merely propagates and further entrenches the existing order of global capitalism that is in the process of growing itself to death (Turner, 2014). The fall in prices also undermines the oil industry by scaring off capital investment in an age when the costs of establishing and drilling new fields is relentlessly on the rise (Kopits, 2014), due to declining energy returns on investment (Murphy, 2014). Cheap oil therefore is likely to retard mid-to-long term production, setting the scene for a foreseeable mid-range supply crunch that will soon enough push prices back up (see Kent and Faucon, 2015; Mushalik, 2015a).

      Accordingly, we should not be fooled by this current period of depressed prices. As the world continues to replace the easy ‘conventional’ oil with ever-more marginal ‘unconventional’ oils (e.g. deepwater, shale oil, tar sands, etc.) and alternative ‘biofuels’, the laws of physics will forever be putting upward pressure on production costs. So despite currently depressed prices, it remains true to say that we live in an age of expensive oil, a position that might seem contradictory if interpreted superficially but which is actually accurate when interpreted in geological context: the low-hanging fruit is gone. The only way oil will remain cheap over the long term is if our economies are doing so poorly from a conventional growth perspective that we cannot afford for oil to be any more expensive, making oil demand weak and keeping prices deflated (see Meijer, 2014a).

      Looking at the current situation from a different angle, cheap oil also makes renewable energy alternatives less ‘cost competitive’, which will have disastrous ramifications on climate change mitigation by dis-incentivising the necessary transition beyond fossil fuels at a critical time. This ecological issue is typically overlooked by those oil analysts who are blinded by the apparent, short-term economic benefits of cheaper oil. Herein lies the paradox of oil: the cheaper it is (economically), the more it costs (environmentally).

    2. Could it be that 2015-17 will be the oil ‘glut’ that marks the peak in ‘liquid fuels’? If cheap oil is in the process of jeopardizing future production, as it seems to be doing, and/or if the ‘shale boom’ peters out in the next year or two (Energy Watch Group, 2013; Heinberg, 2013; Hughes, 2013; Hughes, 2014; Mushalik, 2014) this near-term peak could indeed eventuate. A new study conducted by Goldman Sachs (see Adams, 2014) concludes that the lower oil prices means that $1 trillion of oil investment funds are now at risk of being withdrawn from projects, and this would reduce production by 7.5 million barrels of oil per day over the coming decade. Since that study was undertaken prices have fallen further. Even before the price slump, in fact, the biggest oil companies were shelving expansion plans and shredding operations with profit margins too tight to justify (Gilbert and Scheck, 2014; Tverberg, 2014). Maintaining current production looks like it is going to be a Herculean task.

      Nevertheless, the foreseeable consequence of a production and investment drop will be a tightening of global oil supply, thus increasing the price of oil, especially if demand increases at the same time. This upward pressure, of course, could potentially bring some of the high-cost producers back online, although investors will be more cautious and funds will be harder to come by, for fear of another price collapse. Furthermore, if the economy cannot accommodate a return to expensive oil, we may see a subsequent price slump, yet again, and a further production drop for the reasons just outlined. This is a volatility that we can expect to see in coming years and decades. It is too simplistic to suggest that lower prices mean that oil troubles are over. They are merely challenging oil-dependent economies in new ways, primarily by threatening to render huge amounts of existing production ‘uneconomic’. At the World Economic Forum in 2015, the chief economist of the International Energy Agency, Fatih Birol (as quoted in Mushalik, 2015c), described the oil situation as follows:

      In 2015 we expect oil and gas upstream investments to decline $100 billion or 15%. And the big chunk of it will come from the high cost areas. And this will have implications, not perhaps immediately but for 2016-17. And if this comes together with a stronger demand this will have strong implications for the price and the markets.

    3. What we do know is that the EROI of oil is in terminal decline, and it is this geological reality which means that there will forever be upward pressure on the price of oil, and that is forever going to put pressure on oil-dependent, growth-orientated economies. As Murphy and Hall argue: ‘increasing the oil supply to support economic growth will require high oil prices that will undermine that economic growth’ (Murphy and Hall, 2011a: 52). This is the world we now live in.

      In the introduction to this article I stated that there is no ‘optimal’ price for oil. It should now be clearer what I meant. In an age of increasing capital expenditure on new oil fields, due to declining EROI, oil needs to be sufficiently expensive for oil supply to keep up with demand. But when oil is too expensive, economies that rely on cheap energy inputs cannot function and demand dries up, reducing the price of oil. Some analysts argue that there is a ‘narrow ledge’ (Nelder and Macdonald, 2011) where the price of oil is high enough to procure the necessary investments and production but not so high as to inhibit so-called ‘healthy growth’ of the economy. That may have been the case in recent history, but my suspicion is that this ‘narrow ledge’ has itself now crumbled away. There is no longer an ‘optimal price’ that falls within such a ledge. Oil is now either too cheap to procure ongoing investments and production or too expensive for oil-dependent economies to function well (perhaps even both too cheap to meet demand and too expensive for growth). When these issues are placed in the context of climate change and the need to transition beyond fossil fuels, it becomes clear that there is no such thing as cheap oil.

      In short, industrial civilisation now finds itself between a rock and a hard place; or, to change the metaphor, we now find ourselves in ‘checkmate’, with nowhere to move. Our only option is to start playing a different game – a game ‘beyond oil’ – a choice we should have made many years, if not decades, ago. Unfortunately, building a post-petroleum civilisation (Trainer, 2010; Alexander, 2012) would require a bravery and boldness that we have hitherto lacked. Can we yet muster the courage?

      [http://bit.ly/17WtuXs]

  2. New Zealand is in many ways exceptional when considering Peak Oil. It has its own oil and gas supplies, which at the time of writing are producing enough liquid fuel to support around 70-75% of our current needs (although we export it all and import the same amount of lower quality crude for national petrol and diesel needs). However, our current proven reserves are subject to the same eventual declines that we’re seeing globally. Recent efforts to find further productive wells in risky deep sea locations are so far proving fruitless. Reliance on the same strategy as in the USA – massive expansion in fracking activities – is both a short term strategy only, and also dependent on huge capital expenditure which has to be debt financed.

  1. Climate change:

    1. This crisis is probably the factor with the highest long term risk (0-200 years).

    2. All evidence indicates that the causes of the surface warming slowdown are temporary, that the Earth is still accumulating heat at an exceptionally rapid rate, and that surface warming will soon accelerate. Although they don’t yet capture short-term variability accurately, we have no reason to doubt climate models’ long-term global warming projections, which are dominated by the growing global energy imbalance caused by the increasing greenhouse effect.

      Arguments against the need to take immediate action to curb global warming are unsound, both scientifically and from a risk management perspective. There’s always a chance that future climate change won’t be as bad as experts currently think, but there’s also a chance it will be worse than expected.

      If we fail to minimize the risks associated with future climate change impacts, especially given the scientifically flimsy arguments against taking action, future generations won’t praise us for our rosy optimism.””

      Source: http://bit.ly/1c1V7jK

    3. Increasing extreme weather events, a warming ocean, and increase in sea level rise has happened with a .85C rise in temperature. The atmosphere now has a concentration of over 400 ppm CO2. If you take into account other greenhouse gasses such as methane you have a total concentration of 480 ppm. The last time that happened we had dinosaurs, and we had the Permian extinction.

      There is a 20 – 40 lag time between releasing greenhouse gasses and when we feel the effects with an increase of temperature. What we are experiencing now, is not what we are doing now, but what we did 20-40 years ago. That means that with 400 ppm of CO2 we already have further warming factored in, irrespective of what we do if ever the world’s leaders DID decide to do something.

    4. Climate change is has been described as “the greatest market failure in human history” [Lord Nicolas Stern]. The failure to curb emissions of emissions trading schemes globally shows the folly of trying to fix it with a market solution.

    5. The Infometrics Limited report “A General Equilibrium Analysis of Options for New Zealand’s post-2020 Climate Change Contribution for Ministry for the Environment – 13 April 2015” states: “Uncertainty should not be a reason for doing nothing. Instead policy should be cognisant of the risks (favourable and unfavourable) and seek to manage those risks.” http://bit.ly/1HrlGKn

    6. A legal basis for challenging governments on inaction on this existential threat to our species and all life on earth has recently been established by a panel of eminent international judges and legal experts from countries including India, Brazil, the US and China released the Oslo Principles, which hold that governments have an obligation to avert dangerous global warming. The preamble states that:

      1. Climate change threatens the well-being of the Earth. The threats are grave and imminent. Indeed, climate change has already begun to harm human communities and the environment. As a group of legal experts concerned about global climate change and its disastrous effects on the planet and on life, we have come together to identify and articulate a set of Principles that comprise the essential obligations States and enterprises have to avert the critical level of global warming.

      2. These Principles, seeking to overcome the generally abstract nature of previous efforts to define the scope of legal obligations relevant to climate change, express both

        1) the current obligations that all States and enterprises have to defend and protect the Earth’s climate and, thus, its biosphere; and

        2) basic means of meeting those obligations.

      3. Fulfilling these obligations is necessary and urgent if we are to avoid an unprecedented catastrophe. The obligations set out here derive from broad fundamental principles and a wide range of well-established law.

      4. The biosphere, all forms of life within it and the ecological processes that maintain all living organisms are part of the common heritage of humanity. Human beings, because of their unique nature and capacities, have an essential duty, as guardians and trustees of the Earth, to preserve, protect and sustain the biosphere and the full diversity of life within it.

      5. Avoiding severe global catastrophe is a moral and legal imperative. To the extent that human activity endangers the biosphere, particularly through the effects of human activity on the global climate, all States and enterprises have an immediate moral and legal duty to prevent the deleterious effects of climate change. While all people, individually and through all the varieties of associations that they form, share the moral duty to avert climate change, the primary legal responsibility rests with States and enterprises.”

        [http://bit.ly/1Aky7rK]

    7. I broadly support the conclusions from Generation Zero’s ‘Fix Our Future’ campaign that:

      1. Acting on climate change is an investment in our future.

      2. New Zealand needs a target of zero carbon dioxide emissions.

      3. Targets need to be backed up with a credible plan.

      4. We need a climate change law to keep government on track.

      5. We need political parties to work together.

      6. We can’t wait.

      [http://bit.ly/1AkxTke]

Please refer also to my presentation to the Draft Venture Southland Business Plan 2014 [] and to the draft Otago/Southland Regional Land Transport Plan 2015 [].

Summary of implications for infrastructure, ‘business as usual’, and our communities:

Financial risks: In NZ as in most developed nations, we are heavily indebted to the global banking cartels, worsened by recent central government decisions to borrow from overseas rather than engage in QE as other major economies have. The effect of a worsening export climate with further depression in commodity prices forecast, combined with a strong NZ dollar, spells big trouble for our exporters.

Energy risks: In NZ, we are geographically dispersed, and heavily dependent on oil supply in our economy, particularly for transport and fertilisation. Furthermore, we produce none of the electronics, etc that will be unavailable if disruption in globalised supply chains occurs. Risk of long term disruption from fuel shortages is growing yearly as our energy budget, or the ‘net energy available’ to us declines.

Climate Risks: IN NZ we will fare better than many other nations with climate change, however we will experience milder versions of the castastrophic droughts, storms and flooding, etc, as is already apparent. Remember. This is only a 0.85 deg C rise in global average temperature causing the current levels of disruption.

How do we address these risks?

Firstly, we need to know as a nation what they are, and their relative importance. The Wise Response Appeal, here in New Zealand http://bit.ly/wiseresponse, is calling for a non-partisan appraisal of the global risk environment we’re operating in, and asks the question: “As demand for growth exceeds earth’s physical limits, causing unprecedented risks, what knowledge and changes do we need to secure New Zealand’s future wellbeing?”

I think that’s a really good starting point, and will hopefully point central government, and in time, local government, in the right direction if it is allowed to inform policy decisions.

However, in the meantime, and because we may not have that much time, I feel it’s imperative for local government, particularly the likes of our regional economic development body to consider putting some money into heading in the right direction, aside from central government directives. That direction acknowledges that; the oil won’t be with us forever, that it will be very difficult to ‘adapt’ at the point of crisis, and that ‘degrowth’ in economic activity is a reality we’re facing far sooner than the mainstream media will admit (with some notable exceptions: http://bit.ly/1pKHXZx http://bit.ly/1zhiyNW).

In Southland, we have some of the most productive farmland in New Zealand, and it’s possible that given our low population density and remoteness from nuclear facilities (try managing the waste at those locations successfully, without the high energy budget our species is currently squandering…), that we have the potential to be a place where humans can continue to thrive. More than that, many people going forwards are likely to recognise these fundamental strengths, and strong inward migration can be expected (a direct contrast to the flatlining immigration projected in the “Southland Region Labour Market Assessment” recently commissioned and published by Venture Southland.

I’ve already posted some ideas regarding how we might enable this under the ‘how’ category http://bit.ly/1lzmhmD on my blog, and will continue to do so. In the meantime, I’d like to add that it would make sense for Venture Southland and the Regional / District Councils to consider the following observation when deciding how much resource to throw at preparation for this probable future:

3. A love/hate relationship with risk. It’s a paradoxical idea, but one way to build resilience, or antifragility, is to keep the vast majority of the business as safe as possible, but then take big risks – ones that may pay off 10-fold or more – with a smaller part of the business.

Think of the famous idea from Clayton Christensen of trying to disrupt or cannibalize your own business before someone else does. Imagine setting up a skunk works to identify major risks to the business stemming from resource constraints or climate change – and then lean into those risks and come up with products and services that avoid them and challenge the core business (for example, a car company investing in car sharing programs which consumers use to save money, but also reduce material and energy use dramatically).”

[Source: http://bit.ly/1qOsSbF]

We already have some independent economic analysis supporting this general direction in the form of the BERL report from 2012: http://bit.ly/1qpuVVU http://bit.ly/1qpwP8O and Venture Southland apparently continues to explore these possibilities: http://bit.ly/1qpv5N4, however, the content of the major development initiatives as outlined in the annual report http://bit.ly/1qpvsHd is mostly lacking in this type of thinking, despite my submission to the draft business plan suggesting some potential avenues to explore http://bit.ly/1sTdmeB.

A worthwhile response would move us in the direction of a society as summarised in The Simpler Way’: a vision of how the future could be, if we choose to move in that direction:

We cannot achieve a sustainable and just world order unless we change to:

  • Simpler lifestyles, much less production and consumption, much less concern with luxury, affluence, possessions and wealth.
  • Small, highly self-sufficient local economies, largely independent of the global economy.
  • More cooperative and participatory ways, enabling people in small communities to take control of their own development.
  • A new economy, one not driven by profit or market forces, and a zero-growth or steady-state overall economy, which produces much less than the present economy.
  • Some very different values, especially cooperation not competition, and frugality and self-sufficiency not acquisitiveness and consuming.

The Simpler Way is about ensuring a very high quality of life for all without anywhere near as much production, consumption, exporting, investment, resource use, environmental damage, work etc. as ther e is now. There are many rich alternative sources of satisfaction other than material acquisition and consuming. Consider having much time for arts and crafts and personal growth, living in a rich and supportive community, having to go to work for money only two days a week, living in a diverse and productive leisure-rich landscape, having socially worthwhile and enjoyable work with no fear of unemployment…and knowing you are not contributing to global problems. There is no need to sacrifice modern technology to achieve these benefits.

[http://bit.ly/1Aegudu]

Response on the specifics of ES’s ‘Big 3’:

All of the comments below should be read in the context of the risk environment I outline above.

1 Water quality and quantity issues

I generally support efforts to sustain and improve water quality. I would sound a word of caution were any plans for large expansion of oil ‘fracking’ or other mineral mining activities to be proposed (such as Longwoods). These activities have well known and reported detrimental effects on water quality and I can provide an extensive list of these if needed.

2 Managing air quality

I have already submitted extensively on Air Quality Issues and refer to my previous submissions, repeated as Appendix 2 to this submission.

3 An increased focus on biodiversity

Biodiversity is important to provide resilience to ecosystems in light of probable climate impacts. I would question whether current thinking is sufficient to provide a high biodiversity for the future, in light of the probability of the probable average temperature changes.

Appendix 1: “Pressures and Risks facing land transport in Otago – 2011”

as referenced on page 127 of the “Draft Otago Southland Regional Land Transport Plans 2015-2021”: [Source http://bit.ly/1EtWPH1]

Section 3.7 of the report states:

3.7 Financial pressures on the transport network

Rising rate levels for roading, and declining public funding for transport outside large urban areas, coupled with ageing infrastructure (especially bridges) and an expanding network, all place financial pressure on Otago’s transport network. Furthermore, while exports from Otago are primary produce, only 8.3 % of the population are employed in agriculture, fishing and farming, which limits the amount of rates funding that rural areas are able to provide for rural roads.

Subdivision is the primary reason why the network is expanding. Unrealised or partially

realised subdivision potential around the fringes of settlements threatens the ability of the public sector to maintain infrastructure without a decline in overall level of service to some communities.

Inadequate depreciation reserves for funding renewal and inappropriate revenue-gathering mechanisms add further pressures, as does unsuitable funding arrangements. Revenue-gathering mechanisms for funding capital expenditure with long payback periods are inadequate, especially for areas with small rating bases, such as Queenstown. The challenge is to put in place suitable funding arrangements to ensure that those benefiting from tourism-oriented roadside facilities, infrastructure and services contribute to their funding.

Section 4 of the report states:

4.1 Longer-term global factors: Peak oil and climate change

Changes in the supply and affordability of oil products Transport in Otago, as in the rest of New Zealand, is overwhelmingly dependent on imported oil, with 99 % of transport energy coming from oil products. As well as fuelling vehicles, oil is important in roading infrastructure construction and maintenance, whether as bitumen used for surfaces or as fuel for machinery.

Rising and volatile oil prices and shortage in fuel supplies will affect Otago. Globally, low-cost oil reserves are being rapidly exhausted, forcing oil companies to turn to more expensive sources of oil, and driving the price of oil higher. Oil producers, unable to continue producing oil at an increasing rate as in the past, face what has become known as ‘peak oil’ – the time when the rate of global petroleum extraction has peaked and the rate of production declines towards zero. The actual timing of peak oil is uncertain.

Forecasts suggest that, over the next five years, world oil supply production capacity will remain static, while demand will continue to rise – a situation known as a ‘supply crunch’ – causing the price of oil to ‘spike’ to high levels. This supply crunch may occur as early as 2013, inducing a further global recession.

Over the longer term, international oil prices are likely to rise and remain volatile (with further price spikes), causing a shortage of affordable transport fuels and other oil products. Despite uncertainty over when, exactly, these cycles of oil supply crunches leading to oil price spikes and global economic recession will occur, their effects will almost certainly be felt within the next 30 years, the timeframe for a new regional development strategy.

The current government, which envisages a largely market-led approach, anticipates the uptake of technologies that provide for storage of energy, such as the aggregated use of electric vehicle battery storage, the uptake of more efficient vehicles and low-carbon fuels and technologies, as well as efficiency measures in freight.

As oil-based fuels become more scarce and expensive, our market-based economy will cause these fuels to ‘flow’ to their highest value use, which may or may not be transport. Although low emission energy alternatives such as electricity and biofuels may substitute for oil-based transport fuels to some extent, this substitution may not be adequate to prevent a shortfall in supply.

Short-term disruptions in supply pose a particular risk to Otago. Although the government maintains 90-day oil reserves for use in serious disruptions to international oil supply, adequate supplies may not reach less populated or remote areas – for instance, farms, in much of Otago – in times of oil shortage. The government may need to intervene to reduce the likelihood and severity of major temporary disruptions. Otago does not maintain a strategic fuel reserve to fuel backup generators at essential critical localities, such as in hospitals and rest homes.

Adjustment of the region’s economy, and individual lifestyles, to a new world energy economy will probably be protracted and not without pain, despite the market opportunities that such crises open up. In both their personal and business lives, people will respond to increases in the price of oil by modifying their travel behaviour and choices about where they live and what type of vehicle, if any, they own.

Otago’s key export-generating industries – tourism, forestry, dairy and meat exports – are very vulnerable to oil shocks because of their reliance on affordable international transport. The cost of exporting bulk products is likely to rise dramatically, as are international airfares. The relatively poor fuel economy of the New Zealand’s light vehicle fleet may also place Otago’s tourism industry at a competitive disadvantage, if improvements in the efficiency of rental cars and campervans do not keep pace with improvements in other developed nations.

Rising oil prices, and supply shortages, are likely to challenge the viability of some of Otago’s smaller, more isolated communities connected by road to basic services and facilities. Depending when alternative fuels become mainstream and fuel prices stabilise, these communities might not be able to maintain their current level of mobility.

Experts believe that there are large oil reserves off the coast of New Zealand, probably in difficult-to-access deposits under the Great South Basin and the Deepwater Taranaki Basin. Furthermore, Origin Energy and its partner United States oil giant, Anardako, began seismic surveys off the coast of Oamaru in 2007 and there are plans to begin drilling in late 2011 at prospective sites 65 km off the coast of Dunedin. New Zealand also has a vast resource of lignite coal in Otago-Southland, which could be converted to petroleum products. Domestic oil or petroleum production would not, however, insulate New Zealand users from global oil price shocks because New Zealand is required to pay international prices for oil it uses, regardless of where it is sourced.

The effects of climate change on transport

Local communities will bear the brunt and the cost of climate change in their area, and these will occur regardless of any mitigation measures at that level. Any local efforts to mitigate climate change, such as reducing greenhouse gases, will do little to moderate projected global climate changes. In light of this, adaptation has been the chosen response

by local authorities addressing climate change issues, such as the DCC. Some road controlling authorities in Otago are already incorporating measures such as raising roads, pumping and drainage into their routine management and maintenance programmes.

Another consequence of local climate change is likely to be an increase in the number of storm surges. The risk of such storm surges swamping coastal communities and transport infrastructure could more than double after 2040. Local councils face considerable costs in protecting and strengthening the fore-dunes as the main line of defence against future storm surges at higher sea levels. Some coastal land and infrastructure may have to be abandoned if small coastal communities cannot afford the cost of building and maintaining protection structures. If demand for coastal properties, in particular holiday homes, continues to rise, this could place pressure on councils to continually upgrade coastal routes.

With rising sea levels, an increase in the number of storm surges and higher flood levels due to greater intensity of rainfall in Otago, the transport infrastructure on Otago’s coast or near-river mouths and estuaries will be particularly at risk. If we are to retain coastal roads and the main trunk railway, we may need to raise them by at least 0.3m by 2040.

Climate change may eventually bring about changes in land use. Agriculture and forestry should benefit from longer and better growing seasons, fewer frosts and an increased amount of rainfall. Production from land will increase and a wider variety of crops will become commercially viable (although pest damage may result from a warmer climate).

But, towards 2090 an increase in the incidence of drought in coastal areas north of Dunedin may adversely affect agricultural production there. Although ultimately it is impossible to know how climate change will affect rural production, it seems wise, however, to maintain the existing rural roading network around the Otago region. In the face of this unknown.

Looking around one hundred years ahead, climate change may change settlement patterns. People may be forced to move out of areas such as South Dunedin, the harbour-side and coastal settlements, the lower Taieri plain and populated estuaries along the eastern coast. These matters go beyond the term that is covered by the new regional land transport strategy.

Appendix 2: Nathan Surendran submissions on Air Plan:

Further Submission to the air plan consultation by Nathan Surendran:

General points on process and quality of ES work (questions requiring a response in bold):

  1. Notifications! I missed the original communication about the release of comments for review, and found actually accessing the document to be difficult. Having taken the time to use your electronic system, I’d have at least expected a system email notification! Why was this not done?
  2. Decisions requested. It concerns me to note that your staff have failed to interpret the decisions I requested in the general comments section of my submission, and in several other submitters comments. I noted that you ask for specific recommendations in your notes, and I felt that I gave specifics, although obviously not clearly enough. Several other citizens made implied requests for decisions (although some struggle with the language, the spirit of their comments and the nature of the decision seems fairly obvious), some of which were interpreted in the document and some of which were not. It appears to be very variable, and I would expect a higher standard from the council on this important matter. Please provide an explanation?
  3. I have no idea why you chose to repeat standard submissions from multiple citizens as individual line items in your “summary of submissions” – why not put all the submitters names in a list and put the comment once. Where a standard comment was submitted for multiple sections of the report, your summary should have referred back to the original submission. How will you improve this for future comments processes?
  4. Do you guys have a QA process, and was it followed? Please provide evidence.

My clarifications as to the specific decisions sought in my ‘general comments’ section in my original submission (specific decisions sought in bold, new text in italics):

General comments and/or new provision(s):

We understand that this deadline has been around since 2005 – why is this policy revision only now being introduced? It does not give sufficient time for people to adapt in the timelines outlined. The outcome is likely to be poor people living in colder houses, which will have poorer health outcomes on top of the economic affects and stress related impacts. Other councils have taken a much more proactive approach to the NES, and have reaped benefits.The consultation document reads very much like the council shifting the cost of its inaction onto the community. Questions:

  • What will be the penalty of non-compliance with the target 3 exceedances in 2016? Provide this information publicly as it is not evident in the documentation.
  • Who within the executive at the council bears the responsibility for this cost, and what penalty is there to those responsible for the lack of action that has led to the current situation?

The economic rationale that forms the basis of this report is ‘neo-classical’ in origin. Specifically, the general thinking in the report appears to be that if you put in place limitations on the emissions, the point of use, the effects will ‘trickle up’ the supply chain, as constrained consumers demand better products from the market that enables them to comply. With regard to domestic emissions within the Gore and Invercargill air sheds, this is unwise in a number of respects:

  1. The consumers in this case are domestic households. Placing the onus on them to manage the quality of the fuel they burn places too much emphasis on a time and knowledge poor sector, with no reason beyond punitive punishment to change. The supply side should be managed through regulation to simplify the choices available to the consumer.
  1. The consumer market is heavily marketed to by the heat pump industry in particular. Whilst heat pumps have their place, the replacement of simple solid fuel systems with heat pumps is problematic for a number of reasons. Whilst the equipment is marketed as low installation cost, if a home has an existing solid fuel installation that they are having to replace at the same time, with associated removal of flue, and making good of roofing, etc, then this claim is highly debatable. It would be better to recommend people KEEP their existing solid fuel installation, if they are going to install a heat pump. This also provides a level of resilience that is relevant to the council’s Emergency Management responsibilities. Note the recent power outages relating to weather across NZ, most prominently the 85k homes in Auckland. From a resilience and emergency management perspective, as recent events in Canterbury have made clear, relying on a single source for fundamental needs (water, food, heat) is a highly risky strategy. With increasing disruption in an increasingly unstable world, we should be looking to balance resilience, environmental impacts, and economic considerations (in that order, recognising that the economy should be considered a wholly owned subsidiary of the environment: http://bit.ly/ZxnwJ4). This is within the council’s remit under the RMA to consider, as a non-functional ecosystem will lead ultimately to a precipitous collapse in the economy.

Whatever is unknown about the future with regard to economic growth / degrowth and future energy supply, the following are incontrovertible statements of fact that can not and should not be ignored when considering this draft policy:

  1. Energy and fuel costs are getting more expensive on a long term trend, short term fluctuations should not be considered evidence to the contrary. The Royal Society’s analysis estimates a 50% increase in electricity prices by 2025 (Pg 10, Fig 4 of http://bit.ly/1rPafBF). Provide evidence that this rise in fuel prices is factored into the economic case for the policy.
  1. The increase in energy costs is a reflection of the declining ‘energy profit’ from energy production activities. This is sometimes also known as Energy Return on Investment (EROI) and an explanation of this was included in the ‘Wood Energy Demand Assessment that Nathan Surendran authored on behalf of EIS Energy for Venture Southland in 2011 (bit.ly/vs_weda). Basically, as we go for more dispersed (less dense) energy reserves to supply our needs, we have to put a greater proportion of our resources into the extraction and processing of these fuels, which leaves less for us to actually use (bit.ly/1qpDZtK). Considered at the global level, current estimates are that we are operating in the region of 20:1, that is to say 20 units of energy back for every unit we put into extracting it. However, that does not tell the whole story. Due to the inexorable decline, certain key fuels, specifically liquid fuels for transport, are getting disproportionately more expensive over time. It is probable that the combination of this reduction in ‘net energy’ available to us, combined with GFC2 (when the current money printing activities lead to a loss of faith in the ability of debts to be repaid, leading to another, more severe global crisis http://bit.ly/1wW4Ayf), will significantly reshape the economy going forward. Energy supply will become less certain and more prone to disruption. Diversity of energy sources and reduction in demand are the keys to a less carbon intensive future. Policy response should be cognisant of this reality. Provide evidence that this declining ‘energy profit’ is factored into the economic case for the policy.
  1. Appropriate responses to a probable rather than hoped for future include:
    1. Doing as much as through insulation retrofit programmes and guidance on the economics of beyond code insulation for new build, to reduce demand. This almost always has better economics on a case by case basis, and economies of scale would improve on these. Policies 3.5 and 3.6 refer to this potential, but specific policy should increase funding for insulation retrofit alongside new installations. Benefits include:
      1. Lower energy requirements going forward. Less environmental impact, and lower operating costs.
      2. Significantly reduced size of heater installed – lower captial costs, and reduced environmental impact (less materials, lower embodied energy).
    2. Look to appropriate technologies that can reduce the causes of overnight smoke build up (damped fires). In this regard, rocket mass heater technology (similar to, but distinct from masonry heaters) is a recommended approach as:
      1. it has extremely high efficiency (flue exhaust temperatures well below 100 deg C)
      2. it has extremely low particulate emissions due to the high temperature burn
      3. it offsets the time between the burn occurring and the heat entering the space (similar to the concept of a night store),by storing heat in the thermal mass and releasing it gradually
      4. it uses by preference stick wood, which lends itself to short rotation coppice, and can be collected using manual tools, rather than being reliant on machinery for harvest
      5. much of the information relating to stove designs is open source or available at low cost, allowing a level playing field for local construction / engineering firms to manufacture
      6. construction is low tech, and can make use of recycled and local materials, significantly lowering embodied energy in the appliance
      7. a single barrier to roll-out of this stove type exists – building consent / type approval. This could be addressed through policy to:
        1. give basic manufacturing parameters for these heaters based on a local R&D effort to define these
        2. address the knowledge gap regarding fire engineering that would allow these units to gain consent
    3. Alternatives to the rocket mass heater that are higher tech should also be considered. e.g. large wetback / hot water cylinders with a few radiators.
    4. There are higher tech retrofit options for existing burners that would lower the capital cost of compliance with the particulate emissions – specifically electrostatic precipitators. These should also be investigated as an alternative option. It is understood that Reefton, NZ is currently performing a trial of these units. This would allow the full life of these units to be realised, and would provide a tail off in coal use that would help that industry to adjust.
  1. Given that the economic modelling that the proposed policy is based on was not published with the consultation documentation, there is nothing that can currently be done to assess the economic case that is the basis of the policy draft. It is requested that the economic analysis is published with a commentary, to answer the following questions:
    1. Who wrote the report and conducted the analysis, and why?
    2. Is there any evidence or data from the real world in the analysis? If not, what are the assumptions made?
    3. How have risk and uncertainty been assessed?
    4. How has what would happen without the changes implied by the policy been assessed?
    5. What economic ‘levers’ are being considered by councils? It is understood that ICC have a ‘pilot loan scheme’ under consideration, but no information was provided with this consultation.
  1. Flue dampers that can shut off air flow in the flue when the fire is not in operation to reduce heat losses associated with an open flue. The draft plan identifies this issue in relation to open fires, but ignores it in relation to burners. How should this be addressed?
  1. It is recommended that the regional and local councils put in place a simple email list that you can register with to be notified of consultations. It is crazy that the newspaper, which not everyone reads, many cannot afford, and some choose to ignore, is the sole means of communicating upcoming consultations. There should be multiple contact options on the mailing list, such as an automated voice message option for those without email or newspaper access, including the blind, etc. Given that citizens are engaging in providing feedback as an unpaid activity, the burden is on the councils to simplify the process:
    1. It is good that the current upgrades to the consultation platform mean submissions can be made electronically, direct into the system. Will this be used to notify all registered users of upcoming consultations. Could this be extended to encompass the territorial council consultations using the same platform as the regional council?
    2. You are currently failing to meet the basic standards for disabled access http://bit.ly/1wW0Lcd by not providing .doc versions alongside .pdf, for example. How will you address this going forward?
  1. We expect that there will be some submissions that focus on the job impact on the coal industry in the area. We would recommend the ‘Jobs After Coal’ report from Coal Action Aotearoa as a counterpoint to that argument: http://bit.ly/1rPdyJ4 Ensure that the economic analysis from the ‘Jobs after Coal’ report is used alongside other economic evaluations in re-formulating the policy in response to submissions.

I strongly support the other submissions that were received that make the same points as I raise, and other valid points I’ve not considered. Particularly, I have identified the following submissions as noteworthy (decisions requested in bold, my attempt to summarise the submitters requests):

  • Para 1.15 Dr Mark Smith’s point: Note and include in your economic analysis Air Quality correlation to deaths and other public health costs. Supporting evidence:
  • Para 1.75 Peter Shand’s point: Fund further insulation measures. This is an example where specific decisions were evident, but not noted in the right hand column. Insulation is both a resilience upgrade and a
  • Para 1.82 Chris Henderson’s point: Incentivise coppice planting around the cities for wood fuel should be investigated both to reduce transportation costs of the fuel, but also to have fuel available close to town once the current wood harvesting activities from currently maturing forestry begin to wind down.
  • Para 1.104 Rayner’s point: Perform an economic analysis ESP’s as a mitigation strategy to enable deferment of replacement of existing multi-fuel burners to the end of their economic life, and include this in policy economic considerations.
  • Para 4.4 Jane Forbes’s point: Include further economic analysis of the incentive programmes, and show how this has been considered in the policy that is drafted by way of supporting documentation.
  • Para 5.2 Lloyd Smith’s point: I disagree with Lloyd’s point that the Ecomax coal boiler is a complying appliance – if coal manufacturers could get compliance with the standard without bag filters or ESP’s, there would be complying coal fired appliances on the MfE approved list… The reality of the extra ash from coal (a proportion of which is entrained in the hot flue gases without being visible as smoke) is an incontrovertible fact.
  • Para 6.3 Geoff Corrie’s requested decision: ‘find a unique solution’ – refer to my general comments recommending the council investigates rocket mass heaters as both a solution and an economic development opportunity for the region.
  • 38.17 Bill and Beverley Blakie’s point: The economic and design life of a heat pump is 7-10 years (the Ministry of Education’s experience regarding heat pump installations), and the economic analysis in support of the recommendation to install heat pumps should factor in the need to replace a heat pump installation several times during the life of a well designed and operated solid fuel appliance. Ensure that the economic case that supports the recommendation to install heat pumps correctly factors in both CAPEX and OPEX costs on a LIFE CYCLE BASIS.

My further decisions requested upon reviewing the submissions:

Detail the education strategy that is to be adopted alongside installation of complying appliances, as correct use of existing appliances (combined with insulation upgrades), could solve the issues now.

I will be making these further submissions publicly available on my blog: http://bit.ly/sear_blog

My original submission below for reference:

Original Submission:

Joint response to consultation document by:

Full Name: Nathan Surendran

Organisation: Schema Consulting Ltd

Phone no: 021 209 6286

Email: nathan@schemaconsulting.co.nz

Postal Address: 60 Dublin Street, Invercargill

Post code: 9810

Full Name: Phil Orr

Organisation:ArchDraught Limited

Phone no: 032142460

Email: archdraught@orcon.net.nz

Postal Address: 161 Earn Street, Invercargill

Post code: 9812

Part II We could NOT gain an advantage in ‘trade competition’ through this submission.

Part III Please see our general comments and specific recommendations below.

Part IV We DO wish to be heard in support of our submission.

Submission Contents:

Section A.

Section B.

Rule 4.9 (a) and (b)

Policy 3.2 and Rule 4.6

Policy 3.5

Section A.

General comments and/or new provision(s):

We understand that this deadline has been around since 2005 – why is this policy revision only now being introduced? It does not give sufficient time for people to adapt in the timelines outlined. The outcome is likely to be poor people living in colder houses, which will have poorer health outcomes on top of the economic affects and stress related impacts. Other councils have taken a much more proactive approach to the NES, and have reaped benefits.The consultation document reads very much like the council shifting the cost of its inaction onto the community. Questions:

  • What will be the penalty of non-compliance with the target 3 exceedances in 2016?
  • Who within the executive at the council bears the responsibility for this cost, and what penalty is there to those responsible for the lack of action that has led to the current situation?

The economic rationale that forms the basis of this report is ‘neo-classical’ in origin. Specifically, the general thinking in the report appears to be that if you put in place limitations on the emissions, the point of use, the effects will ‘trickle up’ the supply chain, as constrained consumers demand better products from the market that enables them to comply. With regard to domestic emissions within the Gore and Invercargill air sheds, this is unwise in a number of respects:

  1. The consumers in this case are domestic households. Placing the onus on them to manage the quality of the fuel they burn places too much emphasis on a time and knowledge poor sector, with no reason beyond punitive punishment to change. The supply side should be managed through regulation to simplify the choices available to the consumer.
  1. The consumer market is heavily marketed to by the heat pump industry in particular. Whilst heat pumps have their place, the replacement of simple solid fuel systems with heat pumps is problematic for a number of reasons. Whilst the equipment is marketed as low installation cost, if a home has an existing solid fuel installation that they are having to replace at the same time, with associated removal of flue, and making good of roofing, etc, then this claim is highly debatable. It would be better to recommend people KEEP their existing solid fuel installation, if they are going to install a heat pump. This also provides a level of resilience that is relevant to the council’s Emergency Management responsibilities. Note the recent power outages relating to weather across NZ, most prominently the 85k homes in Auckland. From a resilience and emergency management perspective, as recent events in Canterbury have made clear, relying on a single source for fundamental needs (water, food, heat) is a highly risky strategy. With increasing disruption in an increasingly unstable world, we should be looking to balance resilience, environmental impacts, and economic considerations (in that order, recognising that the economy should be considered a wholly owned subsidiary of the environment: http://bit.ly/ZxnwJ4). This is within the council’s remit under the RMA to consider, as a non-functional ecosystem will lead ultimately to a precipitous collapse in the economy.

Whatever is unknown about the future with regard to economic growth / degrowth and future energy supply, the following are incontrovertible statements of fact that can not and should not be ignored when considering this draft policy:

  1. Energy and fuel costs are getting more expensive on a long term trend, short term fluctuations should not be considered evidence to the contrary. The Royal Society’s analysis estimates a 50% increase in electricity prices by 2025 (Pg 10, Fig 4 of http://bit.ly/1rPafBF).
  1. The increase in energy costs is a reflection of the declining ‘energy profit’ from energy production activities. This is sometimes also known as Energy Return on Investment (EROI) and an explanation of this was included in the ‘Wood Energy Demand Assessment that Nathan Surendran authored on behalf of EIS Energy for Venture Southland in 2011 (bit.ly/vs_weda). Basically, as we go for more dispersed (less dense) energy reserves to supply our needs, we have to put a greater proportion of our resources into the extraction and processing of these fuels, which leaves less for us to actually use (bit.ly/1qpDZtK). Considered at the global level, current estimates are that we are operating in the region of 20:1, that is to say 20 units of energy back for every unit we put into extracting it. However, that does not tell the whole story. Due to the inexorable decline, certain key fuels, specifically liquid fuels for transport, are getting disproportionately more expensive over time. It is probable that the combination of this reduction in ‘net energy’ available to us, combined with GFC2 (when the current money printing activities lead to a loss of faith in the ability of debts to be repaid, leading to another, more severe global crisis http://bit.ly/1wW4Ayf), will significantly reshape the economy going forward. Energy supply will become less certain and more prone to disruption. Diversity of energy sources and reduction in demand are the keys to a less carbon intensive future. Policy response should be cognisant of this reality.
  1. Appropriate responses to a probable rather than hoped for future include:
    1. Doing as much as through insulation retrofit programmes and guidance on the economics of beyond code insulation for new build, to reduce demand. This almost always has better economics on a case by case basis, and economies of scale would improve on these. Policies 3.5 and 3.6 refer to this potential, but specific policy should increase funding for insulation retrofit alongside new installations. Benefits include:
      1. Lower energy requirements going forward. Less environmental impact, and lower operating costs.
      2. Significantly reduced size of heater installed – lower captial costs, and reduced environmental impact (less materials, lower embodied energy).
    2. Look to appropriate technologies that can reduce the causes of overnight smoke build up (damped fires). In this regard, rocket mass heater technology (similar to, but distinct from masonry heaters) is a recommended approach as:
      1. it has extremely high efficiency (flue exhaust temperatures well below 100 deg C)
      2. it has extremely low particulate emissions due to the high temperature burn
      3. it offsets the time between the burn occurring and the heat entering the space (similar to the concept of a night store),by storing heat in the thermal mass and releasing it gradually
      4. it uses by preference stick wood, which lends itself to short rotation coppice, and can be collected using manual tools, rather than being reliant on machinery for harvest
      5. much of the information relating to stove designs is open source or available at low cost, allowing a level playing field for local construction / engineering firms to manufacture
      6. construction is low tech, and can make use of recycled and local materials, significantly lowering embodied energy in the appliance
      7. a single barrier to roll-out of this stove type exists – building consent / type approval. This could be addressed through policy to:
        1. give basic manufacturing parameters for these heaters based on a local R&D effort to define these
        2. address the knowledge gap regarding fire engineering that would allow these units to gain consent
    3. Alternatives to the rocket mass heater that are higher tech should also be considered. e.g. large wetback / hot water cylinders with a few radiators.
    4. There are higher tech retrofit options for existing burners that would lower the capital cost of compliance with the particulate emissions – specifically electrostatic precipitators. These should also be investigated as an alternative option. It is understood that Reefton, NZ is currently performing a trial of these units. This would allow the full life of these units to be realised, and would provide a tail off in coal use that would help that industry to adjust.
  1. Given that the economic modelling that the proposed policy is based on was not published with the consultation documentation, there is nothing that can currently be done to assess the economic case that is the basis of the policy draft. It is requested that. The economic analysis is published with a commentary, to answer the following questions:
    1. Who wrote the report and conducted the analysis, and why?
    2. Is there any evidence or data from the real world in the analysis? If not, what are the assumptions made?
    3. How have risk and uncertainty been assessed?
    4. How has what would happen without the changes implied by the policy been assessed?
    5. What economic ‘levers’ are being considered by councils? It is understood that ICC have a ‘pilot loan scheme’ under consideration, but no information was provided with this consultation.
  1. Flue dampers that can shut off air flow in the flue when the fire is not in operation to reduce heat losses associated with an open flue. The draft plan identifies this issue in relation to open fires, but ignores it in relation to burners. How should this be addressed?
  1. It is recommended that the regional and local councils put in place a simple email list that you can register with to be notified of consultations. It is crazy that the newspaper, which not everyone reads, many cannot afford, and some choose to ignore, is the sole means of communicating upcoming consultations. There should be multiple contact options on the mailing list, such as an automated voice message option for those without email or newspaper access, including the blind, etc. Given that citizens are engaging in providing feedback as an unpaid activity, the burden is on the councils to simplify the process:
    1. It is good that the current upgrades to the consultation platform mean submissions can be made electronically, direct into the system. Will this be used to notify all registered users of upcoming consultations. Could this be extended to encompass the territorial council consultations using the same platform as the regional council?
    2. You are currently failing to meet the basic standards for disabled access http://bit.ly/1wW0Lcd by not providing .doc versions alongside .pdf, for example.
  1. We expect that there will be some submissions that focus on the job impact on the coal industry in the area. We would recommend the ‘Jobs After Coal’ report from Coal Action Aotearoa as a counterpoint to that argument: http://bit.ly/1rPdyJ4

Section B.

Specific provisions:

The specific provisions of the proposal that my submission relates to are: (Specify provision number and title, e.g. Policy 6 – Ambient air quality) My submission is that: (State whether you support or oppose each separate provision you have listed in column 1, or if you wish to have amendments made. State the reasons for your views.) I seek the following decisions from Environment Southland: (Please give precise details for each provision including any proposed wording changes. The more specific you can be the easier it will be for the Council to understand your concerns.)

Rule 4.9 (a) and (b)

Amend.

Reasons: High moisture content coal – specifically lignite – should be excluded. Instead, Rule 4.9 (b) only prohibits by sulphur content. Lignite suppliers will argue that their coal is under 0.6% http://bit.ly/1rutFin (which implies quite a bit will also be below the 0.5% threshold and therefore okay to burn). There is no way to burn this fuel that will comply with the NES specifications for efficiency and particulates short of briquetting it. The briquetting approach has been shown in recent years to not be technically feasible.

Amend text thus:

(a)from 31 December 2014, any fuel having a moisture content of more than 25% dry weight;

OR

(b) from 31 December 2014, any fuel with a moisture content exceeding 25% dry weight, and a sulphur content exceeding 0.5% by weight;

Policy 3.2 and Rule 4.6

Open fires in the Invercargill and Gore airsheds

Discharges to air from an open fire in the Invercargill and Gore airsheds are a prohibited activity after 1 September 2015…

Amend

Reasons:

Affordability. For existing state houses / old villas / etc which have not yet had remedial building envelope work to reduce heat loss, running costs for a heat pump / installation costs for a complying retrofit heating appliance, will be unaffordable for many.

This will disproportionately affect people on low income (poor families and the elderly), renting older houses – typically people already struggling with fuel affordability.

Yes, landlords may install heat pumps, but these are often unaffordable to run without significant insulation / air tightness – running costs can be upwards of $500 / month.

The deadline for compliance with Rule 4.6 should be extended if the council cannot show that they have a mitigation strategy that addresses the disproportionate impact on the poor. This should be a multi criteria strategy that has more than just the basic economics factored in. 1 year is not a reasonable time frame without full funding for vulnerable / financially stressed families to make this shift.

Policy 3.5

Amend

Reasons: There is specific help that consumers need to be able to make good choices. Educating about effects of PM10 discharge and remedies need to be supported by clear guidance as to the products available, alongside the subsidies that they can access.

Schools should be engaged in the education process to get the message to otherwise busy and inattentive parents – the nag factor – corporates rely on it, government should too.

Add the following bullet points:

  • Clearly communicate which solid fuel appliances are accepted.
  • Clearly communicate the subsidy / finance available.
  • Provide teaching resources to enable schools to communicate this to parents through their children.

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Filed under How, What, Why

The view from further down the oil supply pyramid – de-growth probable – an interview with Gail Tverberg. Southland NZ implications.

An edited transcript of an interview on the Extraenvironmentalist Podcast, Episode #55. If you’d prefer to view the video interview that this excerpt is based on, you can watch it here: http://bit.ly/ZekRDz. After the transcript, some potential ideas as to how to put this into effect for Southland NZ are added.

========================================

Seth: Gail’s been in this peak oil scene for a long while, and she’s watched the whole scene play out. And being an actuary, she knows how to look at the numbers and see where the risks fall, and it’s very interesting her perspective that she comes from.

Gail: One kind of response is to kind of agree, but then put it out of your mind and say, “well, maybe it will happen to my grandchildren,” or something like that. Or maybe “she just doesn’t know what she’s talking about.” I think that the people who are closer to a situation, maybe the other actuaries for example, they look and they say, “Aha! I think she’s got something there.” Well, when I talk about the oil situation, I think I explain it a little bit differently than what a lot of people understand.

The way I see peak oil is different. The way I describe things is sort of in terms of a triangle of resources, and the way I see things is that we start at the top of that triangle, and the resources at the top of the triangle are the easy-to-extract, cheap oil. We started there a long time ago, and most of those are already extracted. Then we have to move down and we get to the little bit more expensive, little harder to extract oil, or maybe a little farther away, or maybe not quite as good a country that’s got a good political system.

diminishing returns on oil extraction - pyramid

Figure 18. Oil and Gas Resource Volume Versus Resource Quality. This graphic illustrates the relationship of in situ resource volumes to the distribution of conventional and unconventional accumulations, and the generally declining net energy and increasing difficulty of extraction as volumes increase lower in the pyramid.
Source: "Snake Oil: How Frackings False Promise of Plenty Imperils Our Future"  
Chapter 2, ‘Technology to the Rescue’ - Richard Heinberg. http://bit.ly/1iqIAJa

We keep going down the triangle, and there always looks like there’s lots more oil there, but what happens is the more oil that’s there, it’s harder to extract. It’s more expensive to extract and it disrupts the economy. It’s not the cheap oil that our economy started with when the economy was first set up. So it tends to lead to recession.This was never factored in.

People who are looking at the situation just look at the big triangle and say, “My! There’s lots and lots of oil down there.” Yeah, there is lots and lots of oil down there, and that oil may permanently stay in the ground because it’s so expensive to extract and it causes so many economic problems. When we do extract it, we really can’t afford to extract it.

Well, I think what happens is that the oil prices don’t necessarily go up all that high. In fact, I think what we’ve been seeing is exactly what happens. The price goes up a little, but what happens is that you start getting debt defaults. It goes up and you start seeing the situation like we had in Europe.

Europe is a little bit different than the United States because in the United States, we’ve got cheap natural gas which is kind of helping us along to kind of offset the high price of oil. But in Europe, they don’t. They’ve got high-priced natural gas besides high-priced oil, and they’re the ones that are going to be hit worst by the debt defaults. But I think that the way this all evolves is through debt defaults from the high price of oil, and we’re going to see Greece and maybe we’ll see Spain – I think we’re also going to see some kinds of situations in some of the oil-producing countries, for instance Egypt, the countries that find that they’re out of balance as well. And we’re going to see bad financial situations there too. It’s not just in Europe, but the way this all plays out as peak oil, what it looks like is financial collapse.

I think a big piece of the reason why the economies of Greece and some of these other countries are falling apart is because they are such big oil importers, such big users of – they’re so dependent on fossil fuels. I think Greece is actually coal that they’re using a lot of, but what happens is that as the prices increase, the tourists, for example, are not able to travel as much, so it cuts back on the tourist packages that they were selling. And so things don’t go as well. They lay people off of work, and you start seeing the recession that we see, and the taxes aren’t high enough to pay the benefits that they’ve promised the laid off workers, and you start seeing the pattern that we see today.

I think what we’re going to see coming ahead from what is being called peak oil, but I guess it’s really the high oil prices is we’re going to see more and more of what people will think of as financial collapse. And that’s going to be happening around the world. It probably will start in Europe, but it’s going to spread to the United States. It may very well spread to China. It is going to have an impact on places like even Africa too, because they are depending on us for some of the exports that we send them as well.

It’s hard to see a good solution to the problems that we’re coming to right now. I mean maybe there are few mitigating things, you know, that we can have our gardens and we can try to make things better, and not plan for a new bigger car and a new bigger house, and a new bigger all of these things, but I think a lot of it is a question of how long it takes for the whole situation to play out. We don’t have a whole lot of control over it. If it plays out over a long enough period, it may very well be that some of those mitigating things that we do will actually be a reasonably good help for some people…

Justin: So Gail was saying that a lot of what we actually do to respond to peak oil depends on how fast this plays out. We really are at the mercy of how quickly we’re depleting our oil reserves, but we’re also at the mercy of the geology and how quick the oil does deplete because we can do things like frack the land and pull out shale oil, and delay some of the absolute scarcity of oil, but like Gail was saying, if you look at the big picture, it is like a triangle. And as you get further down from the tip of the triangle, which is that easy-to-extract oil, as you get towards the middle, if you’re still inside it, you just look down and you see – wow, there’s so much oil remaining. And you see that everywhere now, with so many reports that are coming out saying that we just have basically a limitless oil reserves. But that oil is not the same as the stuff that was at the tip of the pyramid…

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Editor’s note: The Extraenvironmentalist spoke with Gail Tverberg of ‘Our Finite World’ during the 2013 #degrowth conference in Montreal. The full podcast episode is available to listen to here: http://bit.ly/1qhWluX

Peter Brown on degrowth – 6m

Michael M’Gonigle on education – 17m

Josh Farley on money and alternatives to GDP  – 26m

David Suzuki on localism – 43m

Bill Rees on denial – 53m

Mary Evelyn Tucker on a new narrative – 1h06m

Janice Harvey on culture change  – 1h12m

Charlie Hall on energy return – 1h27m

Gail Tverberg on peak oil  – 1h43m

Juliet Schor on working less  – 1h5om

Joan Martinez-Alier on ecological economics – 2h6m

Erik Assadourian on degrowth – 2h15m

Gregor Macdonald on the IEA, claims about US oil production and Jeremy Grantham – 2h38m

Transcripts of the other interviews from this 2013 ‘degrowth’ episode are being released following on from the 2014 degrowth conference in Leipzig, to keep the buzz going, and stimulate further conversation. For a playlist of the video recordings from the live sessions from Degrowth Conference 2014, click here: bit.ly/degrowth2014_sessionsplaylist_ee.

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This transcript was originally prepared for my blog, Southern Energy and Resilience. Regular readers will know that I try to put a Southland, NZ spin on things I post. Here’s a few thoughts on what this means for this region:

New Zealand is in many ways exceptional when considering Peak Oil. It has its own oil and gas supplies, which at the time of writing are producing enough liquid fuel to support around 70-75% of our current needs. However, our current proven reserves are subject to the same eventual declines that we’re seeing globally. Recent efforts to find further productive wells in risky deep sea locations are so far proving fruitless. Reliance on the same strategy as in the USA – massive expansion in fracking activities – is both a short term strategy only, and also dependent on huge capital expenditure which has to be debt financed.

Globally, this risk is growing of supply disruption, because of soaring costs of production, and a ceiling on the price the market can bear, beyond which the global economy goes into recession:

“The world’s leading oil and gas companies are taking on debt and selling assets on an unprecedented scale to cover a shortfall in cash, calling into question the long-term viability of large parts of the industry.

 

The US Energy Information Administration (EIA) said a review of 127 companies across the globe found that they had increased net debt by $106bn in the year to March, in order to cover the surging costs of machinery and exploration, while still paying generous dividends at the same time. They also sold off a net $73bn of assets.

 

This is a major departure from historical trends. Such a shortfall typically happens only in or just after recessions. For it to occur five years into an economic expansion points to a deep structural malaise.

 

The EIA said revenues from oil and gas sales have reached a plateau since 2011, stagnating at $568bn over the last year as oil hovers near $100 a barrel. Yet costs have continued to rise relentlessly. Companies have exhausted the low-hanging fruit and are being forced to explore fields in ever more difficult regions.

 

The EIA said the shortfall between cash earnings from operations and expenditure — mostly CAPEX and dividends — has widened from $18bn in 2010 to $110bn during the past three years. Companies appear to have been borrowing heavily both to keep dividends steady and to buy back their own shares, spending an average of $39bn on repurchases since 2011.”

 

Full article here: http://bit.ly/1pKCvre

And in recent months, sell prices have been trending down again, worsening the situation for the producers, due to major reductions in demand from Asia, amongst other reasons:

“So far this week, oil prices in New York and London continued the collapse that has been going on since mid-June. New York futures closed at $91.67, after hitting the lowest intra-day level since May 2013, and London closed at $98.18, the lowest close since April 2013. As has been the case for several months, the markets are seeing too much production and too little demand.  US crude output hit a 28-year high last month and Libya’s National Oil Company is saying that Libyan production is up to 800,000 b/d, despite the turmoil in the cities.

The EIA and OPEC have lowered their expectations for global demand growth in 2014 and Saudi Arabia announced that it had cut its production by 400,000 b/d in August due to a drop in exports to Asian markets.”

 

Full article here: http://bit.ly/1qpyoDL

Richard Heinberg:

Yeah, the big news right now is that the industry needs prices higher than the economy will allow, as you just outlined. So we are seeing the major oil companies cutting back on capital expenditure in upstream projects, which will undoubtedly have an impact a year or two down the line in terms of lower oil production. That is why I think that Campbell and Laherrère were right on in saying 2015, 2016 maybe, we will also start to see the rapid increase of production from the Bakken and the Eagle Ford here in the US start to flatten out. And probably within a year or two after that, we will see a commencement of a rapid decline.

So you know, on a net basis, taking all those things into account, I think we are probably pretty likely to see global oil production start to head south in the next year or two.

But this change in capital expenditure by the majors, that is a new story. You know, just a couple of years ago, they needed oil prices around $100 a barrel in order to justify upstream investments. That is no longer true. Now they need something like $120 a barrel but the economy cannot stand prices that high. So you know, if the price starts to go up a little bit, then demand just falls back. People start driving less. And so the economy is unable to deliver oil prices to the industry that the industry needs. This is—I think Gail Tverberg is saying this is the beginning of the end. I think she is right.

 

Full article here: http://bit.ly/1lYqfFg

 In NZ, we are geographically dispersed, and heavily dependent on oil supply in our economy. Furthermore, we produce none of the electronics, etc that will be unavailable if disruption in globalised supply chains occurs.

Risk of long term disruption from fuel shortages is growing yearly as our energy budget, or the net energy available to us as a species declines, and the situation we face may well be very different from the past, for a set of reasons Gail Tverberg outlined earlier this year:

The big problem in the past with civilizations that collapsed was that humans were using renewable resources faster than they could renew. Population continued to expand as well. The combination of rising population and depleting soil and forest resources led to diminishing returns, lower wages for many workers, and difficulty funding governments. A 500 year gap between civilizations took the population pressure off an area. Forests were able to regrow, and soil was able to renew (at least partly through regeneration of soil by erosion of base rock).

 

Today, we sill have the problems we had in the past, but we have some new ones as well:

 

  • We are depleting aquifers much more rapidly than they regenerate. In many cases, the water table is far below what can be reached with simple tools. It will take thousands of years for these aquifers to regenerate.
  • We are depleting minerals of all kinds, so that we now need “high tech” methods to extract the low ore concentrations. These minerals will be out of reach, without the use of electricity and fossil fuels. In fact, the vast majority of fossil fuel energy supplies will also be out of reach, without today’s high tech methods. Eventually this may change, with new fossil fuel formation and with earthquakes, but the timeframe is likely to be millions of years.
  • Most people today do not know how to live without fossil fuels and electricity. If fossil fusel and electricity disappeared, most of us would not know how to produce our own food, water, and other basic necessities.
  • Most of us could not just “pick up and do as we did before,” with respect to our current jobs, if the government and 95% of the population disappeared. Our jobs are often supported by global supply chains that would disappear, as well as direct use of fossil fuels and electricity.
  • The world is sufficiently networked that most of it is likely to be drawn into a world-wide collapse. In the past, areas that did not collapse continued to function. These areas could act as a back-up, if functions were lost.

 

In the past, the 500 year gap was enough to allow regeneration of forests and soil, once population pressures were reduced. If that were our only problem now, we could expect the same pattern again. Such a regeneration would allow a reasonably large group of people (say 500 million people) to get back to a non-fossil fuel based civilization in 500 years, with new governments, roads and other services.

 

In such a new civilization, we would likely have difficulty using much metals, because ores are now quite depleted. Even reprocessing of existing metals is likely to require more heat energy than is easily available from renewables sources.

 

We are now so dependent on fossil fuels and electricity that any collapse that does take place seems likely to be faster than prior collapses. If the electric grid goes down in an area, and cannot be repaired, most business functions will be lost – practically immediately. If oil supply is interrupted, it also will bring a halt to most business in an area, because workers can’t get to work and raw materials cannot be transported.

 

We are being told, “Renewables will save us,” but this is basically a lie. Wind and solar PV are just as much a part of our current fossil fuel system as any other source of electricity. They will only last as long as the weakest link–inverters that need replacing, batteries that need replacing, or the electric grid that needs fixing. We are being told that these are our salvation, because politicians need to have something to point to as a solution–not because they really will work.

 

For the full article: http://bit.ly/TOXvkL

How do we address these risks?

Firstly, we need to know as a nation what they are, and their relative importance. The Wise Response Appeal, here in New Zealand http://bit.ly/wiseresponse, is calling for a non-partisan appraisal of the global risk environment we’re operating in, and asks the question: “As demand for growth exceeds earth’s physical limits, causing unprecedented risks, what knowledge and changes do we need to secure New Zealand’s future wellbeing?”

I think that’s a really good starting point, and will hopefully point central government, and in time, local government, in the right direction if it is allowed to inform policy decisions.

However, in the meantime, and because we may not have that much time, I feel it’s imperative for local government, particularly the likes of our regional economic development body to consider putting some money into heading in the right direction, aside from central government directives. That direction acknowledges that; the oil won’t be with us forever, that it will be very difficult to ‘adapt’ at the point of crisis, and that ‘degrowth’ in economic activity is a reality we’re facing far sooner than the mainstream media will admit (with some notable exceptions: http://bit.ly/1pKHXZx http://bit.ly/1zhiyNW).

In Southland, we have some of the most productive farmland in New Zealand, and it’s possible that given our low population density and remoteness from nuclear facilities (try managing the waste at those locations successfully, without the high energy budget we currently are squandering…),  that we have the potential to be a place where humans can continue to thrive.

I’ve already posted some ideas regarding how we might enable this under the ‘how’ category http://bit.ly/1lzmhmD on the blog, and will continue to do so. In the meantime, I’d like to add that it would make sense for Venture Southland and the Regional / District Councils to consider the following observation when deciding how much resource to throw at preparation for this probable future:

” 3. A love/hate relationship with risk. It’s a paradoxical idea, but one way to build resilience, or antifragility, is to keep the vast majority of the business as safe as possible, but then take big risks – ones that may pay off 10-fold or more – with a smaller part of the business.

Think of the famous idea from Clayton Christensen of trying to disrupt or cannibalize your own business before someone else does. Imagine setting up a skunk works to identify major risks to the business stemming from resource constraints or climate change – and then lean into those risks and come up with products and services that avoid them and challenge the core business (for example, a car company investing in car sharing programs which consumers use to save money, but also reduce material and energy use dramatically).”

For the full article: http://bit.ly/1qOsSbF

We already have some independent economic analysis supporting this general direction in the form of the BERL report from 2012: http://bit.ly/1qpuVVU http://bit.ly/1qpwP8O  and Venture Southland continues to explore these possibilities: http://bit.ly/1qpv5N4, however, the content of the major development initiatives as outlined in the annual report http://bit.ly/1qpvsHd is mostly lacking in this type of thinking, despite my submission suggesting some potential avenues to explore http://bit.ly/1sTdmeB.

 

Nathan Surendran

BEng(Hons) CEng MCIBSE MEI

Consultant – Schema Consulting Limited

e: nathan@schemaconsulting.co.nz

m: 021 209 6286  p: 03 221 7487

l: linkedin.com/in/nathansurendran

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Efficiency without Sufficiency is Lost: A Critique of Technology Optimism

The solution to the unintended consequences of modernity is, and has always been, more modernity – just as the solution to the unintended consequences of our technologies has always been more technology. – Ted Nordhaus and Michael Shellenberger

The Simplicity Institute’s co-director, Samuel Alexander, has been doing some work recently with the Melbourne Sustainable Society Institute, and has just published the first of a number of working papers, entitled ‘A Critique of Technology Optimism: Efficiency without Sufficiency is Lost’:

‘Technological optimists believe that humanity will be
able to solve environmental problems primarily through technological application and advancement, while continuing to focus attention on economic growth. From this widely held perspective, sustained growth of the global economy will eliminate global poverty and raise living standards for all, without destroying the necessary ecosystems that sustain life as we know it. There can be no doubt that this promise of technology is seductive – material abundance for all, while solving environmental problems. But is this promise credible? If not, what are the implications? This paper presents an evidence-based critique of techno-optimism, arguing that the vision of progress it promotes is unrealisable due to the limits of technology and the inherent structure of growth economics. The considered application of technology is, without doubt, an essential part of any transition to a just and sustainable world, but it is argued that there must also be a value-shift away from growth economics toward a ‘post-growth’ or ‘steady state’ economy based on material sufficiency.’

The full paper is available at the following link:
1_Critique_of_Techno_Optimism-with-blurb.pdf.

 

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Just who is crazy? – Guest Post – Bob Lloyd

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.
http://www.otago.ac.nz/physics/staff/BobLloyd.html

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