The Oil Drum: Australia/New Zealand

This is a guest post by Rob Dietz and Brian Czech. Rob Dietz is the executive director of the Center for the Advancement of the Steady State Economy (CASSE). He received a master of science degree in environmental science and engineering from Virginia Tech and an undergraduate degree in economics and environmental studies from the University of Pennsylvania. Brian Czech, the founder of CASSE, is also a professional biologist in civil service and an adjunct professor of Ecological Economics at Virginia Tech. Czech has a Ph.D. in Renewable Natural Resources ( University of Arizona, 1998) and is the author of "Shoveling Fuel for a Runaway Train". (note: Herman Daly, who helped me choose my Phd path, first wrote about the steady state economy in 1977 - he is on CASSE's board)

When pundits, talking heads, and government officials debate policies related to oil consumption (e.g., gasoline taxes), they invariably ask, “Will it hurt economic growth?” This statement could be broadened to a whole range of policy debates on the environment, from climate change to endangered species. But since this is the Oil Drum, let’s stick with the topic of oil and economic growth.

Stuart Staniford proposed a “way forward” for humanity in his article Powering Civilization to 2050. This article proposes an alternative vision: instead of trying to create continual, technological stop-gaps to the demands of growth, we must address the problem of growth head on. Infinite growth is impossible in a finite world--a great deal of economic growth may be possible without a growth in resource consumption, but eventually the notion of perpetual growth is predicated on perpetual increase in resource consumption. This growth in resource consumption causes problems: it brings civilization into direct conflict with our environmental support system. Growth is also one way of improving the standard of living for humanity by creating more economic produce, more material consumption per human. Growth, however, produces very unevenly distributed benefits, and there is little convincing evidence that the poorest, most abused 10% of humanity is actually better off today than the poorest, most abused 10% of past eras. Furthermore, if you accept my statement above that infinite growth is impossible in a finite world, then employing growth today to “solve” our immediate problems incurs the significant moral hazard of pushing the problem—perhaps the greatly exacerbated problem—of addressing growth itself on future generations.

With that in mind, my intent here is to propose one possible means for humanity to directly address the problem of growth itself. I am attempting to take what I see as an inherently pragmatic approach—one that does not rely on the universal cooperation of humanity, nor on the assumption of yet-to-be-developed technologies. My approach to the problem of growth is to stop trying to address its symptoms—overpopulation, pollution, global warming, peak oil—and attempt instead to identify and address the underlying source of the problem.

On 5th December 2007 Fatih Birol, Chief Economist and Head of the Economic Analysis Division of the International Energy Agency (IEA) gave a presentation in London at the Shell Centre, hosted by the British Institute of Energy Economics (BIEE). Mike Pepler attended the meeting and took the following notes (his personal comments are in italics):

Introduction

·         We are on the eve of a new world energy order.

·         On the supply side, we have oil production outside the core OPEC countries reaching a peak, which is not good news for the International Oil Companies (IOCs). The National Oil Companies (NOCs) will determine future oil supply.

·         On the demand side, China and India are transforming global energy markets through their sheer size and rate of economic growth.

·         Between now and 2030, China and India will account for 70% of new global oil demand, and 80% of new coal demand.