We live in a very strange time.
The most serious existential crises that our species has ever faced, issues we have known for decades we’d have to deal with eventually, are now at our doorstep, yet still we fail to respond.
We know that fossil fuels, comprising over three-quarters of the world’s total primary energy supply, are entering a new era of slow contraction. Oil supply hit its ceiling in late 2004, and will likely go into terminal decline by 2014-2015. Coal and gas will be right behind it, peaking circa 2020-2025. We’ve known about this potentiality since the 1960s. Yet official policy and models continue to deny it completely. In our most honest moments, we make up improbable stories about how we might get around it, without acknowledging it directly.
We’ve also known for decades that carbon emissions could change the climate. The climate itself frequently reminds us that it has broken with historical norms, and is now taking a heavy toll in human life, wildlife, damaged infrastructure, crop yields, and supply chain interruptions. Fresh indications of thawing permafrost and methane bubbling in the Arctic are but the latest of warning signals. Yet we continue to deny that it’s even an issue (indeed, some call it a hoax, despite the obvious lack of any hoaxers). The best we have done is to squabble ineffectually at climate summits, accomplishing little.
We have known for centuries that debt bubbles always pop. We’ve known for several decades that driving economic growth through debt, instead of organic productivity, could leave us in an over-extended position, and that excess leverage could ruin the global financial system. Yet we knowingly let “financial innovation” run wild, and still cannot bring ourselves to rein it in, or prosecute abuses of fiduciary responsibility and the public trust.
Why? Why do we invariably choose to protect vested interests, rather than do what is sensible or rational?
Nobody really believes that fossil fuels are infinite, or that their exploitation won’t look like a bell curve in hindsight. That’s been true for our consumption of every natural resource.
Nobody seriously believes that carbon, sequestered naturally over hundreds of millions of years, then released into the atmosphere over a mere 150 years, would have no effect on the climate. That suddenly vaporizing over one trillion barrels of oil, over half a trillion tons of coal, and over 80 trillion cubic meters of natural gas would have zero effect. No. That’s simply not rational.
Nobody really knows how this planet could sustainably support over 9 billion humans. All models in which that is possible require a liberal dose of magical thinking about technological progress, and human altruism and fairness. We know from biology what happens to populations with exponential growth rates: they rapidly increase, hit the limit of carrying capacity, then die off even more rapidly. Does anyone think the human organism is somehow exempt from this well-understood phenomenon?
Nobody has politically acceptable solutions for any of these problems. Surely we can put them off a few decades more. All we do is try to create enough uncertainty around them to avoid facing them now.
Even so, no one would dispute that any of these challenges can threaten our very survival. So why can’t we deal with them?
Climate policy and energy policy
The answers to these questions inevitably circle back to a basic human foible: We value the present more than the future. It’s a species-scale instance of a monkey trap. According to folklore, one can catch a monkey by putting some tasty treats in a jar, coconut, or other container with an opening just wide enough to put an empty hand into, then chaining the container down. If the monkey cannot remove its hand while still clutching the treats, it will remain with its hand stuck inside and allow itself to be captured rather than letting go of the treats.
The metaphor is apt. Consider the recent brouhaha over the Keystone XL pipeline.
The sensible, rational response to climate change is simple enough for any child to understand: transition from fossil fuels to renewables. Doing so would simultaneously address the problems of fossil fuel depletion and climate change.
But that’s too threatening to the vested interests of the fossil fuel lobby, which utterly dominates our political system. So we tried to clamp down on emissions without providing a substitute energy supply, which isn’t really a solution. When that proved too difficult in climate summit after climate summit, and carbon taxes remained a non-starter, we turned to trying to stop a single pipeline which would have permitted more synthetic oil from the tar sands of Alberta to reach our existing, underutilized refineries on the Gulf Coast. That challenge was a lose-lose proposition for the Obama administration. On the one hand, they would have risked alienating their base by approving the pipeline, and on the other, risked some modest job-creating bi-partisan legislation by killing the pipeline proposal. So the president punted the decision until after the election by sending it back to the State Department for more busy-work review. The Republican leadership countered by attaching the pipeline review as a poison pill to legislation that would have extended the payroll tax cut. If they had wanted to extend the payroll tax cut, as Ezra Klein pointed out in the Washington Post, they could have offered a clean bill approving the one-year extension, and it would have passed both houses in 10 minutes flat. Instead, they employed brinksmanship to try to force the president to approve the pipeline quickly.
The risks of the pipeline itself weren’t even that significant, in my estimation. Look at this chart of the existing oil and gas pipeline network, helpfully provided by John Mauldin, and ask yourself why the Keystone XL would have been so much worse.
Yes, the Keystone XL pipeline would run across the giant Ogallala Aquifer, but so do dozens of others already. And yes, the tar sands are an environmental nightmare. I have called them the oil junkie’s last fix. But stopping this pipeline would not stop the development of the Alberta tar sands; that oil would simply find its way to market elsewhere—probably Asia. In short, stopping that pipeline would be a vanishingly small win for the climate hawks, if it were a win at all. Conversely, approving the pipeline would probably reduce our imports from hostile countries only marginally, given the dynamics of our refinery industry and a free(ish) global market for oil and refined products. There is no requirement that the refined products made from oil delivered by Keystone XL would only be sold to American consumers.
But look how far afield from the original problem we’ve gotten. Now we’re having twice-removed, picayune debates about how many jobs one pipeline might create, and arguing over a bile-soaked hairball of legislation that will accomplish nothing for the causes of climate change, nor energy transition. The pipeline wouldn’t even create very many jobs when compared to the enormous infrastructure-building exercise of energy transition.
We’re so far down the legislative rathole now, we can’t even remember why we started down it in the first place. The latest bill failed due to another Tea Party revolt in the House yesterday, and as of the new year, a two percentage-point payroll tax increase will go into effect on 160 million workers, unemployment benefits will be terminated for millions of jobless Americans, and reimbursement rates for doctors who treat Medicare patients will be reduced. We went from climate change to Medicare in just a few turns of the political sausage-grinder. The actual merits and risks of the pipeline aren’t even in play.
Even respected energy economists can’t quite seem to grasp that climate change and energy policy are inseparable. A long essay by MIT lecturer emeritus Dr. Denny Ellerman, published in the inaugural issue of the new journal Economics of Energy & Environmental Policy by the International Association of Energy Economics, argued that we should not conflate climate policy with energy policy, because the latter has been a failure. “Energy policy has evolved since the 1970s into the promotion of whatever form of energy has the requisite political support at the moment,” and therefore we should not let climate policy fall to the same fate. As if there were another option!
The root problem, as Harvard professor Lawrence Lessig argues in his new book, Republic Lost: How Money Corrupts Congress, and a Plan To Stop It, is that money buys results in Congress. Just 0.05 percent of Americans max out the Congressional campaign, he says, and only 0.26 percent give more than $200 each. Meanwhile, Congressmen spend 30 to 70 percent of their time chasing campaign funding. Corruption isn’t just a cancer on our electoral system; it’s completely endemic to it. The vested interests of this country, an even smaller portion of the country than “the 1 percent,” call the shots. Our leaders are stuck in a mon(k)ey trap, but rather than strike at the roots of the problem, as Thomas Jefferson put it, we flail uselessly at the branches.
As a final point, consider the recent comments by Olivier Rech in Le Monde. Rech was the point man developing the IEA’s oil outlook scenarios for three years until 2009. I have followed the IEA’s scenarios closely for many years, including those developed under Rech’s leadership, as I reviewed two weeks ago. Nowhere in those scenarios did I find the sort of stark realism that Rech now offers. He believes that oil supply has peaked, and expects an annual decline of 1 to 2 million barrels per day (mbpd) beginning in 2015-2020, with initial tensions evident by 2013-2015. Unconventional oil, and new oil development in areas from Africa to South America, will not be able to compensate for the background decline of mature fields, which is running at 5 percent per year. Conventional and unconventional oil combined will remain below 95 mbpd, he says.
This outlook is very close to mine, as I have detailed in this column and elsewhere. But the IEA never said that while Rech was developing their outlooks. Clearly, it was politically impossible for him to tell the plain truth while working for the agency. Instead, we were given some pretty stories about how demand would fall and unconventional fuels would rise, meeting in perfect harmony. Oil decline wouldn’t be an issue until well after 2020, they said.
Again, politics trumped reason. The vested interests the IEA represents simply would not allow the truth to be spoken.
It’s quite a mess we’ve gotten ourselves into, and it seems now that only radical measures can clean it up. How far we have strayed from the ambitions articulated in the Preamble to the Constitution, to “establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty.” A broad electoral revolt against all incumbents in the next election might shake some of the moneyed influence out of politics, but even that wouldn’t be enough to restore true popular representation. We would need sweeping reform of lobbying, and bold new initiatives aimed not only at energy transition, but transportation transition as well. Ultimately, we’d have to shake off our hallucinations of endless growth, and start facing up to the Politics of Less.
A tall order indeed.
Illustration: Monkey trap artwork by Brian Call, used by permission