Can We Afford Our Future?

In an article published by the Common Dreams, Richard Heinberg, author of Afterburn: Society Beyond Fossil Fuels, believes our over extraction of fossil fuels is already eating away at our expectations of “future petroleum-fed progress.”. Heinberg writes: “Everybody expected a shiney new future… But, in the intervening decades, progress has begun to lose its luster. Why? It’s simple. We can’t afford it.”

Today, everything we do is almost entirely reliant on energy. Therefore, once we figured out how to extract and use coal, natural gas and oil—fuels that provided cheap, abundant, concentrated and easily stored and transported energy— economic activity began to skyrocket.

However, as fossil fuels are depleting non-renewable resources, they are also subject to declining resource quality. In fact, according to the IEA’s latest forecast, production rates for conventional oil— the most economically important of the fossil fuels—have stalled out during the past decade and are set to drop. Between 2004 and 2014, exploration and production costs for the oil industry rose at almost 11 percent per year. Up until recently, the growing production of unconventional oil — specifically tight oil in North America associated with the fracking boom—was the oil industry’s brightest star.

Although boom and bust cycles can be recognised throughout the oil and gas industry’s history, this current instance is thought to have permanent affects. As reported by Common Dreams, “Tight oil is expensive to produce, individual wells decline quickly, well quality varies greatly, and good drilling sites are limited in number.” Initially, these problems did not seem to be an issue; however, because the frackers proceed to over-produce over the short run, oil prices were driven far below the cost of doing business. As a result, drilling rigs are idled and production is declining.

The fossil fuel industry, which for decades extracted only the highest quality oil, coal, and natural gas, is now “increasingly faced with unpalatable future prospects (unconventional oil and gas, lower grades of coal) that are more expensive to extract and that entail higher environmental risks and costs.”

From this evidence, we can determine that future fueled by fossil fuels will be more expensive; however these expenses are just the beginning.  Every year, coal use costs the United States between a third and over half a trillion dollars in health, economic, and environmental impacts, according to a 2011 study which was co-authored by Richard Heinberg. These costs combined with the bills for cleaning up oil spills, for health impacts of fracking, and for the potential health costs of environmentally dispersed petrochemical-based hormone disrupters, ultimately increases the annual cost of fossil fuel use to a prohibitive level.

In addition, when calculating the costs of using fossil fuels, climate change must also be considered. Extreme environmental changes such as rising sea levels, prolonged drought and unprecedented heat waves would cost the U.S. an incalculable amount in relocation efforts, medical treatment and reduced agricultural production.

Once these costs are taken into consideration, it becomes clear that we simply cannot afford a fossil-fueled future. Renewable sources such as wind, solar and water are therefore the most logical alternative to fossil fuels.

However, despite the fact that a renewable energy future is both necessary and inevitable, replacing fossil fuel plants cannot simply be achieved overnight; an energy transition requires time and the replacement of an extraordinary amount of infrastructure. In addition, it should also be noted that solar and wind energy is intermittent and uncontrollable, meaning additional technology is required to adapt these sources to meet our demands 24/7.

In spite of the challenges, a full transition to renewable sources is  not only our best option, it is also affordable, once you factor in the expense of climate change. “In recent studies, Mark Jacobson of Stanford University and his co-authors have concluded that a full transition to renewable energy would be affordable.”

To estimate how much a total energy transition would cost, one must calculate the “costs of energy storage, grid redesign, and redundant capacity; plus required investments in new technology for the transportation, agriculture, and manufacturing sectors; in new equipment for building operations; and in energy efficiency retrofits to nearly every existing structure,” Heinberg explains. In the past four years, rates of investment in renewable energy have levelled off; while investment rates in Europe shrink, China continues to surge ahead.

However, one pressing question still remains; how can we afford to transition into renewable energy if the world is everlasting debt? This brings us to the financial tool which is used to deal with costs – credit. Over the past few decades, we have exploited this tool to deal with a number of mounting costs. As a result, today’s household debt, corporate debt, and government debt are all at or near record levels; global debt has increased by $57 Trillion since the financial crisis of 2008.

In fact, many economists believe our global debt—global debt currently stands at 286 percent of GDP—is unstable and must eventually lead to a deleveraging event that is comparable or worse than the Great Depression.

Ultimately, our goal is to produce enough energy to maintain current levels of mobility and amenity; however, how are we to pay for our energy future (fossil fuelled or renewable), without accumulating more debt? With the world GDP growth slowing rather than accelerating, it appears we would be unable to do all that spending using current account surpluses.

Once this evidence has been taken into consideration, it becomes clear that we as a global civilisation, simply cannot afford an increase in energy and material consumption. In response to this, Heinberg explains that in order to preserve our future, we must begin planning immediately.

According to Heinberg, our future will be “slower, simpler and less mobile than the Futurama daydreams of the 1960s.” In addition, we will have to live closer to the land and reduce our use of energy and materials, otherwise we are likely to see our future turn into a “dystopian, post-apocalyptic nightmare.”

Image Credit: Aaronazz/Wikimedia Commons

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