The Great Disruption in Continous Consumption

I applaud Thomas Friedman for publicizing previously unthinkable questions about the current worldwide crisis.  He and a few others see evidence that the American lifestyle of continuous consumption is unsustainable. (It's the same lifestyle that Dick Cheney said is non-negotiable.) He feels that 2008 was the tipping point.

In the meanwhile, the US government is creating money and giving it to the usual suspects who will try to get "consumers" to resume their spending so we can return to continuous consumption. Imagine this – unsustainable government spending to stimulate unsustainable consumer spending! What's wrong with this picture? Can this end well?

Below are some excerpts from Friedman's column.

Link: Op-Ed Columnist – The Inflection Is Near? – NYTimes.com.

What if the crisis of 2008 represents something much more fundamental than a deep recession? What if it’s telling us that the whole growth model we created over the last 50 years is simply unsustainable economically and ecologically and that 2008 was when we hit the wall — when Mother Nature and the market both said: “No more.”

We have created a system for growth that depended on our building more and more stores to sell more and more stuff made in more and more factories in China, powered by more and more coal that would cause more and more climate change but earn China more and more dollars to buy more and more U.S. T-bills so America would have more and more money to build more and more stores and sell more and more stuff that would employ more and more Chinese …

We can’t do this anymore.

“We created a way of raising standards of living that we can’t possibly pass on to our children,” said Joe Romm, a physicist and climate expert who writes the indispensable blog climateprogress.org. We have been getting rich by depleting all our natural stocks — water, hydrocarbons, forests, rivers, fish and arable land — and not by generating renewable flows.

“You can get this burst of wealth that we have created from this rapacious behavior,” added Romm. “But it has to collapse, unless adults stand up and say, ‘This is a Ponzi scheme. We have not generated real wealth, and we are destroying a livable climate …’ Real wealth is something you can pass on in a way that others can enjoy.”

Over a billion people today suffer from water scarcity; deforestation in the tropics destroys an area the size of Greece every year — more than 25 million acres; more than half of the world’s fisheries are over-fished or fished at their limit.

“Just as a few lonely economists warned us we were living beyond our financial means and overdrawing our financial assets, scientists are warning us that we’re living beyond our ecological means and overdrawing our natural assets,” argues Glenn Prickett, senior vice president at Conservation International. But, he cautioned, as environmentalists have pointed out: “Mother Nature doesn’t do bailouts.”

One of those who has been warning me of this for a long time is Paul Gilding, the Australian environmental business expert. He has a name for this moment — when both Mother Nature and Father Greed have hit the wall at once — “The Great Disruption.”

“We are taking a system operating past its capacity and driving it faster and harder,” he wrote me. “No matter how wonderful the system is, the laws of physics and biology still apply.” We must have growth, but we must grow in a different way. For starters, economies need to transition to the concept of net-zero, whereby buildings, cars, factories and homes are designed not only to generate as much energy as they use but to be infinitely recyclable in as many parts as possible. Let’s grow by creating flows rather than plundering more stocks.

Gilding says he’s actually an optimist. So am I. People are already using this economic slowdown to retool and reorient economies. Germany, Britain, China and the U.S. have all used stimulus bills to make huge new investments in clean power. South Korea’s new national paradigm for development is called: “Low carbon, green growth.” Who knew? People are realizing we need more than incremental changes — and we’re seeing the first stirrings of growth in smarter, more efficient, more responsible ways.

In the meantime, says Gilding, take notes: “When we look back, 2008 will be a momentous year in human history. Our children and grandchildren will ask us, ‘What was it like? What were you doing when it started to fall apart? What did you think? What did you do?’  Often in the middle of something momentous, we can’t see its significance. But for me there is no doubt: 2008 will be the marker — the year when ‘The Great Disruption’ began.”

via Sharon Astyk at Casaubon’s Book

More Reasons for Energy Independence

Our addiction to oil funds authoritarian governments, who fund terrorists. When these two forces, authoritarian governments and terrorists, gain economic power from the increasing price of oil, political freedom around the globe declines.

We are spending trillions to fight terrorists in Iraq. These expenditures have done nothing to ease our addiction to oil or increase our energy independence. Our leaders insist that the American lifestyle is not negotiable, but it appears that the oil producing countries have more power over the American lifestyle than our elected leaders. I wish it wasn’t so.

Below are some excerpts from an article on these issues in the New York Times by Thomas Friedman. It is not good news.

Link: The Democratic Recession – New York Times.

The term “democratic recession” was coined by Larry Diamond, a Stanford University political scientist, in his new book “The Spirit of Democracy.” Freedom House, which tracks democratic trends and elections around the globe, noted that 2007 was by far the worst year for freedom in the world since the end of the cold war. Almost four times as many states — 38 — declined in their freedom scores as improved — 10.

As the price of oil goes up, the pace of freedom goes down. As the price of oil goes down, the pace of freedom goes up.

“There are 23 countries in the world that derive at least 60 percent of their exports from oil and gas and not a single one is a real democracy,” explains Diamond. “Russia, Venezuela, Iran and Nigeria are the poster children” for this trend, where leaders grab the oil tap to ensconce themselves in power.

But while oil is critical in blunting the democratic wave, it is not the only factor. The decline of U.S. influence and moral authority has also taken a toll. The Bush democracy-building effort in Iraq has been so botched, both by us and Iraqis, that America’s ability and willingness to promote democracy elsewhere has been damaged. The torture scandals of Abu Ghraib and Guantánamo Bay also have not helped. “There has been an enormous squandering of American soft power, and hard power, in recent years,” said Diamond, who worked in Iraq as a democracy specialist.

The bad guys know it and are taking advantage.

But we also need to do everything possible to develop alternatives to oil to weaken the petro-dictators. That’s another reason the John McCain-Hillary Clinton proposal to lift the federal gasoline tax for the summer — so Americans can drive more and keep the price of gasoline up — is not a harmless little giveaway. It’s not the end of civilization, either.

It’s just another little nail in the coffin of democracy around the world.

U.S. Energy Policy Favors Oil

Thomas L. Friedman at the New York Times describes the political mess that constitutes U.S. energy policy (excerpts below). While I have some reservations about subsidies for alternative energy, I don’t think that subsidies for traditional energy (oil and gas) should be extended. Apparently the oil lobby and their fat wallets are more important in Washington than energy independence.

Link: Dumb as We Wanna Be – New York Times.

Few Americans know it, but for almost a year now, Congress has been bickering over whether and how to renew the investment tax credit to stimulate investment in solar energy and the production tax credit to encourage investment in wind energy. The bickering has been so poisonous that when Congress passed the 2007 energy bill last December, it failed to extend any stimulus for wind and solar energy production. Oil and gas kept all their credits, but those for wind and solar have been left to expire this December. I am not making this up. At a time when we should be throwing everything into clean power innovation, we are squabbling over pennies.

These credits are critical because they ensure that if oil prices slip back down again — which often happens — investments in wind and solar would still be profitable. That’s how you launch a new energy technology and help it achieve scale, so it can compete without subsidies.

The Democrats wanted the wind and solar credits to be paid for by taking away tax credits from the oil industry. President Bush said he would veto that. Neither side would back down, and Mr. Bush — showing not one iota of leadership — refused to get all the adults together in a room and work out a compromise. Stalemate. Meanwhile, Germany has a 20-year solar incentive program; Japan 12 years. Ours, at best, run two years.

While all the presidential candidates were railing about lost manufacturing jobs in Ohio, no one noticed that America’s premier solar company, First Solar, from Toledo, Ohio, was opening its newest factory in the former East Germany — 540 high-paying engineering jobs — because Germany has created a booming solar market and America has not.

Save-A-Watt Makes Sense in Energy

Thomas Friedman discusses a proposal by Jim Rogers, the chairman and chief executive of Duke Energy. "Save-a-watt" would reward utilities for the kilowatts they save customers by improving their energy efficiency rather than rewarding them for the kilowatts they sell customers by building more power plants. Excerpts below.

Link: The mother of all energy paradigm shifts by Thomas Friedman

Rogers’ proposal is based on three simple principles. The first is that the cheapest way to generate clean, emissions-free power is by improving energy efficiency. Or, as he puts it, "The most environmentally sound, inexpensive and reliable power plant is the one we don’t have to build because we’ve helped our customers save energy."

Second, we need to make energy efficiency something that is as "back of mind" as energy usage. If energy efficiency depends on people remembering to do 20 things on a checklist, it’s not going to happen at scale.

Third, the only institutions that have the infrastructure, capital and customer base to empower lots of people to become energy efficient are the utilities, so they are the ones who need to be incentivized to make big investments in efficiency that can be accessed by every customer.

"The way it would work is that the utility would spend the money and take the risk to make its customers as energy efficient as possible," he explained. That would include installing devices in your home that would allow the utility to adjust your air-conditioners or refrigerators at peak usage times. It would include plans to incentivize contractors to build more efficient homes with more efficient boilers, heaters, appliances and insulation. It could even include partnering with a factory to buy the most energy-efficient equipment or with a family to winterize their house.

"Energy efficiency is the `fifth fuel’ – after coal, gas, renewables and nuclear," said Rogers. "Today, it is the lowest-cost alternative and is emissions-free. It should be our first choice in meeting our growing demand for electricity, as well as in solving the climate challenge."

Because energy efficiency is, in effect, a resource, he added, in order for utilities to use more of it, "efficiency should be treated as a production cost in the regulatory arena." The utility would earn its money on the basis of the actual watts it saves through efficiency innovations. (California’s "decoupling" system goes partly in this direction.)

At the end of the year, an independent body would determine how many watts of energy the utility has saved over a predetermined baseline and the utility would then be compensated by its customers accordingly.

That is how you produce a more efficient energy infrastructure at scale. "Universal access to electricity was a 20th century idea – now it has to be universal access to energy efficiency, which could make us the most energy productive country in the world," he added.

Pulling all this off will be very complicated. But if Rogers and North Carolina can do it, it would be the mother of all energy paradigm shifts.