Perpetual cycle: oil, growth, climate change

Perpetual cycle: oil, growth, climate change

Energy availability in society is very heavily based on fossil fuels, namely oil (petroleum) and coal. There are several sources and forms of energy other than fossil fuels, but they all depend basically upon oil for raw material extraction (mining) and for the subsequent complex economics of raw material processing and refining, product manufacture and marketing, with transportation at every level of economic activity.

Transportation by road, rail, sea or air is entirely based on oil for propulsion. Even electric propulsion is based upon electricity generated at some place, mostly with the use of oil. This demonstrates the almost total dependence upon the non-renewable oil resource in all modern economies.

However, many people believe that science and technology will deliver some solution to overcome this dependence including making present energy usage more efficient. This may be dangerous optimism or debilitating complacence.

Enhancing energy-use efficiency through science and technology developments can be a chimera, as Jevon's Paradox in environmental economics usually kicks in. For example, producing more efficient automotive engines to combat exhaust emission air pollution (less fuel consumption per kilometre and consequently less pollution per car) leads to increase in car sales, in turn to a huge increase in total fuel consumed and therefore consequently in the total exhaust emissions, effectively defeating the original purpose.

This also leads to industrial growth (in this  example, of the automotive industry) and growth of the economy as GDP increases. Thus economic growth by means of GDP growth is the central aim of "development" as it is defined in present-day economics.

Economic growth as announced every year is expressed as a percentage based upon the status at the end of the previous year, and thus is growth compounded every year. This compounded growth is exponential, and is practically endless or perpetual, and directly connected with the availability and consumption of energy, almost entirely oil-based, as explained above. Thus, energy management is the key to economic growth, and oil consumption increases along with GDP increase year-on-year.

In effect, there is a repetitive cycle of the economy taking inputs from the environment and producing money (the GDP figure) which is expended to increase, diversify and speed-up the mining-processing-manufacture- marketing process. This cycle results in depletion of natural capital (including oil), and the consequent pollution degrades the so-called ecological capital, with the attendant ill-effects on society due to population-displacements, impoverishment, environment-related health issues and social tensions. This endless cycle of economic growth amounts to the "carrot" of GDP always being out of reach of increasing numbers of people adversely affected by the depletion of natural and ecological capital.

This situation is neatly stated by economist Kenneth Boulding, who said that it is unrealistic to believe that the real-world of finite natural resources can support the present economic paradigm of perpetual economic growth.

Energy, mostly represented by oil, is a universal currency. Its extraction, like for any natural resource, is initially easy and cheap, levels out over time, and then it becomes increasingly difficult and expensive. This also relates to the depletion of oil reserves and lowered oil availability for consumption.

When money-supply and oil-production are considered together, we observe that these two grew at almost the same rate until 1971, since money production was based on the gold standard, and oil was produced and purchased using this money. But when money production (and supply) was delinked from the gold standard in 1971, it rose exponentially, even as oil production began to peak and level out. This sudden divergence between money-supply and oil-production can affect the world economy very seriously as societies are forced to adjust to lower energy availability, since oil reserves are finite.

Every industrial product from umbrellas to airplanes, manufactured using energy mostly from oil, with natural resources taken from the environment, eventually becomes "junk" and pollutes the environment (earth, water and air) at some place on the planet. The industrialised and industrialising world thus increasingly degrades the environment with the pollution caused by the increasing quantities of energy extracted and consumed in the cycle of extraction of primary resources, their processing, product manufacture, marketing and use. This self-limiting process uses the environment both as a source of materials and as a sink for disposal of wastes.

The process of industrialisation, spurred by the economic paradigm of perpetual growth, has caused enormous emissions of greenhouse gases (GHGs) which have led to global warming and consequent climate change.

Briefly, the perpetual quantitative economic growth paradigm has led to unending and exponential energy consumption which, in turn, has accelerated the generation of GHGs, which are the prime cause of climate change.

Therefore, howsoever good the intentions of the national action plan on climate change (NAPCC) may be, so long as unending economic growth, measured by GDP growth, remains the ruling development paradigm that drives domestic and international politics, the NAPCC will be a non-starter.

(The writer is a former Additional DG, Discipline & Vigilance, in the Army HQ AG's Branch)  

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