I've just returned from Burlington VT, the University of Vermont, hosting the 7th Biennial Conference of the US Society of Ecological Economics and the BPE co-meeting. The original intention had been to hold a joint meeting with BPE and EE folk interacting and attending each others' concurrent sessions. To some degree we managed to do that, but mostly it ended up with birds of a feather...
The perspectives are quite different. Ecological economics attempts to open the neoclassical economics model up to include the environment. Their main cause has been to find the right prices for ecological services, such as water purification in wetlands. The idea is to include those costs in accounting business practices so that companies that are directly benefiting or by their actions causing some destruction of those services reflect those costs in their profit and loss statements. However, of late, more of the EE crowd are recognizing that this is just not enough. There was a good deal more talk at the conference about the fundamental problems with capitalism itself. One of the themes of the EE conference was “renewing the biophysical roots” of EE. I think there is a growing realization that the basic model is actually the cause of our problems and needs to be completely rethought.
The BPE perspective treats the economic system as one open to the flow of energy and effectively closed to the flow through of matter. Energy is used to do economic work, transforming natural resource materials into usable goods (and performing services). Here we talk about the cost of energy to run the economic engine in terms the amount of energy used to do the work of extraction. The energy return on energy invested (EROI) has been declining for all of the fossil fuels and more so recently with the inclusion of fracking, deep water drilling, and tar sands mining. All of these non-conventional sources are very expensive to operate precisely because they take more energy to accomplish.
A number of papers reported on more refined analyses of this situation. None of the news was good. The main stream media continues to blather on about the US being awash in oil due to the tight-oil extraction technology (fracking). But they never bother to actually look at the production data for, say, the Bakken formation in North Dakota and Montana, or Eagle Ford in Texas. If they had a clue they would find out that in both of these locations the so-called flood of new oil is really just a trickle and that the depletion profiles of these wells does not reflect the assumed 'ultimately recoverable resource' (URR). They have a rapid early production followed by an equally rapid exponential decline and the total oil pumped is much less than a conventional well would bring. This means the returns per well drilled is slim to none. Moreover, we heard about the “sweet spots” or locations that have the best early production. There really are not that many of them and the surrounding areas come up poor or dry. This is not the picture of a revolution in oil extraction. It looks a lot more like a last desperate attempt to keep the illusion going.
There is a growing awareness that the financial and monetary systems are directly tied to energy. For example, one reason the oil majors have to keep pushing the “awash” story is that they need investment capital just to keep punching more holes. Their margins aren't actually that great. They can't fund new operations on past profits so they need to keep investors excited. The banks are definitely not excited. They are going to need huge returns on loans to pay for all of their prior sins and with interest rates this low that won't happen. The oil picture is basically screwed and the abundance of cheap fuels that everyone is proclaiming is just over the hill is never coming.
Gas and coal aren't very far behind in terms of EROI. No fossil fuel is destined to save civilization. So what about solar PV and wind. That still remains a fuzzy picture although there are some refinements in combining life cycle analysis (LCA) and EROI. One of the more promising ideas that has been kicked around for a couple of years is to use power instead of just raw energy. The concept is power return on power invested. The reason this is more promising is that it takes many factors into account as a function of time. In particular both solar and wind are intermittent sources. That is they are not continuously producing power so we have to look at the life cycle distribution of power when considering how much up-front to invest. I expect this type of analysis to play an increasingly important role in determining whether solar and wind really do make a lot of sense economically. The big hurdle for both of these is that intermittency requires some sort of backup or storage in order to smooth the power production to consumption curve out. Researchers are still playing around with exotic battery technology, pumped storage (pumping water into a reservoir when energy is produced but not needed). All of these have problems of their own and a lot more work is going to have to be done to figure out the long-range feasibility.
Another aspect of alternative energy sources that is starting to get more attention is something I brought up at the second BPE meeting several years ago when I was on my sabbatical at SUNY-ESF. In order to call an alternative source a “renewable” source it has to provide all of the net energy that society needs to operate plus enough in excess to power reproducing itself. In other words, unless a PV installation can provide ALL of the power needed to mine resources, process them, fabricate more solar panels and install and maintain them over their entire life cycles, then something in that process will need to be subsidized from an external energy source. It can't be wind, because wind has to do the same for itself. Maybe nuclear, though most people at this meeting are probably not terribly in favor of nuclear. One might think hydroelectric power could do the trick, but it turns out hydro is in the same boat with solar and wind. Dams have to be repaired. The generating equipment has to be repaired and replaced. The only real option are fossil fuels. Currently they are the main source of energy for production and installation, maintenance, etc. of these alternative sources. It will have to be shown conclusively that they can be self-supporting while supporting society's power requirements. I am still highly skeptical of their potential. One thing I am confident of is that even if they can replace themselves, say, every twenty-thirty years, society's needs are going to have to be substantially less than they are now.
My paper continued a theme I started at the first BPE meeting in Syracuse NY in 2009 and continued last October (in Burlington VT) at the fourth meeting (which I posted here). For a very long time I have recognized the deep relation between money and energy flow. I have been working with some students to formalize a systems modeling approach that will allow us to show this relation dynamically (by its effects on behavior of the system). This year's paper focused on a 'systems' viewpoint of that analysis. You can find it here.
I must say, however, that these meetings are truly academic exercises. While many of the participants sincerely believe that if we can just get the formulas right, we can fix society, the economy, and our culture such that we can go on living in some kind of civilization, I am quite skeptical. The main message from such folk seems to be something like: “If we can just find the way, then everything will be better.” I have yet to hear any of them provide the formulation, however. Hence, for me it is intellectually stimulating and satisfying to investigate these systems phenomena. But I feel more like a field naturalist who can observe and record but cannot interact with the subjects. For the naturalist the reason is that they don't want to change the behavior of the system they observe. For me it is because I simply see no way to change the behavior. The inevitable is baked into the cake. I think Biophysical Economics is one of the best ways to understand what is happening, but I don't see it providing any solutions that the general public would consider as acceptable.
Now back to my other “academic exercise” — a systems science text book!