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« Stuck in Hurricane Sandy | Main | Who will win??? »

November 01, 2012


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John Wesley Harding

Thank you for the summary. Its nice to see this field moving forward.

That aside, I am curious if anyone has given thought to the notion that (seemingly) climate change is reaching that tipping point (extinction level event) precisely when EROI is beginning to significantly curtail growth. I am somewhat uncomfortable with this correlation, as it suggest that perhaps my alarmist tendencies are cherry picking facts and connecting dots to draw conclusions that no one is able to make yet.

There is no reason we should be confronted by both events at the same time. If there were more easily-extractable oil, we could easily warm the globe with constant exponential growth. And on the other hand, we could imagine another scenario where growth could be hampered long before the environment was in this amount of danger (an earth with less fossil fuels and biomass that we could tap into).

Humans evolved at the precise moment in time that the quantity & distribution of energy stored from the sun could be unlocked in such an amount to cook the planet, but not enough to fuel their economy past that. While I understand the law of diminishing returns, are we there yet? Does this perplex anyone else?

Is there some simple answer such as, we aren't really at the critical point yet (on both ends) but the overall certainty of any one bottle-neck event amplifies the attention we are giving either?

John Wesley Harding

"Money already in circulation represents existing wealth (real assets)."

Wouldn't this then assume all assets must be priced exactly at the amount of energy it took to make them (no profit), and they are securely exchangable for that energy in the future (without depreciation)? If so, this structure is immensely incompatible with reality (in terms of depreciation). Energy can definitely be used (and compensated for) to create an asset that is destroyed.

Regardless, I still think it is very difficult to construct a cohesive energy based system. Currency doesn't just represent wealth of existing assets (as you suggest in your example), but also debt at the same time. For every unit of energy that a person is compensated for, currency is given to them to promise that a reciprocal amount of energy must be done at some time to pay them back. It is as true in our system as it would be in yours.

If you could somehow quantify the amount of energy needed to produce a brick, and compensate me for it with an exergy-pegged currency, then I could then purchase an amount of food that took an equivalent amount of energy to produce as my brick (or I could save it and do this later). But over some long amount of time, there is no way you could guarantee that the currency I saved up during a long life of brick production could be instantly honored with the available amount of energy that population may have.

When you begin to then aggregate all such xenergy-pegged currency creation throughout time, it could quickly grow, as t approaches infinity, to dwarf the available energy of the society. In such a case, you would then have a similar crash. The currency may be asset-backed, but the real world runs on energy.

Interestingly, any type of system without a severe inflation rate demands constant consumption of energy to honor past consumption of energy. All work must be reciprocated endlessly to secure the health of a system, until the amount of required reciprocation dwarfs the system's ability.

The only way out is a simpler rudimentary system where there is no currency to promise future production, and all transactions involve assets created by previous production (IOW, trade and barter).

Or is there something I am missing?


George - Thanks for the comprehensive summary of the conference. I would have loved to have listened in to some of those sessions as an interested lay person - and it does seem extraordinary that the "finest minds" among the plutocracy are not attending and learning, at least from a selfish I-must-survive point of view. (Surely they will get it eventually that frantically amassing and constantly counting one's personal "wealth" is a huge and pitiful denial.)

Something has been bubbling away in my cranium for months and I have a simple though hopefully not simplistic question to ask you:

What would happen to the dynamics of the current progression towards the bottleneck if scientists miraculously discovered a way to properly tap the sun's energy (i.e. using a method that supplies new energy resources in excess of the energy required to harness them)?

What I am thinking of is a theoretical energy production system that immediately converts solar radiation into usable power on a large scale, replacing long-term solar energy trapped in fossil fuels. A big issue would be any pollutants also created, but for the sake of argument, let's assume this process is fairly clean.

The core of my question in other words is: Can species decimation be side-stepped by a breakthrough in renewable energy creation?

Even if this is theoretically possible albeit highly unlikely, I would have thought that remaining energy resources (scientific minds and available fuels) should be devoted to the global pursuit of this breakthrough. As a minimum, we Homo sapiens could go down fighting, rather than drowning in a sea of worthless dollar bills.

Thanks and best wishes, Oliver


John Wesley Harding,

I don't have time to post right now but demurrage or an expiring symbolic currency might be a starting point for the thinking.

I have thought of the exact same potential problem that you describe.

So has M. King Hubbert and he suggested a 2 year expiration for the energy "chits".
I have much more but won't be able to post until later today or tomorrow.

Also it is the VELOCITY of the currency running through the economic system that causes activity not the aggregate amount that exists in accounts.
That is a huge point almost everyone seems to miss or miss-understand.
Not saying that you don't get the point "just sayin".


Some other resource would become the rate limiter or absolute limiter.

Also the sun obviously imparts an enormous influx of energy to the earth on a daily basis but it is spread out over the entire surface and hence needs to be collected and concentrated.......that is the big problem.

Just some early thoughts on the subjects that you guys bring up.

Excellent observations and the reason that I always read this blog.

Joseph Ormond

Sounds like a great conference! Thanks for the summary. If any of it was recorded it would be great to actually watch the presentations.

John Wesley Harding


Thanks for addressing my comment. I would understand that the expiration of chits would in fact work to "balance" the system against the threat I mentioned, but then you are decoupling the currency in circulation from the existing assets + energy, and once again currency becomes arbitrary.

As time approaches infinity, you would have currency supply of 3 years of available energy that represents all wealth. IOW, 3 years supply of pegged chits could potentially purchase the current supply of exergy + an infinite number of existing assets. This action would essentially cause deflation (unless you made it illegal to sell an existing asset for less than the energy it took to make it).

Further, if you pushed "use it or lose it" upon a society, you would simply incite mass consumption & production, a problem in our current system?

Anyway you cut it, I think that a physics based currency has the same challenges than a fiat currency with 1 exception: economic fairness. No longer could a janitor get paid less than an executive who commanded the same amount of energy. Society becomes a non-profit, socialist system but the currency system does not become bullet proof.

This worries me...because if people are opposed to this capitalistic monster, how do we know that the alternative is really a more sound idea, or simply appeals more to our ideals? Are we preferring it because we have a preference for science and fairness? Thats fine, but shouldn't we be honest with ourselves and everyone else, instead of pushing it as some type of sustainable savior financial system (that has its own holes and arbitrariness)?

This goes back to my first post here...I abhor our current predicament (yet I sit at home and program for a living). Is it not possible that my personal perception is clouding my judgment on where we are on a financial and climate level? Its difficult to ever know for sure that you are not just like the 'end is near' sandwich board guy who has walked the streets for the last 100 years. This is something I wonder, but I find it healthy to examine myself along with system.


Thanks Porge - I understand what you say about the sun's energy being dispersed across the planet, but consider this:

If I sunbathe after covering my entire body in reflective material except for a one-inch square of exposed skin, the sun will burn that bit of skin. So there's enough energy in that narrow ray of sunlight to cook my patch of skin. Isn't it feasible that a process could be discovered to trap/tap into each ray of sunlight and harness it for power?


Solar thermal....I am sure you are already aware....


Here is Hubbert's take from 1940.
It all applies today.

Not saying I advocate his approach just that it is another way of looking at the problem and a solution.

Basically... forget the free market.
Money doesn't get used multiple times as a medium of exchange but is more like a cashiers check that can be used once by the holder only and is not transferable.
That keeps it linked to the energy production that it initially represents for it's 2 year life.
Use it or lose it but there is a finite amount in aggregate to use by the population. This takes care of the run away consumption that a demmurage currency that circulated would create.

Anyway this is a really interesting and insightful read and it is quite amazing that it was written back in 1940.

Md. Faruque Ahmed Jani

This is very nice blog & we get great information here.
[Moderator edit: Removed commercial URL]

George Mobus

John W. H.,

Your first question is unclear to me. What is it that is perplexing? Are you concerned that the dual events of climate change and running out of carbon-based fuels is too much of a coincidence?

As to your second post, I have actually covered these issues in prior blogs. Though I didn't mention it explicitly here, demurrage (in money systems) is a reflection of the Second Law and represents natural decay of assets over time.

Remember this presentation was just 15 minutes and there is much more between the lines that you can read about in past Biophysical Economics postings.


What would happen to the dynamics of the current progression towards the bottleneck if scientists miraculously discovered a way to properly tap the sun's energy (i.e. using a method that supplies new energy resources in excess of the energy required to harness them)?
Emphasis mine.

Well we already have. Evolution of "proper" capture and conversion systems has already taken place in the form of photosynthesis. We invented farming to maximize our access to solar energy and tools to make this access as efficient as we could. Given the Carnot limits on all energy transformations in doing work it is unlikely that we will discover anything delivering maximum power as well as photosynthesis. Anything that increases the power delivery, like solar PV or somehow genetically modifying algae to increase their efficiencies by a percentage point or two, require much more energy input to the overall system thus reducing the net power delivered!

I think there are actually good reasons the pursuit of breakthroughs has been lukewarm at best. Those who have the technical knowledge and understanding of the thermodynamics are aware that our science is approaching a limit WRT harnessing real-time solar energy in a way that could conceivably scale to meet our power needs in BAU or even a reduced economy.


Ah! I see you see the light! (no pun intended). Good answers.


I remember seeing a video camera in the back of the hall, but don't know for sure what they were recording. The slides, where used, will be posted on the BPE site and I will provide that link as soon as I know of it.


John and Porge,

Good discussion.


John Wesley Harding


It does seem like an improbable coincidence, so I wonder about my bias. Likewise, I also wonder if there is some type of universal equation/law of everything to explain exactly why.

Human technological and biological evolution has happened in the blink of a cosmic eye, allowing us to tap into ~3.5 billion years of solar collection (through photosynthesis). Thousands of different possibilities could have either produced a population that did not have enough net available energy to cause climate change before economic collapse, or so much they could have caused it without yet reaching that economic point of diminishing returns (that is, until food production in a warmer/drought world took its toll).

I understand how inter-related these ideas are, and how energy levels impact growth & technology levels. In the end, it just seems incredibly "tidy". In any case, climate change is an objective fact


Thanks for putting me right George. It seems my conjecture about real-time solar energy is dead in the water, owing to the laws of thermodynamics. However, I still can't quite give up on the idea that because every narrow band of sunlight can quickly burn a tiny patch of skin, these narrow bands could also be harnessed in real time (at more output than input power) given a leap of imagination by an Einstein of a thermodynamic scientist.

If this is "hope", at least it's a rational hope, as opposed to the fraudulent hope fraudulently promised by both arch fraud presidential candidates.

step back


Forgive me that I don't have my thoughts well organized just yet.

I see "money" differently.

I see it as including a number of different time and velocity factors. How fast can you spend it? (For different end goals) How fast can you repay it (when it is borrowed)?

For the above reasons, I think we need to think in terms of rates of energy expenditures (a.k.a. "power") not just in terms of raw "amounts" of energy.

Even "power" alone is not enough. In the end, it is concentration of power and its application over time that counts.

How much power do you have for how long and how does that influence your situation within a society that worships power?

I think that we need to come up with metrics that take all of the above into account. EROEI alone is insufficient.

John Wesley Harding

How relevant and important is the currency question in itself if it cannot prevent overshoot and non-sustainability?

The problem is not necessarily the misrepresentation of today's exergy, but rather, it is today's inability to recognize an impending decline in tomorrow's exergy.

The most sound currency system will still leave a society susceptible to collapse if it expands beyond tomorrow's ability to fuel its growth rate. Whether you use energy chits, clams, dollars, or whatever, if you hit a bump in the road and there is no energy to grow a society will face decline.

Without addressing civilization's inherit drive to mindlessly attain infinite growth, there is nothing that can be "fixed" for good.

It seems that only by throttling energy consumption to the exact constant amount that can be utilized from the sun each year (without oil investment), could humans ensure permanent sustainability (as all other fuel sources are more finite).

John L

"I don't have much hope that the science, which, in my opinion, is maturing and quite solid, will ever have much impact on policies that would make a difference in what is coming our way."

I observe economics as the only certain driver of global change. Environmental, health, legacy, even "economic security"... all are trumped by greed.

Fortunately, that same greed is propelling record high amounts of investment into PV research (at all levels: academic, govt, industrial). And based on (1) emerging demand and (2) a number of recent breakthroughs, I think we will remain near the same PV efficiency/cost slope tracking since the 1970's. This would put PV cheaper than fossil electricity by 2040, and steer 20-year forward power-plant capital largely into PV by 2030. I do believe my son will see the effective end of fossil-nuke plant construction before his retirement. I've blogged some recent thoughts and number crunching, if you're interested.

BTW, I met Prof Hall in Portugal at an APSO conference. He gave one of the most in-depth and compelling talks at ASPO (which I summarized in an Energy Bulletin essay).

George Mobus


Once again I find myself falling terribly behind in responding. The book project is reaching what seems like a crescendo. My work on developing a systems science and engineering program is also bearing fruit so I have to pay attention to that. All in all very busy!

But here are a few responses if anyone is still listening!

John WH,

I suspect that the seeming improbability can actually be reduced if we think about the total carbon cycle on the planet. Perhaps I should say 'cycles'. If we are just a mechanism by which carbon completes its short and long term recycling into and out of the atmosphere, then perhaps it is not just coincidence after all!

ON your second point: No argument whatsoever. This is an exercise in "if we had a sapient society then we'd do it this way..." It isn't a prescription for how we should do it now!


The energy that does the burning is in the ultra-violet range and our skin is particularly sensitive (absorptive) in that range. Various PV cells have been developed over time that react to different wave lengths in the spectrum, including UV but over all, the power delivered across the spectrum is still very low compared with burning a fuel and recovering work in the same time scale.


I don't think we see it differently. Money is unitized the same as joules unitize energy. The flow per unit time works the same way for both. The amount of work and the intensity can both be measured in units per unit time so I don't see the difference.

What I think you are seeing is the need to keep track of this dimension as well as just the total number of units. Actually EROI per unit time does consider power. In fact, Hall's concepts include the maximum power principle (fourth law of thermo?) that was developed by Howard Odum. Past some peak of power applied the amount of return starts to go down for each unit of energy used in extraction.

John L,

See my comment to Oliver above.

Your trend line analysis sounds too linear. There is no technology known (especially knowing the details of the PV phenomenon) that doesn't follow the diminishing returns law WRT: increasing efficiency. All of the major improvements in PV efficiency over the last 20 years have been through using rare (and expensive) elements in doping silicon. I honestly do not see a physical breakthrough coming in a process that has been so completely studied as the photovoltaic effect. But, it is dangerous to make absolute predictions!!!!



John L.

George, we are a long way from hitting "diminishing returns" on PV technology.

1.) Micro-inversion is today around $0.80/watt. Energy secretary Steven Chu predicts inversion at $0.10/watt. As an EE experienced in the cost curve of emerging technologies, I think we'll easily hit $0.20/watt by 2030.

2.) Since the 1970's, panel efficiency has improved at roughly 3% per year. Today, mass-market panels are 15% efficient. Sharp et al have demonstrated manufacturable cell efficiency in the 45% range. PV panel efficiency can "realistically" climb to around 55-60%. Let's be conservative and say efficiency improvement will slow by 1/3, to 2% per year. This gives us 30% efficient panels by 2040, effectively halving the cost of PV installation.

3.) Panel cost has halved in price-per-watt every 7-8 years for the last 30 years. I do think we're approaching diminishing returns here, but not quite yet. Today, mass-market panels retail for $1.00/watt. Once we've hit the raw cost of materials, I think panels will flatten around $0.20/watt by 2030-2040.

Today, we're around $3.00/watt for installed PV. Following conservative forecasts, we should be under $1.00/watt by 2030-2040. That's $0.02/kwh in sunny areas (California) and $0.05/kwh in cloudy areas (Seattle). And that's without government incentives.

Today, in the south west desert, we're building PV plants that produce $0.07/kwh electricity.

And that means PV electricity (coupled with emerging "night time and cloudy day" renewables) will be cheaper than fossil electricity by roughly 2040.

One of the big issues moving forward will be adapting our existing grid to renewable dynamics. California is now at 15% renewable electricity, with 30% forecasted by 2025. Germany should be 80-100% renewable by 2050. I see electricity in the industrialized world at 80% renewable by 2070-80.

John L.

By the way, a rather positive 21c forecast for electricity does not change our oil problems. Most transportation is expected to run on fossil oil through 2040. Fully 1/3 of U.S. energy demand is sourced from oil. One forecast puts 2032 as the year when hybrids+EVs outsell pure internal combustion automobiles, but globally there will still be over one-billion petrol-based vehicles and apps (cars, trucks, engines, aircraft, mfg stock, military, agriculture, derivative, etc.).

Fossil oil demand has more or less peaked in the Western world. Exxon predicts that U.S. oil demand will drop 15% (20M b/d to 17M b/d) by 2040. On the other hand, the non-OECD industrializing world (India, China, etc.) is predicted to nearly double its oil demand over the next decades, requiring an increase of worldwide oil production from 90M b/d to over 110M b/d relatively soon (It’s been noted that increased U.S. immigration could also spark a new population boom, re-kindling U.S. oil demand into 2040.)

Many energy researchers are not convinced world oil production can (affordably) supply 110-120M b/d. As world oil demand ramps up, it’s not clear that emerging economies can support healthy growth while paying >$125-150-175/bbl for oil. Increasingly expensive oil leads to worsening global economic malaise and more frequent and violent boom-bust cycles.

I have a reasonable confidence that PV will achieve “global grid parity” by 2040 (hopefully sooner) – and that the accelerating move to PV electricity will be a strong market signal towards rapidly prioritized electric mobility and storage research. Given the power of economics to change historical momenta, I would not be surprised to see pure electric vehicles by 2040 that outperform IC vehicles in every metric, including life-cost and range, with short charge times. For those requiring “fast fill” I would not be surprised to see the average 2040 “plug-in hybrid sedan” approaching 100 MPGe.

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