As the Hydrocarbon Era Comes to an End, We Need a New Focus for Economics

January 10, 2022

Bart Hawkins Kreps and Clifford W. Cobb

Petrocor depot at Port of Oshawa, Ontario, Canada, July 2017. Photo courtesy of Bart Hawkins Kreps

A burst of new energy from fossil fuels made it possible for more people around the world to live in cities, but the trend won’t last if energy costs continue to climb. Fossil fuels may not be “running out,” but the cost of their extraction is rising to the point that fracking, for example, can continue only with subsidies. Since it is unlikely that renewable energy sources can match the net energy surpluses yielded by fossil fuels during the twentieth century, we could soon see a swing from urbanization to de-urbanization.

That train of thought underlies a new book: Energy Transition and Economic Sufficiency: Food, Transportation and Education in a Post-Carbon Society. Published in November 2021 by the Post Carbon Institute, the book’s twenty contributing authors collectively illustrate transformations in many facets of our lives that will help us build a sustainable society in a post-fossil fuel, post-economic growth era.

Although the fossil fuel era has been a brief blink in the evolution of human society, it got us hooked on cheap and plentiful energy to fuel economic growth. During the twentieth century theorists and policymakers came to believe that this growth was not constrained by physical limits. Mainstream political currents today, whether left or right, continue to accept that ongoing economic growth is possible, necessary, and desirable. The most common point of contention is whether a renewable resources economy can maintain the same growth that fossil fuels delivered up to now.

Energy Transition and Economic Sufficiency advances a different set of ideas. The ideal of infinite economic growth, we argue, is an illusion born of a particular historical circumstance—the temporary availability of so much fossil-fuel energy that resource limits no longer appeared to matter. But economic growth is already faltering, and it will not be revived by “green growth” while we transition to a low-carbon or zero-carbon economy. Energy transition, in this book, is a whole-culture transition with implications for every aspect of human society.

The ideal of infinite economic growth...is an illusion born of a particular historical circumstance.

In “The Future is Rural,” Oregon farmer and biologist Jason Bradford takes up the urbanization/de-urbanization theme. He reminds us that industrial farms depend on high energy inputs from fossil fuels, and that renewable energy resources are a poor fit for many current agricultural methods. As we phase out fossil fuels, farms are going to require many more workers.

Some economists treat food production as of relatively little importance, because statistically it is a small part of the economy. Not so in the future. The energy transition will highlight once again the irreducible, primary importance of food production. Accordingly, several chapters of Energy Transition and Economic Sufficiency are devoted to the production and distribution of food. Regenerative agriculture will become more essential as natural sources replace synthetic fertilizers. Integrative farming methods can produce healthier food while restoring biodiversity and sequestering carbon in soil. Contributors also discuss initiatives to produce food within urban and suburban areas that can strengthen community ties while lessening dependence on long-distance supply chains.

The availability of cheap, convenient energy can obscure many of the social and lifestyle choices we make while narrowing our focus to technical definitions of efficiency. Belgian researcher Kris De Decker looks at energy use historically and asks us to question some basic beliefs of high-energy modernity. In Western societies, we have come to accept that most energy services must be available every day and in every season. Light switches must work, trains and factories must be able to operate, and we should be able to consume any type of food whether it’s night or day, whether it’s hot or cold, sunny or cloudy, windy or calm. That belief is barely a hundred years old, and it allows us to pretend that we live outside the bounds of nature. Earlier generations were able to lead rich lives even though they took for granted that energy demand should be as variable as the weather.

A rapid energy transition must draw on so many modalities of learning that rigid borders between disciplines are a major hindrance. Neither electrical engineers, nor specialists in regulatory practices, nor experts in business administration, have adequate tools within their disciplines to fully understand or communicate the challenges of transforming our electrical grid. Jonee Kulman Brigham and Paul Imbertson lead a cross-disciplinary “Power Systems Journey” on the University of Minnesota’s main campus. They write about how their students, who typically include engineers, political scientists, graphic designers, biologists, and ecologists, come to understand energy as a complex socio-technical system while developing ways to explain energy transition to civic leaders, business groups, and the wider public.

Energy technologies are also intertwined with social and legal systems, and we should not assume that current ownership and regulatory regimes must prevail in a renewable energy future. Kathryn Milun, an anthropologist at the University of Minnesota Duluth, takes aim at the ownership structure of the electrical grid. Her essay on “Solar Commons” describes an innovative photovoltaic project owned by a trust through which profits flow not to a monopolistic corporation, but to residents of a low-income neighbourhood.

Bart Hawkins Kreps uses the concept of “Energy Return On Investment” (EROI) as a lens on the relationship between energy and economic growth. In this view, the total energy extracted in an industrial system is of secondary importance to the net energy remaining after accounting for extraction costs. An immediate example is the shale oil “revolution” in the United States. “Saudi America” triumphalism notwithstanding, much of the energy produced from shale was simultaneously used up simply to keep the whole fracking enterprise running, resulting in tepid economic growth, at best, for society as a whole. A renewable resource economy, Kreps argues, is not likely to reverse the trend towards lower EROI, casting doubt on the possibility of continued economic growth.

In common with several other contributors, Kreps also questions whether continued economic growth is even desirable in the first place. Much of the growth in affluent industrial economies is devoted not to satisfying human needs, but instead to expanding human wants, ceaselessly and insatiably. Unsurprisingly, this growth does not contribute to human happiness or health, even in the short-term, and, in the long term, such growth must end in ecological catastrophe.

As challenging as the idea may sound to a generation of policymakers obsessed with economic growth, a renewed focus on sufficiency will be a necessary part of the coming energy transition. As we lose the illusion of an economy without limits, we’ll need to discern which goods and services are essential for human health and prosperity. Achieving an effective and equitable energy transition in just a few years is a tall order, made even harder by the worsening effects of climate crisis and the need to repair the life-giving ecosystems that we have damaged. We can improve our chances of success if we get over the idea that more consumption must always be our goal, and if we learn instead when to say “enough.”

Energy Transition and Economic Sufficiency, edited by Bart Hawkins Kreps and Clifford W. Cobb, was published by the Post Carbon Institute in November 2021. It is available in PDF and in print. Contributors include Clifford W. Cobb, Bart Hawkins Kreps, Paul Cox, Stan Cox, Jason C. Bradford, Courtney White, Heather Gray, K. Rashid Nuri, Jon Steinman, Kris De Decker, Samuel Alexander, Brendan Gleeson, George Liu, Samuel Nello-Deakin, Marco te Brömmelstroet, Yuki Yamamoto, Nicola Cutcher, Jonee Kulman Brigham, Paul Imbertson, and Kathryn Milun.

 

Bart Hawkins Kreps is a former farm hand, highway construction worker, community newspaper editor, and a four-season cyclist for 40 years in Ontario and in the Canadian Arctic. He blogs at www.anoutsidechance.com.

Clifford W. Cobb is currently the editor of the American Journal of Economics and Sociology, which is devoted to analyzing economic, social, and environmental problems from diverse perspectives.

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