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September 8, 2010

Reaching the outer limits

Societies in the developed world are based on continued economic growth; a lack of energy in the future threatens that entire concept

By Alexander Ač

Several key trends suggest the West will soon reach the limits of economic growth. Chief among these is the declining supply of fossil fuels and the inability of markets to foment alternative energy sources.

As Western societies are based on continuous economic expansion, reaching these limits is likely to herald alarming consequences touching all aspects of life as we know it. As long as societies perceive economic growth as the most important thing and link this growth exclusively to increased consumption, the resulting disillusionment will be exceedingly painful, with globalization likely making this a pain felt by all.

With the help of science, technology and health care, we are living in the most complex civilization in human history. There are nearly 7 billion people living on the planet, many of whom can travel great distances in a matter of hours if they so choose. This interconnectedness created by globalization has changed (and in some ways improved) our ability to tackle local problems as such problems no longer occur in a vacuum.

For example, if crop failure or flooding affects one state, other areas experiencing a production surplus can easily provide aid. In this way, globalization can enable very effective use of natural and human resources. If China produces cheap steel or shoes and Spain grows the best tomatoes, the market will ensure that the resources for these activities are moved to the appropriate places. Such an idea was long ago proposed by David Ricardo in the Theory of Comparative Advantage.

However, interconnectedness also has its darker side. It not only leads to increased energy consumption (to help move goods great distances among other things) but also increases the dependence of individual regions on one another. If consumption growth, for example in the energy sector, is no longer possible, it disrupts the functioning of other sectors of the global system, creating a ripple effect.

The current economic crisis presents a good example. A mortgage-based crisis in the United States spread not only across the entire world but into other economic spheres.

Today, it is not possible to claim the European Union has no interest in the affairs of the United States, nor that China does not have to consider domestic affairs in Greece.

Cultural anthropologist Joseph Tainter, who researches the collapse of complex civilizations, claims that today, unlike in the past, no developed state can collapse on its own. Globalization ensures that any collapse will be global.

The risk of a global collapse is closely related to society’s growing complexity. Often, we attempt to deal with global issues with concern first and foremost for our local situation. Therefore, as time passes, the search for a solution that suits everyone becomes far more complicated. Looking at the short term, too often we tackle the easiest problems first and leave the harder ones for later. In this way, often the solution to a minor problem creates a plethora of new problems, resulting in ever-decreasing benefits to society overall.

Alexander Fleming needed approximately $20,000 for his research that resulted in the discovery of antibiotics. Saving millions of lives, antibiotics were without a doubt a great success. Thus, the return on investment was enormous.

In contrast, today, we invest tens of millions into research that aims to reduce the side effects of new medications (an example of solutions to small problems creating new ones). The investment returns on such research are therefore infinitely smaller.

This does not discount the possibility that scientists will discover a new revolutionary medicine or make other groundbreaking discoveries, nor does it suggest that we should stop financing basic and applied research. What the point illustrates is that solutions to increasingly complex and intricate problems inevitably decrease the frequency of major discoveries and as a result decrease society’s ability to enjoy exponentially greater results. Situations where solutions will themselves become the source of other, new problems will occur more often in the future.

Though nobody likes to admit it, we live on a planet where there are limited natural resources, and it is becoming increasingly difficult to replace these limited resources with more efficient alternatives.

The Industrial Revolution began with James Watt and improvements to the steam engine, which opened the road to a massive growth in the use of coal and eventually other fossil fuels (with the advent of the internal combustion engine). Today, 30 billion barrels of oil are used globally each year (one barrel equals 159 liters). For every four barrels used, only one new barrel of oil is discovered. In light of this, we can presume that even the largest of the newly discovered oil fields can satisfy the global demand for oil for a limited period of time. Additionally, the accessibility of newly discovered oil is becoming increasingly problematic.

In the past, the cost of oil was as low as $1 to $10 per barrel. The current price now hovers around $80 per barrel or higher, illustrating the increased demand. Moreover, the extraction of oil from less accessible areas increases the risk of accidents as seen in the explosion of the Deepwater Horizon oil rig, which resulted in the biggest marine oil spill in history.

While the drive to increase the use of nuclear energy highlights the possibility of switching to a non-fossil fuel system, to completely replace oil, at least 52 nuclear reactors with the same output as Temelín would have to be built every year for the next 50 years.

While making this switch along with moving toward other alternative energy sources is possible, it is a massive task unlikely to occur in the short term. And it’s even less likely to succeed as states will tend to focus on solving their own local problems first, leading to, as expressed above, an entire new set of problems.

People are most comfortable with what they know. Change, even if for the better, is often accepted with great reluctance. In terms of energy, this reluctance to change has long-term ramifications. A coal power station built today will operate for at least the next 50 to 70 years. Other massive undertakings, like nuclear power stations or deepwater oil extraction, result in similar time commitments.

Energy infrastructure is one of man’s most stable and unchanging infrastructures. Electricity networks are created to draw from secure, consistent energy sources. This is one of the reasons newly established renewable energy sources do not currently play a leading role in the energy industry: They have not yet become fixed or predictable, and new networks and infrastructures need to be created to fully utilize their potential. Any source of energy without greenhouse gas emissions will still take several decades to be fully integrated in our energy networks. The history of nuclear energy offers a similar lesson. Nuclear power has been around for more than 60 years but still only represents 6 percent of world energy consumption.

Coal and oil are still the world’s largest sources of energy. This is why a fossil fuel shortage is a critical (and imminent) problem. Unfortunately, the mechanisms of the free market will not be able to offer the necessary solutions as the market tends to focus on short-term profits at the expense of long-term trends. Tackling easy-to-solve problems first and looking for convenient answers (as is the case with utilizing resources that are easily accessible: oil and coal) is a dangerous combination. This coupled with societies based on the need for continued economic growth leads to a likely reckoning in the near future.

Studies show that we use more energy today to perform the same tasks than we did in the past. For example, to catch an equivalent amount of fish, 17 times more energy is used now compared with 150 years ago. A separate but equally harmful problem is that we use far superior technology in locating and harvesting these fish, meaning we can consume fish more rapidly. If this and similar trends go unchecked, it can’t help but result in future shortages – in both fish and fuel.

Much like in Lewis Carroll’s Alice in Wonderland, we are forced to run faster and faster just to stay in the same place.

Most policymakers seem to feel there are no alternatives other than further economic growth and expansion. However, GDP is not and cannot be the only measurement of prosperity and success. Sustainable growth needs to be more than a political catchphrase. It is impossible to ignore that the world is exhausting its fossil fuel deposits. Alternatives must be found or we must come to terms with the very real possibility that growth – and everything we base upon it – will come to an end.

– The author is a researcher at the Institute of Systems Biology and Ecology at Masaryk University. A version of this article appears in the current issue of The New Presence (New-Presence.cz)


  1. An outstanding summary of our energy predicament. Thank You. I predict you (and I) will be pilloried by comments that we are needlessly worried because there will be a magical solution just around the corner.

  2. This is all very true, the new economics foundation here in the UK has written reports on how we can change society and stop this ever boring existence of work to earn, earn to consume but I doubt policy makers will ever use them, so in the near future expect energy shortages but also food shortages as the food making process and delivery requires a lot of oil. This coupled with global warming will make the future a grim place.

  3. Most policymakers seem to feel there are no alternatives other than further economic growth and expansion.

    Thank you. One get’s tired of hearing every politician say that we should bash our heads against the same wall until we die because that’s what we have done in the past. Never mind the blood, just keep bashing!

  4. In two short decades the increase in students studying capital markets and their potential future growth sectors has multiplied in the developing world. Alongside come geologists with new electronic tools to identify energy resources financed if not by corporations then upward growth government systems. The time scales and demand for economic sectors requiring materials has shrunk and competition for existing commodities has its conflict zones. In a capital driven market there will be little that has had some research with development outcomes factored into time, labour, and eventual economic risk. Established fiscal markets and their currencies may face challenges from emerging capital growth sectors that feel they can do a better job than what passed as the status quo.

    Conflict resolution within human behaviour has had its study time in the developing world but few would say it has seen its benefit progress as fast as mans destructive elements. Into this melting pot come the religions which seem to offer faith to many despite the division and extreme interpretations of text. I liked the article and hope that human reason and resolution save life and the universal needs to sustain a meaningful life for all.

  5. Chad forged a relationship with China to drill for oil and refine it by building a refinery. They also installed a telecommunications system and built some schools. The Chad government were given money to help in ‘projects for their people’. The Chinese held the key technologies regarding exploration and refining of the oil although some training packages were encouraged. Estimates of Chad’s oil capacity flowing in good conditions were 11%. Many farmers sold their land for development and promises of income from government funds. Inevitably internal power conflicts led to arms buying and all the people began to gain was carnage from government/rebel conflicts. The Chinese policy was to stay out of internal ‘political’ affairs; after all, the oil was running. The local people began to live in declining poverty. The number of ‘companies’ operating in Africa is in the 1000’s. The conditions and legalities of ‘start up contracts’ has few regulations. In decades to come, the world will reach a point where ‘looking the other way’ may lead to events that no country can afford to compromise on.

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