[cube]

cube's explanation of "energy efficiency"

Suppose consuming 1 unit of energy creates 10 units of economic wealth.
As the energy crunch hits we'll eventually be forced to only use half as much == 0.5 units of energy.
Can 0.5 units of energy create 10 units of wealth through efficiency gains?
If yes then why didn't we start with 1 unit of energy to create 20 units of wealth?
Society always wishes to maximize wealth so the fact that we didn't start off with a 1 to 20 ratio is proof that it cannot be done.
Therefore it is impossible to maintain economic wealth with diminishing energy consumption.



simple logic

[MrBill]

Cube, since when does society maximize its wealth? Quite the opposite. We often witness society consuming its wealth. Sometimes in an unsustainable manner.

When energy is cheap and abundant there is no economic need to improve efficiency. There is no pay-off to do so. Let someone else do it and then reap the benefits as a free rider. It is scarcity and economic need that drives improvements in efficiency.

Creating wealth stems from combining land, labor, natural resources, capital, technical know-how and intangible assets into something of greater value. Something that someone else wants or needs and is able to pay for.

That may mean using more energy, but as energy declines the remaining energy becomes more valuable. Therefore, wealth can be generated by being able to produce renewable energy as other sources of non-renewable decline and become more expensive.

Producing food has become a low value-added, high volume industry. As energy becomes more expensive and prices for food, fuel and fertilizer rises in tandem that dynamic may change. There may be plenty of wealth created by growing food again. Or by owning the land on which it is grown as labor relative to energy will become cheaper.

What is sure that declining conventional sources of energy will change the economic relative-value between the remaining land, labor, natural resources, capital, technical know-how and intangible assets creating winner and losers. Probably resulting in lower living standards with more losers than winners. That scarcity and economic need will in turn drive innovation as well as the search for substitutes and alternatives.

[yull]

Without energy there is no economy, it's as simple as that. The world economy is 100% dependent on energy, it always has been and it always will be, as without energy nothing happens.

The economy can grow for a short period with declining energy but it will be only temporary. Less energy = less economy, in the long run.

[MrBill]

$this->bbcode_second_pass_quote('yull', 'W')ithout energy there is no economy, it's as simple as that. The world economy is 100% dependent on energy, it always has been and it always will be, as without energy nothing happens.

The economy can grow for a short period with declining energy but it will be only temporary. Less energy = less economy, in the long run.

[yull]

$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('yull', 'W')ithout energy there is no economy, it's as simple as that. The world economy is 100% dependent on energy, it always has been and it always will be, as without energy nothing happens.

The economy can grow for a short period with declining energy but it will be only temporary. Less energy = less economy, in the long run.

[yesplease]

$this->bbcode_second_pass_quote('yull', '')$this->bbcode_second_pass_quote('MrBill', '')$this->bbcode_second_pass_quote('yull', 'W')ithout energy there is no economy, it's as simple as that. The world economy is 100% dependent on energy, it always has been and it always will be, as without energy nothing happens.

The economy can grow for a short period with declining energy but it will be only temporary. Less energy = less economy, in the long run.

[MrBill]

BIC Syndrome - bureaucracy, incompetence and corruption - African-style claims another victim.
$this->bbcode_second_pass_quote('', '[')b]"It's all very nice having the cheapest electricity in the world, but that's irrelevant if you don't have any electricity at all."

Proceeding with the smelter — at a time when mines are threatening mass layoffs because of unreliable power supply, and voters can't plug in the kettle for a cup of tea — would be a risky political move by government, with national elections coming early next year.

While the terms of Alcan's deal with Eskom have not been made public, it is widely understood here that the power company guaranteed the smelter electricity at a price far below even South Africa's legendarily cheap power rates.

All of this leads to a few crucial questions: How did the South African government — the continental leader in governance, the guardian of the economy that produces a third of sub-Saharan Africa's economic output — mess up so badly? How did the growth-obsessed government of Thabo Mbeki it fail to notice the country didn't have enough electricity to keep toasters running, let alone to fuel an aluminum smelter, one of the most power-hungry forms of industry on earth?

[TonyPrep]

$this->bbcode_second_pass_quote('yesplease', 'I')n short, a decrease in energy does not always imply a decrease in economy. It can, but it isn't absolute.

[MrBill]

Yes, as measured by GDP output per energy input. As well OECD energy consumption delcined in the past 12-months, while the economy(s) posted positive economic growth. That growth cannot survive in the absence of energy inputs, but it is clear that we can do more with less. Cutting out recreational uses of energy does not materially affect production except in the services sector. One could plausibly argue that most of the service sector consumes wealth rather than creates it. That is not to say it is not important. Somewhere I read that we need just 15% of the working population to cater to all of our material needs. The rest of the 85% are taken up in service related industries out of necessity. The economy expands to include workers. They are not necessarily needed to keep it running. My job included.


UPDATE: although bottling water creates jobs, income and therefore consumption and economic growth I would hesitate to call it wealth creation. more like wealth consumption.
$this->bbcode_second_pass_quote('', 'P')lastic waste
Statistics Canada's report also noted that the amount of plastic waste generated by the consumption of bottled water has "raised concerns," since potable tap water is available in most Canadian communities.

According to the Container Recycling Institute (CRI), a U.S. nonprofit organization that promotes policies and programs to increase the recycling of beverage containers, more than 80 per cent of plastic water bottles in the U.S. end up being incinerated or sent to landfills. No figures were available for Canada.

Between 2002 and 2007, world consumption of bottled water jumped by 7.6 per cent per year, from 130.95 billion litres to 188.8 billion litres, according to the Beverage Marketing Corporation. The United States consumes the most bottled water on the planet (33.4 billion litres), while residents of the United Arab Emirates consume the most bottled water per capita (259.7 litres per person per year).

In the latest figures available for Canada, the Beverage Marketing Corporation says that In 2005, Canadians spent $652.7 million on bottled water. It adds that Canadians consumed a total of 1.9 billion litres of bottled water in 2005 — 60 litres per person — which represented a 20 per cent jump over 2004.

[isgota]

In a short answer, yes, you can have economic growth with declining energy.

And not just in short-term but also in long-term, even if OECD consumption had fallen last 12 months, some countries are performing flat or falling energy consumption patterns for about a decade:

BP Statistics since 1965 (Excel format)

- Denmark and Germany had been reducing slightly their energy consumption since mid 90's, and their pace it's accelerating right now amazingly. New Zealand as well.

- The UK is been almost flat since the end of 90's in a period of strong economic growth (no wonder that in a weaker economic growth it's energy consumpion felt near 4% last year).

- Japan was almost flat as well since the beggining of the century with a weak economic growth (but about 4% unemployment rate). Right now, it is starting to reduce its oil and energy consumption with little damage to their economy I guess.

And I bet this year we are going to see more broad consumption reductions in almost all OECD countries (unless we see 80$/barrel in the second half of 2008 ).

Best regards.

[TonyPrep]

$this->bbcode_second_pass_quote('isgota', 'I')n a short answer, yes, you can have economic growth with declining energy.

And not just in short-term but also in long-term, even if OECD consumption had fallen last 12 months, some countries are performing flat or falling energy consumption patterns for about a decade:

BP Statistics since 1965 (Excel format)

- Denmark and Germany had been reducing slightly their energy consumption since mid 90's, and their pace it's accelerating right now amazingly. New Zealand as well.

- The UK is been almost flat since the end of 90's in a period of strong economic growth (no wonder that in a weaker economic growth it's energy consumpion felt near 4% last year).

- Japan was almost flat as well since the beggining of the century with a weak economic growth (but about 4% unemployment rate). Right now, it is starting to reduce its oil and energy consumption with little damage to their economy I guess.

And I bet this year we are going to see more broad consumption reductions in almost all OECD countries (unless we see 80$/barrel in the second half of 2008 ).

Best regards.

[ddd]

$this->bbcode_second_pass_quote('MrBill', 'W')e may not have enough time to switch to alternative energy to run our existing infrastructure before petroluem goes into irreversible decline. It is quite possible that our existing infrastructure is simply unsustainable. Period. That is not a market failure. That is piss poor planning! ; - )

[isgota]

$this->bbcode_second_pass_quote('TonyPrep', 'Y')ou are citing examples of economies embedded in a world economy where the manufacturing industries have largely been exported by the countries you cite. So the global economy is, perhaps, the only example of a full economy right now. And energy consumption is increasing globally, at about 2% per year.

Perhaps you'd like to consider whether the countries you mention could cut themselves off from the rest of the world, tomorrow, and continue growing their economies with declining energy use.

[sjn]

$this->bbcode_second_pass_quote('isgota', '')$this->bbcode_second_pass_quote('TonyPrep', 'Y')ou are citing examples of economies embedded in a world economy where the manufacturing industries have largely been exported by the countries you cite. So the global economy is, perhaps, the only example of a full economy right now. And energy consumption is increasing globally, at about 2% per year.

Perhaps you'd like to consider whether the countries you mention could cut themselves off from the rest of the world, tomorrow, and continue growing their economies with declining energy use.

[TonyPrep]

$this->bbcode_second_pass_quote('isgota', 'S')orry but I don't buy the excuse of "exported manufacturing industries".

[MonteQuest]

$this->bbcode_second_pass_quote('MrBill', 'Y')es, as measured by GDP output per energy input. As well OECD energy consumption delcined in the past 12-months, while the economy(s) posted positive economic growth. That growth cannot survive in the absence of energy inputs, but it is clear that we can do more with less.

[MonteQuest]

$this->bbcode_second_pass_quote('isgota', 'I')n a short answer, yes, you can have economic growth with declining energy.

[yesplease]

$this->bbcode_second_pass_quote('TonyPrep', '')$this->bbcode_second_pass_quote('isgota', 'S')orry but I don't buy the excuse of "exported manufacturing industries".

[Precipice]

$this->bbcode_second_pass_quote('yesplease', 'E')conomic growth compared to energy consumption hasn't been linear AFAIK. From ~80-85, world energy consumption energy consumption was at an average of ~0-1%/year, while world GDP was at an average of ~2-3% per year.

[yesplease]

$this->bbcode_second_pass_quote('Precipice', 'B')ut has there ever been a period of sustained economic growth (eg at least several successive years) while energy consumption has been declining in a sustained way for the same period?