Source of this article: European System Science Research Association
Author of this article: Nox, Tanxingzang, etc.
Introduction
As the conflict between Russia and Ukraine continues to escalate, the European energy crisis has become a fact. Whether it is the current short-term restart of coal-fired power in Europe, the measures to purchase natural gas , or the accelerated shift to clean energy, it proves the extreme importance of energy to economic development. Europe's gritting teeth to endure the pain of soaring natural gas prices is undoubtedly the ultimate magic weapon on future energy transformation. The expectation behind it is that it is possible to support economic growth with lower energy consumption and carbon emissions in the future. However, this expectation itself is based on a false economic conclusion that “economic growth can be decoupled from energy consumption.” This article analyzes the objective physical relationship between energy and economic activities, and reminds us that decoupling theory may obscur our understanding of the nature of economic activities, thus ignoring a more fundamental crisis.
penetrates the veil of various complex economic model , and all economic activities ultimately come down to the consumption and transformation of natural resources. The current reduction in primary energy consumption accompanied by current economic growth has become a problem: consumption during energy transportation, energy consumption at the production end of consumer goods, and dissipation in energy conversion at different levels are not paid attention to. Therefore, it is basically a false proposition that economic growth can be decoupled from energy and resource consumption. At the same time, the popular economic model also presupposes another premise that the three elements of labor, capital and technological progress in economic growth can be replaced by each other. However, energy is actually irreplaceable. There is an upper limit on the reserves of fossil energy, and new energy seems to be an alternative. However, if we take into account the differences in energy flow, transformation and quality, as well as the limited capacity of the earth's ecosystem, new energy actually has its upper limit. On the other hand, the energy structure has strong inertia. To improve technology and efficiency requires a lot of resources and manpower investment, and development requires a balance between consumption and profit.
Various facts show that The decoupling theory of economic growth and energy consumption is itself a dangerous myth. On the one hand, Western wealthy people borrowed the theory of decoupling to reduce fossil fuel consumption, but ignored the impact of energy price fluctuations on ordinary people's livelihoods and the vast majority of underdeveloped countries; on the other hand, the theory of decoupling obscures the importance of deeper system changes, and the energy and ecological crisis requires human society to change its fundamental understanding of economy and development and find new sustainable paths, which cannot be achieved without breaking the existing global society and economic system. This article was specially compiled by the Eurasian Systems Science Research Association for readers' reference. This article was originally published in "Monthly Review" and only represents the author's own views.
Energy, economic growth and ecological crisis
text｜Erald Kolasi
translation｜Nox, Tanxing
Source｜Monthly Review
▲ European Commission Chairman Ursula von der Leyen delivered a speech at a press conference held in Brussels, Belgium on July 20, 2022, calling for a plan to "save gas for a safe winter." Source: Xinhua News Agency
1. The myth of decoupling
Can economic growth last forever? The seemingly simple problem stumps modern capitalism . In the Outline, Karl Marx believes that capital cannot be restricted, that is, promoting growth and finding new markets are the primary survival priorities of capitalist politics and economy. This is about the life and death of the entire current order. Capitalism cannot recognize that there are any natural restrictions on economic growth, because it means that it will eventually perish. In order to pretend that capitalism exists forever and is invincible, most politicians and economists who support the current order have discussed the relationship between economy and nature, with the central meaning: economic growth can be decoupled from the material needs of human civilization (decoupling).Inspired by neoclassical theory, a new generation of economists began to argue that the economy could grow even without consuming additional environmental resources, although there have been many counter-proof in history.
Basically, economists usually define decoupling as a process in which economic scale expands and resource impacts (usually carbon emissions or energy consumption at a time) decrease. When the absolute value of resource impact drops, absolute decoupling occurs even if the economy continues to expand. Macroeconomic theory that supports capitalism measures economic scale and activity by calculating GDP (GDP). Despite being widely accepted, it is not entirely scientific to use this indicator as an accurate barometer of overall economic activity. Furthermore, the difference between carbon emission growth and economic growth, and the difference between economic growth and primary energy consumption, is often confused in public and academic discussions on the issue of decoupling, causing various confusion.
This article aims to synthesize and understand these different ideas and to give a comprehensive overview of the relationship between energy, economic growth and social development. In essence, it is because many people's arguments use inaccurate theories or misleading statements that have led to their controversy to this day. People often confuse the concepts of energy consumption and energy use, and the subtext is that they are actually not clear about the principles of energy accounting, or the important difference between the two. Many economists view energy and efficiency in a very different way from physics, which leads to confusion in interdisciplinary cognition.
2. The key role of energy conversion
Energy consumption is very complex and involves many issues of the nature of civilization. When most governments and organizations discuss energy consumption, they usually refer to primary energy consumption, that is, energy consumption that does not need to be converted in advance, such as oil; primary energy such as oil and coal need to be converted into secondary energy such as gasoline and electricity before it can have other uses or end uses. secondary energy can be converted into three energy according to its use. But primary energy itself is the result of early transformation and transformation in nature. For example, the carbon and hydrocarbon compound that constitutes the residue of animal and plant of petroleum is a secondary product of photosynthesis . This constitutes an important challenge facing common energy accounting methods: the concept of primary energy itself is theoretically doubtful.
There are two common methods for measuring primary energy: partial substitution method and physical energy content method. When fossil fuels are converted, energy consumption is directly equal to the energy of burned coal, but wind, solar and renewable energy are complex because nothing is burning when these energy sources generate electricity. This requires the above two methods. International Energy Agency (International Energy Agency) uses the physical energy content method. In the physical energy content method, only the electricity generated by these sources needs to be counted as primary energy, although electricity is actually converted energy. BP (British Petroleum) in its popular global energy report (BP Statistical Review of World Energy) adopts a partial alternative approach, which requires the assumption that the power produced comes from a virtual thermal power plant, and multiplied by an energy efficiency conversion rate. For example, if the factory's conversion rate is 20%, the energy consumption per unit is equal to the power generation multiplied by five times. These differences are important precisely because they can lead to divergence in estimates of energy consumption, especially for countries that rely heavily on renewable energy sources.
has a lot of discussions on which method is more accurate, but in fact that is not the core issue. In fact, outside the field of statistical accounting, only energy conversion is meaningful. Renewable energy electricity flows from nature dynamically; transporting fossil fuels to processing and refining points requires machines and human power to convert energy, which first extracts these fuels and then transports them to specific locations. This all happens before the real energy conversion and is recorded. calculation from the perspective of energy consumption will conceal the actual energy flow and transformation process required by economic activities, and may also lead to confusion and misleading in the discussion. The difference in GDP growth and energy consumption shown by economists and media is actually the difference from primary energy consumption, and then arbitrarily claims that economic growth has been decoupled from energy consumption. The assumption of
is extremely misleading. We generally define energy as a limited state of motion that can be transferred between different physical systems. It comes in many forms: chemical energy , thermal energy, kinetic energy and electrical energy. Chemical energy can be converted into mechanical energy, such as the combustion of fuel by a car engine and converts the generated thermal energy into mechanical movement of the wheels. Thermal energy, mechanical energy and electrical energy can also be converted into each other. Considering energy consumption only once will ignore and marginalize these energy conversions, but they are actually the key.
All economic exchanges from money to goods require energy conversion from various sources. And the flow of energy does not stop after the fuel is burned, but will continue to flow to all human behaviors. But some economic theories suggest that this subsequent flow does not exist, thereby artificially separating capital and labor from energy constraints and effectively cutting off the connection between physics and economics. In fact, we should not only focus on energy consumption once, but emphasize the total flow of energy (aggregate flow) , that is, the sum of all energy converted through our economic activities. The total flow rate per unit time is called the total flow rate (aggregate flow rate, AFR) . Generally speaking, the AFR of a wealthy society is higher than that of a poor society, which means that a wealthy society can generate and circulate more actual surplus wealth.
In addition to the crucial transformation process, energy quality is also very important. Different primary energy efficiency can be divided into high or low. For example, in 2017, an average of 7,812 British thermal units (BTU) of natural gas, or 10,465 BTU of coal. By this measure, natural gas is about 25% more efficient in power generation than coal. Energy thinker Vaclav Smil (Vaclav Smil) believes that the power density of energy is an important feature of economic growth and civilized development. He defines power density as the energy flux per unit area that can be released during energy conversion. Smier believes that fossil fuels are unique to capitalism because they have higher power density than other energy sources such as wind and solar. The greater the power density, the higher the output, and the higher the profit.
Other energy measurement methods are also imagined, but the key point is that the uses and attributes of natural energy vary greatly. And the only way to understand these differences is to track the conversion process of energy consumption at one time. If this key is ignored, false conclusions are drawn that all energy sources should be treated equally.
3. "alternative" fantasy and limits of
The knowledge basis of the decoupling theory comes from the universal paradigm of capitalist orthodox economists - neoclassical economic theory. Neoclassical is usually criticized for its unrealistic assumptions about society and a large number of mathematical inconsistencies, not to mention that it does not have predictive power in itself. What this article wants to remind you is the fundamental problem of this set of theories: denying physics and ignoring the laws of nature. In the 1850s, economist Robert Solow (Robert Solow) constructed one of the earliest models to describe economic growth. In different versions of these neoclassical theory, productive inputs such as capital and labor are combined with output or final products in economic transactions. Capital growth can increase output, while fixed asset depreciation will lower the data. Ultimately, the impact of growth and depreciation is inefficient, and growth returns to zero, and the economy enters a stable state. Neoclassicalism believes that if the output of in the economy needs continuous technological progress, that is, the total productivity needs to be continuously improved. This advancement means that productive output can increase without changing productive inputs. Solo proposed a mathematical model to detect the impact of this technical growth on GDP changes, but most of the mathematical results are questionable and actually cannot confirm his claim.In the expansion of Solo theory by
, productive investments usually include capital, labor and technology. Energy is sometimes classified into three traditional inputs, and sometimes classified as one input. Crucially, theories believe that productive inputs are independent of each other, that is, they can be replaced by each other as needed to maintain or increase the upper limit of production levels. Neoclassicalism believes that if society lacks natural resources, it can be replaced through technological innovation, efficiency improvement or other means. Therefore, the long-term sustainability of capitalism is materially possible, and all it is necessary is to find a social and institutional framework that can ensure this sustainability. Solow also agrees with this view, believing that nature will not limit economic growth, the reason is that if other elements can easily replace natural resources, then in principle there will be no ‘problem’, and the world can still exist without natural resources. Depletion is just an event, not a disaster. Although his model suggests that competition will eventually lead to natural resources depletion, his views actually represent the inevitable general attitudes of most economists.
To explain neoclassicalism, you only need a minimalist model: a small pizza restaurant. According to neoclassical theory, pizza shops can maintain or improve current production levels no matter what is short. A shortage of workers can increase the oven; a shortage of cheese can improve the efficiency of cheese making technology; a shortage of electricity can improve labor productivity, such as training workers to increase the speed of making pizza after shortening the construction period. Everything can be replaced, endless. This is the basic assumption of neoclassicalism, which is usually used to explain the relationship between energy consumption and economic growth. That is to say, improving technology or increasing efficiency can always increase production, even if this increase in production leads to some kind of exhaustion or instability in the wider natural world.
To break this carefully compiled fantasy, only a little basic physics literacy is needed. The most basic limitation of substitution comes from the thermodynamics , which mainly studies heat, work and energy. Thermodynamics limits the maximum efficiency of energy flow in technical systems. Automotive engines, power plants and photovoltaic cells have limitations in the ability to convert one energy into another, and technological advances cannot be overcome. I have proposed that the total efficiency of an economic system is defined as the ratio between the final mechanical work or electricity generated and the total primary energy consumption. The value of total efficiency has strong inertia in time because its substantial increase requires a large amount of investment, which can disrupt the existing economic order.
Once society adapts to a specific energy structure, it becomes difficult to change it because the elites rely heavily on this structure to obtain wealth and influence. Take German experience as an example: In 2000, the German government launched an ambitious energy transformation plan, hoping to shift the focus of energy to renewable energy such as wind and solar energy to reduce greenhouse gas emissions. Compared with 1990, Germany's greenhouse gas emissions fell by 28% in 2017. In the same year, renewable energy accounted for 13% of primary energy consumption. But the fact is that the significant reduction in carbon emissions since 1990 is actually largely due to the collapse of heavy industry after East Germany's reunification. And in the past eight years, Germany's greenhouse gas emissions have hardly changed. The unstable nature of wind and solar energy brings problems related to power storage, and prices will fluctuate violently due to weather conditions. To balance these and other problems, when the coal industry put pressure on the Merkel government to relax policy controls, the German government immediately undermined the energy plan and rebuilt a series of coal-power plants. Another major limitation of
substitution is the ecological instability caused by excessive economic growth. These unstable factors combine with each other and will stimulate and amplify existing natural phenomena. Capitalism is a typical highly dissipative system that often produces powerful amplifier effects, which create what Marx calls a "metabolic break" between nature and society, (metabolic rift) , which means that the ecological foundation of civilization is gradually eroding by profit-seeking and energy-intensive development, and the losses are actually more than gains. Some important critical points in nature should not be crossed, but if unlimited economic growth is pursued through alternatives, some key critical points will inevitably be broken through, which will further threaten the wider ecosystem that supports human civilization.
There is another problem. In small-scale and limited economic activities, substitution often occurs, from light bulbs, pizza restaurant ingredients, to wealth forms in certain countries. However, this substitution can only be temporary. The Pacific island country Nauru is a case: Nauru in the 20th century had a large number of phosphate deposits, which were highly regarded agricultural fertilizers. Nauru has dried up its excessive mining of phosphate deposits, but this global deal has brought Nauru to an extremely high standard of living in 1990. Nauru converts part of the revenue from the phosphate trade into public trust and further invests through the financial market. However, after the phosphate was exhausted, living standards in Nauru fell sharply, and most of the funds in the trust funds evaporated. person cannot eat money. Substitution can exist in the micro level of economic activities in the short term, but long-term substitution at the macro level is just a daydream.
There is a hypothesis that can help us better understand the alternative limitations at the macro level. Assume that the earth's economic activities are all achieved through solar energy. At present, most commercial photovoltaic power generation can only convert less than 30% of solar energy into electricity, while the remaining energy is lost in the form of thermal equilibrium and infrared radiation. The theoretical efficiency limit for photovoltaic facilities is slightly less than 90%, and even cutting-edge laboratory experiments cannot achieve this number. Even if according to the assumption of neoclassicalism, technological advances ultimately lead to photovoltaic products with conversion rates up to 90%, once they reach the theoretical ceiling of efficiency, they can only build more solar panels if they want to further increase their power generation, which will occupy more land. Due to the limited surface area of the earth, it will eventually reach the production ceiling of solar energy. Renewable energy cannot solve the global ecological crisis under the capitalist economic system, that is, use renewable energy instead of fossil fuels. As long as we are still pursuing unlimited economic growth, the earth's civilization will eventually be destroyed within centuries.
Economists always believe that on the basis of improving knowledge and technology growth, even if the quantity of items remains unchanged, their monetary value will continue to increase. But they overlooked that technological innovation itself requires investment. Changes in the production cycle depend on the electrical, chemical and mechanical energy that can be used for research and training. Programmer Write new programs requires energy to think and type, and the computer itself also needs power to continue running. Without continuous energy conversion flow, it is impossible to improve the computer program. Increased productivity requires energy flow, which means that all forms of technological change are closely related to the energy conversion on which humans rely on.
In short, technological change itself is subject to hard physical limitations, and at the same time, the quality growth brought about by technological change is also limited. power plants are typical of technology limitations: for decades, power plants have been operating at the highest efficiency, and further improving power generation technology has been difficult. The failure of the expansion of the reactor in nuclear power plants will expose the technical limitations, and other impressive technologies, such as fusion reactors, will eventually achieve the same goal. The profit margins of capitalist inflation depend to a large extent on the energy-intensive basis on which its existence relies. Without this foundation, capitalism will no longer exist.
4. The relationship between energy, growth and emissions
All economic activities require energy. In recent decades, although per capita energy consumption has been declining, the US economy has continued to grow, but the speed has declined. In addition, the cost associated with primary energy consumption accounts for a smaller share of total U.S. demand. Based on this, many economists and authoritatives concluded that energy consumption and economic growth have been decoupled. The narrative “an economy that has begun to use natural resources at higher energy efficiency and greater power density can achieve growth even in the case of a drop in energy consumption” is established.But in fact, economists such as David Stern (David Stern) and Robert Kaufmann (Robert Kaufmann) clearly show that once the difference in energy quality is included in the analysis, it will be found that the growth of energy consumption in the United States is actually closely related to the growth of total demand.
11 The energy crisis of the 1970s prompted the United States to reduce per capita oil consumption and focus on improving efficiency through the use of other natural resources, which led to an increase in natural gas consumption. The shift to natural gas and renewable energy has helped to significantly reduce carbon emissions, with U.S. greenhouse gas emissions peaking in 2005 and beginning to decline year by year, and by 2016, a drop of 14%. After that, the downward trend gradually stopped, and emissions in 2018 actually increased by more than 3%, the largest increase in eight years. The transportation sector is crucial to economic growth, and overactiveness in the transportation sector is the culprit of the surge. This shows that even if there are macro-level efficiency improvements and technological innovations, as long as the economy still prioritizes growth, large-scale emission reductions are almost impossible.
▲ US carbon emission trend chart, unit: 1 billion tons. Source: US Energy Information Administration
A large number of studies on different countries and regions have shown that primary energy consumption is positively correlated with economic growth, and the correlation has a fundamental causal relationship. Over the past few decades, global economic growth has begun to slow down and global energy consumption growth has declined. Several major economies such as Japan, , EU, , have entered a period of stagnation caused by extremely low growth rates and population aging. There have been signs that the economic irrationality of today’s financialized capitalism and what natural resources we choose to use will limit future growth potential.
Capitalism is losing momentum and cannot significantly reduce total emissions. Greenhouse gas emissions have been stable for many years, so global economic leaders have begun to believe that economic growth can actually be decoupled from harmful emissions. In 2016, the International Energy Agency proudly announced: "The decoupling of global emissions from economic growth has been confirmed." However, in 2017, global greenhouse gas emissions rose sharply. Scientific reports on the dangers of global warming are increasingly worrying, while emissions rose again in 2018 and were growing higher than the previous year. It turns out that the decoupling of emissions from economic growth is not as simple as the global elite initially thought. (Translator's note: In 2019, the global carbon emissions decreased by about 2-3% under the transformation of new energy, and the total global carbon emissions increased; in 2020, due to the economic stagnation caused by the epidemic, the total global carbon emissions decreased by about 6%; in 2021, carbon emissions in all regions increased compared with 2020, and carbon emissions in developed economies decreased slightly compared with 2019.) There is another problem with this theory: The way the elite class calculates carbon emissions. Governments and various organizations usually measure greenhouse gas emissions from a manufacturing and production perspective. If a U.S. company sets up a factory in India to produce goods and sells it to American consumers, the emissions from that factory will be recorded in India, instead of the United States. This process is called geographical substitution, where companies at the heart of capitalism transfer ecologically destructive manufacturing to developing countries , which has a large amount of cheap labor, has been the main reason for the differences between Western carbon emissions and economic growth. In other words, measuring emissions from the consumption point will reveal that without any decoupling, all multinationals can do is to keep shifting production before they have nowhere to go. But geographical substitution is also limited.
In addition to comparing total demand with emissions, another approach to understanding the material basis of economic growth focuses on the process flow of raw materials before reaching the final consumption point. In 2012, Australian researchers analyzed the total raw materials exchanged between countries through international trade , and introduced the concept of material footprint to locate raw material consumption into the final demand economy. They concluded that for every 10% increase in GDP, the country's average [material footprint] will increase by 6%. The achievements of advanced economies in decoupling are smaller than those reported, and they do not even exist at all. They also estimate that about 40% of raw materials are used to promote the export of goods and services to other countries, suggesting that reducing international flows of global capital may be key to solving the growing ecological crisis. (Thomas O. Wiedmann et al., “The Material Footprint of Nations” Proceedings of the National Academy of Sciences)
There is another fact that it can indirectly prove that it is too early to say that economic growth and resource consumption can be decoupled: in the past three years, the average life expectancy of Americans has been declining continuously, while the US economy is growing. But the media did not publicize the decoupling of average life expectancy from economic growth. The destruction of the decoupling fantasy gives us an important reminder - we should not easily draw a major conclusion based on the slight changes that have only appeared in recent years.
5. The social effect of accelerated crisis
The early stage of the ecological crisis has arrived. The Puerto Rico hurricane in 2017, and the historic drought that triggered the Argentina recession and even the currency crisis in the same year. All kinds of disasters are just the beginning of the tension that mankind faces in the coming centuries. (Translator's note: From 2019 to 2022, natural wildfires occurred in the Americas, Australia, Asia and other places, Pakistan suffered severe floods, major rivers in Europe were cut off, drought and rain and snow disasters in the United States frequently occurred, and natural ecological crisis is escalating.)
Ecology and other left-wing economists have long criticized neoclassical thought as a dangerous fantasy, and some elites have also begun to change their positions. In 2016, the International Resource Panel concluded that since 2000, the growth rate of global material consumption exceeded global GDP growth, adding that "global material utilization began to decline for the first time in a century." Eric Waerness, former chief economist at Norwegian oil and gas company Equinor (Eric Waerness), , wrote that economic growth and energy consumption are "impossible" decoupled. Optimism ultimately gives way to realism, even if many of these individuals and organizations forget the next necessary step: a comprehensive social, political and economic confrontation with capitalism.
Analysis of class and society is crucial to understanding the crisis that capitalism is about to arouse. To a large extent, ecological crisis is the product of the wealthy's large amount of energy consumption. Any solution to the ills we currently have to first completely solve the class differences that cause these ills. Western wealthy people have launched various market-oriented tax and pricing plans to reduce the consumption of fossil fuels, but do not consider that these proposals will harm the livelihoods of ordinary people. The correct way to protect the masses during this transition period is to strengthen social control over fossil fuel-related production and distribution cycles and implement temporary price control on the consumer side. In this way, capitalists will lose profits after destroying the ecosystem, and the masses will not have to face any sudden price shocks.
The class structure of modern capitalist society can be roughly divided into three categories: employees, managers and capitalists. Capitalists make huge profits with assets and companies, and they can maintain their current standard of living without working, but employees and managers are different. Most workers are increasing their debts, and the financial control of capital over the rest of society also makes it difficult for workers to demand higher wages and better living conditions. The result is that a small group of rich people formed a chaebol group, completely hijacking the political process and being able to easily resolve any demands for democratic change.
Although these resistances exist, the social and ecological demand for new directions is growing rapidly every year. A democratic, ecological socialist civilization needs to limit the commodification of natural resources and at the same time closely link the fate of the rich to the poor. Assure everyone six universal rights: food, work, housing, health care, child care and education, limiting and constraining wealth growth.It can achieve this by imposing a wealth tax on capital and socializing most of the economy, thus allowing limited and heavily regulated markets to survive. Capitalists around the world are hoarding a lot of financial wealth, and they refuse to invest in the real economy because of low growth rates and little chance of obtaining excess profits. Governments should control the vast majority of this wealth and invest it in improving social services, rebuilding infrastructure and providing affordable health care.
Our political and business leaders have been immersed in capitalist propaganda throughout their lives. They have believed that economic growth is a magic pill that can cure all sins. For most people in modern society, according to current capitalist calculations, alternatives to economic growth are even unimaginable. But imagining and realizing these important alternatives may be the only way to save human civilization from imminent disasters. We should not organize our society and economy around the principle of growth, but around the principle of sustainable human development, which requires the metabolic stability of a wider ecosystem. By strictly limiting the levels of production and consumption to a certain dynamic balance and emphasizing improving the relationship between people and society, the periodic bubbles and crises of capitalism can be avoided and the lifespan of human civilization can be extended. By allocating more wealth and resources to workers and the general population, we can build a fair society without the recurring attacks of political and economic instability. Crisis from economic to ecological is about to converge, and we need to propose a new vision for social order.
*The article was originally published in MONTHLY REVIEW (JUN 01, 2019). Due to space limitations, some abridged, and the subtitle was self-produced by the Eurasian Systems Science Research Association.
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