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It seems there are many camps when it comes to our energy and climate future. Some don't think there's a problem. Some think we'll not only solve our problems, but produce even more energy more cleanly. Some think we're doomed and have no chance of anything other than catastrophe. Some think we're in for a long, slow decline in energy and living standards. Who's right? Across several previous posts I've tried to articulate different aspects of this, but haven't tried to really spell it out directly. In large part that's because I don't know, and am skeptical of those who claim to know with certainty. More than asking who's right, the question I'm interested in is this one: what should we do?

Here I'd like to take a shot at thinking about this in a different way: as a hedging strategy. That is, what investments do we need to make to offset the risk posed by adverse outcomes? To figure that out, we first need to estimate the risk (likelihood and impact) of the various possible outcomes.

Let's consider the four possible scenarios for our energy future I mentioned above. I should mention none of these are mutually exclusive: they might happen in different regions of the world at the same time. Here's a bit about each:

Techno-utopia. Kurzweil and other technological utopians are right: solar power development proceeds at a pace far beyond what most believe is possible today and by the mid 2020s we power the whole world with solar energy. We also figure out a way around the non-substitutability of electricity with liquid fuels by both building a new transportation infrastructure that runs on electricity---electric trains and cars---and by developing efficient algae fuel production for legacy vehicles. In doing so, we also completely stop greenhouse emissions. These developments remove a huge drag from the global economic system and end climate change.

Business as usual. Global fossil fuel production doesn't increase or decrease, and a multi-decade shift to alternatives takes place. High oil prices prove to be a mild drag on industrial economies, which oscillate between slow growth and recession. The shift away from fossil fuels happens too slowly to avert dangerous climate change.

Slow reversal. Global fossil fuel production declines slowly, beginning with liquid fuels around 2015 and followed by natural gas and coal in the 2020s. High oil prices prove to be a significant drag on industrial economies, which oscillate between severe recession and partial recovery. The economic contraction, combined with the energy trap, prevent a serious, rapid transition to alternatives, and the decline proceeds for a couple decades before a temporary reprieve at a lower economic and energy level. Climate change worsens and has major effects, but not to the extent that it causes runaway warming.

Collapse. Global fossil fuel production declines moderately quickly, and geopolitical and financial dynamics create interacting positive feedbacks to the downside that cause a rapid disintegration of various nations around the world over the course of a decade or two. Global commerce and finance, industrial agriculture, and other complex systems grind to a halt.

How likely is each of these outcomes? Below I list what I think is the "conventional" estimate for the likelihood of each outcome vs. what I think is a more realistic estimate.

Future Outcome Conventional Estimate Realistic Estimate
Techno-utopia 1/8 1/8
Business as usual 3/4 1/4
Slow reversal 0 1/2
Collapse 1/8 1/8
As you might expect, the conventional expectation is for business as usual. If anything else is considered, it's either the techno-utopia or collapse scenarios, which are the two extremes that are deemed possible but not likely. (As Greer has pointed out, there's a tendency among many folks to jump either to cornucopia or apocalypse, other than business-as-usual, rather than to consider something less extreme.)

It's a bit worrying that a quite likely possibility---slow reversal---is not only not considered possible, but it's not even discussed as a possibility. Given Hirsch's estimates (among others) indicating that declining liquid fuels production will result in a proportionate decline in global GDP, and given the likelihood of a near-term decline in liquid fuels production, it seems quite likely that we'll experience at least a decade or two of economic decline (and after that, who knows). While the Limits to Growth scenarios were just that---scenarios, not predictions---we might describe their base scenario (Scenario 1) as a slow reversal. (Oddly, their Scenario 2, which is much like the business as usual scenario above, also results in a decline as the effects of pollution---in this case greenhouse gases---eventually have a major impact, but it happens several decades later than in Scenario 1.)

Others have done similar analyses and broken it down a bit differently, but the basic idea is the same (see Sharon Astyk's take on this---she has a different category that I'd place in between slow reversal and collapse that she thinks is most likely). I don't think either techno-utopia or collapse are likely, but I can't rule them out despite my best efforts at reasoning about them. On one hand, I suppose it's possible that technological developments will surprise us, and present a solution out of nowhere. On the other hand, maybe through unwise geopolitical / military actions or unprecedented financial chaos, global systems become fundamentally unstable and come apart at the seams beyond the ability of nations to repair them.

A hedging strategy requires some understanding of the possible impact of each possible outcome. Since it's difficult to assign values here, we might just make the simplifying assumption that the "cost" of missing out on the upside of techno-utopia is equal to that of the downside of collapse; same for business as usual and slow reversal.

Whether or not these estimates are even roughly right, they present a reasonable strategy for both individuals and communities, businesses and nations: invest in what you'll need for each scenario in proportion to its likelihood. That is, 1/8 of your resources and effort in expectation of techno-utopia, 1/4 for business as usual, 1/2 for slow reversal, and 1/8 for collapse. For example, in the context of a nation that means that 1/8 of the government's investments would be in far out technologies (fusion, space-based solar, nanotechnology, etc.), 1/4 would be in things they're funding today or could be funding today (conventional alternatives, 100% carbon tax and dividend, etc.), 1/2 would be in low-tech, low-cost, or more sustainable solutions (DIY solar/wind, microhydro, wood-gas, vehicle conversion, electric freight/passenger rail, small-scale organic agriculture, etc.), and 1/8 would be in failsafe systems (a new distributed SPR, distributed food reserves, medical supply reserves, backup communication networks, etc.).

I think such a strategy has two benefits, one practical and one psychological. First, by not putting one's eggs in a single basket---expecting only a single outcome---it's possible to avoid serious problems if that scenario doesn't come to pass. Second, it's easier to start planning and preparing for these possible scenarios if you know you don't have to have an exact idea of what is going to happen. If you disagree with the values I assigned, assign your own and start hedging! (I'd also be interested to hear about other possible future scenarios and/or their likelihoods.)

Originally posted to barath on Thu Feb 09, 2012 at 07:37 AM PST.

Also republished by Climate Hawks and DK GreenRoots.

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Comment Preferences

  •  Tip Jar (10+ / 0-)

    contraposition.org - thoughts on energy, the environment, and society.

    by barath on Thu Feb 09, 2012 at 07:37:18 AM PST

  •  Our financial system is pretty much set up (4+ / 0-)
    Recommended by:
    barath, G2geek, Gooserock, rmabelis

    to eliminate the possibility of 1 or 3. It won't tolerate either of them. So short of changing that, I'm guessing 4.

    •  Hmm... (2+ / 0-)
      Recommended by:
      G2geek, FG

      I'm curious what you mean. I would have thought it would only prevent 3 if anything, but only if the slow reversal isn't that slow.

      contraposition.org - thoughts on energy, the environment, and society.

      by barath on Thu Feb 09, 2012 at 07:53:04 AM PST

      [ Parent ]

    •  Yep Because There's So Much Money to Be Made (4+ / 0-)
      Recommended by:
      barath, TJ, G2geek, SolarMom

      so fast, and so high a fraction of it can be taken home at the top end, that incentives for system change can never come fast enough for it to be worthwhile to management and ownership to change course.

      Since Reagan, in just a few months' work and decision makers at the top can make their entire families rich for life. When changing economics begin to threaten that pace of returns, they're by definition a process of collapse.

      This is why economically both parties are rightwing. Nobody will tolerate the least mention of a purpose in restraining the top end so as to tie its fortunes to the fortunes of society and civilization. The farthest the Democratic rightwing party will go is to suggest the top end ought to pay a "fair share."

      The Democrats by themselves are sufficient to drive us off the energy/climate cliff.

      We are called to speak for the weak, for the voiceless, for victims of our nation and for those it calls enemy.... --ML King "Beyond Vietnam"

      by Gooserock on Thu Feb 09, 2012 at 07:56:07 AM PST

      [ Parent ]

      •  How do these preclude 1 and 3, though (1+ / 0-)
        Recommended by:
        G2geek

        I completely agree about the distortions caused by finance. I wonder though if that inherently changes what's possible. The techno-utopians aren't held back in any way by the financial system - their claim, as I understand it, has everything to do with the inherent positive feedbacks in technological development. Similarly, there isn't anything obvious that would prevent the slow decline scenario: it seems quite possible that we'll see severe recessions followed by 2 year partial (slow growth) recoveries in which everyone thinks "oh, everything is returning to normal"---rinse, repeat and you have a long-term slow decline.

        Also, since I'm talking in terms of likelihood here, I'd say that none of this eliminates the possibility of any outcome - just changes the values assigned.

        contraposition.org - thoughts on energy, the environment, and society.

        by barath on Thu Feb 09, 2012 at 08:05:54 AM PST

        [ Parent ]

    •  Our political and financial system (2+ / 0-)
      Recommended by:
      barath, SolarMom

      is pretty much set up to favor possibility 2. This is the only possibility today's governing elites can accept. Any other possibility will lead to new elites. Today's elites would rather see possibility 4 come to pass than accept a loss of power and influence.

    •  Not so much the financial system per se (0+ / 0-)

      ...but the political system, and the big oil money entwined with it.

      That's what pushes me toward 4...I think enough business as usual will go on that we will wind our way inexorably toward collapse.

      I hope I'm wrong.

      “Better the occasional faults of a government that lives in a spirit of charity than the consistent omissions of a government frozen in the ice of its own indifference.” -- FDR, 1936

      by SolarMom on Thu Feb 09, 2012 at 05:03:54 PM PST

      [ Parent ]

  •  Interesting, though I don't see such clear (2+ / 0-)
    Recommended by:
    barath, G2geek

    contradictions.

    Information Technology is following Moore's law but we are also hitting Resource Limits.

    That's actually near a consensus view of both technologists and financiers/speculators. The real question is can we sustain this kind of population level (7 billion and counting)

    The answer seems to be clearly no. So what is the solution?

    The the answer to that question will define the 21st century.

    •  The end of Moore's law, and funding. (2+ / 0-)
      Recommended by:
      DSWright, G2geek

      I recently wrote about what the future of computing might look like in an era of limits. Technological limits, combined with the financial limits (less funding for R&D, etc.) as a result of resource limits seems like it might slow down or stop technological development of the sort that the techno-utopians expect.

      Still, while I don't think it's likely to happen, I can't outright dismiss it, which is why I've given it a 1/8 chance.

      contraposition.org - thoughts on energy, the environment, and society.

      by barath on Thu Feb 09, 2012 at 08:12:10 AM PST

      [ Parent ]

      •  Well Ray is extrapolating to extremes, in reality (2+ / 0-)
        Recommended by:
        barath, G2geek

        the growth will be more modest but it will have those exponential returns. In any case the distribution obstacles of that technology and political implications thereof will likely stall much of the explosive growth.

        So life will get better in the developed world in regards to energy, healthcare etc. But the divisions will still exist and the developing world is fragile - especially China.

        Hence material progress can be undermined by financial pitfalls and more fundamentally resource limits - which will cause political conflicts that further jeopardize material progress.

        There is no real scenario where this kind of population and subsequent resources needed to maintain it is sustainable.

        Hard or soft landing - the softer the landing the easier the corresponding material progress will be.

        The future, as always, is a jump ball.

  •  another scenario: punctuated grind. (5+ / 0-)

    The larger component of this is "gradual decline" or "long slow grind." Population & consumption overshoot of resources (e.g. peak oil and also peak phosphorus etc.), and the climate crisis, combine to cause a rundown of civilization over a period of a number of decades.

    For the 99%, life becomes a social darwinist nightmare of "economic death by paperwork with booby-traps." The mortgage fiasco is a perfect example of this dynamic; and expect it to spread to other areas of the essentials in peoples' lives.

    The long slow grind is "punctuated" by occasional major crises, crashes, violent occurrences, and so on. Each one jolts the system into a lower state than before, from which point the grind continues. Terrorist bio and cyber attacks are examples, as are market crashes, and violent weather that continues to worsen under climate change.

    Meanwhile the plutocracy continues to engorge itself: dissipative structures feeding off the entropy that they themselves deliberately help to accelerate, like looters who stir up riots in order to loot.

    As for preparation, prepare for the high-consequence events even if low probability, and also prepare for the high-probability/medium-consequence events. Don't think that disasters fit your mode of preparation; take a dispassionate view of the disasters that are likely and prepare accordingly.

    The most important investment you can make is in your skills. You need a) skills related to the production of essential physical necessities, e.g. food, shelter, sanitation, etc.; b) skills related to the production of physical elements of a civilized society (production and maintenance of physical goods & services that are not quite as essential but are still considered necessities); and c) skills related to the continuation and propagation of the cultural elements of a civilized society, e.g. education, the sciences, the arts.

    Develop at least one skill in each of those categories, then go back and add more skills in each of those categories. Your local community college system may be a surprisingly good resource toward this end, offering a lot of practical hands-on courses in vocational & technical areas as well as courses in academic subjects that can at least get you started in areas you missed if/when you were in college before the shit hit the fan.

    Best of all, do these things with a group of friends who all share a similar outlook. Strength in tribes, same as it ever was. Don't try to organize a group from among random strangers; work with people you know. If you don't know anyone as it is, then join your local ecology group and ask around to find others and take your time getting to know them before you offer to organize preparedness plans with them.

    "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

    by G2geek on Thu Feb 09, 2012 at 08:18:46 AM PST

    •  Other examples (1+ / 0-)
      Recommended by:
      rmabelis
      For the 99%, life becomes a social darwinist nightmare of "economic death by paperwork with booby-traps." The mortgage fiasco is a perfect example of this dynamic; and expect it to spread to other areas of the essentials in peoples' lives.
      I've never heard of this possibility, and it sounds interesting (and possible) - would you be able to describe other examples of this?

      contraposition.org - thoughts on energy, the environment, and society.

      by barath on Thu Feb 09, 2012 at 08:21:25 AM PST

      [ Parent ]

      •  the "long slow grind" stuff is well known in... (0+ / 0-)

        ... the circles that deal with peak oil. Shouldn't be hard to find.

        At this very moment I'm about to scoot away from desk so I don't have time to do the dig. But we'll have a chance to talk more in depth soon.

        "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

        by G2geek on Thu Feb 09, 2012 at 02:35:12 PM PST

        [ Parent ]

        •  Ah... (1+ / 0-)
          Recommended by:
          G2geek

          Yeah, I've read a bunch about the long slow grind stuff, but just hadn't heard about the death by paperwork aspect of it you mentioned. I'll do some digging and see if I see it.

          contraposition.org - thoughts on energy, the environment, and society.

          by barath on Thu Feb 09, 2012 at 03:26:15 PM PST

          [ Parent ]

          •  death by paperwork is my phrase. (1+ / 0-)
            Recommended by:
            barath

            Keyword search on dKos "murder by spreadsheet" which is one version of it, having to do with health insurance.

            Another version of it is the whole fraudulent mortgage thing, where the fraudsters try to bury their victims in paperwork.

            Generally, whenever you see some entity requiring people to go through mountains of paperwork, there's a social darwinist trap being laid. This is part of a general syndrome where the administrative sector takes over society.

            By comparison, if the construction sector took over, everyone would be required to demonstrate competence at carpentry or plumbing (rather than paperwork) before they could buy a house or a car or whatever. You can see how absurd that would be, right? One particular trade taking over and demanding that their trade be used as the gateway to various rights and transactions.

            But what we have instead, is the "paperwork trade" demanding that everyone do paperwork.

            And what all of that is, is the attempt by an interest group to place themselves and their cohorts in a privileged position of access to whatever resource is involved. Like the way redwood tree root systems excrete something into the soil that makes it more difficult for other things to grow nearby: it's a competitive strategy in an ecosystem.

            "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

            by G2geek on Thu Feb 09, 2012 at 03:37:51 PM PST

            [ Parent ]

    •  Disaster Capitalism (3+ / 0-)
      Recommended by:
      rmabelis, G2geek, SolarMom
      Meanwhile the plutocracy continues to engorge itself: dissipative structures feeding off the entropy that they themselves deliberately help to accelerate, like looters who stir up riots in order to loot.
      This sounds like disaster capitalism - which I think you're right, will continue to go on.

      I remember hearing a grim observation about financial and societal collapses: a great many fortunes are made by the extreme misfortune of others.

      contraposition.org - thoughts on energy, the environment, and society.

      by barath on Thu Feb 09, 2012 at 08:22:51 AM PST

      [ Parent ]

      •  entropy gradients. (0+ / 0-)

        Any place you have an entropy gradient, dissipative structures will form around it to capture dissipating energy.

        And sometimes, increasingly often, they act to increase the net entropy of a system in order to provide themselves with more energy to harvest.

        Rioters & looters are one example, corporate wreckers who buy up companies to shut them down and sell off the assets are another.

        "Minus two votes for the Democrat" equals "plus one vote for the Republican." Arithmetic doesn't care about your feelings.

        by G2geek on Thu Feb 09, 2012 at 02:37:34 PM PST

        [ Parent ]

    •  The best of the new breed of fantasies (2+ / 0-)
      Recommended by:
      barath, G2geek

      dealing with current themes might be "The Windup Girl", a fully realized future bereft of carbon neutral energy sources (just enough fossil fuel to keep war machines and the "calorie men" in business), a reversion to physical labor to take up the energy slack, starved of naturally occurring foods but replete with genetically modified foods, creatures and organisms, rising sea levels and a global economic system that has been thrown back to the 1800s .

      “The first principle [in science] is that you must not fool yourself, and you are the easiest person to fool.” Richard Feynman

      by the fan man on Thu Feb 09, 2012 at 08:48:21 AM PST

      [ Parent ]

      •  I've been recommended that book (1+ / 0-)
        Recommended by:
        G2geek

        Been meaning to read it, but haven't read much fiction in a while...

        Does it deal with the transition from today to that future scenario, or is it all set in the distant future?

        contraposition.org - thoughts on energy, the environment, and society.

        by barath on Thu Feb 09, 2012 at 08:49:41 AM PST

        [ Parent ]

        •  Perhaps a not so distant future, some (1+ / 0-)
          Recommended by:
          barath

          background of how things came to be. Excellent writing, the author describes this world in great detail which also provides hints to the past. As disturbed as this world was, I wanted to see it with my own eyes. That's how well this book is written.

          Maybe more to what your looking for is Kunstler's "A World Made By Hand". Gives the blow by blow to the decline and fall of this round of civilization, though uses possible but not certain events (nuclear terrorism, epidemics) to precipitate collapse. Heard mixed reviews of how it reads as fiction. Haven't read it myself.

          “The first principle [in science] is that you must not fool yourself, and you are the easiest person to fool.” Richard Feynman

          by the fan man on Thu Feb 09, 2012 at 09:00:56 AM PST

          [ Parent ]

          •  I borrowed Kunstler's... (2+ / 0-)
            Recommended by:
            the fan man, G2geek

            It was pretty terrible... Maybe it's that I found it both unlikely in the world it painted (he seems to think, or at least portray that, we'd see full-scale collapse by the mid 2020s), and the story line wasn't captivating.

            And I've liked his previous non-fiction, so I was disappointed.

            contraposition.org - thoughts on energy, the environment, and society.

            by barath on Thu Feb 09, 2012 at 09:04:16 AM PST

            [ Parent ]

            •  Fiction writing is an art unto itself. Not many (1+ / 0-)
              Recommended by:
              G2geek

              can make the leap from non-fiction to fiction. "The Windup Girl" is not a probable scenario, it is dystopian sci-fi at its best. Stretches your imagination.

              “The first principle [in science] is that you must not fool yourself, and you are the easiest person to fool.” Richard Feynman

              by the fan man on Thu Feb 09, 2012 at 09:30:43 AM PST

              [ Parent ]

  •  what are the winning powerball numbers? (0+ / 0-)

    isn't it up to 200 million?

    seriously? slow growth, business as usual.

    -You want to change the system, run for office.

    by Deep Texan on Thu Feb 09, 2012 at 08:52:31 AM PST

  •  SOme notes (0+ / 0-)

    From the White Papers I've read 20% from solar, 20% from wind in 20 years is deemed doable by industry associations. With the right incentives this could be bettered by a little bit.

    Its interesting that Robert Hirsh serves on the peer review group looking at Polywell fusion. It seems the most recent iteration, WB-8, has shown scaling and improved containment, next step should be proton boron11 fuel, the holy grail. PB11 fusion is anuetronic, requires no thermal plant, directly converts to electricity.

    GDP is reliant on 4 things, energy, resources, population growth and productivity growth. Right now productivity is the only factor purely in the + side. Liquid fuels production is only part of the energy factor, and the ratio must change, otherwise liquid fuels availability will become more problematic as time goes by.

    I see something more optimistic than business as usual. GDP growth of no more than 3.5 % long term. 20% to 25% of electricity from solar in 20 years, 20% to 25% from weind in 20 years. Hydro storage leads the way over the same 20 years, the Hydro industry has some stunning numbers when looking at hydro improvements. Molten sodium solar gets established in the 2nd half of the same 20 years. in 25 yrs renewable storage starts to catch up with renewable generation.

    Once space based resources are tapped, that swings the equation back into an overall plus scenario. But this wont happen without cheap practical fusion, Re: Polywell.

    Why this wont happen

    Techno-utopia. Kurzweil and other technological utopians
    Right now our baseline path is so far from this happening - I just dont buy it. Not in the 2020's. Assuming a due dilegence effort, and assuming Polywell fusion works, then we can talk about 2050, and electric transportation, liquid fuels starting to be niche, renewable with storage providing us what we need

    FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

    by Roger Fox on Thu Feb 09, 2012 at 11:11:36 AM PST

  •  Have you considered Greer's "catabolic collapse"? (2+ / 0-)
    Recommended by:
    barath, SolarMom

    See his article The onset of catabolic collapse for an introduction.

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