Last year, some realizations hit me hard. For me, 2023 really saw the beginning of the end of what we might call the industrial way of life. For many years I have advocated transitioning to sustainability. Below I outline why I now think it is too late, instead the focus should be on mitigating the effects of destabilized weather patterns. It looks like several tipping points may be inevitable. At least we must prepare.
Economics as practiced is badly prepared. Just witness the debacle of Nordhaus economics Prize for his work that maintains 3 degrees of warming will not affect GDP. We cannot follow the advice of economists. We need newer and more appropriate advice relevant to the situation we are in.
The material basis of the economy will have to come to an end
It is not known, apparently, how to manage an economy that is not growing to give every citizen an acceptable standard, and it is not known how to grow an economy without increasing material and energy inputs. Increasing inputs is seen by the academic community as unlikely to happen.
The scale of the challenge is not widely understood by policy-makers so we can not expect a timely rational response The diagram below illustrates the flows of material through the economy in gigatonnes.
Source: EU
There are two important aspects to bring to the attention:
- Stocks are HUGE. Materials are not being recycled, rather they are accumulating in infrastructure as stocks. Indeed, the mass of anthropogenic material on Earth is now larger than all biomass on Earth. (See the diagram at the end of this blog post. )
- The current amount of recycling going on is minimal, from 4 to maximum 12%
In 2023, Simon Michaux consulted with the EU as well as the Finnish and Swedish governments on his work with minerals and the limits to growth. His main conclusions: there is neither the time to, nor minerals available to, replace fossil fuel supplies to reach these countries’ net zero ambitions. At the same time during this period of transition, he expects fossil fuel supply to be lower than demand, so continuing on the current path is not an option. Materials handling needs to be radically re-thought based on what can be made to work.
Michaux proposes circular economy solutions. Urban and industrial symbiosis in clusters is one of them. Other approaches might be to use the existing stocks of material to extract new ones or adapt to new uses.
Either way, the circular economy presents a challenge for conventional economies. The very paradigm underlying how the economy works must be adopted to circularity. During the year, economist Steve Keen published statistics on GWP (gross world product) and world energy use. As you can see from the diagram below, taken from a pre-release of a chapter from his latest book, the way the economy functions can be described as one which transforms energy into GWP – Gross World Product. As the materials flow diagram illustrates, material extraction and use requires energy, a shrinking energy density of society will mean a shrinking material density. Unless, that is, other paradigms can be found.
For 2024 it is hoped we can promote the idea of the circular economy wider, and So basically, there is no way forward – growing material stocks, a gigantic built world that does not work for all, dwindling energy supplies, not enough materials to fulfill even net zero plans. And economists have no idea how the current economic set-up can provide whilst the economy is shrinking.
Source: Steve Keen, unpublished chapter
Quite simply, we need to come up with another approach.
There is one more factor in the 2023 list: global warming reached 1.5 degrees, and it looks like the Earth will warm by 2 degrees. This means that weather patterns are likely to be disrupted to a point where normal business activities will be affected, possibly to the extent that hunger and damage to property brings even greater hardship.
It is probably too late to plan for net zero. Policy should focus instead on preparing to face extreme weather patterns as a priority. Second priority should be rapid decarbonisation to not make things worse.
Municipal response to climate change
Earlier in the year, we published a long report aimed at municipalities, urging them to put climate change adaptation as the first priority. Given that electrification will not happen at the speed needed, and that fossil fuels may well be in short supply, together with the fact that the climate is already changing and going into periods of hard to predict drought and floods, the best strategy is to work with preparation for the unexpected.
The strategy of preparing for the unexpected is well known in business, and promoted by strategy guru Igor Ansoff in his strategy books. However, in public management, where things do not change at a fast pace, the strategy is largely unknown.
There are several workshops planned for 2024 to form the plan for tackling climate change in the local municipality.
How to approach 2024
We should still keep our options open. For example, Nafeez M Ahmed identifies a few areas where Michaux might be wrong. There are many people working on alternative economics, and UBI, UBS, Job guarantees, etc might just evolve to be our next adjacent solution.
However, we still need to accept that 2024 is a different situation than 2022.
Appendix
Stephen Hinton Consulting 