Economic Challenges in the Anthropocene
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Ignazio Musu, Ca’ Foscari University of Venice. Economic challenges in the Anthropocene. 1 What is Anthropocene. •Nobel laureate Paul Crutzen (2002): for the past three centuries, profound shift between humans and the rest of nature; unprecedented influence of human action. •The Earth system has left the interglacial (Holocene) era and entered a new one: Anthropocene. •The qualitative shift was determined by the industrial era. •Energy bottleneck in the final stage of Holocene removed by diffusion of fossil fuels. 2 During Holocene: •Impact of preindustrial human societies on environment (through hunting, gathering and, later on, agriculture) within the bounds of environment’s natural variability (Steffen and al., 2007). •Constraints to energy available: • Water and wind power only in favorite locations and limited by importable technologies (of watermills, sailing ships and windmills). • Energy from animals (and through them from plants) limited by land suitable for crops and forage. 3 • Fossil fuels removed the energy bottleneck by offering access to carbon stored from millions of years of photosynthesis. • Industrial societies use four or five times as much energy as did agrarian societies , which in turn used three or four times as much as did hunting and gathering societies (Steffen and al., 2007). • Examples of scientific and technological progress based on fossil fuels: • Invention (and refinement) of the steam engine by James Watt in the 1780s; • Ammonia synthesis from atmospheric nitrogen pioneered by Fritz Haber (the Haber-Bosch synthesis) in the early 20th century. 4 Summary on energy transitions (Scott Taylor, 2012) •Biomass (old green power) to Coal •Coal to Liquid Fuels – Oil and Natural Gas •Liquid Fuels – New Green Power (?) •Past transitions were very slow and of relatively small magnitude. •Transitions always to higher density sources (density power: energy per m2). •Low pre-industrial energy density of “old green power” (plants, water, animals) led to small city size; denser energy sources in industrial era led to higher urban dimensions. •Fossil fuels reduced transport costs and widened their potential. 5 Oil Gas Coal From its introduction in 1850 to its complete dominance by 1920, coal took 70 years. From the first well in 1880 until its point of maximum dominance in 1970, oil and natural gas took 90 years. Source: Scott Taylor, Moreno Cruz, 2012 6 Biomass Coal Oil, gas Source: Scott Taylor, Moreno Cruz, 2012 7 Source: Scott Taylor, Moreno Cruz, 2012 8 Three stages in Anthropocene (Steffen and others, 2011): •First stage: from the industrial revolution to the Second World War. •Second stage: “Great Acceleration”, from the end of Second World War to the end of twentieth century; •Third stage: present one, challenge to mankind for the sustainability of the Earth system. 9 Great acceleration after the Second World War, Source: UNEP, GEO5, 2012 10 The Great Acceleration: population From 1800 to 1950 world population tripled: from 1 to 3 billions. From 1950 to 2000 world population doubled: from 3 to 6 billions. Source: Steffen e al. 2011. 11 The Great Acceleration: urban population In 2050 more than 50% will live in urban areas. Urban size will grow. Today more than 20 cities have more than 10 million inhabitants and 450 have more than one million. Source: Steffen e al. 2011. 12 The Great Acceleration: total real GDP From 1950 to 2000 world total real GDP increased from 7 to 35 trillions 1990 US dollars ( a multiplier of 5) Source: Steffen e al. 2011. 13 The Great Acceleration: motor vehicles Motor vehicles grew from 40 millions in 1945 to almost one billion now. According to IEA in China car sales in 2016 (11 millions) will be higher than in US. Source: Steffen e al. 2011. 14 New car sales in China IEA, WEO 2007, p.300 15 The Great Acceleration: fertilizers consumption Source: Steffen e al. 2011. 16 Global-scale transformation of the environment particularly evident in the atmosphere. CO2 concentration: •Range of Holocene variability: 260-285 ppm. •1750: 277 ppm. •1800: 283 ppm •1850: 285 ppm. •1900: 296 ppm. •1950: 311 ppm. •2000: 369 ppm. •2011: 395 ppm. 17 Temperature change and CO2 concentration Source: UNEP, GEO5, 2012 18 Anthropocene, technological change and economic growth. Three technological revolutions in the Anthropocene (Gordon, 2012; Smil, 2005, 2006). •First technological revolution (Industrial Revolution): 1750-1830. • Coal replaced wood as main energy source • Inventions of steam engines and cotton spinning. • Energy density of coal facilitated its use in transportation. • Improved communications through early railroad and steamships. 19 • Second technology revolution: 1870- 1960s. • First phase: 1870 – 1914. • Oil and gas replaced coal and wood. • Their higher energy density allowed further mobility and miniaturization of engines. • Great innovations: • Electricity, • Internal combustion engines , • Chemistry and chemical engineering, • Running water, indoor plumbing, central heating, • Telephone, telegraph, radio. • Crucial phase: roots of technological transformations of the second phase (Smil, 2005). 20 • Second technology revolution: 1870- 1960s. • Second phase: 1918-1960s. • Incremental innovations based upon first phase radical innovations: • road means of transport, • durable consumption goods, • new systems of communication and entertainment (motion pictures, TV). • Fading benefits of the second technological revolution in the 1970s ( “productivity slowdown” ). • Energy crises (increases in oil price). 21 • Third technology revolution: ICTs • Big developments in 1990s. • Economic globalization. • Technological «leapfrogging» in emerging economies. • Incremental innovations in communication and entertainment (Ipod, smart phones, tablets, Ipad). • 2001: ICTs bubble starts bursting; twin towers. • Growth supported through explosion of private debt: housing and financial bubbles. 22 Evolution of primary energy by different energy sources and technological innovation (Global Energy Assessment, 2012) 23 The nature of the technological revolutions in the first two stages of Anthropocene. •What did the three past technological revolution in the industrial era have in common: a virtuous circle between innovations and market demand. •Innovations successfully absorbed by a widening market demand, particularly for consumption goods. •Larger market demand at the basis of likely increasing profits from investments in R&D and new products, which promoted further innovations. 24 A new technological revolution for the third stage of Anthropocene? Warnings (Steffen e al., 2011): •Growing awareness of human impact on the Earth system, particularly through the energy-environment issue. •Commitment to build systems of global governance because of the globalization of the problems. •Awareness of limits (planetary boundaries (J. Rockstroem e al. 2009) ? 25 Source: J. Rockstroem e al., A safe operating space for humanity, Nature, 461, 2009, pp. 472-475. 26 Questions about the energy-environment crisis (latent during the economic crisis): •scarcity of fossil fuels? •energy safety? •sustainability: the climate change problem. 27 Scarcity of fossil fuels: increasing role of unconventional reserves. Remaining recoverable natural gas resources, end-2011 (tcm) (IEA, WEO 2012) Unconventional gas: 41.5% of total remaining resources 28 Unconventional gas production in 2035 (IEA, WEO 2012) 29 Energy safety: is there a “political peak” concerning fossil fuels supply? •Political power of the oil producers’ cartel, OPEC, and gas suppliers such as Russia; political instability in many oil producer countries. •However: • Price effect of restricting supply: alternative supplies encouraged, energy efficiency, promotion of alternative technologies. • Likely reaction by fossil fuels exporters: increased supply to finance investments for a better level of life asked by an expanding population. 30 The energy-environment challenge: climate change (Helm, The Carbon Crunch, 2012). •News about a world with still abundant fossil fuels are not good news for the climate change issue. •More necessary and urgent to explain why it requires to be addressed (particularly mitigation). •Important to recognize that different types of fossil fuels emit different quantities of carbon. •A switch from coal to gas: great difference in terms of aggregate emissions; useful as a transitional solution. 31 Energy efficiency. •Can be stimulated by a higher energy price; but it is doubtful whether markets will lead to this result, given the abundance of unconventional reserves. •Problems for markets to implement energy efficiency measures: why energy saving companies do not emerge to exploit the fact the investments now will produce future energy consumption savings? •Policies required to support energy saving investments: but they are costly and need resources. 32 Need of a carbon price: but on consumption rather than on production. 33 Problems with current renewable technologies as an alternative to fossil fuels. •Low density power and the need of large spaces. •Intermittency, storage and the need of back-up traditional technologies. •Needs of costly subsidies (feed-in tariffs). •Are the new infrastructure with the existing renewable worth? •For nuclear: increasing capital costs (safety) and unreliability of political framework. 34 The need of investing in new technologies. •Little technical progress in the energy industry in the past century. • Coal power stations date from the 19th century. • Gas combined cycle and the nuclear power stations