Dr. Dennis Meadows, one of the authors of Limits to Growth, gave a talk in Davos, Switzerland in September 2009 at the World Resources Forum. Gail Tverberg at The Oil Drum has posted an “approximate” transcript.

Here’s the takeaway thought. Climate change and energy scarcity – the two greatest challenges of our time, perhaps in human history – are symptoms. The problem is physical growth, continued population expansion, continued increase in material standards of living, in a world that has finite limits.

Meadows points out the probability of the problem of physical growth being addressed is 100%. What cannot be known is whether it will be addressed voluntarily or involuntarily. Collapse – meaning that material standards of living, peace, trust in the government, and other things fall, out of control – is a possibility:

The same thing with collapse. I know that the current growth in population and in material use cannot continue–absolutely, with 100% probability, that it is going to stop. When? How? How seriously? We have no scientific way to make predictions.

The longer we wait to do social measures, like birth control, or voluntary simplicity, the more likely it will be that physical measures will cause this decline.

A post by Zoe MacIntosh at Heatingoil.com contains a couple of graphs that beautifully illustrate Jeffry Brown’s Export Land Model – which posits that it’s global oil exports that really matter, not global oil production.

First, here’s Brown’s classic graph.

As domestic consumption continues to rise after oil production peaks, exports quickly decline to zero.

Now take a look at a real-world example: Great Britain.

Wikipedia has graphs of other examples of countries where oil exports are seeing accelerated declines due to rising domestic consumption: Indonesia, Egypt, Malaysia, Mexico. The implications for oil importing nations are ominous as ever more oil exporting nations hit peak and begin to decline.

The Wikipedia article argues that Great Britain doesn’t fit the model because domestic consumption has remained essentially unchanged for the last 20 years rather than rising. Changing the slope of the domestic consumption line in the Export Land Model graph from rising to flat does, of course, make a difference for exports. But ultimately the results are similarly stark for exports – level domestic consumption, or even domestic consumption that declines less rapidly than domestic production, means that soon there’s no excess oil left to export. The only difference is how “soon” soon is. Despite flat domestic consumption, Great Britain has now shifted from an oil exporter to an oil importer, sucking supplies from the rest of the world rather than adding to world supplies.

Automatic Earth riffs on this quote by Treasury Secretary Tim Geithner, speaking to the House Budget Committee on Wednesday (2/24/10):

Without growth, we cannot begin the process of restoring fiscal responsibility. . . . before the federal government can begin attacking soaring deficits and a massive national debt, it needs to increase jobs and ensure economic growth.

Calculated Risk points out housing (not existing home sales!) is historically the best leading indicator for the economy and unemployment, using Residential Investment (quarterly from the BEA’s GDP report), monthly data on Housing Starts and New Home sales from the Census Bureau, and builder confidence from the NAHB. How do these look?

Total starts had rebounded to 590 thousand in June, and have moved mostly sideways for eight months. Single-family starts were at 484 thousand (SAAR) in January, up 1.5% from the revised December rate, and 36% above the record low in January and February 2009 (357 thousand). Just like for total starts, single-family starts have been at about this level for eight months.

Housing starts are moving sideways . . .

The housing market index (HMI) was at 17 in February. This is an increase from 15 in January.

The record low was 8 set in January 2009. This is still very low – and this is what I’ve expected – a long period of builder depression. The HMI has been in the 15 to 19 range since May 2009.

More moving sideways . . .

New Home Sales in January were at a seasonally adjusted annual rate (SAAR) of 309 thousand. This is a record low and a sharp decrease from the 348 thousand rate in December.

And it would be generous to even call this “moving sideways”.

Automatic Earth continues:

Sheila Bair’s report on the banks is abysmal, lending in the private sector is falling off a cliff while public lending is running up that same cliff, and in that quote above Geithner just told us that there are no plans to quit adding to the debt before spending gives birth to growth in some fictional fairy tale of immaculate financial conception. But it’s beyond foolish not to ask what happens if no such fairy tale ending exists, if only simply because the risk that pervades the entire endeavor is as palpable as it is terrifying.

The taxpayer funds presently spent on the thus far evasive dream of recovery and growth resumption could be spent on programs to soften the blow of possibility number two, where growth never resumes, or doesn’t do so for many years to come. It’s one thing for everyone to want growth, it’s quite another to actually get what you wish for.

Jim Kunstler has for years been predicting that we’ll blow our last wad trying to maintain business as usual long after BAU is over for good.

Given the reality of peak energy, it’s time to begin planning for “possibility number two, where growth never resumes”.   As economic activity is dependent on energy inputs, declining energy availability means return to growth simply isn’t in the cards.

Time for Plan B.

The January 2010 Oilwatch Monthly is now available from Peakoil Nederland.

I fount the following charts particularly thought provoking.

First, here’s a history of all liquids production from 1938 through the 2008 peak.

You can’t really see a peak at that scale – and besides, the chart ends at 2008, so production after that year doesn’t show up. Here’s a closer look at the period before and after the July 2008 peak.

It looks pretty noisy, but except for the spike in 2008 production looks to have plateaued. Now take a look at the energy content of the fuels produced.

It’s clear that as far as energy content goes, we’ve been on a plateau since mid-2004. And increasingly, we’re relying on unconventional liquids (heavy and extra heavy oil, oil shale, oil sands, natural gas liquids, lease condensates, gas-to-liquids, coal-to-liquids,and biofuels) rather than crude oil to maintain both total production and energy content.

As the energy content of unconventional is less than that of crude, we’re running harder and harder just to keep in place. It’s the Red Queen’s race:

“Well, in our country,” said Alice, still panting a little, “you’d generally get to somewhere else — if you run very fast for a long time, as we’ve been doing.”

“A slow sort of country!” said the Queen. “Now, here, you see, it takes all the running you can do, to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”

In the U.K., the Industry Taskforce on Peak Oil and Energy Security has released a new report warning of an impending energy famine for some oil importing nations.

The report, titled “The Oil Crunch: Securing the UK’s energy future,” includes two opinions on oil-supply risk, one from Peak Oil Consulting (Chris Skrebowski) and the other from Royal Dutch Shell (Dr. Robert Faulkner). The optimistic opinion (from Royal Dutch Shell) sees global supply of oil flattening by 2015. Skrebowski’s analysis points to a peak in global oil production in the period 2011-2013.  Both agree that the age of “easy oil” is over.

The problem addressed by the task force was laid out by Matt Simmons in a recent presentation:

• Current production base will fall to 25 MM B/D by 2030.
• To keep supply flat (at ~85 mbd) we need to add equivalent of four new Saudi Arabias.
• To modestly grow 5 MM B/D, we need two more Saudi Arabias.
• None of this is remotely possible.

The report imagines three possible future scenarios:

The risk from premature peak oil can be thought of, globally, in terms of three qualitative scenarios. In a “plateau” scenario, like the one Shell foresees, global production will flatten around 2015 and remain on a plateau into the 2020s, propped up by expanding volumes of unconventional oil production because of the decline of conventional oil production. In a “descent” scenario, global production falls steadily as oilfield flows from newer projects fail to replace capacity declines from depletion in older existing fields. In a “collapse” scenario, the steady fall of the “descent” scenario is steepened appreciably by a serial collapse of production in some – possibly many – of the aged supergiant and giant fields that provide so much global production today. On balance, having reviewed the state of play in global oil production, the taskforce considers that the “descent” scenario is a highly probable global outcome. We also fear that a “collapse” scenario is possible.

While we are able to get away with denying the urgency of the climate crisis for a few more decades before reality smacks us in the face, we won’t have that luxury with the energy crisis:

The speed with which the UK would need to mobilise for a “descent” peak oil scenario, much less a “collapse” scenario, exceeds anything that has yet been considered in the climate-change policy-response arena.

The energy crisis means bye-bye to the “economy” as we’ve come to think of it over the last century. Survival will be the new challenge.

The stark implications of our addiction to fossil fuels and their impending depletion are eloquently voiced by David Hayes:

It took me a long while to admit to myself the conclusion I now draw from all this: that the civilisation we currently take for granted is coming to a stuttering end, that we are unequipped to prevent it, and that it is probably too late to prevent the worst of what climate change, peak oil and ecological destruction will throw at us. I suspect that the great challenge of the 21st century will not be building a great, “sustainable” civilisation to lead us to the stars, but coming to terms with decline, materially and existentially, as the fossil-fuelled bubble bursts and leaves us adjusting to a harsher reality.

Sergio Gabrielli, CEO of Petrobras (a Brazilian multinational energy company headquartered in Rio de Janeiro), says global oil production (including biofuels) will peak in 2010 due to oil capacity additions from new projects being unable to offset world oil decline rates.

Gabrielli points out in his presentation that the world will need to produce oil from new sources equivalent to one Saudi Arabia every two years to offset future world oil decline rates – which he sees at about 5% per year.

Finding and bringing to production the needed magnitudes of new oil is simply not going to happen. Even managing to maintain historically observed decline rates may prove to be a challenge. Take Nigeria, for example. As the world teeters at the edge of economic and political collapse, Nigeria seems to be going over the edge. Nigeria, which in 2008 produced over two million barrels of sweet crude a day and today provides 9% of U.S. oil imports, could vanish as an oil exporter, virtually overnight. Despite its enormous reserves, Venezuela is looking none too stable as a producer and exporter, either.

Chris Nelder takes a close look at Mexico, Venezuela, and Saudi Arabia and warns the oil export crisis has arrived – we just haven’t felt it yet:

[W]hen oil prices rise again, the pain will be far greater for the U.S. than it is for our top suppliers. Next time, the spear of declining oil exports will puncture a lung.

If the gap between demand and supply shown in the chart above cannot be filled with new supply, the only alternative is for prices to increase to reduce demand to equal supply: “demand destruction.”  That means economic shrinkage rather than growth, and a consequent financial crisis of epic proportions. Consequently we are going to find it harder to extract other energy and mineral resources. As George Mobus points out in a post at The Oil Drum, our net energy is already in decline and that is at the root of the global economic problems we are seeing. You cannot have a growing economy when the basis of all economic wealth production is in decline.

The economic tremblings we’ve seen over the last couple of years may prove to be mere foreshocks. No matter how many trillions we throw at the problem, all the king’s horses and all the king’s men won’t be able to put Humpty Dumpty back together again.

Rather than trying to save the irretrievably lost, we’ll have to accommodate ourselves to the new reality:

We can only start simplifying our societies and giving up the many discretionary expenditures of energy that we currently enjoy without much thought. We can learn to once again live on real-time solar influx via our food raising systems. And even then we are talking about an ability to support only a small fraction of the current population. Ironically the simplification of society involves the increasing complexity of individual lives. What this means in practice is that each individual must start to become more of a generalist in terms of the functions that support life. Everyone will have to become a food grower! Believe it or not that isn’t simple! Knowing how to grow your own nutrients is actually quite complicated and will demand a whole new set of cognitive skills.

For the environment, peak oil and economic collapse offers a glimmer of hope. For example, oil accounts for 43% of our CO2 emissions from energy use. Consequent economic collapse will mean that a lot of coal plants in the works will never get built, and maybe we’ll even see existing plants begin to wither away.

In 2009, cars scrapped in the U.S. exceeded new car sales  for the first time since World War II, shrinking the U.S. vehicle fleet from the all-time high of 250 million to 246 million.

The 14 million cars scrapped exceeded the 10 million new cars sold, shrinking the U.S. fleet by 4 million, or nearly 2% in one year. The U.S. fleet has apparently peaked and started to decline.

Lester Brown at Treehugger identifies “market saturation” as the dominant factor. The United States now has 246 million registered motor vehicles and 209 million licensed drivers – nearly 5 vehicles for every 4 drivers.

Brown points to Japan as an example. In Japan, annual car sales peaked 1990 and have since shrunk by 21%.

Mish Shedlock looks at the data and asks, what about boomer demographics and teenage driving?

The massive wave of boomer retirement is about to hit. Many boomers will go from two cars to one, or from two new cars to one new car and an “emergency” clunker.

As for teens, parents can no longer afford to buy cars for their kids. And with teenage unemployment at the highest rate in history, can no longer afford to buy their own cars.

Peak oil, peak autos.  What’s next?

Architect and urban planner Andres Duany blames peak oil and global warming on the American lifestyle:

Seth Bauer at the Huffington Post quotes Duany:

It’s where we live, the size of our houses, the distances we drive for work, commerce, play–everything.

And goes on to summarize Duany’s rant:

And it’s all a vicious circle. The reason our houses are so big (and inefficient), he says, is because we have eliminated a healthy civic life. We build homes with giant foyers because we have no public squares. We need media rooms because it’s not easy or pleasant to drive to a multiplex theater, cross a parking lot through an ocean of cars, and pay a fortune for popcorn. We build bars in our basements because there are no neighborhood pubs. We have giant refrigerators and ever-growing storage needs because shopping is both far away and unpleasant (hello, Costco). The result? We heat and air-condition unused rooms in oversized unpleasant houses. And because our home bars and foyers are empty and our media experiences private, we’re lonely, to boot.

But the American lifestyle is really just a symptom of a larger disease – if not industrialization itself, certainly the ideology of growth that it has spawned.

Politicians and economists around the globe are focused on one thing: economic growth. When “the economy” falters, all efforts are towards returning the global economy to a path of growth. As Chris Martenson says in a piece titled Copenhagen & Economic Growth – You Can’t Have Both at the Energy Bulletin:

We need more jobs, we are told; we need economic growth, we need more people consuming more things.  Growth is the ever-constant word on politicians’ lips.  Official actions amounting to tens of trillions of dollars speak to the fact that this is, in fact, our number-one global priority.

Martenson is spot on in pointing out that any solution to global warming requires that carbon emissions be reduced by a vast amount over the next few decades. But economic growth and reduced emissions are mutually exclusive.  You can’t have both.

Even if we can’t muster the moral fortitude do do anything to avert catastrophic global warming, we still may fail in our desperate efforts to maintain economic growth. The primary implication of peak oil is that the era of economic growth is over. The current recession is very much energy-related. The whole concept of recession as a temporary period where growth is briefly interrupted within a long-term trend of economic growth is likely to become irrelevant in a world where oil is becoming ever more expensive to extract and oil supplies are decreasing.

We’re seeing a feedback loop develop with oil eerily similar to the feedback loops operating in the global warming context. The global financial crisis has resulted in oil investment shrinking by 20%, which in turn will result in less oil and more expensive oil in the future, causing more financial turmoil in an ever-worsening downward spiral.

We already are seeing the future beginning to emerge. As the election results in Massachusetts show, that future will hold ugly surprises.

In overwhelmingly approving the report of its Peak Oil Task Force, the Bloomington (Indiana) City Council,  has endorsed a truly revolutionary idea:

Recognize the need for, and the inevitability of, a steady state economy – one that is not predicated on ever-greater amounts of energy and materials throughput, but recognizes the limits of the biosphere.

The Task Force report – Redefining Prosperity: Energy Descent and Community Resilience - calls for a reduction in community oil consumption by 5% per year in an effort to realize a 50 percent decrease in consumption in just 14 years. The targeted rate of decrease in oil consumption is along the lines laid out by the oil depletion protocol.

Suggested strategies for achieving the reduced fuel consumption goals include:

• Explore new energy sources, greater efficiencies and conservation opportunities for the following energy-intensive municipal services: water and wastewater treatment; law enforcement and fire protection; heating and cooling municipal buildings; and trash removal and recycling. Immediate attention should be given to off-grid water production to meet minimum community needs.
• Promote economic relocalization. Our community’s reliance on a steady supply of inexpensive goods from as far as halfway around the world makes us vulnerable to a decline in inexpensive oil and/or shortages. Producing and processing more goods within the community fosters greater security in a post-peak world while strengthening the local economy.
• Intensify the City’s emerging focus on form-based development, so that residents can easily live within walking distance of daily needs, such as grocery stores, schools and pharmacies.
• Increase home energy conservation and aim to retrofit 5 percent of housing per year.
• Establish community cooperative rideshare programs.
• Advocate for greater local, state and federal funding for public transit.
• Accelerate local food production by training more urban farmers and removing legal, institutional and cultural barriers to farming within the city.
• Plant edible landscapes throughout the city.

The Task Force’s vision is for a city where “most residents live within walking distance of daily needs; most of the food required to feed residents is grown within Monroe County; residents can easily and conveniently get where they need to go on bike, foot or public transit; most of the community’s housing stock is retrofit for energy efficiency; and local government provides high-quality services to its residents while using less fossil fuel energy.”

That actually sounds pretty good, doesn’t it? A post-peak world need not be dismal.

Dr. Dennis Meadows, one of the authors of “Limits to Growth” and its subsequent updates, has a powerpoint presentation and podcast of a recent talk available at the Population Institute site.

Most interesting is his view that the end of growth does not come directly from depletion, but indirectly from rising capital expenditures as the costs of exploiting resource sources and dealing with saturating sinks rise exponentially. And as he points out, that’s what we’re beginning to see already:

Most people assume that the major global difficulties would occur after the end to growth.

This is not correct.

The globe’s population would experience the most stress prior to the peak, as pressures mount high enough to neutralize the enormous political, demographic, and economic forces that now sustain growth.

We are in the early phases of that period now.

Meadows’ presentation finishes up with a chart showing CO2 emissions as a function of four factors:

1. Number of people.
2. Number of units of capital per person, which is a surrogate for living standards.
3. The amount of energy required to build and operate that capital.
4. The fraction of that energy that comes from non-fossil sources.

Meadows points out the key to our climate change predicament lies in reversing population and consumption growth. If we can’t change those, technology can at best only prolong the agony.

Gail the Actuary at The Oil Drum transcribes his finishing words:

So far, our concern about climate change had manifested itself through efforts to improve efficiency and to implement alternative energy sources–the so-called technology options. I will just close by pointing out that as long as we ignore demographic and cultural issues, the growth in the first two factors will continue to offset all of the improvement we make in factors 3 and 4. And so until we can understand how to begin reducing the growth in the first two factors, climate change is a foregone conclusion.

Richard Heinberg also has his presentation posted at the same site. Heinberg focuses on how peak oil and the consequent end of growth led to the financial crisis, one that will not be resolved in the way to which we have become accustomed. The end of growth means we have entered a new era.