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admin 01.05.2016

Data derived from the Department of Energy (DOE) Energy Information Administration (EIA) 2009. In part 1, I described the central equilibrium loop that controls the earth’s temperature. This reinforcing loop has driven the growth in the economy and energy use since the beginning of the industrial era. Exponential growth cannot go on forever, so there must be a balancing loop somewhere that (eventually) brings this growth to a halt. In this new loop, each link inverts the direction of change: as consumption of fossil fuels rises, the remaining reserves fall. If these two loops operate on their own, we might expect an initial exponential curve in the use of fossil fuels, until there are signs that reserves are being depleted, and then a gradual phasing out of fossil fuels, producing the classic bell-shaped curve of Hubbert’s peak theory.
Would this mean that any climate model must consider the current state of civilization when measuring energy demand? Now it’s time to look at other loops that interact with central loop, and tend to push it out of balance. As we might expect from a reinforcing loop, this dynamic creates an exponential curve – in both the size of the global economy and the consumption of fossil fuels.

In 1751 the world was producing about 3 tonnes of carbon per year, and this rises to about 50 tonnes per year by 1851. The world’s supply of fossil fuels is finite, so if we keep climbing the exponential curve, we must eventually run out.
In the process, economic development would also grind to a halt, unless we manage to decouple the first loop fairly quickly, by switching to renewable sources of energy. So now we have a system that could keep the economy functioning well beyond the point at which we exhaust conventional sources of fossil fuels.
The most important of these is the use of fossil fuels that produce greenhouse gases, which change the composition of the atmosphere. In theory, the rising price of fossil fuels should cause this switch to happen gracefully, once prices start rising – a properly functioning economic system should guarantee this. At each new price point, there’s a stimulus to start tapping new sources of these fuels, and as these new sources come on stream, they allow the global economy to keep growing, and the consumption of fossil fuels to keep rising. There are dips for global recession in the 1930s and 1980s, but these barely dent the overall rise.
It’s a balancing loop because (once it starts operating) each rise in fossil fuel prices should cause a price rise that then damps down further consumption.

Unfortunately, the switch is not easy, because we’ve build a massive energy infrastructure that is based exclusively on fossil fuels, and this locks us in to a dependency on fossil fuels. To someone who just studies economics of energy, everything looks okay for the foreseeable future (except that cheap oil is never coming back). This lock-in, along with the exponential growth in demand, means that we cannot just switch to alternative energy as the prices rise – a more likely outcome is an overshoot, where the rate of consumption is stuck in an upwards trend, causing prices to shoot up, while the balancing loop is unable to do its stuff. Twenty years ago, nobody could extract these because it was too expensive, compared to the price of oil. To someone who predicts doom because of peak oil, it complicates the picture (except that the resource depletion predictions were basically correct).

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