Friday, June 21, 2019

Population growth is not a driver of climate change

It seems so easy to blame excess population for our planet’s woes. It could hardly appear more straightforward: people consume resources; more people means more consumption; if we have any prayer of reducing our collective damages to the environment, we must make fewer babies.

There’s a well-known equation first devised in 1970 by John Holdren and Paul Ehrlich called the IPAT identity: 

Impact = Population x Affluence x Technology

The environmental impact of society is proportional to our population, our GDP per person (affluence), and the environmental damages per unit of GDP (technology).

On the face of it, the IPAT identity is totally clear, and dimensionally irrefutable. An increasingly affluent and growing population is going to have an increasing impact on its environment. 

A step further is the Kaya Identity, which looks specifically at the impact from carbon dioxide emissions, and breaks down Technology into two components: energy efficiency measured as annual energy consumption per annual GDP and carbon intensity measured as CO2 emissions per Energy:

Emissions = Population x (GDP/Population) x (Energy/GDP) x (CO2/Energy)

Again, at least on the face of it, nothing is wrong with this expression. Modifying any of population, affluence, energy efficiency and carbon intensity, will allow us to help the environment: we can maintain our affluence and reduce carbon dioxide emissions provided that we invest in energy efficiency, switch to renewables, and support birth control. 

What’s not to like? Certainly, countless politicians and scientists have argued that with sufficient political will, we can accomplish these combined goals to save our planet while supporting our economy.

The devil is that the Kaya and IPAT identities are constructed so that affluence, energy efficiency and population can be seen as being largely independent of one another, making it seem possible to tweak one without affecting the other.

In fact, each of the ingredients of the Kaya and IPAT identities can be better seen as symptoms not causes. One perspective is that, broadly put, civilization is a heat engine. What this means is that all of the internal circulations defining what we do in civilization are driven by a consumption of energy, mostly fossil, and a dissipation of waste heat, including carbon dioxide as a by-product. From this perspective, only about 1/20th of the total caloric consumption by civilization as a whole is due to the caloric consumption of people themselves. The remainder is used to support the appetites of everything else, like the energy required for industry, transportation, and communications. Globally averaged, people have each about 20 energy slaves working around the clock to help them accomplish all of civilization’s tasks. 

People themselves are a relatively small proportion of the world’s total resource consumption. Imagine someone visiting Earth for the first time, knowing nothing ahead of time about the planet or its inhabitants. The visitor would witness all the marvelous phenomena of the earth, atmosphere and oceans. Maybe they would even have a special sensor they use to detect massive plumes of heat, particulates, carbon monoxide and carbon dioxide emitted into the atmosphere from all over the planet, some from small stationary sources and others moving quickly across the oceans and land. Almost all would come from objects made of steel. The visitor would probably fail to perceive people and conclude they are insignificant relative to civilization’s machinery

You as a staunchly proud human might tell the visitor that they are missing important context. It’s people who are running the machines not the other way round, and that the measured environmental impacts are proportional to population. 

But this perspective is based on a belief that people are independent drivers of environmental impacts, that make and grow babies independent of environmental conditions, and affect the environment proportionately. 

As a counterweight to this perspective, in an article I wrote in 2009, I presented an alternative to the IPAT identity. Using some physics to derive Eq. 12, it was shown that: 

Population growth rate + Affluence growth rate = λ x Energy efficiency + Energy Efficiency growth rate

Where the symbol λ had a constant value of 0.22 exajoules per year per year 2005 trillion USD. For example, for the period 1970 to 2015, plugging numbers into the equation gives the following for the annual growth rate of each of the terms:

1.5% + 1.5% = 0.22 x 0.089 x 100% + 1.0%

where the value 0.089 has units of inflation-adjusted year 2005 trillion USD per exajoule. Simplifying: 

1.5% + 1.5% = 2.0% + 1.0%


           3.0%  = 3.0%

Both sides of the equation add up to 3.0% per year. This is pretty cool. A simple equation for the growth of humanity derived using physics rather than economics agrees surprisingly well with what is actually observed.

But what does it all mean? The upshot is that being energy efficient, as on the right hand side of the equation, is what enables civilization as a whole (not at just the national level) to increase its population and affluence, as on the left hand side of the equation. If we become more energy efficient, we accelerate growth of population and affluence, and increase our environment impact. It is not the reverse! 

Moreover, because the first term on the right hand side of the equation -- current energy efficiency -- reflects the history of prior energy efficiency gains, and we cannot erase the past, past advances in energy efficiency are effectively the single parameter that determines current growth of population and affluence.

Intellectually, this is a really nice simplification that removes some of the uncertainty in making long-run forecasts of population and affluence. On the other hand, it might seem totally counter-intuitive. Understandably, most would assume that we can increase energy efficiency independent of population and affluence; and more importantly, increasing energy efficiency will reduce our overall environmental impact. Let’s buy a Prius! 

But this comes back to the previous point that the components of the Kaya and IPAT identities are coupled symptoms of something more important. To understand how each IPAT component is linked through the equation above, it is necessary to understand a bit about the very special nature of how a self-organizing civilization operates like a heat engine

The heat engine in your car is of fixed size. Civilization differs because it can grow. It grows because it is able to successfully use energy to incorporate raw materials from its environment into its internal structure.

If civilization is energy efficient, then it is able to rapidly incorporate raw materials into its structure. Energy efficient civilizations are productive and grow quickly. There are two ways we can witness this material growth. One is that population increases: we ourselves are constructed from raw materials. The other is that we increase the amount of our stuff, or our economic affluence.  

With greater efficiency, we can have faster growth, and more of everything, more people included. Interestingly, as shown above, increased energy efficiency appears to increase population and affluence in roughly equal parts, both 1.5% per year. 

So, does population growth matter? Well, I think it’s the wrong question. Instead it makes more sense to ponder the external forces that control the energy efficiency of civilization as a whole, and how efficiently it can use energy resources to incorporate raw materials from the environment.  

Waves of accelerated discovery and exploitation of coal and oil that began around 1880 and 1950 preceded unprecedented explosions in population and affluence. Looking ahead, many question whether we will sustain continued resource discovery. If we can’t, what does a declining civilization look like? If we can, what is the end game when there are inevitably accelerating negative impacts on the environment?

Tuesday, April 9, 2019

Can we use physics to forecast long run global economic growth?

One of the more challenging problems in physics is the evolution of complex systems. Atmospheric scientists study phenomena ranging in scale from those of molecules to the size of the planet, and struggle with integrating the full gamut of interacting forces into a usefully comprehensive whole.

The world’s economy could easily be another example. Individual actions have become intertwined with global trade agreements. Economic forces seem uniquely human, subject to the vagaries of choices of consumers and political and business leaders, and almost impossible to predict with any degree of accuracy.

Yet, humanity is still part of the physical universe. An immense body of work in the social sciences demonstrates that - taken in aggregate - we obey the same mathematical distributions seen in many well-established physical phenomena, such as power-laws for income distributions, and negative exponentials (or Boltzmann distributions) for the proximity and number in our social circles.

Perhaps well-established tools from physics could be used to help address questions about where the economy is headed. Forecasting is well-developed in the geosciences for prediction of such complex phenomena as earthquakes, the wind, and tides. Can similar tools be used to help determine our financial future?

To be sure, this line of thought is not exactly new. Practitioners of a sub-field called econophysics  invoke physical analogs to explain market movements.

My own approach is rather different. Like many physicists, I believe a first approach to any complex problem is to step back as far as possible, to constrain the big picture first before getting bogged down in any details.

Looking at the whole, one technique is to imagine successive degrees or "moments" of complexity that determine current rates of change, each with its own tendency to persist. For example, things stay still - except when they are perturbed by velocity, which is constant - except where it is perturbed by acceleration, which is constant, except where it is perturbed by the jerk, and so on.

Or, consider this beautiful woodcut. We might ask ourselves which way is the boat in the foreground going? Up, down, or staying still? To me, Hokusai conveys the artistic sense that the oarsmen in the foreground are moving upward towards the crest of a wave.

Maybe you see something different. And more scientifically, we cannot know:  all we see is a snapshot in time. Without additional information, assuming the boat stays in roughly the same place would be as safe a guess as any.

This "stationarity" is what we might call "Persistence", or steady-state in the "zeroth" moment. Naturally, we'd hope to do better by going to higher order moments requiring perhaps that we ask the artist in his grave is where the boat was a few moments earlier. Then we might sensibly suppose that the boat continues its upward or downward trend.

As a means for making a forecast of the boat’s position, we might call this technique “Persistence in Trends” or steady-state in the first moment. We could feel confident that such a forecast would do better than assuming a model of mere “Persistence” that does not consider that the boats moves at all.

And more sensibly, we know that the boat cannot continue moving up or down indefinitely. To account for this, we would try to go further to the second or even higher moments. For this we might look at other waves for a guide or use a model of the fluid mechanics of an ocean wave to predict how far and fast a wave rises before it falls or breaks.

Economic hindcasts and Skill Scores

My contention is that we can do something similar with long-term predictions of the global economy, by using thermodynamically-based expressions for how economic systems respond to external forces such as resource discovery and depletion to offer robust, physically-constrained economic forecasts.

It can be (has been) argued that it's pretty arrogant or nuts to imagine that something so complicated as humanity is predicable. But in its defense, it simplifies the problem to a level that it should at least be testable.

One way to test any prognostic model framework is to perform what in meteorological forecasting is called “hindcasting” : How well can a deterministic model predict present conditions initialized with the conditions observed at some point in the past? Model accuracy is evaluated using a “Skill Score”, which expresses how well the model hindcast reproduces current conditions relative to some Reference Model that requires zero skill.

In the Hokusai woodblock, a zero skill Reference Model of “Persistence” would assume the boat stays still; “Persistence in Trends” would assume the boat continues on its existing trajectory. A model based on ocean physics would hopefully beat either of these simple models to exhibit “positive skill”.  Then, the Skill Score would be

Skill Score = [1 - (Error of the hindcast)/(Error of the Reference model)]x100%

If a physics-based model of the global economy does no better than the reference at predicting the present, then the Skill Score is zero percent. If it does perfectly, then the Skill Score is 100%.

Hindcasts of civilization growth
I have applied these techniques to evaluate the predictive skill of a new economic growth model for the long-run evolution of civilization. This model approaches the global economy rather like an organism. Civilization's growth rate is determined by its past well-being, environmental predation, whether it eats all its food, and whether it is able to move on to discover new food sources.

For civilization, food is things like oil and iron. We use the energy in oil to incorporate iron into our structure just as people use carbs, protein and fat to turn bread into flesh. Civilization depletes reserves at the same time it uses them to discover and grow into new reservoirs, if they exist. Our ability to discover and exploit new reservoirs might easily be impeded by natural disasters, such as those we might experience from climate change.

A model based on these concepts provides deterministic expressions for civilization’s rates of economic growth and energy consumption. Input parameters are the current rate of growth of global energy consumption and wealth  and a rate of technological change that can be derived from, among other things, past observations of inflation and raw material consumption. Output parameters include the rate of return on wealth and primary energy consumption, how fast this rate is growing (or what is termed the “innovation rate”), and the world GDP growth rate (or GWP).

Gray lines: Fully prognostic model hindcasts initialized in 1960 for the global rate of return on wealth, economic innovation rates, and the GWP growth rate. Hindcasts are derived assuming an average rate of technological change of 5.1%/yr (dashed lines) derived from conditions observed in the 1950s. Solid colored lines: Observed decadal running means. The model reproduces observations with skill scores > 90%.

As shown in the figure above, a first principles physics-based model initialized in 1960, based only on observations available in the 1950s, does remarkably well at hindcasting evolution through the present. For example, average rates of energy consumption growth in the past decade would have been forecast to be 2.3 % per year relative to an observed average of 2.4 % per year. Relative to a persistence prediction of the 1.0% per year growth rate observed in the 1950s, the Skill Score is 96%.

Or, using the same model, a forecast of the GWP growth rate for 2000 to 2010 based on data from 1950 to 1960 would have been 2.8% per year compared to the actual observed rate of 2.6% per year. The persistence forecast based on the 1950 to 1960 period is 4.0% per year, so the skill score is 91%.

No other economic model I am aware of is capable of such accuracy, at least not without cheating by tuning the model to data between 1960 and 2010. How is it then that the physics-based model does so well at predicting the present based only on conditions 50 years ago?

Well, the obvious answer might be that humanity acts as a physical system and the model at least has the correct physics. But it helps too that the model was initialized in the mid-twentieth century when civilization was responding to an exceptionally strong impulse of fossil fuel discovery. The figure above uses the IHS PEPS data base to show that between 1950 and 1970, remaining global reserves of oil and natural gas doubled because discoveries outpaced depletion. Since, discovery and depletion have been in approximate balance; remaining reserves have been more or less stable.

It is as if civilization suddenly found itself in 1950 at an enormous restaurant buffet. Each time it visited the table it discovered new plates of delicious energy to consume, and its appetite increased apace. At some point around 1970, however, its appetite increased to the point that it discovered new food not much faster than it consumed the food that was already there. The amount of known food on the table stayed stable.

New discoveries matter, just not as much as showing up at the buffet in the first place. Finding the buffet was far more innovative than merely going back to the table, and it had a correspondingly large and lasting impact on economic growth.

There was a remarkable discovery event between 1950 to 1970 period, and what followed was a clear physical response to this strong prior forcing. Forecasting the future should also be possible, but it will probably be more of a challenge than hindcasting the past 50 years...unless, once again there is a new wave of massive energy reserve discovery. If discovery once again outpaces growing demand, it might propel civilization to a renewed phase of accelerated innovation and growth. Then, I anticipate that our future trajectory will once gain be amenable to deterministic forecasts using economic equations based on physics.

Thursday, September 20, 2018

Is increasing energy efficiency driving global climate change?

Improving energy efficiency is our best hope to slow global energy consumption and limit carbon dioxide emissions. 

Makes perfect sense, right? Better technology for more jobs and a healthier planet! Yay capitalism. 

But let's look a little closer. People may choose to drive more often if a vehicle is fuel efficient: driving is useful or pleasurable and now it is more affordable. Or, less money spent on fueling energy efficient vehicles could enable more money to be spent on fuel for home air conditioning.

Economist do acknowledge this to some degree referring to a phenomenon called "rebound". A very few studies even argue for “backfire”: gains in energy efficiency ultimately lead to greater energy consumption.  The idea was first introduced by William Stanley Jevons in 1865. Jevons was emphatic that energy efficient steam engines had accelerated Britain’s consumption of coal. The cost of steam-powered coal extraction became cheaper and, because coal was very useful, more attractive.

Calculating the total magnitude of rebound or backfire has proved contentious and elusive. The problem for academics has been that any given efficiency improvement has knock-on effects that can eventually propagate through the entire global economy. Estimating the ultimate impact is daunting if not impossible. 

Imagine you buy a nice new fuel efficient car. An unequivocal good for the environment, right? Sure feels good to do one's part to save the planet. And you have a fatter wallet too since you spend less on gas. Life's good! You can spend that saved money now (for argument’s sake) on better household heating and cooling so that you sleep better at nights. Being more rested you become more productive at work, giving you a raise and your employer higher profits. The business grows to consume more while you take that much deserved flight for a vacation in Cancun. 

In this fashion, the ramifications of any given efficiency action might multiply indefinitely, spreading at a variety of rates throughout the global economy. Barring global analysis over long time scales, conclusions about the magnitude of rebound or backfire may be quantitative but highly uncertain since they are always dependent on the time and spatial scales considered. 

Analyzing the global economy like a growing child
There’s a way around this complexity - to ignore it, by treating the economy only as a whole. 

Stepping back like this is a standard part of the physics toolbox. Imagine describing the growth of a child without being an expert in physiology. It shouldn't take a doctor to comprehend that the child uses the material nutrients and potential energy in food not only to produce waste but also to grow its body mass. As the child grows, it needs to eat more food, accelerating its growth until it reaches adulthood and its growth stabilizes (hopefully!). 

Now, an inefficient, diseased child who cannot successfully turn food to body mass may become sickly, lose weight, and even die. But a healthy, energy efficient child will continue to grow and some day become a robust adult who consumes food energy at a much higher rate than as an infant. 

What could be treated as a tremendously complicated problem can also be approached in a fairly straight-forward manner, provided we look at the child as a complete person and not just a complex machine of component body parts. 

Efficient civilization growth
We can take the same perspective with civilization.  Without a doubt, consuming energy is what allows for all of civilization’s activities and circulations to continue -- without potential energy dissipation nothing in the economy can happen; even our thoughts and choices require energy consumption for electrical signals to cross neural synapses. Just like a child, when civilization is efficient it is able to use a fraction of this energy in order to incorporate new raw materials into its structure. It was by being efficient that civilization was able to increase its size. 

When civilization expands, it increases its ability to access reserves of primary energy and raw materials, provided they remain or are there to be discovered. Increased access to energy reserves allows civilization to sustain its newly added circulations. If this efficiency is sustained, civilization can continue to grow. In a positive feedback loop, expansion work leads to greater energy inputs, more work, and more rapid expansion. 

This is the feedback that is the recipe for emergent growth, not just of civilization, or a child, but of any system. The more efficiently energy is consumed, the faster the system grows, and the more rapidly the system grows its energy consumption needs. 

Ultimately there are constraints on efficiency and growth from reserve depletion and internal decay. But in the growth phase, efficient conversion of energy to work allows civilization to become both more prosperous and more consumptive.

Implications for climate change
It is easy to find economists willing to express disdain for the concept of backfire, or even rebound, by pointing to counter-examples in economic sectors or nations where energy efficiency gains have led to less energy consumption. For example, the USA has become more efficient and thereby stabilized its rate of energy consumption. 

While these counter-examples may be true, they are also very misleading, especially if the subject is climate change. Nations do not exist in economic isolation. Through international trade the world shares and competes for collective resources. Quite plausibly, the only reason the USA appears to consume less energy is that it has outsourced the more energy intensive aspects of its economy to countries like China. Should an economist argue that “There is nothing particularly magical about the macroeconomy, it is merely the sum of all the micro parts” we can be just as dismayed as we would upon hearing a medical practitioner state that “there is nothing particularly magical about the human body, it is merely the sum of all its internal organs”. Connections matter!

Fundamentally, through trade, civilization can be treated as being “well-mixed” over timescales relevant to economic growth. In other words, trade happens quickly compared to global economic growth rates of a couple of percent per year. Similarly, excess atmospheric concentrations of CO2 grow globally at a couple of percent per year. They too are well-mixed over timescales relevant to global warming forecasts because atmospheric circulations quickly connect one part of the atmosphere every other. For the purpose of relating the economy to atmospheric CO2 concentrations, the only thing that matters is global scale emissions by civilization as a whole.

Taking this global perspective with respect to the economy, efficiency gains will do the exact opposite of what efficiency policy advocates claim it will do. If technological changes allow global energy productivity or energy efficiency to increase, then civilization will grow faster into the resources that sustain it. This grows the economy, but it also means that energy consumption and CO2 emissions accelerate. 

CO2 emissions can be stabilized despite efficiency gains. But this is possible only if decarbonization occurs as quickly as energy consumption grows. At today’s consumption growth rates, this would require roughly one new nuclear power plant, or equivalent in renewables, to be deployed each day

For more details

Garrett, T. J., 2012: No way out? The double-bind in seeking global prosperity alongside mitigated climate change, Earth System Dynamics 3, 1-17, doi:10.5194/esd-3-1-2012

Monday, September 10, 2018

On the thermodynamic origins of economic wealth

What are the origins of wealth?
Economics textbooks describe wealth as an accumulation of all financially valuable resources. It is our collective beliefs that give this accumulated stock value.  Human labor uses this stock to produce more stuff through the GDP thereby enabling overall wealth to grow with time.

At least on the face of it, this view of the economy makes a lot of sense. Economists have mathematical equations that express these ideas providing quantitative descriptions for how and why the economy grows.

Yet something still seems unsatisfyingly magical. Why should we believe in the concept of economic value in the first place?. The existence of a financial system is hardly obvious. It hasn’t always existed through history, even during periods where people produced and consumed. And most of what we do in our lives (fortunately) doesn’t involve any exchange of currency at all. We are able to enjoy a good moment of each other’s company without having to pay a single cent.

The economy and the second law
Sure, financial wealth is a human quantity, but we are still part of the physical universe. No matter how rich we may be, we are all equal subjects of its rules.

Chief among these rules is the Second Law of Thermodynamics. The Second Law has been expressed in many ways that are either wrong, strangely mystical, or maddeningly vague. It doesn't have to be this way. The most straightforward is to view the direction of time as a flow of matter that redistributes energy to ever lower potentials. Drop something it falls. It was up, now it’s down; air flows from high to low gravitational potential or pressure to make the winds. Easy.

Take the waterwheel in a mill. A mill consumes high gravitational potential energy from a flowing stream. The flow drives the wheel circulations and finishes its journey in the stream below where the potential energy is becomes unusable. The total capacity of the mill to dissipate potential energy, its size or “stock”, is something we can estimate by looking at the size of the mill and noting how fast it circulates.

Or how about a hurricane? The pressure difference between the eye of the hurricane and its surroundings provides the potential energy with which to drive the winds while the hurricane constantly loses energy by radiating to space. Again the hurricane has a size or "stock" that defines its power.

What does this have to do with the economy? Well, everything. Our perceptions are based on neuronal activity in the form of cyclical transfers of charge from high to low potential in our brains. The cycles are sustained by by high potential calories in food that we dissipate as waste heat from our bodies. Our food is produced with high potential fossil fuels that we burn to till the land, produce fertilizer and transport from farm to market. We get to and from market using gasoline that is dissipated in our cars. The money we use to buy food comes from the fruits of our labors staring at computers that that themselves dissipate energy as they make computations with a certain cycle frequency and transfer data to and from other computers along communication networks, all of which turns high potential energy to low potential waste heat.

But can we really reduce all this to something as simple as a waterwheel or hurricane? There’s 7+ billion of us, our brains are so complicated, and the economy is so big.

All the circulations in civilization are ultimately derived from the consumption and dissipation of high energy density “primary energy resources”. As a global organism, our civilization collectively feeds on the energy in coal, oil, natural gas, uranium, hydroelectric power and renewables. Civilization continually consumes these resources to accomplish two things: the first is to propel all civilization’s internal back-and-forth “economic” circulations along its accumulated networks; the second is to incorporate raw materials into our structure in order to grow and maintain our current size against the ever present forces of dissipation and decay.

Energy, from whatever source, powers our machines, our telecommunications, modern agriculture, and the supply of the meals that give us the energy to sustain our thoughts, attention, and perceptions. Without energy, civilization would no longer be measurable. Everything would grind to a halt. Nothing would work. Lacking food, we would be dead and our attention span with it. The gradient that meaningfully distinguishes civilization from its environment would disappear. Value would vanish.

Wealth is power
Stepping back to see the world economy as a simple physical object, one where people are only part of a larger whole, would be a stretch for a traditional economist hung up on the idea that wealth must be restricted to physical capital rather than people. But, crucially, unlike traditional models, it is an idea that can be rigorously tested and potentially disproved. It is a hypothesis that is falsifiable

I have shown in peer-reviewed studies published in Climatic Change, Earth System Dynamics, and Earth’s Future that the observed relationship between the current rate of energy consumption or power of civilization, and its total economic wealth (not the GDP), is a fixed constant of 7.1 ± 0.1 milliwatts per inflation-adjusted 2005 dollar.

Equivalently, every 2005 dollar requires 324 kiloJoules be consumed over a year to sustain its value. In 2010, the global energy consumption rate of about 17 TW sustained about 2352 trillion 2005 dollars of global wealth. In 1970, both numbers were about half this. Both quantities have increased slowly by about 1.4% per year to 2.2% per year averaging a growth rate of 1.90% /year.  The ratio of the two quantities has stayed nearly constant over a time period when both wealth and energy consumption have more than doubled and the rates of growth have increased by about 50%. Currency is the psychological manifestation of a capacity to dissipate energy.

Can wealth continue to grow?
What this means is that we must continue to grow our capacity to consume primary energy reserves just to grow our wealth. We should never conclude that growth can’t continue over coming decades, as some claim in perennial doomsday predictions. It’s just that there is nothing stronger than inertia to guarantee that it will. The water wheel in the picture above can rot or the river can dry. Hurricane low pressures can dissolve. For us, continued consumption growth may quite plausibly become too difficult due to depletion of energy and mineral reserves or accelerating environmental disasters such as climate change. If this happens, all our efforts to produce growth can be expected to be more than offset by decay.

At some point, all systems experience decay and collapse. We’ve seen the waxing and waning of civilizations throughout history. Historical studies suggest that any long-term decline in a society’s capacity to consume forebodes hyper-inflation, war, and population decline. The question for us should not be whether collapse will happen, but when, and whether it will be slow or sudden. 

Friday, August 17, 2018

The global economy, heat engines, and economic collapse

British Petroleum provides some pretty nice tools for visualizing energy consumption like the figure above which drives home effectively the point of just how fast our demand for energy is growing, roughly quadrupling in the past 50 odd years.

In order to understand this growth better, I think it's important to ask why we need energy in the first place. This may seem like a pretty bone-headed question -- of course we need energy. But energy is not an essential ingredient in traditional macro-economic models. In the best case energy is treated as a quantity that can be "substituted" for other ingredients of the global economy as capital and labor.

As a physicist, this seems totally nuts as our individual ability to work rests on the availability of energy. We're not somehow divorced from the laws of the universe. I've never heard of someone being an effective element of the labor force who had completely ceased to eat. And food sure doesn't materialize without work being done.

Instead, I think it's appropriate to treat civilization as a what can be termed a thermodynamic heat engine. The idea of a heat engine was first envisioned by French engineers in the early 1800s. In a car, work is done to propel a car forward by consuming the chemical energy in gasoline at high temperatures and dissipating it as waste heat at low temperatures with the pistons moving up and down in between.

In one way, we're very similar. We consume energy to go through the cyclic motions of going to and from work and the grocery store, sending out internet search requests, and pumping our hearts. All these actions require a temperature gradient where energy is released at high temperatures and dissipate at cold temperatures, whether with our cars, our computers, or the gradient from the inside to exteriors of our bodies. In fact, we can see all of human civilization as a "super-organism" that consumes primary energy to engage in all of its internal circulations, ultimately radiating waste heat to the atmosphere and then to cool of space.

High potential primary energy resources like oil and coal sustain civilization’s circulations against dissipation of waste heat. ‘Useless’ energy ultimately flows to space through the cold planetary blackbody temperature of 255 K. In between lies civilization, including people, their activities, and
all their associated circulations, whether or not they are part of the GDP.

Civilization Growth

A key difference between human civilization and a car is that it can grow. By growing, its thermodynamic engine expands. A larger engine consumes more, dissipates more, and does work ever faster. This positive feedback provides a recipe for exponential growth.

Civilization uses energy consumption mostly to sustain existing circulations. A small fraction is also used to grow civilization through an incorporation of new raw materials (e.g. iron and wood) into its structure. Thermodynamically, this is possible only if civilization consumes a little more energy than it dissipates. A small fraction of the energy that is consumed is available to incorporate raw materials to build civilization.

We’re actually pretty familiar with this. If we eat too much we get fat. I’m told that consuming an extra 3500 calories beyond what we need leads to a pound of weight gain. This is the energy required for the body to turn food into flesh.

A child consumes food today in some proportion to the child’s body mass. The child experiences a production of mass if there is a convergence of energetic flows such that it dissipates less heat than is contained in the food energy eaten. The child’s current size is directly a consequence of an accumulation of prior mass production. Its current rate of food consumption is also a consequence of prior production. As the child grows it eats more. As the child approaches adulthood, the disequilibrium between consumption and dissipation narrows, and (hopefully!) the production of new mass stalls.

So economic production, or the GDP, can be seen as the consequence of this imbalance: production is positive only when primary energy consumption is greater than the rate at which civilization dissipates energy due to all it’s internal circulations. If production is positive, civilization is able to incorporate raw materials into its structure. It grows, and then uses the added population and infrastructure created with the materials to consume even more energy.


I think this is what is happening with the BP statistics. Because the GWP exists, we grow, and then use our growth to access more energy which we can then consume with the higher infrastructure demands. The relevant equation is that every 1000 dollars of year 2005 inflation-adjusted gross world product requires 7.1 additional Watts of power capacity to be added, independent of the year that is considered.

Right now, energy consumption is continuing to grow rapidly, sustaining an ever larger GWP. But it is not the rate of energy consumption that supports the GWP, but the rate of growth of energy consumption that supports the GWP.

This important distinction is flat out frightening. The implication is that if we cease to grow energy and raw material consumption globally, then the global economy must collapse. But if don't cease to grow energy consumption and raw material consumption then we still collapse due to climate change and environmental destruction.  Is there no way out?

Wednesday, August 1, 2018

Is macroeconomics a science?

Macroeconomics can get a pretty bad rap at times, perhaps unfairly. Some of its practitioners are so politically influential on such familiar topics as unemployment and economic growth it's easy for the non-expert with an opinion to get a bit jealous. Few would dispute the merits of the latest winner of the Nobel in physics. But the Higgs boson is pretty inscrutable even to most physicists. It's only natural that economists get more attention -- and criticism -- when Nobel prize winners like Paul Krugman write popular columns for the New York Times.

Yet, even the noted economist Paul Romer has offered the caustic remark that the field is in "...a general failure mode of science that is triggered when respect for highly regarded leaders evolves into a deference to authority that displaces objective fact from its position as the ultimate determinant of scientific truth."

Ouch. So maybe macroeconomists are our modern day equivalent of medieval High Priests. Economists' theoretical models didn't predict the economic crash of 2008. Nonetheless, economists don't seem particularly troubled, certainly not troubled enough to consider that their models might be profoundly off course. From their perch, why should they?

Confirmation bias -- seeing only that which supports existing beliefs -- can be brushed off as the sort of normal human arrogance that we are all susceptible to. But being able to falsify a result lies at the core of the scientific method. It must be possible to set up a test that could lead to a model being discarded. 

For a comparison of professions, imagine if meteorologists predicted sunny days rather than the landfall of a hurricane. And then, because respected NASA scientist James Hansen was himself unconcerned, they put little effort into preventing such a thing from happening again.

That's not what happens. Instead, in meteorology, the validity of forecast models is constantly tested by performing what is known as "hindcasts" -- starting a model sometime in the past to see how well it predicts the present. Aside from the fact that the models are built on basic physics to the greatest extent possible, various model flavors are ranked according to their hindcast accuracy. It's the job of a professional meteorologist to both understand the model workings and know which models do best in which situations to communicate to the public the best forecast possible.

I can find no evidence of the economics profession doing something similar. Traditional macroeconomic models employ equations for the GDP, or “production functions”, that are  “tuned” to match past observations of labor and capital. It is not possible to falsify these moving theoretical targets because they are always made “right” by adding layers of social complexity or by tweaking the production function exponents until a decent fit is obtained. If conditions change and the formula no longer works, economists just tune again and call it a “structural break”.

This is cheating! At least if the goal is understanding how things work. It would be abhorrent to imagine a basic physics equation being adjusted as time progresses for the situation at hand. The speed of light in a vacuum doesn’t get to be different for you than for me or for last year versus this year.

Let's take for example the basic Cobb-Douglas production function used by economists as a starting point for relating economic production Y to labor L and capital K. The quantity A is a “total factor productivity” that has been thought -- largely due to efforts by Paul Romer -- to be related to innovation.

Y = A Lα Κ1-α

Here the parameter α is tuned to past data in order to reproduce values of Y. In economic studies, when the inelegant Cobb-Douglas function (or whatever is used as a replacement) doesn’t work well, for whatever reason, the approach is not to ask whether or not something might be fundamentally wrong about the premise behind the fit, but rather to add ever more bells and whistles until once again a sufficient fit is obtained, totally independent of any consideration of dimensional self-consistency.

For example, maybe a constant exponent α doesn’t provide a good fit unless A is allowed to change too according some equally complex function. Paul Romer introduced government stimulus of R&D to obtain this sort of example of complexity:

So many free parameters! With such a complex function one could replace labor with the historical population of rodents in Calcutta and tune A, α and β in such a manner that the Cobb-Douglas function would still reproduce beautiful timelines for Y. As John Von Neumann quipped With four parameters I can fit an elephant, and with five I can make him wiggle his trunk.

This is not what sophistication should look like! Making things ever more mathematically complex does not make things more true, if anything less so. It feels akin to astrology, a highly complex, self-consistent model based on un-physical nonsense. Totally convincing to those who are looking to believe that the world has order and explanation, and that they alone have the years of training required to understand it, but completely lacking in any means for falsifiability.

It gets worse. The production functions lack the simple element of dimensional self-consistency. Take a basic physics equation, Newton's F=ma, or Force equals mass times acceleration. Mass has units of mass, obviously, and acceleration has units of distance per time squared. So the units of force are mass times distance per time squared. The equation would be totally bogus if force were declared to have any other sorts of units.

Now compare Newton's F = ma with the Cobb-Douglas function. There is nothing fundamental about the free parameter α since it is just a number. In fact, it can have any value depending on the statistical fit, the country, or the period considered. Suppose for the moment that α = 0.3. If A is just a number, labor has units of worker hours, and capital units of dollars, then Y would necessarily have the absurd units of worker hours to the 0.3 power and dollars to the 0.7 power. This has nothing to do with the real units of economic output which are dollars per time!

A couple years ago I had the opportunity to discuss economic growth models with well-known environmental economist Robert Ayres on a visit to Paris where he lives. He was quite adamant that I was wrong about everything. I don't think he had actually bothered to read anything I had done, which was too bad given the condition for the meeting (his idea) was that I buy and read his latest book. I tried to be patient, but eventually raised this units issue with him. His response was "only a physicist would care about units"!

Perhaps, I have been too harsh -- everybody is trying their best -- but it looks like fluency in Latin in the Catholic Church, where established macro-economists need something sufficiently opaque in order to maintain their high-priesthood. More generously, economics is complicated and economists just don’t yet know yet how to describe it without such detailed dimensionally inconsistent fits; even in physics, similar fits are occasionally used to describe interactions of particles with turbulence, for example, simply because the underlying physics can be rather challenging.

And maybe my rant is just another one of those pot-shots from non-economists, I have however tried to do better, by creating an economic growth model with no bells and whistles that can be easily tested and discarded. It is founded on a proposed constant relationship between energy consumption rates and a very general representation of total inflation-adjusted wealth (analogous to capital K) and is borne out by observations. Further evaluation of the model has been done by performing hindcasts, asking whether we predict the present with a deterministic model that is initialized at some point in the past. Again, in this case it appears we can: current global rates of energy consumption growth and GWP growth can be accurately predicted based on conditions observed in the 1950s, without appealing to any observations in the interim, with skill scores >90%.

For myself, there's adequate contentment in simply understanding some of the power of thermodynamics. But that is balanced by some abhorrence with certain aspects of macroeconomics.

Saturday, July 28, 2018

George Orwell on the metabolism of the industrial world

When discussing biophysical economics -- the idea that the human economy can be treated like any other biological organism that grows subject to resource constraints -- well-known names include Charlie Hall, Cutler Cleveland, and Robert Costanza. My personal favorite for the level of insight, using prose rather than math, is the work of Geerat Vermeij.

Recently, I've been reading George Orwell's 1937 book "Road to Wigham Pier", a testimony of the plight of the British working class. He captures similar themes, more eloquently, I think, than anything else I've read:

Our founded on coal more completely than one realizes until one stops to think about it. The machines that keep us alive, and the machines that make machines, are all directly or indirectly dependent upon coal. In the metabolism of the Western world the coal-miner is second in importance only to the man who ploughs the soil. He is a sort of caryatid upon whose shoulders nearly everything that is not grimy is supported.


Watching coal-miners at work, you realize momentarily what different universes people inhabit. Down there where coal is dug is a sort of world apart which one can quite easily go through life without ever hearing about. Probably majority of people would even prefer not to hear about it. Yet it is the absolutely necessary counterpart of our world above. Practically everything we do, from eating an ice to crossing the Atlantic,and from baking a loaf to writing a novel, involves the use of coal, directly or indirectly. For all the arts of peace coal is needed; if war breaks out it is needed all the more. In time of revolution the miner must go on working or the revolution must stop, for revolution as much as reaction needs coal. Whatever may be happening on the surface, the hacking and shovelling have got to continue without a pause, or at any rate without pausing for more than a few weeks at the most. In order that Hitler may march the goose-step, that the Pope may denounce Bolshevism, that the cricket crowds may assemble at Lords, that the poets may scratch one another's backs, coal has got to be forthcoming. But on the whole we are not aware of it; we all know that we 'must have coal', but we seldom or never remember what coal-getting involves. Here am I sitting writing in front of my comfortable coal fire. It is April but I still need a fire. Once a fortnight the coal cart drives up to the door and men in leather jerkins carry the coal indoors in stout sacks smelling of tar and shoot it clanking into the coal-hole under the stairs. It is only very rarely, when I make a definite mental-effort, that I connect this coal with that far-off labour in the mines. It is just 'coal'--something that I have got to have; black stuff that arrives mysteriously from nowhere in particular, like manna except that you have to pay for it. You could quite easily drive a car right across the north of England and never once remember that hundreds of feet below the road you are on the miners are hacking at the coal. Yet in a sense it is the miners who are driving your car forward. Their lamp-lit world down there is as necessary to the daylight world above as the root is to the flower. 

The full chapter, truly remarkable for its description of the work life of the miners, is here

When I am digging trenches in my garden, if I shift two tons of earth during the afternoon, I feel that I have earned my tea. But earth is tractable stuff compared with coal, and I don't have to work kneeling down, a thousand feet underground, in suffocating heat and swallowing coal dust with every breath I take; nor do I have to walk a mile bent double before I begin. The miner's job would be as much beyond my power as it would be to perform on a flying trapeze or to win the Grand National. I am not a manual labourer and please God I never shall be one, but there are some kinds of manual work that I could do if I had to. At a pitch I could be a tolerable road-sweeper or an inefficient gardener or even a tenth-rate farm hand. But by no conceivable amount of effort or training could I become a coal-miner, the work would kill me in a few weeks.