Energy Insolvency - The debt "roulette"

The matters analysed in previous postings highlight why energy insolvency is the core issue hidden behind the global crisis that has been unfolding since 2007 – in this matter the EROI wild cat is totally ruthless.

To hopefully dispel any lingering misunderstanding recall that, at the global level, each year, the amount of net energy humankind can mobilise is finite and that this finite amount combined with humankind’s ability to keep mobilising it through sustainable technologies are the sole possible tangible referent for the whole of rapidly increasing global financial transactions amounting to hundreds of trillions in whatever currency one may want to consider. The implications of this ratio between net energy versus monetary mass and debt are so drastic that they indeed warrant examining in greater depth. Recently, recalling the extent of the growth of the global debt since President Nixon dropped the gold exchange standard, Cordt Schnibben summarised the view of many analysts in acknowledging that “at the moment, the world has only one approach to getting out of this labyrinth of debt: incurring trillions of even more debt.” [1] However, what Schnibben and the world’s communities of politicians, economists and financiers alike do miss is what we have highlighted in this Briefing, namely that the EROIs for both fossil fuels and alternatives have become far too low to enable the present industrialised world to grow itself out of such a high level of debt, let alone its further expansion.

The endless contortions of almost all players in their struggles to try and exit from the debt issues through austerity, tax, other “quantitatively eased” financial recovery means, or simply debt eroding inflation, entirely disconnected from thermodynamic realities are purely illusory. Under current paradigms as well as current industrial structures and infrastructures, the world simply cannot mobilise enough net energy each year. In short, notwithstanding their ceaseless efforts to maintain the illusion of the status quo and banish the death of their world by way of “magic, myth and rituals” of the financial and economic kinds, decision-making elites cannot escape having eventually to face the global insolvency of the whole of humankind vis-à-vis itself and vis-à-vis the whole of life on the planet – a situation far worse than what Imperial Romans ever experienced.

In effect, as we begun to observe in the earlier posting on Energy: the fundamental driver of wealth creation, the present massive flows of currency trading, financial products and so-called derivatives act as a huge smoke screen hiding the dire reality that, through globalised consumerism, humankind taken as a whole has been living way above its energy means for far too long and has “eaten its future”. [2] In Baudrillardian terms these illusory financial masses are pure fantasy simulation of a “more-real-than-real hyper-reality” that so-called consumers are hypnotised, seduced and/or coerced to believe in, but one that is now entirely alienated from earthly reality. [3]

Put into more colloquial terms, the matter is now one of “pass the parcel” or, in less childish and more ominous ways, playing poker in Wild West fashion, or “Russian roulette”. This game now even concerns climate change. As Harald Welzer noted pointedly in Der Spiegel, at the 2013 United Nation Climate Change Conference held in Warsaw, in spite of appearances and very discreetly, climate change has been definitively removed from the global policy agenda to be replaced with a mad race for energy survival on the “everyone to themselves” mode with the “devil taking the hindmost”. [4]

Faced with a finite tangible yearly energy “parcel” (and one actually declining in size in terms of availability per head of global population), this is a struggle of all against all, each attempting to extract as much of highly elusive and virtual value as they can, while attempting to pass the resulting massive parcels of troubles to the other players. Most of the players, however, seem unaware of the real (and very stubborn) rules of this game – at the global level there is no cosmic “banker” available to bail out those who miss the vital Joules, no one is “too big to fail” and the more people play at this lethal game without even knowing what it is that they are playing at, the harder the fall for everyone, even the would-be winners.

[1] Schnibben, Cordt, 2012, “Betting with Trillions – Prison of Debt Paralyses West” in Der Spiegel, 16 November.

[2] Acknowledging Tim Flannery’s pointed phrase (Flannery, Tim, 2002, The Future Eaters: An Ecological History of the Australasian Lands and People, Grove Press).

[3] Throughout his abundant work, among many other matters Jean Baudrillard analysed and highlighted the hyper-reality of our times based on endless simulation of the “more real than real”, the complete flotation of values, the absolute vacuity of economics, and the impossibility of the global debt of all to all to be ever repaid.

[4] Welzer, Harald, 2013, “Climate Summit Trap – Capitalism’s march towards collapse”, in Der Spiegel, 6 December.

#eroi #thermodynamics #renewables #fossilfuels #debt #roulette