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Dr Simon Michaux 2/10/2014
You can never get enough of things you don’t need
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Everything we want is made from raw materials
We are conditioned to believe there are no limits and growth is our reason to be
Most of what we want is manufactured
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From raw materials extracted from the Earth
Using energy
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Which is generated by burning raw materials extracted from the Earth
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Dynamic Self Regulating Finite System
This system is not growing and has been stable for some time
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Oil
Coal
Gas
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Exponential growth in a finite system is not sustainable
Consumption of all natural resources are following this basic pattern over time
Driven by increasing demand
Production is Increasing
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48% Decrease in Multifactor Productivity
50
60
70
80
90
100
110
Inde
xed
2000
-01
= 10
0
Topp et al. (2008) Australian Bureau of Statistics (2012)
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Conventional mining practice is struggling to remain economically viable
Ore Grades Are Decreasing
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Metal Price Cost (Indexed to the year 2000)
0
100
200
300
400
500
600
700
Real
Pric
e
Inde
xed
2000
-01
= 10
0
Au Cu
Pb Zn
Ag Ni
Al Fe Ore
Year 2008 (GFC)
Cur
rent
Min
ing
cras
h
ABS 1350.0 Financial Markets - Long term http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/1350.0Jul%202012?OpenDocument ABARES - Australian Mineral Statistics March 2011 12
Source: Nature 26 Jan 2012, Vol 481 Comment Price $50 USD/barrel Price $147 USD/barrel
Peak Conventional Oil Production - 2006
International Energy Agency
http://makewealthhistory.org/2010/11/11/iea-peak-oil-happened-in-2006/
Source: EIA, en.wikipedia.org/wiki/Oil_Megaprojects, Tony Erikson “ace” theoildrum.com
GFC 2008
World Crude Oil & Lease Condensate Production, Including Canada Oil Sands
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China industrial demand dominated the rest of the planet
China now dominates manufacturing and resource consumption 14
We are 8 years into an era of industrial transformation
0
100
200
300
400
500
600
700
Real
Pric
e
Inde
xed
2000
-01
= 10
0
Au Cu
Pb Zn
Ag Ni
Al Fe Ore
Oil supply became inelastic
Chinese industrial demand
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Total Mining costs have also risen
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
Total Income
Total Expenses
ABS 1350.0 Financial Markets - Long term http://www.abs.gov.au/AUSSTATS/[email protected]/DetailsPage/1350.0Jul%202012?OpenDocument ABARES - Australian Mineral Statistics March 2011 16
Source: Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES) 2008
Energy consumption in mining increased 450% in the last 40 years 17
Peak Gas Year 2018
Zittel, W. et al, Fossil and Nuclear Fuels – the supply outlook Energy Watch Group March 2013
CSG and shale gas has pushed Peak Gas back from approx. 2010 18
Peak Oil
Conventional and unconventional oil supply
Zittel, W. et al, Fossil and Nuclear Fuels – the supply outlook Energy Watch Group March 2013
Discovery & Production
Year 2012
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Tar and oil sands have pushed back the peak of total oil supply back 6-7 years from approx. 2006
Peak Coal
Zittel, W. et al, Fossil and Nuclear Fuels – the supply outlook Energy Watch Group March 2013
Year 2020
Peak date contingent on China selling us their coal 20
Future projection of Uranium production
2014
Nuclear power would have to increase 12-13 times capacity at peak potential to make up for total energy supply to replace fossil fuels
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Zittel, W. et al, Fossil and Nuclear Fuels – the supply outlook Energy Watch Group March 2013
Existing nuclear infrastructure needs replacing
Each new reactor sites takes 5-15 years to construct
22 Someone has to finance each one
Storage of spent fuel rods • Spent fuel rods are
very radioactive and generate a lot of heat
• Need to be stored in cooled water for 10-20 years before dry storage
This is the Achilles Heel of nuclear technology as a solution
to our energy supply problem 23
When U peaks production, coal gas and oil will have already peaked
World supply of fossil fuels and uranium
Zittel, W. et al, Fossil and Nuclear Fuels – the supply outlook Energy Watch Group March 2013
Peak energy approx. 2017
Industrialisation in a global context will soon tip into contracting economies - the end of growth based economics 24
http://www.zerohedge.com/news/2014-05-30/us-gasoline-consumption-plummets-nearly-75
Source: Zero Hedge, Submitted by Jeff Nielsen via BullionBullsCanada blog
2008 (GFC)
U.S. “gasoline consumption” – as measured by the U.S. Energy Information Administration (EIA)
– has plummeted by nearly 75%
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Food and civil unrest
Inability to buy food correlates with civil unrest
Food and the price of oil
Adapted from DECPG data.
Industrial agriculture is failing • Petro-chemical fertilisers and herbicides are increasingly less effective,
requiring more each year for the same output
• Every year, 0.3–0.8% of global arable land (75 billion tons of fertile soil) disappear/year and is rendered unsuitable for agricultural production
• 52% of the land used for agriculture is moderately or severely affected by soil degradation
• Arable land loss estimated at 30 to 35 times the historical rate
• In Australia, organic matter humus content has fallen from approx. 5% to less than 1% (needs to be approx. 20%)
Conventional food sources are in the process of failing
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Corporate culture genuinely does not know where to start to instigate a major shake-up of technology and approach; instead across the board,
focus has been on short term risk aversion
Decreasing Grade
Sovereign Debt Default
Decreasing Grind size + Increasing
Depth + Peak Fossil Fuel +
Peak Mining
Credit Freeze + Structural
Inflation + FIAT Currency
Devaluation +
Peak Finance
Peak Manufacturing
Peak Industrialisation
=
=
The End of the Industrial Revolution
Expansion of production needed to stay viable
Expansion of money needed to service debt
The Industrial Big Picture
160 years after it started 30
Forced Transformation
Understand true implications
Deterioration and Fragmentation
Decay/Collapse
Write-off/Reset
Mounting Stress
We
are
here
Conquest of
another system
Fundamental Reform
Mounting Stress
Existential large scale crisis
Existential large scale crisis
business as usual
Early small scale crisis
All 5 Stages of Human Grief at all scales
Deterioration and Fragmentation
Temporary solution loop
Where we are
Where we should be
Inelastic oil supply 2005
Peak Total Energy 2017
With 20/20 hindsight
business as usual
Early small scale crisis
This diagnoses a certain outcome 31
The writing on the wall • Everything we need/want to operate is drawn from non-
renewable natural resources in a finite system • Most of those natural resources are depleting or will soon • Demand for everything we need/want is expanding fast
• When these trends meet, there will come a point where how
we do things will fundamentally change
• None of these issues can be seen in isolation.
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The most difficult but significant task in front of us is a revolution in perception and a restructuring of social responsibility
Questions???
My wife and I in 40 years time (its up to you to keep up)
