introductory lectures jean-marc jancovici - climate and energy consultant. man and energy: the devilish lovers. good morning. welcome back. i hope you're landing nicely after two months trying to forget the tribulations of the planet. the topic today is energy. i will be successful if: a. you leave with a lot more questions you had when you came in. b. you understand that any change in this world involves energy. c. i manage to trigger the career change of at least one of you.
i'm an international expert but to start off i'm going to ask for the help of france's most prominent professor. you see him once a month at 8.30pm. he asks a question and the answer gets to be known by several million french people. let's suppose he asks the following open question: "what is energy?". i would bet the first answer that would come to mind would be: "my electricity bill. energy is something i pay". it could be electricity, it could be oil, it could be gas, it would be something i pay. a smaller portion of the population would think of something we need to save, without really knowing how and why. then you may get some poets who will define energy as what you feel in the morning when you are in shape. well, the poets would be right, energy is by definition the main feature of a changing world, it is what puts the world into motion.
let me return to two very basic principles: the 1st law of thermodynamics and cross-multiplication. despite not having a formal definition, let us assume that energy is the unit used to measure the change of state of a system. another way to put it is: as soon as something changes, energy is involved and reciprocally as soon as energy is involved, something changes. thus making the idea of clean energy nonsense by definition. a few examples, energy is involved when: a temperature changes in a system. the relative speed of an object changes. the shape of an object changes. a chemical composition changes. calories for example are nothing else than the capacity of the molecules we ingest to supply energy we use to keep warm, make our body move and our brain work. a body interacts with a field (magnetic, electric, gravitational...).
an atomic composition changes a matter radiates, which you may have experienced over the summer, or when you use a microwave or a laser let me stress this again: counting energy is counting transformation, counting transformation is counting energy. there is no clean energy. there is no dirty energy either, it's all a matter of orders of magnitude. an energy debate which does not involve figures and calculations is absolutely worthless. the 1st principle of thermodynamics will always win over political promises, always. i'll bet my wealth on that. let's look at some orders of magnitude. how much energy can our body produce during a day of hard work? we will assume the following: day hike, body weight 80kgs, backpack 10 kgs, difference in level of 2000m
who has ever done this? well, when you get to the end of the hike, which is no small achievement, your legs have barely supplied 0,5 kwh. i'll spare you the details, but basically after sweating for a whole day, the energy production is half a kilowatt hour of mechanical energy. repeat this every two days and at the end of the year, your legs will have produced about 100kwh of mechanical energy. let's now assume that you dig a big hole and remove 6 cubic meters of dirt (about 15 tons), the calculation is the same, you produce 0,05kwh, 10kwh per year if you repeat this every two days bottom line, the capacity of a woman or a man to change the surrounding environment, using his/her sole muscles, is somewhere between 10-100kwh per year in comparison, a liter of oil contains 10kwh of heat, equivalent to 2-4 kwh of mechanical energy. conclusion: in a single liter of oil, whose consumption reaches 1,400 liters per capita per year in france, you get the same capacity to change the environment than in 10-100 days of labour. in economic terms, using the minimum wage rate, the price of the mechanical kwh will be between 200-2000 euros. whereas a machine can provide the same service for 0,4 euro (considering the marginal cost only).
to put it otherwise, oil, coal and gas enabled us to transform the planet at a unit cost 500 to 5000 times less than what human beings can do only by themselves. everything you see around you derives from this. everything. the fact that you can study, that you can fly, that you can live in a 20sqm flat, that you have access to a profusion of clothes, that you can eat meat at every meal, that you live until 70... we owe all this to energy. all the claims, be they by worker unions or the national confederation of french employers, or political promises come from this simple fact. again, for the sake of argument, and even though it is not politically correct, let's suppose we have a slave and let's calculate the cost. you need to catch a slave, which has a cost or pay a third party to do it for you, which has an extra cost. you also need to prevent him from escaping and feed him so he does not die. if you make this sordid calculation, you will find out that even a slave is 10-100 times more expensive than a machine conclusion: the slave trade did not disappear because rousseau was right and men suddenly became virtuous, it disappeared because machines, which work 24/7 and do not go on strike, could do the same tasks for 10-100 times less money. let's talk about power. we had humans supplying at best 100 watts or horses supplying at best 1kw.
this has drastically improved now. for example, a tractor has a power of 60kw (equivalent to 600 pairs of legs or 100 horses... for a lot less money). give tractors to farmers and you suppress 90% of the agricultural workforce. a construction site machine has a power of 100kw (equivalent to 10,000 pairs of arms). if we were to build nowadays a skyscraper in paris cbd with methods dating back to ancient egypt (manual extraction etc...), it would take 50 years. a truck has a power of 4,000 pairs of legs. it is the truck that does all the work, not the driver who is only steering the wheel and changing gears. a plane has a power equivalent to 1,000,000 pairs of legs and a rolling-mill has a power equivalent to 10,000,000 pairs of arms. if rolling-mills did not exist, we would need to have the population of paris and its suburbs pounding on steel to get the same result as one of these machines, which only requires one worker. who is doing all the work today? not us anymore but the machines. we are merely giving orders to the machines. that is why employment nowadays depends on one thing and one thing only: the number of machines at work. less energy, less machines, less employment.
now, here is the average per capita energy consumption per year over the last 150 years. note that 'consumption' is a somewhat improper term, as we 'mobilize' energy sources to feed them to machines. one and a half century ago, an average human being had about 1,500kwh at his disposal, wood and coal to produce heat mostly and to a lesser extent movement (pumps, boats...). you can see that the quantity of coal available per capita increases, then levels off for a century and starts increasing again. the coal quantity (per capita or globally) has never decreased in these 150 years. when i was younger, we were used to hearing that coal was an energy from the past, clearly it's not. most of the coal today is used to produce electricity. it is by far the 1st source of electricity in the world, and the one growing the fastest. no matter what you hear about renewables from the press. on top of this came oil, which is fed to transportation machines: 98% of planes, cars or boats use oil. no oil, no exchange. you can notice that all energy sources were stacked on top of each other, they did not replace each other, barring a few minor exceptions. the blue area on top includes the per capita amount of wind/solar/tidal/biogas/geothermal/wave energy... all these things that get journalists all fired up.
later on, we will make a cross multiplication to see if this is capable of generating green growth and replace all the rest. if it fails that test, it will go bankrupt. one very important remark: for a century, the amount of energy per capita increases by 2,5% per year. that is by far the main factor of the increase in labour productivity over the period. the more energy, the more machines we can get to work, the more machines, the higher the production. and per capita, the production increases as well. our talent was just to develop ways to tap these existing stocks of energy faster and faster. since the oil shocks, the growth has been much slower, especially in oecd countries where the amount of energy per capita has been stable. growing debts, sluggish labour productivity, de-industrialisation, sluggish economic growth all date back to the oil shocks. not because the oil price suddenly became volatile, the price does not particularly matter. but because the rate of growth of energy per capita changed drastically.
every year, we want to believe the pace will accelerate again, but i will show you just the opposite. over the past two ears, you can see a leveling off, which is a direct explanation for the current slowing down of the word economy you may have heard about in the press. nevertheless, thanks to the energy available to us, we have reached a standard of living without any precedent in human history. i'ma about to state an abomination but even a person earning the minimum wage in france lives like a nabob. he or she may not realize it and think his being poorer than others is unfair, but that is the truth. if i convert the average amount of energy available per capita into slave equivalent, each human being has about 200 energetic slaves working for him all day long. each french has about 600 energetic slaves and you guys about 1,000 since you belong to the wealthiest. that is the reality of the potential offered by energy today. we all live as if we had an army of slaves at our disposal. in passing, that was also the case of the handful of free citizens of the roman and greek empires who were surrounded by a huge crowd of hard working slaves doing the hard work for them, which freed some time to take care of the of the city business.
let me stress this again, minimum wage earners in france live like nabobs. they have access to 40sqm accomodations, cooled in the summer or heated in the winter. even aristocrats from the middle age did not enjoy such comfort. they enjoy a life expectancy of 75 years, as opposed to 25 years in urban centers 200 years ago. they have access to education, tv, radio and can afford to eat 30kgs of red meat per year... quite different from the standard diet two centuries ago. the real price of any item which already existed 150 years ago, defined as the time needed to work to be able to afford it, has been devided by 30 to 100. a french peasant from two centuries ago could absolutely not afford to pay back his accomodation after working for 20 years. no way. just try and imagine what the everyday life of the average french peasant was 200 years. it looked nothing like the life of a minimum wage earner today. the reason for their discontent is to be found in what tocqueville wrote: since in a democracy everybody is supposed to have the same rights, if some have more than others, it isn't fair. here are a few examples of our modern day slaves, which we feed with resources from below the earth crust, as opposed to real slaves who had to use a portion of fertile soil to feed themselves.
that is how we get a few hundreds energetic slaves at our disposal. the food they 'eat' take the shape of fossil fuels, which are ancient life residue (dead plants for coal, dead plancton for oil and gas). they have two main features: we can consider their stock is given once and for all given the timescale necessary for replenishment (10-100+ million years) and they release carbon when burned. here is a breakdown of electricity sources: coal comes first, then gas, then a bit of oil which has not really decreased in absolute value over the years. all are fossil fuels. we then have renewables which is by far mostly hydro. here is what gets journalists all fired up. you cannot even see solar. now see the breakdown of global greenhouse gas emissions. remember this: fossil fuel electricity plants (coal for the most part) account for more than 25% of the total, personal cars 5%, trucks 5%, boats 3%, air travel 2%. killing coal is therefore a priority to fight global warming. and doing this just with solar panels and windmills won't get us there in time. quick advice for your career: when in doubt, go get the data and check by yourself, a simple cross multiplication will provide the answer. never believe what you see in the press without checking by yourself. this graph shows the quantity of co2 emitted by the use of a tep (tonne equivalent petrole), which equals 11,600kwh.
over one and a half century, this quantity does not change a lot, hovering between 2 and 3. has the it revolution and internet dematerialized the economy since 2000? so far, absolutely not. the introduction of the new renewables in the mix has not changed the figure either. the so-called energy revolution and digital revolution have not made any impact on the amount of co2 per tep so far. the same goes for the energy efficiency of the economy (energy use per euro of gdp), it has not changed since 2000. here is a graph showing the variance per energy source of the amount used in 2014 compared to 2000. what you can see is that coal increased 35 times faster than solar and 10 times faster than wind. so this period was characterized by a coal boom more than a renewables boom. let's move on to the distinction between primary and final energy. let's have a look at the 1st law of thermodynamics, a simple deduction follows: the only thing humans can do is use to their benefit a source of energy which already exists in the environment. the term 'production of energy' is improper. we cannot produce energy, we can only extract and transform it.
by economic convention, we assume that all primary energies are free: oil, coal, gas, wind, sun, uranium are all free. what we pay for is the fee for people who sit on them and the cost of people who extract them for us. as a result, when we pay for energy, what we are paying for is either the salaries or (unearned) income we have to disburse to extract and transform that energy. to put it otherwise, the cost of energy is proportional to the ease of access to energy and our capacity to transform it. therefore, the more diffuse the energy, the more work is involved to concentrate and dispatch it, the more expensive it will be. the volume available is irrelevent. what matters is the concentration. for example the 3 degree kelvin radiation of the universe is huge but we will never make any use of it. in that respect, oil will be remembered as the 'optimal' source of energy humans will have ever used. we gained in ease of access and concentration when we switched from wind and biomass to coal and then again to oil. but since then, we regress: gas is less practical than oil, nuclear is less practical than gas and renewables are less practical than nuclear. in economic terms, the consequence is that a lot more capital is necessary at every change to get the same result. back to the distinction between primary and final energy... primary energy is the different sources of energy already existing in the environment. but that is not what is fed to the machines who 'eat' final energy: refined fuels, refined gas, electricity etc... the energy business complex is all about transforming primary energy into final energy.
necessarily, you have at best as much final energy as there was primary energy in the first place. you may lose some energy in the process. as per carnot principle, you have losses when you turn heat into electricity. thermal power plants (coal or nuclear) experience losses of about 66% in average. finally, there are also losses when switching from final energy to useful energy, the energy contained in the service offered by the machines such as the movement of a car. a combustion engine is only 20-30% efficient for example. improving the efficiency of the energy business complex is a question for engineers, which is why politicians enjoy so much addressing energy issues: they only have to bother the tiny population of engineers without questioning the habits of the rest of the population. they also enjoy addressing combustion engine efficiency issues for example, because again, this is only an engineer problem. what they hate though is telling the population to save energy by living in smaller houses. but energy savings fall under two categories: energy efficiency and energy sobriety. regarding the former, you only need to bug engineers, regarding the latter you need to bug the entire population. in a democracy, politicians will always favor the first option and frown upon measures aiming at encouraging sobriety via taxes and regulations.
see now the breakdown of world final energy which shows we depend enormously on fossil fuels (80% of the total), oil being the first source. you may have heard france was 'all nuclear'... here is france final energy consumption by usage (residential, services, industrial, agriculture etc...). let me now circle fossil fuels and ask again: is france 'all nuclear'? there should be room for discussion to say the least. in economic terms, what have we got? oil, accounting for b$65 in imports and 64% of our co2, gas, accounting for b$16 in imports and 24% of our co2 and uranium, accounting for b$1 and no co2 i told you earlier energy drastically changed your life. if you live in a city and work in an office, you owe it to energy. here is a breakdown of france employment by sector over the past two centuries. 200 years ago, two thirds of the french population was working in the fields growing food, meaning a farmer's productivity was enough to feed himself and half another person doing non farm work. nowadays, as a comparison, a farmer (and all the agricultural machines) can feed himself and 50 other people doing non farm work. as you can see, the agricultural population increases for a few decades because agricultural land size increased while productivity stagnated. deforestation reached a maximum around 1850. then the agricultural population starts to decline. why? mainly because of the increase in productivity stemming from the capacity of a burgeoning industry fueled by energy to supply better tools.
after the war, industry intense development provides the agricultural sector with fertilizers, phytosanitary products and tractors. wheat productivity per hectare was multiplied by 8 in france in 40 years. in the meantime, the working population in other sectors increases because with a growing energy supply we could afford to increasingly extract ores of all kinds and turn them into manufactured goods to be sold. that was the beginning of industry: more machines, more employment since every machine needs a pilot. once the goods leave the manufacturing plant, they require all kinds of services: distribution, marketing, financing, accounting, transportation. services are nothing but a dependency of physical goods production. remove industry and you have no more of these services. remove industry and construction, you have no more amphitheatres, no more computers, no more chairs, no more benches, no more transportation means to bring you here... your school would not exist! services are not disconnected from industry. they are a way to exploit the underlying industrial sector. then came the oil shocks after which the amount of energy available per capita in the western world stopped growing, but the unit size of the machines kept increasing, less and less machine pilots were therefore needed. so industrial production kept on increasing along with services depending on it but employment in the industrial sector started to decline. this was common to all industrialized countries. but a new category appears: unemployed people, as in people who do not have a machine to pilot.
to put it otherwise, the productivity per worker has reached such a level that there is not enough 'pilot seats' to give to every worker. unemployment hovered around 2-3% before the oil shocks and never ever came back down to these levels in the following decades. here is a scatter plot showing on the x-axis the amount of energy per capita and on the y-axis the percentage of the working population in agriculture. each dot accounts for a country. overall, it looks like f(x)=1/x. if you know the per capita energy consumption per person, it is then easy to deduct the proportion of farmers. machines replaced farmers, which 'emptied' the countryside. industries and services developed around urban areas, especially services which require lots of exchanges, which are themselves more efficient when the density is high. urban areas were stretched thanks to energy and cars, which enable to cover much longer distances than before while keeping the intense network of exchanges permitted by urban concentration. this pattern is common to all western countries: empty countrysides where tractors replace humans, while workers flock to the cities to find a job in the industry or service sector. land settlement and social structure eventually both come down to an energy issue. just like macroeconomics. i'm sorry to inform you that conventional economics is all bullshit. i'll tell it to you straight.
here is the conventional view of economics, the one that is taught at school: capital and labour as inputs produce an output. if the output weakens and we cannot finance our pensions, we then proceed to kick the workers ass (decrease minimum wage etc...), lecture the bankers to stop fooling around and the production should start growing again, right? well, it just doesn't work. we have been trying to do just that in western countries since 2007, when energy supplies in oecd countries reached a maximum. it does not work anywhere, gdp does not start growing again, at best we get asset bubbles. which is what is happening at the moment with debts piling up all over the place. the only relevant question then is: when will the next crash be? why doesn't it work? because this view of the economic system is flawed. here is the correct view of the economy. the economy is merely a resource transformation plant. without sand and gas, a glass bottle factory cannot make glass bottles. without fish and fuel, a fishing boat cannot produce any output. what we need for the economy to work well is resources to transform. all the objects in this room, everything you will see during this day or during your entire life are nothing but natural resources transformed by us (or not).
the only thing is, two centuries ago, some clever devils decided that natural resources should not be accounted for. at the time, world population was less than 1 billion, the productivity per worker was about 50 to 100 times less, so the stock of resources was huge compared to the transformation capabilities. if the stock is considered infinite, we can estimate that î”stock equals 0 and we can forget about it. two centuries later, the orders of magnitude are much, much bigger and we still do not account for the stock. and it's a bit of a bummer because î”stock is not equal to 0 anymore. inside the labour production factor, human muscles account for 1 whereas the machines account for 200. it is then crystal clear. energy is constrained? well then your output will be constrained, even with accomodating bankers and workers and plentiful resources. and if your resources are constrained, you will also have a constrained output. simple theory but it matches the data quite well. here is the world gdp reconstructed since year 0. no or almost no growth during the first 1,800 years, quite straight forward.
then came fossil fuels and boom! 3% yearly growth. wonderful. question: who is ready to bet his wealth on this trend continuing a few more decades? i'm always surprised journalists never ask this question to politicians during interviews. you know when they say 'this is what i'm going to achieve', the first thing i would reply is 'would you bet your money on it?'. this is how it works. see on this graph in green the growth in world energy consumption and in blue the world gdp growth. they look quite close. you'll notice that at times they move apart, just like recently. based on previous experiences, that is a precursory sign of a downturn. one way to create dematerialized gdp is to create asset bubbles. when real estate prices double, gdp increases necessarily because credit creation is up, real estate agencies commissions are up, local tax revenues after transactions are up... without the consumption of one extra kwh. but lots of debt gets created in the process, and that is a very unstable equilibrium which should quickly deflate. that's what we have noticed since 2007: the federal debt in the us almost doubled, the uk public debt doubled. all countries with a big financial sector have seen their debt skyrocket. unless we come up with a new perpetual debt concept, at some point, we will have to concede that we will never pay it back. greece has already started, but it only accounts for 1% of the european gdp. the next one will cause more damage. these are volatile dynamics, there will be a downwards correction necessarily, it's obvious to me.
here is now the best economic model in the world, it's a straight line. world energy consumption on the x-axis, deflated gdp on the y-axis. the more energy, the more gdp. the best macroeconomic model in the world is a simple straight line. i am going to go a little faster. natural resources, which include fossil fuels, and for which we did not pay for enabled us to achieve the social framework we enjoy today and take for granted: fast growth, modern jobs, leisure... translated into economic terms, we came up with the gdp concept, which stands for transformation. the gdp is an aggregate of added values, which are the differences between output and input. two questions. how long can we play that game without having the climate system trigger a disruption of the root causes (i.e. humans) like human population contraction or decrease of the life expectancy? how long can we play that game with the stocks which we inherited and which are given once and for all? for reasons linked to the way the media work, it just happens that the subject at the bottom of the slide has already shown its effects since the oil shocks without us realizing it. whereas the subject at the top is only starting to show its effects, without us realizing it either, because issues such as daech and the arab spring are indeed related to climate change. reminder: when we tap resources from a finite stock, the rate of production cannot be infinitely increasing, not even infinitely constant. actually, the rate of production will necessarily be 0 as it approaches infinity, + or -, and reaches a maximum inbetween. cumulative production will at best reach the value of the original stock.
that means we will reach a peak in yearly production. it is not ideology, it is mathematical. all political promises violating a mathematical law will fail, just like what i said about the 1st law of thermodynamics. so we can expect, if it has not already occured, a peak for all sorts of natural resources, including oil, gas, coal, uranium... just name it. regarding oil, the only question is have we already passed the peak or is it ahead of us? the short answer is we are at the peak right now. even though it may take the shape of an undulating plateau. as you may know, when you reach the peak of a curve, the derivative becomes 0, so let's have a look at the derivative. here is the yearly change of the rate of the world production of oil smoothed over 10 years. back when we had technologies that would embarrass the alumni from this school, the change in yearly rate of production amounted to 15%. then came engineers with better skills and the yearly change decreased to 10%. then down to 5%. then, with the help of the best of the best engineers and the us federal reserve, we are now close to 0%.
at every step, the new technologies did not prove more efficient and they resulted in declining yearly change. oil majors have not willingly increased their upstream investment expenditures by 5 or 6 over the past 8 years. it has just become necessary to build these complex oil extraction devices to get the oil. shale oil and gas deposits have been known for more than two centuries. the first commercrial gas exploitation in the us was shale gas from fredonia on the east coast in the mid 1820's. it's sort of like 'back to the future': we exploited for some time handy conventional sources but since they are more and more depleted, we have to get back to tapping lower quality unconventional sources we have known for a long time. here is the world total liquids production. i won't go into the details of the definition of 'liquids'... it's not only oil. this is where we are. the question everybody asks is: how much is this going to cost? my answer: we couldn't care less, it's irrelevant. first reason: all price forecasts tend to be proved wrong. another quick advice: check the forecasts made over the past decades to what happened in reality. when you get results such as these, it's time to stop paying attention.
in red, the price of oil since 1985. all the other lines account for the price forecasts made by the international energy agency. if my marketing director was doing such poor forecasts, i would let him go this instant. second reason: there is no relationship between volume and price. conventional economics assume that increasing volumes result in lower prices etc... well no, sometimes yes, sometimes no... that does not make a law. between 1920 and 1973, the volume of oil increased twenty fold and the price remained constant. there is not exactly a price-volume elasticity. during the decade following the oil shocks, the price went up an down while the volume remained almost constant. then, the price hovered around $30 while the volume increased by 25%. and since the beginning of the millenium, the price varies a lot while the quantity stays more or less the same. at best, the only conclusion we could draw is that when the volume is constrained, the price will fluctuate. so, if we count on the market to send a price signal to consumers to save oil, we will fail because the price signal will never be sent, the price will just go up and down. i have never stated that a constraint on oil supply would result in an ever increasing price. on the contrary, i believe that under such circumstances, the price of oil will fluctuate, as we can see these days with $40 oil. it will go back up... and down again.
there is also no relationship between the price of oil and world gdp. if that was the case, on this graph with the price of oil on the x-axis and world gdp on the y-axis, we should see a hyperbole. it would show an increasing gdp when the price of oil decreases and vice versa. that's not what we see. gdp can grow with a decreasing price of oil, it can grow with an increasing price of oil, then again with a decreasing price of oil, and again with an increasing price of oil and finally with a decreasing price of oil. there is no relationship. it is a zero sum game. if the price increases, the oil producing countries end up with full pockets and consumers suffer, full point. qatar buys psg and the galeries lafayette, everyone is happy. for importing countries however, that makes a substantial difference: they pay more when the price increases. i think we can all agree. again, what matters regarding oil, is volume. here is a graph showing the yearly change (smoothed over 3 years) in oil consumption in red and the yearly change in gdp per capita in blue since 1965. after the oil shocks, oil supply became constrained, switching from a yearly change of 10% to 1%, and even 0% since 2005. we notice that the gdp per capita yearly change comes very close to the yearly change in world oil volume. with a little delay.
the red line precedes the blue line a little bit, which means that we do not grow and therefore consume more oil, we first consume more oil and then we grow. why? because oil is synonymous with exchanges, exchanges are a pre-requisite for economic activity. nowadays, not a single economic agent can handle producing, manufacturing and commercialization without transportation. an economic agent is just part of a much bigger supply chain and transportation is required between every single link. less oil means less transport, less transport means less gdp. let's talk about oil supply in oecd countries. you can see it reached a maximum in 2006, 2 years before lehman brothers. real estate prices in the us started falling at the end of 2006, this was the financial trigger of the crisis. the physical trigger of the crisis dates back to 2005, when oil production stopped growing and oecd oil supply starts being constrained. that became a pressing issue in europe. here is the european oil consumption, north sea production in pink and imports in green. since 2006, the volume we consume has decreased by 18% because of the constraint. this trend will carry on. same thing for the gas supply. since 2005, the volume of gas we consume has decreased by 20%. also see the shale gas potential in europe by my calculations, if we decide to go get it, which is not necessarily a good idea. and here is europe total energy consumption by source, which reached a maximum in 2006. note the new renewables in light purple at the top, in which we sank hundreds of billions of euros, 350 for germany alone.
it did not make a big difference. now, this is how france industrial production evolved. but that's because our politicians suck, so let's look at others... ... england... ...denmark... ... sweden... ... finland... ... germany... world champions. why? because they make 500 billion euros in exports yearly. but not every country can be a net exporter. so, the german industrial growth is made at the expense of other countries growth. ... spain... ... italy...
... europe. i could have showed you japan, it is the same story. and even the us have barely made it back to the level where they were in 2007. here is the european gdp yearly change over the past 55 years. the trend line is clearly going downward. nothing surprising... all natural resources extraction cannot follow an ever increasing trend, therefore the gdp, which is just the monetary translation of the transformation of these resources, cannot grow forever. you know the joke: "anyone who believes exponential growth can go on forever in a finite world is either a madman or an economist." and economists have this enormous edge over physicists: their principles did not include any constraint, quite handy isn't it? the only thing is that their principles are flawed. because when you try to make forecasts based on these principles, it does not work. it's a lot of fun though. here is the same data for oecd countries... ... and for the world... so, for energetic reasons, we will not see a lasting economic growth ever again in oecd countries and you and i are going to have to deal with it. it may even go the other way. let's now talk about the climate a little bit. (...)
(...) let me just remind you this: the greenhouse effect was discovered two centuries ago. you can read about this later. the mass media talk a lot about the expected increase in temperatures, but they should be paying attention to the rest also, like the expected change in precipitations. and in particular in the countries bordering the mediterranean sea, where less precipitations are expected. the agricultural production will be under increasing stress. add to that an increasing population, we have lots of historical examples to compare it to, it will end up in a revolution. a few other things: agricultural yields will be under pressure, ecosystems will suffer, the biodiversity of diseases will increase, extreme weather events intensity will be on the rise, sea level will rise, acidification of oceans with unknown effects on sea ecosystems. change of ocean currents, destabilization of greenland ice caps and west antartica ice caps, destabilization of carbon sinks let me now come to this very important last point. when you run an experiment for the first time, it makes no sense to ask for an accurate description of everything that could happen. let's take an experiment that we, humans, have made 3 billion times: getting married. maybe some of you are married already. we ran that experiment a lot, we have a track record.
still, take a couple getting married today, there is no way you can tell what is going to happen to that couple in 30 years. now, let's run an experiment in real life conditions for the first time, warming the climate by 5 degrees celsius in 2 centuries, it makes absolutely no sense to ask the scientific community to tell precisely one by one all the consequences. absolutely no sense. what makes sense though, is to try to look in the past to understand that we are 'shaking' the system to such an extent that the probability of getting away with it safe and sound is nil. let's look into this now. this is what europe would look like today if ecosystems had been left untouched by man: forests mostly, which is positive since it brings biodiversity. except to the far north and east where it is too dry for forests to thrive. this is europe 20,000 years ago. it looks nothing like today. there were 3km thick ice caps over scandinavia. the ocean was 120m lower and the coast was outside present day great britain. there was no channel. the water had been absorbed by the ice caps over the artic and antartica. there were no forests. the north of scotland and canada also had ice caps over them. the european ecosystem looked quite like the conditions experienced in northern siberia. the 'agricultural system' in france could supply food for about 100,000 people, the population of boulogne-billancourt, mostly through hunting and gathering.
to my left, 20,000 years ago, to my right, the present day conditions. the difference in average global temperature is 5 degrees. 20,000 years go, the earth was going through an ice age and the global temperature was 5 degrees less than today on average, or to be precise the pre-industrial era. only 5 degrees in 5,000 years. that's one degree for each 1,000 years, i.e. 0,1 degree per century. now, let me ask: do you think that a few degrees within one century will be an easy ride? not at all, it won't come down to removing a few layers of clothes. back then, moving was easy, there were 5 million people living on earth. the head of the tribe would unilaterally decide to get moving, grab a few tools and proceed, done deal. nowadays, there are 7 billion people living on earth. we cannot move with our schools, churches, factories, refineries on our back. besides, people already living where you are trying to move may not be very welcoming. what these extra 5 (or 4 or 3) degrees celsius mean is a chaotic and bellicose world. what we are talking about here is the challenge posed to our social and political stability, to our life expectancy and to the population size.. energy will be the challenge of this century, whether you like it or not... that's my summary. there is not enough fossil fuels left to keep the supply growing, but there is too much left to keep a stable climate. thank you.
time for questions after a depressing and alarming review. what solutions have you got in mind? it depends on what you call 'solutions'. solutions for what? a solution that would enable us to get an international cohesion? that's the last thing we'll ever get because all countries are impacted differently. the desires to tackle the issue are different and the cultures, the hierarchy of values are different. so you'll never get an international cohesion. what we could get though is international agreements on specific aspects. if you had in mind paris cop21, i do not think it will drastically change the way countries are organizing to respond to this issue because the un does not have the power to send tanks to coerce the worst carbon emitters to curb their emissions. the un is a 'bottom up' system in which each individual country has a voice, tuvalu just like the us, and decisions are taken on the basis of consensus. everybody has to agree.
have you ever attended a joint owners meeting? just picture 198 joint owners deciding, regardless of the size of their flats, of a service charge increase without knowing the breakdown and who will benefit/lose? and they need to agree unanimously. what is the probability of success? 0. besides, reducing carbon emissions means reducing fossil fuels consumption which means reducing energy consumption which will result in gdp contraction. the climate talks are more or less a way to organize a physical degrowth. what is the chance of success? 0. so an international agreement remains difficult to reach, we may get it when an increasing number of countries will understand, for selfish domestic reasons, it is in their best interest to tackle this issue all things being equal. i can see two regions in that situation. europe first. but it has to understand its fossil fuel supply is already under a lot of stress and this will worsen. so decarbonizing its economy is its best option. we struggle to convey this assessment because, if you allow me to digress a bit, the mass media are pushing the climate issue a lot more than the energy stress issue.
because the climate movement benefits from an active militant base supported by scientific data whereas none of this is available regarding the energy constraints. the militant base is non existent and the data is hard to get to because having a complete view of the energy supply requires you to attend many alcoholized business meals with field experts so they give you a realistic picture after they lower their guard. the real data about production and reserves is not in the public domain but part of proprietary databases. you have to compile everything yourself and it is time consuming, whereas climate research is published and available to the public. so it's in europe best interest. and the second region would be china. because chinese people are an ancient civilization, they understand what is going on, they know their population is too big, they can adopt long term thinking. and maybe most importantly, the urban elites are starting to find the coal plants pollution unbearable. so these two regions will be very interesting to follow. also note that the us are on the right track since they are replacing coal by gas, but it may only be temporary. as you may know, the us motto is 'no limits', 'no limits' versus an issue that is all about limits is going to be interesting.
so the solution will come from a piling up of national or local actions. that is the sort of scale you may want to look at. another area of interest: multinational corporations. these dirty capitalists, right? indeed, but some of them have a clear benefit if they start acting. and multinationals are the only international institutions capable of imposing an internal discipline. along with maybe the european union. but multinationals are a good starting point, they are not all converts yet, but note that the corporate world is becoming more and more devided on this issue. 10 years ago, it spoke from one voice to decry the need for curb emissions. now this has changed. here is one example: total ceo is now advocating for an increase of the co2 price in europe. you may think he is crazy. no, he isn't. this is the sine qua non condition for gas to become more economically viable than coal. nowadays, coal electricity production is doing just fine and gas electricity production is collapsing. and total ceo is pointing out that maybe we should do just the opposite, the only condition being a high enough price on carbon to make gas electricity plant more viable.
so he is dragging in his wake a few other european and international oil majors to advocate for a co2 price increase. and he is not doing for purely altruistic reasons, he is doing it because it makes sense for a corporate decision maker to do so. that is what i meant when i said the corporate world is divided over the issue. we need to lobby in favour of the potential winners, who are not simply the wind and solar energy manufacturers and operators. just to precise, any technical solutions come to your mind to achieve a smooth transition? well, then again, it depends how you define solutions. if you mean things to do no matter what because if we do them we'll end up being better off than if we don't, i have plenty of ideas. here is a random list. regarding transport, we need to regulate the consumption of new cars, tax the ownership of vehicles based on how much they consume, increase taxes on fuels. increase the bus transportion options, since trains are way too capital intensive to be able to take cars off the roads quickly. promote bike riding and car pooling.
and in the long term, deflate big urban centers. we cannot afford to have 10 million inhabitant cities in an energy constrained world. replace them with dense urban nodes well distributed over the country with an hinterland that allows the provision of food supplies with minimum transportation. regarding buildings, we need to have people divorce less because the more divorces, the bigger the need for constructed area, the population staying the same. that's not a joke. when people divorce, their energy consumption increases by 60%. bad news for you guys: it will be more difficult for your generation to divorce. so pick your partner wisely. it is a serious problem, you may have the best technical solutions, but if the need for constructed areas keeps increasing, we are not solving the problem. besides, we need to isolate our buildings better, install heat pumps and build a few nuclear reactors to fuel them. regarding electricity, we need to kill coal and replace it with nuclear energy. we will never be on schedule, never, with solar photovoltaics and wind energy. as you may know, the road to hell is paved with good intentions. people advocating for solar and wind to replace fossil fuels are only worsening the climate change issue unfortunately.
in practice, that's what they are doing, they may tell you i'm crazy, but in practice that's what they are doing. it's as if you were telling renault whose car sales are declining: "sell trombones and you will not need to cut jobs". it will not work. so killing coal is the key. we do not use a lot of coal in france for electricity production, so we are not directly concerned. but we are directly concerned for our industry. regarding manufacturing, we need to get used to the idea that manufactured goods will become more durable, more expensive, easier to fix and less affordable. a decreasing industrial production is the natural course of history in a way. we should not need to change our fridge of computer every 3 years.
and this goes hand in hand with an economic system where goods are more expensive and where we take better care of them. i recommend you read a very good book written by an engineer, philippe bihouix, called 'the age of low tech'. he claims, and i feel embarrassed i have not thought about it myself, that for recycling to be efficient, you cannot make high tech products. because high tech involves mixing 2/3 of the periodic table elements in your output products. and then it is impossible to retrieve each individual elements. for example, to be able to retrieve steel you cannot make plenty of specific alloys for specific uses. what p. bihouix is saying is simply that to recycle a lot we need to make low tech, not high tech. it is very disturbing for engineers like you and i but there is something very true in this claim. manufacturing should be simple, modular, deconstructible etc...
regarding agriculture, we need to put a few million people back in the agricultural sector. but not to be part of intensive farming. instead, they would carry out local actions, like soil regeneration or shortening distribution channels. for example, it makes no sense to raise all chickens in brittany. i have not asked them direcly, but i don't think they would be less happy elsewhere. also, using animal faeces as natural fertilizers instead of fossil fuel ones would work like a charm. we need to move back towards mixed livestock farming. clearly, we cannot have palm trees south of paris, but we have ways to diversify our farming practices. this would be a way to depend less on downstream transportation. keep in mind that 1/3 of the trucks on french roads transport food. that is where the reliance on fossil fuels really is: downstream more than in the fields. specialization, concentration, transformation, distribution... such a system does not work in a world where energy supply is constrained. more people involved in farming to get a better yield with less inputs.
and more added value or transformation closer to the production sites as opposed to far away places. production units also need to shrink in size. globalization just does not work with less oil. all the above needs to be done but that will not give us back economic growth if that was the question. but these are all interesting, meaningful projects if we handle them correctly. we can manage this. if by doing all these actions, we end up earning 1% less every year, that is no big deal. the problem today is that everyone hangs on to their benefits and the revenue loss is concentrated on the same portion of the population. they are feeling the pain. we need to reinvent labour talks, and those of you who will have executive positions will have to deal with this. i had to participate in labour talks in my company, a consulting firm with highly skilled employees.
just getting them to understand that when there is no inflation, there is no reason to grant a common pay rise was no piece of cake. despite the fact that they all believe in sharing, generosity... everything needs to be reinvented since, as we saw, energy enabled us to live on an ever expanding bubble gum and we need to come up with new mechanisms which are not compatible with this perpetual expansion. we may be heading towards a very innovative period. last point, we will also have to do a whole lot of things regarding already embedded climate change since, because of ocean inertia in particular, if we stopped emitting tomorrow, the climate system will still keep changing during thousands of years. you mentioned a lot the 1st law of thermodynamics, how important is the 2nd law when it comes to energy production? yes, it matters. coming back to the 3 kelvin degrees radiation of the universe example, that accounts for a huge source of energy.
but with respect to the 2nd law of thermodynamics, you will never find a good use for it. yes but wind energy or marine current energy could be very interesting as far as the 2nd law is concerned, couldn't they? yes, but they are very diffuse, and it is always better to have a poor return on a very concentrated energy source than a top return on a diffuse source of energy. in the end, the concentrated energy source will prove to be better. let me add one thing: you may know that electricity cannot be stored since it is made of moving electrons. and we only how to store these in supraconductors. the only alternative is to turn electricity into another form of energy to be able to store it. unfortunately, all the known storage solutions as of today involve significant mass issues. and that is what handicaps the use of electricity against king oil for transportation.
one gas tank contains 10kwh per liter whereas one kg of lead-acid battery contains 35wh. even fancy lithium-ion batteries only contain 150-200wh per kg so the density is reduced by a 10+ factor compared to oil. so you may be able to get a good return on the electricity you produce but after storing it, the return is very poor. you seem very pessimistic regarding the chance of success of cop21, you painted an apocalyptic picture of a 5 degree scenario, do you think 2 degrees is achievable? from a physical standpoint, yes. are we going to make it? i cannot tell. does it guarantee no trouble? no. could these troubles possibly reduce world population by 50%? i do not know. because this will not be the only pressure on the size of world population, energy stocks will also play a role. history will only be written once, so assigning causes will be no simple task. maybe some of you know brice lalonde.
he was the campaign manager of the first green party candidate in 1974, rene dumont. he is french-american, that may be why he is so atypical. he has been involved in the environmental movement for a very long time. 1974 is a while ago. he was the environment minister under mitterrand at the time of the rio summit in 1992 when the climate convention was signed. he took part in all the climate summits since that date, well, he jokes about failing for 20 years to solve this problem and having to organize a cop '21'. and it makes perfect sense. given the way the un works, we will never achieve any discriminating results. on the rare occasions when we achieve something, the mainstream press lead by self-righteous people claims that is not the way it should have been obtained.
let me tell you about what happened at the copenhagen summit, i was present. there was a hold-up of the g20 at the united nations. at some point, the powerful raised their voice and said 'listen you munchkins, shut up, that's the way it is going to be'. that's the only way it can work. if you tried to have all the people present today decide unanimously what the 1st year subjects should be, with one vote per student, do you think this is going to work? if the academic director said 'it's like that and that's the way it is', it will work better i guess. or at least, you get a result. that is exactly what happened in copenhagen. here is what i heard from a reliable source: during the 2nd week, between thursday and friday, sarkozy said 'we cannot possibly leave with no agreement'. 'merkel, cameron, obama come over here, let's have a meeting and decide what we want to do'. they had a little chat, drafted two pages with 12 items that they agreed on.
that became the beginning of a political agenda. at the end of the day, there was an agreement on 2 degrees and 100 billions for the climate fund. that's a success. the press called it a failure. why? because ngos did not have their say and they were the first to appear in front of the mics. they claimed it was a 'failure' and the word remained. not only are international negotiations not made for what you think they are made, but sometimes the few progress are called failures by the press. i am not pessimistic, i am just teasing... but what matters with these summits are not the negotiations themselves but the buzz around them. the main upside is to bring the issue up the list of media (and therefore politicians) priorities at least once a year. but the important technical decisions are not taken during these summits except in the case of a hold-up. ideally, climate should become a topic of discussion during presidential summits, like g20 conferences, and the decision-making process would go even faster.
other than that, i'm about as pessimistic as when i observe i run a little slower every year. that's life. yet, am i less happy? if i can find other sources of pleasure in life to keep me busy, well then it's all good. what i have just told you is that economic growth belongs to history, barring a few temporary bursts, well that's life, it's not a big problem. what is a big problem though is that we do not have the option anymore to launch projects working only in a growth framework. that's a bummer. one more question... good morning. you talked about the link between climate change and the arab spring, could you provide some more details? i need 5 minutes, is that ok?
the arab spring has two root causes. crude oil production levelling off in 2005, which is very consistent with the energetic issue. the 2010 historical heatwave in russia, which is very consistent with the climate change issue. the levelling off of crude oil production in 2005 brought about a slowdown of the world economy starting in 2006-7 in a growing number of countries. and this slowdown collided with full force with the accumulation of debts which stems from the first oil shocks. the trend started after the oil shocks just got amplified by an even more constrained oil supply. we tried to revive the economy through investments by granting everybody loans. but since we do not have a high enough level of available energy, we end up with investments, i.e. loans, without the matching revenues that would enable us to pay them back. and so the stock of debts keeps growing.
since the oil shocks, we have pretty much invented the perpetual debt. it is a ponzi scheme. every year, we borrow more to reimburse what we borrowed the previous year. just like what madoff did. for the moment, moody's puts a 'aa' on it... for the moment. so in 2005, this trend accelerates, but this time there is a crash, we end up with a default and financial crisis. the financial crisis triggers a correction of the economy. the 2009 gdp decreases by 3%. what were the discretionary expenses consumers cut first back then? travel expenses. less tourists in tunisia and egypt and to a lesser extent in algeria and morocco. decrease of export revenues for these countries. 2010 - historical heatwave across russia, which produces 100mt of grains yearly with about half being exported.
note that the grain world market is very tight because only 10% of the grain output crosses a border. it is a small market. 2 billion tons of grains are produced yearly, about 200 million cross a border, including a few tens of millions which come from russia. overnight, russia decided to ban exports sometimes during july. the day after, the price of grains on the chicago merc increased by 30%. if you take a look at the price of grain during the whole year, it doubled. let me come back to egypt and tunisia. egypt is the biggest wheat importer in the world. increasing population, 80 million people, not enough food production.
i also forgot to mention the drying up of the countries bordering the mediterranean basin, which put the food production of these countries under a lot of stress. stagnating food production, expensive imports, shortage of currency reserves. in 2010 and early 2011, the price of food skyrockets. all food. the price of grain shoots up and the price of other food commodities followed suit since they are all interlinked. the price of meat doubles, the price of milk doubles, the price of oil doubles. the pice of sugar doubles... the average egyptian, or let's say the poorest half of the population, earns $1 a day. a ton of grain costs $200. what the doubling of the price of grain meant for a person eating 1kg of bread per day was a doubling of his food budget, which already accounted for 50% of his/her revenues if not more before. it's 1789 all over again... people took to the streets because they had nothing to eat anymore. and because the government who had run out of cash reserves could not subsidize food imports.
take algeria which has oil and gas, no riots. take morroco which has about enough food supply, no riots. take syria, its poor connection to the world markets because of its political regime along with the drought brought about a food supply issue, and eventually the civil war. and we are seeing the consequences at the gates of europe as we speak. the repercussions of the energy-climate conundrum are not to be felt in 2100, they are to be felt right now. it's already happening. here is an example among others, if you need some more check out my excellent new book soon available for sale. i am also able to establish a relationship between populist vote and energy. or the us subprime troubles and energy.
so although you would not suspect it at first, the energy-climate component is already at work all around us. well, time is up, we will leave it there, let's all thank jean-marc jancovici for this riveting conference.