THE HONEST SORCERER
JAN 22, 2024
There is a growing body of evidence that the 2024–2030 period will present us with a critical juncture, upending a centuries long era of economic growth. No, it will have nothing to do with climate change or novel viruses: those two will come somewhat later. Missing entirely from mainstream discourse there is a greatly overlooked side of our predicament, which will set a nice little ‘game of musical chairs’ in motion most probably around 2025. Fasten your seat belts, while you can.
We live in a supermassive complex system, often referred to as modernity, industrial civilization, or the world economy. This enormous organism has a life of its own, with its own inputs (resources) and outputs (pollution), as well as its own lifecycle. It is something best understood through the lens of systems dynamics, a modelling method developed in the late 1960’s. The first results were published in 1972, in a study titled Limits to Growth. Without going too much into the details, the authors were tracking the many interconnections between five key factors: non renewable natural resources, persistent pollution, population, food production and industrial output, and established various scenarios. One of them was World3, or Business As Usual (BAU).
There were multiple follow-ups to the original study, all published in peer-reviewed scientific journals. All proved the original concept to be correct, and confirmed that we are indeed following the BAU scenario set out in the World3 model. The latest iteration of these follow up studies was titled Recalibration23, published in November 2023.
By looking at the chart above from the most recent model run one can easily understand the interrelated nature of the system. Just concentrate on the continuous lines: as resources (pink) go down and deplete, both industrial output (red) and food production (green) goes through a tipping point and starts to decline. As a result world population (orange) peaks and dwindles. Pollution (blue) will keep rising though as people go back to less cleaner technologies and burn just about everything they can put their hands on to stay warm in the winter.
Needless to say, no model is perfect, but some of them can be quite useful. Since our world is immeasurably more complex than what these five factors show, it is impossible to make precise predictions on exactly when and where will things go south. (The same goes for climate modelling, too.) However, these tools are incredibly useful in decoding the cause and effect relationships between individual factors, helping us understand better where we are headed as a civilization. The authors of the study conclude:
Like the [Business As Usual] scenario of the [Limits to Growth] publication, the new scenario Recalibration23 reflects the overshoot and collapse mode due to resource scarcity. […] Here, the model results clearly indicate the imminent end of the exponential growth curve. The excessive consumption of resources by industry and industrial agriculture to feed a growing world population is depleting reserves to the point where the system is no longer sustainable. Pollution lags behind industrial growth and does not peak until the end of the century. Peaks are followed by sharp declines in several characteristics. This interconnected collapse, or, as it has been called by Heinberg and Miller (2023), polycrisis, occurring between 2024 and 2030 is caused by resource depletion, not pollution. The increase in environmental pollution occurs later and with a lower peak.
The main message here is that it looks increasingly certain that we will run out of resources sooner than the coming deterioration of the climate could put an end to our lifestyle. (And that’s quite a feat, knowing how a growing Earth energy imbalance has accelerated warming recently…) The model also assigns a not so distant timeframe when the whole economic model we thought to be relevant for centuries to come might go badly wrong.
As to the reason why this might indeed be the case, and as an independent corroboration to the study above, I suggest to take a look on the state of the petroleum industry. Why? Well, energy is still the economy, as the basket case of Germany can testify, and despite all the handwaving oil is still the master resource, making all other energy and mineral resources available. Mining, agriculture, construction, long distance transport, plastics, all hopelessly depend on petroleum. Hydro, nuclear and “renewables” are also made possible by using diesel and gasoline burning vehicles to bring people, raw materials and equipment on site. Should the availability of oil decline, it would eventually bring all other resources and energy production down with it.
In the past couple of posts I already hinted at how the US shale boom will soon come to an end, and also mentioned the net energy predicament besetting the petroleum and mining industry. The process of replacing high yield, low energy cost fields with ever costlier ones is a well known “secret” of the industry, but nary a single soul talks about it outside geologist circles. You see, it’s not that we will run out of oil from one day to another, catapulting our entire society into the dark ages ahead, but that oil extraction will return ever less net energy over time… To the point of diminishing returns, resulting in a relentless economic contraction, making any transition to any other energy source impossible. The Journal of Petroleum Technology, the Society of Petroleum Engineers’ flagship magazine has published an article in 2023 saying just that:
“Energy necessary for the production of oil liquids is growing at an exponential rate, representing 15.5% of the energy production of oil liquids today and projected to reach a proportion equivalent to half of the gross energy output by 2050 (Delannoy et al. 2021).
When the energy required for the extraction and production of these liquids is taken into account, the net-energy peak is expected to occur in 2025 at a level of 400 PJ/d [1]. In the foreseeable future, the energy needed to produce oil liquids could approach unsustainable levels, a phenomenon called “energy cannibalism.”
The concept of energy cannibalism is becoming increasingly relevant, as mounting energy use in oil production means the very resources needed for the transition to renewable energy may be constrained, particularly when viewed from a net-energy perspective and in terms of economic growth.”
Peak net energy means that no matter how hard we try to replace our declining easy-to-tap traditional oil reserves with tar sands, or ultra-deep wells drilled into the seafloor, beyond a certain point we will no longer be able to increase the amount of oil available for other uses (like manufacturing, transport, mining, agriculture, etc.). “Energy cannibalism” does not stop at the peak though: it will continue to take ever more energy to maintain oil extraction as existing fields “mature”. Operating drilling equipment, pumping seawater or CO2 into ageing wells to uphold production, delivering sand used in re-fracking existing wells etc. will continue take up an ever larger portion of the oil produced — as well as other forms of energy — leaving less and less for the rest of the economy (2). Is it any wonder then that oil companies have opted to pay back their investors instead of drilling new wells, and called it a day?
And it’s not only about net energy, but the overall availability of oil (3). For most of the second half of the 20th century, oil companies were finding more crude than global consumption, around five times the demand volumes. This ratio of discovered resources versus demand has dropped in recent decades, and is now at around 25%. (This means, that we burn four times as much oil every year than what we find.) Again, this all ties back to the increased energy demand of finding and drilling into ever smaller, ever more remote oil patches. Why invest in ever more energy intensive drilling methods and exploration then, when the economy can no longer bare the increased energy costs of bringing more oil to the market? A quick glance at how the oil and gas industry spends its profits, confirms all of the above. As an ominous sign of things to come, Occidental Petroleum’s CEO warned the Davos crowd already:
“2025 and beyond is when the world is going to be short of oil.”
I have a hard time imagining anyone taking her seriously. Despite all the handwaving though, there is now a growing body of evidence all pointing towards this date. And these are all radically different approaches from wholly independent sources… The Recalibrated23 study, EROEI calculations (Delannoy et al. 2021), investment patterns, not to mention estimates of a peak and fall in shale oil output, all indicate that we are just a year away from a net peak in oil output. And after a brief plateau, all models suggest an ever accelerating decline.
Knowing how petroleum output affects everything we do, the significance of passing this civilizational tipping point cannot be overemphasized. Again, this has very little to do with subsidies or finance: we are about to pass a point of diminishing returns from an energetic and geological perspective. And then it really will not matter if we drill more wells, it will no longer provide any additional energy to rest of the economy. In fact, drilling more wells beyond this point will increasingly act as a drag on the energy system.
Barring an energy miracle it increasingly looks like that from 2025 on we will no longer be able to maintain the amount of material transported, mined, the food grown etc. on a global aggregate. Something will got to give.
Oil is still the economy, no matter how polluting it is. As net energy from oil peaks, then starts to fall during this decade, it will thus directly translate into a fall in economic output. I hate to be the bearer of bad news, but this means renewed raw material shortages, skyrocketing shipping costs, inflation, and an overall economic decline (4).
And this is where the picture gets murkier. While there might be some not yet utilized boosts to oil production, a hidden gem of an easy to drill oil patch found here and there, one thing is for sure. Petroleum is a finite resource and it’s only a question of time when we hit the peak and embark on a long decline. With that said, crossing such a tipping point is not tied to a single date. At first, it might not even be noticed for months, if not a year. It could be also masked by the ongoing deindustrialization and economic decline of Europe, or a major financial crisis. (Both of which are closely related to fossil fuel availability, just saying.)
Sooner or later though, the oil shock will hit, and the music will stop playing. Everybody will be desperately looking for a seat (except for Europe bleeding out on the floor already). As the first wave of panic is over, however, people all around the world will start to adapt to this new reality, but currently there are no models to predict how exactly this will play out. We will be in completely uncharted territory. Once again to cite the authors of the Recalibrate23 study:
However, it is important to note that the connections in the model and the recalibration are only valid for the rising edge, as many of the variables and equations represented in the model are not physical but socio-economic. It is to be expected that the complex socio-economic relationships will be rearranged and reconnected in the event of a collapse. World3 holds the relationships between variables constant. Therefore it is not useful to draw further conclusions from the trajectory after the tipping points. Rather, it is important to recognize that there are large uncertainties about the trajectory from then on, building models for this could be a whole new field of research.
Talking about the “rearrangement of complex socio-economic relationships…” How about the end of the unipolar world, and the rise of new trading blocks (BRICS+)? Perhaps a global conflict over who gets to burn the last barrels of oil available for export? Or a major financial meltdown upending the current financial system?
Tumultuous times are all but guaranteed in the decades ahead. On a local economic level, large building projects might be cancelled due to shortages and skyrocketing costs, leaving the infrastructure in an ever more deprived state. Remote working could (again) become the norm — at least for those who still have a job. Large manufacturing companies will go bankrupt, one after the other. The detrimental effects of climate change unleashed by burning all that oil, coal and natural gas will become impossible to fend off.
Business as usual will no longer be possible. Welcome to the collapse of modernity, a long drawn out decline.
With less energy comes less complexity. After a few years perhaps a decade into this crisis-mode, it will no longer be possible to uphold current institutions and large political structures. The reasons, as always: the gap between interests too wide, the costs of maintaining central control too high… The US, for example, could easily fall apart along its many already existing fault lines, once the reality of losing it’s military-economic superpower status sinks in with the populace. Texas could declare its independence, followed by the North-East Coast, the West Coast, the South-East, leaving quite a bit of no-mans land in-between… The EU and the German Bundesrepublik could also break up into independent states.
After the first wave of collapse so many previously tied up resources would be freed up, that even a few years of renewed economic growth could become possible again. Energy cannibalism will remain a bitch though, and will ask for an ever higher share of energy production to maintain whatever oil extraction remains. So, this moment of relative calm would quickly end, too, this time leading to the fall of central power in many weaker states. After a few decades into this new economic era of involuntary “degrowth”, and with a further fall in net energy production, grid electricity together with many services will gradually become intermittent and unreliable. If you live in the global North and would like to see how you will live in a few decades time, just look at how people live a couple of hundred miles south from you. The weather will be much hotter, rainfall less predictable, and your economic outlook even less so.
With an ever shrinking amount of net energy from oil, eventually all of our technologies will become unviable — not that any technology based on a set of finite minerals were viable on the long run…
There is absolutely nothing new in this. Every civilization — ours included — grew by living up its one time inheritance, be it fertile topsoil or petroleum, overshooting both the natural carrying capacity of its environment and the non-renewable resource base it relied on. Then, as resources got depleted below a critical level, they all went through their respective phases of collapse.
Decline is a perfectly normal, easy to understand part of every society’s life. Once you move beyond denial and bargaining it becomes clear as daylight, that is has its causes in our biology, physics, and Earth’s geology. There is really no one to blame. There is really no super-duper technology holding the key to saving civilization either. It was a wholly unsustainable proposition from the get go. At this point, if we had access to a truly general AI capable of understanding our world with all its interrelatedness, it would say only this:
“You shouldn’t have embarked on this journey, and destroyed the planet in the process to ask me at the very end what to do. There is nothing left to do to prevent collapse. Now, its time to prepare for a long, hard and bumpy landing. Oh, and try not to exterminate yourselves in the process. Good day, and good luck.”
Still, from an individual person’s perspective the end of modernity will take an awful lot of time to unfold. However, it will also give us plenty of opportunities to reconnect with our environment, neighbors and family, or develop new skills and traits. Perhaps it will teach us a thing or two about what’s important in life, and give a new meaning to our short existence on this planet. Be it as it may, one no longer can bury its head into the sand.
Until next time,
thehonestsorcerer.substack.com
JAN 22, 2024
There is a growing body of evidence that the 2024–2030 period will present us with a critical juncture, upending a centuries long era of economic growth. No, it will have nothing to do with climate change or novel viruses: those two will come somewhat later. Missing entirely from mainstream discourse there is a greatly overlooked side of our predicament, which will set a nice little ‘game of musical chairs’ in motion most probably around 2025. Fasten your seat belts, while you can.
We live in a supermassive complex system, often referred to as modernity, industrial civilization, or the world economy. This enormous organism has a life of its own, with its own inputs (resources) and outputs (pollution), as well as its own lifecycle. It is something best understood through the lens of systems dynamics, a modelling method developed in the late 1960’s. The first results were published in 1972, in a study titled Limits to Growth. Without going too much into the details, the authors were tracking the many interconnections between five key factors: non renewable natural resources, persistent pollution, population, food production and industrial output, and established various scenarios. One of them was World3, or Business As Usual (BAU).
There were multiple follow-ups to the original study, all published in peer-reviewed scientific journals. All proved the original concept to be correct, and confirmed that we are indeed following the BAU scenario set out in the World3 model. The latest iteration of these follow up studies was titled Recalibration23, published in November 2023.
By looking at the chart above from the most recent model run one can easily understand the interrelated nature of the system. Just concentrate on the continuous lines: as resources (pink) go down and deplete, both industrial output (red) and food production (green) goes through a tipping point and starts to decline. As a result world population (orange) peaks and dwindles. Pollution (blue) will keep rising though as people go back to less cleaner technologies and burn just about everything they can put their hands on to stay warm in the winter.
Needless to say, no model is perfect, but some of them can be quite useful. Since our world is immeasurably more complex than what these five factors show, it is impossible to make precise predictions on exactly when and where will things go south. (The same goes for climate modelling, too.) However, these tools are incredibly useful in decoding the cause and effect relationships between individual factors, helping us understand better where we are headed as a civilization. The authors of the study conclude:
Like the [Business As Usual] scenario of the [Limits to Growth] publication, the new scenario Recalibration23 reflects the overshoot and collapse mode due to resource scarcity. […] Here, the model results clearly indicate the imminent end of the exponential growth curve. The excessive consumption of resources by industry and industrial agriculture to feed a growing world population is depleting reserves to the point where the system is no longer sustainable. Pollution lags behind industrial growth and does not peak until the end of the century. Peaks are followed by sharp declines in several characteristics. This interconnected collapse, or, as it has been called by Heinberg and Miller (2023), polycrisis, occurring between 2024 and 2030 is caused by resource depletion, not pollution. The increase in environmental pollution occurs later and with a lower peak.
The main message here is that it looks increasingly certain that we will run out of resources sooner than the coming deterioration of the climate could put an end to our lifestyle. (And that’s quite a feat, knowing how a growing Earth energy imbalance has accelerated warming recently…) The model also assigns a not so distant timeframe when the whole economic model we thought to be relevant for centuries to come might go badly wrong.
As to the reason why this might indeed be the case, and as an independent corroboration to the study above, I suggest to take a look on the state of the petroleum industry. Why? Well, energy is still the economy, as the basket case of Germany can testify, and despite all the handwaving oil is still the master resource, making all other energy and mineral resources available. Mining, agriculture, construction, long distance transport, plastics, all hopelessly depend on petroleum. Hydro, nuclear and “renewables” are also made possible by using diesel and gasoline burning vehicles to bring people, raw materials and equipment on site. Should the availability of oil decline, it would eventually bring all other resources and energy production down with it.
In the past couple of posts I already hinted at how the US shale boom will soon come to an end, and also mentioned the net energy predicament besetting the petroleum and mining industry. The process of replacing high yield, low energy cost fields with ever costlier ones is a well known “secret” of the industry, but nary a single soul talks about it outside geologist circles. You see, it’s not that we will run out of oil from one day to another, catapulting our entire society into the dark ages ahead, but that oil extraction will return ever less net energy over time… To the point of diminishing returns, resulting in a relentless economic contraction, making any transition to any other energy source impossible. The Journal of Petroleum Technology, the Society of Petroleum Engineers’ flagship magazine has published an article in 2023 saying just that:
“Energy necessary for the production of oil liquids is growing at an exponential rate, representing 15.5% of the energy production of oil liquids today and projected to reach a proportion equivalent to half of the gross energy output by 2050 (Delannoy et al. 2021).
When the energy required for the extraction and production of these liquids is taken into account, the net-energy peak is expected to occur in 2025 at a level of 400 PJ/d [1]. In the foreseeable future, the energy needed to produce oil liquids could approach unsustainable levels, a phenomenon called “energy cannibalism.”
The concept of energy cannibalism is becoming increasingly relevant, as mounting energy use in oil production means the very resources needed for the transition to renewable energy may be constrained, particularly when viewed from a net-energy perspective and in terms of economic growth.”
Peak net energy means that no matter how hard we try to replace our declining easy-to-tap traditional oil reserves with tar sands, or ultra-deep wells drilled into the seafloor, beyond a certain point we will no longer be able to increase the amount of oil available for other uses (like manufacturing, transport, mining, agriculture, etc.). “Energy cannibalism” does not stop at the peak though: it will continue to take ever more energy to maintain oil extraction as existing fields “mature”. Operating drilling equipment, pumping seawater or CO2 into ageing wells to uphold production, delivering sand used in re-fracking existing wells etc. will continue take up an ever larger portion of the oil produced — as well as other forms of energy — leaving less and less for the rest of the economy (2). Is it any wonder then that oil companies have opted to pay back their investors instead of drilling new wells, and called it a day?
And it’s not only about net energy, but the overall availability of oil (3). For most of the second half of the 20th century, oil companies were finding more crude than global consumption, around five times the demand volumes. This ratio of discovered resources versus demand has dropped in recent decades, and is now at around 25%. (This means, that we burn four times as much oil every year than what we find.) Again, this all ties back to the increased energy demand of finding and drilling into ever smaller, ever more remote oil patches. Why invest in ever more energy intensive drilling methods and exploration then, when the economy can no longer bare the increased energy costs of bringing more oil to the market? A quick glance at how the oil and gas industry spends its profits, confirms all of the above. As an ominous sign of things to come, Occidental Petroleum’s CEO warned the Davos crowd already:
“2025 and beyond is when the world is going to be short of oil.”
I have a hard time imagining anyone taking her seriously. Despite all the handwaving though, there is now a growing body of evidence all pointing towards this date. And these are all radically different approaches from wholly independent sources… The Recalibrated23 study, EROEI calculations (Delannoy et al. 2021), investment patterns, not to mention estimates of a peak and fall in shale oil output, all indicate that we are just a year away from a net peak in oil output. And after a brief plateau, all models suggest an ever accelerating decline.
Knowing how petroleum output affects everything we do, the significance of passing this civilizational tipping point cannot be overemphasized. Again, this has very little to do with subsidies or finance: we are about to pass a point of diminishing returns from an energetic and geological perspective. And then it really will not matter if we drill more wells, it will no longer provide any additional energy to rest of the economy. In fact, drilling more wells beyond this point will increasingly act as a drag on the energy system.
Barring an energy miracle it increasingly looks like that from 2025 on we will no longer be able to maintain the amount of material transported, mined, the food grown etc. on a global aggregate. Something will got to give.
Oil is still the economy, no matter how polluting it is. As net energy from oil peaks, then starts to fall during this decade, it will thus directly translate into a fall in economic output. I hate to be the bearer of bad news, but this means renewed raw material shortages, skyrocketing shipping costs, inflation, and an overall economic decline (4).
And this is where the picture gets murkier. While there might be some not yet utilized boosts to oil production, a hidden gem of an easy to drill oil patch found here and there, one thing is for sure. Petroleum is a finite resource and it’s only a question of time when we hit the peak and embark on a long decline. With that said, crossing such a tipping point is not tied to a single date. At first, it might not even be noticed for months, if not a year. It could be also masked by the ongoing deindustrialization and economic decline of Europe, or a major financial crisis. (Both of which are closely related to fossil fuel availability, just saying.)
Sooner or later though, the oil shock will hit, and the music will stop playing. Everybody will be desperately looking for a seat (except for Europe bleeding out on the floor already). As the first wave of panic is over, however, people all around the world will start to adapt to this new reality, but currently there are no models to predict how exactly this will play out. We will be in completely uncharted territory. Once again to cite the authors of the Recalibrate23 study:
However, it is important to note that the connections in the model and the recalibration are only valid for the rising edge, as many of the variables and equations represented in the model are not physical but socio-economic. It is to be expected that the complex socio-economic relationships will be rearranged and reconnected in the event of a collapse. World3 holds the relationships between variables constant. Therefore it is not useful to draw further conclusions from the trajectory after the tipping points. Rather, it is important to recognize that there are large uncertainties about the trajectory from then on, building models for this could be a whole new field of research.
Talking about the “rearrangement of complex socio-economic relationships…” How about the end of the unipolar world, and the rise of new trading blocks (BRICS+)? Perhaps a global conflict over who gets to burn the last barrels of oil available for export? Or a major financial meltdown upending the current financial system?
Tumultuous times are all but guaranteed in the decades ahead. On a local economic level, large building projects might be cancelled due to shortages and skyrocketing costs, leaving the infrastructure in an ever more deprived state. Remote working could (again) become the norm — at least for those who still have a job. Large manufacturing companies will go bankrupt, one after the other. The detrimental effects of climate change unleashed by burning all that oil, coal and natural gas will become impossible to fend off.
Business as usual will no longer be possible. Welcome to the collapse of modernity, a long drawn out decline.
With less energy comes less complexity. After a few years perhaps a decade into this crisis-mode, it will no longer be possible to uphold current institutions and large political structures. The reasons, as always: the gap between interests too wide, the costs of maintaining central control too high… The US, for example, could easily fall apart along its many already existing fault lines, once the reality of losing it’s military-economic superpower status sinks in with the populace. Texas could declare its independence, followed by the North-East Coast, the West Coast, the South-East, leaving quite a bit of no-mans land in-between… The EU and the German Bundesrepublik could also break up into independent states.
After the first wave of collapse so many previously tied up resources would be freed up, that even a few years of renewed economic growth could become possible again. Energy cannibalism will remain a bitch though, and will ask for an ever higher share of energy production to maintain whatever oil extraction remains. So, this moment of relative calm would quickly end, too, this time leading to the fall of central power in many weaker states. After a few decades into this new economic era of involuntary “degrowth”, and with a further fall in net energy production, grid electricity together with many services will gradually become intermittent and unreliable. If you live in the global North and would like to see how you will live in a few decades time, just look at how people live a couple of hundred miles south from you. The weather will be much hotter, rainfall less predictable, and your economic outlook even less so.
With an ever shrinking amount of net energy from oil, eventually all of our technologies will become unviable — not that any technology based on a set of finite minerals were viable on the long run…
There is absolutely nothing new in this. Every civilization — ours included — grew by living up its one time inheritance, be it fertile topsoil or petroleum, overshooting both the natural carrying capacity of its environment and the non-renewable resource base it relied on. Then, as resources got depleted below a critical level, they all went through their respective phases of collapse.
Decline is a perfectly normal, easy to understand part of every society’s life. Once you move beyond denial and bargaining it becomes clear as daylight, that is has its causes in our biology, physics, and Earth’s geology. There is really no one to blame. There is really no super-duper technology holding the key to saving civilization either. It was a wholly unsustainable proposition from the get go. At this point, if we had access to a truly general AI capable of understanding our world with all its interrelatedness, it would say only this:
“You shouldn’t have embarked on this journey, and destroyed the planet in the process to ask me at the very end what to do. There is nothing left to do to prevent collapse. Now, its time to prepare for a long, hard and bumpy landing. Oh, and try not to exterminate yourselves in the process. Good day, and good luck.”
Still, from an individual person’s perspective the end of modernity will take an awful lot of time to unfold. However, it will also give us plenty of opportunities to reconnect with our environment, neighbors and family, or develop new skills and traits. Perhaps it will teach us a thing or two about what’s important in life, and give a new meaning to our short existence on this planet. Be it as it may, one no longer can bury its head into the sand.
Until next time,
2025: A Civilizational Tipping Point
There is a growing body of evidence that the 2024–2030 period will present us with a critical juncture, upending a centuries long era of economic growth.
thehonestsorcerer.substack.com
