ch12- Exponential growth in demand

Let's look at the morphology of energy consumption from a global perspective first (Source: Energy Information Agency, US DOE, www.eia.doe.gov/oiaf/ieo/world.html). In the right figure we can see that global energy consumption is projected to increase linearly. But when you look at it in detail, we'll see three different consumption profiles (figure below, left). The developing markets have an accelerated consumption curve(exponentially increasing profile). The developed markets seem to gain consumption at a slow and steady rate (linearly increasing rate). The underdeveloped markets have a flat, sometimes increasing, sometimes decreasing profile. And when we look at the sources of energy, it becomes apparent that only fossil fuels have the capacity to feed the energy appetite of the world for at least the next 20 years (figure, below right). So we are faced with a given morphological reality.

Energy Consumption Key

US Values for all countries are in million tons of oil equivalent, from 1971 to 1999

Canada

Energy Consumption By sector Key

China    Energy Use By Sector

South Korea

What we see is that when a nation is underdeveloped, it's energy consumption is relatively small and it's rate of growth is relatively flat. During development the rate of growth of consumption accelerates until the society reaches developed status. Then the rate of growth flattens out again.
Now that we have looked at the macro picture, let's drill down to the micro picture and look at the per capita energy consumption and it's rate of growth in developed, developing and underdeveloped countries.

Here are some per capita energy consumption (per person per year) figures for years (1990,2000) in kilograms of oil equivalent (KOE), the percentage of change is given as the third figure (source www.earthtrends.org) :

We all want the things that make life better, houses, refrigerators, air-conditioning, cars, etc. All these things are essentially different manifestations of energy. If you put together all of the people in the developed world that have these things with all of the people in the emerging and underdeveloped economies that want them, then we see a historical exponential growth in energy demand.

This problem is a particularly nasty one. As we saw in the last chapter, to curb the population explosion the evident solution seems to be to develop the under-developed world. That would imply that we need to bring the consumption pattern of the underdeveloped world to the level of the developed world. The problem there is that there aren't enough resources to do that. Besides that, we are already reeling from the problem of waste in the developed world. Given that we are presently completely dependent on fossil fuels as our energy source, we have a double whammy of a problem: there aren't enough fossil fuels to bring up the under-developed world and we can't handle the waste problem even if there were enough resources. Here is some back of the envelope calculations: say the population of the world is six billion, and say about 1 billion live in emerging or developed circumstances. That leaves 5 billion people who want to reach that level. So, according to the above per capita consumption figures, to reach that goal with fossil fuels we have to multiply their current consumption levels by a factor of  perhaps 80 (Bangladesh 100 koe to US 8000 koe)?! And we have to do that for 5 billion people?!  Hell, call me a pessimist, but I don't think that's doable!

So on the face of it, bringing up the under-developed world to a developed status, would bankrupt the planet. So what is the way out? One way is to change the definition of what developed means. The other is to leave the definition as is, developed is defined by the developed world. The second seems to be the currently prevalent one. If that is the case we need an energy generation technology that currently is simply not on the table. The fossil fuel supply of the planet is just not there to support the entire population of the planet at 8000 koe per capita consumption level. So we need something else, perhaps nuclear fusion technology, or some yet to be discovered technology, a very nice dream!

Ok, enough of the bad news; if you have managed to keep up, here are, wait, wait (drum roll please), solutions.

8- Industrial vs Knowledge Economies

Another way out is to rethink what developed means. To us developed means us. High industrial capacity, high-energy usage capacity, big houses, big cars, well, just big. But the highest demand in the developed world is for knowledge workers. That may have a huge implication for the under-developed world. Here is another personal example to illustrate the point. In 2000 I joined an ill-conceived effort to create a global software development infrastructure. As part of the workforce we recruited programmers from India. What struck me was that at least some of these software programmers came from under-developed circumstances. One statement comes to mind, this one fellow told me he was the first in his village to travel overseas. That was an epiphany for me. Here was this fellow from an Indian village stuck in the age of subsistence agriculture. He leapfrogged the industrial age to directly arrive in the knowledge age. That, in my mind, completely changed the problem of developing the under-developed world. The prevalent thinking was that you follow our development path, you have to go through the industrial age to arrive at the knowledge age. His example violated that. He showed that it was possible to directly enter the knowledge age. The implications are staggering. Look at it from the reptile brain angle, the village folks don't have to compete with the Smiths next door. They don't have to have the big house, the big car, the big whatever that the Smiths have. To bring small to mid size towns into the knowledge age you need food/water, shelter, and schools with electricity. You need computers and communications links to the Internet. And you need teachers. Then the under-developed world can directly produce knowledge workers. I thought this a pipe dream, perhaps I still do. But I can't shake the fact that I met at least one person who actually did it.

Think of what that implies. You can directly bypass the high-energy demand of the industrial age, the sub-urban sprawl, and the reptile brain mindset that goes along with it. You don't have to think "big" to achieve status, you need to think smart. This is a reptile brain centric solution for a reptile brain centric problem. The under-developed towns can directly produce knowledge workers that can go into the agriculture, aquaculture, teaching, medicine, tech-sector, energy sector, etc. The list of demand for the knowledge workers and the products that they produce is endless. And the products that they produce can directly enrich the towns and villages that they came from, thereby solving the problem of population explosion as well. If the people of the town know that they can be empowered by producing knowledge workers directly and get rich in the process, they will invest the time and effort to hit jackpot. They have to, it is a reptile brain draw. The price of investment in a child would keep the populations low. So you achieve the developed world's solution to population explosion problem without having to go through the energy demand explosion that the developed world had to go through, maybe!

In a sense that is already happening to some extent. Here are some facts. The industrial world has for some time been exporting its manufacturing plants to the developing world. It is now in the process of exporting knowledge jobs. Some countries that used to be under-developed, such as the Pacific Rim Asian nations, e.g. Korea and Taiwan are already developed. Two major countries, China and India are making major strides in the direction of development. The situation is even more promising when we look at college graduation in the developing world. They are producing knowledge workers by enlarge. Though I have personally seen examples of entering the knowledge economy in one generation, as hard as that is to fathom, we certainly know it can be done in a few generations. We have seen that in action in the Pacific Rim Nations, South Korea, Taiwan, Singapore, for example. What they did, over time, is to establish the two morphological markers of the knowledge economy, as discussed previously: A System and Culture of Learning, and Economic Freedom.

A knowledge worker economy has a huge impact on economies and consumption patterns in general. Lets look at some anecdotal facts from the US where the knowledge worker population has had some time to establish. Today the richest man in the world is a knowledge worker and some of the world's most profitable companies are knowledge works factories. A 1998 University of Texas study found that the Internet generated $301 billion that year. Compare that to some other sectors (in billions of US $, source http://www.pbs.org/newshour/bb/cyberspace/july-dec99/economy_7-7.html):
Internet revenue 301
Telecom 270
Energy 223
Auto 350
And, US Commerce Department reported that from 1995 through '98, information technologies accounted for more than a third of the nation's real economic growth during that same time. 
Looking at a far larger knowledge worker sector, in 2004 US health care spending was 1.4 trillion (source http://www.healthcare-informatics.com/issues/2004/04_04/kaplan.htm) with National Institute of Health Budget of 28 Billion.
There are estimates that in 2005, 28 to 45 percent of the US work force was comprised of knowledge workers (source http://www.kmworld.com/Articles/ReadArticle.aspx?ArticleID=14264, Oct 2005). The hottest growth sectors include information technologies, biomedical technologies, nano-technologies, energy development and optimization technologies, among other knowledge sectors. It is quite likely that in the coming decades, as price of fossil fuels keeps rising, the energy sector will eclipse pretty much everything else.
Knowledge workers, in short, permeate every market sector, impacting everything from technological development and deployment to policy making. Further, the energy consumption patterns of pure knowledge worker industries are relatively small compared to traditional industries such as steel or petrochemicals. In short, the knowledge worker economy is inherently global, relatively unrestricted by material restrictions and caps, it is limited in scope only by demand for knowledge goods and products, and has a relatively small energy demand overhead, oh and it generates wealth, lots and lots of wealth.
So, given a knowledge worker economy, under the right urban living and consumption patterns, it is possible to generate tremendous growth in wealth without a corresponding increase in energy consumption. That appears to be a key in solving the sustainability problem.

The problem is that we may not have that much time to volunteer self-correction. It is very likely that rising global demand will swamp the supply of fossil fuels and force us to take action within the next few decades. At that point no amount of political pressure and military muscle flexing will solve the problem. Within the same time frame, if predictions hold, at the current exponential rate of growth of burning of fossil fuels, there would be mass disruptions of weather patterns due to global warming, resulting in mass dislocations in coastal areas and wherever else weather patterns have been disrupted. So one way or another, it appears that if we don't self correct the profile of fossil fuel consumption in our energy demand within the next few decades, nature will correct it for us, catastrophically.

9- Conclusion
In conclusion, the global demand morphology is composed of three morphologies, the developed world, the emerging world and the underdeveloped world. 

The developed world is fairly set in its consumption patterns that can be forced to self-correct only by the emerging supply-demand corrections over the next few decades. Cultural momentum rule dictates that the developed world will do its best to keep changes to minimum. It is a matter of social physics. Will the developed world hold off until catastrophes force change, or will it change before really, really major catastrophes hit. 

The far bigger question here is how will the underdeveloped and emerging societies develop their consumption patterns. Will they aim for the US  ~8000 kilogram oil equivalent (koe) per capita consumption figure. Will they aim at the European 4000 koe figure. Can they join the knowledge worker world at ~1000-2000 koe. That is really the central question of long term global sustainability. If the developing world can join the knowledge worker world at ~2000 koe, then we have reduced the future flattening of the world energy consumption figure by a factor of  perhaps 5-10 from where it is projected to go based on the US model.

Why the ~2000 koe target? Simple, at the 2000 koe level distributed(e.g. renewable) energy resources are in play (much more on solution details in the upcoming chapters), at 4000-8000 koe levels we are stuck with centralized power sources, that means fossil fuels. 

If that happens, and it is quite possible that it will, then a major shift will happen. Think about it. If a knowledge worker in one corner of the globe produces goods at say 2000 koe and another knowledge worker on another spot on the globe produces the same thing at 8000 koe, who do you think will get the sale. The guy with 2000 koe overhead! He will produce the same goods cheaper. In that sense there is hope. Over and above the global equalizing effect of knowledge workers, the size and scope of knowledge works is immense, software, music and movies, expert services in medicine, food production, clean water production, education, governmental institution building, security services, business management, etc. The list goes on and on. And, the energy required for producing knowledge products is relatively small compared to producing material goods. It  takes a lot less energy to write and sell software than it takes to produce steel or plastic. And history demonstrates that there is a significant shift in production of goods from strictly material goods to intellectual goods. This shift produces a tremendous amount of economic growth for a relatively small amount of energy overhead. 

A realistic question is how will that happen? How can, say China or India, or other developing societies reach the developed world's per capita economic status at say ~2000 koe. The first thing that just jumps out is to not follow the US sprawl model. Rather follow some version of the New Urbanism model in urban planning. They have to do some sort of urban planning anyway, given the tremendous influx of people into the cities. That will aim them at the ~4000 koe European and Japanese consumption levels, with the same per capita income levels as the US. Then comes the question of how to shave off another 50% off of the 4000 koe level. One thing is to focus on developing knowledge driven industries that have substantially less energy overhead while creating a lot of wealth; as we have seen that list is endless. The other is to use decentralized, renewable fuels as much as possible: bio-fuels, solar and wind energy, etc (net Zero Energy homes?!). It is consistently demonstrated that alternative fuels fare comparably well with fossil fuels at ~2000 koe.  And finally, efficient technologies and conservation measures offer tremendous opportunities in generating the same output at substantially reduced energy overhead. So the ~2000 koe goal is not a pipe dream, in my opinion.

When all of these things happen, then perhaps long term energy sustainability will be achievable. Remember our earlier discussion on demise of past civilizations. There, the top of the social organizational pyramid was lopped off. But the bottom survived, just to rebuild again. Here, we can look at the current global social organizational pyramid as reflected in the koe consumption figures. At the bottom you have the under-developed world at say ~100 koe, in the middle you have the emerging economies and at the top you have the developed economies at ~4000 koe, and US at ~8000 koe. And what we can forecast is that if that pyramid flattens where the top is at say ~2000 koe, then there is not much of a top to lop off. If the top of the pyramid stays rigid at 4000-8000 koe or more, it will likely get lopped off in the next few decades, unless major new energy generation capacities come on line. The only question to my mind is whether it gets catastrophically lopped off or will it flatten out by soft-landing through global competition of knowledge workers.