8.4 Markets, Technology and Substitutes to the rescue?

 

 

8.4 Markets, Technology and Substitutes to the rescue?

Mainstream economists do not see things in this way. They assume that markets will be able to anticipate scarcities and problems arising from the limits to growth, that these problems will be reflected in rising prices in forward markets – and then the rising prices will create and incentivise profitable opportunities for technological solutions. If necessary it is recognised that the state may have to step in to adjust prices to ensure that incentivisation is strong enough to bring about the necessary new technologies and substitute arrangements. Thus markets and ingenuity will always provide alternative arrangements on a rising curve of human well-being. The message is therefore that we do not need to be particularly worried about climate change or peak oil or the depletion of fossil energy or other resources. Greater efficiency of resource and energy use and other ways of doing things will enable us to find a way out of our problems.

But there are problems with this view which can be illustrated with a case study – energy usage and carbon by the internet. At the current time the internet uses about 1 to 2% of the global energy supply. Roughly 50% of this is energy used in the internet day to day and the other 50% is the energy used to create the computers, infrastructure and so on. Technological change is so rapid that the energy efficiency of the internet is improving 10 times every 5 years. That seems highly reassuring – however despite this, overall energy usage by the net is doubling every 5 years. Continue that trend for half a lifetime and the net would be using an amount of energy equivalent to the current entire global energy usage. (Starting at 2% and doubling every 5 years this would be 4% in 5 years, 8% in ten, 16% in 15, 32% in 20 and so on....)

The fact that energy usage increases even though energy efficiency is rising was first noticed by the English economist Stanley Jevons in the 19th century. Indeed increased energy efficiency tends to generate increased usage – people with cheaper low energy light bulbs leave them on all night. Corporations that use internet video conferencing between their executives rather than flying them to meet each other save a lot of money and energy – but the money saved is then used for business expansion which means the purchase of goods and services...which consume energy...so the value to the environment of the gains are undone with no absolute reduction occurring.

To lock in the gains of energy and materials efficiency requires an absolute cap on energy usage that is reduced to the sustainable maximum that the planet can bear.