Monday, June 4, 2012

Jeff Rubin and The End of Growth

Recently my hubby and I attented a talk by Jeff Rubin at Capilano University. Part of the (low!) ticket price was a free copy of his latest book, The End of Growth (note: he's not the only one to have written a book with this title!).

Mr. Rubin is a really good speaker, very entertaining and thought-provoking. His main premise is that the days of cheap oil are gone, and that $100+/bbl oil will have economic consequences including:
- lower economic growth around the world and specifically very low growth in the developed world for years;
- the breakup of the European Monetary Union (the so-called "PIIGS" will leave the Euro) as debt-ridden, low-growth economies can no longer be supported by the richer members;
- lower social benefits (health, education, retirement) as governments struggle with debt load and lower tax revenues;
- permanently higher unemployment (especially for youth);
- pressure to decrease immigration...

None of these ideas are really new to me; I've been reading about this type of stuff for a while. This blog, in particular, has some pretty clearly reasoned arguments about the limits to growth and its consquences, from an economics perspective (as opposed to from a science perspective). While I may not buy into the rather apocalyptic visions of some of the peak oil doomers, I think it's pretty clear that changes are on the horizon.

Anyways, what I found interesting about his talk was his realpolitik take on a lot of these economic issues. Having been active in the heady world of international finance for decades, Mr. Rubin knows how decisions are made. He's pretty practical when it comes to realistic expectations of what can and can't be done. I found it interesting, for instance, to hear why Germany wants to have Greece in the Euro: it keeps the value of the Euro down, which is good for German exports. Not something I'd really realized before...

Another interesting point was that Mr. Rubin is not a big fan of the Kyoto or Copenhagen agreements, and basically thinks these kinds of treaties are a waste of time. Governments will simply back out of them when they really start to cost money...as Canada did to avoid paying a hefty fine for not living up to its treaty obligations!

Mr. Rubin's point is that rising energy costs alone cut energy use and GHG emissions. Becoming "more efficient" isn't good enough and is in fact counterproductive. There's enough analysis done by economists (inlcuding our own Mark Jaccard) that - in economics circles anyways - this isn't a controversial idea (and you can bet that BC Hydro understands this even if the Province - its political master - doesn't want to hear it). The only thing that makes people downsize is high prices. Kinda like the Vancouver housing market, eh?

Mr. Rubin's most surprising contention is that the IPCC predictions about climate-geddon will not come to pass because there isn't enough cheap hydrocarbon fuel (oil or coal) to burn to get us there. This is an interesting idea, although I'm not convinced. While I'm sure he's correct that the IPCC doesn't include any economic considerations in their predictions, I've not seen any hard analysis of, for instance, the energy prices that would be required to start shuttering coal-fired electricity in China, or to grind truck-based transportation in North America to a halt.

But since we've just hit 400ppm CO2 in the Arctic, if we want to avoid catastrophic climate change, whatever that price limit is, we'd better hit it soon.

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