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Peak Oil & the End of Growth

Nate Hagens

Thursday, January 19, 2023

Chris Keefer  0:00  

Welcome back to decouple. Today I'm joined by Dr. Nathan Hagen's. Nate is, amongst other things, the executive director of the Institute for the Study of energy, and our future and the host of the great simplification podcast. Nate, I came across your work, doing some research for an interview with Simon Michaud, who's now a mutual guest of ours, you've had him back, I believe, a second time now. And I was really struck by both the quality of us as a host and interviewer, but you bring a lot to the table in terms of some serious thinking you've been doing over many, many years now. You frame yourself as being a systems thinker. And I like to get a bit of a self introduction for my guests. So I'm curious if you can give us a bit more of your biography and your training and your formation that led you to the vantage points that that you have as as a self described systems thinker.

Nate Hagens  0:52  

Sure, Doc, good to see you glad to be here. I majored in finance in the head of MBA in finance, worked on Wall Street started trading oil futures for one of my clients. And I got obsessed with learning about oil, because it was my job. And then I realized that oil is so central to our economies, and it would peak and decline in my lifetime. And not only that, but the pollution both chemical and co2 isn't included in the prices that we pay. And so I quit my job and I devoted my 4060 hours a week learning about how the whole thing fit together neuroscience, anthropology, energy, money, debts, climate change, biodiversity, human individual and aggregate behavior. And I got so obsessed with it that I ended up going back to get a PhD and might as well if I'm studying that much. And so for the last 20 years, I've befriended scientists, systems ecologist, neurosciences all these types of people and learned from them, and connected a.of how the parts and the processes of the human situation fit together. And they do. And this is a system that we're a part of, you're a nuclear energy expert. That's a vital part of the system, but it's just one of many of the pieces. And yeah, so I think we have to fly up high enough and look down, and how the pieces fit together. And I'm still learning on on some pieces that I've never thought about. But with 20 years of research, I think the fundamental three things are energy, human behavior, and ecology, and the environment. Those are the three things that underpin the human and planetary futures. And so I've I've kind of focused on the intersection of those three areas.

Chris Keefer  2:51  

Now, it's interesting being referred to as a nuclear expert, I've certainly been pouring the last, you know, four or five years of my life into analyzing it. But, you know, frankly, I come at it as a physician, as a bit of an anthropologist of, you know, all of the quirks and facets of the people involved, be it, you know, the actual engineers and technologists, you know, but also people theorizing about it, the opponents, etc. So it is an interesting vantage point. I'm not sure if that, you know, if I describe myself in the terms you do, but, you know, being a host of the podcast is such an amazing, not only sort of tool of distributing social capital, but gaining many, many different perspectives. And certainly, I've been very influenced by the work of James Lovelock, who I think would, would be very sympathetic to this idea of not getting siloed. But what do you see as as the dangers of of being siloed of not being a systems thinker in terms of where we're heading, and we're gonna get into you describing your your thesis around the great simplification, but maybe just in more abstract terms, just just starting from that, that issue of systems versus more siloed thinking and the kinds of problems that can create for us?

Nate Hagens  3:59  

Well, we live in a world that rewards reductionist expertise. If you're a real estate developer or a plastics, component, manufacturer, or any sort of research, you get rewarded with status and money, if you're an expert in your thing. The only professions that reward a generalist might be a librarian, or a teacher, or maybe a hedge fund manager. But even that's not macro enough because it doesn't look at Ocean Acidification or the loss of insects or you know, longer term things. So I think our whole system has rewarded islands of expertise. And all these super confident charismatic experts are talking about their thing without a map of how their thing connects to the whole human predicament and it's not easy to keep all this stuff in your brain. But it really is kind of simple when you think about it. I almost called my class I teach a class at the University of Minnesota. Reality 101 A survey of the human predicament I almost called it, things you always know, knew but didn't know, you knew, because a lot of these things are just kind of basic common sense. Right?

Chris Keefer  5:26  

Right. You know, it's interesting talking about the human predicament. And often that's shaped in, I guess, the sort of apocalyptic fears of each generation, or each sort of phase of history. And certainly dating back pre industrially, there were things like plagues, I mean, famines continue to some degree, climate change is certainly a modern one. But energy depletion seems to lie at the core of your concerns. So maybe this is a launching off point. To explain. I guess we'll start with just a very succinct description, and we're gonna kind of pick it apart and dive in a bit deeper. But what is your what is your theory? What is the great simplification for those that haven't come across your work? The elevator pitch?

Nate Hagens  6:10  

How long? How long do I have,

Chris Keefer  6:13  

we got like 40 stories, you know, this, we might have, we might have an entrapment or something like that, and elevator traveling. But uh,

Nate Hagens  6:20  

so So the most people in the world, living during this era, think that technology and innovation are what generates our productivity and wealth. And certainly they are important, but we neglect the fundamental role of, of energy in providing our wealth and productivity and basic needs. And energy is fundamental in nature. So an animal needs to spend some calories to get a killer return. And those animals that have an excess return, survive and reproduce. And it's the same thing in human systems. And for the longest time, we were hunter gatherers, and we would work 20 hours a week and get enough calories to sustain us, we didn't have stuff, we didn't have consumptive stuff beyond our own caloric consumption. And once we started sedentary, more agricultural intensive ways of life, we started to generate surplus, like grain and other things that we could store and trade. And that changed everything about our species, our culture. And fast forward to the Industrial Revolution, where we discovered this ancient sunlight under the earth that not only was energy, but it was so dense liquid at room temperatures, transportable, so many great qualities that had turbocharged our economies a barrel of oil. And I'm sure you know, this, if you've listened to my podcast, has 5.7 million Btus in it, which translates to 1700 kilowatt hours of work. You were I working for a eight hour work day generator out and 0.6 kilowatt hours of work. So a barrel of oil does 11 years of our physical work. Now humans are more efficient at directing muscle labor towards an outcome. So you have to handicap that. And my research shows that it's about 40%. So it's four and a half years of labor, we get from a barrel of oil that we pay less than $100 for. So this has created massive profits, higher wages, lower price stuff and a global economy. So this is what I call energy primacy or energy blindness, that we just don't realize how energy combined with technology is making our lives an anomaly relative to humans that lived in the past. And so carry on carry on Yeah, so that's the first piece energy primacy and I think, you know, your listeners probably understand, understand that the second is entered energy quality or energy fungibility is a BT EU doesn't equal a BT EU and what it provides. So nuclear power, depending on if it's, you know, lightwater molten salts or whatever generates electricity may be some additional heat. But right now, electricity is only 20% of global energy consumption. We need a lot of diesel and bunker fuel and gasoline, which come from oil. So there's a there's an energy quality issue with what powers this civilization. And then the third issue and that's a long discussion. The third issue is energy depletion. where we just kind of assume that next year we'll have the same or more energy than we did this year. And that has been true, with the exception of a couple of recessions. COVID, the financial collapse in 2009. That's been true for the last 100 years, we have more energy every single year. However, this stuff is been generated by phyto, plankton and algae dying over 10s or hundreds of millions of years, and we are extracting it out of the earth 10 million times faster than it was trickle charge by daily photosynthesis by Earth's processes. And we've already accessed all of the easy stuff and a lot of the middle stuff, there's a lot left, but it's of lower quality, lower density, harder to access, more polluting, etc. So the three largest oil producing nations in the world are the United States, Russia, and Saudi Arabia. But in the United States case, we have used all of the, or most of the really high quality light sweet crude, that we used to read about 30 or 40 years ago, then we access the North Slope of Alaska, which is part of the United States, but not contiguously. So then we access the oil under the Gulf of Mexico. And now we're accessing the light tight oil, also called shale oil, which is found in the source rock. That's where all the other oil migrated from. And after the shale oil, there's nothing left, that is the source rock. And over half of our oil now is this lower quality oil, the shale oil. And this stuff depletes very rapidly. So if you drill a new shale, well, it will deplete at something like 80 or 90%, in the first 18 months. So what we're doing is we're drilling faster and faster, more and more to keep our production growing. But we still have to find new stuff. And right now, if we were to stop drilling for an environmental reason, for a financial reason, for any reason at all, US oil production would decline by 40% in the first year, and another 25% or so in the second year and the third year. So we have to keep drilling in order to maintain production. And then there's money, finance and where money comes from fits into this picture. But the come the combination of all that and the reason to have a long winded answer to your question. Energy enables complexity in human societies. And we've built this six continent just in time, complex supply chain, and it's all enabled by liquid oil at massive scales, at low cost, relatively low cost for what it provides to human societies. And anthropologist Joseph Tainter wrote a book called The collapse of complex civilization showing that humans add energy to that they solve problems by adding energy. So we've built this huge amount of complexity, expecting that our energy access would continue in the future. I think in the next decade, we're going to crest the carbon pulse, and still have a lot of energy, but it will be a declining amount of energy every year, which will imply that societies have to simplify and it's not going to be a little simplification. I call it a great simplification, because energy invisibly so underpins everything that we do.

Chris Keefer  13:56  

I think one of the things that was most striking to me is just how tightly coupled energy and GDP had been together. And if we run into energy depletion, by necessity, you know, this isn't a philosophical argument anymore, but whether or not we should D grow, this becomes a sort of imposed form of D growth. So it can you talk a bit about that in terms of the implications for economic system, in terms of what money is as a claim on energy and what debt is and how our financial system is, I guess both accelerating resource depletion and covering it up at the current moment.

Nate Hagens  14:31  

Right. So globally, and this is important, energy and GDP are over 99% coupled. Now the US, the UK, other service based economies are decoupling relatively a little bit we can generate more GDP with using a little bit less energy. But that's because in the US the average American consumes 57 barrel of oil equivalents of oil, natural gas and coal, but we consume in other 17 to 20. In China and other areas that we import, the stuff that we buy from these countries the embodied energy. So GDP and energy are 99%. Plus linked, yes, we get a little bit more efficient in how we use things, which is why it's not 100%. But if you want to build a new factory, and make 1000 new cars, you're going to use almost the same amount of energy, GDP and materials are 100% correlated, if we double the size of our economy, we're going to double the size of materials. So what we do is money. Contrary to what's taught in economics textbooks, money comes into existence when loans are made at commercial banks, the majority of money like 8080, to 90%. So that all works fine in a monetary system when productivity and wealth are growing. But when new money is created, the same amount of oil and turtles and phytoplankton and copper and timber, and thorium, exist as before the money was created. So we're growing our financial claims, while our underlying biophysical reality is slowly depleting. And so the delta between the two is widening. So we can create money, but we cannot create energy, we can only extract it faster, which is what we've been doing. So that's another aspect of the great simplification is, at some point in the not too distant future, this rubber band of financial claims, is going to snap back to an under an underlying reality, which is going to mean a smaller economy. So every dollar or Canadian dollar that you have in your bank, when you spend it, you will defacto spend it on something that required energy, there is nothing in our global economy that contributes to GDP that doesn't have energy somewhere in it. So if you think about money, as a claim on energy, then when you issue debt, I don't have enough money today to pay for the things I need, I need to borrow money, that borrowing of money. That's a claim on future energy. And so all the claims in the world on what people think they own, will eventually have to be spent on energy. And I don't think we have that amount of energy to make all those claims valid.

Chris Keefer  17:35  

And it sounds the way you're describing that. Very much like the situation the Europeans are finding themselves in right now where they don't really produce much of their own energy, and are responding by printing a lot of money to try and prop up that system is just fine. Yeah, that's

Nate Hagens  17:48  

exactly right. So the Russia situation, ripped the energy blinders off of European society and the rest of us that are paying attention. Because Russia, although it's one of the top three oil producers, it doesn't use a lot of its own energy. So if you if you delineate all the world's oil producing nations, and you subtract out how much they use internally, how much is available for export Russia is between 20 and 25% of the world's available, while oil and natural gas is similar. So yeah, the European industrial model was built on an expectation of very low energy inputs. And so what we're doing with energy, just the fundamental model of the Industrial Revolution, is we're adding vast amounts of very cheap fossil energy to technology. And the combination of those things, replaces human and draft animal labor from the past, we're being incredibly energy inefficient at doing that. But we're very monetarily efficient it because it's so cheap. And so now all of a sudden, that model is breaking down, and lots of like, chemical plants and industrial factories and stuff in Europe are, are having to close their doors because that that math no longer works. And this also has, as you well know, Chris, is flipped the conversation a little bit from low co2 energy to energy security, because and this is a challenge with nuclear as well is solar and wind are great when they're paired with natural gas. Nuclear is great when it's paired with natural gas. And this conversation is front and center in lots of European governments right now. And it's going to be really interesting to see how they respond. And

Chris Keefer  20:01  

so the response of classical economists, and I've gleaned this mostly actually from listening to your podcast, not from any kind of economic training that I have, is one of resource substitution. And, you know, well, being a, you know, someone who's very interested in nuclear energy, and even a nuclear advocate, I like to put myself in a camp, that's actually, you know, quite pragmatic, and maybe even quite pessimistic, very much recognizing what you said, the fact that electricity is only about 20% of global energy use. There certainly are some applications with industrial process heat with potentially high temperature gas reactors, there's some opportunity for some flexible storage with not Molten Salt Reactors, per se, but molten salts, thermal storage of electricity, like things like an atrium reactor, which are some ways down the line, and possibly the creation of synthetic fuels using I think it's Fisher trot process, similar to what the, you know, BASF was up to and world war two to keep the German Luftwaffe in the air with a bit of jet fuel. So, you know, there's lots, you know, and I think very bad media coverage of, you know, energy transition, all the new kind of substitutes we'll have for fossil fuels. There's a lot of energy blindness to think in terms of how those are covered, including, you know, some of these nuclear substitutes I've mentioned. So I wanted to get a bit more of your analysis of kind of the the zeitgeist on that in terms of, you know, again, that issue of resource substitution, what are the limits? Is it sort of energy return on energy invested? What metrics do you use to assess the quality of those claims that, hey, we can replace, you know, X fossil fuel with another source?

Nate Hagens  21:38  

I think the fundamental challenge is that people look at the system and assume that the system is going to stay pretty static, except for the thing that they're focused on. And that's going to change. So the backdrop is, we use 100 billion barrels of oil equivalents of old oil, coal and natural gas per year. So at four and a half years, each of human labor, that's equivalent of an army of 500 billion human workers added to the global labor force relative to 5 billion real humans working. So if we look at the energy transition, we have to recognize that that 500, is it going to peak at 520 or 550, or something, and then it's going to decline. And it's going to go to 504 50 and 403 50. And, and so that hasn't happened, we just look at technology, and we extrapolated forward, but we're extrapolating it forward, assuming that this 500 billion helpers are still there. So that's number one, is they're going to gradually be retiring. And oil is the super warrior worker, and that's probably going to start to decline.

Chris Keefer  23:00  

It's gonna ask you, I was going to ask you that, you know, I was just jokingly thinking about this beforehand. And I was imagining, like a holy trinity of fossil fuels. And you have, you know, basically coal gas and crude oil or petroleum. Why do you privilege oil above those other two sources, especially given that sounds like we're nowhere near concerns about peak coal? Why, why is oil so central to your thesis?

Nate Hagens  23:24  

Well, oil is the most energy dense, it's transportable, that liquid temperatures, and therefore you can transport it in a pipeline, you don't need to ship it or put it on rail. So it ends up being more cost effective. You can put it in liquid in your car in my car, and I can't do that with coal or natural gas. So easily. If you look at a logarithmic chart of GDP and different countries and their oil use, it's an almost one for one graph that right now, oil is the economy. It's with military and trade and everything else. It is just the highest quality fuel there is granted. Nuclear has a far higher energy density. But that's the actual creation of the energy. Right? The it's not the putting it in my car, like with nuclear, I wouldn't be able to do that right now. So oil is is super important for the economy.

Chris Keefer  24:30  

And I guess this feeds off of that, that thought but you know, there's certainly been concern in the past about, you know, peak oil from the supply side. And that was, I guess, essentially put on hold with the fracking revolution. But now there's a lot of talk about peak demand because of a shift to electric vehicles. What's What's your read on, you know, being saved from this, this future of energy depletion you're talking about? Again, I guess this this comes back to resource substitution. So maybe this can be pretty short answer, but just your thoughts on peak demand.

Nate Hagens  24:58  

Yeah, the challenge Chris is None of these things really can be short answers. I think peak demand is is totally energy blind. It's just a fallacy. Are the reindeer on St. Matthews Island? Did they have a peak demand for like, and I mean, it's it's not going to happen that way. First of all, a barrel of oil, only 40% is gasoline. So let's just assume that we did create some cost effective electric cars that would eliminate all demand for gasoline. Let's just say that that were the case. And I can tell you a bunch of reasons why I don't think that'll happen. First of all, because a lot of developed countries are technically insolvent because we have three and a half to four times debt to GDP kind of globally right now Japan, Europe, US. I'm not so sure about Canada, I haven't looked. But anyways, if we didn't need gasoline, we would still need all the diesel, all the butane, propane, petrochemicals that create plastics and all all those things would still be in demand, we would still need the bunker fuel all the other products from a barrel of oil. So if we stopped using gasoline tomorrow, it would not reduce the amount of oil demand in the world at all. Yeah, we

Chris Keefer  26:22  

had a great episode on on the diesel engine as the kind of pumping heart of civilization in terms of you know, just thinking about agriculture, but transportation, etc. In terms of difficulty decarbonize sector, you're what you're saying is very much echoing our guests, BF Randles. So it's it's good to hear that.

Nate Hagens  26:39  

Yeah. Well, it's not good to hear it. It's just that's our reality. And here's another thing that you might not have heard next week. So middle of January, I will have a podcast and other podcasts with with art Berman, and we did some sleuthing on this. A lot of people don't know this. But right now in the United States, if you aggregate all of our oil production, or what the Energy Information Agency would say, this is how much oil the United States produces. 40% of it is not oil anymore. 20 years ago, it was 90 some percent was oil. We are lumping things in to the gross categorization of what is oil, or around 30% of it is what's called natural gas liquids, which is a byproduct of drilling for natural gas. And the majority of that is ethane, which you turn into plastic bags and such. Then there's not methanol, not heavy distillates. No, there's corn, ethanol and oxygenates, and some other renewable fuels. And they're adding that all in counting as oil. So this is art. And I joked about it, it's called the peak oil, the hedonic adjustment. Because just like our, our Bureau of Economic Analysis, over time, they kind of Jimmy, the CPI statistics, where you used to be able to afford steak, and now you can just afford a hamburger. But it's kind of the same amount in your budget. So it looks like CPI isn't going up as much. Same thing with oil. We're having difficulty maintaining those levels of extraction. So we're adding things to it. I think the the world oil and financial situation is going to be the main story in the next decade, assuming that we don't, that we somehow avert war. And I think some of this is linked to war. I mean, Russia is sitting on, you know, if you look at the world from a biophysical lens, which is energy and resources, Russia is one of the richest nations in the world. And the US dollar, because we, the United States is used more hydrocarbons than any other country in history. And we have the wealth that results from that. But we also have the seniority of the US dollar because the world has to price things. Oil, but also their debt and borrowing with the IMF and everything else in dollars. So we've had this huge tailwind from the US dollar being the international currency. Russia doesn't want that Russia wants to price dollars in I mean, price, natural resources in a basket of other currencies.

Chris Keefer  29:33  

I guess it's kind of one one final question on on this question of resource substitution. I just finished reading a great book. I'm blanking on the author's name, which I hate doing, but it was called the alchemy of air and it was all about haber bosch, and really beautifully written history of the development of synthetic nitrogen production, which, you know, kept Germany in World War One, both from the perspective of feeding itself without having all its colonies or without having any colonies to bring in at surplus food and also, you know, continue to make explosives and artillery and things. And interestingly, the ways in which, after World War One, you know, this enormous amount of German chemical engineering, brilliance and infrastructure was turned into the creation of synthetic fuels. Because the 1920s, I think many of the big oil companies were thinking we were in a peak oil situation, this was before discovering the Texas fields, I think, in the Oklahoma fields. And so, you know, Carl Bosch, in talks with Standard Oil, you know, was saying, Hey, we're going to be producing synthetic gasoline. And we'll keep this whole automotive industry going was just a very interesting historical vignette. And by way of introduction, I guess what I'm trying to get to. And I want to say this, you know, I'm not a hopeless optimist. In the sense, I think there's major issues with scaling, and technological development, and, frankly, regulatory obstructionism. But I think one of the hopes of the nuclear as a panacea tribe is that, you know, nuclear has been held back so much by by regulation that could be drastically cheaper than it is, if we were to actually understand its risks relative to other technologies. And that potentially, you could be using nuclear heat to generate an enormous amount of sun fuels and in some way, make up for declining oil. Obviously, it didn't go wonderfully well, for the Germans in World War Two, partially because the allies were bombing the shit out of these couple of industrial nodes that were making synth fuels. But just briefly, if you have any thoughts about that, I'm curious before we move on to something else,

Nate Hagens  31:29  

yeah, well, Fischer trough is a viable technology. I know people in South Africa are doing that now turning coal into liquid fuels. There's many of these things that work like we can overbuild solar and wind right now, and do Power to Gas and with methane and hydrolysis, we can create low carbon, fossil fuels. But it ends up costing 10 or $12, a gallon versus two or $3 a gallon. So a lot of these technologies are viable, and we should pursue them at but I think it's the cost. It's the incredibly low cost at scale of what oil has done for us that has enabled this amount of globalization and complexity. So I think in all the discussions that I'm having on my past podcast, and you're having on yours, there's two kind of distinct questions is what sort of a technology and a social structure for a civilization is feasible with what we have now and some upcoming technologies, including nuclear? And then I would bet that the size and scale of that enterprise is going to be smaller than it is today. The central question then becomes how do we get there from here? And that becomes a political, psychological, social, geopolitical question. I think those are two separate questions. But I but I do think that we have to continue to look at technology and innovate. But, you know, we've become more energy efficient, pretty much every year for the last 200 years. And we use more energy as a global culture pretty much every year over the last 200 years. So just solving how do we get more energy is not the problem. I think we have to change I mean, this gets into more. You call your podcast decouple when I hear the word decouple. I think two things. Can we decouple energy from GDP? The answer is no. Can we decouple GDP from carbon? The answer is yes. If we grow our low carbon resources faster than we grow GDP, but if you care about climate change, that's not happening remotely at a at a level that that is be effective. The real decoupling, Chris and I have, I've only listened to one of your podcasts. So I don't know if you discuss this. The real decoupling that humanity faces is decoupling our hedonic well being and the well being of the planet from energy and resource use. That's where the Holy Grail discussion is.

Chris Keefer  34:24  

Yeah. I mean, you have a number of excellent zingers. And one of them is that, to paraphrase you hear some of the exact quote in front of me, but we're basically transforming hundreds of billions of barrels of oil into microliters of dopamine, but in feeding that and I encourage people to really check out your podcast I absolutely have been deep diving in and binging it. You have an amazing way of communicating issues like scale or exponential functions, which I think are big traps that lay people like myself have a hard time getting our heads around. But you brought up decouple and this question, and forget exactly how you phrase it, but I wanted to sort of again So tell me a little bit about my psychological motivation for starting decouple. I mean, it very much came out of questions of climate dualism, and flirting with eco modernism, which, you know, I think really brings to our attention the ways in which modernity, industrialization have had objective improvements in terms of, you know, things you can measure, like child mortality or human lifespan, I'm thinking of Hans Rosling here. And he has a great, great quote that, you know, human beings never lived in harmony with nature, we died in harmony with nature, and that was mostly, you know, children under five years of age, you know, the average woman used to have six children. And when population was stable, that meant that only two of them were there to replace population. So, you know, my own son was born quite prematurely and would not have made it without energy abundance, you know, in order to run his incubator in the health care system that kept him there. So I have this, you know, I guess, psychological protective mechanism of saying, you know, I would love to preserve some very important parts of human well being, you know, and we want to decouple from ecological impacts from trashing the planet from, from runaway climate change, and other forms of pollution. And so, you know, that's why nuclear has been a focus. And it's not not a panacea by any means. But I think, you know, history has demonstrated that it is the most effective replacement for some fossil fuel services. And whenever there is a crisis, like the energy crisis in Europe, in the 70s, that's when you see nuclear being built out or on peninsular island nations with difficult access to fossil fuels, that's typically where you see a lot of nuclear happening, you know, I guess, this question, again, of return to some sort of balance of an inevitable economic contraction, you do a lot of theorizing and thinking about that. You make some, I think, fairly confident predictions as to the timeline as to when this may occur. And you're certainly listening, spending a lot of time chatting with guests exploring, you know, how to bend and not break. So maybe that sort of leaping off point. You know, I've explained the rationale for my podcast, and it's continually developing, but I think you have a very specific one in terms of, of this idea of bend, not break and of trying to imagine a post growth world. So I'll let you jump in on that wherever you like.

Nate Hagens  37:09  

It's a really big conversation that, you know, I have 60 podcasts that are an hour, an hour and a half each, and we're just scratching the surface of this. But from what I was saying earlier, we live in a system that's largely based on historical sunlight combined with humans are taking 30 to 40% of the annual daily net primary productivity of the planet, one of 10 million species directing it towards us, this is patently unsustainable. And if we lived in a world where there was no money, but we were just this unsustainable, and where we're using this amount of resources, then we would start to use less a little bit every year, but because of the monetary overlay, we have grown our debt more every year, at a higher percentage than we've grown our economy. Since you and I have been on the planet, this is so unsustainable, that the step down has to happen, by definition in the financial markets,

Chris Keefer  38:21  

are you referring to the decoupling from the gold standard? Is

Nate Hagens  38:23  

that is that the moment where things diverge? Or, you know, I'm just trying to get, you know, lifespan is a canard that the gold bugs kind of set up the this started long before then when we created our banking system, that is when like, in the 1915, once we started to issue money with no tether to natural resources, it wasn't the gold standard, it was all money creation. So there's, you know, hundreds of trillions of dollars of financial claims in the world versus around 100 trillion of GDP. And now our energy is of lower quality, and you're going to start to decline. So the bend versus break scenario is how do we as individuals, as culture, as nations, as communities, hold the social structure and the social cohesion together in this coming? Well, so 1930s, North America had a 29.6% drop peak to trough in the Great Depression, something like that I expect is coming in the next decade, not because oil is going to be dropped by a few percent or whatever. But because we won't have the amount and quality and scale of energy to support the maintenance of this growing debt. Just a few years ago, we had $20 trillion in debt in the United States. Now suddenly, it's 31 trillion. So when we have economic problems, we just grow our debt and pay for them. So let me just ask you this quick example here, if you made $50,000 a year, but you lived kind of large and spent more than that. So you had to borrow more every year, you already owe the bank $175,000. But now interest rates are going up. So the amount of interest you owe, the bank is taking a big cut out of your 50 grand that you make. So you're trying to buy or borrow more from the bank, because you're spending. If you were an individual, that would be like, Wow, that's really not sustainable. Those numbers that is exactly the developed world. That is the math 52. It's about 350% debt to GDP.

Chris Keefer  40:46  

Again, my economic education is pretty shaky here. But I remember to blindly, probably probably, but I think it's the monetary theorists say, you know, don't compare government financing to a household financing. That's that's the only thing I'm remembering here and wondering if that's a valid pushback.

Nate Hagens  41:02  

Well, it's when and here's why it's partially valid. And partially not governments that are in debt that can print their own money can technically never go bankrupt, because they can print money to pay those claims back. But this neglects the energy thing, they can't print energy. So that is exactly what's going to happen is we're going to do another round of quantitative easing. And there's gonna be more artificial guarantees. But eventually, this system can't continue growing with tight linkage to energy and materials. And you know, my academic paper about the super organism, no one is planning this, Chris, no one is behind the scenes saying man want to make more money, this is what we're going to do. This is an emergent phenomenon of a social species, finding a huge amount of fossil carbon surplus, and building a civilization around it, expecting that to continue. So what I'm trying to do with my podcast is educate and inspire and inform the scout team of people that take a role in their community or in their political leadership areas. So that we prepare ahead of this moment for a lower consumption lifestyle, which doesn't have to be a disaster, right? If we dropped 30% in our economy, we would be back to 1990s levels of GDP per capita, not going to be fun, and not even fun talking about it. But I think the more people that think about that and start to simplify first before the rush, the better off we're going to be. And nuclear and other alternative technology like deep geothermal, those things are I'm agnostic about but if you're an expert that is researching this, we need to research these things and find out what's viable. It's just not only that, right, it's how the whole system fits together. And, you know, I'll say this, because I believe it. My biggest problem with nuclear isn't the things that you talk about. My biggest problem with nuclear is the assumption that we will have continuity of the human system for centuries. And if we don't, we've got these 400 Odd nuclear plants that something happens. So I think some of the costs of nuclear are potentially underline that word. backloaded that we can't foresee. But that that's something also that we want to bend and not break.

Chris Keefer  43:45  

Well, I mean, it is interesting that we're, you know, hearing rumors, again, of a nuclear renaissance. And you know, you always have to wait to see if they come true before, before believing them, because nuclear has a huge, huge lag time in terms of, you know, being large infrastructure projects. But but it is interesting that this occurs during fossil fuel squeezes. So I do anticipate that similar to the fossil fuel squeezes we've had in the past, we will see a significant uptick in nuclear and potentially some of the deregulation that will be necessary to make that happen. What I struggle with is, you know, we were much better prepared in the 1960s and 70s, with you know, vertically integrated, regulated monopoly utilities, you know, with, you know, a lot of competence pre deindustrialization in many Western countries, that kind of scale of nuclear build outs were, you know, France, you know, built 54 reactors and 20 years, I think those are, would take a long time to sort of build back up. And that's, I think, largely a question of, of human resources. But I do think there's a role, you know, in terms of, you know, this this change that you're describing the simplification, the end of economic growth, that is going to be something that will send shockwaves through through the economy and through society and how we fundamentally live so I mean, I think that maintains my motivation as a new would advocate to try and lessen the the cliff that we fall off of with the full understanding that nuclear is not a replacement for all fossil fuel services and not some panacea that's going to take us to the stars.

Nate Hagens  45:09  

Well, one could hope it's a replacement for coal from from a, from a climate standpoint. But let me throw this out. I don't think that all the stuff that you just said, I don't think the markets are going to suddenly manifest nuclear replacing coal, what they might do is add nuclear, increasingly add more nuclear, but it's not going to get rid of the other stuff, which is why your work is really important, because if we have this great simplification, where there's this economic drop, and then we restructure things so that we're able to get human wellbeing and medical base baseline and respect nature or whatever comes out of that, then maybe nuclear could play a larger role. But I don't think the market is going to vote for that, in the same way that solar and wind are not reducing carbon globally. There, they're growing fast. But the absolute amount of coal, oil, natural gas is increased more than solar and wind. So we're just adding more and more fuel into this runaway train and the runaway train, at some point is going to have a little bit of a hiccup. And it's that hiccup that we should all be focused on. Not all of us, I'm sorry. Those people looking at scaling nuclear and alternative technologies into a sustainable system should look at now you guys where you live. Ontario could be in Quebec could be among the richest places in the world in the future, because you have so much hydro, that a lot of places in the world don't have access to that.

Chris Keefer  46:57  

Yeah. And we put some serious effort into building the infrastructure to harness it. But yeah, we are we are kind of tapped out. There's not much more resources there. But it will last a long time. So for sure. I think in closing, I wanted to touch upon a couple of archetypes that we were mentioning in the pre chat. And that is of this idea of of the wizard and the Prophet. It's a great book by Charles C. Mann, I hope to see you interview him at some point. But he's he's modeling

Nate Hagens  47:19  

the man, the woman I know that name because he did something about soil that I assigned to my students

Chris Keefer  47:26  

is out there 1491 and 1493, about the America's pre Columbus and the post Columbian Exchange, both totally Excellent. But he has this this archetype again of the wizard. And it's, it's, you know, he chooses Norman Borlaug, the Father of the Green Revolution to illustrate that figure. And William votes, the author of road to survival, one of the early sort of environmental godfathers, grandfather's and ecological thinkers. And, you know, when we think about, you know, any organism in a petri dish, for lack of a better analogy, I mean, there are walls at the end of it. And human beings have been pretty extraordinary at harnessing essentially, every available flow of energy that we can imagine even, I mean, I won't say, harnessing fusion yet, but it's pretty incredible that we, you know, originated as a species, partially because of our use of fire and can have big brains and shortcuts as a result. And then we've gone on, you know, photovoltaic effect fish, and etc. It's, it's been a remarkable trip, and that's continually kind of expanded our carrying capacity. Things like the fixation of nitrogen, you know, through Peruvian guano. And then, you know, the haber bosch process, the Green Revolution, genetic engineering, I mean, to me, I'm attracted, particularly in a climate of doom. And, you know, looking at, for instance, the the climate movement and seeing lots of young people that essentially, to my, you know, I'm 40 now, so I kind of look and don't understand entirely, the zeitgeist but you know, it's kind of a competition for who can write the weightiest slogan on a placard. And, you know, an attitude of like, well, supreme fatalism, what's the point of going to school? What's the point of educating myself? What's the point of, you know, being able to contribute, if it's all going to hell anyway, I think these are things that we struggle with. So there's a certain heroism that I would ascribe to some of these wizards, you know, that have managed to extend our carrying capacity, perhaps in the inevitability that like any other organism, if we find a loss of energy, we're going to overuse it, and we're going to have a an overshoot and collapse. But on the other hand, I think there's a lot of value to that more of that profit, figure, and maybe that's someone like yourself, who's drawing attention to what I guess is kind of the fundamental limit that you're seeing, which is fossil fuel depletion, and we're using finance to create the illusion that the walls of the petri dish are farther away. I guess I'm just curious about your thoughts on sort of doom, Doom or ism, and how you deal with that maybe personally and in terms of the kind of tribe that you're bringing together with your work in your podcast, how you, I guess, just explore what the psychological response should be and how to stay healthy with some of the realizations that you've come to.

Nate Hagens  49:58  

It's a hell of a question, Chris. So yes, you're right, I deal with this all the time my Twitter handle is navigating the thin road between fantasy and doom. Because I think the human brain abhors uncertainty. And when we hear stories, we glom on and our personal identity gets associated with them. And there are a lot of people that hear the climate, peak oil, financial collapse. And it's an easy, simple story. And it also means that I don't really have to do anything this is happening. For a lot of people. It's really threatening and complex and scary. It's like I don't want to hear that at all this Elon Musk, electric cars and colonizing Mars, that story makes more sense to me. The human brain doesn't like uncertainty. So the truth, you and I would agree is somewhere in between those. And holding that uncertainty on a daily basis is difficult, especially since a lot of people don't want uncertainty they want like someone like a demagogue or a really charismatic political figure saying this is what's going to happen and those people are to blame. So I struggle with Well, I did a podcast with Thomas Bjorkman about the meta modern perspective on how to have multiple perspectives while suppressing your own identity a little bit in order to learn and also approach a problem with diverse voices contributing to it. And I think that's where we have to go. But those diverse voices, in my strong opinion have to be tethered to this biophysical reality, how human behavior, energy and materials and ecology fit together. I've been working on this for over 20 years, and three or four times I started from scratch, this can't be right. And I looked at first principles. And I always came back to my same conclusion. But the average American and I think Canadians are similar uses 100 times more energy than our bodies need. It's not like we're redlining here. So if we were to drop to 70 times what our bodies need, it would not be a disaster. So I long ago grieved for the future that is being advertised at the Super Bowl commercials and on television and in the media. I know, that's unlikely. And I know we have some environmental damage on the back end that we're going to experience. Not only climate, but species loss and plastics and phytoplankton and things like that. But my whole goal of my work is to make humans and the natural world navigate the bottlenecks of the 21st century and propel as many things of value, culture knowledge, species, ecosystems, children, ethic ethics, through the coming decades. And so if if my expectations are have been reduced, then I'm very optimistic that we can exceed those, which is why I'm focused on the bend not break and the things that you and I are talking about. People feel this, I call them the walking worry, they feel that something is horribly wrong. And we're going to have to make sacrifices and things aren't going to be as easy. But it doesn't mean that the carbon pulse means that it's the end of us, the carbon pulse may in some cultural ways. wake us up. And you talk about haber bosch and the wizards you know, Thomas Malthus was wrong, because he didn't know about fossil fuels. Paul Ehrlich, when he wrote about The Population Bomb was wrong, because he didn't know about debt and globalization. Then we had, we shifted from commercial banks to central banks in 2008 as the monetary model. Now with COVID, we're kicking the can and other ways, when you talk about decoupling, I said this before, I think that the next wizard, or the story is going to be relevant is how to get our evolutionary neurotransmitters that match the emotional states of our ancestors, which is dopamine, which is over over regulated in our society. That should be one of the arrows of the in the quiver of neurotransmitters, hormones and endocrine cascades, balanced with serotonin and other things is how can we get those emotional states with using less material throughput and less damage in nature? That is the calling of our time. And I don't think another technology when we're doubling every 30 years and the size and the scale of our economy, our natural world can't really handle another great technology that will kick the can further unless it's paired with some different cultural aspirations and governance system

Chris Keefer  55:02  

well made, I want to be respectful of your time. But I really do hope I'll be able to get you back at some point. Again, I really encourage listeners to check out Nate's work. That is the podcast a great simplification. Where else can people find you and interact with you, Nate?

Nate Hagens  55:16  

There's a YouTube channel, Nate, Hagens, YouTube and the podcast, the Great There's a 32 minute animated movie that kind of gives an overview of all this, that's on both those places, and I'm on Twitter and LinkedIn and such.

Chris Keefer  55:31  

And I'm genuinely hopeful for a really interesting kind of cross pollination again, between certainly my listenership and yours. And I think you bring some very interesting questions, cognitive dissonance to some of my audience and to some folks in the Eco modernist community. And I haven't seen that interaction happen yet. So I look forward to watching the sparks fly the sparks that illuminate the darkness, so that we can, you know, better find our paths forward.

Nate Hagens  55:59  

Let's continue this because that philosophy that you just said, is what what we need. I don't I know the questions and the challenges. I don't know the answers. And frankly, I don't think there are solutions. I prefer to talk and responses. And there's a million responses and we just need more people joining this conversation and playing a role in our collective future. So thanks so much, Chris.

Chris Keefer  56:23  

All right. Take care

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