Richard Douthwaite

The world has warmed by approximately 0.7 degrees Celsius in the 200 years since fossil fuels began to be used on any significant scale[1]. The rate at which the planet is heating up could be accelerating and 2010 was the hottest year since the global record began, 131 years ago[2]. All ten of the warmest years on record have occurred since 1998.

Money and energy have always been linked. For example, a gold currency was essentially an energy currency because the amount of gold produced in a year was determined by the cost of the energy it took to extract it. If energy (perhaps in the form of slaves or horses rather than fossil fuel) was cheap and abundant, goldmining would prove profitable, and a lot of gold would go into circulation enabling more trading to be done.

In a widely-circulated article in September 2011, Chris Skrebowski, who runs a peak oil consulting firm and was editor of the Petroleum Review for eleven years until 2008, argued that there are two forms of oil peak. One is, or will be, caused directly by depletion – the oil is no longer in the ground in sufficient quantities for producers to be able to maintain production. The other is the economic oil peak, which he says is the “price at which oil becomes unaffordable to consume and therefore to produce.” He says that oil becomes unaffordable when the “cost of the supply exceeds the price economies can pay without destroying growth at a given point in time.” In other words, the unaffordable limit is passed when extra cost of the oil after a price increase captures all, or more, of the increase in income that the growth process seemed likely to deliver.

Money has no value unless it can be exchanged for goods and services but these cannot be supplied without the use of some form of energy. Consequently, if less energy is available in future, the existing stock of money can either lose its value gradually through inflation or, if inflation is resisted, be drastically reduced by the collapse of the banking system that created it. Many over-indebted countries face this choice at present — they cannot preserve both their banking systems and their currency’s value. To prevent this conflict in future, money needs to be issued in new, non-debt ways.

Whatever carbon-management system the world adopts, farming methods will need to change, and the efforts of hundreds of millions of people will be necessary to get the carbon out of the air. We, the residents of the world’s industrialized countries, should not expect our lives to continue in much the same way.

As the Montreal conference on global warming opens, we cannot hope for progress on climate change unless the approach to negotiations is drastically revised.