@pluralistic On the "markets can't solve this" aspect ... there's one possible angle in which they might help.

Business function as accounting engines. They don't create wealth, they create accounting profits. (Interesting backstory, look up Alexander Hamilton Church on the origins of Cost Accounting, and yes, he's related to that A. Hamilton.)

Because Reasons, accounting considers some costs and not others. Natural resource accounting, and economics, its own special class of utterly fucked up, and that's also an interesting little tale of utter fuckwitted thinking. See Hotelling's Rule & earlier L.C. Gray (neither of whom cite any geology), and back to David Ricardo for what theory exists. It utterly fails to match actual pricing history (see BP's annual statistical rule, petroleum's got excellent data to 1860).

(Hotelling's relationship to Rockefeller-funded University of Chicago also raises eyebrows: petroleum monopolist-financed economist justifies petroleum monopolist pricing.)

Leo Tolstoy has an interesting alternative accounting, IIRC in "What Then Shall We Do" which includes sunshine and land and other factors excluded from traditional cost accounting.

The Rule of Capture (via an utterly fucked-up 1904 Texas Supreme Court ruling) creates a legal basis that again utterly ignores geological science. The principle is less used, but the legal precedent stands.

Jeffrey S. Dukes, "Burning Buried Sunshine" (2003), gives the information on primordeal primary production (plant growth) that resulted in fossil fuel deposits. A year of present consumption is 5 million years of ancient accumulation, a depletion cost not considered in present pricing.

If it were, depletion allowances for extraction would increase the cost of fossil fuels by a factor of millions. Simply by an accounting change, the resources would be effectively pinned to the ground by a force stronger than gravity: it would be a complete economic loss.

(Odds of this happening? Uncertain. Worth a shot? Um, hell yeah!)

Keep in mind that this is independent and in addition to accounting for sink costs, which is what a carbon or other pollution cost would be. Proposed carbon taxes are a very small fraction of what a full, geologically cognizant cost-accounting depletion allowance would be.

Links to follow.

#AlexanderHamiltonChurch #CostAccounting #HotellingsRule #NaturalResourceEconomics #HowardHotelling #LeoTolstoy #JeffreySDukes #BurningBuriedSunshine #DepletionAllowances #AccountingStandards #Petroleum #Economics

Burning Buried Sunshine: Human Consumption of Ancient Solar Energy

Jeffrey S. Dukes1
Climatic Change volume 61, pages 31–44 (2003)

Fossil fuels developed from ancient deposits of organic material, and thus can be thought of as a vast store of solar energy from which society meets >80% of its current energy needs. Here, using published biological, geochemical, and industrial data, I estimate the amount of photosynthetically fixed and stored carbon that was required to form the coal, oil, and gas that we are burning today. Today's average U.S. Gallon (3.8 L) of gasoline required approximately 90 metric tons of ancient plant matter as precursor material. The fossil fuels burned in 1997 were created from organic matter containing 44 × 10¹⁸ g C, which is>400 times the net primary productivity (NPP) of the planet's current biota. As stores of ancient solar energy decline, humans are likely to use an increasing share of modern solar resources. I conservatively estimate that replacing the energy humans derive from fossil fuels with energy from modern biomass would require 22% of terrestrial NPP, increasing the human appropriation of this resource by ∼50%.

https://dge.carnegiescience.edu/DGE/Dukes/Dukes_ClimChange1.pdf

Dukes's article has singlehandedly done more than any other source to shape my thinking on energy, finite resources, renewables, and the fundamental failure of economic markets to rationally price production. Largely toward pessimism.

The buried lede is that we're consuming petroleum and natural gas at 5 million times their rate of formation. In about 200 years we'll have drawn down an inheritance accumulated over 400 million years, effectively accounting for bank withdrawals based on the cost of printing cheques written against it.

As cheap energy is presumed for all economic productiion functions, and cost accounting ignores natural capital, this is a tremendous bias at the very core of all market pricing mechanisms. The system is based on a lie.

The numbers also reveal just how rocky the process of moving off fossil fuels will be, whether that's a planned sustainable migration to renewable/carbon-neutral sources or something more catastrophic. The magnitudes involved are tremendous, specific qualities of energy sources hugely significant, and glib expectations that a few windmills, solar panels, and dams scattered across the landscape will be sufficient tremendously naive. (Of other renewable options, only geothermal offers any plausible scale, much of which is already exploited. And there's the troublesome prospect of nuclear power.)

Author Vaclav Smil (see below) describes oil wells as punctiform. They are literally holes in the ground from which modern civilisation has spouted, more effectively than any djin pouring forth from a lamp. Renewable resources are (mostly) expansive: they capture or harness energy diffusely incident over vast areas, measured in watts per square meter.

The paper pairs well with deeper contexts. Ironically, petroleum apologist Daniel Yergin's The Prize (1992) does a phenomenal job of conveying just how completely transformative oil was for humanity. Vaclav Smil's Energy and Civilization (2018) quantifies the impacts and mechanisms of past energy transitions. The economic piece has yet to be written, though Herman Daly, Nicholas Georgescu-Roegen, Robert U. Ayres, and Steve Keen have provided significant bits. Possibly Mariana Mazzucato's work on value also.

#energy #climateChange #fossilFuels #JeffreySDukes #EnergyTransitions #Limits #LimitsToGrowth #economics