The End of Doom

by Ronald Bailey

  The announcement of China’s intended export restrictions unsurprisingly excited peakists into spreading alarm about peak rare earths. To counteract the supposedly impending global shortages, Rep. Mike Coffman (R-CO) introduced in March 2010 his Rare Earths Supply-Chain Technology and Resources Transformation (RESTART) Act. The RESTART Act would offer federal loan guarantees to mining and refining companies to re-create in five years a domestic rare earth minerals industry. Rare earth minerals independence, if you will. The bill apparently died from lack of action in 2011, perhaps because the prices of rare metals fell fast. “Global market forces are leading to positive changes in rare earth supply chains and a sufficient supply of most of these materials likely will be available to the defense industrial base,” noted a comprehensive review of industrial raw materials supplies by the Department of Defense in late 2013. The report further observed, “Prices for most rare earth oxides and metals have declined approximately 60 percent from their peaks in the summer of 2011.” Why did prices fall? As the DOD review reports, “One factor contributing to reduced demand is the substitution of other materials for rare earth materials.” For example, Tesla Motors installs induction motors that do not use rare earths; LumiSands in Washington State has developed LED lights that replace rare earths with abundant silicon.

  In addition, China’s threat to create a rare earths cartel provoked exploration and the opening of new mines around the world, including in the United States, Australia, and Malaysia. “There are over 400 rare earth projects under review globally, approximately four dozen of which may be considered in advanced stages of development in over a dozen countries worldwide,” notes the DOD review. This is exactly the response that one would expect to higher prices. By January 2015, rare earth prices were 8 percent below their 2011 highs.

  Kudos must be given to tireless and imaginative peakists for their astonishing ability to foment alarm about the future availability of rare earth metals. The USGS estimates that at current levels of consumption, the known reserves of rare earths will last 1,272 years. The agency doesn’t bother with providing figures for the ultimately recoverable resource base, simply noting that “undiscovered resources are thought to be very large relative to expected demand.”

  Proponents of peak depletion get it wrong because they treat natural resources as fixed stocks, failing to take into account the inherent dynamics of market forces and technological innovation. Amazingly, some still claim that the era of cheap resources is over, when in point of fact nearly all resources in the past were much more expensive than they are today, even taking into account the current super-cycle.

  Resources are defined by advancing human knowledge and technology. A deposit of copper is just a bunch of rocks without the know-how to mine, mill, refine, shape, ship, and market it. “Innovation has arguably been the dominant force in determining the path of real prices for primary commodities over the past three and a half centuries,” assert economists Harry Bloch and David Sapsford. They add, “The influence of innovation has been sufficient to result in negative trends in real prices for numerous individual commodities and for aggregate indexes of commodities. The negative trends occurred in spite of massive increases in output with growth in the world economy.”

  Richer Means Cleaner

  The folks who put together The Limits to Growth back in 1972 concluded that if humans were somehow able to overcome all other “limits,” pollution would still do us all in. “Virtually every pollutant that has been measured as a function of time appears to be increasing exponentially,” read the report. It turns out that they were making this exponentialist prediction just as a wealthier United States was reaching the per capita income thresholds at which citizens begin to demand better environmental quality. Happily, once again, the new Malthusians had things exactly backward.

  Consider that the EPA reports that between 1980 and 2011, US gross domestic product increased 128 percent, vehicle miles traveled increased 94 percent, energy consumption increased 26 percent, and the US population grew by 37 percent. During the same time period, total emissions of the six principal air pollutants dropped by 63 percent.

  Why does pollution peak and then fall? More than two decades ago, economics scholars noted that when incomes begin to rise, pollution gets worse—until it doesn’t. Income and pollution data from around the world have revealed that there are various per capita income thresholds at which air and water pollutants begin to decline. This discovery has been dubbed the Environmental Kuznets Curve (EKC). The Environmental Kuznets Curve hypothesis posits that environmental conditions initially deteriorate as economic growth takes off, but later improve when citizens with rising incomes demand better quality environmental amenities. There is still considerable debate over the empirical reality of this hypothesis, but a 2011 meta-analysis based on 878 observations from 103 empirical EKC studies (1992 to 2009) reports that its results “indicate the presence of an EKC-type relationship for landscape degradation, water pollution, agricultural wastes, municipal-related wastes, and several air pollution measures.” The best evidence backs the notion that increasing wealth from economic growth correlates with a cleaner natural environment—that is to say, richer becomes cleaner.

  While levels for many pollutants are falling in rich developed countries, it must be acknowledged that globally, pollution from industrial and agricultural production continues to rise. When can we expect this beneficial dynamic to take hold in other countries?

  Recent data suggests that sulfur dioxide emissions even from rapidly industrializing China may have peaked in 2006 and have begun declining. Earlier studies cite evidence for a pollution turning point at which people begin to demand reductions in sulfur dioxide emissions when their per capita annual incomes reach a threshold of around $10,000 (purchasing power parity). The researchers in that study concluded, “One important lesson here is that it is possible to reduce emissions that are by-products of a modern economy, without sacrificing long-term growth.”

  In the face of the overwhelming evidence to the contrary, why do so many Americans still believe that air pollution is getting worse? When crime rates fall, mayors, police chiefs, and district attorneys are eager to spread the news and take the credit. But when pollution levels fall, environmentalists and environmental bureaucrats show a peculiar reluctance to cheer. The difference is that the environmental movement uses scare stories to raise money for their campaigns: no crisis, no money, no movement. In other words, Americans believe that air pollution is getting worse, as cynical as it sounds, because activists make a living peddling fear.

  Doing More with Less

  Jesse Ausubel, head of the Program for the Human Environment at Rockefeller University, and his colleagues point out: “If consumers dematerialize their intensity of use of goods and technicians produce the goods with a lower intensity of impact, people can grow in numbers and affluence without a proportionally greater environmental impact.” In fact, that is happening. Modern economic growth is generally the result of constantly figuring out how to do more with less.

  University of Manitoba natural scientist Vaclav Smil points out that modern technology enables humanity to create ever more value using less and less material. For example, the amount of energy it takes to produce goods has dropped steeply. Today it takes only 20 percent of the energy it took in 1900 to produce a ton of steel. Similarly, it now takes 70 percent less energy to make a ton of aluminum or cement and 80 percent less to synthesize nitrogen fertilizer than it did in 1900. In addition, technologist Ramez Naam shows that the amount of energy used to heat an average house in the United States is down 50 percent since 1978. The amount of energy needed to desalinate a gallon of water has plunged 90 percent since 1970. LED lights use about ten times less energy than incandescents. Humanity has gotten richer over the past couple of centuries not chiefly by doing more of the same old things, but by developing better recipes.

  Excluding construction materials, Smil calculates that in the United States it once t
ook about 10 ounces of materials back in 1920 to produce a dollar’s worth of value, but that is now accomplished using only about 2.5 ounces, yielding a 75 percent decline in material intensity.

  With regard to energy consumption, the American economy between 1970 and 2010 has wrung ever more value out of each kilowatt-hour and gallon of gasoline. A 2013 study by the green lobby group the Alliance to Save Energy reported, “Over the past forty years, the United States made significant gains in energy productivity. U.S. economic output expanded more than three times since 1970 while demand for energy grew only 50%.” The ASE study also cited data from the energy conservation think tank the Rocky Mountain Institute suggesting that “if energy productivity had remained constant since 1970 [when about 68 quadrillion Btu (Q or quad) were consumed], the U.S. would have consumed 207.3 quadrillion Btu in 2007, when it actually only consumed 101.6 quads.” A quad is roughly equivalent to 170 million barrels of oil.

  While the ever more efficient use of energy and materials results in relative dematerialization—less stuff yielding more value—the overall trend has been to extract more and more materials from the earth and the biosphere. “There can be no doubt that relative dematerialization has been the key (and not infrequently the dominant) factor promoting often massive expansion of material consumption,” writes Smil. “Less has thus been an enabling agent of more.” For example, the 11 million cell phones in use in 1990 each bulked about 21 ounces for total overall mass of 7,000 tons. By 2011 cell phones averaged about 4 ounces, but the total weight of all 6 billion had increased a hundredfold to 700,000 tons.

  As increases in efficiency make goods cheaper, people demand more of them. Initially this calculation makes it appear that people are using more resources rather than less, but this is likely wrong. Consider that billions of smartphone users living in poorer countries have skipped over the resource-intensive phase of building out millions of miles of wire phone lines, deploying tens of millions of clunky desktop computers and printers for both the home and the office, cameras and film processing, and so many other capabilities that are now embodied in four-ounce phones.

  Nevertheless, Smil doubts that the current trajectory of dematerialization will speed up enough so that relative declines in material consumption translate into aggregate declines—that is, using absolutely less material while creating more value in goods and services. “The pursuit of endless growth is, obviously, an unsustainable strategy,” he asserts. But what is “endless growth”? People don’t want electricity, grain, housing, automobiles, and so forth. What they want is lighting, tasty food, comfortable lodging, and convenient transportation.

  As a plausible scenario of how demand for materials could rise, Smil calculates that if automobile ownership in currently poor countries rises to just a third of the level in Japan (600 vehicles per 1,000 people), that would double the global fleet to 2.2 billion vehicles. However, the advent of self-driving vehicles could provide a technological end run around such projections of a growing vehicle fleet. Instead of sitting idle for most of every day, as the vast majority of automobiles do now, cars could be rented on demand.

  Researchers at the University of Texas, devising a realistic simulation of vehicle use in cities that took into account issues like congestion and rush-hour usage, found that each shared autonomous vehicle could replace eleven conventional vehicles. Notionally then, it would take only about 800 million vehicles to supply all the transportation services for 9 billion people. That figure is 200 million vehicles fewer than the current world fleet of 1 billion automobiles.

  In the Texas simulations, riders waited an average of 18 seconds for a driverless vehicle to show up, and each vehicle served 31 to 41 travelers per day. Less than half of 1 percent of travelers waited more than five minutes for a vehicle. In addition, shared autonomous vehicles would also cut an individual’s average cost of travel by as much as 75 percent in comparison to conventional driver-owned vehicles. This could actually lead to the contraction of the world’s vehicle fleet as more people forgo the costs and hassles of ownership.

  In addition, a shift to fleets of autonomous vehicles makes the clean electrification of transportation much more feasible, since such automobiles could drive themselves off for recharging and cleaning during periods of low demand. Such vehicles would also be much smaller and packed more tightly on roads, since they can travel safely at higher speeds than human-driven automobiles. Such a switch would imply the construction of far less material-heavy transportation infrastructure. And fewer vehicles means that much of the 20 percent of urban land devoted to parking can be transformed into housing and businesses.

  Smil worries that energy production and consumption technologies are so capital intensive that humanity will be locked into dependence on increasingly scarce and expensive fossil fuels for decades to come. Previous energy supply and consumption transformations have indeed taken decades to play out, but perhaps the energy future will follow a deployment path similar to that of information technologies.

  Two decades ago, most prognosticators did not foresee how the world would skip over building landline telephone infrastructure to cellular phones. In fact, worldwide, there are in 2014 only about 1.1 billion fixed telephone landlines compared to more than 7 billion cellular phone subscriptions. I make no predictions, but increasingly cheap solar panels attached to cheap high efficiency batteries powering miserly lights, appliances, and infotech is not out of the question. Trying to forecast how much energy people living in 2100 will be using and what technologies they will be powering is like assembling a committee composed of luminaries like Thomas Edison, Madame Curie, and Albert Einstein in 1900 to accurately project how much energy we use today and how we use it.

  Some trends do, in fact, indicate that humanity is withdrawing from the natural world.

  In a 2014 analysis, Iddo Wernick, a researcher at Rockefeller University’s Program for the Human Environment, presented data on resource consumption trends that suggests that improving efficiency and changing consumer preferences are outrunning the demands from rising population and affluence to actually reduce in many cases the amounts of material that Americans and the rest of the world use.

  Wernick and his colleagues collected consumption data on a hundred materials that have long been used in the US economy. The commodities were sorted into three categories: those in which both intensity of use (kilograms per dollar of GDP) and absolute consumption (kilograms overall) are falling; those in which intensity of use is falling but absolute consumption is still increasing; and those in which both intensity of use and absolute consumption are increasing.

  Thirty-six of these materials fall into the first category, including chromium, iron ore, pig iron, copper, lead, and asbestos. Fifty-three fell into the second group, among them corn, electricity, nitrogen, beef, nickel, and petroleum. Wernick believes that many of these commodities will soon reach their absolute peak—that is, the point where an economy decreases its consumption of a material resource even as economic growth and increases in wealth continue to multiply. For example, nitrogen fertilizer use has been essentially flat since the 1980s even as crop yields have risen. US population increased 80 million since 1980, yet the country uses no more water than it did then.

  And then there are the eleven commodities for which both intensity of use and absolute amounts are still increasing. These include diamonds, gallium, rhenium, niobium, helium, garnets, and chicken. Wernick pointed out that while the absolute amounts of these eleven commodities are still increasing, the actual tonnage is quite small. Except for chicken, most of the commodities in this group function as technological “vitamins” that enhance the efficiency of many other industrial processes and technologies.

  Why chicken? In part, because Americans are substituting it for beef. Program for the Human Environment director Jesse Ausubel outlined an input productivity hierarchy of meats, analogizing beef to getting 12 miles per gallon, pork 40 mpg, chicken 60 mpg, and tilapia and catfish 80 mpg.

/>   How do the trends look in the rest of the world? Those data are much sparser, but Wernick was able to find reliable information in some cases. Japanese aluminum consumption, like US aluminum consumption, peaked in the 1990s. Per capita petroleum consumption peaked in the United States around 1970 and in Japan and South Korea in the 1990s. China and India are both on the early part of their consumption curves for materials, yet Wernick argues that “while Asian countries are at different stages of development, they show similar patterns of eventual saturation.” Ausubel observed that Japan and Europe are paralleling materials consumption patterns identified in the United States. “I expect that in two or three decades it will be the same story in China and India,” he added.

  Furthermore, research by Jesse Ausubel and his colleagues suggests that humanity has reached peak farmland. Crop productivity is increasing so much that farmers will increasingly leave more and more land for nature. “The 21st century will see release of vast areas of land, hundreds of millions of hectares, more than twice the area of France for nature,” declared Jesse Ausubel in 2012. In addition, requirements for synthesized nitrogen fertilizer may moderate as crop plants bioengineered to be nitrogen-sparing are deployed.

  The development of lab-grown meat could well obviate Smil’s advocacy of a more or less vegetarian diet in order to reduce environmentally damaging material flows. Researchers argue that cultured meat would require up to 99 percent less land, 96 percent less water, and 45 percent less energy, and would produce up to 96 percent less greenhouse gas emissions. As a proof of concept, researchers at New Harvest backed by Google founder Sergey Brin produced a lab-grown hamburger in 2013. The team is now forging onward “building a progressive food system that is sustainable, healthy and humane.”