Energy and Human Ambitions on a Finite Planet, 2021a

2 Economic Growth Limits 24
2.3 Physically Forced Economic Limits
Let us now consider a thought experiment. We will use Figure 2.4 as
a guide as we go along. Colored numbers in the following text point
to similarly-colored labels in the figure. We start by positing a constant
growth rate for the entire economy (point 1; red curve in Figure 2.4)
following the familiar 2.3% annual growth rate, picked for its convenient
factor of 10 each century. Meanwhile, the scale of physical resources
(energy, materials) in the economy also climbs at the same rate, starting
at point 2. The vertical gap between the curves at the left-h<strong>and</strong> edge
conveys that the economy is not 100% physical in the beginning: the
total economy is larger than the physical piece. 18
Verify this for yourself in Figure 2.4!
18: ...thussome room for services.
1000x
7
100
relative scale of economy
100x
10x
1.0x
0.1x
6
1
3
2
0.01x
0
−200 −100 0 100 200 300
years from transition time
5
growing gap
Fast-forward to a time when physical resources have stopped growing,
starting at point 3. Chapter 1—using energy <strong>and</strong> thermodynamics as the
basis—made the case that we cannot expect physical growth to continue
indefinitely, ending on a few-century timescale at the longest. 19 In this
scenario, the scale of energy in our society flat-lines at a steady scale
(point 4).
If we dem<strong>and</strong> continued economic growth in the context of fixed energy,
decoupling becomes increasingly necessary, shown as a growing gap
in Figure 2.4. In other words, if the gross domestic product (GDP; as
an indicator of economic activity) is to continue rising 20 (point 5), then
overall intensity (energy per dollar) must continually decrease. For this
to happen, less-energetic activities must assume increasing importance
in the economy. So far, economists are on board: this is precisely what
inspires an affinity for decoupling—a way forward in the face of physical
limits. One might expect more abstract services, virtual experiences,
art dealing, enhanced presentation: all requiring little or no additional
4
8
80
60
40
20
percentage of economy that's non-physical
Figure 2.4: Model evolution of the economy
after physical resources saturate. The blue
curve is the scale of the physical economy
(leveling out, or saturating). The solid red
curve is the total economic scale, which
we force to adhere to a constant growth
rate (10× per century, or 2.3% annual rate).
The magenta curve is the percentage of the
economy in non-physical sectors, <strong>and</strong> the
red dashed curve is a more realistic reaction
of the economy to a saturating physical
sector. Colored arrows point to the scale
that each curve should use—logarithmic on
the left for economic scales <strong>and</strong> linear on the
right for the percentage curve. This model is
constructed simply to illustrate the overall
behavior: time scales <strong>and</strong> other quantitative
details should not be taken literally.
19: It is assumed here (optimistically) that
we have managed to find a renewable alternative
that can satisfy a constant dem<strong>and</strong>
effectively indefinitely. If not, the story is
even worse <strong>and</strong> we are forced to ramp down
the scale of the physical sector, which would
force the blue curve in Figure 2.4 to descend
in later years.
20: . . . <strong>and</strong> not artificially via inflation, but
in terms of real value
© 2021 T. W. Murphy, Jr.; Creative Commons Attribution-NonCommercial 4.0 International Lic.;
Freely available at: https://escholarship.org/uc/energy_ambitions.