Simon Michaux on Why the Green transition and the Circular Economy Cannot Work As Advertised

Discussion

Marco Fioretti:

(who sumamrizes three videos by Simon Michaux)

Michaux argues that the BRICS economies and the Ukraine war are a change from a [petrodollar] Empire to a Commodities backed Empire. In that context, he says, the Russians are not interested in finishing the war anytime soon, because what it's really about is not Ukraine: it's Russia's attempt to do what the United States did in 1973, trying to force Europe into a position where it allows survival of the ruble, which already is a partially commodity-backed asset.

Of course, he says, the West cannot let that transition happen, since the affirmation of a commodity-backed currency would "set off a financial nuclear explosion" of fiat currencies like the dollar and the Euro, and all the associated debt.

For the world at large, a bigger (underlying) problem than BRICS and wars is the fact that, while there still are enormous amounts of fossil fuels, all the cheap and easy ones to get are gone, especially oil: fracking, biofuels, gasoline made with alternative processes all bring massive inefficiencies to an industry that spent decades to become super efficient.

This inefficiency would be the reason why a barrel of oil cost 80 USD, but a gallon of gas still costs 3.5 USD at the pump: to get that gallon of usable oil, we much more money, infrastructure, upstream investments and refining. It's like, says Michaux, trying to drink beer with a spoon: the first half of the mug is no problem, but the bottom becomes harder and harder to drink as you go.

The global financial crisis of 2008, he says, was caused by a chain reaction with its genesis in these growing problems of the oil industry. The problem was solved, or better: postponed, by printing money, as with all previous crises of the same kind since 1970, all tied to increasingly serious geopolitics issues. For example, says Michaux, countries like Qatar, Norway and the US, could provide all the gas Europe and China need only if they canceled all their existing contracts. Only Russia produces so much more gas than it consumes to also fill those needs.

In the background, after decades of the same play, global debt is spiraling out of control (in 2008 American debt was around 7 trillion USD, now it's 34) to levels that printing money won't fix anymore, and will require a reset.

The root cause of all this is that when we're talking about money we're actually talking about physical systems: no matter how many financial or fiscal policy tricks you invent, money is linked in an unbreakable trinity with energy and raw materials. Technology (powered by money) consumes energy to turn those raw materials into some outcome that's useful to whoever provided the money. But money and economics, defined as "a decision-making system of who owns what and who does what", are just the top layer which can never ignore its physical constraints.

* Green transition and circular economy cannot work as advertised

Unfortunately, instead of taking those physical constraints into account, we tend to hope for future technology breakthroughs that will somehow deliver more commodity resources. But dogmas like "The free market will fix it" or "human Innovation is amazingly powerful" are just denials of reality, and the entire Green Transition can only be a stepping stone to something else.

Net Zero by 2050 means having, just 26 years from now, all energy from renewable sources, all transport of goods and people powered by assorted combinations of electricity, hydrogen fuel cells, synthetic fuels, biofuels or ammonia, and heating by electrically powered heat pumps. Is that physically feasible?

Michaux's answer, backed in the videos with plenty of research, data and charts, is NO, no way, because we simply don't have enough time and money, and even if we did, we'd meet huge bottlenecks:

• to make the current economy work with renewable but intermittent sources like wind or solar, there must be enough energy storage to power the whole system for at least four weeks, or months in many places. That (see next paragraphs) turns out to be the largest task

• we don't have the technology to save so much power for such a long time

• as large as they are, Chinese refineries and industries are not large enough to deliver all the physical stuff that is needed

• we don't even have to care that expanding mining would destroy ecosystems and have its own extra effect on climate change, because mineral supplies (from both land and sea floors) are "nowhere near enough, not even close"

• recycling (and by extension the circular economy) is not the answer, and not even because the quality of the material flows that are coming out of recycling is just not good enough. To make the Green Transition by 2050, we'd need 30 times all the copper that has been consumed in the last 30 years. Same for most other metals: the quantities mined until today are a tiny fraction of what would be needed

• to transition the whole world economy as it is today

Circular economy is just as flawed and imbalanced as the Green Transition, says Michaux: more specifically, he argues that European conceived the circular economy because they were concerned only with the dependence of European industries upon raw materials that came from China, not with the intrinsic scarcity of the same materials. In other words, the EU conceived the circular economy just as a market-based answer to a market phenomenon, not to hard, physical limits.

Causes of the bottlenecks and limits of renewables

Wind and solar are highly variable sources, and even very short glitches may destroy the electronic devices we are totally dependent upon. Our world needs stationary, very stable power, but today there are still no large renewable network that can provide it by running completely in a self-sufficient matter. For example, in Europe, wind turbines in Denmark are balanced by power from Germany and Sweden gas turbines, because if you have unsufficient wind in Denmark, you will almost always have the same situation even in neighboring countries. Ditto for solar power.

In order to balance these large scale, long term variations you would need months of storage, but hydrogen and battery banks simply can't do that at scale, and pumped hydro isn't viable either. Michaux quotes studies that found 530K sites worldwide that could become pumped hydro reservoirs, but obviously concluded that first ,it would be politically impossible to rezone enough of them, and second that should that happen, it would "lock" half of the fresh water that's absolutely needed by humans and agriculture.

Michaux goes on to demonstrate that all this doesn't even matter, because providing uninterrupted power year round would require "four times more raw materials than there are thought to be on Earth period", and even if they existed, mining a meaningful quantity of them by 2050 would be impossible anyway. He also observes that the more we moved to nuclear power, the smaller this problem would be, because that move would substantially reduce the total amount of metals needed. For that to happen, however, we should find much faster ways to build nuclear plants, and use lots of fossil fuels to do it.

The biggest problem is inside us

On the positive side, Michaux points out that markets, growth and many related concepts are not laws of nature, but just a rule set that this current batch of society has put together: we can burn them to the ground and make something else, so the future doesn't have to be one of war, doom and gloom.

Michaux says it's crucial to accept that renewable energy sources just aren't strong enough to replace fossil fuels in their current form, because they aren't as effective, and we'd need many more of them that we can physically make anyway. Even more important, we have to realize and accept that so far, every time a new source of energy came along, we just stacked it on top of the other ones, but now, this is the first time through the ascent of man is that we'll be removing lesser dense forms of energies for different forms of energy, whether we like it or not.

Usually (and often with good reasons) we think in terms of patches instead of completely new solutions, as in "just replace internal combustion engine vehicles with electric ones and Life Will Go On as before". But the only way to cope with that fact is to radically reorganize all current industries, and Michaux fears that until we start rationing this necessity is not going to fully hit home on the general population, at least in "First World" countries" where everybody is still living in the 1950s in their head: air conditioning running 24/7, cheap food in supermarket, gadgets from Amazon, a sea of energy taken for granted.

(https://mfioretti.substack.com/p/no-petroleum-and-minerals-no-problem)