Wednesday, November 8, 2017

The Seneca Paradox: if mineral depletion is a problem, how is it that we don't see its effects?



With oil prices remaining low and with production apparently more than sufficient to satisfy the demand, most people have jumped to the conclusion that all mineral resources are abundant and not a concern for the foreseeable future. Yet, the problem remains: mineral resources are not infinite. The solution to the conondrum may be in the "Seneca Effect." It is an insidious kind of effect that hides future risks behind an apparently safe and robust growth. 


The story of the Club of Rome starts with the issue of natural resources. In the 1960s, it had become clear to the Club's founder, Aurelio Peccei, that the world's resources were finite and to ask the question of how that was to affect humankind. It was the origin of the first and the best-known report to the Club of Rome, "The Limits to Growth," published in 1972.


The 1972 report already provided answers to the question of depletion. It turned out that resource scarcity would limit the growth of the world's economy and, eventually, lead it to decline. This conclusion was often misunderstood as meaning that humankind would soon "run out" of oil, gas, or some other resource; but that was never stated in the report and it never was the point.


In 2014, the Club of Rome produced another report titled "Extracted" in English and "Der Geplunderte Planete" in German that reiterated the earlier conclusions. The author of the report, Ugo Bardi, a researcher at the University of Florence, Italy, concluded that the problem of mineral depletion was real and that it was progressively getting worse.

Yet, these conclusions are far from being generally accepted. Depletion, it seems, is still considered a non-problem, especially in the extractive industry. "If depletion is really a problem," industry representatives often say, "how come that we are still producing mineral commodities at the highest rates ever seen in history? Besides, we observe that our production costs are not significantly increased when we use lower grade ores."

So, is mineral depletion an existential threat to human civilization? Or is it just a marginal problem that can be fixed by some technological improvements? This is truly a fundamental question for the future of humankind. An answer is provided by the latest report to the Club of Rome that was published in 2017, "The Seneca Effect."

Taking inspiration from something that the ancient Roman philosopher Seneca said, the author of the study, Ugo Bardi, examines the trajectory of an economic system subjected to the dual strain of mineral depletion and pollution. The result is the "Seneca Curve", a graphical depiction of Seneca's statement that "Increases are of sluggish growth, but the way to ruin is rapid." It is something well known in everyday life, but the study could confirm it using mathematical models. Here is the curve as calculated by simulations.


The "Seneca Effect" or the "Seneca Paradox" explains why mineral depletion is a problem but, at present, we are not feeling its effects. We haven't yet reached the summit of the curve and we are not seeing the cliff awaiting us. So far, the extractive industry has been able to mask the effects of depletion by means of economies of scale. That has been possible as long as production keeps increasing, which has been the case up to now for most mineral commodities. The problem is that this strategy cannot last forever: mineral resources are not infinite. 

A good example of this effect can be found in the oil industry. At present, all fears of "running out" of oil seem to have been dispelled by the low market prices and by the still increasing production. Both factors give the impression of an abundance of cheap oil that could last for a long time - if not forever. But this is exactly the result of the shape of the Seneca Curve. As long as we don't reach the start of the cliff, we don't see it. 

But ruin, as Seneca said, may be rapid. Consider the current climate situation and the urgent need of reducing carbon emissions. Consider the rapid switch to electric vehicles, often seen as a way to fighting climate change. Consider that in the US more than 60% of the market for crude oil product is for private vehicles. Then, you see that if people were to start replacing their old cars and trucks with electric ones (something that they should do by all means for the sake of our survival), the oil industry would lose a big bite of its market. 

For the oil industry, losing a significant fraction of their market is not just a question of downsizing;  it is their death knell. It is here that the "Seneca Effect" starts playing its role. The economies of scale which had allowed the industry to overcome the effects of depletion become diseconomies of scale, increasing costs and reducing profits. The industry becomes unable to attract new investments; it starts shrinking and eventually disappears: it is what Seneca said, "ruin is rapid". 

The decline of the oil industry has already been ongoing in several regions of the world and the loss of efficiency due to scaling down is well documented (see, e.g. Hall et al. 2014). In recent times, the US industry has been able to start a new cycle of oil extraction with "Shale oil" (more properly, "tight oil") but that simply means to postpone the unavoidable and the Seneca Cliff of shale oil may be just around the corner. 

Humankind is facing a difficult situation right now, with the twin threats of depletion and pollution working together to cause a decline that could be very rapid, as it is has been often the case for past civilization. The "Seneca Effect" makes the situation all the more insidious because at present we have only a few hints of the future decline but when we will see the cliff in front of us it may be too late to avoid it in full. 

Yet, today we have powerful tools in the form of the science of complex systems. If we are willing to use them, these tools allow us to understand the future and to be prepared for it. If we understand the threats we face, they may be seen as opportunities. So, the impending ruin of the oil industry is not a threat but an opportunity to avoid, or at least mitigate, a future climate disaster. 

Once we understand this point, the strategy becomes clear: do not fight the unavoidable; do not try to keep the oil industry alive at all costs; that's exactly what makes the Seneca Cliff steeper. Instead, favor the unavoidable change. it means helping the oil industry to disappear by favoring its replacement by something less polluting and more sustainable. Similar strategies are possible for many polluting industries still common today.

As always, the future is nothing but the choices we make and there is still time to make good choices. The Seneca cliff of the human civilization will happen only if we choose to make it happen. 










29 comments:

  1. Those people in the extractive industries -and the economists - are a little like Napoleon.

    When he lost his huge army in Russia, he merely said 'I've lost an army. No matter. I'll get another one!'

    And he did get more armies, until he left France exhausted and drained of its best young men.

    Here's a thought: what regions could still produce minerals using 18th-century technology, after the collapse of our high tech civilisation?

    Any at all, or have we gone too far and too deep?

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  2. personally i believe we need to hit that Seneca cliff to terminate industrial civilization asap, which is what everyone is working towards anyway, even if they don't realize it. artificially delaying collapse will only make things worse, as overshoot ramps up and the world is degraded ever further. i don't think there is a way of avoiding paying for what we have done due to the scale of it all. its salutary to remember that mankind has done absolutely nothing about global warming or overpopulation. so why would anyone think humans deserve salvation. this is all academic of course, because humans wont do anything to prevent their fate. never have, never will.

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  3. Well, maybe extraction industries are capable of keeping the costs down by improving processes or increasing scales of the projects, but users are also capable of reducing their need. To take again the example of the petrol industry, cars mileage per gallon has increased so much that driven miles increase much more than gasoline production. So we just don't see that production doesn't increase so much.
    Etienne

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    1. >To take again the example of the petrol industry, cars mileage per gallon has increased so much that driven miles increase much more than gasoline production

      Jevon's Paradox,

      https://en.wikipedia.org/wiki/Jevons_paradox

      it's why increased efficiencies are a furphy. We are 100s of times more efficient than a hundred years ago and yet the problem is worse, as we become more efficient, we use more. It's also why the cheap plentiful energy meme would be so dangerous if ever realised, resource use would sky rocket.

      http://kevinanderson.info/blog/dont-muddle-energy-efficiency-with-reducing-emissions/

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    2. This is more complex than Jevons's paradox. I used to say for example that there was no price increase on internal doors in buildings between 2000 and 2010, but a reduction of wheight. If you compare doors in buildings built in 2000 and 2010, the quality is much lower. This is also an efficiency gain, but more doors won't be installed because they are of lower quality, it's rather the opposite with more open space offices being used. So we have a case where industry was able to hide a cost increase without having significant change in global output.
      The same way, I don't believe that more gold is used because the industry is able to hide a cost increase with wider trucks in wider mines.

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  4. I always have wondered what would happen to the U.S. automobile industry if we quit bailing them out. What would transportation look like it a thousand little start up got a piece of the pie. I'm still hoping for an electric carriage, light weight, top speed 35mph, and cheap! I'll not hold my breath.
    I have a feeling that even after we fall off the cliff, people will still not see it. Blame the environmentalist for ruining the economy, or globalization, or Russia, or we might all just be a pile of radioactive dust, or my favorite, it is those damn optimist!

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    1. have you not heard of the ebike revolution? you can slap a bafang 1000wat motor on any bike for £500, for 30mph, and as high a range as you want to carry lipos for. stick a little trailer on the back to carry loads. nobody needs cars any more.

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    2. https://en.wikipedia.org/wiki/Renault_Twizy
      starting at €6,990 up to €8,490

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  5. I'm happy to hear that peak oil is still an issue. Nowdays, people only talk about peak demand, but both are linked because reduced demand will make many production sites non economical and production will go down. I wonder what will be the first signs of the Seneca cliff.
    I also wonder what industry might create to keep the economical machine going. From what I heard, self driving electrical vehicle would require much less maintenance and would have much longer lifespan, so that would greatly reduce the costs, so will we spend even more money in electronical devices ? We just created the 1000 $ mobile phone, and it's a price almost without income tax for the producer. Maybe it's a sign of the Seneca Cliff, always more value in always less material. It's called a leisure civilisation, I hope that I can retire before most jobs are IT related, call centres, packaging and delivery centres.
    Gandhi did a great job to get India independant of Great Britain, maybe we should continue his work to become independant of international companies. I like very much his concept that he needs to work with his hands (farming, producing his clothes, cleaning the toilets...) in order not to have an overinflated self esteem, slugs will eat his salads even if he is the Mahatma, so it kept him with both feet on earth and reduced his dependency of the British industry. 30th of January next year is the 70 anniversary of his death. If you want to know more about him, a great movie was done in 1982, just watch it, it's worth the time it takes.
    Etienne

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  6. This paper quantifies, on a global level, the relationship between ore grade and energy intensity. With the case of copper, the study has shown that the average copper ore grade is decreasing over time, while the energy consumption and the total material production in the mine increases. Analyzing only copper mines, the average ore grade has decreased approximately by 25% in just ten years. In that same period, the total energy consumption has increased at a higher rate than production (46% energy increase over 30% production increase).
    from:
    Decreasing Ore Grades in Global Metallic Mining: A Theoretical Issue or a Global Reality?
    Guiomar Calvo 1,*, Gavin Mudd 2, Alicia Valero 1 and Antonio Valero 1

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    1. Yes,there are some papers that indicate an increase in the specific energy needed for producing copper and other metals. But if you speak with industry people they'll normally deny that. I think truth stands somewhere in the middle. There is an increase, but in large part it is countered by economies of scale. As usual, things are never simple and clear-cut

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    2. In a hypothetical mine of factory where inputs don't change over time, we would still see a slow steady gain in outputs even without increases in scale. We simply get better at our work as time goes on, in thousands of little ways. This could dampen or mask changes in the cost or availability of inputs such as energy to some extent.

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    3. economies of scale
      means that the losses are so well distributed that you and I pay for it, although the barrel is cheap, the food and gas is still expensive

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  7. With ERoEI of petroleum decreasing, how will we mine these natural resources?
    Solar and wind energy capturing devices couldn't provide the high heat necessary for processing many of these metals.

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    1. By the time we would be struggling to melt metals with wind or solar, I suspect the demand for those metals will have long since melted!

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    2. As others have pointed out, the planet has nearly the same quantity of minerals in 2018 as it had before the start of the Industrial Revolution. The difference is that an increasing percentage of the readily available forms have been transformed into things like copper wire and dispersed all over the planet. Thus the question of raw material depletion and eventual shortage is really an energy cost equation. At a certain energy cost every inch of copper wire (for example) can be recovered, transported, and re-manufactured into copper foil, solar panel components, or whatever we desire. The laws of thermodynamics don't allow recovery of raw materials that have undergone a phase change like gasoline burned and dispersed as C02, but they do allow mining of raw materials and scrap materials at EROI's that are far outside the range of feasibility that prevailed when the end use was something as inefficient as burning for fuel. And ultimately raw materials can probably be built from individual atoms using nanotechnology.

      We haven't even begun to tap the energy potential of nuclear power. Commercial nuclear power is still based upon designs created 50 years for nuclear submarines and perpetuated by monopolies protecting their revenue streams. Follow this description of an evolved molten salt reactor design to learn what is possible. http://www.transatomicpower.com/the-science/

      The cost for a new MSR reactor is reasonably estimated by Transatomic at $2 billon due to its simplicity and safety, rather than the $11 billion + that a new LWR costs. And it could be powered by thorium which is in almost unlimited supply.

      I'd be the last to suggest that this technology is the answer to all the problems of late stage industrial civilization, but lack of heat from solar and wind energy is not likely to be the cause of societal collapse.

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    3. Solar energy can be concentrated, most easily by converting it into electricity. Electric furnaces are commonplace. Solar radiation can be directly focussed. Beacause the temperature of the radiation is not much different from when it left the surface of the sun, a big enough mirror can vaporise any metal instantly. Solar actually has other more practical problems.

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    4. Phil, I think the limitation with solar is its intermitency, not the amount of energy available.

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    5. Yvan
      Yes, that is one of the practical problems I alluded to. And I agree that the economics and business plans are likely change radically over time. But for what its worth I imagiine there will be demand well into the future for forging and casting and blacksmithing. Think of all those high-rise offices and their metal frames as a future metal resource.

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    6. Phil, yes, I missed your original comment!

      Horizonstar, it seems demand destruction will continue to affect things. EROI drops and the diffusion of wealth follows. Once we return to our historical norm of a few rich and many poor focused on food production we may not care much about large scale energy or mineral extraction, aside from fertilizer maybe.

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  8. The situation for the fossil fuel industry with be even worse than what you describe if all private transportation would go electric. It would almost completely remove the demand for gasoline. Almost half of every barrel of crude oil ends up as gasoline (depending on the API gravity). That means that the industry would not only lose half the value of crude oil, but they would also need to spend resources on disposing of the gasoline. Alternatively, they could recombine lighter distillates into diesel, but at the scale we are talking here it would probably be prohibitively expensive.

    What this means in practice is that as long as we are extracting crude oil (and we don't institute harsh penalties/taxes) there will be a market for cars running on gasoline.

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    1. I don't agree with the conclusion. Petrol products allow activities with much higher added value than transportation. Just think at the clothing industry, soles for shoes, many chemicals, lubrification oil... The end of the combustion engine will kill all the non conventional petrol extraction, but not the cheap conventional one.

      I guess that Jevon's paradox is only valid with constant prices because it assumes that higher efficiency lowers the relative cost of using a resource. So it might not be valid in our actual situation where increasing efficiency allows cost to stay constant. Maybe this is one of the first signs of the coming cliff.
      Etienne

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  9. To repeat my query: let us suppose that modern means of extraction and processing fail, and we are reduced to an 18th century level of technology - what quantity would be extractable, if any? It is something that has to be faced.....

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    1. With minor exceptions, atoms are neither created nor destroyed. This means that the world has today as much gold, copper, lithium, phosphorus, ... as it has always had. The problem is how we obtain these things.

      Our strategy has been to mine the richest ores first, then the next richest, and so on in a Red Queen's Race we cannot win. There is just one alternative: mine these resources where they are most dilute: in the ocean. And if we can make this work we will be able to mine forever.

      My crazy idea is to create genetically engineered algae that sequester specific minerals. All powered by another dilute resource, sunlight. Then extract the minerals and turn the algae into food. If we can do this, the food alone will fund the mine, and the minerals are free.

      Work with Nature, not against her.

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    2. If we were reduced to an 18th century level of technology the world's cities would be empty of people from mass starvation. Empty cities would provide a bounty of easily accessible metals for anyone who cared to cart them away.

      We wouldn't need to mine virgin ores for centuries or even millennia because we have spent enormous amounts of energy concentrating vast amounts of ore into finished products, which would now be available for salvage.

      Of course, once those salvaged metals are dispersed or rusted away, there would be no way to repeat the process that concentrated them in the first place.

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    3. Maybe civilization was a virus in the human mind to scatter those metals, Gaia needed them scattered

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  10. Good evening.
    Back to oil: http://www.businessinsider.com/americas-path-to-energy-independence-in-charts-2015-9?IR=T
    So what?

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    1. Fracked wells are notorious for their rapid depletion rates.

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Who

Ugo Bardi is a member of the Club of Rome and the author of "Extracted: how the quest for mineral resources is plundering the Planet" (Chelsea Green 2014). His most recent book is "The Seneca Effect" to be published by Springer in mid 2017