Monday, August 13, 2012

"The Coal Question"

 Today (August 13th) is the 140th anniversary of the death of the British economist William Stanley Jevons (pictured at left, courtesy of Wikimedia Commons).

Jevons' is no longer a household name, though he is famed among economists as one of the originators of the "marginalist revolution" - the application  of the ideas of calculus to economics. Keynes was later to say of Jevons that he was "the first theoretical economist to survey his material with the prying eyes and the fertile, controlled imagination of the natural scientist". Jevons was also the inventor of an early computer called the "Logical Piano", whose name is so intriguing that I wish I could say more about it.

But it was for "The Coal Question", published in 1865, that Jevons became famous. He wrote at a time when coal was by far the primary industrial energy source and feedstock - just as oil is today - and when Britain was by far both the largest producer, and the largest consumer, of coal.  Since the Industrial Revolution of a century before, Britain had known steadily expanding production, population, and prosperity, and had acquired a worldwide empire. Jevons' book brought the unwelcome news that coal, the foundation of all this prosperity, was a finite resource that would not be replenished, and would quickly be exhausted by continued growth.

It's an easy read (the link above will get you a PDF of the whole book) and it is remarkably prescient. For instance, the fundamental idea of the whole book is to estimate what would later be called the exponential reserve index for British coal.  At the time Jevons wrote, he could estimate that British reserves of recoverable coal amounted to about 85 billion tons, and that annual coal consumption in Britain was about 85 million tons. So,  there were 1000 years of coal supplies left, right? Wrong, said Jevons.  For the previous half-century, coal consumption had been growing at an annualized rate of about 3.5%.  And continued growth at that rate had become an embedded social assumption: to slow or stop growth would be both difficult and dangerous.  "Have they", wrote Jevons, referring to certain opponents, "taken time to think what is involved in bringing a great and growing nation to a stand? It is easy to set a boulder rolling on a mountain-side; it is perilous to try to stop it." Therefore, the correct question to ask was not how long present reserves would last at the present rate of consumption, but how long they would last at a rate of consumption that continued to grow annually at 3.5%.  And the answer to that question was a great deal shorter: in fact, a bit less than a century.

It was an astonishing figure to Jevons' readers, and he spent a good deal of the book discussing (and ultimately rejecting) various ways in which the conclusion might be dodged.  Energy efficiency? A good thing of course, but "as a rule, new modes of economy will lead to an increase in consumption" (because they make it worthwhile to implement many formerly unprofitable  industrial processes, and thus accelerate the rate of economic growth - a rebound effect now called the Jevons paradox.) Alternative energy sources: hydro, wind, solar? Jevons analyzes them all, as well as electricity (which as he points out is not correctly an energy source at all, but a mode of transmission  - he has some tart words for his contemporaries who, like the "hydrogen economy" writers of today, confused these notions.)  "Dematerialization" (the same level of economic production with less embodied energy), cash for clunkers, or carbon taxes?  These are analyzed too.  But in the end, Jevons' conclusion remained: "We cannot long continue our present rate of progress."

So, was he right? In terms of British coal production, the answer is a clear yes.  Production peaked around the time of the First World War, at about 300 million tons a year.  In the 1950s annual production was still above 200 million tons, but it has since then dropped precipitously to about 20 million tons today.  The total present reserves are now estimated at about 1 billion tons.  (I found this archived Open University course helpful in learning about British coal production.)  Jevons' estimate of the timescale on which economically recoverable British coal would be effectively exhausted was pretty accurate.

But British (and global) economic growth did not peak in the early twentieth century, because a new primary energy source became available, still more convenient and powerful than coal.  Jevons is aware of "petroleum", but only as an expensive natural curiosity or a coal distillate: "what is Petroleum but Essence of Coal, distilled from it by natural or artificial heat?".  Of course he knows nothing of the huge oilfields under Britain's North Sea, and throughout the world, which helped power the growth of global fossil fuel energy use roughly at Jevon's 3.5% annually until the 1970s. But, had he been aware of them, would they have changed his conclusion?  The "peak oil" literature is full of calculations of exponential reserve indices for oil, on the lines that Jevons laid out, and the conclusions are very similar.  There is one difference though.  In 1865, while the geology of Britain had indeed been well studied, there were vast areas of the world that had hardly been explored for fossil fuels.  That is not the case now. It does not seem at all likely that some completely new kind of fossil fuel will turn up to replace oil, as oil replaced coal. (Even if it did, the question of its global warming effect - something else that Jevons was unaware of - would still have to be faced.)

Another surprise for the modern reader is the entirely British focus of the book. At the time Jevons writes, industrialization is a primarily British phenomenon, which is why Britain owns the sustainability problem: "while other countries mostly subsist upon the annual and ceaseless income of the harvest, we are drawing more and more upon a capital which yields no annual interest, but, once turned to light and heat and force, is gone forever into space." Thus the limits on British coal are its central theme, and other global reserves - especially those of North America - are treated as practically inexhaustible.    Jevons does briefly allude to the prospect of a decline in global coal production when citing the work of another author (Babbage), but he rules it out of consideration for his book, focused as it is on British comparative advantage: "passing over the period which this work considers, when coal will be scarce here and plentiful elsewhere, he (Babbage) has thrown his thoughts forward to the time when coal will be scarce everywhere."

Jevons leaves his readers with a question.  They are, he believes, living at a uniquely privileged historical moment. Never again will a people enjoy such power, such wealth, such a breakneck pace of coal-fired invention.  And Jevons, like a good Victorian, is an enthusiast for invention - he doesn't appear to worry about the blighting effects of the "dark satanic mills", only that they may run out of coal to continue their operations, and his only description for a post-industrial future is "mediocrity".  But he asks: What will this privileged generation do with its privileges?  Will it invest for the future, abolishing child labor, building a decent education system, paying down debt, and "stimulating the progress of mankind"?  Or will it squander them?  "So long as future generations seemed likely for an indefinite period to be more numerous and comparatively richer than ourselves, there was some excuse for trusting to time for the amelioration of our people. But the moment we begin to see a limit to the increase of our wealth and numbers, we must feel a new responsibility. We must begin to allow that we can do to-day what we cannot so well do to-morrow."

My generation is surely the privileged one. What are we investing in?

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