Al Gore Agrees with Me

Before listening to Al Gore speak at Columbia's World Leader's Forum on Monday, I scribbled down the following question in my notebook:

"Is the paradigm of short-sighted markets equipped to handle the long-term energy issues related to global warming?"

Long before the post-speech question and answer session, Gore addressed my question, buttressing his points with vivid details about the absurd nature of present-day markets.

Gore's general thesis was this:

(1) Capitalism, which he defined as an incentive-driven open-market economic system, is the best economic structure we have. It fuels innovation, creativity, and technological advancement.

(2) However, capitalism is broken. The aspiring capitalist aspires towards incentives that are fundamentally distorted because they are biased towards short term goals. In other words, the time horizons of are far too short. He offered up a number of examples of this:

• Money managers and CEOs operate in a world of quarterly reports. CEOs of major companies were asked the following question: Would you invest in something that would increase your profits over the next fiscal year, but cause you to fall short of your quarterly earning target? Eighty percent responded no, preferring to achieve quarterly earnings goals instead of making the prudent long-term investment.

• Regulators recently tried to change the way stock markets operate by forcing each offer to buy or sell a stock to remain open for one entire second. Traders went into an uproar, and the reforms were never instituted.

In a world where things are evaluated on the time-scales of milliseconds in the case of stocks, or months in the case of corporations, there is no room for long-term value assessments.

What's the value of putting 90 million tons of carbon into our shared atmosphere each day? If you think about the next few years, carbon assets (oil companies, car companies, aviation, etc...) are incredibly valuable. However, that value ignores the future environmental destruction, political instability, and general economic calamity that unchecked carbon emissions will generally cause.

Gore termed such investments sub-prime carbon assets, drawing an intentional parallel with the now infamous sub-prime mortgages. In the same way that sub-prime mortgages were valuable as long as the housing bubble remained intact, sub-prime carbon assets are valuable as long as the global climate bubble, our tenuous atmosphere, remains intact. Once that bubble fails, releasing 100's of millions of climate refugees, catastrophic storms, devastating droughts, it will seem infantile how we now indiscriminately dump greenhouse gases into an open atmospheric sewer.

Any savvy investor realizes that this is true, but markets are structured in such a way that does nothing to incentivize long-term investments. Market forces, the most powerful vehicle of change in the world, can address the climate crisis, but only if they can look tens of years into the future - a far cry from the second-by-second existence of the modern trader.

Laser Beads

I spend most Fridays at Lamont Doherty Earth Observatory, working in the Argon lab. We heat up small samples of volcanic rocks, ashes, and ocean sediments with a powerful laser to measure the argon gas trapped inside. This process of laser heating fuses the samples into small glass beads.

Here's a picture of one sample, from a deep-sea sediment core, before heating:

The sample is composed of small particles, 10s of microns across. The fragment pictured weighs less than one milligram.

After intense heating by the laser, these things turn into small, beautiful orbs.

Air bubbles are trapped inside.

This one, for some reason, formed a donut hole.

Sustained Economic Growth: Our Favorite Oxymoron

I'll begin by admitting that I know quite little about the topic of oil production. Most of my knowledge comes from a short talk I heard a few weeks ago by Sally Odland.

Odland's talk made me realize something which I think is both obvious, and profound. This realization stems from two basic observations.

The first is that there is a causal relationship between energy consumption and GDP. These two quantities are inexorably linked. Just take a close look at the following graph, which plots U.S. energy usage and GDP:

There's a lot going on here, but I think there are three important observations.

(1) Both energy consumption and real GDP have risen, more or less linearly, over the course of the last 150 years.

(2) The growth in energy consumption has come, almost entirely, from increased use of fossil fuels.

(3) Amidst this growth, there are various dips in economic activity, recessions and the like. If you look closely you'll notice that dips and bumps in the GDP curve are mirrored by dips and bumps in overall energy production.

In other words, fossil fuel consumption and GDP move in tandem. In fact, one could say they are almost the same thing.

Here's the problem:

Growth in oil production, which has largely come from the Middle East over the last 20 years, appears to be plateauing. Now people will argue about how much oil still remains in reserves. But Odland makes the point that OPEC doesn't actually offer any proof for a large number of its claimed reserves, many of which which appeared out of thin air during the 1980's

Regardless of the reserve quantity, everyone agrees that the production and consumption of fossil fuels cannot increase forever. And a simple examination of the above graph shows that we have reached, or are close to reaching, the maximum amount of daily production.

These are the two facts that I have just illustrated:

(1) fossil fuel consumption is GDP

(2) fossil fuel production has, or is close to plateauing.

With these two key ideas in mind, it strikes me as absurd that economists continue to talk about things like sustained economic growth. This concept is simply an oxymoron.

What is sustained growth? It is an exponential increase. It is in fact, the definition of a cancer - something that continues to grow unchecked. In other words, our stated economic goals are a continued growth of consumption and production. We don't have to be a cancerous growth upon the earth's surface, but our current economic philosophy dictates that we be exactly that.

Down in the flood

A moment of chaos...

Imagine this:

It's 17,000 years ago and you are a wooly mammoth grazing in a region which, someday, will be called Eastern Washington. Things are looking up. The climate is getting warmer and the melting ice sheets have uncovered large new tracts of land.

The same melting ice has pooled in a giant lake, one that is now half the size of modern Lake Michigan. This melted ice water is trapped behind an ice dam.

But, on this bright Spring day, the dam begins to leak, and then, suddenly fails, unleashing a wall of water hundreds of meters high.

In the distance you hear a roar, and then, raising your matted head to face the oncoming deluge, you are swept up in the roiling waves, and moments later your consciousness is extinguished...

It happened many times...

Geologists believe floods of this variety occurred around 40 times during the time period from 18.6-15.9 thousand years ago. This evidence comes from multiple high water marks in the Glacial Lake Missoula basin, and stacked layers of sediments from high-energy flooding events on land and in deep-sea sediment cores off the coast of Washington.

The land

Eastern Washington is dominated by features from the Missoula Floods. During late August, I spent two days in Douglas County looking at erosional and depositional features from the flood. Here are some pictures and short descriptions:

This picture shows mega-ripples along the banks of the Columbia River. Ripples form from the agitation of particles in a current-driven or wave-driven fluid. For example, you can witness structures like those depicted in this picture forming in wave-modulated currents along the ocean coast. However, those ripples are typically a few centimeters in height and spaced a few tens of centimeters apart. The sheer dimensions of these mega-ripples indicates a flow strength many orders of magnitude greater than any ocean current.

Dry Falls. During the floods this waterfall would have been greater than any waterfall which exists in the modern world. Water flowed 300 feet above the upper surface of the falls.

A classic formation of the Channeled Scablands. The floods carved deep incisions into the basalt which covers much of Eastern Washington. The majority of these heavily eroded sites is now dry. The shaping of this landscape occurred during a few catastrophic events.

Here is a layer of unconsolidated sediment which was deposited by some major flooding event. The geometry indicates a rapid flow with a lot of entrained sand and silt.