skolkovo open lecture by dennis meadows

Professor Dennis Meadows“New Business Opportunities

for a Limited World. Next 50 Years”

for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Outline of Speech

Main conclusions from the Club of Rome StudyWhat I will include and excludeThe two foreseeable limits affecting Russian business – energy scarcity and climate changeWhat do “limits” mean?Creating new businesses for a limited world

Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012 2

Exercise on Habits

4Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Our Main Conclusions

A computer model cannot prove there are physical limits to physical growth on a physically finite planet. We showed that population and industrial growth are inherently exponential; and that exponential growth will take global society to any existing limit quickly, where ever that limit is.

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We are following the collapse scenario

From: Growing within Limits, Netherlands Environmental Assessment Agency, October 2009, page 23.

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The Time of Greatest StressMost people assume that the major global difficulties would occur after the end to growth. This is not correct.The globe’s population would experience the most stress prior to the peak, as pressures mount high enough to neutralize the enormous political, demographic, and economic forces that now sustain growth. We are in the early phases of that period now; you will experience more change over the next 20 years than occurred during the past 100 years.

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Issues Included & Excluded

I include two main continuous trends– Global oil production is falling -> energy limits– Global climate is changing -> water and food

limitsI exclude many possible discontinuous trends

– Volcanoes could limit food production– Solar flares could damage the electricity and

electronics sectors– Epidemics could limit transportation

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Global Oil Production is Falling

Global Primary Energy Consumption by Source in 2010A Comparison to Total Non-Hydro Renewable* Energy

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11Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

The Easy Oil is Gone

Oil discoveries peaked in 1960s. Every year since 1984 oil consumption has exceeded oil discovery. In 2009 discoveries were about 5 billion barrels (bb); consumption was about 31 bb.Of the world’s 20 largest oil fields, 18 were discovered 1917 - 1968; 2 in the 1970s; 0 since.

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90

85

80

75

70

65

Million Barrels/Day Year

Global Oil Production

Series 1

19952009

13Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Global Oil Production is Nearing the End of its Plateau

1995 - 1999 + 5.5%2000 - 2004 + 7.9 %2005 - 2009 + 0.4 %

- data from the International Statistical Supplement – 2010 edition, International Energy Agency, p. 18

2010 - 2030 – 50%** Projection from Crude Oil – The Supply

Outlook, Energy Watch Group, Feb 2008, p. 12.

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15Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

“By 2012, surplus oil production capacity could entirely disappear, and as early as 2015, the shortfall in output could reach nearly 10 MBD”

- U S Joint Forces Command, Joint Operating Environment Report, February, 2010

“Peak Oil Production May Already be Here” - Science, p. 1510, Vol 331, March 25, 2011

Awareness is Growing that the Oil Peak Has Passed

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Oil Price Signals the Decline

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18Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Global Climate is Changing

CO2 Concentration

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The Globe is Becoming Warmer

Since the 1970s, each subsequent decade has gotten hotter – and 9 of the 10 hottest years on record occurred since 2000. The head of the state weather service, Alexander Frolov, said that the heatwaveof 2010 was the worst in 1,000 years of recorded Russian history

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Precipitation is Becoming More Extreme

Worldwide, 2010 and 2011 were the wettest years over land in recorded history.In the United States 7 states had their wettest year in history in 2011; several others had their driest year in recorded history. Artic ice fell to its lowest volume in history in 2011. Western El Salvador, received nearly 1.5

meters of rain in 10 days. 22Dennis Meadows for Moscow School of Management SKOLKOVO

Open Lecture 14 April 2012

23Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Climate Change is:

Rising temperature -> lower crop yieldsChanges in precipitation -> lower crop yieldsShifting cultivation zonesGrowing acidity in the oceanGreater instability in windsMigration of ecological zones, pests, diseasesRising sea levelThus, massive changes in human settlements, in migration, in political systems, and in patterns of agricultural and industrial production

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25Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Water Stress.The World Today

Severe water stress

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0

4

8

0,0

0,7

1,4

0,0

0,2

0,4

World OECD

Current Water Withdrawals [1,000 km³/a]

Sub-SaharanAfrica

Agriculture

Domestic

Industry

Source: Millennium Ecosystem Assessment

Global withdrawals 3800 km3 /a

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The Effect of Limits

+

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Capital Cost of Production & Use

0 1Fraction of Resource Remaining

Cap

ital

Req

uire

d fo

r

Prod

ucti

on &

Use

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Capital Investments for US Energy

150 oil refineries4000 offshore platforms160,000 miles of oil pipelines10,400 electricity generating plants410 underground gas storage fields1.4 million miles of gas pipelines160,000 miles of high voltage powerlinesPort facilities to handle 15 million barrels/day of oil

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_

32Dennis Meadows for Moscow School of Management SKOLKOVOOpen Lecture 14 April 2012

Four Factors Determine the Amount of Oil Consumption

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© Dennis Meadows

Four Factors Determine the Amount of CO2 Emissions

CO2 Emissions

Number Units of Energy Fraction of of x Capital x Required per x Energy from People Per Person Capital Unit Fossil Fuels

Demography Technology

Solar EnergyCulturalNorms

Efficiency

© Dennis Meadows (2007)

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Renewable Costs are Declining

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New Business Opportunities

Adapting to energy scarcity– Less transportation, especially air transport– Lower discretionary income for luxuries– New markets for non-fossil energy– Higher demand for energy-efficient methods for

producing food, materials, and goods

Adapting to climate change– Reducing greenhouse gas emissions– Increasing the resilience of food production– Developing water conservation methods

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