Last week’s heatwave in England and global warming

On Tuesday last – 19th July – this was the global temperature across Earth:

In the UK, there were serious wildfires, homes burnt down, railway-tracks buckled and runway tarmac melted. 

Is this an omen of things to come? In this piece, I would like to outline my thoughts on the reasons related to the lack of a straightforward solution to this challenging problem.

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Human nature

In Thinking Fast and Slow, the Nobel-prize psychologist Daniel Kahneman explained the reason human beings make irrational decisions. In short, the brain has two separate systems for thinking: a strong, fast, emotional, and relatively ‘stupid’ one; and then, a weaker, slower, rational, and much smarter one. Thinking ‘with your gut’ relies on the first system, while pondering something cautiously – and arriving at a rational choice – is the second system. In the realm of behavioural economics, the term “hyperbolic discounting” is used to refer to the partiality of humans when it comes to evaluating the worth of future objects. In a cost-benefit analysis in prioritising decisions, we have a tendency to prioritise the more proximate rewards – which are much safer – and whose effects are more immediately felt. In contrast, long-term rewards are much more remote are harder to evaluate and weigh; and their risks and analysis is more abstract. The net effect of hyperbolic discounting is the large tendency to disregard future events – which may entail sacrifices in the present. Similar observations were made in the celebrated Stanford marshmallow experiments.

Furthermore, the problem is compounded by a phenomenon referred to as “the tragedy of the commons”. In Garrett Hardin’s thought-experiment, one should imagine a lush verdant pasture of grass that is not owned by the state or a private individual. Farmers adjoining this meadow would bring their cattle to graze for free. However, the process of grazing would slowly spoil and damage the pasture. Nevertheless, every farmer would know that an over-grazed pasture would culminate in all the grass eventually dying, and then, the pasture will be of no benefit to anyone. Even if a farmer withholds his cattle from the pasture to let the grass regrow; another farmer will just as easily take his place. The tragedy of the commons refers to the incentive structure that leads to the inevitable destruction of the pasture, because nobody takes responsibility for maintaining it – “it’s someone else’s problem”. This can account for the overexploitation of the seas by fisherman. (The solution would favour capitalism’s inherent system of private property rights; with profit and individualism as incentives to protect investments which foster the resultant common good.)

Taking into account the above models, for many in the West, the consequences of climate change – serious as they may be – are too remote to supersede our more pressing quotidian anxieties and exigencies. Moreover, the structure and institutions in society do not incentivise any form of sustainable management of the commons-at-large.

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Fossil fuels

The world is betting on higher-and-higher CO2 concentration with no end in sight. Every single year, global daily oil consumption increases. In 2020, the “global demand reached a record 100 million barrels a day, driven in part by the needs of rapidly industrialising emerging markets”. According to the FT:

The world runs on oil. The dark, often viscous liquid is the single biggest contributor to the world’s energy mix, at 34 per cent of consumption, followed by coal at 27 per cent and natural gas at 24 per cent. But the fossil fuel has also quietly seeped into other aspects of our lives: from paint, washing detergents and nail polish to plastic packaging, medical equipment, mattress foams, clothing and coatings for television screens. (FT.com)

World’s oil consumption levels. Graph: FT.com.

Political leaders in the West – to whom climate change is an exigent and glaring electoral issue – are now franticly drilling for more oil and gas and planning to burn more coal. According to the FT, and as a result of the Ukraine war;

Brussels has given the green light for the EU to burn more coal over the next decade as it tries to end the use of Russian gas and oil. Coal is the most carbon-intensive fuel but the European Commission said the EU would use 5 per cent more than previously expected over the next five to 10 years as the bloc tries to replace Russian energy imports. The EU’s insistence that it must end the use of Russian oil and gas has been one of the biggest consequences for the bloc from Moscow’s war in Ukraine. Brussels wants to eliminate ties to Russian energy by 2027, both to deprive President Vladimir Putin of revenues and to give itself more freedom of manoeuvre to act against Moscow. But the likely increased use of coal shows the short-term consequences for the EU’s green agenda, although the commission insisted it would still hit its carbon reduction goals. (FT.com)

The point here is that even the West – with all its shared political resolve and high-tech capability – cannot successfully wean itself off fossil fuels. If so, what hope is there for the rest of the world? As an example, former President of Ireland, and ex-UN climate envoy, Mary Robinson recently entreated the world to let “Africa exploit its natural gas reserves” (The Guardian). The continent’s energy demands are so great that – like us – they need to rely on fossil fuels.

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Overpopulation

Another dimension to the problem is the overpopulation of the planet with its concomitant negative externalities. Industrial agriculture contributes enormously to the greenhouse effect. It seems methane contributes more to warming than carbon. Per capita, the United States is by far the most polluting large nation in the world. The graph below is shocking. The world cannot live like the United States. By comparison, the Chinese are fairly abstemious. Most of the developed nations have a much larger per capita pollutant debt extending as far back as the Industrial Revolution. It’s only in recent times, for example, that we have made an effort to re-invigorate our former wrecked forests in England (as compared to the Amazon rainforest’s ongoing deforestation). Moreover, when it comes to China, half of their produce supplies the West with our wants and needs. If anything, China is the world’s offshored pollutant factory.

Changes in CO2 emissions per capita. Source: economicshelp.org.

Climate change must be a logical consequence of the recent exponential population growth. Electric cars and paper straws simply won’t have a measured effect. I don’t think there is a solution that one could propose to “cap” the numbers – at least humane or decent. Indeed, it seems we have still not peaked in the population projection incline. Traditionally, birth rates have plummeted through the broad education of women and girls and from wide access to family planning; so that might be an avenue to support in areas with high fertility rates. However, unless GDP increases inline with the broader human population, then poverty will also increase. As we know, in our society people can expect to have a well-paid job, a few holidays a year, a car, a flat and so on. But, the population increase may put a strain on living standards we have become accustomed to as well as intensifying global warming.

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Has the time has come to ban bitcoin?

Bitcoin is the original cryptocurrency. Like any currency, it’s value stems from its nominal scarcity and broad utility. Cryptocurrencies seek to replace the scarcity of traditional currencies, such as the USD. They require absurd levels of computational power and electricity which – I would submit – no intelligent and rational person would configure into any system ab initio. The amount of calculation required to create new ‘coins’ exacts an obscene amount of power. Or, maintaining a copy of a ledger should not – in any normal everyday life – require that much power. The entire process is computationally intensive, and thus power intensive. See graph below for comparison. Bitcoin consumes more energy than entire nations.

Indeed, crypto’s scarcity derives from the scarcity imposed by its protocols. A person using crypto – as a form of money – is replacing one means of exchange of value with another that exhausts orders of magnitude more energy. It’s even worse as crypto entails units of soi-disant ‘miners’. These people are not themselves using crypto for anything other than to cash out – while the music is playing. Their energy use makes the whole enterprise way more resource-intensive than any normal everyday alternative. 

Bitcoin’s energy problem. Source: FT.com

For me, I don’t believe crypto or bitcoin has any utility. It is neither a medium of exchange nor – as recent market sentiment has established – any store of value. In my view, the energy associated with crypto has the sole purpose of bolstering a Ponzi scheme with no attendant benefits whatsoever to humanity – but amplifying our global warming woes.