Today, 6.5 billion humans depend entirely on oil for food, energy, plastics & chemicals. Population growth is on a collision course with the inevitable decline in oil production.
To think that we can advocate for human rights, peace, and social justice while ignoring their necessary ecological basis—is both intellectually dishonest and ultimately self-defeating.
The longer we put off choosing the nicer methods of achieving demographic stability, the more likely the nasty ones become, whether imposed by nature or by some fascistic regime. Urine Good Company might represent a mild version of what could actually be in store if we let the marketplace, corporations, and secretive, militaristic governments come up with eugenic solutions to our population dilemma.
~ Population, Resources, and Human Idealism, Energy Bulletin | Population Growth: Most Powerful Force on Earth, Money&Markets ~
17 March 2009 | by Jack Rosebro
Water consumption or withdrawals per unit of energy produced, by energy type, in the United States. Source: DHI Group. Click Image to Enlarge
A Pacific Institute report commissioned by Ceres, whose Investor Network on Climate Risk advises investors with more than US$7 trillion in assets, concludes that impacts of declining water quality and availability will be “far-reaching” for business and industry in the developed as well as the developing world, and that companies which address water stress as a key strategic risk will be better positioned to adjust to negative effects such as reduced water allotments, rising water costs, community opposition, and increased public scrutiny of corporate water practices.
Among the increasing challenges is that while the sourcing, processing, and delivery of clean water is becoming more energy-intensive, the extraction and refining of fossil fuels and their substitutes is trending towards increasing water requirements per unit of fuel produced as energy companies work with progressively lower grade resources.
Processes such as oil extraction from sources such as tar sands and deep-water offshore oil wells, as well as the expansion of first-generation biofuels such as corn-based ethanol are setting the stage for a “water/energy collision” of resource management policies. “With increasing frequency,” write the Pacific Institute researchers, “we value energy production over water production.”
Citing a study by Danish water consultancy DHI Group as well as a study from the University of Texas, the researchers point out that the water footprint of renewable energy sources varies widely, and is particularly intense for first-generation biofuels made from sugar, starch, vegetable oils, animal fats, or other food-source feedstocks, rather than non-food sources such as cellulose.
Climate change. The report “Water Scarcity and Climate Change: Growing Risks for Businesses and Investors” notes that drought conditions are currently causing water shortages in Australia, Asia, Africa, and the United States, and that drought patterns are in many cases mirroring previously predicted effects of climate change. While climate change is projected to increase precipitation in some areas, it is also likely to destabilize freshwater supply in other areas by compressing precipitation and snowmelt into shorter and more intense periods, overwhelming existing catchment infrastructure and creating longer periods of drought.
The percentage of the world’s population living in water-stressed regions—currently one out of every three—is expected to double to two of every three by 2025 as declining water supplies are further stressed by increased water demand for irrigation, hydration, and industrial cooling in warming regions. Although desalination has the potential to reduce freshwater demand in relatively affluent coastal urban areas by providing an alternative source for drinking water, it remains the most expensive demand-management option due to its energy-intensive processes, and is particularly vulnerable to rising energy prices.
Last year, a special report by the Intergovernmental Panel on Climate Change (IPCC) forecast that the effects of rising temperatures would lead to “changes in all components of the [global] freshwater system” in the 21st century. The IPCC’s Fourth Assessment Report, released in 2007, had also forecast that “climate change will challenge the traditional assumption that past hydrological experience provides a good guide to future conditions.”
However, the authors of the Ceres report note that “businesses and investors are largely unaware of water-related risks or how climate change will likely exacerbate them.” Industries which face the greatest risks include the agriculture, beverage, electronics, energy, apparel, pharmaceutical, forest products, and mining sectors.
Sectoral Water Risks
20th century world water withdrawals by sector, in cubic kilometers. Source: UNESCO. Click Image to Enlarge.
Apparel. Cotton production, which requires 25 cubic meters of water for every 250 grams of finished product—the approximate weight of a T-shirt—is both water-intensive and highly vulnerable to risk. Cotton is typically grown in arid regions converted to farmland; in Uzbekistan, for example, which is one of the world’s largest exporters of cotton, the extraction of water from rivers that supply the Aral Sea is a key contributor to its deterioration and desertification. Wastewater from cotton production degrades local water supplies, but many countries which export cotton have relatively weak wastewater regulations
Electronics. Semiconductor wafer production is extremely water-intensive: in 2007, Intel and Texas Instruments used a total of 11 billion gallons of ultra-pure water (UPW), which requires significant amounts of energy to purify. Eleven of the world’s fourteen largest semiconductor factories are located in Pacific Rim regions which are already water-stressed.
Food Production. The largest and fastest-growing use of water is embedded in modern food production. Although livestock production requires many times the amount of water per calorie of plant-based food production, agricultural water requirements have also intensified as a result of the conversion over the past century of many naturally arid regions, such as California’s San Joaquin Valley, Texas, and parts of Egypt and Pakistan, to high-volume farming regions.
Drought is expected to become more common in many of these areas, as well as higher surface temperatures, which dry out soils, evaporate snowmelt, and require accelerated water inflows. Beverage manufacturers also face direct competition with local communities for affordable drinking water, and bottled water sales are beginning to decline in some developed countries because of environmental concerns.
Biotechnology. Chemicals and microorganisms in biotech wastewater present a particular threat to local ecosystems. Synthetic chemicals are typically developed for persistence, and do not readily break down in nature when discharged by pharmaceutical manufacturers.
Forestry. Pulp and paper manufacturing is the third largest consumer of water as well as fossil-based energy in the United States. While the sector is at particular risk from climate change, forests are also key components of watersheds, influencing water availability, transport, and quality.
Metals and Mining. The mining sector is restricted by the location of ore, and water must be imported to support mining operations. Development of new sites may also face local opposition; Canadian mining company Barrick Gold, for example, plans to mine gold from beneath glaciers in Chile; Andean farming communities which rely on the glaciers for their water supply oppose the project.
Electric Power. The electric power industry accounts for more than a third of all freshwater withdrawals in the United States, with nuclear power plants requiring about 40% more water per kilowatt-hour produced than fossil-fuel power plants. Declining levels and/or warmer temperatures of cooling water supplies during periods of extreme heat and/or drought have triggered nuclear plant shutdowns in the US and Europe in the past five years. Hydropower-based generation is also at risk, particularly in the Western United States, due to drought.
The Ceres report poses five primary questions as discussion points for exploring the level of risk that a company’s water policy might pose to its own long-term economic health:
- Does the company know and measure its water footprint, including wastewater discharges, and understand the relationship between its energy and water use?
- Has the company assessed business risks associated with its water footprint, including both direct and indirect risks (e.g. supply chain), and developed contingency plans for potential future risks such as those associated with climate change?
- Is the company engaged with key stakeholders, including consultation and collaboration with affected communities, government entities, and NGOs?
- Has the company integrated ongoing assessments of water risk into its business planning, governance, and risk management structures?
- The report concludes by pointing out several cross-sectoral trends in water risk for businesses:
- Typically, water risk is embedded more in the value chain, especially of raw material production, than in operations or assembly of final product. This risk is rarely reflected in corporate sustainability reports or security filings.
- Industries that require large amounts of water withdrawals, ultra-pure water, or both face increased risk of competing directly with local populations for water access. Fallout ranges from reputational damage to shutdown or relocation of facilities.
- Wastewater discharges for industries with large gray water footprints are an increasing problem as developing countries adopt environmental regulations.
- Fragmented information about corporate water risk as well as underlying supply conditions often make it extremely difficult for investors to assess the true magnitude of the risk.
- As water supply declines, the quality of available water also typically declines, requiring more treatment and increasing the amount of energy embedded in the delivery of adequate water supplies.
PDF: Water Scarcity and Climate Change: Growing Risks for Businesses and Investors
Source: GreenCarCongress [PDF: Water Scarcity and Climate Change: Growing Risks for Businesses and Investors]
Thursday, Feb. 7, 2008 08:27 PST | Andrew Leonard, Salon
Synthetic fertilizer prices are spiking upwards all over the world, inflicting economic pain on farmers everywhere. Another sign of the peak oil apocalypse? The industrial production of nitrogen -- a key synthetic fertilizer ingredient -- is extraordinarily energy intensive. So when energy prices rise, so do fertilizer prices. And if you buy the thesis that without manmade fertilizer the world will be physically incapable of supporting a population of nine billion, then you start to get very nervous.
Opponents of biofuels have been quick to point the finger at the stampede to divert farming land to energy crops as another reason explaining the fertilizer market's failure to keep up with global demand. But that's only one factor. Population growth and the explosion of meat and dairy consumption in the rising middle classes of the developing world are also contributing to the worldwide agricultural boom. Even without rising energy prices, the surging demand for fertilizer would be overwhelming suppliers.
When demand rises, supply follows -- and sure enough, investment in synthetic fertilizer production is booming. Intriguingly, the global center for synthetic fertilizer production appears to be the oil states of the Mideast. A new study by the Doha-based Gulf Organization for Industrial Consulting reports that UAE, Saudi Arabia, Kuwait, Bahrain, Qatar and Oman are expected to invest billions of dollars in the next few years ramping up ammonia and urea production.
Which drops a big fat dollop of synthetic fertilizer irony in our laps. The growth of energy crops is in part directly attributable to rising energy prices. But the demand for synthetic fertilizer to nurture those energy crops requires the consumption of even more fossil fuel, thus likely pushing energy prices further, and creating even more demand for energy crops. On second thought, that's not ironic. That's tragic.
The price-mechanism doesn't only work in the direction of encouraging more synthetic fertilizer. One news report, while predicting that the current imbalance between supply and demand could last as long as two years before new supply came on line, observed that in the meantime farmers might be forced to "consider converting to organic production."
So you can forget about the endless argument over whether organic food is healthier for human consumption than the product of the industrial agricultural system. If synthetic fertilizer prices continue to rise, organic food may end up cheaper than the alternative.
One big corpration dominates the soon-to-be-prized potash market
Tom Philpott, Grist | 15 May 2008
Industrial agriculture currently stands as humanity's big plan for "feeding the world" as global population moves toward 10 billion and the earth warms. Increasingly, as oil supplies tighten and prices rise, we're looking to industrial ag to fill our gas tanks, too.
Unhappily, this relatively new form of farming relies utterly on three elements -- two mined (potassium and phosphorus) and one synthesized from natural gas (nitrogen) -- to maintain the productivity of soil.
In other words, unless we quickly move toward other agriculture models, we're likely to see increased geopolitical competition for these fertilizer resources, outsized power for the entities that control them -- and diminishing efforts to minimize the ecological effects of extracting them.
I've written before about Mosaic, the world's largest phosphorus supplier, and the devastations of its Florida mining operations. Two-thirds owned by agribusiness conglomerate Cargill, Mosaic has seen its share price rise seven-fold since the fall of 2006 (roughly when corn prices began to jump).
Now let's look at Canada's Potash Corporation of Saskatchewan, whose shareholders, like Mosaic's, have enjoyed an ecstatic run of late. The company so dominates potash (potassium) production that one stock analyst has hailed it as "the Saudi Arabia of Fertilizer."
The analyst, Ben Johnson of Morningstar, has this to say about Potash's market position:
PCS is the world's largest potash producer, with 22% of world capacity. ... PCS is also the world's second-largest nitrogen producer by volume (with 2% of world capacity). ... PCS is the world's third-largest phosphate producer (with 6% of world capacity).Wow, so in the big-three macronutrients, the company ranks one, two, and three. But it's the company's position in the potash market that really has investors licking their chops. Get this:
I feel [an] apt analogy would be to call [Potash Corporation of Saskatchewan] the Saudi Arabia of the "other OPEC" -- Organization of Potash Exporting Countries! ... PCS owns 22% of the world's potash production capacity, while Saudi Arabia accounts for roughly 13% of global oil production. Both enjoy low-cost positions in their particular markets, thanks to scale and the attractive natural resources they control. The Middle East has more than 60% of the world's proven oil reserves, while Canada sits on about 57% of the world's potash reserve base, according to the U.S. Geological Survey.The analyst says that the company's dominant potash position has made it extraordinarily profitable as fertilizer prices have surged recently, pushed up by the biofuel boom and rising demand from Brazil and China. He writes that "gross profit per metric ton of potash sold nearly doubled to $97 in 2007 from $51 in 2004." He adds:
And there will be more to come. Given recent price announcements for potash, average selling prices will easily double from 2007 levels in the coming quarters.Similar trends are playing out with nitrogen and phosphorous:
Unit gross profit in nitrogen has more than doubled from $45 to $94 over this same span, and phosphate unit margins have compounded an eye-popping 14 times from $4 in 2004 to $57 in 2007.Several questions arise here. Is it really sustainable to "feed the world" -- much less move its cars -- using technologies that require ravenous doses of finite resources?
How long before big buyers in places like China start to balk at paying such elevated prices -- and supporting such monopoly-style profit margins? Already, we're seeing countries that are cash-rich and food-poor (think China and Saudi Arabia) buy up farmland in places like Brazil and Africa, the Financial Times reports.
Fertilizer, a critical input for industrial food, is darting down the unhappy path forged by crude oil. It looks set to become the globe's next "prize" -- to paraphrase Churchill's famous quote at the dawn of the oil age. Other ways of "feeding the world," of course, are possible.