Offshoring Energy and Emissions - Coming back from Developing to Developed Countries

A recent study in the journal in Environmental Science and Technology discusses the 'embodied carbon' in global trade. The concept of embodied effects in global trade has been noted by scientists and engineers by estimating such aspects as the energy embodied in a product when it is made in one place and shipped to another.

Somewhat by definition, making a product in China (say a Barbie doll) and shipping it to the United States takes more energy than making it in the United States and keeping it here. Just think of the energy used to create the infrastructure (tankers) and fuel the cargo ships (low grade petroleum used in ships). You don't need these if you don't travel the globe, but both systems require intra-continental infrastructure.

As peak oil and gas come on, businesses will be forced (albeit in some views 'rightly so') to better account for the energy used to make a particular product or provide a particular service. Products from China don't cost less in the U.S. because it actually costs less to make from an engineering sense; it just costs less based upon how much you value a person's time and labor. Essentially the time of farmer converted to factory worker in China has less value than the average Joe/Jane in the U.S. The 100s of millions of workers in China available to work cheap is the main reason why products have gotten cheaper in the U.S.

Essentially, the CO2 being shipped from abroad to the U.S. (and generally from developing to developed countries) is a proxy measure for energy. As suggested in the synopsis (linked above), the solution is likely to factor the cost into the consumer of the product and not necessarily its producer.

And we should quit shipping electronic 'waste' to China, as someday we'll likely wish we kept it to make use of it via recycling, but that's another story ...

An oil scare story from the past ...

“It is the Summer [two years from now]. Violent uprisings have shaken Saudi Arabia, and the House of Saud has fallen. For months, the nation has been kept in turmoil by dissidents with strong religious and anti-Western feelings: ultraconservative Muslims of the Wahhabi sect, angered by corruption among some of the ruling princes and embittered by the erosion of family and tribal values; and disaffected foreign workers, many of them Palestinians, stirred up by radical forces in other lands.

Oil no longer flows from rich Saudi fields. Critical elements of the oil distribution system, systematically wrecked, lie in ruins. The giant terminal at Ras Tanura, which once sent half a dozen tankers a day down the Persian Gulf and out to the global oil routes, rusts silently under a scorching sun.

The free world has lost a fifth of its oil supply – some ten million barrels a day.

For a brief time, the United States seemed not to feel the loss; its daily share from Saudi Arabia was less than a million and a half barrels, and there were stockpiles and a small strategic reserve to draw on.”

Does this projection sound believable? It did in 1981, because that is when it was written in National Geographic magazine along with comments about projections that oil could be at $80 per barrel in 1985. It turned out that the cost of a barrel of oil in 1985 was about $27, and only $14 in 1986 (which is roughly $52 and $27 in early 2007 dollars). How wrong was that oil price projection?

See http://www.wtrg.com/prices.htm and http://www.inflationdata.com/inflation/Inflation_Rate/Historical_Oil_Prices_Chart.asp for discussion and charts of oil prices.

What this look into the recent past indicates, is that projecting energy prices and uses into the future is pretty much as good as looking into a crystal ball. The reason that oil prices dropped is due to efficiency improvements and adjustments in the world economy that reduced demand. These adjustments were caused by people, just as the price increase and embargo was also caused by people.

And a large part of the reason it has taken approximately 25 years for us to have the same conversation again about the future of oil supplies and Wahabbi sects in the Middle East, is because people had the ability to act and change the future. Thus, in the 1970s and 1980s, people were the major influence in energy consumption and energy prices. Today, people are still the major influence as we still have room to become more energy efficient to choose the goal for oil consumption for the next few decades.

The question is: how long can people’s choices and adjustments remain the most influential factor in energy consumption and prices? Because, if people are not the most influential factor, then that means nature’s limitations in resources is the most influential factor. At no point yet in history has per capita energy consumption declined. Human choices can possible maintain high standards of living even if and when energy per capita begins to decline, sometime in the future. Our goal should be to maintain the world and society such that humans always have the most control over energy consumption, because otherwise, it means, by definition, we are not in control.