Experts explore energy, debt, climate challenges

SANTA ROSA -- Navigating economic realities involving energy, debt and climate trends that will impact our lives and provide the context for local economic development in the North Bay, was the focus of Richard Heinberg’s presentation May 8 at the Glaser Center in Santa Rosa.

Sponsored by Share Exchange, the Threshold Foundation, Summit State Bank and 20 community partners, the event also included a panel discussion.

[caption id="attachment_74193" align="alignright" width="352"] Panelists (from left) Ann Hancock, Director of the Climate Protection Agency; Stacey Lawson, CEO, the Ygrene Energy Fund, and Marc Armstrong, Director of the Public Banking Institute[/caption]

Share Exchange founder Kelley Rajala was the moderator for the evening and introduced Mr. Heinberg and panelists Marc Armstrong, director of the Public Banking Institute; Ann Hancock, director of the Climate Protection Agency, and Stacey Lawson, chief executive officer of the Ygrene Energy Fund.

Mr. Heinberg is a senior fellow in residence at the Post Carbon Institute, based in Santa Rosa, and is widely regarded as one of the world's foremost Peak Oil educators. He is the author of 11 books such as The End of Growth: Adapting to Our New Economic Reality.

"Our nation has enjoyed over two centuries of excellent financial and economic growth. All of us grew up believing that the world’s supply of food, fuel and other resources was endless, and that limits to economic growth were unthinkable. After factoring in the rise in global population, Earth temperatures and pollution levels, and seeing how these trends interact with industrial output, scientists have concluded that the world is on an unsustainable course," Mr. Heinberg said.Increasing cost of energy

[caption id="attachment_74194" align="alignleft" width="245"] Richard Heinberg[/caption]

According to Mr. Heinberg, we are rapidly depleting cheap oil while some say we have 100 years of inexpensive natural gas and tar sands that could fill energy demand virtually forever.

However, prospectors today are going after lower-quality resources using slant drilling, cluster pad drilling and hydrofracturing techniques to glean oil from impermeable rocks. The problem is the high investment required to get it. Tar sands are another story.

"After the initial puff of fracturing oil is extracted, the rate of production falls rapidly, evidenced by a survey of some 63,000 shale, gas and oil wells over time," Mr. Heinberg said. "Seeking low-grade resources such as tar sands is like turning gold into lead -- with only a 5-to-1 return on the investment. It takes a lot of natural gas to cook tar sands. A much higher ROI is required to sustain an industrial society."

In the early 20th century, cheap oil fueled automated assembly lines as the U.S. made cars and other consumer products faster, leading to overproduction.

Advertising and planned obsolescence were part of industry’s response, but most people could still not afford a $900 Studebaker in 1910. This led to the creation of consumer credit, time payments and rising household debt.

In a paper prepared for the National Bureau of Economic Research by Robert Gordon, he said the 1980s were the turning point when the U.S. continued to see more innovation, but without economic growth.Rising public debt, rising GHG

The 1980s also saw household debt increase three times faster than overall GDP in a range of $6 to $8 trillion. 

However, until 2008, government debt was not growing faster than private debt. 

The recession changed all that as the government stepped in to pump money into the economy through Federal Reserve "quantitative easing" and government deficit spending.

"We are still seeing the money supply increasing at a rate of $100 billion a month due to government deficit spending," Mr. Heinberg said.

Meanwhile, greenhouse gases (largely, carbon dioxide) have risen to a level of 400 parts per million, resulting in a global temperature rise of one degree.

"With a two-degree increase, we would still be in a relative safe zone, yet scientists say that a six-degree rise is possible during this century caused by the melting polar cap that would no longer reflect the sun’s heat, and the release of methane gas locked in arctic tundra permafrost," he said. Methane is 20 times more polluting than carbon dioxide.

Mr. Heinberg said, "what is needed is more resiliency in our local economy," the ability to absorb shocks and keep going.He defines resiliency as having redundancies in critical systems with a series of dispersed system control points and inventories, as well as balanced feedback loops.

"We must produce more locally.The pendulum is swinging away from globalization. International long distance trade depends on low oil prices and growing supplies. Getting off growth means finding alternatives to GDP at the local level with a focus on meeting human needs -- factors not measured by GDP."

Three panelists offered innovative solutions to the issues raised by Mr. Heinberg.Solutions for rising public debt, energy costs

"The Climate Protection Campaign set national precedent by establishing aggressive GHG-reduction goals," said Ms. Hancock, director. "Since 2005 Sonoma Clean Power advocates have been working to tell our county’s cities to give us a choice.

"First Community Bank is providing startup funds for Sonoma Clean Power because this initiative is local and innovative. People must be willing to rethink their perceptions about where we need to go."

Ms. Lawson of Ygrene Energy Fund said its public-private partnership is leveraging financing vehicles to drive energy-efficient retrofits on both commercial and private residential properties.

"We are also upgrading aging building stock to reduce fossil fuel consumption," she said. "Over the next five years our fund will put $2 billion to $3 billion into the marketplace while creating 45,000 jobs, providing an economic stimulus of $7.5 billion for local communities, and saving 360,000 metric tons of greenhouse gases."

She said 28 states have signed enabling laws to bring new tax-based capital solutions to finance public-private benefit programs that will truly scale. 

"New ideas take a lot of education and investment to get community groups on the upside of change," Ms. Lawson said.

Marc Armstrong, director of the Public Banking Institute, said people need to be educated on the value of public banks.

"Currently, the Bank of North Dakota is the nation’s only state-owned bank serving chiefly as a public-funds depository, while reinvesting in the state’s community banks and small businesses," he said. "This banking system allows consumers and students to obtain loans at reasonable rates. It also delivers a handsome profit to its owners -- the 700,000 residents of North Dakota."

He said Germany is also embracing the public-banking concept to help fund solar and windmill projects.

"We need public banks like this in our region," he said.

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