What is the key factor driving Digitalization?

 

I am sorry to rain on your parade, but the key driver behind Digitalization is coal. All studies agree that digitalization will significantly increase global demand for electrical power. Unfortunately, most of this power will come from thermal power plants, powered by coal and gas.

World Power GenerationWorld Electrical Power Generation by Fuel (Key world energy statistics, IEA 2017)

The industrial revolution gave us fossil fuel and capitalism some 250 years ago and there has been essentially no progress since. Today, the correlation between CO2 emissions and GDP is as strong as ever. Using publicly available data from the World Bank on global GDP and CO2-emissions during the last 50 years, one can easily create the following plot:

Graph2
Global GDP (in current USD) and CO2 emissions (World Bank Open Data)

A linear fit shows that emitting a ton of CO2 into the atmosphere increases global GDP by roughly 3700 USD. Interestingly, this number has been remarkably constant and economic growth is therefore just a different name for burning as much fossil fuel as possible. Any improvements in energy efficiency, which will increase the slope of this curve, will only make fossil fuel even more valuable, thereby increasing its use. This is known as Jevons Paradox, first published in 1865.

Now, let’s consider the future. During the last couple of years, our governments have agreed on the mutually exclusive goals of growing the economy by 2% annually (G20 summit in Hamburg July 2017) and limiting climate change to less than +2°C, which requires cutting CO2-emissions by half every 10 years (Paris climate agreement, December 2015, Rockstrom et al., Roadmap for rapid decarbonization, Science 355 2017). The consequences are shown in the diagram below:

CO2-GDP FutureGlobal GDP and CO2-emissions: Historic data up to 2016 compared
with the consequences of accepted policies.

Obviously, they might as well have agreed to abolish the laws of thermodynamics. You cannot take two quantities, which have been almost perfectly correlated (with a correlation coefficient of +0.995) for the last 50 years, and decide that they are suddenly going to be anti-correlated. Reality does not work that way.

Einstein famously said that you cannot solve problems with the same kind of thinking that created them in the first place. For all its benefits, our carbon-fueled growth-based economy has created a lot of problems. Solving these problems will require radically different thinking. Above all, it will force us to question the concepts of economic growth, GDP, and capital income.

Interestingly, the famous invisible hand of the free market was an early attempt to solve a problem using an algorithm. The markets, rather than the governments, decide what to produce and how to distribute it. Unfortunately, the people developing the algorithm still assumed the planet to be infinite and ignored external costs, such as pollution. After some 250 years, the time has come to upgrade the software.

How about some real innovation for a change? Humanity is rapidly destroying the biosphere of the only habitable planet in the known universe while our most creative minds are busy finding ways to connect our smartphones to the electric toothbrush. This makes no sense! Shouldn’t we use our intelligence and creativity to save humanity, rather than speeding up its demise. Rewriting the operating system of the world economy seems like a good place to start.

In the meantime, I will continue to advocate a Consumer Strike as the only reasonable way to change the system. Stop buying and stop flying – the survival of your children depends on it.

A wish you all a happy and fulfilling 2018!

 

 

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