{"id":4602,"date":"2024-10-07T21:56:08","date_gmt":"2024-10-07T19:56:08","guid":{"rendered":"https:\/\/www.rivistaeco.com\/?p=4602"},"modified":"2024-10-07T21:56:08","modified_gmt":"2024-10-07T19:56:08","slug":"innovation-will-not-end-with-resources","status":"publish","type":"post","link":"https:\/\/www.rivistaeco.com\/en\/2024\/10\/07\/innovation-will-not-end-with-resources\/","title":{"rendered":"Innovation Will Not End with Resources"},"content":{"rendered":"

Ignoring climate change is becoming increasingly difficult. However, there is no unanimous agreement on the proposed plans to reduce emissions. Critics argue that these plans are destined to fail due to the depletion of the necessary raw materials to achieve them. History tells us that societies solve problems using available materials: it will be the same this time too.<\/span><\/i><\/p>\n

During the scorching days of the Italian summer, accompanied by floods in Northern Italy, it is impossible to ignore climate change. Extreme weather events will only worsen as we continue to add CO2 to the atmosphere. On this, the vast majority of Italians agree. However, where things get complicated is when it comes to the “how.”<\/span><\/p>\n

Zero Emissions: How to Get There<\/b><\/h3>\n

The decarbonisation programmes proposed by international institutions and governments worldwide outline a three-part plan: electrify everything that can be electrified, increase zero-emission energy sources (solar, wind, hydro, nuclear), and proceed with carbon capture and storage for the remaining emissions. The recipe should lead to the fabled “net zero” by 2050. Critics accuse these plans of suffering from techno-optimism: excessive faith in the possibilities of innovation. Addressing the climate crisis this way will require large quantities of materials to build new wind farms, solar panels, electric cars, and much more. According to this worldview, on a planet with limited resources, we are inevitably destined to run out of raw materials. Consequently, with an approach centred on technological innovation, we would only be postponing the problem when the only possible solution would be to pursue a process of degrowth as happily as possible. In truth, as I explain in my book “Green Growth,” innovation will not run out of resources because the very definition of a productive resource depends on what is available. We have observed this throughout human history: societies solve their problems using what is available to them. Think of a fundamental and widely spread technology like writing, developed by many societies independently to first meet the needs of commerce and then the accumulation of knowledge. Depending on the place and existing technology, different writing materials were used: stone or clay tablets, bamboo strips, papyrus, wax tablets, parchment, paper, and copper plates, depending on local availability. The same can be said for navigation, which has accompanied humanity since prehistory: the first boats were built with techniques and materials ranging from bamboo and logs to reeds and leather, again based on the availability of materials and local needs.<\/span><\/p>\n

Historical Precedents<\/b><\/h3>\n

In 1968, biologist Paul Ehrlich caused a stir by predicting in “The Population Bomb” that humanity would run out of resources and people would starve before the end of the following decade. According to Ehrlich, the only way out was strict birth control, like the one implemented by China ten years later with the one-child policy. At the time, economist Julian Simon challenged Ehrlich to choose five raw materials, arguing that their prices would be lower ten years later regardless of the choice. Ehrlich chose those that seemed destined to run out most quickly: copper, chromium, nickel, tin, and tungsten. By the end of the decade, the prices of the five elements had decreased. Simon was not simply lucky. He had understood the market dynamics: when the price of a good increases, a rationing mechanism is triggered, causing buyers to move away from that material and pushing the innovation machine to find alternatives or devise more efficient ways to use what is available. For example, the reason for the decline in tin prices at the time was that aluminium proved to be a better and cheaper substitute. Aluminium itself has an interesting history. It is the most abundant metal in the Earth’s crust. Yet until the 1880s, when a method was invented to smelt and electrolyse the element, its cost was prohibitive. It was not seen as a production resource but was used as a precious metal. In the book “The Knowledge,” Lewis Dartnell recounts the curious episode of an imperial banquet organised by Napoleon III in the first half of the 19th century. At the table, aluminium cutlery was displayed as a show of power reserved for the most distinguished guests, while other guests used simple gold knives and forks. The very definition of what is a consumer good and useful for production varies over the centuries and depends on availability. The concern that some raw material will run out and that the crisis will deliver a fatal blow to civilization is a recurring theme in history. In Great Britain during the age of sail, there was fear that once oak, a fundamental wood for building ships and their masts, ran out, the country would be left defenseless. Clearly, this did not happen: in the end, iron replaced wood, and in the meantime, trade with Scandinavia, the Baltic States, and North America provided sufficient wood supplies during the transition. For goods that cannot be substituted, prices generate strong incentives to improve extraction and recycling. Think of copper, which has excellent properties as an electrical conductor. When electrification was in its infancy at the beginning of the 20th century in the United States, geologist and copper extraction expert Ira Joralemon warned that “The age of electricity and copper will be short. At the intense production rate needed, the world’s copper supplies will barely last twenty years […] Our civilization based on electricity will shrink until it is extinguished.” A century later, we can see that his prediction was not quite accurate.<\/span><\/p>\n

Will This Be the Century of Organic Chemistry?<\/b><\/h3>\n

It is not even said that most technological solutions to combat climate change must rely on geological materials. One of the reasons agriculture contributes significantly to greenhouse gas emissions is that fertilisers are produced through the Haber-Bosch process (the method for industrial ammonia synthesis), which requires a great deal of energy and thus currently CO2. Recent research shows, however, that certain bacteria can capture atmospheric nitrogen without the high pressures and temperatures of the traditional process. It is therefore imaginable to use them on an industrial scale to produce zero-emission fertilisers. Similarly, research is moving towards new materials, opening the possibility of producing consumer goods with algae-based bioplastic instead of today’s petroleum-based PET. If the 20th century was characterised by the triumph of inorganic chemistry, the 21st century may see that of organic materials destined to meet human needs. The era was inaugurated by the advent of biotechnology, which thanks to recent advances such as genome editing, will provide powerful tools to address current challenges, including reducing the use of pesticides and herbicides in agriculture. Innovation not only produces new technologies and goods but also allows us to derive more value from what is already available. In the field of more efficient material use, the idea of a circular economy is an example where society organises to reuse or recycle materials and rely less on the extraction of new ones. The digital revolution has also led to an increasingly “dematerialised” economy in production and consumption because it is increasingly based on intangible goods. This is what economist Danny Quah calls the “weightless economy.” Another push towards more efficient resource use is known as the sharing economy, which we have been experiencing for years in various cities for products like cars, scooters, rental homes, and coworking spaces. According to this model, people shift from individual ownership of goods to enjoying a service, often through digital technology, where an object can be shared by multiple users to collectively gain more utility from the same amount of raw materials. In the book “More from Less,” MIT economist Andrew McAfee shows how and how much the American economy has dematerialised since the 1970s, reducing the consumption of nearly all 72 raw materials monitored by the US Geological Survey, including minerals, timber, and cement, whether of domestic origin or imported. In the agricultural sector, the United States managed to increase production by 35% between 1982 and 2015 while simultaneously reducing the use of fertilisers and returning an area of land equivalent to the state of Washington (about 176,000 square kilometers) to nature. The same combination of increased productivity and dematerialisation has allowed many advanced economies to see reforestation and economic growth progress simultaneously over the past three decades. In today’s decarbonisation challenge, it is useful to look at the fundamental materials for the transition. Two textbook examples are lithium and cobalt: both elements form the basis of batteries. If the scarcity of raw materials were an insurmountable problem, one would expect that in the face of a huge increase in demand, their price would have risen. Instead, the price of lithium is essentially at the same level as in August 2018. The same goes for cobalt, which has a price aligned with the long-term average of 2012-2016. To conclude, it may be useful to remember an old joke: the Stone Age did not end because we ran out of stones. Similarly, the era of oil and gas will not end because we l run out of them, and innovation will not end because raw materials are exhausted. It is useful to remember this in summer conversations, when the heat directs the discussion towards climate change and inevitably someone claims that electric cars, batteries, and consequently renewables are destined for oblivion because we will run out of lithium.<\/span><\/p>\n

The ideas and opinions expressed in this article are attributed to the author and do not reflect the responsibilities of the affiliated institutions.<\/span><\/i><\/p>\n

Bio<\/b><\/em><\/p>\n

Alessio Terzi is an economist at the Directorate-General for Economic and Financial Affairs of the European Commission, where he has contributed to the economic strategy associated with the Green Deal. He is also a lecturer at the University of Cambridge and Sciences Po in Paris.<\/span><\/em><\/p>\n

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