Sunday, April 5, 2015

Peak Fish and Sustainable Food’s Last Mile Problem

Peak Fish
My wife and I are subscribers to a local sustainable “fish share.” It’s like a vegetable CSA except instead of getting locally-grown vegetables we get fish that have been caught off of the San Francisco Bay. The fish are super fresh and delicious. The fisheries are managed to restrict catches to a sustainable level. This type of sustainable fishery management, unfortunately, is the exception rather than the rule around the world. Globally, somewhere between 12% and 30% of fisheries have collapsed. Based on actual tonnage of fish in the sea, the world reached “peak fish in the sea” in the late 1980’s. When we analyze the tonnage of fish captured globally we see that we reached “peak fish capture” in 1996.
peak fish
Global fish capture peaked in 1996
Because population continues to rise, the date of “peak fish caught per capita” occurred in 1988. Since 1988 there have been fewer and fewer kilograms of fish caught per person living on our planet.
peak fish per capita
Global Per Capita Fish Capture Peaked in 1988
We are also seeing a dramatic “peak fish” decline due to ocean acidification. When carbon dioxide (CO2) dissolves into the water in the ocean (H2O) it becomes carbonic acid (H2CO3) and other carbonates. These carbonates lower the pH of the ocean and make it harder for calcifying organism like coral to produce their shells. This chemical reaction (CO2+H20=H2CO3) is simple and predictable. There is no question that atmospheric CO2 are levels are rising; As a result, there is no question that our oceans will continue to acidify. Simply put, as we pump more carbon dioxide into the atmosphere we kill more of the bottom of the ocean food chain. Without the bottom of the food chain, the top of the chain (the fish we eat) disappears. Our oceans are currently acidifying at a rate 100 times faster than any change that has occurred in the last 20 million years. The last time things got this bad was 65 million years ago during the Paleocene-Eocene Thermal Maximum, which resulted in an extinction event worse than the K-T Extinctionthat wiped out the dinosaurs. Unlike some of the other more complicated effects of climate change, ocean acidification is directly observable – you could literally stick some litmus paper in the ocean water outside your house and see the change over time. Here’s what the trend looks like:
Even if we stop catching fish at an unsustainable rate, ocean acidification will continue to put pressure on fisheries around the world. This means the “ceiling” for the “sustainable catch rate” will continue to get pushed lower every year. We’ve already reached “peak fish,” but these two forces will continue to push down fish capture rates, likely insuring that the peak is permanent.

Peak Oil
Besides unsustainable catch rates and ocean acidification, the third factor that will ensure the permanence of “peak fish” is peak oil. It takes an incredible amount of boat fuel to capture the fish we eat. Our current global food supply chain is woefully unsustainable and incredibly dependent on cheap oil. On average, it takes 10 calories of fossil fuel to produce and deliver a single calorie of food in the United States. A 2008 paper by Weber and Matthews found that, on average, the food we eat travels a total distance of 4,200 miles to get to our plates. Peak oil writer Jim Kunstler frequently uses the example of the “3000 mile Cesar salad” to bring attention to the food milestraveled in our current global food system. These long supply chains are especially evident when looking at fish – two thirds of the world’s fish are shipped internationally by airplane. When we inevitably reach peak oil (and peak coal and peak gas) we will have fewer calories of hydrocarbon fuel available per day for each person on earth. Unless we move our food production to a sustainable system that doesn’t rely on sunlight that was stored in the ground millions of years ago, we will have to do with fewer calories of food globally.
For fish, much of the energy expenditure comes in the form of boat fuel burned to troll the oceans and catch the fish. Here are some examples of how many liters of boat fuel are required to catch a metric ton of fish:
  • Sardines: 71
  • Skipjack tuna: 434
  • Scallops: 525
  • North American salmon: 886
  • Pacific albacore: 1612
  • Sole: 2827
  • Shrimp and lobster: 2923
One way to look at this fuel expenditure is to think about fishing on an Energy Returned on Energy Invested (ERoEI) basis. A food Calorie (big c) is more accurately called a kilocalorie as it contains 1,000 calories (small c) of energy. A “serving” of fish is about 84 grams, or 0.084 kilograms, and contains about 120 kilocalories of food energy. This means a metric ton of fish contains 1.43 billion calories of energy. Diesel fuel contains 8629.8 kilocalories per liter, so catching a metric ton of sole would require burning 2.44 billion calories of fossil energy. So if you sat by the dock and ate raw sushi fresh from the fishing boat you would achieve an ERoEI of 0.58:1. Any ERoEI below 1 is net energy negative and thus unsustainable. To put it another way, a 120 Calorie “serving” of fresh fish eaten directly from the boat required 207 Calories of diesel fuel to catch it. Your serving of fish required about half a shot glass worth of diesel fuel to catch it. Once the fish is caught it is often “flash frozen” (requiring diesel to run the generators that power the freezers on board the boats). High-end fish used for sushi is then usually sent air freight (burning jet fuel) to a refrigerated warehouse (burning coal or natural gas) where it is then picked up by a diesel-powered delivery truck and sent to the restaurant where diners arrive by gasoline-powered cars. After adding up the energy required to catch, freeze, package, ship, pick up and cook, wild-caught fish becomes severely net energy negative.

Local Food
At first glance the “local food” movement seems to fix the problem of the high-energy 3,000+ mile supply chain that delivers most of our food. If we simply purchased food that was grown locally (or better yet ate food grown in our own gardens), we wouldn’t need to ship as much food all over the world. Food could be grown organically (without fossil fuel-based fertilizers and pesticides) and greenhouses could provide us with year-round fruits and vegetables regardless of season. But unless you’re riding a bicycle down to your local farm, most “local food” still requires a tremendous amount of gasoline and diesel to transport the food from the farm to the farmers market and to transport the shopper from their home to the farmers market and back. Industrial-scale food is produced in huge quantities and shipped with semi-trucks. Local food is produced at a much smaller scale and is usually driven to farmers markets in small pickup trucks. The semi-trucks drive longer distances than the pickup trucks but because they carry more food they get much better MPG-per-ton of food. A 2008 paper studied the energy differences between the two different types of food systems in Berkeley, California and concluded on an energy consumption basis that “no statistically significant difference was found between the two food systems.” Simply put, local food, as it is currently practiced, is not more energy efficient than our “3000 mile Cesar salad” system.

The Local Food Last Mile Problem
The main problem with our “sustainable” fish share isn’t the way the fish are caught but rather the “last mile” problem of picking up the fish. I try to take the BART to work most days – not because I’m trying to be “green” but because I much prefer to read a book on my way to work than sit in traffic. However, on days when we have to pick up the fish in Berkeley, it’s necessary to drive to work so that I’m able to drive to pick up the fish share after work. I’m doing a “reverse commute,” where I live in a semi-urban area (walkscore 76) and work in suburbia (walkscore 39). Due to the crazy traffic patterns of the Bay Area, I have to drive the “long way” to work, which takes less time but requires driving a longer distance. On fish pickup days the full round-trip commute from home to work to the fish and back home requires 80.7 miles of driving. I’ve been tracking our vehicle fuel efficiency using fuelly and for this trip I get an average of 23 mpg (it doesn’t help that I’ve got a heavy foot). This means the entire trip to pick up the fish requires 3.5 gallons of gasoline. Burning 3.5 gallons of gasoline releases about 69 lbs of carbon dioxide. Peer-reviewed studies put the social cost of carbon at $43 per metric ton. So if we had a carbon tax that fully priced the externalities of climate change I’d have to pay $1.35 in carbon tax to make the trip to pick up our “sustainable” fish.
Taking the BART requires 0 gallons of gasoline because it is electric, but the BART currently isn’t connected down I-680 (because doing so would cost $5 billion), so half the trip is done on a bus. Contra Costa County uses hybrid buses. These Gillig Low Floor BRT hybrid buses get 4.0 MPG of diesel; they are often standing-room-only on the way to and from work, so with 40 passengers aboard they get 160 passenger miles per gallon of diesel. This means my entire commute takes 0.165 gallons of fuel to complete when I take public transit. That is still not a negligible amount of fuel – it would fill a “venti” coffee cup – but it is 95% less fuel than I use when I drive a car.
The really crazy thing is when you compare the fuel used to catch the fish versus the fuel use in the “last mile” for me to pick up the fish. Our usual fish pickup is about 2 lbs of fish, which is about 907 grams and contains about 1300 Calories. At an EROEI of 0.58:1, that 1,300 calories of fish requires 2,241 Calories of boat fuel to catch it. The car trip to pick up the fish requires about 3.5 gallons (13.2 liters) of gasoline which at 7594.0 Calories per liter is about 100,612 Calories of fuel. This means for each Calorie of “sustainable” fish I eat, it required:
  • 1.7 Calories of boat fuel to catch
  • 77 Calories of car fuel to pick it up
It requires about 45 times more energy for me to pick up the fish in the “last mile” than it did for the boat to go out and catch the fish. Clearly my unsustainable “sustainable” local fish share is an extreme example and most people aren’t driving 80 miles by car to do their grocery shopping. It does, however, shed light on a major gap in our society’s quest for sustainability. Much of the US population lives in suburban and rural areas and as a result many of those people live in “food deserts” where it requires more than a 20 mile round-trip by automobile to pick up groceries. The key lesson learned from all of this is that local food has the potential to make our food consumption far more sustainable, but in practice such efforts often fall short. As peak fish and peak oil limit our food options, the lessons learned (including the failure in my case) from the thousands of local food efforts around our world will become incredibly important in building more resilient and sustainable food networks.

Wednesday, March 4, 2015

Sustainable Banking

Our Fiat Currency System
As the late peak oil writer Michael Ruppert used to say, “until you change the way money works, you change nothing.” Chris Martenson does a great job in his “Crash Course” linking the banking system to peak oil. In short, our entire global fiat monetary system is dependent on exponentially-increasing levels of debt. If debt does not continue to increase exponentially, there isn’t any money to pay off the interest on the existing debt and the system seizes up. Exponentially-increasing debt is dependent on exponentially-increasing economic growth which is largely dependent on exponentially-increasing resource extraction. Of course you can’t have exponentially increasing resource extraction when you live on a finite planet with a finite quantity of resources, so eventually we will reach peak oil and “peak everything” and the whole debt-based monetary system will unravel.
Due to its basic design, our current monetary system encourages unsustainable resource extraction practices. Until we move to a sustainable monetary system, we will continue to find it extremely difficult to transition to a sustainable economy. Ultimately if we are going to live sustainably on our earth we will need to reach a sustainable equilibrium where we no longer need to extract resources from the ground and are able to provide all of our energy, food, water, housing, products, etc. from renewable energy, recycled water and recycled raw materials. Every product would be designed to be “cradle-to-cradle” with the full product lifecycle from manufacturing to recycling (or upcycling) designed for sustainability. Instead of planned obsolescence we would have products designed for multi-generational longevity (like myaluminum cornhole boards!) But in order to get to that sustainable future, we need a currency that isn’t dependent on increasing economic growth.
I see two main sustainable alternatives to the current fiat debt-based monetary system:
  1. Resource-based money
  2. Cryptocurrencies

Resource-Based Money
Before the Bretton Woods Agreement, our global currencies were resource-based. The US Dollar was backed by gold. Before that, the British Pound was backed by an actual pound of silver. Going forward, we could return to this old system by having a gold or silver-backed currency where each paper or digital dollar is backed by gold or silver held in a vault which is redeemable on demand. For years people like Ron Paul have been pushing for a return to the gold standard in the US. There has been speculation that the Persian Gulf countries have been accumulating gold in order to create their own gold-backed currency called the Khaleeji. An interesting new technological twist on the gold standard is a product by Valaurum called the “Aurum.” The Aurum is essentially a sheet of gold laminated between plastic. Instead of holding gold in a vault and printing paper notes which are claims on physical gold, people could actually hold the physical gold inside of the note in their wallets. Obviously for larger sums of money (or for digital transactions) a gold-backed currency would still require gold to be held in a vault, but for day-to-day cash transactions the value of the gold could be held in Aurum and physically transferred. Obviously, this is the way cash transactions used to happen with gold and silver coins, but the Aurum allows for a much smaller amount of gold to be held in a familiar form-factor.
Besides precious metals, governments could also back their currencies with any physical commodity. OPEC countries, for example, could back their currencies with oil. Instead of holding gold in a vault, countries could issue notes that are redeemable for barrels of oil. Someone holding 200,000 Saudi Reals could call up the central bank and arrange for the shipment of 1,000 barrels of crude oil. Obviously the main problem with this system is transparency; since the wealth of the nation would be calculated based on the recoverable reserve barrels, the reserve estimates would need to be independently-variable.

In the last few years cryptocurrencies like bitcoin and darkcoin have emerged as a new asset class which could allow us to transition to a sustainable monetary system without the need for government-backed resources like gold and silver to be held in vaults. I first started investing in and blogging about bitcoin in 2010. Since then I’ve seen the value go from $1 to over $1000 and crash back to less than $300. Obviously that kind of price volatility doesn’t make for a confidence-inducing monetary system, but as adoption widens the currency value should become more stable. The reason bitcoin could provide us with a sustainable currency alternative is that the algorithm built in to bitcoin regulates the currency supply. Over time the rate of money supply for bitcoin will slow and ultimately halt at a finite amount of 21 million bitcoins. This finite supply works exactly the same way as gold or silver. Without the ability to print more money, our governments would be required to balance their budgets and wouldn’t be able to live off the “inflation tax” they currently survive on.
One of the main problems with bitcoin is that it is “pseudoanonymous” and thus is actually far more traceable than cash if users aren’t careful. This fact came to the public’s attention recently at the trial of Ross Ulbricht, the alleged operator of the online drug marketplace Silk Road. By claiming ownership of the bitcoins that were seized by the government, prosecutors were easily able to trace all of the transactions associated with those bitcoins and prove Ulbricht’s connection to the Silk Road’s illegal activity. In June of 2014 I wrote a book called “Anonymous Cryptocurrencies” (which became an Amazon #1 best seller!) about some of the alternative cryptocurrencies that offer true anonymity. Since then darkcoin has emerged as the anonymous cryptocurrency leader, offering instant and anonymous transactions – creating the world’s first true “digital cash.” In the future we may see governments adopt darkcoin (or the technology behind darkcoin) to create a sustainable currency with a finite supply that offers their citizens financial privacy.

Sustainable Banking
Until we transition to a sustainable monetary system like a resource-backed currency or cryptocurrency, we will have to make do with our current debt-based system and attempt to make it “more sustainable” in whatever way we can. One of the simple actions people can take is to switch their checking account from a global “megabank” to a local bank or credit union. When I lived in Ithaca, we had the Alternatives Federal Credit Union which invested in local businesses and even backed the local alternative currency Ithaca HoursToday in our household we bank at San Francisco’s New Resource Bank. New Resource does a great job being sustainable with our current unsustainable monetary system. They have incorporated as a B-Corporation and as a result are able to pursue many sustainability-related efforts without needing to explain to investors why such efforts don’t have a direct financial return. They also invest locally with the goal of becoming 100% invested in local businesses that are sustainability-focused; this means that they currently invest in companies like Cowgirl Creamery and Hog Island Oysters. Local banking, however, isn’t all sunshine and rainbows. Some of the annoyances we’ve endured with our local bank include:
  • Fees – local banks typically have higher fees than megabanks.
  • Locations – New Resource Bank has 1 location. Bank of America has 5,132 locations. Obviously more locations is more convenient.
  • Hours – our bank is only open 9-5 on weekdays while most megabanks are open on weekends.
  • ATM – When we visited the bank a few weeks ago the bank’s only ATM was “permanently disabled.” Thus our only way to despot checks during non bank hours is gone.
  • Fraud Lockouts – much to our consternation, almost every time we travel and attempt to use an ATM we get locked out because the bank’s hair-trigger fraud detection system thinks our card has been stolen. The bank’s website also requires that you change your password every few weeks, which is also extremely annoying. Unlike megabanks, which can spread the risk of fraud across millions of customers, local banks need to be more careful, which means more annoyances for customers.
The most basic reason for all of these inconveniences is that local banks simply aren’t able to be as profitable as global megabanks, which brings me to my final point…

One of the main threats to local banks is the Federal Reserve’s policy of keeping interest rates at nearly 0%. When rates are this low, the traditional small bank model of taking deposits and making loans becomes impossible to sustain. Banks simply can’t find enough low-risk people and businesses to lend to at the current rates to justify the risk-return equation required to maintain business as usual. Ultimately this will mean increasing fees for depositors as banks are unable to make enough money from loans to cover all of the overhead costs associated with providing depositor banking services. Not only has the FED painted itself into a corner with multi-century low interest rates, they are starving the local banks that provide the only semi-sustainable business model that could ultimately save us from our unsustainable monetary system.

Tuesday, December 30, 2014

Solar Electric Car vs Gasoline Powered Car: Total Cost of Ownership

In this video I compare the total cost of ownership between an electric car (the Nissan Leaf) powered by rooftop solar panels and an equivalent gasoline car (the Nissan Versa Note). I find that the solar-powered electric car will become cheaper than the equivalent gasoline powered car over the next 5 years. I put the model on Github for anyone who wants to play around with the assumptions:

The conceptual framework:

Solar-powered electric cars are far better for the environment than gasoline-powered cars, both for air quality and for climate change.

Rooftop solar prices are expected to continue to decline:

Gasoline prices are expected to continue to rise:

In 2012 it became cheaper to drive an electric car with rooftop solar than to drive a gasoline powered car.

Electric car battery costs are expected to continue falling:

The total cost of ownership of a gasoline powered car will likely continue to rise:

The total cost of ownership of a solar-powered electric car will likely continue to fall:

By 2016 it should be cheaper overall to drive a subsidized electric car than it would be to drive a gasoline car. By 2020 it should be cheaper to drive an unsubsidized electric car.