There is global shale gas euphoria, particularly in the United States, which has the world's second largest shale gas reserve with ready fracking technology to extract this abundant energy resource. It seems a god-sent answer to America's prayer for total energy independence, cheap and "greener" fuel, creation of millions of jobs, and boosting a lack-lustre economy. There is increasing expectation that America will be able to export its excess energy, earning more profits and global influence, notwithstanding sharpening debate. There is even renewed optimism of a new American Century.
The reality is often hidden beneath the surface. In "Fracking Hell: The Untold Story", a LinkTV documentary on YouTube exposes the alarming risks of ground and surface water pollution and the threats to local environment and civilan lives as a result of a sudden skyrocketing jump in fracking activities across America.
China has the world's largest shale gas reserve, which is however located inside much more technically-difficult topography. See the collection of reports and data in The Golden Age of Gas
China's fracking technology is not as advanced but the United States has indicated willingness to share it. If so, the vast opportunities for an energy-hungry and energy-security-obsessed China seem only too good to miss.
But it seems that the fracking technology is not as ecologically safe as it is made out to be. If the environmental and health fall-out from fracking is allowed to multiply, the expected shale gas bonanza could well turn into a mind-boggling nightmare that could eventually spell an ecological if not socio-political "Collapse".
In his eponymous work (Penguin Books, 2006) on the disappearance of past civilizations including that on Easter Island, Jared Diamond provides an apt warning that the shale gas exuberance needs a strong dose of sobriety. The alluring music of energy abundance could well turn out to be the songs of Sirens to ecological doom.
Apart from ecology, there is also a sharp warning from Shalebubble.org, "the joint effort of Post Carbon Institute, Energy Policy Forum, and Earthworks,
with the goal of providing critical analysis — using industry and
government data — to counter the false claims that domestic supplies of
shale gas and shale oil (tight oil) will ensure energy security and
significant long-term economic benefits to the US".
According to a summary on their website, the current shale oil and gas frenzy is "nothing more than a bubble" with diminishing returns, a "drilling treadmill" of a "frentic pace of drilling to offset declines", and "Wall Street (promoting) the drilling frenzy in order to profit from mergers &
acquisitions, resulting in prices lower than the cost of production".
If Shalebubble.org's analysis is true, the current shale oil and gas euphoria may well morph into a huge bubble that is going to burst in a ecological disaster of epic proportions with tears from environmentalists and investors alike.
1. Severe income disparity 2. Chronic fiscal imbalances 3. Rising greenhouse gas emissions 4. Water supply crises 5. Mismanagement of population aging
A detailed Risk Landscape of 50 Global Risks is presented as follows -
1. Chronic fiscal imbalances 2. Chronic labour market imbalances 3. Extreme volatility in energy and agricultural prices 4. Hard landing of an emerging economy 5. Major systemic fincial failure 6. Prolonged infrastructure neglect 7. Recurring liquidity crises 8. Severe income disparity 9. Unforeseen negative consequences of regulation 10. Unmanageable inflation or deflation
1. Anti-biotic resistant bacteria 2. Failure of climate change adaptation 3. Irredeemable pollution 4. Land and waterway use mismanagement 5. Mismanaged urbanization 6. Persistent extreme weather 7. Rising greenhouse gas emissions 8. Species over-exploitation 9. Unprecedented geophysical destruction 10. Vulnerability to geomagnetic storms
1. Critical fragile states 2. Diffusion of weapons of mass destruction 3. Entrenched organized crime 4. Failure of diplomatic conflicdt resolution 5. Global governance failure 6. Militarization of space 7. Pervasive entrenched corruption 8. Terrorism 9. Unlilateral resource nationalization 10. Widespread illicit trade
1. Backlash against globalization 2. Food shortage crises 3. Ineffective illicit drug policies 4. Mismanagement of population aging 5. Rising rates of chronic diseases 6. Rising religious fanaticism 7. Unmanaged migration 8. Unsustainable population growth 9. Vulnerability to pandemics 10. Water supply crises
1. Critical systems failure 2. Cyber attacks 3. Failure of intellectual property regime 4. Massive digital misinformation 5. Massive incident of data fraud/theft 6. Mineral resource supply vulnerability 7. Poliferation of orbital debris 8. Unforeseen consequences of climate change mitigation 9. Unforeseen consequences of nanotechnology 10. Unforeseen consequences of new life science technologies
A similar, and perhaps more precise, global risks assessment is provided in the Chartered Institute of Insurance (CII)'s Centenary Future Risk Series Report 6 - Insuring for a stronger world (2012) - Future Risks mind map (p.7).
1. US economic decline 2. Asian threat to Western competitiveness 3. Currency War 4. Eurozone collapse 5. Fall of Bretton Woods - return to protectionism 6. Chinese financial crisis 7. Rising economic uncertainty 8. Stagnation
1. Political unrests across emerging markets 2. Rising geopolitical uncertainty 3. Chinese social unrest 4. US political paralysis 5. National/international terrorism 6. Breakdown in public trust of state institutions
Investment in technology
1. Slowdown of investment in new tech 2. Reduced use of technology in business 3. Reduced understanding of technology
Technological "Black Swans"
1. Cyber crime 2. Failure of largescale IT systems 3. Widespread data loss or corruption 4. Global spread of disease through international travel
Technology and Risk management
1. Out-of-date computational models 2. Failure to understand model limitations 3. Failure to horizon scan
Adaptation to climate risks
1. Poor local infrastructures 2. Town planning in hazardous areas
1. Geopolitical tension over scarce resources 2. Exploation for new energy sources
1. Cost of age-related spending to public purse 2. Intergenerational fairness 3. Falling economic productivity 4. Rising liabilities of pension funds 5. Adequacy of pension income 6. Increased chronic disease
Poverty trap: high fertility and low life expectancy
1. Violent internal conflict and social unrest 2. Increased antagonism towards developed countries
Global population growth
1. Fears of overcrowding 2. Concerns about immigration 3. Increased risk of pandemic
By means of a fictional "Special Report - The Remarkable Rebound 6 February 2030", in which the world looks back on how some of the major risks have been contained or overcome, the CII proposes the following preventive measures against a disastrous outcome -
1. Reform to the international economy - global economic imbalances; EU fiscal and political union; sustainable international trading system 2. A vibrant private sector - effective financial services including insurers and banks 3 Private sector-led growth through partnership between research centres, entrepreneurs and business leaders 4. Climate Change mitigation and adaptation, involving insurers and risk managers 5. Improving healthcare and pensioner security - extended working lives and cost-effective use of telecare 6. Greater private savings 7. Dynamic technological change improves lives; avoidance of "black swans" through enhanced risk management
Apart from a whiff of self-interest in some of the recomendations, few would doubt their validity, but not too many are likely to be convinced that they will be sufficient or will all be delivered. However, the test of the pudding is in the eating. There is still some time for the Remarkable Rebound of 6 February 2030 to become a reality.
According to China Water Risks, a Hong Kong -based non-profit think-tank on the subject, water moved from the sidelines into the spotlight in China 2012 and is expected to stay in 2013.
In an online report "2012 Review and 5 Trends in 2013"of 4 February 2013, the NGO says, "In China the tipping
point has come. Li Keqiang, China’s next Premier-to-be in March, said
that China’s limited water resources have become serious economic and
social development constraints; saving water and improving water-use
efficiency are priorities".
The 2012 Review highlights the following -
(1) Water remains a top priority for the Chinese government; (2) More floods & droughts; (3) Low levels of water in lakes and rivers and potential diversions; (4) Reputation at risk with more pressure from naming-&-shaming campaigns & public protests; (5) Investors & Companies continue to play catch up
The 5 Trends in 2013 are -
(1) A pro-water government; (2) Multi-pronged approach in managing water for agriculture; (3) Energy security – no choice but to plow ahead with hydropower & fracking but tech could save us; (4) Supply chains continue to be under fire; and (5) More corporate action and financial institutions incorporating water risks into valuations.
According to World Economic Forum's Global Risks 2013 Report, Water Risk continues to stay in the top five global risks by Likelihood and Impact.
So the world water crisis looks critical, especially China. A stern warning is sounded in a report dated September 2012 by HSBC Global Research on Climate Change - "No water, no power - Is there enough water to fuel China’s power expansion?" Click here
Nevertheless, it appears from the Water Risk assessments that there is now a glimpse of hope as China's leadership, China's own NGOs and the private sector are all beginning to seize the moment.
The very active role China's NGOs are playing in addressing the country's water risks also testifies to the rapid development of China's civl society.
According to a BBVA Research Report (January 2013), "Lower-income and poor people stood at about 80% of of the population in emerging countries in the 80s and 90s. Things started to change dramatically in 2000; in fact, by 2010, 660 million had been added to the first stages of the middle-class. In the same vein, middle and high middle classes more than doubled in a decade."
This explosive trend produces many risks as well as opportunities. Think energy, resource and food scarcity and resultant regional rivalries. Think global inter-connectivity. But also think brands and life-style products at the mass-market end and luxury goods at the top end in a world sans frontiers.
The world is heading towards 2030 with much greater uncertainty as epochal trends and paradigm shifts are playing out. That's according to the latest report by the Washington D.C -based National Intelligence Council - "Global Trends 2030: Alternative Worlds" dated December 2012.
The report admits that global economic power is definitively shifting to the East and the South, reversing the historic rise of the West since 1750.
By 2030, the developing world will account for over 50% of the world's economy with China displacing the United States as the largest economy.
Power will become more diffused in a multipolar world, including individuals and other non-state actors, characterised by unprecedented urbanization, rise of the middle-class, new, disruptive, or lethal technologies, resource constraints, more aging populations, and risks of more crises and conflicts.
America will lose its global dominant position but is likely to remain primus inter pares amongst all nations. By all accounts, a great re-balancing of the world will be taking shape, perhaps not dissimilar to the European "long peace" set in motion by the Congress of Vienna in 1815, which was also a mutli-polar period of rapid social, economic, technological and political change. However, many a black swan could change the game along the way.
According to the report, how America will navigate this changed world is likely to shape its fate, including that of the United States itsef, for better or for worse.
The NIC report may be put into better perpective with reference to the so-called soaring EAGLEs (Emerging and Growth-Leading Economies) here
Or when read in conjunction with the latest World Bank Report "China 2030: Building a Modern, Harmonious, and Creative High-Income Society", which was undertaken jointly with the Development Research Centre of the State Council.Click here
The following China-centred dynamics are also relevant -
to Goldman Sachs, by 2050 the top ten economies in the world will be,
in descending order, China ($70 trillion), US (about $38 trillion),
India (about the same as the US), Brazil (barely over $10 trillion),
Mexico (just under $10 trillion), Russia, Indonesia, Japan, United
Kingdom, and, lastly, Germany (about $5 trillion). Only
four of the G7 would thus remain on this list. Except the US, the
other three G7 countries, Japan, UK, and Germany, would fall to the
combined economic weight of the six so-called Emerging and
Growth-leading Economies (EAGLEs), what may be called the E6, would be
over two and half times more than the remaining G4. Amongst the EAGLEs are the so-called BRICS (Brazil, Russia, India, China and South Africa), of which China's economy is bigger than the rest of the BRICS combined.
(b) According to Huang Renwei, Vice President of Shanghai Academy of Social Sciences, compared with a rising China, the relative strategic power of the United States is declining due to-
(i) its mounting debt exceeding sustainable limits, threatening the status of the US Dollar as the world's dominant currency;
(ii) its increasingly constrained financial capacity is likely to reduce its military capacity, its R & D expenditure and hence its ultimate technological lead;
(iii) the American-dominated global alliance may come apart in a decade or two if the United States becomes less and less able to provide most of the public goods holding such alliance together; and
(iv) geopolitics are giving way to geo-economics where China is building a China-centric regional economic infrastructure (read regional production and supply chain) reinforced by such economic alliance as ASEAN-China Free Trade Area, the largest in the world by population.This is happening while the West, including Japan, struggles to re-start their weakened economies by one form of quantitative easing or another (read money-printing).
See Huang's remarks (in Chinese) on Xinhuanet on 20 December 2012 here
(c) Rapidly being ""internationalized", the RMB, though remaining non-convertible on the capital account, is already ipso facto "eclipsing" the U.S. Dollar as the world's "reference currency". Click here
(d) according to “World Intellectual Property Indicators 2012”
released by the Switzerland-based WIPO (World Intellectual Property
Organization) on 11 December 2012, China tops the world in 2011 patent
applications. China also leads head and shoulders in trademark applications as well as industrial design. As a developing country, China is therefore well on track to overcome the Middle Income Trap. Click here
(e) As the world is increasingly becoming eco-conscious, China is starting to lead in a number of renewable energies, including solar, wind and hydro. In particular, China is pushing for the rapid development of electric cars, through heavy state subsidy towards private ownership and intensive research and development, including green battery technologies. This promises to revolutionize the world's entire auto industry.
(f) Shale gas is set to change the shape of the world of energy. Click here for "The Golden Age of Gas" In addition, the widespread use of abundant shale gas in America and China will weaken the strategic clout of the Middle East and other oil-producing countries, with all that implies. As the world's leading energy consumer for a long time to come, China is well poised to benefit from America's expected shale gas bonaza and her own vast shale gas reserve, the world's largest, provided problems of water scarcity, groundwater pollution and lack of advanced fracking technologies can be overcome.
In sum, provided China continues to maintain an even keel in the run-up to 2030 (though that is by no means a foregone conclusion), the country, together with or in addition to America, is set to influence, if not shape, global dynamics much more than the National Intelligence Council report seems to imply.
A timely warning is sounded in the latest report dated September 2012 by HSBC Global Research on Climate Change. Click here
This highlights China's looming water conundrum as follows -
"China plans to add more than the total installed power capacity of the US, the UK and Australia by 2030. Consequently, industry faces more water and electricity shortages. Nearly half of China’s GDP is earned in water-scarce provinces (including such economically dynamic cities as Beijing, Shanghai and Tianjin). Looking ahead, ambitious expansion plans for power capacity could face real water constraints. This is expected to drive an increased focus on water and energy efficiency in the power, industry and mining sectors. Project financiers, investors and companies should consider resource shortages and more efficient options before funding, investing and expanding."
As the world's population is expected to increase by 2.6 billion to a total of 9.1 billion by 2050, and as water scarcity and climate change are increasingly posing severe contraints to food production, this high-tech, transportable, and flexible mode of food production which can be located right in any urban centre could well turn out to the answer to the world's food prayers.