Nate Hagens on the Dangers of Our Net Zero Obsession

November 16, 2023 Impact, Business, Science, Technology, Environment

As part of Stockholm’s Impact Week in September 2023, Nate Hagens was invited to give a keynote address to a room full of the world’s wealthiest impact investors.

The hundreds in attendance, and tens of thousands online, were all eager for guidance on how they could best spend their time, energy and financial resources to benefit humanity in the era of the polycrisis.

Hagens opened his speech with a quote from Albert Einstein, ‘If I only had an hour to save the world, I’d spend 55 minutes defining the problem and one minute resolving it.’ For Hagens, we don’t have an hour, we have around a decade, and if we’re going to navigate our collective predicament, we first need to understand it.

By: Daniel Simons

When it comes to locating and articulating the challenges facing humanity, Hagens is one of the world’s leading thinkers - but before that, he was a money man.

Motivated by the desire for a fancy car and a big apartment, Hagens went into finance. He graduated with an MBA with Honours from the University of Chicago and then went on to work on Wall St. at Salomon Brothers before taking on his own clients.

Managing the money of wealthy individuals led Hagens to an epiphany that would change the course of his life. For the two years that he was in business school, he hadn’t heard the word ‘energy’ uttered once.

But when Hagens began trading oil futures for one of his wealthy clients, his research led him to a chilling realisation: oil - which he now describes as the haemoglobin of the modern global economy - was a finite and dwindling resource, and the era of the ‘carbon pulse’ might soon be over.

The awakening led him to close his business, give all of his clients’ money back and hike around North America for a year with his golden retriever and backpack full of books about ecology, neuroscience and systems thinking.

Hagens went on to do a PhD in ecological economics in 2005 and became the Editor of The Oil Drum. He now dedicates his life to exploring the worlds of systems thinking, neuroscience, energy and financial systems, climate change and biodiversity and building a tribe of ‘pro-future’ thinkers.

He’s created an animated video series about our collective predicament, hosts The Great Simplification podcast, is the Director of The Institute of Energy & Our Future (ISEOF), and is a regular keynote speaker at conferences around the world.

Matters spoke with Nate about why ‘net zero’ might be a dangerous goal, and where we should focus our efforts to ensure a better future.

Your podcast is called ‘The Great Simplification’ What is The Great Simplification? What are you trying to achieve with your courses and podcasts?

The Great Simplification has three connotations. Firstly, that we live in a very complex and confusing world and I try to simplify how the parts and processes that comprise the human ecosystem fit together in a way that is easier, or ‘simpler,’ to understand.

Secondly, for most people watching the podcast, a simpler, less resource-intensive lifestyle, with community, time with family, friends and nature and human-scale experiences, can replace materially intensive lifestyles. In other words, a personal simplification for many actually could be ‘great’.

Mostly I named it thus due to the third connotation: the academic and cultural implications of the term.

Humans, historically, have solved problems by adding complexity - we use new tools and innovations to overcome limitations of our current circumstances - but all of this additional complexity requires additional energy inputs.

Our access to fossil fuels has added the equivalent of ~400 billion human workers to the global economy, and our global economy currently uses the energy equivalent of 190 billion light bulbs constantly turned on.

But these high-quality fossil fuel deposits are declining, making extraction more difficult and costly. We are approaching a time when our two centuries of continual increase in energy access will plateau - then decline - so the backside of the built ‘complexification’ this enabled - is the inverse - a simplification. And given the size and scale of the human enterprise, this will perhaps be the greatest event ever experienced by our species - ergo a ‘Great Simplification.’

The first purpose of our work is to build a broader awareness and cohesion and scout the team of humans that is watching this, seeking out the signal to noise and wanting to play a role in their own lives, their own community and the wider world.

The second purpose - not so much with the podcast, but with the other work - is to change the consciousness of those in power, because those in power have the optionality to make outsized changes to our institutions, our goals, our policies.

The main goal is to change the initial conditions of the events that are coming our way, to try and get more people thinking two steps ahead.

The climate crisis is one of the greatest challenges humanity has ever faced. With scientists warning that we can’t go past 1.5 degrees of warming, many governments and corporations are announcing ‘net-zero’ goals. There are projects like RE100, the Science Based Targets Initiatives, and a whole swathe of new off-setting financial instruments and carbon accounting apps. What do you think is wrong with focusing on the goal of ‘net zero emissions’ and why might it be dangerous?

I’ll answer that question with some simple realities.

A focus on ‘net-zero’ is systems blind - it assumes everything else remains constant and focuses solely on carbon, ignoring growing constraints with global finance, debt, geopolitics, and supply chain fragilities.

Net zero is also systems blind in that it treats carbon as the problem as opposed to a symptom of the core issue which is ecological overshoot.

The impact of our global energy metabolism on nature has been tragic, and is now accelerating, resulting in, among other things, animal, bird and fish populations dropping by 50% since the 1970s, plastic now weighing more than all animals on land and in the sea, human sperm count dropping 1-2% per year, and a child born today being expected to outlive Earth's coral reefs.

These trends won’t change by just a reduction in emissions.

Additionally, it relegates the focus of response to ‘technology’ alone instead of cultural, value and economic system change. Net zero narratives happen ‘out there’ and imply we can continue consuming at today's level with no need for personal involvement in our ecological predicament.

But perhaps most importantly, net zero is based on flawed logic. It assumes that we can continue to grow while at the same time using less energy and less carbon. This can happen on an individual country basis but not as a world.

Energy and global GDP are 99% correlated and GDP and materials are 100% correlated. If we did continue to grow at 3% a year, as most governments and institutions expect, we would need to use as much energy and materials in the next 30 years as we have in the past ten thousand!

We can’t grow without more energy - and if we can’t grow we have a date with the grim reaper of the financial system - because of all the debt we have built up.

You’ve said climate is a symptom and not the problem. What is the actual problem? If net zero is the wrong goal, what is the right goal?

The actual problem is we’ve been living beyond our means for several generations, drawing down natural capital well beyond its replacement rate, and treating it as if it were interest and not principal. Ecologically, humans are in ‘overshoot.’

We have built machines and technology to boost our living standards around the world but have forgotten these machines are powered - mostly - by energy that is non-renewable on human time scales.

The “right goal” is to become an ecological civilization - but that is unlikely given the momentum of current civilization and institutional inertia - so the right goal now is to prepare for smaller, less interconnected, less resource-intensive economies and all the implications and challenges that this suggests.

You often talk about a ‘crisis of sensemaking’ and you use the analogy of a ‘superorganism.’ What is the superorganism and what do you think most people are missing when it comes to understanding our place in the world?

Our public stories amplify experts who are charismatic and authoritative and use simple siloed solutions to a systemic problem.

Our global economy is a system that integrates technology and ingenuity with energy and materials to create products and services that we represent with dollars - the entire system seeks ‘feelings’ (for the humans involved) that match the emotional states of our successful ancestors and also produces waste and pollution.

But from a systemic view, this process works very differently than taught in economics class.

Humans self-organise as families, small-businesses, nation states and the entire world by maximising monetary profits.

These profits are 99% tethered to energy and 80% tethered to carbon. Collectively, this has resulted in an emergent phenomenon where humanity is now acting like a heat dissipating structure.

No matter what rules or international agreements or renewable energy buildout has happened, emissions continue hitting all-time highs. So far there is no ‘green revolution’, only a ‘green addition’ to growing overall throughput. The ‘market’ is pulling society forward without a plan other than more GDP growth and energy use.

Our global transportation network is acting as veins and arteries of a global superorganism, with oil and its products acting as the haemoglobin. We have - so far - as a species outsourced our wisdom to the financial market - which has no brakes, until it breaks.

How does it break?

All the money in the world - when it's spent - will be spent on something requiring energy. This means money is a claim on energy and debt is a claim on future energy - we don’t have the amount of energy - at low enough cost - to pay back all existing financial claims.

So yes, managing this future ‘biophysical recalibration’ moment is the calling of our time. It won’t be easy but it’s the main risk facing societies in the next decade.

If you look at the relationship between debt and oil, the US is currently raising debt at about a billion dollars an hour while simultaneously drawing down the strategic petroleum reserve.

The relationship between those two is never connected and the amount of debt we have, which is now $34 trillion, is probably more than all of the extractable crude oil on earth at today's prices.

Societies believe our wealth is solely due to money and ingenuity. These are important but both rely fully on energy, materials, and ecology. The divergence between these two narratives is widening rapidly.

In your podcast with Douglas Rushkoff, you asked him what he would do if he was given the powers of a benevolent global dictator. How would you answer the same question?

First, a benevolent dictator is quite a different proposition than a president or prime minister. The former can do whatever he or she chooses, the latter has to do things that will be responded to by citizens.

This is why ‘end of growth’ discussions are politically difficult, although French President Macron has been advocating for ‘sobriety’ arguing that just like an alcoholic has to get sober - our culture has to get realistic about using less energy and materials - for a long time forward.

If I had one wish, it would be that everyone would include the natural world in their value system.

If I could do one economic policy, I would change the prices of things that include non-renewable inputs to represent their long-term scarcity.

This would give inventors/investors the incentive to innovate in a true biophysical environment and citizens an incentive to conserve.

How do you stay sane, optimistic, and motivated to continue with your work? What hope for the future can your readers and listeners hold on to?

Historically, humans solve problems by adding complexity which requires additional energy. As our fossil energy stores decline, the goals of technology will have to change – we will have to simplify our lives, our expectations, and our social interactions.

This ‘great simplification’ will be one of the most momentous events of human history – and if you’re alive today you will live through it.

But, if you reflect on the best five moments of your life, most of them will not have required much energy, money, or resources at all.

A weekend camping, time with friends or dogs, a special event for family, a quiet evening with a loved one, four days in a natural park... After basic needs are met, most of the best things in life are free or close to free.

Everyone hearing this feels the truth of it, but our economic system keeps growing and forcing us to compare our success as humans in material ways. We need more people stepping outside of that model and living full active lives working on the most meaningful stuff without being tethered to consumerism.

We need pilots of people living differently and headed towards a different culture. These people can act as what I call ‘rocks in the river’, that is, an anchor of emotional, physical and psychological strength in the community.

So, when the water metaphorically ‘runs faster’ you stay put and can help others….and if there are enough ‘rocks in the river’ in the community you can actually redirect the flow of the water.

The coming decades will be a time of chaos, disruption, emergence, discovery, resilience, courage, purpose, and even joy and satisfaction. What matters is that we get started – and to do that we first have to understand the situation – and to care about it.

‘Net zero’ is a great conceptual goal – effectively we want to have a robust human society while living more in harmony with Earth’s natural ecosystems.

In the not-too-distant future, we’ll be using less carbon, but also less of most things that currently contribute to GDP, most likely not by our own volition. How to change technology and human culture and governance is the challenge of our time.

This could be an exciting and upbeat time, the beginning of a true “age of sentience” for mankind. It could be humanity’s finest hour... or it could go in other ways.

The stakes couldn’t be higher. It will be the end of the world as we know it, but it won’t be the end of the world.