Printer Friendly

The era of insufficient plenty: as global competition makes some commodities scarcer, engineers will be challenged to find new solutions.

For more than 100 years, the United States has been the world's largest industrial power. Over that period, we consumed a plurality and sometimes even a majority of the world's resources.

Thanks to outstanding science and engineering, we could extract and process natural resources to make almost any type of product at a reasonable cost. If we needed a commodity, a device, or specialized knowledge, we felt confident that we could find, buy, or negotiate for it. Sometimes, the price was high, but if we were willing to pay, we could get it.

We have never really had to confront a situation where another country on this planet could consume as much as the United States. Today, we face that situation in spades. The economies of many developing countries have begun to take off, but China and also India are special cases. Both have enormous populations, very large workforces of educated professionals, fast-growing economies, and voracious appetites for resources.

In fact, we must now start asking ourselves what will happen when the things we need become unavailable at any price. How will we run our factories, maintain economic growth, and support our lifestyles? The answers to these questions will challenge every major engineering discipline to find alternative materials, methods, and processes in the future.

We also need to rethink our very definition of sustainability. A classic definition, from the 1987 World Commission on Environment and Development. stated that sustainable development "meets the needs of the present without compromising the ability of future generations to meet their own needs."

Yet this definition is incomplete, because it presumes availability. We do not have that luxury anymore. There are plenty of resources out there, but no guarantee that we in the United States will have access to them. We are entering a world of insufficient plenty.


To understand how the world is changing, let's start with the working population. These people, who range from 15 to 64 years old, are not only a society's most productive members, but also the ones who drive consumption. By 2015, the working population in East and Southwest Asia and Oceania will exceed 1.5 billion people, primarily in China, and in South Asia 1 billion people, primarily in India. That compares with about 300 million potential workers in Western Europe and fewer than 300 million in the U.S. and Canada.

As these large populations grow wealthier, their use of energy rises. Energy growth in the world's most industrialized nations has leveled off over the past decade. Most of the world's increase in energy consumption has been driven by developing nations, like China and India, as well as Eastern Europe and Eurasia.

In terms of gross domestic product, we already crossed from one era to another in the 1990s. That was when the regional GDP of East/Southwest Asia and Oceania surged past that of Europe and North America. According to the Central Intelligence Agency's long-term growth model, the gap will continue to widen.

In 2003, Goldman Sachs projected that the dollar value of China's GDP would exceed that of the United Kingdom and Germany by 2010, Japan by 2015, and the United States by 2040. India would surge past Germany after 2020 and past Japan after 2030. These forecasts seem to be tracking well. In 2009, China was the world's third-largest economy and well on its way to overtaking Japan before 2015. India ranked twelfth and was rising rapidly.

This actually underestimates the strength of the Chinese economy, since it measures economic activity in dollars and China undervalues its currency to keep export volume high. Instead of looking at dollars, consider purchasing power parity, or the amount of local currency it takes to buy a basket of equivalent goods in different countries. This is probably a better indicator of what a nation consumes, especially a nation where labor costs are comparatively low.

The 2009 CIA World Factbook underscores this difference. Based on dollars, China's GDP equals 33 percent that of the United States and ranks behind Japan. Based on purchasing power parity, however, China's gross domestic product equals 55 percent that of the United States and is more than twice the GDP of Japan.

In 2003, Germany displaced the United States as the world's largest exporter. In 2009, China moved past Germany to become the world's largest exporter.

China is the world's largest coal consumer and second largest consumer of oil. This is just the beginning. According to China's National Bureau of Statistics, China has 64.7 million civilian motor vehicles (not counting 91 million motorcycles). This comes to about 48 vehicles per 1,000 people. Contrast this with the United States, which has 823 registered vehicles (not counting 7 million motorcycles) for every 1,000 citizens.

The CIA World Factbook estimates that China consumed 8.0 million barrels of oil in 2008, compared with 19.5 million barrels for the United States. This is going to change, and quickly. In 2009, China shot past the United States to become the world's largest motor vehicle market. Not counting motorcycles, the Chinese bought nearly 14 million vehicles. Most analysts did not expect this to occur for another decade. According to renowned oil analyst Daniel Yergin, this puts China on track to exceed U.S. oil demand by the end of this decade.



Let us go one step further. Prior to the decline that followed the current financial crisis, commodity prices had been skyrocketing. The reason was intense competition for resources by nations with rapidly rising levels of industrialization and personal wealth. We all know what rising global demand did to the price of oil. Other commodities played out similarly. The price of copper is in many ways typical. It rose from a 60-year low of 60 cents per pound in 1990 to $3.50 in April 2007. Although it crashed to below $1.50 at the bottom of the financial crisis, it had rebounded to about $3 in early February 2010.

The rebound in copper prices was driven by rising demand from China and other developing nations. Demand grew steadily for most of the past decade and shows no signs of going away. Expect commodity prices to continue rising again as recovery takes hold.

It is important to note that access to commodities is not just about paying the prevailing price. It is also about positioning, relationships, shipping access, and port control. China has been especially active in sealing longterm contracts and building port facilities in key commodity supplying countries in Asia, Africa, and South America.

This vast consumption of commodities is driven by China's economy, which has grown by just under 10 percent per year for the past 30 years. That average includes much higher growth rates in some parts of the economy. Just before the financial crisis in September 2008, China's Bureau of Statistics reported annual gains of 15 percent in industrial value-added, 27 percent in investment in fixed assets, and 22 percent in retail sales. These are amazing numbers for a nation that was economically paralyzed 30 years ago.

Let us go one step farther. Because of our dependence on oil, the United States tends to think of scarcity in terms of crude petroleum and energy. That is shortsighted. We could find ourselves competing for other resources as well. In its 2006 World Economic Outlook, the World Monetary Fund noted that China had become the largest consumer of several key metals. In 2005, it absorbed 25 percent of the world's aluminum, 22 percent of its copper, 18 percent of its nickel, and 44 percent of its iron. Between 2002 and 2005, it accounted for half the growth of global demand for aluminum, copper, and steel, and almost all the growth for nickel and tin.

Moreover, China is buying up 20-year swatches of its entire planned consumption ahead of time and paying cash. It is an interesting way of accomplishing your needs. But the Chinese are not doing it to corner world markets. Instead, the Chinese leadership appears terrified of the social instability that would result if it cannot meet expectations of progress in the country. That is literally where they must go.

How long will the Chinese continue to behave like this? Raghuram Rajan, an economist at University of Chicago's Graduate School of Business, notes that at China's current stage of development, "The kinds of things the Chinese will consume or use will be material intensive--more housing, more cars, more hard goods." Some economists estimate that China's intense demand for metals will abate when its per capital GDP reaches $15,000. It is currently $6,500, and so has some ways to go.

Most of the metals mentioned so far are used in bulk products. Yet China is also a factor in other critical materials as well. It currently produces more than 90 percent of the world's rare earth elements. They play essential roles in such advanced products as computer chips, cellphones, solar panels, missiles, and computer displays and televisions.

Over the past three years, China has increasingly limited production and exports of many of these materials. In 2009, a proposed six-year economic plan would have banned exports of terbium, dysprosium, yttrium, thulium, and lutetium. The new plan would have allowed total rare earth exports of 35,000 tons per year, down from 53,000 tons in 2008 and roughly 66,000 tons in 2005. The plan also called for a 42 percent tax on exports.

Under intense international pressure, China said it would not eliminate rare earth exports. Still, China has sent a clear signal to manufacturers of advanced magnets, motors, superconductors, and other products. If they want unrestricted access to rare earth elements, they must move their factories and make their products in China.

Of course, there are also natural shortages. Consider, for example, hafnium. It is used in nuclear reactor control rods. It has also replaced silicon dioxide as an insulator on advanced semiconductors. The nanoscale features of those chips are packed so tightly together that silicon dioxide cannot prevent current from leaking from one device to another. Only hafnium will do.

Armin Reller, a materials scientist at Germany's University of Augsburg who has studied mineral reserves, estimated in 2007 that we are on track to run out of hafnium by 2017. I remember discussing this before a group of Silicon Valley executives. There were a couple of gentlemen from one of the local firms that had not heard of this problem. From the expression on their faces, I thought we were going to have to call for an ambulance.

Incidentally, Reller's team also estimated that we may run out of indium in 2017, terbium (used to make green phosphors in fluorescent light bulbs) in 2012, and zinc by 2037. Is it a surprise, then, that Russia has federalized its metals market? That is a step a nation takes when it feels threatened.


Now, the implication is that we need a shovel to go out and find more of these resources. Yes, they are probably there. On the other hand, we do not call them 'rare earth' elements for nothing. They are very hard to find and extract. The same is true of other materials that are in increasingly short supply.

Let's return to the rare earth situation for a moment. Shortly after the financial crisis began, Chinese government-owned mining companies tried to buy 52 percent of Lynas Corp. and 25 percent of Arafura Resources. Both companies were developing rare earth element mines in Australia, and both had lost their financing. Eventually, the Australian government stepped in to prevent the Lynas acquisition.

This raises a question about asset ownership. Until the late 1990s, the growth of U.S.-owned assets abroad and foreign-owned assets in the United States rose fairly smoothly. Over the past 10 to 12 years, however, ownership has oscillated wildly in both frequency and amplitude. Today, we are moving a billion dollars of asset ownership per day on this planet. We have never seen that kind of chaos before. It suggests that our ability to predict asset ownership and resource availability is becoming more difficult.

Water is another resource that we often take for granted. Six years ago, I began displaying a series of water availability maps that appeared in an assessment of the National Intelligence Council, a U.S. center for longterm strategic studies. It shows water availability per person in the United States declining from high in 1980 to the world average in 2015.

It also shows availability falling from low to very low in China and catastrophically low in India over the same period. Notice that in the same area of the world where we expect the highest consumption of other things, we are seeing some of the worst water conditions.

Now let's do some arithmetic. The amount of water on Earth is fixed. The amount of recoverable fresh water without desalination is fixed. At current energy costs, we could only sustainably desalinate enough water for 11 percent of the world's population. Over the next 25 years, however, we can expect the world's population to grow by 2 billion to 3 billion people.

Many gaps exist in our ability to access and use water. Although our planet is mostly water, desalination is too costly for most potential users. Much of the groundwater in industrialized nations is polluted. There are few national markets to simplify the distribution of water within nations, much less across national borders. In fact, before we created national or international markets, we would need to build a water distribution infrastructure. To make it work, we would need to develop a new generation of energy-efficient, maintenance-free pumps.


To solve the problems of insufficiency, we are going to have to start thinking differently. Water provides a good example. The United States and many other countries have dry river beds. They form an excellent distribution network. Why don't we find a way to put bladders in those river beds and pump water to places that need it, from the coasts, so that we can do desalination on site? In fact, science and engineering will play a critical role in meeting challenges in the era of insufficient plenty. But we have to change how we apply these disciplines.

Let's face it. We in the technology community are always talking about the next big thing. But often the next big thing brings with it the next big problem. Consider, for example, three broad technology opportunities: biotechnology, nanotechnology, and quantum technology. All have outstanding potential, but because we are not managing their hidden risks properly, development has lagged.

Biotechnology includes such disciplines as genetics, proteomics, and synthetics. It offers ways to save our lives, repair our bodies, and improve our food, textiles, and materials. Yet we are novices when it comes to altering life. This shows up in the number of drugs we need to pull off the market. Yet we know enough for nations to weaponize viruses and bacteria.

Nanotechnology promises outstanding new products, but are we really equipped to handle even a small spill of potentially destructive products that are small enough to penetrate our lungs and even our skin?

Quantum technology promises computers than can make multiple calculations at once. They also promise a high-speed way to crack our strongest encryption technologies, used to store military, government, and financial data. What would happen if an enemy cracked our atomic weapon codes, or re-encrypted our Social Security or health databases?

As chief knowledge officer of Black & Veatch, these are the types of things I worried about. It is not what we know, but what we do not know--the unintended consequences of technology--that will turn around and bite us.

Yes, we need science and engineering to face the challenge of insufficient plenty. But we cannot plunge headlong into the next big thing--whether it is one of these technology opportunities or another way of coping with insufficiency--without considering the consequences of our actions. We cannot, because we can no longer count on unlimited access to natural resources to bail us out.

Let me end with this thought. Imagine the sum of all the resources from around the world consumed by the United States in 2000. We'll call this one U.S. Consumption of Resources (USCR) unit.

Now look at what is happening in the other parts of the world, especially in China and India. We expect China to reach one USCR somewhere around 2013-2015. That is an amazing number. India is moving in the same direction.

When China reaches one USCR, it will consume as much as the United States in 2000. There may not be enough to go around. That is the fundamental truth about global resources.

The United States will need outstanding science and great engineering to resolve those potential shortfalls, but we can no longer act in a vacuum. We cannot grow enamored with the next big thing without thinking about where it will lead us. We must plan ahead, because our margin of error is decreasing.

To Learn More

This article is adapted from a talk given at the National Academy of Science's Government-University-Industry Research Roundtable in October 2009. The session was titled "Diminishing Natural Resources: Recognizing Limitations, Responding to the Challenges." The presentations for this talk and other talks given at the meeting are available on the Roundtable's Web site at http://sites.nationalacademies. org/PGA/guirr/PGA_054088.

John G. Voeller is senior vice president, chief knowledge officer, and chief technology officer for Black & Veatch. He has served as a consultant to the Department of Homeland Security and other federal agencies since 2002, He was an ASME White House Fellow in the Office of Science and Technology Policy of the Executive Office of the President from 2003 to 2008.

Measuring economies by what the local currency buys instead of dollars
shows China and India's true strength.

                  GDP (purchasing        GDP--real
                  power parity)          growth rate   GDP -per capita
                      (rank)             (rank)        (PPP) (rank)

European Union  $14,510,000,000,000 (1)   -4.00 (178)   $32,600 (41)
United States   $14,260,000,000,000 (2)   -2.40 (151)   $46,400 (11)
China            $8,789,000,000,000 (3)    8.70  (4)     $6,600 (128)
Japan            $4,137,000,000,000 (4)   -5.30 (193)   $32,600 (42)
India            $3,560,000,000,000 (5)    6.50 (13)     $3,100 (164)
Germany          $2,811,000,000,000 (6)   -5.00 (190)   $34,100 (37)

Source: The World Factbook
COPYRIGHT 2010 American Society of Mechanical Engineers
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2010 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Comment:The era of insufficient plenty: as global competition makes some commodities scarcer, engineers will be challenged to find new solutions.(FOCUS ON MANUFACTURING)
Author:Voeller, John G.
Publication:Mechanical Engineering-CIME
Geographic Code:1USA
Date:Jun 1, 2010
Previous Article:Manufacturing at the crossroads: many U.S. companies are reexamining their outsourcing strategies. Will production move closer to home?
Next Article:Rebuilding a broken land: a mechanical engineer who served on a reconstruction team in Iraq tells how a little outside help can hasten the recovery...

Terms of use | Privacy policy | Copyright © 2021 Farlex, Inc. | Feedback | For webmasters |