THE PRECIPICE & THE FALL OF 2008

On Monday morning, September 15, 2008, Wall Street traders awoke to the startling news of the bankruptcy of Lehman Brothers, one of New York’s oldest and most respected investment firms. Merrill Lynch had avoided the same fate only by selling itself off to Bank of America at a deep discount the night before. More than $20 billion in investment capital vanished from Morgan Stanley’s books over the ensuing forty-eight hours of financial chaos, forcing that venerable firm to issue a warning on Wednesday that it might well run right out of cash before the weekend. General Electric, meanwhile, worried publicly that it was in danger of having to cease operations for lack of credit to pay its employees and its bills, and insurance giant AIG’s midweek plummet toward insolvency was slowed only after the Federal Reserve strung out a multibillion-dollar safety net beneath it.

US Treasury notes were soon trading at less than 1 percent interest—a guaranteed investment in the future of the world’s largest economy valued essentially the same as cash, an alarmingly clear sign of the wholesale flight of confidence from the American financial system. Money began to flee from mighty Goldman Sachs the next day, at which point the US government intervened directly with its unprecedented $700-billion bailout. (All figures here and throughout the book are in US dollars unless otherwise noted.) Still, it was only the Sunday night intervention by a Japanese bank that saved Morgan Stanley from total collapse the following Monday morning.

Over the next few weeks, practically the whole of Iceland’s banking sector was nationalized to prevent the ruin of the country’s economy. Not long after that, the British government rolled out its own bailout to avoid the failure of two of its biggest banks. Around the world, mortgages went sour and banks went begging. Jobs disappeared, homes emptied and credit vanished. Construction cranes fell idle worldwide. Contracts and orders were cancelled, retail and advertising space left vacant. Even the assembly of new oil-drilling rigs in the deep seas off the coast of Brazil and the wilderness of northern Alberta, essential to the steady chug of the global economy, ground to a halt for want of a loan.

There was of course no bigger news in the fall of 2008 than the global financial meltdown. It so fully dominated headlines and the public discourse worldwide that other stories, some freighted with consequences just as dire for the economy’s (and the planet’s) long-term health, passed with little notice at all.

There were in particular two other emerging calamities, less publicized but just as awesome in scale—energy scarcity and climate chaos—that are now converging with our economic woes to form the defining crisis of the twenty-first century. If you were watching carefully among the fragments of smashed-mirror information in those chaotic months of 2008, you could piece together a picture that made it clear these were not random, disjointed events. These were tightly interconnected, born of a single unsustainable system in imminent danger of complete failure. Together, they form the chasm that we all must cross as soon as possible. They define the necessity of The Leap.

The sudden halt in our frenzied hunt for more fuel, buried though it was in the news of broader economic chaos, should’ve been more alarming. It came, after all, just a few months after oil prices had reached all-time highs in response to skyrocketing and seemingly insatiable demand. This was a dramatic indication of our proximity to the precipice and the hazardous scale of our possible fall. And if you were keeping careful watch, the chasm’s floor seemed to fall away even further before your eyes in November 2008, with the publication of the International Energy Agency’s (IEA) annual World Energy Outlook—the bellwether of the energy crisis looming in the shadows of the banking disaster.

In conventional energy circles, the IEA’s World Energy Outlook is a document whose importance resides somewhere between essential field guide and holy writ. A comprehensive report on the entire planet’s proven conventional energy reserves—especially the fossil-fuel trinity of oil, coal and natural gas—the Outlook provides the benchmarks used by governments and energy companies alike to set their priorities, make investments and draft policy. The 2008 edition contained an unprecedented admission: For the first time ever, the IEA acknowledged that peak oil was a fixed reality on the horizon. Beyond the peak—the all-time high in global production—the price of oil will climb upward in volatile spikes, availability steadily downward, and competition for the oil that remains only more ferocious.

It was, to be sure, a backhanded admission, easily lost amid the banner headlines of the ongoing economic crisis. The IEA report simply stated that “global oil production in total is not expected to peak before 2030,” implying that it would do so sometime around then. Still, for an organization whose top officials dismissed the very idea of peak oil as mere doomsaying as recently as 2005, it was a startling reversal. So much so that George Monbiot, the influential Guardian columnist and author of Heat, pressed IEA chief economist Fatih Birol for clarification. How, Monbiot wondered, had this remarkable shift in position occurred? Birol replied that the 2008 Outlook was the first one ever to replace “assumptions” about global oil production with actual data from the world’s eight hundred largest oil fields.

Whereas the 2007 Outlook had estimated that the global oil supply was dwindling by 3.7 percent each year due to drying wells and slower flows (meaning that production from new sources had to increase by at least that amount simply to keep global supply steady), the 2008 report revised the rate of decline to 6.7 percent. Under repeated questioning from Monbiot, Birol revealed that the IEA now believed that oil production would reach its global peak by 2020.

“The world’s energy system is at a crossroads”—so read the opening sentence of the 2008 Outlook’s Executive Summary. The next line we’ve seen already: “Current global trends in energy supply and consumption are patently unsustainable—environmentally, economically, socially.” A factsheet accompanying the 2009 Outlook stated the problem even more baldly. “The days of cheap energy are over,” it read, in italicized, oversized type.

Another passage, in boldface this time: “Without a change in policy, the world is on a path for a rise in global temperature of up to 6°C, with catastrophic consequences for our climate.” The conventional energy business—particularly the fossilburning part of it—is the IEA’s primary subject and raison d’être. Owing to this cozy relationship, the IEA is not in the habit of dismissing the status quo of that industry as “patently unsustainable,” nor of describing its path as one barrelling toward catastrophe.

Most remarkable, though, is that the IEA was now making unambiguous and emphatic links between fossil fuel dependency and environmental disaster.

This direct connection between the coming energy supply crunch and the climate crisis was just as apparent when viewed from the precipice in the fall of 2008, but again only if you were watching carefully. Few of us were, of course—in the midst of burst housing bubbles and collapsing banks, a press release like the one issued on August 14, 2008, on behalf of the world’s leading coral reef researchers was almost entirely ignored. (The New York Times, for example, didn’t catch up with the story until January 2009.) When it comes to long-term consequences and global scale, though, nothing that happened in the second half of 2008 was as vital to the health of our collective future as “The Honolulu Declaration on Ocean Acidification and Reef Management.” If the chasm that yawned wide in those months has a bottom, it is a place first mapped by the Honolulu Declaration.

The full import of the declaration is easy to miss, shrouded as it is in the technical language of marine science and public policy. The eight-page document, signed by a dozen of the world’s top coral reef scientists, begins with a detailed explanation of the nature and extent of the acidification problem. Ocean acidification is a phenomenon only recently uncovered but as old as the oceans themselves, governed by a process in which excess carbon dioxide in the earth’s atmosphere is absorbed by the world’s oceans and turned into weak carbonic acid, increasing their overall acidity. Roughly a quarter of the carbon dioxide generated by human industry ends up in the oceans this way.

The Honolulu Declaration was inspired by recent measurements of the mean pH level of the world’s oceans, which has declined from 8.2 to less than 8.1 since the dawn of the Industrial Revolution. The declaration noted that by midcentury our current emissions trajectory would lower the oceans’ pH to a level not seen in “tens of millions of years” and cause “major changes” in marine habitat. “Such changes compromise the long-term viability of coral reef ecosystems and the associated benefits that they provide.” This was an oblique and measured way of saying that the world’s coral reefs—all of them—were on the verge of extinction.

Anyone watching news coverage of the economic meltdown understood immediately what hundreds of billions of dollars in losses meant, but it took some specialized knowledge to understand the enormity of the Honolulu Declaration. You needed to know, for starters, that the pH scale is logarithmic, meaning that a change of 0.1 indicates a 30 percent increase in the acidity of the world’s oceans. You needed to understand as well that a pH of 8.1 is less than 0.1 away from the point at which corals can no longer make reefs, and that the world’s foremost expert on corals— Charlie Veron, former chief scientist of the Australian Institute of Marine Science and a Honolulu Declaration signatory—believes that we are as little as a decade away from that “commitment” point on the pH scale, beyond which there will be no way to save the world’s coral reefs. Furthermore, it helped to know that there have been five mass extinctions of the world’s coral reefs in the distant geological past, all of them caused by overly high concentrations of carbon dioxide in the earth’s atmosphere. And that a quarter of everything that lives in the ocean is dependent on coral reefs for its survival, and that hundreds of millions of people are dependent on all of that marine life for their livelihoods. And ultimately that the discovery of the fact of ocean acidification, through a simple and irrefutable litmus test, a scientific measurement so tried and true it is taught to millions of children in science classrooms around the world, is the strongest piece of evidence yet uncovered of the threat to humanity posed by the climate change crisis. In short, if there’s a canary in the global climate coal mine, its name is ocean acidification, and the Honolulu Declaration is the tune the sick bird is singing on its deathbed.

It is a terrible thing to lose a home or a job; the human costs of the financial collapse of 2008, measured in ruined lives and collapsed communities and multivalent social decay, will surely outweigh even those catastrophic trillion-dollar losses in the long term. The prospect of permanently rising oil prices threatens not only to amplify such problems at every gas pump but also to fundamentally alter the economic equations by which we feed and clothe and house ourselves using goods delivered to us over immense distances by oil’s grace (and often made from the byproducts of its refining). The disastrous BP oil spill in the Gulf of Mexico in 2010 provided a graphic illustration of the staggering size of the modern energy economy and the profound risk involved in its everyday operations. Still, these problems remain comprehensible in human terms. Losses can be calculated, compensation paid out, leaking wells sealed. But there is simply no tabulating the cost of the loss of an entire ecosystem and the permanent alteration of the chemistry of every drop of sea water on the planet—and all the money in the world can’t begin to repair the damage.

The extinction of the world’s coral reefs would be the defining disaster of a less turbulent age all by itself, and the cascade of interlinked calamities that will be visited on the world by climate change will come to define the ultimate boundaries of crisis in the twenty-first century. The real kicker, though, is that all of these crises are deepening more or less simultaneously. Almost in lockstep, actually. This is not an accident or a coincidence. The crises in our economic system, our energy supply and our climate are converging—not just in the sense of separate trajectories pulling together, but also in the way that an optical illusion of multiple images will converge into a singular reality in our field of vision.

What appeared to be a patch of scattered ruts in the path ahead is in fact a single gaping hole. The basic logic of the easy-credit bubble that precipitated the economic meltdown is as much a petrochemical creation as plastic or pesticide, a byproduct of oil’s miraculous energy and the unprecedented rewards reaped by burning it at industrial scale. Another petrochemical byproduct— carbon dioxide—is the primary engine of climate change. In broad strokes, the three-headed crisis maps out like this. Starting in the nineteenth century, fossil fuels became the chief fuels of industry’s engines. Oil—exponentially denser in energy and far easier to transport than any other fuel source humankind had ever harnessed—was particularly crucial to this new industrial order, and it ushered in an era of seemingly boundless expansion.

Wall Street emerged as the most important financier of this expansion, replacing the more modest mercantile system with the frenetic wizardry of corporate high finance. The sheer pace of innovation and growth fuelled by the oil economy supplied the logic for a whole system based on the idea that economic growth could be limitless on a finite planet. This idea found its ultimate expression in an era of credit so abundant it was handed out by the billions without collateral, through financial instruments so complex and obscure that not even the people buying and selling them understood what they were. And the entire process played out under a steadily expanding cloud of carbon dioxide and other greenhouse gases that were slowly but irreversibly changing the earth’s climate on the epochal scale of geologic time. Fossil fuels fed a rapacious economic order driven by the pursuit of growth at all costs, which in turn produced a global environmental catastrophe.

There is only one crisis, just a single deep chasm. And now there is the necessity of crossing it.