A Renewable Energy Future Will Collapse the Financial System

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Energy is the economy. That’s a radical concept because most people think that the economy runs on money. It doesn’t.

What is energy? It is the potential or capacity to do work. The economy runs on work. That’s why energy is the economy. That’s simple.

What is money? That’s a little more complex.

“Money is not the value for which goods are exchanged, but the value by which they are exchanged.”

John Law

In other words, money has no inherent value. Economists often attempt to change the subject by pointing out that money is at least a medium of exchange, a store of value or a unit of account. The same, however, could be said for cigarettes that were used as money in Communist Romania in the 1980s.

“Society runs on energy and materials, but most people think it runs on money…[Money] is created as debt subject to mathematical laws of compound interest…Money eventually gets spent on a good or service which will contain embodied energy. Money is a claim on energy yet its creation is not tethered to energy availability or cost.”

N. J. Hagens

In the end, money–as paper, coins, gold or cigarettes–is just a financial claim on energy, a marker, a unit of account. For example, I may contract someone to do work for me—to build a fence or to move some heavy equipment—and we agree on a payment amount. I pay him dollars for his physical work (joules). He may then use those dollars to buy food (joules), gasoline for his car (joules) or contract someone else’s labor to do some work for him (joules). Money is the medium of exchange but the value exchanged is energy.

Another key point is that money is created as debt. That’s not what I learned in school when my class visited the mint in Washington, D.C. Money is, in fact, created from nothing.

“Money is not a physical thing…Banks and governments can create “Money from Nothing.” Banks create money when new loans exceed loan repayments; Governments create money when their spending exceeds taxation…

“Neither the government nor the banks needs a stock of anything—gold, flowers, chairs, or anything else—before they create money. What they do need are people with whom they can have a financial relationship: taxpayers for the government, borrowers for the banks.”

Steve Keen

If money is created from nothing and it is nothing but debt, then what is debt? Debt is a lien on energy.

It is critical that we understand this.

A barrel of crude oil contains the energy equivalent of about four-and-a-half years of human work (Figure 1). In 2022, the world used 85 billion barrels of oil equivalent from coal, natural gas and oil. At four-and-a-half years of work per barrel, that means that society has 383 billion fossil energy slaves working for us all the time.

Figure 1. One barrel of oil contains 4.5 years of human work or 383 million fossil slaves. Source: Institute for the Study of Energy & Our Future & Labyrinth Consulting Services, Inc.

Let that sink in. That’s magic. That boost in productivity is what created the modern world. Technology and ingenuity were important but played a secondary role to fossil fuels.

We can easily determine how much energy is contained in a barrel of oil. We burn it and measure the heating value as its energy is released.

It’s not so easy to measure the energy contained in renewable sources. One their wonders is that we don’t have to burn anything to produce electricity. Electric power comes directly from a solar panel or a wind turbine. But this makes it hard to compare with fossil energy. There is no barrel of sunlight or wind that we can burn or analyze.

The best way to compare renewable and fossil energy is through power density. Power is the rate at which work can be done and is measured in watts. Power density is the amount of work that can be harnessed from a given area—how many watts we can get per square meter?

Natural gas power density is the electric power produced per square meter of the generating plant. A 25-megawatt mobile gas turbine can occupy as little as 140 m2. Solar power density is the power available per square meter of a solar panel, and wind power density is the power available per square meter of swept area of a turbine.

Figure 2 shows that solar, geothermal, and wind power densities are a fraction of those for natural gas, nuclear, oil and coal. The power density of natural gas is about eighty times greater than solar and two hundred times more than wind.

Figure 2. Median Power Densities of Fossil-Fuel and Nuclear Generation & Renewable Electricity Generation (W/m2). Source: Saunders (2020).

This is not a criticism of renewable energy. It is a measurable fact that electric power generated from wind and solar farms is far less efficient than from fossil fuel and nuclear power plants.

Once the lower productivity of renewable energy is recognized by financial markets, the amount of available credit will radically contract. Debt is a lien on a future energy supply that cannot possibly generate the same returns as the present mostly-fossil energy supply.

“If we are ever to honor our current debts, the amount of energy required will be immense. If the energy is not available, at cheap prices, those debts will never be repaid.

N. J. Hagens

Our entire system of currency, finance and banking is predicated on the future productivity of energy. For the last 200 years, fossil fuels have been the source of that future.

Most of the world’s leaders and the public accept that we are in the early stage of an energy transition away from fossil fuels to renewable energy. Few of them understand what that means for our financial system because renewable energy—for all of its progress and benefits—cannot replace our 383 billion fossil energy slaves.

Money creation is nothing but debt. Debt is an IOU on future energy. If future energy can’t provide the same returns as present energy, money supply and credit will radically contract. A future based on renewable energy will collapse the money supply and the financial system.

Let that sink in.

Art Berman is anything but your run-of-the-mill energy consultant. With a résumé boasting over 40 years as a petroleum geologist, he’s here to annihilate your preconceived notions and rearm you with unfiltered, data-backed takes on energy and its colossal role in the world's economic pulse. Learn more about Art here.

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  1. Daniel J Swanson on January 29, 2024 at 7:27 am

    Hi Art, love your work.

    I think of our modern money as nothing more than a political accounting system. The “power” that money has is political.

    That “power” can easily disappear when political winds change.

    Power in physics is of course very real and well defined.

    • Art Berman on January 29, 2024 at 1:19 pm


      Money has no value. It is a claim or a marker on energy.

      All the best,


  2. John Gentile on January 28, 2024 at 1:45 am

    There are few commentators, or certainly energy consultants, I feel have earned to be held in as high regard, nor trusted as much as you. Your lectures, reports, and interviews are priceless, in my view, to gain an informed and insightful view both into energy and finance. Such a complex web of geophysics, markets. Further, elucidating the understanding of money and work and how energy relates to both inextricably.

    However, I must remind myself, in your asserting the title of this piece, your blind spot is nearly complete. Dumberg formed a similar conclusion and uses the experience in Canada primarily to justify his view. I sense he really believed it though I believe you are being more provocative in your assertion…Ok…

    So, first, please, i do love and respect you as much as I can for as little as know you so please forgive me the criticism as, me too! and probably for most or all over a certain age, such ‘second nature’, we can hardly escape it. With such strong comment about ‘blind spot’ perhaps it’s useful, given the title you selected, to recall a summing up of George H.W. Bush’s presidential re-election campaign. A shorthand both a little vulgar but so accurate as to explain in a few words the election loss completely; “It’s the economy, stupid.”

    For us, “Its the CARBON,____”. Another failing echos the ‘energy blindness’ of the masses discussed above. There is a companion ‘climate destruction’ blindness. I contend for those over a certain age. They can see no different construct. Like the person who stares at a gestalt illusion and can only see the old lady and right before their eyes is a young, beautiful maiden in the same picture. They can stare at the picture forever, the failing to construct the vision of the maiden is IN THEIR OWN MIND.

    In any case, our current systems are at once energizing a system even more powerful and unforgiving than oil or money and that we’ve now set in motion. All to say, it’s ridiculous, given the implication you make, to think a robust and well functioning market economy would collapse due to renewable energy…or any ‘type’ of energy. In that respect, you are entirely inaccurate.

    But of course, we don’t have a well functioning, market economy. Let alone a ‘robust’ one. We have one ADDICTED (to oil) as asserted to the world by President Bush the younger in one of this speeches. Addicts suffer, become very ill or die due to their addiction.

    No. Renewable energy isn’t powerful enough to collapse the economy by itself or even in part but compounding, unrelenting biblical scale weather catastrophes coupled with an addiction to what is the destroyer will, is and will continue to collapse what we thought of as -was once- ‘the economy.’ And the strongest one the world had ever known…

    • Art Berman on January 29, 2024 at 3:55 am

      Thanks for the kind comments, John, and for the blind spot observation.

      A blind spot assumes that I am ignoring or not seeing something. That’s not the case. I just see it differently than you do.

      All the best,


  3. Jon Wright on January 25, 2024 at 1:21 pm

    We truly find ourselves between a very big rock and a very hard place. Renewables will not enable the world we consider normal, and probably won’t be around for long without a fully functional fossil energy economy to underwrite them anyway. Fossil energy on the other hand is non-renewable and dwindling.

    I am curious Art why it is you think this is not going to cause an abject return to medieval conditions, say. (Not to get hung up on finding a precise comparison.) As opposed to your assertion in other places that what this spells for our future, which is (correct me if i recall incorrectly) “a return to the economic conditions of the 1970’s.” I can imagine that we will see days when we have become the equivalent of the 1970’s economy, but i can only see this as a limited-time circumstance that we pass through on our way down. Imagine the chaos in a growth dependent world of 21st Century conditions dependent people and more importantly institutions being forced to try to adapt to an economy that much reduced from what is now required. It seems to me there would be no compound interest and no way to maintain governments and banks for instance on the one hand, and therefore even to finance food production. What am i missing here? Is what i describe here not in fact why systems in decline tend to drop below baseline before slowing returning to it? Baseline being what we can manage in the absense of the anomaly of a fossil-fuel economy? Thanks, what a great reference your page is.

    • Art Berman on January 29, 2024 at 4:20 am


      Comments are not the place to respond to such a broad question about 1970s vs Middle Ages. You may want to schedule a call through the website to discuss it further.

      All the best,


  4. Justin on January 23, 2024 at 5:38 pm

    And who stands to gain from collapsing the system?

    • Art Berman on January 29, 2024 at 3:57 am


      That’s outside the scope of my post. I leave it to you to decide.

      All the best,


  5. Alessio Martinelli on January 23, 2024 at 4:30 pm

    I agree with You that the money is debt and that more money means more energy to be produced.
    However, the money issued by Bank Systems (FED, BCE + commercial banks) is subject to interest. Thus every dollar or euro in our pockets is a debt and the money (Capital + interest) to be returned back to the Bank System is more than the money emitted (Capital). This means that the debts cannot be payable entirely. Furthermore neither a little part of this immense debt can be payable, because the market needs all the money emitted: indeed if money were overabundant there would be a great inflation. Thus, the payment of even a little fraction of the debt could create a great economical crisis.
    The existence of interest over the permanent debts make that the debts increase nearly exponentially. Only economical crisis, wars or natural disasters can lower the debts by eliminating many debtors.
    Our attempt to pay increasing debts is to increase the goods production, thus we need an increasing energy production to compensate the debts increase.

    In this context, it is not appropriate to speak about the alternative between energy from fossil sources and energy from renewable energy: we will need both. Thus for many years both the fossil and renewable energy production will increase.

    The solution is to change the way by which the new money is issued, so that it doesn’t create growing debt. This is our only chance and only after it we will be able to discuss about replacing fossil fuels with renewable sources.

    • Art Berman on January 29, 2024 at 4:24 am


      Thanks for your comments. I don’t think there is a solution to money.

      All the best,


  6. Caroyn on January 23, 2024 at 2:17 am

    I understand you are using published figures of w/m² from Zalk and Bahrens, but does the value for coal plant include the square meters of existing mine and the portion of the railway that is used to bring the coal to the plant? How about the area of mountain tops removed, streams ruined, etc…

    I am always fascinated by the denominator used to calculate a comparison. These folks were using m², while others use a denominator of person hours, fresh water, pollutants released, etc .

    I’m looking forward to a time when lifecycle analysis work will use a common set of denominators, so that we can compare apples to apples.

    • Art Berman on January 29, 2024 at 4:25 am


      Why don’t you read Zalk and Behrens as well as Smil and others for the answers. It is their work, not mine.

      All the best,


  7. Ken on January 22, 2024 at 8:44 pm

    The Malcolm Bendall Lectures / OPEN SOURCE ACCESS To The MSAART PLASMOID TECHNOLOGY As Announced By Randall Carlson On The Joe Rogan Podcast



    • Art Berman on January 29, 2024 at 1:18 pm


      Thanks for the references.

      This kind of deus ex machina research is part of the human technology fantasy that we can continue consuming more energy and destroying the planet without any constraints of limits.

      All the best,


  8. Geert Verbeurgt on January 22, 2024 at 3:53 am

    Yes, good article about the fuel/labour that keeps the economy running, but money is the lubricating oil that smoothens the machine.

    • Art Berman on January 22, 2024 at 3:37 pm


      Thanks for your comments.

      All the best,


  9. Steve on January 22, 2024 at 1:39 am

    Great read though I’d frame it somewhat different via the factors of production, i.e. land, labor, and capital. Energy is an out but also and input seen as a labor surrogate.

    Separate question, as a medium to long term horizon allocator which do you favor, drillers or producers?

    • Art Berman on January 22, 2024 at 3:39 pm


      Thanks for your comments. Please contact my business manager and we can schedule a call to discuss the longer term

      [email protected]


  10. Joe Clarkson on January 21, 2024 at 11:56 pm

    Power density per powerplant footprint is a strange way to compare energy resources. The footprint of a fossil or nuclear powerplant is small, but that small area should be supplemented by the area of everything that gets fuel to the powerplant. Wells, pipelines, tanks, and mines all have area that you don’t include.

    I suggest that a better comparison would be to compare levelized cost per kWh plus cost per kW of firm capacity. Even though that method excludes externalities, it’s far more important than W/m2.

    The big drawback of renewables is not the cost of generation but the fact that, except for hydro, biomass and biofuels, renewables can’t provide firm capacity (unless a lot of batteries are included). This is their real weakness, not power density.

    • Dave on January 22, 2024 at 2:55 pm

      Read Vlacav Smil’s “Power Density” book. He quantifies exactly what you asked for. The power density of fossil fuels still comes out much much more than so-called renewables. Smil is actually sympathetic to using renewables, but is honest about this fact. He’s written a bunch about this topic, very interesting and he tries to quantify everything he discusses.

      • Art Berman on January 29, 2024 at 1:11 pm

        Yes, Joe. I’m quite familiar with all of Smil’s work.

        All the best,


    • Art Berman on January 22, 2024 at 3:42 pm


      Thanks for your comments.

      Power density is a common measure of efficiency in the electricity industry. It’s physics, not economics/levelized cost or externalities.

      All the best,


      • hu owens on January 27, 2024 at 4:32 pm

        excellent response Art to Joe who is also an excellent analyst. Joe’s comment has a ring of veracity but it doesn’t matter. IT is a question of degree. The bald fact is that “renewables” cannot compete with fossils on the basis of work accomplished. With less work done it’s party over.

        • Art Berman on January 29, 2024 at 3:56 am

          Thanks, Hu.

          All the best,


  11. Matt Mushalik on January 21, 2024 at 11:33 pm

    Energy density needs to be defined more comprehensively. For example, for shale gas, you have to consider the whole area in which gas wells are drilled. For brown coal the area covered by open pits. You would also have to add the area needed for carbon sinks like timber plantations.

    In many countries space does not matter, but distance for transmission lines which add extra cost.

    There are many other factors which determine the efficiency of energy systems. Banks will look at these characteristics. Dispatchability is important as this requires energy storage for renewables.

    At present, the (wholesale) cost of electricity in Australia is arrived at in auctions, sometimes with perverse outcomes (negative prices)


    which is a reflection of the competing forces of different fuels


    This article describes the bid stacks:


    • Art Berman on January 22, 2024 at 4:08 am


      EROI is supposed to provide the accounting that you mention but that’s not what power density measures. This is physics, not economics.

      All the best,


  12. Pwelder on January 21, 2024 at 6:12 pm

    Aside from this fine piece, I haven’t seen much – (make that any) – comment on the relationship between energy realities and public finance. Although Gail Tverberg over at Our Finite World seems to be moving closer to the topic.

    Are you aware of any others in government or academia thinking along these lines?

    • Art Berman on January 21, 2024 at 9:16 pm


      I cited Nate Hagens and Steve Keen in the post. I doubt Gail has the background.

      All the best,


  13. Juan Ituarte on January 21, 2024 at 5:12 pm

    Buenas tardes.
    Me gusta mucho su explicación sobre que la economía es energía. Lo mismo sobre que el dinero es un derecho sobre la energía presente y la deuda sobre la futura. Encuentro muchas similitudes entre sus postulados y los del dr.Tim Robins y su SEED.
    Muchas gracias, le seguiré leyendo.

    • Art Berman on January 21, 2024 at 5:26 pm


      Gracias. Espero sus comentarios!

      Saludos, Art

  14. Edward Moore on January 21, 2024 at 2:33 pm

    Great refreshing articles. Big fan. Thank you for clearing up the static. Your team really gets to the bottom of things.

    • Art Berman on January 21, 2024 at 3:44 pm

      Thanks, Edward. I have no team. It’s just me.

      All the best,


  15. Will Stewart on January 21, 2024 at 2:33 pm

    There are multiple reasons (such as peak oil and other resource constraints) that the financial system will contract. However, IMO it is a long stretch to focus on energy density to then conclude “Once the lower productivity of renewable energy is recognized by financial markets, the amount of available credit will radically contract. ” I don’t dispute the latter will happen, just that the the reason is more in line with the fact that requisite resources to directly replace fossil fuels with renewable energy exceed the economically extractable supply.

    Also, ‘efficiency’ of a renewable energy source is not directly comparable to the ‘efficiency’ of a fossil fuel power source. Mounting 22+% efficient solar panels over rooftops, asphalt surfaces, etc that are at 0% efficient is an infinite increase in efficiency.

    • Art Berman on January 21, 2024 at 3:44 pm


      I disagree that renewables and fossil energy should not or cannot be compared. They must be because those are the choices. I agree that there are no ideal means of comparison. I chose power density because it is commonly used and addresses the electric power part of the comparison which is all that renewables can practically achieve.

      All the best,


  16. John Munter on January 21, 2024 at 2:02 pm

    Solar and wind require fossil fuels and need to be replaced and recycled, but geo-thermal once the pump is primed wouldn’t that be preferable?

    383 billion slaves assumes no externalities like social cost of carbon and social cost of methane. It also assumes there are limits to time and space and imaginative financial systems. In deserts, oceans, and underground there are lots of space. In long term planning and investment, more externalities are taken into account that may require more public-private partnership.

    • Art Berman on January 21, 2024 at 3:41 pm


      Geothermal has terrible power density and EROI.

      All the best,


      • Scott R Relien on January 21, 2024 at 4:17 pm

        Very well articulated & consise overview of energy & the financial system.

        I continue to believe that EROEI (physics & The Laws of Thermodynamics) will win the ‘renewable’ argument. However, some authors believe that expensive renewable energy costs (thus expensive food, heating, travel costs) is the real goal of the World Economic Forum. Sadly, I’m not sure those who believe this are wrong as the financial viability of ‘renewable’ energy (as you articulated) is obviously not compatible with modern middle-class Western society.

        Thank you again for simplifying a very complex topic!

        • Art Berman on January 21, 2024 at 5:24 pm


          EROI is conceptually important but not practical because it has too many unknowns and dependent variables.

          All the best,


        • Replenish on January 22, 2024 at 1:03 pm

          Thanks for the article!

          Scott, there’s no secret plan to increase energy prices and restrict travel, private vehicle transportation, shipping and textiles. WEF affiliated orgs openly state their goals and objectives with timelines. For example, UN SDGs 21/30, C40 Cities and UK FIRES Absolute Zero. Well intentioned activists cry “world leaders have had 60-70 yrs to mitigate overshoot and collapse” an then call you a CT if you point out how the events of the past 3 years further Degrowth, Regional Trade Blocs and the Post Carbon goals of managed economic contraction and desirable and humane population reduction. Prepare accordingly!

        • Jon Wright on January 25, 2024 at 1:28 pm

          The World Economic Forum is not driving the bus, Scott. Although it would certainly like to think so, and for the rest of us to agree.

          Physical energy reality is driving the bus. Larger forces that are impartial to the human condition. The selection of people who make up the WEF will increasingly lack the means to exist in a future of declining energy returns.

  17. Robert Wise on January 21, 2024 at 12:51 pm

    It’s great to see the link between energy and finance spelled out so clearly. And your conclusion is at least partly right. But on the way you progress to a definition of power density based on the footprint of the generating plant, and then equate that with efficiency. Fuels are usually compared based on energy density- tough to apply to wind or solar because there’s no fuel to measure. I think it’s more accurate to say that the financial system is on the road to collapse, as Hagens points out, and that a huge investment in low yielding power sources may speed it on its way.

    • Jacco Mooijer on January 21, 2024 at 9:34 pm

      Dear Art,
      Interesting article when it comes to linking both systems, energy and finance. My limited thinking capacity however does not follow the comparison based on power density you apply.
      I guess comparing electrons with molecules in this way of looking at square meters of land area looking at a 25 MW gas fired turbine or powerplant versus an appliance area when it comes to PV or CSP or rotor covered area for a wind turbine is somewhat strange. I would probably try to calculate the energy generated by each method based on cost per unit MW provided taking into account fabrication, erection, logistics, maintenance cost, etc. plus the cost of the natural gas (obtaining it is a cost, it is not obtained for free) and of course the cost of solar irradiation or wind if will, of which the latter are sort of freely available. Perhaps fossil still wins, but the numbers would be different i think.

      • Art Berman on January 21, 2024 at 11:16 pm


        Power density is a standard way to compare fossil fuels and renewable energy.

        All the best,


  18. Richard HA on January 21, 2024 at 12:01 pm

    Ancient Hawaiians had no metals so they had no money. Yet, they had to trade. This resulted in “the more you give the more you receive” to me, that reciprocity was the basis of Aloha!!

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