What the Global CO2 Shortage Teaches Us About the Modern Economy and Entrepreneurial Innovation

What the Global CO2 Shortage Teaches Us About the Modern Economy and Entrepreneurial Innovation
Green ballons bearing the inscription "CO2" are fluttering in a hall during the opening day of the Gruene Woche (Green Week) international agriculture fair in Berlin on Jan. 17, 2020. (Tobias Schwarz/AFP via Getty Images)
Zilvinas Silenas

It seems like we are running short on all sorts of things these days, including CO2 (carbon dioxide).

YahooFinance recently reported that Italian drinks companies can’t get enough CO2 to put fizz into their cans and bottles, as gas producers cut output in response to rising energy prices.

"Our suppliers have informed us they are struggling to find CO2 because the Ferrara plant operations are curtailed due to high energy costs," Alberto Bertone, CEO and chairman of Italian mineral water firm Acqua Sant'Anna, told YahooFinance.

The shortage isn't confined to drinks companies, however. In December, Patrick Carroll of the Foundation for Economic Education wrote about how the meat industry in the UK was facing a similar shortage. These stories tell a bigger story of interconnectedness in the economy, and how the removal of one element leads to a cascade of other problems.
The carbon dioxide used in these particular cases comes from the production of synthetic fertilizer. The Haber-Bosch process uses natural gas to make nitrogen fertilizer. If it weren't for this process not only would we not have fizzy drinks, but literally billions would starve. Medieval agriculture lacking fertilizer produced about 10 times fewer crops per seed than modern agriculture; a medieval farmer collected four seeds for every seed planted, while modern farming methods yield 30 to 40.

The fact that CO2 is captured, packaged, and sold illustrates something else. First, rather than being wasteful, modern industrial production is a very frugal, snout-to-tail operation, much more efficient than anything that your average "organic medieval farmer" or hunter-gatherer living “in harmony with nature” could achieve. (If you're fascinated with what Native Americans produced out of a buffalo, you would be amazed by what industrial farming extracts out of a cow carcass.)

Second, entrepreneurial innovation turns one man's trash into another man's treasure. Until humans figured out what to do with CO2, it was trash—just like oil and coal were useless before we figured out how to use them. Even though we call them “natural resources,” coal in its natural form is full of impurities and difficult to use for metallurgy. It needs to be turned into coke first. Similarly, we don't use crude oil, but refined products of oil—from gasoline to plastics. What unites all these cases is that without innovation, all the things we regard as "natural resources'' wouldn't be resourceful at all.
Third, the current industrial production is a carefully choreographed performance directed by billions of conductors. If a lack of CO2 causes major disruptions, imagine what complete removal of fossil fuels would do. It isn't as simple as switching to a bicycle or a Tesla. Fossil fuels are turned into energy, fertilizers, plastics, concrete, and lipstick (to name a few); removing them from the industrial world would be very costly, and doing that without feasible substitutes is nearly impossible without severely impacting our modern way of life.

Of course, it isn't impossible to reduce the use of fossil fuels. After all, the economy of medieval Europe was very much wood-based, where it was a main fuel source and used as a building and crafting material. The modern economy transitioned to metal and fossil fuels because they were better and cheaper than wood. The same thing could happen to fossil fuels—but we must first find better and cheaper alternatives.

Environmentalists are very good at identifying complex links in ecosystems, and understanding how the removal of key species can lead to dramatic effects on plants and animals. So it's puzzling that when it comes to the modern economy, environmentalists often seem oblivious to the drastic adverse effects their proposal would wreak on humans.

Proposing to ban fossil fuels and not providing a better and cheaper alternative is tantamount to getting rid of photosynthesis in an ecosystem.

I'm certain that Italian soda makers will find an alternative source of CO2, and their Aperol Spritzes won’t be flat this summer. But the next time you are sipping your Coke, try to appreciate the miracle of the modern economy, where a byproduct of fertilizer tingles your tongue.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Zilvinas Silenas became president of the Foundation for Economic Education (FEE) in May 2019.
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