“Clean coal,” according to GMO’s Jeremy Grantham, is a big lie worthy of Nazi propagandist Joseph Goebbels. Clean coal is an oxymoron, but Grantham's choice of metaphors is intentionally hysterical. Not even the politicians who endorse the concept every four years believe their own hooey.

But in his latest quarterly newsletter, Grantham parlays several perspicacious observations into a grand Doomsday theory of an environmental apocalypse that stretches credulity. He calculates that carbon emissions have increased global temperatures by 0.8 degrees centigrade, or 40 percent of the 2 degrees centigrade increase that would cause very serious damage.

The only way to avert such a catastrophe and remain “even a little safe,” in Grantham’s view, is for the oil companies to leave 80 percent of their proven reserves in the ground. The chances of that he estimates are “nil.”

Maybe so, but the problems Grantham addresses are already being resolved, albeit slowly, by technology and other market forces. Coal is indeed the dirtiest energy source, but companies that use it are rapidly switching to cheaper, cleaner natural gas at a rate likely to accelerate in the next decade. Already, the coal industry is in decline, as mines shutter and workers get terminated.

Grantham uses the problem of climate change and resource constraints to challenge the entire concept of economic growth as we know it. On one point at least, he is spot on, though hardly original. With population growth, the key driver of GDP expansion, slowing on a global basis in the next 50 years, it will inevitably translate into slower growth around the world. All other things being equal, slower population growth reduces the rate of increasing resource utilization, though we’ve all been told to expect the developing world to consume more proteins, minerals and energy, etc.

Admitting that the range of uncertainty is very large, Grantham spells out his Malthusian, Al Gore-like scenario as follows: “The bottom line for the U.S. is that if resource prices rise at an accelerated 9 percent, then obtaining sufficient resources will use up all our growth potential in just 11 years,” he writes. “If we get lucky and costs decelerate to 5 percent a year, then we will have 31 years to fix our problems.”

To justify his zero-growth prediction, Grantham turns to a fascinating paper on productivity by Northwestern University economist Robert Gordon that uses statistics on the U.K. economy’s growth from 1300 to 1906 and then switches to the U.S. Fairly enough, Grantham challenges some of the logic behind how we measure U.S. GDP growth today. So pardon me for questioning the measurement accuracy of U.K. growth from 1300 to 1770. That is a fair game.

But Gordon’s encapsulated view is that the world experienced a once-in-a-millennium surge in productivity between 1850 and about 1965. Most of us were mesmerized by the advent of the PC and the Internet in the 1980s and 1990s, but Gordon correctly points that advances like the railroad, telephone, electricity, refrigeration, and antibiotics went much further to improve our quality of life than Facebook has.

Gordon’s problem is that he assumes that productivity will inevitably decline since most of the low-hanging fruit of the Industrial and Information revolutions are already here. Grantham buys it. Maybe they are right, maybe not.

A capitalist who started two companies and employs 600 people, Grantham takes this argument a step further into what becomes an anti-capitalist, environmental near rant. Eventually, as the price of discovering mineral and energy resources grows ever more expensive, GDP actually could rise as we are forced to spend trillions ripping off the snowcapped peaks of Mt.  Rainier or Mt. Kilimanjaro or drilling 60,000 feet below the Gelapagos Islands (my words, not his) for the last drop of oil.

This is a finite world with finite resources, as Grantham says. But human imagination is certainly not finite. Actually, it’s practically unlimited. Two weeks after the International Energy Agency predicted the U.S. will become self-sufficient in energy in the next two decades, it’s worth noting that we already have electric cars. And while politicians may babble about clean coal, they might as well be talking about smart buggy whips.