You think you're discussing technologies, and you quickly discover that you're discussing belief systems. The battle among environmentalists over how or whether our future energy is supplied is a cipher for something much bigger: who we are, who we want to be, how we want society to evolve. Beside these concerns, technical matters – parts per million, costs per megawatt hour, cancers per sievert – carry little weight. We choose our technology – or absence of technology – according to a set of deep beliefs: beliefs that in some cases remain unexamined.

The case against abandoning nuclear power, for example, is a simple one: it will be replaced either by fossil fuels or by renewables that would otherwise have replaced fossil fuels. In either circumstance, greenhouse gases, other forms of destruction and human deaths and injuries all rise.

The case against reducing electricity supplies is just as clear. For example, the Zero Carbon Britain report published by the Centre for Alternative Technology urges a 55% cut in overall energy demand by 2030 – a goal I strongly support. It also envisages a near-doubling of electricity production. The reason is that the most viable means of decarbonising both transport and heating is to replace the fuels they use with low-carbon electricity. Cut the electricity supply and we're stuck with oil and gas. If we close down nuclear plants, we must accept an even greater expansion of renewables than currently proposed. Given the tremendous public resistance to even a modest increase in windfarms and new power lines, that's going to be tough.

What the nuclear question does is to concentrate the mind about the electricity question. Decarbonising the economy involves an increase in infrastructure. Infrastructure is ugly, destructive and controlled by remote governments and corporations. These questions are so divisive because the same world-view tells us that we must reduce emissions, defend our landscapes and resist both the state and big business. The four objectives are at odds.

But even if we can accept an expansion of infrastructure, the technocentric, carbon-counting vision I've favoured runs into trouble. The problem is that it seeks to accommodate a system that cannot be accommodated: a system that demands perpetual economic growth. We could, as Zero Carbon Britain envisages, become carbon-free by 2030. Growth then ensures that we have to address the problem all over again by 2050, 2070 and thereon after.

Accommodation makes sense only if the economy is reaching a steady state. But the clearer the vision becomes, the further away it seems. A steady state economy will be politically possible only if we can be persuaded to stop grabbing. This in turn will be feasible only if we feel more secure. But the global race to the bottom and its destruction of pensions, welfare, public services and stable employment make people less secure, encouraging us to grasp as much for ourselves as we can.

If this vision looks implausible, consider the alternatives. In the latest edition of his excellent magazine The Land, Simon Fairlie responds furiously to my suggestion that we should take industry into account when choosing our energy sources. His article exposes a remarkable but seldom noticed problem: that most of those who advocate an off-grid, land-based economy have made no provision for manufactures. I'm not talking about the pointless rubbish in the FT's How To Spend It supplement. I'm talking about the energy required to make bricks, glass, metal tools and utensils, textiles (except the hand-loomed tweed Fairlie suggests we wear), ceramics and soap: commodities that almost everyone sees as the barest possible requirements.

Are people like Fairlie really proposing that we do without them altogether? If not, what energy sources do they suggest we use? Charcoal would once again throw industry into direct competition with agriculture, spreading starvation and ensuring that manufactured products became the preserve of the very rich. (Remember, as EA Wrigley points out, that half the land surface of Britain could produce enough charcoal to make 1.25m tonnes of bar iron – a fraction of current demand – and nothing else.) An honest environmentalism needs to explain which products should continue to be manufactured and which should not, and what the energy sources for these manufactures should be.

There's a still bigger problem here: even if we make provision for some manufacturing but, like Fairlie, envisage a massive downsizing and a return to a land-based economy, how do we take people with us? Where is the public appetite for this transition?

A third group tries to avoid such conflicts by predicting that the problem will be solved by collapse: doom is our salvation. Economic collapse, these people argue, is imminent and expiatory. I believe this is wrong on both counts.

Last week something astonishing happened: Fatih Birol, the chief economist of the International Energy Agency, revealed that peak oil has already happened. "We think that the crude oil production has already peaked, in 2006." If this is true, we should be extremely angry with the IEA. In 2005 its executive director mocked those who predicted peak oil as "doomsayers". Until 2008 (two years after the IEA now says it happened) the agency continued to dismiss the possibility that peak oil would occur.

But this also raises an awkward question for us greens: why hasn't the global economy collapsed as we predicted? Yes, it wobbled, though largely for other reasons. Now global growth is back with a vengeance: it reached 4.6% last year, and the IMF predicts roughly the same for 2011 and 2012. The reason, as Birol went on to explain, is that natural gas liquids and tar sands are already filling the gap. Not only does the economy appear to be more resistant to resource shocks than we assumed, but the result of those shocks is an increase, not a decline, in environmental destruction.

The problem we face is not that we have too little fossil fuel, but too much. As oil declines, economies will switch to tar sands, shale gas and coal; as accessible coal declines, they'll switch to ultra-deep reserves (using underground gasification to exploit them) and methane clathrates. The same probably applies to almost all minerals: we will find them, but exploiting them will mean trashing an ever greater proportion of the world's surface. We have enough non-renewable resources of all kinds to complete our wreckage of renewable resources: forests, soil, fish, freshwater, benign weather. Collapse will come one day, but not before we have pulled everything down with us.

And even if there were an immediate economic cataclysm, it's not clear that the result would be a decline in our capacity for destruction. In east Africa, for example, I've seen how, when supplies of paraffin or kerosene are disrupted, people don't give up cooking; they cut down more trees. History shows us that wherever large-scale collapse has occurred, psychopaths take over. This is hardly conducive to the rational use of natural assets.

All of us in the environment movement, in other words – whether we propose accommodation, radical downsizing or collapse – are lost. None of us yet has a convincing account of how humanity can get out of this mess. None of our chosen solutions break the atomising, planet-wrecking project. I hope that by laying out the problem I can encourage us to address it more logically, to abandon magical thinking and to recognise the contradictions we confront. But even that could be a tall order.

• A fully referenced of this article can be found on George Monbiot's website