Category Archives: energy and climate change

Gigatonne Lab: Why? What? How can you help?

Climate change is one of the most profound challenges we face today. We need to reduce emissions urgently and our progress was too slow – even before the election of President Trump. I’m part of creating a Gigatonne Lab, the brilliant idea of the brilliant Zaid Hassan, because I think it would accelerate our shift to a low-carbon world. Here’s the why, what, how of the Gigatonne Lab – and an invitation to help.

WHY?

Climate change is widely acknowledged to be one of the most profound challenges we face today.

  • The Paris Agreement sets a welcome, and hugely stretching, target: “holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels.”
  • What is needed now is implementation. To even get close to the ambitions of the Paris Agreement we need emission reductions urgently, and we need all society to play their part.

unep-emissions-gap-2016
UNEP Emissions Gap report 2016

But too little is happening.

  • Even if countries deliver on their Intended Nationally Determined Contributions (INDCs, the emission reductions they volunteered in the run-up to Paris), then it is estimated we will see ~3.7C warming.
  • We risk living in a world of run-away climate change, with devastating consequences for many parts of the world, especially the Gulf nations and countries in tropic regions.

There are a host of brilliant initiatives…

Here are just a few:

  • Accelerating research and development:
    • Missions Innovation aims “to accelerate the pace of clean energy innovation to achieve performance breakthroughs and cost reductions to provide widely affordable and reliable clean energy solutions that will revolutionize energy systems throughout the world over the next two decades and beyond.”
    • Breakthrough Energy, which has $1b from Bill Gates, “is committed to investing in new technologies to find better, more efficient and cheaper energy sources.”
  • Addressing systemic barriers in US electricity sector:
    • eLab “focusses on collaborative innovation to address critical institutional, regulatory, business, economic, and technical barriers to the economic deployment of distributed resources in the U.S. electricity sector.” through three annual working group meetings, coupled with on-going project work.

…but there is still a gap on implementing rapid decarbonisation.

  • We believe that there are too few efforts at deploying existing solutions across many sectors that will have an immediate impact on global emissions.
  • This is a particular need right now, as the Trump Administration acts against addressing climate change.

Now is the time to make rapid decarbonisation happen.

  • We believe there is a needed for a new vehicle that:
    • tests and then invests in solutions that can make a significant difference now.
    • attracts attention through its ambition and impacts
    • provides lessons on what does and doesn’t work.
    • that demonstrates to others that they can reduce carbon emission where they are.

Enter the Gigatonne Lab.

WHAT?

An international collaboration to identify and launch a portfolio of initiatives to reduce global greenhouse gas emissions (CO2e) by one gigatonne within a two-year timeframe.

  • Goal. Ignite emission reductions at the scale and urgency required to hold the increase in the global average temperature to well below 2 °C above pre-industrial levels by demonstrating how to take 1GT out of the global economy in a short-time frame.
  • Outputs.
    • A portfolio of solutions which cumulatively reduce global greenhouse gas emissions (CO2e) by one gigatonne (a billion tonnes) within a two-year timeframe.
    • A database on insights into technologies, solutions and efforts to diffuse them, so that others can apply what does work and avoid ones that don’t.
    • Many people inspired and equipped to pursue emission reductions at scale and with urgency, because of the high-profile example of the Lab and the specific insights it has generated.

What the Gigatonne Lab would do

There are many possible configurations, and the specifics would vary depending on who gets involved. The current design can be summarized as:

  • Five teams. Each multi-disciplinary team of approximately 35 people would have a focus, either regional (e.g. US) or sectorial (e.g. shipping). They would be tasked with abating 200 MT in 2 years in that domain.
  • An open innovation pipeline. Each team would have a database of the most viable solutions for their area of focus. There would be an open invitation for others to suggest additions.
  • Fast stress-testing. The team would select the best remaining solution, and stress test it. What would need to be true for this solution to make a good-enough contribution? Are those conditions met? After a solution has passed or failed a stress-test, the team would move on to the next one.
  • Swift move to investment. If the solution passes the stress-test then a sub-team would move to implementing.
  • The Lab Fund. The Lab would have a fund of suitable size available to invest.
  • Wide pool of participating organisations. The solutions would be implemented within the wide pool of participants, who would be big corporations, cities, and other public bodies. These organisations would benefit from the finance to address climate change, and the lower risk profile of stress-tested solutions.
  • The secretariat. The five teams would be supported by a secretariat, who make sure guide the teams, make sure that lessons are being learnt and acted on, communicate and engage with the wider world as well as connect with the funders and other key stakeholders. 

HOW?

How can we get started?

Over the last few years, Zaid has spoken with tens of possible partners around the world. The typical reaction is: ‘wow, too ambitious; if it happens we’d love to join in’.

Now, a couple of things have shifted since those conversations.

  • The science is telling us more bad news about climate change.
  • The Paris Agreement has committed the world to a more aggressive reductions trajectory.
  • The Trump Presidency threatens to suck momentum out of action across the world.

I sincerely believe that the Gigatonne Lab will be much more challenging to start than to run. Once we have a big enough fund then the struggle will be dealing will the applications from people wanting investment. No, getting to that momentum will be tougher.

So, the key question is: how can we get to that position? My answer is to make a simple first step:

  • A global investigation. We believe we could run a series of workshops in different parts of the world which would aim to get the ball rolling.
    • Test our key hypotheses:
      • There are solutions that are can be unblocked through the vehicle of the Gigatonne Lab.
      • There are sources of funding which want to accelerate decarbonisation (and take the wind out of Trump’s sails).
    • Identify the best 5 segments (sectors, regions or technologies) to the GTCO2e.
    • Create the starting database of possible solutions.
    • Identify team members and participating organisations who bring the required expertise and attitude.
    • Create excitement and anticipation.
    • Estimate the size of investment Fund and operating costs required.

How can you help?

There are several ways you can join in:

  • Funding. So, we need cash. Obviously. There are small and large versions of what global investigation could be. The first dollop can bring in the next.
  • Brand. Credibility attracts others. Your brand could help us bring in other partners or more money.
  • Expertise. Our expertise is in running innovation processes that have systemic effects – not cliamte change solutions. We will need partners and people who can help us choose the right 5 foci, and then discover, test and scale the best solutions.
  • Insight. You can help us improve by giving us feedback. You can show that it is not needed (rather than needed but difficult). Or you can have suggestions on how to go forward from here.

How would you benefit?

Well, the long-term benefit is reducing the risk of runaway, civilisation-undermining climate change. In the short-term how about:

  • Early access to the innovation pipeline. You would know about which solutions are ready (and which not) before others, giving you a possible first-mover advantage.
  • Proof of high-ambition climate action. Many companies have made bold promises but struggle to make the internal investments to fulfil those promises. Supporting the Gigatonne Lab would demonstrate that you are a leader on climate action.
  • Financial eturns on climate solutions. We anticipate the fund will be run to give investment returns. You could make money on this deal.

 

Personally, I know that the Gigatonne Lab is a risky venture. But what is the point of working on climate change if you are not going to take risk? And, realistically, will we be able to address climate change without a range of highly-ambitious, individually-risky efforts? This is one of my high-risk, high-return projects in my portfolio. It could never get started, but with incredibly interesting insights along the way.

Or, it could start – and be part of putting human civilisation on a sustainable footing. That’s worth a bit of risk. THat’s why I’m delighted to be an Affiliate of Zaid’s business, Roller Strategies, trying to make the Gigatonner Lab happen.

Energy revolution: exponential except for sluggish incumbents

Earlier this week I attended, and was @TheCrowd tweeter, at XEnergy, a half-day conference on the energy revolution organised by The Crowd. I was moderating the roundtable on the Energy Revolution. So, I had a ringside view of what is going on, and how big companies are responding. I can see what’s going on in five categories (see diagram) and how big companies are responding in one word: sluggishly, because they only think in terms of a financial case for marginal efforts. They risk missing out, and we risk more delay in getting to a low carbon world.
 

What’s going on in the energy revolution?

screen-shot-2016-11-23-at-11-03-52
 
The first category of activity in the energy revolution is technologies for energy production and use. At the conference people were getting excited about storage (“less than five years away”). As Michael Liebreich makes clear in this brilliant 2016 Bloomberg New Energy Finance keynote, we have already seen a miracle in renewable energy. Wind costs have fallen 50% since 2009. Solar PV costs have fallen 80% since 2008. This is having consequences. US independent oil and gas producer solvency ratios have deteriorated, with 69 companies under credit ratings review. Coal is in distress. The last 3 years have seen GDP growth with carbon emissions growth. 
 
But more important are digital technologies, that control and match the production and use of energy. By far the most astonishing presentation of the day was from Mustafa Suleyman of Deep Mind, the Ai research company recently bought by Google. Their mantra is “solve intelligence; use it to make the world a better place”. Deep Mind is famous for being the first computer to beat a person at Go, the fiendishly difficult board game. They did this by throwing lots of data at an AI, and then letting that AI learn for itself, not from pre-determined rules about the game ‘Go’.
 
Now here’s the thing about ‘solving intelligence”. If you do that with Go, then you can do that with lots and lots of situations where there is more data than a human mind can cope with. One situation like that is energy management in data centres. These clusters of servers – on which your email, this blog, any internet really – sit consumer around 3% of the world’s energy. Google engineers had been pretty savvy on energy use in Google’s own sever farms. Deep Mind learnt from the data and had novel ideas that added up to an extra 40% of savings.
 
Let that sink in. The best specialist engineers in the world were out by 40%.
What a boon to the world to roll out that problem-solving capability across many, many domains! But. Do you feel safe in your job? If you do, then you either spend all your time doing non-routine things, or your function doesn’t depend on using data – or you’re not paying attention.
 
As well as control, the other critical thing digital technologies can do is match generation and use, on much quicker cycle times and with much greater accuracy. The possibility is of only producing what is needed at the moment it is needed. Which reduces the requirement for spare capacity or base-loads. The vital element here is the interfacing between all the various digital control systems and data. The other thing, of course, is avoiding the rebound effect, where the efficiency gains are wiped out by using the newly-released resources in other impactful ways.
 
No one technology makes up the energy revolution. Instead the potential comes from being able to the combine many, especially the ability to make many interrelated decisions quickly. 
 
A third category are social technologies that underpin the relationships between system actors. We’re very used to generators generating, users using and contracts between the two making sure each party knows what they’re getting. But what if someone has a solar panel on their roof? Sometimes they are a producer, sometimes a consumers. What are the right contractual relations for such a ‘prosumer’?
 
This is what people mean when they say ‘business models are challenged’. The existing relationships no longer fit with what the technologies can do. and the social technologies like contracts that govern those relationships are obsolete. As the value starts to go to those who can match better, then expect to see the rise of more platform business models, that create value by facilitating exchanges between two or more interdependent groups. Will the trade din ata about energy production and use be more valuable than the energy itself?
 
The two remaining categories are physical infrastructure and enabling context. We risk locking ourselves into a grid which is well-suited for the past – a small number of large producers – rather than the future – a large number of small producers. Whatever else one thinks of nuclear and Hinkley C, it risks crowding out the investment needed for a diffuse, dynamic grid. The roundtable participants were full of tales of their staff resisting adopting new technologies, and so the company missing out.
 
 

The sluggish response from big companies

When people talked of their experience in big companies we, inevitably, talked about the business case. People had been successful in getting capex, but often the teeth of opposition. There is lots of baggage that ‘sustainable’ must mean costly. Energy itself is rarely considered a strategic priority: either the cost to the business is too small, or it is assumed to be a given. There’s nothing we can do about it, so let’s comply, be efficient and put our scarce capital behind other ways our company can win.
 
All this reminded me of Clay Christensen’s classic HBR piece: “Innovation Killers: How Financial Tools Destroy Your Capacity to do New Things”. He wasn’t writing about sustainability, but just the lessons of how normal financial decision-making lets companies down. (If you are interested in the business case for sustainability then you must read the full article.) The key insight for energy and big business is this:
 
“The way that fixed and sunk costs are considered when evaluating future investments confers an… advantage on challengers and shackles incumbent firms.”
 
In any NPV calculation you look at the marginal cost and benefit – the extra cash invested to make something new happen and the extra cash back in over time. Everything else is assumed to continue on as before, with fixed costs and the same returns over time. The decision on the investment is treated as only about the new cashflows. It’s not worth including the existing cashflows in the analysis because of an unconscious assumption they will not change. 
 
That’s fine “as long as the capabilities required for yesterday’s success are adequate for tomorrow’s as well”. So, it’s not fine in a period of revolution. If new capabilities are required for future success, then the existing ones are going to become obsolete. The cash spent on maintaining those current capabilities is a waste but, because of the unconscious assumption that things will not change, it does not get included in the marginal investment analysis
 
On the other hand, challengers are looking at the total cashflows in and out. In a period of change, they had the advantage because they are considering how best to use all their resources, not just the marginal part (because most of the budget is already spent in people’s heads on the usual stuff, even before the year begins). 
 
In the HBR article Christensen gives an example of steel mills:
 
“Nucor, the attacker, had no fixed or sunk cost investments on which to do a marginal cost calculation. To Nucor, the full cost was the marginal cost. [A new mill] was the only choice on its menu—and because the IRR was attractive, the decision was simple. USX, [the incumbent] in contrast, had two choices on its menu: It could build a greenfield plant like Nucor’s with a lower average cost per ton or it could utilize more fully its existing facility. 
 
“So what happened? Nucor has continued to improve its process, move upmarket, and gain market share with more efficient continuous strip production capabilities, while USX has relied on the capabilities that had been built to succeed in the past. USX’s strategy to maximize marginal profit, in other words, caused the company not to minimize long-term average costs. As a result, the company is locked into an escalating cycle of commitment to a failing strategy.”
 
Any of that sound familiar? Is your company maximising marginal profit today and so ‘locked into an escalating cycle of commitment to a failing strategy’? Are you sure? Because that’s what I heard behind the stories from people on the roundtables again and again.
 
 

Energy: vital but invisible and interchangeable

Where I have more sympathy with incumbents is on the nature of energy. For the vast, vast majority of customers – whether business or consumers – do not buy something because of the type of energy used to make it. They care about price, quality, convenience and so on. Our modern world is built on the viability of cheap energy, starting with steam for the industrial revolution. But the quality of this blog does not depend on whether the electricity powering my computer is renewable or not (full disclosure: yes, it is renewable, through Good Energy). Energy is vital but invisible and the different sources are – from the end-user’s function point of view – interchangeable.
 
One roundtable member argued that the business case will only come when there is revenue growth, which means making the customer care about the carbon impact of the product they are buying. I cannot say I agree. We’ve had 20 plus years of trying to convince mainstream consumers and businesses that they should care about ‘green’. Quite apart from any ethical concerns on social engineering, it simply hasn’t worked. 
 
In general things get to scale when they are good-enough for the end-user and they are cheap. So, surely the way to drive the energy revolution is to about giving your end-product or service a cost advantage. The operating costs of renewables are part of taking us to a zero marginal cost society. Taking part in the energy revolution means you have cost advantage over your competitors. Use that to reduce the price point and sell more, or make more profit per unit – but use it to win.
 
At the end of Energy, John Elkington gave a typically rousing talk on the need for exponential, following on from the excellent Breakthrough Business Models (full disclosure: I inputted at points and commented on a draft of this report). He had four Ds for everyone’s new year’s resolutions: disrupt; decentralise; democratise; decarbonise. I agree with all four. 
 
What struck me was also that, for companies who use energy but are not in the energy sector, focussing on the energy revolution keeps this all off to one side. To make it strategically relevant, perhaps we need to talking about the wider digital revolution, of which massive changes in the economics of energy is one part.
Otherwise, I fear incumbents will miss out, and our progress to a low carbon world will be delayed.
 
 
 
 

Bending the curve on climate change

David Bent writes about the four seminar series, run by Centre for Science and Policy and convened with Prof Charles Kennel. 

Through February and March I made my way to Christ’s College Cambridge on four evenings to hear the latest on climate change, the science, the politics and the possibilities. Suitably, the evenings got lighter as the series went along. Here are some of the highlights, with a particular focus on the final panel session which focussed on the role of universities, along with some reflections of my own.

It was possible to put the insights from the first three seminars into three buckets: the science; the Paris Agreement; and things to do.


The science is evermore certain and frightening.
Dr Emily Shuckburgh of British Antarctic Survey told us that there has been a dramatic increase in risk of impactful events due to climate change already observed , and there is a possibility that catastrophic changes already underway. The Paris Agreement talks of “holding the increase in global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels”. Dr Shuckburgh’s view was that 1.5°C might not be impossible (but might be) . (It has to be said other voices from the floor were more pessimistic on this). Either way, the timeline is tight even for keeping well below 2°C, and will involve accepting unavoidable impacts, trade-offs and unintended consequences. We should “throw the kitchen sink” at the problem.


The Paris Agreement is not enough, but is different in interesting ways from the past.
In the view of Dr Joanna Depledge of the Department of Politics and International Studies , the agreement will not save the world, whatever the closing rhetoric. Nevertheless, pursuing efforts for 1.5C was a big surprise, and an indication of a shift in attitude from key negotiators. The US, India and China all made an effort (in their different ways) to make sure an agreement was made.

This was part of a changed the “storyline”, with a common global endeavour (compared with North/South blame game) that looks to the future, not the past and which sees climate change as an opportunity to pursue in cross-sectoral partnership, not just a burden for governments to intervene on. There were many more ‘coalitions of the willing’, and the business voice in particular was pushing for action, rather than inaction.

Dr Richard Fraser of the Department of Social Anthropology was able to study Paris negotiations as an ethnographer. Amongst other observations, he spoke of it as a cultural event, where people drawn from many different constituencies from across the world created shared imaginary communities together that were global, and gave the participants a sense of control and optimism. The way he told it, such magical thinking is a positive thing.

Prof Charlie Kennel hopes the COP process will be to the 21st century what the world fairs were for the 19th century: events that both demonstrate and are signals of the world that we want to create, and the future to come.


There are many things to do; we heard three types.

– Change how we do policy analysis to focus on worst-cases. Simon Sharp of the Foreign and Commonwealth Office spoke of his work shift the focus from the average prediction to the worst-case scenario, as it is accepted practise in policy circles to avoid that worst case. He had worked with others to create a report of climate risks exactly to move policy maker attention to that consideration.

– Galvanise the diverse abilities of a large institutions. Prof Kennel described the University of California’s approach. After a period of analysis and deliberation, UC has chosen 10 pragmatic, scalable solutions under the banner ‘bending the curve’. All of these can be implemented immediately and expanded rapidly. They will clean our air and keep global warming under 2 degrees Celsius and, at the same time, provide breathing room for the world to fully transition to carbon neutrality in the coming decades. These ten cover science, economics and more and so draw on the research and development skills from across the whole university.

– Changing how we design and run infrastructure and buildings. Prof Ian Leslie spoke of Smart Buildings, where, amongst other things, the internet of Things would be a profound disruptor of the status quo. Prof Paul Linden described redesigning cities so there was more mixing of green and blue (e.g. parks and canals), reducing the heat that surrounds buildings. The buildings themselves should be redesigned to allow for free flow of air, rather than boxing in the heat form people and their machines and then needing to expend energy to take that heat away.

When it comes to universities, the final session looked at two questions. What is the responsibility of universities, given the societal transformations required to bend the curve on climate? How can Cambridge itself should leadership among universities?

Prof Kennel took us through the relevant history of the University of California, and especially the Scripps Institute of Oceanography that he used to lead. It’s a story of discoveries, such as the realisation oceans don’t absorb as much CO2 as had been thought, and of using those insights to equip students, such as future Vice President Al Gore, and to push climate change up the political agenda. The most recent staging post is the ten scalable solutions mentioned above. The message: addressing climate change is what universities do, as part of understanding the world.

Polly Courtis of the Cambridge Institute for Sustainability Leadership spoke of her experiences being on the interface between the university and industry. For her there are three opportunities. First is what we teach, to make sure all graduates have a basic awareness and to weave these big issues into any executive or business education. Second, is how we collaborate with business, so that the problems that companies are facing can become of interest to academics. Third, is how the university helps to envision the future, by giving the windows of discourse that describe what is needed.

Lord Rees looked for scalability and multiplier effect. He believes that Cambridge has been very successful in innovation, so it should lead the way of clean energy. let’s speed the transition to a low carbon economy by making the costs of production competitive with incumbent energy generation. The other role is to keep it on the political agenda, through education and by making the issues prominent in politicians’ inboxes.

Questions from the floor teased at many of these points. Is it only technological innovation, or is there a need to help diffusion of market-ready technologies and pushing priorities on social change? Could there be a foundation course for all students on sustainability? Should colleges and the university divest their endowments out of fossil fuel assets? How important is it for the university to put its own house in order?

The big picture was that universities are places for ‘big thinking’, as the UC story proves. The square miles around Cambridge have been amongst the most effective in the world over the last few centuries on innovation. So, there’s a clear role accelerating the clean energy revolution. But that needs more than just invention, it needs commercialisation and diffusion too. The final word from a panelist was for Cambridge to make climate change a ‘red thread’ that goes through the activities of the institution.


Final reflections

As someone who attended all of the seminars I had some other reflections.

In 1997 I distinctly remember my atmospheric physics seminar when the lecturer said that “climate change is happening”. Through my work at Forum for the Future I’ve tried to get companies to act on that science, a minor part compared to others’ efforts on many levels. Even so, few would say we have acted at the pace or scale required so far. It is not fanciful to say that that runaway climate change is possible, and could degrade the foundations on which global civilisation sits.

The seminars reinforced for me the observation that climate change is a such a profound problem because it sits in the blindspot of our current way of doing things. Cognitively, economically, politically we respond quickly to things that are immediate and obvious. The effects of climate change are diffuse and long-term, the causality of any one climate event tangled, the response required complicated. Problems that we can solve with our current way of doing things get solved; those that we cannot solve remain.

 

So, if climate change could be addressed by individual choices in free markets framed by stand-off governments, then we would have done it by now. My conclusion is that we need to change how we arrange the interplay of economics, law, politics and more that set the operating context for individuals and organisations, and that are expressions of dominant beliefs in society. In short, we need to change our current political economy.

It seems likely to me that the best of the responses to climate change can be the seeds of that new political economy, and will be used to address other public policy questions. If we find that government-business alliances can drive the technological innovation we need on renewable energy, say, then we’re likely to use the same vehicles for water, biodiversity and social questions too. As it happens, since the seminar series, Michael Jacobs of the Grantham Institute has written about how civil society created the Paris climate agreement. He argues a similar point: the Paris Agreement set in train a process where, by tackling climate change, we can change capitalism.

The implication is that we have the agency to act, today, in ways that can develop and scale the best of the responses to climate change to craft the political economy we need for a sustainable economy. We should expect those responses to challenge one or more fundamental assumptions about how things are done, whether that’s ‘market incentives can solve all problems’, or ‘governments only provide framing conditions’.

Finally, I was struck by how important universities are incubating the ideas that can create the world we need. In the conversations around the seminars it is clear many people are doing brilliant work in their fields, from the scientific like fluid dynamics through to an anthropological understanding of the global social process. There was enthusiasm, there was deep knowledge.

It all points to the strong, positive role that a world-leading university can play in that transition to a safe climate. In the desperate situation we are in, I hope that any and all universities can find their own way to ‘throw the kitchen sink’ at the problem.

How will I tell if I have had a good sabbatical?

So, I’ve just started my sabbatical. I have three months ‘off’ — which I have chosen to be three months exploring how we can create systemic change in business for a sustainable future. This week has been about setting myself up. I’ve been trying to figure out what I want to achieve. When it finishes on Mon 16 May, how could I tell if I have had a good sabbatical?

The first evidence of a good sabbatical are the outputs associated with the different lenses I have: climate change, digital revolution, innovation policy, enabling business narrative and political economy (my meaning: the way we organise ourselves in society — the interplay of economics, law, politics and more that set the operating context for individuals and organisations, and are expressions of dominant beliefs in society).

On ‘bending the curve on climate change’ my hypothesis is that the ways we try to re-organise ourselves in the near-future to urgently address climate change are likely to become the vehicles we then use to address other sustainability challenges (like delivering the Sustainable Development Goals). For instance, much of the analysis of The Paris Agreement says that the surprisingly-ambitious outcome (working towards 1.5C) came from new forms in the negotiation process: Chinese appreciation of the impact of climate change; business-NGO-government high ambition clubs; a move from the negative framing of ‘burden-sharing’ to a more positive one of opportunity; and so on. Imagine if these continue, and start to be applied to other global, diffuse challenges like inequality.

So, I want to know more about:

– what features of a new political economy are emerging in order to address climate change?
– how could we nurture them, so they are stronger and more effective?
– what might the long-term consequences be, especially constraining our ability to address other important (but less urgent) challenges?

Also, as part of that I’d like to see what happens when I try to help a fabulous institution to act. I’m chairing a panel on the 17 March where various luminaries from across the university will be exploring the role of a university like Cambridge in the societal transformations required to bend the curve on climate. I’m seeing the university as a microcosm of the bigger picture. At the least, I’d like to know more about the barriers to prominent institutions playing a role that matches their potential with the scale of the problem, on the presumption that this will be useful data for others. Even better would be helping move the university forward at least a little how it helps society to address climate change.

When it comes to surfing the digital revolution to a sustainable future my hypothesis is that it is not possible to put the genie back in the bottle, that positive social, environmental and economic impacts are very possible, but will not just ‘magically’ appear. Instead we must be proactive in getting the best from the profound changes that come alongside the technological revolution. I have some handle on the hopes and fears (which will come out in an article in Forum’s annual compendium called The Long View in March). Less clear to me is what you would do to be proactive. What institutions, regulations, etiquettes, incentives and more would you use? How could you experiment with them starting now?

So, the output I’m going for here is a ‘concept note’ of what that programme of experimenting might look like, alongside more connections that can provide the insight into that concept note, and would be interested in using the analysis.

The output on pro-sustainability innovation policy is in many ways more straightforward. A friend of mine is a senior politician (not in the UK, and I’m not sure yet if I can say who). He has asked for an input into their manifesto. So, I’m going to be writing a report which is ready to use by at least that person, and I hope by other policy-makers plus others who are interested in fostering pro-sustainability innovation. My instinct — and we’ll see how true this is — is that many of the recommendations will also be applicable to large businesses, investors, technology transfer firms and more.

The enabling business narrative is a bit more uncertain because it depends on others. At the least I want to have a map of the different ‘narratives’ that are currently in plan (such as Volans’ Breakthrough Capitalism, or Alex Steffen’s Bottleneck Decade, or Forum-BSR-Shine’s Net Positive Project). Better would be to see if there is some coordination and connection between many of the different players to provide more coherence. But that means others wanting to play, which isn’t in my control.

The final lens — creating the political economy we need — is where the ends is the means and vice-a-versa. Given that I’m saying ‘political economy’ is the way we organise ourselves then how I go about my sabbatical is itself an expression of the potential political economy.

So, the second evidence of a good sabbatical, alongside these outputs, is that I have experimented with being the change I wish to see in the world. I want to try ways of creating those outputs that are the pre-cursors of the political economy we need. My starting point there — which I want to share soon — has already been well-articulated, I think, in ‘Embracing Complexity’. In one sentence the mindset is systemic, allows for emergence and therefore acting with and through others with a proactive attitude to change and learning.

The third and final evidence of a good sabbatical is that more change is happening. The outputs are being used (even if to say “not that, but this”). There are the first signs of impact One person reading, thinking, talking, connecting, writing is not enough — any more than 70 people. The impact will come being a catalyst with and for others.

Which leads to my invitation. If you are interested in any part of this — if you have insights, want to do something, are already doing something relevant, know someone I should connect with, have a suggested piece of reading, whatever — then do get in touch.

If you have better ideas on what I should achieve in the next 3 months then let me know. I’d love to help you, in our attempts to create a sustainable future.

Lord Stern increases the reasons to move to New Zealand

With Lord Stern saying we’re on track for 4 degrees warming, is it time to dust off plans to emigrate to somewhere ‘safe’ like New Zealand? 

My twitter feed today had many, many people linking to Lord Stern’s interview in the Observer. The headline is this quote:

I got it wrong on climate change – it’s far, far worse.

Back in 20o6, the Stern Review was a watershed. A credible member of the establishment making the economic argument for action. Martin Wolf, the FT’s most important commentator, concluded that “In spite of sceptics, it is worth reducing climate risk”.

The case was made. Action is bound to follow. Bound to.

We’re seven years older and what progress there has been (like the UK Climate Act) has been too small and too local. On one level the reason is obvious – entrenched interests have too much to lose – though there is a lively debate in the US on the specifics.

Lord Stern’s interview is just the latest of a series of warnings. Late last year New Scientist had a special edition with the title “Climate Change: Five years ago we feared the worst; but its looking even worse than that.”

Faced with these stark facts, and glacial pace of change, anyone who has worked in this field for any time is bound to feel moments of despair. Which is where New Zealand comes in.

Now, there are lots of reasons for wanting to live in New Zealand. I’m a big rugby fan, and that might be enough by itself.

But consider: it has resilient political institutions; they speak English and have deep historic connections with the UK; it is separated by oceans from other places; it has a large farming sector.

Where better to retreat in the event of run-away climate change?

The UK has greater wealth, but has other disadvantages. It has a high population density, a depleted natural resource base (we’ve used a lot of our coal, oil, soil and forests) and is enmeshed in global trade for many basics. In the words of David Steven, the UK has made a one-way bet on open global systems. (Note: the link has the quote applied in general; I can’t find the report where he says UK specifically. It has a blue cover.) I can see a world like Children of Men, where the UK’s wealth attracts climate refuges from all over, but especially Africa.

For sure, New Zealand would need to re-orientate its economy. It too relies on exports (especially of its farming goods). But at least it would have that option. I worry the UK wouldn’t have that choice.

In a way the problem for me is one of timing: when do you commit to such a big move? If you wait until all the evidence is in then lots of others will have come to similar conclusions. If they have more money or skills then New Zealand will take them instead.

Of course, the picture of a protectionist world I’ve painted here is only one of many plausible scenarios. Back in 2008 I was part of team which create 5 such possible 2030s, in a report for HP Labs called “Climate Futures“.

Protectionist World was one. The others were: Efficiency First, where rapid innovation is just about dealing with the environmental aspects (think California max); Service Transformation, a massive growth in collaborative consumption, sharing economy and closed loops; Redefining Progress, where economic growth is being replaced with other means of fulfillment; and, Environmental War Economy, when governments take charge of everything and act (like in World War 2).

Now, you can make a case for aspects of Efficiency First and Service Transformation happening. But my instinct is that these aspects are too slow, small and local to avoid run-away climate change as things stand. There’s always talk of redefining progress but show me increasing numbers of people changing behaviour rather than eminent reports.

You can say that we’re not that stupid, that we will respond when we see the cliff-edge. But the longer we wait the larger the response will need to be and the more it will need to be of the scale of total war.

Clearly, China has the political culture and institutional levers for Environmental War Economy. It does seem to treat solar power as a sector of strategic importance. But, if you want market-led democracies, then you want to avoid getting to a point where governments feel they have to intervene like that. The irony is that, at the moment, it is the pro-market people who are creating a situation where anti-market responses will be necessary.

What we didn’t put in the report were the scenarios that were plausible but not useful – if they were happening there was nothing you could do as a global company. One of those was called something like ‘its too late’, which speculated about what happens if you realise you’ve already gone past the point of no return. What if in 2020 we learn we locked ourselves into greater than 4 degree rise in 2014?

Lord Stern’s remarks – combined with all the latest science – reinforce the sense that we are more heading towards the worse end of outcomes. Which makes it worth dusting off those back up plans. Mine is emigrating to New Zealand.

What’s yours?

Unpacking Lex on solar power

Today’s FT has a short Lex column on solar power (subs). I think it’s worth unpacking what it has to say.

First, the good news. Solar is in the new because investment guru Warren Buffet has committed a further $2.5bn to the industry through his MidAmerican Energy Holdings. This is part of a wider trend, with shares in solar-panel makers rising on the back of increased demand from China and US tax credits surviving the fiscal cliff.

The better news is that Lex backs Buffet’s judgement that the solar industry is a good long-term investment.

But now the bad news. Lex points out that the  global industry is still dependent on subsidies, and those subsidies are subject to politics. Here in the UK the government unexpectedly cut the feed-in tariff, which caused an almighty kerfuffle – not so much because the industry should always have a subsidy but because the announcement seemingly came out of nowhere. Regulatory uncertainty hits companies and investors.

What Lex doesn’t mention is that the reliance on subsidies is a phase. New technologies go down a cost curve, where the first few are expensive but the price goes down as there is economies of scale (making lots is cheaper than making a few) and learning effects (what you learn from making the first means the second is easier). Most observers expect the price to continue to go down, McKinsey expect underlying costs to go down by 10% per year until 2020 (subs).  In some parts of the world solar has already reached grid-parity.

Lex says that the true cost of solar must also include that of storage capacity (for instance batteries). Now, I think that might be a little out of date, or rather, a little narrow. Certainly the intermittent nature of the energy means that solar is not sufficient by itself. But doesn’t mean that each solar assembly must have a battery. It means that any electricity system has to plan how to provide energy throughout the day and with varying weather. That might mean storage in batteries or fly wheels, it might mean a mix of energy sources, it might mean a smart grid where extra generation in one area compensates for a shortage in another. Most likely we have a mixture of storage, sources and smart grid.

Sometimes people imply that solar isn’t a good investment, so it will never be significant (Lex doesn’t). The best response to that point is airlines. A lousy investment – losing 20% of value since 1992 compared to 200% gain for the wider market – but clearly a vital part of the global economy. (Also, an argument for being careful in markets with large political risks.)  The difference here is as solar gets cheaper the politics will be less important, while the over-capacity will remain as long as governments keep wanting their flag carrier.

Finally, Lex points out that “a supply glut mean that most manufacturers will not return to profitability any time soon” and that short-haul investors are “in for an Icarus moment”.

So, long-term investors will be rewarded, and short-term investors punished. Why, is that an argument for investing for the long-term? What a good idea!

Jeremy Rifkin and the problem with grand narratives

Last Forum co-hosted Jeremy Rifkin as he launched his new book, The Third Industrial Revolution, in the UK. Rifkin paints a grand narrative of human history, with the next phase a revolution to a distribute energy system run like the internet. Much of the content was intriguing, but the overall effect wasn’t strangely dis-empowering. I left realising that I didn’t have a credible way to use his insights because they were too certain.

A few months ago the grapevine said that a truly startling book was on its way. Jeremy Rifkin had finished the Third Industrial Revolution. It proposes that each industrial revolution is a coming together of new energy and new communications technologies, which replace the old order with new economic activity – plus evokes a new, expanded consciousness. The first industrial revolution in the 19th century was steam plus printing (and heightened literacy) for mass production; in the 20th century electricity plus the telephone and television produced mass consumption. Now renewable energy sources and the digital technologies were already combining to produce an ‘energy internet’. This revolution is changing the nature of power,  in his words from ‘vertical’ to ‘lateral’. The greater connectivity will change people’s sense of empathy to create a biosphere-wide consciousness (building on his previous book The Empathic Civilisation). An intriguing grand narrative; I wondered what was in the detail.

Through Forum I got galley copies of the book and tried to read it. Now I like big themed-books; my shelves groan with their weight. But I confess I struggled to get through the foreword of this one. He claimed two things that just made me put the book down: the EU is making lightning fast progress on the Third Industrial Revolution; and it was doing so because he was advising so many leaders. The first claim just didn’t match my experience. If second is true, how come I hadn’t come across this jargon or Rifkin more? Why haven’t I heard about it from newspapers, journals and lots of other people?

So, I went into the lecture at UCL with questions about Rifkin’s credibility as a change agent. His lecture almost overcame those questions. He gave a number of cities which are putting in place the 5 pillars he says are necessary to catalyse the Third Industrial Revolution:

  1. Shifting to renewable energy (‘generate’)
  2. Converting all buildings into power plants (‘collect’)
  3. Hydrogen and other energy storage technology (‘store’)
  4. Smart Grid Technology (‘the nervous system’)
  5. Plug-in, electric, hybrid, and fuel cell-based transportation (‘convert’)

There’s much to like in these pillars: they feel rounded and feed-off each other. Rifkin claimed that when they happened together there would be a continent-wide roll-out “like WiFi”. It is, he said, a practical plan. There are questions about the details of each – all buildings? really? – but Paul Ekins had the bigger questions. Do all 5 pillars need to happen at once? Rifkin: yes. But Rifkin didn’t have the missing link: what is the plan to make the 5 pillars happen?

Rifkin himself says that the revolution will challenge the status quo. From personal experience, I would say that today’s energy companies can only really think in terms of a huge power station pushing power out at lots of users; they cannot get their heads (or assets or skills) around a distributed energy system. They will resist the 5 pillars a great deal. Without a plan to get the 5 pillars to happen, it is difficult to claim the Third Industrial Revolution is practical. Put it another way, it is like NASA saying their practical Mars plan starts with “When we get to Mars we will…”.  But, how did you get to Mars?

A number of people asked variants of ‘how to do create all the pillars simultaneousness?’ from the floor. His answers were reiterated (or rather, repeated and repeated) the grand narrative that leads to the Third Industrial Revolution. Lots of intriguing insights into the history of civilisation. Just no useful hand holds for a change agent scaling the cliff-face. I didn’t hear no strong tactical or strategic pointers on how to deal with the incumbent energy companies. Do we try to bring them into the new system? Ignore them? Appeal to their emerging global consciousness? Legislate against them?

Rifkin’s answers the second type of question – ‘what about x counter-trend?’ – were also revealing. The examples were sort of squashed under the steam-roller of the inevitability of our changing consciousness.

Now, there is no doubting that we in the UK have a much broader sense of who we care for today than 60-odd years ago. Chamberlain could come back from Munich in 1938 and say that Czechoslovakia was a small country, far away. For a host of reasons – cheap long-distance communications being one – we didn’t treat Sri Lanka or other Asian countries like that when the Indian Ocean tsunami hit in 2004. But anyone who glances through the Daily Mail knows there is a strong current in our culture of saying we should empathise only with those like us, nearby.

Also, the new energy-communications nexus is having paradoxical effects on power. Knowledge is widely distributed, but we are using centralised ‘gates’ like Google and Facebook. As the internet goes into The Cloud, it is simultaneously spreading access to information and narrowing control of the infrastructure. And so on. The broad brush stroke of an emerging global consciousness is like saying Americans are more can-do than the English. There’s a grain of truth but it doesn’t really help you very much day-to-day.

Ultimately, I found that Rifkin’s certainty in his own grand narrative was too much. Let’s imagine he had presented the success in those cities as experiments that proved a distributed energy system was feasible at the city-level and, gosh darn-it, maybe beyond. let’s go find out. Well, I could have responded to that, seen my role in that, had something to contribute to that (through my actions and even adding to the thinking on how to make it happen). But he didn’t do present in that way . Instead he implied the Third Industrial Revolution was inevitable – so why do I need to do anything? – and the only way of understanding all of history.

I hope that something akin to the Third Industrial Revolution happens. If it happens, perhaps Rifkin will be credited. But I suspect such a change will happen because many different people do many things. On Tuesday (and in the book) Rifkin had the chance to help those people understand their role in a Third Industrial Revolution, and feel part of a movement. His certainty in his own ideas gave me no way to be involved, and grated against my experiences.

Ironically, given his enthusiasm for lateral power and the prominence he gives to empathy, I felt dis-empowered by his top-down style. An opportunity missed.