When we spoke six months ago, you anticipated that when the recovery picked up, food prices would surge and so would oil prices, as was the case in 2007-2008. You said that was due to the fact that we had reached peak oil pro-capita. It seems you were right. Do you sense that we will face the same crisis again?
I don't know when it's going to hit, but it's going faster than I thought. Every time that we try to grow at the same rate as before July 2008, oil prices will surge and when it will hit 150$ a barrel, the system will collapse again.
Since we last talked, the International Energy Agency put out its 2010 energy report in December and, for the first time, they acknowledged that we probably hit peak global oil in 2006 at 70 million barrels a day – it was a big story, but no one really covered it.
They said in 2006, we likely hit peak oil at 70 million barrels and in order to even maintain a plateau at 69 million, we’d have to put in $8 trillion to get the remaining oil out, use all fields that are there and find new ones. The reason we hit this last year was peak oil per capita, which occurred 30 years ago.
If you put them together, this is an end game - no one can predict exactly when, but at the end point you have to say that it’s the end of the second industrial revolution.
Before people thought banks were too big to fail and they failed. Now they have to deal with the idea of an industrial revolution too big to fail, but that is failing.
I don’t know when oil prices will rise to $140 or $150 a barrel again, but it’s going up very quickly. There’s no way to breach this with developing countries moving huge amounts of demand into the system and Europe and the US feeding in.
It’s over – I don’t mean it’s over tomorrow morning, it’s the beginning of a long end game that will stretch out over years and years. It’s a dangerous period: just look at food prices and raw materials, it all depends on oil.
This week European leading trade associations and consumers are joining forces to ask the EU leaders meeting on Friday, and the European Commission, to come up with a comprehensive legislative program for a five-pillar post carbon strategy to precisely engage in the third industrial revolution. What’s the strategy? Why Europe?
We know we have to go to renewables – we have 191 million buildings that can be converted to power plants in the EU, which will start a construction boom and create millions of jobs [The first two pillars]
We know we have to store these energies – hydrogen is the most universal – and share them, meaning we have to put internet technology on the shelf, which will cost about €1 trillion in the EU [The third and fourth pillars].
And we have to plug-in transport, in order to keep the logistics and build a seamless market [the fifth pillar].
This is the next stage in European integration, for sure, because Europe has two agendas: one is the post-Lisbon agenda to be the most competitive economy and two is the 20-20-20 agenda to be the most sustainable economy. They have to become compatible.
The next stage is to understand what we’re integrating – the EU has 500 million consumers and partnership regions in the Mediterranean and North Africa have another 500 million.
That’s one billion people, so the EU can create a seamless energy and transport communication grid to have one market for a billion people – not a vertical one but a lateral one with power distributed. This will be the next stage of European integration.
Lateral? What do you mean?
I have a new book coming out in September on the third industrial revolution and one of the points I make is precisely that…
I met Herman Van Rompuy and we went over all this in detail, because he’s trying to deal with the big picture.
The third industrial revolution favours a continental infrastructure. You know the saying ‘information likes to run free on the internet?’ The third industrial revolution infrastructure likes to run uninhibited across continuous landmasses until it reaches the oceans.
It’s like Wi-Fi: each city and region becomes a node that connects with all the other nodes, sharing a collaborative power grid. The EU is ideally positioned to lead the 21st century, it just doesn’t know it.
What is ironic about this is that they’re so close, but they’re not there. The first industrial revolution – which was print communication and coal, steam and rail – allowed us to broaden markets from local into national markets. With these markets we created nation states, allowing the possibility of bigger tempo-spatial reaches made possible by the first industrial revolution.
The nation state then went into the second industrial revolution – centralised electricity, the suburban rollout, national markets and national governments. The third industrial revolution favours continental governance, for sure. It’s lateral power – power that is collaborative and distributed. It favours networks that are continental and the EU is the first continental union.
Europe leading the way?
The Asian union is forming quickly, along the same lines as the EU, and will hopefully be in place by 2014. The African union was going nowhere until the EU started to develop hundreds of millions of euros of projects to create the beginnings of the third industrial revolution infrastructure when Piebalgs was energy commissioner – projects on power grids, local renewables, buildings partially converted, the whole works.
The South American union formed two years ago out of the old Mercosur and Andrean unions. NAFTA [a free trade agreement between the US, Canada and Mexico] is not a union, but we’re starting to see intra-continental unions between the northern US states and the Canadian provinces.
I’m always amused that we hear all this talk about G20, G8, G2 and what’s actually happening is there’s a completely different political configuration emerging that no one is talking about – and that is continental unions. They are the ideal framework, if you will, for infrastructure that is lateral and has networks running across continental landmasses.
In business, for example, when you see a lot of conglomeration and big ones taking over little ones, it means business is not good. In other words, you’re trying to conglomerate just to stay where you are. The fact that we’re going from G20 to G8 and G2, it’s the last promise of the nation state as the primary unit. Nation states won’t disappear, cities won’t disappear, regions won’t disappear, but they’re going to be nestled in more lateral network governing, which is the continental model.
So the EU has an enormous opportunity to be the flagship for a new model of governance. At the same time that it can integrate its own continental space and its partnership regions and create a seamless post-carbon energy and communication network, its political governance can be a model for creating similar kinds of arrangements with other unions.
It’s working with Africa on energy and communication, it could start working with Asia, South America…
As you know, the EU has now a competence in foreign affairs but it’s struggling to find its own dimension. Do you think this post-carbon agenda can be a springboard for boosting Europe’s position on the global stage?
In my two-and-a-half-hour discussion with President Van Rompuy, I said this is a shift from geopolitics to biosphere-politics. Geopolitics reflected the national markets, nation states and fossil fuels of the first and second industrial revolutions.
Our notion of human nature from the Enlightenment is that we’re autonomous, materialistic, self-seeking, predatory, utilitarian – the nation state is supposed to reflect our concept of nature, nation states seek property and compete against all others.
The third industrial revolution is both entrepreneurial and collaborative, it requires a shift from the geopolitical frame to biosphere politics. Biosphere politics are continental politics.
They give us a greater sense that we’re part of a human family – in other words, as we move to continents we don’t give up nations, regions or cities but they all become nodes in continental networks that are lateral. And that gives us biosphere politics.
If you think about it visually, we are responsible for our little node in the biosphere and have to steward our energy from the sun, the wind and the ground, but we have to share that energy collaboratively in open-source networks across continents.
At some point, we become cognitively embedded in the idea that we are as interdependent in the energy flows and the biosphere as we are in the social spaces on the internet. They go together – that’s a spatial-temporal shift, that’s biosphere politics.
It requires cooperation, because renewables are everywhere, on every square foot, but require common stewardship of the Earth because if we move towards climate change, everybody’s energy is destroyed in the process. So this is a new politics, it comes with a new energy and communication revolution.
Is the EU receptive to your vision? You’re going to launch this post-carbon network trade association with the leading associations in Europe – UEAPME, BEUC, Co-op Europe.. so you have that support, but what about leaders?
I am frustrated having spent so many years – this narrative is not difficult, every 25-year old in the world understands the narrative I’ve laid out.
There is no reason why President Van Rompuy or President Barroso or the leaders of the member states can’t to a young population that’s concerned about its future: ‘‘You are the generation that has been empowered across the world to connect your lives, create video, audio and text and share with each other in a global society, now I want you to work together so you can be empowered to create your own energy and share it across continents, so you’re as connected in the biosphere as you are in the social spaces.’’ In twenty seconds you’ll get a younger generation on board, whether you’re in Egypt, France, Japan or Senegal.
Why is this so difficult? It’s difficult because there’s a shift in power, from vertical hierarchical power to lateral power. It’s going to change everything. The energy and communications revolutions determine spatial-temporal orientation and the way societies are organised. We’ve been organising a top-down model for two centuries.
Here’s a little history: in Italy the CGIL [one of the most prominent trade unions]said they are ready for a third industrial revolution. They realise this five-pillar infrastructure means ten of thousands of new businesses and millions of jobs.
Renewable energies: thousands of business and jobs, all in SMEs, to create the energies. Imagine every building in Italy and in Europe has to be converted to a power plant – that’s thirty years of construction, the biggest construction boom in a concentrated time since the suburban rollout in the big cities in the 19th century.
Then you have to put hydrogen storage across the entire infrastructure of Italy and Europe – millions of jobs, huge amounts of SME work. Then we have to set up the inter-grid –which is like the internet – which involves redoing all the transmission lines, power stations… then we have to plug in electric transport.
This is a new infrastructure that is labour-intensive, jobs that cannot be exported out of Europe. It gives us thirty to forty years for the last mass labour movement – because after it’s connected it’s all going to be intelligent and smart.
You have to prepare the students for two different operations now: 40% of new employment has been in the not-for-profit sector here. It’s big everywhere. Now we need to rethink education to prepare young people for laying down a distributed, collaborative infrastructure that is smart but also prepare them for a distributed, collaborative social capital in civil society.
You asked about leadership here – this is my message: we have the three biggest umbrella organisations in Europe ready to go and I can tell folks in Brussels that this isn’t stopping with a little press conference here. On the ground, Italy came together: CGIL brought all four SME associations together, in the same room, and we’re going to have a political movement across Italy that will change the landscape.
I can say without telling the countries that this is now emerging politically, right now on the ground, in other countries across Europe.
This is a lateral power movement, a political power movement for the landscape and I think it says it’s time now, no more talk, let’s get this thing moving. The window is shortening, we have got a global energy crisis, climate change is imperiling our survival. It’s time now to move from shellshock, from the crisis of 2008. Everybody’s got to start moving now to get this done.
What we see here is the new politics that is emerging, and this is going to be very difficult for Brussels, it’s not right or left. Ask any 25-year old – do you think they’re sitting around on the internet asking all these questions about ideology, capitalism, socialism, geopolitics theory, right-left?
So it is a new way of pragmatism?
Yes, well, their politics is not right-left, what their political configuration is whether someone, a being or an institution, is patriarchal, hierarchical, top-down, proprietary and closed or whether a human being or an institution is transparent, distributive, collaborative, lateral.
This is a generational shift, and what we are finding is some politicians are the old order – they are centralised, hierarchical, top-down, proprietary, very closed, and the others – and they can cross party-lines, completely – are more distributive, open, lateral, flat.
But don’t you think China will overcome Europe. They are massively investing in renewables, your first pillar, and they are catching up very fast. They could be the leader of your continental model. Couldn’t they?
They’re going to lose a generation. India will speed ahead in other places, the reason is… I’m trying to sort all this out in my book.
A little taste, you don’t have to give all the details.
You’re too smart for this conversation, you’ve asked me all the key questions.
Here’s what I really believe. China is a big country that won’t even let Google in. Do you think the Chinese leadership is going to be interested in lateral power? No. So what they don’t understand is the whole young generation from the streets of Egypt, to the coffeehouses, the teahouses of China. The new rights are not property rights, that’s the old regime. The new rights are access rights: the right to be included in a global family in one biosphere, the kids are as hungry for this as in the 19th century the revolution of 1848 when they were hungry for property rights.
It’s a new era, so the interesting thing about China is they are creating all the components of the five pillars, but they have no sense of how the infrastructure sets up a new system and that undermines basically what they have in mind. It’s the ultimate contradiction. India will do well with this.
There are certain countries that will do better than others with this. The first time I was with Chancellor Merkel, after she was elected she asked the question how do we go with the German economy.
I went to the whole schtick of the five pillars, afterwards we had a drink and she said: “I like the third industrial revolution.” I thought, well she’s a physicist, so she’s going to give me all the reasons. She said “Jeremy, you are obviously not too smart about Germany. You really don’t know Germany. We are a republic of the regions. This fits our country, it may not fit some other countries.”
So what I’m saying, those countries where they already are starting to think more distributive, you know regions, they’re a leg up. So China could end up creating all the components very cheap and either not be willing to put it together or not understand how it’s a system.
The reason this may fail and the reason the EU may fail – and if they fail, there is no other political jurisdiction to take this up, and then we’re really in trouble – they may fail, the EU, because everything is piloted in silos when it gets to the DG level.
You can have a big picture, sit there, talk to the President, but when it gets down to the Director General level, it’s going to be up to the Catherine Day’s to make this happen.
Those are the people who are going to have to make this happen. They are going to have to be able to see that these five pillars have to each move at the same level with each other. If one pillar falls behind the other, it collapses. So if you treat each pillar as a silo, stand-alone project, you lose billions and trillions of dollars in the process. Literally, lose billions of dollars.
What I’m saying I think is hard to grasp for people, but it’s so simple: All these five pillars together create synergies which creates a system – the technology is not the pillars it’s the system, the system that emerges is bigger than the sum of the parts. It’s a new beast. It’s a central nervous system for an entirely new business model. And it actually is creating whole new business models. Its multiplier effect and its growth curve will be even more dramatic than the first and second industrial revolution. That will be sustainable growth. And lateral, not vertical growth.
Also, this favours the developing countries because they can leapfrog into this. They couldn’t do it, because of the geopolitics, the fossil fuels, the Uranium, which required huge geopolitical investments, lots of capital. But now, these renewable energies they’re everywhere, so this can go lateral in the developing world, they could leapfrog really quickly because they don’t have any infrastructure.
Do you think Cancún has delivered on that?
I am not saying we should not have global mandates. With time running out we need an economic plan that actually can move to a new energy regime, create millions of jobs, thousands of businesses, be completely seamless, go across continents, get us to post-carbon and not low-carbon.
Our companies which are cooperatives, small and medium-sized businesses and some of the biggest companies of the world, we know this can be done, all of this can be done.
Now we have to have government at every level: metropolitan, regional, national, create collaborative masterplans to implement and then we have to have the EU set-up codes, regulations and standards across the continent to have a seamless playing field to get this thing implemented.
But it is the other way around?
Every level of government has to be involved regionally, locally to because you have to set the notes up. The EU has to actually set up codes, regulations and standards so that there’s no duplication, you have a seamless market, so that everything is integrated.
The EU’s credit, it’s doing all of the parts, it’s almost like it has all the parts of the symphony but it does not have the conductor putting it together into the opera.
It has the chapters, it has the senses, it does not have the story together. Almost – it understood it needed the grid for the other stuff to happen.
Neelie Kroes understood that we have to unbundle supply from demand or at least make sure there’s an independent authority because we need to make sure everyone can have access to the grid. They have done so many right things on the components. It’s almost that they are intuitively there.
We have been speaking about this now since Romano Prodi was there, but now we need just that last element of bringing this all together and integrating it. The EP in 2007 endorsed this, and you know how hard written declarations are, 90 days they never get past. All five political parties endorsed this.
On Tuesday [2 February], I’m here only for one reason – Friday is the Energy Summit. A lot of it is getting boiled down, all pipelines, gas this and oil that, but some of the new components are there.
The EU Parliament is formally on record saying that the legislative body in Europe is committed to this infrastructural roll-out of the third industrial revolution. We will have representatives of five parties there, then we’ll have the three big umbrella organizations.
Now what I was saying to the President of the Commission, the President of the European Council, all the Commissioners, all the departments, these are the umbrella organizations that represent the businesses of Europe, the SME association, this is millions and millions of players, all the consumers, all the coops…
And most of new jobs come from SMEs not from the big companies …
Unbelievable, that’s why, what happened in Italy, we’re now on the ground in other countries, we’re starting to reduplicate this.
I have great confidence that the EU is the place to get this done. I’m guardedly hopeful that there will be political leaders emerging here at the Commission level and at the Directorate General levels who understand the need to move to biosphere politics.
So what I am really saying to the Commission and Mr. Van Rompuy is that they’re closer to where we want to go by far than any one else, but they just haven’t made that last step which is the crucial one, to come on stage. They’re just still in the wings, they got to come on stage.
There is no Plan B model that will work for Europe or the world, so now they actually have to do a plan.
Let me take you a last example: The music companies. Millions and millions of kids started finding new software to share music. They thought it was a joke, then they got scared and tried to legislate and put encryption. And then they collapsed.
Because when millions of young people have nothing else to do but figure out ways to distribute and collaborate, it works. Anything you can imagine with centralized power in the music industry.
Take Encyclopedia Britannica: they could not imagine Wikipedia. Why would millions of people, amateurs and professionals, do their own articles free for everyone else and then check each other’s accuracy. Now Wikipedia is the tenth largest site on the internet.
No one even hears about Encyclopedia Britannica. Bill Gates could not understand Linux – open-source code? Why would people share and distribute? Facebook, Google, go on and on.
We see what’s happening here is that – people from the second industrial revolution, their DNA is so connected to the idea that all power flows from the top down. They don’t see that power, lateral power, when millions of small players come together and they start sharing, collaborative, maybe in a way it’s a good way because it’s going to move.