US economist Rifkin: ‘Budgetary rules should not apply to green investments’

US economist Jeremy Rifkin: 'At COP25 in Madrid, they all repeat that we need to have a plan to limit the rise in temperatures to 1.5°C. But no one knows which one.' [EPA/OLE SPATA]

While visiting Paris, American economist Jeremy Rifkin talked to EURACTIV France about his hopes for the new European Commission’s Green Deal, while calling for a climate narrative that inspires real change across society.

Jeremy Rifkin is an American economist and distinguished author of many books about the environment. He also advises companies and governments on the energy transition.

According to you, renewable energies are in the process of saving the world. How did it come to this?

The EU’s objectives for 2020, when it comes to energy efficiency, renewable energy and CO2 emissions, may have been ambitious, and not all of them have been met, but they have given the necessary impetus.

By an act of serendipity, China got down to it. They even made so much progress that they digitised part of their electricity grid in just a few months, for example! Thus, the EU and China have set the scene by subsidising the research and development of renewables, to ensure they are now very affordable.

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Fossil fuels will quickly become obsolete and unusable: it’s over, the market is too powerful. Offshore platforms extracting oil and gas will be abandoned, the same with pipelines, unless they start transporting hydrogen gas. All oil-dependent industries, such as the petrochemical, plastics and derivatives sectors, are also at risk of not being able to cope. Unless they radically change.

Meanwhile, the Saudi oil company Aramco is preparing to raise around $100 billion to be listed on the stock exchange…

$11 trillion in assets have already been withdrawn from fossil fuels, and it is groundbreaking.

Pension funds in major cities such as London and New York are also announcing that they are giving up on fossil fuels. They saw what happened to the coal sector with the Peabody bankruptcy. What Karl Marx did not anticipate was that with capitalism, millions of workers, whose pensions are invested in the economy, can influence the course of events.

These workers do not want to lose their assets or favour the old world. They want assets with modest but stable profitability. This is exactly what renewables offer.

Do climate-related negotiations accelerate the fight against climate change?

I have some doubts about the method. I just came back from the COP25 in Madrid. It’s depressing, but they all repeat that we need to have a plan to limit the rise in temperatures to 1.5°C. But no one knows which one! Besides, 1.5°C is a meaningless objective and has become outdated for some time now. So we are told about goals, targets and sustainable development, but what is needed is a vision!

Such a vision exists, and some pioneering companies are beginning to adopt it. We are talking of a future without fossil fuels, with decentralised renewable energy production in a hyper-connected and digital world, in which services and other subscriptions will be the primary business model, rather than the sale of products.

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This economic model you are describing; does it not go hand-in-hand with a reduced GDP?

Part of the economy is already demonetised: Wikipedia is the fifth-largest website in the world, completely free and collaborative. And our economy is increasingly based on exchange. We need to think about other ways of calculating wealth, not simply in terms of GDP but in terms of quality of life. Within the OECD, some countries are beginning to address this issue.

How can we finance the energy transition, particularly to drive this change within the companies most affected by climate change?

The priority is to transform the infrastructure. To do so, I am in favour of green bonds: the European Investment Bank, as well as the European Central Bank, and EU member states need to participate in issuing such bonds that will be used to finance the future. And the EU must allow member states to invest massively because the stakes are too high.

Budgetary rules should not apply to green investments. Investments in research, assets and in the training of young people in the new professions of this current revolution are far too important. Otherwise, we could be facing extinction!

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In concrete terms, how can this new industrial revolution be financed?

The assets are not the problem, and there are many coming from fossil fuels. Projects are the problem. In Europe, there are no large-scale projects that can attract investment. It’s almost ironic: we have the technology and the assets, but there are no major projects, such as the renovation of an entire region. This will be the main focus in the discussion of the new European Commission’s Green New Deal.

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Companies like Total are, however, totally opposed to your vision of things. How are you going to convince them?

I won’t waste a second trying to do it. There are those that are the first in line, but for the rest, I can’t do anything about it. Energy companies have to make decisions.

The same goes for assets from nuclear energy. Nuclear power is outdated, ridiculous, and too expensive. And I’m not talking about waste. In France, as in most countries, all energy can come from solar, wind and biomass, so it is useless to cling to the past.

Many companies are paralysed and do nothing. But there are “first movers”, societies ahead of their time that set an example. Electricity suppliers (“utilities”) have already undergone this phase: coal or nuclear power plants in Germany have become obsolete, they are called “stranded assets”.

What do you think is the main challenge of the new European Commission?

There are really positive signs. The European Parliament has declared a climate emergency and Ursula von der Leyen seems convinced of the urgent need to act in favour of the energy transition. But now we need to find a new narrative, a vision that will make the population embrace the fact that we are living a radical revolution.

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Is youth engagement for the climate useful support?

This movement of young people is unprecedented. No other generation in history has ever united at the global level like this, to protest against the threat of extinction.

On the other hand, this generation must now seize the democratic tools, vote and be elected, to have an impact. Because those in power, who are 50-60 years old, have a completely different political consciousness.

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[Edited by Zoran Radosavljevic]

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