“A New Future for Europe's Economies”
The US economist, sociologist and internationally respected government advisor, Jeremy Rifkin, is championing the growth impetus provided by the "third industrial revolution" – in a conversation with Christian Rabhansl in Deutschlandradio Kultur's "Tacheles" .
Around five years you were an advisor to the EU, when it set itself the so-called 20-20-20 objectives. These are 20 percent fewer greenhouse gas emissions, 20 percent of the energy mix accounted for by renewable energies and 20 percent more energy efficiency by the year 2020. But we are now stuck in the middle of the financial and sovereign debt crisis. And that seems to be consuming all available political resources and not to mention vast sums of money. Has Europe forgotten your warnings?
Jeremy Rifkin: I think the time has come when the EU needs to understand that the 20-20-20 formula represents its gateway to a new future. Let’s take a closer look at the nature of this crisis. The actual crisis started in July 2008, when the oil price reached US$ 147 per barrel on the global market. When that happened supply chain prices just rocketed, because everything is derived from or dependent on oil – fertilisers, pesticides, building materials, pharmaceutical products, power, heating, transport , light - everything. So when oil traded at US$ 147 per barrel, prices exploded and people stopped buying and any economic dynamism just came to a grinding halt. That was an economic shock of seismic proportions. The collapse of the financial markets sixty days later was just an aftershock. So we need to understand that we are currently at the peak of globalisation. We have reached the endgame of the fossil-fuel-based industrial revolution – at around US$ 150 per barrel of oil. But why is that so? When China and India, between them accounting for a third of the global population, became economic forces to be reckoned with, they put enormous pressure on the supply of oil. So when these countries boasted growth rates of 10, 12 and even 14 percent, the price of oil shot up, as did the prices of everything else and purchasing power crashed. I believe we have reached the final round. If we attempt to kick-start economic growth again as prior to 2008, oil prices will just keep rising and therefore all other prices will follow suit and purchasing power will decrease, especially because so many new developing countries have come on the scene. That is exactly what is happening now. Every time we attempt to reinvigorate the economy, this is followed by an economic collapse – boom, bust, boom, bust. This sequence will be completed in intervals of less than three years in each case. Historically speaking this is a very dangerous period. Furthermore we are currently experiencing climate change in realtime. That is having a dramatic impact on agricultural yields and is damaging infrastructure. So the question has to be asked as to what we should do. What we need now are new, post-fossil-fuel economic ideas, which can be implemented quickly within 30 years and which will create several million new jobs and thousands of new businesses. The 20-20-20 formula is just the beginning. Now we need to initiate a third industrial revolution.
That is a very broad-ranging concept that you have developed – away from oil towards a carbon-free society, towards renewable energies. When you say that the current crisis is actually one to which we have not hitherto paid sufficient attention, is your advice to the politicians: forget the sovereign debt crisis - that is of secondary importance?
Rifkin: Governments – in Germany, the EU and throughout the world – now need to devise responsible austerity programmes, in order to trim budgets in a responsible manner. In parallel new and very appealing economic paradigms need to be generated to reactivate the economy, to create millions of new jobs and to guide us into a flourishing yet sustainable future. Both courses of action need to be taken. The third industrial revolution is therefore a paradigm shift. It is based on five mainstays. The European Union officially endorses a five-pillar plan that is designed to guide us towards this new paradigm. And Germany is playing a lead role in this revolution. I had the honour of developing this plan for the EU. And this is what it looks like. First pillar – 20 percent renewable energies by the year 2020. Germany has already achieved this objective ahead of schedule; 20 percent of its electricity is now generated from renewable sources and it is aiming for 35 percent by 2022. Second pillar –how do you source renewable energy? Renewable energy sources are to be found everywhere – the sun, wind, geothermal energy, waste, everywhere you care to look. So the intention of the second pillar is to transform every single building - every home, every office, every factory - in the European Union into a micro power plant, so that electricity can be generated on site. Solar panels on roofs, wind power generation directly on site, geothermal energy and power generated from waste etc.
To date that has been an expensive environmental hobby – a thermal pump in the basement or solar panels on the roof. How can this be funded on such a massive scale?
Rifkin: Just let me finish listing the five pillars and then we can talk about funding, because this can definitely be funded. Pillar No. 2 will give the construction industry a huge boost – Transforming every building into a micro power plant requires massive manpower and will therefore create millions of new jobs. That means that massive sums of money will be injected into the economy. That generates economic growth. The third pillar is energy storage. The sun does not always shine in Germany, the wind does not blow constantly. This is where hydrogen comes into play, to enable us to store this energy and ensure reliability of supply. The fourth pillar involves dovetailing the energy and the communications revolutions. We take Internet technology, we take Europe’s power grid and turn it into an energy internet. In this way millions of buildings can absorb renewable energies on site, store them using hydrogen and then convert these renewable energies to electricity, which in turn can be sold throughout Europe via an energy internet, if it is not consumed on site. The fifth pillar involves rechargeable electric vehicles. Fuel cell vehicles will be incorporated into the system, thereby creating a completely seamless logistics system that does not involve carbon technology. These five pillars are the basis of a new technological revolution. Viewed individually, they are just components. So they need to be combined to generate synergies. If that does not happen there will be no economic revolution. So how do we fund all this? Gross domestic product is generated both in good and bad times – even in an economic depression. And a certain percentage of that GDP will be used for new investment. Money is invested even in bad times. The issue now is where these investments are channelled. Do we want to invest in an old system, in the 20th century’s second industrial revolution? Do we want to subsidise sources of energy that are drying up? Do we want to continue backing technologies that are well past their shelf life? The infrastructure is on a drip. We do not want it to collapse, we have to keep the second industrial revolution alive. But what we need to do is use private- and public-sector investments to create a new infrastructure, which can generate millions of new jobs and thousands of small and medium-sized businesses…
You have now highlighted where money should be invested. One more question – from which industries should money be withdrawn?
Rifkin: Those industries that will be successful are included in these five pillars – our future lies in the renewable energies industry. Fossil fuels have no future. Renewable energy technologies that can generate and store power are definitely the key to our future. Pillar No. 2 – these small, medium-sized and large businesses that focus on converting buildings into micro power plants will earn a lot of money. Pillar No. 3 – that is a niche, yet it will require a large number of small and medium-sized businesses to create specific energy storage options. Pillar No. 4 is a major domain. Imagine transforming the entire electricity grid into an energy internet. That will cover a period of twenty years during which new businesses are established, new technologies and innovative applications are developed, in which the Internet will be enhanced to enable the electricity grid to be operated remotely. Pillar No. 5 is a huge sector, which involves logistics, transportation, an intelligent transport and logistics system that is linked to the electricity grid, that generates green electricity and can sell it – this creates a whole new logistics paradigm. If you combine these five pillars, the investment opportunities are staggering. It creates a new infrastructure. And it can begin straightaway - as soon as municipalities of all sizes start to invest in these points of intersection, new job are created and businesses established that can work on putting this infrastructure in place….The third industrial revolution is non-hierarchical. Everybody generates their own power. Energy is now in the hands of the people – it has been democratised. In future millions of people will produce their energy locally. That is unavoidable. Why? Sunshine is free of charge, the wind is free of charge, geothermal energy costs nothing and your rubbish belongs to you. These new technologies – e.g. photovoltaic systems, wind technologies, geothermal systems - that generate and store this energy from a range of renewable sources will become cheaper. And within 15 years they will be so inexpensive (the cheapest mobile phones ever were already on the market after 15 years) that everybody can afford these technologies and will be able to “harvest” these no-cost renewable energies locally.
