BBC Politics and Energy — Economist Jeremy Rifkin galvanised the Research Connections 2009 conference in Prague with a roadmap to simultaneously solve the economic and energy crises. He proposed a pan-European strategy of small-scale energy generation and smart energy grids that make everyone a partner in energy. What is more, he said, the plan would create millions of jobs and foster investment that would see the end of the current economic crisis.

Mr Rifkin leads a roundtable of 100 top CEOs and government officials who have subscribed to the plan. The roundtable is part of the Foundation on Economic Trends, which Mr Rifkin founded.

He said old economic models will not see humanity through, and the combination of the climatic, energy and economic woes of the planet created a “perfect storm” that will see in a new era for its inhabitants. But such a revolution is not unique to human history, he said.

“The great economic revolutions in history occur when two things happen. First, we humans change the way we organise the energy of the Earth; we’ve done this frequently over the course of our history. Second, and equally important, we change the way we communicate to organise new energy regimes. When energy revolutions converge with communication revolutions, those are the pivotal points in human history.” …

Although the sheer scope of the idea raised eyebrows throughout the room, Mr Rifkin laid out a cogent, four-part plan that he said could in one stroke dispel the perfect storm he described.

The first two pillars of the plan were a call to technological arms: further develop renewable energy technologies’ efficiencies, amplify production to access “economies of scale”, and develop means to store the intermittent energy they harvest.

The third pillar is a common idea writ very large indeed. He called for a pan-European commitment to microgeneration - small installations of renewable energy technology work in place of, for example, vast wind farms - but on every single building already up or yet to be built.

“We cannot build enough centralised wind and solar parks to run Europe,” he said. “If this energy is distributed over every square foot all over the world, why would we collect it only at a few points? The problem is we’re using 20th century, centralised, top-down business models.”

Instead, Mr Rifkin suggested overhauling the technology of infrastructure and architecture such that buildings have integral power generation: solar panels and small vertical wind turbines on roofs, heat pumps harvesting geothermal energy in basements. In rural settings, agricultural waste could be used to generate methane and in coastal regions, tidal power could be harvested.

“Your building becomes your power plant, just like your computer becomes your information vehicle to the world. Every home, factory, industrial park, every building is converted,” he explained. While existing buildings could generate a sizeable fraction of their energy demands, new buildings would be “positive power” - generating more than they need through grand changes in building materials and architecture. (05/11/09)
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John Mauldin writes: It has long been my contention that we are entering an extraordinary period of time in which using historical analogies to plot market behavior is going to become increasingly problematical. In short, the analogies, the past performance if you will, all break down because the underlying economic backdrop is unlike anything we have ever seen. It makes managing money and portfolio planning particularly challenging. Traditional asset management techniques just simply may not work. Buy and hope strategies may be particularly difficult to navigate.

Part of the reason we are co challenged in our outlook is that we are experiencing a deleveraging on a scale in the world that is absolutely breath-taking in its scope. And to balance that, governments are going to have to issue massive amounts of sovereign debt to deal with their deficits. But who will buy it, and at what price? And in which currency? This week’s Outside the Box gives us some very basic data points that illustrate the challenge very well. But the problem is that even though we can see the challenge, it is not clear what the final outcome will be, other than stressful volatility as the market reacts.

This week’s recommended essay is by my good friends and business partners in London, Niels Jensen and his team at Absolute Return Partners. I have worked closely with Niels for years and have found him to be one of the more savvy observers of the markets I know. (05/11/09)
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Imagine a group of 100 fisherman faced with declining stocks and worried about the sustainability of their resource and their livelihoods. One of them works out that the total sustainable catch is about 20% of what everyone is catching now (with some uncertainty of course) but that if current trends of increasing catches (about 2% a year) continue the resource would be depleted in short order.

Faced with that prospect, the fishermen gather to decide what to do. The problem is made more complicated because some groups of fishermen are much more efficient than the others. The top 5 catchers, catch 20% of the fish, and the top 20 catch almost 75% of the fish. Meanwhile the least efficient 50 catch only 10% of the fish and barely subsist. Clearly, fairness demands that the top catchers lead the way in moving towards a more sustainable future.

The top 5 do start discussing how to manage the transition. They realise that the continued growth in catches - driven by improved technology and increasing effort - is not sustainable, and make a plan to reduce their catch by 80% over a number of years.

But there is opposition - manufacturers of fishing boats, tackle and fish processing plants are worried that this would imply less sales for them in the short term. Strangely, they don’t seem worried that a complete collapse of the fishery would mean no sales at all - preferring to think that the science can’t possibly be correct and that everything will be fine.

These manufacturers set up a number of organisations to advocate against any decreases in catch sizes - with catchy names like the Fisherfolk for Sound Science, and Friends of Fish. They then hire people who own an Excel spreadsheet program do “science” for them - and why not? They live after all in a free society. (05/11/09)
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