Marrying Capitalism with a Zero Carbon Economy (#39)
Climate change expert Chris Goodall says that fighting climate change isn’t as challenging or as expensive as we think it is and can actually benefit our economy. In today’s episode, we discuss how the climate change movement can advance social change, whether we can save our planet without some structural shifts to capitalism, nuclear energy, the politics behind tackling the climate crisis, and more. Chris has written several books, of which What We Need To Do Now For A Zero Carbon Future and How To Live A Low Carbon Life.
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The world will move towards the low carbon alternatives, but it’s now China and India who are going to dominate this discussion, not the U.S.
[00:01:24] Ben: We are with Chris Goodall, author and expert on new energy technologies. We’re going to be discussing with Chris the imperative of moving to a zero carbon economy and specifically discussing his book, What We Need To Do Now. Chris, welcome to the Structural Shifts podcast.
[00:01:41] Chris: Hello, nice to be here, thank you.
[00:01:44] Ben: So Chris, I thought your book was excellent, really excellent. Very accessible, very positive. And I think there’s so much that I want to cover in this podcast because it goes so much further than just sort of talking about the steps we need to take to get to a zero carbon economy. You know, it talks about a much broader opportunity to use climate to declare emergencies, to springboard us to some sort of new green deal. So, so we’re going to cover all of that during the course of the podcast, but I thought it might be a good place to start by talking about your 10-point plan for getting us to zero carbon economy. Do you mind just explaining and talking us through that 10-point plan?
[00:02:23] Chris: Well, what I wanted to try to do in the book and it crystallized into, into that few pages, is an attempt to say to people, it’s no good just thinking that the energy trends, the zero carbon transition is just about energy. It’s actually very much wider than that. Energy is the single largest source of carbon and other greenhouse gas emissions. However, when it comes to things like food, we have to radically change our behavior and that’s right across the world, right across every single economy. So I was trying to give a sense that there is a package of measures available to make the transition. It’s not just about energy and it will necessarily involve some changes to human behavior. This is not a comfortable thing for anybody to say, but we will not be able to live exactly as we have been living for the last 50 years in a zero carbon future.
[00:03:17] Ben: One of the areas where your book differs from some of the other commentary about climate change is that even though it acknowledges the need for us to change our behavior, it doesn’t sort of suggest that we need to go back in time, right? In other words, if you listen to a lot of people like Sir George Monbiot would be an example, right? If somebody sort of says, you know, we almost need to go back to the sort of 1950s or something and cut back on how much we consume. But it seems to me that it’s a paradox, we almost need to keep consuming if we’re going to create the economic incentives to, to get us to a zero carbon economy. Would you agree with that?
I think that the severity of the threat from climate change is now in most countries recognized across the political spectrum, both conservative and social democratic.
[00:03:54] Chris: This is an incredibly difficult thing. I remember I wrote my first book 12 or 13 years ago, which, I had the title, How To Live A Low Carbon Life. What would you do? How would you do things differently if you decided you yourself personally wished to live a life of zero carbon?
[00:04:12] And in it, I posed, I suggested a number of things had to happen. For example, you need to stop flying. This was very, very unpopular. I’d go and give talks to Quakers, i. e. people with exactly the right set of values to make this sort of thing possible. And I’d find that faces would drop as I began to talk about things which needed to change. That really convinced me that part of the solution has to be technology. We have to push forward in ways that make it possible to switch away from fossil fuels, but retain many of the most important aspects of our modern life. So in this book, I’m saying really, there’s a mixture. We do need to change our way of behavior. We are not going to be able to eat as much meat. We almost certainly will not be able to fly as much, but there are technological routes for making that compatible with retaining some of our freedom to travel and indeed some of our freedom to eat meat-like substances. So in the case of aviation, we need to move to synthetic fuels and away from fossil fuels, fuels that are made out of hydrogen and carbon dioxide extracted from the atmosphere, and so have a zero carbon implication. And we need to, if you want to eat meat, you’re going to have to move to meat that comes from artificial sources, such as lab cultivation or things such as the impossible foods, a burger which pretends it is meat, but is actually made entirely from plants.
[00:05:39] Ben: In your 10-point plan or at least around the 10-point plan, you talk a lot about hydrogen. Why do you put so much emphasis on hydrogen?
[00:05:46] Chris: Because without hydrogen, I suspect that the energy transition is completely impossible. And why is that? We, again, we’re trying to move, we are moving around the world to another electricity system, which is increasingly based upon renewable energy sources, predominantly wind and solar, the next and new generation, as well, of course, as existing hydro in places like Switzerland or Norway. If we build our electricity system around wind and solar, inevitably we’re going to have periods when we don’t have enough electricity. And at that time we need to have some form of stored energy carrier. Right, at the moment, all we can possibly do is to use as that backup, that complement to renewables, a gas system where the CO2 is then collected and stored underground. That’s possible in some countries, including the United Kingdom, it’s not possible in many other parts of the world. So in those places, there is no alternative way of providing electricity when the wind isn’t blowing or the sun isn’t shining. I’m thinking of places like Germany where it would be politically impossible to start to store large quantities of CO2. So, somewhere like Germany needs to move to a renewables plus hydrogen economy. There really isn’t a choice for the electricity system. And that’s why hydrogen becomes central. If we’ve got lots of hydrogen, we can then use it for a multitude of other activities; one, to generate electricity first, but also to provide the energy for steel-making, for making synthetic fuels, and so on, and so forth. So the world I envisage in the book is one where renewables completely dominate. We build 10, 100 times as much renewable capacity as we’ve got at the moment. We use the surplus to make hydrogen and that hydrogen fills all the energy needs, which we aren’t otherwise going to be able to accommodate.
[00:07:53] Ben: So in other words, hydrogen becomes the mechanism by which we can store surplus energy and then reuse it.
Over the last year, there’s been faster movement towards a zero carbon future than I could possibly have imagined at the beginning of 2020. And it’s not governments that are doing this, it’s large companies, companies, more generally, people realizing that they have to change if they’re going to survive.
[00:08:00] Chris: Yeah, yeah, exactly. Much, much, much more coherently put.
[00:08:04] Ben: Okay, I’m going to try to cover the book in different sections. So, the next section I wanted to cover was the political implications or the political shifts necessary. And, the first point I wanted to cover was one around the sort of politicization of climate change, because it is very much considered in lots of countries to be a sort of issue of the left, right? So, my first question is how do we move climate change from being a partisan issue to being a nonpartisan or center ground policy priority?
[00:08:38] Chris: I’m not entirely certain I agree with that. I think that the severity of the threat from climate change is now in most countries recognized across the political spectrum, both conservative and social democratic, i. e. the dominant, the 80% of the population of most, most countries in the West. There are places, parts of Australia, for example, where this wouldn’t be true. But if you look at public opinion polls in Europe, for example, you will find that the depth of the emergency is understood by people up to the far right, the very far right in most of these countries. So I don’t think there’s much of a political problem here.
[00:09:28] Ben: I guess I was just thinking more about the US, where it seems to be very much a polarized issue.
[00:09:34] Chris: It’s certainly changed and if you ask people in opinion polls is climate change a severe threat which government needs to do something about, or companies need to do something about, you’ll get roughly the same response as you would do in a European country, roughly, it’s not that different. However, large parts of the American political system still reject the widespread use of renewables. Today is a few days after the breakdown of the Texas electricity system…
[00:10:08] Ben: I was going to ask you about that…
[00:10:10] Chris: … and there we have, yep, the right has gone for that and said the fault absolutely lies in the failure of wind turbines to keep going when they’re frozen. There’s nothing one can do about that. But the fact is that wasn’t the case, that isn’t the case. That is, a lot of wind turbines did cease to work because they haven’t been properly weatherized. But the lesson that we ought to be drawing from the Texas problem, the series of problems in Texas, is that we need to make our electricity and energy systems much, much more resilient than they are, or they seemed to have been in Texas. The reason why the Texas system fell over, the most important reason, is the failure of gas-fired power stations to be able to cope with the temperatures systems going, systems going down, as well as to a lesser extent, problems with wind turbines. Texas isn’t well connected, if at all, into the rest of the US system, it doesn’t have a market for promises to provide electricity under emergency circumstances, what we in Britain call capacity market, and the result, it has built itself an energy system which is completely incapable of dealing with emergencies. We’ve got to do something about that. Most European countries recognized that a long time ago and I don’t think it’s a result necessarily of a political, of a particular political ideology.
I don’t think it’s ESG. I think it’s conventional greed. It’s saying that unless I do something to move my portfolio towards companies that are more fitted to the next few decades, I will lose a lot of money. And that is absolutely to be encouraged.
[00:11:33] Ben: Okay, you’ve challenged the premise of my question. So I’m going to, I’m going to rephrase it, which is, if we have broad political consensus around climate change, which, which may be the case now, how do we find the political capital to move quicker? Or put another way, if we’ve got consensus, why aren’t we moving quicker towards a zero carbon economy?
[00:11:56] Chris: I understand the sort of, if I may say, some of the pessimism behind that question, but I would say that in my experience over the last year, there’s been faster movement towards a zero carbon future than I could possibly have imagined at the beginning of 2020. And it’s not governments that are doing this, it’s large companies, companies, more generally, people realizing that they have to change if they’re going to survive. The examples of large corporations going under because they failed to move fast enough in the energy space is growing and it will continue to show, to provide examples to companies around the world of what happens if you don’t keep up with the energy transition or keep ahead of it. So, I think the move isn’t necessarily reliant upon government anymore. It’s companies and societal organizations more generally which are going to make the shift.
[00:12:55] Ben: Could you give examples of companies that have failed, have been too slow in making that shift? And is it in the core business, or is it taking a different direction?
[00:13:06] Chris: I’m thinking of, for example, the stock market performance of oil and gas companies over the last year, compared to people, specialists in renewable fuels, that’s number one, but we can see the same, look, look at what’s happening in cars, it’s going to happen across the board in a wide variety of different fields where, a classic example was gas turbine manufacturer four or five years ago where the producer, Siemens Mitsubishi, GE had thought that gas was going to become the fuel which is used for electricity supply to compliment renewables. That turned out not to be the case, market value was crippled within the space of a few months when that realization became well understood in the market more generally.
[00:13:50] Ben: It’s interesting you talk about stock market performance because we are seeing this massive push into sort of ESG and impact investing. Do you think this might provide the mechanism by which companies now start to act, i. e. so much of remuneration is sort of dependent on stock market performance. The individuals are through their asset managers now starting to, to change where they invest. And maybe that’s now creating some sort of incentive for CEOs and for corporates to act.
[00:14:20] Chris: I don’t think it’s ESG. I think it’s, I think it’s conventional greed. It’s saying that unless I do something to move my portfolio towards companies that are more fitted to the next few decades, I will lose a lot of money. And that is absolutely to be encouraged. We need to tell, we need the message to get out to asset holders that they shouldn’t, if they want to achieve returns on their investment, they shouldn’t be investing in Shell, they should be trying to find the next Tesla.
[00:14:56] Ben: You said that governments are becoming, I guess, relatively less important in solving this issue than perhaps was historically the case. But what about some of these international agreements? For example, you know, we’ve got Glasgow 2021 coming up, how important do you see international cooperation on this issue being, and then are you sort of more bullish than you would have been now that Joe Biden is in charge and there’s kind of, you know, some leadership again on this issue?
[00:15:25] Chris: I’m not completely certain, to be honest, because I think that governments do tend to follow what they think is possible, they’re not, politicians aren’t leaders anymore. They are responding to the environment in which they’re found. We’re not going to get people taking difficult decisions, but it doesn’t look to me as though the people in charge in China realize that heavily pushing the technologies of the future towards their tech, the technologies are going to take the world towards zero carbon is the right way for their society to move in its own economic self-interest. And once we got to that point, we don’t really have to worry too much about leadership, people taking difficult decisions. Everything becomes a lot easier because it becomes much more transparent, that the world will move towards the low carbon alternatives. I suspect the US government will follow, but it’s now China and India who are going to dominate this discussion, not the US.
[00:16:30] Ben: Your book and your 10-point plan, we didn’t actually cover them, so I’m just going to very quickly run through them. So the 10-point plan is renewable energy generation, improving the housing stock, electrifying the transport system, local energy grids, moving away from eating meat, making fashion more sustainable, changing the technology for fertilizers, steel, cement, increasing woodland, reducing flights and shipping and carbon taxation. That was the 10-point plan. So in that 10-point plan, conspicuous by its absence is nuclear energy. And I just wanted to ask you, is that because nuclear energy is less politically viable after Fukushima, or is it just because renewables are simply better and cheaper, and don’t have that stuff…
[00:17:11] Chris: Cheaper, massively cheaper, and we’ve got places around the world which can generate, which will be generating electricity at around 2, a low 2 US cents per kilowatt hour,$20per megawatt hour. We’ve got in the example of the relatively small number of nuclear power stations that are being constructed around the world at the moment, average prices well above five times that level. So, if you believe that you want cheap energy, nuclear is absolutely not the way to go. It’s not about the ideology of whether it’s appropriate or not. I think nuclear waste storage is a problem that ought to be solvable. I think nuclear power is essentially safe. It’s just vastly more expensive than wind and solar.
We’ve got used to being able to treat clothing essentially as single-use. I’m exaggerating, but we see it, we buy it, we wear our clothing a few times, we then throw it away. We have no concept of the consequences of that chain of actions.
[00:18:07] Ben: How can we use this climate change movement to galvanize social change? So, you talk a lot in the book about how we can use it to improve our wellbeing and to create a fairer society. How can we practically do that?
[00:18:24] Chris: Terribly difficult question and also very difficult to summarize effectively. So, if I may, I’ll just look at one example of the sort of things that society is. I shy away from thinking governments do this, it’s societies that do it often through local democracy rather than the head office, as it were, sitting in the, in the country’s capital sending out edicts about what needs to happen. And this example is becoming increasingly common around Europe in particular, saying that the center of towns and cities should be dominated by pedestrians and cycles, moving cars out of towns. Why is this good? It’s good in a number of ways. It reduces carbon use for example, but it also brings back into public use, public use, spaces which had been effectively neutralized — car parks, roads, which people, which individuals couldn’t use.
[00:19:26] So we’ve begun to build this structure whereby community cooperation becomes possible. Towns without cars are healthier, they’re healthier both in terms of social interaction, you see more people you can talk to, your children can go out and play more, but they’re also healthier in the sense that they tend to demand as to cycle or to walk. And in most places in the developed world, people really do need to get out more, to take more exercise. And these places in general will have better health. I think I quote the example in the book of Utrecht in the Netherlands, which is one of the most pedestrian and cycle friendly places in the world, where the costs of establishing the cycle infrastructure are vastly less than the benefits that have been saved in terms of lower healthcare costs. So just to go back to the, the meat of the question there, city centers, towns that have been given over to public use are inherently more equal than those, those places which prioritize the 50, 60% of the population who can afford to own and run a car in most societies. So, that’s an example of the way in which the low carbon transition can, if properly done, equalize our economic standing. European, American, many, many societies around the world are vastly too unequal at the moment. I think there’s increasing political understanding of this. The carbon transition has to make the move away from inequality happen at the same time as the reduction in CO2 emissions.
I think the best role for the state, being someone who believes in the operation of markets, is for the state to properly price the environmental consequences of what we as individuals decide to do. And that’s, the shorthand for that is carbon price.
[00:21:13] Ben: And do you think that’s the way to build more political consensus? Or to build more, just to act?
[00:21:23] Chris: Yes.
[00:21:24] Ben: Because I suppose now there is a big divide is between the haves and have nots. Whereas even the haves, I guess, want to live in a world where they’re not worried about their children’s future, whereas the have nots, I guess would gladly opt for that and a fairer society.
[00:21:37] Chris: Yeah. Yeah. I think the problem so far has been is that the mission to arrest the speed of climate change has essentially been one sponsored by the well off. It’s often been seen as irrelevant by the people, or counterproductive by the people who are sitting, struggling to survive economically, at the edge of society. If we’re going to take climate change seriously, take the really significant measures that need to be taken, we can only do so with the active support of a very large section of the community, majority of our communities. That hasn’t been the case, and I think pursuing particularly those low carbon moves, which are of direct benefit to the less well off is absolutely vital to the successful transition.
[00:22:33] Ben: And how do you, how do you motivate people to change the way that they behave today? How do you provide incentives? For example, how, how do you, you talked about flying earlier on, how do you, how do you persuade people to take fewer flights? How do you persuade people to, you know, to buy clothing in a more sustainable way? How do you incentivize these kinds of behavioral changes?
[00:22:55] Chris: Well, it’s a whole portfolio of things, isn’t it? In the case of flying, I think what we’re seeing is the beginnings of a movement which says that it is socially unacceptable to fly, particularly to fly a lot. And when the current pandemic is over, I think we will, we won’t see an immediate, if any, return towards the levels of flying which we saw in 2019. That means, for people in Britain who, a large number of who fly to Spain and Portugal for their summer holidays, may decide that they don’t want to do so, or they may decide, for example, to take the train to these places. So that’s moving on to the second point, we do not in general have an alternative infrastructure, a mass market infrastructure that replaces the high carbon ways of doing things. So, we’re beginning to see railway systems around Europe move towards overnight long, long distance trains overnight, when I was a student, that’s the way you got around Europe and we probably need to go back to that, to be honest. This is not particularly attractive. It’s not something which people are going to be that keen about. But I think people increasingly realize that it’s probably necessary for a stable, for a stable climate. So that’s just one example of the way in which society might make, might make it easier. But getting people to restrain their consumption in order for the world as a whole to do better is, is an enormous challenge, I wouldn’t doubt that for a second. And I’m probably too naïve about this, I’m probably too idealistic.
[00:24:42] Ben: During, let’s call it the transition, right? The big transition towards a zero carbon economy, how do we, you know, so, the end state is one that’s desirable and having read your book, I believe now achievable. But how do we sustain society economically and socially during that big transition?
[00:25:04] Chris: Gosh, this would take a long time and it’s, so, if I may use an example of fashion here, we just, just to illustrate the sort of things, which, which are going to be necessary and some of the problems that are going to occur. We’ve got used to being able to treat clothing essentially as single use, I’m exaggerating, but we see it, we buy it, we wear our clothing a few times, we then throw it away. We have no concept of the consequences of that chain of actions. Firstly, no clothing is recycled and that’s got to change, but it’s at the moment probably less than 1% worldwide is genuinely recycled, and it’s not gone up very much in recent years. We need to build an alternative system which produces high quality clothing for longer periods and an industrial structure around it, which allows for rebuilding that clothing as people, as people change, as they sell it to someone else, as it becomes less fashionable. Now, this is a major change to the infrastructure of the clothing industry, and it requires the development of a local refashioning, remaking sector, which, which will provide good quality employment and already does in some parts of Europe. The crucial thing, however, is that we are going to start spending less on clothing and spend, particularly spending less on new clothing purchased from countries in Southeast Asia, where a large fraction of the working population is making clothes for living. So, here the world faces a dilemma. In order to do the right thing when it comes to fashion, we’re going to do pretty terrible things to countries with large sectors where the clothing manufacturer sector is enormous — Cambodia, Bangladesh, and so on and so forth. So we, as a society need to work out how are we going [to cope with that? How are we going to build recycling and refashioning at the same time as ensuring that we’re not pushing large numbers of people back below the poverty line? And I’m sorry, I don’t have an easy answer to that.
[00:27:14] Ben: How do we manage some of these transitions without the active, you know, without the active role of the states and international cooperation agreements and so on?
[00:27:23] Chris: Well, by active role of the state, I’m sorry, I think the best role for the state, being someone who believes in the operation of markets, is for the state to properly price the environmental consequences of what we as individuals decide to do. And that’s, the shorthand for that is carbon price. And I think that’s the most appropriate thing for countries to do, is to say, well, for the world to do as a whole, that anything that emits carbon is going to attract a tax of £100, $100 per ton of carbon dioxide, that would solve the climate change problem within a decade, in the sense that it would push the technologies which are now struggling to get traction in a world of cheap fossil fuels, to the point where they could become genuinely competitive. Is that possible? I think it’s, is a $100 a ton of carbon dioxide possible? Much more so than it was a year ago and in the new US administration we’ve certainly got people who absolutely believe in the importance of this and doing it on a global level. Whether we can get China into that club, I’m not knowledgeable enough about politics, but I suspect it’s more likely than not, because without it, China is going to face carbon border taxes, such as those proposed by President Macron in France. Meaning, for example, everything in sports is going to acquire a tax. It would be better for China to impose that tax than to have it imposed at the border by the European Union, for example.
[00:28:58] Ben: And how would those, how would the carbon tax work internationally? Because if we take, if we take the example of fashion, you can see how a carbon tax on some of these throwaway or fast fashion ranges might, might deter us from buying them. It might make it relatively less expensive to buy better quality, more enduring clothing.
[00:29:15] Chris: Yeah, made from fabrics with a lower carbon footprint, for example. So, we’d switch fabrics, and I’m sorry, Ben, I interrupted.
[00:29:23] Ben: Yeah, no, definitely, switch fabrics, as well. And then I guess the way that we could then compensate the losers, if you like, you know, the massive factories in Bangladesh, it might be by taking some of the money raised to the carbon tax and, and helping those countries in those sectors to, to retrain and built new, more sustainable industries. But that’s only possible if that carbon tax is employed internationally and the, the money collected is, is distributed internationally. Is that possible, do you think?
[00:29:54] Chris: Yeah, I mean, it’s going to clearly be politically troublesome to do this, but imagine that you have a calculation as to the carbon footprint of a pair of jeans made in Bangladesh. You ask Bangladesh to impose, Bangladesh decides that it wishes to be part of the carbon, the global carbon tax, and says right, from now on we’re going to charge at a rate of $100, a ton of carbon dioxide on exports from this country, so that they can go in tax-free to the markets in which those clothing, that clothing is sold. Unless I’ve got this all wrong, that directly provides the financial incentive for countries to do this, so there’s absolutely no question, the actual volume of clothing made in these places is going to fall, although it may require significantly greater labor input, each individual item, rather. So, a very good question, and I’m not certain I’ve got an absolutely robust answer to that.
[00:30:57] Ben: In the book you talk a lot about devolving control to, local authorities and, you know, communities. And you talk about that in the context of energy grids. Why is that? You just think that local politics tends to lead to better outcomes?
[00:31:16] Chris: I think where things are controlled locally, they will generally be done better, and with the interests of local people more in mind. So call that ideology if you want. It is an ideology, it’s a belief that if the elected politician walking down the street, going to buy some bread, meets someone who is affected by his or her decisions, they, the politician, are more likely to take an action, which is responsive to that constituent’s needs. So that’s, that’s at one level, but I’m particularly influenced because I come from the UK where the utility sector infrastructure more generally has been bought up almost entirely now by foreign companies, which have no interest in keeping, in dealing with, addressing local needs, their objective is to return money to pension holders in Australia or Canada or wherever it is. I’ve got a huge gap between the needs of local communities, for example, energy independence and the need to keep that funding and those dividends flowing from the operation of electricity and gas networks in the UK. So that, that feeling is mostly driven by an extraordinary upset I always feel when I come across infrastructure, particularly local network infrastructure in the UK and its resistance to actually refocusing energy generation and energy consumption on local communities. I’ve spoken in generalities there, but just to give you a particular example, I’m part of a group trying to install a battery, a large battery, close to wind and solar farms, which are community owned, 10, 15 miles outside Oxford. That’s proved, that’s proved impossible because although that battery is needed to help Oxfordshire, the county in which Oxford is, develop some form of energy independence, it’s being resisted by the costs, by the people who own the networks, which we have to connect to in order to make this operationally work. If all this was controlled by the Oxfordshire utility in the way that, for example, it is in Germany, or can be in Germany, then we might stand a chance of getting a faster move towards complete decarbonization of energy supply.
[00:33:39] Ben: And do you think the problem of lobbying and vested interest is greater in a centralized system, therefore then, than the decentralized system?
[00:33:48] Chris: Yeah, yeah, as I say in the book, I would like the utilities in Britain to mirror those in Germany, essentially local public ownership. I know it’s much more complicated than I’ve just suggested in Germany, but everything, nothing about the energy system in Britain is controlled or indeed influenced by local societies, local politics or anything. It is all managed, almost all managed by external stakeholders who have no interest whatsoever in the health and speed of energy transition of these communities.
[00:34:25] Ben: There is an exception, though. In the book you talk about the Orkney Islands. Do you mind just talking us through that example? Because I think they would appeal cause we have a lot of like technology listeners and I think that would appeal.
[00:34:35] Chris: Right, okay, well, Orkney is a very, very interesting testbed for a number of different technologies, because it’s pretty remote. Not much of this is not being watched as closely as it should be by the rest of Europe. So Orkney sits, is a series of archipelago off the northeast coast of Scotland. The nearest islands, probably about four or five miles from Scotland extends over a large area. It’s got about population if I remember correctly of 20,000, don’t quote me on that. Enormous resources of wind and also the European Marine Energy Center. So if you want to put a title turbine to try to title turbine, you do it up there. So, most of the time it has a big surplus of electricity. It doesn’t know what to do with it. So, it has scope to use that relatively cost-free energy because the link back to the, to the Scottish mainland is so weak to carry out a variety of experiments that focused on hydrogen, but there’s lots of different things going on at the same time, the hydrogen is used, is stored, put through fuel cells to create electricity when there’s no wind, the relatively few occasions when there’s no wind. There is a school that’s heated by it, there are fuel cell vehicles across Orkney, and so on and so forth. Well, Ireland would like that, the local community can take control of what it does. It’s easier because of the physical separation, but in my opinion, it would be better if communities more generally across countries had the opportunity to do this, to make themselves into independent states, with regard to their energy generation, energy consumption.
[00:36:12] Ben: One of the things I really liked about the Orkney example was it just, it just seems to mirror to me the way in which economies and businesses become networks over time because of, because of the internet, effectively. Because essentially energy can behave like a network as well which there isn’t some central grid, but instead, you know, everybody can sell to the grid or they can be paid to be kind of buying and selling of, of energy.
[00:36:41] Chris: Yeah. Yeah, exactly. So you become, if you can buy the electricity, that’s being, the surplus electricity that’s being generated on your neighbor’s roof by solar panels when you need it, you have a much better sense of the importance of balancing supply and demand, for example. So the whole energy transition thing becomes much more live, much more personal, but we’re not really pushing that very fast in Europe or indeed anywhere else in the world. But peer to peer trading through distributed ledger type systems, not Bitcoin or anything like that necessarily, but distributed ledgers, ought to be a way of enabling ourselves to become more reliant, more aware of the importance of switching to local sources of energy.
[00:37:27] Ben: Can we make this transition within the framework of capitalism? Or do we need some sorts of change to capitalism?
[00:37:37] Chris: I swing on this hour by hour, to be honest. When we’re recording this, as Australia tries to work out how to control the large tech giants, Google, Facebook, et cetera, there isn’t a model for this yet, but what it demonstrates what’s going on in Australia, what it demonstrates is that large corporations, that the tech giants have a degree of authority over the operation of political systems, which is unprecedented, certainly in the last 120 years. We do need to do something about that. We do need to break up the worst examples of this, but if we are going to radically change our energy system, for example, by covering the North Sea with offshore wind turbines, it is almost certainly better in my mind that we use the tools of capitalism to make that as cheap as quick and as effective as possible.
[00:38:37] And so therefore I think we need to keep the large mostly, mostly, today, I think that we need to keep the large companies alive and pursuing profit when you it’s no good asking just to be nice and do good. You have to allow it, if you’re going to allow any form of capitalism, you have to allow it to make profit. That being the case, you need to control the way in which that profit is made and ensure that things that do good for society, make profit. Those which do not, do not. As I go back, if I may, to the point I made earlier, I think the easiest way for the political system to redirect large corporations towards the right ends is to impose a tax on carbon.
[00:39:21] Ben: And then you, you made the point there, which is something we, we observe as well, which is these are big firms because, because they’re subject to increasing economies of scale, you know, through network effects, which is something reasonably new in the history of capitalism, we see this, this phenomenon with kind of super firms and, you know, and you said it yourself, right, which is so big that they can almost have, you know, they can almost challenge the sovereignty of particular states.
[00:39:48] Chris: Yeah, they do, yeah.
[00:39:50] Ben: They do, but the point I was going to make is in a world of super firms, presumably, you know, maybe this is over simplistic, but if you can get those super firms to take climate change seriously, maybe we can, we can move quick on climate change. Would you say that’s…
[00:40:04] Chris: Uh, yeah, once again, I swing between thinking that the climate pronouncement of large firms, Microsoft, Google, whatever, are real, they are actually doing, there’s no question that these companies are doing something. Whether they’re doing it to be good corporate citizens or whether they’re doing it because they think in the long run it will be financially advantageous for them, I don’t know the answer to that, but I’m not certain it matters. I’m just very glad that the large companies have decided that they’re moving in that direction. But just to go back to offshore wind again, if I may, I can’t see a way in which a trillion dollars is going to be put into the North Sea and other windy parts of the world in the next few years, except by using the capital allocation skills of the likes of the large oil companies. So I want to keep Shell in existence and I want Shell to realize that its future depends upon low carbon energy extraction and transformation, not upon drilling holes in the ground. I think that’s perfectly possible, but it has to be driven by a financial motive rather than an ESG motive, for want of a better word. I’ve no love for the amoral large corporation, but I don’t think the world is going to manage to make the transition without the likes of Exxon and Shell being part of it.
[00:41:30] Ben: Presumably, one of the reasons why the book is so positive is because you see this, you see very little kind of opportunity cost through moving to a zero carbon economy, beyond the small sacrifices that we will have to make as consumers and so on, ultimately we can get to a situation where everything is better, right?
[00:41:52] Chris: I think so, everything is better, energy is cheaper, there is more access to goods and services for the whole of our communities, not just the wealthy. I can’t now see a reason not to do the transition. Yes, there are going to be some costs, immediate costs, but look, let’s face it, the world is awash with capital funding wanting things to do. For the first time, certainly in my lifetime, we have central banks trying to pump money into it, that’s a very crude way of putting it, but we’ve got absolutely no shortage of investment capital available at effectively zero interest rates. That’s lucky, because all of it, because most of the costs of this transition involve a capital expenditure now, in return for a reduced cost in the future. That’s what you do. You put up a wind turbine, it doesn’t cost you very much to run in the future. It costs you a lot to put in place the first time, but then you’ve got wind for 30 years from that turbine if everything goes well, unless it’s frosted up, as in Texas last week.
[00:43:02] Ben: So, you’re saying we can get a massive multiplier on this, very cheap.
[00:43:04] Chris: Absolutely, this is, this is 1933 revisited. This is the new deal. This is rebuilding society on the basis of capital and operating expenditure of effectively free capital, which otherwise has nothing to do. And I, I think the world is well advised, whatever your ideology is, whatever you think about climate change, the world is very well advised to spend that trillion pounds on offshore, trillion dollars, excuse me, on offshore wind turbines, at a time knowing that what this will do is it will reduce the cost of electricity for 30 years into the future.
[00:43:46] Ben: And do you think that the transition to green energy or the green new deal can also solve some of the other challenges we see in, in modern economies around, I would say notably productivity?
[00:43:59] Chris: I would like to think so. I would like to think that we will run our societies in 30 years time by 2050 on a higher ratio of invested capital to output. And if everything goes well, that will mean that living standards are significantly higher. I am very, very dubious, speaking as someone who used to do economics, but has forgotten almost all that he ever learned now, as to whether productivity measures that we’re now using are actually effective, but correct in measuring true productivity. But what I do believe is that by applying capital now, we will end up with higher living standards as a result. But there’s also a view of course, that what we call living standards may actually not be really our underlying standard of living. Being able to afford more clothes isn’t necessarily an index of a higher standard of living. Being able to walk down the street or bicycle into town has zero impact on productivity, inverted commas, negative impact on productivity, but will give you a better, inverted commas, standard of living. So I’m just, why I’m putting inverted commas around all of this is all these expressions generated by the economics of the 1940s, 50s, and 60s, and don’t really seem very relevant to the situation we’re facing today.
[00:45:36] Ben: Corona and the future. One of the few positive outcomes of the pandemic has been, that it has been broadly quite good for the environment, right? Because people have been traveling less, we’ve been shipping less…
[00:45:50] Chris: Have we really? You, you tell an owner of a container ship, you ask an owner of a container ship whether there’s more containers being shipped now than there were, I think you might find that the volume of international container trade is close to its high. We’ve got more, more problems getting things out of China than we’ve ever had before, but you, you make the point that there’s less, there’s less aviation there has been lower climate emissions, but the effect so far has been really quite small.
[00:46:24] Ben: So there’s not too much cause for celebration, but I was even going to ask whether you think the changes in people’s behavior are even likely to be permanent, or whether they’re going to, say, catch up, you know, all those people who have deferred their foreign holidays, where they all want to suddenly take them. How much of the behavioral shift do you think will last?
[00:46:45] Chris: Isn’t that a difficult question? I’m not qualified to answer that, really. I instinctively say it won’t last, but on the other hand, I am struck by, for example, in the UK, the increasing strength of the car-free city movement, which I referred to a bit earlier, which could have a significant effect on emissions. I think pointless travel may, whether it be to a meeting with your colleagues for half an hour or whether it’s just because you need a weekend away, to put it crudely, will probably take some time to get back to, inverted commas, normal. Whether any other systematic changes will occur, I don’t know. I think people will work from home more and that’s probably not going to reduce emissions, although it’s unclear, given that we’ve all been sitting at home trying to work in the last few days in unusually cold conditions, and it would have been better to have been huddled up together in an office. I think what has changed is a view that the only significant reason for optimism I believe is that it does now look as though people accept that the world could choose a different trajectory. I’m not saying it will, but people realize that things could be done differently and be maybe more, maybe more flexible in the way that they approach future challenges , and also the fact that the vaccine process, the vaccine development process has been far faster than anybody believed possible. And we can us as an example of what we might want to do on energy with a similar sense of emergency as the consequences of climate change become evermore apparent.
[00:48:27] Ben: A lot of people use the war analogy to talk about COVID. Do you think it will take a war-like approach to solve climate change? I guess, I guess the challenge with the war analogy for climate is around sustaining the level of urgency. We know that climate change is kind of an ever present danger, but how do we stop fatigue setting in? Because sometimes it can seem a bit hopeless? How do we maintain that sense of urgency?
[00:48:58] Chris: Well, the first thing I would say is that the planet is helping us maintain the sense of urgency with every new week, bringing some form of climate-related disaster. The extreme cold in Texas is almost certainly a consequence of a weakening of the polar vortex due to excess heating in some parts of the Arctic Circle. There’s one example of how things are brought back to us, that risks and dangers of climate change are brought to us every day. And there’s more detail today, this week, about, for example, forest fires, another problem that is going to occur in dramatically greater quantities as the world, as the time goes on. So, we need to give people a story and that story needs to be largely composed of optimistic outcomes and optimistic routes to getting the change we require. And one illustration of that is the fact that The Financial Times, which for a long time, didn’t take climate very seriously, now has a separate point on the banner on its website. It’s got foreign news, it’s got markets, it’s got home news, and so on and so forth, and a little section called Climate. In that, the big climate news of the day is being discussed and it’s been discussed usually from an optimistic angle, that is to say the gross rate of electric cars, the number of new technologies for decarbonizing steel and so on, so forth. So, there’s an example of how things that were just presented as apocalypse in waiting are now seen as opportunities for business, not just opportunities, responsibilities of business to do something about, it’s become a little more, every week it becomes more feasible to address this.
[00:50:51] Ben: What happens if we don’t make the transition? Do we still definitely have time in your view?
[00:50:57] Chris: Well, the climate is going to warn us with increasingly large imperatives that action has to take place. It’s not going to get any better as time goes on, the world doesn’t have a choice about doing this. It may think it has, but actually we do need to decarbonize, we will also need probably to geoengineer the atmosphere, and to collect gigatons a year of carbon dioxide out of the atmosphere. There isn’t any alternative. The good thing now is that it’s not necessarily a very expensive route to getting out of, beginning to shade off the rate of growth of emissions is looking a much more manageable task than it even did 12 months ago. Across the major polluting industries, electricity generation, car transport, et cetera, the speed of the transition is, is growing. And there’s every reason to believe that it’s going to be perfectly possible to fully decarbonize the major sectors if we want to. By 2040, 2050. That’s what makes me optimistic, not the fact that the rate of increase of carbon dioxide concentrations in the atmosphere has slowed, because I’m not entirely certain that’s true at all.
[00:52:14] Ben: You wrote a book, it was entitled How To Live A Low Carbon Life; for anyone who’s listening to this podcast who wants to start to make a difference in this area, what would you recommend as a first step towards living a lower carbon life?
[00:52:29] Chris: Well, the first step as individuals has to be taking stock of our carbon footprint and saying, well, I’m going to stop eating meat and traveling by air. For the average relatively well off westerner, someone living in Western Europe, that might well get rid of almost half your carbon emissions, straightaway. Drive an electric car if you can afford to, or get rid of all cars and only car share an electric car would be the next, or improving the heating system in your house. So those are the individual things. I think also being an activist is important. Showing, getting involved in the various movements now that are pushing for faster and faster, decarbonization ranging from extinction rebellion in places like the UK, towards the investor movements, the groups of people who as investors are getting together to try and put more pressure on, on large companies to produce better articulated plans for decarbonization. Go into politics. I think I’d also say that don’t imagine necessarily that the right route is to be an entrepreneur in this field. If you’re an idealist and you think that this is the most important problem the world has faced, you may not actually be the best person to set up a business in this area, because it may be that you’re being driven by things other than economics business logic. What we need in this world is hard-nosed business people who decide to go into these areas because they see profit opportunities, not necessarily because they want to improve their grandchildren’s future.
[00:53:57] Ben: Your book I read it over a few evenings and I found it to be extremely accessible and I guess you wrote it for a non-specialist audience like me. My question is why do you write for non-specialist audiences? Is it because you think ordinary people through ordinary actions can kind of, can crystallize massive change or is it because, or why not write for, you know, for politicians or for CEOs of big companies? Why choose a non-specialist audience?
[00:54:23] Chris: Because I want to be part of the tide that says we can solve this problem. It’s not an unavoidable apocalypse. We have the tools to do something about it. So some sacrifices may be necessary short term in particular, but nevertheless, we can continue to run our societies effectively without massive upheaval. And that’s what I wanted to get across to as wide an audience as possible. I hope it is read occasionally by CEOs and I’ve certainly talked to some of them about it and possibly even politicians, but the main aim is to get the sense across as wide a group as possible that this is a problem we can solve.
[00:55:07] Ben: For every podcast we ask our guests to give us five recommendations. Okay, so I’m going to ask you, first of all, if you would share the title of one of your favorite books.
[00:55:18] Chris: The title of a book that I would really recommend other people might want to read is by a British author called Benedict McDonald called, and the title of the book is “Rebirding. ”There’s a growing movement around Europe and elsewhere, to rewild large areas that have been destroyed by human activities and this particularly is becoming active in Britain now, as people begin to realize that we are one of the least forested countries in Europe, and we really do need to get some nature back across our landscapes. And this is a wonderful book, both because it gives a sense of it’s possible to do, you can get birds, it’s called rebirding, you can get birds back and those have been enormously lost in the UK now, but it’s also, it also does so with logic and numbers, so it makes us an environmentalist consciousness of the importance of keeping bird life going, more so with a sense that it might be financially feasible to do it.
[00:56:13] Ben: Next, a favorite recent article, please.
[00:56:17] Chris: Well, I found this difficult. I read very widely and I can sometimes barely remember what I’ve read from one day to the next. But one thing I would say is that we need new news media, currently television and obviously social media and online media more generally, aren’t very good at getting to the bottom of news stories, whether they be about the environment or about politics, about different countries. And I would heartily recommend a new service which is deep journalism, called tortoise in the UK, slow journalism, tortoise, for its depth of analysis, its robustness, and the fact that it uses numbers, terribly important, but also is written for the widest possible audience.
[00:57:01] Ben: Fantastic. And that’s a subscription service, is it?
[00:57:04] Chris: Tortoise is a subscription service, you have to pay to get involved, but anything worthwhile generally should be paid for and they won’t solve your data to other people.
[00:57:13] Ben: Next please. A favorite thinker or influencer.
[00:57:16] Chris: This is a friend of mine, so I have to confess that. So, I’m pushing the work of Kingsmill Bond, who is an analyst who works for a UK NGO called Carbon Tracker, which is the most effective place in the world for trying to persuade large fossil fuel companies and other people reliant on the fossil fuel industry that their time is limited and they need to get out of their stranded assets as quickly as possible. And what Kingsmill does is bring quantitative analysis, interesting stories, persuasive logic, beautifully written, to this field. So I would recommend that anybody interested in following an author in this area should look up Kingsmill Bond and what he produces for Carbon Tracker and for other sources.
[00:57:59] Ben: Carbon Tracker, okay, so we will share the link to that with our audience. Next, a productivity hack, please.
[00:58:08] Chris: Well, I find it very difficult, I expect to spend a lot of my time writing. I find it very difficult to do so, and I can spend hours just sitting musing about things that I think are related to what I’m doing, but end up with no productivity at all. So my hack is to say to myself, every day, I have to do a certain number of words of writing. I’m failing to achieve it so far today, so I’ll continue to work on it on, continue writing until I’ve got that number done, because that’s the only thing which can persuade me to live by my productivity promises.
[00:58:37] Ben: Literally you will not get to sleep until you’ve hit that number, is that right?
[00:58:41] Chris: That’s the idea.
[00:58:42] Ben: Okay, well, we won’t keep you much longer then [laughter] so you can hit your target for the day. Lastly, a favorite brand, please?
[00:58:51] Chris: Yeah, it’s difficult, isn’t it, because anything that’s very heavily branded tends to have absorbed some of the less good features of capitalism. So, I just wanted to caution in this case, a slightly different sort of company. It’s an online delivery service for local fruit and vegetables predominantly made in the UK. It’s called Riverford. It’s been around for probably 20 years, it’s growing, it’s profited from COVID. It delivers very high quality, fruit and vegetables directly from farmers in the UK to homes. It was owned by a remarkable entrepreneur, Guy Watson, one of the most interesting things he’s done is he’s given the business to his employees, which is something that I think needs to be followed. So for me, the words Riverford produce a very strong, positive brand image.
[00:59:38] Ben: Fantastic, Chris, thank you very much for coming on the Structural Shifts podcast. It’s been an absolute pleasure to talk to you.
[00:59:46] Chris: Thank you, thank you very much.
Thank you for listening to Structural Shifts by aperture. To learn more about us, visit aperture.co. We are strategy for the networked age. Until next time.