Energy expert Tony Seba explains why we need to stop talking about climate change and start talking about ROI
A lot of people think we’re on our way to solving climate change. They see a solar project here and a wind project there. They see Tesla building cool electric cars. It’s easy to think, “Smart people are on the case.”
What they don’t realize is the sheer scale of ongoing environmental devastation caused by consuming and extracting fossil fuels. They don’t hear about the toxic swamps left by Canadian tar sand oil extraction. Or the scars on the land from mountaintop coal extraction in West Virginia. And they may not realize we’re nowhere close to meeting the Paris Climate Accords goal of keeping the planet under two degrees of warming and what that means.
The pathway to two degrees is getting so slim you can hardly see it; at present, it depends on emissions commitments literally no nation is keeping and technologies no one has seen work, and which many scientists now believe cannot possibly work. This is not good…
In the new issue of Nature Climate Change, a team lead by Drew Shindell tried to quantify the suffering that would be avoided if the planet were kept below 1.5 degrees of warming, rather than two degrees — in other words, how much additional suffering would result from that additional half-degree of warming. Their answer: 150 million more people would die from air pollution alone in a two-degree-warmer world than in a 1.5-degree-warmer one.
That is all to say, it is a virtual certainty that we will inflict, thanks to climate change, the equivalent of 25 Holocausts on the world. Or rather, thanks only to the air pollution associated with climate change. We are almost sure to break two degrees of warming, and those numbers do not reflect any of the other — quite considerable — effects of climate change. So 25 Holocausts is our absolute best-case outcome; the likely suffering will be considerably higher still.
Oof. Things are clearly rough when we’re saying things like “25 Holocausts is our absolute best-case outcome.” It’s plain to see: There are problems with energy the world desperately needs to solve and we lack effective global mechanisms to deal with them. We need solutions that are disruptive and new. And we need thinkers who can help us get there — people like energy expert Tony Seba.
We need solutions that are disruptive and new.
Seba is the author of “Clean Disruption of Energy and Transportation”, “Solar Trillions,” and “Winners Take All,” a serial Silicon Valley entrepreneur, and an instructor in Entrepreneurship, Disruption and Clean Energy at Stanford’s Continuing Studies Program. He is an advocate for solar energy but his ideas apply to other renewable energy sources too. Below, he explains how governments are holding back progress, the best way to help developing countries modernize, why subsidies aren’t the answer, and the reason Davos is BS.
A regulatory capture
The problem is the monopolies. It’s the old mechanism.
It’s the same in both advanced and emerging economies. Governments who manage the utilities make money from the existing infrastructure. These government and utility monopolies stand in the way of solar batteries becoming 100% of all new energy.
It’s a regulatory capture, essentially. In most places, including in the United States, you don’t know where the government begins and the utility ends. In the desert, solar is already the cheapest form of energy. Yet Arizona is a third world country when it comes to solar.
Look at Puerto Rico. A friend of mine is the CEO of a company that’s been pushing on that front. He’s been trying very, very hard to solarize the whole island and do it immediately. And essentially the utility and the federal government there won’t let him. The utility has a monopoly. And the government has these old fashioned laws. They would rather let the population rot and die than allow solar companies to make it happen. Does that make sense?
Solving energy requires an economic solution
And then you look at emerging economies: Africa, India, Southeast Asia, etc. A lot of the population there doesn’t even have access to electricity. And a lot of entrepreneurs want to make that happen. And the main impediment is capital.
Solar is already cheaper by far than diesel or whatever they use now. So it’s not that they need an incentive to go solar, it’s that they need the capital. And if we can find a way to help investors use a tokenized currency, we could go direct instead of through governments and banks.
There are thousands of entrepreneurs who want to do this in a place like India and Vietnam. They just don’t have access to capital. We could help investors to invest directly by using something like Swytch. That would be a huge, huge success story.
(Disclosure: Seba is on the Board of Advisors at Swytch, a blockchain-based platform that verifies renewable energy production at the source and rewards producers with tokens that can be cashed in or used to invest in renewable energy projects around the globe.)
The reality is solving energy needs to be centered on economic decisions. We have to reduce carbon. And we need to do it in a way that gives the developing and developed world a return on their investment (ROI).
The reality is solving energy needs to be centered on economic decisions.
In India, 500 million people don’t have access to the grid. We could help whole towns solarize with batteries. And if we partner with local entrepreneurs, we can create a mechanism where we can fund it and the investors would get paid with tokens.
In developing countries, they’re not rich enough to give out tax credits or whatever. So a new mechanism, built from scratch, with governance that creates value, would 1) be a global currency to trade, 2) allow people to invest by purchasing tokens, and 3) become a recognizable mechanism to help finance it all. And the world needs that.
The current mechanisms are all over the map. They’re not connected. You have a lot of intermediaries. We have to put all of this together.
Creating a global currency for disrupting energy
There needs to be a currency for 1) the disruption of energy in favor of renewable sources and 2) transportation/storage of that energy to where people will consume it. Right now, there’s no mechanism to do that. Too often, with renewables, the energy gets generated either far from where people need it or at a time of day that doesn’t match peak consumption.
For example, Australia is going in the direction where folks are going to start selling energy to neighbors. Another example: We don’t have a mechanism to reallocate capital from, say, Norway to India. There’s no easy way to reallocate capital from carbon taxes to where it’s needed.
Something like Swytch can be a hub for all of it. It can be the currency for trading among neighbors, companies, countries, and investors. It can enable trading between makers solarizing a town and the entrepreneurs putting in infrastructure. It can be the global currency for investments, payments, generation, and storage. It can reallocate capital — whether it comes from carbon taxes, investors, or grants — to where it’s needed to make investments. It can be the way transactions within “the clean disruption” are made between, say, Congo and Indonesia.
That is a value proposition for everybody — for the Googles who want to make solar happen in India, for the Norwegian Pension Fund who wants to reallocate carbon taxes for California, etc. We can help reallocate capital from this carbon tax setting directly so it doesn’t have to go through 100 intermediaries before it happens.
Climate change, Davos, and disruption
There’s a lot of BS going on in Davos in terms of the rhetoric. “Oh we need to deal with this inequitable world. We need to deal with climate change.” But what I found being there last year was when you get down to the actual “let’s do something,” they’re all like “whatever.” They still don’t get that this is a clean disruption.
But Davos, remember, is the status quo. I think our challenge right now is to get something going outside of that world. And once we do that, when we’re ready to scale, then we can take it to Davos.
Also, there’s a problem with talking about climate change: Once you get into the “climate thing,” then you get into an emotional space and a political space. You get lost in the whole noise about climate. This is clean disruption. 2/3 of all new energy is solar or wind. And that’s despite all the opposition from monopolies and governments.
There’s a problem with talking about climate change: Once you get into the “climate thing,” then you get into an emotional space and a political space.
This is a disruption. Solar batteries, wind, geothermal. It’s going to happen. And it’s going to happen despite government, despite pollution, despite climate change.
Look at solar in the desert — it is mostly unsubsidized. And it’s happening because it is cheaper than subsidized natural gas, oil, nukes, or coal. This is a disruption that is happening without subsidies. Solar without subsidies will disrupt all these other things with subsidies.
That flips the whole conversation to “If you go with fossil fuels, you’re going to lose your money. This is a big multitrillion dollar opportunity, you better get in on it.” Once you position it that way, the conversation changes. That’s why so many bankers and pension funds have asked me to talk to them. It’s all about the numbers in the end.
(This essay condensed and edited from an interview with Tony Seba conducted by Peter Hirshberg. Learn more about Seba at his site or on Twitter.)
