The Great Disruption (20 page)

To provide a flavor of what we can expect to see when the type of response we are forecasting occurs, I will list some edited excerpts from our plan. They indicate the types of actions that would be required in the first five-year period to get the global economy on the path required to ultimately bring global temperature increase below plus one degree centigrade.

Cut deforestation and other logging by 50 percent

Reduce by one half the ongoing net forest removal and land clearing across the world, including tropical deforestation. At the same time, concentrate commercial forestry operations into plantations managed to maximize carbon uptake. This will require significant payments to developing countries, for the climate services provided by their intact forests, but is surprisingly cost-effective and doable.
10

Close one thousand dirty coal power plants within five years

Close down a sufficient number of the world's dirtiest coal-fired power plants to cut the greenhouse gas emissions from power production by one third. We estimate this implies closing down one thousand plants,
11
resulting in a parallel reduction in power production of one sixth. (Power production would fall proportionally less than emissions, because the dirtiest plants emit more CO
2
per unit of energy.)

Ration electricity, get dressed for the war, and rapidly drive efficiency

In response to lower power supply, launch an urgent efficiency campaign matched with power rationing. Include a global campaign to change the temperature by one to two degrees centigrade in all temperature-controlled buildings (increase/decrease according to season). Make this part of the “war effort” as a public engagement technique, with large immediate power savings. On the back of this, launch an urgent mass retrofit program, including insulating walls and ceilings, installing efficient lighting and appliances, solar hot water, and so on across both residential and commercial buildings. This would have significant short-term job creation impacts.

Retrofit one thousand coal power plants with carbon capture and storage

Install CCS
12
capacity on one thousand of the remaining power plants. This huge investment would be much simpler through international standardization. The CCS technology will also be needed for removal of CO
2
from the atmosphere later in the one-degree war (generating power using biomass and sequestrating the CO
2
). CCS is not yet commercially viable and will require heavy government intervention. However, Jorgen strongly believes CCS will be mandated because it is a simple, albeit expensive, way of reducing greenhouse gas emissions, whereas I'm more skeptical, as I will cover in chapter 12. It's not important at this stage, as all technologies will develop and actions taken will adapt accordingly.

Erect a wind turbine or solar plant in every town

Build in every town of one thousand inhabitants or more at least one wind turbine. If there is no meaningful wind, build a solar thermal or solar photovoltaic (PV) plant instead. Beyond the CO
2
and renewable technology acceleration benefits, this would have the powerful impact of giving most people in the world a tangible physical connection to the “war effort.”

Create huge wind and solar farms in suitable locations

Launch a massive renewable energy program focused primarily on concentrated solar thermal, solar PV, and wind power—on land and offshore. Given the urgency, the initial focus will need to be on those areas with most short-term potential for mass rollout, with finance supported by global agreement. The DESERTEC initiative for large scale renewable energy generation in north Africa connected to the European grid provides an interesting concept of what would be possible with a multilateral focus.
13
On a global scale, various studies have shown how we could move to a 100 percent renewable energy system relatively rapidly. A recent global study showed how this could be achieved by 2030 with full base-load coverage. Of particular interest is that it concluded it would actually be cheaper than fossil fuels and nuclear power, due to the considerable efficiencies inherent in an energy system based on renewable generation and electricity use.
14
All such modeling exercises are problematic and subject to controversy, but there is certainly massive potential in renewables with a war effort–type approach.

Let no waste go to waste

Ensure that all used materials are recycled and reused, at the very least to recover the embedded energy. To force this, limit production of virgin aluminum, cement, iron, plastics, and forest products—possibly through international agreements to restrict their use through higher prices or a special global emissions tax on virgin materials. Drive public recycling as part of the war effort (there are good examples here also from World War II, where mass public recycling drives focused on key materials).

Ration use of dirty cars to cut transport emissions by 50 percent

Launch large-scale replacement of fossil-fuel cars with chargeable electric vehicles—running on climate-neutral power—along with a massive boost in fuel-efficiency standards, bans on gas guzzlers, and greater use of hybrid cars. Public repurchase and destruction of the most inefficient vehicles (“cash for clunkers” schemes) may help speed the transition and help address equity issues. Given the time it will take to scale up production, there will need to be rationing of the purchase of gasoline and diesel and other restrictions on their use such as special speed limits on fossil-fuel cars. Such restrictive measures would help drive acceptance of electric and efficient vehicles that would be free of such controls—the fast electric car can wave as it passes the old gas guzzler on the freeway!

In World War II, fuel in the United States was rationed at four gallons (per vehicle per week), then reduced to three gallons, and finally reduced in 1944 to two gallons. Alongside this, a national 35 mph speed limit was imposed, and anyone breaking the limit risked losing his fuel and tire rations. The government ran marketing campaigns to support these measures, such as advertisements asking, “Is this trip necessary?” and education campaigns on “how to spend a weekend without a car.”
15
It seems there were early-day environmentalists at the U.S. Defense Department!

Prepare for biopower with CCS

Interestingly, the C-war may not see a large increase in the use of biofuels for land transport (not even second-generation fuels made from cellulose). It seems better for the climate to grow the cellulose and burn it in power stations with CCS, thereby removing CO
2
from the atmosphere while making power and heat. For this reason, boosting cellulose production (in plantations and elsewhere) will be key.

Strand half of the world's aircraft

Reduce airplane capacity by a linear 10 percent per year through regulatory intervention and pricing to achieve a 50 percent reduction in airline emissions by the end of year 5. This will force the rapid development of biofuels for aircraft because of the commercial imperative to do so and force a cultural shift to electronic communication and away from frivolous air travel.

Capture or burn methane

Put in place a global program to ensure that a significant proportion of the methane from agricultural production and landfills are either captured for energy purposes or at least burned to reduce the warming effect of that methane by a factor of 23.

Move away from climate-unfriendly protein

Move society toward a diet with much less climate-unfriendly meat—through public education backed by legislation and pricing. This should be not against particular meat, but against the associated emissions, so that preference is given to protein produced with lower emissions. There are large differences among protein types—emissions differ from soy, chicken, pork, and beef (and within beef, from grass vs. grain fed, particularly noting the emerging science that cattle grazed in certain ways can dramatically increase soil carbon). Therefore science-based policy should be established to encourage the most impactful behavior change and for meat to be rated CO
2
e/kg and priced accordingly. We note that the U.S. government ran an effective “meat-free Tuesday” campaign during World War II. There is now already a community-based Meatless Monday campaign.

Bind 1 gigaton of CO
2
in the soil

Develop and introduce agricultural methods that reduce greenhouse gas emissions from agriculture and maximize soil carbon. This will require significant changes in farm technology and farmer psychology, and we are unlikely to get far during C-war. But the effort should be started immediately in preparation for the large-scale binding of carbon in forestry and agriculture that will be necessary from year 5 onward in order to remove CO
2
from the atmosphere over the rest of the century. In both cases, the object will be to grow as much plant material as possible and ensure that the bound carbon ends in the soil or in subsurface storage, not back in the atmosphere. Currently, global forests bind some 3 GtCO
2
e/yr. Hopefully—through the use of fast-growing tropical plantations, supplemented with industrial growth of algae—we could achieve the binding (and safe storage) of some 6 GtCO
2
e/yr from forestry and agriculture combined in future decades.

Launch a government- and community-led “shop less, live more” campaign

In order to free up finance, manufacturing capacity, and resources for critical war effort activities, a large-scale campaign to reduce carbon-intensive consumption, or at least stabilize it, would be of great help. This will align well with the general need to shift the economy away from carbon-intensive activities toward climate-friendly experiences. We would propose a bottom-up and top-down campaign to highlight the quality-of-life benefits of low-carbon lives with less stuff.

While all these actions may seem draconian or unrealistic by the standards of today's debate, they will seem far less so when society moves to a war footing and a focus on “what is necessary.” Once more, World War II demonstrated that seemingly unachievable actions quickly became normal when delivered in the context of a war effort. They ranged across dramatic increases in the level of taxation, the direction by government of manufacturing, and engagement campaigns to drive public behavior shifts. So once more, the plan asserts that the challenge is not to find appropriate actions, but to make the decision to move on the problem.

The full plan, available from the Journal for Global Responsibility Web site,
16
provides further details on these and other actions that would be required. These include how we could raise $2.5 trillion per year by year 5 via a global carbon tax and how this could be used to finance the measures required to compensate the poor, reduce disruption, and create the new industries and employment required. We also cover the types of multinational decision-making bodies that would be required, including a Climate War Command, and more detail on the actions required after the first five-year war, including major reversible global geoengineering projects to reflect sunlight and remove CO
2
from the atmosphere and stabilize the global climate.

The point is not to say that Professor Randers and I have the right plan or have defined all the right actions. What we sought to establish, and the point I'm making here, is that a study of history indicates that we will, in the end, embark upon a crisis response to climate change, and when we do, we can see through our plan that quite extraordinary reductions and management measures are practical and achievable. The plan also indicates the economic cost will be considerably less than unchecked climate change.

Of course, there will be significant disruption as old industries are closed and dislocation as people are moved on to new economic activity. But in a real war, such losses are caused by the decision to go to war. In our case, losses would occur anyway, because climate change would inevitably drive the collapse of the economy if strong action wasn't taken.

The exciting thing about such a plan is that, unlike in a real war, deciding to launch the one-degree war doesn't cost any lives. Instead it saves millions of them. It doesn't shift economic resources onto wasteful though necessary activities, it redirects them to build exciting new industries that will enhance the quality of life for the people of all countries involved. It doesn't waste a generation of youth and leave the survivors traumatized, it educates a generation in the technologies of the future and drives productive innovation that builds new companies and industries.

It is a war we have no choice but to fight and great benefit to gain from declaring.

CHAPTER 11

How an Austrian Economist Could Save the World

People respond to the one-degree war plan in one of two ways. One is that everything we're doing now in this area is pointless and irrelevant, so we might as well just sit back and wait for the world to wake up. I understand this response emotionally, because when measured against what will be required, all of today's actions and proposals can hardly even be advocated as effective training exercises, let alone a serious contribution to the task at hand.

Other people have a more positive response that goes something like this: First there is great relief that we can actually fix this. That despite the decades of delay, a point will arrive when we'll wake up and get down to the serious work of fixing the problem. Phew, we're not going down after all!

They also see that the decades of planning and talking means we have all the answers to get on with the job—we know what we need to do. Then they realize the scale of the response coming and the light-bulb goes on—we better get ready, in fact we better just get to work and do it! They see that now is the time to prepare our companies, our communities, and our lives for what's coming and start to make things happen. They see a world of enormous possibility open up before them, to think large and act at scale.

They're right. We've got a lot of work to do, and we need to get on with the job,
right now
. That's why sitting back and waiting is definitely the wrong reaction.

So how and when will this unfold? And what do we need to do now? We'll answer these questions for individuals and communities later, but in the next few chapters I want to focus on the economic implications and how the future will unfold for business, including the role of government in driving that. I do so partly because many readers will be working in business and will be wondering what it means for them. I also do so because I have believed for many years that we are going to need business and markets fully mobilized if we are to achieve the historic task ahead of us.

This is where my favorite economist comes in. Both as an activist and as an entrepreneur, I have always been particularly fond of the Austrian economist Joseph Schumpeter and his theories of creative destruction. He pointed out that markets are basically “a process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.”

When I first read these words, I realized they could be describing an ecosystem like a rain forest. It is, after all, a stable overall system, but within it there is a process of constant and dynamic change as old things die or are destroyed and new life is created. Like the market, an ecosystem is at once beautiful and brutal. While we look at the rain forest as a magnificent, peaceful place, if you're an animal being torn apart by a predator, you may have a different view.

Markets are not an entity or a sector of society, but a system and process that we are all part of. This is what led me to advocate while I was at Greenpeace in the 1990s that markets could be a powerful delivery mechanism for social change. In the context of the scale of change we are discussing with the Great Disruption, we will be seeing Schumpeter's creative destruction on steroids.

First, though, a few comments on business and markets in general. Some people see the behavior of many of our current companies and their executives and respond with a generalized view that companies are bad and markets are inherently destructive because of their single-minded and at times brutal pursuit of financial wealth.

As will be clear from my comments earlier in the book, I agree with the many justified criticisms of our current economic model and of many companies and business leaders. The mess we're in was delivered by this model, and our companies and their leaders have played a significant role in that process. However, I also see many attributes of business and markets that are positive and effective, especially when you want to build a new economy quickly and globally.

After decades in both the nonprofit and corporate sectors, pondering these issues deeply, I have come to the view that this is not primarily about organizational form (that is, the organizational ownership structure). It is about people, values, and the design of the system.

For example, it's not that people who work for companies are bad whereas those who work for NGOs are good. Indeed, some of the most genuine and compassionate people I know have spent their whole lives working in the corporate sector, and some of the most destructive people I know work in the not-for-profit community. And of course vice versa. Different types of institutions are simply ways of organizing people to achieve a given outcome. People make them what they are and determine what they do.

Whether an organization is for-profit or not, it is certainly the case that its culture and purpose are critical issues, I think perhaps the most important ones. I am dismissive of the idea that companies can exist with a central goal of generating wealth for shareholders. This to me is a shallow and wholly ineffective way to organize people, which is what companies do—organize people to deliver an outcome. Even though this runs counter to the dominant thinking in most companies, it is not actually a radical idea and is well discussed in the business literature. Even the so-called father of shareholder value, former GE CEO Jack Welch, came out after his CEO tenure and said, “On the face of it, shareholder value is the dumbest idea in the world.… Shareholder value is a result, not a strategy.…”

It is also the case that markets and business work well only when adequately guided and controlled by society as a whole, through regulation and goal setting by government and by active consumers and community groups holding companies to account. As free market advocate Tom Friedman said, “I don't want to kill the animal spirits that necessarily drive capitalism—but I don't want to be eaten by them either.”
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One of the realizations I had when we were running campaigns at Greenpeace against corporations was that we were part of the market, that campaigns attacking company brands based on their performance on environmental or social issues could be seen as market forces. Another way of characterizing this was as community regulation.

In the public debate, we often hear questions like “Are you in favor of free markets or regulation?” This is a false dichotomy and dangerously simplifies the issues. Markets work only because of regulation. At its most basic level, for example, business could not function without contract law, which is simply regulation to put structure and rules around social expectations of trust. Regulation makes business function, and good regulation makes business function better. On environmental regulation, many, such as Harvard Professor Michael Porter, have long argued that tighter environmental regulation is a key source of competitive advantage for nations, and benefits rather than inhibits business success—a concept known as the Porter Hypothesis.

As argued by Jared Diamond in
The Third Chimpanzee
, in genetic terms we were quite recently apes, and it is our conscious choice to control our negative genetic tendencies. Regulation is the manifestation of this conscious choice to be a civilized society, with the definition of “civilized” developing and changing over time.

Within climate change, what we now need is for society to set clear and precise guidelines as to how the economy as a whole and each business within it is going to have to behave with respect to greenhouse gases. Likewise more broadly on sustainability. If government does so, I am convinced that business and markets are a key and effective delivery mechanism for the change we need.

First, though, back to the economist whose concepts best describe why markets are a good vehicle for the transition through the Great Disruption.

Schumpeter describes the process we need perfectly when he refers to incessantly revolutionizing the economy from within, destroying the old one and creating a new one. Despite being a fan of well-regulated business and markets, I can see clearly that we need to destroy large parts of the old economy and create new parts. This requires Schumpeter's “destruction” of many existing companies, some of which desperately deserve it. We all have candidates we'd like to put on that list; at the top of mine is ExxonMobil.

We need to do all this, however, while keeping the system as a whole as stable and productive as we can, delivering jobs, goods, and services to the people this economy serves. This is where we need to clearly separate the system—the global economy and society—from the components of the system—individual companies, technologies, and products.

Businesses and markets work inside such a system. A system where NGOs can campaign to hold companies accountable for poor behavior. A system where consumers can reject products and employment from a company that is damaging to society. A system where governments, acting in the interests of the people, can change the rules as needs demand and in doing so put some companies out of business and create the conditions for new ones to emerge. Of course, these things don't always happen, but they all sometimes do. This is what the system design allows, so it shows what's possible for us to create within it.

Where we've gone wrong in managing this system is that we've put the economy on a pedestal as a god that must be protected, with economic growth the metric and our current companies as the foundation of that pedestal. The assumption has been that if government focuses on driving economic growth, all other things will follow.

What we need now is for the conditions to be right for brave government to recognize that the economy serves the people and their quality of life and then acts to deliver this outcome. I accept that individual components of the system, companies, workers, and investors, will naturally and often legitimately argue against change. No one likes to give up what they have, so we all resist. We need government to say: “Yes, I hear your concern, but the greater good demands that change occurs, so let's talk about how to manage that change fairly and equitably. But change
is
going to occur.”

Of course, in detail this becomes a matter of degree. During the public controversy that raged on climate change legislation in Australia in 2009, I had a private conversation with a CEO that summed up the challenge well. He was telling me how they should be compensated for the “completely unexpected” shift in regulation to control CO
2
emissions. I thought to myself, “If this is unexpected to you at this stage, after twenty years of public debate, then you are clearly incompetent as a business leader. If you couldn't see this coming as a key risk, then you simply weren't doing your job.” Mind you, I didn't say it to him quite like that!

One of the reasons Schumpeter's market works is that individual companies and investors take risks and manage these risks based on their likely return for doing so. If they get it wrong, they fail and pay the price. Government's job is to ensure that the overall economic system functions effectively, not to protect all the component parts from change.

So in the case of the CEO above, yes, there is a legitimate role for government in helping the transition occur as smoothly as possible, particularly when change wasn't forecast. But companies must bear the loss for making bad risk decisions, and on climate change, the risks have been clear for a long time. Going forward they are even clearer, so losses should and will be borne. That's how markets should work.

This raises the question of what role business can and should play in sustainability more broadly. While some people judge business and markets too harshly, risking throwing out the baby with the bathwater, others have unrealistic expectations of what business is able to do voluntarily. I had both these views reinforced by spending a large part of my working life inside the corporate sector as an adviser to CEOs and senior executives at major corporations across the United States, Europe, Asia, and Australia.

I formed Ecos Corporation in 1995 after leaving Greenpeace. I was keen to pursue the idea that business could be mobilized to drive change on sustainability and so formed Ecos to test the idea. Some of my friends who were experts in this field argued that 1995 was too early for there to be a viable commercial business in this area and I should consider forming a nonprofit foundation to work with companies.

I realized, though, that coming out of twenty years in activism, I would need to be in business myself to earn the trust of business leaders. I also wanted to understand business properly, and that meant knowing what it felt like to be an entrepreneur, to have your family's income and security depend upon the performance of your business. As I soon learned, whereas in a well-funded nonprofit organization you can have the wrong idea for years, the market is far more ruthless with mistaken views of what the world needs. This meant being in business kept us focused on what was real for market participants and kept us from getting too far off track with respect to business relevance.

The business ended up being very successful and operated for thirteen years until it was sold in 2008. We built a team of twenty incredibly committed and skilled professionals working around the world advising companies on how to see sustainability issues as market forces and integrating them into business strategy. Our clients cut across all sectors and many countries, with companies like DuPont, Ford, Diageo, BHP Billiton, WMC, ANZ Bank, Insurance Australia Group, China Light and Power, Zurich Financial Services, Placer Dome, KPMG, and Anglo American.

I mention this to point out that my views on business weren't formed just from being an observer. They were developed through my experiences as a business owner and entrepreneur working for over a decade at the top levels of companies around the world, seeing what's possible and what's not for companies that seek to lead in this area.