Are we on the cusp of a third industrial revolution?

Jeremy Rifkin shares his compelling vision of a bright new energy economy with Green Futures’ Editor in Chief, Martin Wright.

Imagine the internet, only for energy.

Imagine that, as well as tens of millions of personal computers all linked together, exchanging information this way and that, you had tens of millions of personal power stations, pumping electricity to and fro.

Imagine if, working together, they made fossil fuels redundant, resolved all our fears about energy security, and kickstarted a new era of peer-to-peer power sharing. Oh, and made a decisive impact on climate change, too…

Then you’re imagining the sort of future laid out by Jeremy Rifkin, maverick economist and adviser to German Chancellor Angela Merkel and a clutch of EU leaders.

I meet Rifkin for coffee in London’s Langham hotel, during a flying visit to promote his new book. He’s affable, relaxed – but speaks with the air of a man who is used to being listened to. And it’s hardly surprising, because the vision he paints is a pretty compelling one. In it, the Facebook generation seizes the initiative, tearing up conventional thinking about where energy comes from and how it’s delivered. They apply all their nous in sharing information and building seamless networks to create a new, resilient energy economy in its place, powered entirely by renewables – solar, wind, water and tidal, biomass and more besides. This will be nothing short of a new industrial revolution, says Rifkin, and its impacts will be as dramatic and sweeping as any that have gone before.

“Great economic revolutions happen”, he says, “when new energy regimes emerge that facilitate more complex civilisations and more energy flow. In turn, they require communication revolutions to manage them. And when communication and energy revolutions come together, historically, they change the economic footprint.”

It happened in the 19th century, he argues, when steam power helped bring printing costs down, enabling the spread of the written word as never before, while railways unified nations and continents. It meant we could “introduce public [ie state] schools, and create a literate workforce to manage steam and coal power. We couldn’t have done it with an illiterate work-force; it needed that communications revolution.”

Then in the 20th century, electricity and oil combined to trigger a mass-consuming, car driving society, managed and marketed by radio, TV, the telephone… 

Now, says Rifkin, we’re on the cusp of revolution number three – one that will sweep away our existing energy infrastructure. It will replace the “elitist, centralised, top-down” model of fossil fuel plants with an ‘energy internet’, where individual power suppliers and consumers seamlessly swap and trade electricity, as and how they need it, across a Europe-wide smart grid. Essentially, energy will move as information increasingly does now – to and from millions of sources and consumers.

Fighting talk – so how do we get there?

Entrepreneurs will play their part, says Rifkin: they will gatecrash the energy sector with the same élan that saw the internet start-ups rip apart the complacency of the old computing and music industry giants. But, unlike some cornucopian optimists, he doesn’t believe the free market alone will whisk us into a resilient future: good old-fashioned dirigisme has a role, too.

Rifkin’s revolution rests on five key ‘pillars’. First, a commitment from governments to drive renewable energy (as expressed in the EU’s 20% by 2020 target). Second, a massive expansion in distributed energy, with every building transformed into a renewable-power plant. Third, finding a solution to the problem of storing energy – with Rifkin favouring hydrogen as the most practical storage medium. Fourth, creating a smart grid, and fifth, using electric vehicles as a two-way power source come storage ‘tank’.

So far, how revolutionary? If much of that sounds familiar, it’s hardly surprising. Rifkin shares a lot of common ground with the new wave of green optimists who enthuse over the potential of a growing convergence of IT and energy [see 'Getting creative with data']. And it has to be said, a future in which cheaper, more efficient renewables power an all-electric car fleet, and combine with smart grids to transform energy networks is hardly a novel idea.

So where will the juice actually come from?

“Everywhere!”, he replies – then adds an interesting qualification. “My first inclination was, we’ll go to the Mediterranean for the sun; the Irish have the wind, the Norwegians have the hydro, and so on… So, we’ll concentrate it, put it in a high voltage line and ship it. Then, I realised we were using 20th century thinking! If renewables are distributed and found everywhere, why are we only collecting them in [a few places]?”

So, no glittering arrays of concentrated Saharan sun? No vast swathes of North Sea turbines? What about all that Icelandic geothermal…?

“Look, concentrated solar, wind, geothermal parks are all right”, responds Rifkin. “But they’re transitional: they’re essential to get us started, but they are a tiny part of this revolution and you cannot run the world on [them]. It can’t be done.”

Instead, he wants us to zoom in on “the number one cause of energy use, the number one cause of climate change: buildings. We have 191 million buildings in the EU. That’s our [energy] infrastructure: homes, offices and factories. The goal is to convert every single building so everyone has their own green micro power plant. So you get solar off your roof, wind off your walls, geothermal heat [from] under your ground, energy from your garbage anaerobically digested, ocean tides if you’re on the coast etc, etc.”

Once you’ve got the power, though, you have to store it. As Rifkin puts it: “The sun isn’t always shining, the wind isn’t always blowing; they are intermittent energies. So I’m in favour of every kind of storage: pumped, flow batteries, fly wheels, capacitors – but I’m putting most of the emphasis on hydrogen. Why? Because it’s the basic element of the universe, it’s the lightest element, it’s modular. You can put it in a home or a big utility. So, when the sun hits the roof of your factory or home, you generate electricity. When you have a bit of electricity you don’t need, you put it in water like in high school chemistry [to produce hydrogen]. When you need [power] you just convert it back. It’s a tiny thermodynamic loss compared to bringing [power produced by] oil, gas, coal and nuclear to us.”

Electric vehicles play their part too. They act as mini storage facilities in their own right, taking electricity from the grid to run, and feeding it back when not needed.

“Now, here’s the key”, Rifkin concludes. “These five pillars together are an infrastructure. They are a mega-technology platform, they are a nervous system for a completely new economic era – they are power to the people. Distributive capitalism, if you will.”

It’s persuasive, heady stuff. It has certainly persuaded many EU leaders. Rifkin is that rare American: an unashamed Europhile. He’s kept the faith even as gloom has descended over the continent, recently remarking that, if the Eurozone splits up, “we’re into a dark age.”

One of his recent books bore the subtitle ‘How Europe’s vision of the future is quietly eclipsing the American dream’. And the compliment has been returned. The European Parliament endorsed the principles of the ‘Third Industrial Revolution’, and many see Rifkin’s fingerprints all over the EU’s ambitious energy and climate targets. He’s served as adviser to successive holders of the Presidency, whose names he drops with an easy familiarity: “When Romano Prodi was there, I told him we had to get this moving, so we put in €2 billion for R&D. Then, under Manuel Barroso, we put in €8 billion as a public/private roll out. When Chancellor Merkel came in, I said: ‘You’ve got to let Germany lead.’ She put in €500 million…” Some credit Rifkin with playing a key role in influencing the German decision to abandon nuclear power.

His confidence in EU institutions as a springboard for progress might ring a little hollow to European ears just now, but some leading businesses are also on board, with IBM, Cisco, Philips, Bouygues and Acciona all in conversation with Rifkin. And beyond the EU, Rifkin is advising the UN’s Industrial Development Organisation, and starting work with the Federation of Indian Chambers of Commerce, too.

Rifkin’s influence is hardly surprising, because his confidence is infectious. Yet when he pauses for breath, you can’t help but find yourself wondering if it’s all a touch Panglossian. Are we really going to be able to create this best of all possible energy economies? Are millions of micro power plants going to provide all the heavy lifting we need for industries such as steel, paper and cement? After all, it’s one thing to see a surge of potential for distributed power; quite another to imagine the whole of our fossil-fuelled infrastructure crumbling in the face of the energy equivalent of a bunch of geeks in their garages. With the EU ( – the EU!) as nursemaid…

Rifkin brushes off such scepticism with a practised hand. “That old way of thinking doesn’t address the fact that these [distributed renewable] energies are found everywhere [and] the technology is going to get cheaper and cheaper. It’s following the same curve as mobile phones and desktop computers from the late 70s to 2010. They became so cheap they gave them away: now you buy the service, not the product. The same is happening on this curve right now: we’re just in the early adoption stages. Solar, wind, geothermal, heat pumps, bio-converters – they are all going to get cheaper and cheaper. And once the technology becomes cheap, the sun is free, the wind is free, the heat underground is free, and your garbage is free. When millions and millions of players are collecting even a little bit of surplus, it just overwhelms any kind of energy you can imagine from these little centralised nuclear and coal-fired power plants. It’s just like desktop computers: when you connect millions of them they wipe out anything you can get from the centralised super computer.”

The fossil fuel giants are roughly where the music business was a decade or so ago, he argues. “When millions of kids started file sharing, [the music companies] first thought it was a pain in the ass, and then they thought it was a joke, then they tried to legislate, then they put in encryptions, then they collapsed.” But as important as the obvious potential is the fact that we simply don’t have a choice, Rifkin believes. Unless we seize this moment to crack our dependency on the fossil stuff, we’re going to be trapped on a vicious rollercoaster ride.

“When fuel costs rise, all the other prices across the supply chain go through the roof, because everything’s made out of fossil fuels: fertilisers, pesticides, pharmaceuticals, construction materials, synthetic fibres, power, transport, heat and light. So, when oil went over $80/barrel in 2007, everything else went up. At $100 a barrel, the speculators came in to gain the market. At $120/barrel we had food riots in 22 countries because [the prices of] wheat, rice, barley and rye were doubling or trebling. We had one billion people in harm’s way, according to the UN. At $147/barrel, it shut down. Prices were so prohibitive, consumers stopped buying. That was the economic earthquake. The collapse of the financial market 60 days later was an aftershock.”

He insists there’s no way out for oil. “Every time we try to re-grow the global economy at the same rate we were growing before July 2008, all the [fuel] prices shoot up, all the other prices for everything else go up, purchasing power goes down and we collapse. And this is exactly what’s happening right now. In 2009, oil was at $30 a barrel because the economy had stopped around the world. As soon as we started replenishing inventories in 2010, oil goes up, all the other prices are going up, purchasing power is going down and the economy is collapsing again. These are four-year intervals. Every time we try to restart the engine and start replenishing inventories, prices rise, and at around $125-150/barrel, the engine shuts down. I don’t think you can get through this four year cycle of growth and collapse. It’s very dangerous, it’s an endgame. And if there is a way to get through this wall, somebody needs to tell me what it is.” 

Petro-optimists, of course, will point to shale gas, tar sands and the recent mega discoveries of oil off Latin America, which have shaken some of the more simplistic claims of the ‘peakists’. For Rifkin, they merely exacerbate problems: “They’re dirty, they emit CO2 [and in the case of shale gas] there are huge issues of water contamination”.

And what about nuclear? Rifkin is dismissive. “I don’t even spend time on nuclear energy; it’s a waste of my time.” But wait a minute, what about the arguments put forward by a growing number of environmentalists such as Mark Lynas or George Monbiot, who’ve come to see it as the least worst option in a warming world?

“Look, nuclear was dead in the water after Chernobyl”, responds Rifkin. “Its only come-back strategy was: ‘We could be the saviour on climate change.’ Well, we’ve got 400 nuclear power plants in the world. They’re old, they’re going to be decommissioned, and they only make up 6% of the energy mix. Our climate scientists tell us that, for them to have a minimum impact on climate change, which would be the whole reason for them coming back, they’d have to be 20% of the mix. That means we’d have to have 2,000 nuclear power plants. We’d have to replace the existing 400, and build [some] 1,500 more: that means three power plants every 30 days for the next half a century at a cost of trillions of dollars. Can we really afford that?

“Second, we still can’t get rid of the nuclear waste. We’re 60 years in, and we don’t have an answer. Third, we face [serious] uranium deficits by 2035, just with the existing 400 plants. We could recycle uranium to plutonium, but do we really want plutonium all over the world in an age of uncertainty?

“Finally, we don’t have enough water. That’s the big one. Over 40% of all the fresh water in France is used to cool nuclear reactors. When it goes back it’s heated and it’s dehydrating ecosystems for agriculture.” (During the 2003 European drought, water shortages forced many of France’s nuclear reactors to shut down or operate below capacity.)

But you don’t have to use fresh water… “Yes, you could build salt water plants but then you have the possibility of more violent weather conditions.” So when you put it together I would be shocked if from the business point of view we replaced half of the 400 plants we have now, and that would get us to 2% [of our] energy.”

And nuclear fusion? “Fusion is one of those pipe dreams. It’s always sometime in the future.”

“But the real point”, says Rifkin, “is that all of this – nuclear, shale gas, whatever – is centralised thinking. It’s the old guard. The real question is: How do you regrow any economy in the world based on an industrial revolution that is over? Answer: You can’t do it.”

Then he turns the question on me: “Where do you want to be in 20 years from now? Do you want to be in the sunset of a dying 20th century infrastructure, or in the sunrise technologies of an emerging third industrial revolution?” Its great strength, he argues, its resilience, lies in the fact that the future of power is lateral. “If you’re of an older generation, like us, you think of power as top-down, but the kids think of it as side-by-side.”

We've talked for over an hour, well past the cut off time laid down by his publisher. At 65, Rifkin’s impressively energetic. He claims to be tired after his flight, but it hardly shows, and he politely waves away the hovering PR with a smile, “It’s OK, we’re enjoying ourselves…”

Then he winds up the interview with a characteristically optimistic flourish. “Try to imagine, in 2050, you’ll have had three generations growing up on lateral power and the internet. Are they going to allow themselves to be surrounded by these centralised 20th century ideas? Come on, the kids are going to wipe this out!” 

Martin Wright is Editor in Chief, Green Futures.

The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World is published by Palgrave Macmillan.