‘Logical’ is the last thing human thinking, individual and collective, is. Too compelling an argument can even drive people with a particularly well-insulated belief system deeper into denial.
The Energy of Nations: Risk Blindness and the Road to Renaissance, by Jeremy Leggett, is full of vividly quotable aphorisms – such as the one I’ve just cited. I see Jeremy as one of the world’s leading thinkers on solar energy, oil depletion, climate change, and the dysfunctional ways in which investment all-too-frequently works. The Observer has described him as “Britain’s most respected green energy boss”. A glance at his CV shows an impressive range of accomplishments:
Jeremy Leggett is founder and chairman of Solarcentury, the UK’s fastest growing renewable energy company since 2000, and founder and chairman of SolarAid, an African solar lighting charity set up with 5% of Solarcentury’s annual profits and itself parent to a social venture, SunnyMoney, that is the top-selling retailer of solar lights in Africa.
Jeremy has been a CNN Principal Voice, and an Entrepreneur of the Year at the New Energy Awards. He was the first Hillary Laureate for International Leadership on Climate Change, chairs the financial-sector think-tank Carbon Tracker and is a consultant on systemic risk to large corporations. He writes and blogs on occasion for the Guardian and the Financial Times, lectures on short courses in business and society at the universities of Cambridge and St Gallen, and is an Associate Fellow at Oxford University’s Environmental Change Institute.
On his own website, The triple crunch log, Jeremy has the following to say about himself:
This log covers the energy-, climate-, and financial crises, and issues pertinent to society’s response to this “triple crunch”…
Let me explain why am I worried about oil depletion, climate change, and dysfunctional investment.
I researched earth history for 14 years, and so know a bit about what makes up the climate system. I researched oil source rocks for several of those years, funded by BP and Shell among others, and I explored for oil and gas in the Middle East and Asia, so I have a background in the issues relevant to peak oil. And more recently I have been a clean-energy entrepreneur and investor for more than decade, as founder of a solar energy company and founding director of a Swiss venture capital fund, so I have seen how the capital markets operate close to. That experience is the basis for my concerns…
Many of the critics who comment on my blogs urge readers to discount everything I say because I am trying to sell solar energy, and so therefore must be in it for the money, hyping concerns about climate change and peak oil in the cause of self enrichment. (As you would). They have it completely the wrong way round.
I left a lucrative career consulting for the oil industry, and teaching its technicians, because I was concerned about global warming and wanted to act on that concern. I joined Greenpeace (1989), on a fraction of my former income, to campaign for clean energy. I left Greenpeace (1997) to set up a non-profit organisation campaigning for clean energy. I turned it into a for-profit company (1999) because I came to the view that was the best possible way I could campaign for clean energy – by creating a commercial success that could show the way. The company I set up gives 5% of its operating profit to a charity that also campaigns for clean energy, SolarAid. All that said, I hope Solarcentury makes a lot of money. It won’t have succeeded in its mission if it doesn’t. I’m hoping fewer people will still want to discount my arguments, knowing the history.
Today marks the UK availability of his book, The Energy of Nations. Heeding its own advice, quoted above, that there are drawbacks to presenting arguments in an overly rational or compelling format, the book proceeds down a parallel course. A large part of the book reads more like a novel than a textbook, with numerous fascinating episodes retold from Jeremy’s diaries.
The cast of characters that have walk-on parts in these episodes include prime ministers, oil industry titans, leading bankers, journalists, civil servants, analysts, and many others. Heroes and villains appear and re-appear, sometimes grown wiser with the passage of years, but sometimes remaining as recalcitrant, sinister (yes), and slippery (yes again) as ever.
A core theme of the book is risk blindness. Powerful vested interests in society have their own reasons to persuade public opinion that there’s nothing to worry about – that everything is under control. Resources at the disposal of these interests (“the incumbency”) inflict a perverse blindness on society, as regards the risks of the status quo. Speaking against the motion at a debate, This House Believes Peak Oil Is No Longer a Concern, in London’s Queen Elizabeth II Congress Centre in March 2009, in the aftermath of the global financial crisis brought on by hugely unwarranted over-confidence among bankers, Jeremy left a trenchant analogy hanging in the mind of the audience:
I explain that those of us who worry about peak oil fear that the oil industry has lapsed into a culture of over-exuberance about both the remaining oil reserves and prospects of resources yet to be turned into reserves, and about the industry’s ability to deliver capacity to the market even if enough resources exist.
Our main argument is that new capacity flows coming onstream from discoveries made by the oil industry over the past decade don’t compensate for depletion. Hence projections of demand cannot be met a few years hence. This problem will be compounded by other issues, including the accelerating depletion of the many old oilfields that prop up much of global oil production today, the probable exaggeration by OPEC countries of their reserves, and the failure of the ‘price-mechanism’ assumption that higher prices will lead to increased exploration and expanding discoveries…
In conclusion, this debate is all about the risk of a mighty global industry having its asset assessment systemically overstated, due to an endemic culture of over-optimism, with potentially ruinous economic implications.
I pause to let that sentence hang in the air for a second or two.
Now that couldn’t possibly happen, could it?
This none too subtle allusion to the disaster playing out in the financial sector elicits a polite laugh from the audience…
Nowadays, people frequently say that the onset of shale oil and gas should dissolve fears about impending reductions in the availability of oil. Jeremy sees this view as profoundly misguided. Shale is likely to fall far, far short of the expectations that have been heaped on it:
For many, the explosive growth of shale gas production in the USA – now extending into oil from shale, or ‘tight oil’ as it is properly known – is a revolution, a game-changer, and it even heralds a ‘new era of fossil fuels’. For a minority, it shows all the signs of being the next bubble in the markets.
In the incumbency’s widely held view, the US shale gas phenomenon can be exported, opening the way to cheap gas in multiple countries. For others, even if there is no bubble, the phenomenon is not particularly exportable, for a range of environmental, economic and political reasons
This risk too entails shock potential. Take a country like the UK. Its Treasury wishes actively to suppress renewables, so as to ensure that investors won’t be deterred from bankrolling the conversion of the UK into a ‘gas hub’. Picture the scene if most of the national energy eggs are put in that basket, infrastructure is capitalised, and then supplies of cheap gas fall far short of requirement, or even fail to materialise.
As the book makes clear, our collective risk blindness prevents society as a whole from reaching a candid appraisal of no fewer than five major risks facing us over the next few years: oil shock, climate shock, a further crash in the global financial system, the bursting of a carbon bubble in the capital markets, and the crash of the shale gas boom. The emphasis on human irrationality gels with a lot of my own prior reading – as I’ve covered e.g. in Our own entrenched enemies of reason, Animal spirits – a richer understanding of economics, Influencer – the power to change anything, as well as in my most recent posting When faith gets in the way of progress.
The book concludes with a prediction that society is very likely to encounter, by as early as 2015, either a dramatic oil shock (the widespread realisation that the era of cheap oil is behind us, and that the oil industry has misled us as badly as did the sellers of financial hocus pocus), or a renewed financial crisis, which would then precipitate (but perhaps more slowly) the same oil shock. To that extent, the book is deeply pessimistic.
But there is plenty of optimism in the book too. The author believes – as do I – that provided suitable preparatory steps are taken (as soon as possible), society ought to be able to rebound from the forthcoming crash. He spends time explaining “five premises for the Road to Renaissance”:
- The readiness of clean energy for explosive growth
- The intrinsic pro-social attributes of clean energy
- The increasing evidence of people power in the world
- The pro-social tendencies in the human mind
- The power of context that leaders will be operating in after the oil crash.
But alongside his optimism, he issues a sharp warning:
I do not pretend that things won’t get much worse before they get better. There will be rioting. There will be food kitchens. There will be blood. There already have been, after the financial crash of 2008. But the next time round will be much worse. In the chaos, we could lose our way like the Maya did.
In summary, it’s a profoundly important book. I found it to be a real pleasure to read, even though the topic is nerve-racking. I burst out laughing in a number of places, and then reflected that it was nervous laughter.
The book is full of material that will probably make you want to underline it or tweet an extract online. The momentum builds up to a dramatic conclusion. Anyone concerned about the future should make time to read it.
Not everyone will agree with everything it contains, but it is clearly an honest and heartfelt contribution to vital debates. The book has already been receiving some terrific reviews from an interesting variety of people. You can see those, a summary, Chapter One, and links for buying the book here.
Finally, it’s a book that is designed to provoke discussion. I’m delighted that the author has agreed to speak at a London Futurists event on Saturday 5th October. Please click here for more details and to RSVP. This is a first class topic addressed by a first class speaker, which deserves a first class audience to match!