For over 35 years, the world has counted on veteran energy expert Amory Lovins to guide humans through the great transition from the fossil-fueled Industrial Era to today's Information Age and beyond. The Rocky Mountain Institute's (RMI) careful, in-depth research of all humanity's options has led the way in illuminating the obvious reality: we are entering into the next energy phase from our reliance on wood, whale oil, coal, petroleum, all based, along with nuclear power, on digging such resources out of the Earth's crust. Now, the huge social and environmental costs of all this drilling and digging are mounting to endanger our future, from pollution, health effects, mining disasters, oil well blowout, to climate disruption, droughts, floods and hurricanes.
As Bloomberg Businessweek pointed out, human-caused climate disruption is already real and has been taken into account in most insurance company models for decades. Swiss Re began in the 1990s to shift its investment portfolios to clean energy to avoid climate risk and environmental and social costs over-hanging most companies' balance sheets – still based on externalizing costs. Societies and security analysts failed to notice these ominous costs overhanging companies' futures because these models were obsolete ("Updating Fossilized Asset-Allocation Classes"). Their methods of externalizing costs were also aggregated into national accounts and GDP ("Grossly Distorted Picture: GDP Still Misleading"). We were headed for a collapse, exacerbated by faulty financial models also based on externalized costs! So far, we have learned little from the financial debacles of 2007-8, which still have left unreformed "too big to fail" banks, risky over-the-counter derivatives and high-frequency trading.
Painstakingly, over the past decades, Amory Lovins and RMI's co-founder Hunter Lovins presented their findings on our wasteful, fragile energy systems to audiences around the world. I had come to the same conclusions since my service on the Technology Assessment Advisory Council of the US Congress Office of Technology Assessment (OTA) and on the National Science Foundation from 1974 until 1980. We learned back then of externalized costs of: accumulating carbon dioxide in the Earth's atmosphere from fossil fuel burning, the ecological costs of coastal oil-drilling, the health effects of pollution, the loss of biodiversity, etc. All the OTA studies are still archived at the US Government Printing Office, the University of Maryland, Princeton University and at our library at Ethical Markets Media.
Thus, in "Reinventing Fire," Amory Lovins and RMI are summarizing their case for shifting from digging and drilling to collecting our energy as nature does by photosynthesis and other chemical and thermal processes: from the daily photon shower arriving free from our sun. This book is meticulously researched, relying on their own scientific team as well as many outside studies. We agree that the tipping point for this energy transition is now and our Green Transition Scoreboard® corroborates RMI's findings: that harvesting the Sun's free energy and the huge efficiency savings in our wasteful economy require no new technology. By 2050, the report estimates that our US economy will have grown with no further oil, no coal, no nuclear energy and one third less natural gas. This transition, says RMI, will cost $5 trillion less than business-as-usual while avoiding all the costs and uncounted externalities of our current unsustainable global economy.
In our Green Transition Scoreboard®, we cite many computer models of this transition I described in "The Politics of the Solar Age" (reviewed by the NYTimes in 1981). They show that the transition requires only ramping up efficiency and production of solar, wind, geothermal, hydro and ocean energy sources (including algae-based biofuels) by expanding demand, production and thus driving down their prices (Climate Solutions 2: Low Carbon Re-industrialization). We at GTS find that investing $1 trillion each year from 2010 until 2020 places humanity in the cleaner, greener, smarter Solar Age. Happily, our latest research totaling just private investments since 2007 reached $2.4 trillion worldwide.
Thus, we agree with RMI that the private sector is leading the way. We have been urging the world's pension funds and institutional investors with their $120 trillion AUM to shift at least 10% of their assets away from risky fossilized companies, hedge funds, high-frequency trading, speculating in commodity ETFs and shift "From Rigged Carbon Markets to Investing in Green Growth". Mercer International's report goes us one better and calls for a 40% shift (half for hedging climate risks and half for capitalizing on green investing).
While RMI downplays the role of governments, we see the public and private sectors as two sides of the same coin – obvious to all since the governments' bailed out global banks and financiers in 2007-8. They continue to "re-inject" money into this sector through QE1, QE2 and maybe even QE3 in the mistaken belief it would trickle down to Main Street.
We also call for phasing out producer and consumer subsidies to fossil fuels, ending the vast subsidies to nuclear power which in the USA and Australia is now more expensive than solar PV. We agree that cutting deficits in the USA by at least $380 billion, recommended by the Green Scissors 2011 report, could end many environmentally damaging, government-funded programs. We at Ethical Markets Media (USA and Brazil) also go beyond GDP with our Calvert-Henderson Quality of Life Indicators, using the "dashboard" model, pioneered with the Calvert Group since 2000 and regularly updated at calvert-henderson.com. We also cover all the new metrics now reforming markets by internalizing those externalities at Beyond GDP, following our work with the European Parliament in 2008. We favor Qualitative Growth as I outlined with physicist Fritjof Capra.
"Reinventing Fire" is an essential, in-depth summary of all the evidence of the great energy transition now under way. We recommended this book to the OECD's Green Growth report on the energy transition, on which we were invited to comment. We will promote this book as the perfect companion to our Green Transition Scoreboard®. We think the transition is inevitable, a result of better science and technologies and a huge opportunity for a prosperous, fair, equitable, sustainable future for all.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.