A note from me

Good Folks,

I was struck down with the dreaded early-summer flu so I sadly missed the performance of Beethoven’s 9^th Symphony, which I mentioned in the last Newsletter, that I’d hoped to attend on the weekend of my birthday! Before I succumbed, however, I was able to catch the film “Furiosa”.  

This was, unfortunately, a bit of a disappointment. While not a genre of films that generally appeals to me, it was created as a “prequel” to the surprisingly excellent “Fury Road” and I hoped it would carry some of the brilliance of that film. However, there were no new innovative cinematic ideas. It struggled to shoehorn a life story into the action genre, instead of enjoying the pace and tension of the earlier film where the action all took place over just two days. It was also hampered by knowledge of the fixed points of the later film, e.g. we knew the main character had to survive.  

In the last couple of days, however, we did see a better compression of a life story into a drama through the NT Live filming of the play, “Nye”. I didn’t find this a fully satisfying piece dramatically (I scored it about 7.5 out of 10 on the “Jeremy scale”) but it was effective in a number of ways. This included its focus on a figure from our recent past who changed the way society saw itself, at least for a period. Aneurin Bevan emerged from the mining communities in Wales as a champion of working families seeking a decent and dignified quality of life and overcame many political obstacles to drive the legislation that created the National Health Service in the UK.  

This was a drama about a man who succeeded in making people see things differently, and sometimes drama itself can help achieve such shifts. The television drama “Cathy Come Home” by Ken Loach drove changes in social attitudes to homelessness and the law in the UK in the 1960s, while the film “I am a Fugitive from a Chain Gang” stimulated changes in penal systems in the US in the 1930s.  

How we “see” things really matters – it’s how we make sense of the world around us.  Re-perceiving how we see other people and what is fair treatment has driven developments like universal adult suffrage in modern democracies, the international outlawing of slavery, the end of apartheid in South Africa and recent social movements like “Black Lives Matter” and “Me Too”.  

Re-perceiving can be a very powerful, but subtle, route to driving really important changes in the world.  In this Newsletter, I give some preliminary attention to re-perceiving energy transitions. 

My Bi-Weekly Guide

Re-perceiving Energy Transitions:

This Newsletter builds on the last edition’s introduction to the five main techno-economic blocks of transition. It is not a lack of technical understanding that delays us from making investments in these blocks at a pace and scale sufficient to moderate the environmental impacts that are already in progress. The real frictions are aligning the motivations, costs and benefits of investments for multiple parties so that they actually happen. 

A significant drag is the received wisdom on energy transitions that has emerged from decades of public dialogue. It is a major problem that such dialogue mixes together multiple issues to feed polarisation and culture wars, so that the common wisdom on any particular matter may not actually be wise at all.   

The received wisdom on transition is that it is a single, slow-moving, high-cost, supply-led “burden”. This is hardly inspiring. However, if you look at the actual transitions that are already in progress, or look back on historical transitions, a very different picture can emerge. This re-perceiving of energy transitions may actually help accelerate the necessary investments.

1. Not a single process, but a series of tipping points:
   Aggregating data and showing averages tends to obscure what is happening in any given geography or any given sector of the economy. It may take time for this to happen, but once the stars align (more on this below), tipping points occur around the deployment of particular technologies in particular sectors. Passenger electric vehicle sales took off in California, then in places like Norway and the Netherlands, and now in places like Germany, France, the UK and China. A similar pattern of multiple developments at different times in different places can be seen, for example, with the take-off of renewable power. 

   The stars aligning – pioneer investments, early customers, supportive policy, and supply-chain partners – create the tipping points.

2. Not slow-moving, but explosively fast:
   Many changes that are significant happen “fast” and are often disruptive. You only have to look at what is happening currently with the sales of battery-electric passenger vehicles or the deployment of solar power, or further back to the shale revolution in the noughties, or the growth of the LNG industry in the 1970s, or even further back to the introduction of the car itself. And because global systems are so large, this explosive pace of growth can last for decades before it begins to be moderated by saturation effects. This is largely driven by competitive dynamics.

   Once the stars align and an early mover demonstrates even the slightest prospect of success, fear of being left behind motivates others to jump in as well.

3. Not high-cost, but modest cost at most:
   Many articles emphasise that trillions of dollars of investment costs will be required in the coming years to accomplish energy system transformation. Few, however, place this in the context of total investments in the entire economy and recognise the relatively modest scale of energy transition investments. Fewer still emphasise that  “costs” for one party are usually “revenues” for another so the overall drag on the macro-economy is actually very modest. With this broader landscape in view, the impact proves to be just a few percentage points in the projected size of the entire economy decades from now.  Indeed, the modest nature of even direct costs becomes apparent once they are translated into their impact on the final costs of what people actually consume. 

   While the added costs to manufacturers of making “green” steel or textiles may be 50% or more, the cost impact on consumers may be as little as 2%, e.g. just $1 on a pair of jeans. 

4. Not supply-led, but ultimately demand-driven:
   Because greenhouse gas emissions derive from fossil fuel combustion, attention is often limited to enterprises that produce and sell fossil fuels, or enterprises that use a lot of them. We rarely reflect on why there is a demand for these fuels. Yet, as individuals, we are enmeshed in a system of goods and services that build on considerable embedded energy, or on material content largely derived from fossil fuels.  Just 8 of these business chains account for over 50% of emissions - fashion, food, electronics, personal care and similar fast-moving consumer goods, automotives, construction, professional services, and additional freight outside these business chains. The challenge is that the substantial investments required to reduce emissions are generally needed far upstream in the supply chains that eventually deliver those final goods and services to consumers. This investment could be kick-started, however, by, premium markets in goods like fashion, electronics, automotives and food, and by rigorous regulatory standards for their emissions footprints. 

   Sustainable transition needs to become demand-led, and viewing business chains from the final end-use demand perspective could be the powerful lens that drives change.

5. Not a burden, but a landscape of opportunity:
   The explosive pace of growth highlighted previously, along with modest additional costs that premium markets can readily absorb, presents exciting economic opportunities for companies and countries that choose to be forerunners in attractive transition areas. Tesla, for example, ignited the global market for battery-electric passenger cars and now has a market value ten times that of traditional giants like GM and Ford.

   Of course, sustaining value growth alongside, and beyond, demand growth requires developing advantages that cannot easily be competed away. But early movers also have early opportunities to secure sweet spots.  This can bring great prosperity to some and good jobs to many.

In summary, to accelerate change, there are some things we must learn to “see” differently from how most of us see them currently.  Those interested in exploring these ideas a little further may find the following short video useful:

Question of The Fortnight

Every fortnight I’ll be asking a thought-provoking question in hopes of sparking interesting and enlightening discussion.

I’d love to hear your response! You can do so by simply responding to this email.

Today’s question is:

Can you think of any other historical examples where radical change was driven by a societal ‘re-perception;?

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