www.criticaleye.net 01 A genuine move to sustainable energy could signal a paradigm shift in the economy. If the vision and will exists from governments and businesses, then mass employment could be created and markets revitalised as housing, transport and technology are reinvented to run on what’s being described as a new global ‘energy Internet’.

For Jeremy Rifkin, a Criticaleye Thought Leader and confidant of heads of state and global CEOs, green growth is no longer purely about combating climate change. Rather, New energy regimes it addresses the fundamental economic problems currently gripping the West as countries battle to regain financial stability. annihilate time and space

The collapse of Lehman Brothers and bring more people together in September 2008 was seen as the catalyst for global recession and the so- called credit crunch. You beg to differ, suggesting the cause was earlier and confirmed by other studies, concluding that But how does this endgame scenario link to goes deeper than avaricious bankers? the available oil, if equally distributed, peaked the financial crisis? Surely it is too simplistic in that year. While we’ve found more oil to blame sovereign and personal debt, for When the price of oil went over $70 per barrel since then, the world population has grown instance, on soaring commodity prices? in mid-2007, the cost of products and services much more quickly. If we were to distribute across the entire global supply chain began to all of the known oil reserves today to the The second industrial revolution, by which rise as well, for the simple reason that virtually seven billion human beings living on earth, I mean the coming together of centralised every commercial activity is dependent there would be less available per person. electricity, the oil era, the automobile on oil and other fossil fuel energies. We and suburban construction and a mass grow our food in petrochemical fertilizers The second milestone is global peak oil consumer society, went through two stages and pesticides. Most of our construction production, which is a term used among of development. A juvenile infrastructure was materials – cement, plastics and so on – are petro-geologists to denote the point when laid down between 1900 and the beginning made of fossil fuels, as are the vast majority global oil production reaches its zenith on of the Great Depression in 1929. That of pharmaceutical products. Our clothes, for what is called the Hubbert Bell curve. Peak oil remained in limbo until after World War II the most part, are made from petrochemical production occurs when half of the ultimately and then the passage of the US Interstate synthetic fibres. Our transport, power and recoverable reserves are used up. The top Highway Act of 1956 provided the impetus to light are all reliant on fossil fuels as well. of the curve represents the midpoint in oil mature the infrastructure for the auto age. recovery. The International Energy Agency, So, as the price of oil rose, this the authoritative global organisation that the The establishment of an intercontinental created more pressure than the world economy relies on for energy analysis highway grid, which at the time was global supply chain could stand? and forecasting, dropped a bombshell in its heralded as the most ambitious and 2011 global energy report stating that global most expensive public works project in Come July 2008, Brent Crude hit $147 a peak crude oil production likely occurred all of human history, created unparalled barrel and the price of basic items in stores in 2006. The long and short of it is that we economic expansion, making the US the shot up, gasoline and electricity prices are entering a long endgame for the second most prosperous society on earth. soared, so did the price of construction industrial revolution based on crude oil. materials, pharmaceutical products, and You believe this boom period was fuelled packaging materials – the list was endless. The emerging markets have increased by the cheap and plentiful supply of oil? And people stopped purchasing. The entire the levels of demand too. economic engine of the second industrial Yes, along with the entire infrastructure revolution came to a stop. That, in effect, China and India have brought a third that accompanied it. The credit bubble and was the earthquake, while the collapse of the human race into the game. By financial crisis did not occur in a vacuum. of the financial market, which occurred 2007, India was growing by 9.6 per cent They grew out of the deceleration of the some sixty days later, was the aftershock. and China by 14.2 per cent and that second industrial revolution. That slowdown huge aggregate of demand against the began in the late 1980s, when the suburban Why is this happening now? supply of crude oil pushed prices up. construction boom in the US, brought on by the laying down of the interstate highway The reason we have hit the wall is that we Here is the bottom line. We are heading for system, peaked, signalling the high water have reached two milestones for the fossil a second collapse and these cycles are going mark of the auto age and oil era. It was the fuel-based industrial age: ‘peak oil per capita’ to be every four years or less. Every time we marriage of abundant, cheap oil and the and ‘global peak oil production’. Global peak try to rebuild the economy by replenishing automobile that drove the US to the top of oil per capita was reached back in 1979. BP inventory, oil prices go up, all the other prices the world economy by the 1980s. As that conducted a study, which has since been go up and purchasing power shuts down. decade closed, America experienced a deep www.criticaleye.net 02 recession brought on by the collapse of the commercial and residential housing markets that came with the completion of the rollout of the interstate highway system. In lieu of a powerful third industrial revolution, we came out of that recession in the early 1990s by dipping into the savings amassed during the expansion of the second industrial revolution. Unfortunately, we used up that accumulated wealth in less US purchasing power than half the time we took to create it in an extraordinary buying binge that kept from 1990 to 2007 moved the economic engine artificially revved up while the real economy was winding down. the global economy This sounds incredibly US-centric.

It’s not. We used the wealth we generated way, imagine we fix the situation and and infrastructure of the second industrial after World War II to continue to move the impose austerity. In addition, we regulate revolution, or do you want to be in the sunrise global economy along after the second the markets and we find ways to insure energies, technologies and infrastructure of industrial revolution peaked in America. against recurring bubbles. Do you think an emerging third industrial revolution? After we had depleted our family savings these measures, by themselves, are going and amassed record credit card debt, we to allow us to regrow the global economy? For you, this has to be the future? entered the sub-prime mortgage Ponzi I would really like to have a debate and ask scheme which allowed us to refinance our folks about this – tell me, how are we going The real economic game changers are when homes over and over again, accruing even to be able to grow the global economy when new communication revolutions merge with more debt. We then used the appreciated oil continues to spike up to $147 a barrel? new energy regimes.They make possible new value of our homes to refinance our concepts of civilisation. New energy regimes mortgages in order to secure additional A new energy regime is required, then? annihilate time and space and bring more people cash to maintain our consumption spree. together, differentiate skills and then integrate How does that relate to the rest of the Our existing fossil fuel energies are getting them into more complex economic and social world? Well, US purchasing power from more expensive and the technologies that units. The communication revolutions, in turn, 1990 to 2007 moved the European economy, employ those energies are increasingly manage the complexity of new energy regimes. the global economy, and especially the ineffective. And the whole infrastructure economy of developing nations. We we have established based on those This will take years to achieve. all know that – it’s incontrovertible. fossil fuels is on life support. How do we grow a new global economy atop a I’m 66 and I’ve seen it all, and this is really And if that’s not controversial, the question dying second industrial revolution? difficult. Over the next 20 years, the global is: where did that purchasing power come economy will move in short cycles of growth and from? The answer is that it came from living Countries will need to join together collapse, growth and collapse, and the key is that off the savings from the second industrial to find a solution. we have to keep the system alive on life support. revolution that had already plateaued in the 80s and then we continued the buying We need a new economic vision and But in the meantime we have to think spree by going deeply into consumer debt. gameplan. We have to create a new energy and about where to go beyond that. communication matrix that gives us a powerful So the economic issues faced by economic multiplier effect for the 21st century, In the second interview with Criticaleye, Jeremy will individual countries are, in your view, like the coming together of print technology discuss his economic vision for long-term recovery as part of this wider, systemic problem with the coal power steam driven energies described in his new book, ‘The Third Industrial of diminishing fossil fuels? of the first industrial revolution and the Revolution: How Lateral Power Is Transforming merging of electricity communication —the Energy, the Economy, and the World’ There are countries with very specific telephone, radio and television—with the oil problems like Greece, the UK or Ireland. powered automobile, suburban construction © Criticaleye 2011 But, if you look at the bigger picture, and the mass-consumer society in the second there is the big elephant called the US industrial revolution of the 20th Century. Now which really moved globalisation through we need a third industrial revolution which its unprecedented purchasing power. brings together another communication Jeremy Rifkin and energy matrix for the 21st Century. Founder and President The Foundation on In other words, for you, the debate Economic Trends, USA about say, the Euro or financial What role do businesses have to play? regulation, is to miss the point? Jeremy’s books have been translated into The question to ask is: where does your more than thirty languages and are used in To place the blame on deregulated company want to be ten years from thousands of universities, corporations and financial markets is not systemic thinking. now? Show long-term investors where government agencies around the world.

Let’s dig down and look at the systemic you really want to be. Do you want to Contact Jeremy through www.criticaleye.net problems that emerge. To put it another be in the sunset energies, technologies www.criticaleye.net 03