Beyond Obama's Plan: A New Economic Vision for Addressing Climate Change

Jeremy Rifkin                                                                                                                

Author, 'The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism'

                                                                     

Blogger Ref Link http://www.p2pfoundation.net/Transfinancial_Economics

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Posted: 06/02/2014 10:38 am EDT Updated: 06/02/2014 6:59 pm EDT   HUFFINGTON POST            

           

       

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The White House today released its national climate plan for reducing CO2 emissions, warning that climate change is adversely affecting every region of the United States, with dire consequences for the economy. Unfortunately, the new initiatives by the US government to ward off rising temperatures are weak at best. What's sorely missing from the climate change debate is a new economic vision that can quickly transition the US and global economy out of carbon based energy and into renewable energies, while simultaneously increasing productivity and reducing the amount of the earth's resources used in the economic process, ensuring a more prosperous and sustainable society. That vision is now taking hold.

A powerful new technology revolution is evolving that will allow enterprises and prosumers to make and share their own green electricity, and an increasing array of sustainable physical products and services, at near zero marginal cost, just as billions of prosumers now do with information goods. (Marginal cost is the cost of producing an additional unit of a good or service after the fixed costs have been absorbed). The Communication Internet is converging with a fledgling Energy Internet and nascent automated Transport and Logistics Internet, creating a new technological infrastructure for society--a Third Industrial Revolution--that could fundamentally alter the global economy and usher in an ecological civilization in the first half of the 21st century. Billions of sensors are being attached to resource flows, warehouses, road systems, factory production lines, the electricity transmission grid, offices, homes, stores, and vehicles, continually monitoring their status and performance and feeding big data back to the Internet of Things. By 2030, it is estimated there will be more than 100 trillion sensors connecting the human and natural environment in a global distributed intelligent network.
Enterprises and prosumers will be able to connect to the Internet of Things (IoT) and use Big Data and analytics to develop predictive algorithms that can speed efficiency, increase productivity, reduce the use of natural resources, and lower the marginal cost of producing renewable energy and manufactured products to near zero. They will be able to share what they've made with others on an emerging Collaborative Commons that is beginning to flourish alongside the conventional capitalist marketplace.


Zero Marginal Cost Renewable Energy
For example, the bulk of the energy we use to heat our homes and run our appliances, power our businesses, drive our vehicles, and operate every part of the global economy will be generated at near zero marginal cost and be nearly free in the coming decades. That's already the case for several million early adopters who have transformed their homes and businesses into micro-power plants to harvest renewable energy on-site. Even before the fixed costs for the installation of solar and wind are paid back--often as little as 2 to 8 years--the marginal cost of the harvested energy is nearly free. Unlike fossil fuels and uranium for nuclear power, in which the commodity itself always costs something, the sun collected on rooftops and the wind travelling up the side of buildings are nearly free. The Internet of Things will enable prosumers to monitor their electricity usage in their buildings, optimize their energy efficiency, and share surplus green electricity with others on the Energy Internet.
The same exponential curves that drove the marginal cost of generating and distributing communication to near zero has touched off a similar revolution in the field of renewable energy. Richard Swanson, the founder of SunPower Corporation, observed the same doubling phenomena in solar that IT companies observed in computer chips. Swanson's law holds that the price of solar photovoltaic (PV) cells tends to drop by 20 percent for every doubling of industry capacity. Crystalline silicon photovoltaic cell prices have fallen dramatically, from $60 a watt in 1976 to $0.66 a watt in 2013.
Solar cells are capturing more solar energy that strikes them while reducing the cost of harvesting the energy. Solar efficiencies for triple junction solar cells in the laboratory have reached 41 percent. Thin film has hit 20 percent efficiency in the laboratory. If this trend continues at the current pace--and most studies actually show an acceleration in exponentiality--solar energy will be as cheap as the current average retail price of electricity today by 2020 and half the price of coal electricity today by 2030.
The impact on society of near zero marginal cost solar energy is all the more pronounced when we consider the vast potential of these energy sources. The sun beams 470 exajoules of energy to Earth every 88 minutes--equaling the amount of energy human beings use in a year. If we could grab hold of one-tenth of 1 percent of the sun's energy that reaches Earth, it would give us six times the energy we now use across the global economy.
Like solar radiation, wind is ubiquitous and blows everywhere in the world--although its strength and frequency varies. A Stanford University study on global wind capacity concluded that if 20 percent of the world's available wind was harvested, it would generate seven times more electricity than we currently use to run the entire global economy. Wind capacity has been growing exponentially since the early 1990s and has already reached parity with conventionally generated electricity from fossil fuels and nuclear power in many regions of the world. In the past quarter century, wind-turbine productivity increased 100-fold and the average capacity per turbine grew by more than 1,000 percent. Increased performance and productivity has significantly reduced the cost of production, installation, and maintenance, leading to a growth rate of more than 30 percent per year between 1998 and 2007, or a doubling of capacity every two and a half years. Industry analysts forecast that the harvesting technology for solar and small wind power will be as cheap as cell phones and laptops within fifteen years.
Local, regional, and national governments around the world have instituted feed-in tariffs in the past few years, guaranteeing a premium price for renewable energy above the market value of other energies for a set period of usually 15 to 20 years to encourage early adopters to invest in the installation of wind, solar, geothermal, biomass, and small hydro renewable energy generation and feed the new green electricity back to the transmission grid. Today, millions of business and homeowners in Europe are taking advantage of feed in tariffs and investing their own capital to install renewable energy harvesting technologies on site. While the up-front capital investment is significant, they are beginning to receive low-interest-rate green loans from banks and credit unions. The banks are more than willing to lend money at reduced interest rates because the premium price of the green energy being produced virtually ensures the loan will be honored.
Sixty-five countries have instituted feed-in tariffs, and over half of them are in the developing world. Feed-in tariffs have proven to be a powerful policy instrument in moving renewable energy online. Nearly two-thirds of the global wind and 87 percent of global photovoltaic capacity has been spurred by feed-in tariffs. Unfortunately, in the United States, only California, Vermont, Maine, Oregon, Washington, Hawaii, and Rhode Island have implemented even cursory feed-in tariffs.
Naysayers argue that subsidies for green energy, in the form of feed-in tariffs, are too costly for society. The reality is that they merely speed up adoption and scale, encourage competition, and spur innovation, which further increases the efficiency of renewable energy harvesting technologies and lowers the cost of production and installation. In country after country, solar and wind energy is nearing parity or at parity with conventional fossil-fuel and nuclear power, allowing the government to begin phasing out tariffs. Meanwhile, the older fossil-fuel energies and nuclear power, although mature and well past their prime, continue to be subsidized at levels that far exceed the subsidies extended to renewable energy. Instituting robust feed in tariffs in all 50 states is a much more effective commercial incentive than carbon trading schemes to quickly usher in a post-carbon society.
Already, 27 percent of the electricity in Germany is being generated by renewable energy - mostly solar and wind--at near zero marginal cost and the percentage of green electricity is expected to exceed 35% by 2020. On Sunday, May 11th 2014, 75% of Germany's electricity demand was generated by renewable energy, a milestone for the world's most robust industrial economy per capita. So much near zero marginal cost electricity was being fed into the nation's power grid that electricity prices plunged into the negative category for much of the day. While the cost of subsidizing the new renewable energies places a relatively small short term burden on businesses and homeowners, in the mid- to long-term, Germany and other countries will enjoy near zero marginal cost energy and a dramatic increase in efficiency and productivity across the economy, resulting in sustainable economic growth far into the future.
It is particularly interesting to note that in Germany, which is setting the pace for transitioning into green electricity in Europe, the big traditional power and utility companies--E.ON, RWE, EnBW, Vattenfall Europe--owned only 7 percent of the renewable-energy capacity installed by the end of 2011. Individuals, however, "owned 40 percent of the renewable energy capacity, energy niche players 14 percent, farmers 11 percent, various energy-intensive industrial companies 9 percent, and financial companies 11 percent. Small regional utilities and international utilities owned another 7 percent." Nearly half of the German wind turbines are owned by residents of the regions. In other EU countries, the pattern is the same. Consumers are becoming prosumers and generating their own green electricity.
Gérard Mestrallet, CEO of GDF Suez--the French gas utility--says that just ten years ago the European energy market was dominated almost exclusively by a handful of regional monopolies. "Those days are gone forever," says Mestrallet, now that "some consumers have become producers." Peter Terium, CEO of RWE, the German-based energy company, acknowledges the massive shift taking place in Europe from centralized to distributed power, and says that the bigger power and utility companies "have to adjust to the fact that, in the longer term, earning capacity in conventional electricity generation will be markedly below what we've seen in recent years."
Had anyone suggested ten years ago that the big power and utility companies of Europe would begin to crumble as millions of small, distributed, renewable-energy micropower players began to generate their own green electricity for the grid, it would have been dismissed as fantasy by the powers that be. Not now. "It is a real revolution," says Mestrallet.
Nor is Europe alone. In December of 2013, the Chinese government leapt ahead of other countries, announcing that it is dedicating an initial $82 billion to establish a Third Industrial Revolution distributed "Energy Internet" that will serve as the centerpiece of an Internet of Things technology platform and infrastructure. Under the plan, millions of people in neighborhoods and communities across the country, as well as hundreds of thousands of businesses, will be able to produce their own solar- and wind-generated green electricity locally at near zero marginal cost, and share it on a national Energy Internet.
The Energy Internet, embedded in an Internet of Things platform will change the way power is generated and distributed in society. Already, millions of homeowners, businesses, and neighborhood producer and consumer cooperatives are harvesting clean renewable energy at near zero marginal cost. In the coming era, hundreds of millions of people will produce their own green electricity and share it at near zero marginal cost with each other on an Energy Internet, just as we now generate and share information online. When Internet communications manages green energy, every human being on Earth becomes his or her own source of power, both literally and figuratively. Zero marginal cost energy is "power to the people."


The Democratization of Manufacturing
While millions of people are now producing and sharing their own green electricity on an emerging Energy Internet, hundreds of thousands of hobbyists and thousands of startup companies are already printing out their own manufactured products using free software, and cheap recycled plastic, paper, and other locally available feedstock at near zero marginal cost. The additive manufacturing process, powered by electricity generated from renewable energy, uses one tenth of the materials of traditional factory production, resulting in a dramatic reduction in CO2 emissions and the use of the earth's resources. By 2020, prosumers will be able to share their 3D printed products with others on the Collaborative Commons by transporting them in driverless electric and fuel cell vehicles, powered by near zero marginal cost renewable energy, facilitated by an automated Logistics and Transport Internet.
China is setting the pace in the development of 3D printing. Beihang University is using 3D printing to manufacture sophisticated parts used in rockets and satellites. WinSun, another Chinese company, built ten small houses in less than 24 hours in 2014, using cheap recycled materials. The construction of the houses required very little human labor, and cost less than $5000 a piece to construct, making possible the production of millions of cheap homes at low or near zero marginal cost in China and other developing countries. Tiertime, China's largest producer of desktop 3D printers for use in small businesses and households, unveiled its newest model UP! in 2014. The company is competing head to head with America's leading producers of 3D printers, in the hopes of capturing much of the global market in the years ahead.
While Great Britain sparked the First Industrial Revolution, and the United States led the world into the Second Industrial Revolution, China has set its sights on leading the world into the Third Industrial Revolution by being the first superpower to build out an Internet of Things infrastructure and accompanying Collaborative Commons. In 2010, China seized the initiative over other countries, announcing its intention to erect an Internet of Things, focusing on the smart Energy Internet and an automated Logistics and Transport Internet, with the goal of meshing them with the Communication Internet to create the infrastructure for a Third Industrial Revolution. The Chinese government expects to invest $800 million on the initial build-out of the Internet of Things by 2015. The Chinese Ministry of Information and Technology forecasts that the IoT market will exceed $80 billion by 2015 and $166 billion by 2020.
The efficiency and productivity gains of the Third Industrial Revolution are likely to far outstrip those of the First and Second Industrial Revolutions. Several billion people and millions of organizations connected to the Internet of Things allows the human race to share their economic lives in a global Collaborative Commons, in ways previously unimaginable. This turning point in connectivity potentially exceeds even the integration of economic activity wrought by electrification and the accompanying spread of the telephone, radio and television in the 20th century. Cisco systems forecasts that by 2022, the Internet of Things will generate $14.4 trillion in cost efficiency savings and revenue. A General Electric study published in November 2012 concludes that the efficiency gains and productivity advances made possible by a smart industrial Internet could resound across virtually every economic sector by 2025, impacting "approximately one half of the global economy."


The Sharing Economy on the Collaborative Commons
Forty percent of the US population is already actively engaged in the sharing economy on the Collaborative Commons. 800,000 individuals in the US are now using car sharing services. In car sharing services, once the fixed costs are absorbed, the marginal cost of sharing the vehicle moves to near zero with each additional user.
Global transport currently accounts for fifteen percent of global warming emissions. Each car share vehicle eliminates 15 personally owned cars, resulting in a dramatic reduction in both CO2 emissions and the massive amount of material resources, energy, and labor that goes into manufacturing each automobile. In a recent study focused on the city of Ann Harbor, Michigan, Lawrence D. Burns, formerly the corporate vice president of research, development, and planning at General Motors, found that "about 80% fewer shared, coordinated vehicles would be needed than personally owned vehicles to provide the same level of mobility, with less investment." If we were to extrapolate Burns' study on a global scale, it is possible to envision car sharing services eliminating upwards of 800 million of the 1 billion privately owned cars now on the road, for a dramatic reduction in both CO2 emissions and the massive amount of material resources, energy, and labor that goes into manufacturing each automobile. If the remaining 200 million vehicles were powered by green electricity transmitted across the Energy Internet, carbon emissions in the transport sector would be reduced to near zero.
Buildings are another major contributor to climate change, accounting for approximately one third of global warming emissions. A significant percentage of these emissions come from hotels and resorts. (The travel and tourism sector is one of the largest industries in the world and represents nine percent of global GDP.) Now, millions of homeowners are sharing their apartments and houses with travelers via global online services like Airbnb and Couchsurfing, bypassing commercial hotels. For homeowners and apartment dwellers, whose fixed costs have already been absorbed, the marginal cost of opening up their homes to travelers is near zero. The big brick-and-mortar hotel chains, with their huge operating costs, simply can't compete with cheap short-term rentals or even free accommodations whose marginal costs of operation approach zero. In New York alone, Airbnb's 416,000 guests who stayed in apartments and houses between mid-2012 and mid-2013 cost the New York hotel industry 1 million lost room nights. As millions of homeowners open up their apartments and houses to travelers, we can expect a significant decline in the use of hotels and a corresponding decrease in CO2 emissions.
Millions of people are also redistributing their used clothing on the Collaborative Commons via online networks like ThredUP. The global textile industry is a major contributor to global warming, accounting for 10 percent of the total carbon impact. ThredUPs 385,000 visitors per month shared over 350,000 items in 2012, and orders are growing by a whopping 51% a month. More people sharing fewer clothes reduces the amount of new clothes purchased, resulting in fewer global warming gas emissions.
A younger generation is also sharing their tools, their children's toys, and countless other items on the Collaborative Commons. Freecycle, a redistribution network, gifted and passed along 700 million pounds of used items in the past year. If those items were stacked in garbage trucks, they would extend "the equivalent of over thirteen times the height of Mt. Everest."
In a zero marginal cost society, extreme productivity decreases the amount of information, energy, material resources, labor and logistics costs, necessary to produce and distribute economic goods and services, once fixed costs are absorbed. And the goods and services that are produced at near zero marginal cost are redistributed and shared over and over again on the Collaborative Commons, dramatically reducing the number of things sold, meaning fewer resources are used up and less global warming gases are emitted into the earth's atmosphere.
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The nations of the world are far more likely to make commitments to CO2 reductions if pegged to the vast economic benefits that come from erecting an Internet of Things platform that can unleash extreme productivity, reduce the marginal cost of producing and distributing renewable energy, 3D printed goods, and services to near zero, and give rise to a sharing circular economy on the Collaborative Commons. If the Third Industrial Revolution becomes the centerpiece of the United Nations Climate Change Conference in December 2015 in Paris, rather than a sideshow, humanity might yet snatch victory from defeat, turn the corner on climate change, and restore the planet to health.
Jeremy Rifkin is the author The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. Mr. Rifkin is a principal architect of the European Union's long-term Third Industrial Revolution economic development plan, and an advisor on sustainable development to heads of state around the world. He is the president of the Foundation on Economic Trends in Washington, DC.

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Climate Change Collaborative Commons Barack Obama

A Conversation with Jeremy Rifkin on His Book The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World

by Michael Lerner  Tikkun.org  ~Blog Ref Link http://www/p2pfoundation.net/Transfinancial_Economics

March 29, 2012

"We humans on this globe have burned so much carbon throughout the second industrial revolution," the author writes. "Scientists tell us that, on the upper end, we may see a 70 percent extinction of life by the end of the century." Credit: Creative Commons/Smoke Stacks.

TIKKUN: Could you state for our readers what the major thesis is of your new book?
JR: We’ve had two events in the last three years that signal the endgame for the industrial revolution based on fossil fuels. The first event was in 2008, when oil hit $147 a barrel on world markets. All the other prices across the supply chain went through the roof because so much in this civilization is made out of fossil fuels: fertilizers, pesticides, pharmaceutical products, construction materials, synthetic fiber, power, transport, heat, light—it’s all made out of fossil fuels and moved by them. We had food riots in twenty-two countries. The price on basic commodities, rice, wheat, and other basic foodstuffs was doubling and tripling. We had a billion people in harm’s way in terms of hunger and starvation. People stopped buying everywhere. The entire economic engine—the growing economy—shut down, and purchasing went plummeting. What I’m suggesting is that was an economic earthquake. The collapse of the financial market sixty days later—that was the aftershock.
What I think we’re hitting here is peak globalization: peak oil per capita and peak oil of production. Peak oil per capita occurred in 1979 at the height of the auto age. If we had distributed all the crude oil we had at that point to all the people alive at that moment, that’s the most each person could have. Population grows a lot quicker than new oil reserves, so if we distribute all the crude oil we have today, there’s less to go around. That’s peak oil per capita. When half the oil reserves are used up, the price becomes unaffordable from there on in.
In 2011 the International Energy Agency (the premier body that governments rely on for their studies) dropped a bombshell: its 2011 report said it looks like we now peaked at crude oil in 2006 at 70 million barrels a day, and we’ll probably turn out around 69 million barrels a day over the next twenty years, but it’s going to cost 8 trillion dollars to get the remanding oil out.
So what happened here is that within the last ten years, China and India made a bid to bring a third of the human race into a second industrial revolution (with its blistering 8 percent, 9 percent, or 10 percent growth rate). The aggregate demand was so great, it dramatically spiked prices for oil. All the other goods and services went up, and per capita purchasing powers shut down.

Peak Oil is in fact behind us: the National Energy Agency reports that crude oil peaked in 2006 at 70 million barrels a day. Credit: Creative Commons/Viktor Hertz.

This is an endgame. Every time we try to restart the economy at the same rate it was growing before July 2008, this process repeats itself. In 2009, oil went down 30 dollars a barrel because there was no economic activity; the economy had stalled everywhere as soon as we started to replenish inventory. Then India and China started moving, Europe and America started moving, and immediately oil prices shot up over a hundred a barrel, all the other prices went up, and purchasing power shut down again. We’re likely to see these gyration cycles: wild gyration cycles of four to five years of growth and then collapse. We might go to the dirtier fuels like tar sands from Canada, the heavy oil from Venezuela, or coal and shale gas, but they emit more carbon dioxide.
We humans on this globe have burned so much carbon throughout the second industrial revolution (in the nineteenth and twentieth centuries). As a result, massive amounts of carbon dioxide—and now industrially induced methane and nitrous oxide—have entered into the atmosphere, preventing carbon dioxide from getting off the planet. In 2007, 2,500 scientists, 125 countries, and all the major academies of science released a report saying it looks like the temperature will rise by 3 degrees Celsius rise in this century due to industrial-induced climate change. Five years later, that estimate’s now looking conservative. But to give a perspective to your readers, if we only go up 3 degrees, which is now looking very conservative, that takes us back to the temperature on earth 3 million years ago. Climate is all about the shift of the hydrological cycle, the water cycle: for every degree that the temperature goes up on the planet, the atmosphere absorbs 7 percent more precipitation from the ground. That means the whole water cycle of the planet shifts. More floods, more tsunamis, more hurricanes, more violent snows, longer periods of drought—that’s what’s going on around the world today.
Global ecosystems cannot catch up to a shift in our water. Drastic changes in the hydrological cycle leave ecosystems destabilized—and then the animals and plants within those systems die out. So what our scientists are now telling us is that we are in the early stages of the sixth great extinction event in the history of the planet.
We’ve had five wipeouts in the past. When they come, they come very quickly because the chemistry of the planet shifts. Every time, we’ve had a mass extinction of life, and it has taken 10 million years to recover that biodiversity. Scientists tell us that, on the upper end, we may see a 70 percent extinction of life by the end of the century. The human race is sleepwalking here, totally in denial. There has not been a moment like this since we’ve been on the planet as a species in the last 175,000 years. It’s really a defining moment for the species.

America: A Laggard in the Struggle Against Climate Change

TIKKUN: It may be the case, Jeremy, that many American economic and political elites have given up on the future and are not in denial but rather simply ready to accept that there is no future. Perhaps for that very reason they are now willing to exploit and even destroy some of their own corporations for the sake of short-term plunder for individual wealth and success. We can look at the policies of both political parties and see that the ruling elements in both know most of these facts but are unwilling to develop long-term alternatives or solutions because they simply don’t believe it possible, and given that analysis, they have given up on the future and even the future of their children or grandchildren. If you look at it that way, then you don’t have to attribute irrationality to our ruling elites, but just behavior consistent with an assessment that the ship is going down and that long-term planning no longer makes sense.
JR: Right. Well, there are only 300 million people in the United States, and there are 7 billion people on the planet. People in other countries are beginning to pick up this crisis and demand action, and the U.S. elites will not be able to withstand these demands forever. I don’t think the “powers that be” will be able to withstand it if the wind blows in a new direction across the rest of the world, and I think that’s what beginning to happen. That’s why I started to shift my focus to Europe in the Nineties and spend time with European governments and European industry and civil society. The GDP of the EU’s twenty-seven member states exceeds the GDP of our fifty states even now. We’re beginning to rustle up a new wind in Europe and in the developing countries—an economic wind that I think is going to blow back to America.
I think within a year or so, America is going to have to ask whether American capitalists want to continue to place their money in the sunset energy, technology, and industries that are part of a dying, second industrial revolution, or do they want to be in the satellite energies-technologies industry of an emerging third industrial revolution? So maybe we should talk about the new economic paradigm (it’s moving very, very quickly in places like Germany) and what America can do to catch up.
TIKKUN: Yes, please do.

The Path to a Green Economy

JR: The bottom line is that we have to get off carbon-based energy by 2040. In the process, we’re going to have to create a new economic paradigm that can completely reorient the way we think about business on this planet. It’s helpful to start by looking at how the great economic revolution industry occured so we can get the beginning of a roadmap for the future. The great economic revolution occurred when a new energy revolution converged with a new communication revolution.
When energy and communication revolutions merge, they change the economic paradigm—they even change consciousness. When new energy regimes emerge, they make possible more complex living environments and they allow people to come together in larger units, differentiate skills, and integrate in larger economic social patterns. But when that happens, the new complexities that these energy regimes bring require communication revolutions that are agile enough to manage these new energies. When they come together it makes history.
In the nineteenth century, for example, print technology became very cheap because we went from manual printing presses to steam-powered presses, linotype, and rotary presses. That reduced the transaction costs and allowed us to mass-produce printing material in a cheap and efficient way. In that century we also introduced public schools in Europe and America. And we created a print-literate workforce with the communication skills to manage the complexity of the coal-powered, steam-driven, first industrial revolution. Obviously, an illiterate workforce could not have done it. We needed that communication revolution.
In the twentieth century, we had another convergence as centralized electricity and especially telephones, radios, and televisions became the communication vehicles to manage and market a more dispersed auto and oil culture, a suburban era, and a mass consumer society.
What I’m suggesting now is that for sure the second industrial revolution is on life support. Nobody believes coal, oil, gas, shale gas, tar sand, and uranium are sunrise energies. They’re inventory. And certainly the technologies based on these energies—like the internal combustion engine—are exhausted. The whole infrastructure based on carbon is literally falling apart, crumpled.
The fortunate news here is that if we can get there, we are on the cusp of a new convergence of communication and energy—a third industrial revolution that can move us quickly to a post-carbon regime in thirty or forty years if we can focus our attention and move the roadblock.
We’ve had a very powerful communication revolution in the last twenty-five years involving the personal computer and internet. What’s so interesting about this revolution is that it’s scaled. I grew up on centralized communication (electricity, radio, television), which is top-down. What’s interesting about internet communication is its distributive, collaborative, and lateral power—not top-down power, but side-by-side power. Today we have 2.3 billion people out there, a third of the human race, with a desktop computer or cell phone, and they can distribute their own video, audio, and text in a collaborative manner at the speed of light, with far more lateral power than the most centralized TV and radio networks. We accomplished this shift in twenty-five years.
What’s happening now in Europe—especially in Germany and the Scandinavian countries—is that this internet communication revolution, which is distributive, collaborative, and creates lateral power, is now merging with the new renewable energy sources that by nature are distributed and organized collaboratively and scale laterally. It’s a complete kick in the economic social-political landscape.

Building wind turbines is not enough -- to build a green economy, we must also reduce our demand for fossil fuels. Credit: Creative Commons/Kevin Dooley.

The lead energies (coal, oil, gas, all the fossil fuels) are derelict and they’re not found everywhere. They’re only found in a few places, and to get at them we’ve had to make huge military investments, particularly in the Middle East, to secure them. We’ve had to centralize power and expend huge political investments and massive capital to organize them for the user.
Now the renewable energies are what we call “distributed” energies: they’re everywhere. The sun shines everywhere on the world, every day. The wind blows around the planet every day. Everywhere we check there is a geothermal core of energy, heat energy underneath the ground. And in the rural areas, we have agricultural foraging waste that can be converted to energy. On the coastal areas, the ocean tides and waves come in every day for energy. Wherever we have garbage, it can be bioconverted back to energy. So these are energies that are found literally in every square inch of the world in some frequency or proportion, enough to provide us till kingdom come. So the European Union committed itself back to a five-pillar infrastructure for a third industrial revolution.
Here are the five pillars:
1. Mandated Renewable Energy
EU countries have committed to 20 percent renewable energy by 2020. That means a third of the electricity has to be green. It’s a mandate—every country has to do it. It’s not a suggestion.
2. Collecting Energy in Buildings
We’ve had to ask ourselves, “How do we collect and distribute renewable energy?” Years ago we thought: Let’s go to Spain or Greece—they’ve got a lot of sun. Let’s concentrate it with big solar panels and put a high voltage line and ship it out to Europe. The Irish have a lot of wind. Norwegians have the hydro. None of us opposes these more concentrated uses of what are essentially distributed energies (solar power, wind, geothermal, and hydro), but they’re not essential to get us off carbon. They’re only transitional.
If renewable energy is deposited in every square inch of the world, why the hell are we only collecting it from just a few concentrated points? We were using twentieth-century thinking based on how you collect valuables. There are 191 million buildings in the EU: houses, offices, factories, sheds, etc. The number one cause of climate change is buildings. Buildings use the most energy and they create the most carbon dioxide. The number two cause of industrial-induced climate change is beef production and consumption. The goal in the European Union is to convert every single existing building into a green micro-power plant. The partial power plant in each building will seek to get solar off the roof, wind off the wall, geothermal heat from under the ground, and energy from garbage back for each building. This is already happening for some buildings in Europe.
This pillar jumpstarts construction and creates jobs. It’s going to require millions and millions of jobs to convert the entire real estate stock into thousands of little power sources. Germany reached a goal of 20 percent green electricity in 2011 and it’s heading to 35 percent green electricity by 2020, way ahead of the United States. Germany has 1 million buildings that have been converted to become mini-power plants. The process has created hundreds of thousands of new jobs already. Once we convert every building to everyone’s personal power plant, we have the democratization of energy, the democratization of information. And Pillar 2 will jump start the economy.
3. Storage
Pillar 3 is very difficult: storage. The sun isn’t always shining. The wind can be blowing at night in California, but you need the electricity during the day. In the EU we’re committed to all sorts of storage: flywheels, batteries, capacitors, and more. We’re putting most of our emphasis at the center of storage with hydrogen. It’s the basic elements of the universe. It’s what we’re made out of. It carries other energy. And it’s modular, so you can put it in a home or a big utility, or a power plant. The EU’s committed 8 billion euros to public-private partnerships to introduce hydrogen to store green electricity.
Here’s how it works: Let’s say you have a solar panel on your roof and you’re collecting solar electricity off that panel. If you have some surplus electricity, you put it in water just like in high school chemistry—the anodes, the cathodes. You put the electricity in the water and the hydrogen comes out of the water into a tank. When the sun isn’t shining on your roof, you just convert the hydrogen back into electricity. So it’s stored, and whenever you need it, you got it.
4. A Nervous System for the Third Industrial Revolution
Pillar four is where the internet communication revolution converges with the new distributed renewable energy to create a nervous system for this third industrial revolution. We transform the electricity grid of Europe into an energy “inter-net” that acts just like the Internet. Once millions and billions are collecting their own energy and storing it in hydrogen, then any buildings that have more than they need at any given time of day can use software to send electricity out and sell it across Europe, from Ireland to the doorsteps of Russia. It’s similar to collecting information on a computer, storing it in digital form, and sharing it online.
5. Infrastructure for a New Economy
Pillar five is transformers. Electric vehicles came out this year, and hydrogen-fuel-cell cars, buses, and trucks are set to come out 2014-2015. We will eventually be able to plug in all of our vehicles anywhere where there’s infrastructure that’s collecting green electricity. And anywhere we travel, there will be thousands of power-charging units. Every parking meter will have one. Every parking space will be able to connect back up and get green electricity from the grid. Or, if your car is sitting there doing nothing and it’s monitoring the grid, the computer in your car will tell you when to send your electricity back into the grid.
So, these five pillars together create the infrastructure, the meta-technology platform, for a completely new economic paradigm. And as you know, in America, all of these politicians talk about “infrastructure, infrastructure.” But they’re talking about mending up the old infrastructure, not creating a new one.
I can tell you from the lessons we learned in Europe, why Obama’s green economy didn’t take off. If these pillars come in isolated, stand-alone, the whole effort is powerless. When we realized last year that we need all five pillars, the EU Commission put out a memo saying we need a trillion euros for the energy inter-net now. A trillion in the next nine years.
We put in feed-in tariffs across Europe—they raise the electricity price for each consumer by such a small amount that you don’t even know it on the bill. But the money collected is used for a fund so early adopters can put solar or photovoltaic window shades in their buildings and get premium price for sending their electricity back to the grid. Only Ontario in all of the Americas—all the way to Chile—has an advanced feed-in tariff. Vermont just created one. Fifty-one countries have feed-in tariffs. Germany’s feed-in tariff is what allowed it to take off. So, what we realized is, if feed-in tariffs have been so successful, we have literally millions of players now, millions just in Germany.
TIKKUN: Feed-in?
JR: Feed-in tariffs. Meaning, if the electricity price goes up for the consumer slightly, the money you collect allows early adopters to put photovoltaics on their roofs and then they get more money for sending their electricity back to the grid than the normal electricity in the grid. The feed-ins have been so successful that we have hundreds of thousands of places trying to get their electricity back to the grid. But the old transmission grid is unidirectional. It only goes in one way. When you get electricity in your home, it’s going from the electric company to you. It’s pretty hard for you to send it back.
So we realized that we had to get the grid up because now we’ve got thousands and thousands of players—millions now—that wanted to get their electricity back to the grid. Then we realized the feed-in tariffs have been so successful that in some regions, 20 percent, 30 percent, 40 percent, or even 70 percent of the electricity is green. But we’re losing 3 out of 4 kilowatts because the wind is blowing at night and we need electricity during the day or because sometimes the solar is not there. So unless you store the energy with hydrogen, we’re losing 3 out of 4 kilowatts.
California is classic. It gathers all the wind power at night but its residents need the energy during the day. They need to store it. So, we’re realizing—you can’t do electric vehicles and fuel cell vehicles if there is no infrastructure and the other four pillars aren’t in place. You’ve got to put them all in.
Well, Obama went wrong. He didn’t understand that economic revolutions occur when energy and communication revolutions merge to create a nervous system for a new infrastructure. He spent billions and billions of dollars in U.S. tax money after 2008 on stand-alone, piloted, isolated projects. A wind turbine park here, a battery factory there, a solar factory somewhere else. Completely unconnected. So, there was no multiply effect, there was no synergy that created the new businesses and the new employment. And we end up with people saying, where are the jobs? Where are the businesses? All we see are pilot projects! That’s what he did. It was a failure.
The third industrial revolution—you’ll get a kick out of this—is power to the people. It literally is distributed power. And knowing the impact that the democratization of information has had in terms of lateral power, then imagine how much more powerful it is when that information is used to democratize energy. It will change power relationships literally and figuratively because communication and energy matrices determine, to a great extent, how power is produced and distributed in any civilization in history.
Here we are at the end of that era. Three out of the five largest companies are energy companies; underneath them are large banks and finances; underneath them are Fortune 500 companies that together rely on the oil spigot for all their goods, their services, their products, their logistics. These companies account for one-third of the GDP of the whole world. That’s top-down. So the young kids on the streets and in the Occupy movement—the 99 percent—they have to understand how this occurred. It occurred because of a centralized telecommunication energy matrix. You and I know for damn sure that we’re all better off now, at least in the developed world, than our ancestors were before the first industrial revolution. However, those who are at critical points at the top of the pyramid have benefitted disproportionately.
TIKKUN: Yeah. It sounds the way you’re talking as though all this is just going to happen, as though these stages of development happen apart from human convictions and decisions.
JR: No. I think it is happening. The momentum is very strong. It’s strong but it could be derailed. The newspapers didn’t see the blogosphere coming. Now they’re either creating blogs or internet sites, or they’re going out of business. What they don’t want to recognize is what happens when you can democratize energy, and millions of small players—small, medium-sized companies—can network together. It takes far more lateral power to produce in market products than you could ever get with the centralized old factories in the nineteenth and twentieth centuries and the old logistics of transport.
I’m not sanguine. I’m not pessimistic. I’m guardedly hopeful because I know that this plan is workable. It’s the EU plan. It has now become the United Nations plan. I introduced this in Vienna last month in November at the United Nations Industrial Development Organization headed by Kandeh Yumkella who, aside from being Director General, is also the head of UN Energy.
In Abu Dhabi we’re laying this out for the renewable energy industry. Then India. We are going to be announcing a plan for the entire Indian business community, the Federation of Indian Chambers of Commerce. So we are moving this.
But there are places where it’s not moving. The United States, of all the places in the world, is by far the outlier. It’s not moving here at all except in California, Oregon, and Washington, parts of New England, and southern Texas.
What we’re sensing here is that there’s a new politics that’s emerging here among the younger generation. In Europe it was bottom-up and top-down. It was efforts going on within the green parties and green movements and civil society groups across Europe. The early adopters. Then, it started to move politically because they have a multi-party system and the greens pushed the socialists and the socialists sped past the Christian Democrats, that’s how it moved.

The Lateral Power of the Occupy Movement

JR: The new politics is really interesting. These kids—the internet generation—are already thinking about lateral power. That’s how they organized the Occupy movement. They Twitter and YouTube and Facebook. They know logistically how to use lateral power. They don’t think right/left. When young people think about institutional behavior, the political spectrum they use is very interesting. They judge it by whether the institution—whether it’s business, government, or an educational institution—behaves in a fashion that’s centralized, patriarchal, top-down, closed, and proprietary, or whether the institutional behavior is distributive, collaborative, transparent, open, and based on lateral power.
The Occupy movement, mainly young people, understand that there’s a 1 percent vs. 99 percent, and they certainly understand that there’s something very unfair in the way that the economy and the societal world is organized to benefit the few at the expense of the many. And they’re certainly frustrated about not having any jobs and any future, and angry as hell that the political apparatus keeps them locked out. Whether it’s the Arab Spring or the streets of Manhattan or Oakland or Campton or Ohio. But what I think is missing is the connecting the dots and having a broader analysis of why this has happened. And that a narrative, a framework of why this has happened historically, the communication energy matrices, and the impact it has on creating a pyramid organization society, and they still need to actually begin to look at a new economic vision and game-plan that’s compatible with where they’re coming from. The third industrial revolution really is their revolution because they grew up empowered to create information. They’re completely comfortable with open-commons, open-source—from Wikipedia to YouTube. Now all they have to do is apply it to energy, bring it together, and change the economic and political landscape.
We have a movement here of young people who are asking, “Where are the jobs, where are the businesses?” They should then ask the question, “Can we create new economic opportunities with the existing economic paradigm in this country?” How are they going to have an economic future within a dying economic regime? They’ve got to start looking at a new economic paradigm that they can move, not just on the streets but also in terms of their professional experience.
There is a whole generation of young people coming out of the universities here having done a sustainability curriculum. Hundreds of universities are beginning to create curricula that bring together the business schools, the architecture schools, the urban planning schools, the chemistry and engineering departments, and the ecology departments into cross-disciplinary programs for sustainability. And there are campuses that are actually creating the third industrial revolution’s infrastructure. The community colleges of Los Angeles have all come together and they’ve created a five-pillar infrastructure to share electricity energy across the community colleges.
There has to be prophetic, and there also has to be a thoughtful generation that can create the new professional skills, the intellectual abilities, the political stamina, the focus and discipline to move this thing forward. Otherwise, it’s going to peter out.

A Response to the Politics of Austerity

We’re starting to see right-wing reactions in Europe. More austerity. More cuts. But this right-wing, libertarian phase is going to run its course—because if you keep cutting everything and don’t create any collective response to lay down a new economic infrastructure and paradigm, it gets worse and worse. We are sitting in an old dying economic regime, and we are collectively not doing anything at the federal, state, and local level to stimulate a new infrastructure that creates a new possibility for the next fifty years. If you follow the libertarian path all the way, and get rid of all government, there is no way to create a new economic paradigm for the twenty-first century.
In the first and second industrial revolutions, it was a public-private partnership all the way. Who the hell do they think laid out the public lands, ceded public lands, for the railroads? Who do the libertarians think created the first telegraph, by financing the Baltimore to Washington telegraph for Morse? It was the federal government. Who financed the utilities, subsidized the utilities in the rural electric cooperatives across the country? Who set up the monies for state and federal highways, for the auto culture? Who provided the loans for millions of people to get their own homes under the FHA? Who subsidized the oil pipelines through the whole twentieth century?
I think the young people around the world are moving to biosphere consciousness really quickly. All over the world—this has all happened in less than seven years, really since 2004—ten-year-olds and twelve-year-olds all over the world are coming home and asking some really interesting questions like, “Why is the television on when no one’s watching it in that room?” “How come we have two cars when we can have a car-share, y’know, on a car-sharing lot?” “Where did my clothes come from?” and “Where did the hamburger on the table come from?”
What the young people are learning from grade school through the university is that everything we do has an ecological footprint that affects the well-being of some other family, or some other creature somewhere else in the biosphere—we’re all connected. That is a big deal. If I were thinking about this anthropologically, that’s the biggest shift in consciousness we’ve seen since the shift from ideological thinking to therapeutic thinking. This shift to biosphere consciousness is real. The young people are grasping this and they’re connecting the dots. They’re thinking systemically.
TIKKUN: Well, if the younger generation could succeed in bringing that approach into politics, we’d soon have a “Love, Social Justice, and Transformation Party” advocating for a platform like the one put forward in the Network of Spiritual Progressives’ Spiritual Covenant with America. We certainly hope to see that someday soon!
(Click here for more online exclusives associated with our Spring 2012 issue. )

Michael Lerner is editor of Tikkun, co-chair of the interfaith and secular-humanist-welcoming Network of Spiritual Progressives, rabbi of Beyt Tikkun Synagogue in Berkeley, California, and author of eleven books, including two national best sellers: Jewish Renewal—a Path to Healing and Transformation and The Left Hand of God: Taking Back Our Country from the Religious Right. His most recent book is Embracing Israel/Palestine: A Strategy for Middle East Peace. He can be reached at rabbilerner.tikkun@gmail.com.

The Zero Marginal Cost Society

Source Ref Amazon, and P2P Foundation



* Book: The Zero Marginal Cost Society: The Internet of Things, the Collaborative Commons, and the Eclipse of Capitalism. by Jeremy Rifkin. Palgrave Macmillan, 2014
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Blogger Reference Link http://www.p2pfoundation.net/Transfinancial_Economics

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"In The Zero Marginal Cost Society, New York Times bestselling author Jeremy Rifkin argues that the capitalist era is passing—not quickly, but inevitably. The emerging Internet of Things is giving rise to a new economic system—the Collaborative Commons—that will transform our way of life.
In his provocative new book, The Zero Marginal Cost Society, Mr. Rifkin argues that the coming together of the Communication Internet with the fledgling Energy Internet and Logistics Internet in a seamless 21st century intelligent infrastructure—the Internet of Things—is boosting productivity to the point where the marginal cost of producing many goods and services is nearly zero, making them essentially free. The result is corporate profits are beginning to dry up, property rights are weakening, and the conventional mindset of scarcity is slowly giving way to the possibility of abundance. The zero marginal cost phenomenon is spawning a hybrid economy—part capitalist market and part Collaborative Commons—with far reaching implications for society.
Rifkin describes how hundreds of millions of people are already transferring parts of their economic lives from capitalist markets to what he calls the global “Collaborative Commons.” “Prosumers” are making and sharing their own information, entertainment, green energy, and 3-D printed products at near zero marginal cost. They are also sharing cars, homes, clothes and other items via social media sites, rentals, redistribution clubs, and cooperatives at low or near zero marginal cost. Students are even enrolling in free massive open online courses (MOOCs) that operate at near zero marginal cost. And young social entrepreneurs are establishing ecologically sensitive businesses using crowdfunding as well as creating alternative currencies in the new sharing economy. In this new world, social capital is as important as finance capital, access trumps ownership, cooperation supersedes competition, and “exchange value” in the capitalist marketplace is increasingly replaced by “sharable value” on the Collaborative Commons.
Rifkin concludes that while capitalism will be with us for the foreseeable future, albeit in an increasingly diminished role, it will not be the dominant economic paradigm by the second half of the 21st Century. We are, Rifkin says, entering a world beyond markets where we are learning how to live together in an increasingly interdependent global Collaborative Commons."

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The Third Industrial Revolution: How the Internet, Green Electricity, and 3-D Printing are Ushering in a Sustainable Era of Distributed Capitalism

By Jeremy Rifkin 

 

Source Ref  The World Financial Review, 2013.

Our industrial civilization is at a crossroads. Oil and the other fossil fuel energies that make up the industrial way of life are sunsetting, and the technologies made from and propelled by these energies are antiquated. The entire industrial infrastructure built off of fossil fuels is aging and in disrepair. The result is that unemployment is rising to dangerous levels all over the world. Governments, businesses and consumers are awash in debt and living standards are declining everywhere. A record one billion human beings — nearly one seventh of the human race—face hunger and starvation. Worse, climate change from fossil fuel-based industrial activity looms on the horizon, imperiling our own species’ very ability to survive.

Since the beginning of the Great Recession in the summer of 2008, governments, the business community, and civil society have been embroiled in a fierce debate over how to restart the global economy. While austerity measures and fiscal, labor, and market reforms will all be necessary, they are not sufficient to re-grow the economy. Let me explain by way of an anecdote. Just months after arriving in office, the new Chancellor of Germany, Angela Merkel, asked me to come to Berlin to help her administration address the question of how to create new jobs and grow the German economy in the twenty-first century. I began my remarks by asking the chancellor, “How do you grow the German economy, the EU economy, or, for that matter, the global economy, in the last stages of a great energy era and an industrial revolution built on it?”


       "It is becoming clear that the Second Industrial Revolution is dying. What we need now is a bold new economic narrative that can take us into a sustainable post carbon future."


It is becoming increasingly clear that the Second Industrial Revolution is dying and that industrial induced CO2 emissions are threatening the viability of life on Earth. What we need now is a bold new economic narrative that can take us into a sustainable post-carbon future. Finding that new vision requires an understanding of the technological forces that precipitate the profound transformations in society.

A New Economic Narrative

The great economic revolutions in history occur when new communication technologies converge with new energy systems. New energy revolutions make possible more expansive and integrated trade. Accompanying communication revolutions manage the new complex commercial activities made possible by the new energy flows. In the 19th century, cheap steam powered print technology and the introduction of public schools gave rise to a print-literate work force with the communication skills to manage the increased flow of commercial activity made possible by coal and steam power technology, ushering in the First Industrial Revolution. In the 20th century, centralized electricity communication—the telephone, and later radio and television—became the communication medium to manage a more complex and dispersed oil, auto, and suburban era, and the mass consumer culture of the Second Industrial Revolution.

Today, Internet technology and renewable energies are beginning to merge to create a new infrastructure for a Third Industrial Revolution (TIR) that will change the way power is distributed in the 21st century. In the coming era, hundreds of millions of people will produce their own renewable energy in their homes, offices, and factories and share green electricity with each other in an “Energy Internet” just like we now generate and share information online.


            "Internet technology and renewable energies are beginning to merge to create a new infrastructure for a Third Industrial Revolution (TIR) that will change the way power is distributed in the 21st century."


The establishment of a Third Industrial Revolution infrastructure will create thousands of new businesses and millions of jobs and lay the basis for a sustainable global economy in the 21st century. However, let me add a cautionary note. Like every other communication and energy infrastructure in history, the various pillars of a Third Industrial Revolution must be laid down simultaneously or the foundation will not hold. That’s because each pillar can only function in relationship to the others. The five pillars of the Third Industrial Revolution are (1) shifting to renewable energy; (2) transforming the building stock of every continent into micro–power plants to collect renewable energies on-site; (3) deploying hydrogen and other storage technologies in every building and throughout the infrastructure to store intermittent energies; (4) using Internet technology to transform the power grid of every continent into an energy internet that acts just like the Internet (when millions of buildings are generating a small amount of renewable energy locally, on-site, they can sell surplus green electricity back to the grid and share it with their continental neighbors); and (5) transitioning the transport fleet to electric plug-in and fuel cell vehicles that can buy and sell green electricity on a smart, continental, interactive power grid.

The creation of a renewable energy regime, loaded by buildings, partially stored in the form of hydrogen, distributed via a green electricity Internet, and connected to plug-in, zero-emission transport, opens the door to a Third Industrial Revolution. The entire system is interactive, integrated, and seamless. When these five pillars come together, they make up an indivisible technological platform—an emergent system whose properties and functions are qualitatively different from the sum of its parts. In other words, the synergies between the pillars create a new economic paradigm that can transform the world.

The public/private financing of the Third Industrial Revolution infrastructure build-out across the world will be at the very top of the agenda for the international banking and financial community in the first half of the 21st century.

The Shift To Lateral Power

The Third Industrial Revolution is the last of the great Industrial Revolutions and will lay the foundational infrastructure for an emerging collaborative age. Its completion will signal the end of a two-hundred-year commercial saga characterized by industrious thinking, entrepreneurial markets, and mass labor workforces and the beginning of a new era marked by collaborative behavior, social networks and professional and technical workforces. In the coming half century, the conventional, centralized business operations of the First and Second Industrial Revolutions will increasingly be subsumed by the distributed business practices of the Third Industrial Revolution; and the traditional, hierarchical organization of economic and political power will give way to lateral power organized nodally across society.

Lateral power is a new force in the world. Steve Jobs and the other innovators of his generation took us from expensive centralized main-frame computers, owned and controlled by a handful of global companies, to cheap desktop computers and cell phones, allowing billions of people to connect up with one another in peer-to-peer networks in the social spaces of the internet. The democratization of communications has enabled nearly one third of the human population on earth to share music, knowledge, news and social life on an open playing field, marking one of the great evolutionary advances in the history of our species.

But as impressive as this accomplishment is, it is only half of the story. The new, green energy industries are improving performance and reducing costs at an ever accelerating rate. And just as the generation and distribution of information is becoming nearly free, renewable energies will also. The sun, wind, biomass, geothermal heat and hydropower are available to everyone and, like information, are never used up.

When Internet communications manage green energy, every human being on earth becomes his or her own source of power, both literally and figuratively. Billions of human beings sharing their renewable energy laterally on a continental green electricity internet creates the foundation for the democratization of the global economy and a more just society.

Distributed Capitalism

Energy regimes shape the nature of civilizations—how they are organized, how the fruits of commerce and trade are distributed, how political power is exercised, and how social relations are conducted. To understand how the new Third Industrial Revolution infrastructure is likely to dramatically change the distribution of economic power in the twenty-first century, it is helpful to step back and examine how the fossil fuel–based First and Second Industrial Revolutions reordered power relations over the course of the nineteenth and twentieth centuries.

       "The distributed nature of renwable energies necessitates collaborative rather than hierachical command and control mechanisms. The new lateral energy regime establishes the organizational model for the countless economic activities that multiply from it."


Fossil fuels—coal, oil, and natural gas—are elite energies for the simple reason that they are found only in select places. They require a significant military investment to secure their access and continual geopolitical management to assure their availability. They also require top down command and control systems and massive concentrations of capital to move them from underground to the end users. The ability to centralize production and distribution— the essence of modern capitalism— is critical to the effective performance of the system as a whole. The centralized energy infrastructure, in turn, sets the conditions for the rest of the economy, encouraging similar business models across every sector.

Virtually all of the other critical industries that emerged from the oil culture—modern finance, telecommunications, automotive, power and utilities, and commercial construction—and that feed off of the fossil fuel spigot were similarly predisposed to bigness in order to achieve their own economies of scale. And, like the oil industry, they require huge sums of capital to operate and are organized in a centralized fashion.

Three of the four largest companies in the world today are oil companies—Royal Dutch Shell, Exxon Mobil, and BP. Underneath these giant energy companies are some five hundred global companies representing every sector and industry—with a combined revenue of $22.5 trillion, which is the equivalent of one-third of the world’s $62 trillion GDP—that are inseparably connected to and dependent on fossil fuels for their very survival.

The emerging Third Industrial Revolution, by contrast, is organized around distributed renewable energies that are found everywhere and are, for the most part, free—sun, wind, hydro, geothermal heat, biomass, and ocean waves and tides. These dispersed energies will be collected at millions of local sites and then bundled and shared with others over a continental green electricity internet to achieve optimum energy levels and maintain a high-performing, sustainable economy. The distributed nature of renewable energies necessitates collaborative rather than hierarchical command and control mechanisms.

This new lateral energy regime establishes the organizational model for the countless economic activities that multiply from it. A more distributed and collaborative industrial revolution, in turn, invariably leads to a more distributed sharing of the wealth generated.

The extraordinary capital costs of owning and operating giant centralized telephone, radio, and television communications technology and fossil fuel and nuclear power plants in markets is giving way to the new “distributed capitalism,” in which the low entry costs in lateral networks make it possible for virtually everyone to become a potential entrepreneur and collaborator, creating and sharing information and energy in open commons. Witness twenty something young men creating Google, Facebook, and other global information networks, literally in their college dorm rooms and thousands of small businesses converting their buildings to green micro power plants and connecting with one another in regional electricity networks.

What I am describing is a fundamental change in the way capitalism functions that is now unfolding across the economy and reshaping how companies conduct business. The shrinking of transaction costs in the music business and publishing field with the emergence of file sharing of music, eBooks, and news blogs, is wreaking havoc on these traditional industries. We can expect similar disruptive impacts as the diminishing transaction costs of green energy allow manufacturers, service industries, and retailers to produce and share goods and services in vast economic networks with very little outlay of financial capital.

Democratizing Manufacturing

 

For example, consider manufacturing. Nothing is more suggestive of the industrial way of life than highly capitalized, giant, centralized factories equipped with heavy machines and attended by blue-collar workforces, churning out mass-produced products on assembly lines. But what if millions of people could manufacture batches or even single manufactured items in their own homes or businesses, cheaper, quicker, and with the same quality control as the most advanced state-of the-art factories on earth?

While the TIR economy allows millions of people to produce their own virtual information and energy, a new digital manufacturing revolution now opens up the possibility of following suit in the production of durable goods. In the new era, everyone can potentially be their own manufacturer as well as their own internet site and power company. The process is called 3-D printing; and although it sounds like science fiction, it is already coming online, and promises to change the entire way we think of industrial production. Think about pushing the print button on your computer and sending a digital file to an inkjet printer, except, with 3-D printing, the machine runs off a three-dimensional product. Using computer aided design, software directs the 3-D printer to build successive layers of the product using powder, molten plastic, or metals to create the material scaffolding. The 3-D printer can produce multiple copies just like a photocopy machine. All sorts of goods, from jewelry to mobile phones, auto and aircraft parts, medical implants, and batteries are being “printed out” in what is being termed “additive manufacturing,” distinguishing it from the “subtractive manufacturing,” which involves cutting down and pairing off materials and then attaching them together.

        "In the new era, everyone can potentially be their own manufacturer as well as their own internet site and power comany. The process is called 3-D printing."


3-D entrepreneurs are particularly bullish about additive manufacturing, because the process requires as little as 10 percent of the raw material expended in traditional manufacturing and uses less energy than conventional factory production, thus greatly reducing the cost.

In the same way that the Internet radically reduced entry costs in generating and disseminating information, giving rise to new businesses like Google and Facebook, additive manufacturing has the potential to greatly reduce the cost of producing hard goods, making entry costs sufficiently lower to encourage hundreds of thousands of mini manufacturers—small and medium size enterprises (SMEs)—to challenge and potentially outcompete the giant manufacturing companies that were at the center of the First and Second Industrial Revolution economies.

Already, a spate of new start-up companies are entering the 3-D printing market with names like Within Technologies, Digital Forming, Shape Ways, Rapid Quality Manufacturing, Stratasys, Bespoke Innovations, 3D Systems, MakerBot Industries, Freedom of Creation, LGM, and Contour Crafting and are determined to reinvent the very idea of manufacturing in the Third Industrial era.

The energy saved at every step of the digital manufacturing process, from reduction in materials used, to less energy expended in making the product, when applied across the global economy, adds up to a qualitative increase in energy efficiency beyond anything imaginable in the First and Second Industrial Revolutions. When the energy used to power the production process is renewable and also generated on site, the full impact of a lateral Third Industrial Revolution becomes strikingly apparent. Since approximately 84 percent of the productivity gains in the manufacturing and service industries are attributable to increases in thermodynamic efficiencies— only 14 percent of productivity gains are the result of capital invested per worker— we begin to grasp the significance of the enormous surge in productivity that will accompany the Third Industrial Revolution and what it will mean for society.

Near Zero Cost Marketing and Logistics

 

The democratization of manufacturing is being accompanied by the tumbling costs of marketing. Because of the centralized nature of the communication technologies of the first and second industrial revolutions—newspapers, magazines, radio, and television—marketing costs were high and favored giant firms who could afford to devote substantial funds to market their products and services. The internet has transformed marketing from a significant expense to a negligible cost, allowing start ups and small and medium size enterprises to market their goods and services on internet sites that stretch over virtual space, enabling them to compete and even out compete many of the giant business enterprises of the 21st century.

Consider Etsy, a brash, web start-up company that has taken off in the past seven years. Etsy was founded by a young New York University graduate, Rob Kalin, who made furniture in his apartment. Frustrated that he had no way to connect with potential buyers interested in hand-crafted furniture, Kalin teamed up with a few friends and put up a website designed to bring individual craftsmen of all kinds, from around the world, together with prospective buyers. The site has become a global virtual showroom, where millions of buyers and thousands of sellers from more than fifty countries are connecting, breathing new life into craft production—an art that had largely disappeared with the advent of modern industrial capitalism.

Connecting multitudes of sellers and buyers in virtual space is almost free. By replacing all of the middlemen—from wholesalers to retailers— with a distributed virtual network of sellers and buyers and eliminating the transaction costs that are marked up at every stage in the marketing process, Etsy has created a new global craft bazaar that scales laterally rather than hierarchically, and markets goods collaboratively rather than top-down.


       " The internet has transformed marketing from a significant expense to a a negligible cost, allowing start ups and small enterpreses to compete with many of the giant business engterprises of the 21st century."


Etsy brings another dimension to the market—the personalization of relationships between seller and buyer. The website hosts chat rooms, coordinates online craft shows, and conducts seminars, allowing sellers and buyers to interact, exchange ideas, customize products, and create social bonds that can last a lifetime. Giant, global companies mass-producing standardized products on assembly lines operated by anonymous workforces can’t compete with the kind of intimate one-to-one relationship between artisan and patron.

Although still in its infancy, Etsy is a quickly growing enterprise. In 2011, Etsy’s sales topped nearly $500 million. In a recent conversation, Kalin told me that his mission is to help foster “empathic consciousness” in the global economic arena and lay the foundation for a more inclusive society. His vision of connecting up “millions of local living economies that will create a sense of community in the economy again” is the essence of the Third Industrial Revolution model. Etsy is only one of hundreds of global Internet companies that are bringing together producers and consumers in virtual marketing spaces and, in the process, democratizing marketing costs across the global economy.

As the new 3-D technology becomes more widespread, on site, just in time customized manufacturing of products will also reduce logistics costs with the possibility of huge energy savings. The cost of transporting products will plummet in the coming decades because an increasing array of goods will be produced locally in thousands of micro-manufacturing plants and transported regionally by trucks powered by green electricity and hydrogen generated on site.

The lateral scaling of the Third Industrial Revolution allows small and medium size enterprises to flourish. Still, global companies will not disappear. Rather, they will increasingly metamorphose from primary producers and distributers to aggregators. In the new economic era, their role will be to coordinate and manage the multiple networks that move commerce and trade across the value chain.

New Business Models and Jobs in the 21st Century

Germany is leading the way into the new economic era. The Federal Government has teamed up with six regions across Germany to test the introduction of an energy internet that will allow tens of thousands of German businesses and millions of home owners to collect renewable energies on site, store them in the form of hydrogen, and share green electricity across Germany in a smart energy internet. Entire communities are transforming their commercial and residential buildings into green micro-power plants. To date, more than 1 million buildings in Germany have been converted into partial green micro power plants. Companies like Siemens, Bosch and Daimler are creating sophisticated new IT software, hardware, appliances and vehicles, that will merge distributed Internet communication with distributed energy, to create smart buildings, infrastructure, and green mobility for the cities of the future.


       "The transition to the Third Industrial Revolution will require a wholesale reconfiguration of the entire economic infrasture of each country, creating mimllions of jobs and coutnless goods and services."



The transition to the Third Industrial Revolution will require a wholesale reconfiguration of the entire economic infrastructure of each country, creating millions of jobs and countless new goods and services. Nations will need to invest in renewable energy technology on a massive scale; convert millions of buildings into green micro power plants; embed hydrogen and other storage technology throughout the national infrastructure; lay down a green energy internet; and transform the automobile from the internal combustion engine to electric plug-in and fuel cell cars.

The remaking of each nation’s infrastructure and the retooling of industries is going to require a massive retraining of workers on a scale matching the professional and vocational training at the onset of the First and Second Industrial Revolutions. The new high tech workforce of the Third Industrial Revolution will need to be skilled in renewable energy technologies, green construction, IT and embedded computing, nanotechnology, sustainable chemistry, fuel-cell development, digital power grid management, hybrid electric and hydrogen-powered transport and hundreds of other technical fields.

Entrepreneurs and managers will need to be educated to take advantage of cutting edge business models, including distributed and collaborative research and development strategies, open source and networked commerce, performance contracting, shared savings agreements, and sustainable low-carbon logistics and supply chain management. The skill levels and managerial styles of the Third Industrial Revolution workforce will be qualitatively different from those of the workforce of the Second Industrial Revolution.

The lateral scaling of the Third Industrial Revolution shifts the fulcrum of power from centralized global companies to distributed small and medium size enterprise networks. The rapid decline in transaction costs brought on by The Third Industrial Revolution are leading to the democratization of information, energy, manufacturing, marketing, and logistics, and the ushering in of a new era of distributed capitalism that is likely to change the very way we think of commercial life. The Third Industrial Revolution offers the hope that we can arrive at a sustainable post-carbon era by mid-century. We have the science, the technology, and the game plan to make it happen. Now it is a question of whether we will recognize the economic possibilities that lie ahead and muster the will to get there in time.

About the author

Jeremy Rifkin is the author of The New York Times best selling book, The Third Industrial Revolution, How Lateral Power is Transforming Energy, the Economy, and the World. Mr. Rifkin is an adviser to the European Union and to heads of state around the world. He is a senior lecturer at the Wharton School’s Executive Education Program at the University of Pennsylvania and the president of the Foundation on Economic Trends in Washington, D.C.