Le Chantier

Big Questions

Recently I attended a commercial symposium on "green technologies" in California.  There was enormous interest among the participants in this field, but I was dismayed frankly to realize that this interest is driven almost entirely by the view that this is a great new opportunity to make money.  Nothing against making money, but the challenges of climate change are far more serious than that.

I am concerned that for all the enthusiasm about installing compact fluorescent lights and buying hybrid cars, we have not begun to come to terms with the magnitude of the changes that we face. There is an assumption here that if we all install compact fluorescent lamps and drive hybrid cars, then life can carry on pretty much as normal.  I fear that this may not be true.

While it is good that the majority of the population not agrees we have a problem, we have yet to begin to debate the real magnitude of the problem and who will bear the costs of dealing with it.  Essentially the world needs to choose - fairly quickly please - how much global warming we want to risk.  Given the emissions of greenhouse gases (GHGs) that we have already made, we face an unavoidable rise in average temperature of 1-2C even if we make substantial efforts.  This will produce significant climate changes. Doing less to reduce GHG emissions will lead to larger rises in average temperature.  These may be supportable - at some great cost to society - up to around 4C.  Beyond this point the climate researchers warn of potentially disastrous changes.

So one target, already being studied in Europe, is to attempt to limit change to 2C.  It appears possible that we could attain this by appropriate deployment of alternative energy sources, combined with substantial reductions in total energy consumption.  Recall that we are doing this as major parts of the globe begin to achieve the levels of prosperity that the West has enjoyed for the last 50 years.

The good news is that we have the technology we need.  The bad news is that we will need to make very large investments - measured in trillions of dollars - in order to get the technology deployed and to get it adopted for our major uses - heating and cooling buildings, transportation, and industrial processes.  So government and business face a set of very large investments, that I do not believe can be driven purely by market forces, under conditions of substantial uncertainty.  Uncertainty causes delay and time is not on our side here.

So I have developed a list of questions that require study - not just by climate researchers, but by engineers, economists, politicians, and business leaders if we are to set this process in motion.  Essentially we would like to know what will happen over the coming 20-30 years and of course this is in knowable.  But there are methods we can employ that will enable us to understand what are the most likely outcomes.

So here is my list of Big Questions: 

• What is the optimum/equitable allocation of the spectrum of energy sources to various uses as price and availability evolve over the next 20-30 years?
• How is future price and availability influenced by investment decisions made over that period?
• What investments need to be made for each energy source to create the appropriate distribution infrastructure? Who makes these investments, at what ROI, and over what period?
• How fungible are various energy sources and how readily do energy users switch from one source to another source (secondary investment decisions)? How efficient are the commodity markets at allocating buyers to sellers?
• What opportunities exist for unexpected invention or discovery for each energy source or related inventions, e.g. energy storage, and what investments would be needed to develop these fully into products and what investments would be needed to create the appropriate distribution infrastructures?
• What will be government policies in the major energy producing and consuming nations around the world to incent or disincent the production and consumptions of various kinds of energy? How will these affect price and availability?
• What unexpected political, economic, and natural events could happen over the next 20-30 years that might change any of the above?

Since we cannot know these precisely, instead, over a large range of combinations of possible evolutions

• What are the most likely outcomes?
• How sensitive are these outcomes to decisions that we make today?
• How sensitive are these outcomes to when we begin to make major changes and investment?

For a Simpler Society

When I returned recently to full-time living in the United States, one of the first things that struck me about the experience is how complicated it is.  So many decisions to make about telephones, medical insurance, pension, savings, car insurance, and so on.  Conversely when I have from time to time had a temporary home in Europe, I have been at first frustrated and eventually contented to have a much narrower set of choices with which to deal.

Americans tend to think of European states as much more "socialist" than their own.  While it is true that during the 1940-70s these states did have many nationalized industries, this is certainly not true to today and in many ways there is considerably more competition in European countries than in the United States.  What I think Americans sense about Europe is not so much the socialism of the state but rather the socialism - the sense of community - of the society.

Modern America was founded on the concept of the "American dream" in which opportunity was open to anyone who would work hard and take the risks.  European countries have historically had more rigid societies in which life's expectations were to a large degree set at birth and in which risk was to be avoided for the vast majority of the populace.  Society provided - and still to some degree provides - a ecosystem with niches for citizens of all kinds of abilities and provided one worked hard and took few risks, one was in principle assured of a stable life.  To understand why European and other older societies have this implicit social contract, see for example, Jared Diamond's Collapse, which recounts what has histrorically happened when societies over extended themselves.

This social consensus has been eroding under the forces of globalization as society is no longer able to make these kinds of guarantees.  The fear of this erosion is one of the powerful forces in French society that periodically provokes violent reactions to change.  Nonetheless its spirit remains in the sense that there is a basic template for life and provided one lives within that template, there is great simplicity - education, housing, public transportation, medical care, and pensions are all assured.  One can go outside that template, but this demands significantly greater effort and cost.

American society has never had such a template, where even those of lesser wealth and lesser ability could, through diligence, nonetheless conduct a relatively stable life.  Instead America has preferred the spirit of competition and risk taking that has produced the world's largest economy.  It is perhaps an attribute of a historically young society that retains the confidence of youth and has not yet experienced the tragedies of older societies.

A corollary of this is that life in the United States requires a lot of personal decision-making and a lot of paperwork.  Americans like to criticize those "socialist" governments for their immense and stifling bureaucracies.  But there are plenty of stifling bureaucracies in America; they are called insurance companies, healthcare agencies, financial services, and so forth.  I am amazed at how much time middle class Americans appear to devote to managing their lives as well as configuring all the electronic services they buy.

As a fairly well educated, reasonably intelligent member of that group I find it often mind-bogglingly complicated and so often of course we hire advisors to help us make these decisions.  My employer, which has one of the most highly educated workforces in the world, is currently introducing a new set of saving plans so complex that it is providing a default option button.  So I come to wonder how those Americans who are less fortunate, less educated, less able to take time to make complex decisions deal with this.

It seems to me that in any society, as one considers progressively less able members, there comes a threshold where they are no longer able to cope with the complexity that society places on them.  And that the relatively high complexity of American life may itself be a cause of the high percentage of Americans who live in poverty.

Are the least able and educated really able to take advantage of the benefits that are available to them?  Once they slide off the mainstream of life does it not become immeasurably more difficult to get back there?

While government attempts to provide a safety net for these people, I have an impression that the administration of these programs through a variety of agencies, scattered across cities, each with its own criteria for eligibility creates a Kafka-esque nightmare for those in need.  So while the middle class may feel that it is doing the right thing in paying taxes to provide benefits for these less fortunate members, they in turn may be unable to work through the complexity of gaining them.

We are approaching the coldest season and we may be approaching a period of financial instability.  The burdens of both of these will fall hardest on the poor.  I do not know whether society is providing enough funding for those in need, but I do plead here for governments and agencies to attempt to understand the challenges of their own complexity and to radically simplify their processes so that those least able to deal with complexity can receive benefits when they are in need.