The scene: Slough, UK, September 2010.
An opening ceremony with a difference. Solar roof tiles, glistening on the roofs of eight homes as though rained on under a grey autumn sky, can provide all the electricity the homes use, with plenty left over to power the battery car that the families living in the community share. Four technologies are each capable of heating the whole of the airtight, triple-glazed, development: air-sourced heat pumps, ground sourced heat pumps, a biomass boiler, and solar thermal panels.
SSE, the British utility, and investor in Solarcentury, has built this development for some of its workforce, as a showcase for what could be done. Half Britain’s carbon emissions come from buildings. Half those come from residential buildings. These homes use no coal, no gas, no oil, no nuclear. They go beyond Zero Carbon.
Ian Marchant, SSE CEO, gives a speech.
This is a stunning glimpse into the future, he says. These homes took just 8 months from beginning building to occupancy.
Chris Huhne, Secretary of State for Energy and Climate Change, follows him.
Low-carbon energy is going to be a massive industry, he says. Congratulations to all.
Back to London, I have a meeting at GE with Mark Elborne, their UK CEO. We have another demonstration project to talk about: solar schools, a flagship within GE’s sustainable cities programme. We are destined to hit the front page of GE’s website: a £50 million minnow partnered with a £100 billion giant.
I recount my morning with SSE to Elborne with a pride I can’t disguise.
Just wait until we marry this kind of technology up in a few years time with the storage technologies we are working on, he says. Then we’ll see some changes in energy markets.
This is a good day at work.
Back home in Holland Park, I am dragged back to earth. A meeting of my flat-dweller neighbours convenes. We have all been thrown in purgatory in past months as the owner of the mansion next door builds an underground cinema in his back garden. Platoons of Polish builders troop in and out of the mansion. Our flats shake all day in the incessant jackhammer hell they create. The owner of the mansion has moved out for the duration. We his neighbours can’t.
He is an investment banker. He is spending his bonus, or part of it.
The passage you just read is an extract from my book, The Energy of Nations: Risk Blindness and the Road to Renaissance, in which I set out my best-guess scenario for how systemic risks in our global energy and finance systems will play out in the years ahead, and analyse the implications. Amid the mega-risks there are also opportunities for society. As the story unfolds, a potential good-news future scenario emerges, which I think of as a ‘renaissance’.
Since the dot.com crash, I have developed an ex-academic’s passion for studying the patterns of play in energy markets, and in the financial markets where they pertain to energy. I have logged and analysed these patterns in a 2005 book, Half Gone and, since 2006, on my website [www.jeremyleggett.net]. Today I observe four global systemic risks directly connected to energy that threaten capital markets and hence the global economy. They involve oil depletion, carbon emissions, carbon assets, and shale gas. A market shock involving any one of these would be capable of triggering a tsunami of economic and social problems, and there is no law of economics that says only one can hit at one time.
There are other systemic risks in the energy sector, of course. Persistence with and proliferation of nuclear power risks spawning nuclear devices with which terrorists could take out cities, or weapons that could make nuclear war between nations more likely. The growing use of water in most forms of energy production could accelerate an already grave global water crisis. And so on. But in my book I concentrate on the four systemic risks that I have most direct vocational experience of.
I also write about a fifth risk. Ongoing systemic risk in the financial sector may at first glance seem to have nothing to do with energy. But I share a common view, fashioned with the benefit of hindsight as are the views of so many interested in the 2007 credit crunch and the 2008 financial crash, that they were indirectly connected to energy. Peak panic about the toxicity of mortgage-backed securities followed shortly after the highest ever oil price in history: $147 per barrel in July 2008. Could the high price of gasoline have had anything to do with all those owners of shiny new homes in American suburbs defaulting on their sub-prime mortgages? How could it not.
How best to describe the risks, and analyse the dangers? I have chosen to do this in the course of a historical account, rooted in my own experiences. I hope a chronological narrative approach will interest the reader more than a conventional format, while giving me the opportunity to recount how my own thinking has evolved over the years in the stoking of the serial crisis that faces society today.
Jeremy Leggett is an author, social entrepreneur and founder and Chairman of Solarcentury, the UK’s largest solar solutions company, as well as SolarAid, a charity set up with Solarcentury profits. This article is an edited extract from his latest book, The Energy of Nations: Risk Blindness and the Road to Renaissance, which is available now.
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