The global buying spree and the dramatic rise in aggregate output that ­accompanied it pushed up the demand for an ever-dwindling oil supply. The result: a steep price increase in world ­markets. A sharp acceleration in the price of oil triggered price hikes across the global supply chain for everything from grain to gasoline, finally leading to a worldwide collapse of purchasing power when oil hit a record $147 a barrel in July of 2008. Sixty days later, the banking community, awash in unpaid loans, shut off credit; the stock market crashed and globalization came to a standstill.
The Tea Party activists and millions of other Americans are justifiably frightened and angry about what is happening in America. They are not alone. Families all over the world are scared. Drilling for more oil, however, won’t get us out of the crisis because oil is the crisis.
In short, the Second Industrial Revolution is on life support and will never rebound to its former glory. Everywhere, people are asking “What do we do?” What we need now is a compelling new economic vision for the world and a pragmatic game plan for implementing it, if we are to put people back to work, curtail climate change and save civilization from ruin. The storyline begins with an understanding that the great economic transformations in history occur when new communications technologies converge with new energy systems. The new forms of communication become the medium for organizing and managing the more complex civilizations made possible by the new sources of energy. The infrastructure that emerges annihilates time and shrinks space, connecting people and markets in more diverse ­economic relations. When those systems are in place, economic activity advances, ­moving along a classic bell curve that ­ascends, peaks, plateaus and descends in tandem with the strength of the multiplier effect established by the communications-and-energy dynamic.
Infrastructure, at the deepest level, is not a static set of building blocks that serves as a kind of fixed foundation for economic activity, as we’ve come to regard it in popular economic lore. Rather, infrastructure is a dynamic relationship between communications technologies and energy sources that, together, create a living economy. Communications is the central nervous system that oversees, coordinates and manages the economic organism, and the energy is the blood that circulates through the body politic, providing the nourishment to convert nature’s endowment into goods and services and keep the economic life of society vital and growing.
Today, we are on the cusp of another convergence of communications technology and energy regimes. The conjoining of Internet communications technology and renewable energies is giving rise to a Third Industrial Revolution. In the 21st century, hundreds of millions of human beings will be generating green energy in their homes, offices and factories and sharing it with one another across intelligent distributed-electricity networks—an Intergrid—just like they now create information and share it on the Internet.
The music companies didn’t understand “distributed power” until millions of young people began sharing music online. Encyclopedia Britannica did not appreciate the distributed and collaborative power that made Wikipedia the leading reference source in the world. Nor did the newspapers take seriously the distributed power of the blogosphere; now many publications are either out of business or are transferring many activities online. The implications of people sharing distributed energy in an open commons are even further reaching.
The Third Industrial Revolution will have as significant an impact in the 21st century as the First Industrial Revolution had in the 19th century and the Second Industrial Revolution had in the 20th century. And just as the two former industrial revolutions did, the Third Industrial Revolution will fundamentally change every aspect of the way we work and live. The conventional top-down organization of society that characterized much of the economic social and political life of the fossil-fuel-based industrial revolutions is giving way to distributed and collaborative ­relationships in the emerging green industrial era. We are in the midst of a profound shift in the very way society is structured, away from hierarchical power and toward lateral power.
Like every other communications-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:
–  Shift to renewable energy;
–  Transform the building stock of every continent into micropower plants to collect renewable energies on site;
–  Deploy hydrogen and other storage technologies in every building and throughout the infrastructure to store intermittent energies;
–  Use Internet technology to transform the power grid of every continent into an energy-sharing intergrid that acts just like the Internet. When millions of buildings are generating small amounts of energy locally, they can sell the surplus back to the grid and share electricity with their neighbors;
–  Transition the transport fleet to electric plug-in and fuel cell vehicles that can buy and sell electricity on a smart continental interactive power grid.
The critical need to integrate and harmonize these five pillars at every level and stage of development became clear to the European Union in the fall of 2010. A leaked E.U. Commission document warned that the E.U. would need to spend $1.4 trillion (1 trillion euros) between 2010 and 2020 on updating its electricity grid to accommodate an influx of renewable energy. The internal document noted that “Europe is still lacking the infrastructure to enable renewables to develop and compete on an equal footing with traditional sources.”
The E.U. is expected to draw one-third of its electricity from green sources by 2020. This means the power grid must be digitalized and made intelligent to handle the intermittent renewable energies being fed to the grid from tens of thousands of local energy producers. It will also be essential to develop and deploy hydrogen and other storage technologies across the E.U.’s infrastructure quickly when the amount of intermittent renewable energy exceeds 15 percent of the electricity generation or much of that electricity will be lost. Similarly, it is important to incentivize the construction and real estate sectors to encourage the conversion of more than 191 million buildings in the E.U. to mini power plants that can harness renewable energies on site and send surpluses back to the smart grid.
And unless these other considerations are met, the E.U. won’t be able to provide enough green electricity to power millions of electric plug-in and hydrogen fuel cell vehicles being readied for the market. If any of the five pillars fall behind the rest in their development, the others will be stymied and the infrastructure itself will be compromised.
The E.U. set out with two goals at the beginning of this century: Transform the E.U. into a sustainable zero carbon emissions society, and make Europe the world’s most vibrant economy. Becoming a zero emissions economy meant shifting from a Second Industrial Revolution fossil fuel energy system to a Third Industrial ­Revolution renewable energy regime over the course of half a century. While it’s a considerable task, we should keep in mind that the transformation of the European and American economies from wood-based fuels to coal-powered steam technologies took place over half a century, as did the shift from coal-and-steam-powered rail technology to an oil-, electricity- and automobile-based economy, which should give us confidence that the transition to a renewable energy era should be possible in a comparable time frame.
Civilizations throughout history have experienced critical moments of reckoning when they have had to change their course radically or face the prospect of demise. Some were able to transform themselves in time; others however were not. But in the past, the consequences of the collapse of civilizations have been limited in space and in duration, not affecting the species as a whole. What makes this period different is a growing probability of a cataclysmic change in the temperature and the chemistry of the Earth, which is brought on by climate change, and could trigger the beginning of a mass extinction of animal and plant species and bring with it the genuine possibility of a wholesale die-out of our own species.
The critical task at hand is to harness the public capital, the market capital and especially the social capital of the human race to the mission of transitioning the world to a Third Industrial Revolution economy and post-carbon era. A transformation of this scale will require a concomitant leap to biosphere consciousness. Only if we begin to think as an extended global family that not only includes our own species but also all of our fellow travelers in the evolutionary sojourn on Earth will we be able to save our common biosphere community and renew the planet for future generations.
This is an edited excerpt from Third ­Industrial Revolution: An Insider’s Look at the New Energy Innovation That’s Transforming the World (Palgrave Macmillan)­ ­by Jeremy Rifkin.
Photo: Charles Cook via Flickr