China and the Third Industrial RevolutionBy
Jeremy Rifkin, president of the Foundation on Economic Trends and best-selling author of The Third Industrial Revolution: How Lateral Power is Transforming Energy, the Economy, and the World, just finished a two-week-long first visit to China, where he met with local and national officials, laying out his vision of a post-petroleum, Internet-connected world.
Rifkin came to the attention of Chinese policymakers late last year, after the official Xinhua News Agency reported that Premier Li Keqiang is a fan of his writings; Li has instructed top economic planning and strategy officials to read Rifkin’s books.
The Third Industrial Revolution, whose Chinese edition sold more than 300,000 copies, predicts a future where renewable energy replaces fossil fuels, power is produced individually on millions of buildings on every continent, and transportation is converted to electric plug-in and fuel cell vehicles. Surplus energy will be exchanged over the Internet, cutting waste and boosting economic productivity, Rifkin writes. Bloomberg Businessweek caught up with the peripatetic author on Sept. 23 for an interview at Beijing’s Grand Hotel overlooking Tiananmen Square, just before his departure from China.
Can you explain the challenge the global economy is facing and what needs to be done?
The second industrial revolution is clearly in sunset. The fossil fuels energies have matured, and they are getting more expensive. The global markets for fossil fuels are completely volatile.
To exacerbate the problem, we are in these five-year cycles of growth and slowdown. [Last time] it started when oil hit $147 a barrel in July 2008. And what happened is purchasing power shut down all over the world because everything relies on oil. That was the earthquake and the shutdown in the global economy in 2008. The collapse of the financial markets 60 days later was the aftershock.
Now what has happened is the developing world has come into the game with a third of the human race. So every time we try to replenish inventories, we grow, and when we hit that zone of $122 to $140 per barrel, the price of oil forces all the other prices up, and purchasing power slows down. So we are in a second slowdown right now.
We need a new economic vision for the world. And it has to be compelling and a game plan that is deliverable. And it has to move as quickly in the developing countries as in the developed nations. We have to be off carbon in 30 years. The elephant is climate change. It is looking very dire at this point.
Can you describe a post-fossil-fuel third industrial revolution?
Renewable energies are found everywhere: the sun, the wind, heat under the ground, biomass, the ocean tides and waves. All of these energies are found in some frequency in every square inch of the planet, unlike coal, gas, or uranium, which are elite, require huge military and geopolitical investments, and a hell of a lot of capital.
Ten years from now we will have tens of millions of buildings around the world producing some small amount of green electricity. In 20 years we will have several hundred million buildings, and China will be the big player with Europe in this.
As the technology scales in [for renewables] it is getting cheaper and cheaper and cheaper, and it is following a similar build-out as computers and cell phones, in getting cheaper and cheaper.
Once you install the technology, the sun is free and the wind is free. So is the heat under the ground from the geothermal heat power. Just as we’ve gotten to near marginal zero cost [for information] with the Internet, as we move to these micro power plants, the actual energy is already at near zero marginal cost.
Why do you think your ideas resonate in China?
China has a number of agendas. China has to come up with a new economic reform plan under the new leadership. Secondly it has to urbanize the country. Third it has to bring western China up to par with its eastern part. And finally, it has to deal with the pollution that is literally killing its people.
To create a good Chinese Dream [a phrase popularized by Party Secretary Xi Jinping] for everyone, China has to knock out fossil fuels, because they are killing off this country. And China is now the largest emitter of greenhouse gases.
Many of the people I have spoken to said something along these lines: We missed the first industrial revolution totally. We missed almost all of the second industrial revolution. China came in during the last 15 years as it has sunsetted. So they have copied a revolution that is now on life support. China is determined to lead a third industrial revolution.
Why will China play a leading role in the third industrial revolution?
China has three assets that could position it, along with Europe, to be the leader of the third industrial revolution. Remember, Britain created the first industrial revolution because it had a lot of coal and it invented the steam engine to manage it. The United States created the second industrial revolution because it had lots of oil in Texas and Oklahoma, and we had the internal combustion engine and Henry Ford’s car.
China is ideally suited for the third industrial revolution because it has the most ample reserves of renewable energy resources in the world. It has the most solar radiance, most wind of any major country, off its coast. It has massive amounts of geothermal heat under the ground. It has massive amounts of biomass from its rural, agricultural areas. It is more than the Saudi Arabia of renewable energies. It can provide for every man, woman, and child here until kingdom come.
Asset No. 2, China has a social market economy like Europe. This is a huge asset. Infrastructure requires a social market economy. Infrastructure is something the government has to do and work with the business community to build it out. There is no example in the history of the world where infrastructure was put in by the private market.
The marketplace does not create public goods, so it is absurd to think companies will do it. You can not create the third industrial revolution if your entire business, investment, and financial community is focused on three-month quarterly statements. China is extremely comfortable with the government having this role and with long-term planning. In China they have five-year plans.
And the last asset: China has the cultural DNA to lead a third industrial revolution. In the West, our religious and philosophical tradition is that nature is the enemy, God has anointed us as masters, and we shall have dominion over nature. We exploit it.
Confucius completely parted with that. He said the meaning of the human journey is to extend empathy. And he said human beings are not separate from nature—we are part of nature. The key to the evolution of the human journey is finding a balance and harmony between humanity and nature.
This is China’s cultural DNA. It may not be practiced every day, but it is inside the DNA. And finally, no one wants in 30 to 40 years to be knee-deep in coal. If that is the case, they know they won’t be a great power.