Building a world of
resilient communities.

MAIN LIST

 

Jeremy Leggett: "Make no mistake, this is an energy civil war"

Jeremy Leggett's new book 'The Energy of Nations: risk blindness and the road to renaissance' is an inspirational, page-turning telling of the evolving tale of peak oil, climate change, and economic crisis, and how the three issues intertwine and interweave. I found it gripping, and what comes through strongly is firstly the huge potential of the shift to renewables, and secondly the stubborn stalling tactics and railroading of what Leggett calls "the energy incumbency".  I caught up with him via Skpe, and starting by asking him to introduce himself to any readers who may not have come across his work before. As usual with such pieces, you can either listen to/download the podcast, or read the transcript below.   

"I’m Jeremy Leggett, the founder and chairman of Solar Century, internationally as well as in Britain, and the founder of Solar Aid, the African solar lighting charity funded with 5% of Solar Century’s profits. We have a retail brand Sunny Money, which is the biggest seller of solar lanterns in Africa at the moment.

You’ve just published a book called The Energy of Nations. Could you just tell people in a nutshell what they might expect to find in there?
 
I worry that the energy industry is in the process of repeating systemically the mistakes of the financial sector, and on multiple fronts. I talk in the book about five big systemic risks that I think they’re running, and the risks that they’re taking get worse and worse as time goes by. I tell the story linearly from 2004 when the oil crisis started to go up. I tell it as a narrative of these five risks and intercut diary extracts from my life as I’ve seen this risk-taking grow and grow, to try and make the point about the five risks as a narrative really, as a story, a true story.
 
It’s really compelling, it reads like a thriller. One of the things that was difficult in the early days of peak oil was to make those arguments that peak oil and climate change needed to be looked at as overlapping issues. The climate change people didn’t want to talk about peak oil because it complicated things, and the peak oil people were often just focused on how to get new sources of oil.  Over time, those communities have come closer together, partly through your work and other people’s. But recently, that’s become a harder narrative to hold together, with people saying there’s more than enough fossil fuels to finish the climate off. What you’ve done is very skilfully here is to bring those two issues back together again. How do you see the overlap, the relationship between those two issues?
 
CoverNo matter who’s right in the peak oil debates, there has always been easily enough oil and gas, combined with coal, to wreck the climate and bring down civilisation. I don’t think there’s any dispute about that in a world where we’re at 420 parts per million of CO2 equivalent already. The thing that’s so striking, even for me writing the book, was how in just a few years the dominant narrative, the widely accepted narrative has gone from one of real constraint on oil supply, indeed transparent, palpable alarm from the International Energy Agency for example, right through to 2011 to where now we’re in some cornucopian paradise for the fossil fuel heads of America heading for Saudi-America status, energy independence, all the rest of it.
 
This has happened on the basis of evidence that is really flimsy but has been hyped to high heaven by, I think, a very desperate incumbency locked into an almost religious enculturated belief system which is behaving very dangerously. Very dangerously indeed.
 
One of the things that’s really compelling, as you say, is the extracts from your diary through that time, of different meetings and events. They really leave the reader scratching their head about the detachment from reality and the strange bubble that many of the people who work as executives in the energy industry and the finance industry operate in.  Where does that come from, do you think? Where does that stubbornness and cultural oddness come from?
 
It’s not so surprising when you look at what the neuroscientists are discovering about how our brains work, how we think individually and collectively. As I describe in the book, that’s something I didn’t know about until in the course of my work I went to a couple of seminars on this wave of discoveries in neuroscience.
 
The neuroscientists tell us that their research shows that we’re individually and collectively very prone to lock into belief systems easily and quickly and then when we do, we defend them, we don’t like to be presented with any kind of rational evidence that we’re wrong in that set of beliefs; we have an incumbency effect we prefer to believe in the potency of things and systems that we have as opposed to other alternatives that might be rationally much more appropriate.
 
It doesn’t surprise the anthropologists either. When they look at the history of civilisations and how civilisations have failed, they see time and time again this belief in myths and magic that emerges towards the end, as civilisations are about to go under. The parallels are very clear here. They see the power of the markets – all the things that a modern capitalist is supposed to believe in - the market forces and the validity of basing an economic system on the combustion of hydrocarbons that undermine your climate and therefore your ability to even continue with feeding yourself and providing yourself with clean water.
 
I try and convey that part of the story as well. It’s not all bleak because I think the neuroscientists also tell us that we have this great yearning as human beings for community and all the rest of it, and individualistic or selfish, perhaps what people on the right of the political spectrum constantly try and persuade us that we are. That all points towards the possibility of a road to renaissance and that’s why I titled the book The Energy of Nations: Risk Blindness and the Road to Renaissance. I talk about the importance of things like the Transition movement as the building blocks for this road to renaissance.
 
You say there will probably be "only one shot at capitalising a 21st century energy structure".  You also talk about how the UK government has been "busy plotting gas nirvana with the oil industry", and the UK appears to be set on becoming a "gas hub" through exploiting shale gas.  But also presumably, since the book was published, we've seen the public announcement of the UK also moving towards becoming a nuclear hub. Have the decisions, do you think, been made about what that energy infrastructure is going to look like, or is there still time and an opportunity to shape it?
 
Yes, there’s definitely time and opportunity. They may think that they’ve made the decisions, but look at the extent to which the backing of shale is based on transparent myths for anyone who’s prepared to dig below the surface. Just the notion that the United Kingdom, rural Britain, can be peppered with the density of fracked wells that they’ve had in Texas, Pennsylvania and North Dakota, it’s laughable when you look at the public opposition to the first single well. It wasn’t even a fracked well in Sussex. We are not going to tolerate it, the British people. That’s the first thing, that is bewildering.
 
The second thing is, of course, the mounting evidence that the whole North American shale gas boom story is actually yet another one of these bubbles that we’re terribly good at inflating, and people are losing so much money because of the low gas price, that they’re not going to be able to service the vast amount of debt that they’re borrowing from Wall Street and so that whole system will come off the rails, even in America.
 
There are real questions as to whether the Osborne-ite and Cameron gas tendency are going to get away with their ludicrous plans. As for nuclear, well, they’ve made a crazy decision to commit vast numbers of billions of our money far into the future for a French and Chinese nuclear power plant on the coast of Somerset. But the first thing they have to do is get state aid permission from the European Union to do that. That decision won’t be taken for quite a while, so I don’t see that they’re going to be able to get away with even that one white elephant nuclear power plant, much less the crazy nuclear renaissance that they’re plotting.
 
Meanwhile, the energy industry is a civil war zone. That includes in the Conservative party. Not everyone is lined up behind this craziness. There are some Conservatives who really believe in the green industrial revolution and the localisation of power to the people and all the sorts of things that the Transition movement thinks about. That element of the civil war will continue to play on. Even within the big energy companies, you’ve got people who just know in their hearts that the status quo business models are flawed and probably dying in the water for the big utilities, and are thinking of alternative, localised, people power types of alternative models. 
 
When you look at the growth, what’s growing? What’s growing is renewables, and in Europe over the last three years we’ve put in more renewables than we have fossil fuel and nuclear. More money is going into renewables than is going into fossil fuels and nuclear combined, despite all the wrecking tactics deployed by the energy incumbency. So there are reasons to be cheerful.
 
One of those that comes through in the book repeatedly is Germany's Energiewende and what they’re doing there. What can we learn from Germany, do you think in terms of practicality and in terms of ambition?
 
I think that it’s altogether very encouraging indeed. We can learn that it’s possible to renewably power a modern economy like Germany 100% with renewables, and do it much quicker than people anticipate. We can also see that the ownership structures can change radically, so that people power comes into the mainstream. As you know, more than half the renewable assets in Germany are owned by people, by people and communities.
 
That’s not just the small energy co-ops that are being set up by the multiple hundreds, but whole cities are talking about taking their own power into their own hands, even Berlin, with a membership movement to take control of the way that energy is created in cities. Germany is vital in the whole narrative going forward.
 
You can see the big energy utilities dying basically. The top twenty European energy utilities were worth a trillion Euros in 2008. Now they’re worth half a trillion. That’s simply because of the way wind and solar particularly, but also other renewables have driven down the wholesale price and literally taken power out of the monopoly hands of the utilities. It’s very exciting.
 
You talk in the book about, for example, how Shell have meetings with ministers and reflect on what it would be like if actually the renewable sector had even half the access to ministers, the ability to organise meetings with them, that the non-renewable sector has. Is there any way to break that, do you think? Is there any way of turning that around?
 
It’s a very potent force and a very malign way of operating, so it will be difficult.  I think one of the things I’ve learnt during the adventures I describe in the book is that most of these big companies are incapable of change, and they have to be defeated rather than changed. That’s something that I think is a little sobering.
 
Some of them will change at the margins and ultimately one or two may change wholesale. But you see the way they dig in, the way they defend to the death in the face of all the evidence to the contrary, i.e. BP pulling out of solar energy at a time when the price falls to the point of being competitive in multiple markets. They pull out completely and retreat into unconventional gas and all the rest of it. This is not a company that’s going to change.
 
It’s a company that will have to be ultimately driven out of business. Shell are pretty much in the same category, not quite so badly. The big energy utilities, EDF, you don’t get any sense that they’re capable of changing culturally. Others are maybe different; RWE are clearly going through some kind of soul searching at the moment and may make it through in the way that IBM managed to change, when main computers were replaced by micro computers.
 
But ultimately, the whole fabric of society is going to be changed on the road to renaissance by the continuing emergence of people power. People and communities taking control of their own energy, taking control of their own finance. That’s going to be very important as well, with the growth of crowd funding, peer to peer lending, green bonds, retail bonds, and all the rest of this kind of thing.  Even the assistant director general of the Bank of England, Andy Haldane has said this is showing signs of becoming such a trend, such a potential mega-trend, that it could disenfranchise the main banks, the high street banks in the way that I think some of these trends in renewable energy are going to disenfranchise the energy incumbency.
 
Is there any merit at all to that argument that shale gas can be a bridge fuel, that it displaces coal so therefore it has a role as a bridge fuel, or not?
 
If people were capable of being collectively rational...  Clearly we can’t bring in renewables overnight. When we think of how fast we need to bring them in in order to stay below 450 parts per million of CO2 equivalent and ideally getting a lot lower than that to have a chance at defeating climate change. But we can’t do that overnight, no matter how fast we mobilise. If you can contain the leaks, gas actually works very well with solar as a combined heat and energy, combined heat and power with relatively low emissions.
 
The problem, as I say in the book, is that so much of the gas industry has retreated from the mantra that gas is the bridge to the low carbon future and are now pushing this ludicrous myth that gas actually is the bridge to the gas powered future, that unconventional gas is the route to the unconventional gas powered future. And of course, they deploy their lobbyists and their wrecking tactics to try and stall renewables and indeed kill renewables.
 
Since I finished writing the book, 10 of Europe’s biggest utilities have rocked up in Brussels and told the European Commission, and in Strasbourg the European Parliament, that what they want is all subsidies for renewables stopped, essentially a cap put on renewables, and gas opened up as the main route to powering Europe and also somehow, they say, fighting climate change.
 
One of the things that you did before this book came out was the Carbon Tracker report about 'the carbon bubble', and arguing that 4/5 of the reserves that we know about need to stay in the ground, and that could lead to a big financial bubble. Could you just say a little bit about that, and about how that report has been received and any impact it may have had?
 
Carbon Tracker is the little financial think tank that I have the privilege of chairing and being able to help to the extent that I can. The folk behind it, Mark Campanale and others have really done something amazing. I think I’ve never seen an argument get more traction with the policy world, the financial world. I’ve never seen an argument upset and discomfit the energy incumbency as much as this one does.
 
It’s not even recognised at the first level, in the accounting of companies, on the balance sheets. What Carbon Tracker is saying is let’s start recognising the risk. Of course, as soon as the language is put like that, in the terms of the capital markets, it’s difficult for the regulators and the people who should recognise a risk like the accountants and the auditors and the actuaries and all these folk, right across the financial chain to say "no, we’re not going to recognise the risk".
 
Some of them are, in their different ways. Some of the financial institutions have already started pulling large sums of investment out of fossil fuels as a result of this whole risk dialogue. It’s terrifically exciting, and I actually think that this could be the argument that breaks the log jam on climate change. I’m that optimistic about it.
 
One of the things that I couldn’t find in the Carbon Tracker report was any analysis of issues around energy return on investment and whether it would even be economically feasible, even if people wanted to, to extract and burn all of that carbon. What are the economics that underpin that?
 
The assumption is every time any company brings resources to the market, unless you’re a public offering and ask for money to turn them into reserves, the assumption is that of course all of it can be burnt without constraint. You and I know that there are going to be profound energy return on investment implications. But that’s the next level of argumentation. It’s difficult enough to get traction with these folk just on the basic carbon arithmetic arguments without energy return on investment, dysfunctional as that situation is.
 
I think if we can continue to make as much headway as we are on simple carbon logic, carbon arithmetic, carbon fuel asset stranding risk arguments then maybe there’s a bridge there to allow the very small number of brilliant folks who are working on energy return on investment to get their voices heard too.
 
You say at one point in Energy of Nations, “I’m now convinced that capitalism as we know it is torpedoing our prosperity, killing our economies, threatening our children with an unliveable world. It needs to be re-engineered root and branch.” Does capitalism still have a place? What would re-engineered capitalism look like, and what does that mean for economic growth?
 
It depends on your definition of capitalism. Economic growth as it’s currently measured? I think its days are over. That used to be that the mantras of the people classified as the lunatic fringe, but not any more. You can read this kind of thinking in the commentary in the Financial Times. In a world with a global economy on route to six degrees, how can such a system be viewed as sane any more, much less survivable?
 
The more of us who start using this language, this new type of capitalism – others won’t call it capitalism at all of course – a new type of capitalism. Certainly my point in the book is that modern capitalism, the form of capitalism that’s evolved in the last few decades is basically suicidally dysfunctional and we have to turn our backs on it and introduce an alternative set of systems. That’s what I think we have the opportunity to do in building the road to renaissance.
 
It reads like you see that as lying in a combination of large and small things. You talk about a localisation mega-trend and peer-to-peer lending and community-led initiatives like Transition and others, need to sit alongside the bigger things as well in terms of investment etc. How do you see those two things sitting alongside each other?
 
I think that’s right. The electricity grid might be a very good example of how this will play out. Right now, very few people question the assumption that we need to keep feeding this monster of a national electricity grid system, which is massively capital intensive, very difficult to figure out a way in which that could be upgraded and made fit for purpose decades into the future using new kinds of financing and the rest of it.
 
Jeremy Leggett speaking at the launch of the Peak Oil Task Force report.
But I think inevitably what’s going to happen whether people like it or not, is that communities, towns, individual houses are going to get themselves off that grid and the march of technology is going to help them. People and communities are going to become increasingly self-sufficient.  When you do that, where’s the role for the national electricity grid, at a certain point? Where’s the role for a giant company like National Grid?
 
Aren’t we just going to be devolving down into community-based companies, co-ops and all the rest of it. I think it’s an exciting vision, because you get all sorts of spin-off benefits from a transition of that kind. I don’t have a blueprint template of how we get from A to B, the globalised national, international infrastructure world to the localised world. I think that’s a work in progress that we’re all going to have to be active players in the architecture of.
 
In the popular media at the moment, a lot of the stuff around energy seems to be becoming an increasingly selfish perspective of "I don’t care about green energy taxes because I want my bills to be cheaper". Like it is with food, it’s all about cheap – how do we make energy as cheap as possible. The narrative that comes through very strongly in the book is about how a renewable energy revolution could meet all of our needs much better. We could have cheaper energy, we could have a healthier world. You paint that picture very powerfully. But that doesn’t seem to be yet coming through in the national debates, which seem to be more focused on how do we get rid of all these annoying windmills and pesky green taxes that push my bills up. Is that voice not coming through just because of powerful lobbying at certain levels? Why do you think this message isn’t being heard and how can we make it more heard?
 
Because the incumbency has a nice little scam going hasn't it? They can pretend to be cheap by using an accounting system that takes their subsidies off the balance sheets, so they get tax breaks and they get their subsidies in different ways than the Feed in Tariffs. But all forms of energy have subsidy, as those of us who pay attention to the game know. The incumbency sits there righteously talking about "the cost of green taxes" and all the rest of it and it's a desperately unfair tactic.
 
The other issue that they don’t talk about is the third dimension: time going forward. Our costs and prices are coming down all the time, for the most part, whereas theirs are going up and up. Even where they aren’t, in the case of the US shale gas, they’re dysfunctionally low. So low that the marginal cost of drilling these fracked shale wells is so high that the companies are being driven slowly towards bankruptcy. As Art Berman calls it, the US gas industry is "an industry engaged in a suicide pact" as things stand.
 
Slowly, these things will become clear to people. People are so busy, they don’t have time to look below the mantras, and very often it’s easy to accept these mantras. But there’s so much fibbing going on and myth-spinning going on as a result of the poisoned belief system of the energy incumbency.
 
The story that really comes through in the book, as much as anything, is your own personal story. It’s your own story of going in and out of endless, vastly frustrating meetings and meeting people whose heads are deeply in the sand. Half the stories are you just banging your head against a brick wall, it feels like. How, through all of that, have you sustained yourself? Where does the motivation to get up the morning after those dreadful meetings come from?
 
There are so many grains of hope scattered around everywhere. One of the beauties of working on the front lines of the solar industry is that you see that seeing is believing effect time and time again.  Every person who gets a solar roof and sees that this technology works really well, that’s a joy to behold. It’s true of a middle-class Brit getting a solar roof for the first time in our country, and it’s true of African families getting a solar lantern instead of a kerosene lantern for the first time, and realising that they’ve instantly freed up 40% of their family income to spend on other stuff simply on savings against the price of kerosene.
 
All that kind of hope-laden stuff is very important to me, and of course on the policy front, we have our victories as well. We don’t just get frustrated and have setbacks. The Carbon Tracker is a joy to watch the way that is causing discomfort and anguish to the incumbency. It’s sometimes difficult not to be vindictive in enjoying that discomfort, when big energy companies are confronted with the source of their capital simply being withdrawn from them. I like seeing the looks on their faces.
 
One of your previous books was called The Carbon War. Does this feel like a war to you as well?
The Carbon WarAbsolutely. It’s a civil war. Like all civil wars, it’s complex and there are people with opposing belief systems operating under the same roof all the time. That’s been the case with every civil war in history probably. But here you see it very clearly. There are people in the same energy companies who have radically different views of the future. There are people in the same political parties, including the Conservatives, who have radically different views of the future.
 
It’s not a black and white thing, but a civil war it is, and make no mistake, the threatened incumbency, as they see and smell the ultimate demise of their belief system, ever more clearly, are fighting as in many wars, the most bitter and horrid fighting is done towards the end of the war. You saw that with the Second World War in particular. The same thing is happening in the energy civil war right now.
 
 
 

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.


Why Peak Oil Refuses to Die

Peak oil and climate change are two sides of the same coin. The coin itself …

Peak Oil Review - Sept 1

A weekly review including: Oil and the Global Economy, The Middle East & …

A Big Summer Story You Missed: Soaring Oil Debt

Last July the government agency, which has collected mundane statistics on …

Global Biofuels Status Update

Today I want to take a deep look at the global biofuels picture, drawing …

Peak oil notes - August 28

A mid-week update. Oil prices have been quiet this week trading around the …

Update on US natural gas, coal, nuclear, renewables

On August 6, I wrote a post called Making Sense of the US Oil Story, in …

The Peak Oil Crisis: When?

 The key question is just how many more months or years will production …