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"India Can Lead This New Revolution"
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Why do we need the Third Industrial Revolution?
The second industrial revolution is on life support right now. Fossil fuel energies are getting more expensive. The more scarce ones such as kerosene, shale gas etc and the technologies that invent these are exhausted. The whole infrastructure around the global economy is made out of carbon, which is more expensive to bill and therefore it is getting more expensive to maintain infrastructure.
We've hit peak prooduction for fossil fuels in the second industrial revolution; at $150 a barrel for oil it's going to shut down the economy every time. This is an end game that's going to play itself out for the next 25 years.
For years the international energy agencies thought that it won't to make a peak around 2035. The International Energy Agency dropped the bombshell in their 2012 energy report. They said "looks like we peaked". We peaked in 2006. The business community was blown away by this. It will cost us $7trillion to get the remaining oil out in the next 15-20 years.
When India and china moved in the last decade to the 2nd industrial revolution, at 8-12% growth rate, you were the last players in the game. The aggregate demand was just too much pressure against the supply. Oil prices go up, inflation goes up and purchasing power shuts down. Every time we try to re-grow this global economy at the same rate of pre July 2008, it is going to happen. It is happening now. The next slowdown starting right now people are going to realize that this was the earthquake.
The second problem is climate change which is now in impacting agriculture dramatically. It's the most dangerous period in human history. If we go up 3 degrees in a century it takes us back 3 million years. The big deal here is the water cycle. Everything survives by the way water cycle is conditioned. For every 1 degree that temperature goes up the atmosphere absorbs 7% more precipitation from the ground and the whole water cycle becomes unstable. The eco-system can't catch up to that dramatic shift in the hydrological cycles. Scientists in the UN Panel say we are in the early stages of the 6th extinction of life in 450 million years. That's unbelievable.
Could you elaborate on its Five-pillars?
The EU in 2007 committed to the 5 pillar theory for the parliament which is working its way through the commission and the member states.
Pillar 1: A commitment of 20% renewable energy by 2020. That's a mandate.
Pillar 2: How do we collect the new energies? Today a 3rd of the Indian population has never had electricity.. The question is, if renewables are distributed and found everywhere why are we only collecting them at a few central points? We are using 20th century centralized thinking.
We have 191 million buildings in the EU. The goal is to convert every building to your own green power plant. Collect solar off the room, wind off the side walls, geo-thermal heat in the basement, convertible garbage and so on. It jumpstarts the economy it's going to require millions and millions of jobs and 1000's of SME's over 40 years till they've converted all buildings.
Pillar 3: We have to store these energies. The way it works for a business community is if you have surplus electricity from your rooftop solar panels, put it in hydrogen. When the electricity is not there on the roof, convert the hydrogen back into electricity.
Pillar 4: is where the internet connects with new distributive energy. We transform the power grid of Europe to act exactly like the internet. So millions of buildings are creating electricity on sight and storing it in hydrogen. If you don't need some of the electricity your software can direct it across an energy internet.
Pillar 5: Plug in transport, electricity vehicles came out this year. We'll be able to plug in anywhere there is a building and get green electricity out of it. Or if price is right, you plug it in to a computer which will monitor the price of electricity in the grid and kick in when the price is high.
Alone they are simply components, only when you phase them in the synergies they work. Its distributive capitalism and democratizes energy.
Sharing renewable energy laterally, in power, communications and transport networks that stretch across continents, is going to radically transform the political world. The scale of this is the first and 2nd revolutions are top down and central because the synergies are expensive, and you create national markets and national governments. The 3rd Industrial Rev plays laterally, you have millions of little players coming together and you have a lot more power than you can get with nuclear and coal fire.
How does it fit in emerging economies like India and China?
What India has going for it is deficit. That is, you have no infrastructure. You have 400mn people who have never had electricity. They've never taken part in the previous industrial revolutions. The key is how you get electricity to people. You cannot get out of poverty without having electricity. It also liberates women - half of the human race. They carry the energy - literally.
The rural areas can move nodally. Indians now, are spending more money on kerosene than they'll ever spend on renewable. That's the tragedy of it. From what I understand, they're spending a fifth of their income on kerosene. They can spend much less if they get the upfront cost in to bring solar and geothermal heat pumps. These are going to get cheaper. And they're automatically saving electricity all the time and they have power to be off-grid. Then they can connect as a micro-grid like wi-fi. When someone has a little surplus, you can share it through these micro-grids.
There's no way to grow this economy with everybody migrating to cities. So how do you reverse migration? The 3rd industrial revolution wants people to have electricity so they can have their own businesses.
We have more pressing immediate concerns. How do you fit in a model that might seem pretty futuristic to people here?
First of all, if you're from rural areas and you're on subsistence, you have two choices. You can either work at an farm as a paid employee. You'll never get out of subsistence. Or you can have your own little farm. You have to transport your produce in fuel driven vehicles, which is too expensive. So if you create your own green electricity on site, you can survive, prosper and then move on to the market.
India could lead this revolution tailored to the developing nations. Germany is leading the way for the developed countries. You're going to see Japan and Korea head on head with Germany by next year. India is in a position to lead this revolution because you have the most renewable energy in any single geo-political jurisdiction in the world. You're importing 80 per cent of your oil at an enormous price.
Your second asset is you're the largest democracy in the world. The revolution is based on democratizing information, energy, manufacturing, distribution and the social space. You think big authoritative centralized governments want to do that?
Finally, you have a hidden treasure - the Gandhian tradition. What's interesting about Gandhi is his economic philosophy. He was there when the 1st industrial revolution gave way to the second. He could see the pyramid with centralized energy production. If you're at the bottom of the pyramid which India was as a colony, the resources get taken and people are marginalized. He thought Adam Smith's theory was nuts. He thought of a flat or lateral economy. This is a neo-Gandhian vision. Do not underestimate this power you have. Will you do it? I don't know. Are you potential leaders to do it? Absolutely.
Do you think it's economically feasible? Our GDP is about only one-tenth of EU's.
You're one-tenth of their GDP but you're much faster growing. But you still think that you can grow faster within the frame of the 2nd industrial revolution. It can't be done. So you may grow 8-10 per cent but it will shut down every four years and then you're back to square one. The faster you move to the third industrial paradigm, you create jobs and businesses overnight.
Does it not require a certain consciousness that is perhaps already there in the West?
In terms of consciousness, I think you're correct. I don't think it's possible even with a good game plan (which exists) to get there without a change in consciousness. The 5 pillars are just common sense. And if there is some other plan, I'm absolutely lost as to what it might be to get us away from carbon and climate change and move the economy. But even with a good vision (3rd industrial revolution) of democratizing energy and with the five pillar infrastructure (that's technology and economics), if there isn't a radical change in consciousness to go with it, it won't happen.
(This story was published in Businessworld Issue Dated 20-02-2012)