Brian Fallow

The Economics Editor of the NZ Herald

Man with eye on future sees carbon as part of the past

Sir Jonathon Porritt says the innovation pipeline in clean technology is truly astonishing.
Sir Jonathon Porritt says the innovation pipeline in clean technology is truly astonishing.

For a man profoundly worried by the unsustainable track the world is on, Sir Jonathon Porritt is remarkably cheerful.

A founder director of the UK-based non-profit organisation Forum for the Future and the former head of Friends of the Earth, he is the son of Lord Porritt, the first New Zealand-born Governor-General.

His book The World We Made takes the Utopian approach of looking back from the vantage point of 2050 on how challenges were overcome instead of the more common approach of we are hopeless and doomed.

The innovation pipeline in clean technology is truly astonishing, as entrepreneurs bring forward ideas in such areas as energy efficiency, renewables, waste management and water, he told the Weekend Herald.

The latest report of the Intergovernmental Panel on Climate Change, and in particular its estimate of the limited total amount of fossil carbon mankind can burn and still have a decent chance of avoiding dangerous climate change, reinforces concern about a "carbon bubble" as energy companies around the world already have several times that amount in their proven reserves yet are assiduously looking for more.

"I am really worried about the carbon bubble bursting because I see no completely soft landing from that. We will see trillions of dollars of value lost but trillions of dollars of new value created. That is what [economist Joseph] Schumpeter was saying," he said.

"Schumpeter said that what made capitalism so resilient and adaptable was that it had no sentimentality about companies that had had their day. He said that as long as governments allow capitalism to wreak this creative destruction in the market society will benefit."

Porritt points to trends such as the ever-reducing cost of photovoltaics, whose cost is dropping 5 to 7 per cent a year while conversion efficiency improves as well.

He is confident it is only a matter of time, and years rather than decades, before the moment of "grid parity" is reached and PV solar power is competitive with conventional generation.

The lesson for business from the latest IPCC report is incredibly simple, he says.

"Reduce your dependency on fossil fuels as fast as you can because fossil fuels will eventually be punished by pricing. The principal mechanism for changing behaviour in a market-based economy is price."

Politicians will do what they have to do - eventually.

"The signals from the planet just get worse and worse every year. People will not tolerate a slow drift into apocalypse. They just won't."

Porritt sees pension funds, with their longer time horizons, and the reinsurance industry, with its exposure to climatic disasters, as powerful agents for change in persuading businesses and governments to make the inevitable transition to a decarbonised world.

"Those entrusted with pension funds need to think very carefully about what their liability is here in terms of the way they base their investment strategies. Pension fund trustees will increasingly be asked to account to their members about the risk analysis they have done. It won't change things immediately. But it will rebalance portfolios over time," he said.

"And I think the reinsurance industry will become one of the most effective [at] lobbying for decarbonisation strategies. Governments are used to NGOs and they tend to react along the lines, 'They would say that, wouldn't they.' They are not used to being lobbied extremely vociferously by a very powerful part of the financial services sector."

One of the biggest challenges in a decarbonisation agenda is shipping.

"The world is a better place because of world trade. I see no indication that anyone wants to reduce the volume of world trade and every indication they want it to grow."

As for how to reconcile that with the need to drastically reduce global emissions, Porritt points to a range of innovative solutions.

"Redesigning hulls and streamlining vessels as they move through the water, not just through paints and coatings but through blowing streams of bubbles all along the hull, which reduces drag very significantly and quite cheaply."

Then you would look to improve the energy efficiency of marine engines and at alternative fuels such as liquefied natural gas.

More generally, Porritt sees a role for natural gas as a transitional fuel.

"The priority is to bring the coal industry to a termination as soon as possible. But you can't get out of coal and immediately go into renewables. It's just not technically possible," he said.

An important question is "how do you invest in bridging hydrocarbons to create enough stability and enough prosperity in the world to allow us to get to the point where we are pretty much fossil fuel free. Gas is clearly going to be the fossil fuel of choice in this respect."

- NZ Herald

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