Public Policy playing catch up to the forces of the market ?
Amory Lovins from the Rocky Mountain Institute (RMI) is undoubtedly one of the world’s foremost visionaries in energy efficiency, focusing on this critical theme long before anyone else. As far back as 1976 he published an article in Foreign Affairs suggesting that the end of the use of fossil fuels was inevitable. In fact, relatively recently Lovins returned to the topic and presented a roadmap whereby the US would cease to import oil by end of 2040 and would cease to use it altogether by 2050!
Like all great visionaries, he was not recognized as such for a long time and was even regarded as an “alternative energy eccentric” in many influential circles. Today in contrast he and RMI are regarded as global thought leaders and advise CEOs from corporations of the likes of GM and Walmart and the Heads of State of many countries. At a relatively recent RMI celebration, Bill Clinton delivered an interesting speech and Thomas Friedman also spoke. They each had very interesting remarks on the power of his thinking and the importance of RMI for the world at large.
Particularly interesting for all of us that follow Friedman’s synthesis of how the world operates and where is it going is that he is about to launch his new book with a strong focus on the “Green Revolution”. At the end of the meeting Lovins and Friedman had a chat about the “next 25 years” and discussed the right balance between hope and fear to dream up and execute in a very large scale the solutions to energy efficiency and climate change that are required globally.
Lovins closing thought was that “public policies will play catch up to the forces of the markets” in innovation and in designing and executing the solutions – with laggard public policies needing to adapt to the change in motion. This is where I think a good debate can begin to develop as multiple energy market failures act as significant barriers, creating the need for proactive and systemic policy and economic frameworks that would overcome these failures and enable the innovation and the mass adoption of energy efficiency solutions. Today, even though about 50% of the global GHG abatement opportunity has to do with energy efficiency solutions that have a negative marginal cost (see the recent Vattenfall study) and involve existing technologies they still have not been widely adopted. I will explore this so-called “energy-efficiency paradox” in the near future.