Why We Need A Green Revolution — And How It Can Renew America
♦ The world’s problem is that it’s getting hot, flat and crowded, that convergence–a perfect storm–is driving a lot of negative trends.
♦ America’s problem is that we’ve lost our way–we’ve lost our groove as a country.
♦ And the basic argument of the book is that we can solve our problem by taking the lead in solving the world’s problem.
Zakaria: Explain what you mean by “hot, flat and crowded.”
Friedman: There is a convergence of basically three large forces: one is global warming, which has been going on at a very slow pace since the industrial revolution; the second–what I call the flattening of the world–is a metaphor for the rise of middle-class citizens, from China to India to Brazil to Russia to Eastern Europe, who are beginning to consume like Americans. That’s a blessing in so many ways–it’s a blessing for global stability and for global growth. But it has enormous resource complications, if all these people–whom you’ve written about in your book, The Post American World–begin to consume like Americans. And lastly, global population growth simply refers to the steady growth of population in general, but at the same time the growth of more and more people able to live this middle-class lifestyle. Between now and 2020, the world’s going to add another billion people. And their resource demands–at every level–are going to be enormous. I tell the story in the book how, if we give each one of the next billion people on the planet just one sixty-watt incandescent light bulb, what it will mean: the answer is that it will require about 20 new 500-megawatt coal-burning power plants. That’s so they can each turn on just one light bulb!
Zakaria: In my book about a “post-American world” I talk about the “rise of the rest” and about the reality of how this rise of new powerful economic nations is completely changing the way the world works. Most everyone’s efforts have been devoted to Kyoto-like solutions, with the idea of getting western countries to reduce their carbon dioxide emissions. But I grew to realize that the West was a sideshow. India and China will build hundreds of coal-fire power plants in the next ten years and the combined carbon dioxide emissions of those new plants alone are five times larger than the savings mandated by the Kyoto accords. What do you do with the Indias and Chinas of the world?
Friedman: I think there are two approaches. There has to be more understanding of the basic unfairness they feel. They feel like we sat down, had the hors d’oeuvres, ate the entrée, pretty much finished off the dessert, invited them for tea and coffee and then said, “Let’s split the bill.” So I understand the big sense of unfairness–they feel that now that they have a chance to grow and reach with large numbers a whole new standard of living, we’re basically telling them, “Your growth, and all the emissions it would add, is threatening the world’s climate.” At the same time, what I say to them–what I said to young Chinese most recently when I was just in China is this:
Every time I come to China, young Chinese say to me, “Mr. Friedman, your country grew dirty for 150 years. Now it’s our turn.” And I say to them, “Yes, you’re absolutely right, it’s your turn. Grow as dirty as you want. Take your time. Because I think we probably just need about five years to invent all the new clean power technologies you’re going to need as you choke to death, and we’re going to come and sell them to you. And we’re going to clean your clock in the next great global industry. So please, take your time. If you want to give us a five-year lead in the next great global industry, I will take five. If you want to give us ten, that would be even better. In other words, I know this is unfair, but I am here to tell you that in a world that’s hot, flat and crowded, ET–energy technology–is going to be as big an industry as IT–information technology. Maybe even bigger. And who claims that industry–whose country and whose companies dominate that industry–I think is going to enjoy more national security, more economic security, more economic growth, a healthier population, and greater global respect, for that matter, as well. So you can sit back and say, it’s not fair that we have to compete in this new industry, that we should get to grow dirty for a while, or you can do what you did in telecommunications, and that is try to leap-frog us. And that’s really what I’m saying to them: this is a great economic opportunity. The game is still open. I want my country to win it–I’m not sure it will.”
Zakaria: I’m struck by the point you make about energy technology. In my book I’m pretty optimistic about the United States. But the one area where I’m worried is actually ET. We do fantastically in biotech, we’re doing fantastically in nanotechnology. But none of these new technologies have the kind of system-wide effect that information technology did. Energy does. ♦ If you want to find the next technological revolution you need to find an industry that transforms everything you do. Biotechnology affects one critical aspect of your day-to-day life, health, but not all of it. But… ♦ energy–the consumption of energy–affects every human activity in the modern world. Now, my fear is that, of all the industries in the future, that’s the one where we’re not ahead of the pack. Are we going to run second in this race?
Friedman: Well, I want to ask you that, Fareed. Why do you think we haven’t led this industry, which itself has huge technological implications? We have all the secret sauce, all the technological prowess, to lead this industry. Why do you think this is the one area–and it’s enormous, it’s actually going to dwarf all the others–where we haven’t been at the real cutting edge?
Zakaria: I think it’s not about our economic system but our political system. The rhetoric we hear is that the market should produce new energy technologies. But the problem is, the use of current forms of energy has an existing infrastructure with very powerful interests that has ensured that the government tilt the playing field in their favor, with subsidies, tax breaks, infrastructure spending, etc. This is one area where the Europeans have actually been very far-sighted and have pushed their economies toward the future.
Friedman: I would say that’s exactly right. It’s the Europeans–and the Japanese as well–who’ve done it, and they’ve done it because of the government mechanisms you’ve highlighted. They have understood that, if you just say the market alone will deliver the green revolution we need, basically three things happen and none of them are good: First, the market will drive up the price to whatever level demand dictates. We saw oil hit $145 a barrel, and when that happens the oil-producing countries capture most of the profit, 90% of it. So, some of the worst regimes in the world enjoy the biggest benefits from the market run-up. The second thing that happens is that the legacy oil, gas and coal companies get the other ten percent of the profit–so companies which have no interest in changing the system get stronger. And the third thing that happens is something that doesn’t happen: because you’re letting the market alone shape the prices, the market price can go up and down very quickly. So, those who want to invest in the alternatives really have to worry that if they make big investments, the market price for oil may fall back on them before their industry has had a chance to move down the learning curve and make renewable energies competitive with oil. Sure, the market can drive oil to $145 a barrel and at that level wind or solar may be very competitive. But what if two months later oil is at $110 a barrel? Because of that uncertainty, because we have not put a floor price under oil, you have the worst of all worlds, which is a high price of dirty fuels–what I call in the book fuels from hell–and low investment in new clean fuels, the fuels from heaven. Yes, some people are investing in the alternatives, but not as many or as much as you think, because they are worried that without a floor price for crude oil, their investments in the alternatives could get wiped out, which is exactly what happened in the 1980s after the first oil shock. That’s why you need the government to come in a reshape the market to make the cost of dirty fuels more expensive and subsidize the price of clean fuels until they can become competitive.
Right now we are doing just the opposite. Bush and Cheney [used to] say the oil market is “free,” but that is a joke. It’s dominated by the world’s biggest cartel, OPEC, and America’s biggest energy companies, and they’ve shaped this market to serve their interests. Unless government comes in and reshapes it, we’re never going to launch this industry. Which is one of the reasons I argue in the book, “Change your leaders, not your light bulbs.” Becauseleaders write rules, rules shape markets, markets give you scale. Without scale, without being able to generate renewable energy at scale, you have nothing. All you have is a hobby. Everything we’ve doing up to now is pretty much a hobby. I like hobbies–I used to build model airplanes as a kid. But I don’t try to change the world as a hobby. And that’s basically what we’re trying to do.
Zakaria: But aren’t we in the midst of a green revolution? Every magazine I pick up tells me ten different ways to get more green. Hybrids are doing very well…
Friedman: What I always say to people when they say to me, “We’re having a green revolution” is…
“Really? A green revolution! Have you ever been to a revolution where no one got hurt? That’s the green revolution.” In the green revolution, everyone’s a winner: BP’s green, Exxon’s green, GM’s green. When everyone’s a winner, that’s not a revolution–actually, that’s a party. We’re having a green party. And it’s very fun–you and I get invited to all the parties. But it has no connection whatsoever with a real revolution. You’ll know it’s a revolution when somebody gets hurt. And I don’t mean physically hurt. But the IT revolution was a real revolution. In the IT revolution, companies either had to change or die. So you’ll know the green revolution is happening when you see some bodies–corporate bodies–along the side of the road: companies that didn’t change and therefore died. Right now we don’t have that kind of market, that kind of change-or-die situation. Right now companies feel like they can just change their brand, not actually how they do business, and that will be enough to survive. That’s why we’re really having more of a green party than a green revolution.
Zakaria: One of your chapters is called “Outgreening Al-Qaeda.” Explain what you mean.
Friedman: The chapter is built around the green hawks in the Pentagon. They began with a marine general in Iraq, who basically cabled back one day and said, I need renewable power here. Things like solar energy. And the reaction of the Pentagon was, “Hey, general, you getting a little green out there? You’re not going sissy on us are you? Too much sun?” And he basically said, “No, don’t you guys get it? I have to provision outposts along the Syrian border. They are off the grid. They run on generators with diesel fuel. I have to truck diesel fuel from Kuwait to the Syrian border at $20 a gallon delivered cost. And that’s if my trucks don’t get blown up by insurgents along the way. If I had solar power, I wouldn’t have to truck all this fuel. I could—this is my term, not his—‘outgreen’ Al-Qaeda.”
I argue in the chapter that “outgreening”–the ability to deploy, expand, innovate and grow renewable energy and clean power–is going to become one of the most important, if not the most important, sources of competitive advantage for a company, for a country, for a military. You’re going to know the cost of your fuel, it’s going to be so much more distributed, you will be so much more flexible, and–this is quite important, Fareed–you will also become so much more respected. I hear from law firms today: one law firm has a green transport initiative going for its staff–they only use hybrid cars–another one doesn’t. If some law student out of Harvard or Yale is weighing which law firm to join–many will say today: “I think I’ll go with the green one.” So there are a lot of ways in which you can outgreen your competition. I think “outgreening” is going to become an important verb in the dictionary – between “outfox” and “outmaneuver.”
Zakaria: Finally, let me ask you–in that context–what would this do to America’s image, if we were to take on this challenge? Do you really think it could change the way America is perceived in the world?
Friedman: I have no doubt about it, which is why I say in the book: I’m not against Kyoto; if you can get 190 countries all to agree on verifiable limits on their carbon, God bless you. But at the end of the day, I really still believe–and I know you do too–in America as a model. Your book stresses this–that even in a post-American world we still are looked at by others around the world as a role model. I firmly believe that if we go green–if we prove that we can become healthy, secure, respected, entrepreneurial, richer and more innovative by greening our economy, many more people will follow us voluntarily than would do so by compulsion of a treaty. Does that mean Russia and Iran will? No. Geopolitics won’t disappear. But I think it will, speaking broadly, definitely reposition us in the world with more people in more places. I look at making America the greenest country in the world like running the Olympic triathlon: if you make it to the Olympics and you run the race, maybe you win–but even if you don’t win, you’re fitter, healthier, more secure, more respected, more competitive and entrepreneurial, because you have given birth to a whole new clean power industry–which has to be the next great global industry–and put your economy on a much more sustainable footing. So to me, this is a win-win-win-win race, and that’s why I believe we, America, need to take the lead in it. In the Cold War we had the space race with Russia to see who could be the first to put a man on the moon. Today we need an earth race with Japan, Europe, China and India–to see who can be the first to invent the clean power technologies that will allow man to live safely and sustainably on earth.