What role should UNIDO play in the third industrial revolution?

Given the situation the world is facing right now, if there were no UNIDO, we’d have to invent it immediately. Whatever relevance it had in the past, pales in comparison with the relevance it has now. The reason is that the second revolution is on its deathbed. All the fossil fuel energies are becoming expensive and now the entropy bill from those fossil fuel energies – spent CO2 – is threatening us with climate change, which is having a dramatic effect on agriculture yields and infrastructure, with extreme weather conditions.

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And the technologies that embed fossil fuel energies, like the combustion engine, are exhausted – they’ve lost any potential multiplier effect.

The whole infrastructure of this civilization is based on carbon. Construction, pharmaceuticals, power, transport, heating light, agriculture fertilizers and so on, are made from fossil fuels. We hit the outer edge of the second industrial revolution capabilities when crude oil hit US$147 in July 2008. When that happened, the entire economy collapsed because all the other prices went up across the supply chain, as all the other goods are either made out of, or moved by, fossil fuels. When oil went up, everything went up, and purchasing power declined, and the whole engine shut down in July 2008. Every time when we try to regrow the economy the same way as we did before July 2008, the same thing is happening. That’s what is happening right now. We’re going to see the same four-year cycles of attempting to grow and then collapse, because we have hit peak oil per capita now.

So, we need a new economic vision for the world that is compelling and deliverable quickly – we need a third industrial revolution. We are on the cusp of that third industrial revolution now and UNIDO is in an ideal position, because it represents the United Nations, to move this vision and game plan deeply into every country in the world, working with host countries. We have no time to spare because unemployment is reaching record levels, our youth is unemployed, business opportunities are waning and we’re starting to see panic set in. UNIDO has to play a key role.

You have talked about the need to see the world as a biosphere and to think in terms of “continentalization” rather than in terms of sovereign states. Does this mean a bigger role for the United Nations as a whole?

It only means the UN has to build on its 20th century foundation to be able to accommodate a 21st century world. The first and second industrial revolutions scaled vertically – because fossil fuels are elite, they are only found in a few places, they require huge geopolitical investments to secure them, and huge capital to organize and manage them because they are so expensive. Companies had to scale with centralized factories and production and, because it was a top-down scaling, it gave rise to national markets and national government. The third industrial revolution scales laterally – it brings together Internet communication with distributive renewable energies – and Internet communication becomes the management tool to organize distributive renewable energies and create a third industrial revolution paradigm.

The third industrial revolution doesn’t recognize boundaries – when you create an energy/communication node, it wants to connect with other nodes, and this gives rise to a nervous system for continental markets and continental political unions. The third industrial revolution is based on energies found in every square inch of the biosphere, the sun, the wind, the heat under the ground, garbage, and ocean tides – you find these across continents. When one region has a surplus of sun, wind, geothermal or hydro, it can share with another region that doesn’t. So, when you start to collaborate across continents with third industrial revolution infrastructure, everyone has to share their energy. This sets up an infrastructure for integrated continental markets. When we go to the third industrial revolution, globalization is based on a different model. Continents are working with each other in a very flat, lateral world. The next stage of globalization is continentalization.

Right now, we have the European Union, and ASEAN is moving very aggressively to model similarly. The African Union finally is getting off the ground in these discussions about continental markets and unions, and Latin America is looking at continental markets from Mexico to Chile. Nations are now coming together within continents creating continental markets. To do this, you need a seamless energy grid, a seamless green electricity grid, and a seamless transport grid. Then you can have an entire continent of people engaging in commerce and trade in a sustainable post-carbon environment. Governing units have to be networked to reflect the lateral nature of this collaborative system; you can’t manage entire continents with a centralized system.

UNIDO is already set up by regions, so it’s not a big stretch to think how it could help countries in each continent begin to create this integration. The planning has to be: how do we provide third industrial revolution infrastructure development that allows us to integrate each country’s node? This is more sophisticated organizing, because you can’t isolate projects and say, ‘a new hydro here’ and ‘an industrial technology park there’. The third industrial revolution needs connectivity of continents – sharing transport and communications. So, UNIDO needs to think in terms of each nation but also to think that each nation and region is a node that has to connect across borders, so that you have continental markets and continental political unions.

How do you see the role of governments and the private sector in moving to the third industrial revolution?

The great economic paradigm shifts in modern history required complete public-private partnerships to lay down infrastructure. The third industrial revolution needs public-private partnership at every level, from the UN level, the continental political level, the nation states, regions and provinces at each level. And all three sectors – government, business and civil society – have to join. Government provides public capital, civil society provides social capital, and business provides market capital. They have to be engaged to lay out nodes. The market is the engine that lays it down but you need government and civil society to create the map. So, it can’t be done by any one sector alone.

Moving quickly to the third industrial revolution may be difficult, even in developed countries, with governments implementing austerity measures in response to the crisis and reining in spending. Policies to create jobs are seen as more of a priority than policies to set up a new a development paradigm…

There is no Plan B – either you stay in the second industrial revolution and we all go down, or we go to a third industrial revolution and we have new opportunities for the world.

The great leap forward in terms of jobs and business is always when you lay down the communication/energy infrastructure for a new economic paradigm, because it requires millions of jobs. This five-pillar infrastructure requires massive employment for 40 years:  in Pillar 1 you have to shift to renewable technology, that’s millions of jobs. When Germany put in feed-in tariffs overnight, they created 250,000 in renewable energy jobs – if every country did it, it would mean tens of millions of jobs. In Pillar 2 you have to convert every building into a green micro power plant – that’s hundreds of millions of jobs in the next 40 years….  the minute any region puts the five pillars together, it’s jobs from day one.

But how can this work in a climate of austerity?

Yes, austerity, but austerity has to be based on four principles. 1) Do not compromise the social market model, 2) Make sure nobody in any country is left behind,  3) Ensure quality of life is not compromised, 4) Respect the principles of living sustainably.  If we only have cuts and austerity, we are doomed. Governments have to balance austerity with a growth plan, it has to be sustainable and it has to be deliverable in the developing and the developed world, and it needs to create jobs from day one.

Are you confident it can be done and who will take the lead?

If we didn’t have the game plan, I’d be worried, but we have one now. The key is moving it. I’m guardedly hopeful because Germany is doing it – Germany is leading.

On Pillar 1, Germany already has 20% green electricity and they are going to 35% in nine years. On Pillar 2, they have converted thousands of buildings now and are just starting to do hydrogen storage. And they are testing the energy Internet in six regions now. And on Pillar 5, Daimler is moving to electric and fuel cell transport – they are moving into mass production on this. Germany is on all five pillars. Daimler, Bosch and Siemens, SMEs too, and all political parties. Everyone will follow Germany’s lead.

Watch Japan and South Korea on the Asian front – this will be Japan’s big comeback. After Fukishima, everybody wanted something new for Japan – they wanted the prime minister to resign, but he said he was not leaving until they passed one piece of legislation – a feed-in tariff . It was passed and he resigned, so now all those utility companies that have a monopoly will be overwhelmed, because the IT industry, the software industry, and the construction industry and the Internet generation, all want to move the third revolution model of distributive energy and then export that technology to the world. And South Korea too. This time next year Japan and South Korea will be on the world stage with Germany, and then watch India.

What do you say to people who argue that renewables alone will never be enough to meet energy demand?

It’s the same problem as the music companies. Millions of kids were creating software and figuring out how to share music, and the music companies saw it as a joke. They tried to legislate against it and then collapsed within five years. Newspapers did not understand blogging, now the newspapers are going out of business or creating blogs. As powerful as the democratization of information is, when you begin to use it to democratize energy, it’s more significant.

The reason we can run the world on renewables is because of Grid IT20. Thirty years ago people asked how can we run everything on this kind of soft energy. The answer was given in the 1990s, when a couple of guys in California were trying to monitor the universe. They hit on the idea of creating software to connect little desktop computers that alone had not much power, but when you connect millions of them, the distributive computer power dwarfs anything any centralized computer could do. Now that grid IT software has been taken to all of industry, everyone is using it. When you take grid IT to power lines, you have millions of buildings coming up with just a little bit of their own green energy. We are going to go to hundreds of millions of buildings producing their own green electricity and any surplus can be shared across a grid IT energy Internet across continents. The amount of lateral power you could create with millions of small players sharing dwarfs anything produced by say, coal-fired plants, and this energy is sustainable, it’s post-carbon.

Many less developed countries feel they shouldn’t have to pay, how do we get them on board?

ImageWhat is crucial is to have a paradigm for a democratic economic vision that is practical, sustainable and will create quality of life. Where does a country want to be in 20 years? To be in sunset energies of a failing industrial revolution or in sunrise technologies of the third industrial revolution, where you have a multiplier effect for years to come?  It’s clear where you need to go. It’s clear the younger generation will embrace a third industrial revolution, but you have an old guard, they can’t imagine a future that is different from the past.

How do we pay for it?

There are lots of ways to pay for it. In developing countries they have got to create a transition in agriculture first. They have to get out of pesticides and fertilizer to move to more ecological agriculture. But – for those using fertilizers – it’s a problem, as it takes seven years to detox soil. They also have to move toward land reform, because a lot of land is owned by agribusiness, and they have to move from feed to food. What keeps food prices up is feed – 40% of all the food, we grow is feed for animals – this is the real inequity of the 21st century. It has created the most unsustainable way to feed the population ever seen – you need 10lbs of grain to produce 1lb of beef, and the small amount of people in the world who can consume large amounts of grain-fed meats have it all. Beef production and consumption is the second major cause of climate change after buildings, and transport is third.

You have to make a shift to new channels of distribution to move your food not only locally, but to continental markets, and that means using new Internet technology for logistics and transport to reduce middleman and transaction costs. There are a lot of ways to do it – you can tie in urban areas to rural areas, so they buy in advance of the harvest, so they are shareholders in it. But you have to fundamentally rethink the agriculture paradigm; it’s essential to have all energy created there on the land (locally), so they are self-sufficient and have the lowest cost.

Another example that will be fertile for developing countries is 3D printing. It prints out entire products. So any little company anywhere in the world can come with software for a product and print it right out. If green energy is on site, then they can connect up in virtual networks. It’s the end of centralized top-down production. It is cheaper and much more energy efficient, using 10% of materials and 10% of energy compared with traditional methods. For developing countries to move to 3D printing with vast networks across continents, it’s a win.

In moving towards the third industrial revolution does our education need to change?

Our model now is based on centralized authority and the teacher’s job is to disseminate knowledge – the idea is knowledge is power and the mission is to create an autonomous being who is productive. If you share knowledge you are cheating.

What is happening now is it’s starting to shift. The third industrial revolution has to create a different model because it is a distributive and collaborative communication/energy regime, and it requires that the mind be reorientated to think distributively and collaboratively, to think openly and transparently.

It requires that everyone take personal responsibility for their mind and a more developed sense of self-hood. This model requires a whole different range of educational tools. Learning is a social experience between people, a community process.  The first thing is to break down the boundaries of autonomy – like breaking down a wall in a classroom, for example, by Skyping a class in Vienna with class in Korea, so they learn together. Young people on the Internet are already doing it – we need a system that is compatible with the democratization of information.

We need to move towards critical thinking and that requires interdisciplinary teaching – you cross disciplines so you can understand many perspectives and so you think in terms of complex systems that relate and, in a world that is complex, you need a learning programme that is systemic. As part of this system, ecological thinking has to be processed thorough all the processes of education. You have to get kids into the community so they understand the relationships that make up life. Part of our experience in learning is in the environment where all other species dwell. The idea is to reconnect people with the rhymes of the biosphere. It’s no longer the hermetically sealed classroom where you create an autonomous little agent

The international community is coming together in June 2012 for Rio+20. What are you hopes and fears for the meeting?

The way you address the issues of climate change, environmental degradation, and energy security is to have an economic vision for the future that is compelling, sustainable and will create hundreds of millions of jobs. It’s all right to set targets and goals but they have to be seen as benchmarks for economic advancements and not punishments. Unless benchmarks and targets are accompanied by a compelling, deep, and practical economic vision and game plan, the benchmarks are meaningless, and they will be looked at as punishment for diversions. Now the world community is saying we just want to talk about jobs. The third industrial revolution is an economic vision for the 21st century that will provide the jobs and businesses, and it will more quickly address climate change and energy security than any other single thing we can do.

Jeremy Rifkin is president of the Foundation on Economic Trends, and the author of more than twenty bestselling books on the impact of scientific and technological changes on the economy, the workforce, society, and the environment. His most recent books include The Third Industrial Revolution: How Lateral Power Is Transforming Energy, the Economy, and the World; The Empathic Civilization: The Race to Global Consciousness In a World In Crisis; and The Hydrogen Economy: The Creation of the Worldwide Energy Web and the Redistribution of Power on Earth.

This article originally appeared in "Making It Magazine", the official magazine of the United Nations Industrial Development Organisation.