One ‘Earthquake,’ Three Revolutions

30 St. Mary Axe — affectionately known as “The Gherkin” to locals — is, at 180 meters (590 feet), London’s sixth-tallest building. The structure is also the recipient of a number of design awards since opening in 2004 for its glass-domed design and eco-friendliness. It’s also one of the European Union’s 191 million buildings that author Jeremy Rifkin, who teaches in Wharton’s executive education program, predicts will be part of the next Industrial Revolution, one that must juggle the triple repercussions of the global financial crisis, an energy crisis and climate change.

It was appropriate, then, that Rifkin was at The Gherkin on Tuesday evening to celebrate the 10th anniversary of the alliance between Wharton and INSEAD, and to discuss what he has described in his growing collection of books, essays and interviews as a “post-carbon Third Industrial Revolution.” According to Rifkin, every new economic era in modern history begins with the convergence of new trends in communication and in energy. The first Industrial Revolution brought the wider use of printing presses and greater literacy, along with coal, steam and rail; the second combined the telegraph and telephone with the internal combustion engine and oil.

To describe why we’re on the cusp of a third one, Rifkin began with one of today’s hottest topics: Oil. He argued that trouble was brewing well before the current unrest in the Middle East. With oil prices steadily climbing and fossil-fuel supplies looking increasingly unlikely to meet supply, the big “earthquake” came in July 2008 when oil hit $147 a barrel as food prices skyrocketed following droughts and floods, sparking riots around the world. “We have oil at $147 a barrel, we’re in a long, protracted endgame with fossil fuels and we have climate change affecting agriculture infrastructure,” Rifkin said. And the collapse of the financial markets 60 days after the 2008 spike was simply the aftershock. Combined with the following year’s collapse of the Copenhagen climate change summit among the world’s political leaders, it struck Rifkin that the next revolution was on its way.

Where does The Gherkin come in? In anticipation of the Third Industrial Revolution, Rifkin has been working with the E.U. to develop the “pillars” of a new renewable energy regime. “We need a new economic vision, a new economic game plan for the world, that’s doable, pragmatic, that can be put in place in less than two generations, [and that is] equally applicable in the developing world as the developed world,” he said. One pillar in Rifkin’s plan is the use of buildings as “power plants.” He said buildings today consume one-third of all energy used worldwide and are the number one cause of climate change. With better design, however, buildings — from homes to offices to shopping malls — could meet energy needs by collecting and generating renewable forms of energy — from the sun or wind, for example — and then sell any surplus supplies.

Along with developing new ways to store all that new energy and promoting electric vehicles, another pillar of Rifkin’s plan involves “inter-grids.” Similar to how the Internet enables individuals to develop and share information, off-the-shelf technology will allow businesses and homeowners to develop inter-grids and share energy. As for today’s power suppliers, rather than being disintermediated, they will have a new business role in helping their clients to manage energy across supply chains. The big hitch: For his Third Revolution plan to work, Rifkin said, all these pillars need to happen simultaneously

“Delirious stuff” is what one commentator on the Internet called Rifkin’s vision. The reaction from some members in the audience at The Gherkin was more polite, but no less doubtful. What about transmission and distribution issues, asked one energy-sector executive, adding, “We can’t make 191 million buildings go south-facing suddenly.”

Rifkin partly agrees with skeptics that what he is proposing is no walk in the woods. It won’t be easy, he said, but judging from some of the gloomy scenarios for the global economy, there might not be a lot of choice. Even Rifkin has his doubts. “We are on the verge of a Third Industrial Revolution — a new convergence of communications and energy,” Rifkin noted. “But I just don’t know if we’ll get there on time.”

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