Everything that happened through the nightmare of the financial crisis really doesn’t surprise some of the professionals in the neuroscience vocation. Neuroscientists talk about us having a predictable irrationality as individuals and groups in the way that we think and make decisions.
“There are innate problems in the fossil fuel industry.”
They talk about our endowment effect, whereby we favour things we have over things that we mightn’t have, irrespective of the downsides. So when they look at the financial sector and see a great industry actually making a catastrophic misjudgement about its asset base, they’re not surprised.
People have a great propensity for individual and collective silliness in the face of what with the benefit of hindsight looks blindingly obvious data. I look at the energy industry and ask myself the same question. Could there be similar things going on here? Are problems of the human condition resulting in massive over-evaluation of asset bases? My answer of course is yes.
There are innate problems in the fossil fuel industry.
“The idea that we can import the shale boom into Britain is going to stand exposed as laughable and lunatic.”
They are making a terrific fist of losing the coherence of their business models – the dramas to watch there are huge. But there’s still too many people going with the happy, conventional incumbency narratives on energy. You’ve still got people desperate to believe that we’re sitting on all this gas and oil, waiting to be fracked. We’re going to find out how far these people are prepared to push their crazy narrative. Right now many of them are willing to go so far as to actively suppress renewables.
The idea that we can import the shale boom into Britain is going to stand exposed as laughable and lunatic, given what’s happening in the US as we speak. It’s not working economically in the States; they’re losing money hand over fist. There’s too much hype around the asset base they think they have, they’re deliberately hyping it to try and keep the narrative pumped up for as long as possible.
The boom is going to turn to bust in America, just for economic reasons – on the massive balance of probabilities.
“You’ve still got people desperate to believe that we’re sitting on all this gas and oil, waiting to be fracked.”
Then you’ve got all the compounding local environmental problems, the global environmental problem of how much leakage there is across the system, and on top of that the politics. It’s been banned in New York state, with massive support from across the state, not just in the city. So it’s not just here that fracking will be facing such political opposition – increasingly it’s also the case in America.
Primed for crisis
We’re not going to be able to rationally talk our way to a great turnaround. I think there’s going to be a crisis of some sort and the system is primed for one.
The hope then is that, with evidence of clear and present danger and possibly even no alternative – some sort of collapse of global oil supply for instance – then people will be forced to go for the survival technologies and accelerate them as if they’re mobilising for war. When we get to that point I think that people will be really surprised about what they can do, in the same way that my parents’ generation were surprised by how quickly they could mobilise for war in the late 1930s and early 1940s.
It’s going to be a sorry story when the history books are written. With the evidence on the table and the blinding light of hindsight, people are going to look as stupid as most of the financial services industry did in the analysis phase of the financial crisis.
Jeremy Leggett is a social entrepreneur and author of The Carbon War, Half Gone and The Energy of Nations. He is founder and chairman of Solarcentury, the UK’s fastest growing renewable energy company since 2000, and founder and chairman of SolarAid, an African solar lighting charity set up with five percent of Solarcentury’s annual profits, itself parent to a social venture, SunnyMoney – the top retailer of solar lights in Africa. He chairs the financial-sector think tank CarbonTracker, and is a risk consultant to large corporations. He is a guest contributor to the Guardian and the Financial Times, lectures on short courses in business and society at the universities of Cambridge and St Gallen, and is an Associate Fellow at Oxford University’s Environmental Change Institute.
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