Down to Earth Blog

An Interview With Worldwatch’s Christopher Flavin: Last week the Worldwatch Institute, a research organization that works for an environmentally sustainable and socially just society, released its ‘Vital Signs: 2006-2007’ study. The report examines the “trends that are shaping our future,” including leading indicators in the global economy and sectors such as energy, agriculture, transportation, health care, the environment and more.

In the preface to the report and in the July 12 media conference call, Worldwatch President Christopher Flavin said that the world is on the verge of an energy revolution. I interviewed him July 14 and learned that although things won’t change drastically overnight, the time seems ripe for alternative energy sources to keep gaining market share.

“I think we have entered a new energy era,” said Flavin. “It began in 2000.”

The landscape is changing because oil prices have shot up to $74 per barrel. Flavin says demand is not to blame for higher prices: “Demand growth is not any different from the last 10-15 years,” he said. “The supply side is not growing as rapidly. Reserve margins are much smaller than they’ve been in 20 years. It’s like going around without a spare tire in your car.”

[Graphic from 'Vital Signs,' page 33 (Courtesy Worldwatch Institute)]

Flavin notes that instability in the Persian Gulf region – a “fear factor” – has also caused prices to jump. Plus, Iraq is producing less than it did under U.N. sanctions in the 1990s. “None of these things would matter if there was excess capacity like we had in the 1990s,” he said.

With the oil industry barely able to meet worldwide demand and prices high, use of coal is growing more rapidly than oil. In addition, renewable energy and energy-efficient technologies are also seeing big growth rates.

“Ethanol is getting reasonably significant even now, two percent heading to three percent (of the liquid fuel market)” said Flavin. “[It’s] all an incremental process. The oil economy did not emerge overnight.”

The report states that the production of solar electric cells jumped 45 percent last year and wind power capacity rose 24 percent.

Even though renewable energy has a tiny market share now – wind and solar power, for example, each provide less than one percent of U.S. electric power – he thinks that over time, renewables can grow to 20-30 percent.

“Wind power...is as high as 20-30 percent in some areas, Iowa, Texas, California. In Denmark, Germany, Spain there are some areas over 20 percent, which puts wind ahead of where nuclear is in the United States. Nuclear is [generating] 20 percent of U.S. electricity and it took 50 years to get there.”

Flavin says that businesses have an opportunity. “There’s a lot of money to be made in new energy technologies. The U.S. needs to get moving if we’re to be at the forefront of this. We lost ground in the 1990s” when Japan and others invested more in new energy technologies.
 
Energy technology is becoming a hot area for venture capitalists, according to the report.

As for government, Flavin says we “need stronger policies to encourage [energy] efficiencies, renewables.” Consumers can also play a role by purchasing the most energy-efficient technology.

He lists Germany, Spain and Japan as countries to emulate when it comes to renewable energy sources. Germany has been the leader the last 10 years in wind power, solar and biodiesel; Japan has a large solar roofs program.

China, however, has the largest solar water heating industry, “serving over 30 million households,” said Flavin. “It’s a new phenomenon,” due to lots of new building in cities. “People basically want hot water for the first time in their lives.”

In the conference call, Flavin said that “the  richest man in China is a solar-energy entrepreneur” with Suntech, according to Forbes’ latest list of billionaires. Flavin thinks this is “a more important leading indicator of where the energy system is headed, than the fact that China is using more coal.” (The Forbes Web site listed the Suntech chief, Shi Zhengrong, as No. 98 on the list of 400 wealthiest Chinese, with a net worth of $200 million.)

In any case, Flavin sees the energy revolution as a big opportunity for businessmen and investors. If we are in a transition era to a new global energy system, “the new energy system is bound to create huge new industries and jobs,” said Flavin. “John D. Rockefeller became the richest man in America before people realized we had entered an oil age.”

The stage is set for someone to do the same with renewables.

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