Peter Senge

I spoke to the Minnesota Renewable Energy Roundtable last month, which resulted in a fascinating glimpse into the dynamic and controversial world of emerging energy options in America. In the audience were business leaders as well as several members of the State Senate, including the Speaker, as well as his predecessor. Many are right in the middle of the increasingly heated debate about ethanol in our energy future.

More cars in Minnesota run on E85 blends (gasoline and ethanol blends where fuel content is 85% ethanol) than in the rest of the country combined. This has created jobs and a resurgent agriculture industry. It has also enabled farmers to step forward as contributing to energy security for a country caught in the dilemmas of dependence on oil imports on the one hand and fighting oil-financed terrorists on the other. But recently, the agriculture ethanol producers have come under a lot of heat from academic studies that say that corn-based ethanol is worse than gasoline from a CO2 viewpoint. This public debate has been fueled, not surprisingly, by media seemingly more interested in selling newspapers and airtime than helping in the transition to a long-term sustainable energy system.

At a small lunch after my talk, the head of the one of the largest growers' associations asked, "With all the heat we are taking today, is it possible to say that biofuels are a part of a sustainable energy picture?"

I responded that the answer was definitely, "Yes," from my perspective. But I told him that food-crop-based fuels must be seen as a bridge to a longer-term vision of biofuels that significantly reduce the total carbon footprint of our energy system, and that the growers needed to be part of building that bridge, rather than just defending what they are doing today.

The country of Sweden is a world leader in biofuels, with the northern part of the country committed to being the world’s first economically advanced “bioregion,” running its entire economy based upon renewable resources and sustainably harvested biofuels. Today, they are opening some of the most advanced ”second generation” cellulosic ethanol production facilities, using forest waste products as input. Though they started with ethanol from food crops fifteen years ago, they see none of their biofuels coming from food crops in the future.

Per Carstedt, a leader of the bioregion movement, consults with a dozen regions around the world, funded by an EU grant, to develop long-term biofuel strategies. He is convinced that sustainably harvested biofuels can be a significant part of the energy picture in diverse settings. But in our first interviews with him over two years ago for The Necessary Revolution, Per told us that, “The biggest danger to the whole movement is opportunism – people who jump on the bandwagon to exploit market conditions without a longer term vision for the energy system of the future.”

Carstedt has his own picture of the bridge from fossil fuel economy to one where biofuels play a major part in the long run. His six interlinked elements of the chain not only include feed stocks and production but also the need to create the right sorts of vehicles (a large percent of cars sold in Sweden today will run on 100% ethanol) and knowing the external impacts, like the C02 footprint, and eventually setting up the right overall industry rules (like carbon markets that create an effective cost for green house gases) and government regulations. In short, this bridge goes well beyond opportunism.




I left Minnesota thinking that what we need first of all is a different political climate, one that supports learning and minimizes finger pointing. Creating healthy rural economies is a priority around the world. If this can include new sources of energy that create entrepreneurial opportunity and jobs while restoring topsoil and healthy water use this can be a win for all. Energy security will surely be an increasingly central issue as well. But most of all, in my judgment, dramatically accelerating the transition away from fossil fuels and dramatically reducing the carbon footprint of our economies is urgent. “I got into all of this because of climate change,” says Carstedt.

We need to stop throwing rocks at farmers converting corn to biofuels and start all working together to agree on where we want to be in 20 years. In other words, can we agree on what a truly environmentally sound energy system would look like? This is a crucial strategic task - teaching this agreement - that governments, NGOs and businesses alike must assume responsibility. Then, we could reasonably expect every player, in what will be an increasingly diverse and complex field of energy producers, distributors and customers, to be able to answer the simple question, “What part of the bridge are you building?”

January 12, 2009

On the eve of your inauguration, the world, not just the US is attending to this historic day, perhaps unlike any before in history.

The expectations awaiting you are daunting.

Just last week I received a letter from Andre Beukes, recently retired Commissioner of the South African Police Service. Having lived through another historic transition, he saw powerful parallels between your inauguration and Mr. Mandela coming to office 14 years ago - except that now, “When President Obama moves into the Oval office, he will have to address the incredible task of giving hope to the whole world.”

In a world of unprecedented interdependence, we may continue the conceit that we elect a president of a country. But, in fact, for the U.S. or China or India or Russia, the impacts of our leadership choices reach far beyond our borders. I am sure I do not have to remind you of The Economist magazine’s global internet poll that showed that, although you captured 53% of the US popular vote, you captured over 80 % of their global vote. At no time in history has one country’s presidential election held such meaning for so many.

This seems to me to have one clear implication.

You do not need take on the burden of fixing America’s problems in isolation. Indeed the U.S.’ problems are the world’s problems. The U.S. did not weave the global financial web that shapes investment, and speculation, alone. It did not shape the rules that govern international trade, and massive misallocation of resources toward the wealthy, alone. It did not mold the norms of global consumerism alone. In each of these, U.S. institutions and culture have played a major hand, but hardly left the only handprint. We are not destroying the world’s tropical forests by ourselves, nor species and ecosystems, nor operating unilaterally to steadily worsen the gap between rich and poor. These are the side effects of global industrial expansion driven by systems of investment and commerce that transcend national borders and policies, and these systems will only change through levels of cooperative effort that will be unprecedented.

If ever there was a time for such cooperation it is at hand, not because it is a lofty ideal but an inescapable necessity.

Case in point: climate change, perhaps the archetypal global challenge, also offers a unique opportunity to do just this. Though there are obviously more pressing issues, there are no more important ones. Climate change and the host of related ‘sustainability challenges’ will shape the context for viable economic policies. In countries around the world, people’s views are shifting to no longer passively accept environmental destruction as the inevitable by-product of economic progress. Instead, people are seeing social and environmental damage as the consequences of the wrong products, powered by the wrong energy system, guided by the wrong economic policies. With the Copenhagen climate negotiations looming in December 2009, this year will likely be seen by our children as a turning point in cooperation and collaborative innovation, or a tragically missed opportunity to foster both.

Start with China. I have the good fortune of spending some part of every year in China, and I firmly believe that now is the time for working together on key global challenges like accelerating the transition away from fossil fuels.

Last year, China passed the US as the number one emitter of carbon dioxide. But China’s (gross) manufacturing export flow is over thirty percent of its GDP, almost half of which go to the U.S. So, a large share of China’s greenhouse gas emissions are really contributions to greenhouse gases driven by U.S. businesses and consumer demand. That the emissions are generated outside our boundaries hardly absolves us of responsibility in the matter. Who should be accountable for reducing these emissions when it comes time to commit to global emissions reductions targets in December? Is it the producers alone or the producers and their customers together? (Obviously, a similar argument applies to many other countries who purchase products produced in China, or who purchase services produced India)

So it is disingenuous at the least to point the finger at China and not recognize the three other fingers pointing back at ourselves.

If we approach climate change as a problem created by us all, very different approaches could be devised that would drive collaborative innovation – such as an agreed upon system of carbon labeling that would inform all regarding the embedded carbon in all products. Combined with effective mechanisms for pricing carbon emissions (such as in emerging cap and trade schemes), this could create consistent economic signals linking carbon producers and customers in reducing emissions.

Similarly, both our countries face powerful entrenched political interests aligned behind keeping fossil fuel energy prices artificially low. But businesses and customers alike are awakening to the foolhardiness of these policies. Just as the price of cigarettes hardly reflect their true cost, no one today can think that the low Chinese or US prices of gasoline at the pump or electricity at the socket reflect true cost – neither the costs of US troops in the Middle East nor those, current or prospective, of climate change, which the UK’s Stern report predicted could be comparable to the costs of WWII in the coming decades. Committing to higher fossil energy prices would take immense political courage, but it would create the consistent signals needed to drive innovation in alternatives. (This could be done, for example, by setting a floor under effective prices and taxing the difference if global market prices for fossil fuel energy fall below that floor, using revenues so generated to support investment in energy efficiency, alternative energy, and assisting the poor in adjusting to higher costs.)

And it is the pace and scale of this innovation that will tell the tale – and it is hard to imagine two countries better positioned to co-create this innovation. Together, the markets of these two countries combined for both energy efficiency and alternative energy dwarf the rest of the world. Rising environmentalism is one of the most powerful political forces in China. Rising green entrepreneurialism is one of the most powerful economic forces in the US. (“Cleantech” investment in green energy is already among the largest venture capital flows in the US - some say the largest). No country is better positioned than China to ramp up manufacture of alternative energy, and come down the corresponding cost curves - because of the enormous scale of future energy demand and its equally enormous need for distributed energy production that can slow the tide of mass urbanization (and Westernization) in favor of more balanced and distributed economic development. Just as the U.S. will need to create millions of Greentech jobs to reduce the carbon footprint of our urban and suburban population, almost three quarters of China’s population is still rural and will never be efficiently well served by centralized coal fired power plants.

In a nutshell, there is immense potential for partnerships between our two countries to accelerate the inevitable transition to a regenerative economy. This is what the Chinese call the “circular economy,” one modeled on the principles of the larger living world, versus the linear “take-make-waste” industrial-age paradigm.

It is understandable at times like this for a new President to call upon Americans to step forward and contribute to solving the problems we face. But, I also believe it is a time to reach out to other nations and say that now is the time when we must all step forward to solve the problems that we have all created.

The world has gotten used to an arrogant America. Rather than a sign of weakness, asking for help and partnership might just be the signal of hope that the world is looking for.

@@@@@@@@@@@@@@@@@@@@@@@@@@@@

Peter Senge is a faculty member at MIT, the founding chair of SoL, Society for Organizational Learning and Chair of SoL China.
He is the author of The Fifth Discipline: The Art and Practice of the Learning Organization and co-author of The Necessary Revolution: How Individuals and Organizations are Working Together to Create a Sustainable World (Chinese translation due by June 2009)