Three recent Commonwealth Club events on how our brains understand climate change, how to promote sustainable innovation in the energy sector, and how to create wealth from climate change prompted me to think about how they all tie together. Notice how I strung the titles of those talks together to make the title of my own blog article. Good artists borrow, and great artists steal, so yeah I'm taking a page out of old William Shakespeare's playbook.
George Marshall's Don't Even Think About It is heir to a long tradition in psychology that describes how the human brain has difficulty comprehending abstractions. Emotion-based arguments usually overcome cognitive barriers in the majority of humans. Appeals to authority also help. This is why faith-based organizations like Alliance of Religions and Conservation and Catholic Climate Covenant will play a key role in winning conservatives over for the climate change argument. Bernays' techniques matter in selling climate change to low-information, high-emotion masses with large cognitive deficiencies. A "master narratives" study of how tribes communicate in the climate change debate would reveal much. The human evolutionary bias to underappreciate risks for abstract things like climate change probably has much in common with behavioral finance's understanding of poor investor behavior.
Climate change is like any innovative concept, where early adopters form a beachhead that proves a viable market exists. Social psychology and persuasive technology can produce enough compelling stories to reach the late adopter market in climate change. The Citizens Climate Lobby should be an excellent channel for storytelling targeting late adopters. Human interest stories matter more than narratives using facts or fear. Talented national politicians have dropped names of average schmucks into their major speeches during the Internet Age. Average people can see themselves in those average stories.
Once the narrative frames consumers for adoption, industry must have a minimum viable product ready for purchase. Industry's problem is that it has offered few tangible moneymaking products addressing climate change. Utilities invest in carbon capture because raw carbon is a viable feedstock in automobile tires, advanced fuels, and construction materials. Scaling problems have hindered the promise of carbon capture. Commercializing carbon ideas from government laboratories would be more successful if the tech developers follow the NSF I-Corps model.
Government research is more effective in powering energy innovation than government loans, as we all saw with the Solyndra debacle. Some in government and the energy sector learned nothing from that failure. BrightSource Energy got a $1.6B DOE loan guarantee for a solar thermal project that lowers the cost of capital for NRG Energy and Google. What a sweet deal. NRG also benefits from this $1.2B DOE loan guarantee for a solar PV project. These loan guarantees are a central-planning approach to funding energy innovation. The capital markets now have a better way to fund energy with the "yield co" publicly traded structures.
Large projects do not suffer from lack of funding with Google, Warren Buffett, and George Soros throwing money around. Smaller projects still need a push from entrepreneurs seeking wealth. Too much conflicting information on the risks and rewards of sustainable business models poses a problem for entrepreneurs. Advocates of social entrepreneurship ignore the higher costs of capital and higher risks inherent in many community-based business models that will never scale up to address large markets. NREL published several guides to community solar as good foundation references, available by searching DOE's OSTI archives.
Cleantech entrepreneurs need many baseline references because too many self-serving pontificators on both sides of the climate change debate have muddied the water. I have heard "experts" claim at the Commonwealth Club that China and India value US carbon capture technology because they are still building coal plants. I have also heard the Club's invited experts claim that China's prospects of "Peal Coal" and India's poor quality coal mean they will need expensive coal imports. These positions are reconcilable if developing countries' energy plans balance increased generation capacity with increased resource exploration. Give engineers and economists in those countries the credit they deserve.
The key to wisdom is understanding where each side in a debate gets their basic data. Utilities constantly iterate their supply adjustments to meet demand, using real-time data and decades of modeling experience. If coal and gas power plants cannot spin up turbines individually in sufficient time to smooth out "duck curve" evening demand in the US, then it makes sense for utilities to invest in transmission lines across time zones. A true national grid would not allow gaps between the eastern and western parts of the US to limit supply flexibility. Closing the gap is a matter of time, and in the meantime utilities buy energy futures contracts to hedge their demand forecasts. Utilities also have a strong interest in grid storage, smart grids, and predictive analytics that together make smoothing the duck curve more efficient. Anyone who shorts utility stocks in the face of the sector's incoming tidal wave of innovation has been reading too much gloom and doom literature.
I have argued before that hedging civilization's bets on climate change is much like Pascal's Wager. The worst outcome of preparation is a more efficient use of limited natural resources, even if climate change proves to be groundless. The best outcome is the preservation of the only known biosphere in this corner of the galaxy. I trust our elites to get the programming correct so Spaceship Earth stays on the right course.
George Marshall's Don't Even Think About It is heir to a long tradition in psychology that describes how the human brain has difficulty comprehending abstractions. Emotion-based arguments usually overcome cognitive barriers in the majority of humans. Appeals to authority also help. This is why faith-based organizations like Alliance of Religions and Conservation and Catholic Climate Covenant will play a key role in winning conservatives over for the climate change argument. Bernays' techniques matter in selling climate change to low-information, high-emotion masses with large cognitive deficiencies. A "master narratives" study of how tribes communicate in the climate change debate would reveal much. The human evolutionary bias to underappreciate risks for abstract things like climate change probably has much in common with behavioral finance's understanding of poor investor behavior.
Climate change is like any innovative concept, where early adopters form a beachhead that proves a viable market exists. Social psychology and persuasive technology can produce enough compelling stories to reach the late adopter market in climate change. The Citizens Climate Lobby should be an excellent channel for storytelling targeting late adopters. Human interest stories matter more than narratives using facts or fear. Talented national politicians have dropped names of average schmucks into their major speeches during the Internet Age. Average people can see themselves in those average stories.
Once the narrative frames consumers for adoption, industry must have a minimum viable product ready for purchase. Industry's problem is that it has offered few tangible moneymaking products addressing climate change. Utilities invest in carbon capture because raw carbon is a viable feedstock in automobile tires, advanced fuels, and construction materials. Scaling problems have hindered the promise of carbon capture. Commercializing carbon ideas from government laboratories would be more successful if the tech developers follow the NSF I-Corps model.
Government research is more effective in powering energy innovation than government loans, as we all saw with the Solyndra debacle. Some in government and the energy sector learned nothing from that failure. BrightSource Energy got a $1.6B DOE loan guarantee for a solar thermal project that lowers the cost of capital for NRG Energy and Google. What a sweet deal. NRG also benefits from this $1.2B DOE loan guarantee for a solar PV project. These loan guarantees are a central-planning approach to funding energy innovation. The capital markets now have a better way to fund energy with the "yield co" publicly traded structures.
Large projects do not suffer from lack of funding with Google, Warren Buffett, and George Soros throwing money around. Smaller projects still need a push from entrepreneurs seeking wealth. Too much conflicting information on the risks and rewards of sustainable business models poses a problem for entrepreneurs. Advocates of social entrepreneurship ignore the higher costs of capital and higher risks inherent in many community-based business models that will never scale up to address large markets. NREL published several guides to community solar as good foundation references, available by searching DOE's OSTI archives.
Cleantech entrepreneurs need many baseline references because too many self-serving pontificators on both sides of the climate change debate have muddied the water. I have heard "experts" claim at the Commonwealth Club that China and India value US carbon capture technology because they are still building coal plants. I have also heard the Club's invited experts claim that China's prospects of "Peal Coal" and India's poor quality coal mean they will need expensive coal imports. These positions are reconcilable if developing countries' energy plans balance increased generation capacity with increased resource exploration. Give engineers and economists in those countries the credit they deserve.
The key to wisdom is understanding where each side in a debate gets their basic data. Utilities constantly iterate their supply adjustments to meet demand, using real-time data and decades of modeling experience. If coal and gas power plants cannot spin up turbines individually in sufficient time to smooth out "duck curve" evening demand in the US, then it makes sense for utilities to invest in transmission lines across time zones. A true national grid would not allow gaps between the eastern and western parts of the US to limit supply flexibility. Closing the gap is a matter of time, and in the meantime utilities buy energy futures contracts to hedge their demand forecasts. Utilities also have a strong interest in grid storage, smart grids, and predictive analytics that together make smoothing the duck curve more efficient. Anyone who shorts utility stocks in the face of the sector's incoming tidal wave of innovation has been reading too much gloom and doom literature.
I have argued before that hedging civilization's bets on climate change is much like Pascal's Wager. The worst outcome of preparation is a more efficient use of limited natural resources, even if climate change proves to be groundless. The best outcome is the preservation of the only known biosphere in this corner of the galaxy. I trust our elites to get the programming correct so Spaceship Earth stays on the right course.
