A clean energy future is in our hands
Transcriber: Zeddi Lee
Reviewer: Amanda Zhu
So let me share with you my journey
into renewable energy.
When I was about to turn 16,
I was sitting on a meadow
in Western Germany.
I was there for an orienteering
event with friends.
It was a sunny day,
like this one on the picture here.
But it had been raining overnight,
so the grass was still wet.
And the next day,
I was learning that the rain
that had come down over this meadow
was radioactively contaminated
by an event that had happened
1,500 kilometers away,
the Chernobyl nuclear accident in Ukraine.
This incident really sparked
my interest in energy.
I started asking myself,
isn’t there a better way
to satisfy our energy needs
than relying on nuclear power
and other non-renewable energies?
In hindsight, this was really the day
that marked my three-decade-long journey,
now, into renewable energy.
I looked into different sources
of renewable energy,
like solar, wind and hydropower.
I was fascinated quite early on
by what’s technologically possible.
But this time, back in the 1980s,
it seemed there were
some serious economic challenges.
Renewable energy was just more expensive
than conventional energy,
partly because those were relatively
immature technologies at the time,
partly because of what economists
call external cost,
the fact that non-renewable energies
do not pay for their full cost to society.
Nevertheless, I felt like
there had to be a better way,
so I was eager to learn more.
I went to university;
I studied management,
science and engineering.
I specialized in energy
and transport issues.
I did internships with think tanks
and government agencies.
I wrote a Ph.D. about marketing
green electricity.
That’s it.
After my Ph.D., I had the opportunity
to work in the financial sector
and came to realize that it has a key role
to play in the energy transition.
I worked with one of the leading
European energy venture capital funds
invested in promising technology ventures
and in areas like solar energy,
even wave energy and others.
And I was impressed
by the passion and energy
that entrepreneurs put into creating
new energy realities.
But working in the financial industry,
I also came to appreciate
the wider systemic challenges
in making a successful
global energy transition.
When I returned to academia,
I started building a team,
and a truly amazing team,
I have to tell you,
that is closely following the development
of renewable energy
technologies and markets.
Since we’ve started the Chair
of Management of Renewable Energies
in 2009,
one of the things
that really changed things
was the cost of solar energy has come down
by some 80 to 90 percent.
You can see from this graph here.
This was faster than even the most
optimistic forecasts had anticipated.
And what’s remarkable about that
is not just kind of
this steep learning curve
that solar has gone through
but also the fact that solar and wind
are, by now, even the cheapest
sources of electricity,
cheaper than coal, nuclear or gas.
You can see from this graph here,
published in The Economist
and prepared by Lazard,
the US investment bank.
Wind and solar actually
are about half the cost of coal
in the United States
and about a third of the cost
of new nuclear power plants.
So once these economic challenges
seem to have been overcome,
what else could be challenges
that are there?
Well, that was really one of the questions
that kept kind of being on my mind.
If we have cheaper means of electricity,
if we have more environmentally friendly,
cheaper means of electricity,
and if similar developments can now be
also observed in the transport sector,
with electric vehicles becoming cheaper,
having higher energy efficiency,
having lower lifecycle
greenhouse gas emissions,
what on earth is holding us back?
So that’s really been
the part of the puzzle
that my research team and I have been
trying to address in recent years.
We’ve used experimental methods.
We’ve gained deep insights into consumer
and investor decision making,
and we learned how these decisions
are led by a nuanced interplay
of rational and emotional factors,
or as Nobel Prize laureate
Daniel Kahneman calls it,
“Thinking fast and slow.”
And this kind of interplay
of rational and emotional factors
on a collective level
lead to phenomena
like path dependence and inertia
that can persist among people
but also organizations,
even if new information arises,
like the information
that solar power is now cheaper
than conventional sources of electricity.
The good news is there are ways
to overcome those barriers,
to design policies
and marketing strategies
in a way that actually overcome
these psychological challenges
that are sort of wired
into human beings and organizations.
What can be done is to offer a convenient
and easy-to-understand information
to consumers and investors
at key touch points
during their decision process.
What’s also relevant
is peer-to-peer communication.
So think about your neighbor
putting solar panels on their roof,
and what a powerful message it is
if he or she shares
that positive experience with you
and that excitement.
And that is one of the ways
that path dependence and inertia
can be overcome.
Another piece of good news
is that several organizations basically
refuse to be held back by these challenges
and are making significant progress
to a cleaner energy future.
Think about Ørsted,
the Danish company that used to be called
the Danish Oil and Natural Gas Company,
or DONG,
which decided to move away
completely from oil and gas
to 100 percent wind power
in less than a decade.
Think about Mobility Carsharing,
a company in Switzerland that offers
car sharing that I’m a customer of,
that has now promised
to go to 100 percent electric vehicles,
again, by 2030.
Or yesterday, we had a webinar here
with Bertram Fleck,
who used to be heading
Rhein-Hunsrück-Kreis,
the German district right next
to that meadow that I started out with
when I described my my journey
into renewable energy,
and that district has now gone
to 310 percent renewable energy,
so even beyond the 100 percent level
that other companies are heading for.
And RE100 is a group of, by now,
more than 200 companies
aiming for similar targets,
going for fully renewable energy supply.
So things are happening.
And I think one of the really
interesting things on my journey
was also to observe this change going on
when I was teaching.
I started my teaching career 16 years ago,
and back then, quite frankly,
topics like clean energy
and climate change
were fringe topics at a business school.
But you know what?
We’ve come a very long way since.
And different aspects have played a role.
Of course, societal movements,
like the Fridays for Future movement,
have put climate change
much higher on the agenda
in the last two years.
And again,
we see this peer-to-peer
communication going on
with students sharing the dinner table
with their younger siblings,
who protest on Fridays
and confront their parents
with some of their high-carbon
consumption choices.
That’s a very powerful way
of being exposed to the issue.
But it’s also coming from within.
We see business students
increasingly really kind of seeing
the economic consequences
of climate change.
I see, for example,
banking and finance students
increasingly looking at this and realizing
that if they want to have a career
in the banking and finance sector
in the future,
they need to understand how climate risk
impacts financial markets.
I see business innovation students
who are inspired
by entrepreneurial solutions,
brought about by the likes
of Elon Musk at Tesla, for example,
and both of these groups have seen
dramatic shifts in the market.
We’ve seen Tesla becoming more valuable,
having a higher market capitalization
than some of the established car companies
like Volkswagen, Ford or GM now.
We see Ørsted, again,
the example I just mentioned,
being more valuable than BP,
the kind of traditional oil
and gas company.
And then we also see
international affair students coming in
who really want to help bring
the policy efforts to the next level.
So there’s different groups
of students looking at this.
And I recently launched
Managing Climate Solutions Program
here at the University of St. Gallen,
which was more than 3 times
oversubscribed when we launched it,
really brings those students together.
And it’s fascinating to see
how they come from different backgrounds
and collectively look for ways
of turning their career climate positive.
So all of this is really encouraging.
I think we’ve come already a long way,
but we need to be mindful that there are,
of course, remaining challenges.
Let me highlight three of the challenges
I think still need to be overcome.
First, it really takes
leadership to get it done,
defending the status quo
is easier than arguing for change.
There are lots of silent people,
maybe silent majorities.
They need to be convinced.
There are also vocal minorities
that need to be confronted
with determination.
There are people at risk
in the transition,
and they need to be taken along
and be offered new opportunities.
And we should also not underestimate
that even for the most
enlightened executive,
changing some of the world’s
largest companies
is really no small challenge.
Second, I think one of the things
that still kind of is ahead of us
is that while many studies have shown
that a low carbon transition
will have more winners than losers,
some of the most affected industries
are fighting hard for their influence.
In Switzerland,
the Association of Oil and Car Importers
have just launched a referendum
against the revised CO2 law
that’s been passed by Parliament.
And again, it’s a matter of convincing
the majority of voters,
successfully addressing
their concerns in the transition
if we want to win that challenge.
Last but not least,
my third observation here
is climate leaders need to keep
an emotional balance.
They must remind themselves
that they’re not alone in this.
In several countries,
from Switzerland to New Zealand,
we’ve seen elected leaders
taking on the challenge
of advocating for change.
We’ve seen leadership from young people
in the climate movement
who successfully raised awareness.
However, in other parts of the world,
we see governments
undermining trust in science
and trying to roll back time.
I don’t think they will succeed
in the long term,
but I can very well relate
to the fact that this can feel
like a setback
to many of those of us
who try to make a positive difference.
Maintaining a network
of positive change makers, I think,
is key to staying healthy here
in the long run,
in this long-distance race
that we’ve embarked on.
So I’ve started this talk
by looking back at my journey
into energy and climate issues
that actually started
when I was a teenager.
Today, my daughter is 16 years old,
and I wonder what will her life
look like 30 years from now?
Will she live in a polluted city
in a world facing violent conflict
for scarce resources,
or will she enjoy a better life,
enjoying clean air and prosperity
because 2020 was the year when humanity
finally grasped its greatest challenge,
climate change?
A clean energy future is in our hands.
Let’s get started today.