By PETER SENGE, BRYAN SMITH and NINA KRUSCHWITZ
From Strategy+Business (www.strategy-business.com)
Of all industrial countries, Sweden is probably the farthest along in weaning itself from fossil fuels. Today, the country depends on oil for only 30 percent of its energy, down from 77 percent in 1970. Fifteen percent of all cars sold in Sweden in 2007 can run on ethanol, up from 2 percent in 2000. In 2005, a government-sponsored commission announced its intention to make Sweden the "world's first oil-free economy," starting with an existing "BioFuel Region": an area encompassing 22 municipalities and located on the Gulf of Bothnia, roughly 200 miles north of Stockholm.
One might assume that changes of this magnitude require a massive government effort involving tens of thousands of people, substantial government subsidies, and years of extensively funded research. But until recently, no such support existed. Instead, countless local networks developed quietly, catalyzed by the efforts of small groups of committed and courageous leaders from the public and private sectors.
The Sweden story is a valuable model of what historians call "basic innovation": fundamental changes in technology and organization that create new industries; transform existing ones; and, over time, reshape societies. Basic innovations involve not just a single new technology but a collection of new inventions, practices, distribution networks, businesses and business models, and shifts in personal and organizational thinking that combine to transform the way business is conducted, technology is deployed and people are engaged.
As the implications of global climate change have become clearer, a new wave of basic innovation has begun. These efforts are responses to the same shift of context, in which the prospect of global climate change, in particular, and of growing waste and toxicity and diminishing key resources, in general, has catalyzed a new way of thinking. In this shift, the entire industrial age can now be seen as a kind of extended bubble, showing some of the same dynamics as a financial bubble and being equally unsustainable in the long run.
In financial terms, a bubble is a phenomenon in which the prices of assets outpace the assets' fundamental value. When financial bubbles pop, the same question is always asked: How is it that overexpansion and collapse occurred yet again, drawing in otherwise bright and knowledgeable people?
If a bubble can last for generations, it becomes hard to imagine an alternative to it. But at some point the tensions and inconsistencies between life inside the bubble and the larger reality outside it must be resolved. The bubble cannot expand indefinitely.
The industrial age constitutes an extended bubble of just this sort. Its expansion has continued for more than two centuries, so it is easy to assume that it will continue forever. Its positive impact has been undeniable: Life expectancy in the industrialized world has roughly doubled since the mid-1800s, literacy has jumped from 20 percent to more than 90 percent, and benefits hitherto unimaginable have sprung up in the form of products, services and astounding advances in health, communication, education and entertainment.
But the more harmful side effects of the industrial age have also been apparent from the beginning. They include a host of environmental crises, including increased waste and toxicity, growing stresses on finite natural resources, a loss of community and a commodification of daily life that led to a widening gap between the rich and the poor. No matter how valuable the assets of industrialization may be, their overall costs make the bubble unsustainable.
Global climate change is only one of many side effects of industrial growth, but it has two unique aspects. First, the current and prospective costs are enormous. Second, it provides simple, numerical indicators of just how far out of balance humanity is with nature -- and how rapid and strong the adjustments must be if we are to avert disaster. Climate change can be considered a gift: an alarm clock telling us how rapidly the industrial age is ending.
The alarm clock consists of a wide range of research and computer models, but it can be summed up with a few basic facts. Levels of human-caused carbon dioxide (CO2) emissions -- the primary component of greenhouse gases -- have grown exponentially throughout the industrial age. Today the level of CO2 in the atmosphere is 35 percent higher than at any time in the past half million years.
The current flow of global CO2 emissions is about 8 billion tons of carbon per year worldwide. This is more than 2.5 times the amount -- about 3 billion tons -- that is removed per year from the atmosphere, either absorbed by natural biomass like trees, plants and plankton, or dissolved in oceans.
The difference between "inflows" and "outflows" of CO2 in the atmosphere works like water in a bathtub: So long as the inflow exceeds the outflow, the bathtub continues to fill. At some point, the tub will overflow. CO2 levels will cross a threshold at which the effects of climate change are irreversible and are devastating to humans and other species. The pace of climate changes happening already is leading to a consensus among scientists and some business leaders that catastrophic overflow can be avoided only by rapidly reducing emissions to equal or below the rate at which CO2 is removed from the atmosphere in the next two to three decades. To achieve this will require a 60 to 80 percent reduction of worldwide emissions in 20 years.
Meeting this 80-20 challenge facing industrial society will require a sea change in the prevailing kinds of energy we use, cars we drive, buildings we live and work in, cities we design, and ways we move both people and goods around the world. Humans must rapidly rethink and rebuild their infrastructure, technology, organizations, and approach to working with nature. The growing recognition of this 80-20 challenge is itself a signal that the industrial age bubble has reached its limits.
Moving beyond the bubble does not mean returning to a pre-industrial way of life. But it does mean making choices that reflect very different beliefs, assumptions and guiding principles. Moving beyond the bubble means learning to live within our "energy income" and relying on forms of energy, such as solar, wind, tidal and plant-based energy, that come from renewable sources. In a post-bubble world, everything must be 100-percent recyclable, remanufacturable, or compostable. There also needs to be a different attitude toward the gap between rich and poor. It is not sustainable for 15 percent of the people to have 85 percent of the wealth. All the institutions of society must accept, as the first responsibility of human beings, the need to leave a healthy global biosphere for future generations.
