The root cause of our escalating climate crisis is unpriced carbon emissions. A global price for carbon is the most sensible policy response, and is inevitable. Carbon pricing will speed up the shift to renewables, especially solar power, which is doubling consistently every 2 years and will be the dominant source of energy by 2026.
8. 8
Tesla vs Model T trajectory
All interesting things happen at the edges of the system. They do not happen
at the solid core. In the edges where things are uncertain is where the
evolution happens. - Vinod Khosla
9. 9
Diffusion of Disruptive Innovation
Source: Wikipedia; see Geoffrey Moore’s “Crossing the Chasm” (1999)
Potential: Innovators imagine & build
Visible: Early Adopters sense & respond
10. 10
Shared maps as mass collaboration platform:
spark social intelligence
South Pole & FNA Collaboration… our first map
What should be on the map?
11. • Carbon has become a critical investment risk factor
• Evolutionary leap: from ego to ecosystems (Scharmer)
• Build collaboration platforms
The next 10 years: buckle up penguins...
11
… let’s hunt some dragons together
There are three major disruptive Dragon Kings, as Didier Sornette calls them. These are characterized by small changes that amplify super-exponentially to become major forces that drive the world.
Last year markets a tipping point in divestment with leading endowments, and ever more are signing up. Of course Hedge funds have seen this and many hopped aboard too.
The growth in alternatives is important, especially solar. Oil is competing with technology that is getting exponentially better and cheaper. Solar is either at or will be at grid parity within the next couple of years, with costs continuing to decline. Improving Battery technology and EV has the potential to radically transform the landscape.
And finally, there’s the pricing and limit of carbon, which has the potential to strand over 75% of the industry’s energy assets. Energy producers recognize this, and will therefore keep pumping as much as they can until those costs are actually imposed.
- Coal, Tar Sands, Shale, Deep Sea Exploration
- Materials. Utilities?
- Russia, Brazil, Mexico, Australia, Canada
- Junk bonds
- EM bonds
- Financials with Energy Exposure
Identify where we are in the business growth cycle (from macro to sector & firm level)
Diffusion of ideas and innovation in societies follow exponential growth patterns also seen in epidemiology
Monitor factors that change contagion rates and “tip” epidemics
Malcolm Gladwell’s “Tipping Point”: Connectors, Mavens, Salespeople
How is today’s financial fashion evolving?
Monitor factors that change contagion rates and “tip” epidemics
How is today’s financial fashion evolving?
We live in an increasingly complex and fast moving world. Predict and control no longer works. A more sensible approach is Sense and Respond. A mountain biking race would be a good analogy. Of course we do all the homework and map out the course, get GPS and weather forecasts. But what makes the real difference is executing on the course, sensing and responding to the changing conditions of the course. This is a paradigm we will take to stress testing.