Planning of Large Scale Transformation is Common Sense

Last Thursday I had the opportunity to present Global Energy Transformation at a seminar in Malmö hosted by the organization SNS (a Swedish organization that promotes debate about important issues in economics, society and politics). The other presenters were Jacqueline McGlade, Director at the EU Environmental Agency (EEA) in Copenhagen, and Klas Eklund, senior economicst at the bank SEB, adviser to the Swedish government, and myself representing Global Energy Transformation Institute. Some 70 persons were attending the seminar, prominent journalists from the region ( e.g. Per T Ohlsson (Sydsvenska Dagbladet) and Nils-Eric Sandberg (free lance), representatives from the City of Malmö (e.g. Environmental Director Katarina Pellin) and representatives from international companies like EOn, Alfa Laval, IKEA and a number of companies from the region.

While the previous presenters focused on climate change and the international disagreement at COP15, I spoke about Peak Oil and the pressing need to transform energy systems on a large scale. At the beginning I pointed out that, during the seminar the global economy would be consuming 10 million barrels of oil, or 1000 barrels per second. The magnitude of the transformation of our large scale energy systems will require not only more funding (e.g. in the form of a new fund that was decided at COP15), but also managed projects that aim at developing exactly the technologies and renewable energy sources that we need in order to offset the impending decline in oil supplies.

I also mentioned the examples of previous large scale transformation projects, such as the Apollo Program, the transformation of US industry to war production during The Second World War, and the Marshall Plan. I received the question how I believed that a global transformation project may become organized. My reply was that we should not aim for global programs. Instead we need to start up national, regional, and EU based programs in different countries, naturally also in countries outside of Europe. There will also be a need for transformation programs in industrial sectors, and in clusters of companies that cooperate, such as companies that will have to drive change together with their suppliers and other business partners. All of these programs will identify needs to coordinate efforts with other programs, which, eventually, will lead to the integration of programs into increasingly large units with different forms of coordination. A higher level of planning and management may seemingly go against the widespread belief that the market provides the most efficient organization mechanism.

However, while reflecting on this afterwards it is obvious and a matter of common sense, that if two countries want to build a tunnel through a mountain to unite the two countries they will want to plan a number of aspects of the projects so that both countries work to the same plan from the start of the project:

– The direction of the tunnel so that the drilling teams meet half way.
– The width and height of the tunnel, so that vehicles that enter from one end can drive all the way through.
– Whether it is going to be a railroad or road tunnel.
– If it will be a railroad tunnel, the countries need to agree about the width of the tracks, the signal systems, whether it is going to be electrified or not, etc.

If these issues are allowed to become settled by the market forces, during the construction project and after the tunnel has been taken into use, it will be a waste of time, money, materials, and competence.
If we in Europe or globally, in a similar way, start a number of different projects in different places, where some countries focus on biogas, some on ethanol and others on electric vehicles, biodiesel or other fuels, we make a mistake similar to that of two countries who try to build a tunnel together without agreeing on the basics before starting the project. Furthermore, vehicle manufacturers, fuel producers and fuel distributors and other players, may invest large sums of money in different alternatives, and the coordination process will be costly, time consuming and disorganized. As in the case of tunnel building, planning a large scale transformation of European transport infrastructure is not socialism, it is common sense.