June 9th, 2014

Speakers

Former President, Shell Oil Company; Founder and Chief Executive, Citizens for Affordable Energy

Director, Energy Security and Climate Change Program, Council on Foreign Relations

Co-Author, Resource Revolution

Description 
Today’s two billion middle class consumers will more than double globally over the next two decades. Cities in China, India and other developing countries will be teeming with citizens in need of housing, cars and electronic gadgets. Meanwhile, natural resources are dwindling. But there could be a silver lining. Consumer demand has sparked a third industrial revolution – the Resource Revolution – one that is driving massive innovation, from Teslas to smart meters to new, less wasteful building methods. Three experts joined host Greg Dalton at the Commonwealth Club to discuss how companies are adapting their products, technologies and marketing styles to meet the demands of a changing world.
 
Matt Rogers co-authored Resource Revolution: How to Capture the Biggest Business Opportunity in a Century to address the struggles of business leaders. “If you see two and a half billion new people entering the middle class, nine billion total people on the planet, you say, 'my goodness, we are going to run out of resources.' And at the same time the resources are getting harder to extract…it’s going to be a giant mess.” But in researching the book, he says, they found enormous potential instead. “The technology was actually moving much faster than the market expected [and] was unlocking a set of business opportunities,” he notes. Changing the way we both produce and use resources, says Rogers, will avert the economic and environmental disasters that seem to threaten us.
 
Amy Myers Jaffe, Executive Director of Energy and Sustainability at UC Davis, sees the trends already well under way: hybrid and electric cars, smart technology to regulate energy use and perhaps most controversially, new methods for oil extraction. “I am hesitant to use the word fracking, right?  You know, fracking has this hugely pejorative meaning,” she admits. “So I want to divorce myself from that word and just say that the oil industry has developed new technologies, some of which is fracking and some of which is totally different, to be able to produce the oil that is sitting and trapped in the actual source rock.”
 
While America’s demand for mobility isn’t going away, John Hofmeister, former head of Shell Oil, is adamant about the need for the oil industry to adapt. A supporter of California’s controversial AB32 legislation, he sees change coming and welcomes it. “We can convert our existing cars, as well as all new cars going forward to flex-fuel vehicles…whether that's from biofuel or whether that's from natural gas, until we can electrify more of the fleet,” he says. “I have no doubt in my mind that the primary cars that will be bought in the 2030s will almost all be electric. We can't continue to watch the oil price rise and maintain economic growth at the same time.”
 
All three panelists agreed that the Resource Revolution offers massive opportunity for both environmental progress and economic growth.
 
To illustrate that point, Rogers produced a replica of an original Edison light bulb – a relic of the Second Industrial Revolution. “When it came out, it cost 20 dollars.  It cost 8 dollars per hour to run, and it lasted for 15 hours.  They delivered it in an egg carton because it was so precious…and yet this little light bulb ended up changing the world.” Now, says Rogers, you can buy an LED bulb, controlled by an iPad app, that lasts 10 years and uses one-tenth of the power.  
 
“What we are seeing in industry after industry is this kind of 10x productivity opportunity. And when you see it happen in autos and in lighting and in oil, you begin to say, ‘Hey, we are going to change some of these markets, and that's what managers need to be ready for.’
 
“Companies and technologies are in fact changing fast enough,” concludes Rogers. “It's going to be one crazy ride for the next 20 years, but…we’re going to end up in a very good place.”
 
 – Anny Celsi
June 9, 2014
Photos by Rikki Ward
The Commonwealth Club of California