Sonal Shah meets Leo Johnson for a pensive conversation on the environment.
Leo Johnson is the co-author of “Turnaround Challenge: Business and the City of the Future”, and the co-founder of Sustainable Finance, now part of PwC.
Sonal Shah is a fellow of the Institute and Faculty of Actuaries. She currently works as a freelance actuarial consultant in the insurance industry, and regularly writes for The Actuary magazine.
Sonal: Leo, thank you very much for taking time out of your busy schedule to talk to me about the important issues in the environment, climate change and sustainability arena. We last spoke around 3 years ago, what would you say have been the biggest changes in this arena?
Leo: I would say 3D printing and the distributed energy revolution. There is the change of a shift from the unsustainable model of fossil fuel-based off-shore mass production.
Sonal: To make this change a reality, is money being put towards the right cause? How does politics play a part?
Leo: We are still locked into a system of subsidies where the money goes to fossil fuels: over a trillion US dollars a year according to the International Monetary Fund (IMF). Of course, the politics is key. It is politics suicide to shift that taxation system until there is a low carbon equivalent at cost parity. What is exciting is that we are approaching that point. By 2020, 80% of the world is going to be living in countries where renewable are below cost parity with fossil fuels. That is when it becomes politically possible to shift taxation and subsidy regimes to favour renewable.
Sonal: Is climate change irreversible now?
Leo: If you want to dream up a fossil fuel maximisation machine, it looks a lot like fossil fuel-driven mass production, transportation and consumption. I hold my hopes out for a city of that future that is built on energetic self-sufficiency and local production.
Sonal: What is the biggest concern at the moment in the environment, climate change and sustainability arena?
Leo: I will tell you mine: we are moving from the school of Henry Ford to the school of Facebook; we are going to isolate ourselves from the critical needs of the majority on the planet. In doing that we expose them and us to risk, and miss out on the chance to develop a form of capitalism that, as Klaus Schwab of the World Economic Forum (WEF) put it, “fits the world around it”.
Sonal: As an actuary working in the insurance industry, I come across statistics of the devastating effects of natural catastrophe events. A sector I’m interested in is micro-insurance, which is insurance for low-income families in developing countries. In this area of micro-insurance, even a small-scale natural disaster can wipe out low-income families’ livelihoods for years. If insurance premiums were to rise and/or exclusions were to be applied due to increases in both the frequency and severity of natural disasters, how will the consumers of micro-insurance products afford to buy insurance products and get adequate coverage?
Leo: First, let us take the example of the M-KOPA business model in Kenya. M-KOPA has made affordable solar power by allowing people to lease the lights for fewer than 50 cents a day. By doing so, M-KOPA aims to help its customers do away with kerosene and other costly and inefficient energy substitutes. The slashed kerosene bill allows for valuable funds to free up.
Such funds can then be used to access micro-insurance products; for example, also in Kenya is the organisation Kilimo Salama, which is Swahili for “Safe Agriculture”. Kilimo Salama pays weather insurance directly into policyholders’ accounts if the radio masts tell them that there has been drought or flooding. Such micro-insurance products mean that farmers can dare to invest in their crops.
Another example of benefits from spending less on cheaper renewable such as solar power is that the freed-up funds can be used to make micro-payments for things like the Kickstart agricultural hand-pump which brings access to the underground water table and enables people to plant triple the number of crops. This type of impact on productivity took incomes up from US$160 to US$1600 per head a year, according to one study.
Let’s put this into perspective: the world’s poorest, at the bottom of the pyramid, spend US$38 billion a year on kerosene!
Sonal: What are 3 things each person can do to make a difference and be more ecological?
Leo: Reclaim the home; reclaim work; reclaim the street.
Sonal: If you had to pick one change you would like humanity to make to care more for our precious, diminishing natural resources, what would it be? Would it take an outlier event to shock the world into action?
Leo: The resource I would prize is the originality of others. The sociologist Robert Zajonc said, “the human mind is not a computer…it is a computer with barbecue sauce on it.” We need this barbecue sauce: the bits of us that are diverse, unexpected, unpredictable, and empathetic, as opposed to impassive. We need these bits not just to compete with the machines that will abound, but to have the intent and inventiveness to innovate our way out of this mess.
Sonal: The last time we spoke about environmentally-friendly new products, in particular the Boris bikes, you mentioned the Bamboosero bikes made out of bamboo. What new products do you know of that are revolutionising the carbon footprint? What could we introduce next in the UK, in terms of something that is “green”, useful and environmentally-friendly?
Leo: The smart microgrid for me is a critical part of the sustainable future. It gives low cost renewable energy, and as communities that produce this have seen, like Barcelona and Austin, Texas, it also creates civic intent.
Sonal: This interview is for a magazine that encourages free speech; in that spirit, what no-holds-barred message would you like to impart to the youth?
Leo: Rip up the Fordist rulebook! Don’t sign up for Algoholics Anonymous! Make the real more fun than the virtual! Ask yourself WWKD (What would Keith (Richards) do)?
Sonal: Leo, thank you once again for another insightful, entertaining and educational interview.
Thank you to Leo Johnson for giving his time for this interview, and to Sonal Shah for conducting this interview.
This article was first published in August 2014 edition of FreeSpeech Magazine. To check out the full edition, click here.