Politicians can set environmental policy and create incentives for sustainable business practices, but the innovations necessary for a low-carbon economy will come from entrepreneurs in the private sector, Thunderbird President Ángel Cabrera, Ph.D., said Nov. 6 in Macau.
“Politicians are not very good at innovating,” Cabrera told an international audience at the Thunderbird School of Global Management alumni reunion at the StarWorld Hotel. “It would be a mistake to expect them to try to choose the winning technologies, and to tell us the future is going to be wind, or it’s going to be photovoltaic, or it’s going to be this or that.”
He said these systems and technologies will come to market through the work of entrepreneurs who know how to bring together scientists, engineers, investors, marketers, financiers, lawyers and others.
“We shouldn’t see climate change as a huge threat to us,” Cabrera said. “We should see it as an incredible opportunity.”
He said climate change creates four areas of opportunity for entrepreneurs:
1. Alternative energy production
Fossil fuels will remain the primary source of global energy for years to come, but Cabrera said demand for alternative sources such as wind, nuclear and solar will continue to rise.
2. Alternative energy uses
Regardless of where the energy comes from, Cabrera said the need will grow for products that use energy more efficiently or in different ways. Electric motors, for example, may replace combustion engines in cars. Or methods for heating and cooling homes may change. “Who’s going to seize that market?” Cabrera said. “Who’s going to be ready for that?”
3. Alternative business models
Cabrera said dominant business models today are based on the assumption that crude oil will remain available for $70 to $80 per barrel. This allows companies to set up manufacturing sites overseas where labor is cheap, and then ship materials along various nodes in the global supply chain. Cabrera said this model might not survive much longer. The 2008 spike in oil prices to $150 per barrel could be a glimpse of things to come, as demand for oil climbs in emerging markets such as China and India. “You better start picturing scenarios of how your business will be affected if oil reaches $200 or $300 per barrel,” Cabrera said.
4. Alternative lifestyle products
People who live in big houses and drive big cars today might be looking for something different in the world of the future, Cabrera said. “There is absolutely no relationship between how much carbon we burn and our happiness,” he said. “Only in our minds we have developed certain lifestyles. Who knows what are going to be the new lifestyle patterns when we start living in a low-carbon economy.”
He said he doesn’t know the answers to such questions, but he is confident entrepreneurs will fill in the blanks. “That’s what entrepreneurs are for,” he said, “to picture that world and invent before it comes our way.”
To learn more, read Dr. Cabrera’s blog on the Thunderbird Knowledge Network, or watch the videos below from his Macau presentation.