Decarbonised solutions: an economist's perspective

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Erik Orsenna

Nicolas Bouzou, You are a fantastic spotter of all the transformations taking place in our society. And at the heart of these changes lies, of course, energy. What is your view on energy today? How do you see it developing? 

Nicolas Bouzou

Well, first of all, I think the subject is absolutely crucial. In every industrial revolution, and this has been extensively documented, for an industrial revolution to become possible, there obviously have to be metamorphoses in energy, but above all there has to be an extension in the capacity to produce energy. So what I'm saying was true at the beginning of the nineteenth century, with the steam revolution; it was true at the turn of the nineteenth and 20th centuries, with electricity in particular; and it's obviously true today, with decarbonised energy. 

I would nonetheless like to say that our world is still growing in terms of production, because demographics are rising, albeit less and less. In any case, they will continue to increase until at least 2050. We're still seeing productivity gains, particularly in the emerging countries, so in any case, if you like, global production is continuing to rise. This is about the economic aspect. 

From an economic point of view, we need more and more energy: that's my first point. And this obviously intersects with the ecological question. I'd like to remind everyone that 40% of carbon emissions today are due to power generation, so the main ecological issue, by far, is the decarbonisation of power generation. And actually, when people use the term power generation, they are often referring to electricity.  Why should the topic of energy be at the heart of our thinking? Because we need more energy and we need a slightly different energy, a decarbonised energy, and that's what makes this subject truly exciting.

Erik Orsenna

That's why old energy sources continue to be so important. That’s why those who made their fortune by buying coal plants at low prices were in a way visionary. However, we need to change all that. So, out of all the new energy sources, which do you find most promising? 

Nicolas Bouzou

For the sake of clarity of discussion and to make things easier to understand, I'd like to make the distinction not between nuclear and non-nuclear energy, and not even between fossil and renewable energy, but between decarbonised and carbonised energy. That's the crux of the matter. 

It is absolutely vital that we become able to increase the share of our decarbonised energies. Or decarbonise energies that are carbon-based, which is also possible. So what does this mean in practice? 

I am going to put my foot in my mouth, but those who pit nuclear against renewables, for example, are in my opinion completely wrong. Because if I take France as an example, in any case over the next 30 years, it will have more nuclear power plants and much more renewable energies. Much more renewable energies means more wind, more tidal, more solar panels, even if it's a little more complicated. And then of course we have the question of the decarbonisation of carbon energies. It is not completely possible, but if you take for example gas, which is a subject of great interest to us, we know full well that we have gains in efficiency, but we also know – and this often goes forgotten – that today, we are capable of manufacturing biogas. 

Erik Orsenna

We talked about this a lot in our discussions. 

Nicolas Bouzou

In Brittany, for example, two weeks ago, I met a farmer, who grows pork – an area in which you are one of the world's greatest specialists, dear Érik. And he stood there and told me, “with these pig droppings that I have in large quantities, I can take my methaniser, produce biogas and actually make a lot of money off of that. -

Erik Orsenna

I said at one point that if we continued to grow so much pork in Brittany, thanks to methanisers, Brittany would become the new Qatar. 

There is one aspect that you mentioned that is very interesting, namely, regionalisation. That is to say that before, we had power stations that were huge and looked the same everywhere, no matter where you were, whereas now, every region, in a way, is going to have its own projects. We will have the opportunity to talk about this with Carole Delga, but what do you think about this new development, this territorial anchoring of energy? 

Nicolas Bouzou

Well, my idea is that when we are in periods of transformation, of creative destruction, as the economists say, to use the Schumpeter’s vocabulary, which means very much what it says, i.e. that the new must replace the old, the question of experimentation becomes absolutely crucial. Because if I look ahead 50 years, there will probably be a dominant decarbonised electricity. But which one? I really couldn’t tell you, not being a specialist in electricity, but I am afraid that even specialists would be unable to tell us, actually, because this is not something known. We do not know what the state of technology will be in 2050, we do not know what the economic conditions will be, and we do not know what the prices of energy will be in the markets. That is why my idea is to allow as much experimentation as possible. We need to leave open the realm of possibilities because to bank entirely on nuclear power, entirely on wind power, or entirely on biogas, would be mistakes. We're almost certain to trip up. 

And I think decentralisation is interesting in that sense. We were talking Brittany earlier: to use the vocabulary of the nineteenth-century economists, say Smith & Ricardo for example, Brittany has a large endowment in pigs and, as a result, potentially has a source of energy which it can use. And it has to do so, because in 2050, we will realise that this is a technology that may or may not be co-efficient. I really don’t know. 

You will be talking to Carole Delga. I imagine that in the south of France, solar power is of very particular importance or in the overseas territories too, which is not often talked about, unfortunately, in mainland France, but I imagine that there are things that could be developed there. So in times of change, this question of experimentation at the local level, in accordance with the local endowment in production factors, is something I see as needing to be unleashed. 

Erik Orsenna

This is something I'm tremendously interested in, because it ultimately has to do with the way our society is organised, and experimentation challenges the long tradition of Jacobinism and centralisation. For so long, we've had to struggle against this tendency that we have: we experiment in one place, and when after 2-3 years we are able to extend it everywhere, we stop. Which is just nonsense. So this calls into question the completely centralised vision of energy. At the core, there is a kind of coupling between the decentralisation of territories from an administrative and even political point of view and the decentralisation of energy. It's a kind of creativity, of anchoring in the territories, and as such, brings us back to regional planning, which we've completely turned away from. 

Now, another question that has been raised is the tremendous amount of money that is going to be needed and the tremendous amount of research, i.e. research and research funding. 

Nicolas Bouzou

This brings me to a subject that I'm trying to advocate in the public arena, which is that this energy transition, this decarbonisation of energy, this decarbonisation of the economy in general, is something fascinating. I believe it is entirely possible. What's more, we have started out on this path, because our carbon emissions are actually falling, so what is referred to as decoupling, i.e. having economic growth, an increase in production and income on the one hand and a drop in greenhouse gas emissions on the other, is something that is entirely possible because we are achieving it. 

Erik Orsenna

So let's come back to this absolutely central, if somewhat technical, concept of decoupling. It is possible to produce to meet needs and decarbonise at the same time – because while the idea of “at the same time” doesn't always work in the political arena, the idea of “at the same time” in the economic arena does.

Nicolas Bouzou 

Exactly.  I'll give you an example which I find quite striking, and that is Norway. In the last forty years or so, Norway has multiplied its GDP by 2 and cut its carbon emissions in half. So here, you truly do have an example of decoupling. France is doing this too, but to a much lesser extent than Norway. Very roughly speaking, in France, we have long-term economic growth, which we call structural growth, of around 1% a year, and we are reducing our carbon emissions by around 1% a year. We even reduced them slightly more last year, since we were posting more or less -2.5%. 

So you see that this decoupling is possible, and that we are achieving it. In public and political debate, I often hear people say that “to be environmentally responsible, we need to revolutionise everything, change society”, and so on. That's not true. Our societies and liberal democracies are doing this. We are heading in the right direction but we are not moving fast enough. It's not about changing direction; we are going in the right direction. I also hear that “decarbonisation is ultimately not possible in democratic societies”. Really? Why, then, are France’s carbon emissions dropping? Why is Norway cutting its carbon emissions? The United States is starting from a very high level, but is reducing its carbon emissions, while China is increasing them, seeing as the peak of carbon emissions in China, according to the five-year plans, should come in 2029-2030. In other words, our liberal democracies are perfectly capable of being environmentally responsible. It's just that in view of our objective, the IPCC objective, which is to approach carbon neutrality by 2050, the pace is not yet sufficient. 

So all this is possible, but it's expensive. It costs a huge amount of money, and there is a lot of investment involved. It actually requires a lot of intelligence and a lot of money. 

Erik Orsenna

They're not costs, they're investments. 

Nicolas Bouzou

They are investments, of course. Because I believe that a low-carbon society in 2050 is better than the carbon society of 10 or 15 years ago. So I think this is absolutely fantastic and I also think there can be a narrative, to use a popular buzzword. 

Erik Orsenna

The real cost to society comes when you don’t invest. 

Nicolas Bouzou

This is something that was demonstrated quite a long time ago. The Stern report, which was one of the first major reports on decarbonisation, if I recall correctly, goes back to the 90s. What Stern argued in the late 90s, which was very powerful and right on-target, was that the ecological transition would come at a significant cost, but the failure to transition would have a much greater cost. And we can already he was right, because the cost of warming is very high. You are a specialist in agriculture, Erik, and you know that today, one of the major problems when it comes to our farmers’ yield is the increasing number of droughts and the growing number of natural disasters. There is precipitation, but unfortunately not always the kind that is needed. Extremely violent rainfall that is not necessarily good for the soil and waterways. So it is quite clear, taking agriculture as an example, that global warming has a cost. We need to find a way to limit global warming and invest in decarbonisation to limit global warming, as well as in adaptation, because unfortunately, global warming is already here. However, these are investments – and good investments. I'll give you an example of adaptation because the two go together. The fight against global warming and adaptation to global warming should never be pitted against each other. Water, and there too, I am speaking humbly, being in front of one of my masters in this area, but I'll take the risk. The French President presented a Water Plan a few weeks ago. However, in essence, what this Water Plan contained, i.e., repairing our pipelines because we are losing 20% of our water, or recycling more water because many factories only recycle 1% of the water, comes down to doing something that is not popular but in my opinion is still necessary, namely making water payable according to use. The difference between drinking water and filling your jacuzzi. Filling your jacuzzi is something perfectly legitimate, as I am against bans. However, the price cannot be the same.

In reality, these are common sense measures that should have been taken 10 or 15 years ago. Humanity is such that we respond when we feel the effects of a crisis. However, these measures we are taking to save and manage water are great, they are very good measures. 

Erik Orsenna

Of course they are! What really strikes me, given my my youth as an economist, that is, in the 1970s, is the place of intelligence. Why? Because we are forced to cast off the position of the spoiled child. “Spoiled” refers here to a person who is spoiled, but in this case, is also one who is spoiling everything. 

How do you see the future? How do you see the division between government responsibility and corporate responsibility?

Nicolas Bouzou

The responsibility needs to be fully shared. I'm a liberal as you know: I think the State is more there to provide incentives. I am not against regulations, though; I am liberal, but pragmatic. For example, I was and still am very much in favour of banning plastic straws. It is, after all, something that Humanity should be able to do. 

Overall, I am more in favour of incentives, environmental taxation, a more incentivising carbon market, and investments in decarbonised energies. The role of the State is to provide incentives, to invest and in particular in power generation. 

Companies have an absolutely major part to play because, in reality, who is going to decarbonise the economy? Very concretely, it is the companies. What will make decarbonisation a reality is when a steel plant manages to reduce its carbon emissions by just over 50% by 2050.  

I'm an aviation enthusiast, I'm very interested in flying and I'm a defender of flying. I don't think people should fly for short distances, though. When you can take the train, in France, it is better to take the train. However, I remain an advocate of airplanes because beyond the economic aspects, I think a civilisation without airplanes would bring us back to a kind of barbarism. What's happening in aeronautics is thrilling. Air France has commissioned the Airbus A 220, the new Airbus range, which emits 20% less CO2 than the previous generation of Airbus. 20% is still not bad, it’s not to be overlooked, and it is a start. We will gradually reach 30%, then 40% and thus, gradually we will achieve our decarbonisation. 

But what is it all about? It's about innovation, it demands money and it demands intelligence. I am a little annoyed at those who, in the public arena, tell us more or less, “we are going to decarbonise the planet by working less, and doing less.” It's the negative growth rationale, i.e., there needs to be less of everything. I'm not saying we need to do more of everything, I'm saying we need to do it better. 

Erik Orsenna

I agree and the question that comes up is how to give more meaning to work. Never have we needed work so much, and given so much meaning to work. But I think you will agree that it is not necessarily with the multiplication of opportunities for leisure and recreation that we will create a new civilisation. 

Nicolas Bouzou

I often hear people say, and this very much ties in with your comment: “When it comes down to it, shouldn't we be having fewer children?” This is something that often comes up in the discussion, as it is true that human consume and emit carbon. So, as to having fewer children to save humanity – since it's about saving humanity and not the planet – to quote something that you often say, the planet will survive us anyway. It was Pierre-Henri Tavoillot who answered this simple and very effective argument “Having fewer children to save humanity is still a paradox that should get us thinking”. It doesn't make any philosophical sense! However, above all, we need to make children who will decarbonise: that's the challenge. We've got to make kids who will roll up their sleeves. What I am about to say is a bit of a caricature, but it's just to make my point. It's better to have 10 billion of us not throwing plastic into the oceans and thinking about how to decarbonise the planet than 3 billion saps. 

Erik Orsenna

We definitely agree on that, and maybe we'll conclude on that note. Live life, live out what is possible. It's like those people who don't want to fall in love because they're afraid they’re going to get hurt. What fools they are! Poor them. 

Nicolas Bouzou

But we're getting there, I think we're going to get there. That's the message I want to send out. 

Erik Orsenna

Message received, Nicolas Bouzou. Thank you very much, see you soon.

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