The fable of the emperor’s new clothes came to mind this week with the news that academics from Imperial College, London, have worked out how to convert light into matter, or time or everything else for that matter, as Douglas Adams might have put it. Like the emperor’s clothes, only very smart people know (let alone can see) that sub-atomic particles of matter can be produced by colliding two streams of photons. Although I’m still not entirely convinced this isn’t a delayed April foolsday joke, the research does highlight how far scientific aspirations run ahead of social change. Converting light into energy using photovoltaic systems has only come into mainstream use in the last 20 years with the mass adoption of rooftop solar systems. Yet the science behind photovoltaics has been around since1839 when Edmund Becquerel a 19-year-old physicist, discovered electrical energy could be generated by putting a certain type of electrolytic cell in sunlight. (How does anyone become a physicist at 19? I suppose it helps if your dad runs a pioneering 19th century electro-chemistry laboratory). Anyway, after Becquerel’s brainwave, it took another 76 years before experimental proof of the photo-electric effect was demonstrated by Milikan and another seven years before Einstein came up with his special theory of relativity which explained what was going on: E=mc2 the same formula behind the latest discoveries from London. So, if it takes 150+ years from the discovery of photovoltaics for us to put solar on our roofs, how long is it going to take before we start making some of the really big changes needed to offset the impacts of climate change, which, remember is still only a theory, even though things happen before theories show why they do. Well there is another theory from the field of risk management which might just provide an answer. Time compression means that things happen much faster than expected when they start going wrong. Time compression occurs because of false assumptions that there is lots of time to get things sorted when things go awry. It also means that when we do react, change is inevitably fast and very hard, as we flagged in our consumer macro-trends research, recently.
The time compression principle is presently being applied (by blowtorch) to the global funds management industry, which is being challenged by risk management specialists about its level of exposure to carbon-intensive assets, such as shares in new coal mines and oil companies. The argument being advanced by organizations like the Generation Foundation is that the majority of fossil fuel assets listed on company balance sheets around the world could never be fully realized because of the impact on the climate and hence many of those assets will become stranded. This is not a piece of financial or investment advice (which Gartner does not provide). This is a simple statement that there is a 95% probability the emperor is not wearing any clothes. That risk profile entails a golden opportunity for technology companies. For starters it means that a good chunk of US$80 trillion of carbon investments are now in play for technology investments as funds rebalance risk. How can technology companies make money from these climate-change related opportunities? That is the subject of new maverick research we will be presenting later in the year and in this blog.
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