 So thank you, thank you very much Stephen for the introduction and it's a great pleasure, an enormous pleasure to be here speaking in Auckland tonight and thank you to the Energy Education Trust of New Zealand for sponsoring the event. So you've heard a book, Global Green Shift, when Ceres meets Gaia and you would be forgiven for thinking that this talk, the global green shift is going to be all about carbon emissions and global warming, the ocean acidification, death of coral reefs around the world, loss of biodiversity, species loss, all of these terrible things that we know are going on. But in fact I'm not going to talk about any of those things. I'm going to be talking about industrial dynamics and the specific feature of industrial dynamics that I want to discuss is the rise of China and my argument is quite simply that China is industrializing at a scale which is unprecedented in history and as China industrializes, if it were to follow a conventional fossil fuel pathway that every other industrialized country followed prior to China, if it were to do so then it would run up against impossible limits, limits to do with the supply of oil and coal and gas, the fossil fuels themselves, but more broadly limits to do with the supply of resources. It would run into geopolitical limits, not just resources and limits to growth in that sense but geopolitical limits. My argument is then that it's all about scale and the scale of China really forces it to adopt a green strategy and having done so it's then setting trends that become available around the world. I'm not going to just ask you to take my word for this, I'm going to present the evidence that will convince you I believe that China is indeed following this pathway and the point is I'm a social scientist and the proper procedure for social scientists is to look at the evidence and then to formulate theories or explanations that will help to account for that evidence and I want to discuss the evidence with you for what China is doing and then discuss a plausible account, a plausible explanation for why China is doing what it's doing. That's my agenda for the evening and there's no better place to start such a discussion than with a chart on the shift of manufacturing value added around the world. This chart shows you the wealthy industrialized countries, the members of the OECD in the blue line coming down and the red line coming up is manufacturing value added by non-OECD members for which read China. China is by far the most significant of the non-OECD members and you can see that those lines are about to cross, in fact they probably already have crossed. This is a chart prepared by the OECD and it shows you that manufacturing is moving east, it's moving to China and in terms of manufacturing we are already living in a sinocentric world. Now that's a very significant feature of global industrial dynamics and it's the starting point for my argument and it's the starting point because I'm arguing that what China is doing is building a system that will enable it to become the workshop of the world as indeed it is, that is its strategy. Here we see China's electric power generation and the proportion of China's electric power coming from renewable sources, water, wind and sun and you can see that over on the right hand side that line is going up and up and up. That's the primary evidence that China has already made a choice, that it's moving away from fossil fuels and it's increasing its proportion of dependence on renewable sources. This is capacity and you can see that the capacity has already reached 35% dependence on renewables. That also means that China's power generation system is a very large system and it's still largely dependent on coal so there's no getting away from the fact that it's a black coal fired system but you can see that what's happening year on year it's greening and that's the significance of that chart. When you look at the comparison between China and the rest of the world you see that China is already a superpower in renewables, looking at the capacity that has been built. China far surpasses all the other industrialized countries, the United States, Germany, India. China is the giant in terms of building renewable energy systems, their hydro systems, wind power systems, solar photovoltaic systems. China is already in a sense the Saudi Arabia of renewables. It's already the world's superpower in renewables. In terms of comparisons between China and other leading parts of the world, here's a comparison between China and the European Union. On the right hand side we see the European Union building up its investments in renewable systems increasing each year through the early 2000s but then peaking and starting to pull back whereas China is building up and by now China is investing two and a half times each year what the European Union as a whole is investing. So China again in terms of its investments in renewable systems already far exceeding those of the European Union and it's a trend that we can see continuing into the future. So then we have these twin faces of China as it builds this enormous energy system to drive its enormous manufacturing system and I do ask you to bear in mind the scale at which we're talking. This is by far the largest manufacturing system ever constructed on the face of the earth and it has to be powered by an enormous energy system and the energy system that China has been using is this electric power system based largely on coal because every previous industrializing region and country used coal as its driver so that happened in Britain first then it happened in Western Europe then it happened in the United States then it happened in Japan it happened in Korea it happened in Taiwan. All these countries utilized coal as the driver of their industrialization and building manufacturing industries. China has done the same with a major inflection point in the year 2001. Anybody tell me what happened in China in the year 2001 why this inflection point? It was the year China joined the World Trade Organization. Once China was in the WTO then it was a serious player in terms of the global economy and you can see it ramped up its production of coal fired electric power very very rapidly. That was a government decision but you can also see the influence of the government up there where you see the coal burning leveling off because as China has been burning these enormous quantities of coal so it's been creating enormous pollution problems and it's reached the limit of tolerance of that pollution and now the government is intervening to scale back that degree of coal burning and the evidence is there. Incontrovertible evidence. Meanwhile what is complimenting that black economy the burning of so much coal to drive the fossil fuel economy in China. Meanwhile it's ramping up its complementary green economy. Here we see wind power and there you can see it's doubling in capacity every couple of years. So that's going to continue again in the future. You can see that there's a clear trend there. China seems to have made a big investment a big commitment to wind power along with the other major renewable sources solar power and hydropower. What I'm presenting here is evidence and I then want to move to consider what is the significance of this of these data and how can we account for them. How can we offer a plausible explanation for why this industrializing country is making choices and choosing a direction of development so different from all previous industrializing powers. This is really the most significant question in the whole of the social sciences. Not enough people are addressing themselves to answering this question. In case you think that China might be betting on nuclear power as many climate scientists in the United States argue they argue completely without evidence that China is likely to settle on nuclear power. Well here's the evidence that it won't already by the year 2008-2009 in terms of capacity. Wind power exceeded nuclear capacity in China and by the years 2012-2013 the electricity generated by wind exceeded the electricity generated by nuclear. So nuclear will not be the answer for China it's the renewables partly because they have low marginal costs but because China has an abundance of these renewables but the real reason and I'll come to this in the talk the real reason is that renewables are the products of manufacturing. So if they're the products of manufacturing they give you energy security that's the core of my argument. Now is what China is doing comparable to what is going on in the rest of the world? Well here's the evidence that it is. This shows you global investment in power capacity and globally right through the most recent years you can see that the buildup of that the investment in capacity for renewables is by far the most important of the energy investments then it's followed by fossil fuel then large hydro and nuclear a long way behind. So the significance of that is that China is making choices that are consistent with those that are being made globally and of course as the largest player China's choices are influencing what is being done globally and here's the most recent data which reinforces this point that global new electric capacity added is largely in the realm of renewables if you can read those across their solar wind rather than in the fossil fuels that are over to the right of the of the chart and consistently in year by year China's investments in water wind and sun are outranking the investments in fossil fuels and nuclear. Now of course in other countries and in other regions other regions like California states in the United States like California we see very ambitious goals being set. So here's California with Governor Jerry Brown saying that by 2030 California would be generating 50% of its power would be coming from renewable sources. Now that's an ambitious target but the point is when Governor Jerry Brown says that how does he then translate that target into actual investment flowing from the banks. In China the government sets the target and then the banks invest to meet that target. In this case in California Governor Jerry Brown can say this is an ambitious target but he has no power over the banks. He has no power over the choices being made by the big private sector energy utilities. So it's an aspirational goal but it's not a clear target that is intended to be reached in the way that the targets are met in China. And in other industrialised countries we see similar kinds of developments. Here we see in Germany which is amongst the industrialised countries the closest to China in terms of its commitments to renewable power. So we see German electricity generation reaching 35% coming from renewable sources in the most recent data. And you see that in Germany's case it's a substitution between nuclear and renewables. So here are nuclear coming down and here are renewables rising and that's the proportion. So it's still again even in Germany it's still a very large coal-fired system but Germany is moving because they have a strong government commitment to move in that direction. Elections are fought on that commitment and that's what results. If we do a comparable chart for China to look at electricity generation, again we see that the trend is going up and China's electricity being generated comes 25% from renewables. Similar to the case with the capacity but again this chart shows you this is total electricity generated. This is the renewables coming from water, wind and sun. You can see it's still only 25% of the total. It's still a large coal-fired powered system. So I've been talking to you about energy but I could also spend a lot of time talking about the wider resource question. The resources, the iron ore, the aluminium or the bauxite that goes in, the iron ore that goes into steel. These resources also are being utilized by China at a colossal scale far larger than any in previous industrializing country and there's still a lot of room for China to improve its resource efficiency. So here we see China's aspirations as part of the 12-5 year plan in 2015 to reach that resource efficiency whereas the OECD countries are already well in advance of that. So there's plenty of scope for catch-up by China in terms of resource efficiency but what China is using to do that is a very novel model of how the economy works. It's called the circular economy. Here we see China's circular economy at work where inputs are sourced from outputs of one manufacturing process feeding into another process. So the waste becomes the food of the next industrial process. So here's an example. We see a sugar refinery and it is generating fibre which is burned to produce electricity. Well, some fibre goes into a pulp mill which goes into a paper plant, other parts of the sugarcane go into production of ethanol. So this is the circulation of resources and the more that resources circulate the less the impact on the wider environment, the greater the resource efficiency. So we can see that just as much as China is improving its energy efficiency by making renewables of the source for energy. So we can see that the circulation of resources is China's solution to the problem of improving resource efficiency. So that's a very, very quick, very fast passage through some quite astonishing data about the scale at which China is embarked on its industrialization project. So let's discuss the reasoning on the part of China. Let's discuss an explanation for why it's pursuing that pathway. Now he would be a chart for the conventional pathway pursuing fossil fuels. If China were to pursue the conventional pathway, then its consumption of fossil fuels would continue to grow and its dependence on imports would continue to grow. The gap between these two would indicate the dependence on imports of fossil fuels of coal, of oil, of gas. Likewise with India, which is following in China's pathways, you can see the gap is even broader in relative terms. The absolute numbers are smaller, but the gap is wider in relative terms. And what would that mean for a country like China to have that widening gap between its fossil fuels production and consumption? It would mean increasing dependence on hotspots around the world. So Nigeria, for example, is a hotspot in Africa for oil production. Or South Sudan, China becomes a leading customer of oil from South Sudan. And what happens after China becomes a leading customer? Anybody know what happened in South Sudan? Civil war. A civil war breaks out. Now where did that civil war come from? Actually, nobody knows. Or nobody's saying maybe the CIA had something to do with it. We don't know. Nobody's saying we don't know. But the point is China becomes a leading importer of oil from South Sudan, and suddenly the country is plunged into civil war. That's what I call a geopolitical limit. Become too dependent on unstable countries, and suddenly all your plans for imports are blown apart. And then you carry on around the rest of the world Ecuador, Venezuela, and Latin America, other countries in Central Asia. Not just oil, but other fossil fuels and resources. So there are geopolitical limits in the form of war, in the form of revolution, in the form of terrorism. They are the geopolitical limits that China would face if it were to pursue a fossil fuel pathway. Here's another pathway that was followed in the United States that, again, would represent an unpromising, an unpromising trajectory for China. This was General Motors' great gift to the United States. They were buying up trolley car companies. These were the trolley cars that ran in Los Angeles and provided a very good public transport system in Los Angeles. Now you arrive in Los Angeles at LAX Airport and there's no public transport. Why? Because General Motors bought up the trolley cars and then trashed them, trashed the trolley cars. So that's not a pathway that China would want to follow. Now what drives the sense in China's choices is the falling costs of renewables. Now these are not falling costs in the same way that you can read the price of oil today and the price of oil tomorrow. It's dependent on choices made by OPEC and Saudi Arabia. These are costs associated with manufacturing. These are predictable costs. They're associated with the learning curve or the experience curve. So this shows you in the top line crystalline silicon photovoltaics modules and the bottom line the costs of energy storage in the form of lithium-ion batteries coming down. And they're coming down. And they're coming down because as the scale of production increases, the efficiency of production improves and the cost comes down. Now that's what is backing China's choices. It's the fact that all of the renewable energies, solar photovoltaic, the wind power and the manufacturer of wind turbines, the manufacturer of energy storage systems, all of these are products of manufacturing. And as such, they benefit from the experience curve or the learning curve, which is associated with manufacturing. That is the fundamental reason why, in my account, China is making the choice in favor of renewables that it is doing. So when we look at solar photovoltaic, for example, it seems all very new. It seems these are completely new companies with the new technology. But in fact, it's an old story. We know this story. It's the story of Henry Ford and how he created an enormous market for automobiles at the early years of the 20th century. And as he did so, he was able to drive down the costs of those automobiles. The Model T, that's the famous one. And the more he dropped his price, the more the market expanded. And the more the market expanded, the more he was able to capture efficiencies and economies of scale. And he brought his costs down and then enabled him to reduce his prices. And so you go round and round in a virtuous cycle that is called circular and cumulative causation. That is a fundamental economic principle. And yet I'm prepared to bet that anybody in the room who's done an economics course has never heard of that principle, circular and cumulative causation. It's just not taught as part of economics. And yet it's fundamental to mass production industries, which are the modern industries of the modern era. And of course, they are the industries that China is building, starting with renewable energy industries. So China's model of development is all about infrastructure. And it can do that because it has the scale, the size of China is huge. And here we see its colossal infrastructure in a transport system, high-speed rail system. So this is for China in the 21st century, what the interstate highway system was for the United States in the 20th century. So China has built an enormous transport infrastructure in the form of high-speed rail. And now it's utilizing that to drive its trajectory in energy and resources. The other huge infrastructure project linked with what I'm discussing, the green shift, is the grid. And here we see China's investments in its own national domestic grid and beyond China into grids associated with it that can be integrated with it. That could be called the Asia super grid. And there we see China again being a world leader in promoting the idea of a global integrated smart grid. And that's being promoted by Liu Zhenya, the former head of the state grid corporation of China. What does that mean? A global integrated grid would mean free trade and renewable power, free trade in renewable power. So you take it as a given that we have free trade in oil, free trade in coal, free trade in gas. But you stop short there and you don't think of free trade in renewable power. But this would be how that could be created. It's a Chinese aspiration. And of course, as China drives down the costs, which it's doing for its own benefit, as it does so, it creates opportunities for other countries. And this is how I will treat the issue of what should New Zealand be doing in this situation. Opportunities are created for other countries because the costs are coming down as fast as they're coming down. And here we see countries in Africa, like Egypt. There, it's a nice picture of the world's oldest technology, the pyramids, and the world's newest technology, solar photovoltaics. And Egypt can invest in solar photovoltaics because their cost has come down so rapidly because of China's investments. So that's the global impact of China's choices. And that's what I mean by China driving this global green shift because it's the falling costs generated by, driven by China, that then create opportunities around the rest of the world. So new business deals are possible only because China has driven down the costs in the first place. And that creates many opportunities with related technology. So it's not just solar photovoltaics. Here's concentrated solar power using mirrors and lenses to concentrate the sun's energy on a power tower in the middle of the array. And here we see new developing countries like Morocco leading the way in this transition. So Morocco is one of those North African countries that didn't get oil. So it missed out on the whole oil revolution, but it has plenty of sun. And now as a smart country, it's using the sun to generate electric power that will help to drive its own development, its own industrial development, and it can export it to Europe through intergrid connections, undersea cables across the Mediterranean for the export of Moroccan concentrated solar power. And of course, that relieves energy anxieties in Europe. They don't have to rely so much on gas from Russia. They can get solar power from North Africa. Now in the book, I cover a range of developments. And I'll just mention in passing the developments that are occurring in agriculture. Because this shift, this global green shift, it's impinging on energy. It's impinging on water. It's making the desalination of water as a feasible option for the recirculation of water where water is scarce into a possibility using concentrated solar power. And here we see the growing of tomatoes in huge greenhouses where you have sunshine that is turned into energy by concentrated solar power. The energy is then used to desalinate seawater, which produces fresh water to water the plants. The power drives the water through the greenhouse. And what you get is here we see lovely green, fresh tomatoes. Now this is actually taking place in Australia. It's a place called Sundrop Farms. It's in Port Augusta on the Spencer Gulf in South Australia. And it's a long way from anywhere, hundreds of kilometers away, so it's extremely remote. There's absolutely no farming going on in that area. It's in desert country, but it's near the water, near the seawater. So this is the future face of farming. It's not going to be huge fields watered by rain. It's going to be glass houses with renewable power to desalinate seawater and water the plants that are grown hydroponically. There's really no limit to how that system can be expanded around the world. This is a company founded by a German entrepreneur called Sundrop Farms. And it clearly has an enormous future in a country like China. And moving into other sectors, the green shift is having a big impact, of course, in transport. And I'll just show you one slide. This is the prediction from Bloomberg New Energy Finance on conventional combustion vehicles coming down. That's the red line, while electric vehicles and fuel cell vehicles come up. And they're seeing the crossover by just around 2030. That's not very far away. Now, we're all waiting for the big announcement from China. They've already indicated that they are going to make an announcement about banning the sale of fossil fuel vehicles in China. They haven't said when. They haven't said what the date will be. But everybody's waiting for that moment. And my guess is that it could be around 2030, in which case this crossover will occur earlier than this chart would indicate. So my point here is that this green shift is happening in energy and power production. It's happening in transport. It's happening in industry, where we'll be moving away from cement production, from steel production that are very, very carbon-intensive operations, and eventually in agriculture and horticulture as well. This is a truly global green shift that is involving all countries and involving all industrial sectors. What I haven't mentioned so far and what I want to close on is the issue of finance. And many people seem to think that finance is the great restriction, shortage of capital, for this green shift that I've been describing. But actually, there's no shortage of capital. This is the OECD's data on funds under management. That is pension funds, superannuation funds, insurance companies, hedge funds, sovereign wealth funds. These are all the serious sources of funding. And according to the OECD, they exceed $70 trillion. Now all of those funds under management are looking for a safe investment. Traditionally, they've been investing in conventional projects, conventional industrial projects, fossil fuels, oil wells, coal mines, and all the rest of it. But now those projects are starting to look a little bit less safe. Maybe they're stranded assets. And renewables might look a lot safer, particularly when you look at the choices being made by China and other countries. But you need to capture those funds. You need a suitable vehicle. And here's the vehicle. It's green bonds. So green bonds would be floated by a bank on the world capital markets. And investors would buy the green bond. And the bank issuing the bond would then use those funds to invest in renewable and green projects. So this was the world's first green bond issued by a non-development bank, non-state-owned bank. This is the Korean Export-Import Bank. And it was a $500 million bond issued in March 2013. And it was oversubscribed. It was independently audited as being sufficiently sustainable. And the point is, it was so successful that it was imitated by the Bank of America that was managing the release of the funds. And the Korean Export-Import Bank itself went back to the markets after a couple of years and did a second tranche. So notice that this is a capitalist solution to a capitalist problem. The problem is to how to green the whole system. And here is a method through the institution of the bond markets. The bond markets are the core of our world capitalist system. And here we can see how the bond markets themselves can green by banks issuing instruments that are targeted at providing investments in renewable and green projects. Again, we see China leading the way in this transformation. So we saw that there was a Green Finance Task Force set up in China. It's reported. And after that, we see one bank after another, like the Agricultural Bank of China, the Shanghai Pudong Development Bank, and the Bank of China itself, issuing these green bonds, both to Chinese investors and internationally around the world. $36 billion in issuance up to the end of 2016 by China, a very, very strong proportion of the world total. So this is a trend that we can expect to see accelerating. I note that there's already an investment, already a development in New Zealand for these green bonds and almost every country that has a financial system will be moving in this direction in the near future. So let me just say a couple of words because we're here in the Southern Hemisphere. And so let me just say a couple of words about what's going on outside these core industrialized countries that I've been discussing. This is the situation in Australia. And the best that one can say is that there is a shift in electric power production, electric power generation. And this is a shift towards greater reliance on water, wind, and sun in Australia in spite of government efforts to curb that, to slow that down. So it's not a case of the government leading from the front as in China or in Germany. It's a case of the government trying to hold things back. But actually, you can see the investors have won and the whole system is indeed greening. In New Zealand, it's not quite as manifested. And yet New Zealand, of course, has a very, very green electric power system already largely because of the legacy investments in hydro and geothermal energy. So there's not so much scope in New Zealand to green. And it is greening, but it's modest. It's not what you would say a definite green shift that's going on. But it is going in the right direction, not the wrong direction. So what can you say about the situation in New Zealand? You could say that it does have a green electric power system already, but it's not as a result of decisions taken over, say, the last decade by the New Zealand government. It's more this legacy of hydro and geothermal power. So there is still some thermal content in the New Zealand power generation system, a little bit of coal, a little bit of gas, hardly any oil now. But actually, there should be none. There should be no fossil fuels at all in the New Zealand system. That's not needed because of the great reliance on hydro and geothermal. And it should be, in my view, a target for whatever government is elected this coming national election to get the fossil fuels out of the electric generation system in New Zealand. There's support, a cross-party support for a zero emissions target. And there are some electric power retail companies like Ecotricity, Meridian Origin, and Contact that have clear green targets. But really, there's just no need for any fossil fuels to be part of the New Zealand electric power generation system. And some of these companies like Contact now have their green borrowing program, so they are starting to get into this global green shift in the financial sense. So what would New Zealand have to fear from the global green shift? My answer is, nothing. It just creates opportunities. And that's why it would be, it makes sense for me to be giving this talk, not in the Department of Engineering or the Department of Biological Sciences, but in a business school. Because in the end, the green shift is all about creating business opportunities. And my point is that going on around the world is this huge green shift that creates huge opportunities in power generation, in transport, in industry, in agriculture. These are all areas where New Zealand can become involved. It has nothing to fear from the global green shift. So to round it off, this was the article that I published in Nature on manufacture renewables to build energy security. That's still very much a minority view. You'll see endless discussions about renewables in the press. And it's always to do with carbon emissions. But notice that I haven't mentioned carbon emissions once in this talk. Because renewables are not actually about carbon emissions. That's actually a fortunate side effect of the use of renewables. But renewables are really about the fact that they're manufactured. And because they're manufactured, they benefit from a learning curve and cost reduction. And that cost reduction makes them, in the end, the winners of the great industrial dynamics battles that are coming along. This was a second article in Nature that I did with my collaborator, Dr. Hao Tan, on lessons from China in the circular economy. So here we're looking down on the Suzhou new industrial district. And a lot of the world's electronics and electrical goods are produced in that Suzhou industrial park. And it has enormous requirements for copper and gold for those electronic products. But most of those are met through circulation. It's a circular economy. The copper circulates within the Suzhou district. The gold circulates within the Suzhou district. That's what we were discussing in that article. And then you have the book, The Greening of Capitalism, with Asia driving the next great transformation and the most recent book, Global Green Shift. What do I mean by series meeting Gaia? What I'm talking about here is when people discuss these issues, as I started the talk, they talk about carbon emissions and global warming and ocean acidification and loss of biodiversity. And they then say, well, we have to change the way the planet works in order to solve these problems. And they usually end up with a very gloomy prognostication. Oh, it's too late. Oh, the loss of species is too great. The biodiversity is already too advanced. But my argument is that that's focusing on the wrong thing. We can't really control Gaia, which is the beautiful name for the living Earth. We can't control that. But what we can control is a system of renewable energy and circular economy. And that's what you can call series, circular economy and renewable energy system. And why do I choose series as the acronym? Because series is the Latin goddess of fertility. So here we see a battle at the level of the gods. So this global green shift is a battle on Mount Olympus. It's a battle between the gods. And we have to back series because she's the goddess of fertility. She's the one who nurtures. That's the kind of technological system we should be focusing on. Meanwhile, we'll let Gaia get on with managing herself. That's what she's very good at doing. So we have to create as much wilderness as possible. And that's my only policy recommendation. Leave as much nature as possible and focus all the activity of our industrial civilization on circular economy and renewable energy. And that can be done in 5% or 10% of the planet. The rest can be left as wilderness. And that would be our best gift to the coming generations, a sizable proportion of the planet to be dedicated to Gaia. That's what that subtitle means. Thank you very much for your attention.