Have you ever flown into a large city late in the evening, glanced out the window, and gazed in awe at the profusion of visible lights? There are long yellow lines of streetlights. Miles and miles of red and yellow streaks made by white headlights and red taillights maneuvering in tight traffic. Innumerable high-rises with rows upon rows of lit windows. Lights beaming from bridges and airports and so much more. It’s a vast, awe-inspiring sight, and a unique vantage point on the magnificence of our late-modern cities, so recently constructed.

It’s also a sight that can give one a sinking feeling—as it did to me one night when flying over the sprawling metropolis of Los Angeles. I found myself astounded at the magnitude of modern development, but also acutely aware of its source. Most street and building lights in the world’s cities come from concealed fires of fossil fuels driving turbines to conjure electricity of which only a small fraction became the morass of lights below. Keeping all those lights ablaze came with a price. I’d just finished reading some news reports about politicians promising to reignite growth and deliver energy security. They were arguing for doling out even more drilling rights to huge fossil-fuel corporations, and for removing regulations that constrained their expansion. There was no other way, they argued, to meet the energy needs of the world we have created. At a time when the climate impacts of burning fossil fuels had never been clearer, the world seemed desperate to stick to its old ways. I felt low and dejected, as the plane sank toward the ground, by the thought that we modern humans are in for a societal and economic crash landing. And pretty soon.

I ticked through the litany of reasons why collapse is approaching, and fast. There was the hesitance to step away from the huge oil infrastructure we have built—with its enormous rigs, pipelines, and storage systems, its mile-deep wells and huge tanker fleets. There were coal mines, coal trains, enormous power plants, hundreds of millions of cars with combustion engines, a petroleum lobby with endless funding and well-trained lobbyists, short-term behavior by corporations, sold-out politicians, and arcane congressional procedures. On top of that, in the climate system, self-reinforcing loops were kicking in as tundra and Arctic sea ice melted. Combine this with the growth in global population—and the wealth, consumption, and material extraction fossil fuels enable—and our fate points in one direction: overshoot of planetary boundaries and then collapse. It’s a juggernaut. And there’s no driver in control who can step on the brakes. Or he’s maybe drunk. Or stark raving mad.

If you are aware of societal, economic, and environmental trends, you’ve no doubt ticked through the very same list and struggled to find hope in a different way forward. We are often told that the way forward will come to us through innovation. Do we believe it? To answer that question and see our own time in perspective, let’s look back at the nature of waves of innovation throughout modern history.

In the mental grip of the 1900s gray growth story

It’s hard for those of us who live in richer countries to even imagine how people thought and lived before the industrial revolution, just a few hundred years ago. All those who live in richer countries today take washing machines, plumbing, hot showers, double-paned windows, penicillin, contraception, dentistry, smartphones, the internet, and planes simply for granted. But just around thirty years ago, even the words internet and World Wide Web were nonexistent in the wider society.

Innovations are often incredibly hard to imagine before they arrive. And they seem so natural, ordinary, commonsensical after they’ve spread and saturated our society. The innovations themselves begin to change our worldview, then our world. First, the mind invents technology. Then the technology transforms our language by introducing new metaphors and words. Finally, language shapes our minds and influences how we think. Then, how we think determines what we find natural and what we do. Winston Churchill, speaking about rebuilding London after the Second World War, said it well: “We shape our buildings, and afterwards our buildings shape us.”1 Call it cultural or mental evolution.

Working with data, for instance, on punch cards in the mainframe-computer age of the 1970s was worlds apart from using the computer mouse and Windows screen in the PC networks age of the 1990s. And the PC age is now receding while cloud servers, Wi-Fi, smartphones, and tablets are pervasive. When everyone has smartphones with touch screens, it’s hard to remember the days of Nokia button phones or, even more weirdly, the landline phones with circular dial pads. Today, my teenage kids are hardly capable of imagining what a day without Messenger or Snapchat on their smartphones would be like. The tools we use to think shape the ways in which we think, as MIT professor Sherry Turkle noted.3

Before such shifts happen, they are almost unthinkable. In hindsight, they look inevitable. And the past starts to look strange, dusty, and outdated. Can you imagine how people managed to get around and meet each other in cities before they had a smartphone?

Becoming aware of how limited our untrained mind is when imagining a different world is fundamental to forming a new narrative of the future. This is core to the discipline of scenario thinking: Without good stories to help us envision something very different from the present, we humans are easily stuck in our conventional mental programming. And today, most people are currently still in the grip of the dominant industrial growth story of the late twentieth century.

In most sectors of society—including many corporations, lobbying organizations, public officials, financial and regulatory institutions, and even much of the business media—people prefer not to change. Let’s stick to what we know, they say, stay true to our “core business” and “core competencies.” They try to sound McKinsey-like and look tough-minded, like economic champions carrying on our proud traditions of good profit. Like hard-core business guys. We have all seen this ubiquitous resistance to change masquerading as business strategy. It is the immense institutional inertia at the core of business as usual. People like to do what they’ve always done. Budgets for next year are just like the previous years, only 5 percent larger. We reuse Excel sheets and old designs; we prefer conventional solutions. Psychologists calls it the status quo bias, a strong, automatic emotional bias that prefers the current state of affairs over change.4 It feels even better if we can reinforce that status quo preference with a “good,” seemingly rational explanation. This all-too-human response has been with us for ages. And it is still alive and well today. The grand, gray growth story has a massive grip on our imaginations. It still shaping our society, even as many people speak of sustainability.

So, back to our conundrum: How can we separate ourselves from an ecologically destructive, fossil-fueled economy and its underlying infrastructure? How can or will this vast, seemingly locked-in, path-dependent system change in time? Yes, there is a basket of nice, select, small, net-positive innovation stories like those in chapter 2. But overall the current fossil, food, and financial systems, and the corruption interwoven with them, are so rigid that when thinking realistically it’s incredibly hard to imagine that they ever can or will transform. When looking forward, the International Energy Agency (IEA)—like many others that model our future energy scenarios—sees only a slow, gradual, incremental turning of direction, taking decades and decades.5 Because that’s “realistic”—meaning that it aligns very well with the old story.

A new wave of disruptive innovations

And yet, from 2060 or thereabouts, we might look back and view it as inevitable that it did change. Radically. And fast, from around 2020.

Looking forward from today, however, it is hard to envision just what will overthrow these now-ingrained, nearly one-hundred-year-old patterns of highways, gas stations, pipelines, coal trains, city power lines, supertankers, and exhaust pipes. But it seems clear that our world will be forced away from its primary power sources in the years to come, especially since the fossil-fuel industry has done little new in the last century, mostly sticking to fine-tuning drilling, pumping, piping, processing, and combustion. The trillion-dollar fossil car industry, for instance, will be forced to let go of the combustion engine. Agribusiness will have to let go of fossil fertilizer, excessive meat grazing, Wild West water wasting, and soil-killing practices. The utilities will have to give up their centralized behemoths of coal, fossil gas, and nuclear excesses. The way buildings are conceived and constructed will soon be completely overhauled.

But despite the pains of deep change, the ubiquitous resistance, the status quo bias, and the constant ridicule of radical new by the mainstream, the next innovative wave will be upon us faster than we think. It actually started the day before yesterday. And it will prevail not because of a surge in idealism or a breakthrough in new morals that makes forward-looking politicians to courageously decide to close down the fossil-fuel era.

Our inertia will be swept away because of an unstoppable wave of competitive innovations heading our way. Deep and extensive research has been done on the waves of innovation that have led to major societal shifts since the start of the industrial revolution. Since the first wave of factories and spinning jennies—the first weaving machines of the 1760s—we’ve seen that time and again a set of fundamentally interconnected innovations change the value-creating logic of the economy.6 Each wave of technological innovation—lasting forty to seventy years—fundamentally overthrew the old order in a few decades, killing off a lot of old companies, institutions, and infrastructure. Each wave also created vast new domains of opportunity and riches for those whose innovations were ready to ride the swell at just the right time. In other words, each wave of innovation spurred what economist Joseph Schumpeter named “creative destruction.”

Before we revisit those waves of innovation, let’s recall a familiar story from pre-Victorian England—the story of the classic economist Thomas Malthus. Around 1800, he made some simple calculations that startled him and riled the intellectual world of the British Empire. He observed that population increased exponentially by a certain percent per year when food supplies were abundant. Which means that the more people there are, the more they multiply. But land for agriculture could not grow in the same way. It could only increase linearly by clearing more forest each year. People beget people, but land doesn’t beget land. Land is limited, and the best land is cultivated first. The land cultivated later makes less food.

On the classic Malthusian chart, one line curves upward (population), but the other (food production) can only—at best—grow straight. Hence, by pure mathematical necessity, a population crash was unavoidable in his calculations.

Sooner or later, the hunger of the new millions and millions would far outstrip any food supplies, he argued. Then, with inevitability, vast famines or pests would wipe out the excessive population. The poor would go first. Thus, the poor masses were doomed—unless they could stop copulating. But the cool-headed, tough-minded Malthus did not allow himself to view a change in sexual behavior as a realistic scenario. That was just an illusory hope against cold, hard mathematics. No way forward except into devastation. According to his observations and calculations, society was inevitability heading toward suffering, famine, pests, violence, and breakdown. His conclusion was so dark that it inspired Scottish philosopher Thomas Carlyle to label economics “the dismal science.” It stuck. Malthus died in 1834. He did not live to see why his pessimistic prediction was wrong.

But we all know what happened—or didn’t. Malthus underestimated the effects of international trade and agricultural productivity. Waves of innovation in ships and railways, tractors and fertilizer production disabled the Malthusian trap and saved the British Empire, though they ushered in their own problems. Today, many see Malthus as a failed economist, a false doomsday prophet, a pessimist, and an unjust, inhumane, and narrow-minded elitist. The label Malthusian is applied to anyone today predicting overshoot and collapse of nature’s limits. All he did, though, was to think carefully through certain facts and developments available at the time. The innovations that arrived in the years following his death were unthinkable, unprecedented, hard for him to imagine. None of his contemporary critics pointed to them either. (They were too busy discrediting his character.) Yet in hindsight the innovations appear so natural to us as to have been inevitable.

Five historic waves of innovation

Among the economic historians who have studied waves of innovation and how they impact the economy as well as our society at large we find Nikolai Kondratieff, Joseph Schumpeter, and later Carlota Perez.8 These are not your typical mainstream economists, but a group that tends to struggle with factoring in the disruptive effects of widespread innovation. Since innovation can be erratic and uneven, it rarely fits well into the smooth, elegant equilibrium models that conventional economists prefer. Rather than clean and balanced equilibriums, the innovation economists who analyze messy history prefer the metaphor of waves: They come, swell, boom, break, and recede. Their timing is hard to predict. And after peaking, they leave nothing dry after washing over the entire shore.

As these economic historians tell us, there have been five main historic waves of innovation since the beginning of the industrial revolution. First came the wave of innovation enabled by mechanization with machines and factories (1760–1830), followed by the wave enabled by steam, steel, and railways (1830–1900).

After that came the onset of industry—the mass production of the assembly line, thanks to innovations in chemistry and electricity (1900–1970). The fourth wave was brought on by the expansion of oil, aviation, and electronics (1945–2000). The fifth was the digital wave, launched by information-communication technologies such as PCs, the internet, and mobile phones (1985 to the present). A new sixth wave has just begun: a green innovation wave riding on top of digitalization. This sixth techno-economic wave will usher in an era defined by a transition to renewables, radical resource productivity, and circular flows.

What can we glean from the first five waves that will help us understand the unfolding of the sixth, our main story as we move toward 2050? Here’s a crash course in innovation history.

Wave One: Mechanization (1760–1830)

Imagine it’s 1750 and you’re a visionary riding your horse down to the British Parliament in London—the pinnacle of power in the capital of the empire. You unmount the saddle, walk in, and declare to the lords with a shrill voice and charismatic confidence that in just thirty to forty years, one man will manage to weave as much as 100 to 200 skilled laborers do in one day. “And, by the way,” you shout, “this will change the structure of the economy forever.” After half a second of thought, they declare, “All my eye, what fiddle-faddle!”And throw you out. Everybody knew that this was a ridiculous prediction, since the speed of weaving had been the same for centuries and centuries. Why should it change all of a sudden?

Before machines such as spinning jennies, coal mines, steam engines, and other mechanical wonders reshaped the country, British society was agrarian. Value was made from land, serfs, and rents, or from trade of mainly agricultural products. But with these novel technological possibilities, economic and social change followed. A new class rose beyond the nobility: the capital owners, those who controlled the mills and spinneries, the weaving and mechanical factories. They got super rich and—after a fight—gained political power, too, sometimes ousting the gentry and nobility. The point is: Such techno-economic innovation waves transform the structure of the entire economy. After a period of exponential growth and frenzy, the impacts of the innovations reach everywhere in society. That’s why such waves are sometimes called paradigm shifts.9

Wave Two: Steel, Steam, and Railways (1830–1900)

Now imagine that you are living in the Norway of 1830 and you have had a vision of the future: You can suddenly envision a world with railways and huge, long trains with tons and tons of cargo speeding through tunnels and forests, over steel bridges, and into great halls in the cities. This vision feels important and significant, and you want to share it, to paint a picture in people’s mind of an exciting, new future of mobility. So you mount your horse and head off to the parliament in the country’s capital. You eagerly declare to anyone who cares to listen to you that, in thirty to forty years, one man will be able to drive 200 or even 300 horse carriages of cargo in one day—without any horse! A long silence ensues. Then they throw you out. “Impossible! Will never happen!”

Without converting iron to steel, effective rapid railways are impossible. Iron tracks are too soft to remain functional and secure for heavier and longer trains. The innovation of steel production made not just railways possible but also a whole new manner of construction, cheap enough also for high-rise buildings and larger ships. Railways then made long-range travel and quick, cheap transport possible. It also made huge volumes of coal available to drive steam engines. Proud and grand shipping companies that for centuries had perfected wooden sailing vessels soon went broke. This not only changed trade but also spilled over to change cities, coasts, settlements, and agricultural production.

In turn, the transformation led to a new class of people and companies that rose to the top of the economic ladder. Business models that scaled up steel and railways to immense size tended to generate centralized, monopolistic, hierarchical powers. The winner took all. Insane riches were made by the steel moguls and the railroad “robber barons.” The Rockefellers, Vanderbilts, and Carnegies became the richest people on the planet. Their oversized power and influence extended into business and politics alike.

Wave Three: Industry (1900–1970)

Imagine that you’re in Washington, DC, in 1908. You ride your horse down to see the horse-carriage manufacturers, the whip makers, the breeders, the saddle makers and blacksmiths. Then you say: “Horses will always be the way we get around, just as it’s been for the last eight thouand years. Safest business in the world. You guys deliver terrific quality. I’ve seen the future:

It will bring us better horses that run ever faster!”

Finally, after all those previous rejections, it feels good to be saying the comforting thing. You’re embraced. They pay you one fat consultancy fee. You get two hugs and three cheers for your brilliant analysis.

The problem, of course, was not that electric or petroleum automobiles didn’t exist at the time. They weren’t unheard of or unimaginable. The problem was that an obscure technology—totally unrelated to horses—called the assembly line was coming into existence. And a fellow named Henry Ford had some radical ideas about another future—one that involved business-model innovations that included living wages and car loans. With those, he could accelerate the rollout of cars to people who didn’t have the means to finance their shiny new purchase upfront. Economies of scale made car prices fall and fall. Then cars sold by the millions. By 1920, cities had started to ban horses on roads inside city limits.

The then-new mass-production techniques—alongwith electricity to power pumps, lighting, cooling, and heating—made incredible volumes of consumer goods available at ever-lower costs because resources were abundant and cheap. The combination of cars, trucks, and a flood of new products kicked off modern life as we know it. Economic growth surged, for the most part, through the roaring twenties onward. Again, those companies and owners that controlled the new innovations—the Fords, the Mellons, and later the Waltons, with the advent of Walmart—rose To the top of wealth from mass production and mass retail at the tail end of the wave. This wave of innovations spilled over into all corners of society, changing nearly every sector. The butcher on the corner, the family-owned watchmakers’ shop, and mom-and-pop stores started their terminal decline.

For instance, with widespread electricity came widespread food freezers. All mass-produced foods, whether canned, frozen, or vacuum-packed, needed packaging with new coating materials and plastics. With innovative packaging and surging consumer food demand came new food products and the factories to make them, and further innovations in transport, cooling, retail, and marketing.10 The extension of this innovation wave wasn’t complete before the whole economy had been covered by it. A time traveler jumping from 1890 to 1950 would struggle to believe what their eyes were seeing.

The steel and rail barons, once mind-bogglingly rich just a few decades earlier, were now dwarfed by the new industry conglomerates.

Wave Four: Electronics, Television, and Aviation (1945–1990)

Few inventions have spawned as many innovations as the transistor, a semiconductor at the basis of all electronics. From its lowly beginnings in vacuum tubes, it has not just made radios better but has made telephone switchboards and televisions possible. This spawned television companies, telecommunications networks, and news-broadcasting networks. With this, politics changed forever with the introduction of screened speeches, presidential debates, and live news. On-screen likability became more important than issues or content. One of many surprising consequences of electronics flooding the nations was the reshaping of minds through television, as it spread rapidly to almost all households, see figure 3.1.11

ILLUSTRASJON HER

The transistor also made computers possible. By the 1980s, IBM had catapulted to the top rung of the world’s most valuable companies. In 1985, it was worth almost three times as much as the second-most Valuable company, the petroleum behemoth Exxon from the previous wave.

With advanced electronics and the availability of cheap oil, mass aviation also became feasible. Flying fighter jets and Boeings by mechanical means only wasn’t a very attractive option. Large aviation companies sprung up, airports mushroomed, and global trade took off.

Wave Five: The Digital and Internet Wave (1985–Present)

Given the many ways our lives are defined by the internet today, it’s difficult to believe that the World Wide Web only got going during the late 1990s. It is still rocking all boats. Once again, we can’t really say we saw it coming.

In the late ’90s, I was involved with a multiclient scenario-planning project where we looked into the future of digital society. In 1996, many CEOs were still declaring that the internet was a fad. Why would anyone want to purchase their loans, their newspapers, or plane tickets through such a wobbly, cumbersome channel? Back then, for most users going online involved a dial-up connection with slow analog signals over copper wires. There were already hundreds of television and radio channels, and you could reach anyone by landline phone, fax, or post. What would you need an internet for?

Like the other waves, it started in just a few fringe arenas in physics and defense labs off the radar of the general public. The internet erupted commercially during the late ’90s, then frenzied and crashed in 2001 and 2008, and has since reached the maturity stage. Now it has spread to all parts of society. “Everything changes” through information technology (IT) and digitization. Today nearly everyone has a mobile smartphone or tablet connected to the internet, something no one had only fifteen years ago.

As with other tech waves, the fifth wave has given us new language. Just as prior waves got us talking about “hold your horses,” “driving the highway,” “watching telly,” or “rebooting computers,” our internet age has given us new words that we rarely reflect about, such as website, googling, and tweeting. When our language changes, what we’re able to see and do expands too. As do our jobs. Our answers to that old question “What do you do?” change: “I design webpages and facilitate SoMe.” That would be social media, by the way. In 1995, both the job itself and the answer would be utter gibberish. With each technical wave also come new social discourses. The two cocreate each other.

And also like other tech waves, the fifth wave has changed the structure and value creation of the overall economy. The petroleum and car companies used to be the world’s most valuable corporations, back in the mass manufacturing industry-and-oil wave. Many environmentalists as well as investors still perceive these as large, mighty, stable, profitable entities. They were a core part of most investment portfolios for pension funds and hedge funds alike. But already about thirty years into this fifth digital wave, the shift in value has come about: At the time of writing, the five largest companies by market capitalization in the world are from the fifth wave: Apple, Google, Microsoft, Amazon, and Facebook.12 Among the companies that owned the fossil-fuel industrial age, only ExxonMobil is large enough to hang on among the very top tiers of global corporations.

The order of things has shifted. And it is not just because Ford, IBM, Kodak, Walmart, and Shell have been shortsighted. It is largely because each new wave fundamentally changes the value-creation logic throughout the economy. Hence deeply ingrained business models “suddenly” shift from leading markets to becoming a drag. A business model is sometimes compared to cell DNA: It hardly changes when the organization is well established. It is deeply embedded in its organizational culture, reproducing itself. When its surrounding industrial ecosystem shifts, rather than rapidly adapting, it loses out to invasive and competing species that suddenly threaten to take over.

Wave Six: Green (2015–2060)

Imagine that tomorrow you drive your SUV to an oil company’s annual meeting or a gathering of energy authorities, and tell them that in twenty to thirty years our society can get 100 to 200 times as much mileage and transport work done per barrel of oil burned, if any barrel is burned at all. (By then, burning oil may be seen as stupid, outdated, and useless as a 1990s plastic CD does today.) Perhaps you add that their situation is similar to that of the horse-carriage builders after 1910, punch-card manufacturers in the 1970s, mainframe computer companies of the ’80s, the CD music industry in the ’90s just before the advent of online music or Kodak before ubiquitous digital photography in the early 2000s.

Will they hug and applaud you for revealing the future? Or will they dismiss you as ridiculous? No, they will want to punch back, to turn the tables on you. After your speech, some journalist may ask, “How did you get here? You drove your exquisite Ford here, didn’t you?” Another might chime in, “See! You hypocrite. The car isn’t going away anytime soon. And even your phone and clothes are made of petroleum.”

When waves of innovation put societies on the cusp of change, those most invested in the old ways rarely grasp the speed with which those ways will become obsolete.

For 200 years, innovators found ingenious ways to improve labor productivity. This was mainly accomplished by having machines (real capital) make people (labor) much more effective per hour. Now we have a world with more than seven billion people, most wanting work. But on an Earth that’s restrained in what scientists call sources and sinks—or, in more general terms, raw materials and the air, water, land, and vegetation that can absorb carbon emissions and other pollution—it makes plain economic sense to innovate for optimizing resource productivity. The evolution in lighting provides a case in point. The LED bulb gives off the same amount of light as an incandescent bulb but requires just one-tenth of the coal burned in a typical coal-fired power plant. If we then power a smart LED with a motion sensor on wind and solar power rather than power from a coal-fired plant, we can get the lighting we want with at least 99 percent less resource use than the old system.

From 2010 to 2018, average solar panel power costs per kilowatt-hour (kWh) fell nearly 80 percent, becoming cheaper than fossil fuel most places. And solar modules costs dropped over 90 percent from 2010 to 2020.13 It’s truly dramatic—a solar energy revolution. As we saw in chapter 2, resource innovations are happening in buildings, foods, transportation, and industry. All of these are converging into the next (sixth) wave of disruptive innovation. And the wave is clearly on its way. Even mainstream players like the World Economic Forum are now spotting what it calls an “innovation tsunami” that “has the potential to wash over the world’s energy systems.” In a 2018 report it declared, “Anticipation of this tsunami has been a source of tremendous anxiety. Some firms and industries fear survival. Others foresee riding these powerful waves into new markets.”14

How will this tsunami impact us when it hits?

Innovation researcher Carlota Perez distinguishes five phases of each wave: eruption, frenzy, turning point, synergy, and maturity.15 Eruption occurs when there is intense funding for the new technologies, combined with a disdain of old assets. In the frenzy phase, there is a split between real values and the share or paper valuation. One can see inflated expectations in which the value of speculative financial and underlying production capital deviates wildly. Remember the dot-com bubble in 2000, when any startup with a business plan involving e-commerce could find investors? The frenzy stage usually results in a financial bubble, followed by a crash. After the bust, a synergy phase gets a new golden age going again, followed by a coherent growth stage in which production, employment, and share value realign. Finally, at the maturity stage innovations reach market saturation, and there is less big innovation in main industries but more incremental improvements of the products and services. Hence, the economic margins and rate of return on capital slow down. The wave of innovation has sent its ripples all through the main sectors of industry and society. The stage is set for the next wave.

How do societies transform: top down or bottom up?

Global problems like climate disruptions, deforestation, soil degradation, and nitrogen overload will never be solved by a united, top-down government approach. We will never see all countries instituting stringent pollution regulations and globally harmonized carbon prices over all regions of Earth. Rather, millions of smart people working from the bottom up will improve their and our lives by wasting less. Gradually, as people encounter more frequent examples of others making more money from fixing resource wastefulness, they will understand that it is a smart strategy.

Seeing is believing. Only later, after enough examples have accumulated and this idea, and the companies employing it, have become widespread, will mainstream politicians follow suit. Politicians hardly ever lead by going in front. But they can then, if supported by industry and voters, start raising the bar for everyone, the late adopters, through regulations or taxes.

The guiding mantra of the sixth wave is not only “Less is more” but “More with less.” New innovations can make it possible for nine billion people to live well on one planet by 2050.16 They can enjoy more goods with fewer bads. And this is where the sixth wave and healthy growth intersect.

So will “technology” save us? Is it sufficient that we somehow push new technology and innovation? This question is surprisingly divisive. On the one side, we’ve got the techno-optimists and ecomodernists who view technology as a sole savior. It will fix it for us. Technological change is always accelerating, they argue: “Technology is the future!” Some, like inventor and tech guru Ray Kurzweil, believe in a soon arriving “singularity point,” where technological change gets so exponentially rapid that more or less everything changes at once. On the other hand, we find the modern Luddites, who insist that you can’t fix a problem created by technology witheven more technology. Some stress the need for appropriate technology inErnst Schumacher’s small-is-beautiful tradition, and prefer local, low-tech, slow food, natural, all organic, analog stuff. I love hanging out with both camps, and I love to pack my stuff and travel between them.

Yet a pure bottom-up thrust from new and better technology rarely makes it through all the layers of obstacles that are built into previous institutions. Some guilds from the Middle Ages are still around. And new trains can’t run without nationally coordinated railroads, bridges, tunnels, and the maintenance of them. Cars get nowhere without open roads and interstate highways. Radios and televisions don’t work without clear agreement on the broadband spectrum. GPS can’t work without satellites. Advances and breakthroughs in transistors, microchips, GPS, the internet, or even fracking don’t happen without large research grants. And solar panel technology needed decades of R&D funding and publicly guaranteed power prices in order to grow enough to really drop its costs. The point is that all technologies and all markets exist in historic, social contexts inside governmental regulations, which are run according to deeply ingrained cultural values and ideals.

So, transformations may get momentum from the intense market pressure of new technology, like electric cars or autonomous driving. But without government response and legal guidance, innovations are often unable to break through into the mainstream. The speed of diffusion is too slow. Incumbents and their old systems are too entrenched. There are too many hurdles and too much red tape. The quality of new and unproven tech may be oversold, leaving people feeling duped (as with the fake “low emission” diesel engines that led to the 2015 Volkswagen scandal).

Therefore, any innovation will accelerate better if it can surf on underlying societal driving forces as well as thoughtful regulation in order to gain market momentum. Markets are always embedded in society, reflecting long-lived power structures.17 New innovation waves need sufficient height to break through the historic, established obstacles and infrastructure.

Individual states and To answer this section’s main question in a nutshell: Societies transform by first seeing a swelling wave of new, emergent, bottom-up initiatives, which are initially met with resistance, then political acceptance and top-down institutional reform. Bottom up first. And when the S-shape rises high enough, even the mainstream politicians will finally follow suit and surf the wave. Technology by itself can rarely do it. But when the societal system embraces the technology and starts integrating it into existing structures, then it may contribute to society’s main goals. The ripple impacts may then come as a sudden surprise to those accustomed to the status quo.

Driving forces of the sixth wave

Why will a sixth wave build into a massive change? The coming sixth wave of innovation builds momentum and height from at least four converging gales: radical end-user efficiency solutions, rapidly falling costs for renewable energy, circular material flows, and, finally, rising risks and costs of new fossil investments.

When the first wave of mechanical innovations got going, humanity and its total economy were pretty small compared to the vastness of Earth’s uncharted oceans, extensive forests, unexplored mountain ranges, plentiful rivers, and wild animal herds. Machines and capital, on the other hand, were new and scarce, and skilled labor was relatively expensive. It made economic sense to grab whatever bountiful resources could be taken for free while improving labor productivity by creating ever better machines. The more each worker could produce per hour, the more could be sold. And then profits would rise. That logic continued for about two hundred years. During all that time economic decision makers put less priority on resource productivity. Resources were relatively cheap and abundant. And there was little to pay for the pollution.

But exponential growth is devilish. Slow and imperceptible at first, then, after several doublings in human population, the footprint of the whole human economy, once dwarfed by the scale of Earth’s bounty, “suddenly” became large relative to the size of the planet’s sources and sinks.

There were billions more of us, and 91 percent of everything that we took from nature, from fossil energy to biomass, became waste anywhere from a few minutes to a few months after its use.18

Only in the last decade or so have we seen substantial improvements in energy and material productivity in some richer regions, like North America. 19 Radical resource productivity means, quite simply, much more with less. More well-being and more human needs met—with just a fraction of the conventional twentieth-century resource use, and reduced footprints on nature.

The logic of sixth wave innovations relies on shifting away from our 250-year focus on labor productivity and toward a new focus on resource productivity. It makes increasing sense to achieve this by raising resource efficiency radically, by a factor of 4, 5, 10, and in some applications even 100 and more. Resource efficiency means making the exact same useful benefit or service with less resource input.20 The good news is that radical resource efficiency is not just feasible but also profitable. Wastefulness isn’t just destructive to nature; it is also bad design and bad business.

Driving Force Number One: Radical End-User Efficiency

Efficiency, productivity, intensities,21 waste, sources, resources—all These boring words are becoming sexy in the sixth wave. It’s cool to be lean resource-wise while being creative, clean, elegant, and abundant design-wise. It means adding miniscule sensors and smart features and redesigning material flows with the end user’s human needs as a guiding star. We can design away pollution, toxics, and waste from the get-go. Thus, we can replace the insanely wasteful patterns of the twentieth century with clean system redesign. Better lives with less waste and pollution as incomes per person rise.

Need indoor light? Rather than burning coal to boil water to make power to run through a grid to make light by heating a thin wire at the desired location, just design the building to let daylight in during the daytime. In the dark hours, let sensors determine if someone is around. If so, automatically optimize the LED lighting.

Need to go somewhere? Rather than owning your own car, get a ride share in a taxi or on a bus or hop on your own favorite e-bike. Or, better yet, why even own a bike when you can bike share? You can be guided through the best options by integrated mobility-as-a-service apps.

Need clothes? Rather than purchasing a dress made from conventional pesticide-sprayed cotton, you can rent one from a clothes-sharing company. Or have some AI push an alert to you when fancy, suitable garments from upcycled fiber are available for hire, lease, or purchase near you.

Need a shower? Rather than heating your water with coal-based Electricity or gas or oil, use solar heating from your rooftop and store it in well-insulated tanks until you’re ready.

Need the restroom? Why on earth use gallons of clean, drinkable water? Low-flush and no-water toilets are gaining market share, saving both water and costs.

One research project identified twenty-one major upcoming consumer innovations that have disruptive potential. Seven are in mobility: e-bikes, bike sharing, taxi-buses, 22 ridesharing, car sharing, mobility as a service, and better telepresence. Seven are in the power domain: photovoltaics like solar rooftop with storage, peer-to-peer electricity (selling to your neighbor), vehicle to grid (selling from the car battery back to the grid when demand is high), disaggregated feedback on your consumption (to lighting, washing, cooling, etc.), time-of- use pricing, managing demand (of washing or heating) according to load, and more energy service companies who will optimize your home consumption in exchange for a fixed fee. And seven are in smarter consumption: peer-to-peer goods (sharing tools, sports gear, etc.), home sharing (like Airbnb), the Internet of Things at home, smarter appliances, prefabricated retrofits with click-on insulation plates, smarter and self-learning homes, and heat pumps. Now, that’s an abundant wave of innovations coming toward us, enabling a Low Energy Demand (LED) future with better lives.

In the twentieth century, human needs were met through cheap, abundant energy, most of it from fossil fuels. We turned on the lighting thanks to coal and gas. To get heat we burned oil and gas. Even our food was grown with fertilizer made from natural gas! We used oil and gas to make plastic packaging and clothes. And, of course, in these early 2000s, we still do. But it is the twentieth century that will be labeled the “fossil century” of civilization by future historians. Going forward into the twenty-first, more and more human demands will be met more efficiently without using any oil or gas. That’s right: zilch, zero.

When houses are built with temperature, light, and energy optimization in mind, they don’t need much external energy. Conventional boilers and heating systems can be replaced with smart, passive houses that are so well insulated they hardly need heating or cooling. The small remaining needs can be met with solar-powered heat pumps. You can then cut out the natural gas supply. You don’t need a heating system or to install power-hungry air conditioners. Ventilation systems can be downscaled and cheaper. Buildings become net-positive, meaning they produce more energy than they consume over their lifetime. Being connected to the grid will still be required, in order to trade power with other buildings and the utilities. But on most days buildings might even sell more power than they buy, becoming small power stations while also charging any electric cars connected to their circuits. The electric cars’ batteries may help stabilize the grid, too, optimizing the timing of the power buys so that one can buy power at low cost and sell it when the price is highest.

And so it goes. For all human needs, there are radically efficient end-user solutions ready to go big time. There are a great many startups, scale-ups, and innovations within large corporations aiming to commercialize these opportunities. They are coming to a marketplace close to you in the near future. Among the new players we find Whim, based in Helsinki, the home of Nokia. Whim is an app offering mobility-as-a-service (MaaS) for all your transport needs, whether public transport, bike share, taxis, and affordable rental cars at a fixed monthly rate. Or the San Diego–based vehicle-to-grid company Nuvve, which can help you make money off your electric vehicle even when it’s parked by trading power storage to and from the grid. There’s Spinnova, which offers textiles spun from forest pulp and agricultural wastes. The fibers are warmer than wool and stronger than cotton; there are no toxics in production, and the materials are fully recyclable and compostable. And there’s DesertControl, which injects nanostructured liquid clay to regenerate arid or degraded soils. Whether in lawns, gardens, parks, golf courses, or fields, it can increase the soil’s water retention, organic carbon, and microbacterial capacity. It can drastically improve soil health while cutting fertilizer and freshwater irrigation, both in urban and rural regions. All of these companies—and many others—are working every day to scale up to serve global needs as quickly as they can.

Such radical resource-productivity solutions are ready to sweep the floor of old products and services simply because they offer superior value. Not just because they are greener, but because they are better—for you, for ecosystems, and for profits.

Driving Force Number Two: The Rise and Rise of Renewable Energy

With end-user efficiency we will need much less energy and resources when serving more human needs. With net-positive houses and electric battery cars, gas and oil demand is being substituted. But what will really kill fossil fuels in the coming decades are, of course, the continuing improvements in solar and wind power with energy storage. Each time the number of installed solar capacity doubles, the module price per watt drops around 26 percent.24 This phenomenon contrasts starkly with the increasing long-term risks and investment cost trends in expanding new gas, oil, or nuclear capacity.25

Since the turn of the twenty-first century, we’ve doubled global solar capacity around nine times (from 2 GW in 2000 to ~750 GW in 2020), which has led average prices to drop more than 90 percent since 2000. To a large extent this price drop was initially kicked off by Germany’s generous feed-in tariffs in the early 2000s. Then China’s huge overinvestments in capacity crashed the price again since 2010. “Wind and solar were in 2019 cheapest across more than two-thirds of the world. By 2030 they undercut commissioned coal and gas almost everywhere.”

Every day in 2016, around 500,000 solar panels were set up somewhere. Just two years later, it was around one million panels per day. Producers are gearing up to increase their capacity to install even more. In a few years, there will be many millions of new panels installed every day. And efficiencies are wrenched out of each silicon ingot slice and square inch of solar film. Smarter ways of making materials for solar panels are being commercialized. It is inevitable that the overall costs will continue to decrease while economies of scale grow.

Solar conversion efficiency is also being improved year by year. On premium solar panels it’s now above 21 percent, which means that 21 percent of the energy in the sunshine comes out as electricity. For comparison, the efficiency of photosynthesis is only around 3 to 6 percent.27

Some competing solar power systems have now started to use both sides of the panel, while others use mirrors to concentrate the sun onto the solar panels. This can then achieve even higher conversion rates, particularly if co-generating heat. They can run 40 percent cheaper than conventional solar panels due to cheaper mirrors and fewer panels of higher efficiency.

Other companies are bringing even cheaper panels to market based on new production methods and materials, such as perovskite.28 We’ve certainly not seen the end of solar and wind power innovations. We’re in the midst of a techno-economical paradigm shift, to use Carlota Perez’s language.

Wind has shown the same type of falling costs as solar, if not as quickly. Battery costs, however, seem to be falling as quickly as solar power, an average of 24 percent per year since 2010.29 The main question affecting the pace of solar and wind power growth is how much investment there will be in new annual capacity installation. And the volume of investment is still influenced by policy and tax credits. But whether tax credits are increased or slashed in any one country doesn’t change the global dynamics: The rise of solar and wind power competitiveness is unstoppable. If one country strangles support in policy or with taxes, others will take the opportunity and run with it. The key issue is how rapidly the global annual installed new capacity grows each year. Annual solar and wind installations have grown, in fits and starts, at rates of 0–50 percent per year since 2010. But with just on average 10 percent annual growth, the new installed capacity doubles every seven years. And once installed, each panel provides power for around 40 years or more, almost for free, as they require minimal maintenance.

The main blows to demand for oil will of course come from batteries. As battery-electric vehicles (often called EV or BEV) grow their market share, demand for gasoline falls. In 2015 the one millionth EV car hit the road. The next one million cars took about 15 months. During 2019, more than 2.2 million new light vehicles with plugs were sold.30 When you make a million of something, prices really start to come down, and quality can go up. The combustion engine vehicle industry has had a century of leeway. Producing more than a billion cars, it has had ample time to cut costs. But the fossil car is now toast as it can’t compete with the simplicity, safety, performance, cleanness, and cost of ownership of the electric motor running on abundant renewable supply.31 Now it’s only a question of how quickly consumers will stop buying them and/or governments will ban them.

It’s easy to get lost in the exciting frontier of solar, wind, and battery development. So much is happening during any given month somewhere in the world that no person can really manage to keep an overview. This reality should put terror into the hearts of coal, oil and gas managers. Their business model is being undermined. There will still be a few more decades when there is substantial petroleum demand. But as we pass 2020, there will be no more strong demand growth. The fossil-fuel markets will be in mid-to long-term decline due to squeezed profit margins, from slower end-user demand combined with rapidly rising competitive renewables.

Driving Force Number Three: Circular Material Flows

After radical end-user efficiency and renewable energy with storage, the third large shift comes to linear material flows. Incredible amounts of materials are extracted from nature each year in order to serve the needs and wants of people. But most of that ends up as waste after one or no use. This causes deforestation, acidification, dead sea areas with too many nutrients, soil loss, plastics in the ocean, and so on. Very little of the extracted resources are kept in use for long, nor are they returned for a new cycle after use. Research estimates that the economy is on average only 9 percent circular—meaning that 91 percent of extracted resources end up as waste after one or no human use per year.32

Four main categories of materials flow through the economy: fossil fuels, minerals, metals, and biomass. The first two driving forces will reduce and eventually eliminate the flow of fossil energy. This third driving force curtails the need to extract more minerals, metals, and biomass by transforming today’s linear growth of take-make-waste into circular flows.

In the coming decades, humans will increasingly learn to emulate nature in this regard. In 2020, the European Commission has launched an ambitious Circular Economy Action Plan, which encompasses not just waste but the entire material flow of minerals, metals, plastics and biomass. The plan aims to create a win-win situation through circular economy measures:

Savings of €600 ($650) billion for EU businesses, equivalent to 8 percent of their annual turnover, while creating 700,000 extra jobs and reducing carbon emissions by 450 million tons per year by 2030.33

The biggest category of minerals humans use is concrete. And the largest footprint comes from extracting limestone and converting that to portland cement. After water, concrete is the most widely used substance on the planet. Since 2003, China has poured more cement every three years than the US managed in the entire twentieth century. Continued urbanization in the coming decades will undoubtedly require more concrete. But concrete recycling is an increasingly common method of using the rubble after demolition or renovation. Previously, concrete ended up in landfills. But reuse of concrete by cutting or by crushing and recycling has a number of benefits. It can keep construction costs down, cut transport, soak up CO2 in recycling the concrete,35 and comply with environmental laws and growing awareness. Just outside Oslo, Norway, a very large shopping mall is to be demolished, and the developer is reusing the concrete and other materials for the new suburban sustainable village construction on the same site. Otherwise, they would have had to buy all that as fresh materials. The reuse saves around $160 million in costs.36 This illustrates the essence of the circular material flow driver: cutting waste, costs, and extraction by reusing and upcycling materials in thoughtful ways.

Leading companies are finally getting around to designing circular material flows for their products; Apple has introduced the robot Daisy, which can pull apart 1.2 million iPhones a year, or 200 per hour. Apple sends batteries recovered by Daisy upstream in its supply chain. They are then combined with scrap from select manufacturing sites, and, for the first time, cobalt recovered through this process is now being used to make brand-new batteries—a true closed loop for this precious material, says Lisa Jackson, Apple’s vice president of environment, policy and social initiatives.37 Electric car manufacturers are getting in place similar arrangements for the huge amounts of car batteries that are currently hitting the roads.

A more circular economy can reduce both virgin extraction and CO2 emissions. Increasing the reuse, recycling, and upcycling of just the four value chains of plastics, steel, aluminum, and cement could almost halve the emissions from these sectors globally by 2050 (down from 9.3 to 5.6 gigatons of CO2 per year).38 It is potentially the second biggest lever for CO2 emissions reduction after clean electrification.39

We can measure the degree of circularity as the share of cycled materials relative to the total material throughput in tons per year. As this share of cycled materials grows from 9 percent today to possibly over 50 percent by 2050, the economy’s environmental impact will shrink accordingly. A decisive point that enables this is that the stocks of material resources (in capital such as buildings, machines, cars, and infrastructure) are around ten times larger than the annual extractions and still building up. As the economy matures out of the industrial age’s linear growth model, and better recycling designs and methods are scaled up, huge stocks of already-used materials are becoming available as “new deposits.” Existing stocks can be leveraged at low cost, rather than always going for more extraction from nature. The use of digital technologies, such as sensors, AI, and blockchain, in transparent, circular supply chains can significantly accelerate this driver.

A key step on the road to higher degree of circularity is to eliminate the use of fossil fuels, which are the ultimate linear resource, from extraction to only one-time combustion. This is where the fourth driving force interacts with the three we’ve examined so far.

Driving Force Number Four: The Rising Risks and Costs of Oil and Gas Investments

Cities are economic powerhouses. More than 80 percent of global GDP is made in cities. In recent history, most cities have run almost entirely on coal, oil, and gas. Vast volumes of black, gooey and gassy stuff enter them and “disappear” into the air. Seventy percent of all human emissions come from cities, though they cover just a tiny fraction of Earth’s surface.

Where does all the energy come from? From far away, deep down, and ancient sources. A hundred years ago, the oil and gas that humans started to use wasn’t that hard to find. In 1912 you could take a small drill, make a hole in the ground in Texas, and oil would gush forth. Using just one barrel to drill, you could bring 100 barrels of oil to the cities. People rushed to find more. Some became insanely rich by hitting and owning the right location. The search became more sophisticated as better acoustics enabled petrogeologists to find more and more reserves. The cheapest, easiest oil and gas supplies were explored and extracted first. Then the sources that were farther away, deeper down, and harder to get at were tapped. But even the nearest, easiest-to-exploit oil fields lost pressure after a while. More pumping became needed. Fields quickly become less productive.

By the 1950s, the average energy return on energy invested (EROI) in the US was down to 1:50 (from 1:100 in 1912). Today, EROI in US conventional oil fields is down to about 1:9, and the shale oil wells of Bakken and similar oil fields may yield only 1:4. An immense amount of energy is now combusted to drill, press, boil steam, and inject and break the shale far under the ground. That means some places now burn one barrel of oil (or the equivalent of gas) to produce as little as four new barrels.42 The yields decline quickly for each new shale well over time. It may drop more than 60 percent during a single year.43 Then they must drill and steam and frack again. Economists call this a game of decreasing returns.

Yes, new technology and petroleum innovations may cut costs, and supply may increase when adding more rigs. Innovations within the fracking industries, including horizontal drilling, have increased oil and gas supply from both conventional and unconventional sources, such as tight oil or tar sands or heavy oil fields. What’s common to all extraction, however, is that more energy is used on average for each unit of energy returned as time passes. And the later, newer fields and finds are on average more difficult to exploit and bring to market than the first, which are now mostly depleted.

This dynamic is playing out on a global level. The average EROI for petroleum has been sinking year by year since 2000, irrespective of high or low oil price, while solar and wind are seeing improving EROI. The question is not if renewables will overtake fossils but how quickly. There is a race between petroleum exploration innovation and the inevitable decline in the geological availability of remaining easy reserves. There are huge remaining reserves, but they are found in the ultra-deep sea, the Arctic, in heavy oils, tight rock formations, or in distant and politically unstable areas far away from the cities where the hungry cars and power stations want to explode and combust and burn all that dark, gooey ancient carbon-rich stuff.

Let’s follow oil from well to wheel: To get it into a car driving through the city, oil is pumped, piped, stored, shipped or railed, refined, piped and trucked again, tanked, pumped, driven around, and, finally, in a microsecond, explosively combusted! Gone. The driver must go back for more. It’s an incredibly complex, long linear supply chain. Some may call it a value chain. But it seems more like a waste chain, since its external social costs are not figured in.45

Why is the declining trend of EROI in oil important to understand? Because it guarantees that there is no chance that this industry will get to a point where suddenly large, new volumes of cheap, light, and sweet crude will appear again. Ever more rarely an oil company will have a lucky strike and find some easy oil next to existing fields. One example is the Norwegian offshore Johan Sverdrup oil field, the biggest in western Europe, which started producing in 2020. It will produce a so-called “sweet crude”at relatively low cost for a few decades. But this type of new find is rarer and rarer.46 Yet there is more than enough oil in remaining reserves, but they demand ever more energy to continue producing. The oil industry is now trying to squeeze the last barrels out of mature basins at as low a cost as possible.

But they better hurry up if they want to stay in business. What will become abundantly clear as one understands more of the sixth wave and the driving currents behind it is that there is limited time left for profitably exploring, producing, and selling oil and gas. Why? Because we’ll need less and less as resource productivity improves. In OECD countries, for instance, demand has been dropping since the 2010s. China, too, seems to be reaching peak emissions sooner than expected.47 And we’ll need even less in the near future due to fossil-demand destruction, and because cheap renewables with storage are rapidly outcompeting fossil fuels. All the while, there remain many oil producers—like Saudi Arabia, Russia, Iran, Venezuela, and even US shale oil—with big reserves who want to make sure “their” remaining oil is sold before they become “stranded assets.” That may happen either because demand declines as renewables take over or because policymakers are successful in curbing oil use due to global heating. As financial climate risks increase, investors are looking elsewhere.48 Still, oil and gas will eventually be unable to compete against solar or wind energy, which has near-zero operating costs.

When you start to look closer at what we use fossil fuels for, you discover that there are competing substitutes entering markets all over the place. Power, heating, materials, transport, buildings, and industrial processes: each can—and eventually will—be reduced to near-zero emissions, even in the harder-to-abate sectors. The demand for fossil fuels is steadily decreasing in richer countries, and the financial climate risks are becoming clearer, at the same time as new supply is getting harder to extract. The shift does not mainly depend on climate idealism in politics, or because all business suddenly wants to “go green.” Certainly, removing the current perverse public subsidy for fossil fuels and adding new government regulations, carbon taxes, and more business responsibility can all accelerate it. But the main drivers will be because the substitutes get better, safer, healthier, more attractive, and—finally—more profitable.52 We’re not fully there yet today, nor tomorrow. But we’re not far away either.

The energy system is experiencing the creative disruption Schumpeter described: a full overhaul driven by newer, better, smarter solutions. Yes, old thinking, outdated regulations, lobbyists, corruption, bad risk management, underpriced emissions, and perverse governmental subsidies for fossil fuels can slow it down. But they can’t stop it as we move forward in the twenty-first century.

And with the wave, a mindset

As we’ve seen, technology shifts also become mind shifts. So what new language, new perceptions, and new paradigms will the sixth wave usher in? It’s possible already now to see the contours of a healthy, clean economy, but we would be defying historical lessons to assume we can predict everything about its shape and scope, or even its ultimate impact. The sixth wave is still far enough away to harbor some mysteries. But it is also close enough to reveal some clues about how to ride it well. That involves, of course, changing the nature of growth itself—getting clear on what we want growth to do for us and for the planet, and whether it can someday be truly healthy.

Either way, the wave is approaching, reinforced by end-use efficiency, cheap renewables, circular designs, and risky fossils. Soon, what seems impossible today—becomes the inevitable. Which means it’s time to do everything in our power to steer the impact in a just and regenerative direction. Not only do we need digital disruption of the current system, we need to navigate toward a “good disruption.”