Jancovici : James Finance contre Docteur Carbone – Genève – 17/09/2020

Welcome! Welcome everyone. Everything is fine.
Welcome everyone. I am very happy to invite you to this conference. One of the first conferences thanks to Jean-Marc Jancovici,
I believe there are so many people who want to listen to him regarding ESG, Economic Social Governance,
which is becoming very important and especially nowadays, especially at our level,
in our field of specialization in Finance. BBVA, the Spanish bank, has just issued
an ESG bond this week. And then there will be a lot more that will happen. Jean-Marc Jancovici, will explain to you the reason of this. He already told me it is going to cost us all,
much more than we think. But I am very happy to welcome you here
and we look forward to what you will tell us. Thank you very much. Well, I hope it works. Wonderful! Good evening, I will quickly answer to this introduction. Three days ago, I published, I think it was in a
French economic daily called “Les Echos”, a small article in which I explain that one of the signs showing
that we will address correctly the issue I am going to tell you about is that we will leave the ESG.

As long as we stay in the ESG,
we’re sure we’ll address it dismissively, as totally anecdotal and not at all worthy of the stakes.
So that will be one of the indicators of the fact that the problem is taken seriously. The second thing is that I am going to make
a declaration of interests before this speech. As you can see, there are two logos on this…
well, rather 3, at the top. So here is what I do for a living when
I am not making speeches I am a partner in a company called Carbone 4,
which was established 13 years ago in France and which tries to bring economic community to be a
little more serious on the climate issue, with its ups and downs. It is particularly hard with the financial world,
but we will take during questions time. As for the second, we do both consulting and data work.
So we have a good knowledge of your world when we try to convince you to donate a little bit of money.

The second thing I did was that ten years ago,
I created a trade association: The Shift Project which is therefore a lobby, an NGO which aims to
bring together economic actors who consider that it is their selfish interests of becoming
more serious on the climate issue. That’s the idea. I am trying to create a collection
of selfish interests that say “no, no, I am the one who wants this because…” Regarding the other two jobs that I have:
I am a professor at Mines ParisTech, which is an educational institution that is somehow similar,
and not very different form the EPFL where I was this morning. Except that it is smaller with promotions of 120 students. And finally, the last somewhat significant job
I have is that I am a member of an administrative entity that was created by Macron a year and a half ago. You know, he creates something new every six months.

So, I was member of the thing he created a year and a half ago, called the High Council for the Climate.
We are supposed … the interest of this body, very selfishly, is that we have access to a collective
reflection on what France is doing in terms of commitment regarding its greenhouse gas emissions. I believe that
what is said has no effect on the followed policy on the short term. It has a small media impact. Above all, it allows us to take
some time to sit down and to see what is going on. So, I am going to talk to you about climate and energy
and actually, what I am about to tell you tonight, if I pull it off, should give you a bit of a headache.
For two reasons. Firstly, because it is technical and complicated. There are a lot of things on which I am going to go over quickly.
But I will say it again, it is technical and complicated. It is full of math, physics, biology, etc.
A whole bunch of stuff that makes your head hurt. And the second thing, is that if I pull it off, you will
realize that today, there is an absolutely monstrous gap between the reality of the problem and the actual means.

That means that right now, we are going straight into the wall while honking cheerfully. So if you came to those
two conclusions, what I am about to tell you tonight is a summary of the course I give to my students of Les Mines,
this is the last logo you have in the middle, and is totally available online on my personal site.
You can find a page on my personal website where you can access the entire course I give at Les Mines
online in three different formats: in video recordings, recording boards with audio files
and written transcriptions, there is everything you need.

There you go. And now we are going to start
getting to the heart of the matter. And we will start the heart of the matter with that.
So here, you have a graph that shows you the greenhouse gas emissions of humanity over a century
and a half. So when I say greenhouse gas, maybe some of you do not know the precise
definition of what a greenhouse gas is. A greenhouse gas is a gas. I will give you the
physical definition and then I will explain it. It is a gas that has absorption lines of long wave
infrared bands emitted from the planetary surface.

This is what a greenhouse gas is, i.e. that it is a
gas which has the possibility of having electronic transitions. The gas molecule has the ability to have electronic
transitions exactly in the energy ranges of the photons that are emitted from the planetary surface. This is
the definition that makes your head hurts. Now the definition that makes your head hurts a
little less is that we can say that they are opacifiers to energy evacuation from the planetary
surface released as infrared radiation. So, they are opacifiers to this evacuation.
The first greenhouse gas in the atmosphere is water vapor. But humans have no influence
on the atmospheric water vapor content. No direct influence because the atmospheric water
vapor content mainly depends on the air temperature. On a planet which two-thirds of its surface is
covered with water, that is enough to determine the amount of water vapor in the atmosphere
since the earth is a big evaporation machine. We sometimes forget it because we don’t really
live on the ocean, but most of the planetary surface is covered with oceans and therefore it is a big
evaporation machine.

The second most important gas is CO2. And we are contributing to these
emissions, we can see it on this graph. Then, there are other gases: methane, nitrous
oxide, etc. The first comment I am going to make regarding this curve is that if I had removed
the dates here and ask you to add any… how can I put it?… process that is sometimes put
forward as allowing to be more efficient in terms of emission, you would not have been able
to put any of it. Okay? If I ask you to put on this curve, the beginning of the renewable energies which,
supposedly, allow you to emit less, you would not be able to put them anywhere by
explaining “Well, here is the date. This is obvious because at that point the emissions decline”.

And
if I tell you the beginning of the climate negotiations, it would be the same. When did we start the climate
negotiations in order to lower emissions? With all due respect for the United Nations,
which has a very small building in Geneva, you would not have been able to put it, etc.
And what if I ask you to put for example digitization, dematerialization, the rise of services
in the economy, etc. All that stuff that is supposed to make our economy less predatory on the environment.
You absolutely do not see their impact on this curve. So all these statements are false. Digitization has
no mitigation effect on emissions, none. The expansion of the tertiary sector has
no mitigation effect on emissions, none.

Etc. Etc. And the few billion that we invest, or hundreds of
billions that we invest in wind turbines nowadays have no mitigation effect on emissions, none.
Neither does the Green Bond of the BBVA. No, they have no impact,
but we’ll come back to that at the end. So there you have the greenhouse gas
emissions that humans are responsible for. It turns out, and here is another essential reminder of
physics, or more accurately of chemistry. This first greenhouse gas, CO2, here, is an oxide.
CO2 is carbon dioxide. It is an oxide. As it turns out, chemistry tells us that oxides
are extremely stable molecular forms on Earth.

That is to say that once an element is in the form of
oxides, we have to get out of our way to transform it otherwise and in fact, to get out of our way
means that we have to put energy in the system, to bring energy to the system in order
for the oxygen to go away. So, once an event, an element is in the form
of oxides, if you don’t change anything, it stays in the form of oxides forever.
This is for example the case with iron. If any of you have stocks or bonds in iron mines,
well, iron is often found on earth in the form of oxides and it has been the case for hundreds of millions of years.
Since there is free oxygen in the atmosphere, we find it in the form of oxide, it is attached in the
form of oxide and now it is in the form of oxides since hundreds of millions of years.

It does not change. It is exactly the same for the CO2 that is
added to the atmosphere. As long as the CO2 is in the air without
any contact with the ground, it is eternal. It is eternal because there is no spontaneous
purification process of CO2 from the atmosphere. CO2 is totally inert as long as it is in the atmosphere.
The two CO2 purification processes that we have on Earth, two processes in the atmosphere,
are two processes of contact with the surface. When the atmosphere is in contact with the ocean,
there is balancing of respective concentrations. These are called partial pressures of CO2 between
air and water. And at that time, CO2 is able to pass from air into water if
the partial pressure is higher in the air. But it is a reversible process. If one day we remove
CO2 from the atmosphere, at that moment, part of the CO2 that is in the ocean will
come out to go back into the atmosphere.

And you have a second process which is
photosynthesis. You need a photon, you need energy from the sun. If your teenagers
are trying to grow plants that I won’t name in a cupboard with no light, it just doesn’t work.
So it takes an energy input for this process to operate. And at that moment, the plant deals with collecting
the CO2, of breaking it in two, keeping the carbon to produce glucose and gently releases the oxygen
so that we can breathe. Because of what I just said once we create a CO2 excess in the atmosphere,
which is what we are doing, the time it takes for this excess to be evacuated after
emissions stop is more than historical times. You have here a graph published years ago
and which is known in the scientific world.

It shows what is left of a CO2 excess after the
ending of emissions. We created a CO2 excess. Today, there is more CO2 in the atmosphere than
before we started playing around with coal, oil and gas. Well if tomorrow morning, humanity stops its
emissions, after a century, less than a half, in fact a half and remember this number, half of the CO2 excess
that we have created will always be over our heads. Well, not over your heads, but over our
grandchildren heads for what will be left of them. After a thousand years, between 20 and 30% of this
CO2 excess will still be above our heads. And after ten thousand years, at least 10% of
this CO2 excess will still be over our heads.

What I am telling you is that you must
keep in mind two conclusions. The first is that never again in human history
will we observe the climate of 1700. Never again. Moreover, as long as there is more CO2 in the
atmosphere, there is an opacification of the atmosphere which increases the amount of energy contained
in the system. Never again in historical history, well in human history, will there be a stable climate.
In other words, from now on, climate drift is a structural factor in the world we live in. In 20 years,
the climate will be different from what it is today; in 40 years, it will be different from what it is in
20 years, etc. I remind you that our societies have settled down because for ten thousand years,
since the end of the last glaciation, the planetary climate has been remarkably stable and
therefore we have been able to adapt to the local climate in terms of housing, agriculture, etc.

Obviously,
Swiss agriculture is not similar to Moroccan agriculture, and obviously Swiss homes are not similar to Moroccan
homes. And we owe that to the fact that our generations, the people who preceded us, were able, generation
after generation, to improve the conditions in which they adapted to an external environment which
itself did not vary. Now it is over, that is to say that the external environment will vary constantly,
permanently. What we are seeing nowadays, such as the fires in the world, is just the beginning
of the consequences that are going to come along with the climate change. This is just the beginning.
Okay, this is just the beginning. So obviously, I’m going to tell you a little bit about the consequences.
Obviously, one of the problems that we have and you know it very well in the world we live in,
it is the lack of time to address the problem that we have to deal and which requires not only
one or more human lives, but go far, far beyond the horizons which are yours and which are mine in
the management of … let’s say the society and the economy.

In the political world, a long-term
horizon is three years, that is to say the time when you start thinking about the next election,
two years before the end of your mandate and in the world that is yours, the long term can range
from a few nanoseconds to a year when you are lucky. We are just totally out of it when we think about the
time horizons that we are considering in order to deal with this problem. The only absolutely certain conclusion
is that as long as we stick to those time horizons, of this order, of this nature, we are absolutely sure
that we will not do anything serious. This is also the reason why, in the financial world, the
first to be interested in this issue were the pension funds, because they are the only ones which have a
somewhat long time horizon.

All right, give me my money back in 20 or 30 years…
That’s why they still have to think about it a little bit. But afterwards, as soon as he gives a mandate to
an asset manager, the latter will think in a yearly term because it is all about how much money he is going to
bring back during the year. And if it is not enough, I’ll change you. So we really have a problem. And in
the companies with which I work, I say it publicly I can tell you, that do not prevent me from having
a few clients, in all listed companies, the long-term strategy is 3 years during the good years,
six months during the bad years.

So it is obvious that we are once again completely
out of line with the problem we have to deal with. This accumulation, I mean the emissions, lead to an
accumulation of CO2 in the air because of this very long lifetime. There you see the amount of CO2
in the air measured in milliliters per cubic meter. We call this unit parts per million and you can see,
for example, an experiment that consists of having international meetings. So you see the impact that this
will have on the concentration variation. It is useless, or more exactly, it is not disruptive. What happens in
international meetings is just to endorse what countries are already prepared to do. These
meetings will never give birth to anything new. They will ratify what has already been decided
elsewhere. This opacification of the atmosphere to the radiation emitted by the Earth has the effect
in particular of increasing the equilibrium temperature on the surface of the Earth.

Basically, we receive
energy from the Sun on Earth. Most of this energy passes through the atmosphere,
since air is transparent to light. That is the reason why I can see you. Otherwise, if there was an opaque
wall, I would not be able to see you well. And once that solar energy gets to the ground,
it heats the ground. The ground, among other things, will emit infrared since that’s how a body at ground
temperature gets rid of its energy: it radiates infrared. And at this moment, this infrared want to go back
to space. Except that in the atmosphere, there are gases which intercept it, which absorb
infrared rays and those are the greenhouse gases. And the more greenhouse gases you add to the
atmosphere, the more efficient the infrared absorption near the planetary surface is and therefore, the more
it encloses the energy close to the ground.

Therefore, increasing greenhouse gases increases
the equilibrium temperature on the ground. Here you have a curve that indicates over a
century how the temperature increases, maybe even over more than a century,
how the temperature is changing. So you see that until today it has already increased,
temperature increased by one degree. We already observed 20 million hectares burning
in Australia, more than 20 million hectares burning in Siberia, plus 5 million hectares burning
in California, well no, for the moment, they are only 3 burning in California, and many more. Just with 1 degree.
And what you see on this graph is that based on the emissions we’ll have later and that I will not talk
about now because that’s not our subject. What you see above all is that the next 20 years
are undifferentiated … whatever scenario we follow in terms of emissions, the temperature
curve is exactly the same. This is the consequence of the lifetime of CO2 in the atmosphere. The next
20 years are already written from a climate point of view, no matter what we do regarding emissions. So whatever
we do, from the moment we start to work on the reduction of emissions, we are working
for results in 20 years.

We will have to take this on at one point or another.
But there is a 20-year lag between the moment you start taking the drug and the moment it
starts to have an effect on the disease. This is what we have to keep in mind. And in the
20 years separating us from the moment it starts to have an effect, the consequences will
get worse anyway. Anyway. So this time lag is obviously extremely cruel and
unpleasant, but it's a fact and you have to keep it in mind. Now I am going to tell you a little bit about
the consequences of climate change and I am going to start with a comparison that
I really like and which I am now showing you. I hope this will give you the conception of what
is at stake. I really like this example because when we talk about our senses, a temperature variation
of a few degrees is absolutely not interesting. The outside temperature in Geneva today has
probably varied by more than 10 degrees, as it turns out that we are in a season where
the temperatures vary a lot.

It has probably varied by more than 10 degrees between this
morning and this afternoon. We must have experienced a variation of more
than 15 degrees. It must leave you completely indifferent in the meaning that you were alive
this morning; you are alive in the afternoon. The outside temperature has changed by
15 degrees. The planetary temperature will change by 3 degrees. So what? It’s still just not an issue.
But in fact, what you should understand and what I will try to explain to you now is that an
average value and an individual value. That’s not the same at all. Because while here
it is daylight and the temperature is heating up; in Australia, it is night and the temperature is dropping.
While here, it is fall and the temperature is dropping; in Australia, it is the arrival of spring and then summer,
the temperature then rises in Australia and throughout the Southern Ocean. And in fact, the planetary average
does not vary at all from 10 or 15 degrees nor, you will see, of 4 degrees every four mornings.
It has nothing to do with that. In fact, we must have a good reasoning.
When we talk about the variation of the mean, we must understand that this does not apply
at all to the local and instantaneous variation.

Even if we are talking about temperature in
both cases. So this is what current Europe looks like. When I say current, it is already not so current
anymore. It is Europe. Every time I say to myself that
I should change that legend, so late 20th century Europe looked like this.
So in Europe at the end of the 20th century, you have climatic conditions implying that if
you do not cut the trees to put something else instead fields, roads, schools or banks, well, in Europe we have
large plant species that are capable of growing: trees. So that means it is humid enough and mild enough,
neither too cold nor too hot for large plant species to thrive.

When we’re up north here it's too cold
and too dry for us to have trees. And when you're in the east here, it's too dry for you to have trees,
if not everywhere else you have trees. This is Europe 20 000 years ago.
So Europe, 20 000 years ago, is very different from today’s Europe and
we find ourselves in a context where, in fact, it is much colder because of the tumultuous
marriage between the 10 elements of the solar system. You know that the solar system is a marriage
between the 10 elements: the Sun, plus nine planets. Well, in fact, Earth’s orbit is not constant over time
because we experience the pull of Jupiter and Saturn, and the pull of Jupiter and Saturn causes
Earth’s orbit not to be constant over time.

It is deformed over time and this deformation
of the Earth’s orbit has notably caused the great interglacial glacial cycles at the scale of
hundreds of thousands of years over the last 3 million years. It is hot, it is cold, it is hot, it is cold, but
it lasts 100 000 years, one way, 20 000 years the other. So, 20 000 years ago,
we are at the heart of the last ice wave. There are no Swiss financial institutions because
you can see that the Swiss are under the ice. So this problem is resolved. Nor is there the Norwegian
sovereign wealth fund since the Norwegians are under ice. As you can see there, in fact,
Scandinavia is under 3 kilometers of ice. The glaciers of the Alps have considerably
taken on a great importance, leaving us, when they disappeared, with the
upper valley of the Rhône.

And you also see that for the French, the very good news is
that the Irish and the Scots have disappeared from the Six Nations Championship. This is also
a huge advantage. So you see that the landscape is very different. To make this big ice cube there
and this big ice cube there, plus the big ice cube there, plus the big ice cube which is placed on Canada which
is totally frozen, 3 km of ice too, plus Greenland, etc. You need water, just like in your fridge. You don’t have
ice cubes without water. The water came entirely from the ocean and therefore there was a transfer of water.
And since the ocean is a large tub with the bottom still in the same spot, the ocean level has dropped 120 meters.
You wouldn’t have, Mr. Bourgnon, any one of the two Bourgnon, winning a cross-Channel regatta because there
would be no English Channel anymore. The climate is much colder and much drier.
In fact, it is much drier because it is much colder. You also know that because you don’t
live very far from the mountains.

When the climate is much colder in general,
it is dry because in a cold climate you have less evaporation. Also, the amount of water vapor
you can put into very cold air is much less than the amount of water vapor you can put into
very hot air. So a much colder climate is a much drier climate. Moreover, Antarctica is one of the
driest places in the world. And in this much more hostile ecosystem where most of the European
vegetation looks like what you have in the north of present-day Siberia. Well, the French population
is much inferior than the Geneva population. And the French ecosystem is capable of providing
men, who are animals at the end of the food chain, the capacity to feed 100,000 people. So you can see
that the two landscapes are reasonably different and obviously when Europe went from the state you can see
in the left to the state you can see on the right, the planet got warmer.

I don’t know many people who
manage to melt an ice cube by cooling it. So the planet has warmed up. Of how much?
This transformation is due to global warming which is of the order of 4 to 5 degrees in 10 000 years.
So, there you have the result of a life-size experience that we deduced from the past and which consists of
warming the climate by a few degrees. You can see the result in five to ten thousand years. So before
going into the details, I will say it bluntly. Global warming of 4 degrees in a century means that
the value of the assets you manage will be the least of your worries. First, there will be no more assets to
manage because much of the world's countries will be at war. The other countries will be under dictatorship. It is obvious
that there will be chaos everywhere because there will be such a great displacement of the existing conditions at a
great speed, with such deficiencies in the essential needs and in particular the food, I will tell you that obviously,
it will be a mess everywhere.

So we will not have a stable world and the United Nations may well call
for peace, it won’t do any good. So, it will be a monstrously chaotic world that awaits
us and especially for the people who will follow us because, when it really comes down to it, there are a lot
of people in this room who have, like me, a few white hair Well, if they die tomorrow morning, they would have
lived a good life and they would have lived beyond the life expectancy of humanity of the 1900’s. In the 1900’s,
I remind you that the life expectancy at birth in France was less than 50 years. All the people who are over
50 years old in the room, they’ve already enjoyed life a lot more than most of the humanity that came before us.
But we are talking about our kids and our grandchildren. Those are the category of people we are talking
about and they are not all 50 years old. So, this is what it is about. Now a few details.
Everything I am telling you now have come out of scientific literature,
you can refer to the sources.

First, you can see a graph that shows you the number
of days during which the outside conditions will be lethal. It means that if we go outside, we die. On a planet
that has warmed by 4 degrees. Okay, compared to today. The reason why is it focused on the equatorial band is
because it is an area where the air is saturated with humidity. You know that the temperature of your body is 37 degrees
and that the temperature of your skin is 35 at your forehead, more so since we took all of your temperatures
before letting you enter, and if you looked, you would have seen the temperature displayed.
You saw that it was 35 and a bit. The outer temperature is 35 to 36. If the ambient air,
saturated to 100% with humidity, rises to more than 35 or 36 degrees, then you will enter an environment
in which your body can no longer cool itself by heat loss or by evaporation, or in other words, perspiration.

You would therefore die of hyperthermia. You could die of hypothermia if you are buried
under an avalanche and nobody finds you. Asphyxiation aside, you could die of hypothermia
if you fall in a crevasse. That is possible. Those are the places in which we’d die of hyperthermia.
First, because we cannot withstand external conditions. You have the number of days per year where this applies,
there are places for example here that are a bit too populated, for example here a bit too populated, for example
Nigeria, a bit too populated. Obviously, as we head towards conditions of this nature,
the people living there will not stay there. They will go looking for other weather conditions
elsewhere. They won’t all go by plane because at that time, there will be no more planes,
but they will anyway little by little. Obviously, that will trigger massive geopolitical trouble.

The second thing to keep in mind is that in a globally warmer climate, there will be more
evaporation globally, yet, unfortunately, this evaporation will not lead to increased precipitation
everywhere. The global surplus of precipitation on Earth will be unequally distributed, and some zones will
witness a considerable increase in precipitation, namely the high Northern latitudes and some zones,
mainly around the borders of the Mediterranean basin. Then we are at the forefronts where precipitation
will drastically decrease. Add to the fact that precipitation is decreasing and you will probably
notice if you go for a walk in nature with constant precipitation not far from here,
if temperatures rise, evaporation increases and the soils dry out, even if precipitation does not
decrease. This does not suit trees and cultures. It will stress the trees and the cultures. The
Mediterranean basin is particularly at the forefront as with an increase of 2 degrees, we would already
reach 20% drying out of the soils around the borders of the Mediterranean basin. A part of these borders
consists of all the countries on the southern bank that are already not self-sufficient when it comes to
food.

Due to their demography, they will be forced to import in an increasing manner so long as they can
manage to feed the people, and when they begin to struggle to do so, they will be faced with worse than the
Arab Spring. This is exactly what will happen. So, the millions of refugees in Europe? It’s actually
funny because I was on a radio show, and I was asked my opinion on the vote on
immigration that will be proposed to the Swiss. My answer was that external pressure will rise
regardless, due to this and other problems. If you wish to be well-protected against immigration,
then it is far more important to spend as much money as possible in the countries with possible immigration,
than to barricade yourselves, because that solution will only last so long. Here you have the evolution of
the humidity of the soils and, as a result, the evolution of crop yields.

I’ll directly go to this graph
by the IPCC, dating back to around a year ago. It shows that starting from 2.5 degrees to 3 degrees of
temperature increase, food insecurity begins to become widespread across the planet. Thus, all of you
who have read your history lessons well will remember that food insecurity is the first catalyst of political instability.
The moment people have nothing to eat, they revolt. It works very, very well. We have cut the head off
our king, and we’ve come to regret it a bit now as we have nobody to place in Gala. We are then forced
to elect a president, but if not, it is obviously something that will change a lot. Something that I’ve also forgotten
to say, but that I’ll say straight away. In general, but particularly in the economic world, we tend to
fall victim to the error of linear reasoning.

An action costs me 100 euros,
then two actions cost 200 euros, and we transpose this linear process onto
the physical world that is not linear itself. Therefore, many people claim that 2 degrees
are two times more serious than 1 degree. I am going to use the example of your own body.
From time to time, your own body goes through an increase in temperature, called having a fever.
So if you have a temperature increase of 1°C, you’ll feel a bit lousy.

That’s not such a big deal.
If you’re determined enough, you’d even come here because the appetizers are good. If you have a
temperature increase of 5 degrees, you won’t miss out on 5 appetizers. You’ll be dead.
Therefore your body, which is a perfectly nonlinear system. It demonstrates how consequences are not a
linear function of the temperature increase. Consequences increase at a more rapid pace
than temperature increase. It is exactly the same for the planet. Thus 2 degrees
are not two times more serious than 1 degree. They are probably 50 times more serious than
1 degree. Then 3 degrees would probably be 100 times more serious than 1 degree. At the current
increase, plenty of corals are already suffering. At 2 degrees, they would all be dead, for instance.
So 25% of marine species that depend on coral reefs, today, we know that they will have to find an
alternative otherwise they will disappear.

This is only one example among others. It should
be clearly understood that every half a degree leads to a surplus of unpleasant consequences,
maybe even equal to the total amount of unpleasant consequences that we have already witnessed.
It is not at all linear like the function of damage. Well, just a little subject. I’m sorry for showing a map of
the Hexagon but it was to illustrate something more general. I’ll say it again, you have probably gathered that only a
small part of Australia burned. Not too long ago. In fact, the part of Australia that burned is much
greater than the surface of Switzerland. Almost 20 million hectares burned, or almost 200 000
square kilometers. If I am not mistaken, Switzerland makes up less than half of France, not even that.
We then have a little less than half of France in burned forest area, in Australia. It is a bit similar in
Siberia, there had been mind-blowing temperatures near the Arctic Circle last spring, and fires are raging
everywhere.

At this very moment, California is experiencing the same thing, as well as Brazil and
a part of Africa. What you see here is the result, or more so the summary of what I am telling you,
it is the propensity towards the burning of French forests at the end of the 20th century and in 2040.
This was a simulation from a few years back. It is probably going faster than that now.
Simply put, what you see is that in 2040, there could be fires anywhere in France like the
ones happening today in the Mediterranean basin, well on the Mediterranean coast or inland,
in the Paris region, there will be fires like those happening in the Provençal inland today.
Extreme phenomena will gradually become more intense. I told you earlier that global warming
was a warming of the surface. Planetary infrareds are intercepted near the surface, so the temperature
near the surface becomes warmer. However, if we intercept the infrareds reflected by the surface
near the surface, then there will be less energy to heat up the upper atmosphere. There will be
less rays to intercept in the upper atmosphere. Then global warming is induced by the greenhouse
effect and that is one of the main factors differentiating it clearly from warming caused
by variations in solar activity.

It leads to a cooling of the stratosphere.
When the greenhouse effect increases, the temperature of the soil rises and in turn the
stratosphere cools. When the sun’s activity increases, the stratosphere warms up because when the sun
emits its rays, ultraviolet rays are absorbed by the ozone in the upper atmosphere. If the sun is
more active, it emits more ultraviolet rays, they are then absorbed more by the upper atmosphere
and it becomes warmer. Thus when the stratosphere is warmer, the sun is to blame. When the stratosphere
is cooler, humans are to blame. At this moment, the stratosphere is cooling. As there are weather balloons
measuring its temperature, we know that the stratosphere has been cooling down since the seventies.

We are
therefore absolutely certain of what is happening, it is the greenhouse effect and the sun has nothing to
do with it. There are other markers that also prove it, but this is a definitive marker. All of you who have been
on a glider or a paraglider know that on summer days when the soil is very warm and the stratosphere very cool,
there are strong convective currents that allow you to wander above the Weisshorn as I saw during the summer.
It is exactly the same with the convective movements that bring about hurricanes and tornadoes. The moment
the surface temperature is higher and the stratosphere temperature is lower, there will be an increasing
temperature differential between the two.

That increases in turn the power of the convective
pump that brings about the hurricanes, storms, and tornadoes. Then the logic stands that extreme
phenomena will intensify. I discussed extreme phenomena such as storms, but these phenomena also
include droughts, floods, etc. there are all kinds of things, we see that the intensity tends towards increasing.
Greenland has started to melt. Greenland has started to melt and from this moment on, it will continue
to melt no matter what we do, because the melting of Greenland creates a series of processes amplifying its
own melting. The first process is that on the surface of Greenland there is dust carried by the wind. When
the snow melts, the dust becomes concentrated because dust does not melt. This makes the surface
darker, which makes it absorb more sunrays and therefore melt more. The second process is that if
the surface melts, the altitude of the ice cap decreases because there is a bit less surface.

You know well that
when altitude decreases, the ambient temperature increases and that means quicker melting. The third
process that amplifies the melting is the melting of the pack ice. The pack ice melting does not lead to a
rise in water level itself because the ice is already on top of the water. However, if the pack ice melts,
the very reflective surface of ice is replaced by the very absorbent surface of oceanic water. That means
more sunrays would be absorbed and the ambient temperature of the ice cap increases and it melts faster.
All of these things will continue to amplify. Anyway, the ice cap of Greenland will melt and
contribute between 3 and 6 meters to the rising of the sea levels in the coming centuries. Anyway,
the shot has been fired and there is probably an identical process taking place on the West Antarctic
ice cap.

The West Antarctic ice cap is this part here. There isn’t really a west for the Antarctic because it is
centered on the South pole, but this part right here, there is a number of worrying signs that the glaciers
are flowing much quicker towards the sea. This ice cap is essentially sitting, as with a big part of
this one, on an underwater bedrock. It can also be attacked by the sea from below when it warms.
There is an entire series of processes here as well that amplify each other and there is a concrete risk
that this disintegrates and contributes to a 6-meters rising of sea levels in the coming centuries. 6+3 gives 9.
Plus expansion. My word is that in a few centuries, the north of Europe could look like this.
Well, you’ll say to me, the Swiss don’t care. Our seaboard is pretty short. I will say it again,
if this takes place in Northern Europe, I don’t think Switzerland will remain untouched
by the consequences facing Europe in general. Well, that will be in quite a long time, or at least we
believe that to be the case.

There are severe consequences like that waiting to be triggered. Another consequence
I talked about earlier is that a part of the atmospheric CO2 enters the water. Those of you who’ve read the older work
of Jules Verne remember that the carbonic gas that we called carbonic gas in ancient times, before
we forced your children to call it carbon dioxide, was called carbonic gas and carbonic acid before that.
Why carbonic acid? Because when you add CO2 to water, it turns the water acidic. Then the mixing of CO2 with water
lowers the pH of the water. That will make it harder to synthesize limestone for all organisms that need to synthesize
a limestone skeleton, namely a big part of a zoo and the phytoplankton that synthesize small shells. So the
small marine animals that are at the bottom of the food chain, and need to synthesize limestone to build their little skeletons.

In animals that need to synthesize limestone to build their little skeletons you have mainly the small animals
that led to the geologic limestone layers that we use today to build cement and houses. That is the shells of ancient
sedimented animals. These are layers of limestone. We are then preventing these animals from living.
Let us continue. In a world that will become warmer we will modify the oceanic circulation at a large scale.
The climate will become warmer much faster at the Poles than at the tropics as a result of global
warming caused by the greenhouse effect.

A Swedish chemist named Arrhenius had understood
that already back in 1896. Arrhenius had said: “an increase in the greenhouse effect will cause a
quicker warming at the Poles than the tropics,
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the winter than the summer, and the night than the day.”
There are physical causes as well. Not to go into details, there are physical causes that explain this. First,
the temperature difference between the Poles
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and the tropics will go down. This has two consequences.
It will modify the oceanic circulation at a large scale, notably the one leading us to the North Atlantic drift
that extends the Gulf Stream. This, however, is also weakening the Polar vortex, which is the division
between the polar climate and the mid latitude climate, which is weakening.

This explains why, mainly in winter,
we are witnessing sudden, extremely violent increases in temperature, directly followed by record lows.
This is the weakening border separating the polar climate and the mid latitude climate and the air masses flowing
freely between the two. That creates a much more varying climate swinging from one extreme to the other.
On the 1st of January, 2019 or 2018? I tend to forget. A positive temperature was recorded in the North Pole,
on the 1st of January. Positive temperatures in the North Pole because of the effect of… Covid, let’s talk about Covid
that has nothing to do with climate change apparently. However, it does. When you have a cultural diversity,
the biodiversity of pathogenic agents increases. Nature loves to get creative with its pathogenic agents
when it gets a bit warmer. Viruses love it and so do microbes. Therefore climate change will increase the likelihood
of new unprecedented things appearing or of things we’re already familiar with thriving in zones where
they did not previously thrive.

There will then be plenty of surprises when it comes to pathologies. Well, I’m going
to skip through this, I’m going to skip through this, I’m going to skip through this, and I ask you to look
closely at the last sentence. The last sentence, if you calculate the Value At Risk, it will be pointless
because you do not know the risk. It is not worth it to calculate the Value At Risk for a risk you do not know.
In this experiment performed for the first time, consisting of varying the climate with the same amplitude
of deglaciation on a sedentary humanity of 8 billion. The only certain thing is that we will not be able to
foresee all the possible consequences. That is what we’d call a surprise by definition.
As the climate becomes warmer then, we will witness unexpected, and increasingly unpleasant,
consequences in increasing quantities. There, it is written. Science should not be asked to tell you what will happen
and to have everything prewritten. Tell me, if you have added 4 or 5 sliced mushrooms in a dish.
It doesn’t work that way. Science will always be incapable of drawing up a table predicting all of the risks we may come
to face.

The list I’ve told you about today is almost the most comprehensive you will ever see in terms of the totality
of the risks we will face. I feel that when Gretta Thunberg sees this and says: “You, the generation before us?
What are you doing? It seems that you do not care at all », she’s right. Because we effectively know enough already
to be stirred by the topic, yet we are not.

There is still a lack of knowledge, sure, but there is also
enough knowledge available on the topic to take action. All of this then, how much will it cost?
The answer is something between 0 and infinity. As you know and I’ll show it to you in a bit, natural
resources are free by agreement in our economic system. The climatic system is free by agreement in our
economic system.

There is no single share value that integrates the existence of the climate.
It does not exist. And when an asset is free, the value of the damage to that asset is zero. What
is the value of ruining the climatic system? Zero. We are then trying to work around the problem
by saying: “Well we’ll try to see what loss of GDP we may have if we mess with a free asset that
comes with the fact that we have a GDP.” The answer to that question is, like this.

What’s
funny is that up to this moment, the “like this” gave the left value that you see in this slightly
complicated table. I’ll zoom in on the right value in particular. There are some economists, it’s actually
funny because they’re from the University of Chicago, and you know, the University of Chicago is the University of
Rockefeller, of Milton Friedman, the one that made the people in this room think that he is manipulating data, namely a
price in which all of the necessary information is found.

This is the University of Chicago and Milton Friedman.
Unfortunately, that is not at all true. You will see in a bit and it’s really funny to see that from this university
came an article a week ago stating that if we look at all the consequences, the cost of a ton of CO2 for a ton of carbon
can fluctuate between 10 thousand and 600 thousand dollars.

I will therefore make a simple calculation. The carbon
imprint of a Swiss person, like that of a French person, because we swim in the same waters, fluctuates between
10 and 15 tons of CO2 per year. In other words, if I calculate the necessary imprints of all the products
and services consumed by the average Swiss or French, knowing that all of you in this room are well above
the average Swiss.

Your carbon imprint is much greater. All studies show this, you travel by plane much more
frequently than average. And well, the plane is indeed a means of transport for the rich, when you look
at the social distribution of aerial transportation. At 15 tons of CO2, it isn’t to be taken as an attack,
it’s more so a fact. At 15 tons of CO2 per person, if the ton of carbon costs 100,000 dollars. The ton of
CO2 excuse me, if the ton of CO2 is for 300,000 dollars, then you get 15 x 300,000, 4.5 million dollars in costs
of climate change for the lifestyle we lead today per person, while that same person will only generate 30,000 dollars
in GDP per year. What the economists will tell you, is that we can justify the economic value of climate change
where every time we make 1 dollar in GDP, we think we’re growing rich.

We are however becoming monstrously
poor. It is another way to say that the reparation of damages will be completely beyond the reach of the economy.
It is another way to say that. At this stage then, you’ve listened to me intently, and you want to say
“Fine we’ll move on to action, we’ve understood. We will invest in wind power”. You’ll see.
It is unfortunately a bit more complicated than that and we’ll take the road that leads us to the questions
on this topic. You have here a group of curves that answer the following question: how much has
the planetary climatic system warmed since the beginning of the industrial era? Let’s say between
1850 and 2100 as a function of the total quantity of CO2 released into the atmosphere between 1850 and 2100.
The beginning is not exactly similar. From 1850 to 1870, we don’t care. From 1850 to 1870, so little happened and
it is insignificant compared to what came afterwards.

So, I look at the global emissions over the century and a
half from 1850 to 2100, and I get the temperature elevation that’ll happen between 1850 and 2100. Practical application?
I haven’t yet done the calculations for 2019, but in France,
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we will not be that far. End of 2018, humanity added 2250
billion tons of CO2 to the atmosphere and so we got a temperature elevation of 1.5 degrees, of which 1.2 are already
visible and 0.3 are already embedded in our past emissions. If tomorrow morning, emission stops, we would still hit
1.5 degrees. Even if it displeases the United Nations, with the agreement it just passed in Paris saying
that we will limit ourselves to… whatever. Physics tells us that 1.5°C is already embedded in
our past emissions? That’s it then. We can do nothing to change that.

If we wish to limit ourselves to 2 degrees,
that is the grand tearful declarations, the hand over the hearts of countries at the Paris agreement. The biggest advantage
of a line is that it is bijective. Then we have an answer to this question. We have to limit planetary emissions
to 3000 billion tons of CO2, 2250 of which have already been emitted. That leaves 750. You agree with me.
That leaves 750. This means that for the coming century, to put it simply, a third of the emissions remains that
humanity has already emitted over the past century, again to put it simply, with a humanity that is on average
2 to 3 times fewer. In other words, if we want to respect the 2 degrees, a child born today has a carbon budget
throughout his life ranging between the sixth and the tenth of the one his grandparents, who die on the day of his/her
birth, had.

Again to put it simply, this is what this means. Very simply, let us just plant windmills. OK, let’s continue.
Practically, this means that greenhouse gas emissions have to get to zero very quickly. That means in the second half
of the 21st century, we are in 2020, the second half of the 21st century, they should go down to zero. It should then
go through an intermediary point and from now till my children become my age, the planetary emissions
should be divided by 3. From now till my children become my age. The future generations that are concerned
by this topic, we are constantly around them, I just came this morning from the EPFL
that is full of future generations. Very well. We do not need to go looking for them. The future
generations were born since 1992, the year of the Earth Summit, where we signed a text that talks about
future generations. All those born starting 93 are the future generations. The future generations are around you,
you find them at home coming back from work every night.

I insist, this is not in the future. These are generations already
here. Therefore, from now till my children become my age, planetary emissions should be divided by 3, to see if planting
windmills is sufficient, we will look more closely at where these planetary emissions come from. Here you have a pie
chart representing planetary emissions. We are on the same page. 20% comes from coal-fired power plants.
Coal-fired power plants around the world make up 20% of planetary emissions. Half of that percentage comes from
China. Half of coal-fired plants are found in China. You’ll tell me: “we the financiers, we’re clean, we no longer make charcoal”.
Of course we don’t make charcoal. There is no more charcoal to make. As it happens, charcoal is growing in China, India,
and other countries in South East Asia, in Western Europe, where the peak of production of charcoal in Great Britain
was in 1914.

The peak of production, there is a small link between this and that, as a side note, the peak of production
in Germany was in the 50s give or take if I’m not mistaken. The peak of production in France, was around the same time,
so in terms of charcoal, we have less and less of it in Europe. There is still a decent amount in the United States, but
it is currently being overtaken by gas. It is very easy for financiers to flaunt a badge of honor saying they’ll never
invest in charcoal as there are no more projects in the West accessible to those who wish to invest in charcoal, as
the Chinese are handling their charcoal on their own. This is an undertaking that costs nothing because in
any case, there are no interesting projects. It constitutes however 20% of emissions in the world. Then, 7%
of emissions in the world, is due to gas and fuel plants, mainly gas. I remind you that gas is natural, it’s a fossil fuel.
I also remind you that rock fall and hemlock are also natural.

The fact that it is natural doesn’t mean that it is without
natural danger. Natural, means nothing. In fact, everything is to some extent natural. Cement plants, the business of
Mr. Holcim, makes up 6 to 7% of planetary emissions, and two thirds of that is the calcination of limestone.
It involves taking limestone, CaCO3, and breaking it down in two to produce quicklime, which produces cement
when mixed with snake oil, and CO2 released into the air.

A cement oven then is an oven used to break down
calcium carbonate into two components, one of which is the CO2 released into the air.
The rest of the industry produces 10%, let’s say 12 of greenhouse gas emission.
Here I am talking about direct emissions. I’m not talking about the electricity consumed
by the industry, found in this section here and this section here. I’m talking about direct emissions,
blast furnaces, etc.., chemical plants, places where for example hydrogen is produced. We’ll talk about
hydrogen maybe when the time for questions comes. Today, the production of hydrogen emits as much CO2
as you’d imagine. It involves mixing methane, a natural gas with water vapor and heating the mixture
while burning natural gas. You have CO2 two times in the production of hydrogen, once while burning the
natural gas and the other because the carbon of the methane is pulled by the oxygen from the water vapor and
it produces CO2 that is also released into the air. Thus today, a hydrogen car spits out as much CO2
in its life cycle as a gasoline-powered car. When Europe gets excited at the prospect of making
hydrogen, even though at first it’s a complicated process to electrolyze it using windmills, it’ll always be
complicated.

We got hydrogen called Grey at the beginning to try it. Hydrogen is actually full of CO2. Okay.
So advantage for the climate: none. Advantage for Air Liquide: real, but advantage for
the climate: none. Building boilers account for 6% of emissions in the world, so it is much more in
Switzerland, for example, but because Switzerland heats a lot and cools little. But if you go to India,
there are few places where they heat, but there are a lot of places where they use air conditioning, etc.
So 6% in the world. Transport is 14. In there, 6% represents cars, 4% represents trucks, planes
or rather pre-Covid planes represents 2% and boats represents 2%. So, even before going deeper
in the subject, you immediately see that cars and cement plants are a problem of the same magnitude
in the world as all means of transport. That’s less emissions than coal power plants. Now, you start to have
a little idea. So planting wind turbines to make hydrogen for that, plus hydrogen for this, plus hydrogen for that
and hydrogen for that.

Plus the reduction of iron ore here, plus this there, and that there. Orders of magnitude are
not adapted. Orders of magnitude are not adapted. We will see later, it does not work. Twenty percent
of greenhouse gas emissions are associated to agriculture. These are emissions from cows. I’m sorry to say that in
the land of Herens and Simmentals, but cows are rude. They burp. They have an element of superiority
over men: they have four stomachs, as you know, the rumen, the reticulum, the abomasum and the
omasum, which then makes very good tripe.

But cows burp methane, and you have two major
sources of methane in the world in the agricultural world: the ruminant breeding and rice paddies. There are
quite a few rice fields in Switzerland but a few cows. All ruminants, goats, sheep, etc. But above all, the cows.
And then you also have the methane fumes from the excretions and you also have the nitrous
oxide fumes from the fertilizers. When you use nitrogen fertilizers and put them on
the ground, you have nitrous oxide coming out of it.
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And nitrous oxide is a greenhouse gas. It is also the
laughing gas or mild anesthetic that your children are given in the hospital.

You have to choose between
Strawberry or mint scent. 10% of emissions are the result of deforestation. Deforestation on earth is very simple.
We cut, we burn to make room for agricultural land. This is the process downstream from the forests of Borneo,
with orangutans in front of bulldozers. This is also the process, the burns in Brazil and the resulting fires, etc.

And it is
essentially to grow crops that will be intended either for the country or for export. In Indonesia, palm oil is
exported. In Brazil, soybeans are exported. In Africa, it is a lot of food crops for themselves.
But everywhere, the determinant is the same. It is to have new agricultural areas. So, if you
don't like deforestation, there are two things to be concerned about. It is the size of the world
population and the share of meat in the food ration. These are the two drivers of deforestation.
There is no other. Macroscopically, there are no others. And finally, the other processes are … You can
already see that 30% of the greenhouse gas emissions is associated with food, this in direct process and
this in upstream process. We are not going to change anything with wind turbines. I don’t really see what
we’re going to do with wind turbines here. And finally, here you have other processes such as waste treatment,
refrigerants, etc. In fact, a significant part of these emissions comes from energy, but not all. Okay. Non-energy emissions
still represent a large 40% of planetary emissions. A large 40%, therefore, regarding these emissions there,
it is sure that it is not by planting wind turbines that we will address this issue.

Obviously. So now, we will
talk about wind turbines and therefore we will talk about the energy. I don't know if you know this
pre-retirement man.Well now, he presents the lotto. I personally think it was funnier to host the game.
Anyway, he could have asked the audience to answer the following question: what is energy? I don’t know if
a member of the federal government who is in charge of energy, I do not know if there is one. But in France, we
have a Minister of Energy, a Minister in charge of Energy since a long time. And I am not completely sure if the minister
in charge of this portfolio knows how to answer to this question. When we say energy, there are a number of Pavlovian reflexes
in our brains that can occur.

I will suggest a few to you, none of which, obviously, correspond to the correct
answer because, otherwise, it would not be funny. In the room I’m in, I think the first Pavlovian reflex that
would come to mind is this one: energy is all about money. Ah! Renewable energies cost less than nuclear. It is
necessary to invest, it will develop. Ah! Gas costs more or less than I don't know what, and so on. Money first.
Bills. Well, tough luck. This vision misleads us twice. The first reason for which it is misleading us is that
when you look at what the world pays for its energy versus what the world earns, well it turns out that energy
is a small bill.

The total purchases of oil, gas and coal in the world represent a little percentage of the global
GDP. And as long as energy is a small bill, well we’re going to spend a small fraction of time on it.
I don’t think all financial analysts, if there are any in this room and those you employ or deal with, focus
their analysis on a company’s economic outlook from the perspective of its energy dependence. I am
not completely sure of it. I am even sure of the opposite. From the moment it represents a small bill, we will
spend a small fraction of our time on it. However, we have to understand that one can very well represent
a small fraction of something and yet be of crucial importance.

For example, your brain is only 2%
of your weight. And I’m sorry to say it in this room, men’s testicles represents even a smaller fraction
of their mass. And yet, it still has a big effect on their behavior. So we can cut the testicles, people survive
although they might sing higher. On the other hand, if I cut your brains out, it is sure you wouldn’t survive.
So if I took away 2 % of your weight by removing your brains or even half of your brains, I wouldn’t be taking
away 1% of your efficiency, 1% of your loads. You would be dead! So, the fact that energy is only
worth a few percent of what you spend is not the correct answer because what you will see later is that 100%
of the modern world and 100% of what makes you live depends on it.

100% of what makes you live depends
on it. Your income is entirely dependent on the existence of a world boosted by fossil fuels. All of your
income is dependent on this. This is the first wrong answer. After that, there is a second answer that you often get. You
know, the best energy is the energy you don’t consume. If you type, I'm sorry, I forgot to put the picture, but you can
do this experiment later on at home because you are not allowed to look at your smartphone right away.

So if you type in a
search engine, “the best energy”, just “the best energy”, and you look at what the search engine suggests you to
add to your query, you will see, and I am not lying to you, try this on Google, I know it works. It suggests that
you add “is the one we do not consume” in French. So I didn’t do the test in English, but in French, I’m
sure it works.

Well, tough luck. The best energy is what we consume. How inconvenient. And besides,
if the best energy is the one that we do not consume, how can you explain this curve? Explain this curve to
me. Explain why since we began using energy, we keep consuming more and more. If the best energy is
the one that is not consumed. Why would we be so stupid? If the best energy is the one that we do not consume,
why do we consume more and more? Don’t you agree? I don’t know what you think. As for me, when I have the
best dried meat, I want to eat more and more, I don’t want to eat less and less.

And on the contrary, if I am asked to eat
something nasty prepared by my mother-in-law, I would want to eat as little as possible. I won’t be overeating.
Therefore obviously, the best energy is the one we consume and you will see that the energy we consume is essentially
fossil energy, whatever we do. So you're going to say “Okay but, now that we’re developing renewable energies,
this statement is a little less true”. It is true that we are developing renewables. This is the pink section you can
see there. This is the portion of the new renewable energies in the world’s energy supply. So that’s the sum,
plus the most favorable convention possible.

This is the primary equivalent for wind power
for those of you who are familiar with it. The pink section represents wind power and above it,
you can see the solar energy. If you have really good eyes, it’s a tiny little yellow thread there and also above
it, you have geothermal energy. Oh no, sorry it is biofuels. And the pink section is wind plus solar plus motor tide,
plus tidal power, plus biogas, plus geothermal energy. Plus all the stuff that motivates journalists
and that fill the newspaper columns. It fills the newspaper columns, but it doesn’t fill
the tanks. At the moment, it's totally anecdotal in the world's energy supply and the right question
is whether this can become the main source of energy in the time horizons of political promises.

And if there
are some gamblers in the room, we can go straight away to the notary when we get out of here because I’m betting
all my savings against yours that the answer will be no. If there are gamblers in the room, let’s go. There is
no problem. We can go right now. Here is a small observation of the past. Here, you have the share
of each energy in the global energy supply and you have a curve here on which I draw your attention
and which is the share of fossil fuels in the global energy supply. Well, you can see that the industrial
revolution means increasing the share of these fossil fuels to 80%. And since then, it’s 80 %. So it goes up
a bit or it drops a bit depending on the respective proportions of coal and gas, the development of nuclear power,
and development.

But it remains at 80%. It has been desperately 80% for 50 years. So the idea
that this curve is going to go down to zero in twenty years, at no cost, with just the snap of a finger, I repeat,
if there are gamblers in the room, I am willing to bet in front of a notary. If there is also a notary in the
room, I order him to take the bets immediately. I bet you all of your management assets against
my modest savings. Without hesitation, not for a single second, I take the risk without hesitation
not for a single second.

That obviously means something very unpleasant that you are starting to
experience and I will be a little more explicit later and which consists of solving the problem of climate change
without massively reducing the amount of energy we use. We will never succeed. And we are now going to get
into a second question: what does it mean to massively reduce the amount of energy that we use without
massively reducing the global economic system? This is the question. But for the time being, I won’t
be answering you. So now we have two wrong answers. Now the third answer.

And here are the wind turbines
again. 100% renewable energy. So I have very good news for you. It is possible. It is so possible that we have
already done it. You can see an example of a period when we had done it. Here is a world with 100% of
renewable energy. Switzerland, two centuries ago, was working with 100% of renewable energy.
No problem 100% of renewable energy. You have a world here in which transport is renewable.
Energy is renewable and maritime transport is renewable. Yes, everything is renewable here, absolutely everything.
So the only small limit that we have for the moment is that we know how to do it with 500 million inhabitants
on Earth and 30 years of life expectancy at birth.

That is the small limit we have to keep in mind, otherwise
there is no problem. So with a little luck, going from 8 billion to 500 million, a few troublemakers will disappear in the
process, we must only hope that only them will disappear.
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But you can see from that example that reproducing the
modern world with just the energies of the old world from which we came out. In fact, renewable energies
are energies from which we came out.

You can see here for example the renewable navy. Two centuries ago, we
thought we can do better. You can see here renewable ground transportation. Two centuries ago, we thought
we can do better. And then, here is renewable agriculture. Two centuries ago, we thought we can do better. Here is the
renewable industry, two centuries we thought we can do better. And here is a panorama. A thousand years ago or two
thousand years ago and a century ago. If we could make an industrial civilization with just wind turbines. Second
small question for this room. Since we needed to wait for oil to make it through, if industrial civilization
just works with solar and wind, solar and wind that we had for thousands of years.

We have had mills
in Europe for 2000 years and solar for 500,000 years. Why haven’t we made an industrial civilization out of
just that, if it can be enough. Maybe the problem is that it is not enough. Small calculation of physics. Let’s
imagine that I take this volume, it is roughly the volume of air in this room. I take the volume of air in this room
and I blow it at 80km/hour, 45 knots for those who sail on Lake Geneva or for those who loves aeronautics,
45 knots.

The Bol d’Or would find it very funny. We imagine this wind passing in a wind turbine.
We will get some energy. We activate the blades of the wind turbine and we obtain energy. The
amount of energy we’re going to get by passing the volume of air in this room blowing at 80 km
per hour through a wind turbine is the same as the one we get when we burned this amount of petroleum.
So, what do you think? What’s going to be easiest for men and women? Let us be equal. Is it to extract
energy from 1000 cubic meters of wind? When the wind is generous enough to blow.

I mean,
I happen to know the Valais a little bit since I come there quite often on vacation, and therefore I notice that on
Lake Geneva, from time to time, there are people who go out in a sailboat. But that’s to say that they used the
boat. The sail dangles miserably like a flag at half-staff. This is just to say that they've been on the water.

So,
in your opinion, is it easier to have this in volume, with an extremely concentrated energy that you can
use when you want? Or is it easier to have this in volume of extremely diffuse energy? which turn up
whenever it feels like doing so? Of course, you have the answer. This is the second, which explains why the
wind turbine today provides you with a fatal kilowatt hour, i.e. without storage for a few cents. If you add it up,
storage could multiply that by three to six, whereas, out of the Saudi desert, a kilowatt hour of oil is worth
a fraction of a cent, that is to say dozens of times less.

And that is in a world in which the modern wind
turbine is made with fossil fuels. In order to get you the high-performance wind turbine that gives you
the kilowatt hour at 4 cents, you will have to use the coal to make metallurgy and the steel mat. You
will have to use oil to bring wind turbine components from China where they are made because the solar and
wind are the product of globalization. Everything is done in China up to German or Swiss energy 22. And you
will have to use gas for the cement from which is made the platform of the wind turbine. If now I remove all that,
the wind turbine remains at 4 cents per kilowatt hour. If we make Swiss wind turbines with Swiss copper.

Like you know how trendy it is nowadays on TV to talk about Swiss eggs, Swiss milk. So now we're
going to take Swiss copper, Swiss aluminum, Swiss iron, Swiss silicon, Swiss magnesium, all
Swiss origins. Earth extracted, assembled and transported Swiss wind turbines and Swiss solar panels.
Just to do Hammon metallurgy, Hamon chemistry, etc. Do you think that the kilowatt hour remains at 4 cents?
You can obviously multiply that by 20. So, today, here is the second thing I warn you against: don’t
think you can drift from the marginal to the average.

The financial world spends much of its time making this
mistake, which consist of not seeing the system effects. We cannot derive from the marginal to deduce the
average. It is not because today, a pseudo marginal of our civilization doped with fossil fuels is selling you
out wind power at 4 cents telling you that you can build a civilization with the main energy, coming from wind
turbines, at 4 cents. This is a huge error in reasoning. And I see it all the time. The last to release this kind
of crap is Lazarus and before that Bloomberg, New Energy Finance, etc. In the economic world,
we spend our time deducting linear reasoning from marginal observations. It’s wrong. If one of my
students does that, I directly give him a zero. So, three wrong answers. In fact, I will give you the
correct answer right now. In fact, energy is Ironman in spare parts. There you are, that is energy. In fact,
in physics, energy is what characterizes the transformation of the world.

Energy is what quantifies
you the change in a system state. For those of you who still have some memories of this subject called
physics, it is a physical quantity and you use it to quantify how much a system changes. This is physics.
For a practical application of using energy, you need a system which changes, i.e. a converter, i.e. a machine.
In fact, energy is just like kibble for machines that are used to make Ironman for real.

Your left arm has become
a rolling mill. Your right foot has become a mine truck. You know those trucks with the five meters wheels,
the 40 meters high truck, etc. Something totally gigantic. Your left eye has become a telescope. Your right ear has
become a satellite. Your nostril has become a vacuum cleaner. Etc. Okay. Energy is Ironman in spare parts. This is energy.
It is kibble for machines that allowed us to become totally overpowered. Now I will do a little test. In this room,
who has already… Normally you are not very far from the mountains … who has already walked to an altitude of
4000 meters during a day.

By climbing 4000 meters during a day, you would have succeeded in providing one kilowatt
hour of mechanical energy. It is not much. With this kind of effort, your legs provided an average
of around 100 watts of power over the day. 100 watts. Now who in this room has already made soup with a
soup blender? There are not a lot of people. Wow, you all have servants or you never eat soup. Well,
I will ask again, who has ever used a soup blender? You still are not many. You should try, it’s an interesting
experience.

So who knows the power of his/her soup blender? What is the power of a soup blender? 100 watts, a small
soup blender. It is an old soup blender. Today, you can buy in any supermarket a soup blender, which is in fact a
machine of 300, 400 watts. So when you press the button on the soup blender, you put into action four times the pair
of legs of the man over there, who is capable of climbing 4,000 meters in a day. Four times those pairs of legs
that you put into action instantly. Who has ever vacuumed? It seems you like to clean more than you like to eat.
What is the average power of a vacuum cleaner? 1kW, fine, a little bit more now because they're a
bit bigger.

So when you press the vacuum button, ten times the legs of the gentleman would come into
action. They start pedaling for you. I think he is paid more than the price of the vacuum cleaner, it costs you
a lot less to press the vacuum cleaner button than it does to make the gentleman pedal ten times at
the price he is paid. Who among you, just like Mr. Bayrou in France, has already been on a tractor?
There are a few landowners in this room. Well, when you get on a tractor, you have six hundred times
the legs of the gentleman kicking in. Or if you prefer, the equivalent of 60 draught horses kicking in for you.
Who have already handled a construction machine. A mechanical shovel? Only one person. Well in this case,
it is much more. I’m sorry, it’s no longer the legs working, we’re going to move on to the arms. Suppose you have a
mechanical device of a few hundred of kW, a big one. You have thousands of pairs of arms going into action
for you, instantly.

I continue. A truck represents thousands of pairs of legs and an industrial rolling mill.
I don't know if there is a rolling mill in Switzerland or not. A rolling mill, no? You import the rolled steel?
I know you import cars, that’s for sure. I don't know if you import steel as well. In France,
we have a few rolling mills, one in Dunkirk, one in Fos-sur-Mer. When the Dunkirk rolling mill
is rolling, it’s as if I had multiplied by 10 million. So, it is as if I give the whole Swiss population a
hammer to hit the metal. So there would be no more financiers in Switzerland because you would all be
hitting on metal sheets to replace a rolling mill which, as I speak to you, is operated thanks to one person.
And as it happens, the latter is really Ironman.

In every sense of the word, the day he enters the
cockpit, it has multiplied the power of its action by 10,000,000. What I’m trying to tell you here,
by the way, and I’ll come back to it later on today, is that we are no longer the ones who work. We have
the time to chat in luxurious lounges and listen to lectures in luxurious lounges because the machines are working
for us. So, in fact, today, the world production is no longer made by men. It is the machines. The men are just there
to have fun with the global production. So we have fun doing high frequency trading. We kill time, but we do not
produce anything. Okay, we don’t produce anything anymore, we have fun, we play video games, and we have fun
against a ridiculous price. So now I'm not going to talk about power anymore, I'm going to talk about energy.
So, here is the exercise done by the same gentleman just now. But this time, he did not to go very far. From
where I am, I can see that your weight is probably 80 kilos.

Let’s say your camelback is really full and you want to
sweat a lot. I will give you 10 kilos on your back and then I'll be a little more modest. You are not going to climb
4000 meters, but rather 2000. Too bad for you. You will be a little frustrated if you do this exercise.
You will no longer produce one but half a kilowatt hour of mechanical energy during the day. For those of you
who have a good memory, this calculation is simply obtained by the equation E = MGH.

So I take the mass
times the gravitational pull times the height. Therefore, it is in the opposite direction, so the water
coming down from the dam from the great distance to operate the turbine. It goes back up. If you do this
every other day, you are providing 100 kilowatt hours per year of mechanical energy. Now, if you make a big hole
in the ground, or if you need to do excavation works, 15 tons of soil, 6 cubic meters of sol is about 15 tons of soil.
There, unfortunately, you are 10 times more ridiculous than the mentioned climber. It is the equivalent of 0.05
kilowatt-hours of mechanical energy supplied per unit. And if you do this every other day, you will have
back pain and blisters and you will have provided 10 kilowatt hours of mechanical energy by the end
of the year.

10 kilowatt hours of mechanical energy is the same as the thermal content of the combustion of
one liter of gasoline. One liter of gasoline contains 10 kilowatt hours of heat. So, obviously, you do not
convert all of this into mechanical energy, Mr. Carnot forbids it, but that does not prevent you from using
a liter of gasoline which costs the absolutely scandalous price of 1 franc 40 or 50 in this country.

You have
the same ability to change the environment as in 10 to 100 days of hard work by a human being. In one liter
of gasoline. Obviously, it is not the same price. If you take the French minimum wage, which is far below
the Swiss minimum wage, we are reasonable people. Well, you are going to pay a few hundred to a few
thousand euros for your kilowatt hour of mechanical energy, whereas the machine is doing the same at a marginal cost
of a few tens of cents. And this is why your purchasing power is what it is? This is why the middle classes have emerged
and this is why, for 35 hours a week, we all have the possibility of offering ourselves a whole lot of things,
which a peasant of the Middle Ages would not even have dared to dream of in his wildest delusions.

We all
became nabobs because of it all. So, you are more of a nabob than the average person. In this room, but overall
we have all become nabobs. This is also why slavery disappeared. Because if you take a slave, which is usually not a
youthful vocation, there may be two or three secretly unknown places, known only by insiders in Geneva
where one can go for such practice. But otherwise, in general, it is not a youthful vocation to be a slave.
So if you take a slave you will need to pay to take a person against his/her will and put him/her somewhere
else. Then you need to feed this person and keep him/her from slaughtering you, just like in Django.

So it’s going
to cost you money. Well, if you look at the cost of the mechanical kilowatt hour coming from a slave,
you realize that even this energy is going to cost you 10 to 100 times more than the machine that will not rebel
against its condition as a machine does not go on strike, does not need to take a vacation, and works for you
24 hours a day. So, the reason slavery disappeared on Earth is not because you became good while our
ancestors were evil. We are not less twisted than our ancestors. We all have the same genetic code. It is simply
that there is no rational argument in favor of serving our fellows who are not efficient, who revolt and who kill you,
when the machine is much more efficient a hell of a lot cheaper.

When the energy begins to become limited, we will
see the reappearance of behaviors that are unfortunately not sympathetic from men towards each other because
we will have this auxiliary which will become more and more difficult to mobilize. So here is the quantity
of kibble for machines mobilized by individual for a century and a half. I'm not going to comment extensively
on the subject. I told you before, I'm just going to comment on the final part. The energy supply per person today is
just over 20,000 kilowatt hours per person per year. And with the little equivalence I just did, which is
that a man at work produce 100 kilowatt-hours of mechanical power at most, and some only produce 10.
If I apply a 1:1 ration, it means that roughly speaking, humanity, thanks to energy, and thanks to machines used
to increase the capacity to transform the environment by a factor of several hundred.

In other terms, thanks
to energy and machines, the world’s GDP is 200 times greater than it would be if we didn't have the machines. If
we didn't have the machines, you would all be out of business, all of you in this room. And me too as well. I am a child of
the machines. You are children of machines. What makes the world economy today would require 1400 or 1600
billion people. To be equivalent in terms of the flow of tables, chairs, clothes, etc. And of smartphones, if we didn't
have the machines, obviously we would never be able to. Even in Elon Musk's wildest delusions. So, what makes
the modern world and the modern economy are machines and therefore Ironman in spare parts with its very special
kibbles for machine, which also come with a very good advantage that they leave us the entire surface of the ground
for our food needs, which was not the case two centuries ago because we needed the draft animals that occupied part
of the space, and that also needed to eat.

We also ate them, but even so, to multiply the power of humanity by 200.
In the West, we are more at 500. In this room, we are more at 2000. In other words, your standard of living and mine
would require 2 thousand slaves rather than 200, like humanity as a whole. This way of life has totally
distorted the structure of professions. Unfortunately, I don't have time because I can see the clock ticking,
so I don't have time to do that.

I will go directly to the economic artefact. And then I'll end up with this.
Here. So, regarding all this. There are people who did not see the blow coming, that is to say the classical
economists, two centuries ago. Two centuries ago, when we started to theorize the economy, we said that
the economy must count what is limiting for production. So, two centuries ago, the world was infinite. We have
barely discovered America. We haven't finished killing the Indians, Antarctica, has not been discovered yet.
We did not go down to the Mariana Trench. We did not even know that Antarctica exists.

So the
world is so big and the humanity, not too many. There are 500 million of us, mainly farmers. So at
that time, people who theorize the economy said to themselves we should go ahead. What is mainly limiting
agricultural production? It is the number of people who can work. The more people who can work,
the more we can put people in the farming sector. And then, human capital has already accumulated
the plows and the land and the factories.

So at that time, our friends then told us:
I am going to limit myself to what comes from men as a limiting factor in production. The rest I won’t care
about it, I won’t count it. And since I won’t count, I say it, I say I won’t count, I say natural resources are free. So at
the time, for example, 20% oxygen in the air was worth 0. If I take 20% oxygen out of the air, I put you on the moon.
Certainly, maybe it's worth zero, but the GDP drops to 0 too. Still a bit complicated to have a prosperous GDP
in an unbreathable atmosphere. I mean you will die. What if the climatic conditions on Earth cause 35
degrees to spread everywhere with 100% humidity? GDP also drops to 0. However, the climate system
is not represented in this convention. By definition, resources are free. And two centuries after the economy
you work with and the economy I work with, I am a business owner so I handle euros every day, every day.
I know what are issued invoices, payables, salaries, etc.

Well, it was built with two factors of production.
And your financial analysts also reason the same way: work and human capital. And all you need is work
and capital and the supermarket is full. And if ever the production is not sufficient and that
leads to any problem, we kick the ass of the bankers, we kick the ass of the unemployed and the machine
starts back again. You couldn’t have missed that since 2008, it is not working out. We can kick the ass
of the unemployed and kick the ass of the bankers, the machine is not starting up again, that is to say that
the sources of residual growth are outside the OECD. And in the OECD, growth is fake.

Most of it is asset
inflation, there are no additional square meters built per year. There are even less. There are no more
additional tons loaded in the trucks, there are less. This is totally artificial growth that has been achieved since
2008 in the OECD area. So the reason it doesn't work is that it's not a good representation of the system. There are
other limiting factors. There is a first limiting factor which is the resources. All you have in this room
are resources transformed by our activity. There is not a single thing in this room that is
spontaneously created. Harry Potter did not wave his wand to make the lamp appear by magic. No no.
This lamp exists because there are all the constituent atoms of this lamp. We went to look for
them in the environment and we transformed them, with machines, themselves made with transformed
resources. We needed the resources. If I was in the middle of the deep void, I would not have the atoms
to make this lamp. I wouldn’t be making lamps. I can make this lamp because I have the atoms that
allow me to make lamps on earth, it's just resources, it's not in the form in which we would like to find
them.

So we are going to transform them. And transformation in physics requires work. This is the
transformation and this transformation with what I have already explained to you before, owes a little bit to our
muscles, mainly to the machines and their special kibbles which is called energy. This is the world productive
system. Capital is just an internal loop in the system. This building was made by transforming resources
exactly like your socks or eggs that are not capital items. Well if you have a stock of eggs at a chick breeder,
it becomes capital. But at your place, no. Therefore, the productive system, physically,
has other limiting factors which are the resources. In fact, here, all the limiting factors are presented
because you have the resources which are limited, the number of people to operate the machines
since today we are only good for that. Operate the machines that are limiting and the number
of machines and the energy that feed the machines. There you have it, these are limiting factors today.
But they are not all represented in the numbers that you manipulate. And this is the reason why there is
not a single macroeconomic model in the world that is predictive.

Obviously, there is not a single economic
model in the world that represents physical reality. If you want a good laugh, take a look at the
macroeconomic forecasts for the last twenty years. Year by year and how things really happened.
If I had a marketing manager at Carbone 4 who messes around with this kind of predictions three
years in a row, I fire him, I don’t keep him. Don’t you agree? In the economic world, we keep
them, then we continue to listen to bullshit. So, I feel like saying that here are some concrete
expressions of what I just told you. Here you have a reconstruction of the world GDP, since, I’m sorry,
excel tends to put the beginning of the X-axis at 0, but this is the Roman calendar, so I should have put 1.
So, since the birth of Jesus Christ, this is what the world GDP looks like. You see that for a long,
long time growth was not a topic of discussion because it had no growth. Remember that at
that time, there was no democracy either. Managing the lack of growth in a democratic world,
I am waiting to see what would happen then.

But for the moment, it does not seem very sustainable.
To promise more during electoral campaign when there is no physically opportunity to do more,
I’m not completely sure it’s that easy to do. Until the start of the industrial revolution, some
growth opportunities started to appear, Britain, etc. There was a kind of industrial revolution in the
Middle Ages and the Renaissance in Europe. It didn’t really do much. And then there comes the
fossil fuels.

And economists invented this big joke
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01:28:27,001 –> 01:27:32,000
called long-term structural growth. I am sure there
are a lot more people in this room who have heard that expression than people who have handled
a soup blender. I am wrong? Long-term structural growth is a big joke. Long-term structural growth.
How do you want to grow structurally in the long-term, anything on a planet that was 13,000 km in diameter
two centuries ago, which will still be 13,000 km in two centuries and which will still be 13,000 km
in diameter in a billion years? What do you want to grow structurally in the long term.

Maybe, our illusions,
as long as they last. Obviously that doesn’t work. So for now, we are not there yet. It still works,
but it will not be structural in the long term. Here you have the best macroeconomic model
that I know of, which is an approximation of the last few years. It’s called a straight line and
it is much easier to manipulate than all the models that have complicated names. It’s a straight line,
it works very, very well. So what does the line tell you? It tells you: Tell me how much energy,
that is to say how many machines you put into operation, and I will tell you the production
of these machines of which I am able to give an economic counterpart which is called the
GDP.

It's very, very simple. Do you see heaps of energy efficiency in there that would cause
the points to behave very differently? I don't see them too. The curve is very slightly
convex. Okay. So here I am going to propose a first conclusion: strongly reducing the energy
that we use without reducing the GDP, it's just impossible because it's the machines that
work on our behalf. So sticking to 2 degrees without a recession, we'll never get there. So the
good news is that if we don't respect 2 degrees, we will have a recession anyway. Because the environment
will blow us away. In fact, from now on, our choice is to reduce in a managed manner. Or I wait for
disasters to take care of it for me.

Is that the equation? Okay, it's unpleasant, it's unpleasant, but you were
in this room, you are well behaved, you did not leave along the way, and you can see here the exact same
thing regarding CO2. You can see for the moment we are waiting for the massive decoupling.
In fact, my theory is that it is essentially a reflection of quantitative easing, that is to say the phenomenal
inflation of assets which has caused GDP to increase artificially. Because when the price of real estate
explodes, mortgage loans explode just as much. You don't have more square meters to sell, but
you make twice as much credit and it’s nominally counted in GDP. When the value of the shares
doubles because I decided to create a website called My-Ass-on-the-Dresser.com, and everyone
is rushing to lend me $ 2 billion.

I mean when Macron says we’re going to make $ 1 billion unicorns
and nothing is easier than to make $ 1 billion unicorns. Any bullshit .com makes you $ 1 billion unicorn,
that's just not the point. So he tackled the easy topic. That is a difficult subject. It is a difficult subject.
A unicorn at one billion, who cares. I mean, I don’t see how it's going to make it rain. Unless
I am mistaken. So what you see here is the drama of the climate negotiations. In fact, I have a friend
called Brice Lalonde who was Minister of the Environment in France and who was Mitterrand’s
advisor in 1992 at the Earth Summit in Rio. He was the Minister of the Environment during the
government at that time.

It was very interesting and he has seen it all since. He told me one day that the tragedy
of climate negotiations is that since they exist, developing countries attend them while thinking that
we are going to talk about development. The developed countries attend them while thinking that we are going
to talk about climate and it is the first who win. and so we have this value which continues to go up
and to the right.

There you go, it is as stupid as that. So, my system, it can have other limiting factors.
It can have fossil fuels as a limiting factor to energy. At that moment, it lowers the production or it can have
the resources which are limited and at this moment, it also lowers production. So, I told you, it will happen
willingly or by force. So who in this room has already seen this document? Ah! Thank God. It is not in the
empty set. Everyone else, you should have read it. It is a lot more important than reading all the
financial analysis from who-knows-who regarding who-knows-what. This document tells you one thing.
It tells you that the world production of conventional oil, that is to say everything that does not come
from Loyal, the American shale oil, and from the tar sands in Canada, went through an absolute
maximum in 2008 and has been declining since.

Who had heard about this conclusion? You are already
a little more numerous. It is the International Energy Agency that took ten years to spit it out. And it also
turned out that the oil analyst of the International Energy Agency who I know well because he is
currently working for The Shift Project. The Shift Project is currently working on a statistical
baseline of all the oil fields in the world ,which normally worth several million dollars per year.
We don't have these means, so we got it for much less. I don't think there is a single person in this room who
had access to this data there, except possibly someone who works in a very wealthy financial institution and
who invests mainly in the Oil & gas sector. So, if there is someone in this room who corresponds to
this definition, he can have access to this data. Everyone else, do you have access to this information?
Alright, fine. We are currently analyzing this database with the help of this man who worked at the IEA.

So I can tell you that statement. You have to take that very seriously because this one is true, we can tell
each other a lot of bullshit about the future but this one is true. So why am I telling you about oil
now? Because it turns out that the first limiting factor in all the energies we use is oil. Here, you have a curve
that I accidently made by doing tests. From time to time, I do regressions just to see what it would look like.
And then, once I consider it looks interesting, I try to see if I can explain why. Okay so, 10 years ago,
maybe even 15 years ago, I started doing this.

I looked at how the quantity of oil that is brought out
of the ground varies respectively. So that’s not the price, it’s the quantity that comes out of the ground.
Besides, there is no connection with the price. And the GDP per person in the world. So what you can
see is that since the end of the oil shocks, where we have adjusted these two curves much better, which
is a way of saying that we have removed all the superfluous. What remains is the essential,
i.e. the energy of globalization and since that time we have had an absolutely perfect co-variation
between GDP per person and the amount of oil going out into the world.

And when you have a
time lag, oil comes before GDP. So we don’t have the economic growth coming from Mars and suddenly
we have no more money and we are no longer buying oil. It’s because we have no more kibbles for machine that
we have a greater GDP. Because we have more kibbles for machine, we have more GDP. The best advanced
indicator of the future of the economy isn’t the analyses made by macroeconomists.

It is the quantity of oil
coming out of the ground. Since Covid, you have probably noticed that the quantity of oil coming out
of the ground has significantly decreased. I can therefore tell you that the global economy will be depressed for
a while. I will tell you the same thing here. If there are any brave people willing to bet, we can go to the notary.
We can make a series of bets with the same notary.

I am sure. There is no link between the price and
the volume of oil. Here is a little graph. I am sure that you’ve all heard of elasticity. Price,
volume, you know the elasticity, price volume. I look at the quantity of what is sold on the market
and if the offer increases, the price decreases. You have all heard of this. This should also apply
to oil, if there is plenty of it, the price decreases. If there is not enough, the price increases. I tried
to perform a little test here. I looked at every year since 1920, what was the quantity of oil offered on
the market that is bought totally and sold since land stocks are infinitesimal. And how much was the
barrel for. And if we have an elasticity, the points should be organized in something like this.

Yet in fact
not at all. If I try to theorize this curve, I’d say that there are two inelastic systems orthogonal to each
other. One system in which the price stays the same regardless of the quantity. And another system in which
the price is indifferent for a fixed quantity. On and on we go. In fact, there is zero elasticity,
price-volume on oil and the conclusion of this graph is that if there is a lack of oil, you won’t see it as an
indefinite explosion of prices.

As it is a factor of production essential to the global economy, if you do not have
enough, at first the prices will explode. Yet if you do not have enough, Ironman starts to suffer. Production
decreases, and at that moment consumer credit goes down and so consumer credit readjusts to a lowered offer and
the price stops increasing. Therefore, the price of oil post- peak will not be an indefinite increase of the price of oil.
The GDP will be reduced.

It will not cause an indefinite explosion of prices of oil. This may seem paradoxical to
you, but it is absolutely clear. I’m getting to the end of this introductory part. Yes, yes, it is an unproductive part.
Humanity is now, since 10 or 20 years – at the beginning, I used to say today but in fact, no, we are beyond that.
We are passed this – on a crossroads where we could. We are stuck. I like the Donut theory that I
heard this morning at the EPFL that says we are stuck between a ceiling and a floor. The ceiling is the
planetary limits that should not be crossed otherwise the system self-regulates and that would be unpleasant
because the spontaneous regulations of the system represents serious decreases in the population and
serious decreases in its life expectancy. That is how the system self-regulates in animal populations.
We will then be fewer in number and poorer, but quickly and not so sympathetically. We will
also be less free because in this type of regulation, free and open systems crash, and inversely, if we try
to act too quickly to go towards something sustainable, then we pressure the floor of social resistance, which
means the people from whom we are demanding efforts.

We are demanding efforts from them that exceed their
limits. I’d like to say of resistance and at that moment, the system cracks at the other end. Then either we return
to the approach and the example applied to the climate? Or we let the emissions continue because we say, it is
impossible to force financiers to make less money. It is simply impossible. We would then be signing up
for a greater environmental regulation. This is where the system imposes its limits on us. Or we say
No, no, we want to try to last a while longer. Moreover, we can ask ourselves how much time
we have left. And at that moment, we will tighten our belts at once. The question then obviously
becomes, how do we organize the least for everyone in the resulting world? We are stuck today between
these two objectives, and obviously, the two conclusions that I leave you with, if we want
to leave with operational conclusions is that if you want, how can I say it, if you want to progress in the way that
your activity tomorrow can better reflect what I’ve told you, you need two things minimum.

I said two things
minimum. I’m sorry. I’m going to shamelessly plead pro bono, but it turns out that I do what I do today
because I’ve understood this issue. It is not the other way around. All the people who work
for you must absolutely understand the issue to be addressed, so you face a huge problem of
training. All companies that claim to be serious about this matter, to me, they are not serious if they
haven’t forced their executives to complete 20 hours of courses. Well then, if you do not complete the 20
hours of courses, you can be as loud as possible, all we are doing is a kind of handywork because to get out of it we
need to understand the issue.

The second thing, is that today you have exhaustive monetary accounting. Everything
is integrated, from pen purchases to positions on the market. If you want to know, at the end of the year,
if you are doing better or worse on the monetary level, you won’t start to say, I’ll just take the things that have
worked out in my favor, the things that have not worked out for me, I’ll leave them aside. When I travel, I only
keep count of the drink at the bar and the plane ticket, I won’t’ keep track of it. You keep track of everything and
in doing so you see, in general, if you are evolving in the right direction when it comes to this indicator.
You are forced to do the same for carbon. If you wish to know where you are heading. You cannot
content yourself and this is what I wanted to explain, although it is my job to perform the analyses of impact on the
green bond, I am very happy that there are green bonds but that is not the topic.

With these problems I have
discussed, we should not issue one green bond. We should make all bonds green. And in order to
make all the bonds green, you have to shred every bond through the carbon accounting. This is exactly
what we are trying to do at Carbon 4. This is what we have to do. Okay, the other day, BNP Paribas
did a post on the Indy saying Taratata, we funded solar panels in Belgium.

So, besides the fact that
we are a whisker away, I noted that it is not the subject. Is BNP Paribas getting in line with a 4% drop in
emissions per year? Since I showed you earlier that this is what you have to do to stick to the 2 degrees
objective. So is the carbon footprint of all BNP Paribas commitments are able to spend the tens of millions of
dollars that should be spent every year to comply with this carbon footprint while you give a lot more that
money to a lot of other people to do a lot of other stuff. I know very well that the banking and financial world is
the first consumer of SS2I in the IT world.

You are very big consumers of IT, it would cost you 1 percent
of your IT budget to comply with the carbon requirement. Today, people that are not doing it, they’re just not serious.
So there you have it. The second thing to do is to have physical accounts that let you know how far away you
are from the problem and as long as we don't do that. I consider that we are not serious. So the two positions
that I have just expressed to you, I published them in a small forum, on a small modest site called Responsible
Investor.

A year ago, I publicly tell you what I say to everyone. I hope I was useful by shocking you a little bit, but
obviously, the start of being serious in this issue goes through the two stages I just mentioned. Anyone who
tells me I issued three green bonds, I have arranged for a wind turbine, etc. But I don't do the other stuff
I just mentioned. In fact, it’s just not serious. There you go. And since my train is tomorrow
morning, now you have all night for questions..

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