Tuesday, 3 June 2014

SYSTEMS THINKING




Last week we discussed the EU’s growing appetite to import biomass to support low carbon power generation capability to meet carbon reduction targets. This week President Obama announced carbon reduction targets for the USA. So whilst the politics mean it’ll take some time for any meaningful legislation to come into force the line has been drawn. It’s a fair bet that much of the biomass arising in the US will soon be utilised closer to home. Which leaves the EU with a challenge.

The energy industry is a highly complex, interconnected system that responds to the demands of society. It is facilitated by a heterogeneous global shipping fleet where each ship is a complex system in itself. All of these systems function within the confines of a finite planet, which throws further systemic challenges at us - how can we sustain a growing global population aspiring to what we in the west consider to be rights - cars, white goods, air travel. This is our meta-problem.

And we have to think about all of this in the context of the long term, where the only certainty is uncertainty.

Aviation, retail, construction, manufacturing - these sectors and more - are addressing the risks presented by economic volatility. How energy and resources are used, or not used, is core to that systems approach. Where new markets will emerge and what they may want to consume in 30+ years and where the raw materials for those products will arise needs to be considered. Thinking about the extent to which particular systems interlock with others and how to create competitive advantage is all part of systems thinking.

Here’s the opportunity. If ships nail down operating costs over the long term by switching to renewable energy sources and offer markets predictable priced logistics solutions, whilst the shipping business may become less thrilling, energy and supply systems can be somewhat stabilised and there will be a premium value in that proposition.

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