The Internet of Things

In the 19th century, steam-powered printing and the telegraph, abundant coal and railroad transportation converged to set off the First Industrial Revolution. In the 20th century, centralised electricity, the telephone, radio and television, cheap oil and combustion engines set off the Second Industrial Revolution. Presently, the digitisation of our society and economy, according to Rifkin, gives rise to an Internet of Things, which forms the platform for the Third Industrial Revolution.

Rifkin outlines this Internet of Things as the convergence of all forms of communication, renewable energy, and automated transport with virtually all stakeholders. In this expanded digital economy, private enterprises and individual consumers connected to the Internet of Things use Big Data and analytics to develop algorithms that improve efficiency, increase productivity, and dramatically lower the costs of producing and distributing physical products. This new digital platform fundamentally changes the way we manage, power, and move economic activity across the myriad of value chains and networks that make up the global economy.

In this emerging ‘new’ world, social capital is as important as financial capital.

The essence of the Internet of Things is the use of sensors in every device, in factories, retail stores, warehouses, distribution centers, smart roads, smart homes, and smart vehicles. Billions of sensors are being attached to natural resources, production lines, the electricity grid, logistics networks, recycling flows, and implanted in homes, offices, stores, and vehicles. Rifkin: “This will allow us to bypass all the inefficiencies of traditional vertically integrated organisations of the First and Second Industrial Revolutions and engage directly at near zero marginal cost – the cost of producing additional goods and services after fixed costs are covered – with an Internet of Things.”

Collaborative Commons

Maximum commitment to an intelligent network that combines renewable energy, automated transportation and connectivity reduces the marginal cost in digital and physical production to almost zero. This allows millions of people connected to the Internet of Things to produce and exchange things with one another for nearly free, in the growing sharing economy. Already, a digital generation is producing and sharing music, videos, news blogs, social media, free e-books, and other virtual goods at near zero marginal cost.

The plummeting of marginal costs gives rise to a hybrid economy―part capitalist market and part Collaborative Commons―with far-reaching implications for society, according to Rifkin. Millions of people are already tapping into this global Collaborative Commons, open, decentralised networks of collaboration. Consumers are plugging into the infant Internet of Things and making and sharing their own information, entertainment, green energy, and 3D-printed products at near zero marginal cost, and are thus turning into prosumers – a combination of producer and consumer. People are also sharing cars, homes, tools and other items via social media sites at low or near zero marginal cost. Students are enrolling in free massive open online courses that operate at near zero marginal cost. Social entrepreneurs are even bypassing the banking establishment and using crowd funding to finance start-up businesses as well as creating alternative currencies in the fledgling sharing economy. In this emerging ‘new’ world, social capital is as important as financial capital, access more important than ownership, sustainability inhibits consumerism, cooperation and sharing inhibit competition and exchanging.

Active steering

The increased energy efficiency and accompanying productivity gains that come with the shift into a Third Industrial Revolution infrastructure prepares the way for a sustainable, circular economy. Using less of the earth’s resources more efficiently and productively and making the transition from carbon based fuels to renewable energies, is a defining feature of such an economy. Various stakeholders are involved in pioneering networks for the transition to a more circular economy: government, business, and individuals. In order to achieve Rifkin’s vision, there must be an agreement on the strategic objectives in the short and long term, a strong government that sets limits and strong coordination between all parties.connect it all together

He does not believe in an invisible hand to steer the sustainable transition. On the contrary: he thinks that only if we actively promote the synergy of the internet revolution, the technologies for renewable energy and a transport system that function will arrive at a sustainable socio-economic model through connectivity.

connect it all

As an example of shared responsibility and commitment Rifkin refers to Germany, where millions of people created electricity cooperatives; consumers, farmers, Small- and Medium-sized Enterprises, all of them received low-interest loans from banks. The government did not finance any of these installation technologies, but subsidised the feed-in tariffs, thus giving this new market a chance to take root. The vast majority of the renewable energy is now produced by millions of small players.

We are on the brink of a promising new economic era, according to Rifkin, with far reaching benefits for humankind. This transformation will certainly not happen overnight and requires a strong global commitment. In the end, however, our reward will be a society that is more just, humane and ecologically healthy, a vision shared by Triodos Bank.

Energy & Climate

Triodos Investment Management has been financing renewable energy for more than 25 years and is a partner of first choice for a relative large amount of developers and investors in the renewable energy sector. Triodos Investment Management considers energy to be a basic human need and therefore something that we need to ensure is being generated and used on a sustainable basis for future generations.

For an overview of our activities in energy and climate, please visit the Energy and Climate investment strategy page and for an overview on our activities in emerging markets, please visit the Emerging Markets investment strategy.