MS. DIANE REHMThanks for joining us. I'm Diane Rehm. The European debt crisis and gridlock in Washington have increased fears of another recession, but Jeremy Rifkin argues we're missing the real threat to the world economy. He's a best-selling author. He's advisor to the European Union on climate change, and energy security.

MS. DIANE REHMIn a new book titled "The Third Industrial Revolution," he says the global economy will face more meltdowns followed by shorter and weaker recoveries as long as it relies on fossil fuels. He joins me in the studio to describe a new economic development plan based on the merger of Internet technology and renewable energy. If you'd like to join us, please call us, 800-433-8850, send us your email to drshow@wamu.org, join us on Facebook or Twitter. Jeremy, it's good to see you.

MR. JEREMY RIFKINNice to be here, Diane, thank you.

REHMYou're talking about the democratization of energy. What do you mean?

RIFKINWe have been living under two industrial revolutions, the first in the 19th century, the second in the 20th century. And, you know, the great economic changes in history as you said leading into the show occur when new energy revolutions converge with communication revolutions. When they come together, it changes the whole way we live.

RIFKINIn the 19th century, print technology became very cheap. We introduced public schools. We created a mass workforce with the literacy skills to organize the complexities of a coal and steam-powered revolution. In the 20th century, the telephone was absolutely essential, and radio and television later to become the communication medium to organize a very complex auto oil and suburban age.

RIFKINThose two industrial revolutions provide us a little bit of a framework of the problem we face now, and if I may, let me just spend a little moment on the crisis.

REHMPlease.

RIFKINWe've missed the real crisis here. The real economic crisis occurred in July 2008. When oil hit $147 a barrel that July, you remember what happened.

REHMI do.

RIFKINPrices went through the roof for every other product, pesticides, fertilizers, construction materials, pharmaceutical products, synthetic fiber, power, transport, heat and light, because our whole civilization is either made out of and/or moved by fossil fuel. So when the price of oil starts to go over 80 a barrel, all the other prices go up on the supply chain, and at 147 a barrel in July 2008, people stopped buying.

RIFKINThe prices were through the roof, and the whole engine of the global economy shut down. What I'm suggesting, that was the economic earthquake. The collapse of the financial market 60 days later, that was the aftershock.

REHMHmm.

RIFKINWe're not going to the crisis. And the reason this is happening, Diane, and it's really peaked globalization. At least in the business communication, we now know the outer limits of how far we can actually globalize this economy based on fossil fuels. It's about 150 a barrel and we'll hit the wall. The reason is something called peak oil per capita, which is related to global peak oil production, but a little bit different.

RIFKINPeak oil per capita occurred in 1979, and there's no controversy about this. If we had distributed all the crude oil that we had at that point to everyone alive on the earth, that's the most each person could have if we shared it. Of course, we found more oil since then, but population rose quicker. So if we distributed all the oil we have to 6.8 billion people, there's simply less to go around.

RIFKINSo when China and India made a bid in the 1990s that at any 10, 12 percent growth rate to bring a third of the human race into the game, the demand pressure against the supply of crude oil was overwhelming, and we bottomed out at 150 a barrel, and here's the proof this morning. You remember after the crisis in 2008, the economy stopped and oil went down to $30 a barrel because there was no economic activity.

RIFKINIn 2010, we started to replenish inventory around the world. We started to grow again. We tried to turn back the engine on and what happened? Oil shot from 30 up to 100 a barrel.

REHMRight.

RIFKINIt's 106, crude oil today, and what's happening? Once again, all the prices are going up for everything else and purchasing power is plummeting and the engine is shutting off again. So here's the message. Every time we try to regrow the economy at the same rate we were growing before July 2008, we will see this terrible, terrible attempt to rejuvenate it, and within three-year cycles, every time we try to rejuvenate it, oil prices go up, all the other prices go up, purchasing power goes down, we collapse.

RIFKINSo we're in a very dangerous period over the next 30 years of growth and collapse, growth and collapse. This is an end game, so we really need to address this and figure out how we move to a new energy regime and new economic paradigm.

REHMAnd in your book "The Third Industrial Revolution," you talk about the five pillars. Tell me about those.

RIFKINAgain, it's based on the premise that the great revolutions occur when communication revolutions emerge to actually organize the complexity of new energy regimes. You know we've had this very powerful Internet communication revolution, Diane, in the last 15 years. And what's so interesting for me as an older person, is I grew up on centralized electricity communication top down.

RIFKINWhat's interesting about the Internet is it's distributed and collaborative in nature, and the power is lateral, which sounds like an oxymoron, lateral power, but -- because we think of power as pyramidical. But a later power suggests side by side power. What we're beginning to see in Europe in the last 24 months is emerging of this very powerful communication medium, the Internet, which is distributed in collaborative with a new energy regime, renewable energies, which by nature are distributed in collaborative.

RIFKINSo when distributed Internet communication starts to organize distributed energies, we have a very powerful third industrial revolution that could change everything, and here are the five pillars as we've laid them out. This is the formal plan of the European Union. I was privileged to develop the plan, it was endorsed by the European Parliament in 2007, Germany is leading by far in this plan, the leading exporting power in the world, and here are the five pillars quickly.

RIFKINPillar one - the EU is committed to 20 percent renewable energy by 2020. That's a mandate. Every one of the 27 states has to fulfill that. That's a third of the electricity of Europe has to be green by 2020. Pillar two, and this is an interesting one, how do we collect these distributed renewable energies, because the sun and the wind and the geothermal heat and the garbage and the ocean tides and forestry waste, they're found everywhere.

RIFKINYou can find some renewable energy in every square inch of the world. So how do we collect them? This got us to pillar two, and our first idea in Europe was okay, let's go to the Mediterranean, they've got a lot of sun. The Irish have the wind, the Norwegians have the hydro, centralize it and put it in a high voltage line and ship it out. Now, we're smiling now because we were thinking 20th century energies which are centralized because they're only found in a few places like coal, oil, gas, and uranium. Old ways of thinking.

RIFKINAnd we began to ask a question two years -- no, four years ago, that seems ridiculously simply now. If renewable energies are found in every square inch of the world in some frequency or proportion, why would we only collect them in a few central points?

REHMFor example, solar power.

RIFKINRight. Big solar parks, big wind parks, geothermal parks. We don't oppose that. They're essential, but not sufficient, and they're a small part of this third industrial revolution. So pillar two lead us to buildings. The number one user of energy in the world is buildings. The number one cause of climate change is buildings. By the way, I should say, Diane, I always feel I need to, the number two cause of climate change is beef production and consumption, and related animal husbandry. Nobody mentions it.

RIFKINNumber three is transport. So in EU, we have 191 million buildings there. The goal is to convert every single office, home, and factory into your own micro power plant over the next 30 years so that you collect the sun on the roof, the wind off the side walls, the heat under the ground, et cetera.

REHMBut who's going to pay for that?

RIFKINWell, Germany has an interesting plan, because Germany is way ahead of the game here, and pillar one they just reached last month, 20 percent renewable energy.

REHMWow.

RIFKINYeah. Absolutely. Ten years ahead of time, and they're heading to 35 percent renewable for electricity in nine more years. Here's the way they did it. They put in feed in tariff, which means you get premium -- if you convert your facility to renewable energy, and you want to sell your energy back to the grid, you get a higher price than the normal energy. It's paid for in this way.

RIFKINThe electricity bill is raised just slightly, so small you don't even notice it, but then the money that's available is used for early adopters to put solar on their roof or winds next to the building, et cetera.

REHMI see. I see.

RIFKINAnd so all over Germany, and now across Europe, buildings are being converted. The new buildings, Diane, are actually positive power. They create so much energy that they can use it and surplus back to the grid. Olivia (word?) Construction has a beautiful office complex in Paris, just went up next to the OECD headquarters. It's positive power.

RIFKINPillar two jump starts the European economy, that's the idea. Millions and millions and millions of jobs. Thousands of small and medium-sized enterprises have to convert 190 million buildings to power plants over the next 40 years. So I think, Diane, the best way for the listeners to think of it is, think mainframe computers 1970s, now you have your own desktop.

REHMOf course.

RIFKINThink centralized power in the 20th century, now you have your own power. Pillar three, that's the tough one. I mean, that's the tough one, storage. The sun isn't always shining in Germany, or in Europe, or here, and the wind isn't always blowing when you need the electricity. These are intermittent energies, so we have to store them. So the EU has committed to all the storage technologies, batteries, flywheels, capacitors, water pumping, but we're putting the big Euros into hydrogen.

RIFKINEight billion Euro commitment of public/private funds in the next few years, because, you know, hydrogen is the basic element of the universe. It's the stuff of the stars. It carries other energy. It's modular so you can use it for small homes and big factories. So here's how it works. You put photovoltaic solar panels on your roof, you generate electricity.

RIFKINIf you have some electricity you don't need for the moment, you put the electricity in the water. Hydrogen bubbles out of the water into a tank. It's real simple. When the sun isn't shining on your roof, you turn it and the hydrogen goes from the tank back to electricity. A very small thermodynamic loss.

REHMAnd you're going to hear about the other two pillars after we take a short break. Jeremy Rifkin is my guest, talking about "The Third Industrial Revolution."

REHMAnd welcome back. Jeremy Rifkin is with me. His new book all about what he calls "The Third Industrial Revolution." Jeremy, you were giving me the five pillars. You gave me three. Let's move on.

RIFKINAll right. Pillar one, renewable energy. Pillar two, your buildings become your own power plants. Pillar three, you have to store it with hydrogen. And then Pillar four, that's the most interesting. This is where the internet communication revolution completely merges with new distributing energies to create a nervous system, an infrastructure for a new economic paradigm.

RIFKINWe actually use off-the-shelf internet technology and convert the power lines of the United States, Europe and the world, the transmissions lines into an energy internet that acts exactly like the internet. So when millions and millions of buildings are collecting their own green energy on site, storing it in hydrogen like you store digital in media, if you don't need some of that electricity, the software can connect you and you can share it across entire continents. Just like we now produce our own information, store it in digital and share it online.

RIFKINAnd it's interesting, in Germany, they have six test sites that have been set up by the federal government and they are actually testing the most interesting things. They're connecting every appliance -- every appliance to the transmission central grid -- to the distributed grid. So we will know what every washing machine is doing across an entire region, every thermostat, every air conditioner. So if there's too much demand for energy and the price is going up, the software can direct a million washing machines to say, forget the extra rinse. If you, the consumer, bought that particular program you'll get a credit and a check from the utility company.

RIFKINThey're even testing weather conditions on the software so each homeowner or business will know moment to moment the change in weather conditions and how that would affect how they use their energy. And you'll have a dial that will tell you the price of electricity moment to moment so that your software can tell you when to get off the grid, sell back to the grid, et cetera.

REHMAnd you're saying that this is already beginning.

RIFKINIt's just beginning, just beginning. Pillar five is electric plug-in transport. The electric vehicles came out this year. Fuel cell hydrogen vehicles are coming out -- this is a done deal -- in mass production by Daimler, General Motors and the other car companies in 2014. So you'll be able to plug your vehicles in anywhere on the grid, get green electricity. Then anywhere you travel, you can connect up to a plug, parking garages, whatever, and either get green electricity from the grid or if your computer says sell 'cause the price is right, you can sell yours back.

RIFKINSo Diane, these five pillars together is a -- they are a new technology platform. They're the infrastructure we keep talking about in America. We keep saying we need infrastructure, infrastructure. But the key is not to mend the old 20th Century infrastructure alone because those energies and technologies are pretty well exhausted, but to create the new infrastructure for a 21st Century third industrial revolution.

REHMWhat happens to nuclear power in all of this?

RIFKINWell, it's interesting. I've been advising the EU for a long time and the chancellor of Germany -- after Fukushima, I got a call from the chancellor's office saying would I join Chancellor Merkel in September to talk about how we grow a sustainable economy in the 21st Century. And Germany is certainly leading in all these five pillars.

RIFKINThe -- I think nuclear's -- it's really over. I think Fukushima was just the last point of departure. I notice that this week Siemens, the great German company, announced they're out of nuclear power.

REHMOut.

RIFKINLet me give you the business reason why it's over. And people can argue about the ideological reasons. Nuclear was dead until the 19 -- in the 1980s because of Three Mile Island and Chernobyl. It's come back in the 1990s, was at -- least nuclear is clean. It doesn't emit CO2. It can play a role in averting climate change. That was the whole rationale for its comeback.

RIFKINThe problem is this. There's about 400 nuclear power plants in the world. They're very old. They only make up 6 percent of our energy mix, that's all. But our scientific community says to have a minimum impact on climate change, minimum, you'd have to have 20 percent nuclear in the mix of energy. That means you'd have to have 4,000 nuclear power plants. That means you have to replace the existing 400 and build three nuclear power plants every 30 days for the next 60 years. That's not going to happen.

RIFKINPillar -- and the number -- the second problem is we simply don't know how to get rid of the nuclear waste. I'm not going to spend a lot of time on it, but we spent $8 billion to build that failsafe vault at Yuka Mountain to put the nuclear material in. We can't open it up because it's already leaking. Number three, uranium costs go up right now with the existing power plants. We could recycle the uranium to plutonium like the French want to do, but then we've got problems with security issues around the world.

RIFKINAnd here's the final thing your listeners should know. We don't have the water. Forty percent of all the water consumed in France last year went to cooling nuclear reactors. And when it comes back, the water's heated and it's dehydrating eco systems for agriculture. So from a business point of view, I'd be surprised if we build more than 50 nuclear power plants. I think the old ones are going to go. I just don't think it's part of the equation.

REHMAll right. So in the midst of all this planning for the future you have oil companies and gas companies pushing for new exploration. What do you say to them?

RIFKINIt's kinda sad. In the opening chapter of the "Third Industrial Revolution" I quote a petroleum institute study because, you know, former vice-presidential candidate Sarah Palin and others are saying drill, drill, drill as if that's going to get us out of the crisis.

REHMIt's actually drill, baby, drill.

RIFKIN...drill, baby, drill. The fact is, the petroleum institute did a study and showed that if we opened up every potential oil reservoir that we have, the Arctic, the Gulf of Mexico, the Rocky Mountains, the east and west coast to complete drilling, and this is the petroleum institute that represents the industry, we might be able to get 10 percent more oil out of the ground. That's infinitesimal in 20 years from now in a global aggregated market. So...

REHMAnd what about gas fracking?

RIFKINGas fracking is problematic, too. Of course, remember, there's CO2 emissions there. Secondly, there is a lot of potential gas, but the environmental consequences are potentially enormous. That's why France, which is very, very fastidious about its power, has outlawed fracking already. And there's a big global discussion going with it.

RIFKINYou know, Diane, there's lots of other fossil fuels. We have tar sands from Canada. And the government here in Washington has to decide whether that pipeline should send that tar sand down to Houston. We have heavy oil in Venezuela. We have coal deposits around the world, but they're dirtier. They emit more CO2. They bring us into climate change even quicker. So we're trapped.

RIFKINOn the one hand, we have a dying fossil fuel second industrial revolution. And every time we try to re-grow it, it's going to collapse because of the price of oil. On the other hand, we have the entropy bill for the industrial aid, the CO2 we put into the atmosphere, which is now affecting agriculture and infrastructure. So we're stuck with this, but we have to find a way to make sure the old system doesn't collapse, keep it on life support. But we have to vest our funds, our knowhow, our talent into laying down this five-pillar infrastructure for a third industrial revolution to grow millions of jobs, create a new business model and make it sustainable.

REHMBut you've got lobbyists, members of congress all locked in to that second industrial revolution with fossil fuels as its basis.

RIFKINThat's true and the energy industry's a very powerful lobby in Washington. They received, even today in their sunset period, they're receiving tens of billions of dollars of subsidies every year. But you know what? I think we have a more powerful lobby here, not in the traditional sense. But when you take a look at these five pillars the industries that are represented are pretty impressive. It's the renewable energy industry. But the construction industry, the real estate industry, the IT industry, the logistics and transport industries.

RIFKINAnd so when we begin to look at the possibilities of taking a stagnant American economy and laying down this new infrastructure, we're talking about thousands of new businesses and millions of new jobs to lay down the infrastructure itself. And it starts immediately. As soon as you commit yourself to this revolution in each city, in each state and begin to create public private partnerships to do this, the jobs start right away at day one.

REHMSo we hear President Obama talking about the prospect of a green economy and how it could create new business and jobs. So why are you critical of his efforts?

RIFKINIt's disappointing because, you know, he really was -- we looked at him as a transitional president to a new generation, the internet president. And he said the worst thing is losing his Blackberry. So I assumed when he came into office that he would understand the potential of joining internet communication to organize distributed renewable energy.

RIFKINThe problem with the Obama Administration is not the will. They do want to have a green economy. And to be fair, this administration has spent billions and billions of dollars in introducing various technologies and initiatives. But he doesn't have a narrative. He doesn't have a game plan. There isn't a coherent cohesive roadmap on how you do this.

RIFKINSo when he introduces his green economy, it's all a hodgepodge of individual projects that seemingly don't tie in, a battery factory over here, an electric car over here, a solar factory over there. And what he hasn't done is put these disparate parts into a comprehensive story that tells us about a third industrial revolution. He doesn't have these five pillars. And if you don't put them together, Diane, you can't create the new economic paradigm we're talking about.

REHMIf you've been meeting with Angela Merkel, why haven't you met with President Obama?

RIFKINWell, that's a good question. In the book, there's a little chapter there in my discussions early on with some members of the congress over the years. And certainly they're aware of what we're doing in the European Union. But it hasn't blown back here in any significant way. But I think it's going to open up really in a major way in the next 24 months. You're going to see developments in Texas, California's already moving along, and northeast and other parts of the country.

RIFKINLet me give you one example. When we first introduced this into Europe, the power and utility companies weren't very thrilled because they're kind of attached to the big energy companies. And they're saying, well, wait a minute. We're going to have to give up controlling energy and sell less electrons? This doesn't make sense. Then we began to introduce a new business model to the power and utility companies on how they make more money in shifting to this third industrial revolution.

RIFKINI said, get used to it. In the future, millions of people in homes, offices and factories are going to produce their own energy. The new technology, solar, wind, geothermal, they're getting cheaper and cheaper. And they're going to follow the same line that the cell phones and computers did, going from very expensive to so cheap you can give them away. And once that technology becomes cheaper and cheaper to collect the energies -- the energies themselves are free, Diane. It's the wind, the sun, the heat under your ground, the garbage you collect, so in the future, millions of people are going to really provide their own energy.

RIFKINWhat's the role of the utility companies? They'll be able to run the energy internets, 'cause that's technical. And the way they're going to make money is they're going to do the IBM shuffle. You remember IBM was in trouble in the '90s. They were making no money selling computers. So they decided that they had to rethink their business. And they came up with the idea that their real business is managing information. So now every company in the world has a chief information officer.

RIFKINThe power and utility companies' new business is to set up relationships with thousands of corporate clients and homeowners to manage their energy flows, to keep their energy costs down and their productivity up. And here's the key for anyone in the business community listening to this. The key to survival in the next 30 years is not labor costs, it's energy costs to the extent that any business can keep its energy costs low, its productivity high and its margins there it survives. And the utility company can share those savings with the companies.

REHMJeremy Rifkin. "The Third Industrial Revolution" is the title of his new book. You're listening to "The Diane Rehm Show." Jeremy, you may have heard my interview in the last hour with the postmaster general. Here's a question that relates to both that discussion and this one. It's from Gary who says, "I heard that the Bush Administration pulled the plug on the electric vehicle program for the post office. Is there any estimate of what the possible fuel savings might be if they switched to electric vehicles?"

RIFKINWell, you know, I've been in direct contact with the U.S. Postal Service for many years. And one of their vice-presidents, Sam Pulcrano has worked with us over the past. They're stellar. They're one of the key companies in the United States that's taking every single measure for energy efficiency to get their productivity up. They're an early adopter.

RIFKINAnd they've been talking about and started implementing putting -- converting their buildings so they can put energy right on site. They've been moving into electric vehicles and testing hydrogen fuel cell vehicles. So the U.S. Postal Service is really a pioneer. And they understand that to stay alive it's all about energy savings. That's going to be critical.

RIFKINDiane, I think there's a generational problem here. The old guard in the business community, they think centralize, they think top down. The young generation in the business community and in the public thinks distributive and collaborative and lateral. The music companies, they didn't understand distributed file sharing of music. They didn't understand it and then they went down in five years. They just tumbled. And the newspapers didn't understand the distributed computing power of a blogosphere. And now newspapers are hurriedly trying to create blogs.

RIFKINBut when the internet connects with energies and we create a democratization of energy, it's 100 times more powerful. Because then it means we begin to create all sorts of new business models and new ways of relating to each other.

REHMAll right. We're going to open the phones. First to Grand Rapids, Mich. Good morning, John, you're on the air.

JOHNHello.

REHMHi.

JOHNCan you hear me?

REHMYes, certainly can. Go right ahead.

JOHNOkay. A few years back, I believe, I don't know if I got this guy's name right, but T-bone Pickens, I don't know if you remember, he was -- he's a geologist that's -- he's into energy, into gas and so forth. He said there was enough energy -- wind energy in the Dakotas and in West Texas to drive the whole country. But one of the major problems is storing that energy.

JOHNWell, in Grand Rapids here just south of us -- or north of us, we have a facility at Ludington where they take, during low peak hours of use of energy, they store it in a big reservoir. And then, during high consumption times, they allow it to go back out into Lake Michigan and it generates power.

JOHNNow this country every year has floods continuously. Every year, it costs billions of dollars. And we could be pumping that water up into the Black Hills or up into the mountains during a time of peak when energy, you know, development. And that would -- but, you know, the problem here is that somebody, one or two companies has to make a ton of money off of something and then at the expense of all the other companies. And I think that is totally wrong. I think the government should get into this and we should develop this and it'd save the country tons of money.

RIFKINThe -- of course, you're talking about pillar three, storage and it's absolutely essential that we have storage. There are now some companies in the United States who are producing wind power and then they're storing with hydrogen right on site.

REHMBut isn't there a danger to the hydrogen storage?

RIFKINThis is interesting because early on we were concerned about hydrogen. Everyone remembers the Hindenburg, the great...

REHMOf course.

RIFKIN...disaster in the '30s. But that's been resolved both in the United States and Europe. Hydrogen is no more difficult than gasoline in terms of its potential of damage...

REHMYou're saying that danger is past?

RIFKINWell, it's past. We have buses running all over Europe on hydrogen right now.

REHMAll right. Short break, more of your calls when we come back. Stay with us.

REHMAnd we'll go right back to the phones to Rocky Mount, N.C. Good morning, Mel.

MELGood morning. How are you today?

REHMGood, thanks.

MELI had an idea about creating jobs, along with green energy would be to -- especially lower-income and even higher-income people would benefit by it -- having every house, every apartment place, every spare lot create -- devoted to some sort of solar energy that would be -- that would create jobs, it would lower people's electric bills and things and create more money for them to spend in the economy. The other thing I was thinking about would be if every -- they wanna make electric cars. If every moving part could have some type of small generator attached to generate electricity as it's moving it could replace the battery charge and wouldn't need plugging in.

RIFKINWell, this is pillared, too. That's where a lot of jobs are created. Imagine converting every single building in North America, home, office and factory, to your own personal power plant in 40 years. That means energy efficiencies, first of all. And that is, you have to retrofit all of these buildings. And you have to make sure they don't leak and that they're energy efficient so you can then lay out the five pillars.

RIFKINLet me show you how it's done in Europe because people say, how do we pay for this? It costs money to put photovoltaic on your roof or have a wind turbine, et cetera, or geothermal heat pump. The feed-in tariff is critical. American's may be surprised to know 51 countries have now put in this feed-in tariff in the last three years, so that you can get premium for selling back to the grid. If you convert your building, you sell this renewable energy back to the grid you get more money for it.

RIFKINPayback is seven or eight or nine years in some cases on the loan. The key is, how you get the loans. How do you finance getting a $30,000 photovoltaic on your roof? The way they do it in Europe is green loans. It's now starting in Italy and Germany. Now, you know, Italy has its problems with bureaucracy, so listen to this one, Diane. There are companies in Italy who have lined up the big national banks. You, a homeowner, can go and get a green loan. You sign a paper.

RIFKINSixty days later, the photovoltaic power plant's on your roof. Sixty days later. And the reason the banks are willing to finance this, because of the feed-in tariff, they know you're gonna save electricity on your bill and you're going to be able to pay as you say. And so they automatically know you're a good risk. In Germany they're starting green loans. In North America, only Ontario has the feed-in tariff.

REHMHum.

RIFKINVermont, I'm sorry, Vermont just put it in. And I think there's some experiments going on in Florida. Vermont has just put it in, as far as I know. So this is the key to opening up these new possibilities and the gentleman who called in is right. We're talking about thousands and thousands of S.M.E.'s, small and medium-sized businesses, contractors, etcetera and millions of jobs over a 40-year period. And it begins with day one, the minute you put in that feed-in tariff in any state or any region, you're producing new businesses and new jobs and new infrastructure.

REHMLet's go to Zach in Dallas, Tex. Good morning to you.

ZACHYes. Hello. Good morning, Diane.

REHMHello. Go right ahead, please.

ZACHYes. Can you hear me, Diane?

REHMYes, just fine.

ZACHYes, ma'am. My name is Zach Faugherty (sp?) . I am calling from Dallas. I'm a founder of a solar panel manufacturing company. And we have this company since three years in Dallas. And we are self-funded company. And we had a huge problems to get there right now. We have 55 people who work for us right now. And have a possibilities to generate a lot of jobs in Dallas factory.

ZACHNow, what a issue we are facing is that here the Chinese government, Chinese banks, since 2010 until today, they give $41 billion for the big solar panel manufacturing companies. With that much money, almost they killed all the companies. Like, for example, Solyndra went down. That's because the Chinese government, they put a lot of money industry and the Chinese companies, they are taken all over the market. I would like to tell you that if we don't have a better energy policy, the Chinese are going to roll over us.

RIFKINWell, let me say it is interesting. Here we are in 2011. We know that the second Industrial Revolution's on life support. We know that fossil fuel energies are never gonna get cheaper. They're just gonna get more expensive and more volatile. We know that technologies based on those energies, like the internal combustion engine, have no more multiplier effect. And we know the whole infrastructure of our economy is made out of fossil fuels, from cement to plastics.

RIFKINSo wake-up call. How do we re-grow the -- any economy in the world when we have an infrastructure based on a energy technology regime that no longer is viable. So you -- the caller mentioned China. There is movement going on all over the world. I would say watch Germany and Europe because Germany, in some ways, is very interested. It vies with China as the leading exporting power in the world, it certainly -- the economic engine of the EU, which is the lead economy in the world right now in terms of GDP.

RIFKINBut, like every other country, we're faced with this transition moment. The key to making it successful in the United States is to take all these components in these separate pillars, put them together in one technology platform and you introduce it in every city, every state in the country. It's gonna come in like wi-fi. As each city introduces this five-pillar infrastructure, then it wants to connect to the next city and the next city, they're nodes, until you connect like wi-fi across the country. And this is bottom-bottom. What I mean is this is lateral power. And it comes like the internet in that as it goes from site to site to site.

RIFKINThe federal government can play a role. And that is it can provide the regulations, the standards, the incentives, the playing field. The states can provide a role by teaming up with private industry in the civil society, but, ultimately, this is gonna come in like the internet part of it. This is gonna come in because millions of people want it, because there's tremendous business opportunities in doing it.

RIFKINSo I think what we will see in the next 24 months -- this is my prediction -- the flood gates are gonna open up here, the wind's gonna blow from Europe back to the states. And we're gonna see, like this gentleman, his factory's gonna be multiplied many, many times.

REHMAll right. To Maurine (sp?) , she's in Martha's Vineyard. Good morning to you. Maurine, are you there?

MAURINEI am here. Can you hear me?

REHMI certainly can. Go right ahead.

MAURINEWell, you know, I just finished a book about Tesla, who, of course we recall, tried to give free energy to the whole planet. And J.P. Morgan pulled the rug out on that one. And Nixon did a similar thing in the 70's. I’m 49 this year, but I was old enough to see that happen, when he stopped all solar production. And I think this is a really beautiful dream. I love listening to you talk. It's so optimistic.

MAURINEBut living on Martha's Vineyard, I see the power of big money that oil brings about. And I just don't see how you're gonna get these big-wigs who have these massive amounts, stockpiles of money, who are part of the oil business, to step out of that and give that up. More power to you. Boy, I’m right behind you supporting this idea, but I don't see how this can possibly happen. We are so hooked on the money that oil brings in.

RIFKINWell, we don't really have any choice. And this really isn't a dream. This is actually taking place. This third industrial revolution…

REHMIt's already happening.

RIFKIN…across the European Union. Absolutely. And it's happening in countries, it's happening in cities. We -- my team -- I have 120 companies in my team that -- and we've actually done master plans. We did San Antonio, a master plan for the utility company there, CPS Energy and the city. It's the seventh largest U.S. city. They're implementing parts of this plan. We did the master plan for Rome. It's an $18 billion year-old rollout. It's going on now. We just did the master plan for Monaco and for Utrecht in the Netherlands and many other places. So it is beginning.

RIFKINWhat I would say is this, the -- we've got to find a way to create new jobs in this country and grow the economy. We have to do it in a sustainable fashion. So what's the alternative here? Do we wanna stay in the old sunrise energies, sunrise industries and technologies of a 20th century second industrial revolution that's clearly, clearly dying? Or do we wanna engage ourselves in the sunrise energies, industries and technologies of a third industrial revolution that's emerging?

REHMWell, what I hear Maurine saying, and I understand what she's saying, is that there's going to be so much push back from the oil companies, from the gas companies, the coal companies because the money entrenched in our political system is going to keep all this from happening.

RIFKINI think it's a problem. We'll wanna …

MAURINEYes. Diane, exactly. Yes.

RIFKINWe are -- the great exceptionalism of America is that, which we don’t talk about too much, is that we're the only democratic economy in the world where elections are actually financed by special interest.

REHMSo it's up to us.

RIFKINIt is. And here's what I would say to all the young people out there, you got a whole internet generation out there that's listening to what I have to say and this makes common sense to them. They grew up empowered, Diane, with the idea that they should be able to create their own information, share it online with millions of people around the world. What they need to do now is engage themselves in the political life of the country and say, we now want to take this internet consciousness and we now wanna create our own energy, make it green, share it across commons, across the United States, create a sustainable society in the 21st century.

RIFKINAnd put the politicians to the test in all the parties and say, this is our future. We don't wanna go back to the 20th century. We wanna go into the 21st century and they should become politically involved. Absolutely.

REHMAnd, Maurine, here's an email, and we've had lots like this, from Matt in Plano, Tex., who says, "what, as an American, can I do to advance your guest's theories here in the U.S.?" And, Maurine, listen closely.

RIFKINWell, I'm gonna surprise you, I think, by saying the first thing is we have to tell the story. We have to create a narrative here. We have to create a compelling vision of why this new economic game plan makes sense for the United States of America. You know, it's kind of interesting to me that America has lost its imagination at this critical moment in history.

REHMWhy do you think that is?

RIFKINWell, the reason it's interesting to me is that no country can tell a story better than America. We -- what made us such a great society is not our military acumen or even our industrial prowess. It's our ability to envision the future with such vividness that we feel that we've gotten there even before we've left the station. Madison Avenue, Silicon Valley, Hollywood excel at helping us take a look at our future. And then we run to it. We queue up immediately with abandon because we're willing to take risks.

RIFKINWhat we need now is to tell this story of bringing the internet to energy and creating a new five-pillar infrastructure that'll allow us to create a sustainable economy and lots of jobs. The president should be telling this story all the candidates for the next presidential election should be telling this story. And if they're not, the young people in this country should put them to fire and just say, we're demanding this.

REHMJeremy Rifken, "The Third Industrial Revolution" is the title of his new book. And you're listening to "The Diane Rehm Show" and to St. Augustine, Fla. Good morning, Bill.

BILLYeah, hi, Diane.

REHMHi.

BILLJeremy, the reason why I'm calling is because my son is a young -- relatively young business man in Maui, Haw. And he just recently contacted me and said, dad, here's what I'm thinking I'm gonna do. He has about 10 properties there. He says, I wanna go with the solar energy because some of the communities out here are promoting this and to the top -- to the first 15 percent of adapters, they then provide the storage of energy, which is step three in your plan.

BILLAnd so are you aware of that, number one. Because he said there are communities in Hawaii that are already at that 15 percent cap. And he wanted to get in on it and said, dad, do you have some extra money for me for this? Are you aware of that going on? And is it anything that's widespread here in the United States?

RIFKINNo. I’m very aware that this is going in Hawaii. And Hawaii has become a little bit of a test case for the rest of the country because it is starting to engage in these pillars. The reason is the price of energy is so expensive in this little island out in the Pacific. And it just…

BILLOkay.

RIFKIN…it means the economy can't grow in the old way and they have lots of renewable energy, of course. The ocean tides, the sun, the wind, they've got it all. So I would say to you, this is a good investment for your son. And this brings up another question, and that is the developing world. This is gonna move as quickly in the developing world, maybe more quickly, than in the developed world.

RIFKINForty percent of the human race lives under $2 a day and a quarter of the human race has absolutely no electricity, never had it. Twenty-five percent of the human race has never had electricity. Another 20 percent of the human race has marginal access. The interesting thing is there's no -- because there's no infrastructure in many of these countries, they can leap-frog right into this new third industrial revolution by putting solar on their buildings, setting up little micro grids, pooling their risks and then organizing node to node to node.

RIFKINIn the developed countries, you have to mend up an old infrastructure and then create the new one. It's sort of like remodeling an old home versus building a new one. It's more expensive to renovate an old home. It’s easier to build it from scratch. So we are hopeful that in the developing countries they will move very quickly to this new energy regime and bring them up to parity with the developed countries.

REHMGood luck to you and your son, Bill. And finally, to Fort Washington, Md. Good morning, Jim.

JIMWell, good morning. Just a real quick question, and that is to your guest, have you ever been able to induce or entice any of the states in the United States to adopt an energy policy where the state would build the, you know, the source of the electricity and sell it and advertise that to other places? The cost of energy in our state, for example, of Maryland, for example, is lower because we have state-controlled electricity. And that would, in effect, be an asset that would, you know, lead other -- an increase in our employment base, for example.

RIFKINUm-hum. Well, let me say that there -- I have been in deep discussions in California and in Texas. What I would say, this, for any elected official listening in, whether it's a county official or a state official across the country, take some time and look what's happening in Germany. Just take a look at it. Examine it. Leading exporting power, the main economic engine now in the West that, at least, is a strong economy, low employment and watch what Germany's doing in these five pillars.

RIFKINIf Germany can do this, why can't the United States of America? So I would say to folks, take a look over there. Watch the way the wind is blowing over there and bring it back here because here's what I am convinced of, once we get this narrative and we understand the possibilities of a third industrial revolution, no one can move faster than the United States of America to make it happen.

REHMJeremy Rifken, the book is titled, "The Third Industrial Revolution," how lateral power is transforming energy, the economy and the world. Congratulations, Jeremy.

RIFKINThanks, Diane.

REHMThanks for being here. Thanks for listening, all. I'm Diane Rehm.

ANNOUNCER"The Diane Rehm Show" is produced by Sandra Pinkard, Nancy Robertson, Susan Nabors, Denise Couture, Monique Nazareth, Sarah Ashworth, Lisa Dunn and Nikki Jecks. The engineer is Tobey Schreiner. A.C. Valdez answers the phones. Visit drshow.org for audio archives, transcripts, podcasts and CD sales. Call 202-885-1200 for more information.