WEBVTT - Electrons will be central to the next era of geopolitical stability 0:00:00.560 --> 0:00:03.920 Welcome to Zero. I am AKSHATARTI this week how to 0:00:03.960 --> 0:00:18.560 think about geopolitical chaos. I don't know if it's a 0:00:18.560 --> 0:00:21.279 good thing, but I'm reading the news these days and 0:00:21.320 --> 0:00:24.000 it keeps reminding me of one of my favorite sci 0:00:24.000 --> 0:00:27.840 fi novels, The Three Body Problem. At the heart of 0:00:27.880 --> 0:00:30.600 that story is an alien world that oscillates between a 0:00:30.640 --> 0:00:34.000 stable era and a chaotic era no one can predict 0:00:34.080 --> 0:00:37.720 when it happens. Here on Earth, it feels like we 0:00:37.760 --> 0:00:42.000 are entering one of those chaotic eras. So today on 0:00:42.080 --> 0:00:44.280 the show, I wanted to bring on a guest who 0:00:44.320 --> 0:00:47.440 thinks a lot about the chaos around us and has 0:00:47.640 --> 0:00:51.640 through the decades advised world leaders and CEOs about how 0:00:51.640 --> 0:00:55.800 to manage in times of chaos. Gerald Buds is the 0:00:55.880 --> 0:01:00.360 chairman of the Eurasia Group, a political risk consultancy that 0:01:00.400 --> 0:01:02.600 he was the chief of staff for Canada's Prime Minister 0:01:02.760 --> 0:01:05.560 Justin Trudeau, and just last year he also ran the 0:01:05.600 --> 0:01:10.120 campaign that successfully put mccarnie in as Trudeau's replacement. I 0:01:10.160 --> 0:01:12.959 wanted to understand how he thinks about the energy shocks 0:01:13.000 --> 0:01:15.400 we are facing and how they will reshape the world 0:01:15.920 --> 0:01:19.680 where the energy transition might falter where it might accelerate, 0:01:20.240 --> 0:01:22.759 and who will be the winners in a decade from now. 0:01:23.360 --> 0:01:25.800 These are questions that will decide where trillions of dollars 0:01:25.840 --> 0:01:30.520 I invested and thus where our climate future goes. As always, 0:01:30.680 --> 0:01:33.680 please send feedback or suggestions to zero Pod at Bloomberg 0:01:33.680 --> 0:01:43.560 dot net. Here's my conversation with Gerald Putts. Welcome to 0:01:43.640 --> 0:01:44.639 the show, Gerald Putts. 0:01:44.760 --> 0:01:47.640 It's great to be here. Longtime listener, first time caller. 0:01:48.160 --> 0:01:50.680 Ah, it's nice to have you on the pod. Finally, 0:01:51.280 --> 0:01:54.000 there's a lot going on in the world, many many fronts. 0:01:54.160 --> 0:01:57.200 I want to talk about energy and climate, but before 0:01:57.240 --> 0:02:00.800 we get there, just tell the audience a little bit 0:02:00.840 --> 0:02:03.600 about yourself. How do you come to working on climate 0:02:03.640 --> 0:02:04.520 and energy issues. 0:02:04.920 --> 0:02:08.920 Well, I've been working on energy transition, climate related issues 0:02:08.919 --> 0:02:13.040 for most of my professional career in both well actually 0:02:13.120 --> 0:02:16.280 in all three sectors. My first exposure to it was 0:02:16.360 --> 0:02:19.639 when I was running policy for the Premier of Ontario, 0:02:19.760 --> 0:02:23.400 which is Canada's largest province, and we I think we 0:02:23.400 --> 0:02:27.640 were the first jurisdiction anywhere to voluntarily retire coal at scale. 0:02:27.720 --> 0:02:32.160 So we retired about seventy five hundred and fifty megawatts 0:02:32.200 --> 0:02:38.120 of coal and replaced it with rebuilt nuclear renewables gas, 0:02:38.440 --> 0:02:41.840 a mix of a very broad mix of generation, and 0:02:41.880 --> 0:02:44.920 that got me interested in the topic. Dalton McGuinty was 0:02:44.960 --> 0:02:47.840 that man's name. He was a three term Premier of Ontario, 0:02:48.760 --> 0:02:52.119 and I think, not coincidentally, he was a scientist, and 0:02:52.600 --> 0:02:55.000 maybe I think he's the one and only scientist to 0:02:55.120 --> 0:02:58.120 have been Premier of Ontario. And because of that, he 0:02:58.160 --> 0:03:01.720 had high conviction that climate would be the issue that 0:03:01.840 --> 0:03:04.280 young whipper snappers like I was at the time would 0:03:04.280 --> 0:03:06.560 be spending most of my career thinking about and trying 0:03:06.560 --> 0:03:08.240 to solve the problems created by it. 0:03:08.480 --> 0:03:12.200 And then you also were chief executive officer of the 0:03:12.240 --> 0:03:16.040 World Wildlife Fund and then chief of staff do Justin 0:03:16.080 --> 0:03:18.680 Trudeau as Prime Minister of Canada. Tell us a little 0:03:18.720 --> 0:03:20.400 bit about those times. 0:03:20.200 --> 0:03:23.640 Well the WWF, and I'm still a proud board member 0:03:23.680 --> 0:03:25.960 of the World Widlife Fund in the United States. I'm 0:03:26.520 --> 0:03:29.040 speaking to you from Silicon Valley, where I'm here for 0:03:29.080 --> 0:03:32.960 a WWF board meeting later today. We are very much, 0:03:33.000 --> 0:03:36.240 as your listeners would know, a conservation organization in its 0:03:36.280 --> 0:03:39.880 broadest possible form. Bit we're in the business of the 0:03:39.880 --> 0:03:44.120 conservation of nature, and that is something that has attracted 0:03:44.120 --> 0:03:47.640 me like I think it should attract all humans, because 0:03:47.680 --> 0:03:51.480 ultimately it is the biosphere that we depend on. And 0:03:51.680 --> 0:03:55.840 in Canadian politics, both for former Prime Minister Trudeau and 0:03:55.920 --> 0:04:00.880 current Prime Minister Carney, I played a strategic in designing 0:04:00.880 --> 0:04:04.360 the campaigns, and in Prime Minister Trudeau's case, I ran 0:04:04.400 --> 0:04:07.200 his office for the first four years of his tenure. 0:04:07.480 --> 0:04:09.880 I left in twenty nineteen to join eurras Group. 0:04:10.280 --> 0:04:14.120 The Eurasia Group is a political risk consultancy. That's sort 0:04:14.120 --> 0:04:17.520 of the broadest way I could describe it, but it 0:04:17.600 --> 0:04:21.120 is still a vague phrase. Can you explain what does 0:04:21.160 --> 0:04:22.640 it involve day to day? 0:04:23.440 --> 0:04:25.960 Well, it's getting a lot less vague for people right. 0:04:26.040 --> 0:04:28.960 The way I tend to describe it is that ten 0:04:29.040 --> 0:04:31.680 years ago Eurasia Group was called into a board dinner 0:04:31.720 --> 0:04:35.040 to give an interesting speech that people could think about 0:04:35.080 --> 0:04:38.599 and then get down to their core businesses the next day. 0:04:38.680 --> 0:04:43.159 And as we're discovering and as investors in particular, and 0:04:43.200 --> 0:04:47.000 our clients are in two classes. We advise large investors 0:04:47.040 --> 0:04:50.360 who have to absorb these risks around the world as 0:04:50.360 --> 0:04:54.320 they think about their asset allocation strategy, and also large 0:04:54.360 --> 0:04:59.000 corporations who have to manage their supply chains, and for 0:04:59.240 --> 0:05:02.440 most of my life if the stable equilibrium and policy 0:05:02.520 --> 0:05:06.640 that private sector actors enjoyed actually meant that this was 0:05:06.680 --> 0:05:10.360 an afterthought. But now, obviously, in particular in this decade, 0:05:10.400 --> 0:05:13.359 it's become a core business for everybody. So trying to 0:05:13.440 --> 0:05:17.800 understand what's causing geopolitical disruption, how long it may last, 0:05:18.440 --> 0:05:21.920 where it's going to be regionally concentrated, in which industries 0:05:21.960 --> 0:05:26.280 it's going to affect most approximately, is our core business. 0:05:26.560 --> 0:05:30.679 Let's talk about one slice of those risks, which comes 0:05:30.720 --> 0:05:34.279 from the current energy shock. It's been more than seventy 0:05:34.360 --> 0:05:37.800 days since the US and Israel attacked Iran, and there 0:05:37.839 --> 0:05:40.240 has been a virtual closure of the Strait of Hormuz, 0:05:40.360 --> 0:05:43.080 responsible for twenty percent of the world's oil and gas. 0:05:43.640 --> 0:05:48.600 On Sunday, Iran replied to the latest US proposal, and 0:05:48.760 --> 0:05:52.360 President Trump declared the response was totally unacceptable. We don't 0:05:52.400 --> 0:05:55.840 know where this goes next. But when you are talking 0:05:55.920 --> 0:05:59.440 to companies and investors in this position, there are some 0:05:59.520 --> 0:06:01.680 of the things are pretty obvious the types of regions 0:06:01.720 --> 0:06:05.720 that are affected right now by the straight disclosure, But 0:06:05.880 --> 0:06:09.080 what are the kinds of things that they are worried 0:06:09.120 --> 0:06:12.800 about that are beyond the obvious that you talk to them. 0:06:12.720 --> 0:06:16.919 About well X energy. I think that a lot of 0:06:16.920 --> 0:06:20.320 people are learning that there's a whole bunch of consequential 0:06:20.360 --> 0:06:23.040 stuff that's created on the other side of the strait 0:06:23.040 --> 0:06:27.000 of Wurmos, from the rudiments of the agricultural supply chain 0:06:27.520 --> 0:06:31.960 to helium, which the healthcare system meant semiconductor industry is 0:06:32.360 --> 0:06:35.960 very reliant upon. So not unlike what happened with both 0:06:36.000 --> 0:06:39.960 the pandemic and the Russia Ukraine crisis, which of course 0:06:40.160 --> 0:06:43.960 also both happened this decade, and if everybody feels tired, 0:06:44.000 --> 0:06:48.000 that's probably why. So we've learned a lot about the 0:06:48.040 --> 0:06:53.480 complexity and the inter relatedness of supply chains through those crises. 0:06:53.520 --> 0:06:56.200 As we feel them come apart, it's less of a 0:06:56.240 --> 0:07:00.040 surprise than it would have been before twenty twenty, but 0:07:00.320 --> 0:07:04.839 it's still surprising to people that so much of what 0:07:05.040 --> 0:07:09.560 their stuff is made of is originating in places that 0:07:09.600 --> 0:07:12.480 they don't really understand, and it can be disrupted by 0:07:12.520 --> 0:07:15.480 forces that they have never reckoned with. So that's what's 0:07:15.520 --> 0:07:18.240 happening here, and the energy side, if we kind of 0:07:18.280 --> 0:07:22.160 telescope out and look at longer range. She'd recall we 0:07:22.280 --> 0:07:26.400 spoke in the aftermath of Russia's invasion of Ukraine, and 0:07:26.440 --> 0:07:29.160 it was a big open question. You wrote about it. 0:07:29.720 --> 0:07:32.520 Lots of thoughtful people were thinking about it at the time, 0:07:32.960 --> 0:07:36.480 whether or not it would accelerate or decelerate the energy 0:07:36.520 --> 0:07:40.440 transition in Europe. I think five years later, six years later, 0:07:40.560 --> 0:07:46.680 we can pretty much declare that it accelerated the energy 0:07:46.680 --> 0:07:49.880 transition in Europe. And I think in this particular case, 0:07:50.520 --> 0:07:55.440 there are so many precarious, economically precarious countries and regions 0:07:55.480 --> 0:07:59.200 that are dependent upon the hydrocarbons that are on the 0:07:59.240 --> 0:08:02.400 wrong side of the Strait of Hormuz right now that 0:08:02.520 --> 0:08:07.280 other actors with supply chains and technologies that could replace 0:08:07.400 --> 0:08:12.040 hydrocarbons are acting very aggressively to do just that in 0:08:12.080 --> 0:08:15.200 the aftermath of this crisis. So when you think about 0:08:15.360 --> 0:08:20.640 growing economies like Vietnam, like the Philippine, Sri Lanka, India, Pakistan, 0:08:21.240 --> 0:08:25.360 all of these countries are those that have already faced 0:08:25.440 --> 0:08:31.160 the shock of watching LNG tankers turn around in the Pacific, 0:08:31.240 --> 0:08:36.600 go back through the Suez Canal and sell contracted hydrocarbons, 0:08:37.120 --> 0:08:41.520 hydrocarbons that they had contracted for four or five, six, 0:08:41.600 --> 0:08:44.800 sometimes ten x the spot price in a region while 0:08:44.800 --> 0:08:47.400 a crisis was underway, and they're going to think twice 0:08:47.400 --> 0:08:51.600 about it now. So the Chinese, to be direct about it, 0:08:51.720 --> 0:08:56.400 have a larger pool of potential interested customers in their 0:08:56.400 --> 0:08:59.840 own region because of this crisis. And I think that 0:09:00.160 --> 0:09:02.920 have a long term impact on the global energy system 0:09:02.960 --> 0:09:04.760 that people are not appreciating right now. 0:09:05.440 --> 0:09:08.520 Yeah, and let's take one of those things at a time. 0:09:08.640 --> 0:09:12.520 So if you look at Europe, and Europe's transition has 0:09:12.520 --> 0:09:16.280 certainly accelerated. I think the biggest evidence I see is 0:09:16.320 --> 0:09:22.520 in Spain. So before the Russia Ukraine crisis, you know, gas, 0:09:22.600 --> 0:09:25.439 natural gas used to set the price of power in 0:09:25.800 --> 0:09:29.040 Spain something like sixty to sixty five percent of the time. 0:09:30.320 --> 0:09:34.440 In this first quarter it's down to nine percent of 0:09:34.520 --> 0:09:38.640 the time because of the sheer amount of solar, and 0:09:38.760 --> 0:09:41.640 solar is the biggest contributor. There's been another contribution from 0:09:41.640 --> 0:09:44.080 wind as well, and a little bit from batteries, but 0:09:44.240 --> 0:09:48.240 really it's solar power and it can show you what 0:09:48.320 --> 0:09:50.160 a country has been. It's not a small country. It 0:09:50.200 --> 0:09:55.079 can do within a small period of time, and not 0:09:55.160 --> 0:09:58.640 all other European countries have quite gone down that pace. 0:09:58.880 --> 0:10:01.240 But even in those play like you're in the UK 0:10:01.440 --> 0:10:05.800 or in Germany, you are seeing much more muted price 0:10:05.960 --> 0:10:09.400 on electricity relative to the type of gas shock that 0:10:09.520 --> 0:10:12.040 has come through because twenty percent of the energy is 0:10:12.080 --> 0:10:15.600 and stuck in the strait of foremost. One single energy 0:10:15.640 --> 0:10:18.600 tanker in the last seventy days has passed through, and 0:10:18.640 --> 0:10:21.760 that was just this past week, so you can start 0:10:21.800 --> 0:10:25.440 to see that change pretty quickly. The oil industry is 0:10:25.480 --> 0:10:28.679 sort of known for its boom and bus cycles. When 0:10:28.720 --> 0:10:31.680 the price is high, they invest a lot to find 0:10:31.720 --> 0:10:36.240 more oil and then the price comes down rapidly. But 0:10:36.320 --> 0:10:39.800 there's something different that governments and even people do when 0:10:39.840 --> 0:10:43.200 there is a dual energy shock. You know, we talked 0:10:43.240 --> 0:10:46.560 about the twenty twenties, but like it's worth going back 0:10:46.600 --> 0:10:49.480 fifty years and thinking through the nineteen seventy three and 0:10:49.520 --> 0:10:52.800 seventy nine shocks. We know that there was a rapid 0:10:52.840 --> 0:10:55.679 decline in the burning of oil for electricity, which at 0:10:55.679 --> 0:10:58.359 the time twenty or twenty five percent of global electricity 0:10:58.400 --> 0:11:02.480 came from burning oil fell and it just continued to 0:11:02.559 --> 0:11:06.360 fall even after the oil price really came back to 0:11:06.440 --> 0:11:11.720 being normalized in the eighties. Governments invested heavily in nuclear power, 0:11:11.960 --> 0:11:14.720 France among them, but so many others, and you saw 0:11:14.720 --> 0:11:18.000 this rapid increase of nuclear power. You also saw increase 0:11:18.040 --> 0:11:21.520 in coal burning, which was on the decline for a 0:11:21.559 --> 0:11:24.800 while with the oil being burned. But then you've got 0:11:25.160 --> 0:11:30.280 much longer term investments, things like battery technology investments that 0:11:30.400 --> 0:11:34.040 Exonomobile made, for example, but also solar investments which are 0:11:34.040 --> 0:11:38.560 bearing fruit today. There were energy efficiency measures, you know, 0:11:38.720 --> 0:11:41.599 cars became just a lot more efficient and they've continued 0:11:41.640 --> 0:11:46.760 to increase their mileage steadily ever since the seventies. If 0:11:46.800 --> 0:11:50.080 you are now looking at this dual energy shock, you're 0:11:50.160 --> 0:11:54.920 seeing countries start to take on renewables, take on electrification. 0:11:55.280 --> 0:11:57.960 What kind of impact do we think we will see 0:11:57.960 --> 0:12:00.720 in ten twenty year's time. 0:12:00.880 --> 0:12:03.480 Oh, it's a great question. And what tends to happen 0:12:03.480 --> 0:12:07.240 in the aftermath of all of these shocks. Local availability, 0:12:07.280 --> 0:12:11.559 which is a policy objective to secure security of supply, 0:12:11.920 --> 0:12:15.240 which has always been an issue with energy since we 0:12:15.240 --> 0:12:19.080 were walking out of caves and cutting down trees so 0:12:19.160 --> 0:12:23.800 that we could burn our evening meal. Local availability has 0:12:23.840 --> 0:12:28.080 always been a prime directive when it comes to energy supply, 0:12:28.760 --> 0:12:33.120 and in Placid geopolitical periods, it starts to feel like 0:12:33.200 --> 0:12:39.040 everywhere is local, right, and policymakers feel that way, large 0:12:39.040 --> 0:12:43.240 investors feel that way. People who operate local businesses feel 0:12:43.280 --> 0:12:46.280 that way. They have no idea and no reason to 0:12:46.320 --> 0:12:49.719 have an idea where their feedstock comes from. And then 0:12:49.800 --> 0:12:53.960 suddenly a disruption like this happens and people are wait 0:12:54.000 --> 0:12:58.319 a second, my stuff comes from where, and my monthly 0:12:58.360 --> 0:13:02.440 budget is dependent on what and how can I put 0:13:02.480 --> 0:13:06.600 pressure on the people who control power in my local area, 0:13:06.760 --> 0:13:10.520 i e. The politicians, both power in the political sense 0:13:10.640 --> 0:13:14.320 and in the energy sense, so that we can insulate 0:13:14.360 --> 0:13:19.480 ourselves against future shocks of this kind. And everything else 0:13:19.559 --> 0:13:24.120 flows from that realization. So what happened in the post 0:13:24.120 --> 0:13:26.800 seventy three period, And I was a child in the 0:13:26.880 --> 0:13:30.800 nineteen seventies playing on a beach in Nova Scotia that 0:13:30.920 --> 0:13:33.120 suddenly had a coal plant at the end of it. 0:13:34.120 --> 0:13:36.480 And the reason we had a coal plant at the 0:13:36.559 --> 0:13:38.640 end of our beach and all over the rest of 0:13:38.679 --> 0:13:41.400 Nova Scotia is because we mind coal in Nova Scotia 0:13:41.520 --> 0:13:45.199 and it was the locally available resource to replace oil 0:13:45.240 --> 0:13:49.600 fired electricity. In other places it was different things. So 0:13:49.800 --> 0:13:53.839 I think that people in climate circles right now tend 0:13:53.880 --> 0:13:57.040 to believe, Aha, well, people will finally come around to 0:13:57.120 --> 0:14:00.439 our way of thinking. And the evidence is the excitlerating 0:14:00.480 --> 0:14:04.599 adoption of evs, especially in markets outside of North America. 0:14:05.200 --> 0:14:08.840 It is the adoption of solar with battery as a 0:14:09.080 --> 0:14:14.280 replacement for hydrocarbons like LNG. That's not what's happening on 0:14:14.320 --> 0:14:18.080 the ground, and I think that people need to appreciate that, 0:14:18.200 --> 0:14:22.240 otherwise they make long term policy mistakes. The example you 0:14:22.400 --> 0:14:24.800 used of Spain, which I think is a really important 0:14:24.840 --> 0:14:29.080 one of upper middle class economy, let me put it 0:14:29.120 --> 0:14:32.680 that way, a G twenty country. They are proving to 0:14:32.760 --> 0:14:37.880 the rest of Europe that from an engineering perspective, renewables 0:14:37.880 --> 0:14:41.200 a scale work. Now, lots of people will say Spain 0:14:41.360 --> 0:14:44.440 is a sunny southern European country. There are others, by 0:14:44.480 --> 0:14:46.520 the way, But as you and I both know and 0:14:46.600 --> 0:14:50.520 probably don't want to spend too much time explaining, that's 0:14:50.520 --> 0:14:54.680 not the way physics works. And the biggest barriers for 0:14:54.920 --> 0:14:59.040 any system planner or policymaker in a large economy is 0:14:59.080 --> 0:15:00.800 whether or not the stuff is going to work at 0:15:00.800 --> 0:15:03.080 the end of the day. And now there's a whole 0:15:03.160 --> 0:15:06.280 series of examples not only that it does work at scale, 0:15:06.600 --> 0:15:10.600 but that it is appreciably cheaper than the old system. 0:15:11.040 --> 0:15:14.120 So you put those two things together, and you have 0:15:14.160 --> 0:15:19.360 an aggressively marketing global power like China that can arrive 0:15:19.440 --> 0:15:23.680 at your policymaker's doorstep with the entire electric stack and 0:15:23.760 --> 0:15:25.520 say we can do this for you, so you don't 0:15:25.520 --> 0:15:28.000 have to worry the next time, or worry as much 0:15:28.160 --> 0:15:32.200 the next time there's a disruption in the global hydrocarbon industry. 0:15:32.560 --> 0:15:34.400 Then it becomes a very You put those three things 0:15:34.480 --> 0:15:37.280 together and it's a very attractive prospect. So my own 0:15:37.360 --> 0:15:41.960 view is that people are under appreciating how much this 0:15:42.040 --> 0:15:44.240 crisis will accelerate the energy transition. 0:15:44.720 --> 0:15:48.080 The other fourth dimension, maybe i'll add in, is one 0:15:48.120 --> 0:15:52.040 that some experts are calling the hyper agency of consumer. 0:15:52.280 --> 0:15:57.000 So typically the energy system has been these long dated, 0:15:57.200 --> 0:16:00.359 a large billion dollar assets that need to be invested 0:16:00.440 --> 0:16:05.200 in by governments and buy large private investors. And this 0:16:05.360 --> 0:16:09.920 time around there is because of the modularization of some 0:16:09.960 --> 0:16:14.560 of these technologies like solar and batteries in particular, consumers 0:16:14.880 --> 0:16:19.960 are able to act even before governments make changes in policy. 0:16:20.000 --> 0:16:22.640 And you know, again you talked about Spain being an 0:16:22.720 --> 0:16:27.440 upper middle class economy. But you know, I'm reporting on 0:16:27.480 --> 0:16:30.320 the Philippines right now, and I heard from a nurse 0:16:30.840 --> 0:16:34.840 whose annual salaries less than ten thousand dollars, whose desire 0:16:35.400 --> 0:16:39.560 was to try and get solar on the roof because 0:16:39.680 --> 0:16:42.720 eight will lower my bills, but also because I want 0:16:42.800 --> 0:16:45.760 my own energy. And lots of people in the past 0:16:45.800 --> 0:16:48.160 may have said I want my own energy but could 0:16:48.200 --> 0:16:51.040 not have done anything about it. Now they can. 0:16:51.200 --> 0:16:56.560 Yes, that is a critical point. I wouldn't overstate it, 0:16:56.240 --> 0:16:59.000 but it is a critically new thing. It is a 0:16:59.000 --> 0:17:03.000 bona fide new thing in the global energy system. I 0:17:03.000 --> 0:17:07.480 would counterbalance that by saying, the most powerful and underappreciated 0:17:07.560 --> 0:17:12.480 force in politics and arguably in nature is inertia, right, 0:17:12.800 --> 0:17:18.199 and incumbents will fight change tooth and nail. And it's 0:17:18.280 --> 0:17:23.040 not an accident that the process you described in the 0:17:23.200 --> 0:17:27.760 nineteen thirties wasn't really about replacing hydrocarbons. It was about 0:17:28.080 --> 0:17:32.000 replacing one hydrocarbon with another and finding different use cases 0:17:32.680 --> 0:17:38.000 for individual hydrocarbons. That meant that the transition, while important, 0:17:38.240 --> 0:17:41.359 was happening largely within the confines of the oil and 0:17:41.400 --> 0:17:45.840 gas and coal industry. Itself right, and I suspect what 0:17:45.960 --> 0:17:50.200 you'll see, and you certainly have seen. It's disrupted politics 0:17:50.240 --> 0:17:55.320 already in many places and especially including the United States. 0:17:56.000 --> 0:17:59.280 The oil and gas industry will not go quietly. They 0:17:59.280 --> 0:18:03.399 will fight change. They will fight the transition every step 0:18:03.400 --> 0:18:05.880 of the way. And as a consequences where we come 0:18:05.920 --> 0:18:08.280 in as you raise your group, because that's an analytical 0:18:08.400 --> 0:18:12.399 judgment from our perspective, not a normative one. It means 0:18:12.480 --> 0:18:16.320 that while the direction of travel is set and the 0:18:16.359 --> 0:18:22.440 trajectory is accelerating in the energy transition itself, it means 0:18:22.480 --> 0:18:25.440 that it will be a lot longer and bumpier than 0:18:25.520 --> 0:18:29.760 the science on the climate side would dictate necessary and 0:18:29.880 --> 0:18:34.040 on the technology side would allow, because the incumbents will 0:18:34.040 --> 0:18:36.560 fight it every step of the way, just because of 0:18:36.600 --> 0:18:39.080 the amount of money that's at stake. 0:18:45.520 --> 0:18:48.200 After the break, more of my conversation with Gerald Buds. 0:18:48.560 --> 0:18:50.760 If you're enjoying this episode of Zero, please take a 0:18:50.760 --> 0:18:53.480 moment to read and review the show on Apple Podcasts, YouTube, 0:18:53.520 --> 0:18:56.800 and Spotify. It makes the algorithms happy and helps more 0:18:56.840 --> 0:19:13.960 people find this podcast. Picking up on your point about 0:19:14.359 --> 0:19:17.720 the disposition of the people and power in governments and 0:19:17.720 --> 0:19:21.360 the directions they may take as a result of a crisis. 0:19:22.200 --> 0:19:24.840 You need to tell me why Canada is taking the 0:19:24.920 --> 0:19:28.360 direction that it is because in power is Mark Carney, 0:19:28.480 --> 0:19:33.119 a man who very well understands climate science and the 0:19:33.119 --> 0:19:36.359 climate urgency better than I would say any world leader 0:19:36.560 --> 0:19:39.439 in power right now, maybe Claudia Scheinbaum would be the 0:19:39.480 --> 0:19:42.400 one who can compete with him on climate science knowledge. 0:19:42.960 --> 0:19:46.080 And yet over the past twelve months fourteen months that 0:19:46.119 --> 0:19:48.800 he's been Prime Minister, that you helped in his campaign 0:19:48.840 --> 0:19:52.160 to put him into that position, he has not done 0:19:52.600 --> 0:19:55.760 the things that you would expect a predisposition to thinking 0:19:55.920 --> 0:20:01.000 on a clean energy dimension, do wanted in his campaign. 0:20:01.040 --> 0:20:04.480 He wanted Canada to become a clean energy superpower. He 0:20:04.480 --> 0:20:07.680 wanted Canada to become an energy superpower of all kinds. 0:20:08.320 --> 0:20:10.520 He has certainly worked on trying to get an oil 0:20:10.560 --> 0:20:13.720 pipeline to the West, but has he done anything to 0:20:13.800 --> 0:20:15.800 really accelerate the clean energy equation. 0:20:16.760 --> 0:20:19.400 Well, I would say it's early days. And I will 0:20:19.440 --> 0:20:22.000 say actually, one of the many, many, many reasons I 0:20:22.040 --> 0:20:25.480 did not go back into active politics after the campaign 0:20:25.680 --> 0:20:28.240 is that I never again want to be in the 0:20:28.240 --> 0:20:31.960 business of explaining the actions of policymakers to people. So 0:20:32.600 --> 0:20:35.680 I'm I'm not going to offer to speak for Prime 0:20:35.720 --> 0:20:39.879 Minister Kearney, but I will say that as someone who 0:20:40.600 --> 0:20:43.680 who cares a lot about my country and who has 0:20:44.280 --> 0:20:48.680 observed it very closely, both as an analyst and as 0:20:48.720 --> 0:20:52.560 a key advisor to policymakers over time, that Canada is 0:20:52.600 --> 0:20:55.720 a more complicated place than it looks from the outside, 0:20:56.000 --> 0:21:01.680 and its core psychosis is internal integration. When I was 0:21:01.720 --> 0:21:04.200 a grad student at McGill back in the nineteen nineties, 0:21:04.240 --> 0:21:07.760 we almost lost the country in a referendum by less 0:21:07.760 --> 0:21:12.600 than one percentage point. There has been another secession referendum 0:21:12.720 --> 0:21:16.679 in my lifetime in nineteen eighty which Prime Minister Pierre 0:21:16.680 --> 0:21:20.919 Trudeau won by twenty points. But it's always in the 0:21:20.960 --> 0:21:24.240 back of your mind that is there a set of 0:21:24.280 --> 0:21:28.800 policy issues that is acting as a force to pull 0:21:28.840 --> 0:21:33.720 the country apart. And I'm not making a normative judgment 0:21:33.800 --> 0:21:36.440 on the actors who will use that as an excuse 0:21:36.520 --> 0:21:40.480 to promote their own interests, which of course always happens 0:21:40.480 --> 0:21:43.560 in politics everywhere in Canada is no exception to that. 0:21:44.440 --> 0:21:47.640 But that coupled with the I was going to say 0:21:47.720 --> 0:21:51.240 the unique, but you could argue that the McKinley administration 0:21:51.440 --> 0:21:54.399 did the same thing in the latter last part of 0:21:54.400 --> 0:21:59.600 the nineteenth century. The aggressive posture of the United States 0:21:59.800 --> 0:22:04.879 to Canada means that policy choices that you would have 0:22:04.920 --> 0:22:08.360 in peacetime look a lot less attractive if you're governing 0:22:08.400 --> 0:22:12.639 the country at a time of unique crisis. So to 0:22:12.640 --> 0:22:17.719 answer your question directly, I think that let's wait and 0:22:17.800 --> 0:22:23.200 give Prime Minister Carney some time to adjust to this 0:22:23.320 --> 0:22:26.560 new reality and see what the climate policy is that 0:22:26.600 --> 0:22:30.480 he proposes to use to make progress in this context. 0:22:31.040 --> 0:22:35.240 But don't judge the actions and decisions that he's taken 0:22:35.880 --> 0:22:38.560 as if those two other big things that I just 0:22:38.640 --> 0:22:41.560 described are not happening, because they are. And if you're 0:22:41.600 --> 0:22:45.200 Prime Minister of Canada, the relationship with the United States 0:22:45.280 --> 0:22:48.880 and the unity of the country itself in reverse order, 0:22:49.040 --> 0:22:51.840 are the two things that are on your desk every day, 0:22:52.040 --> 0:22:53.679 no matter whether you want them there or not. 0:22:54.320 --> 0:22:56.320 One thing that he did do which sort of stood 0:22:56.680 --> 0:22:59.080 a lot of minds was give the speech at the 0:22:59.119 --> 0:23:02.480 World Economic Forum in Davos talking about the Middle Powers. 0:23:03.040 --> 0:23:06.320 You know, Canada, India, Germany, France, the UK like these 0:23:06.359 --> 0:23:10.160 are now all middle powers and with what's happening at 0:23:10.200 --> 0:23:13.640 the very highest level between China and the US. There 0:23:13.680 --> 0:23:16.879 is an opportunity, he said, for the Middle powers to 0:23:16.920 --> 0:23:21.480 come together to work on challenges, including climate change, that 0:23:22.320 --> 0:23:26.760 they could do something about. Now he has been going 0:23:26.760 --> 0:23:29.439 around the world talking to lots of countries, lots of 0:23:29.440 --> 0:23:32.879 Middle powers, trying to make treat deals happen. He's restored 0:23:33.640 --> 0:23:37.480 relationships with India, for example. Specifically, how do you think 0:23:37.480 --> 0:23:40.920 that will come together? Are we seeing any place where 0:23:40.960 --> 0:23:44.560 these middle powers are acting can act? 0:23:45.119 --> 0:23:49.240 Yeah, definitely, I think it will come together. I don't 0:23:49.240 --> 0:23:52.800 think it'll be in the traditional sense of an alliance. 0:23:52.840 --> 0:23:56.359 I don't see the headquarters of the Middle Power alliance 0:23:56.640 --> 0:24:01.200 in Madrid, where everybody where they're where there are five 0:24:01.240 --> 0:24:05.080 thousand bureaucrats working there and everybody comes for a leader's 0:24:05.080 --> 0:24:08.200 summit every year. I don't see it developing that way. 0:24:08.240 --> 0:24:11.159 But I also think that that's part the structural problem, 0:24:11.280 --> 0:24:14.840 is part of the problem with legacy alliances as well. 0:24:15.240 --> 0:24:19.520 I think he described it in DeVos as he didn't 0:24:19.560 --> 0:24:22.199 quite use these terms, but as a networked alliance that 0:24:23.000 --> 0:24:28.040 exists to reinforce each other's values and strategic policy objectives. 0:24:28.720 --> 0:24:31.960 And I think that's the kind of thing that you 0:24:32.040 --> 0:24:34.120 only notice it when you see it, and then when 0:24:34.160 --> 0:24:37.440 you see it you say, oh, okay, that's what Mark 0:24:37.480 --> 0:24:43.399 Carney meant. A large investment agreement between the Golf Cooperation 0:24:43.560 --> 0:24:47.520 Council and Canada wouldn't have happened outside of this context. 0:24:48.440 --> 0:24:52.119 So I wouldn't see it as a replacement for NATO, 0:24:53.040 --> 0:24:55.320 and I certainly wouldn't see it as a replacement for 0:24:55.520 --> 0:25:00.680 the European Union. But it is a viable, I think, 0:25:00.720 --> 0:25:04.880 a practical response to a world in which neither of 0:25:04.920 --> 0:25:10.960 the two superpowers can be depended upon to set the 0:25:11.040 --> 0:25:13.560 rules of the road and then more importantly obey them 0:25:13.600 --> 0:25:18.639 themselves as they conduct global affairs. So I see it 0:25:18.720 --> 0:25:24.760 as usual things get overblown in the media, but I 0:25:24.760 --> 0:25:29.120 see it as a very practical response to roads being 0:25:29.160 --> 0:25:33.080