WEBVTT - Europe Must Go 'Ludicrous Speed' to Meet Climate Targets 0:00:00.200 --> 0:00:03.000 Hi, I'm Danna Perkins, and you're listening to Switch It 0:00:03.080 --> 0:00:06.200 on the B and F podcast. More than any other region, 0:00:06.280 --> 0:00:09.159 the transition to a low carbon economy has been at 0:00:09.160 --> 0:00:11.960 the center of policy making in the European Union over 0:00:12.000 --> 0:00:14.760 the last decade. For the first time in three years, 0:00:14.800 --> 0:00:18.520 Europe has overtaken China when it comes to electric vehicle adoption. 0:00:18.840 --> 0:00:22.079 The EU has made strong financial commitments to investing in 0:00:22.120 --> 0:00:26.400 clean energy, with a willingness to explore important technology developments 0:00:26.400 --> 0:00:31.160 such as hydrogen, and member states have made net zero commitments. However, 0:00:31.200 --> 0:00:33.560 Europe is still not on track to meet its twenty 0:00:33.960 --> 0:00:37.400 clean energy and climate goals. Eleven out of twenty seven 0:00:37.400 --> 0:00:40.479 member states recorded less than two hundred million euros in 0:00:40.560 --> 0:00:43.880 clean energy investment over the last three years. But one 0:00:43.880 --> 0:00:45.599 thing I think I can say that we have all 0:00:45.680 --> 0:00:48.320 learned over the last year is that change can happen 0:00:48.520 --> 0:00:51.960 much faster than we might anticipate. Cold generation in Europe 0:00:52.000 --> 0:00:54.319 today is about half of what it was just five 0:00:54.400 --> 0:00:57.360 years ago. Talk of peak oil demand looked a decade 0:00:57.440 --> 0:01:00.160 or more away, and now it's possible that it has 0:01:00.200 --> 0:01:03.560 already happened. So net zero emissions, while they can seem 0:01:03.560 --> 0:01:06.320 just out of reach is it? And that is the 0:01:06.440 --> 0:01:09.560 question that BNFS team looked to address in the European 0:01:09.640 --> 0:01:13.080 Energy Transition Outlook. So today I speak with the primary authors, 0:01:13.319 --> 0:01:16.840 Dario Trump, who is our global head of Energy Transition Research, 0:01:17.280 --> 0:01:20.680 and Andrea's Gondolfo, the head of European Power Research here 0:01:20.720 --> 0:01:24.840 at BIENF. The report, the European Energy Transition Outlook can 0:01:24.880 --> 0:01:28.080 be found at BENF dot com via our app or 0:01:28.240 --> 0:01:31.560 at b NF go on the Bloomberg terminal. Additionally, you 0:01:31.640 --> 0:01:34.000 can find the research that it was built off of, 0:01:34.040 --> 0:01:36.959 which is an extensive flagship piece we published every year 0:01:37.080 --> 0:01:40.320 titled the New Energy Outlook. Now note that BENNF does 0:01:40.360 --> 0:01:43.080 not provide investment of strategy advice and we always have 0:01:43.120 --> 0:01:44.959 a full disclaimer at the end of the show. But 0:01:45.080 --> 0:01:48.960 for now, let's dive in regarding the European energy transition. 0:01:56.560 --> 0:01:59.920 Andreas and Dario, let's start at the beginning. Tell us 0:02:00.080 --> 0:02:02.280 why this is the right time for us to be 0:02:02.360 --> 0:02:05.520 talking about Europe in particular when it comes to the 0:02:05.640 --> 0:02:09.200 energy transition. Last year, I mean the main topic for 0:02:09.240 --> 0:02:12.959 everyone was of course COVID, but most of the listeners 0:02:12.960 --> 0:02:16.400 of the podcast and being at followers would have noticed 0:02:16.440 --> 0:02:19.960 that was also really big year for climate ambition. So 0:02:20.520 --> 0:02:24.040 we've seen a number of key economies commit to net 0:02:24.120 --> 0:02:28.720 zero targets for the first time. That has included South Korea, Japan. 0:02:29.120 --> 0:02:32.720 We've even had a carbon neutrality pledge in China, and 0:02:32.760 --> 0:02:37.720 of course Europe, wanting to stay ahead and continue to 0:02:37.720 --> 0:02:42.280 to to raise its climate ambition, FLAG managed to essentially 0:02:42.280 --> 0:02:46.960 get all twenty seven member state to commit to common 0:02:47.680 --> 0:02:52.000 neutrality net zero by but more importantly, and that's what 0:02:52.080 --> 0:02:54.839 makes it very concrete and and and really something to 0:02:54.840 --> 0:03:00.000 to look at right away minus emissions reduction by twenties 0:03:00.040 --> 0:03:05.639 thirty from from so real ratchetting of ambition, of ambition, 0:03:05.760 --> 0:03:09.920 and it means many more sectors than the typically affected 0:03:10.240 --> 0:03:13.960 to date power sector will have to be looked at 0:03:13.960 --> 0:03:17.520 and coming is great. So there's a lot happening in 0:03:17.560 --> 0:03:22.200 Europe right now and policy is actively changing the landscape 0:03:22.280 --> 0:03:25.280 as we go forward into this next year and beyond. Now, 0:03:25.400 --> 0:03:27.919 we at bing F do like to look at what 0:03:27.960 --> 0:03:30.960 the potential is for a lot of the different technologies 0:03:31.040 --> 0:03:33.760 that we look at out into the future. And Andreas, 0:03:33.840 --> 0:03:37.440 can you talk to all of us listening today about 0:03:37.880 --> 0:03:40.080 what that exercises and how do we kind of look 0:03:40.120 --> 0:03:42.560 at the world without policy and why is it so 0:03:42.600 --> 0:03:45.760 important then that we layer that on right now? So, 0:03:45.920 --> 0:03:49.760 as you said, yeah, Bloomberg, every year at being if 0:03:49.800 --> 0:03:53.320 we do this big report and energy outco, everyone knows 0:03:53.360 --> 0:03:57.119 about it, everyone hears about it, then essentially it's UH 0:03:57.200 --> 0:04:03.080 an exercise on how a nomics can drive the energy transition. Essentially, 0:04:03.120 --> 0:04:08.360 it's a mostly cost driven scenario that looks at what's 0:04:08.400 --> 0:04:11.960 the cheapest system that we can build in the future 0:04:12.360 --> 0:04:15.640 that essentially can make sure the lights stay on UM. 0:04:15.720 --> 0:04:18.920 That is a very good exercise. It it sets down 0:04:18.960 --> 0:04:21.640 a very good foundation. But when it came to Europe, 0:04:21.680 --> 0:04:26.039 we found that NEO was essentially too global for it 0:04:26.120 --> 0:04:28.720 to answer some specific questions that we had in Europe, 0:04:29.040 --> 0:04:32.279 and at the same time, because of the neutral approach 0:04:32.320 --> 0:04:35.240 that he wants to take and for it to be 0:04:35.279 --> 0:04:39.400 able to compare different regions, essentially strips out completely the 0:04:39.440 --> 0:04:43.279 effect of policies, which in Europe and in the European 0:04:43.360 --> 0:04:46.640 context has been very important in the past and at 0:04:46.640 --> 0:04:48.599 the moment, as Daria told us, essentially is going to 0:04:48.640 --> 0:04:52.040 be very important going forward. So we wanted to add 0:04:52.080 --> 0:04:56.680 that back in and keeping our economic transition scenario as 0:04:56.680 --> 0:05:00.400 a starting point, and keeping the fundamental methodology of you know, 0:05:00.560 --> 0:05:03.479 this is still at least cost system, so it's the 0:05:03.560 --> 0:05:06.479 cheapest way to to do all of this, but adding 0:05:06.520 --> 0:05:10.799 in there the effects of electrifying energy demand, for example, 0:05:10.920 --> 0:05:15.280 the effects of reducing the cost of offshore wind by socializing, 0:05:15.360 --> 0:05:19.159 for example, the transmission expands. You know what's happening in 0:05:19.200 --> 0:05:23.000 Germany where you know, they essentially develop a project up 0:05:23.040 --> 0:05:25.680 to a specific point and they hold an auction and 0:05:25.960 --> 0:05:28.520 by the right to build a project that has a 0:05:28.560 --> 0:05:31.160 cable going to it. You know, the effect of targets 0:05:31.160 --> 0:05:35.320 to any thirty targets. Europe has an increased ambition and 0:05:35.400 --> 0:05:38.440 he wants to hit some specific numbers by twenty thirty. 0:05:38.760 --> 0:05:41.400 And finally, and probably one of the most important things 0:05:41.400 --> 0:05:45.160 that we've tweaked here is increased the carbonization ambition. So 0:05:45.360 --> 0:05:48.240 one of the parameters we've changed is looking at what 0:05:48.360 --> 0:05:52.920 happens if Europe increases its twenty thirty emissions reduction target 0:05:53.440 --> 0:05:58.960 from today fifty in our let's say, current policy scenario 0:05:59.240 --> 0:06:02.520 and up to fifty five percent in our ambitious policy scenario. However, 0:06:02.560 --> 0:06:06.359 I think Daria cannot test that. Essentially our current politicys 0:06:06.360 --> 0:06:10.200 scenari is very too likely going to have fiftent as 0:06:10.240 --> 0:06:14.000 it's a mission reduction target, and our ambitious policy center 0:06:14.080 --> 0:06:17.039 will have to be updated for the next iteration next 0:06:17.080 --> 0:06:20.560 year to probably look at even higher targets. Maybe one 0:06:20.640 --> 0:06:23.479 reference to the podcast of Ian Barryman, who is the 0:06:23.520 --> 0:06:26.200 man behind the machine and the tool we we used 0:06:26.200 --> 0:06:28.960 to explore these different scenarios made he mentioned that and 0:06:29.240 --> 0:06:33.360 the Avengers, This character goes to all these parallel universes 0:06:33.400 --> 0:06:35.320 to to figure out which one is the one in 0:06:35.320 --> 0:06:38.640 which they managed to be the bad guy for him. 0:06:38.680 --> 0:06:42.839 NEO was essentially about playing out all these alternate scenarios 0:06:42.839 --> 0:06:45.880 and finding which one is where we can meet demand 0:06:46.279 --> 0:06:50.200 in the cheapest possible way. And unfortunately we in Europe 0:06:50.760 --> 0:06:53.960 that that wasn't challenging enough. So so what we decided 0:06:54.000 --> 0:06:56.840 to do with Andrea's was too goes to all these 0:06:56.839 --> 0:07:00.480 alternets at universes and find the one where not only 0:07:01.120 --> 0:07:04.400 do we optimize forecasts, but we also deliver on on 0:07:04.440 --> 0:07:07.960 the climate ambition after European Union. So so climate neutrality. 0:07:08.080 --> 0:07:10.480 I love how you said not challenging enough. Come on, guys, 0:07:10.520 --> 0:07:13.280 you guys are overachievers and for those listening if you 0:07:13.320 --> 0:07:17.160 haven't heard in Barriman's podcast, he gets into the complexity 0:07:17.240 --> 0:07:22.240 of just how incredibly detailed this model is. You know, 0:07:22.280 --> 0:07:24.600 it takes us a year to really turn the crank, 0:07:24.680 --> 0:07:26.920 so to speak, and find out all the different things. 0:07:27.000 --> 0:07:30.640 But talking about this expansion on that incredible piece of work, 0:07:30.800 --> 0:07:34.800 so that this europe specific look what we essentially have done. 0:07:34.840 --> 0:07:39.240 Here are more scenarios. So you've got scenario one, which 0:07:39.280 --> 0:07:41.120 is the new energy outlook, and then there's two additional 0:07:41.160 --> 0:07:44.040 ones at their most basic sense, Can you just explain 0:07:44.480 --> 0:07:47.800 what the two scenario offshoots are that we come up 0:07:47.840 --> 0:07:51.240 with for this piece of work. Yeah, I mean, at 0:07:51.280 --> 0:07:55.120 the most basic level, we app the de carbonization ambition. 0:07:55.280 --> 0:07:58.520 So we go from an economic transition scenario that assumes, 0:07:59.480 --> 0:08:02.000 essentially lead that everybody just wants to do what's right 0:08:02.120 --> 0:08:04.480 in terms of economics, right, you want to do things 0:08:04.560 --> 0:08:07.640 that are the cheapest. Yeah, yeah, and it strips out 0:08:08.040 --> 0:08:10.920 all policy beyond the one that we already see. Then 0:08:11.360 --> 0:08:15.360 we created a current policy scenario where we essentially try 0:08:15.440 --> 0:08:19.560 to see what's announced today some targets that we usually 0:08:19.600 --> 0:08:23.160 tend to exclude because we think there is no exact 0:08:23.200 --> 0:08:25.200 way of how to get there, and then we add 0:08:25.240 --> 0:08:28.720 on top of that, let's say some delayed electrification, So Europe, 0:08:28.960 --> 0:08:32.720 we assume that Europe will start electrifying energy demand, but 0:08:32.840 --> 0:08:35.480 that comes late into any thirty, and then our ambitious 0:08:35.480 --> 0:08:38.240 policies and builds on top of that. And it's just 0:08:38.480 --> 0:08:42.680 essentially because a step further, it says Europe starts electrifying tomorrow, 0:08:43.080 --> 0:08:47.640 it also starts building deep the carbonization technologies by tw 0:08:47.640 --> 0:08:51.120 any thirty at large scale to replace gas and core, 0:08:51.760 --> 0:08:55.800 and it phases out core completely by twenty forty, and 0:08:55.840 --> 0:08:59.240 it also ups it's a mission reduction target for twenty thirty. 0:08:59.480 --> 0:09:02.600 So this is the policy scenario for overachievers, or maybe 0:09:02.880 --> 0:09:06.640 it's a policy scenario for actually getting to net zero. Right. Yes, 0:09:06.800 --> 0:09:10.959 unfortunately we've called it ambitious policy scenario, but in reality 0:09:11.200 --> 0:09:16.200 it itself doesn't get us exactly to zero emissions, by 0:09:16.360 --> 0:09:20.319 gets us close, so that the net becomes an important 0:09:20.440 --> 0:09:23.959 detail in the way this whole target has been praised. 0:09:24.080 --> 0:09:27.760 I just wanted to go back on the economics approach 0:09:27.800 --> 0:09:30.400 and and people are doing what is the cheapest and 0:09:30.600 --> 0:09:32.839 that it is right. I mean, the reality is in 0:09:33.000 --> 0:09:36.240 energy systems there's quite a lot of cultural preferences and 0:09:36.559 --> 0:09:40.960 inertia and approaches, and so it's really benf and and 0:09:41.000 --> 0:09:43.480 some other entities who like to look at things from 0:09:43.480 --> 0:09:47.560 the economicsperiment when cost optimization way that rely on these 0:09:48.080 --> 0:09:51.240 on the scenario, but actually governments tend to favor one 0:09:51.280 --> 0:09:54.240 sector of the other because they're interested in the jobs 0:09:54.240 --> 0:09:56.720 they can create, or obviously the French, you know, we 0:09:56.760 --> 0:09:59.680 have a long love for nuclear So it's not so 0:09:59.760 --> 0:10:03.240 that economics is the main driver in reality. And I 0:10:03.280 --> 0:10:06.600 think what those scenarios allowed us to explore here in Europe, 0:10:06.600 --> 0:10:09.400 where we have a very dense set of countries with 0:10:10.080 --> 0:10:12.960 each other, their targets and their goals was on one hand, 0:10:13.000 --> 0:10:16.360 to check, you know, what is current plans and current 0:10:16.400 --> 0:10:19.679 ambition getting us too, is it aligned with what the 0:10:19.720 --> 0:10:22.600 EU is is hoping to achieve And turns out actually 0:10:23.160 --> 0:10:26.960 current national plans aren't delivering. And then the third one, 0:10:27.000 --> 0:10:28.520 which is one where I guess, you know, we have 0:10:28.600 --> 0:10:30.319 a bit more fun, was to say, you know, how 0:10:30.360 --> 0:10:32.240 close can we get to net zero? And that's where 0:10:32.240 --> 0:10:34.960 we we pushed the boat out, and as Undress said, 0:10:34.960 --> 0:10:38.000 there is a little bit left at the end, but 0:10:38.000 --> 0:10:40.880 but it's quite quite um, it's quite close, and but 0:10:40.880 --> 0:10:43.840 but the implications that it has in terms of renewables deployment, 0:10:43.880 --> 0:10:47.719 in terms of of dispatchable capacity extal, which we'll talk 0:10:47.760 --> 0:10:51.040 about more, are quite enormous. So it's it's really interesting 0:10:51.080 --> 0:10:52.959 to see those numbers come out. Well, so let's talk 0:10:53.000 --> 0:10:55.600 about that. So we know now that Europe has announced 0:10:55.600 --> 0:10:57.640 some of the most ambitious targets, but those aren't going 0:10:57.679 --> 0:10:59.440 to get us to net zero. So that's kind of 0:11:00.040 --> 0:11:02.280 let's not fixate on the not quite getting an A 0:11:02.400 --> 0:11:05.280 on the scorecard, and let's say, what's that next step. 0:11:05.600 --> 0:11:09.360 How far away are we in Europe to getting to 0:11:09.480 --> 0:11:12.120 net zero and what do the targets need to look 0:11:12.120 --> 0:11:13.880 like in order for us to get there. I mean, 0:11:13.920 --> 0:11:16.280 if I could start, maybe on on all things renewables, 0:11:16.320 --> 0:11:19.480 I think one thing we're seeing across boast of current 0:11:19.720 --> 0:11:24.400 policy scenari and ambitiousy scenarios that renewables deployment needs to 0:11:25.080 --> 0:11:28.080 right away double from the record levels we've we've seen 0:11:28.080 --> 0:11:30.520 to date. And if we look at that next zero 0:11:30.679 --> 0:11:34.520 scenario in the later parts of the modeling periods of IS, 0:11:34.520 --> 0:11:37.880 you actually see almost a tripling of renewables deployment and 0:11:38.120 --> 0:11:40.880 I think when we talk about you know, what, what 0:11:40.920 --> 0:11:43.880 does zero need to do and is the current reality 0:11:43.960 --> 0:11:47.200 aligned with with this ambition. Clearly there is a gap 0:11:47.520 --> 0:11:50.839 in the volumes of investment and commitments. We've had some 0:11:50.880 --> 0:11:54.880 good news on the side of investment activity in despite COVID, 0:11:54.960 --> 0:11:57.920 so our our investment numbers came out a week ago. 0:11:58.040 --> 0:12:01.600 I think around now in Europe was actually really coming 0:12:01.600 --> 0:12:04.600 out on top. But it's been limited to some asset 0:12:04.640 --> 0:12:07.680 classes in countries. So offshore wind is going through a 0:12:07.720 --> 0:12:10.880 really good period, but then you have some serious buttonnecks 0:12:10.920 --> 0:12:14.280 and onshore wind in Germany and Italy options not clearing. 0:12:14.360 --> 0:12:17.960 So I think one of the first takeaways from from 0:12:18.080 --> 0:12:22.600 the economic to the ambitious policy scenario renewables deployment conditions 0:12:22.720 --> 0:12:25.040 need to improve on the ground if we are to 0:12:25.120 --> 0:12:28.439 have both the economic power system and one that helps 0:12:28.520 --> 0:12:31.600 us and deliver our goals. Now for a very short break, 0:12:31.679 --> 0:12:38.440 stay with us. Okay, So we need to electrify many 0:12:38.520 --> 0:12:41.960 tons of clean power to do it, and what does 0:12:42.000 --> 0:12:44.960 that mean for everything else? As you said, Dana, we 0:12:45.000 --> 0:12:47.560 need to electrify. And one of the things that we 0:12:47.640 --> 0:12:52.840 see actually throw modeling is that electrification drives renewable growth. 0:12:53.000 --> 0:12:57.360 At this point in Europe, these are the cheapest options 0:12:57.480 --> 0:13:02.600 for meeting electricity needs pretty much up or around until 0:13:02.720 --> 0:13:06.200 eight of our electricity needs. Even if these grow, and 0:13:06.200 --> 0:13:08.400 this is one of the things that mainly drives our 0:13:08.400 --> 0:13:13.559 outlook in the European energy transitional. However, this means that 0:13:13.960 --> 0:13:16.559 we have a bunch of plants that are going to 0:13:16.640 --> 0:13:20.640 shut down, and this is primarily called but also gas 0:13:20.720 --> 0:13:24.440 will have to make way in Europe. A lot of 0:13:24.440 --> 0:13:27.000 it is just you know, comes at the end of 0:13:27.040 --> 0:13:32.040 technical lifetime, but some of it is also displaced by renewables. However, 0:13:32.559 --> 0:13:35.920 in this whole process of the energy transition and us 0:13:35.920 --> 0:13:38.280 calling a shut down, what we do find is that 0:13:38.760 --> 0:13:43.800 actually there is still some market opportunity in our outlook 0:13:43.920 --> 0:13:47.720 is gas and a combination of some unknown technologies. On 0:13:47.720 --> 0:13:52.480 an economic basis, renewables can get you to around beyond that, 0:13:52.760 --> 0:13:56.400 we need to start doing some very weird mental exercises 0:13:56.480 --> 0:13:59.560 to go to a dent of our electricity needs with 0:13:59.600 --> 0:14:03.920 wind solar. We start building systems that just don't make sense. 0:14:04.320 --> 0:14:07.600 You know, we deploy a small country's worth of batteries. 0:14:07.960 --> 0:14:10.680 We start making statements such as like a third of 0:14:10.760 --> 0:14:13.600 German and needs to be covered in solar panels, and 0:14:13.679 --> 0:14:17.080 that's how you get to your energy needs. And and 0:14:17.120 --> 0:14:19.840 this essentially shows that that and this is one of 0:14:19.880 --> 0:14:22.960 the reasons why in our outlook we don't get to 0:14:23.200 --> 0:14:25.720 zero in twenty fifty, even in our most ambitious And 0:14:26.640 --> 0:14:28.600 that's a lot of solar panels for a country that 0:14:28.600 --> 0:14:31.600 already has a lot of solar panels. Yes it is. 0:14:31.720 --> 0:14:34.960 And actually, worryingly enough, you're you're building that many solar 0:14:35.000 --> 0:14:39.800 panels and you end up wasting about eight of your energy. 0:14:40.000 --> 0:14:43.440 Right so, so you're building, building, building just so you 0:14:43.480 --> 0:14:48.280 can eke out always less and less and less, which 0:14:48.400 --> 0:14:51.240 essentially tells us that, you know, we need something else. 0:14:51.440 --> 0:14:54.160 And at the time it's at the moment it's gas. 0:14:54.200 --> 0:14:56.840 But of course if we want to get to zero 0:14:57.200 --> 0:15:00.280 net zero and eventually zero, it's going to to be 0:15:00.320 --> 0:15:02.560 something else. Well, so that brings up a good point. 0:15:02.640 --> 0:15:05.800 So right now it is gas, and new plants are 0:15:05.800 --> 0:15:07.840 going in and it's seen is you know, this isn't 0:15:07.920 --> 0:15:11.840 the perfect technology from decarbonization standpoint, but it's going to 0:15:11.880 --> 0:15:15.600 give us flexible dispatch and it's going to be something 0:15:15.600 --> 0:15:18.200 that we can do right now to really decarbonize, but 0:15:18.400 --> 0:15:21.080 these plants can stick around for a long time. So 0:15:22.080 --> 0:15:24.240 what do we do about all the infrastructure that we're 0:15:24.280 --> 0:15:27.200 building now and how useful is that going to be 0:15:27.280 --> 0:15:29.080 for us? Is it going to be really useful and 0:15:29.120 --> 0:15:31.600 bridging the gap for the next five years or ten years, 0:15:32.280 --> 0:15:35.480 or are these timelines changing. One of the things we've 0:15:35.520 --> 0:15:38.880 started to see in Europe is policy emerge on the 0:15:38.920 --> 0:15:42.360 side of legacy assets or the assets that will become legacy. 0:15:42.440 --> 0:15:45.880 So probably won't be a surprise to anyone that call 0:15:45.960 --> 0:15:49.520 phase out are quite in vogue. A large chunk of 0:15:49.720 --> 0:15:53.200 European call now is already covered by phase out schedules. 0:15:53.480 --> 0:15:55.400 We have some some of the few countries missing that 0:15:55.440 --> 0:15:59.280 are have ongoing discussions and even opponent now by joining 0:15:59.320 --> 0:16:02.600 the need Zerope by fifty's also kind of committing to 0:16:02.600 --> 0:16:05.240 to get out of core fight in And when you 0:16:05.280 --> 0:16:08.280 look at what these policy packages are made of, it's 0:16:08.280 --> 0:16:13.040 not just call has to be online and good risons. 0:16:13.040 --> 0:16:14.920 It's also looking at, you know, how do you make 0:16:14.960 --> 0:16:19.520 sure that the owners of these plants are receiving endemization 0:16:19.720 --> 0:16:22.960 for for the lost market activity, but also how the 0:16:22.960 --> 0:16:25.800 community is working in these plants are getting supported and 0:16:25.840 --> 0:16:28.640 so on the front of code at least it feels 0:16:28.680 --> 0:16:31.960 like the legacy issue and and and giving away out 0:16:31.960 --> 0:16:34.720 of the market to these assets that is not just 0:16:35.000 --> 0:16:39.800 driven by their lack of economic potential which is suppressed 0:16:39.800 --> 0:16:44.360 by the common price is happening what our outlook does? 0:16:44.400 --> 0:16:46.840 And I think Andrew asking and talk well to to 0:16:46.920 --> 0:16:49.800 the reason why there is a technology excess. It highlights 0:16:49.840 --> 0:16:52.760 that gas actually is going to have to be taken 0:16:52.760 --> 0:16:55.160 care of next and and but when I say taking 0:16:55.200 --> 0:16:58.359 care of next, that probably means now for many policymakers, 0:16:58.400 --> 0:17:02.680 because going to an zero means that an abated gas 0:17:03.000 --> 0:17:07.119 has to be addressed relatively soon, both on the side 0:17:07.160 --> 0:17:09.560 of the role it place in the short term, so 0:17:09.720 --> 0:17:11.960 there will be some gas needed, how do we make 0:17:12.000 --> 0:17:15.879 sure it comes online and and and receives the remuneration 0:17:15.920 --> 0:17:19.439 it deserves. But also when we need to decarbonize it 0:17:19.520 --> 0:17:21.439 or replace it with something clean, what do we do? 0:17:21.520 --> 0:17:22.919 So I'm just going to come out and ask it, 0:17:23.040 --> 0:17:27.280 are we creating a problem now with gas that we 0:17:27.359 --> 0:17:30.200 have to clean up later or is gas a necessary 0:17:30.359 --> 0:17:34.080 part of the solution and the path to NE zero. 0:17:34.480 --> 0:17:36.600 To be honest, I think you know when we run 0:17:36.600 --> 0:17:39.040 our economic transitions and that this is probably one of 0:17:39.080 --> 0:17:43.880 the easiest questions to answer, and the answer is we 0:17:43.880 --> 0:17:47.679 were notcturing ourselves in the foot by building gas today 0:17:47.880 --> 0:17:52.160 and in fact, over the next decade, building gas is 0:17:52.359 --> 0:17:56.359 essentially a one way street, especially as we're retiring core, 0:17:56.600 --> 0:18:00.960 but we're also seeing some nuclear retirements in the question 0:18:01.040 --> 0:18:03.600 is what type of gas do we build? And this 0:18:03.680 --> 0:18:06.640 is where policy can can play a big role, right 0:18:07.040 --> 0:18:10.080 making sure that, for example, where there is an option, 0:18:10.119 --> 0:18:12.920 we build gas that maybe can burn an alternative fuel, 0:18:13.280 --> 0:18:16.960 so that there is a kind of like insurance policy 0:18:16.960 --> 0:18:19.240 in place that these assets, if they want to operate 0:18:19.880 --> 0:18:23.200 post fifty, they can and they can burn something else 0:18:23.200 --> 0:18:26.960 beyond gas. At the same time, I think policymakers need 0:18:27.040 --> 0:18:31.119 to make it clear today what their expectation is going 0:18:31.119 --> 0:18:34.800 to be into once we go past any thirty, Building 0:18:34.840 --> 0:18:39.120 more gas is going to be lecturing ourselves. However, at 0:18:39.160 --> 0:18:42.359 the at the moment, there is no alternative to it, right, 0:18:42.400 --> 0:18:45.159 so we're going to build it unless something else comes in. 0:18:45.320 --> 0:18:48.479 And this is where our whole idea around technology X, 0:18:48.920 --> 0:18:53.760 which is this unknown perfect replacement for gas that doesn't 0:18:53.760 --> 0:18:58.840 have the associated emissions, comes in and we've purposely named 0:18:58.880 --> 0:19:03.119 the technology X because we just don't know right now 0:19:03.240 --> 0:19:06.600 what's going to win. There are a few options, but costwise, 0:19:06.640 --> 0:19:09.200 we just don't have data to be able to make 0:19:09.760 --> 0:19:13.040 any kind of coal. And you know, we're being very honest. 0:19:13.080 --> 0:19:16.680 Our assumptions are going to determine the outcome and as such, 0:19:16.800 --> 0:19:19.280 this is not going to be a fair exercise if 0:19:19.320 --> 0:19:22.439 we come out and say this is what it is. However, 0:19:22.520 --> 0:19:25.639 you can expect some work from Ben if looking at 0:19:25.680 --> 0:19:29.080 different pathways, so looking at what the future might look 0:19:29.119 --> 0:19:35.240 like if this technology X is this or that like hydrogen, CCS, nuclear. 0:19:35.480 --> 0:19:37.440 I love how you just casually drop that in there's 0:19:37.440 --> 0:19:40.879 this technology X and we don't know what it is. 0:19:40.920 --> 0:19:43.440 But you know, that's a really real way of looking 0:19:43.480 --> 0:19:46.960 at the future because we can't predict what cost curves 0:19:47.000 --> 0:19:49.440 are going to be for solutions, but we do know 0:19:49.640 --> 0:19:51.800 that we need an investment into our indeed to figure 0:19:51.800 --> 0:19:55.200 out what they are. And you mentioned hydrogen, you mentioned CCS. 0:19:55.320 --> 0:19:57.240 Can you talk a little bit about the degree of 0:19:57.280 --> 0:20:02.160 investment that's going to go into finding technology X which 0:20:02.200 --> 0:20:05.000 will help us with the parts that we can't electrify. 0:20:05.359 --> 0:20:07.520 So I mean, one of the things that that's clear 0:20:07.600 --> 0:20:11.960 is that hydrogen has probably been the second most mentioned, 0:20:11.960 --> 0:20:15.119 saying after COVID in the energy space in twenty I 0:20:15.160 --> 0:20:17.760 don't know if that's necessarily a good or bat thing, 0:20:17.880 --> 0:20:20.240 but I wanted to cover a few of the other 0:20:20.280 --> 0:20:23.560 technology excess that I think are particularly relevant in the 0:20:23.640 --> 0:20:27.720 European context before saying a bit more on hydrogen. In 0:20:27.760 --> 0:20:31.320 the bucket Technology X, we have interconnectors, and one thing 0:20:31.400 --> 0:20:34.399 that is important to mention is that, of course in Europe, 0:20:34.440 --> 0:20:37.120 when you see these core power plants come off line, 0:20:37.200 --> 0:20:40.680 or even in the latest term, the gas power plants 0:20:40.680 --> 0:20:44.400 come offline, the flexibility we can give each other by 0:20:44.600 --> 0:20:48.280 collaborating across boarders, by having these integrated power markets is 0:20:48.840 --> 0:20:51.760 a huge asset in the objective of the cormonizing the 0:20:51.760 --> 0:20:54.440 power sector. A lot of the countries that we look 0:20:54.480 --> 0:20:58.320 at reaching a zero that cannot rely on a neighboring market, 0:20:58.320 --> 0:21:00.280 like if Poland, you know, was to close all of 0:21:00.280 --> 0:21:03.119 its call without interconnectors, that will make the challenge a 0:21:03.119 --> 0:21:07.480 lot harder. So that's one. The other thing is mitigating 0:21:07.520 --> 0:21:09.880 a little bit that that need for technology X. One 0:21:09.880 --> 0:21:11.920 of the things we did in the Ambitious policy scenarios 0:21:11.960 --> 0:21:15.399 that we we socialize the cost of the grid for 0:21:15.520 --> 0:21:18.320 offshore wind and I think you know, some of the 0:21:18.359 --> 0:21:21.160 people seeing our numbers in the ambitious policy you will 0:21:21.200 --> 0:21:24.639 say that they're a bit below um what what Europe 0:21:24.760 --> 0:21:28.080 is actually ambitioning for for the offshore wind sector. And 0:21:28.160 --> 0:21:31.280 we're hearing a lot about countries collaborating to build red 0:21:31.680 --> 0:21:34.720 platforms for offshore to to plow into, and so of 0:21:34.760 --> 0:21:37.200 course there there is actually a bit of a lever 0:21:37.440 --> 0:21:41.000 to pull. Now we do have hydrogen and in a 0:21:41.000 --> 0:21:44.680 long section talking about it in a technology X basket, 0:21:44.760 --> 0:21:48.000 and that's driven by the fact that the commitments to 0:21:48.080 --> 0:21:52.400 hydrogen we've we've heard parent around Europe are very tangible 0:21:52.520 --> 0:21:55.359 this time. So there there is money behind it, there's 0:21:55.400 --> 0:21:58.280 capacity deployment targets and and all of them are more 0:21:58.320 --> 0:22:01.680 ambitious than what we had anticipated just a year ago. 0:22:01.880 --> 0:22:04.639 And what's interesting with hydrogen is that in Syria, you know, 0:22:05.200 --> 0:22:09.840 hydrogen turbine burning on clean hydrogen can deliver that dispatchable 0:22:09.920 --> 0:22:13.400 capacity that the system needs. However, the I mean Andreas 0:22:13.400 --> 0:22:15.440 will be able to say that the implications in terms 0:22:15.480 --> 0:22:18.800 of how much energy you need to produce the hydrogen, 0:22:19.240 --> 0:22:22.920 of course quite quite meaningful. To Yeah, actually, that's that's 0:22:22.920 --> 0:22:26.680 a very good point, Dario. And you know, I'm definitely 0:22:27.280 --> 0:22:32.240 convinced that hydrogen is an option, but I'm not convinced 0:22:32.320 --> 0:22:36.159 that it's yet the option. And probably the biggest reason 0:22:36.400 --> 0:22:39.399 is exactly what is one of the biggest reasons is 0:22:39.440 --> 0:22:43.520 exactly what that I just mentioned that essentially, you need 0:22:44.200 --> 0:22:48.440 renewables to produce the hydrogen. Now, in the case of Europe, 0:22:48.720 --> 0:22:51.439 in an ambitious policy scenario, at the moment, we do 0:22:51.680 --> 0:22:56.439 see enough wasted renewables or wind and solar electricity. We 0:22:56.480 --> 0:23:00.399 call it curtailed. Essentially, it's you know, you get moments 0:23:00.440 --> 0:23:03.320 when there's just too much wind or too much solar 0:23:03.440 --> 0:23:06.280