Speaker 1: This is Dana Perkins and you're listening to Switch on
Speaker 1: the b NEF podcast. If you've listened to the show before,
Speaker 1: you'll know that we at BNF spend a lot of
Speaker 1: time talking about the future. After all, it's a huge
Speaker 1: part of the discussion around climate. People are thinking about
Speaker 1: what a warmer world might look like, how warm is
Speaker 1: it actually going to get, How much carbon budget do
Speaker 1: we have left to spend between now and X date
Speaker 1: in the future. The net zero targets discussed to copy
Speaker 1: six or by companies or by countries are inherently forward looking.
Speaker 1: So one of the most forward looking teams we have
Speaker 1: at BIENF is the energy economics team, or perhaps I
Speaker 1: should just say that they look the furthest out because
Speaker 1: they build different scenarios that go out to the year
Speaker 1: between now and If certain versions of the future could
Speaker 1: be true, what steps might need to be taken to
Speaker 1: make them true. Enter scenario analysis, which I think I
Speaker 1: just oversimplified and had a bit of a tendency to do.
Speaker 1: In today's show. Today I speak with sebhend Best, who
Speaker 1: is the chief economist at BNF, and he's also the
Speaker 1: chief author of our new energy Outlook. Now if I
Speaker 1: put it in another way, he's the guy who leads
Speaker 1: our team of forward thinkers. We talk about the New
Speaker 1: Energy Outlook and within it our energy Transition scenario, as
Speaker 1: well as three new net zero scenarios that were introduced
Speaker 1: earlier this year. If you want to read our New
Speaker 1: Energy Outlook, you can find it at be enough, go
Speaker 1: on the Bloomberg terminal, or on benof dot com. A
Speaker 1: quick reminder, we do not provide investment strategy advice, and
Speaker 1: our full disclaimer is at the end of the show.
Speaker 1: But for now, let's speak with Seb about the future. Seb,
Speaker 1: thank you for joining today, pleasure, thanks for having me.
Speaker 1: So we are going to talk about benf new Energy Outlook,
Speaker 1: and we're also going to talk about some net zero
Speaker 1: scenarios that we did that were an expansion on that
Speaker 1: this year. But let's first dig into what is the
Speaker 1: New Energy Outlook we lovingly call NEO. But what is
Speaker 1: the New Energy Outlook and what's it hoping to achieve?
Speaker 1: Great question, right, what is it? It's a big study
Speaker 1: and it's designed to pull together all the energy analysis
Speaker 1: that we do across B and e F into long
Speaker 1: term scenarios, trying to understand what the future energy economy
Speaker 1: might look like. So it's a scenario exercise and we
Speaker 1: do it annually and it's about six people pulling their
Speaker 1: brains together to hopefully join the dots and provide insight
Speaker 1: into how all the changes that we're looking at and
Speaker 1: tracking on a day to day basis manifest into for
Speaker 1: those of you who are interested in detail, well maybe
Speaker 1: not super deep detail, but detail on how we go
Speaker 1: about modeling in their approach to this. We actually have
Speaker 1: another podcast by a colleague of subs, Mattias, who goes
Speaker 1: into that, but today we're going to talk about more
Speaker 1: the findings and what this tells us about the future.
Speaker 1: Now we have this outlook, when is the last time
Speaker 1: that we did this, So that twenty one New Energy
Speaker 1: Outlook came out in July, and we do it once
Speaker 1: a year before that, it was actually October, so the
Speaker 1: publication date changes somewhat, but it's an annual exercise and
Speaker 1: every year we try and make it insightful and keep
Speaker 1: pushing the boundary getting to the you know, the real
Speaker 1: cold face if you excuse the pun, of the really
Speaker 1: big transition questions as we look around the world. So
Speaker 1: when we look at this year, we did a couple
Speaker 1: of different things and we looked at net zero pathways.
Speaker 1: Can you just explain what that means. We will get
Speaker 1: into the detail of it in a couple of minutes,
Speaker 1: but what are the net zero pathways this year hoping
Speaker 1: to achieve? Let me take a step back and just
Speaker 1: explain a little bit about scenarios a set of which
Speaker 1: are these net zero pathways. And it's important to recognize
Speaker 1: the difference between a scenario and a forecast. A forecast
Speaker 1: is a prediction we're saying what we think will happen.
Speaker 1: A scenario is different in the sense that it generally
Speaker 1: looks much further out, and trying to build a picture
Speaker 1: of the future in extreme uncertainty with complex dynamics that
Speaker 1: we can use as an anchor to help us make
Speaker 1: decisions and take big bets. So we're not trying to
Speaker 1: predict the future here, we're trying to present plausible pathways.
Speaker 1: And for the energy transition, there's a lot of uncertainty,
Speaker 1: and so we could build loads of different types of scenarios.
Speaker 1: None of them are wrong, none of them are right,
Speaker 1: none of them are true, none of them are false.
Speaker 1: It's just whether they're useful or not useful. And so
Speaker 1: in near one we developed three different pathways to a
Speaker 1: net zero emissions economy for the energy sector. And there's
Speaker 1: just lots of different ways to get there. So we
Speaker 1: had to make some decisions about what were the technology
Speaker 1: mixes that we wanted to investigate that we thought our
Speaker 1: clients and our readers would find most insightful and most
Speaker 1: useful as they're making decisions, you know, within this transition.
Speaker 1: So we produce three different pathways. We called one the
Speaker 1: green scenario, we called one the red scenario, we called
Speaker 1: one the gray scenario. All of them have lots of
Speaker 1: renewable energy and electric vehicles and the things that we
Speaker 1: can see happening now. But the scenarios differ by sort
Speaker 1: of the second phase. If you're like, well, we call
Speaker 1: phase two technologies. Are we talking about hydrogen, are we
Speaker 1: talking about carbon capture applications? Are we talking about maybe
Speaker 1: small nuclear reactors? How do we get to zero? And
Speaker 1: there are some pretty fundamental questions about what we might
Speaker 1: need to see over the next thirty years to get there.
Speaker 1: Let's talk a little bit about scenarios because these are
Speaker 1: not new to the industry. Lots of organizations do this
Speaker 1: how do the net zero scenarios that we've looked at
Speaker 1: and our approach to looking at net zero, how does
Speaker 1: it maybe map onto or inter relate with the Intergovernmental
Speaker 1: Panel on Climate Change or the i p c c
Speaker 1: S warming scenarios. Yeah, there are certainly lots and lots
Speaker 1: of scenarios out there, and it's pretty difficult actually to
Speaker 1: know which wants to read how to interpret them relative
Speaker 1: to one another. It's not straightforward. I mean, there's a big,
Speaker 1: big complex exercises and it gets a bit inside baseball
Speaker 1: in terms of how they differ, why they differ. There
Speaker 1: are some well known scenarios that are used. Perhaps the
Speaker 1: most important from a climate perspective are the ones that
Speaker 1: the Intergovernmental Panel and Climate Change put together, because what
Speaker 1: they essentially do for all the other economic modelers out
Speaker 1: there who are building scenarios to help them make decisions
Speaker 1: is they provide us with a relationship between the amount
Speaker 1: of greenhouse gases and the atmosphere and the impact on
Speaker 1: the climate. And so often when we're describing climate objectives
Speaker 1: in terms of degrees, we need to understand how many
Speaker 1: emissions that means, and then we have to turn that
Speaker 1: into a budget, a carbon budget which we can then
Speaker 1: operate within, and the difference between scenarios is often the
Speaker 1: definition of that budget, how many miss and have we
Speaker 1: got to work with, and how that budget is then
Speaker 1: divided up by different sectors and different countries, and then
Speaker 1: which technologies or pathways might be employed within the scenario
Speaker 1: to get emissions down while continuing to ensure that demand
Speaker 1: for goods and services and energy within the economy continues
Speaker 1: to be met. So the i PC scenario is really
Speaker 1: are looking at the relationship between atmospheric greenhouse gas concentration
Speaker 1: and temperature, and we can then build from that climate
Speaker 1: scenarios that are consistent with certain temperature outcomes. And for
Speaker 1: the new energy out we built a global emissions trajectory
Speaker 1: that is consistent with one point seven five degrees of warming.
Speaker 1: So halfway between two and one point five there's a
Speaker 1: really really big difference in the total amount of emissions
Speaker 1: in the system between one and a half and two degrees,
Speaker 1: and these are the two temperatures that of course everyone
Speaker 1: talks about in terms of the Paris Climate Agreement. Do
Speaker 1: better than two degrees. Pushing towards one point five means
Speaker 1: that somewhere in there is where governments of the world
Speaker 1: have kind of agreed to try and head and we
Speaker 1: can use that as a guide try and set the
Speaker 1: carbon budget. Our scenarios are right down at the low
Speaker 1: end therefore, of the I p C c S range,
Speaker 1: because they have the very very high emissions trajectories and
Speaker 1: the low and so we're trying to get to one
Speaker 1: point five or right down the bottom if we continue
Speaker 1: on without dramatic policy intervention. From here, we've got to
Speaker 1: run out of carbon budget to keep within one point
Speaker 1: five degrees by right. So this is some of the
Speaker 1: urgency around the next ten years is on the current trajectory.
Speaker 1: Even with all the renewables being built out, with the
Speaker 1: record electric vehicle sales and a lot of government interests,
Speaker 1: we're going to run out of budget pretty soon for
Speaker 1: two degrees. That point is we buy ourselves at extra
Speaker 1: twenty five years almost. It's huge, it's huge. And so
Speaker 1: these temperature differences seem small all but in terms of
Speaker 1: the impact on the transition of the economy from dirty
Speaker 1: to clean, they're really really big. And see this is
Speaker 1: a really big problem for modeling because you've got to say, well,
Speaker 1: what is the right temperature trajectory, how do you possibly
Speaker 1: decide where the one point five, one point seven, one
Speaker 1: point nine two point three what the right answer is,
Speaker 1: and then how do you split that up between sectors
Speaker 1: between countries, Because if you can't model that, then you
Speaker 1: don't really know how to model the supply side, which
Speaker 1: is all the technologies that get us there. And that's
Speaker 1: the first challenge with sort of big net zero energy
Speaker 1: scenarios that we develop. So just to be clear, when
Speaker 1: we set out to do this, we were aiming for
Speaker 1: a net zero emissions world, but we didn't have a
Speaker 1: temperature change in mind. It was just can we get
Speaker 1: to net zero in specifically the energy world that you know,
Speaker 1: that's what we're talking about here. This is agnostic of
Speaker 1: agriculture and other sectors outside of energy. Yeah, the exercise
Speaker 1: we do is just energy focused. So we're skipping a
Speaker 1: whole bunch of emissions that matter, and agriculture and land
Speaker 1: use and the leaking of methane and other things from pipelines.
Speaker 1: We're looking at really the core of the of the
Speaker 1: energy economy, which is the supply, transformation and consumption of energy,
Speaker 1: whether it be to heat a building, move a car,
Speaker 1: make an electron, or even actually as a feedstock into
Speaker 1: chemical industries, you know, things like oil of course go
Speaker 1: to make plastics something. So there's a there's a lot
Speaker 1: of energy accounting in these scenarios. We're trying to track
Speaker 1: each one of those flows all the way through to
Speaker 1: the useful economy, which is the things we want, right
Speaker 1: but what we want is to move around to warm
Speaker 1: the spaces and cool the spaces that we live in,
Speaker 1: and we want to make things and build things, and
Speaker 1: we need energy to do all of that. What percentage
Speaker 1: of the remaining carbon budget would you say that the
Speaker 1: energy industry occupies, so the energy sector makes up over
Speaker 1: It depends how you do the accounting, but it's certainly
Speaker 1: towards three quarters of global greenhouse gas emission. That is
Speaker 1: the really sort of immediate and big challenges to decarbonize
Speaker 1: the energy sectors, and there's a huge number of different
Speaker 1: technology challenges within that. And the outlook, the new energy
Speaker 1: outlook kind of starts with that end economy and goes, well,
Speaker 1: what do we need and then how do we do
Speaker 1: those things? How do we get those things in a
Speaker 1: zero carbon way over time? And what are the technology
Speaker 1: transitions that we might anticipate needing to happen to do that. Okay,
Speaker 1: let's talk about the three different scenarios that we put forward.
Speaker 1: Which one do you start with? This isn't picking your
Speaker 1: favorite child, it's at the very beginning, which one do
Speaker 1: you want to start with? Well, let me discuss all
Speaker 1: three at once, and then we can see which one
Speaker 1: is the most interesting, because I don't think there's one
Speaker 1: that is right now more likely than the others. In in
Speaker 1: in a way, these are global technology paradigms rather than
Speaker 1: sort of bottom up balanced scenarios. Would you say they're
Speaker 1: intentionally extreme. They're designed. If you think about a landscape
Speaker 1: of a future possible worlds, it's very hard to be
Speaker 1: able to pinpoint. And our job isn't really to pinpoint
Speaker 1: the future. It's not a prediction. Our job is to
Speaker 1: describe parts of the landscape that enable people to make
Speaker 1: decisions in a useful way. And so we've defined with
Speaker 1: these scenarios three different technology paradigms. One where we have
Speaker 1: a lot of green hydrogen, one where we have a
Speaker 1: lot of nuclear and what we've called red hydrogen, but
Speaker 1: people call it pink hydrogen, and one where we have
Speaker 1: carbon capture and storage as the dominant secondary vectors of decabanization.
Speaker 1: All three scenarios have loads of renewables, loads of electric vehicles,
Speaker 1: heat pumps, and other forms of electrification of the economy
Speaker 1: because these are the things we can kind of do
Speaker 1: today and the things that are already happening in The
Speaker 1: big uncertainty around that landscape is what about these secondary solutions,
Speaker 1: Which ones will emerge, which ones will get to scale,
Speaker 1: which ones will get cost competitive, And it's quite hard
Speaker 1: to pick that for now. So we defined the scenarios
Speaker 1: based around then assumption that in the future, whether it's
Speaker 1: the green hydrogen or whether it's the nuclear or whether
Speaker 1: it's the carbon capture and storage, those are the technologies
Speaker 1: that that end up dominating. But in reality, actually, since
Speaker 1: you are talking about all three, hydrogen plays a central
Speaker 1: role in all three of them in some way, shape
Speaker 1: or form. It just depends on what we make the
Speaker 1: hydrogen out of. Why is it that hydrogen appears in
Speaker 1: all three net zero scenarios? So hydrogen emerges because you
Speaker 1: can't electrify everything. But that's the basic conclusion of doing
Speaker 1: all this sector level analysis is there are things that
Speaker 1: don't work well with electricity, and we kind of know
Speaker 1: that obviously like an aeroplane would require very big and
Speaker 1: heavy batteries to do long haul flights. Similarly, shipping, you
Speaker 1: could see certain sort of coastal shipping routes done with
Speaker 1: electric ships, but for long ocean voyages you need a
Speaker 1: lot of energy storage and energy density in the form
Speaker 1: of batteries which make the ships very heavy that displaces
Speaker 1: space for cargoes, etcetera. Even in the power sector wind
Speaker 1: and PV, you can only get you maybe seventy of
Speaker 1: supply depending on the country, depending on the latitude and
Speaker 1: the natural resources that country has to work with, which
Speaker 1: means you've got of the electricity demand in the year
Speaker 1: which needs to be met by something else. And what
Speaker 1: we say is a lot of the energy transition can
Speaker 1: be met with clean electrons, but there is a significant
Speaker 1: fraction and what we calculate to be at least of
Speaker 1: final energy consumption that it's not an electricity based and
Speaker 1: of that in our scenario is certainly in the green
Speaker 1: and the red. Around twenty of final energy consumption we
Speaker 1: think could be hydrogen, and then it matters how you
Speaker 1: make the hydrogen. But hydrogen being an energy carrier, being
Speaker 1: a molecule that looks a little bit more like a
Speaker 1: fossil fuel than it does like an electron, and therefore
Speaker 1: has applications in what we might call hard to abate
Speaker 1: sectors in parts of the economy we can't electrify. And
Speaker 1: that's why it appears, because it's pretty useful. If we
Speaker 1: don't use hydrogen, we've got to find other molecule based solutions.
Speaker 1: It could be synthetic fuels or bio fuels, it could
Speaker 1: be carbon capture and sequestration. Continue to use the fossil
Speaker 1: fuel molecules, but then we deal with the emissions separately.
Speaker 1: For most of the energy economy outside of power, and
Speaker 1: certainly in this second phase, clean versions of what we
Speaker 1: do today are actually quite few and far between. So
Speaker 1: the questions we have to ask ourselves are what emerges
Speaker 1: is the most likely solution, and if we don't know that,
Speaker 1: how could we present different scenarios that reflect different winners.
Speaker 1: And that's that's what we've done. So you bring up
Speaker 1: the hard to abate sectors and how difficult it's going
Speaker 1: to be in that run to In that run to
Speaker 1: actual net zero world, there are industries like you brought
Speaker 1: up late aviation that are proving to be extremely challenging. Now,
Speaker 1: let's hope for some serious technology breakthroughs that will help
Speaker 1: us then. But you also mentioned that the energy transition
Speaker 1: is happening in many respects in two parts, and there
Speaker 1: is a big emphasis on the decade that we are
Speaker 1: sitting in right now and everything we need to deploy.
Speaker 1: How does it differ across the three different scenarios. Because
Speaker 1: I took a look at them and I tried to
Speaker 1: do a quick zoom in, and they look very similar.
Speaker 1: I think that's an important conclusion, is that getting to
Speaker 1: net zero, which is consistent with an orderly transition, if
Speaker 1: we want to get on track, we want to get
Speaker 1: on track for one point five degrees or just net
Speaker 1: zero in then there's a certain trajectory that we have
Speaker 1: to meet in terms of emission productions every year. And
Speaker 1: when we do the math on this, what becomes really
Speaker 1: clear is that we have to go much much faster
Speaker 1: this decade. And actually the only way you can go
Speaker 1: faster is by deploying the things you've got. You can't
Speaker 1: reduce emissions faster by investing in early stage technology that
Speaker 1: that's for later, right, But this decade you need to
Speaker 1: deploy everything you've got and that means you need to
Speaker 1: have faster and more renewable energy deployment. You need more
Speaker 1: electric vehicles on the road, you need greater recycling in
Speaker 1: the industry is you need more heat pumps being put
Speaker 1: into buildings can run off electricity. You need a greater
Speaker 1: penetration of bio fuels or sustainable aviation fuels for airplanes,
Speaker 1: and you've got to do that at a certain rate
Speaker 1: to get on track by That doesn't solve your problem,
Speaker 1: but that keeps you within striking distance of your end goal,
Speaker 1: and because getting on track is the primary task. Regardless
Speaker 1: of the scenario, they do look very very similar. They
Speaker 1: differ in the way in which we might need to
Speaker 1: see the ramp up and the scaling of these phase
Speaker 1: two options, whether that's green hydrogen or carbon caption storage
Speaker 1: or small module in nuclear reactors or whatever technology set
Speaker 1: we are thinking about. We're gonna have to scale that
Speaker 1: up this decade so it's ready to deploy post These
Speaker 1: are coming from very small percentages of the overall market
Speaker 1: right now. We need to see almost like a hockey
Speaker 1: stick upward of adoption these technologies. In my correct yeah,
Speaker 1: for those I mean, but even for wind and PV
Speaker 1: right in our scenarios. We want to see about an
Speaker 1: average of five gigawatts of wind and sort of giga
Speaker 1: wats of PV deployed every year out to which is
Speaker 1: double the PV and about sort of fourish times the
Speaker 1: amount of wind that we've seen in even in the
Speaker 1: technologies where we're already doing a lot renewables in particular
Speaker 1: that are cost competitive today. We just need a rate
Speaker 1: of a rate of deployment, a rate of change. It's
Speaker 1: a lot lot faster than the sort of the organic
Speaker 1: rate of deployment, which means we need policy intevidual. So
Speaker 1: let's talk about that. So there's the policy intervention that
Speaker 1: is needed to create this hockey stick kind of very
Speaker 1: quick adoption of certain technologies. If we left everything to
Speaker 1: economics and every country was a complete rational actor in economics,
Speaker 1: where would that get us? Because that was the analysis
Speaker 1: we did the prior year we did our New Energy Outlook,
Speaker 1: and then we said, okay, if we just looked at
Speaker 1: a world agnostic of policy, where would that get us
Speaker 1: from a warming standpoint? I think most people would think that, well,
Speaker 1: in the absence of policy, we're heading out towards four
Speaker 1: or five degrees and the end of days, right. I
Speaker 1: think what we determined from previous scenario work, and that
Speaker 1: looks at the underlying economics of technology change where it
Speaker 1: exists today. So that means we're thinking about where the
Speaker 1: crossover points are from the new to the old, and
Speaker 1: in some parts of the economy those crossover points are
Speaker 1: distant distant. There's not a technology solution that's remotely cost
Speaker 1: competitive today for steel or cement or shipping, but there
Speaker 1: are lots of cheap renewables. Electric vehicles are coming, and
Speaker 1: depending on how you heat the house, your heat pumps
Speaker 1: can look attractive as well. So the absence of big
Speaker 1: climate policy drivers, we get to about three point three
Speaker 1: degrees of warming, and what that means is that emissions
Speaker 1: peak and start to decline across the energy economy, but
Speaker 1: not nearly fast enough to get to zero in. So
Speaker 1: there's a lot to do beyond the underlying sort of
Speaker 1: pace of transition and buy our numbers. I think we
Speaker 1: need to see emissions down roughly from levels by a
Speaker 1: lot of that has to happen just from the power
Speaker 1: sector doing more, because the power sect, you can it's
Speaker 1: where we have the most cost competitive abatement options to deploy.
Speaker 1: So just to add some complexity to this decade, and
Speaker 1: actually not even this decade, just this year and next year,
Speaker 1: I can't help but think about the incredibly erratic and
Speaker 1: may I even say, very high natural gas prices and
Speaker 1: what that's doing to a number of different countries and
Speaker 1: the utilities operating there, because this has become what was
Speaker 1: at one point in time highly regional and now more
Speaker 1: much much more of a global marketplace for gas. Analogy,
Speaker 1: do we see in our scenarios these natural gas prices
Speaker 1: fundamentally changing the near term future or the long term future.
Speaker 1: There's always a question to ask in scenario work whether
Speaker 1: always in the market today is a meaningful signal for
Speaker 1: the longer term, And invariably it's not. Prices go up,
Speaker 1: prices go down. They tend to reflect dynamics of the moment.
Speaker 1: And what we know is that in the absence of
Speaker 1: forces that drive the system in a certain direction, and
Speaker 1: those might be policy or different geo political events or
Speaker 1: something like that, that you get commodity cycles. The adage
Speaker 1: that the solution to high prices is high prices is
Speaker 1: broadly true. High prices should create new supply that drives
Speaker 1: prices down. The increases demand that drives prices up, and
Speaker 1: you play this game and so you get these commodity
Speaker 1: cycles then more complicated than that, of course, But the
Speaker 1: question really is is this time different. Do the gas
Speaker 1: prices that we assume into the future should they be
Speaker 1: altered by the current crunch on gas? And if so why?
Speaker 1: Really difficult question, I think the main in thing we've
Speaker 1: got to ask ourselves is there any reason why that
Speaker 1: commodity cycle gets broken? And climate policy is something that
Speaker 1: can break a commodity cycle, because a commodity cycle relies
Speaker 1: on demand sort of waxing and waning, and supply waxing
Speaker 1: and waning in response to price. If a climate policy
Speaker 1: environment starts to destroy demand, for example, for a commodity
Speaker 1: like gas artificially from the market, are you, by putting
Speaker 1: in place some sort of carbon price or some sort
Speaker 1: of limit, or even the expectation that in the future
Speaker 1: we will need less gas, that's going to start nudging
Speaker 1: the dynamics of supply and demand for gas. For example,
Speaker 1: there's a question that if you're a gas developer gas,
Speaker 1: you're developing gas fields and the prices are really hardh
Speaker 1: you should want to go and produce more gas. But
Speaker 1: if you're not confident that the investment you make in
Speaker 1: that supply is going to pay itself off over the
Speaker 1: lifetime of that field, then maybe you're going to hold off.
Speaker 1: You're going to require greater government sort of guarantees that
Speaker 1: you're not going to be left with a stranded asset.
Speaker 1: And as a result, maybe we're not seeing at this
Speaker 1: point the amount of investment, or haven't seen the amount
Speaker 1: of investment over the last five to ten years in
Speaker 1: conventional fuel supply that we might have otherwise if we
Speaker 1: hadn't had this really big focus on climate decarbonization and
Speaker 1: essentially a policy shift away from carbon intensive energy sources.
Speaker 1: If that's the case, then we might see a lack
Speaker 1: of new supply, which means that high prices don't forget
Speaker 1: greater supply, and we might see higher prices for longer.
Speaker 1: That leads to a secondary question though to me, which
Speaker 1: is that ongoing high gas prices politically palatable and is
Speaker 1: that going to force them to pull back on their
Speaker 1: climate ambitions or at least enable supply to to enter
Speaker 1: the market in a more de risked fashion than otherwise
Speaker 1: might And then we've got lock in of car an
Speaker 1: intensive asset, So there's a really complicated set of dynamics.
Speaker 1: In general, higher fossil fuel prices should make cleaner alternatives cheaper.
Speaker 1: The problem is is that in a lot of areas
Speaker 1: you can't just switch. Like my house is heated by
Speaker 1: gas at the moment, I can't just switch. It's really
Speaker 1: expensive and complex for me to switch to a new
Speaker 1: technology option to do that. And and that's me as
Speaker 1: a householder. But you whold industries that run off gas,
Speaker 1: for example, they can't switch overnight. That just means upward
Speaker 1: pressure on prices and inflationary pressure on industrial and sort
Speaker 1: of consumer prices, which governments are gonna start singing. And
Speaker 1: for now, at least in our scenarios, we're not baking
Speaker 1: that in as a new normal. But we'll see. We
Speaker 1: may have to do some more sensitivity work on on
Speaker 1: what a higher gas price might mean for the outcomes.
Speaker 1: So is this the part of the scenarios that will
Speaker 1: be running because this team works year round, is it
Speaker 1: the consumer end of the things that will be under
Speaker 1: the closer microscope next year? Well, can you we expect
Speaker 1: from benf team energy economics for next year. We've got
Speaker 1: one primary focus and that is to produce a set
Speaker 1: of country level net zero scenarios that reflect sort of
Speaker 1: national considerations, the existing policy environment and the elements of
Speaker 1: path dependency of that policy environment, and the competitive advantages
Speaker 1: that a particular country might have in certain energy sources,
Speaker 1: and trying to pull these big global scenarios down to
Speaker 1: a country level and say, well, what is a pathway
Speaker 1: for China, for the US, for Japan, for the UK
Speaker 1: that can meet these climate objectives taking the national considerations
Speaker 1: into account. So that's the really big challenge to similar
Speaker 1: exercise to this year in a way where we've done
Speaker 1: these big global, big global scenarios, we've got to do
Speaker 1: it the same sort of thinking for each each economy
Speaker 1: and a lot of detail. And that's going to require
Speaker 1: a sort of full power of BENF regionally deployed against
Speaker 1: it to come up with pathways that we can then
Speaker 1: discuss with our clients around the world. And that's that's
Speaker 1: a pretty exciting thing because that's the question everyone has
Speaker 1: is how do we get to zero? It's not obvious,
Speaker 1: it's non trivial, and I think these scenarios can help
Speaker 1: light the way for people making big, difficult bets on
Speaker 1: a big uncertain future. I couldn't agree more so, when
Speaker 1: are we going to see that it's not about future policy,
Speaker 1: it's actually baking in existing policy on the books. When
Speaker 1: can we have you back? I think it's the question.
Speaker 1: October is when we're aiming for, so there's a little
Speaker 1: time to wait. Hopefully the way will be worth it.
Speaker 1: Thank you so much for joining today, Sab, Thanks Danna.
Speaker 1: Today's episode of Switched On was edited by Rex Warner
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