Speaker 1: It took a pandemic to get me to ride a
Speaker 1: bicycle to work. I live in London and studies show
Speaker 1: that the air quality along a busy road is actually
Speaker 1: cleaner than the air quality on my train ride to
Speaker 1: the office. I do my best to think about personal sustainability,
Speaker 1: yet I only started biking to work in March, when
Speaker 1: the term social distancing was already firmly in the lexicon.
Speaker 1: People all over the world have made major changes to
Speaker 1: their daily lives in the past weeks and months, far
Speaker 1: more significant than my morning commute when I used to
Speaker 1: go into the office. So from a BNF perspective, we're
Speaker 1: going to explore what these changes mean for road transport
Speaker 1: as well as clean energy. On the show today are
Speaker 1: Colin mccarrickre and Logan Goldie Scott. Colin is head of
Speaker 1: Advanced Transport at BENF and Logan is head of Clean
Speaker 1: Power Research. They're going to give us their views on
Speaker 1: how clean energy and transportation are changing right now and
Speaker 1: what we might be able to expect in the future.
Speaker 1: Be an F is currently writing a series of indicators
Speaker 1: reports on the impact of COVID Night Team on the
Speaker 1: industries we cover. These include indicators reports on clean power
Speaker 1: as well as global road traffic. These reports are available
Speaker 1: at b NF dot com and on the Bloomberg terminal
Speaker 1: at b NF Go. And please remember that BNF does
Speaker 1: not provide investment or strategy advice, and we have a
Speaker 1: full disclaimer that can be found at the end of
Speaker 1: the show. Hi Colin, Hi Logan, thank you for joining today.
Speaker 1: Hi Dina, good to be here. Hey Danny, great to speak.
Speaker 1: So that was Colin's voice first and Logan's voice second
Speaker 1: for those who are wondering now, one of the things
Speaker 1: that is really great about recording remote podcasts is that
Speaker 1: we actually have the ability to bring in guests from
Speaker 1: different parts of the world. We have this lovely studio
Speaker 1: in London that I haven't stepped put in about three weeks.
Speaker 1: But now we're joined today by Logan, who is located
Speaker 1: in the San Francisco Bay area, which is where I'm
Speaker 1: originally from. I guess we've got a little bit of
Speaker 1: a swap going on here, and I am curious, from
Speaker 1: a city that has a lot of mobility, when's the
Speaker 1: last time you were in a taxi? So San Francisco
Speaker 1: ended up actually moving relatively early, so we've had shelter
Speaker 1: in place since March sixteenth, and then I was actually
Speaker 1: in an uber on March fifteenth, So that was my
Speaker 1: final social interaction that wasn't via camera and virus screen
Speaker 1: and the final time I was in the uber. So
Speaker 1: it's been a couple of weeks. Callin, when's the last
Speaker 1: time you were in a taxi? For me, it's further
Speaker 1: back actually, So we were out in San Francisco actually
Speaker 1: for the San Francisco Summit and the theme is the
Speaker 1: future of mobility, so we were all there at the
Speaker 1: beginning of February for that, and that's the last time
Speaker 1: I think I was in an uber. Once I'm back
Speaker 1: in London. I'm a big advocate of cycling everywhere, so
Speaker 1: despite being someone who spends their time deeply immersed in
Speaker 1: auto market, I prefer two wheels over four whenever I can.
Speaker 1: So it was that same week before I kind of
Speaker 1: moved into my house full time. But I must say
Speaker 1: the last couple of days at work, I started renting
Speaker 1: bikes and I've become a bit of a cyclist and
Speaker 1: I think that will stick with me for a while.
Speaker 1: So then that leads to another important point and something
Speaker 1: that we are tracking now here at b an Epso Collin,
Speaker 1: we're looking at transport and we're looking at traffic and congestion.
Speaker 1: What are we seeing right now and what sort of
Speaker 1: developed over the last couple of weeks Because we are
Speaker 1: tracking this on a weekly basis around the world, are
Speaker 1: we not? We are? And what you're seeing is predictable
Speaker 1: in some sense. Everybody's been told to stay in their house,
Speaker 1: and for the most part, everybody is staying in their house.
Speaker 1: Traffic is plummeted, use of public transit has plummeted. It's
Speaker 1: not all on the same timeline. Some of them are
Speaker 1: sort of a week or two staggered, or in the
Speaker 1: case of say China versus the US or Europe, it's
Speaker 1: more like a month or two. But you see sort
Speaker 1: of the same wave. And when you look at the
Speaker 1: data really closely, you see that ramps down very steeply.
Speaker 1: People really stop moving around when these shelter and place
Speaker 1: rules or these lockdowns come in. And then we're starting
Speaker 1: to see that move again. In China, we're starting to
Speaker 1: see much more people moving around. It's still not back
Speaker 1: to pre COVID levels, but that ice is starting a
Speaker 1: thought and people are moving around pretty much in all
Speaker 1: forms more than they were at the height of this.
Speaker 1: So it kind of looks like about a ten week
Speaker 1: wave that peaks around week five or six and then
Speaker 1: starts to come down. Hopefully that's the pattern we see
Speaker 1: in other countries as well, but of course that's hard
Speaker 1: to predict right now. So is this individual transport or
Speaker 1: we also seeing a pretty massive slowdown in logistics, So
Speaker 1: logistics is a bit less affected, it looks like, and
Speaker 1: I think this lines up with everybody's personal experience. Right
Speaker 1: There're still ordering parcels on Amazon, and grocery trucks are
Speaker 1: still moving things around, so some of that has been
Speaker 1: a bit more resilient than personal mobility, because some of
Speaker 1: it is critical and we need to get more goods
Speaker 1: delivered or at least the same amount of goods delivered
Speaker 1: in quite a few cases. But even that is down
Speaker 1: in some place as well. You think about how much
Speaker 1: stuff is moved around, for say the construction industry or
Speaker 1: just commodities being moved by road and rail and things
Speaker 1: like that, so that is down as well, but probably
Speaker 1: it looks like a little bit less dramatically than on
Speaker 1: the passenger side. And then what is the actual impact
Speaker 1: this is having on emissions, and then as second but
Speaker 1: related note, air quality, because I've seen some pictures of
Speaker 1: the Himalayas visible from India for the first time in
Speaker 1: several decades, or even pictures of Los Angeles in the
Speaker 1: valley and having these beautiful blue skies and the ability
Speaker 1: to see hills nearby. Is air pollution down by a
Speaker 1: ton or are we just seeing short term kick and
Speaker 1: air quality? I mean it's noticeably down. If you look
Speaker 1: at pretty much any measure of air quality, whether it's
Speaker 1: Knox emissions or particulates, they're pretty much all way way
Speaker 1: down overall CEO two emissions of course too, as you'd expect.
Speaker 1: And so yeah, you are seeing urban air quality dramatically change.
Speaker 1: I mean, I'm here in central London and looking out
Speaker 1: from my window, not only is the sky a different
Speaker 1: shade of blue, but you can see stars. That's certainly
Speaker 1: not something you would have seen at any point previously
Speaker 1: in the ten years that I've lived here. The open
Speaker 1: question is how much of that stays versus how much
Speaker 1: of that just returns to normal, And I think there
Speaker 1: are some big unknowns in that right now, but certainly
Speaker 1: we are in a very strange and unique window in
Speaker 1: which urban air quality is dramatically better than it's been
Speaker 1: in living memory. I think, so I am enjoying nice
Speaker 1: air quality, I must say, and I've already been somebody
Speaker 1: who's been pretty fascinated enthusiastic about electric vehicles. Now the
Speaker 1: question is do you think other parts of the world
Speaker 1: will be equally as enthralled by electric vehicles? And will
Speaker 1: they when we come out of this fair the same
Speaker 1: as better than or worse than internal combustion engines, because
Speaker 1: with the backdrop of all of this is also an
Speaker 1: extraordinarily low oil price, and the low barrel price also
Speaker 1: makes internal combustion engines much cheaper to operate. Yeah, there's
Speaker 1: a lot of moving pieces in that question of do
Speaker 1: they fare better or worse Because there's a lot of
Speaker 1: moving pieces in what's driving ev adoption. I think in
Speaker 1: the long term, so we go out five to ten years,
Speaker 1: I don't think much has changed. Look, the battery technology
Speaker 1: is going to continue to get better. There's still rising
Speaker 1: pressure around CEO two emissions. There's this pressure around urban
Speaker 1: air quality. I don't think any of that's going away.
Speaker 1: But in the short term there are really big questions
Speaker 1: so you're probably heading for the first year and your
Speaker 1: drop in auto sales certainly since the financial crisis and
Speaker 1: a few thousand eight and nine. The thing about the
Speaker 1: financial crisis is that it hit different countries at a
Speaker 1: more staggered timeframe, right So the US gets hit hard
Speaker 1: in two thousand eight nine auto sales plummeted into thousand nine.
Speaker 1: Europe it's a much more delayed hit. Asia doesn't get
Speaker 1: it as bad. All these sorts of things where it
Speaker 1: was a bit more staggered. We're pretty unique right now
Speaker 1: and that this is hitting everywhere quite at once, but
Speaker 1: pretty close. And cars are large pieces of discretionary spending
Speaker 1: from consumers. So in a time of big economic uncertainty,
Speaker 1: let alone a time where everyone's walked in their houses,
Speaker 1: people don't go out and buy a lot of cars predictably.
Speaker 1: So this is gonna be very tough year for automakers
Speaker 1: for sure. The question then, is do evs hold up
Speaker 1: better or worse than internal combustion engine vehicles. If it
Speaker 1: wasn't for this all of this, you would have been
Speaker 1: heading for a record year for EV sales. Europe, especially
Speaker 1: sales in the first two months were doubling over last
Speaker 1: year because of this driver around CEO two regulations. China
Speaker 1: cut subsidies last year and sales fell in the second half,
Speaker 1: but it was probably gonna rise again this year, so
Speaker 1: we were heading for this real record. I think that's
Speaker 1: off now, at least in unit sales. But I think
Speaker 1: you can probably make an argument that on a percentage basis,
Speaker 1: that percentage adoption EV share of new car sales will
Speaker 1: be either flat or rising a little bit. If you
Speaker 1: look at most sort of conventional auto analysts, they will
Speaker 1: say that EV sales are gonna get hit harder by
Speaker 1: this than internal combustion engine vehicles, and that's because on
Speaker 1: average they're more expensive, and generally, in economic downturns, more
Speaker 1: expensive things get hit harder. Luxury cars go, but cheaper
Speaker 1: cars hold up a little better. Those are valid arguments generally.
Speaker 1: The arguments against that are that one, there are a
Speaker 1: lot of evs out there with long backlogs of pre
Speaker 1: orders that people have put a deposit on that some
Speaker 1: of the automakers are still ticking through those, so Tesla
Speaker 1: Model Why for example, or the Model Free in China,
Speaker 1: so I think a lot of those are still going
Speaker 1: to get shipped, and even you know in Europe a
Speaker 1: lot of automakers last year we're deliberately pushing orders into
Speaker 1: because they could then count them towards their fleet wide
Speaker 1: CEO to target, which they faced fines if they missed
Speaker 1: this year. But there was no fines in place last
Speaker 1: year because the targets didn't apply until this year. So
Speaker 1: I think there's a bit of a backlog there that
Speaker 1: might help. The other thing is that these are still,
Speaker 1: in large part early adopters who may be a little
Speaker 1: bit less sensitive, and then there's this question of policy support.
Speaker 1: So I've mentioned that they're already the European fleet CEO
Speaker 1: two targets. One of the things we've seen so far,
Speaker 1: even in March in Europe, where for about half of
Speaker 1: March most of the big European economies were under lockdown.
Speaker 1: March EV sales in the u K up a hundred
Speaker 1: and thirty three percent, overall internal combustion engine vehicle sales down.
Speaker 1: Germany EV sales up percent. In March, overall internal combustion
Speaker 1: engine vehicle sales down. For France, UM passenger vehicles sales down,
Speaker 1: sales up twelve So it looks like at least in
Speaker 1: Q one they're holding up a little better. The next
Speaker 1: three months are going to be really brutal for all
Speaker 1: parts of the auto market in North America Europe, but
Speaker 1: in China they're going to start to recover. And I
Speaker 1: think what you'll see is still a pretty strong push
Speaker 1: in China. And this is a bit uncomfortable, But my
Speaker 1: bad is that evs hold up slightly better and at
Speaker 1: the adoption rate, the percentage of new sales is flat
Speaker 1: to a little bit up maybe this year over last year,
Speaker 1: but down in absolute terms. Well, you can add this
Speaker 1: to your predictions that you make, for which we did
Speaker 1: a podcast earlier where we went into those we did. Yeah,
Speaker 1: we can talk the beginning of one and see whether
Speaker 1: or not you were on or off on this new
Speaker 1: prediction joining us a little bit later in the year.
Speaker 1: So in that you know, given that there will be
Speaker 1: some reduced demand since one of the many things that
Speaker 1: Logan has done for us here at b n F
Speaker 1: is look very closely at the energy storage market, so
Speaker 1: he knows the battery space pretty intimately well. And one
Speaker 1: of the potential views on our side is that if
Speaker 1: you have a reduction in electric vehicle sales, given they
Speaker 1: are the largest consumers, right now with the myan batteries,
Speaker 1: that this may depress prices for batteries and maybe therefore
Speaker 1: also battery metals. Do we think that that will end
Speaker 1: up being something that will be felt short term, medium term,
Speaker 1: long term come to pass, so the longer term to
Speaker 1: reject you for battery prices, it's fairly clear. We've observed
Speaker 1: this incredible reduction in battery prices nearly over the last decade,
Speaker 1: and we expect that to continue and battery prices to
Speaker 1: fall from sort of close to a hundred fifty dollars
Speaker 1: a kill it was, how today to nearly sixty dollars
Speaker 1: by so that longer term tige actually remains relatively unaffected
Speaker 1: by the near term issues. As Colin mentioned around electric vehicles,
Speaker 1: there are so many different overlapping factors that will impact
Speaker 1: the battery price. We've looked at VC investment in Q
Speaker 1: one and battery technology companies, lithium iron companies. It looked
Speaker 1: very similar to VC investment that we saw in previous quarters.
Speaker 1: Clearly there's a lag there in this may drop off
Speaker 1: over the coming months, but many of these investments were
Speaker 1: from strategic investors large automakers where the emission targets aren't
Speaker 1: going away, where desire for competitive attractive vehicles is not
Speaker 1: going away, and that needs the highest qualities actually, so
Speaker 1: longer term, we don't see this as a sort of
Speaker 1: particular disruption. The very immediate impact is that the uncertain
Speaker 1: demand has a really significant ripple effect across the supply chain.
Speaker 1: It's essentially a bullwhip effects. By the time that you
Speaker 1: actually get to the raw materials, the lithium, the nickel,
Speaker 1: the cobalt, that uncertainty is magnified hugely, and there were
Speaker 1: ready issues from raw matail processes and miners desperate for
Speaker 1: greater certainty from automakers. They were already complaining about that
Speaker 1: because the investment time frames didn't line up, like a
Speaker 1: minor wanted many more years of certainty than an automaker
Speaker 1: was willing to give them. This collapse in certainty around
Speaker 1: demand is hugely problematic and will make aligning those timings
Speaker 1: on getting a mind, getting a processing fertility, and a
Speaker 1: battery manufacturing plant all online at the right times much
Speaker 1: much harder. Now that you just do not have this
Speaker 1: visibility on demand. We have seen lithium and nickel production
Speaker 1: capacity around ten percent has also been impacted by quarantine measures,
Speaker 1: which is this sort of additional layer of disruption and
Speaker 1: then delays surrounding COVID nineteen also means that we don't
Speaker 1: expect a coboard production in the Democratic Republic of Congo
Speaker 1: to increase as we had in our early predictions. Instead
Speaker 1: this year we think that will be flat. So Logan,
Speaker 1: let's throw on the other hat that you know quite
Speaker 1: a bit about right now, the clean energy space. Our
Speaker 1: colleagues over in the Bloomberg Economics team got an interview
Speaker 1: with the head of logistics at Longisolar, who was saying
Speaker 1: that these have been challenging times for them from a
Speaker 1: production standpoint due to some of the logistics concerns. Are
Speaker 1: we seeing supply chain issues and logistics as a challenge
Speaker 1: for what we would consider maybe some of the bigger
Speaker 1: clean energy markets, let's say wind and solar. Do you
Speaker 1: think that these supply chain issues are going to have
Speaker 1: a massive impact or is it going to be something
Speaker 1: further on the demand side. So let's stop with supply
Speaker 1: then we consider move on to demand for solar, for
Speaker 1: energy storage and for the domestic market for wind China
Speaker 1: and China supply chain is sort of hugely important, and
Speaker 1: it did face severe disruptions throughout Q one. China is
Speaker 1: almost completely resumed production now, so these factories are coming
Speaker 1: back online and lamping up acted their maximum capacity. So
Speaker 1: you have a few weeks of backlog, but production is
Speaker 1: coming back. Outside of China, some factories are also still
Speaker 1: operating in Europe and the US, but many have shut
Speaker 1: down due to sort of national or local shutdown orders. Well, actually,
Speaker 1: the other big thing is just related difficulties maintaining the
Speaker 1: safety of the workforce. So supply chain was severely disrupted.
Speaker 1: There were a couple of things in China that that
Speaker 1: offset that. Many companies had started stockpiling ahead of Chinese
Speaker 1: New Year, and so you had greater inventory, so you
Speaker 1: knew that many of these factories were going to be
Speaker 1: either shut down or operating at a lower rate. This
Speaker 1: extended it, but there was some preparation built in. The
Speaker 1: demand story is much more uncertain, and for US that
Speaker 1: is a much bigger concern in terms of understanding sort
Speaker 1: of broader decarbonization targets over the next couple of years.
Speaker 1: On the demand side, Does it have to do with
Speaker 1: a lack of government attention because they're distracted in rightfully
Speaker 1: by these health concerns, or does it have to do
Speaker 1: with consumer demand, I mean, explain why demand is so
Speaker 1: uncertain in the medium to longer term. So success more
Speaker 1: broadly is held by continuity and economies of scale. So
Speaker 1: if you have those two things, success is likely to
Speaker 1: come your way. At the moment that disruption, supply chain
Speaker 1: caused ripples in terms of the timing of getting projects
Speaker 1: install of time, and so even though there's only a
Speaker 1: few weeks disruption in the US, for instance, the schedule
Speaker 1: for cranes to get win projects up and running, that's
Speaker 1: a very well managed schedule if there are any hiccups,
Speaker 1: and that has a ripple effect across the board. So
Speaker 1: you do have the supply chain impacting demand. Companies are
Speaker 1: rushing to get projects built by end of year or
Speaker 1: by certain deadlines in order to get that government support.
Speaker 1: We expect some leniency in many markets, so that should
Speaker 1: ease things, but clearly that's something that's just been a concern.
Speaker 1: The other piece is immediate government at engine is clearly elsewhere.
Speaker 1: We've seen around half of total wind and solar capacity
Speaker 1: that was due to be auctioned in has now been postponed.
Speaker 1: Governments are not planning on running the auctions as they were,
Speaker 1: but because clearly there are other priorities and companies don't
Speaker 1: know how to bid into those auctions. And so we
Speaker 1: saw that and File decide not to bid into an
Speaker 1: auction in Europe recently because of the broader uncertainty impacting
Speaker 1: their business. They didn't know where the appropriate place in
Speaker 1: the bid was. And so you do see supply chain
Speaker 1: issues impacting the timing, and that's this renumeration for these projects.
Speaker 1: You see near term policy being pushed back, and there's
Speaker 1: also this issue around longer term targets. Many observers that
Speaker 1: I followed have said, now is not the time to
Speaker 1: be talking about clean energy, to be talking about climate girls.
Speaker 1: This is a distant future and we really need to
Speaker 1: focus on the sort of COVID nineteen sort of pandemic
Speaker 1: right now. For me, that's a very misguided view. I
Speaker 1: think in any time where you're thinking about a long
Speaker 1: term massive stimulus package or any type of nationwide support,
Speaker 1: you want to be aligning that near to need with
Speaker 1: a longer term aim. As well. The fact that in
Speaker 1: some countries there is uncertainty around whether the government will
Speaker 1: continue to push your head with their previous targets around decoganization.
Speaker 1: I think that threatens many of these sort of companies
Speaker 1: long term goals as well. I think green stimulus is
Speaker 1: something that is chatted about quite a bit in circles
Speaker 1: that we're in, But I would like to know are
Speaker 1: we actually seeing any tangible moves into this in any
Speaker 1: country in the world or is this just something that
Speaker 1: maybe people in our industry like to talk about. The
Speaker 1: one thing I can point to that we are seeing
Speaker 1: is out of China and is an indication that ev
Speaker 1: charging infrastructure might be part of that stimulus. The government
Speaker 1: has indicated that charging infrastructure might be one of the
Speaker 1: focus areas. Southern Grid, one of the power grid operators,
Speaker 1: has indicated that they're going to invest about three point
Speaker 1: six billion dollars in charging infrastructure. That just came at
Speaker 1: the end of last week. So that looks like one
Speaker 1: And we know governments do like shovel ready infrastructure projects. Right.
Speaker 1: You go back to the last financial crisis two thousand
Speaker 1: eight nine in the US, things like the whole grid
Speaker 1: modernization effort. The smart grid was a big part of
Speaker 1: the American Recovery and Reinvestment Act was pushing money into
Speaker 1: some of these infrastructure ready projects where you could go
Speaker 1: and spend money and get things moving right away. Now,
Speaker 1: I do think there's sort of a hierarchy of needs
Speaker 1: and in the places that are still in the very
Speaker 1: much the acute phase of this. This is all about
Speaker 1: managing the pandemic, managing the health crisis and the humanitarian
Speaker 1: crisis on that side of it. But then again, looking
Speaker 1: to China as an example, is sort of starting to
Speaker 1: come out of this and thinking where to go with
Speaker 1: how you push the recovery. I think it probably depends
Speaker 1: a lot on the politics of who's in power at
Speaker 1: the time, so you will have that reflected in the
Speaker 1: stimulus packages that come out. So I don't think, for example,
Speaker 1: in Europe, you will see a big relaxation of the
Speaker 1: push on the green deal or just sort of generally
Speaker 1: around the green economy that Europe is trying to push
Speaker 1: and these twenty thirty targets that are in place, that
Speaker 1: would be very hard I think to justify, given all
Speaker 1: the things that have gone into getting it to where
Speaker 1: it is. In the U S, it's a bit more uncertain.
Speaker 1: I don't see much of a push coming on the
Speaker 1: clean transport side as a result of stimulus and recovery efforts.
Speaker 1: In the US. I think that is in line with
Speaker 1: also the Trump administration's recent rollback of fuel economy standards,
Speaker 1: which of course are going to get tied up in court,
Speaker 1: but that's consistent with what they've said there. This is
Speaker 1: not a higher priority. So I think a lot of
Speaker 1: this ends up reflecting the politics and the priorities of
Speaker 1: the groups that are in power in those countries today,
Speaker 1: and that means there's going to be a very big
Speaker 1: patchwork of types of stimulus measures and focus of those
Speaker 1: stimulus measures between countries. I'd agree completely. In the US,
Speaker 1: clean power and dcomganization is much more contentious than it
Speaker 1: is in most parts of EU and many other markets.
Speaker 1: There was nothing relating to clean power in the first
Speaker 1: stimulus package that was passed here in the US. If
Speaker 1: anything is to make it into any upcoming stimulus package,
Speaker 1: which is still potentially a trillion dollar plus package, it
Speaker 1: will be a big fight from Democrats to get anything
Speaker 1: related to clean power in there. It's a much more
Speaker 1: contentious issue in Europe because of the EU Green Deal.
Speaker 1: It does look like they're sort of that longer term
Speaker 1: alignment and a broader desire, even if the details haven't
Speaker 1: been worked out to do something that does align with that.
Speaker 1: And then we have smaller instances like China is clearly
Speaker 1: the big one, but in Korea they passed a similar
Speaker 1: package that included some relief for Korean solo installers. The
Speaker 1: Korean government is very keen for solo to continue to
Speaker 1: continue to be deployed in the country. They bumped up
Speaker 1: the subsidy in order to encourage further adoption. And then
Speaker 1: those are all things at the national level, and that's
Speaker 1: of course where stimulus really comes in, because the government
Speaker 1: has the power to print money and spend money in
Speaker 1: a different way. But one of the interesting policy responses
Speaker 1: I'm waiting to see is what we talked about earlier
Speaker 1: on this this part about the city level. The medical
Speaker 1: data supports the idea that the mortality of the coronavirus
Speaker 1: of COVID nineteen is worse in places that have worse
Speaker 1: air quality. We know the places that have worse air
Speaker 1: quality lead to more respiratory problems. We know people with
Speaker 1: more background respiratory problems have a higher mortality rate. When
Speaker 1: it comes to this, I think there's a real chance
Speaker 1: that that makes some people in cities angry that their
Speaker 1: governments have not done more to tackle this faster. I
Speaker 1: would put myself in that category. I imagine you might
Speaker 1: as well, Dana, And I think there's a possibility that
Speaker 1: at the city level that accelerates some action towards electrifying buses,
Speaker 1: towards electrifying taxis just towards getting on with it some
Speaker 1: of the stuff we've been talking about for quite a
Speaker 1: while that has already started and is happening at scale,
Speaker 1: but could certainly happen faster, and we've seen templates for
Speaker 1: how it can happen faster. There's no trillions attached to
Speaker 1: that with a T or probably even with a B
Speaker 1: billions going out on at and there isn't the ability
Speaker 1: to borrow huge sums of money and get the gears
Speaker 1: the economy turning again. But there is this element of
Speaker 1: legitimacy of government and the priorities that they have and
Speaker 1: what citizens really want them to do. And I think
Speaker 1: there might be some interesting things that emerge from that
Speaker 1: at the municipal level as well as the national level.
Speaker 1: So there are some out there who think maybe we
Speaker 1: have reached peak carbon emissions and that we might actually
Speaker 1: be on the decline after this. But what I'm hearing
Speaker 1: for both of your industries is that that actually might
Speaker 1: still be lagging out there in the future. Now I'm
Speaker 1: asking you guys to make tough predictions right here on
Speaker 1: the spot. But my question to both you Logan and
Speaker 1: Colin is, at least for the spaces that you cover
Speaker 1: so clean energy on Logan and advanced transportation for Colin,
Speaker 1: do you think we've hit peak emissions and will be
Speaker 1: on the decline at least on in a decade all sense,
Speaker 1: when we get out of this. One thing we started
Speaker 1: tentatively saying a year and a half ago is that
Speaker 1: it actually looks like sales of new internal combustion engine
Speaker 1: vehicles might have already peaked. Now, that was really uncomfortable
Speaker 1: at the time because that was and we were saying, look,
Speaker 1: might have been a high water mark for that. So far,
Speaker 1: that is holding up, and that will continue to hold
Speaker 1: up after this. So, look, you're gonna have internal combustion
Speaker 1: engine vehicle sales. Overall vehicle sales globally are going to
Speaker 1: be lower this year than they were in seventeen. They're
Speaker 1: going to be lower the year after. They're probably gonna
Speaker 1: be lower in two, it's gonna take a while for
Speaker 1: this to fully bounce back. By the time you get
Speaker 1: to that point, we're anticipating evs are really starting to
Speaker 1: get cost competitive and their policy pressure is starting to
Speaker 1: ratch it up. So then they're getting into the sort
Speaker 1: of five to ten of new vehicle sales. Then it's
Speaker 1: really hard to see internal combustion engine vehicles ever returning
Speaker 1: to those levels of thousand seventeen. So I think in
Speaker 1: sales of new internal combustion engine cars in the passenger
Speaker 1: vehicle segment have already peaked in the past. When I've
Speaker 1: made that in presentations, I've put a question mark at
Speaker 1: the end of the title slide. I'm taking the question
Speaker 1: mark out. I think they've peaked. That doesn't mean transport
Speaker 1: emissions overall have peaked, unfortunately. So we know aviation is
Speaker 1: still high and rise of course this year, notwithstanding. You
Speaker 1: know shipping is high and rising this year. Notwithstanding. I
Speaker 1: don't think those are going to be on a good
Speaker 1: trajectory anytime soon. I think also trucking means that emissions
Speaker 1: from transport are going to keep rising. Now, when you
Speaker 1: look at overall emissions, you need to figure Okay, look
Speaker 1: maybe some segments of transport are still flat, or some
Speaker 1: are down slightly, or some are rising. Is that enough
Speaker 1: to be offset by what's going on in the power sector.
Speaker 1: So I think we're not quite there yet, but I
Speaker 1: think road transport emissions are going to peak within the
Speaker 1: next ten years. Passenger vehicles is going to peak before that.
Speaker 1: Right now, the fleet of internal combustion engine vehicles is
Speaker 1: still growing. But each year where we don't see them
Speaker 1: grow again, you're you're sort of not locking in a
Speaker 1: bunch of further oil consumption that from those vehicles that
Speaker 1: would stay on the road for ten to fifteen years.
Speaker 1: So what's happening right now is really significant. So you know,
Speaker 1: annual New Energy Outlook exercise, in the outlook, you ended
Speaker 1: up with clean energy making up. Just a visit of
Speaker 1: half tital generation was a more bullish view in terms
Speaker 1: of renewable energy adoption than what you saw from many
Speaker 1: of the oil majors from the i E. Now, even
Speaker 1: in that be nephew, there was a huge gap between
Speaker 1: that and a two degrees scenario and that in a
Speaker 1: one point five degree scenario. And so the message was
Speaker 1: even with this significant acceleration in installations for wind and solar.
Speaker 1: There's still much more needs to be done. Now is
Speaker 1: not at the time to take the foot of the pedal.
Speaker 1: This clearly complicates that for wind and solo we were
Speaker 1: expecting record years in as of Q one, our outlook
Speaker 1: for global wind installations for this year is twelve than
Speaker 1: what we were saying Q for last year. The outlook
Speaker 1: from US at the midpoint for solo is eight percent
Speaker 1: lower than what we were saying in QUE four last year.
Speaker 1: So this certainly hurts things in that near term. If
Speaker 1: installations are down, it makes what was already a sort
Speaker 1: of gantuan task even harder. It doesn't mean that the
Speaker 1: PACER change cannot accelerate, because greater awareness around emissions, around
Speaker 1: the benefits the economic benefits of decarbonization, and around the
Speaker 1: economics wind and solar is in many parts of the
Speaker 1: world a cheaper way of producing electricity than emitting alternatives,
Speaker 1: even before you account for any of the nonpower sector
Speaker 1: related costs. So longer term, still more needs to be done.
Speaker 1: COVID nineteen sort of doesn't change that. This does end
Speaker 1: up being a stumble now. What what I think is
Speaker 1: particularly interesting around this is how it could impact the
Speaker 1: type of clean engine installations in place as well. Colin
Speaker 1: mentioned at the very beginning that many cards it would
Speaker 1: be counted as a discretionary spending. Now, utility to get
Speaker 1: wind and solar doesn't tend to fall into that bucket,
Speaker 1: but distributed solar and distributed storage very much does. In
Speaker 1: terms of where the biggest impact on clean power has
Speaker 1: been of the back of COVID, the biggest impact act
Speaker 1: has been in distributed solo and distributed steorage. We reviewed
Speaker 1: what a number of market participants had said over Q one,
Speaker 1: so these are typically solo installers in the US. These
Speaker 1: market artistants seem to agree that sales were down compared
Speaker 1: to what they'd expected. In January and February, average number
Speaker 1: of permits was down across California, Texas, New York, Florida, Nevada.
Speaker 1: So across clean power, this is a stumble. It makes
Speaker 1: an already hard task harder. Distributed clean power gets hit
Speaker 1: the hardest. So I think we'll have to continue to
Speaker 1: come back to this in the next five and ten years.
Speaker 1: So let's let's keep this podcast and these interviews going.
Speaker 1: But I think one thing that is very clear today
Speaker 1: that peeling back the onion around what is something that's
Speaker 1: impacting industry right now and what will in the near term,
Speaker 1: and then what will in the longer term. Is something
Speaker 1: that we're watching very closely and kind of monitoring as
Speaker 1: we look at how this is all evolving. So I
Speaker 1: want to know, since we started this podcast today with
Speaker 1: you know, an impact to how you're moving around or
Speaker 1: as the case, maybe not moving around since we're all
Speaker 1: recording from our homes right now, I want to know
Speaker 1: what has been the biggest change to the way that
Speaker 1: you work. For me, if that's quite an easy one,
Speaker 1: it's that I spend half the day taking care of
Speaker 1: a one and a half year old at home. I
Speaker 1: love it. I'm having a great time. I know that's
Speaker 1: not the conventional answer from people who've been stuck at
Speaker 1: home with their kids um and certainly balancing work is tough.
Speaker 1: One of the most difficult things I think is contact switching. Right.
Speaker 1: You sort of go from being intensely focused trying to
Speaker 1: say something professional and trying to get a piece of
Speaker 1: work done or edit something and publish something, to quickly
Speaker 1: dealing with somebody who's about to jump off a table.
Speaker 1: And so that's a huge challenge. But I think there's
Speaker 1: a lot of great things about it. I'm getting to
Speaker 1: spend more time with my one and a half year
Speaker 1: old son than I would for all this sudden happened
Speaker 1: so silver Lines. So the biggest change for my perspective
Speaker 1: is making sure that I'm speaking to the team frequently.
Speaker 1: There's so many moving parts at the moment. Everyone is
Speaker 1: juggling a huge workload and personal commitments, and so it's
Speaker 1: making sure that everyone in the team is communicating, is happy,
Speaker 1: and is not overworked. It's really hard to balance your
Speaker 1: time if you're not leaving the house, so making sure
Speaker 1: that we retain some balance as well. So, Logan, that's
Speaker 1: a really good point. And I would say the biggest
Speaker 1: thing that has changed from my perspective since we have
Speaker 1: all started working from home has been that time has
Speaker 1: become incredibly fluid and that there's no start time, there's
Speaker 1: no stop time. There is parenting and working, and that
Speaker 1: is very evident by the fact that we are recording
Speaker 1: on what is a public holiday. So I would like
Speaker 1: to say thank you, Logan, thank you calling so much
Speaker 1: for carving time out of your busy schedules to be
Speaker 1: here on the podcast. Thanks Dana, it's always a pleasure
Speaker 1: and yet very interesting times ahead. Everybody, stay safe and
Speaker 1: take care. Thanks Dania, Thanks Colin. Bloombergin e F is
Speaker 1: a service provided by Bloomberg Finance LP and its affiliates.
Speaker 1: This recording does not constitute, nor it should it be construed,
Speaker 1: as investment advice, investment recommendations, or a recommendation as to
Speaker 1: an investment or other strategy. Bloomberg. An e F should
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Speaker 1: an investment decision. Neither Bloomberg Finance LP nor any of
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