1 00:00:00,240 --> 00:00:02,960 Speaker 1: Hi, it's uck shot. The war in the Middle East 2 00:00:03,120 --> 00:00:06,640 Speaker 1: continues to royal energy markets. But it's not just fossil 3 00:00:06,680 --> 00:00:10,000 Speaker 1: fuels that have been affected. This crisis is going to 4 00:00:10,080 --> 00:00:13,720 Speaker 1: reshape the transition to clean energy. I got a chance 5 00:00:13,760 --> 00:00:16,919 Speaker 1: to talk about it with Stephen Carroll for Bloomberg's Here's 6 00:00:17,000 --> 00:00:25,920 Speaker 1: Why podcast. Take a listen Bloomberg Audio Studios, Podcasts, Radio News. 7 00:00:28,160 --> 00:00:32,360 Speaker 2: The war Indi Middle East is creating the largest supply 8 00:00:32,520 --> 00:00:38,559 Speaker 2: disruption in the history of the global oil market. If 9 00:00:38,600 --> 00:00:41,440 Speaker 2: the IEA wasn't out there warning this is the worst 10 00:00:41,520 --> 00:00:45,240 Speaker 2: energy crisis in human history and saying release your reserves now, 11 00:00:46,120 --> 00:00:49,280 Speaker 2: then you'd have a much higher energy price. But they're 12 00:00:50,240 --> 00:00:52,559 Speaker 2: one trick ponies. They're not going to last. Can you 13 00:00:52,680 --> 00:00:56,920 Speaker 2: can't print electrons, baby, in print US dollars, but you're 14 00:00:56,920 --> 00:00:57,960 Speaker 2: not going to print electrons. 15 00:00:58,040 --> 00:01:00,560 Speaker 1: Apart from reopening this straight upward me which of course 16 00:01:00,760 --> 00:01:03,600 Speaker 1: Trump can't do, what can be done to lower the 17 00:01:03,600 --> 00:01:07,120 Speaker 1: oil price effectively and sustainably. Nothing, And I think that 18 00:01:07,319 --> 00:01:10,800 Speaker 1: is the fundamental problem we have over here. Other than 19 00:01:10,880 --> 00:01:14,240 Speaker 1: the chokepoint being removed, you do not have the substitute 20 00:01:14,440 --> 00:01:15,920 Speaker 1: for this volume anywhere else. 21 00:01:16,480 --> 00:01:19,480 Speaker 3: The war in Iran has delivered an unprecedented shock to 22 00:01:19,560 --> 00:01:23,039 Speaker 3: global oil and gas supplies. Prices surged, and for the 23 00:01:23,080 --> 00:01:25,720 Speaker 3: second time in four years, many countries are looking for 24 00:01:25,800 --> 00:01:29,520 Speaker 3: alternative sources of energy. This disruption is happening at a 25 00:01:29,560 --> 00:01:32,600 Speaker 3: time when politicians have been turning cold on the push 26 00:01:32,600 --> 00:01:36,480 Speaker 3: for renewables. So will countries double down on fossil fuels 27 00:01:36,800 --> 00:01:39,080 Speaker 3: or will they speed up the move to clean energy? 28 00:01:39,760 --> 00:01:46,039 Speaker 3: Here's why the Iran War resets the energy transition. Our 29 00:01:46,080 --> 00:01:49,520 Speaker 3: senior climate reporter Akhat radio host of our Zero podcast, 30 00:01:49,880 --> 00:01:53,800 Speaker 3: joins us now for more actuat. First, of all, before 31 00:01:54,200 --> 00:01:57,800 Speaker 3: the Iran War began, how would you characterize the conversation 32 00:01:58,440 --> 00:02:01,720 Speaker 3: around the energy transition, seeing that many countries were following 33 00:02:01,720 --> 00:02:03,360 Speaker 3: the US and pulling back. 34 00:02:03,840 --> 00:02:07,080 Speaker 1: I think fossil fuel economies, or at least countries that 35 00:02:07,160 --> 00:02:10,880 Speaker 1: have access to domestic fossil fuels, were doubling down on 36 00:02:10,960 --> 00:02:13,640 Speaker 1: fossil fuels. But we were also seeing a move in 37 00:02:13,680 --> 00:02:18,160 Speaker 1: countries that were heavily dependent on importing fossil fuels toward 38 00:02:18,320 --> 00:02:23,200 Speaker 1: clean energy. This Iran war is the second energy shock 39 00:02:23,360 --> 00:02:26,760 Speaker 1: in a decade, and in regions like Europe and much 40 00:02:26,760 --> 00:02:30,160 Speaker 1: of Asia, we were already seeing a speeding up of 41 00:02:30,280 --> 00:02:33,919 Speaker 1: a move towards clean energy, and this war is only 42 00:02:33,960 --> 00:02:36,359 Speaker 1: going to add an accelerant to that move. 43 00:02:37,000 --> 00:02:40,639 Speaker 3: This has once again become a conversation around energy security. 44 00:02:41,240 --> 00:02:45,560 Speaker 3: Our renewable energy sources like solar and wind more secure 45 00:02:46,120 --> 00:02:47,520 Speaker 3: than oil and gas supplies. 46 00:02:48,040 --> 00:02:50,680 Speaker 1: I think the conversation on the energy transition in general 47 00:02:50,760 --> 00:02:55,280 Speaker 1: has been moving away from emissions and decarbonization toward security 48 00:02:55,639 --> 00:03:00,400 Speaker 1: ever since Russia attacked Ukraine, and renewables are being seen 49 00:03:00,680 --> 00:03:04,799 Speaker 1: in that security lens as being available domestically, most countries 50 00:03:04,880 --> 00:03:09,040 Speaker 1: have plenty of wind and sun available, and the question 51 00:03:09,120 --> 00:03:13,080 Speaker 1: now is around affordability and reliability. Can you make these 52 00:03:13,600 --> 00:03:17,320 Speaker 1: intermittent sources of renewables last for longer and can you 53 00:03:17,480 --> 00:03:20,399 Speaker 1: deploy them because the upfront cost is still more expensive 54 00:03:20,840 --> 00:03:24,080 Speaker 1: but over their lifetime cheaper. Can you deploy them with 55 00:03:24,160 --> 00:03:28,720 Speaker 1: the affordability constraints that many economies have, even European economies 56 00:03:28,880 --> 00:03:32,280 Speaker 1: really can't borrow all that much more than they already have, 57 00:03:32,639 --> 00:03:35,640 Speaker 1: And of course emerging economies have always struggled to borrow 58 00:03:35,880 --> 00:03:39,880 Speaker 1: huge sums of money, So that is where the constraints 59 00:03:39,880 --> 00:03:43,160 Speaker 1: on moving to clean energy really come from. The security 60 00:03:43,240 --> 00:03:44,800 Speaker 1: question has actually been settled. 61 00:03:45,400 --> 00:03:50,760 Speaker 3: Where are we in the technology around the reliability of 62 00:03:50,880 --> 00:03:55,880 Speaker 3: these renewable energy sources? Can they provide a full replacement 63 00:03:56,000 --> 00:03:57,160 Speaker 3: for fossil fuels. 64 00:03:58,080 --> 00:04:01,119 Speaker 1: Any energy equation is really a trade of you have 65 00:04:01,680 --> 00:04:05,320 Speaker 1: sources of energies that have benefits and down sides, and 66 00:04:05,360 --> 00:04:07,680 Speaker 1: as we're seeing in fossil fuels, yes, they can be 67 00:04:07,720 --> 00:04:11,120 Speaker 1: stored and moved around and power the economy most of 68 00:04:11,160 --> 00:04:13,760 Speaker 1: the time. But of course if you have a war 69 00:04:13,840 --> 00:04:16,120 Speaker 1: and you don't have access to those fossil fuels, then 70 00:04:16,160 --> 00:04:19,560 Speaker 1: you can't use them. On renewables, There's always been the 71 00:04:19,600 --> 00:04:23,200 Speaker 1: intermittency question, but because of the pace at which the 72 00:04:23,279 --> 00:04:26,760 Speaker 1: price of batteries has fallen, that question is becoming easier 73 00:04:26,800 --> 00:04:29,719 Speaker 1: and easier to answer. So solar and wind cannot be 74 00:04:29,760 --> 00:04:33,080 Speaker 1: an answer to fossil fuels on their own, but combining 75 00:04:33,120 --> 00:04:37,120 Speaker 1: them with batteries, with nuclear power, with geothermal, that combination 76 00:04:37,279 --> 00:04:40,080 Speaker 1: can really do a lot to try and reduce the 77 00:04:40,160 --> 00:04:41,920 Speaker 1: dependency on fossil fuels. 78 00:04:42,400 --> 00:04:44,960 Speaker 3: You i mentioned this is the second major energy shock 79 00:04:45,040 --> 00:04:46,960 Speaker 3: in a decade, of course, the last one being around 80 00:04:47,040 --> 00:04:51,200 Speaker 3: Russia's invasion of Ukraine. Does a crisis like this help 81 00:04:51,279 --> 00:04:54,440 Speaker 3: to push an economy towards renewable sources. 82 00:04:54,960 --> 00:04:58,719 Speaker 1: Well, we don't even have to prognosticate very hard. You 83 00:04:58,720 --> 00:05:01,560 Speaker 1: should just look at what the nineteen seventy three oil 84 00:05:01,600 --> 00:05:05,960 Speaker 1: crisis followed by the nineteen seventy nine oil crisis did 85 00:05:06,080 --> 00:05:09,440 Speaker 1: to countries that were importing fossil fuels. They moved into 86 00:05:09,640 --> 00:05:13,799 Speaker 1: nuclear energy, spent a lot of energy research money into 87 00:05:13,920 --> 00:05:17,240 Speaker 1: solar and lithium ion batteries, and we saw a sharp 88 00:05:17,320 --> 00:05:20,480 Speaker 1: decline in how much energy the world was getting from 89 00:05:20,520 --> 00:05:25,320 Speaker 1: oil relative to other sources of energy over the next decade. 90 00:05:25,400 --> 00:05:29,039 Speaker 1: This time around this double shock, many are saying, including 91 00:05:29,360 --> 00:05:32,440 Speaker 1: the head of the International Energy Agency, which was created, 92 00:05:32,480 --> 00:05:35,560 Speaker 1: of course after the nineteen seventy three oil shock, that 93 00:05:35,920 --> 00:05:40,240 Speaker 1: these two dual shocks will have a major impact on 94 00:05:40,320 --> 00:05:44,120 Speaker 1: the decisions that governments and individuals will be making on 95 00:05:44,279 --> 00:05:48,280 Speaker 1: their energy choices, and renewables will certainly get a boost. 96 00:05:48,560 --> 00:05:51,400 Speaker 3: You make an interesting point there about both the individual 97 00:05:51,480 --> 00:05:54,760 Speaker 3: behavior and the government behavior. I wonder which is the 98 00:05:54,760 --> 00:05:58,160 Speaker 3: most important driver. Is it what consumers want to need 99 00:05:58,279 --> 00:06:01,160 Speaker 3: or is it how governments are, perhaps in some cases 100 00:06:01,200 --> 00:06:02,960 Speaker 3: politically willing to act. 101 00:06:03,720 --> 00:06:06,320 Speaker 1: So for the first two decades of the century, the 102 00:06:06,400 --> 00:06:09,640 Speaker 1: clean energy question was really a government question because you 103 00:06:09,720 --> 00:06:12,040 Speaker 1: needed all these policies and you needed to bring down 104 00:06:12,080 --> 00:06:15,520 Speaker 1: the cost of solar panels and batteries. It's only really 105 00:06:15,560 --> 00:06:18,280 Speaker 1: in the twenty twenties that the consumer has come into 106 00:06:18,279 --> 00:06:21,640 Speaker 1: the equation, and actually today the consumer is in the 107 00:06:21,720 --> 00:06:24,279 Speaker 1: driving seat. So take the example of what happened in 108 00:06:24,320 --> 00:06:29,520 Speaker 1: Pakistan after the gas crisis created by Russia attacking Ukraine. 109 00:06:29,640 --> 00:06:33,320 Speaker 1: We saw a major boost in imports of solar panels 110 00:06:33,320 --> 00:06:38,640 Speaker 1: and batteries, mostly done by private businesses and individuals who 111 00:06:38,920 --> 00:06:42,520 Speaker 1: wanted reliable power supply which the state wasn't able to 112 00:06:42,600 --> 00:06:46,920 Speaker 1: provide because it could not import any liquefied natural gas. 113 00:06:47,800 --> 00:06:49,880 Speaker 3: Is it to places like Pakistan that we should be 114 00:06:49,920 --> 00:06:53,240 Speaker 3: looking as to where these advances might happen most quickly? 115 00:06:53,279 --> 00:06:55,679 Speaker 3: Are there certain regions of the world which we feel 116 00:06:55,720 --> 00:06:58,480 Speaker 3: will accelerate this shift after this crisis? 117 00:06:59,040 --> 00:07:01,520 Speaker 1: We know the Strait of Hornor supplies most of its 118 00:07:01,560 --> 00:07:04,840 Speaker 1: fossil fuels to Asian economies, and it's natural to look 119 00:07:04,880 --> 00:07:09,280 Speaker 1: to them, But certain Asian countries are heavily dependent on 120 00:07:09,320 --> 00:07:13,000 Speaker 1: the import So even today Pakistan gets ninety nine percent 121 00:07:13,120 --> 00:07:17,600 Speaker 1: of its LNG from Qatar. Bangladesh gets about seventy five 122 00:07:17,600 --> 00:07:20,960 Speaker 1: percent of it. Places like Japan and South Korea are 123 00:07:21,000 --> 00:07:24,360 Speaker 1: still very heavily reliant on having gas in their power mix. 124 00:07:24,800 --> 00:07:28,040 Speaker 1: Those economies is where I will be looking for this 125 00:07:28,120 --> 00:07:32,080 Speaker 1: move toward clean energy. China, which gets an absolute amount 126 00:07:32,240 --> 00:07:34,400 Speaker 1: a lot of oil and gas from the state of 127 00:07:34,400 --> 00:07:38,160 Speaker 1: hoharmuse in relative amount is actually small, and it is 128 00:07:38,200 --> 00:07:41,080 Speaker 1: the country that has built the most amount of clean 129 00:07:41,200 --> 00:07:44,600 Speaker 1: energy at home and the capacity to deploy all this 130 00:07:44,680 --> 00:07:48,520 Speaker 1: clean energy not just at home but everywhere around the world. 131 00:07:48,920 --> 00:07:52,920 Speaker 1: And there is plentiful supply of solar panels and batteries, 132 00:07:53,080 --> 00:07:56,320 Speaker 1: if anything, that's over capacity. We've been warned before this 133 00:07:56,480 --> 00:08:00,160 Speaker 1: energy crisis started. So there is a competitive advantage that 134 00:08:00,240 --> 00:08:03,880 Speaker 1: clean energy has right now in a world where fossil 135 00:08:03,880 --> 00:08:05,240 Speaker 1: fuels are getting constrained. 136 00:08:06,120 --> 00:08:09,320 Speaker 3: If prices come back down for oil and gas at 137 00:08:09,320 --> 00:08:12,600 Speaker 3: some point, is that going to take away this renewed impetus. 138 00:08:13,120 --> 00:08:15,520 Speaker 1: Ever since the war began, that has been a big 139 00:08:15,600 --> 00:08:18,240 Speaker 1: question we have to ask, which is how long will 140 00:08:18,320 --> 00:08:22,440 Speaker 1: high prices last? And it certainly matters for how much 141 00:08:22,560 --> 00:08:26,920 Speaker 1: governments and individuals will make decisions about their energy hungry 142 00:08:27,240 --> 00:08:32,000 Speaker 1: devices and industries based on those prices. What we now 143 00:08:32,080 --> 00:08:35,319 Speaker 1: know nearly a month into the war, is that even 144 00:08:35,480 --> 00:08:39,160 Speaker 1: if it ends tomorrow, the disruption is going to last 145 00:08:39,160 --> 00:08:42,960 Speaker 1: for weeks and months, and so prices may fall. But 146 00:08:43,120 --> 00:08:46,439 Speaker 1: this shock has now hit in a way where governments 147 00:08:46,440 --> 00:08:51,600 Speaker 1: and individuals cannot psychologically disconnect from what just happened. And 148 00:08:51,920 --> 00:08:55,160 Speaker 1: if it doesn't boost clean energy tomorrow, it will have 149 00:08:55,240 --> 00:08:59,760 Speaker 1: a long term boost that wasn't there before the war started. 150 00:09:00,320 --> 00:09:03,200 Speaker 3: Okay, akshat Rathy, our senior climate reporter, Thank you very 151 00:09:03,280 --> 00:09:05,160 Speaker 3: much for joining us, and you can hear more from 152 00:09:05,160 --> 00:09:09,480 Speaker 3: Macshott on his Bloomberg podcast zero. For more explanations like 153 00:09:09,520 --> 00:09:12,280 Speaker 3: this from our team of three thousand journalists and analysts 154 00:09:12,320 --> 00:09:15,480 Speaker 3: around the world, go to Bloomberg dot com slash explainers. 155 00:09:17,160 --> 00:09:19,920 Speaker 3: I'm Stephen Carroll. This is here's why. I'll be back 156 00:09:19,960 --> 00:09:21,880 Speaker 3: next week with more. Thanks for listening.