Speaker 1: Hi, it's uck shot. The war in the Middle East
Speaker 1: continues to royal energy markets. But it's not just fossil
Speaker 1: fuels that have been affected. This crisis is going to
Speaker 1: reshape the transition to clean energy. I got a chance
Speaker 1: to talk about it with Stephen Carroll for Bloomberg's Here's
Speaker 1: Why podcast. Take a listen Bloomberg Audio Studios, Podcasts, Radio News.
Speaker 2: The war Indi Middle East is creating the largest supply
Speaker 2: disruption in the history of the global oil market. If
Speaker 2: the IEA wasn't out there warning this is the worst
Speaker 2: energy crisis in human history and saying release your reserves now,
Speaker 2: then you'd have a much higher energy price. But they're
Speaker 2: one trick ponies. They're not going to last. Can you
Speaker 2: can't print electrons, baby, in print US dollars, but you're
Speaker 2: not going to print electrons.
Speaker 1: Apart from reopening this straight upward me which of course
Speaker 1: Trump can't do, what can be done to lower the
Speaker 1: oil price effectively and sustainably. Nothing, And I think that
Speaker 1: is the fundamental problem we have over here. Other than
Speaker 1: the chokepoint being removed, you do not have the substitute
Speaker 1: for this volume anywhere else.
Speaker 3: The war in Iran has delivered an unprecedented shock to
Speaker 3: global oil and gas supplies. Prices surged, and for the
Speaker 3: second time in four years, many countries are looking for
Speaker 3: alternative sources of energy. This disruption is happening at a
Speaker 3: time when politicians have been turning cold on the push
Speaker 3: for renewables. So will countries double down on fossil fuels
Speaker 3: or will they speed up the move to clean energy?
Speaker 3: Here's why the Iran War resets the energy transition. Our
Speaker 3: senior climate reporter Akhat radio host of our Zero podcast,
Speaker 3: joins us now for more actuat. First, of all, before
Speaker 3: the Iran War began, how would you characterize the conversation
Speaker 3: around the energy transition, seeing that many countries were following
Speaker 3: the US and pulling back.
Speaker 1: I think fossil fuel economies, or at least countries that
Speaker 1: have access to domestic fossil fuels, were doubling down on
Speaker 1: fossil fuels. But we were also seeing a move in
Speaker 1: countries that were heavily dependent on importing fossil fuels toward
Speaker 1: clean energy. This Iran war is the second energy shock
Speaker 1: in a decade, and in regions like Europe and much
Speaker 1: of Asia, we were already seeing a speeding up of
Speaker 1: a move towards clean energy, and this war is only
Speaker 1: going to add an accelerant to that move.
Speaker 3: This has once again become a conversation around energy security.
Speaker 3: Our renewable energy sources like solar and wind more secure
Speaker 3: than oil and gas supplies.
Speaker 1: I think the conversation on the energy transition in general
Speaker 1: has been moving away from emissions and decarbonization toward security
Speaker 1: ever since Russia attacked Ukraine, and renewables are being seen
Speaker 1: in that security lens as being available domestically, most countries
Speaker 1: have plenty of wind and sun available, and the question
Speaker 1: now is around affordability and reliability. Can you make these
Speaker 1: intermittent sources of renewables last for longer and can you
Speaker 1: deploy them because the upfront cost is still more expensive
Speaker 1: but over their lifetime cheaper. Can you deploy them with
Speaker 1: the affordability constraints that many economies have, even European economies
Speaker 1: really can't borrow all that much more than they already have,
Speaker 1: And of course emerging economies have always struggled to borrow
Speaker 1: huge sums of money, So that is where the constraints
Speaker 1: on moving to clean energy really come from. The security
Speaker 1: question has actually been settled.
Speaker 3: Where are we in the technology around the reliability of
Speaker 3: these renewable energy sources? Can they provide a full replacement
Speaker 3: for fossil fuels.
Speaker 1: Any energy equation is really a trade of you have
Speaker 1: sources of energies that have benefits and down sides, and
Speaker 1: as we're seeing in fossil fuels, yes, they can be
Speaker 1: stored and moved around and power the economy most of
Speaker 1: the time. But of course if you have a war
Speaker 1: and you don't have access to those fossil fuels, then
Speaker 1: you can't use them. On renewables, There's always been the
Speaker 1: intermittency question, but because of the pace at which the
Speaker 1: price of batteries has fallen, that question is becoming easier
Speaker 1: and easier to answer. So solar and wind cannot be
Speaker 1: an answer to fossil fuels on their own, but combining
Speaker 1: them with batteries, with nuclear power, with geothermal, that combination
Speaker 1: can really do a lot to try and reduce the
Speaker 1: dependency on fossil fuels.
Speaker 3: You i mentioned this is the second major energy shock
Speaker 3: in a decade, of course, the last one being around
Speaker 3: Russia's invasion of Ukraine. Does a crisis like this help
Speaker 3: to push an economy towards renewable sources.
Speaker 1: Well, we don't even have to prognosticate very hard. You
Speaker 1: should just look at what the nineteen seventy three oil
Speaker 1: crisis followed by the nineteen seventy nine oil crisis did
Speaker 1: to countries that were importing fossil fuels. They moved into
Speaker 1: nuclear energy, spent a lot of energy research money into
Speaker 1: solar and lithium ion batteries, and we saw a sharp
Speaker 1: decline in how much energy the world was getting from
Speaker 1: oil relative to other sources of energy over the next decade.
Speaker 1: This time around this double shock, many are saying, including
Speaker 1: the head of the International Energy Agency, which was created,
Speaker 1: of course after the nineteen seventy three oil shock, that
Speaker 1: these two dual shocks will have a major impact on
Speaker 1: the decisions that governments and individuals will be making on
Speaker 1: their energy choices, and renewables will certainly get a boost.
Speaker 3: You make an interesting point there about both the individual
Speaker 3: behavior and the government behavior. I wonder which is the
Speaker 3: most important driver. Is it what consumers want to need
Speaker 3: or is it how governments are, perhaps in some cases
Speaker 3: politically willing to act.
Speaker 1: So for the first two decades of the century, the
Speaker 1: clean energy question was really a government question because you
Speaker 1: needed all these policies and you needed to bring down
Speaker 1: the cost of solar panels and batteries. It's only really
Speaker 1: in the twenty twenties that the consumer has come into
Speaker 1: the equation, and actually today the consumer is in the
Speaker 1: driving seat. So take the example of what happened in
Speaker 1: Pakistan after the gas crisis created by Russia attacking Ukraine.
Speaker 1: We saw a major boost in imports of solar panels
Speaker 1: and batteries, mostly done by private businesses and individuals who
Speaker 1: wanted reliable power supply which the state wasn't able to
Speaker 1: provide because it could not import any liquefied natural gas.
Speaker 3: Is it to places like Pakistan that we should be
Speaker 3: looking as to where these advances might happen most quickly?
Speaker 3: Are there certain regions of the world which we feel
Speaker 3: will accelerate this shift after this crisis?
Speaker 1: We know the Strait of Hornor supplies most of its
Speaker 1: fossil fuels to Asian economies, and it's natural to look
Speaker 1: to them, But certain Asian countries are heavily dependent on
Speaker 1: the import So even today Pakistan gets ninety nine percent
Speaker 1: of its LNG from Qatar. Bangladesh gets about seventy five
Speaker 1: percent of it. Places like Japan and South Korea are
Speaker 1: still very heavily reliant on having gas in their power mix.
Speaker 1: Those economies is where I will be looking for this
Speaker 1: move toward clean energy. China, which gets an absolute amount
Speaker 1: a lot of oil and gas from the state of
Speaker 1: hoharmuse in relative amount is actually small, and it is
Speaker 1: the country that has built the most amount of clean
Speaker 1: energy at home and the capacity to deploy all this
Speaker 1: clean energy not just at home but everywhere around the world.
Speaker 1: And there is plentiful supply of solar panels and batteries,
Speaker 1: if anything, that's over capacity. We've been warned before this
Speaker 1: energy crisis started. So there is a competitive advantage that
Speaker 1: clean energy has right now in a world where fossil
Speaker 1: fuels are getting constrained.
Speaker 3: If prices come back down for oil and gas at
Speaker 3: some point, is that going to take away this renewed impetus.
Speaker 1: Ever since the war began, that has been a big
Speaker 1: question we have to ask, which is how long will
Speaker 1: high prices last? And it certainly matters for how much
Speaker 1: governments and individuals will make decisions about their energy hungry
Speaker 1: devices and industries based on those prices. What we now
Speaker 1: know nearly a month into the war, is that even
Speaker 1: if it ends tomorrow, the disruption is going to last
Speaker 1: for weeks and months, and so prices may fall. But
Speaker 1: this shock has now hit in a way where governments
Speaker 1: and individuals cannot psychologically disconnect from what just happened. And
Speaker 1: if it doesn't boost clean energy tomorrow, it will have
Speaker 1: a long term boost that wasn't there before the war started.
Speaker 3: Okay, akshat Rathy, our senior climate reporter, Thank you very
Speaker 3: much for joining us, and you can hear more from
Speaker 3: Macshott on his Bloomberg podcast zero. For more explanations like
Speaker 3: this from our team of three thousand journalists and analysts
Speaker 3: around the world, go to Bloomberg dot com slash explainers.
Speaker 3: I'm Stephen Carroll. This is here's why. I'll be back
Speaker 3: next week with more. Thanks for listening.