1 00:00:02,600 --> 00:00:06,520 Speaker 1: Hi it's akshat. There is now a ceasefire agreement between US, 2 00:00:06,600 --> 00:00:11,440 Speaker 1: Israel and Iran for two weeks starting Tuesday. This week's episode, 3 00:00:11,440 --> 00:00:14,840 Speaker 1: which was recorded before the ceasefire announcement, looks at the 4 00:00:14,880 --> 00:00:17,360 Speaker 1: long term impacts that the war will likely have on 5 00:00:17,400 --> 00:00:20,959 Speaker 1: the energy system. Even if traffic of oil and gas 6 00:00:20,960 --> 00:00:23,960 Speaker 1: ships from the Strait of Hormos re starts, the effect 7 00:00:24,040 --> 00:00:27,840 Speaker 1: on energy markets and policies will play out over months 8 00:00:28,040 --> 00:00:33,880 Speaker 1: and years. Welcome to Zero I am Akshatrati this week 9 00:00:34,280 --> 00:00:51,320 Speaker 1: the big energy pivot. When the US and Israel attacked 10 00:00:51,360 --> 00:00:55,800 Speaker 1: Iran on February twenty eighth, energy markets panicked, but not 11 00:00:55,920 --> 00:00:59,480 Speaker 1: a lot. There was an expectation that, even though Iran 12 00:00:59,560 --> 00:01:02,800 Speaker 1: was attacking ships in the Persian Gulf and had effectively 13 00:01:02,840 --> 00:01:05,440 Speaker 1: stopped traffic in the Strait of horm Moves, that things 14 00:01:05,440 --> 00:01:09,000 Speaker 1: will calm down and the ships carrying twenty percent of 15 00:01:09,040 --> 00:01:11,640 Speaker 1: the world's oil and gas will be back on the job. 16 00:01:12,760 --> 00:01:15,800 Speaker 1: Thousands of people have been killed and dozens of ships 17 00:01:15,920 --> 00:01:20,160 Speaker 1: have been attacked. When I wrote Climate Capitalism, which documented 18 00:01:20,160 --> 00:01:23,480 Speaker 1: the solutions the world has deployed at scale two cut emissions, 19 00:01:23,720 --> 00:01:27,800 Speaker 1: the stories typically had two major pivot points the oil 20 00:01:27,880 --> 00:01:31,120 Speaker 1: crises of the nineteen seventies and the Paris Agreement of 21 00:01:31,200 --> 00:01:34,920 Speaker 1: twenty fifteen. If a book about climate solutions is written 22 00:01:34,959 --> 00:01:38,000 Speaker 1: in twenty fifty, I think there will be a third 23 00:01:38,080 --> 00:01:42,399 Speaker 1: pivot point, the energy crises of the twenty twenties. So 24 00:01:42,600 --> 00:01:44,759 Speaker 1: today I want to look at the kinds of long 25 00:01:44,840 --> 00:01:49,360 Speaker 1: term changes that happen from energy shocks. The nineteen seventy 26 00:01:49,360 --> 00:01:53,360 Speaker 1: three and nineteen seventy nine oil crises happened in short succession. 27 00:01:54,040 --> 00:01:57,760 Speaker 1: It mostly affected rich countries that were prodigious consumers of 28 00:01:57,880 --> 00:02:01,120 Speaker 1: imported oil from the Middle East. Those countries shifted their 29 00:02:01,120 --> 00:02:03,760 Speaker 1: consumption of oil in power plants to natural gas and 30 00:02:03,840 --> 00:02:08,040 Speaker 1: nuclear Major oil companies launched solar businesses and invested in 31 00:02:08,200 --> 00:02:11,520 Speaker 1: energy research, which led to the invention of the lithium 32 00:02:11,560 --> 00:02:16,000 Speaker 1: ion battery, and the International Energy Agency was born, creating 33 00:02:16,000 --> 00:02:20,519 Speaker 1: the Strategic Petroleum Reserve to try and avoid such price shocks. 34 00:02:21,000 --> 00:02:23,760 Speaker 1: There were also a slew of energy efficiency measures that 35 00:02:23,800 --> 00:02:28,200 Speaker 1: were taken, including the Americans buying more efficient Japanese cars. 36 00:02:28,840 --> 00:02:32,000 Speaker 1: The twenty twenty two energy shock hit Europe the most, 37 00:02:32,480 --> 00:02:36,080 Speaker 1: but many gas importing countries also recoiled at the sky 38 00:02:36,240 --> 00:02:39,840 Speaker 1: high prices. Of natural gas. The current shock is much bigger. 39 00:02:40,320 --> 00:02:43,600 Speaker 1: It's both oil and gas, and it is bigger for 40 00:02:43,720 --> 00:02:48,079 Speaker 1: countries in Asia and Oceania particularly. That means we are 41 00:02:48,120 --> 00:02:51,520 Speaker 1: no doubt going to see long term changes, says Bloomberg 42 00:02:51,560 --> 00:02:55,160 Speaker 1: opinion columnist David Fickling. I look forward to every column 43 00:02:55,160 --> 00:02:58,799 Speaker 1: he writes, and right now, particularly his view on how 44 00:02:58,880 --> 00:03:02,960 Speaker 1: the Asian energy market is going to evolve, is very useful. 45 00:03:03,440 --> 00:03:13,320 Speaker 1: I hope you enjoyed this broad ranging conversation, David, welcome 46 00:03:13,360 --> 00:03:13,919 Speaker 1: back to zero. 47 00:03:14,320 --> 00:03:15,040 Speaker 2: Hey, thank you. 48 00:03:15,520 --> 00:03:18,440 Speaker 1: So let's start in your home country to understand the 49 00:03:18,639 --> 00:03:21,080 Speaker 1: myriad ways in which the closure of the Strait of 50 00:03:21,080 --> 00:03:25,919 Speaker 1: Hormuz is having an impact on the energy world. Australia 51 00:03:26,160 --> 00:03:29,840 Speaker 1: is one of the world's largest fossil fuel producers, so 52 00:03:29,880 --> 00:03:33,400 Speaker 1: you would kind of hope maybe that Australia actually gets 53 00:03:33,440 --> 00:03:37,720 Speaker 1: away more lightly in this energy shock than other countries. 54 00:03:38,680 --> 00:03:41,760 Speaker 1: But Australia doesn't have much of its own oil and 55 00:03:41,800 --> 00:03:44,920 Speaker 1: so it really relies on imports. And you wrote a 56 00:03:44,960 --> 00:03:49,360 Speaker 1: column about the country's diesel imports and some of the 57 00:03:49,440 --> 00:03:52,760 Speaker 1: numbers in there were really shocking that for a country 58 00:03:52,800 --> 00:03:56,720 Speaker 1: that is less than thirty million people, Australia is one 59 00:03:56,760 --> 00:04:01,600 Speaker 1: of the biggest world's biggest importers of diesel. It consumes 60 00:04:01,840 --> 00:04:04,760 Speaker 1: more diesel per capita than any other country in the world, 61 00:04:05,560 --> 00:04:09,600 Speaker 1: eighty percent more diesel than US per capita, which really 62 00:04:09,640 --> 00:04:12,280 Speaker 1: does consume a lot of oil, and eight times as 63 00:04:12,360 --> 00:04:15,880 Speaker 1: much as China. So why did Australia get hooked on diesel? 64 00:04:16,279 --> 00:04:18,599 Speaker 2: It's fascinating. I was actually taking a long road trip. 65 00:04:18,960 --> 00:04:20,560 Speaker 2: I live in Sydney and I was taking a road 66 00:04:20,560 --> 00:04:23,120 Speaker 2: trip up to Brisbane, which, funny enough, was like my 67 00:04:23,160 --> 00:04:27,600 Speaker 2: first long ev car trip. It's about nine hundred kilometers 68 00:04:27,720 --> 00:04:30,280 Speaker 2: since nine hour drive a lot of the time. The 69 00:04:30,360 --> 00:04:32,479 Speaker 2: only other vehicles on the road with me are just 70 00:04:32,600 --> 00:04:35,400 Speaker 2: these enormous Technically we don't call them road trains. We 71 00:04:35,440 --> 00:04:39,400 Speaker 2: call them b doubles. In Australia, it's a big truck 72 00:04:39,440 --> 00:04:42,920 Speaker 2: with two trailers behind it. Further out in Australia there 73 00:04:42,920 --> 00:04:45,520 Speaker 2: can be with three trailers behind them, or even four 74 00:04:45,560 --> 00:04:50,440 Speaker 2: trailers behind them. But these are immense diesel powered monsters, 75 00:04:51,279 --> 00:04:53,040 Speaker 2: as big as you'll see so of anywhere else. And 76 00:04:53,320 --> 00:04:55,440 Speaker 2: there's just a constant stream of them going up and 77 00:04:55,440 --> 00:04:58,200 Speaker 2: down the coast and going on all the big intercity 78 00:04:58,279 --> 00:05:01,159 Speaker 2: routes and that's just a small part of the pitch 79 00:05:01,200 --> 00:05:02,960 Speaker 2: that you have in Australia, and I think part of 80 00:05:03,000 --> 00:05:05,719 Speaker 2: it is really because of geography and the structure of 81 00:05:05,720 --> 00:05:10,479 Speaker 2: the economy. In terms of geography, most journeys between major 82 00:05:10,480 --> 00:05:13,320 Speaker 2: cities in Australia are the best part of a thousand 83 00:05:13,400 --> 00:05:18,920 Speaker 2: kilometer journey, So our rail system is quite underdeveloped and 84 00:05:19,240 --> 00:05:22,440 Speaker 2: the distances are not very suitable for freight rail, so 85 00:05:22,480 --> 00:05:25,320 Speaker 2: a lot of that gets done with diesel. Our economy 86 00:05:25,360 --> 00:05:28,360 Speaker 2: is very dependent on mining and agriculture, and mining machineries 87 00:05:28,360 --> 00:05:32,440 Speaker 2: are powered by diesel, and agriculture, you know, farming machinery 88 00:05:32,480 --> 00:05:35,880 Speaker 2: is generally powered by diesel. So all of those countries 89 00:05:35,920 --> 00:05:37,600 Speaker 2: to the fact that, as I say, you know, seven 90 00:05:37,640 --> 00:05:40,960 Speaker 2: point seven barrels of diesel per person per year get 91 00:05:41,040 --> 00:05:43,120 Speaker 2: used in Australia and it's sort of far more than 92 00:05:43,120 --> 00:05:45,839 Speaker 2: any other country. Having said that, I think there's a 93 00:05:45,839 --> 00:05:48,360 Speaker 2: crucial factor that you need to add to that, which 94 00:05:48,400 --> 00:05:52,039 Speaker 2: is that we also subsidize diesel very heavily. It's one 95 00:05:52,040 --> 00:05:55,120 Speaker 2: of the biggest spending programs that the government has. It's 96 00:05:55,160 --> 00:05:58,000 Speaker 2: treated as essential to the economy because this is treated 97 00:05:58,040 --> 00:06:01,560 Speaker 2: as a business input. Running a mine. One of your 98 00:06:01,600 --> 00:06:05,240 Speaker 2: business inputs is diesel. So this, you know, you get 99 00:06:05,360 --> 00:06:08,200 Speaker 2: a rebate on what you spend, but the scale of 100 00:06:08,240 --> 00:06:10,600 Speaker 2: it and the distortion of it is what makes it 101 00:06:10,880 --> 00:06:13,560 Speaker 2: really striking. We spend more on the diesel rebate than 102 00:06:13,600 --> 00:06:16,520 Speaker 2: we spend on on the army, on the air force. 103 00:06:16,560 --> 00:06:18,920 Speaker 2: We spend almost as much on the diesel rebate as 104 00:06:18,920 --> 00:06:22,039 Speaker 2: we spend on public education. That you really get the 105 00:06:22,120 --> 00:06:24,640 Speaker 2: sense of the importance of that when you start talking 106 00:06:24,640 --> 00:06:26,600 Speaker 2: to people who are using a lot of diesel and 107 00:06:26,800 --> 00:06:29,320 Speaker 2: on paper, would like to reduce their use of these diesel. 108 00:06:29,480 --> 00:06:33,160 Speaker 2: All the mining companies they're obviously shying away from this now, 109 00:06:33,200 --> 00:06:35,240 Speaker 2: but a few years ago they were, you know, very 110 00:06:35,240 --> 00:06:38,600 Speaker 2: seriously looking into decarbonization, and they were talking a lot 111 00:06:38,600 --> 00:06:42,839 Speaker 2: about decarbonization, but lots of fairly low hanging fruit that 112 00:06:42,960 --> 00:06:46,760 Speaker 2: exists elsewhere just doesn't really happen very much in Australia. 113 00:06:46,800 --> 00:06:49,000 Speaker 2: There's a lot of sort of talk about tentatively having 114 00:06:49,080 --> 00:06:52,400 Speaker 2: electric mining trucks and things like this, but they essentially 115 00:06:52,680 --> 00:06:54,600 Speaker 2: had some studies of this and most of them are 116 00:06:54,640 --> 00:06:57,080 Speaker 2: not doing very much with this. You go to Chile, 117 00:06:57,760 --> 00:06:59,280 Speaker 2: one of the biggest copper mines in the world to 118 00:06:59,279 --> 00:07:03,640 Speaker 2: Coloquassi has overheadlines a little bit like tram lines for 119 00:07:04,040 --> 00:07:07,000 Speaker 2: haulinger or out of the pit, and that's the standard 120 00:07:07,040 --> 00:07:09,200 Speaker 2: way of doing it. If you go to Brazil, S 121 00:07:09,200 --> 00:07:11,440 Speaker 2: eleven d, part of the biggest iron or mine in 122 00:07:11,440 --> 00:07:14,320 Speaker 2: the world, has a huge piece of electric mining equipment 123 00:07:14,360 --> 00:07:17,400 Speaker 2: that mines and prices and crushes the ore inside the mine. 124 00:07:17,440 --> 00:07:19,120 Speaker 2: And of course, actually, if you're a sort of nerd 125 00:07:19,120 --> 00:07:21,760 Speaker 2: about electric vehicles, of course the biggest electric vehicles ever 126 00:07:21,800 --> 00:07:24,560 Speaker 2: built are actually in Germany. They're not a very net 127 00:07:24,680 --> 00:07:27,600 Speaker 2: zero activity there in some of these enormous lig night 128 00:07:27,680 --> 00:07:30,800 Speaker 2: mines in Germany, and they're all fully powered by electricity. 129 00:07:30,920 --> 00:07:33,880 Speaker 2: So electric mining equipment is common elsewhere in the world, 130 00:07:34,320 --> 00:07:36,440 Speaker 2: not in Australia, and I would argue part of the 131 00:07:36,440 --> 00:07:39,240 Speaker 2: reason is that we're we subsidized diesel so aggressively that 132 00:07:39,520 --> 00:07:41,240 Speaker 2: it doesn't make sense for miners to switch. 133 00:07:41,720 --> 00:07:46,600 Speaker 1: Those gold diggers in Germany are so enormous. I think 134 00:07:46,600 --> 00:07:51,760 Speaker 1: they're like five story buildings that run on electric just 135 00:07:52,000 --> 00:07:57,040 Speaker 1: essentially taking tons and tons of earth with just one 136 00:07:57,120 --> 00:08:00,840 Speaker 1: single swipe. But the point of me here is also 137 00:08:00,960 --> 00:08:03,640 Speaker 1: one that I think you know, we know, but we 138 00:08:03,800 --> 00:08:07,600 Speaker 1: don't really absorb, which is just how much policy matters 139 00:08:08,080 --> 00:08:13,480 Speaker 1: in shaping our choices, especially energy choices. Let me give 140 00:08:13,520 --> 00:08:17,360 Speaker 1: you the example of UK's diesel problem. So around two 141 00:08:17,400 --> 00:08:20,200 Speaker 1: thousand and two, there is a policy brought in to 142 00:08:20,520 --> 00:08:23,720 Speaker 1: encourage people to buy more diesel cars than petrol cars, 143 00:08:23,760 --> 00:08:27,600 Speaker 1: because at that time there was the assumption that diesel 144 00:08:27,640 --> 00:08:30,400 Speaker 1: was cleaner than petrol. And so even though the total 145 00:08:30,480 --> 00:08:32,960 Speaker 1: volume of cars in the UK, diesel made up only 146 00:08:33,240 --> 00:08:36,120 Speaker 1: fifteen to twenty percent at that time, because of the 147 00:08:36,160 --> 00:08:39,520 Speaker 1: incentives that were given, tax incentives that were given, the 148 00:08:39,600 --> 00:08:43,680 Speaker 1: sale of diesel cars really rocketed and by twenty fifteen, 149 00:08:43,679 --> 00:08:46,120 Speaker 1: more diesel cars were being sold than petrol cars. And 150 00:08:46,160 --> 00:08:49,640 Speaker 1: of course we know diesel Gate happened. Folkslagen got caught 151 00:08:49,640 --> 00:08:52,360 Speaker 1: in the scandal. We learned that actually it is not 152 00:08:52,559 --> 00:08:57,520 Speaker 1: cleaner than petrol, and then diesel car sales plummeted. But 153 00:08:58,679 --> 00:09:01,959 Speaker 1: heavy goods vehicles, you know, UK doesn't have that much industry, 154 00:09:02,000 --> 00:09:04,120 Speaker 1: but there are a lot of trucks they continue to 155 00:09:04,200 --> 00:09:08,160 Speaker 1: run diesel, and actually the consumption of diesel hasn't fallen off. 156 00:09:08,840 --> 00:09:11,880 Speaker 1: And now because of the way the country has been 157 00:09:11,920 --> 00:09:17,040 Speaker 1: reconfiguring its refineries, etc. The UK is heavily dependent on 158 00:09:17,160 --> 00:09:20,880 Speaker 1: importing diesel. About sixty percent of the diesel comes from 159 00:09:21,120 --> 00:09:22,920 Speaker 1: the CREUD in the Middle East in some form or 160 00:09:22,920 --> 00:09:26,480 Speaker 1: the other, direct or indirect, and so these policy choices 161 00:09:26,559 --> 00:09:30,360 Speaker 1: really have a huge impact on the fuel dependency that 162 00:09:30,480 --> 00:09:35,760 Speaker 1: is created as a result. But talk me through other 163 00:09:35,840 --> 00:09:40,360 Speaker 1: examples in you're part of the world where the diesel 164 00:09:40,400 --> 00:09:44,440 Speaker 1: dependency is something that could really be walked away from, 165 00:09:44,520 --> 00:09:46,280 Speaker 1: at least on the road vehicle level. 166 00:09:46,600 --> 00:09:48,560 Speaker 2: I think the most striking thing is actually what we 167 00:09:48,600 --> 00:09:51,640 Speaker 2: saw happening last year in China, and this is I 168 00:09:51,640 --> 00:09:56,079 Speaker 2: think not talked about nearly enough, but there's enormous potential there. 169 00:09:56,760 --> 00:10:00,760 Speaker 2: And that's the scale of the electrification of heavy trucks. 170 00:10:01,480 --> 00:10:04,120 Speaker 2: I remember, going back, I think would be about eight 171 00:10:04,200 --> 00:10:07,080 Speaker 2: years now, eight to nine years when Ailn Musk first 172 00:10:07,200 --> 00:10:12,240 Speaker 2: unveiled the Tesla Semi, the electric semi truck. I was 173 00:10:12,320 --> 00:10:14,080 Speaker 2: very skeptical about that that I wrote about it at 174 00:10:14,080 --> 00:10:17,880 Speaker 2: the time, and I was very skeptical that the economics 175 00:10:17,880 --> 00:10:21,440 Speaker 2: and the sort of battery weight elements of electrified truck 176 00:10:21,440 --> 00:10:23,240 Speaker 2: are actually going to work very well. And I think 177 00:10:23,520 --> 00:10:24,840 Speaker 2: I've been proved wrong about that. 178 00:10:25,360 --> 00:10:28,280 Speaker 1: And we know that it took Tesla eight or nine 179 00:10:28,360 --> 00:10:31,800 Speaker 1: years to actually have the semi on the road, because 180 00:10:31,880 --> 00:10:35,760 Speaker 1: it's only last month that of the first commercial semi 181 00:10:35,800 --> 00:10:38,520 Speaker 1: has been put on the road. Indeed, China of course 182 00:10:38,800 --> 00:10:39,600 Speaker 1: got there sooner. 183 00:10:39,720 --> 00:10:41,880 Speaker 2: Well, yeah, China has got there so much sooner that 184 00:10:42,000 --> 00:10:46,160 Speaker 2: actually in December, more than I mean, the number is 185 00:10:46,200 --> 00:10:50,040 Speaker 2: astonishing to me. More than half of the heavy duty 186 00:10:50,080 --> 00:10:55,400 Speaker 2: trucks sold in China in December were electrified trucks. This 187 00:10:55,880 --> 00:10:57,800 Speaker 2: and this is a number that just really sort of 188 00:10:57,800 --> 00:11:00,760 Speaker 2: defies belief to be honest. I mean again, member writing 189 00:11:00,920 --> 00:11:05,800 Speaker 2: about two years ago, there was at that point compressed 190 00:11:05,840 --> 00:11:08,560 Speaker 2: natural gas was actually seen as the sort of the 191 00:11:08,600 --> 00:11:11,640 Speaker 2: thing that would take over large, large scale trucking. I 192 00:11:11,640 --> 00:11:13,840 Speaker 2: was saying, well, that's actually going to damage diesel demand 193 00:11:13,880 --> 00:11:17,079 Speaker 2: in Chinese trucks. But then batteries have really come from 194 00:11:17,120 --> 00:11:19,440 Speaker 2: nowhere and saw this huge search towards the end of 195 00:11:19,520 --> 00:11:22,120 Speaker 2: last year. And the thing that you have to bear 196 00:11:22,120 --> 00:11:23,880 Speaker 2: in mind about a lot of this trucking is a 197 00:11:23,880 --> 00:11:26,120 Speaker 2: lot of the companies that are producing these electric trucks, 198 00:11:26,280 --> 00:11:30,640 Speaker 2: companies like Sanny Heavy and XCMG. They made a lot 199 00:11:30,640 --> 00:11:36,440 Speaker 2: of money during China's construction boom, essentially, their construction machinery 200 00:11:36,600 --> 00:11:39,400 Speaker 2: companies and trucks are a sort of sideline. And of 201 00:11:39,440 --> 00:11:43,079 Speaker 2: course Chinese construction boom has comprehensively ground to a halt. 202 00:11:43,240 --> 00:11:46,640 Speaker 2: The amount of new floor space built in January and 203 00:11:46,880 --> 00:11:48,720 Speaker 2: February this year, we've only got the sort of first 204 00:11:48,720 --> 00:11:51,520 Speaker 2: two months of the year, but it's the lowest since 205 00:11:51,760 --> 00:11:53,719 Speaker 2: two thousand and two, which was just a couple of 206 00:11:53,800 --> 00:11:56,800 Speaker 2: months after China joined the WYE. We're talking about a 207 00:11:56,840 --> 00:11:59,800 Speaker 2: completely different China now that these companies were built for 208 00:11:59,800 --> 00:12:02,400 Speaker 2: that market and they need a new market, and electrified 209 00:12:02,440 --> 00:12:03,400 Speaker 2: trucking could be there. 210 00:12:03,600 --> 00:12:08,679 Speaker 1: But there is also diesel dependencies in developing countries where 211 00:12:08,840 --> 00:12:11,079 Speaker 1: it is used for public transport. There are all these 212 00:12:11,120 --> 00:12:14,199 Speaker 1: mini trucks running around in Africa that run on diesel. 213 00:12:14,800 --> 00:12:18,599 Speaker 1: The Philippines, you've noted, has tried to switch to immobility, 214 00:12:18,640 --> 00:12:22,239 Speaker 1: but it hasn't really worked. So what kind of policies 215 00:12:22,360 --> 00:12:26,680 Speaker 1: would help developing countries to figure out how to cut 216 00:12:26,720 --> 00:12:27,800 Speaker 1: their diesel dependency. 217 00:12:28,240 --> 00:12:31,640 Speaker 2: With a lot of those developing countries, it's a very 218 00:12:31,679 --> 00:12:34,960 Speaker 2: thorny problem that involves I mean, I think it involves 219 00:12:34,960 --> 00:12:36,640 Speaker 2: a lot of the sort of subsidy structure and it 220 00:12:36,679 --> 00:12:39,439 Speaker 2: involves this sort of shift that you always notice in 221 00:12:39,480 --> 00:12:43,120 Speaker 2: development between sort of CAPEX and opex. Op X is 222 00:12:43,160 --> 00:12:45,360 Speaker 2: something that might be more expensive for you in the 223 00:12:45,400 --> 00:12:48,720 Speaker 2: long term, but it's easy to do because you don't 224 00:12:48,720 --> 00:12:50,120 Speaker 2: need a lot of money on hand to do it. 225 00:12:50,120 --> 00:12:53,160 Speaker 2: You don't need to borrow a bunch of money, whereas 226 00:12:53,480 --> 00:12:55,600 Speaker 2: capital spending you need to persuade someone to lend you 227 00:12:55,640 --> 00:12:57,800 Speaker 2: some money. This is a problem that we see in 228 00:12:57,840 --> 00:13:00,640 Speaker 2: the sort of low end of transport across developing world. 229 00:13:00,800 --> 00:13:04,160 Speaker 2: I was channing to an expert today actually in the Philippines, 230 00:13:04,160 --> 00:13:06,240 Speaker 2: where you know, if you've been to the Philippines, you'd 231 00:13:06,280 --> 00:13:08,719 Speaker 2: know their sort of iconic of public transport is what's 232 00:13:08,760 --> 00:13:13,240 Speaker 2: called jeepney, which started after World War Two with military 233 00:13:13,280 --> 00:13:16,600 Speaker 2: jeeps getting converted into little buses with people on the 234 00:13:16,600 --> 00:13:20,319 Speaker 2: flatbed truck. But they're all diesel powered. They or most 235 00:13:20,360 --> 00:13:23,240 Speaker 2: of them are diesel powered. They tend to be very 236 00:13:23,360 --> 00:13:27,440 Speaker 2: very old vehicles with sort of terrible pollution. Passengers don't 237 00:13:27,440 --> 00:13:29,360 Speaker 2: really like going in them anymore. People would like to 238 00:13:29,360 --> 00:13:31,679 Speaker 2: be in something more modern, and the Philippines really for 239 00:13:31,679 --> 00:13:34,760 Speaker 2: the last ten years has been trying to sort out 240 00:13:34,800 --> 00:13:37,320 Speaker 2: the jepney sector. To be honest, it's not gone as 241 00:13:37,320 --> 00:13:40,360 Speaker 2: well as you might have hoped. They've been big strikes 242 00:13:40,400 --> 00:13:44,480 Speaker 2: by drivers because what sorting this out will involve is 243 00:13:44,960 --> 00:13:48,120 Speaker 2: individual drivers getting turned into sort of big cooperatives, and 244 00:13:48,160 --> 00:13:51,000 Speaker 2: then cooperatives borrowing a bunch of money and then they 245 00:13:51,040 --> 00:13:54,920 Speaker 2: can get electric jeepneys and the drivers will get a wage, 246 00:13:54,960 --> 00:13:57,880 Speaker 2: the drivers will get benefits. It'll be much more regularized 247 00:13:57,880 --> 00:14:00,640 Speaker 2: as a sort of business. And people who have converted 248 00:14:00,679 --> 00:14:02,320 Speaker 2: tend to be a bit happier about it. But the 249 00:14:02,320 --> 00:14:05,960 Speaker 2: people who have not converted, they like they like running 250 00:14:05,960 --> 00:14:08,760 Speaker 2: their own business. They like the independence context that makes 251 00:14:08,760 --> 00:14:11,240 Speaker 2: sense for Australian UK. They are a bit like uber drivers. 252 00:14:11,240 --> 00:14:13,640 Speaker 2: They have that sort of independence. They have the upside 253 00:14:13,679 --> 00:14:15,760 Speaker 2: that you get if you have a good day of driving. 254 00:14:16,200 --> 00:14:18,720 Speaker 2: The government was to switch them to more than something 255 00:14:18,760 --> 00:14:21,280 Speaker 2: like a bus driver model, where you don't get any 256 00:14:21,360 --> 00:14:23,600 Speaker 2: upside if there's more driving, and there's been a lot 257 00:14:23,640 --> 00:14:26,160 Speaker 2: of resistance to that and it has proved difficult. 258 00:14:26,400 --> 00:14:28,360 Speaker 1: One other way in which I've been thinking about this 259 00:14:28,560 --> 00:14:32,560 Speaker 1: energy shock is, you know, having lived through what happened 260 00:14:32,560 --> 00:14:36,600 Speaker 1: after Russia attacked Ukraine here in Europe, it feels like 261 00:14:37,400 --> 00:14:40,840 Speaker 1: that kind of energy shock is now really an Asian problem. 262 00:14:41,000 --> 00:14:45,320 Speaker 1: In a way, this is Asia's Ukraine moment. You know, 263 00:14:45,440 --> 00:14:48,440 Speaker 1: it was mostly a gas crisis in Europe. Of course, 264 00:14:48,440 --> 00:14:51,400 Speaker 1: there were other fossil fuels in world as well, because 265 00:14:52,160 --> 00:14:56,160 Speaker 1: Europe imported a lot of diesel from Russia, some crude oil, 266 00:14:56,200 --> 00:14:59,640 Speaker 1: but also a bunch of coal. But in Asia this 267 00:14:59,720 --> 00:15:02,640 Speaker 1: is going to to be both an oil and gas crisis. 268 00:15:02,920 --> 00:15:06,560 Speaker 1: Let's stick to oil, and let's look at electric cars. 269 00:15:06,840 --> 00:15:10,720 Speaker 1: You know, we keep hearing that, yes, they are now 270 00:15:10,840 --> 00:15:13,680 Speaker 1: lower in price, there's all these availability. Actually there's a 271 00:15:13,680 --> 00:15:17,800 Speaker 1: cool factor. We also see that in sales figures some 272 00:15:17,840 --> 00:15:20,840 Speaker 1: of the Asian countries are now selling more electric cars 273 00:15:21,080 --> 00:15:24,160 Speaker 1: as a proportion of new cars than many of the 274 00:15:24,200 --> 00:15:30,240 Speaker 1: rich economies, better than the US, better than the UK, Vietnam, Thailand, Nepal, 275 00:15:30,320 --> 00:15:33,360 Speaker 1: these countries come to mind when you were thinking about 276 00:15:33,520 --> 00:15:36,480 Speaker 1: the switch to evs You know, how are you thinking 277 00:15:36,560 --> 00:15:40,720 Speaker 1: this particular shock will affect EV sales in Asia? 278 00:15:40,840 --> 00:15:43,840 Speaker 2: I think this has been another of these emerging trends 279 00:15:43,840 --> 00:15:46,680 Speaker 2: that again, it was sort of emerging last year, and 280 00:15:46,720 --> 00:15:49,400 Speaker 2: then this energy shock has come on top of it, 281 00:15:49,600 --> 00:15:52,640 Speaker 2: and I think it could prove very dramatic. The numbers 282 00:15:52,680 --> 00:15:54,360 Speaker 2: that we've seen in the last six just in the 283 00:15:54,400 --> 00:15:58,040 Speaker 2: last six months for some of these Asia markets are extraordinary. 284 00:15:58,080 --> 00:16:00,280 Speaker 2: And the one little caveat I would add to them 285 00:16:00,720 --> 00:16:02,800 Speaker 2: is that these markets tend to be quite driven by 286 00:16:02,800 --> 00:16:05,520 Speaker 2: the fact that there have been some quite high tariffs 287 00:16:05,520 --> 00:16:08,360 Speaker 2: on a lot of these vehicles, and they've the tariffs 288 00:16:08,440 --> 00:16:10,360 Speaker 2: were sort of knocked off and a lot of those 289 00:16:10,400 --> 00:16:13,200 Speaker 2: task reductions were coming to an end at the end 290 00:16:13,200 --> 00:16:15,160 Speaker 2: of last year, so a lot of people were rushing 291 00:16:15,400 --> 00:16:18,000 Speaker 2: to buy cars in time for that. So that's probably 292 00:16:18,000 --> 00:16:22,000 Speaker 2: distorted things a lot, but it's shown what you can 293 00:16:22,040 --> 00:16:25,360 Speaker 2: actually achieve if you if you decide not to tax 294 00:16:25,440 --> 00:16:29,600 Speaker 2: green energy basically, and then yeah, the numbers are extraordinary, 295 00:16:29,680 --> 00:16:33,560 Speaker 2: Like fifty percent of cars sold in Thailand and Singapore 296 00:16:33,560 --> 00:16:36,720 Speaker 2: in the last few months have been battery only models, 297 00:16:36,960 --> 00:16:40,520 Speaker 2: not just plugins, but battery only without an engine at all. 298 00:16:41,480 --> 00:16:44,720 Speaker 2: About third in China and Indonesia, South Korea and Vietnam 299 00:16:45,360 --> 00:16:48,000 Speaker 2: far ahead of numbers. I think the UK is about 300 00:16:48,000 --> 00:16:50,880 Speaker 2: twenty percent, the US is about eight percent, Japans about 301 00:16:50,880 --> 00:16:54,240 Speaker 2: three percent. The one that's actually notably that you know, 302 00:16:54,360 --> 00:16:57,680 Speaker 2: lagging of the big economies is India is also similar. 303 00:16:57,800 --> 00:17:01,200 Speaker 2: Japan is about three percent injuries on a very low level, 304 00:17:01,400 --> 00:17:04,640 Speaker 2: but across South East Asia really there's been this really 305 00:17:04,680 --> 00:17:09,000 Speaker 2: dramatic change. Thailand, ev cars are at price parity, which 306 00:17:09,040 --> 00:17:10,919 Speaker 2: is still not quite the case in a lot of 307 00:17:11,080 --> 00:17:14,080 Speaker 2: places that are not as exposed. I think there's not 308 00:17:14,119 --> 00:17:15,840 Speaker 2: the case in the UK. Here in Australia it is 309 00:17:15,880 --> 00:17:18,199 Speaker 2: the case. Evs are pretty much at price parity, and 310 00:17:18,280 --> 00:17:22,200 Speaker 2: certainly in China evs are cheaper. The thing that always 311 00:17:22,240 --> 00:17:24,760 Speaker 2: holds people back is the sticker price. It's actually not 312 00:17:24,800 --> 00:17:27,200 Speaker 2: the price of fuel, but obviously the price of fuel 313 00:17:27,280 --> 00:17:30,600 Speaker 2: is suddenly very much on everyone's mind at the moment, 314 00:17:30,880 --> 00:17:34,160 Speaker 2: So I think that really does you know, that gets 315 00:17:34,160 --> 00:17:35,919 Speaker 2: an opportunity for a much broader shift. 316 00:17:36,200 --> 00:17:40,880 Speaker 1: The tariff policy, you can argue, makes sense for some countries, 317 00:17:41,040 --> 00:17:43,600 Speaker 1: like in India, it probably makes sense because it has 318 00:17:43,680 --> 00:17:46,960 Speaker 1: its own domestic car industry that it wouldn't very much 319 00:17:47,040 --> 00:17:49,800 Speaker 1: like to protect that has a number of people that 320 00:17:49,840 --> 00:17:53,600 Speaker 1: are employed. For most countries there isn't really an auto 321 00:17:53,640 --> 00:17:57,199 Speaker 1: industry to protect. So what is the reason for those 322 00:17:57,280 --> 00:18:00,680 Speaker 1: tartifs to exist and what could be done to encourage 323 00:18:00,760 --> 00:18:02,160 Speaker 1: countries to actually drop them. 324 00:18:02,560 --> 00:18:04,879 Speaker 2: I mean a lot of these tariffs, to be clear, 325 00:18:05,000 --> 00:18:08,200 Speaker 2: are in the countries that are protecting their car industries. 326 00:18:08,359 --> 00:18:10,400 Speaker 2: But as you say, I mean a crucial factor about 327 00:18:10,400 --> 00:18:12,960 Speaker 2: a lot of these emerging markets where you know, to 328 00:18:12,960 --> 00:18:16,280 Speaker 2: be clear, people's models about the future of oil demand 329 00:18:16,600 --> 00:18:19,000 Speaker 2: will depend on the idea that these countries are going 330 00:18:19,040 --> 00:18:22,600 Speaker 2: to buy petrol cars, not electric cars. If you don't 331 00:18:22,600 --> 00:18:25,160 Speaker 2: have an incumbent car industry to protect, you just want 332 00:18:25,440 --> 00:18:28,320 Speaker 2: to buy whatever the cheapest car is. And also, if 333 00:18:28,359 --> 00:18:31,240 Speaker 2: I'm a government, I want the car that it does 334 00:18:31,280 --> 00:18:33,919 Speaker 2: the best thing to my balance of payments. Because of course, 335 00:18:33,760 --> 00:18:36,000 Speaker 2: the other much bigger thing to consider it is that 336 00:18:36,880 --> 00:18:39,560 Speaker 2: the amount that you spend on imported cars in any 337 00:18:39,560 --> 00:18:41,960 Speaker 2: one year is just dwarfed by the amount that you 338 00:18:41,960 --> 00:18:45,920 Speaker 2: spend on imported petroleum. If you're not an oil producer, 339 00:18:46,800 --> 00:18:48,720 Speaker 2: then the amounts that you're spending on oil to fuel 340 00:18:48,720 --> 00:18:51,560 Speaker 2: all those cars is many orders of magnitude in most 341 00:18:51,600 --> 00:18:53,919 Speaker 2: cases greater than the amount that you're spending on cars. 342 00:18:54,359 --> 00:18:56,199 Speaker 2: So it makes no sense if you don't have your 343 00:18:56,200 --> 00:18:58,399 Speaker 2: own car industry to put a fifty percent tariff on 344 00:18:58,880 --> 00:19:00,760 Speaker 2: cars when generally you don't have a ch on the petrol. 345 00:19:00,800 --> 00:19:02,800 Speaker 2: You're just blowing out your own balance of payments. 346 00:19:02,840 --> 00:19:08,199 Speaker 1: Basically, there's also the psychology of what happens during an 347 00:19:08,320 --> 00:19:11,000 Speaker 1: energy shock that sort of remains with people for much 348 00:19:11,080 --> 00:19:14,520 Speaker 1: longer than what the numbers might always be able to capture. 349 00:19:14,920 --> 00:19:17,600 Speaker 1: You know, talk to anybody in America who's lived through 350 00:19:17,600 --> 00:19:21,840 Speaker 1: the nineteen seventies, and they'll talk about rationing of fuel 351 00:19:22,160 --> 00:19:24,840 Speaker 1: and there were all these long cues, and you know, 352 00:19:24,960 --> 00:19:27,920 Speaker 1: many vow this will never happen again. That's why you've 353 00:19:27,920 --> 00:19:30,919 Speaker 1: got the Strategic Petroleum Reserve, et cetera. Well, we are 354 00:19:30,960 --> 00:19:33,960 Speaker 1: already starting to see those kinds of cues across Asia. 355 00:19:34,040 --> 00:19:35,520 Speaker 2: Now, I was just going to say, I mean, I 356 00:19:36,080 --> 00:19:38,160 Speaker 2: grew up in Britain and I remember my parents telling 357 00:19:38,200 --> 00:19:41,440 Speaker 2: these stories of the four day week in the nineteen seventies, 358 00:19:41,480 --> 00:19:43,520 Speaker 2: which was when you know, this was fuel rationing at 359 00:19:43,520 --> 00:19:47,440 Speaker 2: the time of the seventy three Old crisis. And today 360 00:19:47,480 --> 00:19:49,840 Speaker 2: I'm talking to someone in the Philippines and she's telling 361 00:19:49,880 --> 00:19:52,320 Speaker 2: me about how everyone's working a four day week. This 362 00:19:52,359 --> 00:19:55,080 Speaker 2: is something that happened before I was born, and is 363 00:19:55,080 --> 00:19:57,679 Speaker 2: a phrase that I remember from my childhood more than 364 00:19:57,680 --> 00:20:00,119 Speaker 2: fifty years ago. And this is happening right now now 365 00:20:01,040 --> 00:20:03,080 Speaker 2: in Asia. I don't think you ever saw the recent film. 366 00:20:03,119 --> 00:20:06,520 Speaker 2: It was a great film, Licorice Pizza. It came out 367 00:20:06,520 --> 00:20:09,160 Speaker 2: about five years ago. It's sort of set in Los 368 00:20:09,200 --> 00:20:12,399 Speaker 2: Angeles in the nineteen seventies, and there's this wonderful cameo 369 00:20:12,480 --> 00:20:15,879 Speaker 2: scene of people having basically having punch ups in nineteen 370 00:20:15,880 --> 00:20:19,480 Speaker 2: seventy three at gas stations in Los Angeles. And I 371 00:20:19,560 --> 00:20:22,480 Speaker 2: was seeing these videos recently of punch ups in India, 372 00:20:23,600 --> 00:20:28,159 Speaker 2: retail sales of LPG for cooking gas. It's exactly the 373 00:20:28,160 --> 00:20:30,320 Speaker 2: same thing. And this is, you know, memories of a 374 00:20:30,359 --> 00:20:33,320 Speaker 2: generation ago. You know, the new memories are being made 375 00:20:33,400 --> 00:20:33,840 Speaker 2: right now. 376 00:20:39,800 --> 00:20:42,440 Speaker 1: After the break, more of my conversation with David Fickling. 377 00:20:42,840 --> 00:20:45,119 Speaker 1: And while I have you, please take a moment to 378 00:20:45,160 --> 00:20:48,560 Speaker 1: read or review Zero on Apple Podcasts, Spotify, or YouTube. 379 00:20:48,840 --> 00:20:52,720 Speaker 1: It helps new listeners find the show. Recently, a reviewer wrote, 380 00:20:52,840 --> 00:20:55,280 Speaker 1: in a world with so much bad news, love that 381 00:20:55,359 --> 00:20:58,080 Speaker 1: this podcast has some episodes of things that are going 382 00:20:58,160 --> 00:21:15,159 Speaker 1: in a positive direction. So let's come to natural gas 383 00:21:15,440 --> 00:21:20,239 Speaker 1: because this crisis is both an oil crisis and a 384 00:21:20,280 --> 00:21:24,160 Speaker 1: gas crisis. And in the climate conversation, the industry keeps 385 00:21:24,200 --> 00:21:27,639 Speaker 1: promising that look, natural gas, which is a bit cleaner 386 00:21:27,680 --> 00:21:32,360 Speaker 1: than coal, will be the bridge fuel between coal and renewables. Well, 387 00:21:32,440 --> 00:21:36,080 Speaker 1: after the Ukraine crisis, that promise of a bridge fuel 388 00:21:36,119 --> 00:21:39,680 Speaker 1: was really under question. And then I saw your piece 389 00:21:39,720 --> 00:21:43,680 Speaker 1: in March where you talked about how Asian industries are 390 00:21:43,720 --> 00:21:46,720 Speaker 1: switching away from gas and this was happening even before 391 00:21:46,800 --> 00:21:48,960 Speaker 1: the war started, how exactly. 392 00:21:49,440 --> 00:21:51,280 Speaker 2: I mean, the most striking thing I think has been 393 00:21:51,400 --> 00:21:53,920 Speaker 2: has been what's happened in Pakistan with the solar boom there. 394 00:21:54,280 --> 00:21:56,280 Speaker 2: But the effect that's had on gas has been really 395 00:21:56,280 --> 00:22:00,600 Speaker 2: striking because Pakistan is it's a very similar pictured to 396 00:22:00,640 --> 00:22:03,280 Speaker 2: a lot of countries. Egypt is a similar story. In 397 00:22:03,280 --> 00:22:06,800 Speaker 2: Bangladesh is a similar story, Thailand, Malaysia, Indonesia, They're all 398 00:22:06,840 --> 00:22:09,960 Speaker 2: similar stories. They used to produce a lot of gas, 399 00:22:10,080 --> 00:22:13,119 Speaker 2: but their own gas fields are declining, their energy demands 400 00:22:13,160 --> 00:22:17,280 Speaker 2: are increasing. They have outgrown their own declining gas industry 401 00:22:17,320 --> 00:22:21,479 Speaker 2: and they're needing to import LNG. And in Pakistan, we 402 00:22:21,520 --> 00:22:25,760 Speaker 2: saw at the time of the Ukraine War, Europe basically 403 00:22:25,800 --> 00:22:28,240 Speaker 2: went out and bought all of the leg that would 404 00:22:28,240 --> 00:22:31,879 Speaker 2: otherwise have headed towards Pakistan. Pakistan had a big energy 405 00:22:31,880 --> 00:22:34,600 Speaker 2: crunch As a result, they'd also spent far too much 406 00:22:34,600 --> 00:22:38,720 Speaker 2: on a bunch of Chinese finance coal plants, and the 407 00:22:38,760 --> 00:22:41,600 Speaker 2: price of electricity went through the roof. People were spending 408 00:22:41,800 --> 00:22:44,840 Speaker 2: more of their income on energy bills than they were 409 00:22:45,720 --> 00:22:47,960 Speaker 2: on their rent. And so as we know, we saw 410 00:22:48,000 --> 00:22:50,679 Speaker 2: these sort of huge growth of solar and a thing 411 00:22:50,720 --> 00:22:52,320 Speaker 2: that got talked about a lot is the way a 412 00:22:52,359 --> 00:22:54,639 Speaker 2: lot of households just put so on their roof. But 413 00:22:54,680 --> 00:22:56,760 Speaker 2: I think the thing that's really striking is what corporates 414 00:22:56,760 --> 00:23:00,520 Speaker 2: have done. So I was speaking to this cement manufacturer Cement. 415 00:23:00,680 --> 00:23:03,960 Speaker 2: They started putting in solar panels in twenty nineteen just 416 00:23:04,000 --> 00:23:05,480 Speaker 2: because they were getting a lot of sort of power 417 00:23:05,480 --> 00:23:08,720 Speaker 2: cuts and things. They now have sixty nine megawatts of 418 00:23:08,960 --> 00:23:11,640 Speaker 2: solar panels across their sites, which I mean to put 419 00:23:11,640 --> 00:23:15,040 Speaker 2: that in context. Tesla doesn't tell us exactly how many 420 00:23:15,160 --> 00:23:18,320 Speaker 2: megawats they put on their factories. I mean, Elon Musk 421 00:23:19,200 --> 00:23:21,639 Speaker 2: originally said that they were going to be fully solar powered. 422 00:23:22,119 --> 00:23:24,000 Speaker 2: The best I can see, and this is literally from 423 00:23:24,040 --> 00:23:28,320 Speaker 2: counting looking at that like photies and counting solar cells, 424 00:23:28,880 --> 00:23:32,159 Speaker 2: they've probably got about thirty megawatts of solar panels. So 425 00:23:32,240 --> 00:23:35,159 Speaker 2: this cement company in Pakistan that most people have not 426 00:23:35,240 --> 00:23:39,280 Speaker 2: heard of, has at least twice as much solar panels 427 00:23:39,080 --> 00:23:42,800 Speaker 2: as solar Power paring its operations as Tesla, which is 428 00:23:42,840 --> 00:23:46,320 Speaker 2: the you know, the obviously the biggest clean energy stock 429 00:23:46,400 --> 00:23:49,119 Speaker 2: but in some ways in the world, and they're not 430 00:23:49,160 --> 00:23:51,640 Speaker 2: the only ones. You can go like niche Up mills 431 00:23:52,160 --> 00:23:55,760 Speaker 2: into loop. These are names that are not known outside Pakistan, 432 00:23:55,920 --> 00:23:59,440 Speaker 2: but they are their big supplies to you know, Henny's 433 00:23:59,440 --> 00:24:04,239 Speaker 2: and Morit, to the Gap, to ADDIDAUS, to all all 434 00:24:04,280 --> 00:24:06,960 Speaker 2: the sort of high street brands. They have thirty five 435 00:24:07,200 --> 00:24:10,199 Speaker 2: megawats twenty five megawats. There's an enormous amount going on 436 00:24:10,240 --> 00:24:13,960 Speaker 2: because the grid electricity is so expensive and as a result, 437 00:24:13,960 --> 00:24:17,760 Speaker 2: Pakistan is turning away LNG cargoes and is actually in 438 00:24:17,760 --> 00:24:19,520 Speaker 2: some ways I think doing better than of course, you know, 439 00:24:19,560 --> 00:24:22,639 Speaker 2: Bangladesh is the other country that is heavily associated with 440 00:24:22,680 --> 00:24:26,119 Speaker 2: the garment trade. Bangladesh has some challenges Pakistan doesn't have. 441 00:24:26,200 --> 00:24:29,120 Speaker 2: It's obviously much more land constrained than Pakistan, it doesn't 442 00:24:29,119 --> 00:24:32,160 Speaker 2: have it's not as sunny as Pakistan, but it's really done. 443 00:24:32,680 --> 00:24:35,960 Speaker 2: It's policy wise. It still has like a thirty percent 444 00:24:36,040 --> 00:24:38,359 Speaker 2: tax on solar panels. It makes it quite hard to 445 00:24:38,400 --> 00:24:41,720 Speaker 2: install solar, and it's in its imports of Velenji's for 446 00:24:41,720 --> 00:24:45,120 Speaker 2: more or less double since the Ukraine War. So Pakistan 447 00:24:45,359 --> 00:24:47,520 Speaker 2: seems to actually be riding this out pretty well because 448 00:24:47,560 --> 00:24:50,280 Speaker 2: it's installed all with solar, and someone like Bangladesh is 449 00:24:50,280 --> 00:24:51,000 Speaker 2: doing much worse. 450 00:24:51,600 --> 00:24:55,040 Speaker 1: And it's again not just developing countries that get affected 451 00:24:55,080 --> 00:24:59,640 Speaker 1: by energy prices. There is a huge dependency in South 452 00:24:59,720 --> 00:25:03,240 Speaker 1: Korea and then Taiwan on gas that comes from the 453 00:25:03,280 --> 00:25:07,280 Speaker 1: Street of Homus. And of course those are also the 454 00:25:07,400 --> 00:25:12,280 Speaker 1: hubs for the other big industry that is being powered 455 00:25:13,359 --> 00:25:16,480 Speaker 1: by investors right now, which is AI. And you wrote 456 00:25:16,520 --> 00:25:20,400 Speaker 1: about that, talk us through how South Korea and Taiwan's 457 00:25:20,440 --> 00:25:22,520 Speaker 1: gas problem becomes an AI problem. 458 00:25:22,720 --> 00:25:26,080 Speaker 2: Yeah, well, I mean these are really interesting economies because 459 00:25:26,080 --> 00:25:27,840 Speaker 2: of course both you don't think it was South Korea, 460 00:25:27,840 --> 00:25:30,800 Speaker 2: but South Korea is essentially an island because the only 461 00:25:30,800 --> 00:25:33,640 Speaker 2: bit connected with the Menal is North Korea. So these 462 00:25:33,640 --> 00:25:38,719 Speaker 2: are both islands. Essentially, they're island grids, and so they've 463 00:25:38,880 --> 00:25:42,920 Speaker 2: had difficult decisions about how to paw themselves. They're small 464 00:25:42,960 --> 00:25:45,000 Speaker 2: countries as well, they don't have a lot of land 465 00:25:45,400 --> 00:25:47,320 Speaker 2: but I don't think they've made it easy for themselves 466 00:25:47,359 --> 00:25:50,399 Speaker 2: because a lot of their restrictions against renewables as some 467 00:25:50,440 --> 00:25:52,080 Speaker 2: of the toughest in the world. I mean just actually 468 00:25:52,080 --> 00:25:55,199 Speaker 2: in the last six months, Taiwan parts and laws that 469 00:25:55,280 --> 00:25:59,200 Speaker 2: effectively make it impossible to build utility scale solar. South 470 00:25:59,280 --> 00:26:02,720 Speaker 2: Korea until recently had similar laws. So as a result, 471 00:26:02,760 --> 00:26:06,360 Speaker 2: these countries are very dependent on LNG. They're very dependent 472 00:26:06,440 --> 00:26:11,080 Speaker 2: on coal as well, but LNG is you know, is 473 00:26:11,119 --> 00:26:12,960 Speaker 2: a very large part of their grid sort of you know, 474 00:26:12,960 --> 00:26:16,320 Speaker 2: twenty five thirty five percent of their grid. Japan is similar, 475 00:26:16,440 --> 00:26:20,680 Speaker 2: but Japan was quite smart and diversifying its supply. But 476 00:26:20,880 --> 00:26:24,480 Speaker 2: South Korea and Taiwan, each of them, as I say, 477 00:26:24,520 --> 00:26:26,320 Speaker 2: about sort of thirty to forty percent of their grid 478 00:26:26,359 --> 00:26:29,520 Speaker 2: comes from LERG and about thirty percent of their energy 479 00:26:29,600 --> 00:26:33,399 Speaker 2: comes from Qatar and the UAE. South Korea is one 480 00:26:33,440 --> 00:26:35,840 Speaker 2: of the countries that sort of declared, you know, sort 481 00:26:35,880 --> 00:26:40,640 Speaker 2: of energy emergency. Taiwan last year closed down its last 482 00:26:40,720 --> 00:26:43,760 Speaker 2: nuclear power plants, and the politics of nuclear are very, 483 00:26:44,040 --> 00:26:46,640 Speaker 2: very sort of fraught issue in Taiwan. They're now possibly 484 00:26:46,640 --> 00:26:49,960 Speaker 2: looking at restarting some of those nuclear power plants. They 485 00:26:49,960 --> 00:26:52,919 Speaker 2: are obviously scrambling around for coal at the moment to 486 00:26:52,960 --> 00:26:56,160 Speaker 2: get to get more coal, and there's been vocal support 487 00:26:56,240 --> 00:27:00,240 Speaker 2: from South Korea certainly for pushing harder for renewable are 488 00:27:00,280 --> 00:27:02,680 Speaker 2: the countries where all our you know, all our chips 489 00:27:02,720 --> 00:27:05,240 Speaker 2: come from. The South Korea is where all the memory chips, 490 00:27:05,800 --> 00:27:08,120 Speaker 2: the vast ma gjoorraphy of memory chips come from. Taiwan 491 00:27:08,200 --> 00:27:10,840 Speaker 2: is where the vast majorraphy of our pricess and power 492 00:27:10,840 --> 00:27:14,000 Speaker 2: comes from. Those factories will probably be prioritized, but in 493 00:27:14,040 --> 00:27:17,600 Speaker 2: a prolonged energy crunch, we are going to see problems 494 00:27:17,600 --> 00:27:20,720 Speaker 2: that raple through that they economy, through the ai economy, 495 00:27:20,720 --> 00:27:22,040 Speaker 2: through everything that uses chips. 496 00:27:22,200 --> 00:27:23,920 Speaker 1: And one other thing I want to touch on from 497 00:27:23,960 --> 00:27:27,000 Speaker 1: the street of farmers is fertilizers. So because there's so 498 00:27:27,119 --> 00:27:30,120 Speaker 1: much gas that comes from the Middle East, they created 499 00:27:30,280 --> 00:27:33,920 Speaker 1: as you would fertilizer production, because natural gas is a 500 00:27:34,000 --> 00:27:38,120 Speaker 1: key input into essentially stripping out the carbon from methane 501 00:27:38,200 --> 00:27:40,119 Speaker 1: from H four you get to hydrogen, and then you 502 00:27:40,160 --> 00:27:45,359 Speaker 1: combine that hydrogen nitrogen making ammonia fertilizer, which is used 503 00:27:45,480 --> 00:27:49,000 Speaker 1: around the world and often just given the politics of farming, 504 00:27:49,560 --> 00:27:55,120 Speaker 1: it is heavily subsidized. There's usually reserves that countries have, 505 00:27:55,960 --> 00:28:01,960 Speaker 1: but natural gas is acheme. But whether it's coming through 506 00:28:01,960 --> 00:28:04,639 Speaker 1: the Strait of Foremost to a fertilizer plant in India 507 00:28:04,760 --> 00:28:08,200 Speaker 1: or through being turned into fertilizer and then being exported 508 00:28:08,560 --> 00:28:13,360 Speaker 1: to Asia, how are you seeing the fertilizer problem playing out? 509 00:28:13,560 --> 00:28:18,040 Speaker 2: I think, like with India, it's it's particularly crucial obviously, 510 00:28:18,160 --> 00:28:20,760 Speaker 2: like the season we're coming into the sort of monsoon 511 00:28:20,800 --> 00:28:24,119 Speaker 2: crop planting season, so that's you know, that's when a 512 00:28:24,200 --> 00:28:28,160 Speaker 2: vast amount of the fertilizer gets consumed. It's very dependent 513 00:28:28,240 --> 00:28:31,560 Speaker 2: on on Gulf natural gas. And we're actually seeing in 514 00:28:32,119 --> 00:28:33,919 Speaker 2: some of the decisions being made by the Indian government 515 00:28:33,920 --> 00:28:37,080 Speaker 2: there sort of prioritizing the you know, the fertilizer industry 516 00:28:37,280 --> 00:28:39,680 Speaker 2: because that's you know, that scene is so crucial just 517 00:28:39,880 --> 00:28:42,480 Speaker 2: you know, for for rural livelihoods. The other aspect of 518 00:28:42,520 --> 00:28:44,400 Speaker 2: this that I don't think has talked about as much though, 519 00:28:44,600 --> 00:28:46,560 Speaker 2: is the role of China in this. You know, China 520 00:28:46,600 --> 00:28:48,720 Speaker 2: has not thought of as a big fertilizer exporter, but 521 00:28:48,760 --> 00:28:51,240 Speaker 2: actually for a lot of the world, it's it's much 522 00:28:51,240 --> 00:28:53,840 Speaker 2: more important than the Middle East, and China has is 523 00:28:54,160 --> 00:28:57,959 Speaker 2: in terms of nitrogen production is by far the biggest player. 524 00:28:58,760 --> 00:29:00,320 Speaker 2: Now a lot of China is not used all of 525 00:29:00,360 --> 00:29:02,760 Speaker 2: it's nitrogen has fertilizer, a lot of it. You can 526 00:29:02,840 --> 00:29:06,040 Speaker 2: use it for making laminated wood, you can use it 527 00:29:06,080 --> 00:29:09,160 Speaker 2: for sort of pollution control equipment. China uses a lot 528 00:29:09,160 --> 00:29:12,960 Speaker 2: of this nittroen production, ammonia urea production for stuff that's 529 00:29:13,000 --> 00:29:16,840 Speaker 2: not fertilizer. And of course we've seen in terms of 530 00:29:17,680 --> 00:29:20,400 Speaker 2: you know, China's long standing attitude to resources and also 531 00:29:20,440 --> 00:29:23,200 Speaker 2: how it's how it's dealing with the current crisis. It 532 00:29:23,800 --> 00:29:27,000 Speaker 2: doesn't want to extend all its stockpiles to the world. 533 00:29:27,080 --> 00:29:29,600 Speaker 2: It's not it's not a country that is releasing its 534 00:29:29,600 --> 00:29:33,040 Speaker 2: petroleum stockpiles. So and it's not a country that you know, 535 00:29:32,680 --> 00:29:37,000 Speaker 2: they've tightened exports of ura and ammonia rather than increasing 536 00:29:37,000 --> 00:29:40,040 Speaker 2: exports of urine ammonia. But if you if you look 537 00:29:40,080 --> 00:29:42,520 Speaker 2: across a lot of East Asia and actually across the world, 538 00:29:42,640 --> 00:29:45,920 Speaker 2: place like Indonesia is I think about seventy five percent 539 00:29:46,000 --> 00:29:52,360 Speaker 2: or eighty percent of its fertilizer comes from comes from China, Vietnam, Malaysia, Pakistan. 540 00:29:52,400 --> 00:29:55,520 Speaker 2: There they're all sort of you know, you know, thirty 541 00:29:55,560 --> 00:29:58,320 Speaker 2: to forty to fifty percent. It's it's a big player 542 00:29:58,360 --> 00:30:00,920 Speaker 2: in this market. And if you think of the sort 543 00:30:00,920 --> 00:30:03,800 Speaker 2: of long term dynamic, the risk is if a lot 544 00:30:03,840 --> 00:30:07,120 Speaker 2: of fertilizer production from the Gulf becomes more risky and 545 00:30:07,200 --> 00:30:10,040 Speaker 2: less certain. Obviously, this is something where China has a 546 00:30:10,040 --> 00:30:12,880 Speaker 2: lot of export potential, and we've seen with rare earths 547 00:30:13,080 --> 00:30:15,479 Speaker 2: China's abilities to sort of weaponize a lot of that stuff. 548 00:30:15,600 --> 00:30:17,960 Speaker 2: So I would worry in the long term that this 549 00:30:18,120 --> 00:30:19,680 Speaker 2: is another critical mineral. 550 00:30:19,800 --> 00:30:22,680 Speaker 1: Essentially, Yeah, and I think this is something that again 551 00:30:23,400 --> 00:30:27,640 Speaker 1: is worth noticing just because China has built all this 552 00:30:27,760 --> 00:30:31,600 Speaker 1: clean tech capacity and might be the country that provides 553 00:30:31,600 --> 00:30:34,080 Speaker 1: all the climate solutions at least to a majority of 554 00:30:34,080 --> 00:30:37,520 Speaker 1: the countries in the world that cannot produce it. It 555 00:30:37,640 --> 00:30:40,600 Speaker 1: is not doing it for climate concerns or even really 556 00:30:40,640 --> 00:30:45,080 Speaker 1: for the economic growth of those countries. These are industries 557 00:30:45,160 --> 00:30:49,520 Speaker 1: born out of energy security as the priority for China. 558 00:30:49,520 --> 00:30:52,200 Speaker 1: They built a whole cols to chemicals industry that is 559 00:30:52,280 --> 00:30:56,120 Speaker 1: very underutilized to try and make liquid fuels just in 560 00:30:56,200 --> 00:30:58,920 Speaker 1: case of exactly this moment, whether the strait of hormones 561 00:30:59,440 --> 00:31:03,800 Speaker 1: is brought to a halt, the fertilizer capacity is also one. 562 00:31:04,160 --> 00:31:07,520 Speaker 1: As we see it's stopped the export of diesel and 563 00:31:07,640 --> 00:31:11,560 Speaker 1: gasoline from its shores right now. So it's really looking 564 00:31:11,640 --> 00:31:15,360 Speaker 1: inwards as really people should know China would do in 565 00:31:15,400 --> 00:31:20,560 Speaker 1: these circumstances. But let me come to a bigger, broader view. 566 00:31:20,600 --> 00:31:25,120 Speaker 1: I mean, this crisis. Who knows how long this lasts 567 00:31:25,120 --> 00:31:28,560 Speaker 1: and how it all hicks out. But if you're a 568 00:31:28,600 --> 00:31:33,040 Speaker 1: betting man, what do you think happens to the energy 569 00:31:33,080 --> 00:31:36,080 Speaker 1: system in five years and ten years as a result 570 00:31:36,240 --> 00:31:37,720 Speaker 1: of this war? 571 00:31:38,240 --> 00:31:40,640 Speaker 2: I mean, I think the best thing to think about 572 00:31:40,720 --> 00:31:42,400 Speaker 2: is if you just look at the way prices have 573 00:31:42,520 --> 00:31:44,800 Speaker 2: changed since Ukraine of a lot of the sort of 574 00:31:44,880 --> 00:31:49,120 Speaker 2: key components of an energy system. Because obviously, when anything 575 00:31:49,200 --> 00:31:52,120 Speaker 2: like this happens, you can sit back and decide, like, 576 00:31:52,440 --> 00:31:56,080 Speaker 2: you know, how do these pieces fit together, and how 577 00:31:56,160 --> 00:32:00,000 Speaker 2: do we rework the system in future? And one thing 578 00:32:00,080 --> 00:32:02,600 Speaker 2: I think this really underappreciated is how much these prices 579 00:32:02,600 --> 00:32:05,640 Speaker 2: have changed, you know, the price I'm just going by 580 00:32:05,800 --> 00:32:07,840 Speaker 2: China prices here because they're sort of the you know, 581 00:32:07,920 --> 00:32:10,920 Speaker 2: the sort of global market. The China price of solar 582 00:32:10,960 --> 00:32:13,440 Speaker 2: panels is down thirty fifty percent since the Ukraine War, 583 00:32:13,600 --> 00:32:17,400 Speaker 2: the China price of wind turbines is down thirty fifty 584 00:32:17,400 --> 00:32:20,000 Speaker 2: percent since the Ukraine War. The China price of lithi 585 00:32:20,000 --> 00:32:23,080 Speaker 2: iron batteries is down the same amount. Electric vehicles is 586 00:32:23,080 --> 00:32:25,600 Speaker 2: down the same matt The price of gas turbines has 587 00:32:25,880 --> 00:32:31,480 Speaker 2: doubled or possibly tripled. So if you think that the 588 00:32:31,520 --> 00:32:36,200 Speaker 2: shift towards renewables accelerated in the immediate aftermath of the 589 00:32:36,520 --> 00:32:39,160 Speaker 2: of the Ukraine War, which I think it has, if 590 00:32:39,200 --> 00:32:41,880 Speaker 2: you look at the you know, the figure I love 591 00:32:41,920 --> 00:32:43,880 Speaker 2: to look at is that like five years ago, I 592 00:32:43,920 --> 00:32:45,880 Speaker 2: think it was the IA when they put out the 593 00:32:45,920 --> 00:32:48,760 Speaker 2: first net zero report, they said, well, to achieve net zero, 594 00:32:48,760 --> 00:32:50,920 Speaker 2: you need to be installing about six hundred gigawatts of 595 00:32:51,600 --> 00:32:55,719 Speaker 2: solar a year. And this was pipe dream stuff in 596 00:32:56,000 --> 00:32:58,840 Speaker 2: twenty twenty one. That's what we're installing. We may not 597 00:32:58,920 --> 00:33:01,640 Speaker 2: keep installing that much. That's it's an interesting debate to 598 00:33:01,680 --> 00:33:04,360 Speaker 2: see what will happen now. But we have the capacity 599 00:33:04,400 --> 00:33:06,160 Speaker 2: to do that, and we did that last year. And 600 00:33:06,200 --> 00:33:08,320 Speaker 2: that is that that's sort of net zero pathway, and 601 00:33:08,360 --> 00:33:11,920 Speaker 2: that's before any of this stuff happened, before the uncertainty 602 00:33:12,000 --> 00:33:15,520 Speaker 2: over the leg it's been treated as this bridge field 603 00:33:15,560 --> 00:33:19,040 Speaker 2: before the costs of gas went up the way the 604 00:33:19,120 --> 00:33:23,240 Speaker 2: way they have since. So, you know, I think certainly 605 00:33:23,240 --> 00:33:28,760 Speaker 2: here in Asia, energy has been pushed as the fuel 606 00:33:28,760 --> 00:33:31,960 Speaker 2: for energy security in the last few years, and it's 607 00:33:31,960 --> 00:33:34,320 Speaker 2: been pushed very hard. Like if you go to Japan, 608 00:33:35,160 --> 00:33:37,600 Speaker 2: which consumes a lot of energy but also sort of 609 00:33:37,600 --> 00:33:41,000 Speaker 2: sees itself as a sort of ambassador for energy, they've 610 00:33:41,000 --> 00:33:44,600 Speaker 2: been very much pushing developing Asia a dot more and 611 00:33:44,680 --> 00:33:48,000 Speaker 2: more energy over the past few years. It provides a 612 00:33:48,040 --> 00:33:50,440 Speaker 2: sort of export market for a lot of like their 613 00:33:50,480 --> 00:33:54,000 Speaker 2: own you know, gas turbine equipment and that sort of stuff. 614 00:33:55,120 --> 00:33:57,239 Speaker 2: These arguments are going to be looking incredibly weak at 615 00:33:57,240 --> 00:33:59,920 Speaker 2: the moment because these are you know, countries are going through, 616 00:34:00,760 --> 00:34:02,840 Speaker 2: as we were saying, sort of once in a generation, 617 00:34:02,960 --> 00:34:06,760 Speaker 2: sort of lifetime social crises because of these, and they're 618 00:34:06,800 --> 00:34:09,239 Speaker 2: going to start thinking a bit more seriously about what 619 00:34:09,360 --> 00:34:12,200 Speaker 2: energy security really means. As a lot of people have 620 00:34:12,239 --> 00:34:14,759 Speaker 2: pointed out, if your energy supply runs at then you 621 00:34:14,800 --> 00:34:16,759 Speaker 2: have you know, whatever, it's thirty days you've got left 622 00:34:16,760 --> 00:34:19,719 Speaker 2: in stocks. If China stops selling you solar panels for 623 00:34:19,760 --> 00:34:22,480 Speaker 2: whatever reason, you still have thirty years of solar power 624 00:34:22,840 --> 00:34:25,279 Speaker 2: until you need to buy a new one, so it's 625 00:34:25,360 --> 00:34:27,080 Speaker 2: a materially different situation. 626 00:34:27,560 --> 00:34:29,560 Speaker 1: Well, David, this was a lot of fun. I look 627 00:34:29,600 --> 00:34:33,200 Speaker 1: forwd to every column you're write, but I think, given 628 00:34:33,400 --> 00:34:37,480 Speaker 1: this energy crisis is really hitting Asia the worst, if 629 00:34:37,520 --> 00:34:40,160 Speaker 1: there were more reasons people needed to read your columns, 630 00:34:40,560 --> 00:34:43,399 Speaker 1: this is the moment. So thanks again for joining the show. 631 00:34:43,680 --> 00:34:45,360 Speaker 2: Thank you, it's great to talk. 632 00:34:50,640 --> 00:34:52,960 Speaker 1: And thank you for listening to zero. Now for the 633 00:34:53,000 --> 00:35:05,320 Speaker 1: sound of the week. That is the sound of Bagger 634 00:35:05,480 --> 00:35:10,080 Speaker 1: two nine three, a coal excavator, the world's largest land vehicle, 635 00:35:10,400 --> 00:35:13,520 Speaker 1: standing almost one hundred meters tall and more than two 636 00:35:13,680 --> 00:35:17,560 Speaker 1: hundred meters long. It minds dirty coal, but is powered 637 00:35:17,760 --> 00:35:23,200 Speaker 1: entirely by electricity, often from much cleaner sources. If you 638 00:35:23,280 --> 00:35:25,160 Speaker 1: liked this episode, please take a moment to rate and 639 00:35:25,200 --> 00:35:28,680 Speaker 1: review the show on Apple Podcasts, YouTube, and Spotify. This 640 00:35:28,800 --> 00:35:31,600 Speaker 1: episode was produced by Oscar boyd Our theme music is 641 00:35:31,640 --> 00:35:35,719 Speaker 1: composed by Wonderly Special Thanks to Samersadi, Laura Milan, and 642 00:35:35,760 --> 00:35:38,960 Speaker 1: Sharon Chen. I'm Akshatrati back soon.