WEBVTT - How the Iran war will reshape the future of energy 0:00:02.600 --> 0:00:06.520 Hi it's akshat. There is now a ceasefire agreement between US, 0:00:06.600 --> 0:00:11.440 Israel and Iran for two weeks starting Tuesday. This week's episode, 0:00:11.440 --> 0:00:14.840 which was recorded before the ceasefire announcement, looks at the 0:00:14.880 --> 0:00:17.360 long term impacts that the war will likely have on 0:00:17.400 --> 0:00:20.959 the energy system. Even if traffic of oil and gas 0:00:20.960 --> 0:00:23.960 ships from the Strait of Hormos re starts, the effect 0:00:24.040 --> 0:00:27.840 on energy markets and policies will play out over months 0:00:28.040 --> 0:00:33.880 and years. Welcome to Zero I am Akshatrati this week 0:00:34.280 --> 0:00:51.320 the big energy pivot. When the US and Israel attacked 0:00:51.360 --> 0:00:55.800 Iran on February twenty eighth, energy markets panicked, but not 0:00:55.920 --> 0:00:59.480 a lot. There was an expectation that, even though Iran 0:00:59.560 --> 0:01:02.800 was attacking ships in the Persian Gulf and had effectively 0:01:02.840 --> 0:01:05.440 stopped traffic in the Strait of horm Moves, that things 0:01:05.440 --> 0:01:09.000 will calm down and the ships carrying twenty percent of 0:01:09.040 --> 0:01:11.640 the world's oil and gas will be back on the job. 0:01:12.760 --> 0:01:15.800 Thousands of people have been killed and dozens of ships 0:01:15.920 --> 0:01:20.160 have been attacked. When I wrote Climate Capitalism, which documented 0:01:20.160 --> 0:01:23.480 the solutions the world has deployed at scale two cut emissions, 0:01:23.720 --> 0:01:27.800 the stories typically had two major pivot points the oil 0:01:27.880 --> 0:01:31.120 crises of the nineteen seventies and the Paris Agreement of 0:01:31.200 --> 0:01:34.920 twenty fifteen. If a book about climate solutions is written 0:01:34.959 --> 0:01:38.000 in twenty fifty, I think there will be a third 0:01:38.080 --> 0:01:42.399 pivot point, the energy crises of the twenty twenties. So 0:01:42.600 --> 0:01:44.759 today I want to look at the kinds of long 0:01:44.840 --> 0:01:49.360 term changes that happen from energy shocks. The nineteen seventy 0:01:49.360 --> 0:01:53.360 three and nineteen seventy nine oil crises happened in short succession. 0:01:54.040 --> 0:01:57.760 It mostly affected rich countries that were prodigious consumers of 0:01:57.880 --> 0:02:01.120 imported oil from the Middle East. Those countries shifted their 0:02:01.120 --> 0:02:03.760 consumption of oil in power plants to natural gas and 0:02:03.840 --> 0:02:08.040 nuclear Major oil companies launched solar businesses and invested in 0:02:08.200 --> 0:02:11.520 energy research, which led to the invention of the lithium 0:02:11.560 --> 0:02:16.000 ion battery, and the International Energy Agency was born, creating 0:02:16.000 --> 0:02:20.519 the Strategic Petroleum Reserve to try and avoid such price shocks. 0:02:21.000 --> 0:02:23.760 There were also a slew of energy efficiency measures that 0:02:23.800 --> 0:02:28.200 were taken, including the Americans buying more efficient Japanese cars. 0:02:28.840 --> 0:02:32.000 The twenty twenty two energy shock hit Europe the most, 0:02:32.480 --> 0:02:36.080 but many gas importing countries also recoiled at the sky 0:02:36.240 --> 0:02:39.840 high prices. Of natural gas. The current shock is much bigger. 0:02:40.320 --> 0:02:43.600 It's both oil and gas, and it is bigger for 0:02:43.720 --> 0:02:48.079 countries in Asia and Oceania particularly. That means we are 0:02:48.120 --> 0:02:51.520 no doubt going to see long term changes, says Bloomberg 0:02:51.560 --> 0:02:55.160 opinion columnist David Fickling. I look forward to every column 0:02:55.160 --> 0:02:58.799 he writes, and right now, particularly his view on how 0:02:58.880 --> 0:03:02.960 the Asian energy market is going to evolve, is very useful. 0:03:03.440 --> 0:03:13.320 I hope you enjoyed this broad ranging conversation, David, welcome 0:03:13.360 --> 0:03:13.919 back to zero. 0:03:14.320 --> 0:03:15.040 Hey, thank you. 0:03:15.520 --> 0:03:18.440 So let's start in your home country to understand the 0:03:18.639 --> 0:03:21.080 myriad ways in which the closure of the Strait of 0:03:21.080 --> 0:03:25.919 Hormuz is having an impact on the energy world. Australia 0:03:26.160 --> 0:03:29.840 is one of the world's largest fossil fuel producers, so 0:03:29.880 --> 0:03:33.400 you would kind of hope maybe that Australia actually gets 0:03:33.440 --> 0:03:37.720 away more lightly in this energy shock than other countries. 0:03:38.680 --> 0:03:41.760 But Australia doesn't have much of its own oil and 0:03:41.800 --> 0:03:44.920 so it really relies on imports. And you wrote a 0:03:44.960 --> 0:03:49.360 column about the country's diesel imports and some of the 0:03:49.440 --> 0:03:52.760 numbers in there were really shocking that for a country 0:03:52.800 --> 0:03:56.720 that is less than thirty million people, Australia is one 0:03:56.760 --> 0:04:01.600 of the biggest world's biggest importers of diesel. It consumes 0:04:01.840 --> 0:04:04.760 more diesel per capita than any other country in the world, 0:04:05.560 --> 0:04:09.600 eighty percent more diesel than US per capita, which really 0:04:09.640 --> 0:04:12.280 does consume a lot of oil, and eight times as 0:04:12.360 --> 0:04:15.880 much as China. So why did Australia get hooked on diesel? 0:04:16.279 --> 0:04:18.599 It's fascinating. I was actually taking a long road trip. 0:04:18.960 --> 0:04:20.560 I live in Sydney and I was taking a road 0:04:20.560 --> 0:04:23.120 trip up to Brisbane, which, funny enough, was like my 0:04:23.160 --> 0:04:27.600 first long ev car trip. It's about nine hundred kilometers 0:04:27.720 --> 0:04:30.280 since nine hour drive a lot of the time. The 0:04:30.360 --> 0:04:32.479 only other vehicles on the road with me are just 0:04:32.600 --> 0:04:35.400 these enormous Technically we don't call them road trains. We 0:04:35.440 --> 0:04:39.400 call them b doubles. In Australia, it's a big truck 0:04:39.440 --> 0:04:42.920 with two trailers behind it. Further out in Australia there 0:04:42.920 --> 0:04:45.520 can be with three trailers behind them, or even four 0:04:45.560 --> 0:04:50.440 trailers behind them. But these are immense diesel powered monsters, 0:04:51.279 --> 0:04:53.040 as big as you'll see so of anywhere else. And 0:04:53.320 --> 0:04:55.440 there's just a constant stream of them going up and 0:04:55.440 --> 0:04:58.200 down the coast and going on all the big intercity 0:04:58.279 --> 0:05:01.159 routes and that's just a small part of the pitch 0:05:01.200 --> 0:05:02.960 that you have in Australia, and I think part of 0:05:03.000 --> 0:05:05.719 it is really because of geography and the structure of 0:05:05.720 --> 0:05:10.479 the economy. In terms of geography, most journeys between major 0:05:10.480 --> 0:05:13.320 cities in Australia are the best part of a thousand 0:05:13.400 --> 0:05:18.920 kilometer journey, So our rail system is quite underdeveloped and 0:05:19.240 --> 0:05:22.440 the distances are not very suitable for freight rail, so 0:05:22.480 --> 0:05:25.320 a lot of that gets done with diesel. Our economy 0:05:25.360 --> 0:05:28.360 is very dependent on mining and agriculture, and mining machineries 0:05:28.360 --> 0:05:32.440 are powered by diesel, and agriculture, you know, farming machinery 0:05:32.480 --> 0:05:35.880 is generally powered by diesel. So all of those countries 0:05:35.920 --> 0:05:37.600 to the fact that, as I say, you know, seven 0:05:37.640 --> 0:05:40.960 point seven barrels of diesel per person per year get 0:05:41.040 --> 0:05:43.120 used in Australia and it's sort of far more than 0:05:43.120 --> 0:05:45.839 any other country. Having said that, I think there's a 0:05:45.839 --> 0:05:48.360 crucial factor that you need to add to that, which 0:05:48.400 --> 0:05:52.039 is that we also subsidize diesel very heavily. It's one 0:05:52.040 --> 0:05:55.120 of the biggest spending programs that the government has. It's 0:05:55.160 --> 0:05:58.000 treated as essential to the economy because this is treated 0:05:58.040 --> 0:06:01.560 as a business input. Running a mine. One of your 0:06:01.600 --> 0:06:05.240 business inputs is diesel. So this, you know, you get 0:06:05.360 --> 0:06:08.200 a rebate on what you spend, but the scale of 0:06:08.240 --> 0:06:10.600 it and the distortion of it is what makes it 0:06:10.880 --> 0:06:13.560 really striking. We spend more on the diesel rebate than 0:06:13.600 --> 0:06:16.520 we spend on on the army, on the air force. 0:06:16.560 --> 0:06:18.920 We spend almost as much on the diesel rebate as 0:06:18.920 --> 0:06:22.039 we spend on public education. That you really get the 0:06:22.120 --> 0:06:24.640 sense of the importance of that when you start talking 0:06:24.640 --> 0:06:26.600 to people who are using a lot of diesel and 0:06:26.800 --> 0:06:29.320 on paper, would like to reduce their use of these diesel. 0:06:29.480 --> 0:06:33.160 All the mining companies they're obviously shying away from this now, 0:06:33.200 --> 0:06:35.240 but a few years ago they were, you know, very 0:06:35.240 --> 0:06:38.600 seriously looking into decarbonization, and they were talking a lot 0:06:38.600 --> 0:06:42.839 about decarbonization, but lots of fairly low hanging fruit that 0:06:42.960 --> 0:06:46.760 exists elsewhere just doesn't really happen very much in Australia. 0:06:46.800 --> 0:06:49.000 There's a lot of sort of talk about tentatively having 0:06:49.080 --> 0:06:52.400 electric mining trucks and things like this, but they essentially 0:06:52.680 --> 0:06:54.600 had some studies of this and most of them are 0:06:54.640 --> 0:06:57.080 not doing very much with this. You go to Chile, 0:06:57.760 --> 0:06:59.280 one of the biggest copper mines in the world to 0:06:59.279 --> 0:07:03.640 Coloquassi has overheadlines a little bit like tram lines for 0:07:04.040 --> 0:07:07.000 haulinger or out of the pit, and that's the standard 0:07:07.040 --> 0:07:09.200 way of doing it. If you go to Brazil, S 0:07:09.200 --> 0:07:11.440 eleven d, part of the biggest iron or mine in 0:07:11.440 --> 0:07:14.320 the world, has a huge piece of electric mining equipment 0:07:14.360 --> 0:07:17.400 that mines and prices and crushes the ore inside the mine. 0:07:17.440 --> 0:07:19.120 And of course, actually, if you're a sort of nerd 0:07:19.120 --> 0:07:21.760 about electric vehicles, of course the biggest electric vehicles ever 0:07:21.800 --> 0:07:24.560 built are actually in Germany. They're not a very net 0:07:24.680 --> 0:07:27.600 zero activity there in some of these enormous lig night 0:07:27.680 --> 0:07:30.800 mines in Germany, and they're all fully powered by electricity. 0:07:30.920 --> 0:07:33.880 So electric mining equipment is common elsewhere in the world, 0:07:34.320 --> 0:07:36.440 not in Australia, and I would argue part of the 0:07:36.440 --> 0:07:39.240 reason is that we're we subsidized diesel so aggressively that 0:07:39.520 --> 0:07:41.240 it doesn't make sense for miners to switch. 0:07:41.720 --> 0:07:46.600 Those gold diggers in Germany are so enormous. I think 0:07:46.600 --> 0:07:51.760 they're like five story buildings that run on electric just 0:07:52.000 --> 0:07:57.040 essentially taking tons and tons of earth with just one 0:07:57.120 --> 0:08:00.840 single swipe. But the point of me here is also 0:08:00.960 --> 0:08:03.640 one that I think you know, we know, but we 0:08:03.800 --> 0:08:07.600 don't really absorb, which is just how much policy matters 0:08:08.080 --> 0:08:13.480 in shaping our choices, especially energy choices. Let me give 0:08:13.520 --> 0:08:17.360 you the example of UK's diesel problem. So around two 0:08:17.400 --> 0:08:20.200 thousand and two, there is a policy brought in to 0:08:20.520 --> 0:08:23.720 encourage people to buy more diesel cars than petrol cars, 0:08:23.760 --> 0:08:27.600 because at that time there was the assumption that diesel 0:08:27.640 --> 0:08:30.400 was cleaner than petrol. And so even though the total 0:08:30.480 --> 0:08:32.960 volume of cars in the UK, diesel made up only 0:08:33.240 --> 0:08:36.120 fifteen to twenty percent at that time, because of the 0:08:36.160 --> 0:08:39.520 incentives that were given, tax incentives that were given, the 0:08:39.600 --> 0:08:43.680 sale of diesel cars really rocketed and by twenty fifteen, 0:08:43.679 --> 0:08:46.120 more diesel cars were being sold than petrol cars. And 0:08:46.160 --> 0:08:49.640 of course we know diesel Gate happened. Folkslagen got caught 0:08:49.640 --> 0:08:52.360 in the scandal. We learned that actually it is not 0:08:52.559 --> 0:08:57.520 cleaner than petrol, and then diesel car sales plummeted. But 0:08:58.679 --> 0:09:01.959 heavy goods vehicles, you know, UK doesn't have that much industry, 0:09:02.000 --> 0:09:04.120 but there are a lot of trucks they continue to 0:09:04.200 --> 0:09:08.160 run diesel, and actually the consumption of diesel hasn't fallen off. 0:09:08.840 --> 0:09:11.880 And now because of the way the country has been 0:09:11.920 --> 0:09:17.040 reconfiguring its refineries, etc. The UK is heavily dependent on 0:09:17.160 --> 0:09:20.880 importing diesel. About sixty percent of the diesel comes from 0:09:21.120 --> 0:09:22.920 the CREUD in the Middle East in some form or 0:09:22.920 --> 0:09:26.480 the other, direct or indirect, and so these policy choices 0:09:26.559 --> 0:09:30.360 really have a huge impact on the fuel dependency that 0:09:30.480 --> 0:09:35.760 is created as a result. But talk me through other 0:09:35.840 --> 0:09:40.360 examples in you're part of the world where the diesel 0:09:40.400 --> 0:09:44.440 dependency is something that could really be walked away from, 0:09:44.520 --> 0:09:46.280 at least on the road vehicle level. 0:09:46.600 --> 0:09:48.560 I think the most striking thing is actually what we 0:09:48.600 --> 0:09:51.640 saw happening last year in China, and this is I 0:09:51.640 --> 0:09:56.079 think not talked about nearly enough, but there's enormous potential there. 0:09:56.760 --> 0:10:00.760 And that's the scale of the electrification of heavy trucks. 0:10:01.480 --> 0:10:04.120 I remember, going back, I think would be about eight 0:10:04.200 --> 0:10:07.080 years now, eight to nine years when Ailn Musk first 0:10:07.200 --> 0:10:12.240 unveiled the Tesla Semi, the electric semi truck. I was 0:10:12.320 --> 0:10:14.080 very skeptical about that that I wrote about it at 0:10:14.080 --> 0:10:17.880 the time, and I was very skeptical that the economics 0:10:17.880 --> 0:10:21.440 and the sort of battery weight elements of electrified truck 0:10:21.440 --> 0:10:23.240 are actually going to work very well. And I think 0:10:23.520 --> 0:10:24.840 I've been proved wrong about that. 0:10:25.360 --> 0:10:28.280 And we know that it took Tesla eight or nine 0:10:28.360 --> 0:10:31.800 years to actually have the semi on the road, because 0:10:31.880 --> 0:10:35.760 it's only last month that of the first commercial semi 0:10:35.800 --> 0:10:38.520 has been put on the road. Indeed, China of course 0:10:38.800 --> 0:10:39.600 got there sooner. 0:10:39.720 --> 0:10:41.880 Well, yeah, China has got there so much sooner that 0:10:42.000 --> 0:10:46.160 actually in December, more than I mean, the number is 0:10:46.200 --> 0:10:50.040 astonishing to me. More than half of the heavy duty 0:10:50.080 --> 0:10:55.400 trucks sold in China in December were electrified trucks. This 0:10:55.880 --> 0:10:57.800 and this is a number that just really sort of 0:10:57.800 --> 0:11:00.760 defies belief to be honest. I mean again, member writing 0:11:00.920 --> 0:11:05.800 about two years ago, there was at that point compressed 0:11:05.840 --> 0:11:08.560 natural gas was actually seen as the sort of the 0:11:08.600 --> 0:11:11.640 thing that would take over large, large scale trucking. I 0:11:11.640 --> 0:11:13.840 was saying, well, that's actually going to damage diesel demand 0:11:13.880 --> 0:11:17.079 in Chinese trucks. But then batteries have really come from 0:11:17.120 --> 0:11:19.440 nowhere and saw this huge search towards the end of 0:11:19.520 --> 0:11:22.120 last year. And the thing that you have to bear 0:11:22.120 --> 0:11:23.880 in mind about a lot of this trucking is a 0:11:23.880 --> 0:11:26.120 lot of the companies that are producing these electric trucks, 0:11:26.280 --> 0:11:30.640 companies like Sanny Heavy and XCMG. They made a lot 0:11:30.640 --> 0:11:36.440 of money during China's construction boom, essentially, their construction machinery 0:11:36.600 --> 0:11:39.400 companies and trucks are a sort of sideline. And of 0:11:39.440 --> 0:11:43.079 course Chinese construction boom has comprehensively ground to a halt. 0:11:43.240 --> 0:11:46.640 The amount of new floor space built in January and 0:11:46.880 --> 0:11:48.720 February this year, we've only got the sort of first 0:11:48.720 --> 0:11:51.520 two months of the year, but it's the lowest since 0:11:51.760 --> 0:11:53.719 two thousand and two, which was just a couple of 0:11:53.800 --> 0:11:56.800 months after China joined the WYE. We're talking about a 0:11:56.840 --> 0:11:59.800 completely different China now that these companies were built for 0:11:59.800 --> 0:12:02.400 that market and they need a new market, and electrified 0:12:02.440 --> 0:12:03.400 trucking could be there. 0:12:03.600 --> 0:12:08.679 But there is also diesel dependencies in developing countries where 0:12:08.840 --> 0:12:11.079 it is used for public transport. There are all these 0:12:11.120 --> 0:12:14.199 mini trucks running around in Africa that run on diesel. 0:12:14.800 --> 0:12:18.599 The Philippines, you've noted, has tried to switch to immobility, 0:12:18.640 --> 0:12:22.239 but it hasn't really worked. So what kind of policies 0:12:22.360 --> 0:12:26.680 would help developing countries to figure out how to cut 0:12:26.720 --> 0:12:27.800 their diesel dependency. 0:12:28.240 --> 0:12:31.640 With a lot of those developing countries, it's a very 0:12:31.679 --> 0:12:34.960 thorny problem that involves I mean, I think it involves 0:12:34.960 --> 0:12:36.640 a lot of the sort of subsidy structure and it 0:12:36.679 --> 0:12:39.439 involves this sort of shift that you always notice in 0:12:39.480 --> 0:12:43.120 development between sort of CAPEX and opex. Op X is 0:12:43.160 --> 0:12:45.360 something that might be more expensive for you in the 0:12:45.400 --> 0:12:48.720 long term, but it's easy to do because you don't 0:12:48.720 --> 0:12:50.120 need a lot of money on hand to do it. 0:12:50.120 --> 0:12:53.160 You don't need to borrow a bunch of money, whereas 0:12:53.480 --> 0:12:55.600 capital spending you need to persuade someone to lend you 0:12:55.640 --> 0:12:57.800 some money. This is a problem that we see in 0:12:57.840 --> 0:13:00.640 the sort of low end of transport across developing world. 0:13:00.800 --> 0:13:04.160 I was channing to an expert today actually in the Philippines, 0:13:04.160 --> 0:13:06.240 where you know, if you've been to the Philippines, you'd 0:13:06.280 --> 0:13:08.719 know their sort of iconic of public transport is what's 0:13:08.760 --> 0:13:13.240 called jeepney, which started after World War Two with military 0:13:13.280 --> 0:13:16.600 jeeps getting converted into little buses with people on the 0:13:16.600 --> 0:13:20.319 flatbed truck. But they're all diesel powered. They or most 0:13:20.360 --> 0:13:23.240 of them are diesel powered. They tend to be very 0:13:23.360 --> 0:13:27.440 very old vehicles with sort of terrible pollution. Passengers don't 0:13:27.440 --> 0:13:29.360 really like going in them anymore. People would like to 0:13:29.360 --> 0:13:31.679 be in something more modern, and the Philippines really for 0:13:31.679 --> 0:13:34.760 the last ten years has been trying to sort out 0:13:34.800 --> 0:13:37.320 the jepney sector. To be honest, it's not gone as 0:13:37.320 --> 0:13:40.360 well as you might have hoped. They've been big strikes 0:13:40.400 --> 0:13:44.480 by drivers because what sorting this out will involve is 0:13:44.960 --> 0:13:48.120 individual drivers getting turned into sort of big cooperatives, and 0:13:48.160 --> 0:13:51.000 then cooperatives borrowing a bunch of money and then they 0:13:51.040 --> 0:13:54.920 can get electric jeepneys and the drivers will get a wage, 0:13:54.960 --> 0:13:57.880 the drivers will get benefits. It'll be much more regularized 0:13:57.880 --> 0:14:00.640 as a sort of business. And people who have converted 0:14:00.679 --> 0:14:02.320 tend to be a bit happier about it. But the 0:14:02.320 --> 0:14:05.960 people who have not converted, they like they like running 0:14:05.960 --> 0:14:08.760 their own business. They like the independence context that makes 0:14:08.760 --> 0:14:11.240 sense for Australian UK. They are a bit like uber drivers. 0:14:11.240 --> 0:14:13.640 They have that sort of independence. They have the upside 0:14:13.679 --> 0:14:15.760 that you get if you have a good day of driving. 0:14:16.200 --> 0:14:18.720 The government was to switch them to more than something 0:14:18.760 --> 0:14:21.280 like a bus driver model, where you don't get any 0:14:21.360 --> 0:14:23.600 upside if there's more driving, and there's been a lot 0:14:23.640 --> 0:14:26.160 of resistance to that and it has proved difficult. 0:14:26.400 --> 0:14:28.360 One other way in which I've been thinking about this 0:14:28.560 --> 0:14:32.560 energy shock is, you know, having lived through what happened 0:14:32.560 --> 0:14:36.600 after Russia attacked Ukraine here in Europe, it feels like 0:14:37.400 --> 0:14:40.840 that kind of energy shock is now really an Asian problem. 0:14:41.000 --> 0:14:45.320 In a way, this is Asia's Ukraine moment. You know, 0:14:45.440 --> 0:14:48.440 it was mostly a gas crisis in Europe. Of course, 0:14:48.440 --> 0:14:51.400 there were other fossil fuels in world as well, because 0:14:52.160 --> 0:14:56.160 Europe imported a lot of diesel from Russia, some crude oil, 0:14:56.200 --> 0:14:59.640 but also a bunch of coal. But in Asia this 0:14:59.720 --> 0:15:02.640 is going to to be both an oil and gas crisis. 0:15:02.920 --> 0:15:06.560 Let's stick to oil, and let's look at electric cars. 0:15:06.840 --> 0:15:10.720 You know, we keep hearing that, yes, they are now 0:15:10.840 --> 0:15:13.680 lower in price, there's all these availability. Actually there's a 0:15:13.680 --> 0:15:17.800 cool factor. We also see that in sales figures some 0:15:17.840 --> 0:15:20.840 of the Asian countries are now selling more electric cars 0:15:21.080 --> 0:15:24.160 as a proportion of new cars than many of the 0:15:24.200 --> 0:15:30.240 rich economies, better than the US, better than the UK, Vietnam, Thailand, Nepal, 0:15:30.320 --> 0:15:33.360 these countries come to mind when you were thinking about 0:15:33.520 --> 0:15:36.480 the switch to evs You know, how are you thinking 0:15:36.560 --> 0:15:40.720 this particular shock will affect EV sales in Asia? 0:15:40.840 --> 0:15:43.840 I think this has been another of these emerging trends 0:15:43.840 --> 0:15:46.680 that again, it was sort of emerging last year, and 0:15:46.720 --> 0:15:49.400 then this energy shock has come on top of it, 0:15:49.600 --> 0:15:52.640 and I think it could prove very dramatic. The numbers 0:15:52.680 --> 0:15:54.360 that we've seen in the last six just in the 0:15:54.400 --> 0:15:58.040 last six months for some of these Asia markets are extraordinary. 0:15:58.080 --> 0:16:00.280 And the one little caveat I would add to them 0:16:00.720 --> 0:16:02.800 is that these markets tend to be quite driven by 0:16:02.800 --> 0:16:05.520 the fact that there have been some quite high tariffs 0:16:05.520 --> 0:16:08.360 on a lot of these vehicles, and they've the tariffs 0:16:08.440 --> 0:16:10.360 were sort of knocked off and a lot of those 0:16:10.400 --> 0:16:13.200 task reductions were coming to an end at the end 0:16:13.200 --> 0:16:15.160 of last year, so a lot of people were rushing 0:16:15.400 --> 0:16:18.000 to buy cars in time for that. So that's probably 0:16:18.000 --> 0:16:22.000 distorted things a lot, but it's shown what you can 0:16:22.040 --> 0:16:25.360 actually achieve if you if you decide not to tax 0:16:25.440 --> 0:16:29.600 green energy basically, and then yeah, the numbers are extraordinary, 0:16:29.680 --> 0:16:33.560 Like fifty percent of cars sold in Thailand and Singapore 0:16:33.560 --> 0:16:36.720 in the last few months have been battery only models, 0:16:36.960 --> 0:16:40.520 not just plugins, but battery only without an engine at all. 0:16:41.480 --> 0:16:44.720 About third in China and Indonesia, South Korea and Vietnam 0:16:45.360 --> 0:16:48.000 far ahead of numbers. I think the UK is about 0:16:48.000 --> 0:16:50.880 twenty percent, the US is about eight percent, Japans about 0:16:50.880 --> 0:16:54.240 three percent. The one that's actually notably that you know, 0:16:54.360 --> 0:16:57.680 lagging of the big economies is India is also similar. 0:16:57.800 --> 0:17:01.200 Japan is about three percent injuries on a very low level, 0:17:01.400 --> 0:17:04.640 but across South East Asia really there's been this really 0:17:04.680 --> 0:17:09.000 dramatic change. Thailand, ev cars are at price parity, which 0:17:09.040 --> 0:17:10.919 is still not quite the case in a lot of 0:17:11.080 --> 0:17:14.080 places that are not as exposed. I think there's not 0:17:14.119 --> 0:17:15.840 the case in the UK. Here in Australia it is 0:17:15.880 --> 0:17:18.199 the case. Evs are pretty much at price parity, and 0:17:18.280 --> 0:17:22.200 certainly in China evs are cheaper. The thing that always 0:17:22.240 --> 0:17:24.760 holds people back is the sticker price. It's actually not 0:17:24.800 --> 0:17:27.200 the price of fuel, but obviously the price of fuel 0:17:27.280 --> 0:17:30.600 is suddenly very much on everyone's mind at the moment, 0:17:30.880 --> 0:17:34.160 So I think that really does you know, that gets 0:17:34.160 --> 0:17:35.919 an opportunity for a much broader shift. 0:17:36.200 --> 0:17:40.880 The tariff policy, you can argue, makes sense for some countries, 0:17:41.040 --> 0:17:43.600 like in India, it probably makes sense because it has 0:17:43.680 --> 0:17:46.960 its own domestic car industry that it wouldn't very much 0:17:47.040 --> 0:17:49.800 like to protect that has a number of people that 0:17:49.840 --> 0:17:53.600 are employed. For most countries there isn't really an auto 0:17:53.640 --> 0:17:57.199 industry to protect. So what is the reason for those 0:17:57.280 --> 0:18:00.680 tartifs to exist and what could be done to encourage 0:18:00.760 --> 0:18:02.160 countries to actually drop them. 0:18:02.560 --> 0:18:04.879 I mean a lot of these tariffs, to be clear, 0:18:05.000 --> 0:18:08.200 are in the countries that are protecting their car industries. 0:18:08.359 --> 0:18:10.400 But as you say, I mean a crucial factor about 0:18:10.400 --> 0:18:12.960 a lot of these emerging markets where you know, to 0:18:12.960 --> 0:18:16.280 be clear, people's models about the future of oil demand 0:18:16.600 --> 0:18:19.000 will depend on the idea that these countries are going 0:18:19.040 --> 0:18:22.600 to buy petrol cars, not electric cars. If you don't 0:18:22.600 --> 0:18:25.160 have an incumbent car industry to protect, you just want 0:18:25.440 --> 0:18:28.320 to buy whatever the cheapest car is. And also, if 0:18:28.359 --> 0:18:31.240 I'm a government, I want the car that it does 0:18:31.280 --> 0:18:33.919 the best thing to my balance of payments. Because of course, 0:18:33.760 --> 0:18:36.000 the other much bigger thing to consider it is that 0:18:36.880 --> 0:18:39.560 the amount that you spend on imported cars in any 0:18:39.560 --> 0:18:41.960 one year is just dwarfed by the amount that you 0:18:41.960 --> 0:18:45.920 spend on imported petroleum. If you're not an oil producer, 0:18:46.800 --> 0:18:48.720 then the amounts that you're spending on oil to fuel 0:18:48.720 --> 0:18:51.560 all those cars is many orders of magnitude in most 0:18:51.600 --> 0:18:53.919 cases greater than the amount that you're spending on cars. 0:18:54.359 --> 0:18:56.199 So it makes no sense if you don't have your 0:18:56.200 --> 0:18:58.399 own car industry to put a fifty percent tariff on 0:18:58.880 --> 0:19:00.760 cars when generally you don't have a ch on the petrol. 0:19:00.800 --> 0:19:02.800 You're just blowing out your own balance of payments. 0:19:02.840 --> 0:19:08.199 Basically, there's also the psychology of what happens during an 0:19:08.320 --> 0:19:11.000 energy shock that sort of remains with people for much 0:19:11.080 --> 0:19:14.520 longer than what the numbers might always be able to capture. 0:19:14.920 --> 0:19:17.600 You know, talk to anybody in America who's lived through 0:19:17.600 --> 0:19:21.840 the nineteen seventies, and they'll talk about rationing of fuel 0:19:22.160 --> 0:19:24.840 and there were all these long cues, and you know, 0:19:24.960 --> 0:19:27.920 many vow this will never happen again. That's why you've 0:19:27.920 --> 0:19:30.919 got the Strategic Petroleum Reserve, et cetera. Well, we are 0:19:30.960 --> 0:19:33.960 already starting to see those kinds of cues across Asia. 0:19:34.040 --> 0:19:35.520 Now, I was just going to say, I mean, I 0:19:36.080 --> 0:19:38.160 grew up in Britain and I remember my parents telling 0:19:38.200 --> 0:19:41.440 these stories of the four day week in the nineteen seventies, 0:19:41.480 --> 0:19:43.520 which was when you know, this was fuel rationing at 0:19:43.520 --> 0:19:47.440 the time of the seventy three Old crisis. And today 0:19:47.480 --> 0:19:49.840 I'm talking to someone in the Philippines and she's telling 0:19:49.880 --> 0:19:52.320 me about how everyone's working a four day week. This 0:19:52.359 --> 0:19:55.080 is something that happened before I was born, and is 0:19:55.080 --> 0:19:57.679 a phrase that I remember from my childhood more than 0:19:57.680 --> 0:20:00.119 fifty years ago. And this is happening right now now 0:20:01.040 --> 0:20:03.080 in Asia. I don't think you ever saw the recent film. 0:20:03.119 --> 0:20:06.520 It was a great film, Licorice Pizza. It came out 0:20:06.520 --> 0:20:09.160 about five years ago. It's sort of set in Los 0:20:09.200 --> 0:20:12.399 Angeles in the nineteen seventies, and there's this wonderful cameo 0:20:12.480 --> 0:20:15.879 scene of people having basically having punch ups in nineteen 0:20:15.880 --> 0:20:19.480 seventy three at gas stations in Los Angeles. And I 0:20:19.560 --> 0:20:22.480 was seeing these videos recently of punch ups in India, 0:20:23.600 --> 0:20:28.159 retail sales of LPG for cooking gas. It's exactly the 0:20:28.160 --> 0:20:30.320 same thing. And this is, you know, memories of a 0:20:30.359 --> 0:20:33.320 generation ago. You know, the new memories are being made 0:20:33.400 --> 0:20:33.840 right now. 0:20:39.800 --> 0:20:42.440 After the break, more of my conversation with David Fickling. 0:20:42.840 --> 0:20:45.119 And while I have you, please take a moment to 0:20:45.160 --> 0:20:48.560 read or review Zero on Apple Podcasts, Spotify, or YouTube. 0:20:48.840 --> 0:20:52.720 It helps new listeners find the show. Recently, a reviewer wrote, 0:20:52.840 --> 0:20:55.280 in a world with so much bad news, love that 0:20:55.359 --> 0:20:58.080 this podcast has some episodes of things that are going 0:20:58.160 --> 0:21:15.159 in a positive direction. So let's come to natural gas 0:21:15.440 --> 0:21:20.239 because this crisis is both an oil crisis and a 0:21:20.280 --> 0:21:24.160 gas crisis. And in the climate conversation, the industry keeps 0:21:24.200 --> 0:21:27.639 promising that look, natural gas, which is a bit cleaner 0:21:27.680 --> 0:21:32.360 than coal, will be the bridge fuel between coal and renewables. Well, 0:21:32.440 --> 0:21:36.080 after the Ukraine crisis, that promise of a bridge fuel 0:21:36.119 --> 0:21:39.680 was really under question. And then I saw your piece 0:21:39.720 --> 0:21:43.680 in March where you talked about how Asian industries are 0:21:43.720 --> 0:21:46.720 switching away from gas and this was happening even before 0:21:46.800 --> 0:21:48.960 the war started, how exactly. 0:21:49.440 --> 0:21:51.280 I mean, the most striking thing I think has been 0:21:51.400 --> 0:21:53.920 has been what's happened in Pakistan with the solar boom there. 0:21:54.280 --> 0:21:56.280 But the effect that's had on gas has been really 0:21:56.280 --> 0:22:00.600 striking because Pakistan is it's a very similar pictured to 0:22:00.640 --> 0:22:03.280 a lot of countries. Egypt is a similar story. In 0:22:03.280 --> 0:22:06.800 Bangladesh is a similar story, Thailand, Malaysia, Indonesia, They're all 0:22:06.840 --> 0:22:09.960 similar stories. They used to produce a lot of gas, 0:22:10.080 --> 0:22:13.119 but their own gas fields are declining, their energy demands 0:22:13.160 --> 0:22:17.280 are increasing. They have outgrown their own declining gas industry 0:22:17.320 --> 0:22:21.479