WEBVTT - Asia Outlook: The Biggest of Everything 0:00:08.400 --> 0:00:12.160 High Mark quiz question. Do you know how many people 0:00:12.320 --> 0:00:16.720 were on this planet the year you were born? This planet? Um, yeah, 0:00:16.720 --> 0:00:19.000 I'm not that old, so I don't know. They're about 0:00:19.040 --> 0:00:22.319 seven and something now, seven point something billion now, so 0:00:22.400 --> 0:00:25.560 let's just say there are six There are seven point 0:00:25.600 --> 0:00:28.280 seven billion people on the planet now, and I looked 0:00:28.280 --> 0:00:30.960 it up. The year you were born there were four 0:00:31.120 --> 0:00:34.640 point four billion people and no listeners, you do not 0:00:34.720 --> 0:00:37.040 get to know our exact ages, but I'm roughly the 0:00:37.040 --> 0:00:41.000 same ages Mark. So let's continue talking about population today 0:00:41.200 --> 0:00:43.760 in light of the topic we're going to discuss, which 0:00:43.800 --> 0:00:47.200 is Asia. So there were four point four billion people 0:00:47.200 --> 0:00:50.080 on the planet when Mark was born, which is incidentally 0:00:50.320 --> 0:00:54.960 the same number that lived in Asia, just in Asia. 0:00:55.560 --> 0:00:57.600 That was almost half a decade ago, so there are 0:00:57.640 --> 0:01:01.560 actually more people living just to Asia then there were 0:01:01.600 --> 0:01:05.080 everywhere on the globe the year Mark was born. Huh okay, 0:01:05.240 --> 0:01:07.960 that's a lot of people. And uh yeah, if you 0:01:07.959 --> 0:01:10.200 feel like back calculating, you know, my age based on 0:01:10.200 --> 0:01:12.759 that number, go ahead. I won't be offended. But when 0:01:12.760 --> 0:01:15.120 I think about that in the context of ben If, 0:01:15.200 --> 0:01:16.920 it makes a lot of sense. So if you look 0:01:16.920 --> 0:01:20.640 at our twenty nineteen electric vehicle forecast, about six of 0:01:20.680 --> 0:01:23.120 new vehicles sold in twenty nineteen are being sold just 0:01:23.200 --> 0:01:26.120 in China. That's just one country. Or our new Energy 0:01:26.160 --> 0:01:29.839 outlook for twenty nine of clean energy investment between today 0:01:29.840 --> 0:01:32.959 and it will be in Asia. So with over half 0:01:33.040 --> 0:01:35.959 of global greenhouse gas emissions coming from Asia, it is 0:01:36.000 --> 0:01:39.080 also a big part of the solution, and that's important 0:01:39.120 --> 0:01:42.119 context for the podcast today where we'll be interviewing our 0:01:42.160 --> 0:01:44.679 colleague Justin Wu, who is based out of our Tokyo 0:01:44.720 --> 0:01:47.480 office and is the head of Asia Pacific for ben IF. 0:01:47.760 --> 0:01:49.280 We wanted to talk to him about some of the 0:01:49.280 --> 0:01:52.200 trends that he's seeing in the region, but we realized 0:01:52.320 --> 0:01:55.800 this was a pretty lofty task, so we instead asked 0:01:55.840 --> 0:01:58.680 him to give us a few case study countries just 0:01:58.760 --> 0:02:01.760 to narrow it down a bit. He chose China, India, 0:02:01.920 --> 0:02:04.240 and Japan. So in today's episode of Switch Down, we'll 0:02:04.280 --> 0:02:07.200 be talking about a few research notes that we've recently done. 0:02:07.800 --> 0:02:11.080 First is the two aged twenty nineteen China Market Outlook. 0:02:11.200 --> 0:02:14.399 Second or next is a note titled Japan to take 0:02:14.440 --> 0:02:16.799 on Plastics but it's not quite in the bag, and 0:02:17.040 --> 0:02:19.880 the New Energy Outlook twenty nineteen section on India. You 0:02:19.919 --> 0:02:21.680 can find all three of these notes on the Bloomberg 0:02:21.760 --> 0:02:24.519 terminal at BNF Go or on BNF dot Com or 0:02:24.639 --> 0:02:26.400 on the BNF mobile app. If you want to know 0:02:26.440 --> 0:02:28.840 more about BNS perspectives on Asia and you're not one 0:02:28.840 --> 0:02:30.720 of our clients attending our summit in Shanghai at the 0:02:30.760 --> 0:02:32.760 beginning of December, you'll be able to see a selection 0:02:32.760 --> 0:02:35.840 of videos from our speakers on our public website about 0:02:35.880 --> 0:02:39.160 dot BNF dot com forwards last summit forward slash Shanghai 0:02:39.520 --> 0:02:41.600 and a quick reminder, BENIF does not provide an investment 0:02:41.639 --> 0:02:43.440 or strategy advice, and you can hear a full disclaimer 0:02:43.440 --> 0:02:46.799 again in the show. Hi, justin thank you for joining 0:02:46.880 --> 0:02:49.040 us today. Hid great to be here. Not all of 0:02:49.040 --> 0:02:51.680 our guests before they come on the show get a challenge, 0:02:51.720 --> 0:02:54.240 but you did get a challenge, and the challenge that 0:02:54.320 --> 0:02:57.880 we pose to you was to represent some of the 0:02:58.320 --> 0:03:01.320 changing dynamics in the industry that we cover in Asia 0:03:01.440 --> 0:03:04.959 and to select three countries and ultimately three binn F 0:03:05.120 --> 0:03:08.440 research notes that would explain that. Can you tell us 0:03:08.480 --> 0:03:11.639 what those three countries are and why you picked them? Well, 0:03:11.680 --> 0:03:14.720 thank you Dana for for acknowledging the challenge, Um, you know, 0:03:14.919 --> 0:03:17.320 I do. I do get this question a lot. Pick 0:03:18.080 --> 0:03:22.520 three countries or three things to represent a region which 0:03:22.560 --> 0:03:24.920 is Asia, which is you know, more than two thirds 0:03:24.960 --> 0:03:28.200 of the world and and uh significant part of the 0:03:28.240 --> 0:03:30.760 two thirds of the population, two thirds of the economy, 0:03:30.760 --> 0:03:34.000 et cetera. So I took the easy route. I picked 0:03:34.000 --> 0:03:38.520 three countries, and I picked China, Japan, and India. Essentially 0:03:38.600 --> 0:03:43.320 they're the three largest economies in Asia. So it's important 0:03:43.360 --> 0:03:46.360 to look at them because obviously what happens in them 0:03:46.440 --> 0:03:49.120 is going to have a major impact on how we 0:03:49.200 --> 0:03:52.280 think about climate change or how we experience climate change 0:03:52.280 --> 0:03:55.200 in the future. And often we have to acknowledge that 0:03:55.400 --> 0:03:57.360 even though things are moving in the right direction in 0:03:57.400 --> 0:04:00.360 some of these countries with regards to growing a earness 0:04:00.360 --> 0:04:05.360 for sustainability or policy changes that that sort of help 0:04:05.440 --> 0:04:08.200 to cap emissions, etcetera, we still have a long way 0:04:08.240 --> 0:04:11.160 to go, and there's certainly a lot of hurdles still 0:04:11.160 --> 0:04:14.280 to overcome in these places. Maybe jump into the first one. 0:04:14.520 --> 0:04:17.479 Let's start with Japan. There's a story to be had there. 0:04:17.520 --> 0:04:20.160 So one thing I didn't know was that Japan uses 0:04:20.400 --> 0:04:23.360 is the second biggest consumer of is it single use 0:04:23.480 --> 0:04:26.359 or all plastics. All plastics yea, And yeah, I'm I 0:04:26.440 --> 0:04:28.960 moved um actually moved to Tokyo last year, so that 0:04:29.120 --> 0:04:31.560 this sort of issue became really fun and center to me. 0:04:31.640 --> 0:04:33.600 You know, what was really funny is actually when one 0:04:33.600 --> 0:04:35.440 thing I know is after I moved there was that 0:04:35.560 --> 0:04:39.520 I had to sort my trash and they really detailed 0:04:39.640 --> 0:04:44.039 in manner essentially, you know, there are differences between different 0:04:44.040 --> 0:04:47.159 types of plastics, things that could be incinerated and things 0:04:47.160 --> 0:04:48.800 that could not be incenterated. So you don't want to 0:04:49.120 --> 0:04:52.320 apparently burn batteries because they blow up or something like that. 0:04:52.640 --> 0:04:54.679 But anyway, but what occurs to me is that actually 0:04:54.800 --> 0:04:58.360 Japan is a country that actually takes recycling extremely seriously, 0:04:58.600 --> 0:05:00.840 but as the note points, as we looked at it 0:05:00.920 --> 0:05:03.839 and from a research perspective, and actually is the second 0:05:04.080 --> 0:05:06.800 largest per capitive user of plastics in the world after 0:05:06.800 --> 0:05:08.960 the US. And then you know, this year was a 0:05:09.040 --> 0:05:11.600 very special year in Japan because it hosted the G 0:05:11.800 --> 0:05:16.039 twenty conference in Osaka in June, and ahead of that, 0:05:16.120 --> 0:05:19.120 the Japanese government, along with many of the companies, wanted 0:05:19.160 --> 0:05:23.520 to make a show for corporate sustainability. So this manifested 0:05:23.960 --> 0:05:27.000 itself in a number of ways. One was the Task 0:05:27.040 --> 0:05:31.640 Force for a Climate Related Financial Disclosures essentially Japan. There's 0:05:31.680 --> 0:05:34.600 over almost two hundred companies in Japan that have become 0:05:34.640 --> 0:05:38.560 a member of the TCFD, meaning that they will voluntarily 0:05:38.680 --> 0:05:43.080 disclose their business risks and opportunities with regards to what 0:05:43.160 --> 0:05:45.799 might happen if the climate change is the risk associate 0:05:45.800 --> 0:05:48.600 with climate change um, and also what they're going to 0:05:48.680 --> 0:05:50.880 do about it essentially, are they gonna help sort of 0:05:51.120 --> 0:05:54.240 mitigate climate change, etcetera. And then there's you know, two 0:05:54.240 --> 0:05:56.880 other indicators that happened was one was around sort of 0:05:56.880 --> 0:05:59.599 twenty five companies also joined the r E one hundred, 0:05:59.640 --> 0:06:02.880 which is a group that pledges to use renewable energy 0:06:03.000 --> 0:06:06.280 for its operations by a certain year. Uh. And then 0:06:06.279 --> 0:06:08.240 the other one is what we just discussed, which is 0:06:08.279 --> 0:06:11.760 this plastic spand but I think, you know, I think 0:06:11.760 --> 0:06:13.919 one of the issues is that this is all great 0:06:14.000 --> 0:06:16.600 that we see all this progress this year, but I 0:06:16.640 --> 0:06:19.160 think still Japan has a long way to go. And 0:06:19.279 --> 0:06:22.000 essentially all these companies made these pledges and there's really 0:06:22.040 --> 0:06:24.760 sort of high hopes for these things. Um. But then 0:06:24.880 --> 0:06:27.840 it's it's a bit like Okay, what do we do 0:06:27.880 --> 0:06:30.719 now the motivation for these commitments. Do you feel that 0:06:30.760 --> 0:06:34.320 it is predominantly coming from government incentives and will end 0:06:34.400 --> 0:06:37.760 up with regulation. Is it coming from the companies themselves 0:06:37.800 --> 0:06:40.680 and wanting to attract customers in capital? Where is the 0:06:40.760 --> 0:06:43.760 Japanese motivation from your perspective. That's a really good question. 0:06:43.839 --> 0:06:46.279 I mean, I think in this case we can say 0:06:46.320 --> 0:06:48.840 that it is coming. Um, at least this year, a 0:06:48.839 --> 0:06:51.560 lot of this stuff is coming from government. The government, UM. 0:06:51.600 --> 0:06:54.159 You know, the prime minister, Prime Minister Abbe is actually 0:06:54.240 --> 0:06:58.240 leading or pushing some of these efforts to a certain extent. 0:06:58.360 --> 0:07:01.400 The government is doing us because it wants to put 0:07:01.400 --> 0:07:04.479 on a good sort of good face ahead before the 0:07:04.520 --> 0:07:07.600 G twenty meeting. UM. And also Japanese companies, I think 0:07:07.720 --> 0:07:10.400 realized that you know, many of them are pretty sophisticated, 0:07:10.400 --> 0:07:13.360 that pretty uh businesses around the world. They have a 0:07:13.400 --> 0:07:16.720 lot of operations in Europe where you know, this conversation 0:07:16.840 --> 0:07:19.760 is further event. So they realized that actually they are 0:07:19.760 --> 0:07:23.160 falling behind their some of their global counterparts, uh, and 0:07:23.200 --> 0:07:25.600 they need to do something about it. And there are 0:07:25.720 --> 0:07:28.200 you know, there's some evidence to show that Japanese consumers 0:07:28.240 --> 0:07:31.600 are sort of waking up to this, but still it's 0:07:32.200 --> 0:07:34.960 you know, being in London last two days, I've noticed 0:07:35.000 --> 0:07:37.120 that actually, you know, we you know, we don't really 0:07:37.200 --> 0:07:39.880 use a single use straws or a lot. It's gonna 0:07:39.920 --> 0:07:42.520 use plastics now and sort of coffee shops and supermarkets 0:07:42.520 --> 0:07:45.360 here that's not the case in Japan. Um, when you 0:07:45.400 --> 0:07:48.440 go buy something, you still get pretty a lot of 0:07:48.880 --> 0:07:51.720 packaging and plastics, whether you ask for it or not. 0:07:52.240 --> 0:07:54.440 So the interest levels high and perhaps there are some 0:07:54.640 --> 0:07:58.680 easy gains to be made, but still a long way 0:07:58.720 --> 0:08:02.280 to go in terms of of starting point to finish line. 0:08:02.320 --> 0:08:05.720 Let's say. Yeah, And you know, I think one observation 0:08:05.800 --> 0:08:07.960 I made and this is sort of my my personal 0:08:08.200 --> 0:08:09.840 view on this. And you know, if if you live 0:08:09.840 --> 0:08:14.880 in Japan, it's, um, the environment is really really nice, right, 0:08:14.920 --> 0:08:18.400 there's not air pollution is not a problem. The waste 0:08:18.480 --> 0:08:22.400 is mostly incinerated. Actually more than half of all the 0:08:22.440 --> 0:08:26.960 plastics in Japan that gets discarded are incinerated, so you 0:08:26.960 --> 0:08:29.400 don't have these massive landfills and things like that. It's 0:08:29.480 --> 0:08:32.560 that's much higher than global average. So in some ways 0:08:32.640 --> 0:08:35.480 you live in a very nice environment. Uh, and you 0:08:35.520 --> 0:08:38.640 don't really realize that sort of waste is a major 0:08:38.679 --> 0:08:40.800 issue because you don't see it. The streets are really 0:08:40.800 --> 0:08:43.600 really clean, and there's no you don't see sort of 0:08:43.600 --> 0:08:47.200 evening news stories about plastic in the ocean and things 0:08:47.200 --> 0:08:49.800 like that. Um and you don't experience for air pollution. 0:08:49.840 --> 0:08:51.880 I used to live in China and then air pollution 0:08:51.960 --> 0:08:54.320 was a major visible issue and the government had to 0:08:54.320 --> 0:08:57.719 do something about immediately. So I don't want to use 0:08:57.760 --> 0:09:01.160 the word complacent, but it is. It is not there right, 0:09:01.200 --> 0:09:03.240 and I think actually that makes it a little bit 0:09:03.240 --> 0:09:07.720 more difficult sometimes to uh, to get well, to feel 0:09:07.760 --> 0:09:10.880 sense of urgency towards issues like this. I'm glad you 0:09:10.880 --> 0:09:13.959 brought China up because that is another country that you listed, 0:09:14.000 --> 0:09:17.720 and I think you really can't talk about energy or 0:09:17.800 --> 0:09:22.760 Asia without talking about China. They have come a long 0:09:22.800 --> 0:09:24.640 way in the last few years. And I think our 0:09:24.679 --> 0:09:28.880 forecasts and I'm looking specifically at our H two twenty 0:09:28.960 --> 0:09:31.360 nineteen China market outlooks, so we're looking out into the 0:09:31.360 --> 0:09:34.679 future there. The forecast we're showing is a lot more 0:09:34.760 --> 0:09:37.040 renewable energy in their future. So can you talk a 0:09:37.080 --> 0:09:39.800 little bit about where we see China now and where 0:09:39.840 --> 0:09:43.800 we see China, going sure, I mean, we really can't 0:09:43.800 --> 0:09:45.520 talk about a lot of things. He's he's not thinking 0:09:45.520 --> 0:09:48.480 about China, right, It's it's sort of the big, the 0:09:48.559 --> 0:09:51.040 elephant in the room and on a lot of things. UM. 0:09:51.080 --> 0:09:52.679 One thing we know is about China is that there 0:09:52.760 --> 0:09:56.080 is a first of all, there is a slowdown in 0:09:56.520 --> 0:09:58.760 China in in sort of the first half of this 0:09:58.760 --> 0:10:01.719 this year. When we say slow down, we mean a 0:10:01.800 --> 0:10:04.480 number of things. One is that the GDP growth rate 0:10:04.640 --> 0:10:07.400 is the lowest in twenty seven years. You know, some 0:10:07.480 --> 0:10:09.439 of that has to do with the trade issues that 0:10:09.480 --> 0:10:12.360 are ongoing and other factors, but more relevant to what 0:10:12.440 --> 0:10:16.400 we look at as well, UM power demand growth is 0:10:16.440 --> 0:10:19.280 the lowest in a number of years as well. Still 0:10:19.320 --> 0:10:24.280 growing pretty pretty robustly, but that's slowing. And then another 0:10:24.320 --> 0:10:26.800 sort of shocking number we noticed was that in the 0:10:26.880 --> 0:10:31.000 last fourteen months, UM there's been negative growth in car sales, 0:10:31.160 --> 0:10:35.120 specifically sort of internal combustion engine car sales. And this 0:10:35.200 --> 0:10:38.040 is the world's obviously the world's largest auto market. So 0:10:38.120 --> 0:10:41.559 that's a that's a pretty surprising statistic for a lot 0:10:41.559 --> 0:10:44.800 of people to get their heads around. But while all 0:10:44.840 --> 0:10:48.360 this happening, you might say Okay, if if, if, sort 0:10:48.360 --> 0:10:51.760 of there's some economic headwinds in China right now, does 0:10:51.800 --> 0:10:54.240 it mean the clean energy transition or all the other 0:10:54.280 --> 0:10:56.760 things that we talked about before in China, is all 0:10:56.800 --> 0:10:58.960 of that going to be derailed or slowed in some way? 0:10:59.000 --> 0:11:00.880 And the good news is that we don't. We don't 0:11:00.920 --> 0:11:03.480 see that. So we see that for instance, even though 0:11:04.320 --> 0:11:06.600 car sales overall have been down for over a year, 0:11:07.280 --> 0:11:10.880 electric vehicle sales are still growing and we expect actually 0:11:11.679 --> 0:11:14.160 something like one point eight million electric vehicles to be 0:11:14.200 --> 0:11:16.640 sold in China this year versus a million last Year's 0:11:16.679 --> 0:11:19.800 almost a doubling of of of that. We see that 0:11:19.840 --> 0:11:23.960 clean energy capacity UH is still increasing um, not as 0:11:24.640 --> 0:11:27.199 you know, not as much as before, but still still increasing, 0:11:27.360 --> 0:11:30.200 and that um in some ways that now eight percent 0:11:30.320 --> 0:11:33.120 of China's electricity comes from wind and solar, which is 0:11:33.480 --> 0:11:36.160 not an insignificant number, and you know, we think that 0:11:36.240 --> 0:11:38.520 might cross the threshold of ten percent at some point 0:11:38.559 --> 0:11:40.920 within the next year. So that's that would be a 0:11:41.000 --> 0:11:44.240 really interesting milestone I think for UH, you know the 0:11:44.280 --> 0:11:49.199 world's largest electricity system, which is a story not only 0:11:49.240 --> 0:11:54.240 just about China supplying energy to Chinese citizens, but also 0:11:54.480 --> 0:11:57.400 from a scope three emission standpoint. So if you're thinking 0:11:57.440 --> 0:11:59.520 about the emissions that are associated with all of the 0:11:59.559 --> 0:12:02.839 materials that then go into things that are manufactured in 0:12:02.880 --> 0:12:05.000 other parts of the world, a great number of them 0:12:05.000 --> 0:12:07.720 are manufactured in China. So I suppose that this is 0:12:08.760 --> 0:12:12.000 really a global story in addition to it being their story. 0:12:13.040 --> 0:12:15.520 So my question ultimately about China is that you would 0:12:15.520 --> 0:12:17.920 think if renewable energy is really going to take off, 0:12:17.960 --> 0:12:21.439 it's a policy decision. Do you see that reinforced or 0:12:21.480 --> 0:12:24.320 do you see a lot of companies looking at just 0:12:24.440 --> 0:12:27.160 the economics as you do in some places like the 0:12:27.240 --> 0:12:29.600 U S. Or you see power purchase agreements and saying well, 0:12:29.679 --> 0:12:32.800 actually this is just the cheapest form of energy. Yeah, 0:12:32.800 --> 0:12:35.520 of course. I mean it is all policies driven, right, 0:12:35.559 --> 0:12:38.319 and the government in China, both the central government and 0:12:38.440 --> 0:12:40.719 local governments, they all play a pretty important role in 0:12:40.760 --> 0:12:44.440 all of this um in some ways. If if you 0:12:44.520 --> 0:12:48.560 look at UM policy in China, it's um you know, 0:12:48.600 --> 0:12:50.800 obviously a lot of it was needed at the beginning 0:12:50.840 --> 0:12:54.640 to to spur all this growth in both renewable energy 0:12:54.640 --> 0:12:57.120 capacity that's being deployed in the country and also in 0:12:57.160 --> 0:12:59.480 all the manufacturing that took place, and you know that 0:12:59.520 --> 0:13:03.320 manufact that sort of scalpe and manufacturing capacity is what 0:13:04.080 --> 0:13:07.440 in some ways helped us get to really cheap renewable 0:13:07.520 --> 0:13:11.400 energy today for um, almost everywhere in the world. So yeah, 0:13:11.440 --> 0:13:15.680 so so policy still plays a very very very important role. 0:13:15.960 --> 0:13:19.640 What's interesting in China is that actually for years, what 0:13:19.720 --> 0:13:22.160 the government has been trying to do is build a 0:13:22.280 --> 0:13:27.000 so called zero subsidy renewable energy. Now that's a slightly 0:13:27.080 --> 0:13:29.959 a miss a misnomer. Doesn't mean that these are um, 0:13:30.000 --> 0:13:32.520 what we call merchant projects in other countries. In other words, 0:13:32.600 --> 0:13:35.600 you you you kind of um, you leave a renewable 0:13:35.640 --> 0:13:38.280 energy project to the whims of the power market, right 0:13:38.320 --> 0:13:41.120 without giving it any subsidies. Essentially, what it what it 0:13:41.160 --> 0:13:44.720 means is that, uh, they want to build wind and 0:13:44.760 --> 0:13:49.120 solar projects UM at the same price as and give 0:13:49.160 --> 0:13:51.720 it the same price as as a coal fire power 0:13:51.720 --> 0:13:56.240 plant essentially, which is a regulated price. UM. And of course, 0:13:56.280 --> 0:14:00.160 thanks to UM you know, cheaper and cheaper equipment and 0:14:00.000 --> 0:14:02.640 and sort of lower costs of all these projects. UM, 0:14:02.720 --> 0:14:05.800 the government is getting very very close to this goal. 0:14:06.240 --> 0:14:08.760 So we have more and more projects now that are 0:14:08.880 --> 0:14:13.440 being built without additional subsidies, um so, and that that's helped, 0:14:13.920 --> 0:14:15.600 but we have to remember it's still a very long 0:14:15.640 --> 0:14:18.160 way to go, right, Um it's and you know there's 0:14:18.160 --> 0:14:21.200 a figure where um, there's over something like thirty two 0:14:21.200 --> 0:14:26.040 billion dollars of subsidies being old to renewable energy projects 0:14:26.040 --> 0:14:29.040 in China because of you know, the subsidies used to 0:14:29.080 --> 0:14:32.920 be so generous for these these projects. There's a huge backlog. 0:14:33.440 --> 0:14:36.280 So if we want to see China sort of complete 0:14:36.280 --> 0:14:38.880 this transformation and build more and more renewable energy projects, 0:14:38.920 --> 0:14:41.320 that obviously cannot subsidize them at that kind of a 0:14:41.400 --> 0:14:43.720 rate has to find a different way. But it's gonna 0:14:43.720 --> 0:14:46.320 take time. It's gonna take time to steer the ship around. 0:14:46.440 --> 0:14:48.600 Wouldn't the returns be difficult at that rate too, because 0:14:48.640 --> 0:14:51.360 the cold plans are running at a higher capacity factor 0:14:51.480 --> 0:14:53.480 more of the time as opposed to win or solar. 0:14:54.160 --> 0:14:56.920 That's right, Yeah. I mean what what's interesting is that 0:14:57.000 --> 0:15:00.400 I think one of the barriers obviously keeping um, preventing 0:15:00.400 --> 0:15:05.080 renewable energy from let's say, achieving its potential is that, um, 0:15:05.120 --> 0:15:07.760 you know, we have to keep the lights on, right, 0:15:07.840 --> 0:15:09.520 you have to run these co fire power plants and 0:15:09.520 --> 0:15:11.480 you have to run them met a certain rate otherwise 0:15:12.040 --> 0:15:15.600 they become uncompetitive, or that the machinery suffered from breakdowns 0:15:15.600 --> 0:15:19.400 and all this other stuff. But I think now actually 0:15:19.440 --> 0:15:21.320 we see some evidence at least in the beginning of 0:15:21.320 --> 0:15:24.560 the year that UM renewable energy is getting more priority 0:15:24.560 --> 0:15:27.960 to dispatch in some cases, and and actually co fired 0:15:28.000 --> 0:15:30.480 power plants are, you know, being scaled down a little bit. 0:15:30.560 --> 0:15:32.280 So that's that's a very good sign. But you know, 0:15:32.320 --> 0:15:34.360 we have to remember, I think even though some parts 0:15:34.400 --> 0:15:36.560 of the world now we talk about sort of net 0:15:36.640 --> 0:15:39.600 zero missions were shutting down all the coal fire power plants, 0:15:39.800 --> 0:15:43.840 China still building new copier power plants. Actually, in our 0:15:43.920 --> 0:15:48.000 sort of UM forecasts, we expect China build its last 0:15:48.040 --> 0:15:50.960 coal fire power plant in something in two thousand seven, 0:15:51.120 --> 0:15:53.760 so it's still many years ago. And of the coal 0:15:53.800 --> 0:15:56.840 fire power plants in China today, UM, it's a very 0:15:56.880 --> 0:15:59.760 young fleet. So them were built in less than ten 0:15:59.840 --> 0:16:01.200 years as it goes, so they still have a long 0:16:01.240 --> 0:16:03.800 way to go. So it shows you that even though 0:16:03.920 --> 0:16:05.920 renewable energy is ramping up, and you can kind of 0:16:05.960 --> 0:16:09.120 create a lot of positive headlines around that story, there's 0:16:09.120 --> 0:16:11.480 still you know, there's still a lot of coal, and 0:16:11.560 --> 0:16:13.880 we still will still take time to get through all 0:16:13.920 --> 0:16:17.600 of that. Just before this interview being published, a research 0:16:17.720 --> 0:16:19.600 note that said, you know, I know, I know, we're 0:16:19.600 --> 0:16:22.960 getting out of Japan, China, and India here, but Indonesia 0:16:23.360 --> 0:16:27.120 for now, coal remains king where the government is pushing 0:16:27.160 --> 0:16:30.520 a kind of a coal agenda. But it seems from 0:16:30.520 --> 0:16:32.760 our modeling that the coal is being pushed out of 0:16:32.800 --> 0:16:35.960 the out of the market earlier than expected in Indonesia. 0:16:36.200 --> 0:16:39.200 So there seems to be signs that coal is kind 0:16:39.200 --> 0:16:41.960 of on the way out in Asia, but still gonna 0:16:41.960 --> 0:16:44.120 be around for quite a while, That's right, Yeah, I 0:16:44.120 --> 0:16:46.800 mean we we always say that it is it is 0:16:46.800 --> 0:16:50.480 gonna be on its way out. Obviously, renewable energy will 0:16:50.520 --> 0:16:53.560 be competitive against cole Eventually these plans will shut down. 0:16:53.560 --> 0:16:56.440 It's it's always a question of of when, not not 0:16:56.520 --> 0:16:59.920 so much if. But I think the caution I would 0:17:00.000 --> 0:17:01.960 I would bring to this is that the wind could 0:17:02.000 --> 0:17:05.760 be actually quite a while longer um and and Indonesia 0:17:05.840 --> 0:17:08.000 is one of these cases. Obviously, it has a lot 0:17:08.080 --> 0:17:12.400 of domestic sources of coal that it wants to deploy India, 0:17:12.480 --> 0:17:14.639 which I think we'll talk about in a moment. Is 0:17:14.680 --> 0:17:16.920 another one of these cases where there's there's a lot 0:17:16.960 --> 0:17:18.920 of coal and it's going to take time before that 0:17:18.920 --> 0:17:20.679 that's all going to sort of be be sort of 0:17:20.680 --> 0:17:24.240 shut down or or decommissioned. Let's do India, Let's move 0:17:24.320 --> 0:17:27.480 that direction right now, because I think that's a very 0:17:27.680 --> 0:17:32.280 different story than the other two countries, where you're seeing citizens, 0:17:32.600 --> 0:17:36.360 economic incentives, companies all kind of pushing in the same direction. 0:17:36.840 --> 0:17:39.399 India is really interesting because there's just a lot of 0:17:39.440 --> 0:17:42.280 different things all kind of happening concurrently, and maybe it's 0:17:42.320 --> 0:17:44.359 a little more difficult to figure out what the direction 0:17:44.400 --> 0:17:47.760 of travel is. Absolutely, I mean, if we if we 0:17:47.880 --> 0:17:50.679 just sort of take a step back and think about India, right, 0:17:50.760 --> 0:17:55.320 it wasn't it wasn't so long ago that India, or 0:17:55.359 --> 0:17:58.600 the Indian government rather would advance the argument that, look, 0:17:58.640 --> 0:18:01.840 climate change is a problem for rich countries to deal with. 0:18:02.160 --> 0:18:06.320 We are a developing country. We still need to develop 0:18:06.480 --> 0:18:08.879 and and and sort of lift millions and million, hundreds 0:18:08.880 --> 0:18:11.200 of millions of people out of poverty. Um. And that's 0:18:11.200 --> 0:18:14.320 going to require emissions, right, and industry and and and 0:18:14.400 --> 0:18:17.560 coal and all this other stuff. Um. But of course 0:18:17.800 --> 0:18:20.960 you know, we we see now that actually um, even 0:18:21.080 --> 0:18:26.040 that sort of narrative is starting to shift in in India. UH, 0:18:26.080 --> 0:18:29.119 that the government is becoming, you know, open to the 0:18:29.160 --> 0:18:32.960 idea of of of talking about sort of climate change 0:18:32.960 --> 0:18:36.240 and doing something to its emissions. The point about India 0:18:36.320 --> 0:18:40.359 is that actually, UM, one sort of interesting or perhaps 0:18:40.400 --> 0:18:44.760 shocking number that we notice is that, uh, in about 0:18:44.840 --> 0:18:47.240 less than ten years time, India is going to overtake 0:18:47.280 --> 0:18:50.600 the US and become the world's second largest emitter of 0:18:50.760 --> 0:18:54.560 carbon dioxide. So, you know, we need to take a 0:18:54.560 --> 0:18:57.199 closer look at India. And that's because of growth in 0:18:57.200 --> 0:19:00.720 India or reducing demand in US. It's it's a little 0:19:00.720 --> 0:19:04.000 bit of both. Obviously, the US is becoming cleaner in 0:19:04.280 --> 0:19:06.840 the sense from a carbon emissions perspective because of all 0:19:06.840 --> 0:19:10.119 the gas that's that's coming online. But yeah, and also 0:19:10.200 --> 0:19:13.320 it's growth in India of course, right India, India's economy 0:19:13.560 --> 0:19:16.920 is let's remember, India's economy is about half the size 0:19:16.920 --> 0:19:20.359 of Japan UM and it has about six times the 0:19:20.400 --> 0:19:23.359 population of that of Japan. We talked about this in 0:19:23.400 --> 0:19:26.760 our road Fuels episode not too long ago. We noticed 0:19:26.800 --> 0:19:29.200 that a big part of the emissions from transport will 0:19:29.200 --> 0:19:31.800 come from India. And then your future because of the 0:19:31.840 --> 0:19:36.320 growth in transportation from private vehicles and and hired vehicles 0:19:36.440 --> 0:19:39.360 and deliveries. So is that where the missions are coming 0:19:39.359 --> 0:19:41.560 from or is it mostly coming from stationary sources like coal. 0:19:42.200 --> 0:19:44.240 It's it's gonna be both. Um. You know, we have 0:19:44.280 --> 0:19:45.879 to remember the India has a lot of room to 0:19:45.880 --> 0:19:48.560 grow almost everywhere, right if you if you if you 0:19:48.640 --> 0:19:52.840 learn at all the sectors transport, industry, agriculture, even power 0:19:52.880 --> 0:19:55.240 gen and you know, everything, India will have room to grow. 0:19:55.760 --> 0:19:57.440 A lot of it, yes, will be you know, we 0:19:57.720 --> 0:20:00.720 are talking actually about um in this case about power 0:20:00.720 --> 0:20:04.040 sector emissions. Um. So yes, it is a lot of 0:20:04.040 --> 0:20:06.440 that growth will be coming from the new co fire 0:20:06.480 --> 0:20:10.040 power plants that are being built in India. Simply, Um, 0:20:10.080 --> 0:20:14.240 there's not enough electricity in India for its population or 0:20:14.320 --> 0:20:16.320 for its economy to grow at the moment, so you 0:20:16.359 --> 0:20:18.720 will result in a lot of new building of co 0:20:18.880 --> 0:20:20.760 fire power plants. But the only thing I want to 0:20:20.760 --> 0:20:22.440 say is actually this might be a little bit of 0:20:22.440 --> 0:20:24.600 a doom and story about India, but actually there are 0:20:24.600 --> 0:20:27.360 signs of hope as well. Right. One thing is that 0:20:28.160 --> 0:20:31.159 you know, India has some of the most competitive wind 0:20:31.160 --> 0:20:33.760 and solar auctions in the world, so it helps. It 0:20:33.800 --> 0:20:38.000 achieved very low prices for solar projects, so some of 0:20:38.040 --> 0:20:40.600