WEBVTT - EVs Race Ahead of Renewables in Transition Investment 0:00:00.320 --> 0:00:03.560 This is Dana Perkins and you're listening to Switched on 0:00:03.960 --> 0:00:08.360 the bn EF podcast. Every year, BNF releases its Energy 0:00:08.360 --> 0:00:12.160 Transition Investment Trends Report, which is our definitive resource on 0:00:12.280 --> 0:00:15.680 global investment in the low carbon energy transition and the 0:00:15.720 --> 0:00:18.920 sectors that are central to it. Since twenty fourteen, when 0:00:18.960 --> 0:00:22.400 b and EF tracked three hundred and thirteen billion in 0:00:22.480 --> 0:00:26.760 transition investment volumes, we have seen continuous and rapid annual 0:00:26.760 --> 0:00:29.360 growth that broke through the one trillion dollar mark in 0:00:29.360 --> 0:00:32.160 twenty twenty one and reached a record one point five 0:00:32.200 --> 0:00:35.440 trillion in twenty twenty two. So how about twenty twenty three, 0:00:35.600 --> 0:00:38.800 will it be another record year for energy transition investment 0:00:38.880 --> 0:00:42.160 and which sectors saw the greatest growth and perhaps declines. 0:00:42.640 --> 0:00:46.000 To discuss the findings for the Energy Transition Investment Trends 0:00:46.000 --> 0:00:50.160 Report today, I am joined by BNF's Deputy CEO, Albert 0:00:50.240 --> 0:00:54.040 Chung and the head of Technology and Innovation Mark Daily. Together, 0:00:54.120 --> 0:00:57.360 we look at which sectors received the largest volumes of 0:00:57.400 --> 0:01:00.240 investment in twenty twenty three and whether the renw global 0:01:00.360 --> 0:01:03.400 energy industry, which has historically been the main driver, was 0:01:03.440 --> 0:01:06.360 able to hold off electric vehicles at the top of 0:01:06.400 --> 0:01:09.760 the table, we also review global clean tech supply chain 0:01:09.800 --> 0:01:12.920 investment and following booms in protection capacity, we want to 0:01:12.959 --> 0:01:16.559 know whether they've already achieved the investment required to meet 0:01:16.680 --> 0:01:20.759 twenty thirty net zero targets for battery and solar factories. 0:01:21.160 --> 0:01:25.600 And finally, we review if climate tech equity financing rebounded 0:01:25.640 --> 0:01:29.319 last year following declines in twenty twenty two, and for 0:01:29.360 --> 0:01:32.720 the first time, we review a new category debt issuance 0:01:32.760 --> 0:01:36.800 for the energy transition. To access the Energy Transition Investment 0:01:36.800 --> 0:01:40.039 Trends report, B andF subscribers can find it on BENF 0:01:40.120 --> 0:01:43.280 dot com or at benfgo on the Bloomberg terminal. If 0:01:43.319 --> 0:01:46.399 you like this podcast, make sure to subscribe, and if 0:01:46.400 --> 0:01:48.800 you want to make it discoverable by other people, give 0:01:48.840 --> 0:01:51.840 us a review on Apple Podcasts or Spotify. But right now, 0:01:51.960 --> 0:01:55.440 let's hear from Albert and Mark about the Energy transition 0:01:55.520 --> 0:02:08.600 investment trends for twenty twenty three. Mark, thank you for 0:02:08.680 --> 0:02:09.359 joining today. 0:02:09.639 --> 0:02:11.040 Thank you very much, lovely to be here. 0:02:11.120 --> 0:02:13.600 Dana and Albert, thank you for coming back on the show. 0:02:13.800 --> 0:02:14.560 Thanks for having me. 0:02:14.800 --> 0:02:18.400 So we're here talking about the energy transition investment trends 0:02:18.440 --> 0:02:21.360 for this previous year. And the first thing I really 0:02:21.360 --> 0:02:24.320 want to know is what question were we trying to 0:02:24.360 --> 0:02:27.480 answer when we look at energy Transition Investment trends? What 0:02:27.480 --> 0:02:30.120 are you hoping to find when putting that data together 0:02:30.400 --> 0:02:32.320 and having a moment to kind of take a step 0:02:32.360 --> 0:02:34.600 back and give it an annual refresh. 0:02:34.720 --> 0:02:37.000 So, Energy Transition Investment Trends is this report we do 0:02:37.080 --> 0:02:38.880 every year. We've done it every year since I've been 0:02:38.919 --> 0:02:40.839 at the firm, which is fifteen years, and the data 0:02:40.880 --> 0:02:43.480 goes back twenty years. And the question we're trying to 0:02:43.520 --> 0:02:45.839 answer is where is the money flowing in the low 0:02:45.840 --> 0:02:48.560 carbon transition? And you know, we've always had this philosophy 0:02:48.600 --> 0:02:50.919 at New Energy Finance back in the day and BNF 0:02:51.480 --> 0:02:53.160 over the last decade at a bit that if you 0:02:53.160 --> 0:02:54.839 follow the money, it tells you a lot about where 0:02:54.840 --> 0:02:56.920 the opportunities are, It tells you where the interest is, 0:02:56.960 --> 0:02:58.600 it tells you where the action is, and also tells 0:02:58.639 --> 0:03:00.560 you whether you're going fast enough. And that's we exploring 0:03:00.600 --> 0:03:01.280 the report as well. 0:03:01.400 --> 0:03:03.440 So investment is a broad term. Can you define what 0:03:03.600 --> 0:03:06.040 exactly we're looking at when we're following the money? 0:03:06.480 --> 0:03:06.720 Yeah? 0:03:06.760 --> 0:03:09.320 Sure. So in the report we track four different types 0:03:09.360 --> 0:03:11.799 of funding flows. The biggest category is what we call 0:03:11.919 --> 0:03:15.000 energy transition investment, and that's money being spent to deploy 0:03:15.080 --> 0:03:18.280 clean technology and infrastructure, so renewable energy plant, electric vehicles, 0:03:18.320 --> 0:03:21.519 and so on. Then we have clean energy supply chain investment, 0:03:21.600 --> 0:03:24.160 and that is money being spent to build factories for 0:03:24.400 --> 0:03:27.680 wind and solar equipment, hydrogen electrialized as batteries, and also 0:03:28.080 --> 0:03:30.840 mines and refineries for battery metals. So that's category two. 0:03:31.120 --> 0:03:35.040 Category three is climate tech equity raising or equity finance, 0:03:35.040 --> 0:03:37.640 and that's new equity being raised by companies in the 0:03:37.640 --> 0:03:41.000 climate and energy transition space. And then finally, the fourth area, 0:03:41.000 --> 0:03:43.040 which is new this year we haven't done before, is 0:03:43.080 --> 0:03:46.000 debt issuance for the energy transition. So that's debt being 0:03:46.080 --> 0:03:49.120 raised by companies and by governments for energy transition purposes 0:03:49.120 --> 0:03:51.760 to fund operations in clean energy or to fund investment 0:03:51.800 --> 0:03:53.160 into clean energy projects. 0:03:53.280 --> 0:03:55.400 What was the reason to add debt, It was really. 0:03:55.280 --> 0:03:57.840 The missing piece of the puzzle. The first two categories 0:03:57.840 --> 0:03:59.680 are you know, think about the energy transition investment and 0:03:59.720 --> 0:04:01.839 the clean and just supply chain investment. Those are kind 0:04:01.840 --> 0:04:04.080 of real assets being built on the ground. And the 0:04:04.160 --> 0:04:06.520 last two debt and equity are how is the money 0:04:06.520 --> 0:04:09.160 being raised to fund those things? And so we always 0:04:09.160 --> 0:04:10.920 had the equity piece, We've had that for many years, 0:04:11.000 --> 0:04:12.400 and we just wanted to add in the debt piece 0:04:12.400 --> 0:04:13.600 to really round out the whole picture. 0:04:13.760 --> 0:04:16.320 So if we're not talking about emissions in whether or 0:04:16.360 --> 0:04:18.080 not we're going at the rate of change that is 0:04:18.120 --> 0:04:21.320 required to achieve certain outcome, we're really thinking about how 0:04:21.400 --> 0:04:23.920 much money is going and how it compares to previous years. 0:04:23.960 --> 0:04:26.640 So if we're looking at this volume of money in 0:04:26.680 --> 0:04:30.160 many years in absolute terms, these are new records being set. 0:04:30.400 --> 0:04:33.760 So if we're comparing twenty twenty three to other years, 0:04:33.800 --> 0:04:36.320 would you consider it to be a good year in 0:04:36.440 --> 0:04:39.040 terms of overall investment? And I guess we can break 0:04:39.080 --> 0:04:40.960 it down into some of the different areas that you're 0:04:40.960 --> 0:04:41.960 specifically looking at. 0:04:42.160 --> 0:04:44.960 Yeah, definitely, So just looking at the energy transition investment piece, 0:04:45.120 --> 0:04:48.120 deployment of clean tech, deployment clean infrastructure. It's a really 0:04:48.160 --> 0:04:51.040 good news story. We saw one point eight trillion dollars 0:04:51.080 --> 0:04:53.000 invested in twenty twenty three. That one point eight trillion 0:04:53.040 --> 0:04:54.800 is really the headline number that we that we lead with, 0:04:54.839 --> 0:04:57.080 So if you're listening, remember that that's the number that matters. 0:04:57.200 --> 0:04:59.960 That one point eight trillion dollars is up seventeen percent 0:05:00.120 --> 0:05:02.760 since the year before, since twenty twenty two. It's almost 0:05:02.880 --> 0:05:05.960 doubled since twenty twenty which is only three years ago. 0:05:06.120 --> 0:05:07.400 So you know, it gives you an idea of the 0:05:07.400 --> 0:05:09.640 pace of change in the energy transition. And that one 0:05:09.680 --> 0:05:11.440 point it trillion is not only a record year in 0:05:11.440 --> 0:05:14.320 twenty twenty three, but it's the tenth record year in 0:05:14.360 --> 0:05:16.440 a row. So again that gives you something of an 0:05:16.480 --> 0:05:18.520 idea of the size and scale and momentum of the 0:05:18.560 --> 0:05:20.960 opportunities in the energy transition. I can say a bit 0:05:20.960 --> 0:05:23.520 about the individual sectors because within that one point eight trillion, 0:05:23.520 --> 0:05:25.279 there are ten different sectors that we track. I'm not 0:05:25.279 --> 0:05:27.080 going to talk about all of them, but the largest 0:05:27.200 --> 0:05:30.160 this year is electrified transport, and that's all of your 0:05:30.200 --> 0:05:34.280 sales of evs including two and three wheelers, cars, buses, trucks, 0:05:34.400 --> 0:05:37.279 the associated charging infrastructure for all of those as well, 0:05:37.320 --> 0:05:39.479 and a small amount of hydrogen fuel cell vehicles as 0:05:39.520 --> 0:05:42.560 well in there. That's now six hundred and thirty four billion, 0:05:42.640 --> 0:05:45.400 so it's like a third of the total energy transition spending. 0:05:45.480 --> 0:05:48.520 It jumped thirty six percent last year, which is really great. 0:05:48.560 --> 0:05:50.760 I mean, shows how fast the EV transition is going, 0:05:50.839 --> 0:05:53.160 and it overtook renewable energy. For years and years, as 0:05:53.160 --> 0:05:54.720 long as we've been doing this, renewable energy was the 0:05:54.760 --> 0:05:57.160 largest sector. Transport is now the largest sector, and I 0:05:57.200 --> 0:06:00.080 think that was really interesting. But renewable energy also had 0:06:00.080 --> 0:06:02.760 a good year. Renewbal energy is up eight percent this year. 0:06:03.120 --> 0:06:05.000 It's now I think six or twenty three billion, to 0:06:05.320 --> 0:06:08.240 be exact. And one of the kind of underreported stories 0:06:08.440 --> 0:06:11.440 within the data is that the wind sector actually had 0:06:11.480 --> 0:06:14.240 a record year of investment in twenty twenty three. Despite 0:06:14.279 --> 0:06:18.440 everything we saw around project cancelations of us offshoal wind projects, 0:06:18.480 --> 0:06:21.000 failed auctions here and there, actually the wind sector had 0:06:21.000 --> 0:06:23.760 a great year, new projects reaching final investment decisions. So 0:06:24.120 --> 0:06:24.919 really great to see that. 0:06:25.279 --> 0:06:27.960 Can I also add a point. I think the headline 0:06:28.080 --> 0:06:30.920 dollar investment numbers always paint a really positive picture. They've 0:06:30.920 --> 0:06:33.000 been increasing for so many years, But in all of 0:06:33.040 --> 0:06:35.359 these different sectors, the costs of all these assets are 0:06:35.360 --> 0:06:38.279 actually declining at the same time, so investments up every year. 0:06:38.320 --> 0:06:41.159 But that's actually each individual dollar is deploying more and 0:06:41.200 --> 0:06:42.240 more assets every year. 0:06:42.440 --> 0:06:44.159 And actually, you know, one of the other really interesting 0:06:44.200 --> 0:06:45.719 stories is that we're starting to see some of the 0:06:45.760 --> 0:06:48.560 smaller sectors start to scale up. So I'm talking about 0:06:48.560 --> 0:06:51.000 areas like hydrogen and carbon capture, which historically have been 0:06:51.040 --> 0:06:53.920 pretty small parts of this. This total hydrogen investment tripled 0:06:53.960 --> 0:06:57.440 last year to ten billion ccs investment nearly doubled, it's 0:06:57.480 --> 0:07:00.640 now eleven billion dollars, and energy storajet is now thirty 0:07:00.640 --> 0:07:03.080 six billion dollars grew seventy six percent last year. So 0:07:03.400 --> 0:07:05.000 if you look at the charts and the report, which 0:07:05.000 --> 0:07:06.960 I encourage you to do, there's a free version of 0:07:07.040 --> 0:07:08.599 a bridge version of the report you can find or 0:07:08.760 --> 0:07:11.160 or for clients, you can find it on the BNF platform. 0:07:11.240 --> 0:07:13.320 You know, some of these slivers are actually a bit 0:07:13.360 --> 0:07:15.880 too small to see because the renewables and electric vehicles 0:07:15.880 --> 0:07:18.240 and power grades are so big, but they're growing really quickly, 0:07:18.320 --> 0:07:21.080 hydrogen ccas doubling, tripling, and I think that's really encouraging 0:07:21.080 --> 0:07:22.920 for where we need to get to by twenty thirty 0:07:23.000 --> 0:07:24.920 in terms of commercializing those technologies. 0:07:25.280 --> 0:07:28.120 Now Geographically, one of the markets that's adapting things like 0:07:28.120 --> 0:07:33.200 electric vehicles and renewable energy at real scale is China, 0:07:33.320 --> 0:07:36.559 and you really can't understand the energy transition story without 0:07:36.600 --> 0:07:38.720 really taking a closer look at China. So let's do 0:07:38.840 --> 0:07:41.240 that right now. First of all, what is the role 0:07:41.280 --> 0:07:44.320 of China. What is the magnitude of their investment versus 0:07:44.400 --> 0:07:45.240 the rest of the world. 0:07:45.480 --> 0:07:48.920 So China is thirty eight percent of the energy transition 0:07:48.960 --> 0:07:51.240 investment total this year, so thirty eight percent by far 0:07:51.280 --> 0:07:53.800 the largest market, and that's because as a region, as 0:07:53.840 --> 0:07:56.200 a strategy, China has said, we want to be the 0:07:56.240 --> 0:07:58.200 leaders in renewable energy technology, when we want to be 0:07:58.200 --> 0:08:00.600 the leaders in electric vehicle technology, and there's been just 0:08:00.800 --> 0:08:03.600 very consistent support over many years to grow those industries, 0:08:03.640 --> 0:08:06.000 and so China's streets ahead of everybody else. So just 0:08:06.040 --> 0:08:07.960 to maybe talk a bit about how the ranking looks 0:08:08.000 --> 0:08:10.239 in terms of other countries, the US is in second place, 0:08:10.320 --> 0:08:12.680 and the US invested about three hundred billion dollars versus 0:08:12.800 --> 0:08:15.640 China's six hundred and seventy six billion dollars in twenty 0:08:15.640 --> 0:08:17.320 twenty three, So that sounds like a big gap. The 0:08:17.400 --> 0:08:19.240 US is less than half of China, but that gap 0:08:19.280 --> 0:08:21.520 has actually closed a little bit over the last year 0:08:21.560 --> 0:08:23.600 because we're starting to see the effects of the inflation 0:08:23.680 --> 0:08:25.680 reduction act, and so the US is kind of in 0:08:25.720 --> 0:08:27.640 catch up mode, which is kind of nice to see. 0:08:27.680 --> 0:08:29.480 And then the rest of the top ten. If you 0:08:29.600 --> 0:08:31.960 go down the list, you have Germany, UK, France, and a 0:08:32.000 --> 0:08:35.080 number of European countries. You've also got Brazil in there, 0:08:35.120 --> 0:08:37.880 You've got India in there, You've got Japan as well, 0:08:38.000 --> 0:08:40.480 and the EU. So if you take the European Union 0:08:40.720 --> 0:08:43.040 as a block of twenty seven, the EU invested three 0:08:43.160 --> 0:08:45.400 hundred and forty one billion dollars in twenty twenty three, 0:08:45.440 --> 0:08:46.800 which is a little bit ahead of the US and 0:08:46.840 --> 0:08:49.040 still quite far behind China. But I think what was 0:08:49.120 --> 0:08:51.760 really nice to see or interesting to see over the 0:08:51.800 --> 0:08:53.679 last year was that the EU, the US and UK 0:08:53.760 --> 0:08:55.960 are really starting to grow now. And between those three 0:08:55.960 --> 0:08:58.960 blocks they actually accounted for most of the growth that 0:08:59.000 --> 0:09:02.920 we saw last year. And together Europe, US and UK 0:09:03.280 --> 0:09:05.960 invested more than China did in twenty twenty three, which 0:09:06.000 --> 0:09:07.800 they hadn't done in twenty twenty two. So it gives 0:09:07.800 --> 0:09:09.719 you an idea of where the momentum is globally in 0:09:09.760 --> 0:09:10.640 the transition as well. 0:09:10.840 --> 0:09:13.240 Another interesting way to look at the data is these 0:09:13.280 --> 0:09:15.960 numbers are so big, it's it's one point eight trillion. 0:09:16.000 --> 0:09:18.120 What does that actually mean in real terms? One way 0:09:18.240 --> 0:09:20.480 that we think about this to put it in context 0:09:20.760 --> 0:09:23.480 is what percentage is this spending by market as a 0:09:23.520 --> 0:09:26.600 share of its total GDP. This actually changes the order 0:09:26.600 --> 0:09:28.800 of the ranking quite a bit. China is still the 0:09:28.920 --> 0:09:31.520 largest market as a percentage of GDP by quite a 0:09:31.559 --> 0:09:34.400 large margin, spends about three point eight percent of its 0:09:34.440 --> 0:09:37.880 GDP on energy transition. The next best market by this 0:09:37.960 --> 0:09:40.720 metric is actually the UK a two point two percent, 0:09:41.240 --> 0:09:43.680 followed by a string of other large European economies which 0:09:43.720 --> 0:09:46.640 also are around two percent. The US, despite being the 0:09:46.640 --> 0:09:49.720 second largest market, actually spends only one point one percent 0:09:49.720 --> 0:09:52.720 of its GDP on the energy transition, and this is 0:09:52.880 --> 0:09:55.640 well below the global average of one point seven percent. 0:09:55.960 --> 0:09:58.160 So looking at it from that perspective, just pus these 0:09:58.200 --> 0:10:01.160 numbers in context. And what other useful said is actually 0:10:01.360 --> 0:10:04.800 to consider this compared to another large government expenditure defense. 0:10:05.200 --> 0:10:08.719 NATO recommends that governments spend about two percent of their 0:10:08.720 --> 0:10:09.720 GDP on defense. 0:10:10.280 --> 0:10:12.760 In the US, the Inflation Reduction Act is just starting 0:10:12.800 --> 0:10:16.199 to really get steam, right because so much of investment 0:10:16.320 --> 0:10:19.640 in these assets takes time to actually get off the ground. 0:10:19.840 --> 0:10:23.200 As the Inflation Reduction Act gets underway. Do you expect 0:10:23.240 --> 0:10:26.760 that that ratio for the US change or that percentage 0:10:26.760 --> 0:10:29.120 in the US will change, or is it just such 0:10:29.160 --> 0:10:32.640 a big economy in terms of GDP that we're already 0:10:32.640 --> 0:10:35.240 seeing what we expect to see in the yearhead. I'm 0:10:35.240 --> 0:10:37.559 almost asking you to predict what you think will happen 0:10:37.640 --> 0:10:40.520 next year now, which is a bit unfair, but you know, 0:10:40.559 --> 0:10:42.839 what are your views on the Inflation Reduction Act and 0:10:42.880 --> 0:10:45.120 whether we expect to see a lot of additional growth. 0:10:45.480 --> 0:10:48.280 Yeah, I would imagine that we will absolutely see growth 0:10:48.320 --> 0:10:51.280 in the United States. A lot of the subsidies and 0:10:51.360 --> 0:10:53.480 rules that have been deployed in the Inflation Reduction Act, 0:10:53.679 --> 0:10:56.360 the actual specific rules about how they'll be applied to 0:10:56.400 --> 0:11:00.000 projects haven't been determined yet, and so final investment, to say, 0:11:00.200 --> 0:11:02.160 is waiting to happen. And these projects won't even be 0:11:02.200 --> 0:11:05.439 built until years after the final investment decision takes place, 0:11:05.600 --> 0:11:08.040 So we'll be seeing the effect of the Inflation Reduction 0:11:08.080 --> 0:11:09.440 Act for years in these numbers. 0:11:09.880 --> 0:11:12.160 So one of the things we take a look at 0:11:12.200 --> 0:11:15.680 at BNF are these energy supply banking ratios, and what 0:11:15.679 --> 0:11:18.360 we're trying to understand there is actually how much money 0:11:18.440 --> 0:11:23.200 is being invested in fossil fuels versus cleaner technology, low 0:11:23.240 --> 0:11:26.520 carbon technology, and really actually trying to set a framework 0:11:26.559 --> 0:11:29.080 for how much really needs to go into one versus 0:11:29.080 --> 0:11:31.520 the other in order for us to be paras aligned 0:11:31.640 --> 0:11:35.240 and looking at emissions. What do the energy investment trends 0:11:35.320 --> 0:11:38.040 tell us in light of this, How does it align 0:11:38.080 --> 0:11:40.520 with the work that we've already done on the different 0:11:40.600 --> 0:11:42.319 ratios that we need to see, which we know need 0:11:42.520 --> 0:11:45.800 within this current decade needs to be four dollars spent 0:11:45.960 --> 0:11:49.400 on low carbon technology for every one dollar spent on 0:11:50.040 --> 0:11:50.840 fossil fuels. 0:11:51.200 --> 0:11:51.880 Yeah, exactly. 0:11:51.920 --> 0:11:53.720 So, Danny, you're talking about some work we did over 0:11:53.760 --> 0:11:56.200 the last couple of years looking at paras aligned climate 0:11:56.200 --> 0:11:59.240 scenarios and what investment is required to achieve those scenarios. 0:11:59.240 --> 0:12:01.320 And there's a lot of variation, but we find in 0:12:01.360 --> 0:12:03.360 general that during the course of this decade, we need 0:12:03.400 --> 0:12:05.320 to be investing four times as much in clean energy 0:12:05.320 --> 0:12:08.560 supply as in fossil energy supply. So this Energy Transition 0:12:08.600 --> 0:12:10.679 Investment trans Report shines a light on like where is 0:12:10.720 --> 0:12:12.960 the money actually flowing? An arely on track for that 0:12:13.000 --> 0:12:15.600 four to one during this decade? So the answer is, 0:12:15.800 --> 0:12:18.520 we're not on track, but there are some interesting trends 0:12:18.559 --> 0:12:19.960 in here. So let me let me kind of unpick it. 0:12:20.200 --> 0:12:23.280 That one point eight trillion dollars of investment into energy transition. 0:12:23.400 --> 0:12:27.040 Investment includes both supply side and demand side. On the 0:12:27.120 --> 0:12:30.640 supply side, there's about a trillion dollars going into things 0:12:30.640 --> 0:12:33.360 like renewables and nuclear and hydrogen, so it's kind of 0:12:33.440 --> 0:12:36.520 energy supplying technologies. But the rest of it, about seven 0:12:36.640 --> 0:12:40.440 hundred and fifty billion dollars, is energy consuming technologies like 0:12:40.480 --> 0:12:45.200 electric vehicles, electric heat pumps, electric arc furnaces, to make steel, 0:12:45.640 --> 0:12:47.840 things like that that you wouldn't consider to be on 0:12:47.920 --> 0:12:50.400 the energy supply side. So first you have to unpack that. Now, 0:12:50.440 --> 0:12:52.800 if you take the total, the one point eight trillion dollars, 0:12:53.160 --> 0:12:57.360 that's far above what's currently invested into fossil fuel supply. 0:12:57.679 --> 0:13:00.400 Fossil fuel supply investment is only about one point one 0:13:00.440 --> 0:13:03.680 trillion dollars at the moment. That includes exploration and production 0:13:03.720 --> 0:13:07.320 for oil and gas, coal mining, and also uninmbated fossil 0:13:07.320 --> 0:13:09.920 fuel power generation. It's one point one trillion, But that 0:13:10.000 --> 0:13:13.280 one point one trillion fossil is more than the supply 0:13:13.480 --> 0:13:16.280 piece of the one point eight. So the supply piece 0:13:16.320 --> 0:13:18.640 of the one point eight is only one point zero trillion. 0:13:18.760 --> 0:13:20.840 So that's a long, long winded way of saying, if 0:13:20.880 --> 0:13:23.360 you just take the supply of clean energy and supply 0:13:23.360 --> 0:13:25.600 of fossil fuel energy, we think fossil fuel energy is 0:13:25.679 --> 0:13:28.760 slightly ahead. It's still slightly ahead, about seven percent ahead 0:13:28.840 --> 0:13:31.160 of clean energy supply, and that's obviously not where we 0:13:31.200 --> 0:13:32.520 need to get to when we're thinking about a four 0:13:32.559 --> 0:13:33.320 to one ratio. 0:13:33.520 --> 0:13:36.360 Since we're now here talking about one point five degrees, 0:13:36.559 --> 0:13:38.440 what do we need to do? What sort of investment 0:13:38.480 --> 0:13:40.240 do we need to see in order for it to 0:13:40.320 --> 0:13:42.800 be aligned to that emission scenario. 0:13:43.240 --> 0:13:45.880 So in the report, we look at our own net 0:13:45.960 --> 0:13:49.840 zero scenario, which is a parasaligine scenario in which the 0:13:49.840 --> 0:13:52.760 world achieves net zero by mid century. And in that scenario, 0:13:52.840 --> 0:13:56.079 the required levels of energy transition investment over the course 0:13:56.120 --> 0:13:59.079 of the rest of this decade is about four point 0:13:59.120 --> 0:14:01.760 eight trillion dollars per year. So from twenty twenty four 0:14:01.760 --> 0:14:03.520 to twenty thirty, an average of four point eight trillion 0:14:03.520 --> 0:14:07.000 dollars per year, that's almost three times the one point 0:14:07.040 --> 0:14:09.800 eight trillion dollars we saw invested in reality last year. 0:14:09.920 --> 0:14:14.040 So we're talking about an overnight rapid acceleration of energy 0:14:14.040 --> 0:14:16.840 transition investment. But remember we've seen a doubling over the 0:14:16.880 --> 0:14:19.240 last three years, so we're not standing still. And this 0:14:19.360 --> 0:14:21.320 time next year, are we going to be at four 0:14:21.320 --> 0:14:23.600 point eight? No, we're not. But I'm not going to 0:14:23.600 --> 0:14:25.760 be telling you that it needs to triple. That gap is. 0:14:26.000 --> 0:14:27.800 I'm sure it's going to get smaller and smaller. So 0:14:28.040 --> 0:14:31.040 I think whenever I present these numbers, this tripling that's required, 0:14:31.080 --> 0:14:33.040 people always go, oh my god, that's incredible. But you know, 0:14:33.080 --> 0:14:34.720 when you sit in this industry long enough, you see 0:14:34.760 --> 0:14:37.880 doublings happening, you see triplings happening, and it does leave 0:14:37.880 --> 0:14:39.400 you with a sense of you know, we can climb 0:14:39.400 --> 0:14:40.600 this mountain. It can be done. 0:14:41.240 --> 0:14:44.760 It's also worth noting that while certain markets are further 0:14:44.800 --> 0:14:47.400 ahead in terms of their energy transition spending, I don't 0:14:47.400 --> 0:14:49.280 think there's a single one of the G ten markets 0:14:49.320 --> 0:14:51.200 that are actually on track. The fact that China is 0:14:51.240 --> 0:14:54.000 spending more money, it actually needs to spend even more 0:14:54.240 --> 0:14:57.080 than regions in Europe to get on track for net zero. 0:14:57.240 --> 0:15:00.000 So basically everywhere can be doing more to get on track. 0:15:01.560 --> 0:15:03.800 On this show and actually for everybody over the last 0:15:03.840 --> 0:15:05.960 few years, I think people have been giving a lot 0:15:05.960 --> 0:15:08.440 of thought to supply chains, how things get where they 0:15:08.520 --> 0:15:10.160 need to be. How are we going to get all 0:15:10.160 --> 0:15:13.040 of this clean energy equipment in place in order for 0:15:13.120 --> 0:15:16.600 us to create these infrastructure investments. So where is the 0:15:16.640 --> 0:15:20.600 clean energy supply chain investment being invested into or actually 0:15:21.080 --> 0:15:24.520 is it being invested into enough in order to facilitate 0:15:24.560 --> 0:15:27.120 the magnitude of change that we're talking about. 0:15:26.920 --> 0:15:28.640 Thanks Dennis. So that brings us to the second part 0:15:28.640 --> 0:15:30.240 of the report, which is all around this question of 0:15:30.280 --> 0:15:32.320 clean energy supply chain investment. Let me just talk a 0:15:32.320 --> 0:15:34.200 bit about the overall numbers that we're seeing and maybe 0:15:34.200 --> 0:15:36.080 we can move on to is it enough, which is 0:15:36.120 --> 0:15:38.320 a really interesting question in its own right. So within 0:15:38.360 --> 0:15:40.840 the clean energy supply chain investment piece of this report, 0:15:40.960 --> 0:15:45.280 we're looking at factories across the supply chains of the 0:15:45.320 --> 0:15:48.960 battery sector, the solar sector, the wind sector, the hydrogen sector, 0:15:49.080 --> 0:15:51.480 you know, across all those value chains, plus also the 0:15:51.480 --> 0:15:55.040 mining and refining of key battery metal, so that's lithium, cobalt, 0:15:55.040 --> 0:15:57.160 and nickel specifically. So that's the scope of what we're 0:15:57.160 --> 0:15:59.120 looking at. There are some other parts of the energy 0:15:59.160 --> 0:16:01.000 transition that are are going to be important that we're 0:16:01.040 --> 0:16:03.560 not quite including just yet, things like copper and steel. 0:16:03.600 --> 0:16:05.840 But these are the really kind of central core pieces 0:16:05.880 --> 0:16:07.480 of equipment that we need to scale up for the 0:16:07.560 --> 0:16:09.960 energy transition. The good news is it scaling up. So 0:16:10.160 --> 0:16:12.080 from twenty twenty to twenty twenty three we saw an 0:16:12.080 --> 0:16:14.880 increase in investment from forty six billion dollars to one 0:16:14.960 --> 0:16:17.280 hundred and thirty five billion dollars, so almost a tripling 0:16:17.360 --> 0:16:19.840 of investment over the last few years into all of 0:16:19.840 --> 0:16:22.560 those pieces of factories in mining and refining that are needed. 0:16:22.640 --> 0:16:25.160 And because we have a slightly different methodology for this 0:16:25.200 --> 0:16:29.280 piece of the report, we're actually tracking expected factory commissionings 0:16:29.280 --> 0:16:31.440 and mine mind commissionings, and you can actually see a 0:16:31.440 --> 0:16:34.560 little bit more into the future for these assets. We 0:16:34.560 --> 0:16:36.080 can see what's going to happen over the next couple 0:16:36.120 --> 0:16:37.920 of years. So from one hundred and thirty five billion 0:16:37.960 --> 0:16:40.440 dollars invested in twenty twenty three, we actually expect that 0:16:40.520 --> 0:16:43.080 to reach two hundred and fifty billion dollars by twenty 0:16:43.120 --> 0:16:46.520 twenty five, which is about a two thirds increase again 0:16:46.600 --> 0:16:48.440 from what we saw last year. So the answer is 0:16:48.720 --> 0:16:51.560 it's really healthy. We're seeing really good investment into the 0:16:51.560 --> 0:16:53.800 global clean energy supply chains. And just to kind of 0:16:53.800 --> 0:16:56.040 illuminate a little bit what the main drivers are. In 0:16:56.080 --> 0:16:59.000 any given year, about eighty or ninety percent of that 0:16:59.080 --> 0:17:02.600 investment is going either into battery factories or solar factories. 0:17:02.680 --> 0:17:05.159 So batteries and solar are the vast, vast majority of that, 0:17:05.200 --> 0:17:07.879 and that's just the sheer production capacity needed to supply 0:17:07.960 --> 0:17:12.000 those very rapidly growing industries. Then hydrogen and wind make 0:17:12.080 --> 0:17:14.520 up a very small sliver, and then there's about ten 0:17:15.040 --> 0:17:17.560 to twenty percent depending on the year, that goes into 0:17:17.600 --> 0:17:19.920 the battery metals piece. So that's just kind of how 0:17:19.920 --> 0:17:22.199 to understand. It's not right or wrong, but that's just 0:17:22.240 --> 0:17:24.320 what we're seeing in terms of the investment trends. 0:17:24.080 --> 0:17:24.520 At the moment. 0:17:25.240 --> 0:17:28.720 Historically, we've seen China be a really dominant player with 0:17:28.840 --> 0:17:31.720 batteries and solar, which you point out, and you're highlighting 0:17:31.760 --> 0:17:34.000 that there's a lot of money going into supply chain 0:17:34.080 --> 0:17:37.679 specifically for these two industries. Is that a sign that 0:17:37.720 --> 0:17:39.760 we are actually seeing a bit of a pivot because 0:17:39.880 --> 0:17:41.600 one of the things that we have noticed since been 0:17:41.640 --> 0:17:43.520 brought up on this show a few times, is that 0:17:43.920 --> 0:17:46.560 supply chains are changing. There is more near shoring and 0:17:46.600 --> 0:17:49.439 on shoring, and different parts of the world are thinking 0:17:49.480 --> 0:17:53.639 about not only investing in a clean energy future, but 0:17:53.720 --> 0:17:56.800 actually thinking about how they're going to manufacture it closer 0:17:56.800 --> 0:17:59.320