1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:08,440 --> 00:00:11,000 Speaker 2: I'm Stephen Carroll, and this is Here's Why, where we 3 00:00:11,039 --> 00:00:13,119 Speaker 2: take one new story and explain it in just a 4 00:00:13,119 --> 00:00:15,560 Speaker 2: few minutes with our experts here at Bloomberg. 5 00:00:19,840 --> 00:00:23,320 Speaker 3: The war in the Middle East is creating the largest 6 00:00:23,640 --> 00:00:29,600 Speaker 3: supply disruption in the history of the global oil market. 7 00:00:30,080 --> 00:00:32,839 Speaker 3: If the IEA wasn't out there warning this is the 8 00:00:32,840 --> 00:00:36,120 Speaker 3: worst energy crisis in human history and saying release your 9 00:00:36,120 --> 00:00:40,040 Speaker 3: reserves now, then you'd have a much higher energy price. 10 00:00:40,120 --> 00:00:43,920 Speaker 3: But the one trick ponies, they're not going to last. 11 00:00:43,960 --> 00:00:48,080 Speaker 3: And you can't print electrons, baby, in print US dollars, 12 00:00:48,320 --> 00:00:49,640 Speaker 3: but you're not going to print electrons. 13 00:00:49,720 --> 00:00:51,920 Speaker 1: Apart from reopening the straight up war mews, which of 14 00:00:51,960 --> 00:00:55,160 Speaker 1: course Trump can't do, what can be done to lower 15 00:00:55,200 --> 00:00:58,720 Speaker 1: the oil price effectively and sustainably. Nothing, And I think 16 00:00:58,760 --> 00:01:01,200 Speaker 1: that is that is the the mental problem we have 17 00:01:01,280 --> 00:01:04,400 Speaker 1: over here. Other than the chokepoint being removed, you do 18 00:01:04,480 --> 00:01:07,600 Speaker 1: not have the substitute for this volume anywhere else. 19 00:01:08,160 --> 00:01:11,160 Speaker 2: The war in Iran has delivered an unprecedented shock to 20 00:01:11,200 --> 00:01:14,720 Speaker 2: global oil and gas supplies. Prices surged, and for the 21 00:01:14,760 --> 00:01:17,399 Speaker 2: second time in four years, many countries are looking for 22 00:01:17,480 --> 00:01:21,200 Speaker 2: alternative sources of energy. This disruption is happening at a 23 00:01:21,240 --> 00:01:24,279 Speaker 2: time when politicians have been turning cold on the push 24 00:01:24,280 --> 00:01:28,160 Speaker 2: for renewables. So will countries double down on fossil fuels 25 00:01:28,440 --> 00:01:30,760 Speaker 2: or will they speed up the move to clean energy? 26 00:01:31,440 --> 00:01:37,680 Speaker 2: Here's why the Iran war resets the energy transition. Our 27 00:01:37,760 --> 00:01:40,080 Speaker 2: senior climate reporter akshat Rady, who is host of Our 28 00:01:40,240 --> 00:01:44,880 Speaker 2: Zero podcast, joins us now for more. Actually, first of all, 29 00:01:45,040 --> 00:01:48,680 Speaker 2: before the Iran War began, how would you characterize the 30 00:01:48,760 --> 00:01:52,760 Speaker 2: conversation around the energy transition. It seemed that many countries 31 00:01:52,800 --> 00:01:55,000 Speaker 2: were following the US and pulling back. 32 00:01:55,520 --> 00:01:58,720 Speaker 1: I think fossil fuel economies, or at least countries that 33 00:01:58,840 --> 00:02:02,560 Speaker 1: have access to domestic fossil fuels, were doubling down on 34 00:02:02,640 --> 00:02:05,320 Speaker 1: fossil fuels. But we were also seeing a move in 35 00:02:05,360 --> 00:02:09,800 Speaker 1: countries that were heavily dependent on importing fossil fuels toward 36 00:02:10,000 --> 00:02:14,880 Speaker 1: clean energy. This Iran war is the second energy shock 37 00:02:15,040 --> 00:02:18,400 Speaker 1: in a decade, and in regions like Europe and much 38 00:02:18,440 --> 00:02:21,840 Speaker 1: of Asia, we were already seeing a speeding up of 39 00:02:21,919 --> 00:02:25,600 Speaker 1: a move towards clean energy, and this war is only 40 00:02:25,639 --> 00:02:28,040 Speaker 1: going to add an accelerant to that move. 41 00:02:28,680 --> 00:02:32,320 Speaker 2: This has once again become a conversation around energy security. 42 00:02:32,880 --> 00:02:37,239 Speaker 2: Our renewable energy sources like solar and wind more secure 43 00:02:37,800 --> 00:02:39,119 Speaker 2: than oil and gas supplies. 44 00:02:39,720 --> 00:02:42,360 Speaker 1: I think the conversation on the energy transition in general 45 00:02:42,440 --> 00:02:46,959 Speaker 1: has been moving away from emissions and decarbonization toward security 46 00:02:47,320 --> 00:02:52,080 Speaker 1: ever since Russia attacked Ukraine, and renewables are being seen 47 00:02:52,360 --> 00:02:56,480 Speaker 1: in that security lens as being available domestically, most countries 48 00:02:56,560 --> 00:03:00,720 Speaker 1: have plenty of wind and sun available, and the question 49 00:03:00,800 --> 00:03:04,760 Speaker 1: now is around affordability and reliability. Can you make these 50 00:03:05,240 --> 00:03:09,000 Speaker 1: intermittent sources of renewables last for longer and can you 51 00:03:09,120 --> 00:03:12,079 Speaker 1: deploy them because the upfront cost is still more expensive 52 00:03:12,480 --> 00:03:15,760 Speaker 1: but over their lifetime cheaper. Can you deploy them with 53 00:03:15,840 --> 00:03:20,360 Speaker 1: the affordability constraints that many economies have, even European economies 54 00:03:20,560 --> 00:03:23,920 Speaker 1: really can't borrow all that much more than they already have, 55 00:03:24,320 --> 00:03:27,320 Speaker 1: and of course emerging economies have always struggled to borrow 56 00:03:27,560 --> 00:03:31,520 Speaker 1: huge sums of money. So that is where the constraints 57 00:03:31,560 --> 00:03:34,800 Speaker 1: on moving to clean energy really come from. The security 58 00:03:34,880 --> 00:03:36,480 Speaker 1: question has actually been settled. 59 00:03:37,080 --> 00:03:42,320 Speaker 2: Where are we in the technology around the reliability of 60 00:03:42,560 --> 00:03:47,559 Speaker 2: these renewable energy sources. Can they provide a full replacement 61 00:03:47,680 --> 00:03:48,800 Speaker 2: for fossil fuels. 62 00:03:49,720 --> 00:03:52,800 Speaker 1: Any energy equation is really a trade off. You have 63 00:03:53,360 --> 00:03:56,960 Speaker 1: sources of energies that have benefits and down sides, and 64 00:03:57,040 --> 00:03:59,240 Speaker 1: as we are seeing in fossil fuels, yes, they can 65 00:03:59,280 --> 00:04:02,720 Speaker 1: be stored and move around and power the economy most 66 00:04:02,720 --> 00:04:05,200 Speaker 1: of the time. But of course if you have a 67 00:04:05,240 --> 00:04:07,520 Speaker 1: war and you don't have access to those fossil fuels, 68 00:04:07,640 --> 00:04:11,120 Speaker 1: then you can't use them. On renewables, There's always been 69 00:04:11,160 --> 00:04:14,680 Speaker 1: the intermittency question, but because of the pace at which 70 00:04:14,720 --> 00:04:17,919 Speaker 1: the price of batteries has fallen, that question is becoming 71 00:04:18,000 --> 00:04:21,120 Speaker 1: easier and easier to answer. So solar and wind cannot 72 00:04:21,160 --> 00:04:24,120 Speaker 1: be an answered to fossil fuels on their own, but 73 00:04:24,240 --> 00:04:28,160 Speaker 1: combining them with batteries, with nuclear power, with geothermal, that 74 00:04:28,240 --> 00:04:31,520 Speaker 1: combination can really do a lot to try and reduce 75 00:04:31,680 --> 00:04:33,640 Speaker 1: the dependency on fossil fuels. 76 00:04:34,080 --> 00:04:36,800 Speaker 2: You mentioned this is the second major energy shock in 77 00:04:36,839 --> 00:04:39,080 Speaker 2: a decade, of course, the last one being around Russia's 78 00:04:39,080 --> 00:04:43,039 Speaker 2: invasion of Ukraine. Does a crisis like this help to 79 00:04:43,120 --> 00:04:46,880 Speaker 2: push an economy towards renewable sources. 80 00:04:46,640 --> 00:04:50,400 Speaker 1: Well, we don't even have to prognosticate very hard. You 81 00:04:50,400 --> 00:04:53,239 Speaker 1: should just look at what the nineteen seventy three oil 82 00:04:53,279 --> 00:04:57,600 Speaker 1: crisis followed by the nineteen seventy nine oil crisis did 83 00:04:57,760 --> 00:05:01,119 Speaker 1: to countries that were importing fossil fuels. They moved into 84 00:05:01,279 --> 00:05:05,479 Speaker 1: nuclear energy, spent a lot of energy research money into 85 00:05:05,600 --> 00:05:08,919 Speaker 1: solar and lithium ion batteries, and we saw a sharp 86 00:05:09,000 --> 00:05:12,120 Speaker 1: decline in how much energy the world was getting from 87 00:05:12,200 --> 00:05:17,000 Speaker 1: oil relative to other sources of energy over the next decade. 88 00:05:17,080 --> 00:05:20,719 Speaker 1: This time around this double shock, many are saying, including 89 00:05:21,040 --> 00:05:24,120 Speaker 1: the head of the International Energy Agency, which was created, 90 00:05:24,160 --> 00:05:27,240 Speaker 1: of course after the nineteen seventy three oil shock, that 91 00:05:27,600 --> 00:05:31,919 Speaker 1: these two dual shocks will have a major impact on 92 00:05:32,000 --> 00:05:35,800 Speaker 1: the decisions that governments and individuals will be making on 93 00:05:35,920 --> 00:05:39,640 Speaker 1: their energy choices, and renewables will certainly get a boost. 94 00:05:40,240 --> 00:05:43,080 Speaker 2: You make an interesting point there about both the individual 95 00:05:43,160 --> 00:05:46,400 Speaker 2: behavior and the government behavior. I wonder which is the 96 00:05:46,440 --> 00:05:49,800 Speaker 2: most important driver. Is it what consumers want to need 97 00:05:49,960 --> 00:05:52,840 Speaker 2: or is it how governments are, perhaps in some cases 98 00:05:52,880 --> 00:05:54,640 Speaker 2: politically willing to act. 99 00:05:55,400 --> 00:05:57,960 Speaker 1: So for the first two decades of the century, the 100 00:05:58,040 --> 00:06:01,320 Speaker 1: clean energy question was really a government question because you 101 00:06:01,400 --> 00:06:03,720 Speaker 1: needed all these policies, and you needed to bring down 102 00:06:03,760 --> 00:06:07,200 Speaker 1: the cost of solar panels and batteries it's only really 103 00:06:07,200 --> 00:06:09,920 Speaker 1: in the twenty twenties that the consumer has come into 104 00:06:09,960 --> 00:06:13,320 Speaker 1: the equation, and actually today the consumer is in the 105 00:06:13,400 --> 00:06:15,960 Speaker 1: driving seat. So take the example of what happened in 106 00:06:16,000 --> 00:06:21,200 Speaker 1: Pakistan after the gas crisis created by Russia attacking Ukraine. 107 00:06:21,320 --> 00:06:24,960 Speaker 1: We saw a major boost in imports of solar panels 108 00:06:25,000 --> 00:06:30,320 Speaker 1: and batteries, mostly done by private businesses and individuals who 109 00:06:30,600 --> 00:06:34,200 Speaker 1: wanted reliable power supply, which the state wasn't able to 110 00:06:34,240 --> 00:06:38,599 Speaker 1: provide because it could not import any liquefied natural gas. 111 00:06:39,480 --> 00:06:41,520 Speaker 2: Is it to places like Pakistan that we should be 112 00:06:41,560 --> 00:06:44,919 Speaker 2: looking as to where these advances might happen most quickly? 113 00:06:44,960 --> 00:06:47,359 Speaker 2: Are there certain regions of the world which we feel 114 00:06:47,400 --> 00:06:50,159 Speaker 2: will accelerate this shift after this crisis. 115 00:06:50,720 --> 00:06:53,240 Speaker 1: We know that Strait of Hormones supplies most of its 116 00:06:53,240 --> 00:06:56,479 Speaker 1: fossil fuels to Asian economies, and it's natural to look 117 00:06:56,520 --> 00:07:00,920 Speaker 1: to them, But certain Asian countries are heavy dependent on 118 00:07:01,000 --> 00:07:04,680 Speaker 1: the import. So even today Pakistan gets ninety nine percent 119 00:07:04,800 --> 00:07:09,240 Speaker 1: of its LNG from Qatar, Bangladesh gets about seventy five 120 00:07:09,279 --> 00:07:12,600 Speaker 1: percent of it. Places like Japan and South Korea are 121 00:07:12,640 --> 00:07:16,000 Speaker 1: still very heavily reliant on having gas in their power mix. 122 00:07:16,480 --> 00:07:19,720 Speaker 1: Those economies is where I will be looking for this 123 00:07:19,800 --> 00:07:23,720 Speaker 1: move toward clean energy. China, which gets an absolute amount 124 00:07:23,880 --> 00:07:26,080 Speaker 1: a lot of oil and gas from the state of 125 00:07:26,080 --> 00:07:29,840 Speaker 1: hoharmuse in relative amount is actually small, and it is 126 00:07:29,880 --> 00:07:32,720 Speaker 1: the country that has built the most amount of clean 127 00:07:32,880 --> 00:07:36,280 Speaker 1: energy at home and the capacity to deploy all this 128 00:07:36,360 --> 00:07:40,200 Speaker 1: clean energy not just at home but everywhere around the world. 129 00:07:40,600 --> 00:07:44,600 Speaker 1: And there is plentiful supply of solar panels and batteries, 130 00:07:44,760 --> 00:07:48,000 Speaker 1: if anything, that's over capacity. We've been warned before this 131 00:07:48,160 --> 00:07:51,840 Speaker 1: energy crisis started. So there is a competitive advantage that 132 00:07:51,920 --> 00:07:55,560 Speaker 1: clean energy has right now in a world where fossil 133 00:07:55,560 --> 00:07:56,880 Speaker 1: fuels are getting constrained. 134 00:07:57,800 --> 00:08:01,000 Speaker 2: If prices come back down for oil and gas at 135 00:08:01,000 --> 00:08:04,280 Speaker 2: some point, is that going to take away this renewed impetus. 136 00:08:04,760 --> 00:08:07,160 Speaker 1: Ever since the war began, that has been a big 137 00:08:07,280 --> 00:08:09,920 Speaker 1: question we have to ask, which is how long will 138 00:08:10,000 --> 00:08:14,119 Speaker 1: high prices last? And it certainly matters for how much 139 00:08:14,240 --> 00:08:18,560 Speaker 1: governments and individuals will make decisions about their energy hungry 140 00:08:18,920 --> 00:08:23,680 Speaker 1: devices and industries based on those prices. What we now 141 00:08:23,760 --> 00:08:27,000 Speaker 1: know nearly a month into the war is that even 142 00:08:27,160 --> 00:08:30,840 Speaker 1: if it ends tomorrow, the disruption is going to last 143 00:08:30,840 --> 00:08:34,640 Speaker 1: for weeks and months and so prices may fall, but 144 00:08:34,800 --> 00:08:38,120 Speaker 1: this shock has now hit in a way where governments 145 00:08:38,120 --> 00:08:43,280 Speaker 1: and individuals cannot psychologically disconnect from what just happened. And 146 00:08:43,559 --> 00:08:46,840 Speaker 1: if it doesn't boost clean energy tomorrow, it will have 147 00:08:46,920 --> 00:08:51,439 Speaker 1: a long term boost that wasn't there before the war started. 148 00:08:52,000 --> 00:08:54,880 Speaker 2: Okay, acath Rati, our senior climate reporter, thank you very 149 00:08:54,960 --> 00:08:56,840 Speaker 2: much for joining us, and you can hear more from 150 00:08:56,840 --> 00:09:01,320 Speaker 2: maxhat on his Bloomberg podcast zero. More explanations like this 151 00:09:01,400 --> 00:09:04,240 Speaker 2: from our team of three thousand journalists and analysts around 152 00:09:04,240 --> 00:09:09,000 Speaker 2: the world, go to bloomberg dot com slash explainers. I'm 153 00:09:09,000 --> 00:09:11,840 Speaker 2: Stephen Caroll. This is here's why. I'll be back next 154 00:09:11,840 --> 00:09:13,560 Speaker 2: week with more. Thanks for listening.