1 00:00:00,480 --> 00:00:03,239 Speaker 1: This is Tom Rowland's Rease and you're listening to Switched 2 00:00:03,279 --> 00:00:06,080 Speaker 1: on the podcast brought to you by Bloomberg n EF. 3 00:00:06,559 --> 00:00:09,639 Speaker 1: The push toward a lower carbon global economy faced serious 4 00:00:09,680 --> 00:00:12,320 Speaker 1: headwinds last year, and the start of twenty twenty six 5 00:00:12,400 --> 00:00:14,880 Speaker 1: offers little in the way of a clean reset for 6 00:00:14,960 --> 00:00:19,440 Speaker 1: climate focused investors and companies. The landscape remains complex, shaped 7 00:00:19,480 --> 00:00:23,560 Speaker 1: by political uncertainty, uneven policy support, and slower progress in 8 00:00:23,600 --> 00:00:27,480 Speaker 1: some markets. But despite these challenges, the energy transition is 9 00:00:27,520 --> 00:00:31,520 Speaker 1: still moving forward, driven by underlying economics, technology, and long 10 00:00:31,600 --> 00:00:36,839 Speaker 1: term structural change. On today's show, Albert Chung, bnef's deputy CEO, 11 00:00:37,120 --> 00:00:40,120 Speaker 1: is going to read his recent note titled Progress despite 12 00:00:40,159 --> 00:00:44,360 Speaker 1: Fragmentation Energy Transition to twenty thirty. In it, he explores 13 00:00:44,360 --> 00:00:46,960 Speaker 1: how the global context has shifted and why the energy 14 00:00:46,960 --> 00:00:49,320 Speaker 1: transition is likely to continue to grow through the second 15 00:00:49,320 --> 00:00:52,639 Speaker 1: half of this decade. BNEF clients can find Albert's note 16 00:00:52,640 --> 00:00:55,880 Speaker 1: by heading to BNF go on the Bloomberg terminal ORBNF 17 00:00:55,920 --> 00:00:58,319 Speaker 1: dot com if you'd like to learn more about how 18 00:00:58,360 --> 00:01:02,080 Speaker 1: BNEF approaches strategy research from the energy transition, including developments 19 00:01:02,080 --> 00:01:05,040 Speaker 1: in commodity markets, trends, across different sectors and the cross 20 00:01:05,040 --> 00:01:07,720 Speaker 1: cutting technology is shaping the future. You can find more 21 00:01:07,760 --> 00:01:10,200 Speaker 1: information on BNEF dot com, and if you'd like to 22 00:01:10,200 --> 00:01:12,319 Speaker 1: speak with a member of our team about becoming a client, 23 00:01:12,440 --> 00:01:16,399 Speaker 1: email us at salestp BNF at Bloomberg dot net. But 24 00:01:16,520 --> 00:01:18,800 Speaker 1: for now, let's take a closely look at the progression 25 00:01:18,800 --> 00:01:21,120 Speaker 1: of the transition to what is proving to be a 26 00:01:21,120 --> 00:01:25,200 Speaker 1: tough decade. 27 00:01:33,040 --> 00:01:38,160 Speaker 2: Progress despite fragmentation the energy transition to twenty thirty. The 28 00:01:38,200 --> 00:01:40,679 Speaker 2: second half of the decade will not be straightforward, but 29 00:01:40,840 --> 00:01:44,039 Speaker 2: count on more progress being made. The emergence of a 30 00:01:44,080 --> 00:01:46,760 Speaker 2: low carbon global economy, at the core of which is 31 00:01:46,800 --> 00:01:50,720 Speaker 2: the energy transition, encountered many challenges last year. The start 32 00:01:50,760 --> 00:01:53,280 Speaker 2: of twenty twenty six is unlikely to bring the sort 33 00:01:53,320 --> 00:01:56,520 Speaker 2: of reset that climate focused investors and companies might like 34 00:01:56,560 --> 00:01:59,520 Speaker 2: to see. Following this troubled time, it is important to 35 00:01:59,600 --> 00:02:02,240 Speaker 2: understand and how the context has changed around the world 36 00:02:02,440 --> 00:02:05,840 Speaker 2: and why energy transition will continue to progress in spite 37 00:02:05,880 --> 00:02:11,480 Speaker 2: of ongoing challenges, different regions, different priorities. A year ago, 38 00:02:11,800 --> 00:02:14,760 Speaker 2: I wrote that the overarching narrative for low carbon transition 39 00:02:14,960 --> 00:02:18,359 Speaker 2: had shifted from one of opportunity to one of competition. 40 00:02:18,840 --> 00:02:21,560 Speaker 2: This shift is even more evident today. Indeed, it is 41 00:02:21,600 --> 00:02:24,360 Speaker 2: no longer clear that major economies are even running the 42 00:02:24,400 --> 00:02:29,360 Speaker 2: same race. Different priorities are leading to fragmentation. In the US, 43 00:02:29,760 --> 00:02:32,640 Speaker 2: the race for clean energy leadership has been subjugated to 44 00:02:32,680 --> 00:02:35,680 Speaker 2: the race for AI dominance, a competition in which the 45 00:02:35,800 --> 00:02:39,520 Speaker 2: US still leads. This is supercharging demand for both clean 46 00:02:39,639 --> 00:02:42,760 Speaker 2: and fossil energy to power and explosion of data centers. 47 00:02:43,280 --> 00:02:46,960 Speaker 2: On the international stage, American diplomats are now leaning into 48 00:02:47,040 --> 00:02:50,320 Speaker 2: their country's role as the world's largest oil and gas producer, 49 00:02:50,600 --> 00:02:54,400 Speaker 2: searching for more LNG markets and actively disrupting efforts to 50 00:02:54,440 --> 00:02:59,040 Speaker 2: decarbonize shipping. More recently, US action in Venezuela shows just 51 00:02:59,160 --> 00:03:03,080 Speaker 2: how radically it is priorities have changed. For China. Energy 52 00:03:03,120 --> 00:03:06,680 Speaker 2: security and clean energy leadership continue to coincide as both 53 00:03:06,680 --> 00:03:11,040 Speaker 2: strategic priorities and economic growth drivers. In China's case, these 54 00:03:11,080 --> 00:03:15,120 Speaker 2: priorities sit alongside the quest for AI dominance. The country's 55 00:03:15,160 --> 00:03:18,680 Speaker 2: success in EVS means domestic oil demand has already hit 56 00:03:18,760 --> 00:03:22,000 Speaker 2: a peak, helping to limit its exposure to fuel imports. 57 00:03:22,520 --> 00:03:25,920 Speaker 2: The might of its renewable energy sector meanwhile, suggests a 58 00:03:26,000 --> 00:03:29,360 Speaker 2: peak in coal and therefore emissions may be at hand. 59 00:03:29,880 --> 00:03:33,520 Speaker 2: China's clean tech companies continue to grow their businesses overseas 60 00:03:33,680 --> 00:03:38,680 Speaker 2: through both exports and international manufacturing investments, even though tariff barriers, 61 00:03:38,800 --> 00:03:43,240 Speaker 2: stubborn over capacity and project delayers are causing pain. Europe meanwhile, 62 00:03:43,320 --> 00:03:46,160 Speaker 2: retains its role as a global climate leader. This is 63 00:03:46,200 --> 00:03:50,520 Speaker 2: despite a softening stance on sustainability, disclosures and vehicle emissions 64 00:03:50,560 --> 00:03:54,160 Speaker 2: in the EU. In a more uncertain world, clean energy 65 00:03:54,200 --> 00:03:57,840 Speaker 2: and electrification continue to offer the EU and UK a 66 00:03:57,920 --> 00:04:01,040 Speaker 2: path to greater energy security and r reduced exposure to 67 00:04:01,120 --> 00:04:04,920 Speaker 2: international oil and gas markets. The greater challenge facing Europe 68 00:04:05,160 --> 00:04:08,160 Speaker 2: is how to increase its economic competitiveness in a world 69 00:04:08,200 --> 00:04:13,120 Speaker 2: dominated by Chinese made products and American information technology. Lower 70 00:04:13,240 --> 00:04:15,960 Speaker 2: energy prices must be part of the solution, and reduced 71 00:04:16,120 --> 00:04:19,640 Speaker 2: LNG exposure could be one factor that will help. Each 72 00:04:19,760 --> 00:04:23,799 Speaker 2: of these major economies faces different strategic considerations, and climate 73 00:04:23,839 --> 00:04:26,839 Speaker 2: mitigation is no longer the shared priority it once was. 74 00:04:27,120 --> 00:04:29,280 Speaker 2: Nowhere is this clearer than in the mixed bag of 75 00:04:29,360 --> 00:04:33,880 Speaker 2: so called nationally determined contributions or NDCs submitted last year 76 00:04:34,080 --> 00:04:37,279 Speaker 2: in advance of COP thirty. The UK and EU have 77 00:04:37,360 --> 00:04:41,080 Speaker 2: each set new paras aligned emissions goals for twenty thirty five, 78 00:04:41,279 --> 00:04:44,720 Speaker 2: which will require significant efforts to achieve. China's new target 79 00:04:44,760 --> 00:04:46,919 Speaker 2: is a step forward, as for the first time it 80 00:04:47,000 --> 00:04:49,880 Speaker 2: calls for the country's emissions to decline, even though it 81 00:04:50,000 --> 00:04:54,240 Speaker 2: lacks quantitative ambition and should prove easy to reach. In contrast, 82 00:04:54,360 --> 00:04:56,960 Speaker 2: the US NDC, released in the last days of the 83 00:04:56,960 --> 00:05:01,040 Speaker 2: Biden administration, is now effectively null and void. The US 84 00:05:01,160 --> 00:05:04,720 Speaker 2: is exiting the Paris Agreement. India, another major player in 85 00:05:04,760 --> 00:05:07,800 Speaker 2: the global energy and emissions picture, has not even submitted 86 00:05:07,839 --> 00:05:12,440 Speaker 2: one yet. These decidedly mixed approaches to emissions goals should 87 00:05:12,440 --> 00:05:15,120 Speaker 2: go down as the legacy of international climate action in 88 00:05:15,160 --> 00:05:19,640 Speaker 2: twenty twenty five, demonstrating how changing priorities have knocked climate 89 00:05:19,680 --> 00:05:24,640 Speaker 2: progressed down the priority list. Clean energy will keep making progress. 90 00:05:25,720 --> 00:05:28,400 Speaker 2: All of this provides for some awkward mood music, but 91 00:05:28,480 --> 00:05:31,400 Speaker 2: the energy transition keeps on trucking and we will see 92 00:05:31,400 --> 00:05:34,440 Speaker 2: more progress in the second half of this decade. Take 93 00:05:34,480 --> 00:05:38,480 Speaker 2: renewable energy. We estimate that global solar and wind installations 94 00:05:38,560 --> 00:05:42,159 Speaker 2: exceeded eight hundred gigawatts last year, an all time record 95 00:05:42,200 --> 00:05:45,160 Speaker 2: and a tripling in yearly deployments since twenty twenty one. 96 00:05:45,560 --> 00:05:48,240 Speaker 2: Installations will be flat in twenty twenty six and grow 97 00:05:48,320 --> 00:05:51,560 Speaker 2: more modestly to twenty thirty, but they will grow. As 98 00:05:51,560 --> 00:05:54,560 Speaker 2: we have said many times before, the economics of renewable 99 00:05:54,600 --> 00:05:57,279 Speaker 2: power are just too good to ignore, and this helps 100 00:05:57,279 --> 00:06:00,960 Speaker 2: to insulate the sector from geopolitical volatility. What is more, 101 00:06:01,200 --> 00:06:04,120 Speaker 2: the acceleration in power demand from AI, data centers and 102 00:06:04,200 --> 00:06:08,400 Speaker 2: electric vehicles will undoubtedly support further deployment of wind, solar 103 00:06:08,400 --> 00:06:12,440 Speaker 2: and storage, even in the face of changing tariff regimes. Globally, 104 00:06:12,560 --> 00:06:15,320 Speaker 2: we now expect four point five tarawats of new wind 105 00:06:15,320 --> 00:06:18,400 Speaker 2: and solar installations over the next five years, a sixty 106 00:06:18,480 --> 00:06:21,920 Speaker 2: seven percent increase on the preceding five year period. Even 107 00:06:21,920 --> 00:06:25,000 Speaker 2: in the US, where policy momentum has moved decidedly away 108 00:06:25,000 --> 00:06:27,919 Speaker 2: from clean energy, we still expect some three hundred and 109 00:06:28,000 --> 00:06:31,200 Speaker 2: thirty six gigawatts of wind, solar and energy storage to 110 00:06:31,200 --> 00:06:34,120 Speaker 2: be installed in the years twenty twenty six to twenty thirty. 111 00:06:34,480 --> 00:06:37,800 Speaker 2: This is a significant reduction from our previous forecasts, but 112 00:06:37,920 --> 00:06:41,240 Speaker 2: is still twenty four percent higher than installations in the 113 00:06:41,279 --> 00:06:44,920 Speaker 2: preceding five year period. Speaking of energy storage, the future 114 00:06:44,960 --> 00:06:48,720 Speaker 2: here looks bright too. We expect annual global storage installations 115 00:06:48,760 --> 00:06:51,520 Speaker 2: to exceed one hundred gigawatts in twenty twenty six for 116 00:06:51,600 --> 00:06:54,719 Speaker 2: the first time and rise onward past two hundred gigawatts 117 00:06:54,760 --> 00:06:58,120 Speaker 2: over the coming decade. Our most recent energy storage system 118 00:06:58,160 --> 00:07:01,120 Speaker 2: costs survey showed that IT equipment prices are now one 119 00:07:01,160 --> 00:07:04,080 Speaker 2: hundred and seventeen dollars per kilo hour, less than a 120 00:07:04,120 --> 00:07:07,080 Speaker 2: third of what they were three years ago. This tipping 121 00:07:07,120 --> 00:07:10,240 Speaker 2: point is arriving just in time to support continued renewable 122 00:07:10,320 --> 00:07:13,440 Speaker 2: energy growth in markets where power prices have been depressed 123 00:07:13,600 --> 00:07:19,160 Speaker 2: by high solar penetrations. Disruption underway as EV growth continues, 124 00:07:20,120 --> 00:07:24,080 Speaker 2: Falling battery prices and better electric vehicles continue to drive electrification. 125 00:07:24,160 --> 00:07:27,160 Speaker 2: In transport. EV sales are now over a quarter of 126 00:07:27,200 --> 00:07:30,880 Speaker 2: global car sales and unthinkable milestone just a few years ago, 127 00:07:31,000 --> 00:07:33,720 Speaker 2: and we are forecasting their share to rise to forty 128 00:07:33,760 --> 00:07:37,200 Speaker 2: percent by twenty thirty. China is the runaway leader, with 129 00:07:37,320 --> 00:07:40,320 Speaker 2: EV's share of over fifty percent today, and Europe's share 130 00:07:40,360 --> 00:07:43,320 Speaker 2: is above twenty five percent, while other markets sit below 131 00:07:43,360 --> 00:07:47,040 Speaker 2: the global average. True, not everything in life is about economics, 132 00:07:47,080 --> 00:07:49,200 Speaker 2: but quite a lot of it is. It is no 133 00:07:49,320 --> 00:07:52,720 Speaker 2: coincidence that China is the only major market selling a 134 00:07:52,760 --> 00:07:56,240 Speaker 2: majority of evs. It is also the only major market 135 00:07:56,400 --> 00:07:59,640 Speaker 2: where upfront purchase prices of evs have fallen below the 136 00:07:59,640 --> 00:08:03,080 Speaker 2: price of an internal combustion engine vehicle. In other markets, 137 00:08:03,120 --> 00:08:05,640 Speaker 2: there is still an EV premium, but we should expect 138 00:08:05,680 --> 00:08:08,880 Speaker 2: sales to keep rising everywhere as that premium narrows. This 139 00:08:08,960 --> 00:08:12,120 Speaker 2: includes emerging markets where we are seeing strong growth, such 140 00:08:12,120 --> 00:08:16,040 Speaker 2: as in Southeast Asia, Latin America, and even Ethiopia. The 141 00:08:16,120 --> 00:08:19,560 Speaker 2: rapid development of EV's in China means that incumbent Western 142 00:08:19,560 --> 00:08:23,119 Speaker 2: and Japanese automakers face disruption. The market share of foreign 143 00:08:23,160 --> 00:08:25,920 Speaker 2: automakers in China has fallen from two thirds in twenty 144 00:08:25,960 --> 00:08:29,240 Speaker 2: twenty to below forty percent today. At the same time, 145 00:08:29,480 --> 00:08:32,400 Speaker 2: Chinese automakers have seen a step up and now command 146 00:08:32,440 --> 00:08:36,320 Speaker 2: an eighteen percent share of EV sales in markets outside 147 00:08:36,360 --> 00:08:39,160 Speaker 2: of China, with Europe being one of the main destinations. 148 00:08:39,600 --> 00:08:42,360 Speaker 2: While US federal policy makers seem to have made peace 149 00:08:42,480 --> 00:08:45,960 Speaker 2: with ceding the global EV market to China, European leaders 150 00:08:45,960 --> 00:08:49,200 Speaker 2: and automotive companies are determined to fight on the industry 151 00:08:49,240 --> 00:08:53,000 Speaker 2: is increasingly collaborating with Chinese companies to accelerate their battery 152 00:08:53,040 --> 00:08:57,800 Speaker 2: and EV technology development. Examples include Stlantis's partnership with coatl 153 00:08:57,960 --> 00:09:01,200 Speaker 2: and Leap Motor to produce batteries and EV's and the 154 00:09:01,240 --> 00:09:05,200 Speaker 2: partnership between Volkswagen and XPANG to jointly develop EV models 155 00:09:05,200 --> 00:09:08,440 Speaker 2: for the China market. The European Commission's recent decision to 156 00:09:08,520 --> 00:09:11,920 Speaker 2: weaken its twenty thirty five vehicle emissions policy will allow 157 00:09:12,080 --> 00:09:15,080 Speaker 2: internal combustion engines to keep being sold in the EU 158 00:09:15,240 --> 00:09:18,120 Speaker 2: after that date, but we still expect more than eighty 159 00:09:18,160 --> 00:09:20,640 Speaker 2: percent of new car sales will need to be pure 160 00:09:20,679 --> 00:09:23,880 Speaker 2: battery electrics by then, which provides a clear growth signal 161 00:09:23,920 --> 00:09:26,480 Speaker 2: for the sector. Disruption is also on the way for 162 00:09:26,520 --> 00:09:29,800 Speaker 2: global oil markets. Our base case scenario has oil demand 163 00:09:29,880 --> 00:09:33,240 Speaker 2: peaking in twenty thirty two as evs shave more barrels 164 00:09:33,280 --> 00:09:35,600 Speaker 2: off the global market. This is in contrast to the 165 00:09:35,640 --> 00:09:39,480 Speaker 2: EU's recent World Energy Outlook Current Policies scenario, which projected 166 00:09:39,559 --> 00:09:42,640 Speaker 2: rising oil demand until twenty fifty. The year of peak 167 00:09:42,679 --> 00:09:45,400 Speaker 2: oil has moved around in BNF's forecasts over the years, 168 00:09:45,440 --> 00:09:48,240 Speaker 2: but even a sharp reversal in US climate policy has 169 00:09:48,280 --> 00:09:50,600 Speaker 2: only shifted the milestone back by a year or two. 170 00:09:51,840 --> 00:09:54,480 Speaker 2: Hard to abate sectors are still hard, but progress is 171 00:09:54,480 --> 00:09:58,880 Speaker 2: being made. Beyond clean power and vehicle electrification, momentum is 172 00:09:58,920 --> 00:10:03,480 Speaker 2: more fragile. Decarbonization of industry, building, heat, shipping, and aviation 173 00:10:03,640 --> 00:10:06,240 Speaker 2: relies on technologies which today are out of the money 174 00:10:06,240 --> 00:10:09,440 Speaker 2: and still scaling up. The ingredients for success are, however, 175 00:10:09,480 --> 00:10:13,920 Speaker 2: well understood. Technologies such as electrification, hydrogen, carbon capture and 176 00:10:13,960 --> 00:10:17,480 Speaker 2: renewable fuels need robust carbon pricing to level the playing field, 177 00:10:17,679 --> 00:10:22,640 Speaker 2: subsidies or incentives to defray additional costs, mechanisms that create demand, and, 178 00:10:22,840 --> 00:10:27,040 Speaker 2: if appropriate, trade protections to prevent carbon leakage. This year 179 00:10:27,040 --> 00:10:29,840 Speaker 2: will deliver important lessons on how to make these measures work. 180 00:10:30,200 --> 00:10:33,160 Speaker 2: The EU is introducing its long awaited and dreaded in 181 00:10:33,240 --> 00:10:37,240 Speaker 2: some quarters, carbon Border Adjustment Mechanism or SEABAM, coupled with 182 00:10:37,280 --> 00:10:40,280 Speaker 2: its Decarbonization Bank and the phase out of free allowances 183 00:10:40,280 --> 00:10:43,040 Speaker 2: in the carbon market. This is, in principle, the final 184 00:10:43,080 --> 00:10:45,640 Speaker 2: piece of the puzzle needed to spur net zero aligned 185 00:10:45,679 --> 00:10:48,880 Speaker 2: industrial production in the EU. There are still questions on 186 00:10:48,880 --> 00:10:51,559 Speaker 2: implementation even at this late stage, but the EU is 187 00:10:51,600 --> 00:10:53,680 Speaker 2: the one market that is pulling all of the relevant 188 00:10:53,720 --> 00:10:57,280 Speaker 2: policy levers. The bar for success is high. SEABAM needs 189 00:10:57,280 --> 00:11:00,520 Speaker 2: to successfully reduce emissions in Europe without sack reficing its 190 00:11:00,559 --> 00:11:05,439 Speaker 2: industrial competitiveness, while also encouraging other jurisdictions to implement stringent 191 00:11:05,559 --> 00:11:09,840 Speaker 2: emissions policies. We will soon know if it works or not. Elsewhere, 192 00:11:10,080 --> 00:11:12,480 Speaker 2: China is expanding the scope of its carbon market and 193 00:11:12,559 --> 00:11:15,840 Speaker 2: planning to introduce absolute emissions caps. It is also ramping 194 00:11:15,920 --> 00:11:18,400 Speaker 2: up efforts on hydrogen, with new policies to fund the 195 00:11:18,400 --> 00:11:22,840 Speaker 2: scale up of hydrogen production. Japan's gx ets carbon market 196 00:11:22,840 --> 00:11:25,160 Speaker 2: will launch in twenty twenty six to two, which could 197 00:11:25,240 --> 00:11:28,760 Speaker 2: lay the foundations for the country's industrial sector to decarbonize. 198 00:11:28,880 --> 00:11:31,760 Speaker 2: While policy change has slowed investment in the US, the 199 00:11:31,800 --> 00:11:34,440 Speaker 2: country will still be the largest host for carbon capture 200 00:11:34,440 --> 00:11:37,120 Speaker 2: projects until the end of the decade. In the meantime, 201 00:11:37,200 --> 00:11:40,280 Speaker 2: there will be gradual progress on emerging technologies. We now 202 00:11:40,280 --> 00:11:43,839 Speaker 2: expect global carbon capture capacity to increase more than fourfold 203 00:11:43,920 --> 00:11:46,880 Speaker 2: by twenty thirty to exceed two hundred million metric tons 204 00:11:46,920 --> 00:11:50,199 Speaker 2: per aanum. Clean hydrogen production rises to five million metric 205 00:11:50,280 --> 00:11:52,800 Speaker 2: tons peranum by the same year. While this is a 206 00:11:52,880 --> 00:11:56,160 Speaker 2: much lower figure than previously expected, it still represents a 207 00:11:56,200 --> 00:11:59,640 Speaker 2: sixfold jump over the next five years. As for sustainable 208 00:11:59,640 --> 00:12:03,120 Speaker 2: aviation fuels. We project a ten fold increase from twenty 209 00:12:03,200 --> 00:12:06,320 Speaker 2: twenty four to twenty thirty, reaching three point eight percent 210 00:12:06,360 --> 00:12:09,120 Speaker 2: of global jet fuel demand by the end of the decade. 211 00:12:09,360 --> 00:12:12,960 Speaker 2: The numbers remain small and expectations are much lower than before, 212 00:12:13,080 --> 00:12:17,280 Speaker 2: but progress is still being made. Winning and losing in 213 00:12:17,320 --> 00:12:21,640 Speaker 2: the climate race. We are in a fragmented multi speed transition. 214 00:12:22,080 --> 00:12:25,760 Speaker 2: Progress will continue, but different regions are placing different levels 215 00:12:25,760 --> 00:12:28,760 Speaker 2: of priority on clean energy development, and different technologies are 216 00:12:28,800 --> 00:12:31,840 Speaker 2: scaling at different speeds, And as I've hinted in this article, 217 00:12:31,920 --> 00:12:34,600 Speaker 2: we are starting to see relative winners and losers in 218 00:12:34,640 --> 00:12:37,320 Speaker 2: the clean energy race. But take a step back and 219 00:12:37,360 --> 00:12:39,960 Speaker 2: remember that the physical impacts of climate change weight for 220 00:12:40,040 --> 00:12:43,640 Speaker 2: no one. Our colleagues in Bloomberg Intelligence have calculated that 221 00:12:43,679 --> 00:12:46,640 Speaker 2: the world suffered one point four trillion dollars of climate 222 00:12:46,720 --> 00:12:50,280 Speaker 2: damages in twenty twenty four, a figure that's currently doubling 223 00:12:50,320 --> 00:12:53,640 Speaker 2: with each decade, and data limitations mean this is likely 224 00:12:53,679 --> 00:12:56,720 Speaker 2: to be a considerable underestimation of the true costs. In 225 00:12:56,800 --> 00:12:59,760 Speaker 2: twenty twenty five, we saw devastating storms and floods in 226 00:12:59,760 --> 00:13:03,520 Speaker 2: South East Asia, deadly heat waves in Europe, extreme storms 227 00:13:03,559 --> 00:13:06,520 Speaker 2: and tornadoes across the US, and who can forget the 228 00:13:06,520 --> 00:13:08,960 Speaker 2: wildfires in Los Angeles at the beginning of the year. 229 00:13:09,360 --> 00:13:12,920 Speaker 2: Climate damage is already harming communities and economies around the world, 230 00:13:13,040 --> 00:13:15,400 Speaker 2: and it is only going to get worse. In a 231 00:13:15,440 --> 00:13:18,600 Speaker 2: world where the energy transition fails, we will all be losers. 232 00:13:18,840 --> 00:13:21,720 Speaker 2: But that is not the world we're in. True we 233 00:13:21,760 --> 00:13:24,000 Speaker 2: can now see that global warming will not be kept 234 00:13:24,040 --> 00:13:26,720 Speaker 2: below one point five degrees celsius, and in my view, 235 00:13:26,720 --> 00:13:30,160 Speaker 2: we should not be surprised. The extremely sharp emissions reductions 236 00:13:30,160 --> 00:13:32,520 Speaker 2: required to achieve this goal were always going to be 237 00:13:32,559 --> 00:13:36,240 Speaker 2: monumentally challenging to deliver, but the clean energy transition still 238 00:13:36,280 --> 00:13:38,719 Speaker 2: holds the keys to a better outcome. In our New 239 00:13:38,840 --> 00:13:42,440 Speaker 2: Energy Outlook last year, we presented a new economic transition 240 00:13:42,520 --> 00:13:45,679 Speaker 2: scenario showing that a global peak in emissions could occur 241 00:13:45,800 --> 00:13:49,480 Speaker 2: immediately if we only deployed clean energy technologies in line 242 00:13:49,520 --> 00:13:53,280 Speaker 2: with a cost effective base case trajectory. We also demonstrated 243 00:13:53,280 --> 00:13:56,840 Speaker 2: that a faster net zero ALIGNE transition carries only a 244 00:13:56,920 --> 00:13:59,600 Speaker 2: nine percent higher cost for the energy system to twenty 245 00:13:59,640 --> 00:14:03,360 Speaker 2: fifteen compared with the base case. The payback in reduced 246 00:14:03,440 --> 00:14:06,880 Speaker 2: climate damage, improved air quality, and human well being should 247 00:14:06,920 --> 00:14:10,520 Speaker 2: speak for itself. This spring, Bloomberg and EF will publish 248 00:14:10,520 --> 00:14:13,240 Speaker 2: a new climate scenario that provides a pathway to keep 249 00:14:13,280 --> 00:14:16,040 Speaker 2: global warming well below two degrees, in line with the 250 00:14:16,080 --> 00:14:18,720 Speaker 2: headline goal of the Paris Agreement. This will not be 251 00:14:18,760 --> 00:14:21,800 Speaker 2: a top down narrative scenario, but a bottom up analysis 252 00:14:21,800 --> 00:14:26,040 Speaker 2: of technologies, sectors, countries and economies showing a credible pathway 253 00:14:26,080 --> 00:14:29,200 Speaker 2: to a climate safe outcome. At a moment when countries 254 00:14:29,240 --> 00:14:32,800 Speaker 2: face competing priorities, we should remember that the energy transition 255 00:14:33,120 --> 00:14:36,360 Speaker 2: will keep progressing and a pathway to stabilizing the climate 256 00:14:36,600 --> 00:14:49,040 Speaker 2: still exists. Today's episode of Switched On was produced by 257 00:14:49,120 --> 00:14:53,440 Speaker 2: Cam Gray with production assistance from Kamala Shelling. Bloomberg NEF 258 00:14:53,480 --> 00:14:56,680 Speaker 2: is a service provided by Bloomberg Finance LP and its affiliates. 259 00:14:56,720 --> 00:14:59,400 Speaker 2: This recording does not constitute, nor should it be construed 260 00:14:59,440 --> 00:15:03,240 Speaker 2: as investment and advice, investment recommendations, or a recommendation as 261 00:15:03,280 --> 00:15:06,120 Speaker 2: to an investment or other strategy. Bloomberg ANIAF should not 262 00:15:06,160 --> 00:15:09,200 Speaker 2: be considered as information sufficient upon which to base an 263 00:15:09,240 --> 00:15:12,400 Speaker 2: investment decision. Neither Bloomberg Finance LP nor any of its 264 00:15:12,400 --> 00:15:16,120 Speaker 2: affiliates makes any representation or warranty as to the accuracy 265 00:15:16,200 --> 00:15:19,000 Speaker 2: or completeness of the information contained in this recording, and 266 00:15:19,120 --> 00:15:22,680 Speaker 2: any liability as a result of this recording is expressly disclaimed.