1 00:00:00,120 --> 00:00:03,200 Speaker 1: Hi, I'm Dana Perkins, and you're listening to Switch on 2 00:00:03,520 --> 00:00:05,760 Speaker 1: the B n OF podcast. So today we're going to 3 00:00:05,840 --> 00:00:08,560 Speaker 1: talk about the energy transition and how it's shaping up 4 00:00:08,560 --> 00:00:10,480 Speaker 1: in Europe. Now, you don't need to be in Europe 5 00:00:10,480 --> 00:00:13,840 Speaker 1: to be interested in it. Europe has ambitious climate targets 6 00:00:13,840 --> 00:00:17,680 Speaker 1: and policies that support developing solutions like green hydrogen, so 7 00:00:17,800 --> 00:00:20,200 Speaker 1: there's a lot for us to learn and potentially apply 8 00:00:20,440 --> 00:00:23,479 Speaker 1: to other parts in the world. Now. Meanwhile, Europe is 9 00:00:23,520 --> 00:00:26,759 Speaker 1: also feeling the crunch from the current energy crisis, and 10 00:00:26,840 --> 00:00:29,720 Speaker 1: this may have an impact on the outlook into the 11 00:00:29,720 --> 00:00:33,160 Speaker 1: future and how the transition actually plays out. We took 12 00:00:33,159 --> 00:00:35,159 Speaker 1: a look out into the future for Europe and we 13 00:00:35,240 --> 00:00:38,239 Speaker 1: ran some scenarios out to You can find them in 14 00:00:38,320 --> 00:00:42,040 Speaker 1: our European Energy Transition Outlook. Now, let's just say this 15 00:00:42,080 --> 00:00:45,400 Speaker 1: is one of our longer reports. Lots of facts, lots 16 00:00:45,400 --> 00:00:49,279 Speaker 1: of charts, lots to learn, but sometimes these can be 17 00:00:49,360 --> 00:00:52,479 Speaker 1: the hardest podcast to record. What really comes out of 18 00:00:52,479 --> 00:00:54,840 Speaker 1: the conversations is what are the authors of the report 19 00:00:54,920 --> 00:00:59,040 Speaker 1: think actually stands out and that was the basis of 20 00:00:59,040 --> 00:01:03,120 Speaker 1: today's discussion. I'm joined by Emma Champion, whose research really 21 00:01:03,120 --> 00:01:08,080 Speaker 1: focuses on the energy transition in Europe specifically, and Andreas Gondolfo, 22 00:01:08,200 --> 00:01:11,080 Speaker 1: who is the lead European power analyst at bienn F. 23 00:01:11,360 --> 00:01:14,640 Speaker 1: Now quickly our disclaimer that BIENNAF does not provide investment 24 00:01:14,720 --> 00:01:17,360 Speaker 1: or strategy advice. We have a full disclaimer at the 25 00:01:17,440 --> 00:01:20,119 Speaker 1: end of the show. But now let's hear what Emma 26 00:01:20,520 --> 00:01:23,840 Speaker 1: and Andreas think about the energy transition in Europe and 27 00:01:23,880 --> 00:01:26,160 Speaker 1: what really sounds out to them as they think about 28 00:01:26,200 --> 00:01:37,959 Speaker 1: forecasting out and out. Emma, thank you for joining today. 29 00:01:38,200 --> 00:01:40,720 Speaker 1: Hi Dana, thanks for having us. And Andreas, thank you 30 00:01:40,760 --> 00:01:44,720 Speaker 1: for joining the show. So the basis of our discussion 31 00:01:44,760 --> 00:01:48,880 Speaker 1: today is on the European energy transition. Outlook. Now, if 32 00:01:48,920 --> 00:01:51,320 Speaker 1: you heard that and you're thinking maybe I don't care 33 00:01:51,320 --> 00:01:53,520 Speaker 1: as much about Europe, I'm gonna log off. Now stay 34 00:01:53,640 --> 00:01:55,880 Speaker 1: stay for a second. Let us just pitch you really 35 00:01:56,000 --> 00:02:00,360 Speaker 1: quickly on why Europe is so important for us to 36 00:02:00,400 --> 00:02:03,480 Speaker 1: actually think about as a case study for the rest 37 00:02:03,480 --> 00:02:05,360 Speaker 1: of the world and also for those of us who 38 00:02:05,360 --> 00:02:08,320 Speaker 1: are located in Europe as we chart the path forward 39 00:02:08,360 --> 00:02:12,080 Speaker 1: in the energy transition. So let's start with my first question, 40 00:02:12,280 --> 00:02:17,239 Speaker 1: which is essentially why do we write this report around 41 00:02:17,280 --> 00:02:21,240 Speaker 1: the European energy transition and the outlook, specifically when we 42 00:02:21,240 --> 00:02:24,160 Speaker 1: know we already do a new energy outlook which looks 43 00:02:24,160 --> 00:02:27,399 Speaker 1: out to the year, which is global and pulls upon 44 00:02:27,560 --> 00:02:31,160 Speaker 1: lots of different regions. I think that Europe has long 45 00:02:31,200 --> 00:02:33,280 Speaker 1: been thought of as a front runner in the energy 46 00:02:33,320 --> 00:02:36,400 Speaker 1: transition and is something of a special case when we 47 00:02:36,480 --> 00:02:40,080 Speaker 1: do our long term analysis. For everyone listening, we've probably 48 00:02:40,120 --> 00:02:42,640 Speaker 1: heard that the UK and the EU now have both 49 00:02:42,840 --> 00:02:47,200 Speaker 1: legislated their targets to hit net zero emissions by twenty 50 00:02:48,080 --> 00:02:50,720 Speaker 1: and that's a really big step change in the level 51 00:02:50,760 --> 00:02:54,280 Speaker 1: of ambition that we've ever had for previous emissions reduction targets. 52 00:02:54,560 --> 00:02:58,720 Speaker 1: It's come with significantly ramped up twenty thirty ambitions, so 53 00:02:58,800 --> 00:03:01,639 Speaker 1: we actually have something toterial to say about the trajectory 54 00:03:01,680 --> 00:03:05,080 Speaker 1: to get there. And then, of course, at the moment 55 00:03:05,240 --> 00:03:09,040 Speaker 1: since these targets have been announced, the European region has 56 00:03:09,040 --> 00:03:13,160 Speaker 1: actually faced several pretty significant crises. We had the COVID 57 00:03:13,240 --> 00:03:16,240 Speaker 1: nineteen pandemic and the impact of the recovery from that 58 00:03:16,520 --> 00:03:20,520 Speaker 1: on our global supply chains, the ongoing energy crisis today 59 00:03:20,560 --> 00:03:23,600 Speaker 1: and the war in Ukraine is becoming really material for 60 00:03:23,600 --> 00:03:27,440 Speaker 1: the transition risks around inflation and recession on people's minds 61 00:03:27,480 --> 00:03:30,600 Speaker 1: at the moment a lot, and these carry really significant 62 00:03:30,639 --> 00:03:34,000 Speaker 1: impacts when we think about the trajectory and the pace 63 00:03:34,240 --> 00:03:37,480 Speaker 1: of the energy transition here in the region. So really 64 00:03:37,480 --> 00:03:41,240 Speaker 1: the intention with this report is to really start to 65 00:03:41,680 --> 00:03:44,040 Speaker 1: look at that more regional lens have a bit of 66 00:03:44,040 --> 00:03:47,920 Speaker 1: color on how Europe can both diversify and decarbonize its 67 00:03:48,000 --> 00:03:51,680 Speaker 1: energy system simultaneously. So yeah, figuring out essentially what that 68 00:03:51,720 --> 00:03:54,480 Speaker 1: path to net zero looks like is the intention. And 69 00:03:54,560 --> 00:03:57,280 Speaker 1: I think, especially in the context of Europe where perhaps 70 00:03:57,360 --> 00:03:59,800 Speaker 1: these targets are a bit more material, the report's really 71 00:04:00,000 --> 00:04:03,240 Speaker 1: funded and kind of starting to answer these questions. Before 72 00:04:03,280 --> 00:04:05,840 Speaker 1: we take a look into the future, let's take a 73 00:04:05,920 --> 00:04:09,040 Speaker 1: quick look back at what has happened in Europe in 74 00:04:09,080 --> 00:04:11,240 Speaker 1: the past when it comes to climate policy. And I 75 00:04:11,320 --> 00:04:14,800 Speaker 1: must say so, I'm from northern California, very beautiful part 76 00:04:14,800 --> 00:04:17,640 Speaker 1: of the world. Actually map the valley, and oftentimes when 77 00:04:17,640 --> 00:04:19,560 Speaker 1: I talk to people will say why did you move 78 00:04:19,640 --> 00:04:22,400 Speaker 1: to London, Like what brought you here? And it was 79 00:04:22,480 --> 00:04:25,479 Speaker 1: the energy transition, so over fifteen years ago when I 80 00:04:25,600 --> 00:04:28,440 Speaker 1: moved here, it's because Europe was doing so much and 81 00:04:28,480 --> 00:04:33,040 Speaker 1: had so many targets in place regarding decarbonization, that this 82 00:04:33,120 --> 00:04:36,160 Speaker 1: was really the right place to be in terms of 83 00:04:36,200 --> 00:04:39,080 Speaker 1: the energy transition, whereverything felt like it was happening. Not 84 00:04:39,200 --> 00:04:42,080 Speaker 1: that California wasn't doing anything, but they weren't where Europe 85 00:04:42,240 --> 00:04:45,240 Speaker 1: was at that time. So looking back a little bit, 86 00:04:46,120 --> 00:04:50,800 Speaker 1: what has historically been europe stance from a policy standpoint 87 00:04:51,480 --> 00:04:54,599 Speaker 1: regarding how the transition is taking place? Yeah, I could 88 00:04:54,600 --> 00:04:56,560 Speaker 1: take this first and then maybe under I also have 89 00:04:56,680 --> 00:04:58,920 Speaker 1: some thoughts at least the way that we've looked at 90 00:04:58,960 --> 00:05:00,920 Speaker 1: it and being a Europe has really been a front 91 00:05:00,960 --> 00:05:04,560 Speaker 1: runner and deploying clean power, so really ahead of the 92 00:05:04,600 --> 00:05:07,040 Speaker 1: cub I think almost double the volume of any other 93 00:05:07,040 --> 00:05:09,440 Speaker 1: region that we look at today in terms of wind 94 00:05:09,480 --> 00:05:12,039 Speaker 1: and solar on the ground. And the power sector has 95 00:05:12,080 --> 00:05:14,760 Speaker 1: really been the focus point right We're looking at not 96 00:05:14,839 --> 00:05:17,960 Speaker 1: just renewables, but also ambitious targets to phase out call 97 00:05:18,040 --> 00:05:22,880 Speaker 1: and deal with the electricity supply here and the next 98 00:05:22,920 --> 00:05:24,560 Speaker 1: step from there. And we can kind of get to 99 00:05:24,600 --> 00:05:26,640 Speaker 1: this a little bit later, because it really is central 100 00:05:26,640 --> 00:05:29,840 Speaker 1: when we're thinking about net zero, but starting to look 101 00:05:29,880 --> 00:05:32,640 Speaker 1: more ambitiously at things like the transport sector and heating 102 00:05:32,680 --> 00:05:34,760 Speaker 1: and I think Europe still has a place as a 103 00:05:34,839 --> 00:05:38,040 Speaker 1: front runner in looking at those other sectors that need 104 00:05:38,120 --> 00:05:42,840 Speaker 1: to decarbonize in order to hit a fully netar energy system. 105 00:05:42,920 --> 00:05:46,120 Speaker 1: And you know, Androws, you're joining us from Greece, so 106 00:05:46,360 --> 00:05:50,719 Speaker 1: we're spanning the entire eastern and western side of Europe. 107 00:05:50,720 --> 00:05:52,440 Speaker 1: When we're trying to sit here and naturally talk about 108 00:05:52,440 --> 00:05:54,920 Speaker 1: the transition, and we're talking about it as a continent, 109 00:05:54,960 --> 00:05:57,960 Speaker 1: which we know has a bunch of smaller, more regional 110 00:05:58,000 --> 00:06:00,200 Speaker 1: markets in it. And andre As, would you say from 111 00:06:00,200 --> 00:06:02,839 Speaker 1: your perspective that as we talk about the transition, that 112 00:06:02,880 --> 00:06:06,479 Speaker 1: there are commonalities that we can draw from the different 113 00:06:06,480 --> 00:06:10,520 Speaker 1: countries that do comprise Europe the continent. I think there 114 00:06:10,520 --> 00:06:13,719 Speaker 1: are commonalities and differences and they all come up and 115 00:06:13,880 --> 00:06:16,640 Speaker 1: they're very interesting to look at. I'd say there's a 116 00:06:16,680 --> 00:06:20,400 Speaker 1: division in resource from north to south, with the north 117 00:06:20,440 --> 00:06:24,000 Speaker 1: being wind rich and the south being sun rich, and 118 00:06:24,480 --> 00:06:28,680 Speaker 1: consequently these two different parts of Europe concentrating on different resources. 119 00:06:28,680 --> 00:06:31,200 Speaker 1: But then when you look at the totality of things, 120 00:06:31,560 --> 00:06:33,880 Speaker 1: and this is what I like about studying Europe as 121 00:06:33,880 --> 00:06:37,080 Speaker 1: a whole, is that actually the continent approaches the problem 122 00:06:37,400 --> 00:06:40,839 Speaker 1: in a combined way. Even though you know, the historical 123 00:06:40,920 --> 00:06:45,000 Speaker 1: data doesn't necessarily show them yet, and essentially there are 124 00:06:45,080 --> 00:06:48,360 Speaker 1: thoughts about, Okay, how do we get wind from Denmark 125 00:06:48,480 --> 00:06:51,560 Speaker 1: went from the UK all the way south to France, 126 00:06:51,640 --> 00:06:54,039 Speaker 1: or how do we get sun from Spain and Italy 127 00:06:54,120 --> 00:06:57,320 Speaker 1: all the way north to Denmark. However, we must not 128 00:06:57,680 --> 00:07:01,160 Speaker 1: make this sound too romantic. There are still differences within 129 00:07:01,279 --> 00:07:04,600 Speaker 1: Europe itself. You know, Greece, for example, is a little 130 00:07:04,600 --> 00:07:07,000 Speaker 1: bit further back i'd take compared to other countries in 131 00:07:07,040 --> 00:07:09,640 Speaker 1: the energy transition and especially in the harder to the 132 00:07:09,720 --> 00:07:13,320 Speaker 1: carbonized sectors. I'd say policies only now catching up with 133 00:07:13,440 --> 00:07:18,400 Speaker 1: the reality of targets. However, as a whole the continent 134 00:07:18,600 --> 00:07:22,240 Speaker 1: and the European Unions specifically within that, it's definitely I'm 135 00:07:22,280 --> 00:07:24,800 Speaker 1: moving in a direction that other parts of the world 136 00:07:25,120 --> 00:07:28,360 Speaker 1: will soon have to start going towards. And I think 137 00:07:28,400 --> 00:07:30,720 Speaker 1: this is what makes you a very interesting Let's get 138 00:07:30,760 --> 00:07:33,600 Speaker 1: into what this looks like, so we do too scenarios 139 00:07:33,640 --> 00:07:36,360 Speaker 1: as we're looking forward. One is the economic transition scenario 140 00:07:36,680 --> 00:07:38,520 Speaker 1: and the second is the net zero scenario, and I 141 00:07:38,520 --> 00:07:40,760 Speaker 1: think we'll probably spend more time focused on the second. 142 00:07:41,120 --> 00:07:44,160 Speaker 1: But can you quickly just refresh everybody's memory. If you 143 00:07:44,520 --> 00:07:46,840 Speaker 1: have been frequent listeners, to switch it on and if 144 00:07:46,840 --> 00:07:49,360 Speaker 1: you're new here, then it will be worth the definition setting. 145 00:07:49,440 --> 00:07:52,600 Speaker 1: What is the difference between the economic transition scenario and 146 00:07:52,640 --> 00:07:56,880 Speaker 1: the net zero scenario. So the economic transition scenario really 147 00:07:56,920 --> 00:08:00,360 Speaker 1: aims to look at creating a baseline and economics driven. 148 00:08:00,680 --> 00:08:03,840 Speaker 1: You know, we look at the fundamentals and existing policies 149 00:08:04,040 --> 00:08:07,920 Speaker 1: only where there's kind of a legislated mechanism for their implementation. 150 00:08:08,040 --> 00:08:11,040 Speaker 1: So we do include things like the European carbon price 151 00:08:11,240 --> 00:08:14,760 Speaker 1: and regulations that affect things like electric vehicles, but they 152 00:08:14,760 --> 00:08:18,240 Speaker 1: do feed into the economics lead baseline, But fundamentally it 153 00:08:18,360 --> 00:08:20,840 Speaker 1: is looking at how far the fundamentals get us. The 154 00:08:20,880 --> 00:08:24,360 Speaker 1: net zerio scenario, by contrast, is much more driven by 155 00:08:24,400 --> 00:08:28,600 Speaker 1: a carbon budget approach, so we actually force all energy 156 00:08:28,640 --> 00:08:33,000 Speaker 1: consuming sectors in Europe to fully decarbonized by and to 157 00:08:33,240 --> 00:08:36,520 Speaker 1: kind of bring that into context for everyone. That actually 158 00:08:36,600 --> 00:08:40,200 Speaker 1: requires a tripling the pace of emissions reductions over the 159 00:08:40,240 --> 00:08:43,720 Speaker 1: next three decades compared to the economic transition scenario. So 160 00:08:43,760 --> 00:08:47,360 Speaker 1: it's really a much more aggressive trajectory for transition of 161 00:08:47,440 --> 00:08:50,920 Speaker 1: all of the sectors and how we've actually kind of 162 00:08:51,320 --> 00:08:53,319 Speaker 1: sold for the solution side of things in the net 163 00:08:53,400 --> 00:08:56,560 Speaker 1: Zerio scenario is really by looking at two key kind 164 00:08:56,559 --> 00:09:02,120 Speaker 1: of climate pathways electrification and green hydrogen, and those two solutions, 165 00:09:02,120 --> 00:09:03,920 Speaker 1: which we can talk about in a little more depth, 166 00:09:04,240 --> 00:09:07,600 Speaker 1: really enable Europe to kind of increase reliance on on 167 00:09:07,679 --> 00:09:11,680 Speaker 1: domestic renewable energy sources and displace the need for fossil 168 00:09:11,720 --> 00:09:14,840 Speaker 1: fuel in the primary energy mix. So that's helping those 169 00:09:14,840 --> 00:09:17,880 Speaker 1: sectors like heating and transport which really rely on a 170 00:09:17,880 --> 00:09:20,040 Speaker 1: lot of oil and gas, as well as industry which 171 00:09:20,320 --> 00:09:22,320 Speaker 1: is relying on a lot of fossil fuel inputs. So 172 00:09:22,679 --> 00:09:26,160 Speaker 1: that's kind of the key distinctions. But really the nets 173 00:09:26,200 --> 00:09:29,640 Speaker 1: Aery scenario is kind of hinging on those those solutions. 174 00:09:29,800 --> 00:09:32,640 Speaker 1: If I can add something about the scenarios is what 175 00:09:32,760 --> 00:09:36,319 Speaker 1: I find interesting though, and we're increasingly going to see 176 00:09:36,320 --> 00:09:38,920 Speaker 1: that in the Benet work and probably in other people's 177 00:09:38,920 --> 00:09:42,160 Speaker 1: work as well, is that what I do expect is 178 00:09:42,760 --> 00:09:46,320 Speaker 1: slowly the economic transition scenario and the net serious scenario 179 00:09:46,880 --> 00:09:52,160 Speaker 1: will show convergence in future iterations, as for example, costs evolving, 180 00:09:52,200 --> 00:09:55,359 Speaker 1: we get a better view on how we can decarbonize 181 00:09:55,400 --> 00:09:58,760 Speaker 1: industry and we can dicarbonize transport, especially in the current 182 00:09:58,880 --> 00:10:03,000 Speaker 1: commodity environment. It persists. Essentially, what high gas prices are 183 00:10:03,040 --> 00:10:06,320 Speaker 1: telling us is electrification is one of the cheapest options 184 00:10:06,320 --> 00:10:09,559 Speaker 1: out there, being hydrogen might become cheaper so much earlier. 185 00:10:09,840 --> 00:10:12,559 Speaker 1: So even though we have two differend scenarios today, I 186 00:10:12,559 --> 00:10:15,959 Speaker 1: wouldn't be surprised if in ten years dying we no 187 00:10:16,040 --> 00:10:19,160 Speaker 1: longer have an economic transition Senator, because the economic transition 188 00:10:19,200 --> 00:10:20,960 Speaker 1: senatia and the net serious Senator, maybe we don't have 189 00:10:20,960 --> 00:10:24,440 Speaker 1: a net serious scenario. Don't know. Essentially, they say the 190 00:10:24,520 --> 00:10:27,080 Speaker 1: same thing that that we we red some missions in 191 00:10:27,120 --> 00:10:29,200 Speaker 1: the long term, and so the question then becomes, Okay, 192 00:10:29,200 --> 00:10:32,000 Speaker 1: which are the nuances in the technologies that we choose? 193 00:10:32,040 --> 00:10:34,400 Speaker 1: And I find that very interesting. I find it really 194 00:10:34,400 --> 00:10:37,160 Speaker 1: interesting too, and I think in particular this green hydrogen 195 00:10:37,280 --> 00:10:39,839 Speaker 1: aspect of it, where we're looking at the cost of 196 00:10:39,920 --> 00:10:43,760 Speaker 1: hydrogen is being much higher than any of the other 197 00:10:43,800 --> 00:10:46,480 Speaker 1: solutions that are out there, at least right now, and 198 00:10:46,559 --> 00:10:49,280 Speaker 1: that is a space where Europe is actually a bit 199 00:10:49,280 --> 00:10:52,000 Speaker 1: of a frontrunner in terms of how they're approaching hydrogen 200 00:10:52,040 --> 00:10:54,160 Speaker 1: and potentially embracing it. Is a part of the energy 201 00:10:54,200 --> 00:10:57,640 Speaker 1: max going forward. You explain a little bit about how 202 00:10:57,760 --> 00:11:00,160 Speaker 1: Europe is looking at hydrogen in the energy make and 203 00:11:00,240 --> 00:11:03,720 Speaker 1: how they in theory could potentially in this scenario look 204 00:11:03,720 --> 00:11:06,280 Speaker 1: at hydrogen and the energy mix in order to get 205 00:11:06,320 --> 00:11:11,160 Speaker 1: to net zero potentially sooner. So the Commission currently is 206 00:11:11,200 --> 00:11:14,520 Speaker 1: actually looking a lot more seriously at green hydrogen as 207 00:11:14,520 --> 00:11:16,880 Speaker 1: a solution a to kind of get gas out of 208 00:11:16,920 --> 00:11:19,720 Speaker 1: the mix sooner so that they can really reduce that 209 00:11:19,760 --> 00:11:22,560 Speaker 1: dependency on Russian imports. That's part of the kind of 210 00:11:22,679 --> 00:11:26,199 Speaker 1: energy security strategy at the moment is putting renewables, including 211 00:11:26,240 --> 00:11:30,120 Speaker 1: green hydrogen, front and center, and when when we're thinking 212 00:11:30,120 --> 00:11:33,200 Speaker 1: about what that means for the time horizon, you know, 213 00:11:33,559 --> 00:11:36,480 Speaker 1: it's clear that Europe is setting perry ambitious goals. They're 214 00:11:36,520 --> 00:11:39,280 Speaker 1: looking at and nothing short of twenty million metric tons, 215 00:11:39,520 --> 00:11:42,439 Speaker 1: which is double the volume of fossil hydrogen that the 216 00:11:42,720 --> 00:11:45,480 Speaker 1: region currently uses and that they want to have as 217 00:11:45,520 --> 00:11:49,760 Speaker 1: green as green hydrogen used by industries by So that's 218 00:11:49,800 --> 00:11:53,800 Speaker 1: within this decade, and the requirements for the amount of 219 00:11:54,000 --> 00:11:56,640 Speaker 1: production capacity you need to deliver that is is also 220 00:11:56,880 --> 00:12:00,920 Speaker 1: quite quite steep. You know. I think when we think 221 00:12:00,960 --> 00:12:03,400 Speaker 1: about the longer term and the role that hydrogen could 222 00:12:03,400 --> 00:12:06,240 Speaker 1: play in a net zero economy in Europe. That's a 223 00:12:06,320 --> 00:12:08,520 Speaker 1: really you know, at least the twenty horizon is a 224 00:12:08,559 --> 00:12:12,520 Speaker 1: really accelerated step towards that goal. But we we actually 225 00:12:12,559 --> 00:12:15,400 Speaker 1: do have a very important position for green hydrogen in 226 00:12:15,440 --> 00:12:19,280 Speaker 1: the energy mix. In our net zero scenario, by twenty fifty, 227 00:12:19,640 --> 00:12:23,480 Speaker 1: European final energy is twenty percent supplied by green hydrogen, 228 00:12:23,760 --> 00:12:26,920 Speaker 1: which translates to a hundred million metric tons by twenty fifty. 229 00:12:27,040 --> 00:12:29,360 Speaker 1: So you can think of that as going up to 230 00:12:29,440 --> 00:12:34,079 Speaker 1: twenty and the Commission's target and then timsing that by 231 00:12:34,120 --> 00:12:38,760 Speaker 1: five essentially by twenty fifty. So and I think, just 232 00:12:38,800 --> 00:12:40,960 Speaker 1: stepping back ad been a minute. The reason that we 233 00:12:41,080 --> 00:12:44,800 Speaker 1: need a molecule based fuel like green hydrogen is simply 234 00:12:44,840 --> 00:12:47,000 Speaker 1: because there are those parts of the economy that can't 235 00:12:47,000 --> 00:12:51,280 Speaker 1: be electrified easily or economically. And we also identify as 236 00:12:51,360 --> 00:12:54,920 Speaker 1: andrea saluted to already that green hydrogen, how's the potential 237 00:12:55,000 --> 00:13:00,000 Speaker 1: for cost reductions. So there are sectors including steel, cement, petrochemicals, 238 00:13:00,040 --> 00:13:02,920 Speaker 1: even for some heating and buildings and power generation that 239 00:13:03,280 --> 00:13:07,120 Speaker 1: it may become more interesting to use green hydrogen as 240 00:13:07,120 --> 00:13:10,600 Speaker 1: a fuel and fossil fuels from the policy standpoint, hydrogen 241 00:13:10,679 --> 00:13:13,560 Speaker 1: was already very much on the table before Russia invaded 242 00:13:13,600 --> 00:13:18,360 Speaker 1: the Ukraine. Have you seen that markedly change since then? Yeah, 243 00:13:18,400 --> 00:13:20,839 Speaker 1: I mean it's doubled. Essentially, we had a ten million 244 00:13:20,920 --> 00:13:25,800 Speaker 1: ton target pre you two, and then that's doubled to 245 00:13:25,880 --> 00:13:29,920 Speaker 1: twenty by I don't think the long term ambition has 246 00:13:30,320 --> 00:13:34,240 Speaker 1: changed drastically for green hydrogen, but definitely this decade we're 247 00:13:34,280 --> 00:13:36,880 Speaker 1: looking at, you know, to the point where the European 248 00:13:36,880 --> 00:13:39,280 Speaker 1: Commission have essentially come out and said, we know we're 249 00:13:39,280 --> 00:13:40,880 Speaker 1: not going to be able to deliver this much green 250 00:13:40,960 --> 00:13:43,160 Speaker 1: hydrogen within Europe. We know that we're probably going to 251 00:13:43,240 --> 00:13:45,880 Speaker 1: look for trading partners and bringing imports into the region. 252 00:13:45,960 --> 00:13:48,559 Speaker 1: So that's something that we weren't expecting to be talking 253 00:13:48,559 --> 00:13:50,960 Speaker 1: about until the twenty thirties, when you have a more 254 00:13:51,000 --> 00:13:54,840 Speaker 1: mature hydrogen market starting to evolve, but the commissions trying 255 00:13:54,880 --> 00:13:57,679 Speaker 1: to frontload a lot of that progress and market development 256 00:13:57,720 --> 00:13:59,760 Speaker 1: in order to deliver on the on the phase out 257 00:13:59,800 --> 00:14:03,120 Speaker 1: of GATH. And because you referenced that green hydrogen is 258 00:14:03,160 --> 00:14:06,320 Speaker 1: specifically talked about a bit more, that requires a pretty 259 00:14:06,320 --> 00:14:10,199 Speaker 1: big scale out of renewable energy and projects that maybe 260 00:14:10,240 --> 00:14:13,560 Speaker 1: aren't necessarily even yet commissioned. So as we look at 261 00:14:13,640 --> 00:14:15,840 Speaker 1: we mean what we're in two so we've got eight 262 00:14:15,920 --> 00:14:19,560 Speaker 1: years to and we also know that from a temperature 263 00:14:19,560 --> 00:14:24,160 Speaker 1: and warming situation, the sooner that we bring down emissions 264 00:14:24,160 --> 00:14:26,720 Speaker 1: and there there are multiple different ways to get to 265 00:14:26,800 --> 00:14:29,240 Speaker 1: net zero, and when we do it actually has the 266 00:14:29,280 --> 00:14:32,600 Speaker 1: biggest impact on what that warming looks like. So the 267 00:14:32,680 --> 00:14:36,640 Speaker 1: between here and twenty as opposed to between here and 268 00:14:36,680 --> 00:14:40,720 Speaker 1: twenty fifty, that's shorter term that eight years. What needs 269 00:14:40,760 --> 00:14:44,000 Speaker 1: to happen in terms of scale and build out, and 270 00:14:44,160 --> 00:14:47,560 Speaker 1: what sort of signs are we seeing that things are accelerating. 271 00:14:47,920 --> 00:14:50,040 Speaker 1: I think this is actually a moment to come back 272 00:14:50,080 --> 00:14:52,600 Speaker 1: to the power sector, and I'd love Andreas to step 273 00:14:52,600 --> 00:14:54,920 Speaker 1: in here as well, because really the power sector is 274 00:14:55,000 --> 00:14:57,760 Speaker 1: going to be delivering a lot of the emissions reductions 275 00:14:57,800 --> 00:15:01,680 Speaker 1: this decade. We talk about green hydrogen, realistically, the progress 276 00:15:01,760 --> 00:15:04,760 Speaker 1: that really matters is in the power system, and I 277 00:15:04,800 --> 00:15:07,680 Speaker 1: think with that in mind, were also can't deny that 278 00:15:07,720 --> 00:15:10,640 Speaker 1: green hydrogen relies on further ambition in the power system. 279 00:15:10,640 --> 00:15:14,440 Speaker 1: Electorallyzers will potentially have impacts for grids, and they will 280 00:15:14,480 --> 00:15:17,880 Speaker 1: rely on additional wind and solar to actually supply the 281 00:15:17,920 --> 00:15:21,320 Speaker 1: electricity to produce the hydrogen. So I think taking a 282 00:15:21,360 --> 00:15:24,240 Speaker 1: step back and thinking about the level of ambition required 283 00:15:24,280 --> 00:15:27,240 Speaker 1: to accelerate the transition for power this decade is really 284 00:15:27,840 --> 00:15:31,440 Speaker 1: is really important. I agree with that in we are 285 00:15:31,480 --> 00:15:34,280 Speaker 1: seeing it. We're seeing it in the dext we're seeing 286 00:15:34,280 --> 00:15:36,720 Speaker 1: it in the models. I'd say, we're we're willing to 287 00:15:36,800 --> 00:15:40,880 Speaker 1: see it. This is on the ground converted from ambitious 288 00:15:40,960 --> 00:15:45,400 Speaker 1: targets and statements of politicians to actual action. But it's 289 00:15:45,440 --> 00:15:49,040 Speaker 1: doing if you take a look at the energy transition, 290 00:15:49,080 --> 00:15:51,920 Speaker 1: I mean, at the end of the day, it is 291 00:15:52,040 --> 00:15:57,160 Speaker 1: widely agreed that you know, renewables in the form especially 292 00:15:57,200 --> 00:16:01,040 Speaker 1: of wind and solar, maybe combined with some other technologies 293 00:16:01,120 --> 00:16:06,480 Speaker 1: being nuclear or ccs, but in general, like low carbon 294 00:16:06,720 --> 00:16:10,000 Speaker 1: or zero carbon electricity generation, it seems to be the 295 00:16:10,040 --> 00:16:13,200 Speaker 1: answer no matter where where we look at. And so 296 00:16:13,640 --> 00:16:16,120 Speaker 1: focusing the efforts on the power sector in the coming 297 00:16:16,160 --> 00:16:20,960 Speaker 1: decade and essentially scaling up wind and solar capacity such 298 00:16:21,000 --> 00:16:23,440 Speaker 1: that we can produce you know, around six or seventy 299 00:16:23,520 --> 00:16:28,960 Speaker 1: percent of our electricity from renobos by is essentially the 300 00:16:29,000 --> 00:16:31,320 Speaker 1: way forward. Because if you think about it, let's say 301 00:16:31,320 --> 00:16:34,280 Speaker 1: that you want to produce hydrogen and there are a 302 00:16:34,320 --> 00:16:38,360 Speaker 1: few options out there today. Even if you build electoralizers today, 303 00:16:38,440 --> 00:16:40,880 Speaker 1: you would be producing emissions because you're powering it with 304 00:16:40,920 --> 00:16:43,160 Speaker 1: a gas plant or with a cold but along with 305 00:16:43,240 --> 00:16:46,200 Speaker 1: wind and solar. So if you don't transition your electricity grid, 306 00:16:46,440 --> 00:16:48,840 Speaker 1: everything else you're doing on the back of that, it's 307 00:16:48,920 --> 00:16:53,880 Speaker 1: just a step in the right direction, but incomplete, let's say, 308 00:16:54,080 --> 00:16:57,040 Speaker 1: until the wind and solar is there. And this is 309 00:16:57,040 --> 00:17:00,880 Speaker 1: why you know, again and again what we see in 310 00:17:00,960 --> 00:17:03,160 Speaker 1: our models, what we've see in policies, that the big 311 00:17:03,160 --> 00:17:05,520 Speaker 1: bed is what do we do? And this steel up 312 00:17:05,560 --> 00:17:07,639 Speaker 1: is pretty big. I mean, we need to get in 313 00:17:07,640 --> 00:17:10,840 Speaker 1: our economic transition scenario, we need to get about two 314 00:17:10,880 --> 00:17:14,080 Speaker 1: hundred fifty gills wind and solar in Europe by twenty thirties. 315 00:17:14,720 --> 00:17:18,199 Speaker 1: Just to put it into perspective, doubling the capacity. Our 316 00:17:18,280 --> 00:17:21,040 Speaker 1: net zero scenario is across a little bit more two 317 00:17:21,119 --> 00:17:23,760 Speaker 1: hundred and eighty gig awards by twenty thirty. These are 318 00:17:23,880 --> 00:17:27,080 Speaker 1: like massive numbers. It took us twenty years to get here, 319 00:17:27,520 --> 00:17:29,440 Speaker 1: and now in eight we need to do what we 320 00:17:29,520 --> 00:17:32,880 Speaker 1: did in twenty that's a big bed. Yeah. I think 321 00:17:33,240 --> 00:17:35,360 Speaker 1: Andrews is right that the level of ambition really does 322 00:17:35,440 --> 00:17:37,200 Speaker 1: need to step up, and I think to some extent 323 00:17:37,280 --> 00:17:39,359 Speaker 1: we do see that merrit in the policy. But I 324 00:17:39,440 --> 00:17:42,000 Speaker 1: also think, you know, at least from when when we 325 00:17:42,080 --> 00:17:44,760 Speaker 1: do our botteling and analysis, there are there are two 326 00:17:44,840 --> 00:17:47,399 Speaker 1: things that I kind of hold out hope on. The 327 00:17:47,480 --> 00:17:50,240 Speaker 1: first is that you know, it is already cheaper to 328 00:17:50,280 --> 00:17:52,520 Speaker 1: build new winded solo plants today in Europe than it 329 00:17:52,640 --> 00:17:55,159 Speaker 1: is to run those existing cold and gas plants. You 330 00:17:55,240 --> 00:17:58,960 Speaker 1: know that, and not fundamental gap is widening even further 331 00:17:59,080 --> 00:18:02,840 Speaker 1: because of the current situation with commodity prices, so that 332 00:18:03,320 --> 00:18:06,760 Speaker 1: that it's clear from the economics that this makes sense now. 333 00:18:06,880 --> 00:18:08,760 Speaker 1: And Andrea's is right to a point that actually just 334 00:18:08,840 --> 00:18:11,640 Speaker 1: getting projects on the ground, figuring out how to make 335 00:18:11,840 --> 00:18:14,480 Speaker 1: the permitting processes in Europe as easy as possible is 336 00:18:14,520 --> 00:18:17,520 Speaker 1: going to be the next kind of logical step. The 337 00:18:17,600 --> 00:18:21,280 Speaker 1: second thing that I've actually quite recently been been sharing 338 00:18:21,320 --> 00:18:23,440 Speaker 1: with some of our team is that when when we 339 00:18:23,600 --> 00:18:26,440 Speaker 1: kind of I guess the term is like back test, 340 00:18:26,520 --> 00:18:29,000 Speaker 1: are are models from from the past, and we look 341 00:18:29,040 --> 00:18:31,359 Speaker 1: at the renewable energy deployments in Europe that have been 342 00:18:31,359 --> 00:18:34,639 Speaker 1: achieved compared to what our models have anticipated, We've actually 343 00:18:34,720 --> 00:18:38,639 Speaker 1: often either been on the mark or even conservative. So 344 00:18:38,880 --> 00:18:41,359 Speaker 1: I kind of hold out hope that even though people 345 00:18:41,480 --> 00:18:43,960 Speaker 1: sometimes you know, raise their eyebrows when they see the 346 00:18:44,040 --> 00:18:46,879 Speaker 1: volumes that we're saying makes sense from a cost perspective 347 00:18:46,960 --> 00:18:49,359 Speaker 1: in terms of, you know, solving for the power system, 348 00:18:49,840 --> 00:18:52,520 Speaker 1: they you know, I think there's actually hoped that our 349 00:18:53,119 --> 00:18:56,040 Speaker 1: scenarios that we're developing are actually showing where what the 350 00:18:56,119 --> 00:18:58,879 Speaker 1: cheapest system is and that's a compelling narrative both for 351 00:18:59,200 --> 00:19:02,440 Speaker 1: consumers and companies on for government. So I think the 352 00:19:02,520 --> 00:19:05,360 Speaker 1: leve and of ambition is steep, but I have there 353 00:19:05,480 --> 00:19:07,439 Speaker 1: is a lot of discussion at the moment though, around 354 00:19:07,560 --> 00:19:10,480 Speaker 1: how the economics of the energy transition. We're reaching a 355 00:19:10,520 --> 00:19:13,560 Speaker 1: crunch point where if we just trusted the economics, we're 356 00:19:13,600 --> 00:19:15,920 Speaker 1: not going to get to net zero by and that 357 00:19:16,080 --> 00:19:20,760 Speaker 1: we actually need to really focus on forcing certain things 358 00:19:20,840 --> 00:19:23,960 Speaker 1: to happen and then driving those costs down and and 359 00:19:24,119 --> 00:19:27,400 Speaker 1: having the complexity of the energy mix actually embrace all 360 00:19:27,480 --> 00:19:31,240 Speaker 1: of these different aspects, some of which are economically very competitive, 361 00:19:31,280 --> 00:19:34,959 Speaker 1: others which are not so. On that beyond the power system, 362 00:19:35,240 --> 00:19:38,920 Speaker 1: which we've acknowledged does need to be decarbonized quite quickly 363 00:19:39,000 --> 00:19:41,080 Speaker 1: and have a lot of attention given to it. What 364 00:19:41,240 --> 00:19:45,200 Speaker 1: are the other ways? And I know that this is 365 00:19:45,320 --> 00:19:48,600 Speaker 1: a very complex question, so I'm asking you to then 366 00:19:48,840 --> 00:19:51,400 Speaker 1: essentially pick winners. And I know nobody ever like through 367 00:19:51,480 --> 00:19:54,879 Speaker 1: this and oversimplify, but you've taken a look at Europe 368 00:19:54,920 --> 00:19:58,359 Speaker 1: on the whole. So which sector or I'll let you 369 00:19:58,400 --> 00:20:02,800 Speaker 1: have two, Which sector yours should we look to decarbonize 370 00:20:02,960 --> 00:20:07,560 Speaker 1: first beyond the power sector if we want to fully decarbonize. 371 00:20:07,640 --> 00:20:11,920 Speaker 1: The challenges that we're seeing beyond power really stem from 372 00:20:12,359 --> 00:20:14,480 Speaker 1: and I think the most useful exercise when we're thinking 373 00:20:14,480 --> 00:20:16,800 Speaker 1: about this question really is looking at the difference between 374 00:20:16,840 --> 00:20:19,760 Speaker 1: our economic transition scenario in the next serio scenario. What 375 00:20:19,880 --> 00:20:23,920 Speaker 1: are the biggest differences? Okay, we have probably you know, 376 00:20:24,440 --> 00:20:27,960 Speaker 1: close to double the need for electric vehicles compared to 377 00:20:28,040 --> 00:20:30,639 Speaker 1: what we're getting to in our economic transition scenario and 378 00:20:30,680 --> 00:20:33,480 Speaker 1: the next zero scenario. The sector that concerns me the 379 00:20:33,560 --> 00:20:38,359 Speaker 1: most as buildings, because it's a very highly distributed, very 380 00:20:38,359 --> 00:20:42,560 Speaker 1: difficult to decarbonized sector that relies on solutions such as 381 00:20:42,600 --> 00:20:46,399 Speaker 1: heat pumps, which you know, perhaps the economics are starting 382 00:20:46,440 --> 00:20:49,439 Speaker 1: to make more sense given the current crazy energy costs 383 00:20:49,520 --> 00:20:51,960 Speaker 1: that consumers are facing but that's not really an ideal 384 00:20:52,040 --> 00:20:55,480 Speaker 1: situation to to have economics makes sense for heat pumps. 385 00:20:55,480 --> 00:20:58,359 Speaker 1: So I think that the gap for buildings, the gap 386 00:20:58,520 --> 00:21:02,320 Speaker 1: for it transport is especially the heavier duty segments of transport. 387 00:21:02,720 --> 00:21:06,520 Speaker 1: And then industry Europe has actually started already. You know, 388 00:21:06,640 --> 00:21:09,040 Speaker 1: industry is covered by our by our carbon price, but 389 00:21:09,320 --> 00:21:11,680 Speaker 1: for a long time it has been subject to pretty 390 00:21:11,720 --> 00:21:14,800 Speaker 1: generous reallocation, which essentially means they don't end up paying 391 00:21:15,280 --> 00:21:17,600 Speaker 1: the full they're not really exposed to the full carbon 392 00:21:17,720 --> 00:21:22,159 Speaker 1: price in a meaningful sense. And there are meaningful discussions 393 00:21:22,200 --> 00:21:25,399 Speaker 1: now to phase that out and figure out ways to 394 00:21:25,440 --> 00:21:28,720 Speaker 1: still keep industry within Europe. And I think that discussion 395 00:21:29,400 --> 00:21:32,960 Speaker 1: will be really important. Where I see risks is that, 396 00:21:33,920 --> 00:21:38,240 Speaker 1: especially in light of today's energy crisis, the momentum to 397 00:21:38,320 --> 00:21:42,359 Speaker 1: try and phase out gas potentially instead of making progress 398 00:21:42,440 --> 00:21:45,000 Speaker 1: faster on things like coal will have will have an 399 00:21:45,040 --> 00:21:48,440 Speaker 1: impact on on which sectors actually get priority for de 400 00:21:48,560 --> 00:21:52,840 Speaker 1: carbonizing sooner. So that's that's one tension. I suppose that 401 00:21:52,920 --> 00:21:55,359 Speaker 1: we can say we notice when we compare something like 402 00:21:55,440 --> 00:21:58,280 Speaker 1: our nets aero scenario, which really prioritizes, you know, the 403 00:21:58,400 --> 00:22:02,320 Speaker 1: most economic sectors to transition first, based on the solutions 404 00:22:02,359 --> 00:22:05,760 Speaker 1: that are available and the on the emissions impact versus 405 00:22:05,840 --> 00:22:09,320 Speaker 1: something like the current situation placed by Europe where you 406 00:22:09,440 --> 00:22:12,880 Speaker 1: really are trying to do two things at once. Essentially, 407 00:22:13,400 --> 00:22:15,800 Speaker 1: andre s do you have winners? I'm going to go 408 00:22:16,320 --> 00:22:20,080 Speaker 1: back to my my playbook, which is which is power? 409 00:22:20,160 --> 00:22:21,920 Speaker 1: And I think, you know, the more the more I 410 00:22:22,040 --> 00:22:24,640 Speaker 1: look at this, the more I realize that, well, all 411 00:22:24,720 --> 00:22:28,040 Speaker 1: the answers get back to the power sector. I mean 412 00:22:28,160 --> 00:22:33,440 Speaker 1: more our lead European parents got up all biased in 413 00:22:33,560 --> 00:22:36,280 Speaker 1: coming to this conclusion. But I do like what I 414 00:22:36,320 --> 00:22:40,440 Speaker 1: see on the ground. I'd say, maybe one thought to 415 00:22:40,720 --> 00:22:44,320 Speaker 1: throughout here the Emma said, how like the current energy 416 00:22:44,400 --> 00:22:49,600 Speaker 1: crisis is shifting attention to displacing gas maybe before displacing cold, 417 00:22:50,000 --> 00:22:52,880 Speaker 1: and in a way, I, you know, I do see 418 00:22:52,920 --> 00:22:56,520 Speaker 1: the negative effector on the other I think it's quite 419 00:22:56,640 --> 00:22:59,480 Speaker 1: clear in the minds of people today that call is 420 00:22:59,600 --> 00:23:03,560 Speaker 1: something needs to go. So the big question we used 421 00:23:03,600 --> 00:23:05,760 Speaker 1: to come up against in the past, and in a 422 00:23:05,800 --> 00:23:08,359 Speaker 1: way we come up against in the e t O. 423 00:23:08,720 --> 00:23:11,000 Speaker 1: Considering that a lot of the work was done before 424 00:23:11,680 --> 00:23:17,240 Speaker 1: the Russian invasion of Ukraine and repower you essentially, you know, 425 00:23:17,480 --> 00:23:19,639 Speaker 1: you do all this s effort to the carbonized school, 426 00:23:19,640 --> 00:23:21,399 Speaker 1: and then everyone kind of used to go mute on 427 00:23:21,520 --> 00:23:24,040 Speaker 1: gas and be like, Okay, it's a clear fuel, we'll 428 00:23:24,119 --> 00:23:26,879 Speaker 1: keep it around for longer. What I think the current 429 00:23:27,000 --> 00:23:30,320 Speaker 1: energy crisis is going to do and the crunch is 430 00:23:30,440 --> 00:23:35,400 Speaker 1: essentially gonna say, we're gonna in induce Europe to also 431 00:23:35,520 --> 00:23:39,440 Speaker 1: take care of gas and not go risk entering a 432 00:23:39,560 --> 00:23:41,520 Speaker 1: trap where it says like, all right, I took care 433 00:23:41,560 --> 00:23:43,600 Speaker 1: of coal. Now I can kind of like sit back 434 00:23:43,680 --> 00:23:45,879 Speaker 1: because I really reduced my missions. I mean a bit 435 00:23:45,920 --> 00:23:48,320 Speaker 1: of what we saw happening in the US about ten 436 00:23:48,440 --> 00:23:51,760 Speaker 1: years ago, right where core plants closed because gas became economic, 437 00:23:51,840 --> 00:23:54,560 Speaker 1: and then people were like, yeah, we've reduced emissions more 438 00:23:54,600 --> 00:23:58,400 Speaker 1: than our European counterparts. We've been subsidizing rhables for ten years, 439 00:23:58,920 --> 00:24:01,879 Speaker 1: and so we can sit and enjoy the spoils of 440 00:24:01,960 --> 00:24:04,440 Speaker 1: war for a little bit. And and there was a 441 00:24:04,520 --> 00:24:07,800 Speaker 1: risk of that. So I'd say there is a positive 442 00:24:07,880 --> 00:24:09,920 Speaker 1: in that as well, in the call is on the 443 00:24:10,000 --> 00:24:12,879 Speaker 1: way out one way or another, and so dealing with 444 00:24:13,080 --> 00:24:18,719 Speaker 1: gas through things like hydrogen through heat pomps for home heating, 445 00:24:19,320 --> 00:24:21,359 Speaker 1: I think is a step in the right direction that 446 00:24:21,520 --> 00:24:24,040 Speaker 1: was probably missing and it's where the economics don't work. 447 00:24:24,080 --> 00:24:27,520 Speaker 1: I mean, Emma said earlier, right, power sector economics make 448 00:24:27,560 --> 00:24:30,600 Speaker 1: a perfect sense. You don't really need to worry about 449 00:24:30,720 --> 00:24:33,920 Speaker 1: hydrogen for another ten years in power and you really 450 00:24:34,000 --> 00:24:38,359 Speaker 1: get that far in the power sector that it's you know, 451 00:24:38,400 --> 00:24:41,520 Speaker 1: at that point by twenty thirty five, you really need 452 00:24:41,600 --> 00:24:44,200 Speaker 1: to focus your attention somewhere else. And it's good to 453 00:24:44,320 --> 00:24:47,360 Speaker 1: see that we're focusing about attention somewhere else today such 454 00:24:47,440 --> 00:24:50,320 Speaker 1: that in twenty five we don't need to worry about 455 00:24:50,440 --> 00:24:53,600 Speaker 1: sending that last emission out of the system, and instead 456 00:24:53,680 --> 00:24:56,880 Speaker 1: we can focus on the carbonizing other sectors that can 457 00:24:56,960 --> 00:24:59,880 Speaker 1: really have an impact. And I think just to add 458 00:25:00,000 --> 00:25:02,520 Speaker 1: to that and the point that kind of all roads 459 00:25:02,560 --> 00:25:05,240 Speaker 1: are kind of pointing back to the power sector, we 460 00:25:05,359 --> 00:25:08,719 Speaker 1: do identify in the report quite a significant challenge when 461 00:25:08,760 --> 00:25:11,320 Speaker 1: it comes to decar but like deep decarbonization of the 462 00:25:11,359 --> 00:25:13,960 Speaker 1: power system. You know, if you're relying on electricity to 463 00:25:14,040 --> 00:25:17,119 Speaker 1: decarbonize things like heating and transport, that that does have 464 00:25:17,240 --> 00:25:20,159 Speaker 1: meaningful impacts for how the power system will evolve and 465 00:25:20,240 --> 00:25:22,480 Speaker 1: look like in the future. And then how do you 466 00:25:22,680 --> 00:25:25,840 Speaker 1: create you know, incentives for the clean backup capacity that 467 00:25:25,920 --> 00:25:28,280 Speaker 1: you need when the wind and soda generation isn't around. 468 00:25:28,680 --> 00:25:30,359 Speaker 1: I know Andrea's has done a lot of work on 469 00:25:30,480 --> 00:25:32,639 Speaker 1: this over the last two years or so, and this 470 00:25:32,840 --> 00:25:35,359 Speaker 1: is something that we're increasingly looking at. We look at 471 00:25:35,440 --> 00:25:38,080 Speaker 1: hydrogen as one of those potential solutions, but there there 472 00:25:38,160 --> 00:25:42,720 Speaker 1: are a number of flexibility solutions that could also come 473 00:25:42,720 --> 00:25:45,879 Speaker 1: into the space and really shape, really make an impact 474 00:25:45,960 --> 00:25:48,719 Speaker 1: on how the power system evolves. Hydrogen keeps coming up 475 00:25:48,920 --> 00:25:51,040 Speaker 1: as one of these potential solutions, and there are kind 476 00:25:51,040 --> 00:25:53,560 Speaker 1: of two questions around this that I have. One actually 477 00:25:53,760 --> 00:25:57,200 Speaker 1: is around the emissions associated with hydrogen. So we know 478 00:25:57,440 --> 00:26:00,720 Speaker 1: that gas is cleaner than coal, and so there was 479 00:26:00,800 --> 00:26:03,040 Speaker 1: a transition to that at one point in a big 480 00:26:03,080 --> 00:26:06,760 Speaker 1: discussion around how gas actually burns so much cleaner and 481 00:26:06,920 --> 00:26:11,000 Speaker 1: is this better option? And now we've moved away from 482 00:26:11,080 --> 00:26:13,520 Speaker 1: gas and the associated emissions and are starting to talk 483 00:26:13,560 --> 00:26:17,200 Speaker 1: about hydrogen more. It is still not absolute zero. It's 484 00:26:17,520 --> 00:26:21,119 Speaker 1: net zero that we're headed towards. So invariably some level 485 00:26:21,200 --> 00:26:25,280 Speaker 1: of emissions will be tolerated. And in this cleaner, greener 486 00:26:25,920 --> 00:26:27,760 Speaker 1: fifty year out in the future that I hope we 487 00:26:27,840 --> 00:26:31,760 Speaker 1: all reach, will the emissions associated with hydrogen still be 488 00:26:31,880 --> 00:26:34,600 Speaker 1: tolerated when we get there, or will that then become 489 00:26:34,720 --> 00:26:37,639 Speaker 1: something that we will need to transition off of with 490 00:26:37,760 --> 00:26:42,080 Speaker 1: better solutions in the future. We love capped the production 491 00:26:42,160 --> 00:26:44,720 Speaker 1: of hydrogen in the report in two different ways, so 492 00:26:45,080 --> 00:26:49,000 Speaker 1: Europe can go fully green. It can just use wind 493 00:26:49,080 --> 00:26:53,720 Speaker 1: and soda to produce green hydrogen using electrolysis, and that 494 00:26:54,359 --> 00:26:57,320 Speaker 1: we find essentially requires nothing short of one point five 495 00:26:57,440 --> 00:27:00,760 Speaker 1: terra wants of additional wind and solar, which is close 496 00:27:00,840 --> 00:27:03,159 Speaker 1: to doubling what we need for the power system, so 497 00:27:03,640 --> 00:27:07,000 Speaker 1: it's it's a massive amount of additional renewable energy passed 498 00:27:07,080 --> 00:27:10,880 Speaker 1: you need. Of course, Europe could explore options with importing hydrogen. 499 00:27:11,200 --> 00:27:13,520 Speaker 1: There then become questions around how do you how do 500 00:27:13,560 --> 00:27:16,240 Speaker 1: you regulate and standardize, make sure that you know that 501 00:27:16,320 --> 00:27:18,360 Speaker 1: that hydrogen is green, and how do you make sure 502 00:27:18,400 --> 00:27:20,840 Speaker 1: that the transporting it around is green. All of those 503 00:27:21,000 --> 00:27:23,320 Speaker 1: considerations to take into effect I think I think will 504 00:27:23,359 --> 00:27:25,840 Speaker 1: become a material in the future, especially if there are 505 00:27:25,920 --> 00:27:29,240 Speaker 1: constraints to actually delivering all of the green hydrogen needs 506 00:27:29,480 --> 00:27:33,280 Speaker 1: in the in the region domestically. We also did look 507 00:27:33,359 --> 00:27:37,200 Speaker 1: at another way that Europe could produce green hydrogen, and 508 00:27:37,320 --> 00:27:41,200 Speaker 1: that's for electorallyzers to also use some of the you know, 509 00:27:41,480 --> 00:27:44,720 Speaker 1: would be wasted wind and solar generation on the grid. 510 00:27:44,960 --> 00:27:47,720 Speaker 1: So essentially we looked at the curtailment profiles from our 511 00:27:47,760 --> 00:27:51,960 Speaker 1: power system modeling and essentially concluded that that can help 512 00:27:52,040 --> 00:27:55,280 Speaker 1: to reduce by about three gig or what's the need 513 00:27:55,359 --> 00:27:59,320 Speaker 1: for additional wind and solar capacity. The constraint there is 514 00:27:59,400 --> 00:28:01,879 Speaker 1: that there is only so much energy that gets wasted 515 00:28:01,920 --> 00:28:04,840 Speaker 1: from the power system, and you know, you can't just 516 00:28:05,000 --> 00:28:08,280 Speaker 1: rely on that to produce zero emissions hydrogen. So there 517 00:28:08,400 --> 00:28:10,639 Speaker 1: is a risk, as you rightly point out, data that 518 00:28:10,760 --> 00:28:14,720 Speaker 1: during that transition, if we have grid connected electrolyzers, it's 519 00:28:14,800 --> 00:28:17,960 Speaker 1: very difficult to be certain that they won't be using 520 00:28:18,240 --> 00:28:21,080 Speaker 1: fossil fuel electrons during the time, you know, during the 521 00:28:21,119 --> 00:28:24,760 Speaker 1: transition period. And and actually certifying that that is that 522 00:28:24,880 --> 00:28:28,240 Speaker 1: that is green is is becoming an increasingly important consideration, 523 00:28:28,359 --> 00:28:31,520 Speaker 1: not just for people like US modeling modeling this, but 524 00:28:31,640 --> 00:28:33,920 Speaker 1: also for investors that are looking at these projects and 525 00:28:34,040 --> 00:28:36,680 Speaker 1: wanting to be sure that you know, the hydrogen that 526 00:28:36,760 --> 00:28:40,120 Speaker 1: their projects want to produce will be able to be 527 00:28:40,200 --> 00:28:43,080 Speaker 1: labeled as green. I think here just to add is 528 00:28:43,960 --> 00:28:48,920 Speaker 1: the importance of actually delivering on the carbonization of the 529 00:28:49,040 --> 00:28:53,240 Speaker 1: power sector, right Like people are worried about how hydrogen 530 00:28:53,320 --> 00:28:55,800 Speaker 1: will be produced and whether it's green or not. I'd say, 531 00:28:56,200 --> 00:28:58,920 Speaker 1: if we're producing it with electricity, it's a big first 532 00:28:59,000 --> 00:29:01,880 Speaker 1: step forward. And then we need to make sure we 533 00:29:02,000 --> 00:29:05,120 Speaker 1: delivered the green electrons, that this hydrogen needs to be green. 534 00:29:05,720 --> 00:29:08,520 Speaker 1: And I'd say, I'd say again, you know, of course 535 00:29:08,680 --> 00:29:11,080 Speaker 1: there there are costs involved in all of that, but 536 00:29:12,400 --> 00:29:15,400 Speaker 1: it all comes back to exactly this question, right like 537 00:29:15,520 --> 00:29:17,880 Speaker 1: how easy or hard? And you know, we started from 538 00:29:17,920 --> 00:29:20,120 Speaker 1: this how easy or hard is it to build renewables 539 00:29:20,760 --> 00:29:24,520 Speaker 1: in Europe today? And and what sense does it make 540 00:29:24,840 --> 00:29:27,080 Speaker 1: to building yourbles economically or not? In the answer is 541 00:29:27,240 --> 00:29:30,040 Speaker 1: it does make sense economically, and so we need to 542 00:29:30,760 --> 00:29:36,160 Speaker 1: look at the other problems that surrounded the sector, which is, 543 00:29:36,240 --> 00:29:40,000 Speaker 1: you know, we've heard them many times, permitting and and 544 00:29:40,480 --> 00:29:45,320 Speaker 1: land use and all of that that might limit how 545 00:29:45,480 --> 00:29:48,280 Speaker 1: much wind and solar we we might send. One of 546 00:29:48,320 --> 00:29:51,760 Speaker 1: the favorite things that I've heard from people in the 547 00:29:51,920 --> 00:29:54,720 Speaker 1: industry who really like dealt with the question of like 548 00:29:55,040 --> 00:29:57,280 Speaker 1: where you're building in newables and how it's like everyone 549 00:29:57,400 --> 00:30:00,960 Speaker 1: is in favor of renews everyone, right, like in Europe especially, 550 00:30:01,080 --> 00:30:03,600 Speaker 1: people love renewables until you build them next to their house, 551 00:30:04,320 --> 00:30:07,880 Speaker 1: and then they all become the most staunch anti environmentals. 552 00:30:07,920 --> 00:30:09,920 Speaker 1: Now that's a bit cynical, of course, as of you, 553 00:30:10,120 --> 00:30:15,360 Speaker 1: but it's it's widely too and and in a way, 554 00:30:15,840 --> 00:30:19,240 Speaker 1: I'd say that's that's the big question, right, how do 555 00:30:19,360 --> 00:30:24,080 Speaker 1: we unlock the renewable revolution in the electricity grid such 556 00:30:24,200 --> 00:30:28,920 Speaker 1: that we can then safely shift our transportation are heating 557 00:30:29,440 --> 00:30:33,120 Speaker 1: our hydrogen to the power sector. Well, when you bring 558 00:30:33,240 --> 00:30:35,960 Speaker 1: that up to the renewables and the nimbiism that not 559 00:30:36,080 --> 00:30:38,800 Speaker 1: in my backyard, folks, not wanting it necessarily near them. 560 00:30:39,200 --> 00:30:41,560 Speaker 1: Is it going to be possible to find all the 561 00:30:41,640 --> 00:30:44,280 Speaker 1: places that we need in order to build out renewables, 562 00:30:44,520 --> 00:30:47,120 Speaker 1: not just to electrify certain parts of the industry, but 563 00:30:47,200 --> 00:30:49,600 Speaker 1: then also to create all of the hydrogen we need? 564 00:30:49,640 --> 00:30:51,840 Speaker 1: And what are the web use constraints that were really 565 00:30:51,920 --> 00:30:56,040 Speaker 1: looking at in what is reasonably densely populated part of 566 00:30:56,080 --> 00:30:59,280 Speaker 1: the world. We actually answer this question. We looked at 567 00:30:59,440 --> 00:31:02,720 Speaker 1: why you're will actually need to deploy on shore wind 568 00:31:02,800 --> 00:31:05,440 Speaker 1: and PV to produce all of that clean electricity and 569 00:31:05,680 --> 00:31:09,600 Speaker 1: green hydrogen in the net zero and we conclude that 570 00:31:09,800 --> 00:31:12,880 Speaker 1: the land requirement is about three percent of land use, 571 00:31:13,120 --> 00:31:16,840 Speaker 1: up from just nor point to percent used for technologies 572 00:31:16,880 --> 00:31:19,760 Speaker 1: like conshore wind and PV. That's kind of putting it 573 00:31:19,800 --> 00:31:22,600 Speaker 1: into context. Three percent of land. What does that roughly represent. 574 00:31:22,760 --> 00:31:25,440 Speaker 1: It's slightly around the mark where the roads kind of 575 00:31:25,560 --> 00:31:28,880 Speaker 1: use this amount of land use today. So this isn't 576 00:31:29,240 --> 00:31:32,800 Speaker 1: an impossible amount. You know, development of this size is 577 00:31:33,200 --> 00:31:37,560 Speaker 1: not inconceivable, but it will be really important to you know, 578 00:31:37,720 --> 00:31:42,520 Speaker 1: keep evaluating how public acceptance of renewables evolved, and it's 579 00:31:42,520 --> 00:31:47,400 Speaker 1: actually becoming more important in certain regions where the renewable 580 00:31:47,480 --> 00:31:50,800 Speaker 1: energy saturation is getting higher. So we we we have 581 00:31:51,000 --> 00:31:54,120 Speaker 1: looked at what a land constrained scenario for Europe would 582 00:31:54,160 --> 00:31:57,640 Speaker 1: look like, and we do find that in total we 583 00:31:57,840 --> 00:32:00,680 Speaker 1: end up with quite a sizeable amount less on shore 584 00:32:00,760 --> 00:32:03,680 Speaker 1: wind I think around two hundred gigs and instead around 585 00:32:03,720 --> 00:32:06,880 Speaker 1: a hundred and fifty gig. What's more offshore wind, because 586 00:32:06,960 --> 00:32:10,160 Speaker 1: that's the next cheapest kind of technology to deploy kind 587 00:32:10,200 --> 00:32:14,280 Speaker 1: of bulk electricity to the grid. So that's the first thing, 588 00:32:14,400 --> 00:32:17,120 Speaker 1: is that really this the land constraints when we when 589 00:32:17,160 --> 00:32:21,360 Speaker 1: we consider them, really impact onshore wind. Now the regional 590 00:32:21,440 --> 00:32:25,760 Speaker 1: implications aren't evenly distributed either, So Germany and Italy were 591 00:32:25,840 --> 00:32:29,480 Speaker 1: both the most heavily impacted. In our land constraints scenario, 592 00:32:29,880 --> 00:32:32,560 Speaker 1: we found that offshore wind in Germany delivered nearly half 593 00:32:32,640 --> 00:32:35,360 Speaker 1: of all their power by and that's compared to just 594 00:32:35,600 --> 00:32:38,520 Speaker 1: fifteen percent in our net zero scenario without those land 595 00:32:38,560 --> 00:32:41,360 Speaker 1: constraints in place. Another kind of risk is that we 596 00:32:41,480 --> 00:32:44,040 Speaker 1: found in that scenario that Germany actually relied on more 597 00:32:44,160 --> 00:32:46,880 Speaker 1: gas in the near term because of the slower rollout 598 00:32:46,960 --> 00:32:50,480 Speaker 1: of onshore renewal bals and a longer time needed to 599 00:32:50,680 --> 00:32:54,000 Speaker 1: allow offshore wind to scale and bridge that gap. So 600 00:32:54,240 --> 00:32:56,480 Speaker 1: I think you know, when we when we're thinking about 601 00:32:56,920 --> 00:32:59,480 Speaker 1: land constraints and how this plays out in the near term, 602 00:33:00,080 --> 00:33:03,800 Speaker 1: really that the onshore, the onshore renewables are going to 603 00:33:03,840 --> 00:33:07,760 Speaker 1: be absolutely critical to really squeezing out the thermal generation 604 00:33:07,880 --> 00:33:10,720 Speaker 1: mixing that's needed to kind of meet the current targets 605 00:33:10,800 --> 00:33:13,800 Speaker 1: that Europe is setting. And speaking of constraints, all of 606 00:33:13,880 --> 00:33:15,840 Speaker 1: this is going to take money. So let's talk a 607 00:33:15,920 --> 00:33:20,200 Speaker 1: little bit about investment. Do we see signals that the 608 00:33:20,640 --> 00:33:24,200 Speaker 1: finance community is essentially looking to invest in these sorts 609 00:33:24,240 --> 00:33:26,760 Speaker 1: of projects and what does that mean in the near 610 00:33:26,880 --> 00:33:28,560 Speaker 1: term and what does that mean in the longer term. 611 00:33:28,640 --> 00:33:31,440 Speaker 1: I mean, are we seeing signs that this is a 612 00:33:32,600 --> 00:33:35,880 Speaker 1: space where there is a good amount of investment flooding 613 00:33:35,920 --> 00:33:39,280 Speaker 1: into it. I'd say they are not here. The signals 614 00:33:39,320 --> 00:33:43,800 Speaker 1: are somewhat mixed, at least at the moment. For a 615 00:33:43,960 --> 00:33:47,760 Speaker 1: very long time, Europe has relied on subsidies right then, 616 00:33:47,840 --> 00:33:50,280 Speaker 1: So in that sense, it's very hard to get a 617 00:33:50,400 --> 00:33:52,720 Speaker 1: clear view on what has been driving investment in the 618 00:33:52,800 --> 00:33:57,080 Speaker 1: renewable sector because who doesn't want in a way. I'm 619 00:33:57,120 --> 00:33:59,280 Speaker 1: not going to call it free money, but you know, 620 00:33:59,440 --> 00:34:02,120 Speaker 1: it's a relatively safe return, and if you know what 621 00:34:02,240 --> 00:34:04,480 Speaker 1: you're doing in Europe, you could lock in a good 622 00:34:04,520 --> 00:34:09,480 Speaker 1: return with you know, good fifteen years subsidutes. Now, subsidies 623 00:34:09,560 --> 00:34:13,400 Speaker 1: in Europe are not necessarily going away, but they're changing 624 00:34:13,440 --> 00:34:16,080 Speaker 1: in nature and how they're delivered. In Germany, for example, 625 00:34:16,120 --> 00:34:18,799 Speaker 1: they're given as a top up to the power price, 626 00:34:18,880 --> 00:34:20,719 Speaker 1: or you're exposed to the power price, and it makes 627 00:34:20,760 --> 00:34:25,560 Speaker 1: some occasions we've seen projects going and bid zero, you know, 628 00:34:25,640 --> 00:34:27,200 Speaker 1: they want to zero top up so they have a 629 00:34:27,239 --> 00:34:31,000 Speaker 1: full exposure to the market. And in Spain we're seeing 630 00:34:31,040 --> 00:34:34,879 Speaker 1: a lot of private interest in building projects without the need, 631 00:34:35,200 --> 00:34:38,279 Speaker 1: without you know, subsidies backing them, and instead going straight 632 00:34:38,320 --> 00:34:40,960 Speaker 1: to the market and maybe signing a power purchase agreement 633 00:34:41,600 --> 00:34:44,439 Speaker 1: with a court, you know, with a company that takes 634 00:34:44,520 --> 00:34:47,920 Speaker 1: the power. But in general, I would say, you know, 635 00:34:48,040 --> 00:34:51,960 Speaker 1: we need around five point three trillion dollars in investment 636 00:34:52,040 --> 00:34:55,240 Speaker 1: over the coming three decades deliver on the net zero scenario. 637 00:34:55,800 --> 00:34:58,360 Speaker 1: So that's quite a bit of money. And when we 638 00:34:58,520 --> 00:35:02,320 Speaker 1: look at our power price modeling analysis, what we find 639 00:35:02,480 --> 00:35:07,279 Speaker 1: is that the long thought of you know, kind of 640 00:35:08,120 --> 00:35:11,759 Speaker 1: short term contracts maybe one to three years out, a 641 00:35:12,800 --> 00:35:16,320 Speaker 1: lot of reliance on spot markets and all that just 642 00:35:16,560 --> 00:35:20,520 Speaker 1: doesn't doesn't make the cut. You do need to create 643 00:35:20,600 --> 00:35:24,720 Speaker 1: that longer term price stability to drive the investment forward. 644 00:35:25,320 --> 00:35:28,680 Speaker 1: And this is in a way where what subject is 645 00:35:28,719 --> 00:35:33,040 Speaker 1: also showed is that people want long term stability. So 646 00:35:33,080 --> 00:35:37,440 Speaker 1: I'd say for the time being, the investment interest is 647 00:35:37,560 --> 00:35:40,800 Speaker 1: there and the money is going in there even where 648 00:35:41,200 --> 00:35:45,160 Speaker 1: when no subjecties are involved. Part of the spike could 649 00:35:45,640 --> 00:35:48,480 Speaker 1: is also attributable to the rising in carbon prices over 650 00:35:48,520 --> 00:35:51,000 Speaker 1: the last few years and now some commodity prices that 651 00:35:51,120 --> 00:35:54,839 Speaker 1: is essentially making the power market a very attractive place 652 00:35:54,920 --> 00:35:57,120 Speaker 1: to go, even if you don't have some kind of 653 00:35:57,239 --> 00:36:00,160 Speaker 1: price stability into the future. We're doing some analysis in 654 00:36:00,320 --> 00:36:04,319 Speaker 1: Spain today essentially cutting off three or four years from 655 00:36:04,400 --> 00:36:08,319 Speaker 1: your investment horizon just by like being online this year 656 00:36:08,600 --> 00:36:11,239 Speaker 1: or last year due to the high prices. But at 657 00:36:11,320 --> 00:36:14,040 Speaker 1: some point we're gonna have to see a shift towards 658 00:36:15,400 --> 00:36:21,279 Speaker 1: longer term thinking and the the the options there, i'd say, 659 00:36:21,320 --> 00:36:24,880 Speaker 1: are a bit mixed. You could have a more market 660 00:36:26,200 --> 00:36:31,880 Speaker 1: based approach, whereby governments don't intervene and essentially the market 661 00:36:32,000 --> 00:36:35,720 Speaker 1: is left to find what length of contracts are needed 662 00:36:35,840 --> 00:36:38,960 Speaker 1: and how many of them and for what portion of 663 00:36:39,040 --> 00:36:42,799 Speaker 1: your project output. Or you could have more centralized approaches 664 00:36:42,880 --> 00:36:48,680 Speaker 1: such as continued options for subsidies and maybe capacity mechanisms, 665 00:36:49,520 --> 00:36:52,120 Speaker 1: and and the jury is still out on which one 666 00:36:52,239 --> 00:36:59,840 Speaker 1: is better. Probably the centralized mechanisms run by governments delivered targets, 667 00:37:00,160 --> 00:37:03,479 Speaker 1: you know, deliver on targets in a more consistent way, 668 00:37:03,880 --> 00:37:08,240 Speaker 1: and the volume, let's say, is in control of centralized planners. 669 00:37:08,320 --> 00:37:11,200 Speaker 1: But it creates a little bit of a dependence on 670 00:37:11,280 --> 00:37:13,239 Speaker 1: the system, you know, kind of like it's very hard 671 00:37:13,280 --> 00:37:16,960 Speaker 1: to shake that off. The alternative to kind of like 672 00:37:17,080 --> 00:37:19,759 Speaker 1: incentivize the industry to take a more long term view, 673 00:37:19,800 --> 00:37:22,520 Speaker 1: which for a long time they haven't done. And the 674 00:37:22,600 --> 00:37:26,640 Speaker 1: reasons are are many, and Beno has analyzed them. But 675 00:37:26,880 --> 00:37:31,000 Speaker 1: incentivizing the industry to take a long term view would 676 00:37:31,040 --> 00:37:35,239 Speaker 1: then create a sustainable environment where this system just propagates 677 00:37:35,239 --> 00:37:41,120 Speaker 1: itself forward and investment becomes a private enterprise with little 678 00:37:41,239 --> 00:37:46,719 Speaker 1: to no government intervention. And it's primarily driven by the 679 00:37:46,840 --> 00:37:49,759 Speaker 1: fact that building then yourbles is cheaper and there is 680 00:37:49,800 --> 00:37:53,160 Speaker 1: a way to also meet them repay for themselves, right 681 00:37:53,160 --> 00:37:56,120 Speaker 1: because now they're cheaper, but people struggle to see, Okay, 682 00:37:56,160 --> 00:37:58,440 Speaker 1: how do we pay for them? And and I say 683 00:37:58,520 --> 00:38:01,320 Speaker 1: that that's where markets come in, and the good market 684 00:38:01,400 --> 00:38:05,040 Speaker 1: design is is important in also making them financially sustainable. 685 00:38:05,280 --> 00:38:07,400 Speaker 1: And just to kind of underscore the fact that in 686 00:38:07,560 --> 00:38:10,360 Speaker 1: order to get that five point three trillion invested in 687 00:38:10,600 --> 00:38:13,560 Speaker 1: in the nets aeria scenario that we identify as needed 688 00:38:13,600 --> 00:38:15,759 Speaker 1: for that's just for the clean energy supply, so that's 689 00:38:15,800 --> 00:38:19,439 Speaker 1: your power and green hydrogen capex needs that will rely 690 00:38:19,560 --> 00:38:22,359 Speaker 1: on those really robust investment signals, which, as Andrea said, 691 00:38:22,520 --> 00:38:26,320 Speaker 1: is fundamentally the market design and the investment frameworks that 692 00:38:26,400 --> 00:38:28,560 Speaker 1: are in that are in place, and I don't think 693 00:38:28,840 --> 00:38:31,480 Speaker 1: in my time at be enough, I've ever been in 694 00:38:31,640 --> 00:38:35,359 Speaker 1: such an environment where this has been under the microscope 695 00:38:35,440 --> 00:38:39,719 Speaker 1: so severely. You know, the the energy crisis is exposing 696 00:38:39,840 --> 00:38:43,040 Speaker 1: some of the challenges of the market in its current design, 697 00:38:43,480 --> 00:38:46,880 Speaker 1: particularly for for wholesale electricity and gas prices, and I 698 00:38:46,960 --> 00:38:51,799 Speaker 1: think questions around reform and regulatory interventions are still very 699 00:38:51,920 --> 00:38:55,560 Speaker 1: much influx, and we're going to be having to follow 700 00:38:55,640 --> 00:38:58,479 Speaker 1: this super closely because it will affect all of those, 701 00:38:58,719 --> 00:39:01,399 Speaker 1: um you know, all of those factors that go into 702 00:39:01,520 --> 00:39:04,440 Speaker 1: driving investment into clean technologies, and I think will be 703 00:39:04,560 --> 00:39:07,719 Speaker 1: a really hopefully something that can help accelerate the move 704 00:39:07,800 --> 00:39:11,040 Speaker 1: towards as Andre has mentioned, the long time pricing and 705 00:39:11,200 --> 00:39:14,040 Speaker 1: signals that you need in order to actually get projects 706 00:39:14,040 --> 00:39:16,880 Speaker 1: on the ground. Yeah, hopefully it ends up in that direction, 707 00:39:16,960 --> 00:39:18,600 Speaker 1: but I think there are risks that we go back 708 00:39:18,680 --> 00:39:22,759 Speaker 1: to more heavy handed regulatory interventions that maybe create distortive 709 00:39:22,800 --> 00:39:26,680 Speaker 1: effects or or maybe hinder hinder the transition in ways 710 00:39:26,719 --> 00:39:29,359 Speaker 1: that we can't really anticipate just yet. So let's say 711 00:39:29,400 --> 00:39:31,040 Speaker 1: I'm in another part of the world and I am 712 00:39:31,120 --> 00:39:34,920 Speaker 1: not part of the European system. What is it that 713 00:39:35,040 --> 00:39:37,680 Speaker 1: I'm looking at most closely. Is it the market design 714 00:39:37,800 --> 00:39:40,279 Speaker 1: question that you just brought up, or is it the 715 00:39:40,600 --> 00:39:45,000 Speaker 1: technology and the l c o E declines for certain 716 00:39:45,080 --> 00:39:47,720 Speaker 1: technologies that are being invested in more heavily in Europe? 717 00:39:48,000 --> 00:39:51,440 Speaker 1: What is it that I am watching most closely? If 718 00:39:51,480 --> 00:39:55,399 Speaker 1: I were in the America's or in the Asia Pacific area, 719 00:39:55,719 --> 00:39:59,240 Speaker 1: I think it's gas. Honestly, I think that's time everyone 720 00:39:59,400 --> 00:40:02,120 Speaker 1: is fast needed by the gas discussion that's playing out 721 00:40:02,160 --> 00:40:05,719 Speaker 1: and how your steps away from its reliance on particularly 722 00:40:05,719 --> 00:40:09,760 Speaker 1: those Russian imports. I agree with gas and call maybe 723 00:40:10,000 --> 00:40:13,479 Speaker 1: being the two things that people look at, but either 724 00:40:13,760 --> 00:40:16,520 Speaker 1: to say something also that maybe it's a little bit 725 00:40:16,680 --> 00:40:20,880 Speaker 1: older news but still very relevant, which is not. Denmark 726 00:40:21,000 --> 00:40:25,480 Speaker 1: two years ago hit something like renewable energy. The UK 727 00:40:25,760 --> 00:40:30,120 Speaker 1: with its officure wind rollout is I'm going to see 728 00:40:30,160 --> 00:40:33,200 Speaker 1: a very big increase in order like getting to six 729 00:40:34,600 --> 00:40:37,440 Speaker 1: renewable energy by twenty thirty. So if I'm looking at 730 00:40:37,520 --> 00:40:40,520 Speaker 1: Europe from the outside, I'd say, how are they making 731 00:40:40,560 --> 00:40:45,000 Speaker 1: it work? How are they making these systems remain stable, 732 00:40:45,160 --> 00:40:49,040 Speaker 1: deliver the power that that they need while also kind 733 00:40:49,040 --> 00:40:52,919 Speaker 1: of the carbonizing and and I'd say for some time 734 00:40:53,000 --> 00:40:56,759 Speaker 1: to come, Europe will remain at the forefront of kind 735 00:40:56,800 --> 00:41:00,839 Speaker 1: of like setting records for you know, shares of electricity 736 00:41:01,080 --> 00:41:05,839 Speaker 1: meeting shares of renewable EA, tristy meeting demand going from 737 00:41:05,920 --> 00:41:08,560 Speaker 1: a dred percent over one day to a percent over 738 00:41:08,719 --> 00:41:13,120 Speaker 1: one week, to a percent over one month, and so 739 00:41:13,239 --> 00:41:15,279 Speaker 1: on and so forth. And I think that is a 740 00:41:15,400 --> 00:41:19,080 Speaker 1: very interesting and important dynamic to to keep an eye 741 00:41:19,120 --> 00:41:22,160 Speaker 1: out for because it's also one of the biggest criticism 742 00:41:22,280 --> 00:41:29,200 Speaker 1: for in yours how do we go from one to thirty? Yeah, 743 00:41:29,239 --> 00:41:32,320 Speaker 1: and I think offshore wind, especially from the policy perspective, 744 00:41:32,400 --> 00:41:35,279 Speaker 1: is increasingly that solution. That's the kind of the go 745 00:41:35,480 --> 00:41:40,640 Speaker 1: to for the post. I don't time frame. You know, 746 00:41:40,719 --> 00:41:42,960 Speaker 1: we've we've just had that announcement for the fifty gig 747 00:41:43,000 --> 00:41:46,480 Speaker 1: of what's in the UK, and that's you know that 748 00:41:46,600 --> 00:41:48,839 Speaker 1: that is a really sizeable ramp up in ambition from 749 00:41:48,960 --> 00:41:51,160 Speaker 1: just the thirty gig and what's two years ago and 750 00:41:51,200 --> 00:41:53,520 Speaker 1: forty gigo what target that they said a year ago? 751 00:41:53,640 --> 00:41:55,960 Speaker 1: So yeah, I think I think Andreas is right that 752 00:41:56,120 --> 00:41:59,600 Speaker 1: that that is one of the hottest areas I guess 753 00:41:59,680 --> 00:42:01,799 Speaker 1: to be to be looking at. So this is now 754 00:42:02,000 --> 00:42:04,760 Speaker 1: an annual report that served second time running it correct 755 00:42:04,960 --> 00:42:08,560 Speaker 1: it is, Yeah, what other parts of the world and 756 00:42:08,680 --> 00:42:12,160 Speaker 1: other teams are also doing an energy transition outlove Now, 757 00:42:13,239 --> 00:42:16,160 Speaker 1: you know, we don't have a plan to formalize the 758 00:42:16,680 --> 00:42:19,759 Speaker 1: publication for other regions yet, but I really hope that 759 00:42:19,920 --> 00:42:23,120 Speaker 1: we can develop and use this kind of methodology to 760 00:42:23,320 --> 00:42:26,160 Speaker 1: really add that regional color to how we develop on 761 00:42:26,239 --> 00:42:27,920 Speaker 1: net s aerio scenarios. I know that's going to be 762 00:42:28,000 --> 00:42:30,960 Speaker 1: a really important dimension to how our new energy outlook evolved. 763 00:42:31,239 --> 00:42:34,120 Speaker 1: I think in America's energy transition outlook would be super cool. 764 00:42:34,400 --> 00:42:36,919 Speaker 1: I'd love to also start exploring the regions that maybe 765 00:42:36,960 --> 00:42:40,279 Speaker 1: are less well served by by enough coverage, so really 766 00:42:40,360 --> 00:42:43,480 Speaker 1: modeling things market like South Africa. I think that would 767 00:42:43,520 --> 00:42:46,360 Speaker 1: be that would be really interesting to start thinking about 768 00:42:46,400 --> 00:42:49,000 Speaker 1: their long term transition pathways, just because it looks so 769 00:42:49,160 --> 00:42:52,359 Speaker 1: fundamentally different to what we have in Europe. And while 770 00:42:52,440 --> 00:42:54,560 Speaker 1: they can take advantage of some of the solutions that 771 00:42:54,680 --> 00:42:57,200 Speaker 1: we have, there are other things that are constraints that 772 00:42:57,480 --> 00:42:59,680 Speaker 1: you know, the sectors in these regions face that we 773 00:42:59,800 --> 00:43:02,840 Speaker 1: just don't have head So final question, and I know 774 00:43:03,400 --> 00:43:06,160 Speaker 1: the Russian invasion of the Ukraine came up several times 775 00:43:06,200 --> 00:43:08,560 Speaker 1: in the podcast today, and one of the things they 776 00:43:08,560 --> 00:43:11,640 Speaker 1: all of Europe is thinking about will this accelerate or 777 00:43:11,800 --> 00:43:17,080 Speaker 1: decelerate the energy transition. Many people are very much focused 778 00:43:17,160 --> 00:43:19,360 Speaker 1: on the fact that, you know, wind and solar is 779 00:43:19,400 --> 00:43:23,920 Speaker 1: a way to reduce reliance on gas and therefore imports. 780 00:43:24,400 --> 00:43:27,560 Speaker 1: But equally there are policy decisions that are being made 781 00:43:27,680 --> 00:43:30,959 Speaker 1: right now in order to bring costs down and also 782 00:43:31,200 --> 00:43:35,320 Speaker 1: find imports from other parts of the world, and invariably 783 00:43:35,400 --> 00:43:38,480 Speaker 1: with inflation at such high levels, that is part of 784 00:43:38,520 --> 00:43:41,000 Speaker 1: the role of government to look at it. So if 785 00:43:41,120 --> 00:43:42,800 Speaker 1: you had to look into the future, and I know 786 00:43:43,040 --> 00:43:45,840 Speaker 1: that this is just an opinion and an educated guests, 787 00:43:46,280 --> 00:43:49,520 Speaker 1: do you think that the current political climate, in particular 788 00:43:49,640 --> 00:43:53,880 Speaker 1: with what's happening in Ukraine, is this going to accelerate 789 00:43:54,040 --> 00:43:57,640 Speaker 1: or decelerate the energy transition in Europe? I think this 790 00:43:58,160 --> 00:44:00,960 Speaker 1: accelerates things from renewal balls and as we've kind of 791 00:44:01,040 --> 00:44:05,200 Speaker 1: laid out earlier, there's so many signs pointing to scaling 792 00:44:05,239 --> 00:44:07,879 Speaker 1: the sector and there are real barriers, but I think 793 00:44:07,960 --> 00:44:10,560 Speaker 1: that this is good news for for renewables. Where I 794 00:44:10,600 --> 00:44:14,680 Speaker 1: think there are risks is you know, we're we're looking 795 00:44:14,719 --> 00:44:19,239 Speaker 1: at a situation where the European Commission's plans essentially could 796 00:44:19,360 --> 00:44:22,359 Speaker 1: result in a dampening of the carbon price, which could 797 00:44:23,160 --> 00:44:26,600 Speaker 1: essentially result in more coal used to alleviate the need 798 00:44:26,680 --> 00:44:29,319 Speaker 1: for gas. So on the emission side of things, that's 799 00:44:29,360 --> 00:44:33,040 Speaker 1: not great. And I think the tension there between okay, 800 00:44:33,120 --> 00:44:36,200 Speaker 1: great for more renewables, but in terms of the trajectory 801 00:44:36,360 --> 00:44:39,640 Speaker 1: for for the reliance on other things like coal in 802 00:44:39,680 --> 00:44:42,400 Speaker 1: the meantime is is going to be tricky to square. 803 00:44:42,440 --> 00:44:46,720 Speaker 1: So I think this accelerates certain parts of the transition certainly. 804 00:44:46,760 --> 00:44:49,759 Speaker 1: And I think the attention that now things like gas 805 00:44:49,800 --> 00:44:52,920 Speaker 1: boilers are getting pacing pacing out gas boiler isn't instead 806 00:44:52,960 --> 00:44:55,279 Speaker 1: putting heat pumps in that that's something that's needed to 807 00:44:55,320 --> 00:44:56,880 Speaker 1: come on the agenda for a long time. And I 808 00:44:57,000 --> 00:44:59,880 Speaker 1: think that those those things, if the right policies of 809 00:45:00,000 --> 00:45:02,680 Speaker 1: all comes in place, could be an accelerator. But yeah, 810 00:45:02,719 --> 00:45:05,480 Speaker 1: it's very mixed and difficult to judge because of the 811 00:45:05,560 --> 00:45:09,680 Speaker 1: volatility that the market is currently in. I personally say 812 00:45:09,840 --> 00:45:15,080 Speaker 1: that without necessarily trying to look into the future, I'll 813 00:45:15,120 --> 00:45:17,920 Speaker 1: try to look at what has changed quickly over the 814 00:45:18,000 --> 00:45:20,440 Speaker 1: last let's say six months to a year, and the 815 00:45:20,520 --> 00:45:22,800 Speaker 1: one big shift that I saw, and I saw it 816 00:45:22,920 --> 00:45:26,440 Speaker 1: during the the energy price crisis as well as the 817 00:45:26,560 --> 00:45:29,480 Speaker 1: one that the high gas prices started and power prices 818 00:45:29,520 --> 00:45:32,319 Speaker 1: started following, And I was like, oh, yeah, it's gas, 819 00:45:32,480 --> 00:45:35,040 Speaker 1: but it's also wind, and I will get furious with that, 820 00:45:35,239 --> 00:45:36,879 Speaker 1: and if I keep on talking about that, that we'll 821 00:45:36,920 --> 00:45:39,120 Speaker 1: get furious on the podcast as well. So I'm gonna 822 00:45:39,160 --> 00:45:41,400 Speaker 1: stop there. But I used to tell people it's a 823 00:45:41,480 --> 00:45:44,840 Speaker 1: gas story. This whole wind thing is just like a 824 00:45:44,920 --> 00:45:49,200 Speaker 1: smoke screen. As time has gone by, I feel like 825 00:45:49,320 --> 00:45:54,000 Speaker 1: that conversation around the fault of wind in the high 826 00:45:54,080 --> 00:45:58,239 Speaker 1: power prices has subsided, if not gone away completely, and 827 00:45:58,360 --> 00:46:00,680 Speaker 1: instead now a lot of people are saying, oh, we 828 00:46:00,800 --> 00:46:03,760 Speaker 1: told you if we built more renewables, we'd be somewhat 829 00:46:03,840 --> 00:46:07,120 Speaker 1: more shielded today. And in a way, also another conversation 830 00:46:07,680 --> 00:46:10,480 Speaker 1: has shifted around the long term pricing, which was one 831 00:46:10,520 --> 00:46:13,280 Speaker 1: of the mechanics pricing mechanism that I was talking around earlier. 832 00:46:13,320 --> 00:46:16,120 Speaker 1: A lot of people say, like, look, if we're building 833 00:46:16,239 --> 00:46:20,440 Speaker 1: renewables with twenty year contracts, fixed price contracts right now, 834 00:46:20,480 --> 00:46:23,400 Speaker 1: they would have to sell us electricity at a low price, 835 00:46:23,760 --> 00:46:26,320 Speaker 1: even though power prices at the moment are you know, 836 00:46:26,920 --> 00:46:29,960 Speaker 1: three or four times or or six times in some 837 00:46:30,120 --> 00:46:33,520 Speaker 1: places historical averages. So from that point of view, I'd 838 00:46:33,520 --> 00:46:37,520 Speaker 1: say there's been a shift, a positive shift towards unwables, 839 00:46:37,680 --> 00:46:41,960 Speaker 1: which I think personally was needed and in the long 840 00:46:42,080 --> 00:46:46,280 Speaker 1: term it's going to create the stability. I share Emma's 841 00:46:46,360 --> 00:46:50,080 Speaker 1: concern around the core increased colburn, but I think that 842 00:46:50,200 --> 00:46:55,319 Speaker 1: if we stick behind the renewable growth, having a little 843 00:46:55,360 --> 00:46:59,720 Speaker 1: bit more call for four or five years, it's actually 844 00:47:00,360 --> 00:47:03,960 Speaker 1: be overall cheaper. I'm gonna leave us more resources to 845 00:47:04,080 --> 00:47:07,040 Speaker 1: the carbonize than if we went from a cold to 846 00:47:07,160 --> 00:47:10,279 Speaker 1: gas transition only to then go from a gas to 847 00:47:10,360 --> 00:47:14,879 Speaker 1: renewable transition. So I'd say my message is positive there. Yeah, 848 00:47:14,920 --> 00:47:17,240 Speaker 1: I actually love that, Andreas. I was on my community 849 00:47:17,280 --> 00:47:21,080 Speaker 1: this morning. I literally saw a an ad that had 850 00:47:21,160 --> 00:47:23,839 Speaker 1: six words on it and it said when does cheap 851 00:47:24,040 --> 00:47:26,920 Speaker 1: gas is expensive? And it's an ad for like one 852 00:47:27,000 --> 00:47:29,400 Speaker 1: of the renewable energy supplies here in the UK, And 853 00:47:29,520 --> 00:47:31,279 Speaker 1: I think that that kind of says that all that 854 00:47:31,360 --> 00:47:34,359 Speaker 1: that momentum shift and even in the public I now 855 00:47:34,719 --> 00:47:36,520 Speaker 1: is coming on the fact that we would be less 856 00:47:36,560 --> 00:47:39,759 Speaker 1: shielded from from this crisis had we I'm gone faster 857 00:47:39,840 --> 00:47:42,560 Speaker 1: on renewables and those that have higher exposure to renewables 858 00:47:42,560 --> 00:47:44,640 Speaker 1: are actually kind of coping with things a little bit better. 859 00:47:44,800 --> 00:47:47,319 Speaker 1: So yeah, I think that's a really that's a really 860 00:47:47,360 --> 00:47:49,759 Speaker 1: important point to end on. Well, on that note, we'll 861 00:47:49,760 --> 00:47:51,600 Speaker 1: see what the future holds, and thank you so much 862 00:47:51,640 --> 00:47:54,399 Speaker 1: for joining today. Thank you Dana again in ten years 863 00:47:54,719 --> 00:47:58,879 Speaker 1: and reportantly. We're going to come back again next year 864 00:47:59,080 --> 00:48:02,360 Speaker 1: and tell us what's happened with the energetic Definitely be 865 00:48:02,480 --> 00:48:04,680 Speaker 1: a big year from a policy standpoint, I'm sure, but no, 866 00:48:04,800 --> 00:48:12,200 Speaker 1: I think so. I think so. Today's episode of Switched 867 00:48:12,239 --> 00:48:14,879 Speaker 1: On was edited by Rex Warner of gray Stoke Media. 868 00:48:14,920 --> 00:48:17,200 Speaker 1: Bloomberg an e F as a service provided by Bloomberg 869 00:48:17,280 --> 00:48:20,600 Speaker 1: Finance LP and its affiliates. This recording does not constitute, 870 00:48:20,640 --> 00:48:23,839 Speaker 1: nor should it be construed as investment advice, investment recommendations, 871 00:48:23,960 --> 00:48:27,040 Speaker 1: or recommendation as to an investment or other strategy. Bloomberg 872 00:48:27,040 --> 00:48:29,440 Speaker 1: an e F should not be considered as information sufficient 873 00:48:29,480 --> 00:48:32,440 Speaker 1: upon which to base an investment decision. Neither Bloomberg Finance 874 00:48:32,560 --> 00:48:35,320 Speaker 1: LP nor any of its affiliates makes any representation or 875 00:48:35,360 --> 00:48:38,000 Speaker 1: warranty as to the accuracy or completeness of the information 876 00:48:38,080 --> 00:48:40,960 Speaker 1: contained in this recording, and any liability of this recording 877 00:48:41,120 --> 00:48:42,240 Speaker 1: is expressly disclaimed.