1 00:00:00,440 --> 00:00:03,600 Speaker 1: This is Dana Perkins and you're listening to Switched on 2 00:00:03,880 --> 00:00:08,520 Speaker 1: the BNF podcast. The New Energy Outlook contains BNF's long 3 00:00:08,600 --> 00:00:11,959 Speaker 1: term energy and climate scenarios for the transition to a 4 00:00:12,000 --> 00:00:15,040 Speaker 1: low carbon economy. They're anchored in the real world, looking 5 00:00:15,080 --> 00:00:18,720 Speaker 1: at economics but ignoring politics, which can be a hard 6 00:00:18,760 --> 00:00:20,920 Speaker 1: thing to do in a year with so many elections. 7 00:00:21,200 --> 00:00:24,360 Speaker 1: It takes a full year across nearly all of benf's 8 00:00:24,400 --> 00:00:27,520 Speaker 1: teams to get it done. They look at electricity, industry 9 00:00:27,720 --> 00:00:30,440 Speaker 1: and buildings in transport as some of the key drivers 10 00:00:30,440 --> 00:00:33,120 Speaker 1: for this transition. We hope the research helps people think 11 00:00:33,120 --> 00:00:35,560 Speaker 1: about how the future might play out all the way 12 00:00:35,640 --> 00:00:39,000 Speaker 1: to twenty fifty as one planet on spaceship Earth and 13 00:00:39,280 --> 00:00:43,080 Speaker 1: also as individual countries. Today we have David Hastert on 14 00:00:43,120 --> 00:00:45,479 Speaker 1: the show. He is the global head of Economics and 15 00:00:45,520 --> 00:00:48,840 Speaker 1: Modeling at BENEF and I've asked tomerlands Reese to come 16 00:00:48,880 --> 00:00:51,160 Speaker 1: back as my co host so we can grill David 17 00:00:51,200 --> 00:00:53,120 Speaker 1: a bit and make him tell us why it is 18 00:00:53,159 --> 00:00:55,720 Speaker 1: important to think so far out into the future, as 19 00:00:55,760 --> 00:00:58,520 Speaker 1: well as a bit more about the nine technologies that 20 00:00:58,560 --> 00:01:02,120 Speaker 1: could make or break the low carbon transition and which 21 00:01:02,120 --> 00:01:04,560 Speaker 1: ones are succeeding, and which ones might need a bit 22 00:01:04,600 --> 00:01:06,920 Speaker 1: more work to put it lightly. If you like our show, 23 00:01:07,040 --> 00:01:09,360 Speaker 1: make sure to subscribe or give us a review. And 24 00:01:09,520 --> 00:01:12,920 Speaker 1: right now, let's listen to Tom and my conversation with 25 00:01:13,080 --> 00:01:15,880 Speaker 1: David about the New Energy Outlook for twenty twenty four. 26 00:01:25,640 --> 00:01:28,240 Speaker 1: So we're joined again today on Switched On with a 27 00:01:28,280 --> 00:01:31,480 Speaker 1: co host. So say hello to everybody. Tom, Hi, everyone, 28 00:01:32,040 --> 00:01:35,160 Speaker 1: and our guest today is David. So David, welcome to 29 00:01:35,200 --> 00:01:35,520 Speaker 1: the show. 30 00:01:35,680 --> 00:01:37,679 Speaker 2: Hey Dana, Hey Tom, it's great to be here. It's 31 00:01:37,760 --> 00:01:39,920 Speaker 2: like talking with old friends since we've been working together 32 00:01:39,920 --> 00:01:40,720 Speaker 2: for such a long time. 33 00:01:41,160 --> 00:01:44,880 Speaker 1: I agree, And we're here to talk about this year's 34 00:01:45,080 --> 00:01:48,480 Speaker 1: edition of the New Energy Outlook. And we're not going 35 00:01:48,520 --> 00:01:51,080 Speaker 1: to comprehensively go through the key findings. That's something that 36 00:01:51,120 --> 00:01:53,560 Speaker 1: someone can find from a webinar and is better supported 37 00:01:53,600 --> 00:01:56,960 Speaker 1: by a chart or two or twenty in any case. 38 00:01:57,040 --> 00:02:01,080 Speaker 1: But we're here to talk actually about scenarios generally and 39 00:02:01,200 --> 00:02:05,400 Speaker 1: also what we're trying to accomplish here with our neo report. 40 00:02:05,520 --> 00:02:08,080 Speaker 1: But when we're talking about the New Energy Outlook, why 41 00:02:08,240 --> 00:02:10,679 Speaker 1: is it that in this case, well laying the groundwork, 42 00:02:10,800 --> 00:02:13,840 Speaker 1: why is it a scenario rather than a forecast. 43 00:02:14,000 --> 00:02:18,040 Speaker 2: Yeah, so the new energy outlook is Bloomberg's Energy and 44 00:02:18,080 --> 00:02:20,880 Speaker 2: Climate scenarios. So it's a huge body of work that 45 00:02:20,960 --> 00:02:24,079 Speaker 2: brings together the work that our analysts do across the 46 00:02:24,080 --> 00:02:26,560 Speaker 2: different teams. So across being for we have three hundred 47 00:02:26,560 --> 00:02:29,560 Speaker 2: people and of those seventy you just involved with this project. 48 00:02:29,680 --> 00:02:32,640 Speaker 2: It's a huge exercise. And fundamentally, when you do these 49 00:02:32,760 --> 00:02:35,320 Speaker 2: big sweeping analysis you can do them in two ways. 50 00:02:35,360 --> 00:02:38,040 Speaker 2: You can either lock up a team of ten PhDs 51 00:02:38,040 --> 00:02:39,359 Speaker 2: in the room and they hash it out and they 52 00:02:39,360 --> 00:02:41,679 Speaker 2: tell the business what is the solution. But the way 53 00:02:41,720 --> 00:02:43,680 Speaker 2: that we've been doing it, which has been really good 54 00:02:43,680 --> 00:02:46,200 Speaker 2: for our internal alignment, is to say, let's bring everybody 55 00:02:46,200 --> 00:02:49,000 Speaker 2: on board and build the scenario together. And as the 56 00:02:49,160 --> 00:02:52,040 Speaker 2: listeners who work in any group have worked in any 57 00:02:52,040 --> 00:02:55,160 Speaker 2: big projects, know, having internal alignment is about the hardest 58 00:02:55,160 --> 00:02:57,280 Speaker 2: thing you can do. So once we have that, we're 59 00:02:57,320 --> 00:02:59,960 Speaker 2: able to build a bottom up, piece by piece picture 60 00:03:00,400 --> 00:03:03,960 Speaker 2: of how the energy transition can play out. When we 61 00:03:04,200 --> 00:03:06,720 Speaker 2: say that any transition, what we mean is the power sector, 62 00:03:06,760 --> 00:03:12,160 Speaker 2: We mean transport, aviation, shipping, road, transport. We talk about buildings, 63 00:03:12,360 --> 00:03:17,639 Speaker 2: we talk about industry, chemicals, cement, aluminium, and these emissions 64 00:03:17,680 --> 00:03:20,720 Speaker 2: together make up about two thirds of global emissions, so 65 00:03:20,760 --> 00:03:23,000 Speaker 2: it's a huge chunk of kind of man made emissions. 66 00:03:23,000 --> 00:03:26,880 Speaker 2: And our role as scenarios makers is to go out 67 00:03:26,919 --> 00:03:29,320 Speaker 2: and say, well, based on what we know today, based 68 00:03:29,400 --> 00:03:32,120 Speaker 2: on what we as being, what our teams know about 69 00:03:32,120 --> 00:03:36,480 Speaker 2: technology costs, about consumer uptake, about how decision making happens 70 00:03:36,520 --> 00:03:39,520 Speaker 2: to the process, what is a reasonable assumption of how 71 00:03:39,680 --> 00:03:42,440 Speaker 2: these sectors can evolve between today and twenty fifty in 72 00:03:43,000 --> 00:03:45,280 Speaker 2: our base case. And we can talk about scenario kind 73 00:03:45,280 --> 00:03:49,200 Speaker 2: of cases in a moment, and then what would this 74 00:03:49,240 --> 00:03:51,360 Speaker 2: have to look like if we wanted to get to 75 00:03:51,440 --> 00:03:55,560 Speaker 2: net zero. Scenarios can be explorative. They can just say well, 76 00:03:55,640 --> 00:03:58,560 Speaker 2: let's just see what the model tells us. We dial 77 00:03:58,640 --> 00:04:01,800 Speaker 2: in policies, soaris are a policy light. We take a 78 00:04:02,160 --> 00:04:05,480 Speaker 2: quait conservative view on policies in that they need to 79 00:04:05,480 --> 00:04:08,360 Speaker 2: be fully funded, they need to be have actual mechanisms 80 00:04:08,360 --> 00:04:11,160 Speaker 2: that affect prices, so not statements of intent, not kind 81 00:04:11,200 --> 00:04:13,960 Speaker 2: of lofty targets, but actual kind of mechanisms. And then 82 00:04:14,040 --> 00:04:16,760 Speaker 2: after that we say, well, let's just take as much 83 00:04:16,800 --> 00:04:18,560 Speaker 2: as possible look at what is the kind of a 84 00:04:18,600 --> 00:04:21,159 Speaker 2: cost based solution, What is an optimal set up here 85 00:04:21,160 --> 00:04:23,320 Speaker 2: like that that really is just in the money. And 86 00:04:23,400 --> 00:04:26,039 Speaker 2: once you let the play out, you start seeing some 87 00:04:26,120 --> 00:04:28,640 Speaker 2: very interesting things. And then yeah, and in the in 88 00:04:28,680 --> 00:04:32,160 Speaker 2: the natzero scenario, we then apply a carbon budget and say, okay, 89 00:04:32,200 --> 00:04:34,880 Speaker 2: now let's do the same thing the same demand. People 90 00:04:34,920 --> 00:04:37,280 Speaker 2: travel by air, they will want to go someday, they 91 00:04:37,480 --> 00:04:39,640 Speaker 2: come home, they turn on the kettle. How can we 92 00:04:39,960 --> 00:04:44,120 Speaker 2: deliver these same utilities the same final energy demand, but 93 00:04:44,279 --> 00:04:47,280 Speaker 2: in a way that doesn't emit carbon or emits less carbon, 94 00:04:47,440 --> 00:04:49,800 Speaker 2: and soo fundamentally, these are two scenarios. We have a 95 00:04:49,800 --> 00:04:52,720 Speaker 2: base case that is exploratory, and then we have a 96 00:04:53,120 --> 00:04:56,240 Speaker 2: NAT zero scenario that is normative. And yeah, the whole 97 00:04:56,279 --> 00:04:59,400 Speaker 2: act of scenario making in itself, you have to accept 98 00:04:59,400 --> 00:05:00,560 Speaker 2: that you'll definitely be wrong. 99 00:05:00,839 --> 00:05:02,600 Speaker 3: That's fine, Like, these are scenarios. 100 00:05:02,600 --> 00:05:05,600 Speaker 2: They're not forecasts, they're not what we necessarily believe will 101 00:05:05,640 --> 00:05:08,240 Speaker 2: actually happen. But what they can tell you is a 102 00:05:08,720 --> 00:05:12,800 Speaker 2: glimpse into a future that you can't just project based 103 00:05:12,839 --> 00:05:16,000 Speaker 2: on announcements. Because when you start modeling things, you start 104 00:05:16,040 --> 00:05:18,760 Speaker 2: finding new things and new surprising things, and you start 105 00:05:18,800 --> 00:05:22,440 Speaker 2: finding those tipping points that are so hard to predict right. 106 00:05:22,640 --> 00:05:25,680 Speaker 2: Things sometimes change slowly and then they change rapidly, and 107 00:05:25,720 --> 00:05:28,920 Speaker 2: we've seen that in the solar sector. We've seen that 108 00:05:29,000 --> 00:05:31,839 Speaker 2: in a way within the ev actually vehicle sector. So 109 00:05:31,880 --> 00:05:34,960 Speaker 2: there's a lot of kind of nonlinear stuff going on 110 00:05:35,279 --> 00:05:38,360 Speaker 2: that's just really really hard to just forecasts or predict. 111 00:05:38,480 --> 00:05:41,080 Speaker 2: And then in turn, our scenarios can then guide us 112 00:05:41,200 --> 00:05:43,320 Speaker 2: to come back to and say, well, okay, given that 113 00:05:43,360 --> 00:05:45,240 Speaker 2: we think that's going to be a higher of renewables, 114 00:05:45,320 --> 00:05:48,800 Speaker 2: let's just say that's a no regrets decision to more enneables. 115 00:05:48,839 --> 00:05:51,040 Speaker 2: What in turn is then needed to integrate them? What 116 00:05:51,080 --> 00:05:53,320 Speaker 2: are the kind of market designs that we need? What 117 00:05:53,360 --> 00:05:55,920 Speaker 2: does it actually mean to level the playing field? So 118 00:05:55,960 --> 00:05:58,200 Speaker 2: you can have an informed debate, and you know, in 119 00:05:58,200 --> 00:06:01,279 Speaker 2: a year's time we'll do another scenario, we'll find new things, 120 00:06:01,360 --> 00:06:04,520 Speaker 2: we'll adapt our of you, and this way we can kind. 121 00:06:04,360 --> 00:06:06,760 Speaker 3: Of slowly slowly cross the river. 122 00:06:06,760 --> 00:06:10,359 Speaker 2: Feeling the stones, as the famous Chinese proverb goes, can. 123 00:06:10,200 --> 00:06:12,159 Speaker 4: I just push back on this a little bit or 124 00:06:12,200 --> 00:06:12,880 Speaker 4: really probe it? 125 00:06:13,320 --> 00:06:13,400 Speaker 3: So? 126 00:06:14,920 --> 00:06:18,960 Speaker 5: Sebhen Best, who used to run Neo and at different 127 00:06:19,000 --> 00:06:23,840 Speaker 5: points in time, was everyone on this podcast's boss, although 128 00:06:24,000 --> 00:06:27,080 Speaker 5: weirdly never all at the same time, which is interesting. 129 00:06:27,720 --> 00:06:32,120 Speaker 5: This whole scenarios versus forecasts was his favorite little narrative 130 00:06:32,480 --> 00:06:35,760 Speaker 5: and any difficult question you ever asked him, Like you say, Seb, 131 00:06:35,960 --> 00:06:37,840 Speaker 5: you know, is there such a thing as free will? 132 00:06:37,960 --> 00:06:39,440 Speaker 5: And be like, oh, well, you have to understand the 133 00:06:39,480 --> 00:06:43,080 Speaker 5: difference between a forecast and a scenario. Like and by 134 00:06:43,160 --> 00:06:45,640 Speaker 5: the way, I am about to go and have coffee 135 00:06:45,680 --> 00:06:48,800 Speaker 5: with Seb after we finish this podcast. 136 00:06:48,839 --> 00:06:49,400 Speaker 4: We're all friends. 137 00:06:49,400 --> 00:06:51,120 Speaker 5: It's okay that I'm pulling him under the bus here, 138 00:06:51,240 --> 00:06:53,360 Speaker 5: But isn't that a bit of a cop out? I mean, 139 00:06:53,400 --> 00:06:55,919 Speaker 5: wouldn't it be much more useful if we had a 140 00:06:55,960 --> 00:06:59,240 Speaker 5: forecast like this scenario is it? Couldn't it be that 141 00:06:59,279 --> 00:07:01,359 Speaker 5: we just tried a little bit harder to make a 142 00:07:01,440 --> 00:07:04,920 Speaker 5: forecast like our scenario is? Like, really, can you explain 143 00:07:05,320 --> 00:07:07,279 Speaker 5: why a scenario is really useful? 144 00:07:07,920 --> 00:07:08,120 Speaker 3: Yeah? 145 00:07:08,160 --> 00:07:10,040 Speaker 2: No, thanks to Tom, and I appreciate the amount of 146 00:07:10,240 --> 00:07:17,160 Speaker 2: stank in that question that we're not trying so first up, 147 00:07:17,360 --> 00:07:22,760 Speaker 2: even putting together a scenario, you know, how however unreliable. 148 00:07:22,800 --> 00:07:25,440 Speaker 2: You think it requires a huge amount of work and 149 00:07:25,520 --> 00:07:27,680 Speaker 2: set up. So do you even get to the stage 150 00:07:27,680 --> 00:07:30,360 Speaker 2: where you have a scenario that's vaguely credible. That's that's 151 00:07:30,400 --> 00:07:34,400 Speaker 2: in itself as a huge step. The second is that 152 00:07:34,760 --> 00:07:37,920 Speaker 2: when you when you do these kind of forecasts, you say, 153 00:07:38,080 --> 00:07:40,240 Speaker 2: we want to be when we do this scenario, we 154 00:07:40,280 --> 00:07:42,600 Speaker 2: want to be really really sure about the next five years. 155 00:07:42,640 --> 00:07:45,880 Speaker 2: Right in scenario making you care about the next five years, 156 00:07:46,000 --> 00:07:48,520 Speaker 2: and then you have this kind of hot, steamy reality 157 00:07:48,640 --> 00:07:52,440 Speaker 2: where stuff happens, there's politics, there's policy, there's kind of 158 00:07:52,560 --> 00:07:56,280 Speaker 2: weird pandemics thrown in supply chain disruption. Things happen, So so 159 00:07:56,320 --> 00:07:59,400 Speaker 2: we want to be as right as possible on that front. 160 00:07:59,480 --> 00:08:01,560 Speaker 2: But then it's point you have to transition it into 161 00:08:01,640 --> 00:08:05,560 Speaker 2: this kind of cold modeling reality and where most of 162 00:08:05,600 --> 00:08:08,560 Speaker 2: the scenario work happens. And the team, if you think 163 00:08:08,560 --> 00:08:10,480 Speaker 2: about what do we spend most time on, it's that 164 00:08:10,600 --> 00:08:14,400 Speaker 2: interface between this kind of messy, hot reality and then 165 00:08:14,440 --> 00:08:18,160 Speaker 2: this cold modeling world. And when these two fronts meet, 166 00:08:18,200 --> 00:08:20,680 Speaker 2: you have thunderstorms, you just get a lot of messy interactions. 167 00:08:20,720 --> 00:08:22,360 Speaker 2: So so a lot of time is spent kind of 168 00:08:22,720 --> 00:08:26,360 Speaker 2: threading our forecast, which we do tom and you know 169 00:08:26,600 --> 00:08:28,840 Speaker 2: on a quarterly basis, we up at our renewables forecast, 170 00:08:28,920 --> 00:08:30,800 Speaker 2: we take it into consideration all of these things, but 171 00:08:30,840 --> 00:08:32,840 Speaker 2: at some points you have to thread in where you 172 00:08:32,880 --> 00:08:35,560 Speaker 2: go beyond what you know today, and then you come 173 00:08:35,880 --> 00:08:38,199 Speaker 2: into an even a bigger assumption than free will, which 174 00:08:38,240 --> 00:08:41,000 Speaker 2: is rationality. You have to make an assumption that to 175 00:08:41,080 --> 00:08:44,080 Speaker 2: a degree, we will take rational decisions. Because if you 176 00:08:44,160 --> 00:08:46,280 Speaker 2: start dialing in all the things we already know or 177 00:08:46,440 --> 00:08:49,160 Speaker 2: think we know, like you know, say, for example, vehicle 178 00:08:49,360 --> 00:08:53,479 Speaker 2: ev phase outdates Germany, it's a huge European car manufacturer. 179 00:08:53,559 --> 00:08:56,040 Speaker 2: They had a phase outdate for evs that got put 180 00:08:56,080 --> 00:08:59,120 Speaker 2: into question again, so policids. We thought, oh, surely Germany, 181 00:08:59,320 --> 00:09:02,199 Speaker 2: which in our G twenty policy rankings is one of 182 00:09:02,240 --> 00:09:04,840 Speaker 2: the highest ranking countries, very firm policies, very kind of 183 00:09:04,880 --> 00:09:08,280 Speaker 2: good track record. But there's walking back on these commitments. 184 00:09:08,360 --> 00:09:09,880 Speaker 2: When you dial all of these in and think they're 185 00:09:09,920 --> 00:09:12,480 Speaker 2: magically happen, you're just going to overshoot what happens, and 186 00:09:12,520 --> 00:09:14,959 Speaker 2: you just end as the correcting and adapting. So that 187 00:09:15,000 --> 00:09:18,400 Speaker 2: this is where I think no good forecast would be 188 00:09:18,480 --> 00:09:21,319 Speaker 2: good without becoming for policy, and I think us stepping 189 00:09:21,440 --> 00:09:24,000 Speaker 2: away from that and saying, look, we're not going to 190 00:09:24,040 --> 00:09:25,760 Speaker 2: look at that, we really look at the economics and 191 00:09:25,920 --> 00:09:28,400 Speaker 2: assume there's a level playing field already gives us more 192 00:09:28,600 --> 00:09:32,200 Speaker 2: insightful answers rather than seventy people kind of coming together 193 00:09:32,280 --> 00:09:34,880 Speaker 2: and guessing what they think is going to be the 194 00:09:34,960 --> 00:09:35,720 Speaker 2: right mix. 195 00:09:36,040 --> 00:09:40,160 Speaker 5: So we're imagining a world that could be real and 196 00:09:40,200 --> 00:09:42,320 Speaker 5: that we have is self consistent in the way we 197 00:09:42,320 --> 00:09:45,040 Speaker 5: think about it, and there's some useful insights we can 198 00:09:45,080 --> 00:09:47,880 Speaker 5: derive from that. So it's like it's maybe like nineteen 199 00:09:47,880 --> 00:09:49,600 Speaker 5: eighty four rather than Star Wars. 200 00:09:49,880 --> 00:09:52,600 Speaker 1: It's a world in the multiverse that you know, if 201 00:09:52,600 --> 00:09:55,400 Speaker 1: all certain things lined up to be true. But I 202 00:09:55,440 --> 00:09:57,360 Speaker 1: actually want to talk about the year that we go 203 00:09:57,400 --> 00:09:59,360 Speaker 1: out to. So this year twenty fifty is something that 204 00:09:59,400 --> 00:10:02,040 Speaker 1: everybody's really in the climate space when they're thinking about 205 00:10:02,040 --> 00:10:05,360 Speaker 1: emissions targets. We're really comfortable with talking about twenty fifty 206 00:10:05,440 --> 00:10:08,200 Speaker 1: like it's tomorrow, But it's not tomorrow. Maybe we would 207 00:10:08,240 --> 00:10:10,040 Speaker 1: like it to be further away. Would we think about 208 00:10:10,040 --> 00:10:13,320 Speaker 1: how quickly the entire economy needs to transition from an 209 00:10:13,360 --> 00:10:17,040 Speaker 1: emission standpoint. But when it comes to election cycles and 210 00:10:17,080 --> 00:10:19,600 Speaker 1: what any policy maker may really be thinking about in 211 00:10:19,640 --> 00:10:22,960 Speaker 1: terms of getting re elected or investors in how long 212 00:10:23,040 --> 00:10:25,959 Speaker 1: they're going to hold an asset or a position, or 213 00:10:26,000 --> 00:10:28,080 Speaker 1: any sort of investment that they're looking to see to 214 00:10:28,200 --> 00:10:32,440 Speaker 1: make a return on. It's much much nearer. So what 215 00:10:32,600 --> 00:10:38,640 Speaker 1: is it about twenty fifty? Why should those individuals be 216 00:10:38,840 --> 00:10:41,800 Speaker 1: looking at something so far into the future. Is it 217 00:10:41,800 --> 00:10:43,440 Speaker 1: the tipping points? Or is it something else? 218 00:10:44,040 --> 00:10:47,440 Speaker 2: We collectively get sucked into a debate where we have 219 00:10:47,480 --> 00:10:49,520 Speaker 2: a few kind of NOV starts that no everybody knows. 220 00:10:49,640 --> 00:10:52,960 Speaker 2: It's one point five. That's a NOV style that we 221 00:10:53,000 --> 00:10:55,400 Speaker 2: now have. It's twenty to fifty, and then if you 222 00:10:55,440 --> 00:10:57,959 Speaker 2: want to add a word, it's net zero. So all 223 00:10:58,000 --> 00:11:03,040 Speaker 2: of these dates in minds are self reinforcing. The range 224 00:11:03,120 --> 00:11:04,960 Speaker 2: for us to have a one point five degree outcome 225 00:11:05,080 --> 00:11:08,079 Speaker 2: is huge. If you look at the actual climate science 226 00:11:08,120 --> 00:11:10,240 Speaker 2: behind it, there's a huge range. It could be as 227 00:11:10,280 --> 00:11:12,280 Speaker 2: early as twenty thirty, it could be as late as 228 00:11:12,320 --> 00:11:14,800 Speaker 2: twenty sixty's. There's just a lot of uncertainty. The same 229 00:11:14,840 --> 00:11:17,880 Speaker 2: is with the year twenty fifty. That's not a date 230 00:11:17,960 --> 00:11:20,840 Speaker 2: set in stone. It is just a coerescing point for 231 00:11:20,920 --> 00:11:23,040 Speaker 2: us to think about the question and have a certain 232 00:11:23,280 --> 00:11:25,839 Speaker 2: common timeframe about it. I get stressed when I think 233 00:11:25,840 --> 00:11:27,720 Speaker 2: about twenty fifty. I get stressed when I think about 234 00:11:27,720 --> 00:11:30,319 Speaker 2: twenty thirty. But the point is not to get hang 235 00:11:30,400 --> 00:11:32,280 Speaker 2: up on these individual dates. The point is to say, 236 00:11:32,559 --> 00:11:35,880 Speaker 2: let's have a common frame and create a sense of urgency, 237 00:11:36,040 --> 00:11:39,080 Speaker 2: not panic, just urgency, because if we think about our 238 00:11:39,480 --> 00:11:42,040 Speaker 2: emissions curves in our net zero scenario, a lot of 239 00:11:42,040 --> 00:11:44,000 Speaker 2: the emissions that we save in the next five to 240 00:11:44,040 --> 00:11:45,120 Speaker 2: ten years are. 241 00:11:45,040 --> 00:11:47,200 Speaker 3: So much more worth, so much more. 242 00:11:47,040 --> 00:11:49,000 Speaker 2: Than the emissions that we save in the twenty forties. 243 00:11:49,120 --> 00:11:51,640 Speaker 2: I give you an example in our net zero scenario, 244 00:11:51,679 --> 00:11:53,680 Speaker 2: which is a one point seven five degree scenario, and 245 00:11:53,720 --> 00:11:56,080 Speaker 2: we can talk maybe why we didn't pick a one 246 00:11:56,080 --> 00:11:59,040 Speaker 2: point five degree scenario. In that scenario, the energy sector 247 00:11:59,160 --> 00:12:02,200 Speaker 2: reduces emissions ninety three percent by twenty thirty five, so 248 00:12:02,520 --> 00:12:05,199 Speaker 2: it is just around the corner. It's a very short time. 249 00:12:05,360 --> 00:12:07,480 Speaker 2: So in order to we need to think about twenty fifty, 250 00:12:07,480 --> 00:12:09,640 Speaker 2: because we need to think backwards about the technologies that 251 00:12:09,679 --> 00:12:12,080 Speaker 2: we need by them, or the types of solutions that 252 00:12:12,120 --> 00:12:14,120 Speaker 2: we need by then, and so that we can start 253 00:12:14,360 --> 00:12:17,480 Speaker 2: getting them up to speed, because these things take time, 254 00:12:17,720 --> 00:12:20,760 Speaker 2: and every year that we emit at peak emissions as 255 00:12:20,800 --> 00:12:24,240 Speaker 2: we're doing at the moment, we're losing time to enact them. 256 00:12:24,400 --> 00:12:26,160 Speaker 2: And that's why I think twenty fifty to one point 257 00:12:26,240 --> 00:12:29,720 Speaker 2: five are such useful narratives for everybody to keep in mind. 258 00:12:30,120 --> 00:12:33,480 Speaker 2: Behind that, the reality is much more complicated and much 259 00:12:33,480 --> 00:12:34,200 Speaker 2: more nuanced. 260 00:12:34,440 --> 00:12:36,160 Speaker 5: Can I just follo up on this question of twenty 261 00:12:36,240 --> 00:12:39,120 Speaker 5: fifty and you mention you're stressed about twenty thirty, and 262 00:12:39,160 --> 00:12:42,000 Speaker 5: you mention you're stressed about twenty fifty. I also imagine 263 00:12:42,040 --> 00:12:44,440 Speaker 5: you're stressed because you have to deliver a neo report 264 00:12:44,480 --> 00:12:48,000 Speaker 5: every year. This is like a huge amount of work 265 00:12:48,160 --> 00:12:52,720 Speaker 5: a cross BNF, but for you personally and your team individually. 266 00:12:52,800 --> 00:12:55,120 Speaker 5: And I know that you know every year we add 267 00:12:55,200 --> 00:12:57,800 Speaker 5: new nuances and features the analysis, but a lot of 268 00:12:57,840 --> 00:13:00,320 Speaker 5: the analysis is the same at its core, maybe with 269 00:13:00,320 --> 00:13:04,080 Speaker 5: different assumptions. So given the twenty fifty times scale, like 270 00:13:04,120 --> 00:13:06,760 Speaker 5: what differs year on year in the core analysis? What 271 00:13:06,840 --> 00:13:08,040 Speaker 5: new insights do we get? 272 00:13:08,080 --> 00:13:10,160 Speaker 4: Typically? Why are we doing this to ourselves? 273 00:13:10,800 --> 00:13:13,280 Speaker 2: Yeah, that's a question that I get asked a lot 274 00:13:13,320 --> 00:13:18,760 Speaker 2: by my family. The value of doing it regularly is 275 00:13:18,800 --> 00:13:21,720 Speaker 2: that new information comes to light. That risk is that 276 00:13:21,800 --> 00:13:24,400 Speaker 2: actually the downside of redoing it every year can be 277 00:13:24,440 --> 00:13:27,680 Speaker 2: higher than the reward. The issue with more complexity and 278 00:13:27,720 --> 00:13:30,560 Speaker 2: more topics is apart from the fact that there's more 279 00:13:30,640 --> 00:13:33,440 Speaker 2: room for errors is also that you might lose of 280 00:13:33,559 --> 00:13:36,520 Speaker 2: the things that actually are matter, just because there's so 281 00:13:36,600 --> 00:13:39,080 Speaker 2: much complexity and so much interaction. So that's another thing 282 00:13:39,120 --> 00:13:41,520 Speaker 2: we're very mindful about to say, sure, we can add 283 00:13:41,720 --> 00:13:45,079 Speaker 2: more countries, add more feedback loops, more complexity. But some 284 00:13:45,120 --> 00:13:48,360 Speaker 2: of the strong messages that we've gotten from new they 285 00:13:48,480 --> 00:13:52,160 Speaker 2: have evolved over the years. They haven't necessarily changed radically, 286 00:13:52,400 --> 00:13:54,320 Speaker 2: but there is some new stuff like this. This year, 287 00:13:54,320 --> 00:13:57,040 Speaker 2: for example, we did much more work about the limits 288 00:13:57,080 --> 00:14:00,440 Speaker 2: of solar power, so we now have much more better 289 00:14:00,480 --> 00:14:04,040 Speaker 2: idea of what are the economic limits of sola wide? 290 00:14:04,080 --> 00:14:06,600 Speaker 2: Don't more batteries just help? And we're not in a 291 00:14:06,600 --> 00:14:09,680 Speaker 2: curious position where we, as Baniev have a lower solo 292 00:14:09,760 --> 00:14:12,920 Speaker 2: forecast than the IA, the International Energy Agency, And for 293 00:14:13,120 --> 00:14:15,520 Speaker 2: years that was the other way around. For years Baniev 294 00:14:15,679 --> 00:14:18,679 Speaker 2: was super bullish and soler the IA was catching up. 295 00:14:18,880 --> 00:14:21,960 Speaker 2: And now we're reversed. And this is again because you 296 00:14:22,080 --> 00:14:24,480 Speaker 2: keep looking at you you find these new dynamics that 297 00:14:24,600 --> 00:14:25,920 Speaker 2: tell you something new. 298 00:14:26,320 --> 00:14:28,680 Speaker 5: Maybe it's now a good time to ask the question. 299 00:14:29,080 --> 00:14:34,440 Speaker 5: My pop culture reference, so in the novel Foundation by 300 00:14:34,520 --> 00:14:39,160 Speaker 5: Isaac Asimov, which has recently been converted to a very 301 00:14:39,200 --> 00:14:42,760 Speaker 5: excellent series on Apple TV. The core character is this guy, 302 00:14:42,760 --> 00:14:46,160 Speaker 5: Harry Selden, who's a mathematician who invents this field of 303 00:14:46,200 --> 00:14:50,320 Speaker 5: mathematics called psychohistory, where basically he models everything and predicts 304 00:14:50,320 --> 00:14:54,280 Speaker 5: the future. In the series, he predicts the downfall of 305 00:14:54,320 --> 00:14:57,240 Speaker 5: the Galactic Empire and years of chaos, and then he 306 00:14:57,960 --> 00:15:01,720 Speaker 5: promotes this alternative scenario if he gets some funding to 307 00:15:01,760 --> 00:15:04,400 Speaker 5: go and set up a sort of a foundation hence 308 00:15:04,440 --> 00:15:07,120 Speaker 5: the name, with all the knowledge of humanity, he can 309 00:15:07,200 --> 00:15:10,920 Speaker 5: help usher humankind through those dark ages and have them 310 00:15:10,960 --> 00:15:13,240 Speaker 5: bounce back a lot quicker. And the thing I found 311 00:15:13,280 --> 00:15:15,200 Speaker 5: a bit ridiculous, and it kind of alludes to this 312 00:15:15,360 --> 00:15:18,680 Speaker 5: question of the challenge of forecasts. Is throughout the series, 313 00:15:19,000 --> 00:15:22,600 Speaker 5: like with unerring accuracy, a little hologram of Harry Selden 314 00:15:22,680 --> 00:15:25,000 Speaker 5: five hundred years after he's died pops up and he's like, 315 00:15:25,040 --> 00:15:27,360 Speaker 5: I guess you've just navigated this particular crisis. 316 00:15:27,560 --> 00:15:29,040 Speaker 4: This version of history. 317 00:15:28,680 --> 00:15:32,480 Speaker 5: That he's modeled includes his own interventions, and so therefore 318 00:15:32,560 --> 00:15:35,000 Speaker 5: he has a much better chance of getting it right. 319 00:15:35,080 --> 00:15:38,960 Speaker 5: I suppose what I'm saying is because our net zero scenario, 320 00:15:39,000 --> 00:15:44,120 Speaker 5: for example, involves a bunch of interventions. Are we I 321 00:15:44,160 --> 00:15:48,600 Speaker 5: suppose giving a map for policymakers around the world industry 322 00:15:49,160 --> 00:15:52,280 Speaker 5: to say, like, this isn't going to happen. But it 323 00:15:52,360 --> 00:15:55,120 Speaker 5: could be that this is a forecast of the future. 324 00:15:55,400 --> 00:15:58,440 Speaker 5: If you look at this and see the interventions you 325 00:15:58,480 --> 00:16:01,200 Speaker 5: need to make Like, is it like a circular logic 326 00:16:01,320 --> 00:16:03,320 Speaker 5: that we're offering to the market. 327 00:16:03,600 --> 00:16:03,800 Speaker 3: Yeah. 328 00:16:03,840 --> 00:16:06,520 Speaker 2: So what Asimov talks a lot about is kind of 329 00:16:07,160 --> 00:16:10,880 Speaker 2: questions of ethics and moral philosophy. And if the question 330 00:16:11,080 --> 00:16:13,240 Speaker 2: is kind of what does it mean? Then the kind 331 00:16:13,240 --> 00:16:15,520 Speaker 2: of ethical or moral question is what should we do? 332 00:16:15,760 --> 00:16:19,080 Speaker 2: So as as Beanie of what we try to do 333 00:16:19,160 --> 00:16:21,640 Speaker 2: is show like this is a here's an outcome that 334 00:16:21,720 --> 00:16:24,280 Speaker 2: makes sense just from a monetor perspective. You know, we 335 00:16:24,280 --> 00:16:27,400 Speaker 2: haven't factored in human health. We haven't factored in obviously 336 00:16:27,440 --> 00:16:30,480 Speaker 2: they're good implications for keeping temperatures slow, for human health 337 00:16:30,520 --> 00:16:33,480 Speaker 2: and migration and all these other well dimensions of well being. 338 00:16:33,560 --> 00:16:37,080 Speaker 2: But just from a kind of cost perspective, which is narrow, 339 00:16:37,280 --> 00:16:40,480 Speaker 2: here's a solution that just makes sense and it works, 340 00:16:40,840 --> 00:16:42,840 Speaker 2: and it works in the case of the power system 341 00:16:42,840 --> 00:16:44,320 Speaker 2: at an hourly level. And we looked at this in 342 00:16:44,320 --> 00:16:46,920 Speaker 2: great detail. This can work. We also then go and say, 343 00:16:46,920 --> 00:16:48,760 Speaker 2: here's a bunch of barriers that are in the way 344 00:16:48,840 --> 00:16:50,840 Speaker 2: that we didn't model in it before because we didn't 345 00:16:50,840 --> 00:16:53,120 Speaker 2: want to presuppose what will happen. I give you an example. 346 00:16:53,160 --> 00:16:55,960 Speaker 2: We need a lot of batteries in our scenario. These 347 00:16:55,960 --> 00:16:58,960 Speaker 2: batteries need metals. We know these critical metals and minerals 348 00:16:59,000 --> 00:17:02,200 Speaker 2: are in short supply, but we also believe that technology 349 00:17:02,280 --> 00:17:05,119 Speaker 2: change can help adapt some of them. So the amount 350 00:17:05,160 --> 00:17:07,919 Speaker 2: of cobalt, for example, which is say critical mineral that 351 00:17:08,040 --> 00:17:10,440 Speaker 2: is needed in matteries, the amount we forecast is needed 352 00:17:10,480 --> 00:17:12,800 Speaker 2: has come down every year, even though we increase of 353 00:17:12,920 --> 00:17:15,680 Speaker 2: battery focus every year, simply because battery chemistry is changed. 354 00:17:15,760 --> 00:17:18,399 Speaker 2: So we need to acknowledge that there's the technological change 355 00:17:18,440 --> 00:17:21,600 Speaker 2: can also remove some barriers. It's important to talk about them, 356 00:17:21,600 --> 00:17:25,040 Speaker 2: but it's also important, I believe, not to bake them 357 00:17:25,040 --> 00:17:27,440 Speaker 2: in too much into your model because you then don't 358 00:17:27,520 --> 00:17:30,520 Speaker 2: learn something. So when we think about these barriers, there's 359 00:17:30,560 --> 00:17:34,560 Speaker 2: also grids. There is kind of the amount of manufacturing 360 00:17:34,600 --> 00:17:36,760 Speaker 2: that we need. You need to look at these questions 361 00:17:36,760 --> 00:17:38,399 Speaker 2: and then you need to apply another lens, which is 362 00:17:38,400 --> 00:17:41,240 Speaker 2: the country level it's no good to have global scenarios. 363 00:17:41,240 --> 00:17:44,359 Speaker 2: You need to have country scenarios because countries is where 364 00:17:44,440 --> 00:17:47,280 Speaker 2: the action happens, where the policies happen, or the change happens. 365 00:17:47,280 --> 00:17:48,640 Speaker 2: And then you need to look at the country picture 366 00:17:48,680 --> 00:17:51,760 Speaker 2: and say, well, given these barriers, given this you know, 367 00:17:51,840 --> 00:17:55,680 Speaker 2: glorious future that could happen, what is it you should 368 00:17:55,760 --> 00:17:58,359 Speaker 2: be then thinking about. And then that's when it comes 369 00:17:58,359 --> 00:18:02,080 Speaker 2: to market design. So if we have a bunch of 370 00:18:02,320 --> 00:18:05,480 Speaker 2: zero costs or like low cost generators I'm running, that'll 371 00:18:05,520 --> 00:18:06,920 Speaker 2: do things to the power price. So you need to 372 00:18:06,920 --> 00:18:09,119 Speaker 2: think about these things. So we're not trying to be 373 00:18:09,480 --> 00:18:12,080 Speaker 2: normative in the sense of saying that here's the truth 374 00:18:12,200 --> 00:18:15,040 Speaker 2: by BNIF and and you know, if you follow this 375 00:18:15,119 --> 00:18:17,440 Speaker 2: map you'll find the golden treasure. We're trying to say, 376 00:18:17,520 --> 00:18:21,159 Speaker 2: here's like a rational future that we maybe can work towards. 377 00:18:21,160 --> 00:18:24,920 Speaker 2: And I said earlier that rationality is a huge assumption 378 00:18:25,200 --> 00:18:28,080 Speaker 2: in all of this, because energy policy has been anything 379 00:18:28,160 --> 00:18:29,000 Speaker 2: but rational. 380 00:18:29,600 --> 00:18:32,439 Speaker 1: This is a report really for techno optimists, and if 381 00:18:32,480 --> 00:18:35,280 Speaker 1: we're thinking about it, it's a story of technology and 382 00:18:35,359 --> 00:18:38,240 Speaker 1: economics that are associated with this technology. But this fundamental 383 00:18:38,280 --> 00:18:41,320 Speaker 1: premise that the right technologies at the right price are 384 00:18:41,359 --> 00:18:44,879 Speaker 1: going to lead us to this much lower emissions future. 385 00:18:44,960 --> 00:18:45,600 Speaker 3: Yeah, totally. 386 00:18:45,680 --> 00:18:49,399 Speaker 2: And you can overlay behavioral change on that, and you know, 387 00:18:49,440 --> 00:18:50,800 Speaker 2: you can say, well, if I wanted to look at 388 00:18:50,800 --> 00:18:52,959 Speaker 2: my personal footprint, I should be doing this and this 389 00:18:53,000 --> 00:18:56,159 Speaker 2: and this and but fundamentally it's an optimistic view and 390 00:18:56,200 --> 00:18:59,480 Speaker 2: technology and an agnostic view and policy. Policy is a 391 00:18:59,600 --> 00:19:02,239 Speaker 2: very import important role to play as an enabler of this, 392 00:19:02,359 --> 00:19:04,680 Speaker 2: but it's not a driver of this scenario. 393 00:19:04,760 --> 00:19:06,879 Speaker 1: Well, And one of the things that's important when setting 394 00:19:06,880 --> 00:19:08,720 Speaker 1: a target of any kind is to kind of rally 395 00:19:08,760 --> 00:19:11,600 Speaker 1: behind a few things, to just still it down to 396 00:19:12,080 --> 00:19:14,800 Speaker 1: just a list in order for us to be able 397 00:19:14,800 --> 00:19:17,120 Speaker 1: to concentrate. For the same reasons that you're pointing out 398 00:19:17,160 --> 00:19:19,760 Speaker 1: that twenty fifty and twenty thirty and one point five 399 00:19:19,800 --> 00:19:22,600 Speaker 1: are really important things for us to see as benchmarks 400 00:19:22,600 --> 00:19:24,280 Speaker 1: that we start to create a narrative around. 401 00:19:24,359 --> 00:19:25,040 Speaker 4: So within this. 402 00:19:25,000 --> 00:19:29,080 Speaker 1: Report, you actually identified nine technologies that are make or 403 00:19:29,080 --> 00:19:33,159 Speaker 1: break for the low carbon transition. Within these nine technologies 404 00:19:33,160 --> 00:19:35,479 Speaker 1: that you've identified, some are getting a lot of traction 405 00:19:35,680 --> 00:19:37,919 Speaker 1: and some are doing less well. So let's talk about 406 00:19:37,960 --> 00:19:41,680 Speaker 1: first that basket of technologies that are how the wind 407 00:19:41,720 --> 00:19:42,240 Speaker 1: at they're back. 408 00:19:42,320 --> 00:19:45,000 Speaker 2: Let's say yeah, so when I mean we kind of 409 00:19:45,240 --> 00:19:49,119 Speaker 2: blockout it put it out. There's nine key technologies. You 410 00:19:49,119 --> 00:19:51,679 Speaker 2: could say it's ten, depending how you cut it. But 411 00:19:51,840 --> 00:19:55,240 Speaker 2: fundamentally there are two groups of technologies. And this becomes 412 00:19:55,320 --> 00:19:57,800 Speaker 2: very clear when you compare the uptake in our base 413 00:19:57,840 --> 00:20:01,119 Speaker 2: case and in our net zero scenario. The technologies that 414 00:20:01,160 --> 00:20:04,600 Speaker 2: are already doing well in our base case, which is 415 00:20:04,920 --> 00:20:07,800 Speaker 2: solar power, it's wind power, both offshore wind and on 416 00:20:07,880 --> 00:20:11,919 Speaker 2: shore wind. It's electric vehicles, it's batteries and its heat pumps. 417 00:20:12,040 --> 00:20:14,600 Speaker 2: So these are these are technologies that are already on 418 00:20:14,640 --> 00:20:17,399 Speaker 2: the app And if you look at the additional effort 419 00:20:17,560 --> 00:20:20,600 Speaker 2: that's needed to get in its zero, if you squint, 420 00:20:20,920 --> 00:20:23,119 Speaker 2: like if you stand back and squint, you can just 421 00:20:23,160 --> 00:20:25,200 Speaker 2: about see how that can work. Like, okay, we need 422 00:20:25,240 --> 00:20:27,639 Speaker 2: to double solar again, but you know this, we can 423 00:20:27,680 --> 00:20:29,439 Speaker 2: do this, Like we know how this can work. We 424 00:20:29,480 --> 00:20:32,840 Speaker 2: obviously need to massively ramp up evs, and we just 425 00:20:32,880 --> 00:20:35,840 Speaker 2: published our Electric Vehicle Outlook and they've seen some headwinds 426 00:20:35,880 --> 00:20:38,080 Speaker 2: in the short term, but still we know how this 427 00:20:38,160 --> 00:20:41,160 Speaker 2: can work. Where it gets more interesting is when when 428 00:20:41,160 --> 00:20:43,760 Speaker 2: you look at the technologies that are needed that we 429 00:20:43,800 --> 00:20:46,879 Speaker 2: see could be needed for and it's a transition that 430 00:20:46,920 --> 00:20:49,880 Speaker 2: are currently not in the money, whether they're just in infancy. 431 00:20:50,000 --> 00:20:53,160 Speaker 2: I'm thinking about the same aviation fuels. When we looked 432 00:20:53,200 --> 00:20:55,720 Speaker 2: at the kind of types of routes that are being flown, 433 00:20:55,760 --> 00:20:57,640 Speaker 2: the types of planes that are used on these routes. 434 00:20:57,720 --> 00:20:59,320 Speaker 2: When you go down the options, what is it that 435 00:20:59,480 --> 00:21:02,280 Speaker 2: actually can feasibly scale very quickly. You just left with 436 00:21:02,280 --> 00:21:05,640 Speaker 2: the sustainable aviation fuels, which is a drop in jet 437 00:21:05,680 --> 00:21:08,440 Speaker 2: fuel alternative, and we did a bunch of research looking 438 00:21:08,480 --> 00:21:10,960 Speaker 2: into the types of technologies and types of fuels that 439 00:21:10,960 --> 00:21:12,840 Speaker 2: could fill this cup. And then you end up with 440 00:21:12,920 --> 00:21:15,199 Speaker 2: a very narrow band of solutions that can be deployed 441 00:21:15,240 --> 00:21:17,359 Speaker 2: very quickly, but they also need to scale at a 442 00:21:17,440 --> 00:21:20,720 Speaker 2: level that is just exceeding current feedstock levels, so you 443 00:21:20,840 --> 00:21:23,440 Speaker 2: have kind of a scaling challenge. Then we have carbon 444 00:21:23,480 --> 00:21:27,040 Speaker 2: capture and storage, which also could play a big role 445 00:21:27,119 --> 00:21:30,000 Speaker 2: in across a number of different sectors, and this year 446 00:21:30,040 --> 00:21:33,440 Speaker 2: has come up higher than honestly we expected, and that's 447 00:21:33,440 --> 00:21:36,160 Speaker 2: to do with the maturity the technology and the fact 448 00:21:36,160 --> 00:21:38,280 Speaker 2: that it could be deployed quickly. But there too, there's 449 00:21:38,280 --> 00:21:41,359 Speaker 2: a huge scaling challenge. Then we have hydrogen, which this 450 00:21:41,480 --> 00:21:44,720 Speaker 2: year we actually downgraded our forecasts, so there's less hydrogen 451 00:21:44,800 --> 00:21:48,600 Speaker 2: our forecasts now than last year, simply because from our perspective, 452 00:21:48,920 --> 00:21:51,400 Speaker 2: the applications that hydrogen can play and have just become 453 00:21:51,480 --> 00:21:54,560 Speaker 2: much more clear. And then you have grids which need 454 00:21:54,600 --> 00:21:57,240 Speaker 2: to double in length, and then to make matters even 455 00:21:57,600 --> 00:22:01,360 Speaker 2: more complicated, these are not insular technologies. They are connected. 456 00:22:01,560 --> 00:22:04,159 Speaker 2: If you want sustainable aviation fuels, you need to have 457 00:22:04,240 --> 00:22:08,280 Speaker 2: clean hydrogen because aviation fuels need four times more hydrogen 458 00:22:08,480 --> 00:22:12,080 Speaker 2: than conventional jet fuels to crack. If you want clean hydrogen, 459 00:22:12,119 --> 00:22:14,159 Speaker 2: you need to have huge amounts of wind and solar 460 00:22:14,520 --> 00:22:16,840 Speaker 2: so they can produce a clean hydrogen. So each of 461 00:22:16,880 --> 00:22:21,280 Speaker 2: these individually is a failure point, but also collectively they 462 00:22:21,320 --> 00:22:23,840 Speaker 2: are connected. So we use this kind of pillar narrative 463 00:22:23,960 --> 00:22:27,080 Speaker 2: like pillar picture to show that they're all needed. 464 00:22:27,280 --> 00:22:29,280 Speaker 3: You don't can't just have one or the other. 465 00:22:29,600 --> 00:22:33,240 Speaker 1: And you specifically did not mention nuclear. Now is that 466 00:22:33,400 --> 00:22:36,520 Speaker 1: the mystery tenth one or is that a forgotten ninth 467 00:22:36,600 --> 00:22:37,640 Speaker 1: It just needs more? 468 00:22:38,520 --> 00:22:42,000 Speaker 2: Nuclear should not be forgotten like I didn't mention it 469 00:22:42,040 --> 00:22:46,080 Speaker 2: because I well, let's put it this way like if 470 00:22:46,160 --> 00:22:48,480 Speaker 2: you go to nuclear conferences these days, there's huge amounts 471 00:22:48,480 --> 00:22:51,840 Speaker 2: of exiety because now that we find we need a 472 00:22:51,880 --> 00:22:54,119 Speaker 2: whole host of solutions, nuclear is back on the table. 473 00:22:54,200 --> 00:22:58,280 Speaker 2: In our net zero scenario, we're tripling nuclear capacity and 474 00:22:58,359 --> 00:23:02,320 Speaker 2: we're also letting some degree of small modular reactors play, 475 00:23:02,320 --> 00:23:04,440 Speaker 2: in which people are very excited about. It is also 476 00:23:04,480 --> 00:23:07,400 Speaker 2: one of those technologies where a real scaler would need 477 00:23:07,560 --> 00:23:10,879 Speaker 2: a huge effort to even produce the manufacturing capacity. 478 00:23:11,320 --> 00:23:14,879 Speaker 5: This pillar framing, I really like it because it's really 479 00:23:15,240 --> 00:23:18,280 Speaker 5: kind of clear, and it also this division between the 480 00:23:18,359 --> 00:23:21,520 Speaker 5: maturing and the sort of the next wave pillars is 481 00:23:21,520 --> 00:23:23,359 Speaker 5: really clear. And what it makes me think of is, 482 00:23:23,520 --> 00:23:26,320 Speaker 5: I mean, we all started our careers in this space 483 00:23:26,800 --> 00:23:28,960 Speaker 5: at around the same time. I think we all got 484 00:23:29,000 --> 00:23:32,560 Speaker 5: involved because we cared about the environment. And I remember 485 00:23:32,840 --> 00:23:35,399 Speaker 5: back then is if you were working on an area 486 00:23:35,520 --> 00:23:38,359 Speaker 5: like wind or solar, it was sort of like you 487 00:23:38,720 --> 00:23:42,480 Speaker 5: were like purer than pure. There's like very little baggage 488 00:23:42,600 --> 00:23:46,720 Speaker 5: associated with those technologies compared to things like nuclear ccs, 489 00:23:46,840 --> 00:23:50,520 Speaker 5: sustainable aviation fuels, maybe heat pumps. To some extent, these 490 00:23:50,520 --> 00:23:53,600 Speaker 5: things that we've said are the maturing things, whereas now 491 00:23:54,040 --> 00:23:56,119 Speaker 5: with this framing. It feels to me like if you 492 00:23:56,200 --> 00:23:59,080 Speaker 5: jump into wind and solar. Yeah, maybe you're not going 493 00:23:59,119 --> 00:24:01,200 Speaker 5: to get your hands to see, but maybe it's more 494 00:24:01,200 --> 00:24:04,640 Speaker 5: like you're jumping on something that is already maturing. It's 495 00:24:04,680 --> 00:24:07,960 Speaker 5: like you're on the right bandwagon, but you're on the bandwagon. Whereas, 496 00:24:07,960 --> 00:24:10,280 Speaker 5: if you really want to crack the nut, if you 497 00:24:10,359 --> 00:24:12,240 Speaker 5: really want to make the difference, you're going to have 498 00:24:12,320 --> 00:24:17,200 Speaker 5: to go and help the deployment of and I'll read 499 00:24:17,240 --> 00:24:21,040 Speaker 5: them out again, nuclear, ccs, hydrogen, sustainable aviation fuel, and 500 00:24:21,080 --> 00:24:23,480 Speaker 5: heat pumps. Would you agree with that read that this 501 00:24:23,560 --> 00:24:26,280 Speaker 5: is this is where you go if you're really hardcore 502 00:24:26,320 --> 00:24:27,320 Speaker 5: on the energy transition. 503 00:24:27,960 --> 00:24:28,560 Speaker 3: Yes, and no. 504 00:24:29,200 --> 00:24:32,439 Speaker 2: So I would agree that we should focus on the 505 00:24:32,480 --> 00:24:35,960 Speaker 2: problems that are hard, but the heart problems that aren't 506 00:24:36,000 --> 00:24:39,640 Speaker 2: necessarily technologies like individual clouds like hydrogen or ccs. They 507 00:24:39,680 --> 00:24:42,560 Speaker 2: are concepts like how do we how can we get clean, 508 00:24:42,760 --> 00:24:45,640 Speaker 2: reliable backup power? And then it's not about hydrogen per 509 00:24:45,680 --> 00:24:46,080 Speaker 2: se or. 510 00:24:46,080 --> 00:24:48,240 Speaker 3: Ccs, it's what is the actual solution. 511 00:24:48,359 --> 00:24:50,360 Speaker 2: So I think it's rather than coming from the technology 512 00:24:50,359 --> 00:24:53,160 Speaker 2: stampot is coming from what is what is the problem 513 00:24:53,160 --> 00:24:55,480 Speaker 2: we want to solve? Because there's a number of technologies 514 00:24:55,480 --> 00:24:58,400 Speaker 2: that for lack of cost data, for lack of kind 515 00:24:58,400 --> 00:25:01,400 Speaker 2: of just real world data we could model like direct 516 00:25:01,400 --> 00:25:05,120 Speaker 2: air capture, like long duration storage, like different types of batteries, 517 00:25:05,160 --> 00:25:07,040 Speaker 2: Like all of these are important. We didn't model them. 518 00:25:07,040 --> 00:25:09,280 Speaker 2: That doesn't mean they don't exist. They're more than nine pillars, 519 00:25:09,359 --> 00:25:12,000 Speaker 2: and we modeled twenty six different technologies. We could have 520 00:25:12,040 --> 00:25:14,639 Speaker 2: done fifty. So like if somebody says, I want to 521 00:25:14,640 --> 00:25:17,600 Speaker 2: look into advance to your thermal because I think this 522 00:25:17,680 --> 00:25:20,199 Speaker 2: is kind of a sleeping beauty that has to be awoken, 523 00:25:20,280 --> 00:25:23,160 Speaker 2: then that's that's great. So I think that's the first point, 524 00:25:23,200 --> 00:25:26,200 Speaker 2: like we shouldn't going to hang up about these specific technologies. 525 00:25:26,280 --> 00:25:29,720 Speaker 2: The second is on the pushback on what, in our 526 00:25:29,840 --> 00:25:32,680 Speaker 2: view are already mature solutions, but in the with the 527 00:25:32,800 --> 00:25:35,280 Speaker 2: wider world might not seen be seen that way. And 528 00:25:35,480 --> 00:25:39,000 Speaker 2: my personal experience, I don't know if you experiences as 529 00:25:39,000 --> 00:25:40,840 Speaker 2: well some is that in the last eighteen months there 530 00:25:40,920 --> 00:25:43,359 Speaker 2: just has been a lot of kind of concerted pushback 531 00:25:43,560 --> 00:25:45,960 Speaker 2: on things that we thought were already in the bag, 532 00:25:46,080 --> 00:25:49,879 Speaker 2: thinking about solar and kind of articles about the metals 533 00:25:50,000 --> 00:25:53,240 Speaker 2: impact the material, you know, lithium mines in Chile, thinking 534 00:25:53,240 --> 00:25:56,639 Speaker 2: about wind turbines and bird strike and they don't work. 535 00:25:56,840 --> 00:25:58,560 Speaker 1: And we've written articles there, yeah, and. 536 00:25:58,560 --> 00:26:00,760 Speaker 2: We've written plenty about it, and then yeah, but we 537 00:26:01,119 --> 00:26:03,480 Speaker 2: there's just because when we started, when when you and 538 00:26:03,520 --> 00:26:07,000 Speaker 2: I started, solar and wind were inconsequential, so they were 539 00:26:07,119 --> 00:26:10,200 Speaker 2: kind of odd and nice and weird. Now that they're 540 00:26:10,240 --> 00:26:13,960 Speaker 2: making a real impact and now they're really scaling, they're 541 00:26:13,960 --> 00:26:16,760 Speaker 2: treading on people's toes and and and these people are 542 00:26:16,800 --> 00:26:17,280 Speaker 2: not happy. 543 00:26:17,560 --> 00:26:19,760 Speaker 5: That's a really good point, and I think I think 544 00:26:19,960 --> 00:26:22,760 Speaker 5: I'm a really satisfying answer to my question, and so 545 00:26:22,840 --> 00:26:25,800 Speaker 5: I retract it. If anyone was scared off wind and 546 00:26:25,840 --> 00:26:28,920 Speaker 5: solar is not a bandwagon that you're jumping on. There 547 00:26:29,000 --> 00:26:30,920 Speaker 5: is still a fight to be fought there. 548 00:26:30,760 --> 00:26:33,160 Speaker 2: For the right and as the in the formal life 549 00:26:33,160 --> 00:26:35,560 Speaker 2: at being here, for setting the wind service, the wind 550 00:26:35,560 --> 00:26:39,199 Speaker 2: research service. So there's still plenty of things that that 551 00:26:39,320 --> 00:26:41,320 Speaker 2: can be done and can be done better. And also 552 00:26:41,400 --> 00:26:44,080 Speaker 2: like for these technologies to play nicely on the grid. Now, 553 00:26:44,119 --> 00:26:46,440 Speaker 2: if you are kind of an oddity and afterthought, then 554 00:26:46,480 --> 00:26:49,080 Speaker 2: it's fine to not be a good citizen on the grid, 555 00:26:49,200 --> 00:26:51,879 Speaker 2: But when you when when you are the dominant technology 556 00:26:52,280 --> 00:26:55,639 Speaker 2: and increasingly the UK and Denmark and other places. You know, 557 00:26:55,680 --> 00:26:57,840 Speaker 2: Texas and the US think that is the case. So 558 00:26:58,040 --> 00:27:01,439 Speaker 2: now there's a new new frontier to actually play nicely 559 00:27:01,480 --> 00:27:02,320 Speaker 2: on the grid. 560 00:27:02,640 --> 00:27:05,480 Speaker 1: So, given that none of the pillars are a foregone conclusion, 561 00:27:05,560 --> 00:27:08,159 Speaker 1: let's talk a little bit about investment and whether or 562 00:27:08,240 --> 00:27:10,840 Speaker 1: not we're really seeing the levels of investment that are 563 00:27:10,880 --> 00:27:13,960 Speaker 1: required to reach any of the scenarios that we put forward. 564 00:27:14,520 --> 00:27:17,040 Speaker 2: One of the things we do, which again helps the framing, 565 00:27:17,160 --> 00:27:20,680 Speaker 2: is to think about in investment the investment requirements, and 566 00:27:21,119 --> 00:27:23,200 Speaker 2: what we do is we look at the capex which 567 00:27:23,200 --> 00:27:26,200 Speaker 2: has got capital expenders the initial investment needed for these technologies. 568 00:27:26,320 --> 00:27:29,240 Speaker 2: The uncomfortable news is that a lot of the technologies 569 00:27:29,240 --> 00:27:32,040 Speaker 2: that we need are CAPEX heavy, so they require a 570 00:27:32,080 --> 00:27:35,280 Speaker 2: favorit of upfront investment, but then their opic slide, so 571 00:27:35,359 --> 00:27:37,600 Speaker 2: the operational cost of running them is quite low. But 572 00:27:37,720 --> 00:27:40,159 Speaker 2: it's a different type of mobilization of money than like 573 00:27:40,160 --> 00:27:43,000 Speaker 2: a conventional fossil fuel energy system. So that means that 574 00:27:43,160 --> 00:27:46,320 Speaker 2: the energy transition has a kind of front loaded investment 575 00:27:46,359 --> 00:27:49,800 Speaker 2: need for a long term benefit, and that's a challenging proposition. 576 00:27:49,920 --> 00:27:54,119 Speaker 2: So in our base case scenario, investments keep rising and 577 00:27:54,160 --> 00:27:56,919 Speaker 2: I think they go up fifty percent by twenty thirty, 578 00:27:56,960 --> 00:27:59,640 Speaker 2: so it's not like a huge jump. Obviously, what we're 579 00:28:00,080 --> 00:28:02,760 Speaker 2: posing is quite radical from any we're saying renewables will 580 00:28:02,800 --> 00:28:05,720 Speaker 2: dominate the energy system. In our base case, that's already 581 00:28:05,800 --> 00:28:08,080 Speaker 2: a conclusion we can drop. But then in the net 582 00:28:08,119 --> 00:28:10,160 Speaker 2: zero scenario, the investment need goes. 583 00:28:10,040 --> 00:28:11,760 Speaker 3: Up by a factor of three four. 584 00:28:11,960 --> 00:28:14,280 Speaker 2: So we're not nowhere near the levels we need to 585 00:28:14,280 --> 00:28:17,119 Speaker 2: be investing, and we're not investing in the types of 586 00:28:17,160 --> 00:28:19,440 Speaker 2: solutions that we need to bring that about. So it's 587 00:28:19,440 --> 00:28:21,600 Speaker 2: not just wind and solar, it's also you know, this 588 00:28:21,680 --> 00:28:24,520 Speaker 2: whole basket of technologies that the pillars of the technology 589 00:28:24,520 --> 00:28:26,760 Speaker 2: pillars that we just talked about. So given that we 590 00:28:26,920 --> 00:28:29,920 Speaker 2: ran the numbers and we came up to a total 591 00:28:30,040 --> 00:28:33,240 Speaker 2: of one hundred and eighty one trillion dollars investment need 592 00:28:33,400 --> 00:28:36,560 Speaker 2: between today and twenty fifteen our economic transition scenario, which 593 00:28:36,560 --> 00:28:40,120 Speaker 2: is a base case, and then two hundred and fifteen trillion. 594 00:28:39,760 --> 00:28:42,240 Speaker 3: Dollars in our net zero scenary. Mind boggling numbers. 595 00:28:42,400 --> 00:28:45,280 Speaker 2: But if we break those down, what struck us was 596 00:28:45,320 --> 00:28:48,560 Speaker 2: that a on the demand side, like which is the 597 00:28:48,640 --> 00:28:52,920 Speaker 2: types of applications that demand energy mostly vehicles, buying electric 598 00:28:53,040 --> 00:28:55,720 Speaker 2: vehicles buying ice vehicles. It's almost the same spend in 599 00:28:55,720 --> 00:28:58,200 Speaker 2: those scenarios, and there's just a substitution going on on 600 00:28:58,240 --> 00:29:00,880 Speaker 2: a global level. There's a substitution going on between US 601 00:29:00,920 --> 00:29:04,240 Speaker 2: buying evs versus US buying conventional vehicles. And if we 602 00:29:04,280 --> 00:29:06,520 Speaker 2: believe that EV's got cheaper than net, it should be 603 00:29:06,560 --> 00:29:08,760 Speaker 2: about the same. The regional stories are a little bit different, 604 00:29:08,800 --> 00:29:11,320 Speaker 2: but globally it's the same. What's striking then, is that 605 00:29:11,400 --> 00:29:14,480 Speaker 2: on the supply side it is just an increase of 606 00:29:14,520 --> 00:29:16,920 Speaker 2: fifty percent between the two scenarios, so not a lot 607 00:29:16,960 --> 00:29:19,320 Speaker 2: in absolute terms, but the challenges that a lot of 608 00:29:19,320 --> 00:29:21,920 Speaker 2: these investments are simply not in the money yet because 609 00:29:21,920 --> 00:29:24,600 Speaker 2: we're lacking the route to market. We're lacking the kind 610 00:29:24,600 --> 00:29:27,400 Speaker 2: of mechanisms that bring this about. And I, for one, 611 00:29:27,600 --> 00:29:29,640 Speaker 2: I don't think at any point there's an issue here 612 00:29:29,640 --> 00:29:32,240 Speaker 2: that there's a shortage of capital. There's no shortage of 613 00:29:32,280 --> 00:29:35,800 Speaker 2: capital to want to support this. What's lacking is the 614 00:29:35,840 --> 00:29:38,040 Speaker 2: types of projects that are bankable and the route to 615 00:29:38,120 --> 00:29:40,720 Speaker 2: market for those projects. And then the third observation is 616 00:29:40,760 --> 00:29:43,320 Speaker 2: between one hundred and eighty one trillion, the two and 617 00:29:43,320 --> 00:29:46,600 Speaker 2: fifteen trillion. It's just a different of nineteen percent. It's 618 00:29:46,640 --> 00:29:49,120 Speaker 2: just like we were so surprised. We looked at we 619 00:29:49,160 --> 00:29:51,480 Speaker 2: lock the numbers, and with these scenarios, when you build them, 620 00:29:51,560 --> 00:29:53,640 Speaker 2: nothing is done until everything's done, so you need to 621 00:29:53,760 --> 00:29:55,760 Speaker 2: lock everything in and then you run the numbers and 622 00:29:55,800 --> 00:29:58,080 Speaker 2: then you look, oh, this is interesting. It's just nineteen 623 00:29:58,080 --> 00:30:00,880 Speaker 2: percent more. And what this means for from my perspectives 624 00:30:00,920 --> 00:30:05,360 Speaker 2: to say that they're so closed, if we added the opics, 625 00:30:05,800 --> 00:30:09,440 Speaker 2: probably it would be cheap virtual transition than not a transition. 626 00:30:09,600 --> 00:30:10,960 Speaker 2: And this is the kind of the next work we 627 00:30:11,000 --> 00:30:12,600 Speaker 2: want to do to figure out what is the best 628 00:30:12,640 --> 00:30:15,080 Speaker 2: way for us to run the all in cost and 629 00:30:15,320 --> 00:30:17,400 Speaker 2: then we can have a proper conversation and on all 630 00:30:17,440 --> 00:30:19,960 Speaker 2: these investment numbers, by the way, don't account for a 631 00:30:20,000 --> 00:30:22,600 Speaker 2: lot of indicators that we also care about. So we 632 00:30:22,640 --> 00:30:25,080 Speaker 2: care about human health, we care about the environment, like 633 00:30:25,120 --> 00:30:27,600 Speaker 2: the wide environment, we care about well being. So a 634 00:30:27,720 --> 00:30:29,800 Speaker 2: world where we spend one hundred and eighty one trillion 635 00:30:30,040 --> 00:30:33,040 Speaker 2: to get a two point sixty degree outcome and two 636 00:30:33,080 --> 00:30:35,719 Speaker 2: hundred fifteen trillion to get a well below two degree outcome, 637 00:30:35,960 --> 00:30:37,840 Speaker 2: it's pretty clear to me where we should go. 638 00:30:38,200 --> 00:30:43,080 Speaker 5: That is incredibly exciting and inspiring, because our net zero 639 00:30:43,240 --> 00:30:46,920 Speaker 5: scenario is like in a way, certainly to a cynic 640 00:30:47,120 --> 00:30:49,880 Speaker 5: would say that it's a fantasy, because we've just said, 641 00:30:49,960 --> 00:30:51,760 Speaker 5: what if, we're just we're just going to do it. 642 00:30:51,760 --> 00:30:54,080 Speaker 4: We're going to get to net zero by twenty fifty, whatever. 643 00:30:53,840 --> 00:30:57,000 Speaker 5: Happens, And then to learn that it only costs nineteen 644 00:30:57,000 --> 00:31:00,560 Speaker 5: percent more, and that's before we've taken into account various 645 00:31:00,600 --> 00:31:03,720 Speaker 5: things that would actually make the net zera scenari even 646 00:31:03,760 --> 00:31:07,280 Speaker 5: more economically favorable. I find that quite inspiring because it's 647 00:31:07,320 --> 00:31:09,560 Speaker 5: a very small price to pay, if any price at all, 648 00:31:09,720 --> 00:31:11,080 Speaker 5: for a planet we can live on. 649 00:31:11,280 --> 00:31:13,360 Speaker 1: And it's always nice to end a show on a high. 650 00:31:13,440 --> 00:31:15,000 Speaker 1: Thanks for joining Tom and me today. 651 00:31:15,160 --> 00:31:17,120 Speaker 5: Well, thanks for having me, guys, and I'm going to 652 00:31:17,120 --> 00:31:19,040 Speaker 5: go and have a coffee with Seb and tell him 653 00:31:19,080 --> 00:31:20,719 Speaker 5: the good news about the nineteen percent. 654 00:31:29,640 --> 00:31:32,760 Speaker 1: Today's episode of Switched On was produced by Cam Gray 655 00:31:32,960 --> 00:31:36,640 Speaker 1: with production assistance from Kamala Shelling. Bloomberg NEIF is a 656 00:31:36,680 --> 00:31:39,800 Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This 657 00:31:39,920 --> 00:31:42,600 Speaker 1: recording does not constitute, nor should it be construed as 658 00:31:42,640 --> 00:31:46,360 Speaker 1: investment in vice investment recommendations, or a recommendation as to 659 00:31:46,400 --> 00:31:49,240 Speaker 1: an investment or other strategy. Bloomberg NIF should not be 660 00:31:49,320 --> 00:31:53,120 Speaker 1: considered as information sufficient upon which to base an investment decision. 661 00:31:53,200 --> 00:31:56,160 Speaker 1: Neither Bloomberg Finance LP nor any of its affiliates makes 662 00:31:56,200 --> 00:31:59,800 Speaker 1: any representation or warranty as to the accuracy or completeness 663 00:31:59,840 --> 00:32:02,960 Speaker 1: of the information contained in this recording, and any liability 664 00:32:03,000 --> 00:32:05,640 Speaker 1: as a result of this recording is expressly disclaimed.