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Speaker 1: Welcome to COI Time, a podcast series on markets and

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Speaker 1: economies from DBS Group Research. I'm Temu, chief economist, welcoming

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Speaker 1: you to our 158th episode. I have been following the

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Speaker 1: work done by Center for Research on Energy and Clean Air,

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Speaker 1: CREA for a few years. Truly admire the work CREA

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Speaker 1: does in tracking and disseminating data and evidence on pollution

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Speaker 1: and green transition.

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Speaker 1: Laurie Millitra Millita is the co-founder of CREA and I'm

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Speaker 1: very pleased to have him on the podcast today. Laurie,

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Speaker 1: welcome to COI time.

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Speaker 2: Thank you so much,

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Speaker 2: Tara. Great to be

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Speaker 1: here. Uh, great to have you and thanks. I know

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Speaker 1: you've been away on holiday. This is your second day

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Speaker 1: back so I'm really grateful for you to take the time. Uh, Laurie,

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Speaker 1: while both you and I were on vacation.

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Speaker 1: The US passed this big beautiful bill. So I want

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Speaker 1: to just start the conversation by getting a sense of

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Speaker 1: your take on this bill, which has clearly some consequential

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Speaker 1: provisions on supporting fossil fuel and some withdrawal on support

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Speaker 1: for green energy. So what's your take?

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Speaker 2: Um, first of all, I think, I think the overall

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Speaker 2: impact on the, on the temperature in the room is,

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Speaker 2: of course, uh, uh big the world's biggest economy, um,

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Speaker 2: sending this kind of, these kinds of, uh, signals, um, uh,

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Speaker 2: trying to go backwards. It's also much more serious than

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Speaker 2: than what Trump did during his first, um, term. So

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Speaker 2: as we know during Trump's first term, there was, there

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Speaker 2: was a lot of talk about how beautiful coal is

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Speaker 2: and so on.

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Speaker 2: But still more coal plants closed down during uh Trump's

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Speaker 2: first term than during um Obama's tenure um so uh

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Speaker 2: uh so, so it's more substantial now we're talking about actual, um,

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Speaker 2: measures to to kneecap um uh clean energy industries.

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Speaker 2: Um, it's also, it's, however important to, to, uh, um,

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Speaker 2: also remember that compared with Trump's first term, um, the,

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Speaker 2: the clean energy, uh, technologies have, have progressed in leaps

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Speaker 2: and bounds, bounds, so, so they're much more competitive, um,

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Speaker 2: without the tax credits. For example, um, I, I, I

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Speaker 2: think the biggest impact will be on uh clean energy

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Speaker 2: uh manufacturing in the US, so the big ambition.

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Speaker 2: Um, during the Biden administration was to build, um, a,

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Speaker 2: a domestic clean energy manufacturing industry, um, in the US, um,

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Speaker 2: we know of course from the examples of other countries

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Speaker 2: that that requires a vibrant domestic market and, and one with, with, um,

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Speaker 2: a robust outlook which you don't have to the same

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Speaker 2: degree with, with this kind of an administration and then uh.

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Speaker 2: Um, uh, of course, the tax credit is the one

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Speaker 2: that uh.

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Speaker 2: The removal of the tax credit for with the solar and,

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Speaker 2: and uh the fiscal support for EVs is the one

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Speaker 2: that affects uh the bottom line of a lot of companies,

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Speaker 2: so financial analysts will focus on that, but uh but

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Speaker 2: the steps to um to increase the um

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Speaker 2: Um, the hoops that you have to jump through for permitting, um,

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Speaker 2: is a bigger one and, and, um, harder to quantify.

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Speaker 2: So if it's harder to get permissions for, uh, for

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Speaker 2: wind farms, for transmission lines which are of course, um, essential, um, then,

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Speaker 2: then uh, um, that, that will also slow down.

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Speaker 2: Uh, slow things down and direct things differently. One thing

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Speaker 2: that we've seen is that when governments don't act, then, then, um,

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Speaker 2: it's much more those technologies that, that the consumers can

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Speaker 2: deploy themselves, um, solar batteries, EVs that uh where the

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Speaker 2: action happens.

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Speaker 2: Um, and all of that said, it's also important to

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Speaker 2: say that when I, so I don't follow the US

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Speaker 2: that closely, but when you look at projections by um

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Speaker 2: analysts who do, um, they're talking about a reduction of

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Speaker 2: maybe one quarter in, in installed capacity as a very rough, um, indication. So,

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Speaker 2: so we're not talking about 100% the US going from.

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Speaker 2: Solar and wind to um deploy 100% fossil or anything

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Speaker 2: like that, it's, it's still an adjustment of, of course,

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Speaker 2: not a, not a turnaround um based on the projections

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Speaker 2: and these industries do have uh the tendency to surprise us.

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Speaker 1: Oh, absolutely. I mean, Trump really hates wind. I think

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Speaker 1: we all know that. I was in New York, Laurie

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Speaker 1: in April, and in New York, in the southern part

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Speaker 1: of Manhattan, there was supposed to be this very large

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Speaker 1: rather southern part of New York City. There was supposed

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Speaker 1: to be a very large wind turbine facility, so more

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Speaker 1: like import the parts and that's where they'll be stored

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Speaker 1: so that

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Speaker 1: They can be deployed up the coast to build the

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Speaker 1: wind energy turbines and that whole thing, I think like

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Speaker 1: a $500 million investment, everything came to a standstill after

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Speaker 1: Trump got elected and for the right reasons because he

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Speaker 1: is clearly not keen on seeing new wind farms getting built,

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Speaker 1: but at the same time it's a federal system when

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Speaker 1: you see what's happening in California, not just California, even Texas,

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Speaker 1: which is like, you know, as

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Speaker 1: Red as it gets, it's a very big vibrant place

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Speaker 1: for wind energy generation. I don't think that's going to

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Speaker 1: end anytime soon either. Laurie, so overall state of green transition,

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Speaker 1: so put the politics and the recent legislation aside, but

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Speaker 1: just general in trend, is the US anywhere close to

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Speaker 1: meeting some of these Paris climate accord goals?

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Speaker 2: Um

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Speaker 2: The US was just, there, there was hope that it

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Speaker 2: was um gonna get on track with uh.

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Speaker 2: Um, with the Biden administration, um, stuff, so it is

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Speaker 2: going to be a big lift, um, after Trump, um,

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Speaker 2: to get on track, um, to, uh, uh, to the

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Speaker 2: Paris Agreement, um, commitments. Um, I, I would not, uh, not, um, uh,

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Speaker 2: swear on that.

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Speaker 1: But what about this whole idea that very large companies

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Speaker 1: like Microsoft or Google, they have certain, you know, sort of,

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Speaker 1: you know, net zero targets, but they are also one

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Speaker 1: of the biggest spenders on AI. And so I'm hoping,

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Speaker 1: I'm hoping that you will also sort of reassure me

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Speaker 1: that these very large companies, their commitment remains undiminished, and

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Speaker 1: the fact that they are going to spend a lot

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Speaker 1: more on data centers, meaning they need more energy, that

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Speaker 1: they will remain committed on generating green energy. Does that

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Speaker 1: sound about right?

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Speaker 2: I have, I have to say I don't track the

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Speaker 2: companies too closely. I, I, um, I do hope so, uh,

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Speaker 2: but if you compare um the trend with uh.

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Speaker 2: Uh, preceding, uh, the AI boom and uh preceding Trump, um,

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Speaker 2: that was still, it was, uh, great progress. The US

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Speaker 2: was um was definitely making progress but still needed to

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Speaker 2: accelerate to get, um, get to, uh, Paris aligned uh

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Speaker 2: trajectories and so now you have this expectation of increased

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Speaker 2: uh uh electricity demand from AI and you have a

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Speaker 2: hope that those, those big companies will cover most of

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Speaker 2: that with green energy, but that's still um um up um.

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Speaker 2: Um, and net, uh, um, effect of, of, uh.

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Speaker 2: Um, that, that still doesn't have a net effect on,

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Speaker 2: on the trend. Of course, if, if, uh, if the,

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Speaker 2: the expected massive electricity demand from AI, um, and, and

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Speaker 2: other types of data centers materializes and that leads to

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Speaker 2: a boom in, in, uh, green electricity investment, of course,

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Speaker 2: that will be a boost to the industry that could, um,

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Speaker 2: it could, uh, cascade to the rest of the economy,

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Speaker 2: but that's

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Speaker 2: That's a couple of uh ifs there. I personally I've

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Speaker 2: been a bit uh um skeptical of the current projections

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Speaker 2: of the um of the um electricity demand from uh

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Speaker 2: the AI boom. I mainly track China where, where it's,

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Speaker 2: it's really just dwarfed by uh the demand from from

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Speaker 2: traditional industries, but uh, but even in other markets, it's

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Speaker 2: dramatic for, for planners, but uh.

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Speaker 2: Uh, but, uh, efficiency gains in, um, um, data infrastructure

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Speaker 2: have had a tendency to, um, to, um,

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Speaker 2: Um, upset those those projections of, of, uh, massive, uh, um,

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Speaker 2: massive electricity demand. So if, if you look at the

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Speaker 2: current volume of, of data streaming, for example, and you

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Speaker 2: go back 10 years, um, 15 years to, to what

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Speaker 2: that was supposed to mean in terms of uh electricity demand, um,

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Speaker 2: and that, that didn't materialize simply because uh things got

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Speaker 2: so much more efficient.

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Speaker 1: That is absolutely fascinating, uh, Laurie, so in about a

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Speaker 1: couple of weeks' time, I will do another podcast with, uh,

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Speaker 1: from a very large uh provider of cloud services in

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Speaker 1: the world. I was doing a warm-up call with him.

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Speaker 1: He said exactly what you just said.

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Speaker 1: That they are also cognizant of the fact that everybody

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Speaker 1: thinks that they're going to become very brown because they

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Speaker 1: have billions and billions of dollars' worth of data centers

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Speaker 1: in pipeline, but they said that even from 4 years

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Speaker 1: ago to now they managed to make their work more

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Speaker 1: efficient and therefore their increase is not as exponential as

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Speaker 1: people think it is. So I'm really glad you pointed

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Speaker 1: that out, Larry.

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Speaker 1: will bring this question back later on when I discuss

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Speaker 1: nuclear with you, but that's a little later. For the timing,

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Speaker 1: let's leave the US behind. Let's talk a little bit

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Speaker 1: about Europe because regardless of what Trump says, at least

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Speaker 1: so far my understanding is that Europe remains very much

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Speaker 1: committed to green transition. So give us a sense of

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Speaker 1: the present and the future of the green transition journey

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Speaker 1: of Europe.

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Speaker 2: Overall, uh, things have been accelerating, so, so for Europe,

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Speaker 2: obviously the uh uh the um.

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Speaker 2: Um, moved from Putin of, uh, cutting off gas supplies, um,

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Speaker 2: to Europe was a big, um, shock and a big

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Speaker 2: realization that we need to move a lot faster, um,

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Speaker 2: especially on the residential and industrial sectors which have been

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Speaker 2: the major users of, uh.

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Speaker 2: Um, of course, it, uh, rearranged the priorities a bit,

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Speaker 2: so the, the old refrain was that we're gonna get

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Speaker 2: rid of coal first, then oil, then gas, and, uh,

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Speaker 2: and there could even be um an increase in, in

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Speaker 2: gas use as a transition fuel that's not completely gone

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Speaker 2: away but obviously the sound of um of uh relying on,

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Speaker 2: on gas um has has uh.

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Speaker 2: Become a lot less attractive. So, um, so, so the

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Speaker 2: trend the um priorities have been um shifted um another

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Speaker 2: uh trend is uh is or at least was before

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Speaker 2: um um everything that Trump has done in the US was,

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Speaker 2: was concerned about reliance on, on, uh, uh, components, imports and, and, uh,

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Speaker 2: reliance on upstream um inputs uh from China, um, and,

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Speaker 2: and that's still.

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Speaker 2: Um, playing out, but, uh, but in, in Europe it's

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Speaker 2: clear that the priority is to keep the deployment of

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Speaker 2: clean energy going and then see if we can diversify, um,

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Speaker 2: uh supply and uh derisk supply um while doing that, um,

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Speaker 2: so that's not having um a similar effect, um, the

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Speaker 2: recent drop in.

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Speaker 2: In solar and battery prices is uh um I, I

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Speaker 2: think the most exciting um trend and and resulted in

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Speaker 2: a huge um jump in.

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Speaker 2: Um, in, uh, solar installations recently that has of course

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Speaker 2: happened pretty much everywhere except for, or even in the

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Speaker 2: US to some degree, but, uh, more everywhere else where

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Speaker 2: you don't have uh those prohibitive uh tariffs, um, so, um, but,

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Speaker 2: but that's, uh, that's happening in Europe and, uh, um,

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Speaker 2: I think that's going to, um.

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Speaker 2: Change, um, accelerate, um, uh, the transition in the power sector.

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Speaker 2: One thing though that has happened in Europe is that

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Speaker 2: the power sector in fact in aggregate, not in every

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Speaker 2: country but in aggregate is starting to be quite clean, um, so, um, the,

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Speaker 2: the latest tracking, um, from us on, on.

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Speaker 2: Um, Europe's, um, total CO2 emissions showed, uh, that we

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Speaker 2: had another, um, double digit drop in power sector emissions, um,

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Speaker 2: last year, but the overall reduction in emissions was still,

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Speaker 2: still very modest, um, uh, um, a few percent, um, so,

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Speaker 2: so the power sector can't do um the heavy lifting

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Speaker 2: anymore because it, it has become such a small share

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Speaker 2: of total emissions and now a lot more needs to

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Speaker 2: happen in

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Speaker 2: Uh, transportation, buildings, and industry, um, of course it's, it's

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Speaker 2: also starting to happen as I already, um, alluded, so, um,

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Speaker 2: so for, uh, industry, um, the got shock was was

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Speaker 2: a big one and uh, um, for transportation, um, EV

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Speaker 2: uptake is, is, uh, accelerating and, uh, uh, will help

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Speaker 2: a lot.

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Speaker 1: I want to ask you a couple of follow-up questions.

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Speaker 1: So starting with the gas shock, it seems to me

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Speaker 1: that in the immediate aftermath of the gas shock or

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Speaker 1: the Ukraine shock or the Russia shock, Europe became very

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Speaker 1: much reliant on both Qatar as well as the US

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Speaker 1: in terms of, you know, getting LNG and LPG supplies

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Speaker 1: coming in. So is on the margin that is coming

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Speaker 1: down or which is way too early to tell, and

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Speaker 1: related to that.

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Speaker 1: All these trade deals that's happening with the US and Europe,

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Speaker 1: I mean, isn't the US also demanding that Europe buy

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Speaker 1: more fossil fuel energy from the US?

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Speaker 2: That's the um old adage about Europe. If I want

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Speaker 2: to speak to Europe, who do I call and, and

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Speaker 2: in this case, if I want to sell gas to Europe,

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Speaker 2: I send the stuff to say, uh, you know, the

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Speaker 2: people um who are negotiating with the US, they don't

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Speaker 2: have money in their pockets to buy gas, um, of

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Speaker 2: course there's uh.

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Speaker 2: Um, there are some things that, that you can do,

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Speaker 2: but it's mainly, mainly the, um, um, imports from, uh, of, uh,

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Speaker 2: gas from the US surged because so much of that

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Speaker 2: is sold on the spot market. So pretty much all

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Speaker 2: the other exporters um do long term um contracts and

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Speaker 2: then um the US sells a lot on the spot market,

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Speaker 2: so they're their swing supplier and there was also um

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Speaker 2: a major reduction in China's uh gas consumption.

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Speaker 2: Um, when, when Europe was very much short of the stuff,

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Speaker 2: so that led to a.

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Speaker 2: Uh, redirect re direction of US supplies, um, to Europe. Um,

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Speaker 2: we have had the concern that, uh, some of the

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Speaker 2: long-term contracts that are being put in place could be.

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Speaker 2: Um, locking in, um, excess supplies, so when we're talking

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Speaker 2: about multi-decade contracts, um, and then, uh, uh, it, it

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Speaker 2: starts to become.

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Speaker 2: Um, a bit, uh, um, fantastical because, because we do

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Speaker 2: need to get rid of, uh.

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Speaker 2: Um, that gas consumption and, and, uh, it's very hard to,

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Speaker 2: to see how that would be um economical, um, more

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Speaker 2: in a few decades, uh, looking at the way, um, um, electricity, um,

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Speaker 2: clean electricity, um, costs are going and, and storage costs

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Speaker 2: are going which are directly competing with uh gas-fired power plants. Um, so,

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Speaker 2: so that is a concern, but it, it, you know,

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Speaker 2: you also do need to

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Speaker 2: Um, factory in that, uh, um, building, um, cutting off, uh,

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Speaker 2: gas supply did leave a massive gap, um, and, uh,

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Speaker 2: filling that with, uh, LNG trade, so, so that the

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Speaker 2: overland pipeline imports of gas from Russia to Europe were

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Speaker 2: massive and filling that up with uh um LNG trade

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Speaker 2: just uh.

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Speaker 2: Was always going to gobble up um a lot of the,

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Speaker 2: the uh LNG car cargoes um available.

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Speaker 1: It's a fascinating. I will, so one final question before

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Speaker 1: we leave Europe. Is there a north-south divide that when

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Speaker 1: we look at Northern Europe, there are certain aspects related

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Speaker 1: to green transition versus Southern Europe?

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Speaker 2: Well, there's certainly um sitting in, in Finland, um, there's

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Speaker 2: certainly um a, a difference between different countries in terms

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Speaker 2: of how much you can get stuff built. So, um,

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Speaker 2: Germany has been talking for as long as I can

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Speaker 2: uh remember as long as I've been tracking um energy

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Speaker 2: about connecting the north and the south with transmission lines,

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Speaker 2: but that just doesn't seem to be happening and uh

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Speaker 2: uh at the same time.

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Speaker 2: Um, uh, the, uh, between the Baltics, the, the Scandinavia, Finland,

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Speaker 2: and so on, uh, we've had multiple transmission lines built,

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Speaker 2: a much more robust, uh, transmission infrastructure. Um, we're, we're

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Speaker 2: quite good at getting wind, uh, built in, in Finland.

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Speaker 2: It's of course a very small place, but for our

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Speaker 2: size that's, that's attracting um a very nice amount of

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Speaker 2: uh um um investment and interest in.

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Speaker 2: In data centers, in green hydrogen and so on, um,

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Speaker 2: but I, I don't think it's a, it's a clean

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Speaker 2: cut north-south divide, but there, there are certainly huge differences

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Speaker 2: between jurisdictions in, in how long it takes and and

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Speaker 2: uh how hard it is to, to, to get permits

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Speaker 2: for um uh for these kinds of projects and uh

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Speaker 2: that's just going to have a big impact on the

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Speaker 2: industrial uh geography of Europe just like everywhere else.

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Speaker 1: Um, when we were talking earlier about investments on the

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Speaker 1: green infrastructure, especially with respect to wind turbines, uh, are

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Speaker 1: these materials and the technology around wind turbines, the ones

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Speaker 1: that are done in Europe, made in Europe, or they're

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Speaker 1: being imported from China?

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Speaker 2: Europe is still the biggest uh manufacturer for uh wind turbines.

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Speaker 2: So there is uh um that's an industry where um

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Speaker 2: China's exports are um are just starting to trickle out

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Speaker 2: of the country. Wind turbines aren't easy to, to transport,

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Speaker 2: so that's one factor in that. Um, there is, however, um,

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Speaker 2: an upstream um dependency, so the magnets for, uh, wind

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Speaker 2: turbines uh which rely on.

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Speaker 2: Um, heavy, um, rare earth metals, um, are, are very

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Speaker 2: highly reliant on China, that's 11 dependency that, uh, uh,

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Speaker 2: will be important, um, to address.

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Speaker 1: And

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Speaker 2: on

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Speaker 2: solar, um, for solar, uh, it's the polysilicon, um, wafer

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Speaker 2: part of the process, so the, the very upstream part

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Speaker 2: again where, where China has uh

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Speaker 2: Um, um, a, a major, um, uh, dominance and uh

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Speaker 2: that seems to be the part that is also hardest

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Speaker 2: um to get built elsewhere. So there's of course by

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Speaker 2: now China has a tech technological lead in that they've

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Speaker 2: been improving um the solar supply chains and processes, um, and,

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Speaker 2: and um a lot of the process innovation um has

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Speaker 2: been happening there. So China has developed a genuine um

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Speaker 2: a technological lead, but there is um

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Speaker 2: A systemic factor here which is that uh um Chinese

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Speaker 2: policymakers have made a very um

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Speaker 2: Systematic decision to invest in strategic upstream sectors. So those

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Speaker 2: um upstream sectors that have a wide variety of applications

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Speaker 2: of of course polysilicon lending itself to both solar panels

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Speaker 2: and and uh semiconductors being one of those um and

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Speaker 2: uh so they've uh they've invested state capital.

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Speaker 2: Um, with, uh, um, a very high risk tolerance, low, um, return, uh, expectations, um,

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Speaker 2: of return and so on, and these are pretty thankless industries. It's,

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Speaker 2: it's not big value, all the value is downstream. So

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Speaker 2: if you're looking at this, uh, simply from, um, how

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Speaker 2: do you make a buck from

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Speaker 2: Um, a a specific investment, um, it's, it's not attractive,

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Speaker 2: especially when China is crowding out the space. Um, so,

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Speaker 2: so that's the kind of that kind of strategic patience,

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Speaker 2: strategic investment is what is lacking and it's not, again,

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Speaker 2: it's not many facilities that you need whether you're talking

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Speaker 2: about rare earths or um or uh polysilicon and it's

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Speaker 2: it's a few plants that you have to build and

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Speaker 2: build and a few mines um and um.

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Speaker 2: Um, not huge value in the, um, in the big

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Speaker 2: theme of things, um, but it's just something that, uh,

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Speaker 2: you have to have an industrial policy framework to do

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Speaker 2: that and, uh, for example, the EU, the whole rationale

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Speaker 2: for creating the EU was constraining industrial policy, so it's

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Speaker 2: a bit of a reinvention to, to start having um

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Speaker 2: an a European industrial policy.

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Speaker 1: Absolutely fascinating. So let's finish that train of thought before

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Speaker 1: we move on to China, which is, so clearly the

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Speaker 1: Trump administration is very concerned on this issue on railroad supply,

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Speaker 1: and I can see that they're trying all sorts of

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Speaker 1: ways to secure supply from other places. So where is

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Speaker 1: European thinking in that regard?

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Speaker 2: Well, uh, globally, uh, the, the rare rare earth picture

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Speaker 2: has been getting a lot, um, a lot better in

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Speaker 2: terms of diversity of supply, so that, that scare about

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Speaker 2: China's dominance of uh.

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Speaker 2: Rare earths um took place a long time ago and

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Speaker 2: now some of the initiatives are coming to fruition. It's the,

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Speaker 2: the bottleneck is still with heavy rare earths, so a subset, um, but, uh,

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Speaker 2: but that's, so that, that's really um starting to happen. Uh,

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Speaker 2: mining is pretty diverse, so it's, it's refining, uh, where

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Speaker 2: China has the biggest, uh.

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Speaker 2: Um, uh, uh, biggest, uh, uh, market share or, or

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Speaker 2: almost total dominance, so it's, it's building a couple of refineries. It's, it's, uh, again,

379
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Speaker 2: it's low value, thankless, um, work, um, but, uh, um,

380
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Speaker 2: but it, yeah, it needs to be addressed. Um, Europe

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Speaker 2: as a whole, um, has just agreed on some.

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Speaker 2: Um, some guidelines like you don't want to be more

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Speaker 2: than 50% reliant on one supplier and so on, um,

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Speaker 2: and that can unlock some, um, some funding, but, uh, um, there's, uh,

385
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Speaker 2: there's still way, some way to go to, um, operationalizing that.

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Speaker 2: To, to, uh to me it would just, it would

387
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Speaker 2: almost um seem like there should be um a supply

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Speaker 2: of security agency for these these things like we do

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Speaker 2: for um gas and uh electricity that would have a

390
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Speaker 2: mandate to, to, for example, issue uh contracts for their

391
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Speaker 2: friends or other types of of measures to, to bring

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Speaker 2: supply um online.

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Speaker 1: Well, maybe they're listening to you. Uh, Laurie, you have

394
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Speaker 1: spent many years analyzing and doing research on China. So

395
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Speaker 1: help us start the process of understanding China's green transition journey. Uh,

396
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Speaker 1: maybe a couple of data points or a couple of

397
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Speaker 1: stylized facts that you can think of that allow us

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Speaker 1: to appreciate sort of the scale and the enormity of

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Speaker 1: what China has been up to.

400
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Speaker 2: Uh, for sure, so, so the past few years, um,

401
00:23:45,000 --> 00:23:50,109
Speaker 2: obviously China's doing a lot of, uh, wind and solar, EVs, nuclear, um,

402
00:23:50,160 --> 00:23:54,599
Speaker 2: already before, um, 2020 or so, but the past few

403
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Speaker 2: years have just blown past everyone's expectations and, uh, projections. Um,

404
00:24:02,439 --> 00:24:04,910
Speaker 2: so in short, what happened was, uh,

405
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Speaker 2: In uh in 2020, um, there was an announcement by

406
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Speaker 2: um uh Xi Jinping that uh China is going to

407
00:24:13,319 --> 00:24:16,369
Speaker 2: uh target carbon neutrality, so that was a uh top

408
00:24:16,369 --> 00:24:19,609
Speaker 2: level political signal, but at the same time, what was

409
00:24:19,609 --> 00:24:24,839
Speaker 2: happening was, uh, uh, there was a clampdown on real estate, um, uh,

410
00:24:24,849 --> 00:24:29,689
Speaker 2: in China addressing excess leverage and financial risk, uh, that,

411
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Speaker 2: that uh led to a contraction in the sector and

412
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Speaker 2: uh there was of course.

413
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Speaker 2: Of course, um, COVID and the zero COVID policy which

414
00:24:37,494 --> 00:24:41,573
Speaker 2: were um affecting um uh many sectors and, and so

415
00:24:41,574 --> 00:24:44,844
Speaker 2: these things just, just left a lot of um um

416
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Speaker 2: provincial governments, a lot of state owned firms, a lot

417
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Speaker 2: of state-owned banks asking, so where's the action gonna be? Where,

418
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Speaker 2: where are we going to be investing, where are we

419
00:24:53,694 --> 00:24:55,055
Speaker 2: going to uh to be?

420
00:24:55,520 --> 00:24:58,209
Speaker 2: Um, they're putting all of the, um, all of the

421
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Speaker 2: money that we would normally put into real estate and,

422
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Speaker 2: and these other things that were affected and, and everyone

423
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Speaker 2: basically because of the high level political signal because these

424
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Speaker 2: sectors were.

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Speaker 2: Um, uh, we had a lot of promise of uh

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Speaker 2: growth potential and, and, uh, uh, profitability, and pretty much

427
00:25:13,810 --> 00:25:15,569
Speaker 2: everyone landed on, on clean energy as one of the

428
00:25:15,569 --> 00:25:20,609
Speaker 2: answers and that just resulted in an investment boom that

429
00:25:20,609 --> 00:25:25,550
Speaker 2: no one expected or predicted in terms of its, it's magnitude, um,

430
00:25:25,569 --> 00:25:26,369
Speaker 2: and so.

431
00:25:27,479 --> 00:25:32,020
Speaker 2: Um, the, the, the amount of uh solar capacity, for example,

432
00:25:32,099 --> 00:25:37,439
Speaker 2: that China's, um, deployed, um, multiplied from the already um

433
00:25:37,439 --> 00:25:39,619
Speaker 2: high levels, um.

434
00:25:41,520 --> 00:25:46,000
Speaker 2: Uh, we're now talking, um, installing almost uh the entire

435
00:25:46,000 --> 00:25:51,239
Speaker 2: capacity of, of, uh, Europe in uh one year um

436
00:25:51,239 --> 00:25:51,920
Speaker 2: for solar.

437
00:25:52,699 --> 00:25:57,699
Speaker 2: And, and even so, yeah, and, uh, so, so, uh,

438
00:25:57,709 --> 00:26:02,670
Speaker 2: almost Europe's total solar capacity um in um in one

439
00:26:02,670 --> 00:26:04,790
Speaker 2: year and, and most importantly.

440
00:26:05,829 --> 00:26:10,089
Speaker 2: The, the wind and solar and nuclear installations are reaching

441
00:26:10,089 --> 00:26:13,930
Speaker 2: a scale where they, they can cover um all or

442
00:26:13,930 --> 00:26:17,929
Speaker 2: most of China's electricity demand growth. So we're talking about

443
00:26:18,410 --> 00:26:24,380
Speaker 2: um adding about 5% of uh um total annual power

444
00:26:24,380 --> 00:26:30,170
Speaker 2: generation from those uh um three sources. So, so that's then, um,

445
00:26:30,189 --> 00:26:33,010
Speaker 2: that then has the promise of at least stabilizing.

446
00:26:33,449 --> 00:26:36,930
Speaker 2: Power sector emissions because there's no more space for um

447
00:26:36,930 --> 00:26:38,250
Speaker 2: for fossil fuels to

448
00:26:38,250 --> 00:26:38,540
Speaker 2: grow.

449
00:26:39,800 --> 00:26:43,510
Speaker 1: I think I read on your website first that I

450
00:26:43,510 --> 00:26:47,619
Speaker 1: think in both in 23 and 24, China's total production

451
00:26:47,619 --> 00:26:50,709
Speaker 1: or addition of green energy capacity, not just solar but solar,

452
00:26:50,760 --> 00:26:55,349
Speaker 1: wind hydro altogether was like 2260 to 270 gigawatts, which

453
00:26:55,349 --> 00:26:57,790
Speaker 1: is an unthinkable number. I think again, to your point,

454
00:26:57,910 --> 00:26:58,369
Speaker 1: I think you

455
00:26:58,420 --> 00:27:00,770
Speaker 1: Your what is, it is like bigger than the stock

456
00:27:00,770 --> 00:27:05,609
Speaker 1: of US green energy capacity. Exactly, yeah, it's just absolutely

457
00:27:05,609 --> 00:27:10,250
Speaker 1: mind boggling. But Laurie, at the same time, China is

458
00:27:10,250 --> 00:27:13,688
Speaker 1: massively invested in the fossil fuel economy and to the

459
00:27:13,689 --> 00:27:16,969
Speaker 1: best of my knowledge it hasn't stopped building coal-fired energy plants.

460
00:27:18,099 --> 00:27:21,439
Speaker 2: No, not at all, um, to the contrary, so, um,

461
00:27:21,449 --> 00:27:24,939
Speaker 2: during the zero COVID period, uh, uh, the permitting of

462
00:27:24,939 --> 00:27:30,209
Speaker 2: and the construction starts of, of coal-fired power plants, um, accelerated, um,

463
00:27:30,260 --> 00:27:32,819
Speaker 2: as well. Um, and so there are

464
00:27:33,880 --> 00:27:37,189
Speaker 2: A couple of reasons for that, um, the, the basic.

465
00:27:38,109 --> 00:27:42,109
Speaker 2: logic of the policy makers is that uh um coal-fired

466
00:27:42,109 --> 00:27:46,899
Speaker 2: power plants uh provide what is known as dispatchable capacity,

467
00:27:47,030 --> 00:27:49,739
Speaker 2: so it's capacity that you can turn on and off

468
00:27:49,739 --> 00:27:52,419
Speaker 2: or adjust up and down as needed,

469
00:27:52,910 --> 00:27:53,069
Speaker 1: as

470
00:27:53,069 --> 00:27:53,389
Speaker 2: opposed

471
00:27:53,390 --> 00:27:55,189
Speaker 1: to deal with the intermittency issue.

472
00:27:55,920 --> 00:27:59,079
Speaker 2: Uh, to deal with uh variations in both demands. So

473
00:27:59,079 --> 00:28:01,869
Speaker 2: one thing that has been happening in, in China is

474
00:28:01,869 --> 00:28:06,329
Speaker 2: massive heat waves, which has resulted in in a.

475
00:28:07,040 --> 00:28:10,000
Speaker 2: A major increase in the amount of air conditioning that

476
00:28:10,000 --> 00:28:12,800
Speaker 2: is installed and the usage of those air conditioners, so

477
00:28:12,800 --> 00:28:17,739
Speaker 2: you have much higher peaks in electricity demand and of course,

478
00:28:18,130 --> 00:28:20,839
Speaker 2: um you have variation on the supply side from, from

479
00:28:20,839 --> 00:28:22,959
Speaker 2: solar and wind, um, so.

480
00:28:23,829 --> 00:28:27,640
Speaker 2: So that's where the perceived need for uh more uh

481
00:28:27,640 --> 00:28:31,979
Speaker 2: thermal power capacity both um coal and gas um comes from,

482
00:28:32,400 --> 00:28:36,589
Speaker 2: but that is compounded very heavily by by the the

483
00:28:36,589 --> 00:28:41,949
Speaker 2: rigidity of uh China's power grid. So, so uh the

484
00:28:41,949 --> 00:28:44,030
Speaker 2: power grid is still operated in a very

485
00:28:44,800 --> 00:28:50,140
Speaker 2: Inflexible, outdated way, um where um.

486
00:28:50,890 --> 00:28:54,229
Speaker 2: A lot of things run on schedule. So let's, let's

487
00:28:54,229 --> 00:28:57,469
Speaker 2: just take an example from, from Europe, we have, uh, um, so,

488
00:28:57,630 --> 00:29:01,790
Speaker 2: so in Northern Europe we have a massive hydro uh

489
00:29:01,790 --> 00:29:05,390
Speaker 2: power capacity in Norway and Sweden, and we have a

490
00:29:05,390 --> 00:29:08,910
Speaker 2: lot of solar capacity in Germany, we have wind capacity

491
00:29:08,910 --> 00:29:11,380
Speaker 2: here and there and it's, it's a given that those,

492
00:29:11,709 --> 00:29:14,229
Speaker 2: those things operate in tandem when there's a very sunny

493
00:29:14,229 --> 00:29:18,280
Speaker 2: day in, in Germany, then the hydropower plants in

494
00:29:18,630 --> 00:29:21,359
Speaker 2: Uh, in Norway and Sweden will generate a lot less

495
00:29:21,359 --> 00:29:24,750
Speaker 2: to make space for them and vice versa. Um, so, uh, but,

496
00:29:24,790 --> 00:29:27,589
Speaker 2: but that just doesn't happen in China yet, um, to

497
00:29:27,589 --> 00:29:30,609
Speaker 2: the extent that it needs to. Um, so, um, you've

498
00:29:30,609 --> 00:29:33,380
Speaker 2: had cases where, for example, a province is

499
00:29:34,099 --> 00:29:39,579
Speaker 2: Having an electricity shortage, they're having to ration electricity for

500
00:29:39,579 --> 00:29:42,099
Speaker 2: consumers within the province, but at the same time they

501
00:29:42,099 --> 00:29:46,319
Speaker 2: keep exporting a lot of power to other provinces because they're,

502
00:29:46,579 --> 00:29:52,380
Speaker 2: they have quotas to hit and, and schedules to meet. Um, so, uh, uh, the,

503
00:29:52,459 --> 00:29:56,849
Speaker 2: the uh mechanism for just automatically diverting those exports to,

504
00:29:56,969 --> 00:30:00,890
Speaker 2: to uh uh users within the province just, just, uh,

505
00:30:00,910 --> 00:30:01,619
Speaker 2: you know, doesn't.

506
00:30:02,089 --> 00:30:05,449
Speaker 2: Exist and uh a lot of the gold plants don't

507
00:30:05,449 --> 00:30:09,349
Speaker 2: have the incentive to, to ramp up and down um

508
00:30:09,349 --> 00:30:10,010
Speaker 2: when uh.

509
00:30:10,750 --> 00:30:13,630
Speaker 2: Now, when the uh the uh amount of uh wind

510
00:30:13,630 --> 00:30:17,270
Speaker 2: and solar um supply varies, they've been pushed to do

511
00:30:17,270 --> 00:30:20,109
Speaker 2: that administratively, but they just don't have the economic incentive

512
00:30:20,109 --> 00:30:23,189
Speaker 2: to do that, so they're avoiding, uh, doing that and,

513
00:30:23,270 --> 00:30:26,310
Speaker 2: and all of these kinds of rigidity just mean that

514
00:30:26,630 --> 00:30:30,550
Speaker 2: you need a lot more coal plants to manage the

515
00:30:30,550 --> 00:30:35,109
Speaker 2: system than you would if, if things were running um

516
00:30:35,109 --> 00:30:36,180
Speaker 2: in a flexible way.

517
00:30:37,109 --> 00:30:40,089
Speaker 1: Is there also an element of lack of market pricing

518
00:30:40,089 --> 00:30:41,150
Speaker 1: which also gets in the way?

519
00:30:41,849 --> 00:30:45,109
Speaker 2: Uh, yeah, so uh that's the, uh, that's, well, that,

520
00:30:45,229 --> 00:30:49,949
Speaker 2: that's one way of uh of introducing market pricing. Holy

521
00:30:49,949 --> 00:30:53,869
Speaker 2: pricing is one way of uh um making a system

522
00:30:53,869 --> 00:30:57,550
Speaker 2: work flexibly because when you have too much supply, for example,

523
00:30:57,670 --> 00:31:02,420
Speaker 2: then electricity prices will become negative or or very low,

524
00:31:02,510 --> 00:31:05,550
Speaker 2: that will entice coal and gas-fired power plants to shut

525
00:31:05,550 --> 00:31:08,040
Speaker 2: down and so on, so that's how it works in.

526
00:31:08,599 --> 00:31:11,579
Speaker 2: In Northern Europe, for example, China's been working in that direction.

527
00:31:11,650 --> 00:31:14,790
Speaker 2: There are spot markets in most provinces, for example, but

528
00:31:14,790 --> 00:31:18,150
Speaker 2: their volumes are still very low. I, I, I just

529
00:31:18,150 --> 00:31:20,790
Speaker 2: described the problem in a, in a way that is

530
00:31:20,790 --> 00:31:24,489
Speaker 2: trying to be agnostic to the solutions because I think in,

531
00:31:24,550 --> 00:31:27,660
Speaker 2: in China's case, just as in any country's case, it's

532
00:31:27,660 --> 00:31:32,459
Speaker 2: important to remember that the the solution that works best

533
00:31:32,459 --> 00:31:36,640
Speaker 2: in their institutional setting might not be the textbook economic solution.

534
00:31:37,030 --> 00:31:38,819
Speaker 1: No, that's a very good point. I mean, that reminds

535
00:31:38,819 --> 00:31:41,060
Speaker 1: me of the issue related to emissions trading. Even the

536
00:31:41,060 --> 00:31:43,900
Speaker 1: ETS in Europe, I think, has gone through multiple versions

537
00:31:43,900 --> 00:31:46,089
Speaker 1: because Europeans themselves have been sort of trying to figure out,

538
00:31:46,339 --> 00:31:49,979
Speaker 1: do you incentivize volume, do you incentivize price, or at

539
00:31:49,979 --> 00:31:51,660
Speaker 1: the end of the day as a regulator just set

540
00:31:51,660 --> 00:31:55,500
Speaker 1: something and expects the market to clear. So let me

541
00:31:55,500 --> 00:31:58,300
Speaker 1: bring that back into the context of China. Is there

542
00:31:58,300 --> 00:32:02,250
Speaker 1: a thriving emissions trading market in China or if not,

543
00:32:02,300 --> 00:32:04,339
Speaker 1: you know, what what is the current state of affairs?

544
00:32:05,599 --> 00:32:09,449
Speaker 2: Right, so there's a market, there's trading, uh, there's money

545
00:32:09,449 --> 00:32:13,650
Speaker 2: to be made from um buying and selling, but what

546
00:32:13,650 --> 00:32:17,170
Speaker 2: there is not is a carbon price that would actually

547
00:32:17,170 --> 00:32:21,530
Speaker 2: incentivize anyone to reduce emissions. So that might, might sound

548
00:32:21,530 --> 00:32:24,689
Speaker 2: like a bit of a paradox, but, but so the.

549
00:32:25,670 --> 00:32:26,619
Speaker 2: Uh, the system

550
00:32:27,670 --> 00:32:30,510
Speaker 2: First, for, for the first years of its operation, it

551
00:32:30,510 --> 00:32:34,270
Speaker 2: only covered the power sector and what it did is

552
00:32:34,270 --> 00:32:34,709
Speaker 2: uh

553
00:32:35,739 --> 00:32:40,670
Speaker 2: Um, it gives every, it has benchmarks for how much

554
00:32:40,979 --> 00:32:44,939
Speaker 2: a coal plant should be emitting uh per unit of

555
00:32:44,939 --> 00:32:49,660
Speaker 2: electricity produced, um, and, and it's differentiated by the size

556
00:32:49,660 --> 00:32:52,140
Speaker 2: of the coal plant and there's also a different benchmark

557
00:32:52,140 --> 00:32:56,060
Speaker 2: for gas plants. And if you're producing at an intensity

558
00:32:56,060 --> 00:32:59,380
Speaker 2: that is lower than the benchmark, you get excess credits.

559
00:32:59,420 --> 00:33:03,359
Speaker 2: If you're above, then you have to buy, um buy credits,

560
00:33:03,579 --> 00:33:04,479
Speaker 2: but because it's in

561
00:33:04,560 --> 00:33:09,560
Speaker 2: Density based, there's no incentive to switch from coal to

562
00:33:09,560 --> 00:33:12,030
Speaker 2: clean energy or even gold to gas or even from

563
00:33:12,280 --> 00:33:16,359
Speaker 2: uh from uh less uh smaller less efficient coal plants

564
00:33:16,359 --> 00:33:19,040
Speaker 2: to larger because there's all have different benchmarks and there's

565
00:33:19,040 --> 00:33:23,160
Speaker 2: no benchmark for um for clean energy. Um, so it's,

566
00:33:23,199 --> 00:33:27,680
Speaker 2: it's only incentivizing slightly more efficient.

567
00:33:28,219 --> 00:33:33,310
Speaker 2: Um, uh, uh, coal plants within each benchmark category, but it's,

568
00:33:33,510 --> 00:33:36,550
Speaker 2: it's not creating any kind of an incentive to switch

569
00:33:36,550 --> 00:33:39,219
Speaker 2: to clean energy, which is of course the main way that,

570
00:33:39,329 --> 00:33:42,920
Speaker 2: that you're going to decarbonize, uh, the power sector. And,

571
00:33:42,930 --> 00:33:47,790
Speaker 2: and now other sectors have been added um to the

572
00:33:47,790 --> 00:33:51,270
Speaker 2: system in a very soft way steel, cement, aluminum, but

573
00:33:51,270 --> 00:33:56,469
Speaker 2: for those it's even more differentiated for each facility so

574
00:33:56,469 --> 00:33:57,439
Speaker 2: there's no.

575
00:33:57,959 --> 00:34:02,089
Speaker 2: Um, there's no incentive to switch from, um, goal-based steel

576
00:34:02,089 --> 00:34:06,000
Speaker 2: making to to recycled steel making from scrap or hydrogen-based

577
00:34:06,000 --> 00:34:06,719
Speaker 2: steel making.

578
00:34:07,709 --> 00:34:10,750
Speaker 1: Larry, one issue that I struggle with is when people

579
00:34:10,750 --> 00:34:15,509
Speaker 1: tell me that China's emission is peaking or China's carbon

580
00:34:15,510 --> 00:34:17,770
Speaker 1: intensity is declining, I could come back and say, well,

581
00:34:17,790 --> 00:34:20,030
Speaker 1: that's because the economy is slowing. It's nothing to do

582
00:34:20,030 --> 00:34:22,659
Speaker 1: with progress with green transition. So how do we balance

583
00:34:22,659 --> 00:34:27,189
Speaker 1: this seismic progress and adding wind and energy and solar

584
00:34:27,189 --> 00:34:30,270
Speaker 1: energy capacity, but at the same time keeping on producing

585
00:34:30,270 --> 00:34:33,709
Speaker 1: coal energy with this point that actually on the margin

586
00:34:33,709 --> 00:34:36,149
Speaker 1: China's emissions are sort of not going up anymore. In fact,

587
00:34:36,209 --> 00:34:36,870
Speaker 1: they're declining.

588
00:34:38,209 --> 00:34:41,509
Speaker 2: Um, well, two things, so one of them is, is, uh.

589
00:34:42,379 --> 00:34:46,189
Speaker 2: Um, China's GDP is still growing, if you believe the

590
00:34:46,189 --> 00:34:50,229
Speaker 2: official numbers at about 5%, um, uh, and, and I,

591
00:34:50,350 --> 00:34:53,350
Speaker 2: I kind of do because, uh, because energy demand and

592
00:34:53,350 --> 00:34:56,590
Speaker 2: electricity demand are going up at, at high rates. The

593
00:34:56,590 --> 00:35:00,049
Speaker 2: other thing is unpacking the economy, which tends to drive

594
00:35:00,050 --> 00:35:02,500
Speaker 2: me a bit mad, uh, when, when people just say

595
00:35:02,500 --> 00:35:05,739
Speaker 2: the economy is doing this or that because from an, uh,

596
00:35:05,750 --> 00:35:09,669
Speaker 2: from the energy perspective, the different sectors of the economy

597
00:35:09,669 --> 00:35:12,199
Speaker 2: are completely different animals if you have uh.

598
00:35:13,229 --> 00:35:16,729
Speaker 2: Strong growth in, in let's say the restaurant sector that's

599
00:35:16,729 --> 00:35:20,169
Speaker 2: very different from having a strong growth in the, in

600
00:35:20,169 --> 00:35:23,520
Speaker 2: the steel sector because, because the latter will produce um

601
00:35:24,090 --> 00:35:27,719
Speaker 2: um orders of magnitude more CO2 per per unit of

602
00:35:27,719 --> 00:35:33,069
Speaker 2: economic output and so China has uh had uh um in,

603
00:35:33,090 --> 00:35:36,760
Speaker 2: in the past uh um uh 1.5 years, which is

604
00:35:36,760 --> 00:35:37,129
Speaker 2: when

605
00:35:37,560 --> 00:35:41,479
Speaker 2: Emissions have stabilized and started to come down. China still

606
00:35:41,479 --> 00:35:47,669
Speaker 2: has had above average growth in both electricity demand and

607
00:35:47,919 --> 00:35:52,479
Speaker 2: total energy demand. Um, so, so from that perspective, China's

608
00:35:52,479 --> 00:35:56,439
Speaker 2: at the point where, um, if, um, um, if you

609
00:35:56,439 --> 00:35:59,280
Speaker 2: don't have the kind of economic slowdown.

610
00:35:59,659 --> 00:36:04,330
Speaker 2: Um, that, that would bring down energy demand, demand growth, and,

611
00:36:04,419 --> 00:36:08,520
Speaker 2: and if you maintain clean energy additions at the, at

612
00:36:08,520 --> 00:36:12,250
Speaker 2: the rate that was achieved in the past couple of years, then, um,

613
00:36:12,280 --> 00:36:15,050
Speaker 2: and then that's going to be enough to start bringing

614
00:36:15,050 --> 00:36:15,879
Speaker 2: emissions down.

615
00:36:16,949 --> 00:36:20,729
Speaker 1: What is the outlook 2030, 2025, where do you see

616
00:36:20,729 --> 00:36:22,610
Speaker 1: China going in terms of emissions?

617
00:36:25,370 --> 00:36:30,159
Speaker 2: I think the the range of likely outcome, likely outcomes

618
00:36:30,159 --> 00:36:30,928
Speaker 2: is from.

619
00:36:32,040 --> 00:36:36,100
Speaker 2: From a slow, bumpy decline, so of course you will

620
00:36:36,100 --> 00:36:39,600
Speaker 2: have ups and downs, um, ups and downs in emissions, but, uh,

621
00:36:39,610 --> 00:36:42,969
Speaker 2: but overall the trend will be plateauing and and slowly

622
00:36:42,969 --> 00:36:48,379
Speaker 2: coming down to actually starting to bring emissions down, uh, substantially, um,

623
00:36:48,409 --> 00:36:54,139
Speaker 2: and that depends on, on the pattern of economic growth, um, so, um.

624
00:36:54,800 --> 00:36:58,069
Speaker 2: A lot of analysts at the moment are looking at

625
00:36:58,070 --> 00:37:01,719
Speaker 2: the very energy intensive pattern of economic growth that China

626
00:37:01,719 --> 00:37:04,439
Speaker 2: had during and and right after the COVID and expecting

627
00:37:04,439 --> 00:37:08,479
Speaker 2: that to continue, um and uh I I'm.

628
00:37:09,889 --> 00:37:15,649
Speaker 2: Leaning towards expecting the distortions that that were introduced to

629
00:37:15,649 --> 00:37:19,009
Speaker 2: the structure of the economy during and after the COVID

630
00:37:19,010 --> 00:37:22,010
Speaker 2: uh to actually unwind, so you would have less energy

631
00:37:22,010 --> 00:37:25,449
Speaker 2: intensive um growth going forward when the.

632
00:37:26,409 --> 00:37:30,669
Speaker 2: Um, uh, uh, when the service economy and so on recovers,

633
00:37:30,790 --> 00:37:33,939
Speaker 2: but that's, that's, uh, a longer term perspective, it's not

634
00:37:34,030 --> 00:37:37,540
Speaker 2: not doing great again because of, of, uh, um, uh,

635
00:37:37,550 --> 00:37:42,189
Speaker 2: the tariffs and other factors, um, but so, and then

636
00:37:42,189 --> 00:37:46,189
Speaker 2: the other question is, is, uh, what will the, the,

637
00:37:46,250 --> 00:37:47,759
Speaker 2: the level of uh.

638
00:37:48,489 --> 00:37:53,560
Speaker 2: Uh, clean energy addition speed and um um so there was, uh, there,

639
00:37:53,709 --> 00:37:58,229
Speaker 2: there's been concern China recently um changed the way that

640
00:37:58,229 --> 00:38:03,310
Speaker 2: uh new wind and solar producers are compensated um and

641
00:38:03,310 --> 00:38:06,830
Speaker 2: uh that led to a huge rush to install um

642
00:38:06,830 --> 00:38:10,229
Speaker 2: before the, the deadline for the change and, and now

643
00:38:10,229 --> 00:38:14,030
Speaker 2: there's been a bit of a slowdown, um, but, uh.

644
00:38:14,389 --> 00:38:17,580
Speaker 2: Um, and, and projections have varied quite widely of, of

645
00:38:17,580 --> 00:38:21,100
Speaker 2: what the future will look like, but on that I'm,

646
00:38:21,179 --> 00:38:24,699
Speaker 2: I'm tending on the optimistic side, mainly because of the

647
00:38:24,699 --> 00:38:30,889
Speaker 2: massive economic bet that China has made collectively on, on, uh, uh,

648
00:38:30,899 --> 00:38:33,658
Speaker 2: the clean energy economy, so the massive investment in.

649
00:38:34,649 --> 00:38:42,709
Speaker 2: In new um manufacturing capacity, um, transmission lines, um uh

650
00:38:42,709 --> 00:38:46,969
Speaker 2: um EV charging infrastructure, all of these things, um, it's

651
00:38:46,969 --> 00:38:49,110
Speaker 2: uh um uh.

652
00:38:49,760 --> 00:38:54,260
Speaker 2: It's just hard to see um all of that being

653
00:38:54,260 --> 00:38:59,260
Speaker 2: completely undercut by uh by the policymakers letting um letting,

654
00:38:59,300 --> 00:39:03,560
Speaker 2: letting the market contract. So, so I, I think they will,

655
00:39:03,659 --> 00:39:05,979
Speaker 2: they will manage it in a way that uh that

656
00:39:05,979 --> 00:39:07,090
Speaker 2: keeps the boom going.

657
00:39:08,070 --> 00:39:10,609
Speaker 1: Sorry, uh, a couple of quick side notes. One is,

658
00:39:10,729 --> 00:39:15,090
Speaker 1: while your focus and your institutions focus on a particular mission,

659
00:39:15,929 --> 00:39:18,090
Speaker 1: from my latest visits to China, I feel that we

660
00:39:18,090 --> 00:39:20,729
Speaker 1: should also think in terms of noise pollution because in

661
00:39:20,729 --> 00:39:23,919
Speaker 1: a place like Shanghai or Beijing, running in the morning

662
00:39:23,919 --> 00:39:26,009
Speaker 1: is just so easy now because the cars don't make

663
00:39:26,010 --> 00:39:29,370
Speaker 1: any sound and, and I think somebody who spends time

664
00:39:29,370 --> 00:39:31,250
Speaker 1: there would always want to come back to their city

665
00:39:31,250 --> 00:39:33,570
Speaker 1: and demand that their city becomes quiet like that. And

666
00:39:33,570 --> 00:39:35,179
Speaker 1: it's as good as, you know,

667
00:39:35,239 --> 00:39:37,459
Speaker 1: Clean air is the quietness of the city because of

668
00:39:37,459 --> 00:39:39,949
Speaker 1: the cars not making noise. Um, the second one I

669
00:39:39,949 --> 00:39:41,310
Speaker 1: just want to share with you is that I was

670
00:39:41,310 --> 00:39:45,739
Speaker 1: talking to a CEO of SOE in Beijing, uh, last year,

671
00:39:46,070 --> 00:39:48,799
Speaker 1: and to the point, because you said, uh, I talked

672
00:39:48,800 --> 00:39:50,229
Speaker 1: about battery and transmission.

673
00:39:50,489 --> 00:39:53,919
Speaker 1: So his company does wind turbines, but he wants to

674
00:39:53,919 --> 00:39:56,560
Speaker 1: provide end to end solution to his customers, and hence

675
00:39:56,560 --> 00:39:59,479
Speaker 1: he's investing in high voltage transmission lines as well as

676
00:39:59,479 --> 00:40:02,239
Speaker 1: next generation of battery storage. And I was very impressed

677
00:40:02,239 --> 00:40:04,879
Speaker 1: that it was a holistic way of looking at green transition,

678
00:40:04,919 --> 00:40:07,199
Speaker 1: not just one area. So related.

679
00:40:07,324 --> 00:40:11,834
Speaker 1: That Larry is China and tech innovation on the on

680
00:40:11,834 --> 00:40:15,594
Speaker 1: the green space. Give us a sense of where the

681
00:40:15,594 --> 00:40:19,625
Speaker 1: state of the art is in the tech side on battery,

682
00:40:19,834 --> 00:40:24,073
Speaker 1: on transmission, on EVs, on, of course, solar and wind.

683
00:40:25,709 --> 00:40:31,479
Speaker 2: Um, in those kind of boring industries, um, the backend

684
00:40:31,479 --> 00:40:35,219
Speaker 2: industries like, uh, making solar panels and, and, uh.

685
00:40:36,090 --> 00:40:38,379
Speaker 2: So on the, the product will look pretty much the

686
00:40:38,379 --> 00:40:43,199
Speaker 2: same as it did, uh, 5 years ago, but uh the,

687
00:40:43,260 --> 00:40:47,090
Speaker 2: the increase in efficiency, the reduction in the thickness of

688
00:40:47,090 --> 00:40:50,100
Speaker 2: the panels, so the material inputs that go into it has,

689
00:40:50,199 --> 00:40:53,770
Speaker 2: has been amazing and, and so one thing that uh

690
00:40:54,100 --> 00:40:55,260
Speaker 2: that someone told me.

691
00:40:56,899 --> 00:40:59,020
Speaker 2: Uh, some time ago, you know, I hear about all

692
00:40:59,020 --> 00:41:03,379
Speaker 2: these breakthroughs in solar. There's always news about um the

693
00:41:03,379 --> 00:41:07,529
Speaker 2: researcher developed uh um a more efficient solar panel or whatnot.

694
00:41:07,699 --> 00:41:10,459
Speaker 2: I don't, I, I don't know what happens to those, um, and,

695
00:41:10,540 --> 00:41:12,899
Speaker 2: and the answer is they become the mainstream in a

696
00:41:12,899 --> 00:41:16,399
Speaker 2: few years, um, so it's, you know, it's a continuous

697
00:41:16,399 --> 00:41:19,939
Speaker 2: breakthrough in making the stuff, uh, more efficient both in

698
00:41:19,939 --> 00:41:24,100
Speaker 2: terms of, uh, converting sunlight into electricity but also

699
00:41:24,429 --> 00:41:28,080
Speaker 2: Um, uh, in terms of, uh, the amount of, uh, of, uh,

700
00:41:28,090 --> 00:41:31,109
Speaker 2: poly silicon that you need, for example, and that's, that's

701
00:41:31,110 --> 00:41:35,529
Speaker 2: resulting in, um, reduced cost and, uh, of course a

702
00:41:35,530 --> 00:41:39,850
Speaker 2: reduced CO2 footprint from, from manufacturing as well. So, so

703
00:41:39,850 --> 00:41:41,709
Speaker 2: basically I think a continuous.

704
00:41:42,500 --> 00:41:45,280
Speaker 2: Uh, breakthrough that you don't notice as the end user

705
00:41:45,280 --> 00:41:48,939
Speaker 2: is the way to um uh to characterize those sectors and,

706
00:41:48,959 --> 00:41:51,520
Speaker 2: and simply by virtue of, of, uh, so much of

707
00:41:51,520 --> 00:41:55,570
Speaker 2: the manufacturing being located in China, the, the majority of that, uh,

708
00:41:55,879 --> 00:42:01,319
Speaker 2: that kind of quiet optimization um has taken place in

709
00:42:01,320 --> 00:42:03,638
Speaker 2: China and they're the ones who's ones who've been pushing

710
00:42:03,639 --> 00:42:08,520
Speaker 2: the frontier on that, on consumer oriented tech like uh.

711
00:42:09,110 --> 00:42:14,659
Speaker 2: Um, EVs, it's much more um noticeable and, uh, yeah, I,

712
00:42:14,729 --> 00:42:17,610
Speaker 2: I think it's just, just as you said, it's, it's

713
00:42:17,610 --> 00:42:21,090
Speaker 2: very hard to uh to try an EV, especially in

714
00:42:21,090 --> 00:42:24,199
Speaker 2: a place with good charging infrastructure and so on and,

715
00:42:24,330 --> 00:42:26,879
Speaker 2: and say that, um, yeah, I think I'm going to

716
00:42:26,879 --> 00:42:31,069
Speaker 2: go back to, to uh petrol petrol vehicles or or

717
00:42:31,070 --> 00:42:34,810
Speaker 2: horse carts or you know servants carrying me around in

718
00:42:35,090 --> 00:42:38,239
Speaker 2: whatever those things are called. It's just, it just seems like.

719
00:42:38,669 --> 00:42:42,259
Speaker 2: Like that's, you know, that that's yesterday's stuff.

720
00:42:42,669 --> 00:42:44,750
Speaker 1: Oh yeah, so as somebody who just gave up his

721
00:42:44,750 --> 00:42:48,060
Speaker 1: Audi Q5 for a BYD C 7, I know exactly

722
00:42:48,060 --> 00:42:50,109
Speaker 1: where you're coming from. I mean, what was I waiting

723
00:42:50,110 --> 00:42:52,989
Speaker 1: for all these years? It's really, really amazing to drive

724
00:42:52,989 --> 00:42:55,350
Speaker 1: this vehicle and especially now, I mean, to the point

725
00:42:55,350 --> 00:42:57,000
Speaker 1: of the consumer facing aspect.

726
00:42:57,310 --> 00:43:00,399
Speaker 1: The, the, the Teslas of the world brought EVs to

727
00:43:00,399 --> 00:43:02,279
Speaker 1: us and we will always be grateful to Musk for

728
00:43:02,280 --> 00:43:04,919
Speaker 1: doing that. But they weren't fun cars to drive in

729
00:43:04,919 --> 00:43:07,080
Speaker 1: the sense that they were not very human centric in

730
00:43:07,080 --> 00:43:10,360
Speaker 1: their design. inside was kind of cheap and and and

731
00:43:10,360 --> 00:43:11,629
Speaker 1: very overly minimalistic.

732
00:43:11,909 --> 00:43:14,379
Speaker 1: The BID that I have is like such a different

733
00:43:14,379 --> 00:43:16,139
Speaker 1: level from the lorry. When you come to Singapore, I'll

734
00:43:16,139 --> 00:43:17,939
Speaker 1: drive you around, or maybe you have the sea lion

735
00:43:17,939 --> 00:43:19,699
Speaker 1: 7 in Finland already and you can see them on

736
00:43:19,699 --> 00:43:23,459
Speaker 1: the streets. But what about in terms of storage, because

737
00:43:23,459 --> 00:43:25,489
Speaker 1: that's just one complaint that everybody says that, oh well,

738
00:43:25,540 --> 00:43:27,459
Speaker 1: you know, at night there is no solar, when there's

739
00:43:27,459 --> 00:43:31,069
Speaker 1: no wind there's no wind power. We need better battery technology.

740
00:43:31,280 --> 00:43:33,659
Speaker 1: Our battery technologies getting progressively better?

741
00:43:34,719 --> 00:43:38,209
Speaker 2: Uh, they've gotten a lot cheaper and that's the main thing, um,

742
00:43:38,280 --> 00:43:42,239
Speaker 2: that matters, um, so yeah, battery prices, um.

743
00:43:42,959 --> 00:43:47,388
Speaker 2: Uh, are now coming down to less than $100 per

744
00:43:47,389 --> 00:43:51,129
Speaker 2: kilowatt hour, which is the level that was, uh, some

745
00:43:51,129 --> 00:43:54,709
Speaker 2: time ago that was projected for 2030, go sometime back

746
00:43:54,709 --> 00:43:58,709
Speaker 2: and that was projected forever, I think so, um, so

747
00:43:58,709 --> 00:44:03,429
Speaker 2: it's happened uh very, very fast, um, and in China,

748
00:44:03,469 --> 00:44:05,399
Speaker 2: in fact, uh, um.

749
00:44:05,979 --> 00:44:11,610
Speaker 2: I would argue that um battery storage has started to

750
00:44:11,610 --> 00:44:14,939
Speaker 2: happen too fast in the sense that uh

751
00:44:15,810 --> 00:44:18,610
Speaker 2: Uh, uh, that, that, uh, if you.

752
00:44:19,830 --> 00:44:23,340
Speaker 2: Look at an economically optimized system, they wouldn't need um

753
00:44:23,340 --> 00:44:27,340
Speaker 2: that amount of batteries yet, but because of the rigidities

754
00:44:27,699 --> 00:44:32,010
Speaker 2: um in the grid, um it's, it's already starting um

755
00:44:32,050 --> 00:44:37,820
Speaker 2: um starting to happen. Um, we're talking about more than

756
00:44:37,820 --> 00:44:41,580
Speaker 2: 70 gigawatts of uh uh battery storage capacity.

757
00:44:42,179 --> 00:44:45,179
Speaker 2: Installed most of that last year at, at the end

758
00:44:45,179 --> 00:44:48,770
Speaker 2: of the year and, and uh of course more uh

759
00:44:48,770 --> 00:44:52,219
Speaker 2: more coming on uh this year. um, and, and the

760
00:44:52,219 --> 00:44:55,060
Speaker 2: other reason that it's happening, you could say that it's

761
00:44:55,060 --> 00:44:57,739
Speaker 2: happening too fast is that many of those batteries lack

762
00:44:57,739 --> 00:45:01,219
Speaker 2: the price signals to actually operate in the, in the

763
00:45:01,219 --> 00:45:04,179
Speaker 2: way that would be, that would, would uh benefit the

764
00:45:04,179 --> 00:45:07,129
Speaker 2: system the most. So, so there's basically batteries.

765
00:45:07,540 --> 00:45:09,719
Speaker 2: Um, that have been put in place and that are

766
00:45:09,719 --> 00:45:13,399
Speaker 2: still waiting um to, to get the price signals to

767
00:45:13,399 --> 00:45:16,949
Speaker 2: start doing the work that they're, uh, that they should

768
00:45:16,949 --> 00:45:19,560
Speaker 2: be doing, but at least it's showing that uh that

769
00:45:19,560 --> 00:45:23,879
Speaker 2: it can be uh deployed at scale and uh as

770
00:45:23,879 --> 00:45:28,100
Speaker 2: the um the um uh uh the, the expansion of,

771
00:45:28,159 --> 00:45:33,120
Speaker 2: of uh solar and wind um hits um grid bottlenecks.

772
00:45:33,550 --> 00:45:38,300
Speaker 2: Uh, because of, of those, uh, inflexibilities, then more storage and,

773
00:45:38,350 --> 00:45:42,659
Speaker 2: and also more green hydrogen production will start to, um, uh,

774
00:45:42,669 --> 00:45:45,270
Speaker 2: start to happen. So, um, one thing that is, is

775
00:45:45,270 --> 00:45:46,189
Speaker 2: very much happening.

776
00:45:47,300 --> 00:45:49,479
Speaker 2: In China and around which there's a lot of hype

777
00:45:49,479 --> 00:45:53,339
Speaker 2: so-called virtual power plants, um, so that's a way of

778
00:45:53,699 --> 00:45:59,370
Speaker 2: getting around the lack of, um, proper electricity markets. So you,

779
00:45:59,459 --> 00:46:05,969
Speaker 2: you um bundle together solar, possibly windstorage, some thermal power,

780
00:46:05,979 --> 00:46:11,139
Speaker 2: and you, you um uh uh put those bundle those

781
00:46:11,139 --> 00:46:13,939
Speaker 2: together into a virtual power plant that that can then

782
00:46:13,939 --> 00:46:17,000
Speaker 2: make a contract with a buyer for 24/7.

783
00:46:17,360 --> 00:46:20,379
Speaker 2: Um, electricity, so it's it, yeah, it's a way of uh.

784
00:46:21,179 --> 00:46:21,979
Speaker 2: Packaging

785
00:46:22,540 --> 00:46:26,770
Speaker 2: Um, especially solar solar and storage, uh, for a market

786
00:46:26,770 --> 00:46:27,399
Speaker 2: that uh.

787
00:46:28,409 --> 00:46:33,330
Speaker 2: That trades uh month monthly um uh volumes, and I

788
00:46:33,330 --> 00:46:38,070
Speaker 2: expect that uh um that uh in those provinces where

789
00:46:38,530 --> 00:46:41,679
Speaker 2: um uh the solar and wind expansion is hitting, uh,

790
00:46:41,689 --> 00:46:46,989
Speaker 2: hitting constraints created by the grid, um uh uh green

791
00:46:46,989 --> 00:46:52,290
Speaker 2: hydrogen will, uh, projects will also, um, um, take off

792
00:46:52,290 --> 00:46:55,770
Speaker 2: much faster than, than expected as a way of keeping

793
00:46:55,770 --> 00:46:56,489
Speaker 2: the boom going.

794
00:46:57,610 --> 00:47:00,520
Speaker 1: Laurie, I have a friend in Singapore. He's an engineer

795
00:47:00,520 --> 00:47:03,969
Speaker 1: in the marine sort of offshore wind turbine projects, and

796
00:47:03,969 --> 00:47:06,239
Speaker 1: he's done work on Taiwan and Japan, I think also

797
00:47:06,239 --> 00:47:08,408
Speaker 1: in Korea. So I just want to ask you, all

798
00:47:08,409 --> 00:47:11,129
Speaker 1: this sort of, you know, seismic changes that are happening

799
00:47:11,129 --> 00:47:13,830
Speaker 1: in China, is it beginning to have a positive spillover

800
00:47:13,830 --> 00:47:16,500
Speaker 1: impact in North Asia and East Asia?

801
00:47:18,409 --> 00:47:21,310
Speaker 2: That varies quite a bit by country. Um, I, I

802
00:47:21,310 --> 00:47:24,229
Speaker 2: think the most dramatic impact has been, or I don't

803
00:47:24,229 --> 00:47:26,479
Speaker 2: think that's a, that's a a bit of analysis that

804
00:47:26,479 --> 00:47:29,989
Speaker 2: I did, um, that the most dramatic impact is being

805
00:47:29,989 --> 00:47:32,830
Speaker 2: felt in uh in uh uh Middle East, North Africa,

806
00:47:32,949 --> 00:47:37,009
Speaker 2: sub-Saharan Africa, um, even like Latin America, so, um, so

807
00:47:37,010 --> 00:47:40,270
Speaker 2: that's where there's very strong growth in, in China's exports

808
00:47:40,270 --> 00:47:44,699
Speaker 2: of uh uh clean energy technology and also plans for

809
00:47:44,699 --> 00:47:45,830
Speaker 2: um overseas.

810
00:47:46,370 --> 00:47:51,419
Speaker 2: Um, and manufacturing, uh, South Asia as well, for example, Pakistan, um,

811
00:47:51,429 --> 00:47:53,870
Speaker 2: had a massive solar boom and, and now it's starting

812
00:47:53,870 --> 00:47:58,379
Speaker 2: to have a, uh, a storage boom, uh, because the conditions, um,

813
00:47:58,669 --> 00:48:01,939
Speaker 2: were ripe, so to speak, very unreliable and, and, uh,

814
00:48:02,429 --> 00:48:08,919
Speaker 2: expensive grid electricity. Um, in East Asia, well, that's a,

815
00:48:09,189 --> 00:48:13,299
Speaker 2: that's a big um uh case study, but, uh, uh,

816
00:48:13,310 --> 00:48:14,179
Speaker 2: but they are.

817
00:48:15,310 --> 00:48:22,009
Speaker 2: Japan, Korea, um, markets, for example, um, they're regulated, uh,

818
00:48:22,020 --> 00:48:25,889
Speaker 2: markets where, uh, where things happen a lot more slowly.

819
00:48:25,969 --> 00:48:28,570
Speaker 2: So those are, I would say those are more examples

820
00:48:28,570 --> 00:48:32,169
Speaker 2: of markets where uh the the uh uh the great

821
00:48:32,169 --> 00:48:35,729
Speaker 2: planners just need to sit down and do the math on, on,

822
00:48:35,820 --> 00:48:37,770
Speaker 2: on uh uh how much.

823
00:48:38,290 --> 00:48:41,310
Speaker 2: Um, solar and batteries, for example, they should be doing

824
00:48:41,310 --> 00:48:44,899
Speaker 2: if you optimize economically and they, they're still way, way

825
00:48:44,899 --> 00:48:47,299
Speaker 2: behind what they should be doing. Yeah,

826
00:48:47,310 --> 00:48:49,339
Speaker 1: I find that a bit frustrating because you would think

827
00:48:49,340 --> 00:48:53,550
Speaker 1: that they suffer from equal amount of energy insecurity as

828
00:48:53,550 --> 00:48:55,919
Speaker 1: does China because they don't have any oil or gas

829
00:48:55,919 --> 00:48:57,149
Speaker 1: and they have to import everything.

830
00:48:57,429 --> 00:49:00,759
Speaker 1: And, and, and maybe you know they just probably have

831
00:49:00,760 --> 00:49:04,149
Speaker 1: less of a geopolitical urgency than China does on this issue.

832
00:49:04,760 --> 00:49:06,729
Speaker 1: But you know, I find it interesting that you mentioned

833
00:49:06,729 --> 00:49:08,600
Speaker 1: the Middle East. I'll share with you one anecdote. I

834
00:49:08,760 --> 00:49:11,000
Speaker 1: I was visiting Dubai a few months ago and a

835
00:49:11,000 --> 00:49:13,760
Speaker 1: friend who had solar cell panels on his rooftop, he

836
00:49:13,760 --> 00:49:16,469
Speaker 1: was telling me that Dubai summers are getting progressively hotter.

837
00:49:16,719 --> 00:49:19,120
Speaker 1: So at 50 °C, his solar panels are actually not

838
00:49:19,120 --> 00:49:19,760
Speaker 1: very efficient.

839
00:49:20,120 --> 00:49:23,179
Speaker 1: But the Chinese have come up with solutions for higher

840
00:49:23,179 --> 00:49:25,540
Speaker 1: temperature solar panels, so he's going to be replacing them

841
00:49:25,540 --> 00:49:27,698
Speaker 1: with the new ones and that innovation, I don't think

842
00:49:27,699 --> 00:49:29,209
Speaker 1: anybody else is doing other than the Chinese.

843
00:49:29,899 --> 00:49:29,989
Speaker 2: Yeah,

844
00:49:30,139 --> 00:49:32,658
Speaker 2: no, that's, that's one thing that if you, if you

845
00:49:32,659 --> 00:49:33,138
Speaker 2: go to.

846
00:49:34,179 --> 00:49:38,290
Speaker 2: Pretty much any um Africa or other emerging market, you,

847
00:49:38,370 --> 00:49:40,770
Speaker 2: you see that it's, it's not just, you know, Chinese

848
00:49:40,770 --> 00:49:43,770
Speaker 2: stuff isn't just cheaper, they, uh, a lot of Chinese

849
00:49:43,770 --> 00:49:47,250
Speaker 2: companies are putting a lot of effort into um into

850
00:49:47,250 --> 00:49:50,929
Speaker 2: carving out a space in, in those markets and, and

851
00:49:50,929 --> 00:49:57,050
Speaker 2: they're actually good at, at uh um um localizing and

852
00:49:57,050 --> 00:50:00,290
Speaker 2: uh and and and uh going to markets that uh.

853
00:50:00,620 --> 00:50:05,040
Speaker 2: That Western companies have uh neglected or, or put too

854
00:50:05,040 --> 00:50:05,899
Speaker 2: little effort into.

855
00:50:06,820 --> 00:50:08,899
Speaker 1: Larry, earlier I told you that I want to come

856
00:50:08,899 --> 00:50:11,449
Speaker 1: to the issue of nuclear, so maybe that is the time.

857
00:50:11,699 --> 00:50:14,189
Speaker 1: So we've talked a lot about wind and solar, we've

858
00:50:14,189 --> 00:50:16,540
Speaker 1: talked a lot about a battery. Uh, in the US

859
00:50:16,540 --> 00:50:18,979
Speaker 1: it seems like nuclear is back in vogue. Not really

860
00:50:18,979 --> 00:50:21,500
Speaker 1: sure where the Europeans stand. I'm not really sure where

861
00:50:21,500 --> 00:50:23,979
Speaker 1: the Chinese stand. So help us understand that part of

862
00:50:23,979 --> 00:50:24,459
Speaker 1: the story.

863
00:50:25,320 --> 00:50:28,350
Speaker 2: Uh, I think in China's case it's quite clear, um,

864
00:50:28,449 --> 00:50:31,479
Speaker 2: there's been 3 years in a row of 10 new

865
00:50:31,760 --> 00:50:36,290
Speaker 2: reactor projects being permitted, um, so it's very much a

866
00:50:36,290 --> 00:50:39,529
Speaker 2: part of the mix in China. Of course, if you

867
00:50:39,530 --> 00:50:43,899
Speaker 2: compare um 100, 10 gigawatts per year of uh.

868
00:50:44,270 --> 00:50:48,629
Speaker 2: Of nuclear to 250 gigawats of solar, it's still solar

869
00:50:48,629 --> 00:50:51,549
Speaker 2: is the bigger one by far, but it's, it's very

870
00:50:51,550 --> 00:50:53,429
Speaker 2: clearly a part of the mix and uh I think

871
00:50:53,429 --> 00:50:56,620
Speaker 2: for um for China, the fact that uh

872
00:50:57,300 --> 00:50:58,110
Speaker 2: That uh

873
00:50:58,800 --> 00:51:02,029
Speaker 2: The clean electricity boom stands on, on three legs, so

874
00:51:02,030 --> 00:51:05,270
Speaker 2: you have solar, wind, nuclear uh is, is most definitely

875
00:51:05,270 --> 00:51:09,389
Speaker 2: a good thing. China has strong advantages in um in

876
00:51:09,389 --> 00:51:14,419
Speaker 2: uh nuclear. They're good at mobilizing finance, permitting and so on, uh,

877
00:51:14,429 --> 00:51:17,790
Speaker 2: mega projects and, and, and their nuclear industry has a

878
00:51:17,790 --> 00:51:22,969
Speaker 2: volume that they can uh deliver um uh uh projects

879
00:51:23,330 --> 00:51:26,500
Speaker 2: um at a at a predictable.

880
00:51:26,969 --> 00:51:31,419
Speaker 2: Um, time scale and uh price. The, the case for,

881
00:51:31,629 --> 00:51:33,948
Speaker 2: for most other countries is that the nuclear industry is

882
00:51:33,949 --> 00:51:39,069
Speaker 2: not there, um, so you, uh, if, if you want to, um, get,

883
00:51:39,179 --> 00:51:42,540
Speaker 2: get nuclear projects moving, you have to get to.

884
00:51:43,590 --> 00:51:48,959
Speaker 2: Um, to, um, uh, over the initial bump and, and get, uh,

885
00:51:48,969 --> 00:51:53,770
Speaker 2: get from doing pilot projects, uh, one-off projects to, to

886
00:51:53,770 --> 00:51:57,209
Speaker 2: having a pipeline, um, and, and having all the human

887
00:51:57,209 --> 00:52:00,589
Speaker 2: resources and so on. Uh, Europe is, is very divided,

888
00:52:00,649 --> 00:52:05,040
Speaker 2: so you've got countries like Germany that are, uh, where, um,

889
00:52:05,050 --> 00:52:09,610
Speaker 2: a lot of the population is, is, uh, vehemently anti-nuclear to,

890
00:52:09,729 --> 00:52:11,379
Speaker 2: to countries that are very keen.

891
00:52:11,870 --> 00:52:18,428
Speaker 2: Um, uh, uh, a lot of, uh, uh, Central European countries, um, have, um,

892
00:52:18,439 --> 00:52:23,750
Speaker 2: active nuclear ambitions, um, uh, in Finland we just had, uh,

893
00:52:24,850 --> 00:52:29,070
Speaker 2: Um, a reactor, um, uh, completed and, and now have

894
00:52:29,070 --> 00:52:31,270
Speaker 2: a very high share of, of, uh, nuclear as well.

895
00:52:31,550 --> 00:52:34,629
Speaker 2: Sweden is having a debate about whether they should replace

896
00:52:34,629 --> 00:52:38,139
Speaker 2: some of the um aging reactors and so on, but, uh,

897
00:52:38,149 --> 00:52:41,149
Speaker 2: but yeah, for, for countries that don't have that, uh.

898
00:52:42,080 --> 00:52:46,000
Speaker 2: That well oiled uh industry that can deliver it uh

899
00:52:46,000 --> 00:52:49,870
Speaker 2: making the economic case, um, is, is a lot harder,

900
00:52:50,239 --> 00:52:52,799
Speaker 2: but it's uh uh so, so yeah, what I, what

901
00:52:52,800 --> 00:52:57,320
Speaker 2: I tell everyone is, is, uh, um, it's if it's

902
00:52:57,320 --> 00:52:58,919
Speaker 2: nice work if you can get it and you just

903
00:52:58,919 --> 00:53:04,120
Speaker 2: have to be uh realistic about um uh the costs, uh, um, and,

904
00:53:04,159 --> 00:53:09,280
Speaker 2: and the, the hurdles to getting the first few, uh, reactors.

905
00:53:09,550 --> 00:53:12,580
Speaker 2: Um, off the ground. The other thing is that when

906
00:53:12,580 --> 00:53:15,699
Speaker 2: we do start to get to like think about how

907
00:53:15,699 --> 00:53:20,609
Speaker 2: the power system is gonna work um at a near 100%

908
00:53:20,860 --> 00:53:26,080
Speaker 2: uh clean electricity, there is a lot of value, um, in,

909
00:53:26,340 --> 00:53:29,649
Speaker 2: in having nuclear as a part of the mix, especially

910
00:53:29,780 --> 00:53:31,888
Speaker 2: um for countries that have uh

911
00:53:32,709 --> 00:53:37,610
Speaker 2: Uh, have, uh, weak solar in the winter and, uh, and,

912
00:53:37,689 --> 00:53:41,929
Speaker 2: and have uh high electricity demand, um, in the winter, um,

913
00:53:41,969 --> 00:53:46,569
Speaker 2: especially Northern Europe for other countries um that uh that

914
00:53:46,570 --> 00:53:50,909
Speaker 2: have around the year, um, sun and, and, uh, you

915
00:53:50,909 --> 00:53:54,370
Speaker 2: just need uh batteries to make it 24/7, it's a

916
00:53:54,370 --> 00:53:57,370
Speaker 2: lot harder to make uh uh the economic case.

917
00:53:58,360 --> 00:54:01,529
Speaker 1: Laurie, I just recently read a very critical article on

918
00:54:01,530 --> 00:54:04,919
Speaker 1: China's new plans to expand its hydro capacity, you know,

919
00:54:05,000 --> 00:54:07,550
Speaker 1: the one big thing they want to build in Tibet. Um,

920
00:54:07,760 --> 00:54:09,239
Speaker 1: what's your sense on Hydra?

921
00:54:10,810 --> 00:54:13,889
Speaker 2: Um, but China.

922
00:54:14,750 --> 00:54:16,629
Speaker 2: No matter what you do, China is not going to

923
00:54:16,629 --> 00:54:20,270
Speaker 2: get a massive amount of more electricity. Well, it's, it's massive,

924
00:54:20,280 --> 00:54:23,340
Speaker 2: of course, you know, the, the latest uh um um

925
00:54:23,469 --> 00:54:26,149
Speaker 2: dam project is is absolutely massive, it's one of the

926
00:54:26,149 --> 00:54:29,350
Speaker 2: biggest things ever built, but or plans to be, but

927
00:54:29,350 --> 00:54:32,069
Speaker 2: uh uh but still in terms of the scale of

928
00:54:32,070 --> 00:54:36,109
Speaker 2: China's power system, there's just not a whole lot more

929
00:54:36,110 --> 00:54:39,908
Speaker 2: that you can build so, um, so if I was

930
00:54:39,909 --> 00:54:41,949
Speaker 2: making those choices, I would probably say that uh.

931
00:54:42,459 --> 00:54:47,020
Speaker 2: Uh, that the, um, ecological and uh and geopolitical costs

932
00:54:47,020 --> 00:54:52,549
Speaker 2: out outweigh the risks, um, there and, and, uh, um,

933
00:54:52,580 --> 00:54:56,779
Speaker 2: because China has built so much, um, hydro already, most

934
00:54:56,780 --> 00:54:59,790
Speaker 2: of the hydro construction now is in, in pumped hydro

935
00:55:00,219 --> 00:55:04,179
Speaker 2: uh storage, but there's uh a few remaining places where

936
00:55:04,179 --> 00:55:08,100
Speaker 2: you can build uh big dams are being, uh, pursued

937
00:55:08,100 --> 00:55:08,219
Speaker 2: as

938
00:55:08,219 --> 00:55:09,169
Speaker 2: well. Right.

939
00:55:09,580 --> 00:55:12,219
Speaker 1: Laurie, I'm cognizant of time. I know that you have

940
00:55:12,219 --> 00:55:15,419
Speaker 1: other duties to uh tend to, uh, just want to

941
00:55:15,419 --> 00:55:18,810
Speaker 1: finish our discussion in the context of emerging markets, maybe

942
00:55:18,810 --> 00:55:21,379
Speaker 1: with a focus on India, on your sense. You've already

943
00:55:21,379 --> 00:55:24,459
Speaker 1: talked about how China is helping a large part of

944
00:55:24,459 --> 00:55:27,620
Speaker 1: Middle East and Africa and South Asia, uh, sort of,

945
00:55:27,629 --> 00:55:30,020
Speaker 1: you know, push through green transition. Let's talk a little

946
00:55:30,020 --> 00:55:32,219
Speaker 1: bit of India and just an overall comment on where

947
00:55:32,219 --> 00:55:32,779
Speaker 1: we're going.

948
00:55:34,889 --> 00:55:41,169
Speaker 2: So India's, India was the first and most uh systematic in,

949
00:55:41,250 --> 00:55:44,530
Speaker 2: in trying to build their own solar industry um that

950
00:55:44,530 --> 00:55:49,129
Speaker 2: has uh um slowed down deployment to be sure because

951
00:55:49,129 --> 00:55:52,729
Speaker 2: we've had tariffs on, on Chinese supply and uh the

952
00:55:52,729 --> 00:55:57,090
Speaker 2: domestic supply hasn't been online yet. It's starting to come

953
00:55:57,090 --> 00:55:59,300
Speaker 2: online now and uh.

954
00:56:00,020 --> 00:56:04,129
Speaker 2: Um, that should, uh, improve the picture. Um, I hope there's,

955
00:56:04,239 --> 00:56:08,799
Speaker 2: there's a lot more, uh, uh, more investment on that side, uh,

956
00:56:08,919 --> 00:56:11,899
Speaker 2: it's good for the world and, and, um, good for

957
00:56:12,120 --> 00:56:18,669
Speaker 2: at least in terms of, uh, India being comfortable, um, on, on, uh, um,

958
00:56:18,719 --> 00:56:22,110
Speaker 2: in going big on solar, it's, it's good to have more, um,

959
00:56:22,120 --> 00:56:26,040
Speaker 2: domestic um supply, but so, so that's uh.

960
00:56:26,909 --> 00:56:31,149
Speaker 2: That should be accelerating. Um, one thing though that has

961
00:56:31,149 --> 00:56:32,419
Speaker 2: been happening in

962
00:56:33,570 --> 00:56:36,090
Speaker 2: Uh, India is, is the, the country's.

963
00:56:36,889 --> 00:56:40,310
Speaker 2: Economic growth pattern has been the polar policy of China, so,

964
00:56:40,409 --> 00:56:44,090
Speaker 2: so there's been a lot of development in the non-energy

965
00:56:44,090 --> 00:56:49,489
Speaker 2: intensive side and uh now there's, there's been more of

966
00:56:49,489 --> 00:56:53,810
Speaker 2: a construction boom, so quite a bit of uh energy

967
00:56:53,810 --> 00:56:58,189
Speaker 2: demand from, from steel and uh cement and so on, um,

968
00:56:58,199 --> 00:57:03,050
Speaker 2: and emissions so and uh now we do see a

969
00:57:03,050 --> 00:57:04,370
Speaker 2: risk of, of that.

970
00:57:05,139 --> 00:57:06,610
Speaker 2: Um, being

971
00:57:07,770 --> 00:57:11,830
Speaker 2: Overdone in terms of uh the expectations of, of uh

972
00:57:11,830 --> 00:57:18,090
Speaker 2: the construction boom continuing um leading to building much more

973
00:57:18,090 --> 00:57:22,810
Speaker 2: coal-based uh steel capacity, for example, than is needed and

974
00:57:22,810 --> 00:57:26,530
Speaker 2: at a time when um it's in India it's certainly

975
00:57:26,530 --> 00:57:29,530
Speaker 2: still hard, hard to make the case for uh for

976
00:57:29,530 --> 00:57:32,530
Speaker 2: non-coal based steel making but uh things are going to

977
00:57:32,530 --> 00:57:35,120
Speaker 2: look very different um in a decade.

978
00:57:35,590 --> 00:57:39,600
Speaker 2: Um, but so, so we kind of lock in risks

979
00:57:39,600 --> 00:57:44,159
Speaker 2: there and also um with coal, um, what happened a

980
00:57:44,159 --> 00:57:48,800
Speaker 2: decade ago is, is this the private sector pulled back, um, from,

981
00:57:48,979 --> 00:57:53,919
Speaker 2: from coal-fired power, but, uh, the state sector more because

982
00:57:53,919 --> 00:57:58,199
Speaker 2: of politics and in this institutional locking um keeps uh

983
00:57:58,199 --> 00:58:02,879
Speaker 2: pushing that um again at a time when uh when

984
00:58:02,879 --> 00:58:05,310
Speaker 2: the economy case for that is extremely hard.

985
00:58:05,750 --> 00:58:10,070
Speaker 2: Uh, to make, so, so certainly a its back, but uh, yeah, I,

986
00:58:10,189 --> 00:58:14,179
Speaker 2: I'm quite certain that in, in, uh, 5 years that

987
00:58:14,590 --> 00:58:20,520
Speaker 2: um the uh economic race between um um goal and

988
00:58:20,520 --> 00:58:23,510
Speaker 2: uh clean energy in, in India will be, you know,

989
00:58:23,550 --> 00:58:26,429
Speaker 2: resolved in everyone's minds and, and those investments that are

990
00:58:26,429 --> 00:58:30,310
Speaker 2: being uh forced through the pipeline right now are going to,

991
00:58:30,429 --> 00:58:31,149
Speaker 2: to look wet.

992
00:58:31,879 --> 00:58:35,669
Speaker 2: Quite misguided um on the coal, coal power side and

993
00:58:35,669 --> 00:58:38,760
Speaker 2: that would unfortunately be the second time that uh that

994
00:58:38,760 --> 00:58:41,479
Speaker 2: India's banking system, for example, takes a big hit from

995
00:58:41,479 --> 00:58:45,439
Speaker 2: overinvestment in, in coal-fired power, so still hoping that some

996
00:58:45,439 --> 00:58:46,520
Speaker 2: of that can be avoided.

997
00:58:47,600 --> 00:58:49,739
Speaker 1: A very good point. I, I really hope that I

998
00:58:49,739 --> 00:58:51,699
Speaker 1: know that it's naive to expect India and China to

999
00:58:51,699 --> 00:58:54,020
Speaker 1: get along on everything, but on this area, I really

1000
00:58:54,020 --> 00:58:56,540
Speaker 1: hope and pray that India and China find common ground,

1001
00:58:56,620 --> 00:58:59,060
Speaker 1: the Chinese technology as well as some degree of consultation.

1002
00:58:59,370 --> 00:59:02,830
Speaker 1: Because Larry, every particular mission in China sooner or later

1003
00:59:02,830 --> 00:59:05,590
Speaker 1: will end up to a large extent in India. So

1004
00:59:05,590 --> 00:59:08,310
Speaker 1: I think they should cooperate and work things out, and

1005
00:59:08,310 --> 00:59:11,520
Speaker 1: I think the Chinese tech can be very, very helpful

1006
00:59:11,520 --> 00:59:13,189
Speaker 1: to India and India sort of has to make up

1007
00:59:13,189 --> 00:59:16,219
Speaker 1: its mind about whether it wants it or not. Final point,

1008
00:59:16,590 --> 00:59:18,850
Speaker 1: overall EM, which always seems to be a bit of

1009
00:59:18,850 --> 00:59:22,939
Speaker 1: an underthought or developing world, what's what's happening there.

1010
00:59:24,260 --> 00:59:26,540
Speaker 2: Yeah, that's that that is a big question and, and

1011
00:59:26,540 --> 00:59:27,070
Speaker 2: I do.

1012
00:59:28,189 --> 00:59:33,320
Speaker 2: Um, especially, um, Indonesia, I think it's, it's massively, um,

1013
00:59:33,610 --> 00:59:39,360
Speaker 2: underreported in, in, uh, um, every, uh, domain, uh, but

1014
00:59:39,360 --> 00:59:44,409
Speaker 2: I unfort well uh it's the, the signals are confusing, um, from,

1015
00:59:44,530 --> 00:59:47,679
Speaker 2: from the new um leadership, so, so there was just

1016
00:59:47,679 --> 00:59:51,830
Speaker 2: uh an update of um Indonesia's uh power uh power

1017
00:59:51,830 --> 00:59:52,610
Speaker 2: development plan.

1018
00:59:53,030 --> 00:59:57,229
Speaker 2: Um, which is very busy as usual, um, uh, very

1019
00:59:57,229 --> 01:00:05,030
Speaker 2: low targets, almost absolutely low for clean energy, especially, um, solar, um, and, uh,

1020
01:00:05,280 --> 01:00:08,959
Speaker 2: at the same time, uh, very big bold statements from

1021
01:00:08,959 --> 01:00:12,159
Speaker 2: President Pra Prabowo. So he's been saying he wants to

1022
01:00:12,159 --> 01:00:15,679
Speaker 2: close down fossil fossil power plants. He wants Indonesia to

1023
01:00:15,679 --> 01:00:19,590
Speaker 2: be 100% um clean in terms of electricity, but at

1024
01:00:19,590 --> 01:00:21,719
Speaker 2: the same time pushing a lot of uh oil and

1025
01:00:21,719 --> 01:00:22,830
Speaker 2: gas projects, so.

1026
01:00:23,239 --> 01:00:26,719
Speaker 2: Um, so, um, sounds like an all of the above, uh,

1027
01:00:27,169 --> 01:00:32,010
Speaker 2: approach from Prabowo, but unfortunately the institutional setting under him

1028
01:00:32,010 --> 01:00:36,239
Speaker 2: just very heavily favors, um, uh, coal and, and, uh,

1029
01:00:36,250 --> 01:00:39,889
Speaker 2: fossil fuels, um, so if he wants to see even

1030
01:00:39,889 --> 01:00:42,010
Speaker 2: all of the above happen, he needs to put a

1031
01:00:42,010 --> 01:00:44,429
Speaker 2: lot more, um, emphasis on.

1032
01:00:45,360 --> 01:00:48,639
Speaker 2: On making the clean side happen and and holding especially the,

1033
01:00:48,669 --> 01:00:54,229
Speaker 2: the um state uh uh power utility, uh PLN um accountable,

1034
01:00:54,520 --> 01:00:57,620
Speaker 2: maybe knowing that there's a lot of EMs in the world, I'll,

1035
01:00:57,679 --> 01:01:00,120
Speaker 2: I'll just say that Brazil seems to be at the

1036
01:01:00,120 --> 01:01:04,080
Speaker 2: other end, so, so they've really emerged as a leader, um,

1037
01:01:04,239 --> 01:01:07,709
Speaker 2: they're um uh one of those, so, so they, they had,

1038
01:01:07,879 --> 01:01:11,320
Speaker 2: of course, have a very hydro heavy uh power mix.

1039
01:01:11,659 --> 01:01:15,379
Speaker 2: But, but, uh, another place where you just can't build

1040
01:01:15,379 --> 01:01:19,100
Speaker 2: a whole lot more, um, hydro and they have to

1041
01:01:19,100 --> 01:01:23,550
Speaker 2: successfully transition to, to building uh wind solar to cover

1042
01:01:23,550 --> 01:01:26,340
Speaker 2: much of the, or even all of the growth in

1043
01:01:26,340 --> 01:01:30,189
Speaker 2: electricity demand. So that's very positive. Also, also very strong

1044
01:01:30,189 --> 01:01:32,899
Speaker 2: growth starting to happen in um EVs so.

1045
01:01:33,260 --> 01:01:36,260
Speaker 2: Um, so all in all, on the energy side, uh,

1046
01:01:36,310 --> 01:01:40,219
Speaker 2: very positive trends of course in the broader climate picture

1047
01:01:40,219 --> 01:01:44,830
Speaker 2: and air pollution picture, the, the, um, um, forest sector

1048
01:01:44,830 --> 01:01:48,379
Speaker 2: is a whole, um, whole different story, but I think that's,

1049
01:01:48,669 --> 01:01:50,110
Speaker 2: that's for another conversation.

1050
01:01:50,600 --> 01:01:52,909
Speaker 1: Yeah, unfortunately, the forest sector in Indonesia is also a

1051
01:01:52,909 --> 01:01:56,310
Speaker 1: big source of my concern, but Laurie, I cannot thank

1052
01:01:56,310 --> 01:01:58,909
Speaker 1: you enough for this insights. I need to have you

1053
01:01:58,909 --> 01:02:00,350
Speaker 1: back because there are a bunch of other areas that

1054
01:02:00,350 --> 01:02:02,409
Speaker 1: I want to talk about. We didn't have the time today,

1055
01:02:02,469 --> 01:02:03,780
Speaker 1: but again, thank you so much.

1056
01:02:04,399 --> 01:02:06,360
Speaker 2: Thank you so much. I think it was a great conversation.

1057
01:02:06,669 --> 01:02:09,590
Speaker 1: Yes, and thanks to our listeners as well. Kobe Time

1058
01:02:09,590 --> 01:02:12,229
Speaker 1: was produced by Ken Delbridge, Violet Lee and Daisy Sharma

1059
01:02:12,229 --> 01:02:16,469
Speaker 1: produced additional assistance. All 158 episodes of the podcast are

1060
01:02:16,469 --> 01:02:20,139
Speaker 1: available on YouTube and all major podcast platforms. This is

1061
01:02:20,139 --> 01:02:23,389
Speaker 1: for information only, does not constitute any trade advice. For

1062
01:02:23,389 --> 01:02:26,649
Speaker 1: our research publication, you can find them all in DBS

1063
01:02:26,649 --> 01:02:28,629
Speaker 1: Research Library. Take care, everybody.