Speaker 1: With Laurent Segal end from London and Gerard read from Berlin.
Speaker 2: This is redefining energy today.
Speaker 1: On redefining energy, Laurent, we've got to talk about I
Speaker 1: suppose the future, this energy transition, that's what we're going
Speaker 1: to do.
Speaker 3: We have a great guest who has been forecasting all
Speaker 3: those trends, all the investments, and that's Albert Chung, Deputy
Speaker 3: CEO of b ne EF. But first of all, from
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Speaker 1: Back to the and great pleasure that happened.
Speaker 4: I'm actually surprised we haven't had them on before because listen,
Speaker 4: we've been following their work for I don't even know
Speaker 4: how long, it's fifteen years, at least.
Speaker 3: Twenty years in my case, even before there was the
Speaker 3: b So when Michael Levi created an EF, they've been
Speaker 3: providing the data which is the backbone of all the investment.
Speaker 3: Now we're talking about two trillion of investment. I cannot
Speaker 3: see an investment committee, a credit committee where in the
Speaker 3: documentation there is not a data from bn EF. They've
Speaker 3: been so helpful because they bring something that there's so
Speaker 3: much noise, and they're bring trust and that is so critical.
Speaker 3: We're so happy to all him on the show.
Speaker 1: Let's bring him on. Have a chart, Albert. It's great
Speaker 1: to have you on the show.
Speaker 5: Thanks for having me, Albert.
Speaker 3: First question, what is exactly b an EF Now, it's.
Speaker 5: Good that you say now, because I know you know
Speaker 5: us from a long time ago when we were New
Speaker 5: Energy five. But BNF now is a global research provider
Speaker 5: covering energy transition and commodity markets. So we have four
Speaker 5: hundred experts around the world really tracking what's happening in
Speaker 5: the energy transition globally. We cover the technologies that are
Speaker 5: driving the transition, the underlying economics and how the costs
Speaker 5: are changing, how the competitive landscape is changing, and also,
Speaker 5: obviously very importantly, the policy that's driving transition around the world, and.
Speaker 3: Of course at the difference of your peers like IA
Speaker 3: or I. Right now, you're not a political organization, so
Speaker 3: it's really a bottom up and not a bit of
Speaker 3: a top down totally.
Speaker 5: So we're fully independent, we own our own views, our
Speaker 5: own data, and we're really trying to provide an objective
Speaker 5: view of what's really going on and highlight the opportunities. Really,
Speaker 5: I think we've always come at the energy transition from
Speaker 5: the point of view of a kind of capitalistic view
Speaker 5: of highlighting the opportunities and the investment in the space,
Speaker 5: not from a kind of normative view of where we
Speaker 5: think the world should go or where it should be.
Speaker 1: Well, obviously this is I've been also following you for
Speaker 1: years as well, and what I really love is the
Speaker 1: fact that once a year you put out this annual
Speaker 1: report which gives really a great view in terms of
Speaker 1: what's going on from everything from renewable installations to evs,
Speaker 1: and you've just published this report. Maybe just talk a
Speaker 1: little bit about the highlights of that. What really you
Speaker 1: find the most interesting thing of last year.
Speaker 3: Now, in order to spoil the conversation, I also downloaded
Speaker 3: the same report, but for two twenty and I put
Speaker 3: them side by side, and I can tell you you've
Speaker 3: been right on a lot of things, most of the
Speaker 3: things I think you're the best podcaster here, but also
Speaker 3: looking back into twenty there's a lot of things you
Speaker 3: were a bit too optimistic about. And I'm going to
Speaker 3: summarize very simply. You're right on the electrons, you're wrong
Speaker 3: on the molecules.
Speaker 5: Okay. Interesting, So, Lauren, I have not gone back and
Speaker 5: compared to twenty twenty, so this is going to be
Speaker 5: a fascinating discussion. Maybe just to rewind. So what is
Speaker 5: the report we're talking about? As we record this BNF
Speaker 5: we just published our a New Energy Outlook for twenty
Speaker 5: twenty six. It's our annual flagship publication which contains scenarios
Speaker 5: for the future of energy, and we come at this
Speaker 5: really from an economic point of view. And we have
Speaker 5: a base case scenario called the economic transition scenario, where
Speaker 5: we assume that policymakers implement no further climate policy and
Speaker 5: they just deploy the technologies that are economically rational to
Speaker 5: deploy to meet energy demand in their countries over the
Speaker 5: next couple of decades. And we also have a climate
Speaker 5: scenario which is a high ambition, maximum effort climate scenario
Speaker 5: in line with the Paris Agreement. But that is also
Speaker 5: a cost optimization exercise, so we're not dictating solutions, We're
Speaker 5: asking the model to deliver a kind of least cost
Speaker 5: climate aligned scenario. You know, what's really interesting this year
Speaker 5: is to think about the energy security implications of all
Speaker 5: of that, because we are, of course living through an
Speaker 5: unprecedented energy crisis as we record this, you know, the
Speaker 5: straightuform mus are still closed and a lot of countries
Speaker 5: are grappling with implications of that. So this year one
Speaker 5: of the focuses was let's think about what these scenarios
Speaker 5: mean for energy security, because frankly, people right now are
Speaker 5: much more worried about energy security, energy affordability, and climate
Speaker 5: is probably a third priority and in terms of the
Speaker 5: hierarchy of needs, And what we find is that if
Speaker 5: policy makers just pursue an economic energy transition, no additional cost,
Speaker 5: no additional effort, they can significantly reduce their exposure to
Speaker 5: international oil and gas markets and therefore reduce their energy
Speaker 5: security risk. So, for example, markets like the EU and
Speaker 5: the UK can roughly have their energy import exposure as
Speaker 5: a share of GDP between now and twenty forty, just
Speaker 5: by doing the economic things that make sense for them
Speaker 5: in terms of energy transition. You know, in Asia there
Speaker 5: are economies that are three four five six percent of
Speaker 5: their GDP is energy import equivalent and they can see that,
Speaker 5: you know, similar benefits as well. So that's kind of
Speaker 5: one of the new things for this year, Laura. I'd
Speaker 5: love to know what you thought has changed from our
Speaker 5: outlook of the last five years and love to get
Speaker 5: into that as well.
Speaker 3: You forgot the PT scenario put in Trump, which history
Speaker 3: will certainly remember that they were extremely good against their
Speaker 3: will for a naturally transition. Now looking back at two
Speaker 3: twenty versus now, you said sola becomes the cheapest power
Speaker 3: source in his story, solar plus win dominate new capacity editions.
Speaker 3: You said that six years ago, so bing, so you
Speaker 3: were spot on. You also predicted the fall of the
Speaker 3: price of batteries. It was spot on. You predicted the
Speaker 3: rise of EV's. You said IV would reach twenty percent
Speaker 3: of global passenger sales by two or thirty who already
Speaker 3: reached this one? But I think you were a bit
Speaker 3: too optimistic on the adoption of EV's in the US.
Speaker 3: And then when you get it totally wrong. Hydrogel you
Speaker 3: said green anddrogen is going to scale rapidly, you said
Speaker 3: ccs will grow. So overall very good in technology coscurve
Speaker 3: if you adoption sol A we need going to make
Speaker 3: supply chain and the weakness which is is more human
Speaker 3: than technology, you know, policy friction, geopolitical shocks, hydrogen and permittee.
Speaker 5: So that's it.
Speaker 3: So overall it's pretty good.
Speaker 5: I would say I think we probably underbake solar back then,
Speaker 5: and again I haven't actually you've looked at our old
Speaker 5: older reports, But there was this huge acceleration of SOLO
Speaker 5: from about twenty twenty two to twenty twenty five. The
Speaker 5: last three years, you know, installations went from I think
Speaker 5: there were about one hundred and fifty gigawats in twenty
Speaker 5: twenty and then about six hundred fifty gigawats last year,
Speaker 5: so like, you know, more than a quadrupling over five years.
Speaker 5: Let's say. You know that we've always been very bullish
Speaker 5: about the cost reductions in solar and you know, accelerating employment.
Speaker 5: But I don't think even we had that right. Went
Speaker 5: even faster than us, and obviously faster than some other
Speaker 5: agencies as well, so I think that was a surprise.
Speaker 5: I do know that our electricity demand forecasts have risen
Speaker 5: as well over the years, and part of that as
Speaker 5: data centers, of course, which is now much bigger topic.
Speaker 5: And you're totally right that our views on hydrogen and
Speaker 5: ccs have have been revised. Now today we only include
Speaker 5: any significant amount hydrogen ccs in our climate scenario. The
Speaker 5: base case really doesn't have very much at all. But
Speaker 5: even in the climate scenario, we have less hydrogen less
Speaker 5: ccs than we used to, and that's simply because we
Speaker 5: have got much better visibility on the true costs of
Speaker 5: those technologies compared to five years ago. We now know
Speaker 5: that they cost more than what everyone hoped that they
Speaker 5: would over these years, and so they've taken a bit
Speaker 5: more of a backseat, and we have more power, more electrification,
Speaker 5: frankly a bit more nuclear as well to power that electrification.
Speaker 5: If you want to really do the high ambition climate scenario,
Speaker 5: you've got to have nuclear, not nuclear, than ccs or
Speaker 5: something else.
Speaker 1: I was going to just differentiate between molecules and electrons.
Speaker 1: For me, molecules is not about technology anymore. It's about geopolitics,
Speaker 1: and that's really difficult to predict well. Electrons. A lot
Speaker 1: of it's now about technology. It's in other words, you're
Speaker 1: talking about solar, wind, batteries AI. They are all technologies,
Speaker 1: and I'm not surprised that you've done a good job there.
Speaker 1: I think the one on solar is quite interesting because
Speaker 1: what's really clear is just an exponential technology. We've never
Speaker 1: seen the likes of it in the generation space or
Speaker 1: in the energy space. But you've done a much better
Speaker 1: job than nearly everybody else when it comes to solar
Speaker 1: and batteries.
Speaker 5: That's really interesting. I mean, on the point about molecules, though,
Speaker 5: one thing that we face is, you know, the doing
Speaker 5: these long term outlets many months. It takes our team
Speaker 5: about nine months to produce this report and it comes
Speaker 5: out in May, and now just by chant, over recent years,
Speaker 5: multiple times that've been shocked to the energy system that
Speaker 5: happened in February or March, and so to accommodate those
Speaker 5: changes is actually really difficult, as you know, because that
Speaker 5: you know, the molecule's story changes very quickly when you
Speaker 5: have an energy shock, whereas the technology story doesn't change
Speaker 5: that much. So we have to adjust, we have to
Speaker 5: accommodate we have to really think about the energy security
Speaker 5: implications of these different scenarios. And yet if you look
Speaker 5: through all that noise, some things actually don't change that much. So,
Speaker 5: for example, oil peak in our base case scenario doesn't
Speaker 5: move around that much from one year to the next.
Speaker 5: It's always between about twenty twenty nine and twenty thirty two.
Speaker 5: And it's obviously quite a flat peak, as you know,
Speaker 5: it's not a sudden kind of drop off, but it's
Speaker 5: a bit of a plateau. So does that plateau begin
Speaker 5: in twenty nine or twenty thirty doesn't move that much,
Speaker 5: and this year is the same, so you know, we're
Speaker 5: not moving the peak around very much. It's twenty twenty
Speaker 5: nine this year, and then that drops down towards twenty fifty.
Speaker 5: Gas also, I mean gas is probably the most interesting
Speaker 5: think and most controversial of all the molecules, because for oil,
Speaker 5: you can see that the plateau coming. For coal, you
Speaker 5: can see it's going to drop, and maybe it's extended
Speaker 5: a little bit with the current energy crisis, but it's
Speaker 5: going to drop. With gas. In our two scenarios, you
Speaker 5: have this k shape where if you just do the economics,
Speaker 5: just follow the economics of a rising global energy demand,
Speaker 5: growing power system. Even with renewables dominating that power system,
Speaker 5: you still see gas growing because of the overall rising
Speaker 5: energy demand, whereas in the climate scenario, the that zero scenario,
Speaker 5: obviously gas demand tails off is cut very quickly towards
Speaker 5: twenty fifty. So that's where you have real controversy. I
Speaker 5: think that's why the discussions about what is the role
Speaker 5: of gas and the energy transition are so real and
Speaker 5: so vital, because it really depends what is your view
Speaker 5: of the energy transition. Is it more kind of economic
Speaker 5: driven or are we really serious about accelerating towards climate
Speaker 5: goals and frankly towards energy security goals as well.
Speaker 3: Yeah, if you push more energy security, yeah, of course
Speaker 3: you can accept higher prices. Now, if you look at
Speaker 3: your up feeling these tanks, three years after Ukraine, they've
Speaker 3: become very complacent. You thought that after Ukraine they would
Speaker 3: still think energy security. They thought for two years and
Speaker 3: the third year they say, okay, what the heck, there
Speaker 3: is surplus coming from the US Katar. Everything's going fine.
Speaker 3: Cut us the doubling capacity, So they totally forgot. So
Speaker 3: I'm always afraid that just people are very short memory
Speaker 3: there is to go back to their old ways the
Speaker 3: moment they see the prices going down, or they can
Speaker 3: anticipate prices going down. So maybe it's the second shot.
Speaker 3: Maybe they're going to learn this time now. Guess now
Speaker 3: you can do all this you want at three five dollars,
Speaker 3: even six seven dollars, membt. Yes there is a future
Speaker 3: for gas, but if people need to import it at
Speaker 3: fifteen or twenty, forget about it. That's that's pretty much it.
Speaker 3: Do you see Differently?
Speaker 1: Ailron think that the second crisis that we're living through
Speaker 1: now is going to change the world forever. And I'm
Speaker 1: going to like in that the second oil crisis. Nothing
Speaker 1: really happened after the first oil crisis. The second oil
Speaker 1: crisis came along and suddenly France built out nucleer like
Speaker 1: nobody's ever bailted. That was Norway drilled, drilled, Baby drilled,
Speaker 1: and so the whole all of other countries, and they
Speaker 1: reacted really quickly. And I think we're in that moment.
Speaker 1: And let's be clear, as we record here May June
Speaker 1: of twenty twenty six, this strait of Hormo's crisis could
Speaker 1: get worse, and you have real shortages coming into September
Speaker 1: and then you know, we're living in a really crazy world.
Speaker 5: I agree with that. Two things we have to watch
Speaker 5: really closely well three. The first thing you already mentioned
Speaker 5: is how long does this crisis go on? For two
Speaker 5: other things. One is we see demand destruction happening right
Speaker 5: now around the world, particularly in Asia. The question is
Speaker 5: how much of that demand destruction is temporary and it's
Speaker 5: you know, things like people are working from home more
Speaker 5: and the crisis ends, they'll get back in their cars,
Speaker 5: or temporary rationing of things. And how much of that
Speaker 5: demand destruction is structural, you know, people switching to buying evs,
Speaker 5: people buying induction stoves. And I think the longer the
Speaker 5: crisis goes on, the more you have the structural demand destruction,
Speaker 5: which is durable in the long term and really does
Speaker 5: lead to a change. The second thing to watch, and
Speaker 5: I think this is still emerging, is what really is
Speaker 5: the policy response going to be, particularly in the Asian
Speaker 5: markets that are most impacted by the current crisis, Because
Speaker 5: right now, most of the policy response is just trying
Speaker 5: to cushion the impact on consumers tax breaks and subsidies
Speaker 5: and things like that. Do we really see a policy
Speaker 5: response when the crisis is over that is durable, that
Speaker 5: says we are now going to insulate ourselves from these
Speaker 5: rolling fossil fuel crisis which do happen every four or
Speaker 5: five years by accelerating electrification and renewables. There are glimmers
Speaker 5: of that, but I don't yet feel that that's really solid.
Speaker 5: I think we're still waiting to see countries really grasp
Speaker 5: that opportunity.
Speaker 3: Look, if you have gas underneath your feet and you
Speaker 3: get shape, you use it in the power sector. But
Speaker 3: I cannot see gas in any future scenario in the
Speaker 3: power sector. If you need to import it, then maybe
Speaker 3: you're going to say yeah, But the Japanese are doing yeah.
Speaker 3: Maybe that's the exception. But for the rest, gas is
Speaker 3: out of any important country in the litricity sector.
Speaker 1: John with Laurent Toltali in this absolutely yeah.
Speaker 5: And I think when you look at those markets in
Speaker 5: Asia and most of them, the economic competition is between
Speaker 5: coal and renewables. Like for the future of those power systems,
Speaker 5: that's the contest. It's coal and renewables, and of course
Speaker 5: our viewers that renewables will dominate in the long term.
Speaker 5: The economics of coal won't be very good. Actually, globally
Speaker 5: we get to kind of two thirds renewables by twenty fifty,
Speaker 5: so I kind of agree with you. There are going
Speaker 5: to be markets where gas continues to play roll. Obviously
Speaker 5: the US is a major example of that, but for
Speaker 5: most of these Asian markets that are facing the jury
Speaker 5: crisis right now, gas isn't really a big vector in
Speaker 5: the power sector.
Speaker 3: Let's move to electrification in general. EVS. You forecasted EV
Speaker 3: pretty well. Are you still as bullish for the rest
Speaker 3: of the decade and after? We can go into the
Speaker 3: past center heating and other things, But let's talk about
Speaker 3: transportation first.
Speaker 5: So on EV's about a quarter of the world's car
Speaker 5: sales last year were electrified, either pure electric or plug
Speaker 5: in hybrid. I think it's worth just pausing for a
Speaker 5: moment to consider the achievement that that represents given where
Speaker 5: we were five ten years ago, that is an incredible achievement.
Speaker 5: China's far ahead above fifty percent already. Europe has at
Speaker 5: about the global average about a quarter and leading other markets.
Speaker 5: So if you think about where the US is, Japan, India,
Speaker 5: other markets are far behind. We absolutely see that continue
Speaker 5: to rise and there's no real slow down in the
Speaker 5: EV story that we see aside from in the US.
Speaker 5: So we have reduced our forecast for USV adoption, but
Speaker 5: on a global level, the numbers keep going up. Now,
Speaker 5: the growth isn't what it used to be. If you
Speaker 5: look at twenty twenty eight, twenty twenty one, you're talking
Speaker 5: one hundred percent growth in the EV market. You're on
Speaker 5: year sixty percent growth and that keeps dropping. So it
Speaker 5: goes to forty twenty ten, and it's still above ten
Speaker 5: percent growth today. But that's kind of what maturity looks
Speaker 5: like in the market. So you have linear growth. Now.
Speaker 5: That's the bit that we need to grapple with is
Speaker 5: there's a narrative out there that says everything's always exponential.
Speaker 5: Everything in the energy transition is always exponential. You apply
Speaker 5: a kago and it just keeps going and going and going. Actually,
Speaker 5: the lived experience is not that. And with EV's we're
Speaker 5: going to go through a linear period of growth that's
Speaker 5: deep part of the S curve. It is an S curve,
Speaker 5: and then eventually it tails off. So we feel optimistic
Speaker 5: about EV's, but the growth rate simply isn't going to
Speaker 5: be what it was. I will also take this opportunity
Speaker 5: to plug. We have our annual ev outlook coming out
Speaker 5: in a few weeks time, so please keep a lookout
Speaker 5: for that, and that's going to have all the updated
Speaker 5: numbers for.
Speaker 2: You, Alberta. On a transport thing, I'd be very interested
Speaker 2: to hear your thoughts moving beyond the automobile, in other words,
Speaker 2: moving into trucking and other forms of transport, receiving trains,
Speaker 2: actually moving to batteries. What's your view going forward on
Speaker 2: the bachelorization.
Speaker 1: Of other parts of transport.
Speaker 5: We have a team that looks at commercial transport, both
Speaker 5: road and also shipping and aviation. Just taking vans and
Speaker 5: trucks for a minute. You know, the economics for electrifying
Speaker 5: vans for urban and shorthol duty cycles are already really good,
Speaker 5: and we see the beginnings of really good adoption in
Speaker 5: different markets around the world. And the issue there is
Speaker 5: going to be the same as in passenger where you know,
Speaker 5: do you have the infrastructure and is it usable and
Speaker 5: all of that. For heavy duty and long haul it's
Speaker 5: a slightly different story. We have line of sight to
Speaker 5: a point where electrification will be TCO positive for heavy duty.
Speaker 5: Like it's close, it's getting there, but not the case everywhere,
Speaker 5: and the infrastructure is going to be a challenge. So
Speaker 5: kind of long haul you need the highways and so on,
Speaker 5: and there's good work being done to set up corridors
Speaker 5: and different markets for that. One of the big issues though,
Speaker 5: is that between the OEMs and the fleet operators and
Speaker 5: the shippers and you know, the financiers of these assets,
Speaker 5: because they are financed assets, is there's still a perception
Speaker 5: of certain risks that has to be managed. So one
Speaker 5: is utilization risk if you're thinking about the overall kind
Speaker 5: of charging and truck ecosystem. One is battery residual value risk,
Speaker 5: which still needs some work. There's still fear of after
Speaker 5: a certain number of years the value of the battery
Speaker 5: in the truck is is diminished and therefore it's difficult
Speaker 5: to finance. So I think what's needed there is to
Speaker 5: build experience, to build up the data set that shows
Speaker 5: two investors and to the financiers that you can finance
Speaker 5: these assets. The batteries last. I think they do. We
Speaker 5: just need to have the proof points in the data
Speaker 5: and the real life operations to make that case. Well.
Speaker 3: On this one, I think you're too perish the trucking industry.
Speaker 3: It's going to be absolutely phenomenal because once you have
Speaker 3: the test lessony that's out and a lot of things
Speaker 3: happening in China, and the price of diesel for me,
Speaker 3: it's going to go much faster. Look, I'm going to
Speaker 3: give you an example. One of my company portfolio is
Speaker 3: using batteries. Okay, so we get called from the EV
Speaker 3: chargers or are not making a lot of money, but
Speaker 3: they need more power for their IV charging station, and
Speaker 3: of course they can't get grit upgrade for months or something,
Speaker 3: so they would like to rent batteries to give more hoomph.
Speaker 3: For whatever reason, my batteries were too small. So I
Speaker 3: called one of the guys Big Motorway and he said, oh, yeah, yeah,
Speaker 3: we bought a sun Grow Power Titan three points zero.
Speaker 3: And then I called another guy, say yeah, I call
Speaker 3: my colleague, which is my competitor, and we bought the
Speaker 3: sun Growth. You know, they didn't even make any tender analysis.
Speaker 3: The guy say, oh you bought this battery. Does it work? Okay, boomer,
Speaker 3: there's a silent revolution. And then in your report you're
Speaker 3: going to see in a few months or years, oh
Speaker 3: my god, every EV chargers have put some row batteries
Speaker 3: or you know, competitors. There are other good products out there.
Speaker 3: It's going to be like Pakistan all of a sudden,
Speaker 3: nobody talks about Pakistan and now everybody to, oh my god,
Speaker 3: they put ten gig of solar and nobody saw that coming,
Speaker 3: I tell you, And that's totally anecdotal, absolutely no numbers.
Speaker 3: But what I hear when I talk to clients is
Speaker 3: that ev charging is going gangbuster right now and trucks
Speaker 3: are just behind.
Speaker 5: I think that's right. And by the way, in China
Speaker 5: where this is really taking off, as you referenced, you
Speaker 5: know the HTV is there that are being electrified. Some
Speaker 5: of them are actually doing battery, which you know in Europe.
Speaker 5: You know, all three of us live in Europe. We
Speaker 5: have memories of when that was a thing and it
Speaker 5: went away, so it's really interesting to see China now
Speaker 5: doing that for heavy duty.
Speaker 4: Yeah, Albert, I think I just I'm going to back
Speaker 4: up Lauran and what he's just said there, and I
Speaker 4: think the exponential change and batteries is the real real
Speaker 4: driver of change going forward.
Speaker 1: And it's going to stay expanential.
Speaker 5: I'm happy to agree with you on that in my
Speaker 5: role heading up BNF, obviously travel around the world a
Speaker 5: lot and spend a lot of time with clients in
Speaker 5: different parts of the world, and quite often when I
Speaker 5: ask our clients, hey, what's the number one thing that
Speaker 5: you think BNF should be focusing on right now, they
Speaker 5: will say batteries and energy storage, that's the number one thing.
Speaker 5: And I think it's partly because the costs just keep
Speaker 5: coming down, and it's in this phase where that as
Speaker 5: the costs come down, more markets and more applications are
Speaker 5: becoming possible, and so really the sky's the limit. Last
Speaker 5: year talking about stationary energy storage for a second, last
Speaker 5: year was the first time that more than one hundred
Speaker 5: gigawatts of energy storage was deployed globally twenty twenty five,
Speaker 5: an amazing milestone. Solar was there, I don't know, sometime
Speaker 5: in the second half of the last decade. So let's
Speaker 5: say it's a seven or eight years behind. Solar that's
Speaker 5: now going to grow massively over the next few years.
Speaker 5: I reckon it's going to double probably the side of
Speaker 5: the end of the decade, maybe twenty thirty. That's say,
Speaker 5: it's going to double again, and the cost will keep
Speaker 5: coming down and there's no shortage right now of energy
Speaker 5: storage equipment if you want to go to market and
Speaker 5: get it. There are some volatility in the metals prices
Speaker 5: this year, so we've seen lithium, cobalt, nickel up a
Speaker 5: bit this year, but it's not at the moment having
Speaker 5: a really meaningful impact, and I think long term the
Speaker 5: cost will keep coming down. So I'm happy to agree
Speaker 5: with you both on the potential energy storage.
Speaker 3: Albert, you put the scenarios on gigawat or turn offs,
Speaker 3: you two or, but do you put numbers behind them.
Speaker 5: We obviously have the gigawats and the extra duals and
Speaker 5: all of that, but from our perspective, one of the
Speaker 5: big important units is dollars. We do track all of
Speaker 5: the investment and the costs under these scenarios, both the
Speaker 5: base case and the Netzerio climate scenario. So just to
Speaker 5: level set where we are today, last year we tracked
Speaker 5: two point three trillion dollars on investment and spending into
Speaker 5: the deployment of clean energy technologies globally two point three
Speaker 5: trillion in our base case scenario. That figure rises by
Speaker 5: about a third over the next five years, so average
Speaker 5: is about three trillion over the next five years, which
Speaker 5: is a third higher than what we saw last year. Essentially,
Speaker 5: what we're saying is growth continues. Okay, it's not as
Speaker 5: exponential as it was the last few years, but the
Speaker 5: growth of the energy transition is going to be resilient.
Speaker 5: It's going to keep going. Now, if you compare that
Speaker 5: to the net zero scenario, the climate scenario, which is
Speaker 5: our high ambition trajectory, it's not up a third, it's
Speaker 5: actually double. So it's four point seven trillion every year
Speaker 5: for the next five years to get on track for
Speaker 5: that more ambitious scenario. A doubling sounds quite scary, and
Speaker 5: when I tell people we need to double investment to
Speaker 5: get on track for net zero, oftentimes they'll say, okay,
Speaker 5: but that's not going to happen, is it. But that
Speaker 5: gap is actually closing. So each year that we do this,
Speaker 5: the gap has gotten a bit smaller. It used to
Speaker 5: be three x, than it was two point five x.
Speaker 5: Now it's two x. On some level, we start to
Speaker 5: track more into the right direction. That's just investment. There's
Speaker 5: also a question of overall costs, right, So overall cost
Speaker 5: is investment plus op X and fuel costs and all
Speaker 5: the rest of it. If you compare those two scenarios
Speaker 5: on a total cost basis out to twenty fifty, what
Speaker 5: we find is that the net zero trajectory is only
Speaker 5: fifteen percent more cost than the base case of economic
Speaker 5: transition scenario, which is again as a least cost scenario.
Speaker 5: So I find that very interesting because you know, I'm
Speaker 5: not going to sit here and say we're on track
Speaker 5: for the Paris Agreement. But I think one of the
Speaker 5: questions that we're grappling with as society is how much
Speaker 5: do we want to spend to increase our climate resilience
Speaker 5: and also our energy security. Is it one percent more,
Speaker 5: is it two percent more? Is it fifteen percent more?
Speaker 5: For us? You know, for the three of us here,
Speaker 5: we may have a number in mind that we're willing
Speaker 5: to spend, but for society as a whole, that number
Speaker 5: may be different. And I think that's the debate that
Speaker 5: really needs to be had openly, frankly, in every country,
Speaker 5: in every society around the world.
Speaker 2: Albert, first and foremost, thank you very much for coming
Speaker 2: on the show. We will put the link to.
Speaker 1: That report aside the podcast, and again, thank you very much.
Speaker 5: My pleasure, Thanks so much for having me in a
Speaker 5: really great conversation. Thank you, Lauren.
Speaker 1: I suppose the big question which Albert leaves with me
Speaker 1: is the future of the move towards zero, because the
Speaker 1: point he's making is we have to pay for this,
Speaker 1: and are people willing to do it?
Speaker 3: Well, look, are people willing to pay Puttin now? People
Speaker 3: are willing to pay the Uranians. I'd rather pay and
Speaker 3: have peace than pay months after months after months. So
Speaker 3: what is report demonstrates is that the top down government
Speaker 3: mandates they don't truly work. What's doing the work for
Speaker 3: them are two things, technology improvement and energy security. So
Speaker 3: that's the work being done, and the result is going
Speaker 3: to be the same.
Speaker 1: I think sorry that the second point you're saying there
Speaker 1: it's really about resilience, is that what it's all about
Speaker 1: is making sure that we have energy twenty four to seven.
Speaker 1: That's first and foremost the most important priority, and that
Speaker 1: it's as low cost as possible. And the next thing
Speaker 1: in and around resilience, which I would say is we're
Speaker 1: going to have to invest in climate resilience. And climate
Speaker 1: resilience can be simple to be flood protection, it can
Speaker 1: be storm protection. But this is also a must going forward.
Speaker 1: So I don't know where I'm coming from. Is an
Speaker 1: ide hear your tosses. I don't think it's about investing
Speaker 1: in carbon sequestration anymore, to take CO two out of
Speaker 1: the air or whatever it is. It's really about making
Speaker 1: sure that the energy system that we have is resilient.
Speaker 1: That's what the focus is going to be going forward now.
Speaker 3: If people want to burn billionaires money into cab and
Speaker 3: capture good for them. What I do see is, compared
Speaker 3: to six years ago, the number of hydrogen projects that
Speaker 3: are currently being operational under construction, it's only easy rower
Speaker 3: point eight percent of what was announced six years ago
Speaker 3: because of all those top down lobbies, heavy policies. And
Speaker 3: we talk about the people. You have balcony solar, I
Speaker 3: can tell you there's a new thing coming called balcony battery.
Speaker 3: You can buy it in the supermarket. People are just
Speaker 3: gonna buy a battery which is the size of a
Speaker 3: small fridge, and they're gonna put it in their socket
Speaker 3: and the utities won't even see anything about it. That
Speaker 3: is the innovation I love, simple, scaleable down to the people.
Speaker 3: Molecule needs big systems and electrons. The people can take
Speaker 3: charge themselves of getting more resilient at better cost and
Speaker 3: it's good for the climate.
Speaker 1: And actually I like that vision as well, or on
Speaker 1: I think we share that, which is it is about
Speaker 1: technology and all these decentralized exponential technologies enable you to
Speaker 1: have more resilience and at the same time that good
Speaker 1: for environment. With show us absolutely so, it's.
Speaker 3: A very Kumbai episode. We love each other, we love
Speaker 3: bn EF, we love Albert. Everything's great, No run today.
Speaker 5: What's wrang? All right? My friend?
Speaker 2: Good seeing yours ever, I'll see you next week.
Speaker 3: Okay, looking forward to it.
Speaker 2: Thank you for listening to Redefining Energy.
Speaker 4: Don't forget to rate the show and subscribe on Apple, Podcast, Spotify,
Speaker 4: or the platform of your choice.