Cleaning Up: Leadership in an Age of Climate Change

Have We Lost The Climate Argument? Ep190: Lord Adair Turner

Episode Notes

Are we losing the argument that climate change requires action and investment? Can we balance the need for affordable energy with the costs of decarbonizing hard-to-abate sectors like steel, cement and aviation? And how can we counter the spread of misinformation and populist narratives that undermine support for clean energy?

This week on Cleaning Up, Michael Liebreich welcomes back Lord Adair Turner for a deep dive into the state of the energy transition at the end of 2024. They discuss the remarkable progress in technologies like solar, batteries and electrification, but also the political and economic challenges of driving rapid decarbonisation. Turner shares his optimism that we have the technologies to reach net zero by 2070-2080, but also his concern that the pace of change may not be fast enough to avoid significant warming. They explore issues like the role of nuclear power, the need for grid investment, and the complexities of climate finance and international cooperation.

This episode grapples with the tension between technological progress and political realities - and how to navigate that divide to accelerate the transition to a sustainable, zero-carbon future as we move into the new year.

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Cleaning Up is supported by the Leadership Circle, and its founding members: Actis, Alcazar Energy, EcoPragma Capital, EDP of Portugal, Eurelectric, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit https://www.cleaningup.live.

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Episode Transcription

Michael Liebreich

I mean, have we just lost the argument? Are we really in trouble here? Have we lost the argument that climate change is something we actually have to deal with and spend some money on?

Adair Turner

I am optimistic, and I am becoming even more optimistic over time, that we have a set of unstoppable technologies, primarily electric, which by 2070 or 2080, are going to take this world to something pretty close to a zero-carbon economy with a huge set of side benefits as well. I think this is unstoppable, but we are going to need so much electricity in the future. I think we haven't quite yet woken up to how much electricity we will need once we electrify the whole of the economy, and we are beginning to realize there are even bigger demands than we previously thought, with AI, which it turns out, is immensely energy intensive.

Hello. I'm Michael Leibreich, and this is Cleaning Up. Welcome to the last episode of Season 13. This brings to a close a most extraordinary year in the history of the net-zero transition, and it's become a tradition to finish the year with a conversation with Adair Turner, Lord Turner of Ecchinswell. I first met Adair nearly 30 years ago when I joined McKinsey. He's had an extraordinary career after McKinsey as a financial regulator and now chairs the energy transition commission. Please welcome Adair Turner to Cleaning Up.

Adair, thank you so much for joining us here today again. On Cleaning Up.

Well, it's great to be here again.

This is your third appearance now, you're joining a very elite group. In fact, there's only one other, Jonathan Maxwell ,who's been on three times so far. And what we've done in 2022 and 2023 is invited you to help us close the year. So for the audience, if they want to hear what you've said before, they can go back to Episode 110 which we called Lord of the Net-Zero Transition, and Episode 148, you know, forgive the pun, but Second Coming of the Lord of the Net-Zero Transition. So this is your third coming. What we should do, for those who've not seen the earlier episodes, could you just give us the thumbnail bio, the short version, and also what is the energy transition commission?

Well, the thumbnail bio is that I've been involved over the years in things to do with finance. I was the UK's chief financial regulator at one time, but I've also been very involved in issues to do with climate change. I was the first chair of the UK's Climate Change Committee, which, at least some of the listeners will know, is the UK official body, created by a government, created by Parliament, in charge of mapping the UK's path to net zero by 2050. But in 2015, I also became chair of this thing called the Energy Transitions Commission, which sounds as if it was appointed by somebody as a commission, but actually is a freely arising voluntary coalition, initially of about 15-20 companies and institutions, now about 55. It's a voluntary organization, and fundamentally, what it does is techno-economic analysis of how are we going to get to net-zero in all the different sectors of the economy, and what are the policies and private sector investments that Take us in that direction.

And just to complete the background, you and I met at McKinsey.

Well, if we want to go back that far, I was originally at McKinsey. I became a director of McKinsey. I built McKinsey's practice in Eastern Europe and Russia in the early 1990s. I was then the director general of the Confederation of British Industry. And then I did a variety of different things on the boards of several banks and companies. And I've also, if I'm allowed to advertise, I've written three books fundamentally on the nature of economics and financial issues, not really on the details of climate change, though, in my first book Just Capital, there was one chapter called Green Capitalism, which was arguing — and this was back in 2002 — that it was absolutely possible to get to a net-zero economy, and that the costs of it would not be significant in terms of their impact on living standards. So that was way back in 2001, I was certainly engaged on that issue.

We will put a link into the show notes. Who knows, you may see a surge of sales through Amazon of that book, particularly because the area of the intersection between finance and climate is very much a theme that we've pursued here on Cleaning Up. We had Dr Ma Jun...

I know Jun very well indeed. Yes, he's a good friend, exactly. He's a member of the Monetary Policy Committee of the Bank of China. And then the G20 Sherpa in charge of developing the green agenda at the Shanghai G20 and now, of course, has a center devoted to green finance.

Exactly, so we'll put a link in for those who are financially minded, they can dive in there. Now, one thing... I called it the Energy Transition Commission. That's not correct. It's the Energy Transitions — plural — Commission. Can you just explain?

I'm not sure I attach all that much importance to that. Look, I was asked to be the chair. It had already existed and it had got this name, 'Transitions'. I guess it's the idea that there are multiple different things that have to happen to get us to a net-zero economy. But it really doesn't matter whether you have overall a transition or a number of different transitions. Actually, you know, I'm quite tempted by the singular, if I was to change it now, because I do think there's an absolutely central theme of these energy transitions, which is electrification. It's not solely electrification. There are other things we have to do. We have some sectors of the economy which we can't electrify. We also have to deal with the food and agricultural sector, and that's clearly not an electrification story, but in the energy, building industry and transport sectors of the economy, although it's not everything, I think clean electrification is sort of 70 or 80% of the story, and it's very, very important for us to keep on realizing that that is the case, even if, in addition, we need some sustainable bioenergy, we need some carbon capture and storage, we need some hydrogen, etc. So if you wanted one transition, it is the transition towards a deeply electrified economy.

So you will be rebranding as the electrify almost everything commission?

I've been in the electrify almost everything path, as have you, for several years. We keep on looking, at the Energy Transitions Commission, at how high we think we can take electricity as a percent of final energy demand. And we have scenarios that see it going to 65%. The highest scenario that the International Energy Agency puts out is 55%. though I'm pleased to say that every time they produce a new report, that figure tends to go up. So I think they're heading towards us. The other thing to say, when you're trying to work out how important electricity is, remember this, that electricity is so much more efficient. When we say electricity will produce 60 or 65% of final energy demand, it will be delivering a bigger percentage of energy services. Because when you have a heat pump, you put in a kilowatt hour of electricity, and you get out three or four kilowatt hours of heat. When you have to produce those three or four kilowatt hours of heat from a gas boiler, you've got to use three or four kilowatt hours of electricity. So in a sense, it's important to remember that even if we had an environment where only 5% of our end energy services were coming from fossil fuels or bio they would probably be producing 20% of final energy demand simply because they're so inefficient.

So you're actually singing one of my favorite songs, it's called the primary energy fallacy, and it's about how all of this is so difficult because of how much coal and how much gas and how much oil you have to sort of shovel in the front end. And one of the things that I would love to see, is for every report, every scenario, to start with energy services. This is how energy services — which correlate with human happiness and and all sorts of good things — how they grow. They don't shrink in this process, they grow.

They do indeed. They do indeed.

But you have to meet them then, largely electrically, otherwise, the bad stuff grows too.

No, that's absolutely right. And it's a tricky thing to do, to always talk in terms of energy services. So one wants to talk in terms of how many road transport kilometers we deliver, and in order to deliver those in an efficient fashion, by far the best way is with electric vehicles. Almost no major authoritative organization produces those figures. There's some attempts from the IEA to put in those figures. The difficulty is that the units are different for every sector of the economy. In some cases it's passenger kilometers. In others, it's heat delivered into the house, etc. And so we tend to end up with these figures for final energy demand, energy when we use it, primary energy supply, where the energy comes from. But they are imperfect measures of what we're actually delivering in terms of benefit to the end consumer.

One of the best people on this is actually Amory Lovins. He came on the show a few years ago. Because he talks about what we really want. What we really, really want is cold beer and warm houses. And, of course, the proxy, then this primary energy demand that gets used is very, very far removed from that. Let's do the following, because it's been a year since you were on the show, and lots and lots of water has flowed under the bridge. And there'll be some things where there's been no surprises. We've seen exactly what we expected to see happen. The trends have continued. And then in some areas, we've had quite a lot happening. And what I want to do is, if we could start by going through a few of the sectors, so the techno-economic, let's keep it anchored in sectors and things that have happened. And then we can come back to the big picture, the mood music. You know, we're going to have to talk about Donald Trump, and we're going to have to talk about Baku, the COP meeting we just had, and we're going to have to talk about all sorts of other issues that cut across finance, that cut across all the sectors. But let's start with sectors. What's the most astonishing thing that you've seen in the last year, since you were last on the show?

I don't know whether it's astonishing, but it's certainly an endless intensification of a very favorable trend, which is a certain group of technologies. Above all, I would say, solar PV and batteries, which are coming down in price and improving in performance faster than anyone would have dreamed possible 10 years ago. It's getting to the stage where I expect to be surprised, so I'm not surprised, because it keeps on going on. But you've got to remember solar PV's latest prices are about nine cents a watt. This is over 99.9% lower than it was 50 years ago, 90% reduction even in the last 10 years. But actually, you know, a 50% reduction even in the last two years. And I think it's going to go on and on. I think we will see the yields on classic silicon PV going up. But beyond that, we'll see perovskites, a hugely important development. And batteries... the pace at which the battery costs are coming down, the unexpected innovation about five years ago of saying we don't need all batteries to have nickel and cobalt in them. We can do them with just LFP — Lithium Ferrous Phosphate — which unleashed a cost reduction. And there is another cost reduction to come from that, which is sodium batteries. And I think most people, even if they're not experts in mineral supply, will immediately understand that, whereas lithium might be quite an expensive thing to produce, sodium we can simply get out of sodium chloride, and there's huge amounts of sodium chloride. Salt in the world is a very cheap element. You put those two together, and it's interesting. On the summer solstice, The Economist magazine put on its front page just a picture of the sun, and it said, 'we're heading into a solar age.' And I do actually think that we will find that solar plus batteries will be the killer app of the energy transition in the world where the vast majority of people live, which is the equatorial and tropical climes, where the sun shines almost every day. I think we haven't yet quite woken up to how absolutely transformational and beneficial for human welfare that trend is going to be.

So there's a few episodes that I need to shout out to, because, again, these are also favorite songs of mine, and favorite songs of the show. So we did an episode with Jenny Chase on solar. Jenny Chase is the lead analyst of solar at Bloomberg New Energy Finance, the team that I created, and we've been working together for the best part of 20 years. And she talked about these, I think it was 11 cents per watt, because the episode was a couple of weeks ago, it keeps on changing. But the amazing thing was, I remember when the US Department of Energy set a target of $1 per watt, and that was a stretch target that people said couldn't possibly be achieved. And of course, we're now at nine cents.

And the same, if I can Michael, in batteries. In 2010, the US Department of Energy, seeing battery costs at about $1,000 per kilowatt hour storable, said, ;'here's a stretch target that by 2020 we get it to $200 per kilowatt hour storable.' By then we were at about $150 and now we're going below $100 and still falling. So basically, we have over exceeded what they thought was a real stretch target.

I think you misspoke. I think they wanted to get to $200 by 2030?

No, I thought it was by 2020.

Because, I remember all of the analysis...

Of course it depends what your what level they were talking about. Is it cell? Is it pack? Is it total management system? They may be naming it at the total battery management system, but total battery management systems are now available in containerized battery storage systems at sub $100 per kilowatt hour.

Sub $100 and so there was a lot of analysis that said, 'Ah, things will really take off when the battery, just the cell, reaches $100 per kilowatt hour, that is now sub $50.

Yeah, that is going sub $50, and could go to sub $25 with the sodium.

It's just not going to stop, exactly. It's just not going to stop. And so now you can talk about the $10 kilowatt/hour battery, and people don't regard you as completely, you know, sort of... That's not crazy talk. And I don't know where the end point is. The other episode I wanted to call out because it's very much on topic, is Azeem Azhar, whom you may have come across, may not. He writes this thing called Exponential View, and it's also a podcast. And he has spent 10 years thinking about what happens when these exponential technologies crash into each other, when they happen, number one. But number two, when they crash into each other and we talked about, for instance, in Pakistan, where the economy is growing, but grid electricity demand is dropping, and it's because there's 15 gigawatts, or some huge amount, of solar panels that have been imported from China.

I think what we're seeing in some parts of the world, and it's going on, is what I call the democratization of solar PV. A solar panel is becoming literally something you can pick at your local superstore, your DIY store, take home, and as long as you've got a friend who's a competent electrician, you can wire it together. It doesn't need to be a great, big, complicated business model. I think the other exciting thing with solar is that we are going to see an explosion of things beyond the utility scale panel. We're going to see flexible panels. We're going to see agri-PV. Really interesting development, the way of putting solar panels, say, two or three meters above an agricultural field. Interesting thing I saw the other day, a test in southern France of putting it above vines and actually producing much lower water use, a much better yield. Because actually, there's quite a lot of the world where wine is being produced in places which are getting too hot to produce the wine that they did in the past. So we are seeing the possibility of integrating solar with agriculture, integrating solar with homes, integrating it into the building. I think we are literally just at the start of an innovation wave on solar. So that's the good news. We might come to less wonderful bits of news later.

Let's keep going through some sectors. But on that, what's been fun on agri voltaics, integration of solar with growing crops is that when I first heard of it, I thought, well, this is tremendous, but it won't work for everything. Now you're getting to the point where somebody has produced really quite detailed analysis of which crops work. So we're getting some real nuance. And for me, one of the most interesting developments or stories of the year was that in Germany you can plug in solar, for instance, if you've got a balcony, balcony solar, and you're allowed to plug it in and just run your meter backwards, and nobody's allowed to stop you. And what's really interesting about that is your landlord is not allowed to stop you. If you're in rented accommodation, you can simply do that and lower your electricity bill, and you need no permits at all. And of course, meanwhile, in much of the world, by the way, the US solar on the roof still costs a huge amount because of all the permits and all the nonsense you have to go through. So learn from Germany, plug it in, done. That's where we're headed, and I think it is going to be absolutely transformational where we go with solar and with batteries. Now, you've done some work on wind. Wind has not had quite the same year, it was quite troubled when we spoke last time.

Wind over the last 10 or 15 years came down very significantly in price, and then from about 2021 to 23 it hit a bit of turbulence from which we have to pull out. Now, what went on there? First of all, the cost of capital went up. I mean, remember, up to 2020, up to the period of COVID, we were in this period of phenomenally low real interest rates across the world. Very, very important for large utility scale projects, large determinants of their cost. And those went up in 2022-23. The other thing which went up was we went through a period of rising steel prices and also supply chain constraints. If you're doing large offshore wind developments, there's only a certain supply out there, for instance, of ships large enough to take the big blades and the big turbines, all these things come together. And I think what we ended up realizing is that some of the bids that were put forward in 2019 and 20 were assuming that the cost reduction would continue going down, and the people who'd bid in said, 'oh, wow, now I'm not going to make money out of that.' We think that we will come out of this period of turbulence, and that we will be on a path where wind, and in particular offshore wind in the UK, is going to play a major role. What we also have, of course, and it's an important general theme. We have a very big divergence now between the cost of wind turbines in China and the costs in Europe. And a big challenge for Europe and the US is how we drive the cost down to the sort of costs that we're now seeing in China. Because overall, people talk about wind turbine costs have been going up for the last three years. Absolutely not in China, the costs have continued to come down.

If you say, well, it's the interest rates and it's the commodities... Those played out across solar as well, but didn't have the same impact. I think there was some self-inflicted wounds. So you had a whole load of product proliferation by the turbine producers. Then, of course, you had cracks in the gearbox and whatever. You had some technological problems and recalls and so on. But also the developers have become, frankly, complacent about bidding. They were always bidding low and then waiting for the cost to come down and get them out of trouble. And that just stopped. But that was self imposed, that was probably predictable, in my view.

I think there were self imposed problems. And for instance, there was this process of bidding in ever bigger and bigger turbines, turbines which hadn't yet been proven. But the major manufacturers promised that they could deliver a 15 megawatt, a 17 megawatt, but they were unproven technologies. I think the other thing here, and it's really important, is we've realized that the technologies which come down most and fastest in price are those where you can turn into a product, where you just churn out millions and millions of exactly the same unit, right, a solar PV, a panel. At the other end of the scale, wherever there is the need for bespoke on-site engineering, let's take carbon capture and storage, we don't get the same pattern of cost reduction. So one of the challenges on wind is, how close can we get it to that standardized product formula, which tends to bring the cost down in the same way that we've seen in batteries and in solar PV.

And, you know, in China, they're talking about now producing a 26 megawatt turbine. My own advice would be that people don't buy them just yet, for exactly this reason. So you've opened up the conversation about projects that are one offs. And that inevitably brings us to a conversation about nuclear. Anything that you've seen this year? I mean, there's enormous excitement about nuclear, partly because of the other big story this year, which is AI data centers. We will definitely have to talk about AI and data centers. But nuclear, anything that you've seen?

We have not, at the ETC, previously done a deep dive into nuclear. We are going to do it next year. We're doing it next year because we think it is important to really work out, can nuclear play a major role, and should it play a major role? It will always be, I think, ancillary to renewables. I'm pretty sure that by 2050, 60% or more of all our electricity in the world will come from renewables. But is there a significant role for nuclear as well? And the reasons for doing that are we may need it alongside renewables for the following reason: Overall, we're absolutely confident that renewables will, in most parts of the world, be the cheapest way to produce a kilowatt hour of electricity. We're also fairly confident that in most of the world, there is enough natural resource land for solar, places to put wind turbines to provide the vast majority of electricity from wind and solar but possibly not in all of the world. I mean, if you go to peninsular Malaysia, very low wind speeds. Bits of South Korea, very low wind speeds. Places like Bangladesh, population density so high that to get all of their electricity from solar PV, you'd have to cover about 10% of the land area in panels. Now maybe with agri PV, that becomes possible, but we are going to need so much electricity in the future. I think again, we haven't quite yet woken up to how much electricity we will need once we electrify the whole of the economy, and we're beginning to realize there are even bigger demands than we previously thought with AI, which it turns out is immensely energy intensive. It turns out that our human brains are fantastically effective at turning relatively small amounts of chemical energy into billions and billions of calculations per second. And when you try to do it in an artificial sense, you need hundreds or even thousands of times as much electricity.

Much more than that, if I can come in on that, because I've done the calculations for how much. So in AI they're talking about now, for the big models, the next generation, at least a gigawatt of training data centers. And some of them are talking about five gigawatts. Our brains operate on 20 watts.

20 watts. On 20 or 30 watts, we can do about 10 to the 18 calculations per second. I mean, the only counter argument to that, Michael is, of course, our brains do it for our brain. You know, these artificial intelligence things do it and a whole load of people can simultaneously access the answer. But the general point stands, and so we feel the need next year, really, to step back and say, how far is this electrification going to go? How much electricity are we going to need? How much is AI going to need? And can we do it all with renewable energy plus various storage devices, or should we do nuclear as well? And is it true that there are new technologies that could bring down the cost of nuclear, like small modular? I am completely, and we are completely, open minded about that. We want to look at it, and it goes back to the point I made earlier. Of course, what we know from brand new large scale, new-type nuclear, is that they overrun in cost and time. The proposition is, we'll standardize them. We'll produce lots of the same unit. We'll make them smaller, and then the costs will come down. We're completely open minded. I would be overjoyed if that's the case, and I would like it to be the case, so let's see if it stands up to deeper analysis.

So on that, I think we need to put resources into the next generation of nuclear. It's likely, in my view, to end up more expensive, and I think that we should do it anyway. So first of all, clearly, we should do life extensions of everything we've got.

I agree completely.

But the reason to try and build new, even if it's more expensive, you've raised the point that we just need so much, a pure volume argument. I think there's also a portfolio design or portfolio management argument. So exactly in the same way you don't put all your investments in one bucket, some of them perform less well, but you're diversified. And there's also certain roles. I think if you can match nuclear with demand responsive industry, then you've got a chance, because then when there is no wind, there is no sun, you can switch off your desalination or your chemicals plant or your ceramics or whatever it is you're doing. And then, of course, the electricity price at that point is enormously high because there's no wind and solar, and so therefore you might make enough money from your nuclear to make up for them. But what's very interesting is the divergence between what some of these tech companies think nuclear is going to cost and what I hate to say, but we all know it's really going to cost. They think they're going to get, you know, $60 per megawatt hour nuclear. They talk about nth of a kind and think, well, you'll build three or four, and then the fifth one will cost $60 per megawatt hour. And I've got news for them, it's probably going to be $120 or 150 or something like that.

The counter argument would be that, as best we can tell, CGN, you know, China General Nuclear, based in Shenzhen, is rolling out nuclear plants at maybe $60 or $70 per megawatt hour. You're doubting?

I'm shaking my head, for those who are listening on the podcast. The reason is, there are so many places that you can hide the costs.

You can of course, the crucial thing is the cost of capital, right? If you have a subsidized cost of capital that plays into it an awful lot.

Cost of capital, cost of land, cost of fuel, cost of defense, cost of reprocessing,

Whether you allow for the end of life, costs in the upfront cost.

Exactly.

Leaving that aside, broadly speaking, I agree with you. I think it will probably be more expensive than renewables, I think. And this is actually our biggest project at the moment, we are looking at how do you balance renewable-dominated electricity systems. So for instance, we are pulling together the last 30 years of UK and Northwest European weather data. What variation do you get in solar supply and, crucially, wind supply? What variation can you expect, month by month, but also, how extreme can that be in a year which has very low wind, comparing that with demand patterns, and how those demand patterns will be developed, as we, for instance, electrify residential heat. And we believe that you, broadly speaking, can balance this supply and demand with enough batteries, hydrogen storage, compressed air storage. I feel pretty good about having 20% of our electricity from nuclear, so that if there's a really out of the ordinary event, you've still got 20% of your electricity available. There's a hedge, there's an insurance policy. And there's a broad point of view that a diversity is good, right, in an electricity system, a diverse set of supplies, which can be diverse geographically, if you do long distance HVDC lines to bring together different geographical sources. So my suspicion is that it would make sense for many countries to have maybe 20% of their future generation coming from some category of nuclear. Even if, on average, over the year, they're paying somewhat more for that than the total system cost of their renewables.

I'm smiling because that figure of 20% nuclear is one that I assumed when I, you know, going all the way back to the early years of New Energy Finance, when people wanted to be very absolutist about renewables. And I said, 'Well, it'd be quite useful to have some (nuclear).' 'How much?' Well, I said, '20%.' And I've been sticking to that throughout.

Absolutism has not served us well. The close down of the German nuclear fleet before end of useful life, and the fact that Germany has therefore kept the coal plants going for longer, I have been in discussions in India and China with people saying, 'Why should we close down our coal, if German coal isn't going to close down till the mid 2030s?' And I think those who argued for that close down policy of the nuclear in Germany failed to realize that it wasn't just the impact of that on German emissions, the impact of that on the rest of the world. It's incredibly important that here in richer developed countries, we illustrate as soon as possible, first, that we can live without coal, and second we can almost live without gas. The power of that demonstration across the rest of the world is hugely important.

I couldn't agree more. So on the German nuclear fleet, the Christian Democrats, I believe, going into the upcoming election, one of the planks of their manifesto is going to be to bring back the last three plants online, as I understand. And I would be going further. I would be saying to the German people, not only is that needed from a climate perspective, it's needed from a resilience perspective. And if we don't do that, we will have none of these big AI data centers. And so it's needed to actually be competitive in the next great industry that we're facing. But also it's of relevance here in the UK, because those people who say, 'Oh, well, we should just scrap the Climate Change Act, huge mistake. We should step back from that, because we're only 1% of global emissions.' And the point you made, we have to model the behaviors and the systems. We're rich enough to actually drive ahead and show that, and then get the benefits of the innovation and the exports and so on. That absolutely clearly will come from that.

When we have these debates on global climate justice, which are often expressed in terms of how much money the rich developed world is going to give to the developing world, I actually think that is the least important bit of what the rich developed world does. I think driving the technologies is a far greater contribution. The early takeoff of solar PV was driven to a significant extent by the German willingness to subsidize solar PV when they were paying feed-in tariffs of 40 cents a kilowatt hour. If I were the Germans, I would be tempted to declare that that was part of their overseas development budget, because I think it was probably the most beneficial part of what they have done for the developing world. To help drive a technology which now means that the developing world can buy solar PV panels much cheaper than they would otherwise be able to. Here in the UK, we have a commitment to get to a zero-carbon electricity system by 2030. I don't think we'll quite get to absolute zero, but if we get close, in the early 2030s the ability to then say to countries across the world, 'Look, come and visit our network operating center. You can run a system with close to zero carbon electricity.' This is going to be a hugely powerful demonstration effect.

As long as we're not at the same time saying, and by the way, just don't look at the electricity price.

No, that's the crucial thing. We've got to get the electricity price down. And there are some very, very important issues about the structure of our power market design, which at the moment are meaning that people are paying an electricity price which is determined by the gas price. We've got to decouple electricity at the margin from the gas price.

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Have you done any work on price signals? The power of price signals? You've got these trends that push down the costs of renewables, but they don't end up being cheap for the consumer. And we had on the show a member of our leadership circle, Greg Jackson, who's pushing very hard. And the logic of it is incontrovertible, in my view, the zonal pricing, splitting the price would...

Absolutely, I thought you were going to say that. Greg and Octopus are also members of the ETC. Greg is a commissioner of the ETC, and comes to our meetings. And you will not be surprised to know that that is the argument they put forward. And I think there's a lot of case for it. Actually, next year, we are going to dive into the details of how consumer markets for electricity work, and what it is we need to do to unleash these price signals, both the locational and the zonal issue, where Greg is arguing that we have a lot of curtailed renewables, just wasting this cheap, this wonderful zero-at-the-margin-cost electricity which is produced in some parts of the country. The other thing, of course, which Greg and Octopus are drivers of, is time of day pricing, helping people to realize that it would be sensible if they just plugged in or used some software to charge their electric vehicle in the middle of the night, rather than all going home in the evening and plugging it in at 6:30, just when everybody else is doing that. I think again, this is an area where we are just at the start of a range of innovations, in this case, primarily in business models. And to a degree, software and data management rather than hardware will unleash a major efficiency improvement. And regulation, the regulation has to support it as well.

I did a lot of work on price signals at the time when the flavor of the month was feed-in tariffs, and the Germans were going around the world saying everybody should do feed-in tariffs. And that made me very nervous, because it was essentially state pricing. And so I was part of a group of people, you know, there was some thought leadership around 'We've got to get reverse auctions. We've got to get the price signal in.' And in a way, the curtailment problem that we've now got, it's actually a symptom of success, because we've been so successful at building renewables. But now they're cannibalizing each other, and we've got to deal with it. And I do think that the price signal, the zonal pricing, and the price signals and getting locational and time of day absolutely will unleash...

Yeah, it's going to be hugely important. I can't run ahead of our analysis next year, but I think it's highly likely that we'll be arguing that we need to do a whole load of reforms which unleash the potential. Because renewables are sufficiently cheap that we ought to be able to say that at least at some times of day, people can afford incredibly cheap electricity. Actually, I was just talking to somebody from Australia, where people are talking about ending up with a system where for two or three hours in the middle of the day, electricity for everybody would be free. You just say it's free. We just have so much surplus electricity. Please find ways to use it in the middle of the day, because we don't have other uses.

I was in Chile over the summer, and in all of their zones — they have a zonal pricing system — and in all of their zones, 3000 hours a year of free electricity. Now that market is very thin. There's not much liquidity because of course, if the electricity price is zero all day, every day, who's going to build more solar? So the solar that gets built gets built under contracts, but then the excess gets dumped.

Yes, it gets dumped. But if that means that people realize that and then put a battery at home and start shifting that towards the evening peak, that will be very good.

See I think it also helps to solve nimbyism, because I don't want a solar plant near me, but if I get free power for a few hours every day, then my attitude changes entirely. Let's just look at a couple of other things, because... The grid, you've done some work on accelerating the grid, and when I take a step back and these figures of we're going to go from 20% electricity in energy services to 60%, I actually think it has to be even higher than that. But haven't we just been asleep at the wheel? Because we've known those scenarios for certainly the 20 years I've been doing this, and yet investment in the grid has been almost exactly flat.

Well, of course, you have to remember, for the last 15 years, demand in the UK has also been flat. Indeed, it's actually come down slightly from about 330 terawatt hours to 300 terawatts. We've been in a period where, as a result of efficiency, better light bulbs, etc., we haven't been using more electricity, but we now know that we will. We will electrify bits of industrial heat, we will electrify residential heat, we will electrify road transport. So I think there's been signals. In order to get investment in the grid, and investment in the grid has to be long term, it has to occur five to 10 years before you get the increase in demand. It's very difficult to get public policy, people in charge of public policy, to respond to that. So we now need to take it very seriously. We believe that of all the investments required to build a zero carbon economy across the world, 70% are about a bigger clean power system. But of that: 40 of the 70 is generation, but 30 of the 70, so 30% of all the investment needed to build our zero-carbon global economy by 2050 or 2060, is grids. Both long distance transmission, but also, by the way, local distribution grids. Hugely important things about reinforcing our capacity in the grids. So we produced a report saying we've really got to get serious about this. Of course, there are various technologies that can make it better. You can repower existing lines. You can reduce the opposition to taking pylons higher and higher by using new cables that can get more power through the existing lines. But for instance, there are lots of things I think we should be going ahead with. I mean, National Grid in the UK, years ago said we shouldn't really be building these offshore wind farms one by one, and each having a line back to shore, each of which then needs a substation at the shore, each of which is subject to planning, opposition from nimbyism saying, I don't like this. And with a line going across the country back into the core grid, we need to do things like build an undersea seabed mesh in the North Sea, which only has to come back to shore in one or two really fat pipes, which then minimizes the visual disruption, the planning disruption. We need a more strategic vision on the development of grids in the UK. My God in the US it's needed. And the US grid development has been very slow. This is a hugely important issue.

What's very, particularly difficult about the grid is, as you say, it takes much longer to build grid than it does to build either generating capacity or whatever it is that uses the electricity, the application, vehicle charging. And so don't we fundamentally need to invest ahead, doesn't everybody?

We need to invest ahead of time.

Everybody

And the problem is that in the period of flat electricity demand, the whole focus of regulation was, how do you minimize cost? And you minimize cost by not letting the grid companies build anything till the proven demand is there. But that approach has to change for the future. We have to let people build the grids ahead of the demand which will fill those grids.

You've touched on the idea that we're going to be electrifying more industry. Just in the last year, what have you seen that's exciting about electrification in industry?

Well, increasingly, on industrial heat. When we're looking at this, at the moment, we're doing a piece of work called carbon molecules, which is okay, suppose we're right that 65% of final energy demand will be in the form of electricity used as electrons, directly. That would still leave 35% which is some category of molecule, be it hydrogen, a hydrogen derivative, such as ammonia, or some category of hydrocarbon. And the carbon molecules will have to come in a sustainable fashion. So we're doing a deep piece of work on how many molecules we will need, which categories and how you get them sustainable. As part of that we are re challenging how far can you take direct electrification? I think we're seeing that in issues of what you may call medium temperature industrial heat, 100 to 400 degrees, the sort of stuff which is used in the food processing industries, the brewing industries, textile industries, very significant opportunities there to apply the efficiency of heat pumps, which will drive electrification. But what is really interesting is, even if you're talking about 1,000 degree or 1,400 degree heat, a whole series of different electrical ways of doing it: plasma, arc systems, induction systems, which are technically possible. And it all depends on the relative price of electricity relative to a gas or a fossil fuel. And with the crucial point that can these industrial heat applications be flexible? Because if they're flexible, they don't need to buy electricity at the average price. They can buy it when it's cheap. We think that that is going to be a bigger area of opportunity than we previously thought, which may, by the way, push back the role of hydrogen. And I see you smiling as the great hydrogen skeptic. So we are continuing to

Realist.

Realist. I mean, we still think that there will be a significant role for hydrogen, where you are using it not just as a source of heat. I mean, for instance, as the reduction agent in an iron ore reduction, and as a storage device. And I think shipping fuels, we still think will come from methanol or ammonia. So we still believe a significant role for hydrogen. But the direction of change over the last three or four years, and the more we look at it, the more we head in this direction, we see more direct use of electrons and somewhat less use of hydrogen.

So we spoke last year about hydrogen, and you said that the space for hydrogen was being reduced. We talked quite a bit about trucking at that time, but you were still pretty optimistic about the volumes. You were still at 300 to 600 million tonnes. When we first spoke, you were at 500 to 800 and I was at 200 to 300. By last year, you were at 300 to 600 and I was at 150 to 200. Where are you now?

Well, I think we'd be closer to our 350. It was 350 to 600. We'd be closer to 350. We are looking at it again. There is the question of how are you going to decarbonize steel production? I think that probably will eventually head towards a hydrogen based reduction element. Unless, of course, you think that leaps all the way through to direct metal oxide electrolysis. If I had to guess where we'll be in 2070 or 2080, I think we will be electrolysing iron ore. But I think it is still off at that sort of timescale in terms of the technological readiness level, the TRL of those technologies. But we still see a major role in sustainable aviation fuel in shipping, fuels in steel production, less so simply, as a source of heat. Hardly at all, though we were there already in relation to road transport. Probably one of the biggest uses of it is just going to be as a storage system within the power system. But there it's internal to the power system, rather than an end application.

So on steel, what we've seen in the last year is a number of the players — ArcelorMittal, Thyssenkrupp — pulling back to natural gas DRI (direct reduced iron). And I think that, certainly for me, was a bit of an eye opener. Because I thought, well you go from coking coal to hydrogen, you get this big climate benefit, and therefore the cost per ton, the emissions cost per ton of doing that is sort of affordable. But if you've already gone to DRI with natural gas, then doing the last bit to hydrogen becomes vastly expensive.

Not necessarily. Remember that methane, or natural gas, is not a reduction agent. When you use natural gas in a DRI process, you are first of all splitting it into carbon monoxide, CO, and hydrogen, and it is the CO and the hydrogen that are actually acting as the reduction agent. So there is actually a transition pathway there, where you go that step, and then over time, you essentially just increase the proportion of the hydrogen relative to the CO, the carbon monoxide, and you end up with a pure route.

So I think there is a route. But what you could do is actually just use your natural gas, use your methane, emit the CO2, and then it may be cheaper to capture CO2 elsewhere. CDR, carbon dioxide removal might be cheaper than going that last step within the steel industry.

I think that may be true on sustainable aviation fuel. I don't think that will be true in the steel industry. I think we have to be open minded to are there some applications where, if DAC direct air capture and carbon capture and storage gets cheap enough, though, remember, at the moment, that's still up there at $300-600 or so per ton, so it isn't in the money at the moment. But if that got really cheap, if it got below $100 per ton, then we shouldn't exclude continuing to burn some unabated fossil fuel in one part of the economy and offsetting it elsewhere. The difficulty is you've got to be able to say that without that being open season for politicians who don't want to do anything, or businesses who don't want to do anything, to say, let me assume that that comes to the rescue in 30 years time, and I do nothing now. That's the balance in that debate that you've got to get right.

And we talked about that a lot last year, because it was coming out of COP28 in Dubai, and that was a big issue about how much abatement do you need to do versus how much capture can you do? I just want to finish off on hydrogen, because last year you did say that you still thought that we would get to $1.50 hydrogen by 2050, and you quoted Mukesh Ambani who had been promising $1 hydrogen by 2030. And you said, 'Well, it might be $1.50' and I said, 'I'll bet you it won't be.' And you were not sure whether you should take the bet. Where are you now? I mean, one of the things we've learned is that actually making hydrogen is a lot more expensive than we thought. The learning curve applies to the electrolyzer plates, the stack, but not to the whole system.

Well, if you go back to solar, it's a highly standardized plug and play system, right? You churn out the solar panels, you put them in a container, you take them to the other end of the world, you take them out, and you plug them in.

And the balance of the plant is an inverter.

And you've got an inverter, you've got a bit of stuff like that. But it's not fundamental. What we know in electrolysers is that they're quite complicated stuff. They've got heating equipment, cooling equipment. You got to manage heat, you've got to manage all sorts of things. Having said that, I am still hearing people in China who are very, very confident that they are going to drive the cost down to maybe $2 a ton, that sort of level. The other thing to remember, of course, is if your total electrolyzer system, even if it isn't what we used to think three years ago, you know, $200 per kilowatt, even if it's $500 a kilowatt, actually, it doesn't make all that much difference to the economics of a kilogram of hydrogen. They're fundamentally dependent on the cost of the electricity. That is the bigger driver. Obviously, if they're thousands of dollars per kilowatt, it's a problem, but once they get down to $400-500 or so... Look, we have revised up our forecasts for what we think the costs of hydrogen will be. Am I going to take a bet with you? Michael, I think I might take a bet that somewhere somebody will get down to $2 per kilogram by 2035, from the information I have.

I'll take that bet.

Well, let's work out later what the unit of this bet is, right?

And there's all sorts of reasons, because I've now done very deep dives into what is the cost structure of green hydrogen, and...

Well obviously the most complicated bit is the electrolyzer. I mean, we know what the cost of electricity is.

Well but when you say the electrolyzer, there's an electrolyser and a stack.

The totality, the stack, the system, the whole balance of system, yep.

And something like 30 or 40% of it is heavy engineering. It's compressors and heat exchangers. And there's a very good study, which we can link in the show notes, by TNO and they got confidential data from a number of people who are actually building in Europe. Hydrogen, green hydrogen operations, and the numbers are sort of six euros up to 15 euros.

They're very significant off what we thought.

And when you look at what makes them up, they're not about to drop by a factor of five anytime soon. So I'm pessimistic about hydrogen. And by the way, I would say....

Well, I'm going to China in two weeks time and talking to a lot of people in the hydrogen business there. So we'll see whether I come back more or less optimistic.

You need to ask them if their electrolyzers have now finally been proven to be reliable, and whether they can work on intermittent power. Because what we're also learning, there was a synthesis of studies that looked at how efficient it is to make hydrogen when you have to keep on load following. And the efficiency just falls off a cliff. So I'm not optimistic, but that's well known, that's not news to anybody. I think we've finished our tour of the horizon of sectors, and let's take a step back, because there's the mood music, right? And we just had, two episodes before this one, a conversation between me and James Cameron, who's the chair of our editorial council, and is a long time not just a supporter of the COP process, but a negotiator and so on. So Baku, good COP or bad COP?

I don't think it achieved much, frankly. COP26 in Glasgow did achieve some step forwards, particularly on coal. I think COP28 in a sense, surprisingly, made a step forward in getting a rhetorical commitment to move beyond transition away from fossil fuels. You may say, does that matter? But in a sense, it sets some tone music. And I think the commitment at COP28 in Dubai last year to the tripling of renewables, again was very important for concentrating people's mind on 'this is the way we're heading,' to realize the scale of what we're doing. I don't think we really got that out of COP 29 there was stuff on long-duration storage and that was useful. There was this supposed commitment on finance. And this was something which, in the last year, the Energy Transition Commission produced a report on what's called the New Collective Quantified Goal, the NCQG. And the point we made in that report was we've got to start talking about this in specific terms that make it clear what we're talking about. And in that respect, I'm afraid COP29 didn't do that at all. Here's the challenge. When people talk about climate finance, they are often talking about two — well you can say even four — but two broad categories of completely different things. One, how much investment has to occur in total in developing countries of all sizes, from upper middle income down to lower income. And the answer is, say, one and a half trillion dollars a year by 2030. And how are we going to do it? Where the answer will be mainly domestic savings, some international private financial flows, and a significant role for the multilateral development banks. But almost nothing of that has to do with grants paid out of taxation. It's about a mobilization of capital, the mechanisms by which we reduce the cost of capital, etc. At the other end of the scale, you have an issue of is the rich developed world going to provide grant finance to help, primarily, really poor countries, vulnerable island countries, low-income countries in Sub Saharan Africa, vulnerable countries, to help them deal with the consequences of climate change and the loss and damage. That's in the few hundreds of billions, not in the trillions. And there's really no point any longer in a statement on climate finance where you produce a commitment to provide finance, and it is completely unclear from the language which of these you are talking about. So what we actually had in COP29 was two clauses, one of which said, all actors commit to mobilize $1.3 trillion, unspecified what for in all sorts of different things that might go into it, private, domestic, etc. And the developed world promises to do $300 billion. But that also had, this could be private, it could be MDBs. So there were two figures and a lack of clarity as to what these were. So we think this is a process which, in a sense, is broken in terms of debating the issue of climate finance in figures where really, from the outside, you have no idea what people are saying. And I fear that reading from inside, some of the people who signed up are not clear on what they've signed up to either.

I'm quite sure they don't. Because I think it's intentional.

I think it is intentional. The only way I'm going to get out of this negotiating room is to have a clause which has so much fudge in it that everybody can interpret in whatever way they want. But I think the time... To make progress, we've got to start getting some clarity, and we've got to separate this issue of is the rich developed world going to help the most vulnerable countries on loss and damage from how do we mobilize capital, not not gifts, but capital which, correctly done, gets a return at a reasonable cost of capital.

So let me tell you what I was struck by during Baku. They're talking about this $300 billion commitment. First of all, we've been there before. It was $100 billion at the Copenhagen commitment, but now it's $300 billion with whatever lack of definition, which is a problem. But I was really struck by the fact that you've got the US at this point had already voted for Trump, so the US is going to give nothing. Then you've got Japan, you have South Korea, and you have Europe, and you've got a few other bits and pieces that could put some money in, but broadly speaking, the European negotiators. It's Europe saying we commit to invest. And I look at it and I say, 'Well, what are they investing in?' Are they going to be investing $300 billion, huge amounts of money, in what are effectively potential competitors, economic competitors of theirs, in an era when Europe has essentially other than the Draghi report report, which I find very underwhelming, has no idea how it is itself going to transform its industries, meet net-zero, and do so at a low enough cost to be, as you suggest we need, an example to the rest of the world. So we don't have a clue how we're going to reach net zero cost effectively, but we're committing to give $300 billion a year to others.

Well we weren't committing to give $300 billion a year. We were committing that there would be $300 billion — read the things that then follow that — from a combination of the private sector, financial institutions, etc, etc. So it was not a commitment to grants. It absolutely wasn't. It wasn't coming out of fiscal resources.

But wouldn't you like to see it go into European industry, into steel, into glass?

I don't think there is a sort of zero sum game here. And I think this is the wonderful trick of multilateral development banks. I think they are a highly leveraged use of money. I think the amount of money that you have to put into shareholdings and increased capital subscriptions to multilateral development banks, once leveraged up, you're essentially creating a form of international money. That's what you're doing. You're creating a bank balance sheet which can grow massively beyond the capital that you put in. I think there is a win-win opportunity there. I don't think it's as narrowly sort of, 'if it's going to happen there, it won't happen here,' as you're suggesting. The other thing which we have to do, and there were baby steps towards this, we have to have a serious contribution about who else is going to help with this process. Now, de facto, one of the biggest flows of investment into low and middle income countries is going to be from China. And this is why: China runs a large current account surplus. Just as a piece of macroeconomics, if you run a large current account surplus, you are a capital exporter. That investment is going to occur. The China Development Bank has a bigger balance sheet than the World Bank, so a significant amount is going to come from China, and we should be creating environments in which we agree with them and work together with them. World Bank, working together with Chinese institutes. The other area is the Middle East. We can't go on with this fantasy that there is a group of countries called developed, defined by who was developed in 1992, Kyoto, stuck there forever, and Saudi Arabia, with emissions per capita of 19, is not meant to be a contributor into helping the developing world deal with climate but the UK, with four tons per capita, is. This is a debate which was beginning to be opened up in the language of the COP29 agreement on finance, but we've got to start being robust against this. And you're quite right, in a sense, there was a bit of a fantasy going on in COP29 with the Europeans and the Japanese talking about $300 billion, where Donald Trump, one of the first things he said was, you know that I think it was $3 billion which goes into the UN Green Climate Fund. He's going to cut that out, because it's an 'outrageous' amount of money. So the idea that the US is there on any scale at all... It's not there, and we've got to have a more straightforward debate about what is possible. And that's why, when we're talking about the grants, the actual help with loss and damage, that's really got to be focused on the really low income, vulnerable countries. That's where it's got to be focused. The idea that there's going to be large amounts of loss and damage payments going to middle income countries like Indonesia or India, it's not going to happen. And there's no value in living in a fantasy where people in a negotiating room pretend that it is.

I can't remember who said that institutions, what was it: 'nobody kills an institution, they commit suicide through irrelevance.'

Yeah, I don't know who said it.

Maybe you do?

No, I can't remember. But it sounds like one of those statements, which is...

Maybe we'll put it in the show notes, the famous show notes. But, you know, have we got to the point where the COP process has had so many different agendas hanging off it, and when it gets into the specifics of, you know, even transitioning away from fossil fuels, this tremendous success in COP28 was not repeated in COP29, and so we have these huge discussions about what are essentially irrelevant issues. We have numbers — $300 billion of this, that and the other, nobody knows what's in it — and we're just kicking the can further and further down the road. People are defecting from the process: the US, obviously, again, but also possibly Argentina, possibly Papua New Guinea. So at some point, do we have to just rebuild that process?

Well, I wouldn't throw it away, because it's the only process we've got, and it has had successes in the past, in the Paris process. And a lot of people back at Copenhagen thought it was a bust, and then it produced what I think was a step forward at Paris. So I think it is capable of producing step forwards. I think the NDC process, which is governed by the national determined contributions, I think they do provide a framework for debate, but assuming that the US pulls out, this will depend a lot on what happens in COP30 in Brazil next year. I think it will require a degree of clarity and openness. There's a point where diplomatic fudge is no longer serving a useful purpose, but is simply getting in the way of a step forward. And I think we may have reached that point in COP 29.

Now, I will be at COP 30 in Brazil, but I don't know exactly what I'll be witnessing. It's a little uncertain. I just want to finish with a question about populism. And one of the things that we talked about last time — and in fact, this time as well — was that some things are just going to cost more, right? We can be seduced into thinking solar is cheap, batteries are cheap, EVs are cheap, wind will get back on track, and so on. But there are chunks of the economy — shipping, aviation, cement — we've not talked about this time, and so on, the costs are going to go up. And it's very easy to say, 'Oh, well, but that gets spread across so many different sectors that it really doesn't matter.' But inflation does matter. We've just seen it in the US elections, and we've seen it in the UK. People are hurting. Can we glibly assume that doing these inflationary things does not engender a pushback. And I worry about populism, not just in the US. I worry about, you know, you look at Marine Le Pen, you look at AFD in Germany, you look at Reform in the UK. It is so easy to demonize the people that are pushing these solutions. I mean, have we just lost the argument? Are we really in trouble here? Have we lost the argument that climate change is something we actually have to deal with and spend some money on?

Well, it's certainly an issue, this whole issue of populism, which we are looking at very carefully in the ETC. And next year, we will produce a deep analysis of the economics of transition. I think the essence of it is the following. I think there are some sectors of the economy which have higher transitional costs, but once we're through the transition, people are going to enjoy electricity cheaper than they otherwise would. They're certainly going to be buying EVs for less than they pay for internal combustion engines. I think there is then another category where I would argue that it doesn't matter all that much, that it's more expensive. I really don't think higher steel prices, once they come through to the end consumer, do much to the inflation rate, because the total amount of steel in the economy is very, very small. So I think that the argument that higher shipping costs, higher cement costs, higher steel costs, I think they've played almost no role whatsoever in the increase in inflation which we've seen over the last few years. When you run it through, there will be some things which are more expensive. Let's be clear, we can't do zero-carbon aviation without charging people something like 50 percent more for an airline ticket than they would otherwise have to pay. And we've got to say that honestly to people. You will eventually buy an EV cheaper than an internal combustion engine, but aviation will be more expensive. I think some of the biggest challenges, however, are the ones where there is an investment en route to the cheaper solution. And I think in particular, it's not at all surprising to me that one of the flash points has been heat pumps. Heat pumps are a way of enjoying future lower prices to heat your home, but there is an investment up front. And an investment up front, the economics of that depends crucially on each individual consumers’ cost of capital. Now, if you are a relatively well-off person as both you and I are, and we invest in a pump for £10,000, we've probably got £10,000 sitting in a bank account. So our cost of capital is the 4% we were getting in that bank account. If you go to a lower income household investing in a £10,000 heat pump, this is going to cost them 25%, because they borrow at the margin by credit cards. And for them, the economics don't work. It's not at all surprising to me that if you look at the AfD in Germany, their opposition had nothing to do with steel or cement prices, or the impact of the European carbon emission scheme, and I don't think it ever will. But my God, it's heat pumps. These people are forcing you to take out your gas boilers and spend money up front. So those are the things that really worry me, is where there are upfront investments and where the costs of those vary by different category of household, and I think we're going to manage through that in a very thoughtful fashion. And I don't think we've been thoughtful in the past.

So one thing that I would take issue with is the idea that steel, or some of these primary materials, doesn't really drive inflation. You know, we are privileged here, we live in a very wealthy country, so we're worried about aviation, and prices of flights. But if you are rapidly urbanizing, if you're India, don't you worry much more about the cost of steel, because you've still got...

Honestly, I think, I think the cost of cement and steel to the Indian economic growth path is not terribly relevant.

Just pushing on that. Somebody is getting their first concrete floor in their building because they've had a dirt floor, and they've made some money, and they're improving their housing. And you're saying that the cost of steel, doubling the cost of steel doesn't matter?

The cement might, but the steel really is very small in that. Now, there's other things I would really worry about, but most of them come off the gas price. I mean, for a lot of the world, food is coming off fertilizer prices, which is coming off the gas price. I mean, the core of this inflationary surge was gas and oil prices. That's what drove the inflationary surge. So we've got to break this down, and we've got to make sure that we understand where the inflation is coming from. But where it's coming from the green transition, we've got to recognize that in advance and respond to it.

Okay. But there is another critique of that kind of worldview, which is very technocratic. You said that you do techno economic analyses — the transitions, plural, each sector, shipping, blah, blah, blah. But the populist don't have to play by those rules, because they can take a pot shot at heat pumps, but they can also take a pot shot at, you know, all it needs is one celebrity to have a failed EV charging session and boom, that whole week they can make hay out of the fact that this technology just doesn't work. And are we equipped? When I ask, 'have we lost the argument?' Is it because we are playing tennis and they're playing rugby?

Look again, this is something we debated extensively at a recent meeting of the Energy Transitions Commission. To be blunt, our capability, our natural place is a somewhat technocratic argument. It's basically saying, 'we have rationally analyzed this. This is where we could be heading. We need to be heading in this direction. If we have good policies. These problems are manageable, but they need to be managed.' We are the provider of policy understanding for elected politicians who've managed to create the support for the direction, and we're not politicians. At our recent meeting, we had a session with people who are experts in what is going on out there, in social media and in the intersection between the vaccine deniers, the manosphere of incels who believe that feminism has gone so far. And the climate change deniers, and there were 45 of us in the meeting, either there or online, and the person who was presenting, Jenny said, 'how many people here have heard about climate lockdown?'

Climate lockdown?

And nobody had. I hadn't heard about it. Sounds like you didn't even know about it. Did you know about climate lockdown?

I can guess what it is.

Climate lockdown is a plan coordinated by the World Economic Forum, probably also by Michael Liebreich and Adair Turner and George Soros. George always comes into it. And what it is is: us elites observed how we managed to get fossil fuel demand down in the COVID period. So we want to do the same again. We want to have lockdowns. We want to get people out of the cars. We want to force them to be pedestrian. This is climate lockdown.

It didn't work very well, by the way, because it only reduced demand by five or six percent.

But this is running big in bits of social media, and the point that Jenny, who's from a very brilliant group called the Institute for Strategic Dialogue, which is involved in working out all the people who use the internet for extremist ends, from Islamic fundamentalists through to the extreme right and climate change deniers. What Jenny said was, 'Well, there's your problem. You're producing reports, which are going to one audience, but there's a big group of people out there who are going to vote some other way because they're influenced by those debates.' Now, I don't know what to do about that. We can't turn the ETC suddenly into a sort of street fighting social media group, but we need to create the links between those of us who are doing the rational analysis and hopefully providing good analysis can show us the way, but we've got to get smarter. Or somebody's got to get smarter at turning that into the messages which counter the misinformation. And also, I think, create imaginative and emotional arguments for what we need to achieve, as well as just rational, logical, technocratic arguments.

So we've had a couple of episodes, John Marshall of PotentialEnergy, and also most recently Rory Sutherland of Ogilvy, talking about how you might market climate solutions. And in the case of Rory, how apparently, it's not so bad to be marketing fossil fuels still. But these are on how to use messaging. But my worry is that when we try to counter misinformation, we do it technocratically. And I believe that the answer to some of these things... 15 minute cities, right? What could possibly be bad about telling people that you should have a corner shop and your kids should be able to go to primary school somewhere that doesn't require a huge commute and whatever? But that's turned into this…

Oh, 15 minute cities is a key part of climate

Exactly.

It's a key part of climate lockdown.

I think the response to that is not to explain that, 'no, no, no. It is to do with this, and it's to do with that.' It's actually just to find it hilarious that anybody should waste their time sitting in their mum's basement endlessly tweeting about climate lockdown and 15-minute cities as a conspiracy. Because it's just so thoroughly stupid and hilarious. Why aren't we not just mocking these people?

Well, a bit of humor is absolutely right. But I also think the 15 minute city is also an interesting example of some bits of communication we maybe got wrong. I'm hugely in favor of 15 minute cities. I think they're wonderful. I think London and Paris are steadily becoming much more attractive places to visit and live. Huge steps forward over the last 30 years. I arrived here by bicycle, by electric bicycle.

Paris yes, London. Not so much.

London in terms of cycling, etc. But my point is, I don't think we should have linked that argument to the argument on climate change. We don't need those to deal with climate change, and by putting those forward as an argument of how we're going to deal with climate change, we undermine our case in places like much of suburban America, where they're not going to have 15-minute cities, where you're going to have to electrify the existing transport system. So I think not all good things in life should be put together. I think we need technologies which can enable us to achieve a zero carbon economy. I would say separately, I want to live in a 15-minute city. But I'd actually keep them separate, because I think we may undermine our first argument if we link it too much to the second.

So that's like trees. And people say, can we solve the problem of climate with trees? And I say no, but I like trees in any case. I've got a final question. It's the same final question as the last two times that you've come on the show. Actually, it's a two parter. Are you optimistic or pessimistic? And I want to know the second derivative. Or is it the first derivative? It's the first derivative. Are you becoming more optimistic or are you becoming less optimistic over time?

I am optimistic and I am becoming even more optimistic over time that we have a set of unstoppable technologies, primarily electric which, by 2070 or 2080, are going to take this world to something pretty close to a zero-carbon economy, with a huge set of side benefits as well. I think this is unstoppable. I am pessimistic, and in a sense, I've become still more pessimistic that the political inability to go fast enough, the counter arguments, the misinformation, mean that we will not get there fast enough, and my current estimate is we will probably warm the world by close to two degrees at best, and possibly higher, before we achieve this zero-carbon economy. So I think we're going to have to deal with that. So that's the balance, but I'm still happy to devote a bit of my energy to trying to shift the balance to seizing the opportunity of these amazing technologies and bringing that end point forward.

So if I paraphrase, the cup is half full, the cup is half empty, but it's also becoming half fuller and half emptier. You can work out the physics on that.

Yeah, I think that's right. That is a complicated set of physics.

Our audience loves it when I get stuck in and we get into a bit of an argument and disagreement with guests and so on. But it hasn't happened, I think, probably because we just see the world very, very similarly. So it's always a huge pleasure to have you on the show. Thank you so much for your time.

Great, thank you very much.

So that was Adair Turner, Lord Turner of Ecchinswell, chair of what I now know is called the Energy Transitions — plural — Commission. As always, we'll put a link in the show notes to resources we mentioned during our conversation. So that's the Energy Transitions Commission website and the two episodes with Adair Turner at the end of 2022 and the end of 2023, as well as the episodes with Ma Jun, with Avinash Persaud, with Amory Lovins, with Jenny Chase, with Greg Jackson, with Azeem Azhar, with Rory Sutherland and with John Marshall. So that brings to an end this Season 13 of Cleaning Up. It only remains to me to thank all the people who made this possible. That's Oscar Boyd, the producer, Alex McInerney, events coordinator, Jo Jagger, executive producer, Jamie Oliver, video editor, my co host, Baroness Bryony Worthington, the chair of the editorial council, James Cameron, and, of course, our Leadership Circle Members and amazing guests. Make sure you have a fantastic break over the holidays, and please join us early in January for Season 14 of Cleaning Up.