Cleaning Up: Leadership in an Age of Climate Change

The Electrotech Revolution Will Not Be Fossilized | Ep231: Kingsmill Bond

Episode Notes

What if the energy transition isn’t about sacrifice and belt-tightening, but abundance? Are electrified technologies ready to replace the polluting fossil fuel system we’re so reliant on? And what will it mean for western nations if they can’t keep up with China?

In this special bonus episode of Cleaning Up, recorded live in Berlin, Michael Liebreich sits down with Kingsmill Bond, strategist at Ember, to unpack The Electrotech Revolution, a powerful new framing of the global shift from a fossil-fuel economy to an electrified, efficient, and inevitable clean energy system.

Together, Kingsmill and Michael explore why the growth of solar and wind is now outpacing fossil fuels worldwide, how China’s leadership is reshaping the global landscape, and what Europe and the US must do to compete.

Leadership Circle:

Cleaning Up is supported by the Leadership Circle, and its founding members: Actis, Alcazar Energy, Davidson Kempner, 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.

Links and more:

Ember’s Electrotech Revolution Report: https://ember-energy.org/latest-insights/the-electrotech-revolution/
Ember’s Funders: https://ember-energy.org/about/
Lauri Myllyvirta on Cleaning Up: https://youtu.be/FqjvCeR9VLg
Michael’s Pragmatic Reset Part 1: https://www.youtube.com/watch?v=OHKGor2_BzQ
Michael’s Pragmatic Reset Part 1: https://www.youtube.com/watch?v=OFF1imh1U2c

Episode Transcription

Michael Liebreich

There'll be a whole load of people going: solar, fabulous, yes, yes, yes. Wonderful, wonderful, wonderful. There'll also be a whole bunch of people saying that we are Chinese Communist Party stooges because we are just promoting China's plan for its own economy and for world domination using this thing that you've now conveniently dubbed electrotech.

Kingsmill Bond

Well, actually put yourself in China's shoes. In 1850, the West shows up in town with better fossil tech. And you did have then siren voices, which said, ‘No, let's ignore this foreign fossil tech, and double down on the old system.’ And it didn't end well for them. They had a century of humiliation, as they call it. I think part of the argument we're now making to the west is: wake up, because this is the future. This is a better series of technologies. China is leading, and we need to get involved.

Hello, I'm Michael Liebreich, and this is Cleaning Up. Now what many of you out in the audience may not know is that Cleaning Up is more than just a podcast and a YouTube channel. We also host a series of events around the world in different cities, bringing the Leadership Circle members together with senior decision makers from the worlds of industry, finance, government and civic society. So I'm here in Berlin, hosting a breakfast, and I've invited Kingsmill Bond, director and strategist at Ember, to come and present his new report on the electrotech revolution. So I'm delighted to be able to offer the first part of the proceedings, which is my conversation with Kingsmill, as an episode here today. Please welcome Kingsmill Bond to Cleaning Up.

Kingsmill, thank you so much for joining us here this morning in Berlin. Can we start in the way that we always do, which is you introduce yourself in your own words?

Sure. So my name is Kingsmill Bond. I am a strategist at Ember. I should say this is not my first time in Berlin. I came here on the night of the 10th of November, 1989, which I think you will all remember. So it holds a special place in my heart to be in Berlin.

I'm going to interrupt because there will be people in the audience who are so young they do not remember. Were you clambering on the walls with a pickaxe and with a sledgehammer?

I was, indeed. I was freeing Europe, or we were all freeing Europe, at least we felt we were that night. I was studying German in Munich, and I came up here. But anyway, I leave that aside. I have a background as a financial market analyst, which is where, of course, you and I ran across each other many years ago, and so I've been a financial market analyst and then strategist for Deutsche Bank, Citibank and SpareBank, and many other different financial organizations. And about 10 years ago, I pivoted into your world, Michael, of energy transition, and have been trying to apply the disciplines of finance to this story ever since.

And a few words about Ember. So my co-host, Bryony, chairs Ember, I think she played a role in its creation. But what does Ember do, and who pays for it?

So Ember is a think tank. We're about 70 or 80 people. We are based all over the world, and our primary goal is to speed up the energy transition. We're financed by a wonderful group of philanthropists who have a similar goal. And so it's people like Quadrature, for example, or Sequoia or PI, and all of the all of our funders are very easily accessible on our website.

So Quadrature is a member of the Leadership Circle. So we know, I know, all of your funders quite well. And what we'll do is, I think it will be fair to put a link to, if you've got a page with the funders. And the reason I do this is because if there was some oil and gas lobbyist up here, I would happily have a chat with them, but I would make sure that it was clear who they were, what they were, who was behind them. So I need to kind of apply the same rules, I think.

Yeah, I mean, we have a cunning plan to seek to avoid planetary destruction. I'm sorry.

So you were, before you joined Ember 2022, you were with Rocky Mountain Institute over in the US, correct? Yes.

Yes, I worked initially at Carbon Tracker, and then Rocky Mountain Institute, which was fantastic. And then we had this little election in America, and it became no longer possible to speak truth to power in the United States. So I left and joined Ember about a year ago.

Okay, so it was a year ago. And so you were sort of airlifted off the roof, one of the last to leave Rocky Mountain Institute when you were still able to get out? And you’ve come back to Europe.

In fairness, RMI is doing fantastically, still. But for my particular little role of strategy, you kind of need the oxygen of being able to say what you like when you like it, and as I hope we're going to talk about today. But yeah, for me, at that moment, it was just a better position to do what we do from Europe, after the 20th of January.

Of course, we are going to talk about what you're doing. That's the purpose of this. And what you're doing is you have a new report, which you've co-authored, and I've got a copy of the paper version — paper is still a thing, apparently — and it's called the electrotech revolution. So could you just give the sort of the elevator pitch for the electrotech revolution? And then we'll dive in.

So the elevator pitch is, it's very simple: the standard argument at the moment has been, on the one hand, that the fossil fuel folks arguing ‘more and more and more,’ and then the green folks saying that ‘we need to have de growth and carbon capture and tighten our belts.’ And we just wanted a narrative which actually captured reality much more effectively, which is to understand what's happening out there. And what is happening out there right now is a technology shift from the old system to a new system. And then again, I can detail a little bit more later, but basically it is the supply, demand and connection of electrons, and the very rapid growth of these new technologies is creating an entirely new energy system as we speak. And that's the great opportunity that we need to seize. This is the point we wanted to make.

Great. So I had Tony Blair early days on Cleaning Up, and we were joking about the third way, but this is kind of a third way. What you're saying is, you've got the fossil people saying that we just going to do more and more fossil abundance, but it's going to be fossil and then you have the climate people saying, ‘no, no, it's all about less and less and demonizing what we want to get rid of.’ And then the third way is the electrotech revolution, which is an abundance, but based on electrons. Is that a fair summary?

Yeah. And I think again, what is so clear is, and then this, I suppose, is where we bring a sort of financial, very data heavy background to the debate is that this story reflects reality far better than the other two. And so, for example, you have a whole series of facts which can't be explained by the sort of the standard narrative. So the fact that Southeast Asia has leapfrogged Europe in terms of electrification. The fact that two thirds of the emerging markets have leapfrogged America in terms of solar deployment. The fact you're getting 70% market shares of electric vehicles in places like Nepal. Or the fact that Pakistan doubled the size of its energy system in three years by deploying solar. None of these facts are in the standard narrative, but they're all happening right now.

Now, we're going to get on to the bit where I critique, but let me put a flag in there, and we'll come back to it. The inconvenient fact of the electrotech revolution is that fossil fuel use keeps growing, so it's not obvious. And maybe that's the genius of it, because to say something before it's obvious is the difficult bit, right?

As you know, this is our job in the city, is to say something before it's happened, because after it's happened, it's too late. And I think maybe this is the difference between our approach and the kind of hand wringing approach, saying it's not happened yet. The point certainly is it's really simple and easy when you go and look at the detail of what's happening inside each country and each sector, you're seeing a very common pattern of the rise of the new electrotech, that is to say solar, wind and electricity generation, EVs and heat pumps and industrial electrification and the connections between them, you see the growth of the new pushing out the old, one country, one sector after the next. And it's a very clear pattern.

You know, for 20 years I've been saying this stuff gets cheaper, this stuff gets better, and there's more and more investment. So what's the difference? I mean, are you just like the marketing department for things I've been saying for 20 years that you've called it electrotech, and now everybody's like, ‘Oh, Kingsmill, come to Berlin to talk about how clever you are?’

Yes, we are in fact, folks, the marketing department for Michael Liebreich, who, as you say, has been doing this for 20 years. I think all we try to do here is reframe the debate and bring a little bit of systems thinking to the discussion and say: We need to stand back a little bit. There are a whole series of debates which we should not have been having because they're not relevant to the story. I mean, the classic example is carbon capture, or as you pointed out Michael, hydrogen, the hydrogen souffle. And we've been charging down a series of paths. We want to step back and say: Actually, you've got to split the energy system into two parts, production of electricity, where change is happening very quickly, and then electrification, where it is happening in some countries but not in others. And we desperately need to think a lot more about the second part.

And the two examples that you give — CCS and hydrogen — it's absolutely clear that they are attempts to continue burning things. That is the combustion economy, right? If you can burn it, but capture the carbon, or you can burn something else. So it's a focus on burning, isn't it?

Yeah, and it's an absolutely fake answer, and it's just tragic that so many clever people and so much time and talent has been poured into an obvious dead end. So if you want to take the very big picture framing of this, we, humanity, have been burning stuff for tens of thousands of years. And now, for the first time in history, we figured out a way to harness and use the power of the sun directly, without burning it ourselves. And that's the great story, and that's what we need to be leaning into, not these sort of ersatz, fake ways of maintaining the old status quo.

The key page, the one that made me think, actually, I think I do need to get Kingsmill on the show, because he's not just talking about it getting cheaper, which we all know, and it gets better, and so on. But the page that made me think, okay, there's something going on here, and he's put his finger on it, is the page that says new ways of producing electricity, new ways of storing and distributing it, and new ways of using it. So that's the system, because then you've got the whole business system, and you've got these charts, and all of your charts in the whole book. And by the way, we should also say that there is an online version. You can download all the charts, and we'll put a link in the show notes to your slide deck, but all of the charts go up and to the right, all the electrical ones, all the fossil ones, go down to the right. So you don't need to download anything, because that's basically what the book looks like. But there's this page where it just shows new ways of producing that do this, new ways of storing and transporting, and then new ways of using. And then I thought, ‘okay, that puts the finger on something that is pretty profound.’

I think the key point here is you ask so often in technology shifts, and Carlotta Perez, for example, is the most brilliant exponent of this, the Venezuelan academic. You get different technologies coming together at a similar moment to drive change. And the classic example is that solar was kind of reaching its limits of deployment, and then the evolution of batteries getting cheap enough meant that you could back up solar with batteries. So suddenly the combination of these two technologies is more than the sum of the parts.

So you've got in the book one of the pages, it's Carlota Perez has got this kind of five stages model. So you've got the Industrial Revolution, steam and rail, steam and electricity, oil and mass production, and then digital. And you rather cheekily, just sort of tacked on the electrotech revolution. And so you borrowed her five and trumped her. Seen her five and added one. I mean, it's a bit simplistic, isn't it?

Well, it is. And actually, I talked to the great Carlotta before we had the temerity to do this, and she disagreed with me, for what it's worth. She was like, ‘No, we're still in the middle of the IT revolution. But, you know, feel free to use it. Why not?’ Because that's what academics do. Look I think, in response to this point about excess simplicity, I mean, the first point, I guess, is we, you and I, by training, are both able to do very detailed calculations and NPVs and all the rest of it. We're not necessarily simplistic people, but there is a story to be told. And I think we have all been gaslit by the incumbency down a series of really, ultimately false solutions. And we just wanted to, as I say, step back, and just say it's a much better, better explanation of reality.

I’m not sure I would agree with them as false solutions. I think that there was a time, you look at the 50s, 60s, 70s, 80s, 90s, the last century, you know, it was clear that fossil fuels were warming people's homes, it was giving people cars. It was powering television and radio, the internet. I mean, it was fossil fuel. So I'm not sure I could say it's false. The question is whether it's still the right way and the best way, given what we know about planetary boundaries, given what we know about all those curves that all go up into the right.

Well, there is no debate that if you take a chart of global GDP per capita, it's flat from 2000 BC until the 1800s. The average French peasant in 1800 lived the same as a Roman peasant 2000 years before. And then you have fossil fuels, which did, of course, as you say, rescue us from the Malthusian trap. But now they are taking us to a disastrous place. But actually, the point simply is that even without that, we have now found a better solution. And I think we just wanted to make this point. I mean, the person who also nails it, and we also talk about in the presentation, is Ian Morris, who has this beautiful framing of farmers, foragers, fossil fuels. And we, too, continued the sequence: photovoltaics — the fourth F, as it were. And on each occasion, you get a 100 fold increase in energy capture. And I think this is, for me, the most exciting point about where we stand today is that we have the capacity to seize 100 times as much energy from the sun. We need to lean into that.

That reminds me of a joke I used to tell about when, if anybody asked, ‘what was unpredictable about what we're going through?’ And I used to say, well, it was the three F's, Fukushima, Fracking and Elon Musk, which was a good joke. But I think, if you just go back to the Carlotta Perez model, I think the point I would make is that none of these things are phases that start and stop cleanly. So are we still in the digitization phase, of course. And when it comes to electrotech, I mean, these are actually technologies that were discovered at the beginning of the 19th century. Edmond Becquerel discovered the photovoltaic effect in 1800, and the first dynamo, Michael Faraday, I think, was 1840 or 1839. So these are not new technologies. So why didn't we get electrotech immediately and instantly back then?

You’re quite right, Michael, we have been electrifying since 1880 and Edison. This, incidentally, is another interesting point for devotees of the fossil apologist Vaclav Smil. Because he's always saying ‘it takes 100 years.’ Well thank you, Vaclav, we've had 100 years. In fact, we've had a bit more. So it is absolutely true to say that these technologies have been growing for a century, decades. The key point about now is that they have now got big enough and cheap enough to drive a peak in the old system. That's what's so exciting. And again, as you and I know in finance, you're always hunting for peaks. You're always hunting for turning points. It's not change, it's the first derivative change, the second derivative of change is what we're hunting for all the time. And that is right now in this decade.

And I think that's something that's very interesting in a bunch of your charts, is examining that peak, because you do have fossil fuel use and emissions continuing to grow, but what you've done is get underneath the skin of that and say, ‘why are they continuing to grow?’ And what's actually driving that is a very small subset of everything out there.

Yeah. So again. So if you split the energy system into two components, so the production of electricity, and then the electrification of everything, that's final energy, and then look under the hood at what's happening. Well, first of all, at a country level, the OECD fossil fuel demand peaked in 2008. I mean German fossil fuel demand peaked even before then. So at a country level, you're getting these very, very clear peaks. But at a system level, when you look at final energy, it's not necessarily widely appreciated, but we haven't had any growth in fossil fuels for industrial energy since 2014, we haven't had any growth in building fossil fuel energy since 2018. And basically since 2019 we've been on a plateau for road demand as well. So in all three areas there are very, very clear signs of peaking. In the electricity sector, which is really the only primary driver of rising fossil fuel demand over the last six years, almost all of that has come from one country, which is China. And what really excited us is that in China there are also very clear signs from Lauri Myllyvirta, who's also been your show, and others, showing that actually Chinese fossil fuel demand for electricity is also peaking because of the rise of solar and wind. So if you bring all of this together in a kind of systems view, actually you're getting to a very, very exciting moment.

I think we need to spend a bit of time and unpack that. It actually indexes back to my little four line model in the Pragmatic Climate Reset in part one, where I said what we need for the transition is not going to consist of destroying our existing energy infrastructure. That model, which is where you started the conversation about saying, ‘well, there's this kind of the middle way, the growth of abundance, but it's clean abundance.’ That second piece, which is the climate activists view, we have to destroy things, we have to stop doing fossil. But actually, if we just are growing clean, that was what I modeled. And the critique of that approach has been, ‘yeah, but clean energy can't even absorb the growth in energy demand, so fossil fuels continue to grow because clean energy is so small and rubbish.’ But what you're saying is all of that is about to change.

You're quite right. Michael, and Simon Sharpe has been popularizing this recently with his very brilliant recent paper, ‘Build then Break,’ which, of course, is a Chinese phrase, you build the new and then you break the old.

Simon sharp of Five Times, or Seven Times faster?

Five times faster, yeah. He’s got a great book and a great recent series of reports. But anyway, I digress. So you have to build the new before you destroy the old. And with all due respect to the great green movement, I think one of the errors that we have made, or the green movement has made, is to try and destroy the old before you had built the new. And it's only once you've built the new and you've got enough solutions that you can actually start to squeeze the old. And this, I guess, is the absolutely core point here. We needed to build the new. Now we've built the new. And if you take the electricity sector, and again, I've got the numbers at my fingertips, because of what we do at Ember, we look very, very hard at the data. Anyway, in the first half of 2025, the growth in solar and wind, for the first time ever, in structural terms, was greater than total electricity demand growth, and therefore fossil fuel demand went into decline. So I think the numbers are about 410 terawatt hours of solar and wind, and total demand growth is about 400. So fossil fuels did indeed start to decline. And again, we're going to be on a plateau for a few years, so it is going to be messy. But the absolutely core point is that this happens. This happens in one country after another. 50% of the world has reached a peak in fossil fuel demand for electricity by 2019, and it hasn't gotten back to that level and is clearly in decline. Now, if you add China, you're going to get to 70%.

Cleaning Up is supported by its Leadership Circle. The members are Actis, Alcazar Energy, Arup, Cygnum Capital, Davidson Kempner, 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 cleaningup.live. If you've enjoyed this episode, please hit like, leave a comment, and also recommend it to friends, family, colleagues and absolutely everyone. To browse the archive of over 200 past episodes, and also to subscribe to our free newsletter, visit cleaningup.live.

How do you respond to critics? And those critics include Chris Wright, the Secretary of Energy in the US. There was a recent clip where he was on a podcast, and he was asked why he's so negative about the prospects for continued growth of solar, and solar sort of amped up by batteries, as you've described. And he says, ‘there's no there there.’ That's his phrase: ‘There's no there there.’ And he wants to bet that solar and batteries, in 50 years, will not provide 10% of what he's obsessed with, primary energy. What do you what's your response to that? Well, I mean, other than he's probably wrong?

Chris Wright is clearly misinformed, and his numbers are incorrect, as many other people have pointed out. I think he famously said that if you carpeted the world with solar, then you would provide only 20% of energy. And he's wrong by a factor of 1,000 which is slightly concerning.

Let me clarify that one, just because, on that, I think that's important not to be too disparaging. What he's saying is that electricity is only 20% of final energy. So therefore, even if you could do everything with solar electricity, it's only 20%. I think that's what he was saying. We don't want to sort of gloss all of his utterances in great detail, but on that one, let's be just a little careful.

Possibly that was a post hoc justification. But anyway, nevertheless, it's also entirely incorrect, because, of course, what's happening is that we're electrifying. So again, as is very widely appreciated, the two aspects of transition we keep on saying this, are the decarbonisation of electricity, and then the electrification of everything. So the world at the moment, about 22% electricity is a share of final demand. China's got 30% of final energy.

I will kind of come in there, because final energy is not useful energy. There's still a big, big difference between those two. I'm always going to point that out.

No, well, thank you, Michael. Actually, sorry, electricity is about 35% of useful energy.

There we go.

That’s another chart we have in the piece, forgive me. So electricity, the question facing us all now, and it's particularly poignant question in Europe is, ‘how do we increase electrification?’ Because in Europe, it's been stagnant, and in Germany, it's been stagnant, around 20% since 2008 actually. And the core task, I would suggest now, is to increase the electrification rate.

I want to come back to that, but I just want to return to this point about the peak/ because it's such an important point. I mean, if you're right, if we're right, then dramatic things are about to happen. And that's why this stuff is so important, because the future, even in the next five years or the next decade, completely doesn't look like the past, if there's a peak. So we talked about electricity, and how, even in China now, the growth of the new is displacing fossil in electricity. And in transport, you ran through some things very quickly. Why is transport about to hit a peak?

So in the transport sector, as you know, for many years, you've had this continued efficiency gain taking place in the transport sector. And now, of course, electric vehicles have come into the mix. And electric vehicles are now displacing this year, according to the IEA, I think about one and a half million barrels of oil. It could be 5 million barrels of oil a day, being displaced, according to the IEA, by 2030. And the point to me is that that is enough, in a very low growth system, to mean that the growth stops.

How do you respond then to the sort of Saudi Aramco And OPEC view that you've got a middle class that's emerging, that's getting rich around the world, and yes, we'll have a little bit of electric cars in rich places like Europe. I mean, this is the model that they're working on. And the new demand is going to just overwhelm any savings and reductions that you see in the old.

This was kind of the wish list of the fossil fuel system. As you say, it's some sort of Exxon, EIA-type view that the rising middle classes in the emerging markets are condemned to go down the same path as the United States and Europe did a century ago, and China did 25 years ago. And that all of this clean stuff is just a rich man's toy. And that was the narrative, that still is their narrative. What's so exciting now is that it's not how things are playing out. You are seeing everywhere an emerging market leapfrog take place, where the rising middle classes of the emerging markets are going straight from biomass-type technologies to electrotech technologies. And they're not doing it to save the planet. They're doing it because it's cheap, it's local, it's fast to deploy. And in a sense, this is exactly what we've seen so many times in other technology revolutions. We don't have to replicate the old. We can go straight to the new.

You've got some wonderful examples in there of Nepal and places like that, buying more electric cars than fossil already. So, you know, it's quite extraordinary.

So the numbers The New York Times talks about, for example, in Nepal, 90% share of electric vehicles. And Vietnam and then these extraordinary numbers coming out of Pakistan and Africa.

I would love to take the time to plug PragmaCharge, my electric HGV truck charging business, because we're going to do the same thing in trucks. Internal Combustion car production peaked in 2017. And it's happened to buses, and it's clearly going to happen to trucks. We're going to help drive that, but we need to move on to industry. You said some things about industry. There are, of course, industries with growing demand for fossil fuels, not least the oil and gas extraction industry itself.

Yeah. I mean, actually, again, we looked under the hood in the IEA world energy balance data and the headline number is in 2014, industrial demand for fossil fuels peaks. If you then start looking at the 14 sub sectors that the IEA disaggregates, you'll see that in about nine of them, that's all of the light industrial sectors, so food and textiles and pulp and paper, you've seen a very, very clear peak. And we're down 20 or 30% actually, from the peak. And then there's three or four other sectors where we're going to kind of plateau. Iron, incidentally, is on a plateau. It's not growing anymore at all. And there's one sector where there's still growth coming through, which is construction…

And also minerals, parts of minerals, which, of course, is not surprising to anybody who knows how many minerals are in some of the electrotech.

But again, I guess the point to me is that these are simply the laggard sectors in the global shift. And what's happening in this again, to stand out for a second, let us not forget that around 35% of final energy in the industrial sector is already coming from electricity. So we're always being talked to, or lectured about the hard to solve sectors. As with all things in life, you solve the hard to solve sectors last folks, and the easy to solve sectors first. Actually, in many, many areas, we are doing this. But what's really concerning for us here in the West, in Germany in particular, is that China is electrifying its industrial sectors faster than we are. And for countries which have been the pioneers in building out the technology for the fossil fuel system, the hardware is vital to pivot to the electrotech technology.

So I want to come on to industrial strategy and geopolitics in a second. But if we could go back to this process of the two vectors, you call it, of decarbonisation. So you clean up electricity and you electrify. And I agree entirely. And I've been banging on about it for quite some time, some of those industrial sectors that you say already past peak fossil fuel demand, all the light engineering, the laundries and the pulp and paper, lots of the food industry. The amazing thing is, they're past the peak of fossil fuel use, but they haven't yet switched to heat pumps. It's absolutely extraordinary.

Well, as you know, Michael, we all know there is a real deficit of data on heat pumps in the industrial sector. So if anyone's got it, please do send it to us. But yeah, we have a long way to go, and we can do a lot more to speed up change in all of these sectors.

For sure. I'll put you in touch with Paul Kenny, who runs the European Heat Pump Association. If he hasn't got the data, nobody's got the data.

I'm pretty sure they don't. We've been chasing them for ages.

Very interestingly, as an aside, I don't know if you noticed that I redrew the famous Lawrence Livermore Sankey diagram, which has got something missing on it. And what it's got missing on it is actually the ambient heat that goes into heat pumps, that performs useful energy services and is completely missing. So if your energy comes from geothermal or solar or coal or oil or whatever, it's on the Sankey diagram. If it comes from the air, if it comes from the water, it's simply not there. And it's about 1.5% of useful energy in the US already, sorry it’s 1.5% of primary energy, so it’s about 3% of useful. And it's simply not on the Sankey diagram, unbelievable.

I listened to your episode on that. It’s a very brilliant point. Yes, true.

So let's talk about China. It’s popped up in this conversation a number of times, and I know that when this episode goes out, the comments are going to be full of two sorts of people — and lots of thoughtful people as well. So three sorts. One lot will be thoughtful. Then there'll be a whole load of people going solar: Fabulous, yes, yes, yes. Wonderful, wonderful, wonderful. There'll also be a whole bunch of people saying that we are Chinese Communist Party Stooges, because we are just promoting China's plan for its own economy and for world domination using this thing that you've now conveniently dubbed electrotech, but it's actually a stalking horse for Chinese world domination.

Well, actually, put yourself in China's shoes. In 1850 the West showed up in town with better fossil tech, and you did have then siren voices, which said, ‘No, let's ignore this foreign fossil tech, and double down on the old system.’ And it didn't end well for them, they had a century of humiliation, as they call it. I think part of the argument we're now making to the west, grandly stated, is wake up, because this is the future. This is a better series of technologies. China is leading. And we need to get involved, and we need to compete. And actually there are plenty of areas where, be it in software or cabling or services, where Europe and the US can compete, and we need to do so before it's too late.

The great news for Europe is that it's actually very good at a lot of the core technologies of electrotech. I mean, how can I put it? There may be technologies that don't appear in your book because they're below the hood, but some of the kind of solid state switching and a lot of the high voltage DC. There isn't one technology called HVDC. There's lots of sub-technologies, and Europe is extremely good at them. They really are very good. And the European grid, by the way, I think sort of pound for pound, probably performs better than the Chinese grid.

This is exactly the point. As you say, Michael, and forgive us, again folks, if you've got great data, please send it to us. We will use it. And there is a very powerful story of these new technologies arising. And we're most excited, actually, people often say to us, where's the money to be made? It's probably going to be made in what they grandly call ‘the messy middle’. These connection technologies, where, again, as you say, Europe's more powerful, and we need to lean into that stuff and grow it and also have, I think to a degree, the courage of our convictions that this is the future, and let's avoid the blind alleys.

I think part of what you're saying is that this is inevitable because it's better, not only so each individual bit is better, but also it's now coming together as a system. And so this shift is inevitable. And inevitable is a very big word. It's a very important word because strategically if something's inevitable, you have to react to it. If it's not inevitable, you can choose to ignore it.

Yes, again, people don't like the concept of inevitability. Clearly, nothing is inevitable, and individual countries can, just like North Korea, avoid the technology race and changes which are going on elsewhere, if you really want to. What we did is we did a little bit of first principles thinking. We said: there are three fundamental factors, you have physics, economics and geopolitics, which are driving this change. And they are very, very powerful forces. It takes a lot to resist them.

I think a lot of things are inevitable. The example you gave of North Korea… they still have to use fossil fuels, they still have to use digital technologies. There is an inevitability about, in a sense, physics and the resulting microeconomics. So I think I'm kind of on your side. I think you can actually big up the inevitability a lot more, because I do think that this trend is inevitable. I think we're actually negotiating globally about the speed, not so much whether where we will end up is inevitable. The question is, how fast.

Well yes, it’s a very good point. It's quite interesting, if you take, for example, the forecast of some of the fossil fuel folks — Shell for example — they actually have a fairly similar 2100 framing to what we have, you know, decarbonization, electricity, electrification of everything. It's just the shape of how you get there.

What we find looking at sort of scenarios is that they increasingly tend towards reality after the careers of the people who produce them end.

Look, I think the other thing, sorry, totally relevant to this, is that let us not forget that this is not a tabula rasa. We do sit on an enormous fossil fuel system, and therefore, as change goes from growth to decline, there will be very profound consequences. And that is also very rarely in the debate.

So I promised that I would get into some critiques. I've been critiquing and chip shotting away throughout the conversation, but you are very optimistic. I think you do agree that this is kind of inevitable. This is the trend that China is at the moment, out there in front, but that, you know, Europe will figure it out, or it is kind of figuring it out, and has great strengths, and the US will also, presumably, in your world at some point, wake up to the idea that fossil fuel plus AI is not a strategy for the electrotech age.

I don't actually think we are especially optimistic. If we choose one word, it's realistic. We're trying to be right. I mean, again, they teach you in finance that it’s much better to be roughly right than precisely wrong. And we are trying to reflect what's actually going on out there. And I wouldn't say it's very optimistic, because in this framing, we’re going to get pretty close to 2°C degrees. And we've been critiqued on the green side, for not being sufficiently optimistic. But as I say to my friends, it's like we're not saying what we want to happen or what should happen, but what is happening?

One of my favorite charts in the slide deck is on page 102 and it talks about, or it shows, demonstrates, that there's $1.8 trillion of rents going to the fossil fuel industry. So that's licenses and royalties and profits and so on. There's $400 billion of subsidies going to the fossil fuel industry, and there's $160 million per year being spent lobbying in the US alone by the fossil fuel industry. So is there a scenario where this can actually be disrupted, either by all of that, or by China putting controls on rare earths and trying to play it, in a sense, too aggressively for its own benefit?

Well, first of all, let us be clear, the driver of change is China. So China is basically 50% plus of all electrotech systems, more than 50% of the growth. The US, in contrast, is 10% of the system, and less than 10% of the growth. So the US remains a bit of a laggard in the energy transition. It's a transition made in China and cascading out of China. If the question is, could the US frustrate and slow down the change at home, of course, and we see this all the time. But what then happens is that these technologies end up in other places. And it's very interesting, the latest IEA renewables forecast, they downgraded the US numbers for deployment of solar and wind, but they upgraded the numbers in the Middle East and in Southeast Asia and in South Asia, and actually net-net, it's about the same. And I think that's what will happen. And so the US will fall behind. But again, since it's America, and since there are states, and since the power of the market is tremendous, I'd be absolutely confident then the story will keep on going, just not as much as it could have done.

So hopefully your slide deck will be like Sputnik flying over beeping. And it will wake the US up to the fact that they've fallen behind in this key race. But that doesn't feel very likely right now, does it?

Well again, stranger things have happened, Michael. President Trump may yet pivot and decide that actually, this is the way that he's going to get energy to the AI, which is such a very large topic of conversation, because you want to get quick energy, you need something easy, which is solar.

So my scenario for that, by the way, is that they build lots and lots of gas plants — reciprocating and open cycle, very flexible gas plants. Then the AI bubble bursts, and all of that flexible gas peaking is what keeps the lights on for the small intervals between the wind and the sun. Let me come to another critique, which is you almost completely ignore nuclear. It appears very, very occasionally in the book, and clearly doesn't form a major part of your thinking at all well.

I mean, it's not hard to ignore. Nuclear has been 3,000 terawatt hours of generation for about 40 years, and its price keeps on rising, and it's competing against solar and wind, which have come from nowhere to be 4,000 terawatt hours, and their costs are on a learning curve. So nuclear is simply a technology which doesn't have a learning curve, competing against technologies which do, which makes it not particularly exciting for us.

There are those who would disagree with that characterization, and would say that, well, you know, against heavy opposition and enormous scrutiny and pushback, there's been a period of stagnation. But now there's a new dawn of nuclear technologies. And by the way, places that can build them for a lot cheaper than in Europe and North America. So that's the pushback. And by the way, my pushback, that's not mine, that's others, but mine would be: countries are going to build them anyway. And there's enormous co-benefits in everything from the food industry to the medical industry to the defense industry. So we are going to get nuclear, and possibly driven by these AI data centers, which are very difficult to fuel and to power using distributed solutions.

Again, I guess we have the luxury of taking a global and systemic view. And so the real debate, as you know Michael, is: could nuclear, if you think in petawatt hour terms, could nuclear rise from maybe three to four or five? That's the kind of hope of nuclear advocates. Maybe it does. Maybe it doesn't, but in the same time, solar and wind will rise from four to 40 or 50. So again, because we're focusing on the main issues: nuclear, as many other people, and Bryony, of course has said many times, if you've got nuclear, — sorry, Germany — if you have nuclear, probably you want to keep it, but is it going to be the primary driver of growth for the future of the electricity system? No, obviously not.

Finally, we are here in Berlin, in the heart of Europe. Is there any way that Europe can use the electrotech revolution? Can it use this moment in time to gain competitiveness, because I think it's unquestionable — for me, it's unquestionable — this is the direction of travel. But are we just going to be price takers to China? Can we realistically in Europe play this to our advantage and become internationally competitive, not just in these technologies, but right across the board, in everything that we do? Because energy is just the input into the economy.

So I think the key thing about Europe is we have made a mistake by seeking to optimize carbon immediately in this transition. And the problem that Europe faces today is that we have lost our sovereignty, because 60% of our primary energy demand is imported fossil fuels. The way to solve this is to electrify, and the way to electrify is to optimize costs in the electricity system. Actually, sorry, to optimize costs in the electricity system and to lean into electrification technologies. If Europe were to do that, I think you would also achieve the decarbonisation we strive for, but in a much more effective way. And we would also gain energy independence.

I'm going to have to just agree with that, because electrification first and then, well, we've got the electricity to the point where it's fairly clean. So now the priority is to electrify, drive volume through the system, which is what drives costs down, and then finish the job of cleaning. That would be my strategy, I think.

But actually, when it comes to this vexed issue of electricity price, one of the problems at the moment is we've loaded all of these extra costs onto electricity and all of these fake solutions. You called out hydrogen, we're calling out carbon capture. You don't need to do this stuff in 2025. But what it's doing is loading lots of costs onto electricity, which is retarding the electrification we need. So that needs to happen. We also need to rethink the way we price electricity so it's not being priced off gas, and we need to be much cleverer about how we use these technologies in the middle to reduce price.

All of those are themes that have already been covered in numerous episodes, and that is our agenda for many future episodes, and hopefully at some point also, we'll have you back on the show to talk about them in greater depth. Kingsmill, thank you so much for joining me here today in Berlin.

Thank you Michael.

So that was a special episode, me in discussion with Kingsmill Bond at a breakfast for the Leadership Circle in Berlin. Now we mentioned too many resources to put links in the show notes to all of them, but we will, of course, link to Ember’s Electrotech Revolution report, as well as to my two pieces on the pragmatic climate reset. I'd like to thank our producer, Oscar Boyd, our video editor, Jamie Oliver. Special thanks to Alex McInerney, our events organizer, who dealt with all the logistics of the breakfast and also filming. Thanks to the Leadership Circle members, those who were in the room, as well as those who couldn't make it. Thanks to you, the audience, for spending time with us here today. Please join us later this week for the normal episode of Cleaning Up.