Transcript: Energy Insiders interview with Carbon Tracker’s Kingsmill Bond

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This is a lightly edited transcript of the Giles Parkinson and David Leitch interview with Kingsmill Bond, the chief energy strategist for Carbon Tracker. You can listen to the interview on the Energy Insiders Podcast here.

Giles Parkinson

This week Carbon Tracker and Ember released a very significant report talking about the potential of wind and solar and there ability to help this sort of  massive transition that we’re about to embark on in the world. And we talked to Kingsmill Bond, who’s the chief energy strategist for Carbon Tracker. Kingsmill, thank you very much for joining Energy Insiders.

Kingsmill Bond  05:19

Great, thank you for having me.

Giles Parkinson  05:22

You’ve just released a report Sky’s the Limit. Timed, of course, with the Biden Climate Summit. The report has some fascinating predictions about the, or observations about the potential for wind and solar. But one of the things that struck me was the speed of the transition in wind and solar that we’ve already witnessed, and the fact that it is actually already delivering the fastest transition that we’ve ever seen. Faster than coal, gas, or oil or nuclear.

Kingsmill Bond  05:51

Yeah, that’s right. I mean, these other energy shifts that we saw,  to coal and then oil and gas and hydro and nuclear, the the kind of growth rates that they were getting was a compound annual growth rate of maybe 3 or 4%. So doubling every 20 years or so. Solar/wind have a compounded growth rate last year of 19%, that means they’re doubling roughly every three years. So by the time, if you’re doubling every three years rather than every 20, then obviously, what seven doublings versus one doubling,  it’s an extraordinary story. And I think the other point to emphasize is that many other technologies hit kind of limits to growth. So you know, the, the limit to the amount of hydro we could deploy, limit the amount of nuclear because its quite expensive, limits to fossil fuels, there are basically no limits to renewable energy deployment. Almost every single country in the world is just overflowing with renewable energy. And the fact that we’ve now crossed these, these cost barriers means that a huge amount of cheap energy has been unlocked. And the sky’s the limit, hence, the report.

David Leitch  07:05

I’ll let Giles keep asking questions but I just want to make an observation that the speed of deployment also has a virtual circle, because the learning rate is critically important in these technologies, solar, wind and batteries. And that when you double production, you reduce the unit cost by about 15 – 10 to 20%. And so that, you know, that’s become self fulfilling. Back to your Giles. Kingsmill, do you want to make an observation on that?

Kingsmill Bond  07:28

We are, this, this  learning curve, this virtuous cycle that renewables have, again, we got to realize it’s so different to fossil fuels. In fossil fuels it’s a fight against, of geology against technology. In renewables technology is working with size. So the bigger it gets, the cheaper it gets, the more you can deploy. And the sort of fond hope of the incumbent system for years has been that this will somehow stop, but it hasn’t stopped. And it’s carried on going. And I think I would really draw your attention to some very excellent academic work done by people like Doyne Farmer at the Smith School in Oxford, where he just points out that these technologies have very sticky learning curves. That is to say, once you’re on a learning curve, it basically carries on going. And that is what distinguishes these, these manufactured technologies from the extractive technologies of fossil fuels, which don’t have that learning curve. And that means it’s a totally different paradigm to what we’ve experienced before.

David Leitch  08:28

You’ve also got some interesting graphs that, you mentioned Australia, and the potential that Australia has. There’s an extraordinary graph there. It just shows Australia has such, in terms of wind and solar per capita, it leaves the world not just by a small margin, but it’s extraordinary.

Kingsmill Bond  08:44

I mean, it’s not surprising. Australia is a big, big country, and relatively small population, is very sunny, it’s got a lot of wind resources as well. So what we did in this report, we totted up the numbers for Australia, and indeed for every country in the world. And, and it’s astonishing when Australia’s got 10,000 megawatt hours per person per annum of renewable energy, technical potential, most of which has no economic. And that contrasts  with the global average, which are less than 1000, then there are certain countries like Japan where it’s closer to 100. So the point to me is that Australia can become a huge reserve of energy for the rest of Asia, for particularly for parts of Asia, like Japan and Korea and Singapore, which are lacking in renewable energy resources.

David Leitch  09:33

You know, it’s interesting because the others, in Australia we’ve kind of almost moved on for that. We’re very well accepting of the amount of wind and solar resource that we have, but we’ve moved on to the next set of issues which is like firming it all up and, and everything like that. And I think when you talk about the the cost of the energy, you do have to consider the total system cost. Wouldn’t you agree?

Kingsmill Bond  10:00

Of course, you do need to consider the total system cost. So you’ve got to think about not merely the cost of extraction as it were, but also the cost of distribution, getting it to places. And this, again, is where we’ve seen this, these amazing innovations in subsea cables. And long distance, high density transmission lines, which are making longer and longer distances possible. So it’s very clear that for countries which are deploying higher levels of renewables, the total system cost of renewables is significantly lower than that of fossil fuels. Because don’t forget with fossil fuels, it’s not just the extraction cost and the externalities and the pollution and the global warming. But it’s also the massive costs of building the infrastructure to ship, to shift this stuff around in the coal and the oil and the pipelines. And, and it’s very interesting to give a couple of stats on this. So Mark Jakobsen, for example, has calculated that the US uses 1.3% of its land for its fossil fuel system. So fossil fuels themselves very dense, but all the pipelines and infrastructure is not dense, and it’s very, very heavy. So you’ve got two orders of magnitude greater to shift this stuff around, than you do  for renewables, and that means it’s just ultimately going to be more expensive.

David Leitch  11:21

And if we leave Africa out, or the African continent, which has obviously got, when I say obviously, but it’s known to have an absolutely incredible solar resource, you know, significant fraction of the total world, I would imagine. If you left that out, sort of thought about the relationship between wind and offshore wind and solar. And then I think your report divides the wind and the solar into various categories based on you know, I guess proximity to demand, but also water depth for offshore wind and wind speed primarily. Even though technology is improving the outlook for low wind speed electricity generation, how would you think about the relationship between wind and solar and that stuff.

Kingsmill Bond  12:09

So the we took data from the largest, the energy consultancy on solar, and NREL on wind. And as you say, they totted up in different ways. And so the first point I guess, to be made is that there’s 10 times as much solar technical potential as there is wind. So the number is, as well as, about 5800, petawatt hours a year versus about 900. I should say, in case you worry about my math, it’s 5800, up to 10,000.

Anyway, the point is, there’s a lot more solar than there is of a wind. And then the second point, of course, is that there’s a lot more domestic opposition in many countries to putting up wind turbines, people don’t tend to like them so much. So the kind of solution that people will come up with in in, in every country in the world is going to be different.

And this is what we say in the report, the technical barriers have been crossed, the economic barriers have been crossed. Now all you have is a political distribution of how to figure out how to do this stuff. And it’s gonna vary from country to country.

So in the UK, which isn’t very sunny, we’ve got a fairly decent offshore wind resource. So we’re going to be using offshore wind. In countries like Australia, or indeed, large parts of Africa where you’ve got relatively distributed populations, you can use a lot of rooftop solar. And then, you know, some utility solar. Switzerland, for example, again, not a notably sunny country is planning to get 40% of its energy from rooftop solar.

And I think there’s a point I really want to emphasize is that when you start digging, when you start looking, in every single country in the world, least every single country where the policymakers are awake, people are now coming up with plans to figure out how to get hold of this extraordinary amount of renewable energy be it Pakistan, or the United States or the UK, there’s intelligent detailed analysis going on about how to figure it out.

And I think the, you know, the, the, the analogy can be drawn with the start of the Industrial Revolution, where people have this coal under the ground for years and didn’t know how to use it. And then someone figured out how to use it. And then suddenly, that released a cornucopia of innovation, and growth and development. That’s exactly what’s happening all over again.

David Leitch  14:25

And so again, I’ll just come back, well, how do you see trade in energy developing? I mean, you know, we can obviously put a cable between Singapore and Australia, for instance, but let’s just talk about Europe because I’m actually sick of talking about India, China and Japan where I think about them all day. Let’s just talk about Europe where I think Russia is a massive energy exporter to Europe in general at the moment. As a result of this change in the in the fuel to wind and solar, backed up by, I guess hydro for the firming of it at nighttime, and winter, how do you see energy trade evolving? Have you thought about that?

Kingsmill Bond  15:11

We thought a lot about this stuff. I mean, I guess the first point to to make, and in Warren Buffett’s famous aphorism, it’s much easier to shoot the horse than buy the car. That is to say, it’s much easier to find the losers of transitions than winners. And one of the very obvious conclusions about the growth of huge amounts of domestic energy resources is that we’re going to stop or significantly curtail our imports of fossil fuels right across the world. So Germany will significantly reduce its imports of fossil fuels from Russia. China is obviously going to stop, a small dig, obviously going to stop buying Australian coal, and so on and so forth.

And so the imports of fossil fuels will  clearly fall over time. And then, again, as you mentioned earlier, you’re going to see development of ever wider grids because grids enable countries to balance out different resources. It’s sunny in Portugal and it’s windy in northern Germany, for example, and you have ever wider grids that will see the building now of more and more grids and distributions and transmission in order to maximize this resource.

And then within Europe, just to finish on this issue, Europe’s actually quite an interesting case because if we take as a kind of framework that the global average is 100 times as much renewable energy as people need, as people currently use, is the technical potential. In Europe, it’s only 17. And there are certain countries like Belgium where it’s one and a half or Germany where it’s about three. And what that means is that it’s just going to be much, much harder for those countries to do it. And they will have to open up their borders to more imports of renewables. So, but we’re seeing exactly that. So in the German, Denmark and Norway, and we’ll see many more interconnectors.

Giles Parkinson  17:10

You’ve released this report, as I mentioned at the start, at the time of the Biden summit, we’re actually recording this just before the start of that summit, but we can presume that there’s going to be a strong announcement from the US and maybe from other countries. How important do you think that the Biden presidency in his initiative now is going to be to unlocking this massive potential that you’ve identified in this report? And in some countries, you say that they’re already acting?

Kingsmill Bond  17:38

Well, we already have released the report, because the policymakers of the world are searching for the answer, and this is the answer. So we started trying to provide them  with the solution. And I think it’s worth saying that one of the reasons why the policymakers have been a little bit behind the curve is because so many of the current forecasters such as the IEA, or the EIA in the United States have been so slow. And so behind the curve, and so close to the incumbency, they have failed to see the speed of change, and they have misled policymakers and taken them down the wrong path.

We’ve [produced] this analysis just to demonstrate the huge, huge opportunity. So to come back to the role of policymakers in this shift. They play two roles, actually, the initial role was to get it kicked off, which is what they were doing like 10 or 20 years ago, and you know, hats off to Germany, and China and India, the United States and Japan in that time for doing that. That’s happened now. The second role of policymakers is to remove the many barriers to change which currently favor the fossil fuel incumbency, and allow the market actually to do the work. And that’s, it’s a really important task now. And that’s what they need to start doing. They need to stop listening to the siren voices of the fossil fuel companies, which tell them that the answer is biomass and CCS and other completely fake solutions and get on with unleashing the power of renewable energy resources.

David Leitch  18:57

I agree with a lot of that, and particularly the stuff about CCS, which, but I won’t spend time on it now. But I would like and I would say to you, that you have to think we already know in Australia that you have to think beyond wind and solar, you have to think about control of the system. I mean, inertia and that sort of stuff. You have to think about what to do on those cold, windy nights when the wind and solar isn’t there, for one reason and another.

It’s more complex than just wind and solar. But the question I wanted to ask about is the European new deal and policy in Europe, but where exactly is the state of debate in your mind now? How much enthusiasm is there in Europe overall for the, you know, 50% or 55% by 2030 style of target, and I might add it goes beyond the power system into, you know, transport and, and decarbonisation of other sectors as well. You just got a general comment?

Kingsmill Bond  19:59

Yeah, sure. I mean, look in Europe, as you know, there’s a lot of enthusiasm for this and potential German green Chancellor, for example. And they keep on ratcheting the targets higher. But I think you’ve got to realize that politicians are sort of following technologies. And so why did Boris Johnson, for example, decide to ban EV’s? It’s not because he’s suddenly got, sorry ban ICE cars, it’s not because he got religion, its because the price of battery fell so far that it opened up the opportunity to do that.

So I think that’s what’s happening now, as cost falls, as the pricing environment changes, so politicians have a new suite of opportunities and an increasingly, particularly in Europe, they’re seizing them. But I should say, I think there’s a lot of, I don’t think Europe is necessarily making all the right decisions. I mean, there’s a lot of kind of dirigiste top down attempts to solve these problems with taxonomies and all the rest of it. I’m personally not totally convinced that that’s the right way. I think it’d be much better to to make the polluters pay and let the market sorted out. But that’s a kind of secondary debate.

Giles Parkinson  21:00

Kingsmill we do understand that you do have another call to take. So we just have to say thank you very much for joining us in this podcast.

Kingsmill Bond  21:08

Brilliant. Thank you very much, gentlemen, always a pleasure.

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