Jan. 4, 2023

Ep111: Daniel Yergin "The World's Most Influential Energy Analyst"

Cleaning Up begins the new year and its eighth season in conversation with Daniel Yergin. Yergin, Vice Chairman of S&P Global, is a Pulitzer Prize-winning historian and one of the world’s leading authorities on energy.

Alongside discussing the latest edition of his best-selling book, The New Map, Yergin also provided some fascinating predictions for the future of global energy supply and demand, its international nuances, and its historical echoes.

Daniel Yergin is the author of a trilogy of books on energy and is seen by many as America’s foremost energy expert. He was co-founder of Cambridge Energy Research Associates and currently serves as Vice Chairman of S&P Global, one of the world’s largest research and information companies.

Yergin is the author of several bestselling works of history, most notably The Prize: the Epic Quest for Oil Money and Power (1990), which was awarded the Pulitzer Prize and has been translated into 20 languages. His latest book is The New Map: Energy, Climate, and the Clash of Nations (2020). Yergin’s other work includes The Quest: Energy, Security, and the Remaking of the Modern World (2011), and Commanding Heights: The Battle for the World Economy (1998).

Yergin holds a BA from Yale University and a PhD from Cambridge University, where he was a Marshall Scholar. Yergin has served on the US Secretary of Energy Advisory Board under the last four presidents.

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Read: Edited Highlights: CLICK HERE

View: Relevant Guest & Topic Links:

Purchase The New Map: CLICK HERE

On the energy crisis: CLICK HERE

On copper in the energy transition: CLICK HERE

On Putin and winter in Europe: CLICK HERE

Watch: Related Episodes: 

Nobuo Tanaka, Former Head of the International Energy Agency: CLICK HERE

Julio Friedmann, Chief Scientist at Carbon Direct: CLICK HERE

Cleaning Up Audioblog Episode 7: The Great Clean Energy Acceleration: CLICK HERE

Also Mentioned:

Extraordinary Popular Delusions and the Madness of Crowds by Charles Mackay: CLICK HERE

Liebreich: After Ukraine: The Great Clean Energy Acceleration: CLICK HERE



Michael LiebreichSo, Dan, welcome to Cleaning Up. Thank you so much for sharing some time with us here today.

Dan YerginGlad to join you, Michael.

MLI always start by asking, where are you calling in from? You're presumably in Washington right now?

DYI'm in Washington DC where I'm placed, exactly.

MLAnd what better observatory to watch all of the extraordinary things going on in 2022, which is such a bizarre and strange year in energy.

DYYeah, well in energy and in general, Washington DC really is a cauldron. And so many of the different forces converge, and so many different people converge here.

MLNow, 2022: do you have any analogues? You are the great historian of the energy sector, I think it's fair to say, and we'll talk about the most recent of your books, The New Map in a moment, but going back all the way through till the 1970s and beyond, are there any analogues that you could draw on just to help us sort of make sense of what's going on?

DYYes and no. I mean, in a way no, because we've never had this kind of globalized, complicated world. But I did think, as the crisis was unfolding in the first part of 2022, I was thinking, well, the only analogue was the 1970s. And it's not a very good analogue, because that was just about oil. This has been oil, natural gas, coal, renewables, uranium. But there were certain similarities, that is that, you had first an energy crisis, because of underinvestment, and you had tight markets going in, and really, that was the basis of the crisis. And then that intersected with a geopolitical crisis of war. And then the world afterwards was different than the world before, and certainly we know that the world afterwards, or the world we're already in, is very different from the world at the beginning of 2022. I mean, the world... the beginning of 2023 would not have been expected at the beginning of 2022.

DYNow, you in The New Map, you actually wrote a lot about Ukraine, and you actually fingered it as one of the instabilities. You actually wrote very explicitly about Russia's unresolved - at least in Russia's mind - unresolved borders. Do you... is that something that gives you pride? When you look at that, do you think, yeah, I kind of got that one?

DYWell, it gives me shivers actually, to see it. Because, you know, I did write that Ukraine was going to blow up between Russia and the West. I didn't think it would go on... this kind of war, that would not have been imagined. But I think it did go to what you really said, that the reason this happened is not the reasons that Russians gave about NATO, that there was a threat to Russia... The reason is that Putin refused to accept the settlement at the end of the Cold War; he simply refused to accept it, he refused to accept the end of the Soviet Union. He said it was the biggest tragedy of the 20th century, which, when you think about what happened with Nazi Germany, or other things, you know, that's a pretty big reach there. And he was determined, and he continually said, that Ukraine was not a country; he kept saying it all the time. And then you could see the interaction between that, and the struggles over natural gas, and those were the things that led me to say, just looking at the pattern, that where these trends were going, these trends were going to go to a conflict.

DYAnd you talked about this kind of Novorossiya, this idea that President Putin is trying to reassemble the Empire around Russia, so to reconstruct, maybe not exactly the Soviet Union, but something along those lines. So, you wrote about that; when you reread it, do you think that it gives an explanation for more of, particularly Russia's behavior, in the decades previously, which maybe we all missed?

DYThat's a very interesting question. I mean, I think it is important to listen to what people say, and he was saying this. And, you know, after all, he had taken Crimea in 2014, and that had kind of just been accepted. And I think, you know, he would say, he wrote an essay in the summer of 2021 - or somebody wrote an essay for him, a 5000-word essay - saying Ukrainians and Russians are brothers, the same people. So, pretty strong message that he was sending. Of course, it has a bitter irony when you look at the reign of missiles and drones that Russia has now been sending down on the civilian population of Ukraine.

MLMoving from this point forwards... I've written about, after Ukraine, the Great Clean Energy Acceleration; so, in my world, I look at the implications for the shift towards clean energy, that's kind of front and centre in my mind as I think about what 2022 pivots into. Do you think that that's a fair characterization, or do you see the implications of this crisis... You've sort of focused more on what it will do within the broader energy sector.

DYI think the answer, Michael, it's both. I think that we've seen the rediscovery of energy security. It had fallen off the table for different reasons. The United States... you had, I think it was eight presidents I counted, kept saying, the US needed to be energy independent and it seemed to be joke, never happened. The Shale revolution happened, and that meant that people didn't worry about energy security. Europe was different, Europe thought, you know, we can depend on Russian gas, you know, it has its advances on climate, didn't need to worry about energy security. The country that never forgot about energy security is Japan, for obvious reasons, and to some degree China, too. But among the other countries it was pretty forgotten, it's back on the agenda. And I think what you see is really moving on two paths. One, as you say, an acceleration of renewables, and an acceleration not only because of climate, but as you pointed out in some of your writings, because it's also a form of energy security; it's a form of diversification. But the other is a real appreciation of conventional resources. And when you see Germany going ahead with five natural gas, floating regasification facilities, building a new regasification facility in 200 days - normally it takes years, or forever, to get something done in Germany of that nature. You see the Chancellor of Germany flying off to Senegal and Qatar in search of LNG; you realize that there's a recognition that things don't happen overnight. And you don't want to create shortages, that lead to turmoil, or to political disadvantage. So, I think you're quite right about the acceleration, certainly, that's what's reflected in the Inflation Reduction Act in the United States. But I think at the same time, it's also a recognition that you need to [inaudible] resources. And by the way, I see a different perspective in developing countries. I see - and I write about this in The New Map, and I think it's important to understand - that there's a new north-south divide on these issues; not the north-south divide in the 70s, and 80s, which was about the price of commodities, but about the nature of the energy transition.

MLRight now, what I'd like to do is move on to The New Map, and I'm going to ask you in a second to lay out the thesis, because we've kind of started to unpack it, but I want to give you the chance to kind of put it in the frameworks that you used in The New Map. But just before we do that; The New Map, is it really the third of a trilogy? Because certainly my first awareness of your writing was The Prize. You've written quite a few books, but I see The Prize, The Quest and The New Map as a trilogy. I mean, is that how you thought about it, when you first started to type the opening words of The Prize?

DYWell... I thought... that the world has changed so much. And literally, it started out looking at how maps of energy supply and demand were changing, those were the things that really led me to think about the book. It was only afterwards that I started thinking about as a trilogy. But there are two other books I did that I think sort of add to it, and I don't know, if you have five books what it adds up to... My first book actually was about the origins of the Soviet-American Cold War, or the Soviet-American-European Cold War. And I never thought I would be writing another book about the origins of the Cold War, and when I was writing The New Map, I thought, I'm writing about a new Cold War, and of course, now that language has become more common. And then I did a book called Commanding Heights about the changing balance between state and market.

MLWith Joe Stanislaw, I believe?

DYAnd that book - and then we turned that into a PBS, a BBC series - and that too figures in there. So, those themes of those other two books are in The New Map, but I think at the end of the day, as you say, I didn't set out to say, I'm going to write a trilogy, but I guess the facts of the matter indicate that I did.

MLThey're very good. And certainly, there is a sort of narrative thread, picking up as you say, the Cold War issues, Commanding Heights, but then, particularly the energy writing - The Prize, The Quest, The New Map - sort of fits together very nicely for me. Okay, so if you can summarize, please, the thesis of The New Map. And it's important to point out that there's been two editions, so maybe we start with the original thesis, and then we get on to the epilogue, the new update.

DYYeah, I think that the thesis really was that you had a new map of energy and geopolitics coming together, that is the thesis. And then I explored it through a series of maps; America's map, basically around shale, and more revolutionary I think than people may recognize, and how it changed the world in ways that people didn’t and haven't recognized. I mean to think Michael today, that US LNG is now one of the foundations of European energy security... you would not have said that at the beginning of 2022. And yet, that was what was happening. Then the second map is the one you've already talked about, Russia's map, which is really Putin wanting to redraw the map, and Russia as an energy superpower. And one thing we can talk about, is Russia is still going to be an energy superpower? And that's something you've touched on in your most recent essay. The third, of course, is China's map, which is about... there's the map of the South China Sea, there's a map of the Belt and Road, and what do those mean, and again, what does it mean in terms of energy. And there, the question is: what happened to what I call the WTO consensus? Which was the globalization consensus - we're all in it together. And now, it's all about great power competition, almost a pre-World War One quality to it. And then there's the new maps of the Middle East, and that's about, you know, when you see Saudi Arabia and Abu Dhabi, you know, having some of the cheapest solar energy in the world, that's part of a new map, and a kind of changing economy. And of course, ISIS tried to change the map, really eliminate the state system that had been created after World War One in the Middle East. And then of course, there's - I couldn't resist this title, Roadmap of the Future - about the electric car and autonomous vehicles. And then climate map, which is really about the question - and I think we'll talk about it more - is about, what is an energy transition, and how different is this energy transition. So, the difference... the new edition, which is behind you, the paperback, is really an update for the Biden years, let's call it that way, where we are today. And a US administration that came in only focused on climate, but suddenly found that they had to really worry about oil supply to, to the degree - although they said it wasn't for that reason - that the President actually went to Saudi Arabia. And then Michael, this is a very funny thing... Length is an issue, and I did not want The New Map to be as long as The Quest or as long as The Prize. And I wrote this section about China's map, the section called The Four Ghosts Who Haunt the South China Sea. And the publisher said, err, this is a little long, let's take it out. So, painfully took it out, published it in the Atlantic, and then I put it back in the paperback, but as an appendix. And it's really meant to be a warning about... you said that the book was a warning about what was going to happen with Russia-Ukraine. Obviously, it's a warning about the risks that now exist in a world of great power competition, and the lessons. So, that's the change from the hardcover to the paperback.

MLLet me say, that is actually my favorite piece of the book. I mean, it is a beautiful piece of writing, beautifully constructed around these four ghosts, these four characters, whose thinking has influenced both the Chinese and the non-Chinese views of the South China Sea, which... What you're doing is essentially laying down another marker saying, this could blow up, this could be the next equivalent of the Ukraine crisis.

DYExactly. And one of the four ghosts is Grotius, Hugo Grotius, who was this Dutch lawyer of several centuries ago, who's considered the father of the Law of the Sea. And ironically, the Law of the Sea was born out of a military collision in the South China Sea hundreds of years ago. I mean, it's just the ironies of history.

MLWell, there is nothing completely new about anything, it's all just the same issues coming around again and again. So, it starts in the South China Sea, and who knows? And of course, we have to hope that it doesn't... I'm always looking for what could get weirder, or more disturbing than 2022. And of course, there are candidates there, both with Taiwan and the South China Sea.

DYI think that's the big issue now is, does this relationship between China and the United States stabilize or not? And Michael, so much... I really thought about it in terms of 2022, and all of Putin's miscalculations, all of which were rational, but all of which were wrong. And if you look at history, it is so littered with miscalculations where people make mistakes, and then unintended consequences. The First World War was supposed to be over in a few weeks; it went on for four years. So, you have to worry about Taiwan, and what consequences, if people make mistakes or misunderstand the circumstances of what's happening. And, you know, it's clear before our eyes.

MLThat one is chilling on a human basis, but on an economic basis, if you look at Taiwan's market share in these critical chips, I mean... This doesn't bear thinking about; there are no washing machines, there are no cars made. If that one...

DYWhat we're seeing is an upheaval in the supply chains for global oil and gas, but it's part of a larger upheaval in global supply chains. And that is what takes me back a little bit to Commanding Heights is, we had this three-decade period of globalization, people being confident about it, incredible integration in the global economy, much more than anybody recognized. I think, at least, I can't say for Britain, but certainly the United States, actually COVID was this wake-up call to see how integrated... You want masks, you go to China. You know, you want medicine, you go to China; we didn't realize how interconnected it is. And, as you say, now with chips. So, all these supply chains have been created on the basis of efficiency, let's get to lowest costs. Now you're suddenly looking at in terms of security, in terms of resilience, in terms of, what are the risks of the supply chain, and if you go back to 2019, that wasn't happening.

MLCOVID was certainly the wake-up call. But if you also look at the rhetoric of the Biden administration, the nature of the inflation Reduction Act, this beyond the WTO consensus... I guess it's kind of the China map but colliding with the climate and climate technology map. There is definitely a focus on trying to disentangle these global supply chains. Where does that lead us?

DYWell, it's very interesting, because you could look at this Inflation Reduction Act, and you could also say, and I think you're saying this, Michael, it's also a Compete with China Act, and a Rebuild our Supply Chain Act. And I think this is kind of a wake-up call: we did a study, spent eight months on it, on copper, and it was so interesting to understand that copper is the metal of electrification, and so much of the energy transition is about electrification, and the dependence on copper. Where does copper come from? Its supply is more concentrated than oil. And by the way, China has a preeminent position in copper, just as it does in lithium-ion batteries, just as it does in solar panels. And if you read the Inflation Reduction Act, a lot of it is trying to change those supply chains. And the EU has done a report on minerals, as well; they're not explicit about China, like the US government's ones are, but you know what they're talking about, they're talking about dependence on China. Of course, you have to look at different countries, but if you look at Germany, Chancellor Scholz at the end of 2022 led a big delegation of industrialists to China, because, of course, for Germany, China is a very important export market.

MLBut to what extent do you think that the competition - whether it's over copper, or rare earths or lithium, nickel, there's a whole list of critical minerals... Are they taking over? Or will they take over from oil and gas, and historically coal, as being the key source of friction, competitive interface between these great powers?

DYI wouldn't want to overdramatize, but I do think, yes. I think that is.... As you pointed out at the beginning, I'm here in Washington, what do I hear a lot? I hear a lot about, wow, the Chinese spent 15 years getting a dominant position in these minerals, how do we catch up with that? That's a very big thing here, so. What you kind of see, Michael, is almost as though the new supply chains for net zero [are] colliding with great power competition. How serious it gets, or doesn't get, depends upon how people manage it, but you certainly see that in the language, and you see it in these recent pieces of legislation.

ML And we thought a few years back, when China tried to deny rare earth supplies to Japan, but that sort of... They seem to have backed away from that. I don't know if you recall that episode?

DYI do recall it. I was somewhere, somebody said, well, China's never played the rare earth card, and I said, I think they did play the rare earth card with Japan. And rare earths, you need them if you're going to make wind turbines, and magnets and everything. So, I think that was an alarm. That's interesting, then the cost of rare earths came down. And I think that the projects that people were launching, new ones never got off the ground. So, I think there's clearly a competition there. I think we can point to the electric car, because of course, in the West, we mainly focus on Tesla. And I have a great story in The New Map about how Tesla came about as a result of a lunch at a fish restaurants in Los Angeles in 2003, which I will tell for just a second very briefly. This young man, JB Straubel, loved electric movement, tried to convince Elon Musk to do an electric plane, he said, forget it. He said electric car, he said I like that idea. And JB went on to be the Chief Technology Officer for 15 years for Tesla, and Musk said a couple of years ago, I quote him in the book saying, if that lunch hadn't taken place, there might not have been a Tesla, which is amazing to think about, the impact on the automobile industry. But at the same time, there was a movement towards electric cars in China, driven by an engineer who had gone off and worked for Audi, and then come back to Germany [sic]. What do they call them? Returning turtles [haigui]? I forgot what the term is. And so, China was on that track of electric cars, not just [because of] climate, pollution, concern about the import of oil, and the vulnerability that comes from that, but also for another reason. China realized it could not compete with internal combustion engines; it was too late. But it could compete with electric cars, and really become a major force in the global market for EVs, and those Chinese EVs are now starting to show up in Europe, and they sell at lower price points. So, I think we're going to see, actually - and I don't know what you think, Michael - but there's going to be a focus in the next couple of years on this new competition around electric cars. And China's a very formidable competitor. I don't know if you see it that way, too.

MLI absolutely do. I'm put in mind, there was a BNEF conference about 10 years ago in Shanghai. And the moderator of the session, there was a very senior Chinese lawmaker around transportation, and our moderator asked, by 2030, what percentage of new cars in China will be electric, will have some form of plug? And the chap said 80%. And our moderator said, 18, one, eight? And the chap said, no, no, no, 80, and there was a sort of gasp, but basically disbelief. And yet, you know, here we are, and it's now 20% in 2022, it's gone through 20%, and maybe they won't get all the way to 80, but they're going certainly in that direction. And yes, they want to export them as well.

DYRight, exactly. So, they see that as a major new market, and they will have a competitive advantage because they'll have developed that scale.

MLIn The New Map, you highlight three technologies that you think will play a big role on what you call the march to net zero. I'm trying to work our way back to climate, but via the technologies. We've talked about one, which is electric vehicles; one of the three that you pulled out was batteries, which aligns with electric vehicles. The other two were CCS and hydrogen. Are those still your top three, two, three years since you wrote that?

DYWell, I think, even the IPCC says, you don't get to your 2050 goals without CCUS. And with carbon capture use and storage, there's some people who just don't want it or don't think it belongs there. I think it's still early stages, but I think you don't get to get to your goals without it, because the world's going to continue actually to use oil and gas for longer than many people may think is the case. Hydrogen, everywhere you go in the world, Michael, you know this, everywhere you go, there's hydrogen euphoria, that hydrogen is going to do it. And you have these companies that have great engineering, execution, scale capabilities - oil and gas and other industries - now really gearing up to make a major commitment. And certainly, in Europe, Germany pushing hydrogen very aggressively, and the Inflation Reduction Act in the United States gives a big boost to it. One of the things... Ultimately, I think the answers obviously on climate are going to be technology. And at CERAWeek, which is our big conference in Houston, we created a section that's as big as the conference itself called the Agora, where you see the technologies, and you just realize, the range of technologies. There's going to be things that probably we don't really see now, that in ten or 15 years will have a big impact, because the incentive is so great, and the momentum is so great. I mean, I go into this Agora as I did last March, and my eyes just... so many different technologies. And you see people there, who you wouldn't expect to see at a conference like that, like Amazon and Microsoft, the tech companies are there too. So, there could be negative surprises, and we've been talking about some of them; the positive surprises, I think, will be on technology. But [inaudible] hydrogen, you have a very differentiated view of hydrogen, and have given it a lot of thought. And I think your hydrogen ladder is one very interesting way to look at it.

MLI feel like most days, I'm in what I would call the hydrogen cage-fight, where there's some people who think hydrogen will be used for everything, and then I'm trying to sound a note of caution. A couple of days ago, I was called a hydrogen denier, which I found kind of funny and kind of offensive, because that's certainly not what I am.

DYI think the whole use of the word denier, because it's really a play on Holocaust denier, probably should be taken out of the vocabulary.

MLYou know, let me tell you, I never use the word, because it is an attempt to push somebody out of a discussion, by analogy with other discussions, and the Holocaust. I agree with you, I completely agree it's an inappropriate word. I chose not to be too upset about being called a hydrogen denier.

DYI mean, how could they call you that? I mean, you see the role of hydrogen.. But I think I find it interesting, your perspectives is in a differentiated way, rather than the answer to everything.

MLBut some people apparently find that threatening because they're all-in on hydrogen.

DYMichael can I ask you your observation? How did this momentum about hydrogen develop? I mean, I can see.... I mean, you have an oil and gas industry that handles hydrogen, that makes fertilizer, using the refineries. So, it's not like you have to invent something. But how did we get this kind of incredible momentum bandwagon?

MLWell, look, there's a fantastic book, which probably can give more answers than I ever could, called Popular Delusions and the Madness of Crowds, which I'm sure you're familiar with, and it charts bubbles from the Tulip Bubble to...

DYI have it in the other room, I keep it out.

MLExactly, maybe our homework will be to reread it. There's a few things; I think there's something intellectually very attractive about a molecule that burns becomes water. I think it was positioned as a saviour technology in the 1970s, particularly in Japan - it was the only way they could see to continue to power their economy. And some of those brilliant young engineers are now still running large chunks of Japanese politics and engineering. And I think that there are there is also a... I don't know, I'm not sure if I should use the word cynical. But there is a huge amount of money being spent by lobbying organizations; the Hydrogen Council spending tens of millions buying the best possible research that money can buy from McKinsey, and then promoting this vision, which just doesn't bear systems thinking. For instance, how much liquid hydrogen you can actually get to an airport, or how big the fuselage of a hydrogen plane would be, and when you start to push it, it doesn't make sense. They're spending huge amounts of money on it.

DYThen there's the practical question. Well, first of all, obviously, it's a very small molecule, so it has to be managed differently. But the thing that strikes me; when people ask me about hydrogen, is it going to have a big impact or not, I say, we won't know for two or three years. Because we're still in in that phase. I was talking to the CEO of one of the major European energy companies who said he went to his industrial base in his country and said, we can offer you hydrogen, and they said, well, can you also give us new valves and new pipes? Because I think there's an infrastructure question about... you have to re-engineer a lot of things to use it. But there's a lot of momentum.

MLTo a certain extent you can re-engineer. So, you can upgrade the pipes, the valves, the pumps, what I'm fascinated by...

DYSomebody has to pay for that, though.

MLYou have to pay, but we get smart, and the costs come down. I'm fascinated that people don't realize just how bulky hydrogen is. So, to carry the same amount of energy in hydrogen as you do in LNG, is two and a half times as big.

DYRight? I mean, one forgets why oil and gas are attractive. It's because they have a lot of compact energy.

MLThat's right. It's the sweet spot of gravimetric and volumetric energy density; there's a sweet spot, and hydrogen's out here, and batteries, of course, are at the other end. But I want to come back to these three choices, because what you didn't highlight... You didn't say, well, let's have five choices, and include renewables and nuclear.

DYOkay. Well, I mean, we actually did a study - which I think I cited - this paper we did for Breakthrough Energy in 2019, and we had a whole host of technologies, including things that don't really make the list like building technology, making buildings more efficient. Your house is more can be more efficient.

MLMy heat pump, I'm obsessed with heat pumps.

DYYou know, the first book I did on energy was actually at the Harvard Business School, called Energy Future - now, it's long passed. But the part I did was energy efficiency, and I've been always obsessed with energy efficiency, and think it's the underestimated energy resource. And we don't think about that being more efficient can actually be one of the most important technologies. But I think the other two that you've talked about... Obviously, I mean, it's amazing... In The Quest, the middle book of what you call the trilogy, I got really interested in the question of, where did modern solar and modern wind come from? And they're both really industries that emerged - or businesses, or technologies - that emerged in the 70s and 80s, and it took about three decades to really bring the cost down. But the solar revolution, the cost, the 90%, drop in solar... I mean, there may be a shale revolution, there's certainly a solar revolution.

MLThere's a line, if I might, from The New Map, which made me smile. If I just read it to you, you said: "the map hardly assures us a straight line, for disruptions will, with some frequency, inevitably redirect the path." And you then give a few examples: the shale revolution was not anticipated; nor was the financial crisis; the Arab Spring; the nuclear accident at Fukushima. And then you say, nor the rebirth of the electric car, which I think it's fair to say before 2010 and Elon Musk, was not foreseen. But the next one: "nor the plummeting in the costs of solar." And of course, you know, what I've been doing since 2004, is essentially betting on the plummeting of the cost of solar. So that one did make me smile, I will admit.

DYWell, I think that's the one that... You saw it coming, and most people didn't see it coming. And it's still a question, you know, how much is the advance in technology, and how much Chinese manufacturing, scale and skill. And, you know, someday I would love to see somebody explore it: is it just the improvement, is it the management of their supply chains? I mean, what would you attribute...? So, let me turn the question around to you, Michael: what do you think the elements were that that brought solar down?

MLIf I look back, I had great fortune, because early in my career, by complete coincidence, I calculated a lot of learning curves. This was before I went to business school, we're talking 1986. I was doing log-log and doing experience curves. And so, when you look at solar, which is a material science; it's not mechanical engineering, it's material science. And then the controls of solar are of course, software, right? You can make a power station of a million rooves, but you can only do that because of software. And the software and network benefits are also, they're even more powerful than material science learning curves. So, for me, it was always - I don't want to say obvious - but it was just a Moore's law technology. Wind less so, because it's mechanical engineering, but I could see that wind would come down as well. I think what happened was that it wasn't that it suddenly got cheaper, it was just plugging away down that curve, and then it reached a certain break point. I can't tell you how many times I was asked, when will renewable energy be grid competitive? I was asked that every day from 2004 to 2015, and then the question went away: the answer is 2015. And there was this kind of psychological readjustment where people saw renewables as cheap. But the underlying cost curve, I think, was fairly continuous.

DYBut with wind it was different. Wind is scale, isn't it?

MLWell, wind is scale, it's very different in its mechanism; it's not the material science, its higher turbines, hub heights, it's better aerodynamics, it's better planning of the use of the wind, harvesting of the wind more efficiently. But again, it is a learning... Learning curves encompass they bring in technology, they bring in scale, they bring in cost of capital. You mush it all together, and you get these curves, which are quite reliable. Wind is an interesting one, because what was happening was, the turbines were remaining very expensive. But what we didn't all notice was that their output, their yield factors were going up. And so, the benefit was not in the cost of the turbine, but it was in the cost of the electricity. Dan, we should write a book about this together!

DYWell, it's very interesting to say, how did this actually happen? I mean, the question about wind is - and I think we've seen, at least recently, a little upturn in the price of solar - whether the competition for the inputs into wind. Whether we're going to see, as with electric cars, not everything: if everybody rushes to the same side of the ship at the same time, does it tip? And are we going to see the cost of the inputs going up? Obviously, with wind, particularly offshore wind, you have supply chain issues, some of which are legal; can a ship, if you have a non-US crew, can it work in US waters on putting up a wind turbine? So, some of these are jurisdictional issues. But I think that will be one question of whether we're going to see - not on solar, but on wind - whether there'll be cost pressures that now come from trying to go to scale.

MLI think we're going to see some very difficult years. The supply chain constraints are very real, they're very real in batteries as well. But ultimately, there is no shortage of... All of the materials you need - whether it's electric vehicles, or wind or solar - the rare earths are not really rare. So, I think ultimately, I'm very confident we'll get back to the cost curve.

DYTo go back to our copper study, as I said copper is more concentrated than oil, and two countries, Peru and Chile, have 38% of world copper. And then you have an issue which a mentor of mine called the obsolescing bargain: that you go in, Liebreich Mining goes in, and spends $6 million to build a mine, and open a new mine, then the government changes in that country. And they say, well, you may have seen it as risky, but now it's produced, it's not risky anymore, and by the way, the commodity price has gone up, we want more. And therefore, Liebreich Mining struggles with that and says, well, we're not going to invest anymore in country X, because they've changed the terms. So, the electric car has two and a half times more copper than conventional cars. So, that gets us back into politics and geopolitics again, right.

MLSo there we're back to the friction points between the great powers. That's actually a good segue to a question that I have. You've got these maps: you've got the US map; the Russia map; the China map; the Middle East map; the road map; the climate map. To what extent though, are they maps of the terrain as it is, versus a map of the future? Because in a few cases, it feels to me like you say, this is going to be the conflict, it's going to be climate versus energy security - which is a kind of map, it helps you to understand something - but it doesn't tell you... It's kind of a Here-Be-Dragons- type map, not, and this-is-what-to-do type map.

DYWell, I think the China map is one that I would really recommend people read, because I think that's very forward-looking, and it kind of points to where the world is going. And I think if you want to think about the big issues that will dominate, I think [read] that chapter. I think the other one that's forward looking - and is very much in your bailiwick - is the climate map, and the question about the energy transition. Because everywhere in the world, you know, even more than hydrogen, which you hear, the two words are energy transition. And so [I] looked at this energy transition and realized this energy transition is not like any energy transition before. I did something very bold in the book; I said that the energy transition began in January 1709, when an English metal worker figured out you can make iron better using coal than wood. But those energy transitions were really energy additions, as you know, and they unfolded over a long period of time. To say, in a quarter of a century, you're going to change the energy foundations of $100 trillion economy? I think one has to approach that with at least a little bit of modesty. There'll be surprises on the upside, particularly in technology, which you've been so focused on Michael. But also, there are going to be - as the title of a piece I have in the new magazine from the IMF - there are going to be some bumps in the road on the way to energy transition, and one of them is the difference in perspective between the developed and developing countries.

MLAre you essentially saying we're not going to have that... That all these marvelous ideas of transition, that they're not going to happen?  Instead of saying, oh, we should be cautious... is it not going to happen?

DYI think the direction is clear, we are going to move in that direction. And ultimately, again, it will be technology that really drives it, and innovation that drives it. I think the notion of the specific timing, that there is a magic date, is something that you have to stand back and just say, is that really realistic? Is it doable? You know, the energy crisis that we've been in began six months before the Russians invaded Ukraine. Are we going to have a series of shortages, and what are called pre-emptive underinvestment, which will lead to a backlash among publics? So, I just think to pilot a $100 trillion economy and say, oh, we'll just make it all sail through smooth seas, I think is just not the way history works. I mean, who saw COVID? [inaudible] Who saw the Russian... that this war would go on in Ukraine? I mean, what else is going to happen that is going to come along? And so, all I'm saying is, I think direction is very clear. But a little bit, I think a little bit of modesty, in terms of knowing how one is going to make one's way and be prepared for setbacks and challenges.

MLThe question that raises though is, what do you say to those people who say, look, nature is not going to negotiate; nature doesn't care about Ukraine, wars... nature, the climate doesn't care about energy poverty, or any of this; what what the climate will do is what the climate will do. And that is such a pressing urgency, that something must give. How do you respond to that?

DYI think these are very difficult questions, but I would point out that everybody says 2050 - China says 2060; India says 2070. You're looking at almost 40% of emissions. So how can you say that the world in 2050 is going to be at this level, when two of the three biggest emitters are saying we're not actually in that game? So, you know, I just don't know how you put those pieces together.

MLI had Bill McKibben, father of the divestment movement, on this show. And I asked him - he'd been arrested numerous times for his protests - and I asked him, kind of in a nice way, why he'd never gone over to China and been arrested there. And he's very articulate, he gave a brilliant answer, as you'd expect, but he didn't really answer the question.

DYYeah, well, I'm sorry: China has decided, Xi Jinping talks about the China Dream. China is going to do what China wants to do.... I mean, look at how differently they're managing the pandemic. And so, you know, I don't think Brussels, the EU, is going to be able to dictate to China what it does.

MLI want to finish, if I might, because I'm aware of time: you spend a lot of time in India, in fact, you're the only non-Indian on a very eminent panel there, and also the Middle East, shorthand for a number of oil and gas producing countries. Could you summarize - and it may be that this is the Middle East map plus the India map - can you summarize, in a sense, their side of this discussion about the urgency of climate action? And how it plays out against energy security or energy provision?

DYWell, let's differentiate. India's 1.4 billion people; it's per capita incomes, are maybe 1/15 or 1/20 of the per capita incomes of Europe. So, they have other priorities, which is poverty reduction. For them, the energy transition is getting people moving from burning wood and waste to using LPG. So, the message I've gotten from India is that there's not a single energy transition, there are energy transitions. So big commitment, big commitment to renewable in India from the Modi government; big commitment to hydrogen, Michael, as you well know, but also building a $60 billion natural gas distribution system. So, their answer is that there are multiple paths, and they have priorities: climate is a priority, but so is poverty, so is health, so is raising incomes. So, they're just looking at it differently. And I work in a project now called Energy Asia, where these Southeast Asian countries say, we need natural gas, that we needed to back out coal. And if you want to really have a big impact on emissions, back out coal quickly, which we can do with gas. The Middle East, really, we're talking [about] Saudi Arabia and the UAE, Abu Dhabi. And it's interesting to me... Abu Dhabi established Masdar in 2007 to work on renewable energy, and they're now, I think, one of the biggest renewable energy developers in the world. So, they have gone down two tracks: expand production capability - because they see that declining elsewhere in the world, and the world will still need oil - and also saying we're going to put in the cheapest solar energy in the world, and we're going to promote those technologies. So, I think it's a very different voice now [in] let's say Saudi Arabia on these issues, than seven or eight years ago. I think you see that, that they say, there is an energy transition, and we'll be part of that, and by the way, we'd like to be a major producer of green hydrogen, which we will send to Europe. But on the other hand, saying, the world's going to continue to need oil and gas, and we're going to continue to produce because production will go down elsewhere.

MLI do see a big difference between Abu Dhabi... The Emirates is going to be the host of COP28 next year, and I've actually been working with them since about 2007 when they set up Masdar. And they have always, at least in my experience, been pushing very hard for solutions to climate. But Saudi is very much seen as one of the countries that has pushed back. So most recently in Sharm el Sheikh [at COP27], it's generally understood that it was Saudi that wanted the phasing out, and the phasing down, and they want things called low carbon rather than clean and all that sort of thing. So, Saudi is very much seen as resisting action on climate whereas Abu Dhabi is not.

DYWell I think that's shifting, I think they're engaged in it, I think you're putting a lot of money into technology, a lot of money into venture capital, to be a player, a different perspective. But I think there is the argument that the issue is not carbon, the issue is emissions. And I hear that around the world, that the real question is to address emissions. Now, people are saying that we have the lowest carbon barrels and so forth, on the premise that the world is still going to use a lot of [oil]... Again, people may not want to hear it, but probably world oil demand is probably going to increase for about another decade or so I think. Natural gas demand for another decade beyond that, and therefore those supplies will come from somewhere. But it becomes very important to then... how do you address the emissions side of it? And I think that obviously will be a very major focus. And I think COP28 will be... The question there is - I mean, it goes back to your earlier question - what's the role of carbon capture, and what can you really contribute to the whole picture? And how do you advance it as a technology and get to scale?

MLFinal question: will there be another edition of The New Map, going more and more granular? Or is there going to be a new New Map? So, the trilogy becomes five, become six, become seven?

DYI don't know what the word is when you get up into that number. I forgot my Latin; I don't know what it would be. But I think the way I feel about it now, [is] that I and you, and everybody in the world, is living the New Map now. So, it's hard to see beyond it. So there's specific things that I I'm writing and thinking about, but I feel we're living it, and these are very important, very tough questions I want to continue to engage in, and at least try and make a contribution to understanding and clarity on big questions that will have a momentous impact on the lives of everyone around the world.

MLI have always found that the world moves too fast for me to write a book, so I am absolutely filled with awe that you've managed to do it five times, now three times on energy. It's been an enormous pleasure talking to you today. So, it just remains for me to thank you for your time again.

DYWell, Michael, it's really a pleasure to talk to you, I have a great admiration and respect for what you've done and the voice you've been, the clarity you've brought to the discussion. And so, I'd looked forward to this, our own dialogue a lot. And this has been a great discussion, and just shows how much thinking needs to be applied in the future. So, thank you for the opportunity.

DYIt's entirely my pleasure. Thank you. Bye, bye.