The End of Fossil Fuels Is Inevitable | Ep221: Michael Liebreich & Bryony Worthington

Bryony Worthington  

You know the little model that you've built, which shows that, all things being equal, the rate of increase of these clean technologies, the batteries and the solar and the wind, will just displace fossil between now and 2035.

Michael Liebreich  

It will peak. Fossil energy will peak, but only by a little bit. By 2045 it then drops noticeably, by 2055 it's really dying, and by 2065 just because clean energy outgrows energy demand growth by 3% in my little model, 3% per year, but over three or four decades, that kills fossil fuels.

ML  

Hello, I'm Michael Liebreich.

BW  

And I'm Bryony Worthington.

ML  

And this is Cleaning Up. We are at the end of season 15, quite extraordinary, because 15 seasons is actually five years of Cleaning Up. But I want to take people back to the beginning of the season, where you and I did an opener, and we talked about some of the speed at which things are happening. We talked about the vindictiveness with which the new administration, which at that time was three months in, now six months in, had been acting to really demolish the Biden initiatives, the Inflation Reduction Act and so on. And we looked a little bit ahead at some of the things that would be going on as this season progressed, how did we do? What do you think?

BW  

Well, can it really only be six months since January? It's been a bit of a wild ride, hasn't it? I mean, I still maintain that the US energy system is complex. A lot is happening. Rising demand means that lots of things are going to get built, which is probably good for clean energy in some places. But you can't ignore the fact that the signal coming out of the White House is that we're done with the clean stuff, and we want to go back to oil and gas and coal with nuclear and geothermal in the middle, somewhere where they kind of like those technologies. The narrative is terrible, but maybe on the ground, at the state level, I still remain quite optimistic that the US is going to do some innovative things.

ML  

But you'll have listened to the episode last week with Ethan Zindler, my first employee, Head of Americas for New Energy Finance, Bloomberg New Energy Finance now. Now back at BloombergNEF, after a stint as climate advisor to Janet Yellen. So I mean, a real insider. Really knows this stuff inside out, and he talking us through the One Big Beautiful Bill act and just what it does to clean energy, demolishing the frameworks around particularly wind. President Trump seems particularly aggrieved by wind — doesn't really mention solar very much — but also electric vehicles. And I thought what was most troubling was the impact on those companies that had actually pulled the trigger and were trying to invest under the Inflation Reduction Act in the manufacturing, in the supply chain. And just how toxic an environment it now is for those companies. So I hear you, and during the last Trump administration, we did see a lot of activity at the state level, there was kind of almost like the resistance. You had a whole bunch of billionaires pushing back, ‘we're still in,’ and so on. And you did have the states trying to push ahead. It just feels to me like it's going to be a lot harder this time around.

BW  

Well, you mentioned the word vindictive. And the one thing that really caught me was that the Post Office, who have invested in not just clean vehicles but charging infrastructure in their depots, are now being instructed to not just not buy any more EVs, but also to get rid of them and pull out the charging infrastructure. And that charging infrastructure was built and manufactured by a US supply chain. So you feel this level of which, this is not anything to do with economics. It's pure ideology, and it's all narrative, and it's negative to the things that we think we care about by and large. But I suppose the only thing I would say is that the states do carry a lot of power, residually, in their own legislatures, and there are lots and lots and lots of clean energy standards which have been passed that are legally binding. So whilst federal subsidies could be taken away and phased out faster, we've still got these mandates that are in place in many populous and economically powerful states like California, and that will keep guiding investment decisions. Now, sure you're going to say that those investments get costlier, and that's true, but the mechanics of getting projects delivered, delivering clean energy, is now driven by demand, right? And, there is growing demand for energy. So lots of boats will be floated.

ML  

I wish I could be as optimistic as you. You'll have had Ethan talking about the CAFE standards, the vehicle standards, where California has always been able to write its own. President Trump tried to get rid of that capability, or tried to close that — what he would consider — loophole — we would consider it as something quite positive — in his first administration. He’s clearly going to come after it again, but also the early expiry of the tax credits, the production tax credits and the investment tax credit on solar, production on wind, investment on solar, when those expire. The way it used to work is that the state would have a mandate, would have a renewable portfolio standard. We have to do this much renewable energy, but then the cost of that was transferred to the federal budget through these tax breaks, because the developers would know that they can get a tax break themselves, or they could tap into cheap tax equity. Now they can't do that. It's enormously inflationary on renewable energy as experienced by the state. And the worry is that you no longer have that big transfer from the federal budget, they're on their own. And of course, then you've got the research and development that's being dismantled and removed. The national labs are going to be no longer pushing for anything other than, well, it'll be nuclear, and it'll be a whole bunch of clean coal and all sorts of nonsense that will be put forward. But the research effort is also being dismantled, so I'm just finding it very hard to remain optimistic about the US role in clean energy. It'll continue, but it's definitely being slowed down, no doubt about that. 

BW  

And that last point you said about the dismantling of science. You know just at a time when we absolutely need to be investing more and getting prepared for the impacts and our early detection systems, everything needs more investment, they are dismantling huge chunks of that. And that is a cause for gloom, for sure, because what the US does has global implications, and NOA’s budgets are not just for the US, but for everybody who relies on those reliable data sources. But just coming back to your point though. If what we hold to be true, which is that a switch to solar and batteries and electrification is deflationary, because it's just going to be cheaper, then, yes, you're right. It adds friction where there once perhaps wasn't so much friction. But on a level playing field against fossil fuels, these things are still faster to build. They're still now showing that they can be resilient and they're deflationary because they're just more efficient and better. So whatever the White House does, yes, they're going to have this horrible overarching narrative control over the story, but the physics and the economics of this transition, they can't get at that. That's still true.

ML  

One of the themes since the beginning of the season, and I touched on this with Ethan, was around inflation, and I'm now convinced I really can't see how the US can avoid a real inflationary surge. You've got the tax break that's gone through as the One Big Beautiful Bill, or is going through, or whatever. You've got the tariffs, then you've got the tax increase that's going to have to come through after them. It's been pushed back till after the midterms, but it has to come through to vaguely try and close the hole in the budget that has been created by the One Big Beautiful Bill. But also any thoughts… Jigar Shah when he came on the show in February and said that a lot of the policies that were in place, the loan guarantees and so on, would be maintained, because otherwise, when the US needs electricity, why would you get rid of things that produced electricity? I think what we've now seen is they'll get rid of it because of the ideology, because of the narrative. It's just anti-wind, anti-solar, anti-EV, whether those things are cheaper or not, they're going to get rid of them. And again, that's going to be inflationary. But you've also seen the destabilization of the bond markets, which has to increase the cost of capital, so that's inflationary. So I just find it very hard to see a world in which the US doesn't have inflation, and specifically an energy inflation problem.

BW  

I don't disagree. And I think of all of those, though, you know the tariffs are the biggest play relative to the tax credits on energy. What happens to the US in terms of its global trade relationships is the biggest unknown, and it's completely uncertain. You're absolutely right. And you know, some parts of the financial system love uncertainty. Others don't. And you'll you remember, we did the episode with Mohamed El Erian, where we talked about this problem of the US breaking with the tradition of macroeconomic theory, and that the bond markets are acting as a kind of break on that, as as a canary in the coal mine that says this is not sustainable. And we've still got complete uncertainty about the tariffs, because whenever they really press ahead with real tariffs that are not strategic, the bond markets do react very badly, and so I'm not saying that the US isn't in a precarious economic position. I'm just expressing that there's a resistance and a resilience at a state level that will continue to see things getting built because they need the power, and the cheapest form of power is solar plus batteries for many of the states. And there's still a lot of mileage in that. So I'm not trying to be Pollyanna, but the transition is not over. Michael, these are phrases that you yourself use.

ML  

Oh no, look, the transition is not over, because the US is not the world, apart from anything else. The question is how optimistic should we be about the US? By the way, I'm going to say that I thought that that episode with Mohamed El-Erian was absolutely fantastic. If anybody listening to this is going to go back and listen to one episode from the five years of Cleaning Up, then I would say that that episode has to be in the very top list of things that you should pull out of the archive and watch. A bit of a fanboy moment there. But there is another source of, in a sense, optimism, at least for our agenda, that emerged during the season. And if you go back to the episode that we recorded at the beginning, I raised the question, why the mainstream media, whenever President Trump backed down — so he announced these enormous tariffs, and then had to kind of shame-facedly, I thought, admit that he wasn't. Well he was not shame-faced because he doesn't know the word shame. But he had to back down within a few days. I was asking, ‘Why doesn't the mainstream media use the words humiliating climb down?’ He threatened Canada and he climbed down. He threatened China and climbed down. And I was amazed that nobody was painting it as a climb down. They were sort of painting it as this tremendous strategic move. Well, during the course of this season, we saw the emergence of the TACO trade. The TACO: Trump Always Chickens Out. And what's really interesting is you even see elements of that around rehiring people who were fired by DOGE. And you see elements, potentially, of that around some of the disaster and catastrophe science brackets, otherwise known to most people as climate science. Having decided to get rid of it all, then you see things like the Texas floods, and a lot of people are very angry about that. And actually, elements of humiliating climb down, or whatever you want to call it — the TACO trade — or a retreat from the kind of most outrageous positions that he's taken. You've also got the emergence of the whole Epstein files, the list, that has really rattled him, quite obviously. So maybe that also reduces his room for maneuver. I've no idea. Or maybe it makes him double down on some of the extreme stuff.

BW  

We could spend hours on the craziness of the US administration right now. But we probably should just pause on that Texas point that you made, which was a horrific incident. Awful humanitarian story. But in a sense, it was an interesting thing, because as with everything now, even with the LA fires, you can read into that incident whatever you want, depending on your narrative structure. So what's emerged is a story about weather seeding, and that this was man made, that this was not climate, this was people seeding the clouds, and that that was the reason. Or the contrail conspiracies. And then on the other side, you've got everyone saying this is all Trump's fault because he's ripped out all of our early warning systems. And that wasn't true either. It was a terrible incident which happened at a really terrible time in the middle of the night, where it was very hard to alert people, and people have built into floodplains. We do more in areas where there's been a known history of flooding, so that makes more people vulnerable. So it's a much more nuanced story in the middle. But as was the case here, everything's massively polarizing, so any event that happens is evidence of your particular theory being right, and for me, that's the sad part. We've sort of unanchored ourselves from reasonable evidence-based conversations, and that doesn't usually end well. So that's where I get very concerned, is that our information environment is so changed.

ML  

For completeness on that, we should also say that there's a whole load of people saying it was the climate what did it, and this is climate change, and it's evidence and so on. And that's not true either, because that's an area that is a well known flash-flood alley, and has had very substantial flooding incidents. And the fact is that we've now got, I don't know, a six times increase in population in that area over the last 100 years, or whatever the statistics are. It is particularly tragic when you know that a situation where people have died, you know kids have died, is being used, frankly, by everybody, and misused. And that really turns my stomach, to be quite honest.

BW  

And what we should be focused on is, yes, if it happens in the middle of the night, what are the methods with which you can warn people and the practical steps you can do to make yourself more resilient? 

ML  

We're going to get on to talking about the pragmatic climate reset, this piece that I have written for Bloomberg. But before we get on to that, I just think it's really worth recapping, because we had so much richness in the episodes. And at the beginning of the season, I said we were going to have a whole load of, I call it meat and potatoes energy information, just stuff about the energy system and how it's transitioning. And we did, and it really falls into two categories. There was a bunch of stuff about clean energy and some fantastic sort of practitioners building clean energy, people like Antonio Cammisecra, who's got Contour Global and is building a load of wind, and a load of solar around the world, and was clearly just this incredible, capable and charismatic practitioner. We had Daniel Calderon doing the same, but in really difficult countries: Jordan, Egypt, Montenegro, North Macedonia, being a real pioneer and winning great returns by doing the hard yards of project development in difficult markets. But we also had some really interesting episodes on transitioning oil and gas, transitioning businesses and sectors, and you really kicked that off with Jamie Beard.

BW  

Yeah, that's right. I love those episodes that you did where again, it totally highlights this point that the US is not the world, and the rest of the world is getting on with building projects. And yeah, it was fantastic to get those leaders talking us through examples, how they've done this, and how they've overcome some of the barriers there. But you're right. We also had this theme of oil and gas transition, and Jamie Beard, who I sat down with at CERAWeek at Geothermal House, which is this thing that she's created now, and all these big gatherings. It was a fantastic episode. And really just talking about her journey where realizing that there were people who were serving the oil and gas industry, who could pivot their skills. So all these new advanced drilling technologies, all this wonderful knowledge and science of doing things underground, being moved over from oil and gas into geothermal, and this whole category of advanced geothermal that's emerging. So I love that, it’s really inspiring. I was a little bit cynical about who's going to pivot. I didn't really think it was the oil majors themselves, but it's this service industry that are basically contractors to the oil and gas industry that I think she's seeing making this shift. But then you had Ben van Beurden, who's a nice partner to the Tessa Khan episode. 

ML  

Ben van Beurden, the former CEO of Shell. I mean, if anybody has kind of been on the front line of transitioning oil and gas — or how can I put it? Certainly, I think trying to transition.

BW  

Yeah. I mean, he was navigating this space where society was expecting them to transition. But the economics and the board and the shareholders and the investors were making so much money that there was no need at all to do any of that. And he's got a story he's told himself about that period. I think he was a clever actor and trying to keep everyone happy. But ultimately they did not make any real effort, is my view.

ML  

So I'm more charitable. Partly, I was an advisor to Shell New Energies, the new energy piece of Shell at that time under Ben. That's how I got to know him. And I think that there was a— I think he was in good faith steering a super tanker and seeing how fast and how far he could turn it. I think there's a lovely moment in our conversation where I said, ‘Yeah, but eventually your investors vomited over those plans.’ And he said, ‘I think that's putting it a bit too strongly.’ But actually, I don't think it is putting it a bit too strongly. That’s a really fascinating conversation for me, because truly there's nobody, you can't imagine anybody who was more involved in those conversations, with investors, with lawmakers, with the activists who targeted Shell very aggressively. And you know, it's a very complicated landscape that he's navigated. And yes, I think he's got stories about it that he's telling himself, as you know, it has to be a story of success. But also he's not allowed to critique the actions of his successor. So it was a difficult conversation, I think, very complex conversation as well. 

BW

Which was then followed up by then talking to Tessa Khan, who is the founder and the executive director of Uplift, which is a not-for-profit focused on what she would describe as the undue influence of oil and gas on public policy. That the oil and gas industry has skewed everything towards delay and slowing things down, coming up with these promises of action which never really materialized. We could talk about CCS, we could talk about hydrogen, or even just positioning gas as the solution. All of these have been very successful at slowing down the transition to electrification and clean electricity. And so she has set up a whole charity devoted to try and break that deadlock of government and oil and gas interconnectedness. And one of the things that came out of that episode, which is worth highlighting, is that the UK basin is in decline. The North Sea is done, and we're now into a period where we're paying more out from tax than we're receiving. So all this ‘we can't live without the North Sea oil and gas,’ is just not true. Physically not true. And then secondly, we're underwriting now the tail end of this industry. So why would you carry on down that particular cul de sac? You should just make the shift.

ML  

Tessa is tremendous. It's a tremendous episode. And Tessa and Jamie are also incredible human beings, both of them. And that really brought back to me why I started Cleaning Up in the first place. And it was driven by the amazing people. I mean, it's called Leadership In An Age Of Climate Change. And that is what it looks like. And it also, by the way, it brings me back to the early days of Cleaning Up, where I was also determined that we would hear amazing women's leaders, voices in climate action. And we had Rachel Kyte and we had Christiana Figueres, and we had Lawrence Tubiana.

BW  

Kate Hampton, you had a whole host.

ML  

Kate Hampton, exactly, who I've just recently met and saw in London. There's just incredible leadership across the board. But it was just very notable how many of the key people at the Paris Agreement and around that time were women leaders. So there's a bit of a theme there. I don't know if you can call it a leitmotif.

BW  

Yes, and one of the female leaders I was really happy to get on this season was Thelma Krug. You know, she's a former Brazilian negotiator who was a mathematician, got into satellite monitoring of forest cover, and then became IPCC co-chair. She's fantastic. A woman who, throughout her career, has just been trying to apply logic and a kind of analytical approach to this. And what I’m always left with, though, is that we tend towards the analytical conversations, and still I feel like there's a hearts and minds narrative thing going on here that we as technical people, perhaps are, I don't want to say losing, but definitely the politics has got worse everywhere. And I think logic and science and engineering is on our side. But there's something else going on, which is about the narrative. I think it was a fantastic series, with lots of variety in there, from the practitioners on the energy side to the wonderful conversation about the role of fungi in storing carbon in our planet. 

ML  

We've got to talk about the fun stuff. Briefly talk about the fun stuff. I mean, the fungi. What can I say? The guy's name is Merlin Sheldrake, and he's a fungus expert. And when you listen to it, it's almost like that sort of Harry Potter episode of Cleaning Up. This kind of peak English quirkiness. But of course, on an incredibly vital topic about which we I'm almost almost entirely ignorant of.

BW  

As is the rest of the world. I suppose that's the point, right? And Merlin has, through his book Entangled Life, which is now a best best seller, a million copies sold. He's sort of brought this world to popular culture attention. And it is fascinating, and it is directly linked to the climate story, because whilst we tend to focus on the engineered side, the anthropogenic question of what the energy system is doing, the biosphere is doing its own thing and is responding to these elevated temperatures and elevated concentrations. I mean, that's partly what Thelma was talking about, partly what Merlin is talking about is that the biosphere is this great, big unknown. And I'm keen that we do more of that kind of context setting, because it is so important for everything that we do. I happen to think the transition is happening because of great economics and engineering. But we also need to put it in the context of this changed climate that we're in.

ML  

Yes, and I realized listening to that, that although I have had some I had Helen Czerski on a few episodes ago —  again, another great woman leader in climate action or climate leadership — but really, I'm an energy guy through and through. Whereas you've got much more of the peripheral vision or the peripatetic interest in the biosphere and so on. So I think it's been great bringing me back to the planet that we live in and some of those linkages. I am going to pull you up on one episode, though, which we have not talked about. The episode with Andrew Forrest.

BW  

Oh yes, that's fun stuff. I enjoyed that one. 

ML

It was fun stuff, but I was listening to it, and I was jumping out of my seat, and I was like, Bryony, ask him about economics. Ask him about economics. How much does it cost? And you went off on this kind of nuclear ship thing, which kind of, I think, let him off the hook.

BW

So the context for that was, we were at Innovation Zero conference, and we had hard stops on either side. And we both got swept up in this conversation, which really was, for me, one of the funnest ones that I've done. What I loved about it was how we could disagree amiably, and smile at the end of it. And yes, we went down some rabbit holes, but I think what happened was his data points that he was using were about the electrolyzer efficiency. He says he's managed to increase the electrolyzer efficiency. And I know from listening to all your great work, that's just a small part of the equation. But in the moment, it was slightly derailing, because it seemed so persuasive, and that's what he's great at, these persuasive, seemingly game changing stats. And so you're absolutely right. I didn't attack him on the bigger picture economics, and we did go down some interesting cul de sacs, but still, ultimately, I think what Andrew Forrest is doing is absolutely the right thing. He's out there. He's being bold. He may have taken some questionable choices on his ammonia-hydrogen beliefs, but he's out there talking about lethal humidity. How many CEOs are doing that? So I have a lot of time for Andrew. And you're right, I didn't nail him.

ML  

Yeah, on the 95% electrolyzer efficiency stat. So I'm an advisor to an Australian company called Hysata, right? It's an electrolyzer startup, and it truly has technology to make 95% efficient electrolyzers. But Hysata does not belong to Fortescue. And so whether he has 95% efficient technology, first of all, I personally very much doubt it. And then, of course, the point that you made right now, which is, and so what? Because it still only makes green hydrogen work in places like Brazil, where they might make some green ammonia. It absolutely is not the game changer that he's claiming, and he's got just some fundamental economic problems with the business models that he's promoting where, translated into carbon prices he is going to need, if he wants to do green ammonia in Australia and import it into Europe, he's going to need a €300 carbon price. And that's just just not going to happen. And, you know, ammonia in ships is just not going to be safe. 

BW  

But I thought he's quite persuasive about the safety on ships. I suspect it’s an engineering issue that can be solved. Because we ship ammonia around, we're not burning it, of course, but that's not for me. I think you've got to understand where he's coming from. His business is digging iron ore out of the ground and selling it off to China and wherever else. And so his things are machinery in very hard to reach places, so often way off the grid. And then their ships are very hard to decarbonize. So these are two quite hard things to do. And so it's naturally pushed him into these probably lower down the pecking order solutions that we would not start with, but he has to start with there, because he's dealing with mining machinery way out in the deserts, and then ships, which are hard.

ML  

Bryony, two things. We ship ammonia around the world. We don't do it in the engine room of ships. It's very easy to have a small number of ships, incredibly well run, incredibly safely operated by incredibly sort of conscientious organizations. Wait until that goes into… there are crews out there on big ships that are not going to be safe around anhydrous ammonia. But also, the bottom line is, who cares about that? It's going to be too expensive. It's going to be too expensive. It's going to be double and triple the cost of bunker fuel. And so with the best will in the world, the solution is not going to be ammonia or methanol in ships. Most likely it's going to be something like switching to LNG, just natural gas, which is better than bunker fuel. And secondly, to use biogas. And then I do think that you're probably right, nuclear for a very small number of very big ships, probably is part of the solution. But anyway, it was just annoying that, finally, I've been trying for five years, or four years, probably, to get an episode with Andrew, and then to let him off the hook, Bryony.,

BW  

Yes, okay, but it's not the last time, hopefully, we'll speak to Andrew. And let's see where he goes on his journey. And he did say the tide is going out on hydrogen, we might be the last one standing. And then several weeks after we did the episode, they started hacking away at their hydrogen investments and pulling back. So things are shifting. And I do think we've got to understand the origin of that company. They make so much money off iron ore, which is their core business, their actual emissions contribution, is either scope three, well away from them, or it's really hard to do. So hats off to them for trying and at the same time doing the Davos circuit, talking about lethal humidity, because he cares about the fact that this is going to impact things that we care about, people and the environment.

ML  

I call it a one all draw, because I think he does score a goal by being a very high profile business person, highly successful, talking about climate, talking about lethal humidity. Now I'm going to mix my football metaphors. That moves the ball down the pitch. The reason I get so exercised about hydrogen is that it is fundamentally delaying consistent action on climate. It is a delay, whether he means it as a delay, it is a delay. And so that's why it's a one-all draw, because he's moving the ball down the pitch, but he's moving it back again. Because anytime you come out from the hydrogen debate saying, ‘well, it is inevitable, it is going to happen, but right now is too early or whatever.’ This is not correct. It is not going to happen. It's not going to be a big contributor. And therefore we really need to prise their fingers off the window ledge, because otherwise they will hang on and it will come back and it will come back. That's why I call it the hydrogen souffle, not the hydrogen bubble, because it doesn't just go pop and disappear. It just kind of hangs on. We saw that in the episode with Dan Jorgensen, the EU Energy Commissioner.

BW  

Oh yeah, an absolute refusal to accept that they’ve got it wrong.

ML  

An absolute refusal to accept that hydrogen won't become the cheapest way of doing a lot of clean energy stuff, just simply not able or prepared to think about that, and you know, it's going to happen.

BW  

So listen Michael, I've thoroughly enjoyed this little recap. And hopefully anyone who hasn't listened back to the last series will now go diving back into some of these episodes, because we covered such a variety of ground. And as you say, it went from meat and potatoes, how energy transition is actually happening, to how fungi store carbon in the wonderful world of underground networks. So should we take a break now and then when we come back, I want to talk to you about your Bloomberg essay on the climate reset.

ML  

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BW  

So Michael, the other thing we said we’d do in this episode is talk about your recent essay for Bloomberg on the pragmatic climate reset. Now I want you to just start off by telling us what stimulated you to write this. What was the kickoff point that made you put pen to paper?

ML

So the pragmatic, climate reset piece that I've written for Bloomberg, it's a two parter. And the reason it's a two parter is, first of all, I wanted to deal with some of the narratives that have come out of the woodwork in the wake, I think, of the election of President Trump, the empowerment of those who probably never believed or never wanted to engage in any sort of transition. And there were some very powerful narratives that are starting to be used. And so part one of the pragmatic climate reset was to say, actually, those narratives are wrong, misleading, and need to be addressed. So in part two, which comes out later in the summer, what I do is actually having demolished some of the narratives of the failure of the transition, I then provide a set of narratives for those who really want to be on the right side of history to say, you can't just double down and keep repeating the same stories that got us to this point about the penguins and the polar bears; and the imminent collapse of the global food harvest, which has not yet been evidenced in any way; about how cheap solar and wind are, even though most people are now experiencing high energy bills. So in that second part, I try and propose a bunch of resets in areas like the targets, whether it's still appropriate to talk about 1.5°C, or whether we should talk about 2°C. How to defuse the political situation, how to reset the political narratives, the diplomacy, a whole bunch of stuff around energy and policy. So that's coming out later. But in part one, what I really did was just went after some of those narratives — I would say — of transition failure.

BW  

For me when I was reading that part one, the things that really stuck in my mind were that you can be both very optimistic about the transition, but be much more pragmatic about the pace of the transition. So the little model that you've built, which shows that, all things being equal, the rate of increase of these clean technologies, the batteries and the solar and the wind, will just displace fossil fuels. And that really got at this very insidious narrative about, ‘oh, it's all just additive.’ We're just adding renewables on top of the fossil in the same way that we added fossil on top of wood and horse and carts. And you really skewered that. Do you want to talk a bit about that little model? 

ML  

Yeah. So the three narratives that I framed the piece around. One is Dan Yergin, who, by the way, is an alumnus of Cleaning Up, and I was delighted to have him on the show a couple of years ago. He wrote a piece with some co authors called the troubled transition. Then there's a very, very good analyst, a great analyst at JP Morgan called, Michael Cembelest, who wrote about how slow the transition was progressing. And then, of course, Tony Blair, who, on the eve of the local elections in the UK, produced a piece about his version of the climate reset, where he proposes a whole load of solutions, which I don't think are going to do a huge amount. But underlying all three is this idea that the transition is going too slow. It is linear, rather than in any way geometric, or indeed that there is no transition. What I'm also doing is taking on the Net Zero, 2050, 1.5°C transition theory as well, right? Because if you go back to the plan for 1.5°C, as it was, you know, promoted by the IPCC back in 2018 through its SR-15 report, it was that we had to halve emissions by 2030 otherwise terrible, terrible things would happen. And you know, the world would be over as we know it. So that's the 1.5°C transition scenario, which, by the way, all those three scenarios of failure all say, ‘well, that's not happening.’ That theory of halving emissions by 2030, requires incredibly dramatic reductions in fossil fuel use, and it's absolutely correct that we haven't seen those. So what I did with my little model was I said, maybe we're thinking about this all wrong. What we've actually got is energy demand, which continues to grow. And I mean real energy demand, right? I don't mean the primary energy fallacy demand, which is really supply, which, by the way, all three of those failed narratives, Yergen, Cembelest, Tony Blair and, by the way, Chris Wright at the Department of Energy, and Bjorn Lomborg and Vaclav Smil, they all fall into that trap. So if I talk about real demand for energy services in the economy, the first point is that it’s not 20% clean and 80% fossil. They are already nearly 1/3 clean, 31% clean, if you talk about real demand for energy services. So we are already approaching the middle third of the transition. We're not 1/5 of the way in, we're nearly 1/3 of the way in. So that's the first really important point that I make in that piece. But then what I do is I say, I really hope that the demand for energy services continues to grow, because energy services is human progress. That is cold beer, warm homes, air conditioning, people visiting their families, all of those good things. I want that to increase — data centers, right crunching data and producing sonnets on renewable energy, whatever it is you do with your ChatGPT, it's good, and I want more of it. So energy demand grows. But the reality is, clean energy, which has got to 30%, is growing faster than energy demand is growing. And what my little four line, literally, it's a four line model of the global energy system does is it just says, What happens if that delta of clean energy growing faster than energy demand, what happens if it just plays out decade after decade after decade? And what you see is exactly what we are seeing. In other words, fossil energy keeps growing because it's filling a lot of that incremental new energy demand is being filled by fossil because it's still larger than clean energy, and that continues for a bunch of years. You know, sorry Greta Thunberg, we're not halving fossil by 2030 it's actually going to be nearly flat, not quite flat. Then it'll flatten. Between now and 2035 it will peak. Fossil energy will peak, but only by a little bit. By 2045 it then drops noticeably. By 2055 it's really dying, and by 2065, just because clean energy outgrows energy demand growth by 3% — in my little model — 3% per year, but over three or four decades, that kills fossil fuels. Most of the action happens 2045, the visible action happens later in the process, but it's still consistent with 2°C.

BW  

And I really valued that little mathematical exercise you took us through. But what I suppose I worry about is that we had the opportunity, probably 30 years ago, to do this seriously, and in the words of Bill McKibben, so winning slowly is still losing, right? Because we're in this precarious part of this kind of growing climate risk where we're approaching very high levels of concentrations in the atmosphere, that could result in much higher temperatures and quicker than we thought. So I hear you, and I think we do nothing, we'll still get off fossil fuels, because this transition is unstoppable, but they can delay things even further, you can keep delaying. And that Blair piece in particular, I thought was a really interesting insight into what are the latest delaying tactics that you can keep on pushing out there. Oh, we're going to suck it all out with carbon dioxide removal, that's going to be the way. Or we're going to do CCS. How many decades more do you want us to believe that's going to happen? And so I just thought it's really important that policy makers don't relax into, ‘oh, it's all inevitable.’ Or funders, or philanthropists or investors, because it's little, incremental decisions along the way that get us to the best curve we could possibly get to, given where we're starting, and that's been true in the past too. It's all these policies and little tipping of the scales towards clean, and we can't stop doing that.

ML  

Yeah, let me unpack that a bit, because the the Blair piece was a bit different, because it was the one that really, of the three narratives that I demolish or try to demolish, it's the one that's really saying, ‘Well, the problem is all the solutions that you've been proposing are wrong, and we'd be much better off doing it as direct air capture, CCS and nuclear small modular reactors. And I actually go through on small modular reactors. I go through the sheer number, the thousands and thousands of them that you need just to catch up with wind and solar. So the complete improbability of SMRs as a climate solution. You know, I love them. Let's do some, but climate solution — that I don't think so. CCS — I mean, we're not going to do any post combustion CCS, it makes no sense whatsoever when you've got gas being used only a few percent of the year as a backup, when there's a Dunkelflaute. And, by the way, we didn't talk about a fantastic episode with Anders Lindberg of Wärtsilä, who really opened my eyes to the role of gas, which will be just a few percent a year, enables a huge amount of clean energy. So we won't be doing post combustion CCS. We will be doing some biological energy with carbon capture and storage and BECCS. We'll do some process emissions. We'll do whatever, but it won't be CCS. I want to come back to your point about delay and time. So first of all, first point is I would rather fail slowly than utterly fail, because I've tried to go too quickly. And because the second point is that we are going all in on this idea that we had to halve fossil fuels by 2030. It's a precautionary principle approach. It says the only way to stay away from any of these planetary boundaries is massive, massive stranded assets. 50% of our energy system would be stranded, would be valueless in that world, which, frankly, was never, ever going to happen. But also it's probably economically the wrong thing, because you will have heard the words adaptive pathway. For a lot of the finance people in the audience, they will know of it as real option value. So if we were on track, and I hear you completely about the uncertainties, right, when I say something is consistent with 2°C, what I mean is that the median value of where we end up should be at 2°C. But because of uncertainties, it could be 3°C, could be 3.4°C, could be worse, could also be less. But an adaptive pathway says if we discover that we are on one of those bad sensitivities. We still have the time, and, frankly, the wealth, to do something about it. We don't have to make one decision in 2018, when the SR-15 report came out, or in 2025 today that says we just throw the kitchen sink at one strategy, which has to avoid all risk instantly. There are other approaches with real options, adaptive pathways, and I think that that's where I'm now coming out. As I say, coming back to my little model, all we need to do is make sure that clean energy outgrows energy demand by 3% every year. And if you don't, if you think that's too slow, shoot for 4% for 5%, but think of the whole challenge as growing clean rather than demonizing fossil. It's a completely different way of thinking about it.

BW  

And I would argue that that has been the success of this thus far, the things that have really worked have been acknowledging that people like energy services and trying to tell them they can't have access to energy services is a terrible idea. So what you're doing is replacing one machine with a cleaner machine, and you're not worrying about there being a growth in energy consumption, as long as that is clean. And that's what's worked, right? The substitution of internal combustion engines with EVs, the substitution of coal fired power stations with wind turbines and solar. Those transitions have worked really well. But, you know, it's funny, because where my lens on all of this is that I think this little model you've built is understood by those who've got their money at the moment in the fossil economy. And why we're seeing this political backlash is because I think they can see the games up, right? And so what do you do? Do you double down and do you excite political backlashes and get involved in this kind of anti-woke, really vindictive, trying to roll things back in order to stave the inevitable off? And I think that's where we're at in this transition. 

ML  

I'm going to be really fascinated to have a similar conversation when part two is out. Because what you've done there is you've fallen back into saying that the problem is the bad guys, the fossil guys, they understand what's going on, and they're pushing back, right? And I think what I'm saying is that what has worked has been pushing forwards on the clean stuff.

BW  

I hear you, but let me just say this. Why is it that we're having to counter disinformation on electric vehicles or heat pumps? There's so much vested interest in this transition, and some of it's ideological, some of it's got absolutely nothing to do with connections to the industry. But it's so vicious…

ML  

I'm going to jump in here because I'm going to say partly it's because the big push has been to ban fossil fuels, to ban internal combustion vehicles, to ban boilers, to ban and to demonize. Go back to the Ben van Beurden episode, and your reaction is that this is a clever guy who has somehow shimmied his way through all of the objections put into play in the way of fossil fuels and has helped to preserve a business model. I don't see it as that. I see it as somebody who really tried to put the resources of Shell into growing a clean energy business. Imagine if all of those activists, all of the marchers, all of the demonization of fossil fuels and all their ilk, and all of their water carriers and fellow travelers, if that effort by activists, by your former colleagues in previous lives when you were an activist, if that had been put into saying, look, what are the barriers to the uptake of clean energy? Not just demonizing and saying, you know— because the other thing that I talk about a lot in part two, and you hinted at it just then is, if you remove people's fossil fuels before you have a cheap, clean alternative, then you must expect the political backlash. You must expect what’s happening today.

BW  

I completely agree with that, and all the campaigns I've been involved with have been advocating for positive things that make the transition faster, whether it's New Automotive pushing a narrative around EV uptake in the UK, when everyone was saying it was never going to happen. I've always been a natural supporter of things that are, what are you for? Not what are you against, what are you for? But I have seen the headwinds that can be created. And it's not… the Shells and the BPs are the least of our worries, right? It's the national oil companies who don't even need to bother to put out glossy PR literature, because they are the government. Or it's the mom and pop frackers who are funded by private finance that are completely invisible to this kind of public fight we're having. And it's the traders, it's the financiers, it's the bond markets. The whole thing is a pyramid upon fossil. And so, yes, you can argue that we're focused on the wrong things, and I have definitely felt the need to support the positive, and it's worked. But at the same time right now, where you've got the White House behaving so irrationally and with such ideology. That for me, isn't just an accident, it's a point in history. It's that resistance because we're winning, coupled with a lot of money being at stake here.

ML  

There’s definitely resistance because we're winning. And in fact, years ago, I made a little film which was about the transition. It's at first they ignore you, then they laugh at you, then they fight you, and then you win. And it's clear that they're fighting clean energy. But there are things that you can do that can spur that fight, and then there are things that you can do to avoid it, right? You don't have to go full frontal all the time, head on all the time. And the way that we resolve this discussion, I think, is that I have also personally been involved in addressing misinformation. Two examples. There was this thing called Aston-gate, where the government relations person at Aston Martin was promoting some supposed report put out by some agency ad agency, and I discovered that the ad agency had, I think, only one director who happened to be the wife of the government relations person at Aston Martin. So when you see things like that, I agree that it has to be confronted. Another example would be the UK gas distribution industry and the Energy Utilities Alliance in the UK, which is a front organization for the gas heating industry in the UK. And they hired a PR company, and the mandate was to spark outrage. I'm doing air quotes for those listening on the podcast, “spark outrage” about heat pumps. And when you come across that vindictive, you know, wrecking, that has to be addressed. But yeah, the whole edifice of, for instance lawfare, climate lawfare demonizing. And I talked about that with Ben van Beurden. Is that really where effort should be spent versus on very specifically removing opposition to specific measures that allow clean energy to just take over more energy demand?

BW  

Well, we probably, personally spend 90% of our time on that question of what is the thing that unlocks the next level, and how are we learning from what's worked and then replicating it, which is what we're doing with the podcast? So I think we're, we're almost completely aligned, I suspect. And I'm definitely looking forward to the second part of your series, where you're going to put forward your version of the Blair reset. Your pragmatic suggestions on how we navigate this phase that we're in, where the fight has intensified and it is going to be there. I don't think there's one strategy. I think people are all going to take their different paths. But what I think we should hold on to is that the winning now is becoming clearer, and that we're likely to hit increased resistance because of that.

ML  

There will definitely be increasing resistance because we are in that ‘and then they fight you’ phase. Just one final thing that I tried to do with Part One and Part Two, I want to claim the word pragmatic for us, right? This is not just important because I've got an advisory business called EcoPragma Capital and an HGV charging business called Pragma Charge. But pragmatic is actually the battleground word, because what you've got is, for instance, Dan Yergin talks about how we need to be pragmatic. And Tony Blair talks about how we need a new pragmatism. And for Dan Yergin, pragmatic means, ‘well, these children have gone off and talked about a net zero transition, but of course, it could never happen.’ And so pragmatically, we just have to accept that we're kind of trashing the planet. We might do a bit if it suddenly becomes in the interest of oil and gas companies, we'll do it. But pragmatism has to win, and that's his use of it. For Tony Blair, pragmatism suddenly becomes carbon capture, direct air capture and nuclear, which is the pragmatic acceptance that the world needs huge amounts of energy, and those are the only ways of doing it. But of course, the solutions that he's proposing are the absolute opposite of pragmatic. They're, in fact, the most contentious and least likely to work solutions. So I think we do need pragmatism, but it has to be pragmatism in the service of people and the planet. There is a pragmatism. It's a pragmatism of refusing to give up and give in, but not going to extremes where you're talking about renewable fuels of a non-biological origin at $8,000 per ton of fuel, when jet fuel is $700 or $800, and expecting people to pay 10 times as much for fuel. That's not pragmatic. So there's a pragmatism that we need to espouse, and we need to win the fight for that word.

BW  

Well, I'm with you on that, and I think we we can carve out that, because what they leave out, those two camps, is that it is perfectly possible to imagine a world where we've gone beyond this reliance on a very polluting and ultimately unsustainable thing that will run out, which is fossil fuels, into this very distributed electric future, which we're just finishing the job that started decades ago. And neither of those camps are focusing on that, and that's what we've been doing and are doing, and that's why this is such an important podcast, and I'm delighted to be on it. 

ML  

And what we need is for the default to be, in a sense, a slow and steady transition. A slow, steady, inevitable transition. That's the default. We can speed it up if we have to, because we are on one of those really negative pathways. But what we don't accept is that pragmatism says business as usual.

BW  

Yeah. And I think the key area that we need to keep in mind is the data set from which we make those decisions. And just to take us all the way back to the beginning, where I was being all glum about the US. For me, one of the things we've got to watch out for, and which I think Europe has got to step up to, is the monitoring and the early warning systems and the data sets. Because we're not just seeing a backlash against clean and subsidies for clean, we're also seeing the eroding of the science and the eroding of the research. So for me, bringing us back out to the macro: Pragmatism is based on data, and we've got to keep adding to our data and understanding, not reducing it.

ML  

So Bryony, I completely agree with you on data, as you know, one of the eight mini resets in the pragmatic climate reset is around climate science. And I have some criticism of the climate science community there, which we'll get to. And we'll discuss in our special episode on part two of the pragmatic climate reset. And so now, in the new tradition, I'm going to hand back to you to say thank you and lead us out from this season.

BW  

Thank you Michael, and thank you to all of you for listening and watching the Cleaning Up podcast. That's the end of season 15. My thanks, as always, to Oscar Boyd, our producer, to Jamie Oliver, our editor, and to the rest of the talented Cleaning Up team and the wonderful leadership circle members who make the Cleaning Up podcast possible, please join us in the autumn for the start of season 16.

ML  

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 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. That's cleaningup.live.