Show notes
As countries across the world strive to reach their climate targets, they must make sure that the move to a cleaner energy system supports economic growth. The Energy Podcast explores this difficult balancing act. Presented by Julia Streets. Featuring Dr Rob Charnock of the Metis Institute for Climate Strategy, climate scientist and advisor Dr Yvonne Maingey-Muriuki and Shell’s chief economist Dr Mallika Ishwaran. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Eno Alfred-Adeogun. Episode Transcription: 00:00:00 Julia Streets: Today on The Energy Podcast. 00:00:07 Speaker 2: Economic growth and developmental sustainability are not mutually exclusive. 00:00:13 Speaker 3: With a strong talent pool of young entrepreneurs and qualified engineers, we are pressing forward with solutions in climate-smart agriculture, water conservation, clean energy innovations, and more. 00:00:29 Speaker 4: Let us come together to build resilient, sustainable and green businesses, communities, and countries of the future. 00:00:39 Julia Streets: The dust has settled on COP28, and the main takeaway was clear; the world is falling short of its climate targets. But as the leaders who gathered at the conference highlighted, there remains an appetite to do better while simultaneously ensuring economies keep turning. The question is, how? The climate summit showcased diverse approaches. Some nations prioritised boosting the supply of lower carbon energy to meet demand and remain competitive. Others advocated for increasing funding in renewables to attract investment and spur the creation of more jobs. And while some countries pushed for a complete phase-out of all fossil fuels, others favoured a phase-down, where coal, oil, and gas usage is reduced rather than eliminated as a more economically viable plan. The reality is, different solutions will be needed in different places, and countries will move at different paces to achieve net- zero. Hello, I'm Julia Streets, and today on the Energy Podcast as we look ahead to 2024, we ask: how can economies thrive while the world cuts carbon? Joining me today are guests, Dr Yvonne Maingey-Muriuki, who is a climate scientist and strategic practitioner to organisations operating in Africa. Dr Rob Charnock who is director of the Metis Institute for Climate Strategy, and Shell's chief economist, Dr Mallika Ishwaran. Now, before we look ahead to what this year and beyond may have in store, let's take a moment to reflect on where things currently stand. Rob, I'm going to come to you. How would you rate the current global progress in cutting carbon? 00:02:27 Dr Rob Charnock: I think what was incredibly interesting to see at the recent COP, was that it's the first global stocktake, so we really get a sense of how close we are to being on track towards the targets set out in the Paris Agreement. And what I thought was very encouraging is, previously we thought we were on track for somewhere between 2. 7 to 3.6 degrees of warming, but as we get more and more commitments coming through that are updated as well after a few years, we see that we're getting closer. Now, that's not to say we're on track for 1. 5 or even well below two degrees at the moment. 00:02:58 Julia Streets: Some areas of the economy are more challenging to decarbonise than others. I mean, I think particularly industry and transport as well, but they are central to economic growth. I'm curious to think about what's the way forward, and Mallika, I'd love to come to you for your thoughts on that. 00:03:16 Dr Mallika Ishwaran: So what we are seeing is there's a sector by sector difference in how the different sectors are progressing in the transition. I think you can see the evidence is there that power is decarbonising, renewables are coming in at scale and really are changing and disrupting the system. But there are other sectors. I would put passenger EVs as part of the transport segment as something that is changing rapidly. But there are other bits of the transport segment not transforming as easily, and these are areas that require either high heat or they require dense energy molecules, and you can't do that with electricity unfortunately. So they're requiring things like hydrogen or sustainable biofuels, and these are taking a little bit longer to bring to market and to commercialise. So they're still quite a bit more expensive than the fuels we use today. And so the key there is, how do we accelerate the process of commercialisation of these kinds of fuels so that the whole world is changing and transforming to low carbon at pace at the same time by 2050. 00:04:17 Julia Streets: Rob, I'd love to get your thoughts on this. The incentives that are needed in order to encourage consumers to choose lower carbon goods and services that will drive down cost and also increase adoption. 00:04:29 Dr Rob Charnock: Over time we've heard this narrative that low carbon might be more expensive, but as time goes by, you quickly find that the cost profile decreases rapidly, and frankly beyond the forecasts as well. So, I would say, even the economic reason for shifting consumer demand is already coming online in most segments, and this will continue to do so. I also think shifting customer preferences and shifting demands suggest, if you are not properly tackling the carbon profile of your products or even the recyclability of those products afterwards, there is going to be a significant shift away from what you're selling. 00:05:05 Julia Streets: There's clearly a sense, we need to move at pace and we need to move at scale. I'd like to return to COP28, because one of the key topics was about phasing out fossil fuels versus the phasing down of fossil fuels, but the final deal made no mention of either. And instead, we note that the pledge talked about the transitioning away from fossil fuels. So not phasing out, not phasing down, but transitioning away. And Yvonne, I think particularly of a remark made by Ruth Nankabirwa who is Uganda's energy minister. She had a very interesting take on this, and let me just read what she told journalists during COP28: “To tell Uganda to stop fossil fuels, it is really an insult. It is like you are telling Uganda to stay in poverty." I'd love to get your thoughts on that. How would you respond to that? 00:06:00 Dr Yvonne Maingey-Muriuki: I mean, it's a really sort of difficult position to be in. I think on the one hand, African governments, and I'm speaking specifically about the Kenyan government, have made their intentions very clear; we are going to foster low carbon resilient development pathways. If you look at Kenya as an example, where I'm based, where I'm from, 80% of our energy is already renewable. We're looking at more geothermal, hydro, solar. The majority of our grid is actually already quite green. The opportunity within the continent is quite significant to focus on it and to drive renewable energy to power our economy. On the other hand, it's important to think about how Africa is powered specifically, because this is where the root cause of the problem is. About 43% of the total population in Africa lack access to basic electricity. This means that about 600 million people right now do not have access to energy. I think the first question for the African continent is just ensuring that we have access to energy first. But, we have to contend with the reality that African economies for the first time, some of which have just discovered oil, I'm talking about Kenya, looking at one of the most impoverished parts of the country, Turkana, which discovered oil four, five years ago. And expecting some of these local economies to not exploit this resource, I think is a bit rich, particularly from the developed countries. But then we also have to think about in the context of what is the actual contribution to emissions. Look at Tanzania, another great example where they have natural gas deposits, which they have on many occasions shown a desire to develop and to exploit. But when we look at the calculations, Africa already accounts for maybe less than 4% of global greenhouse gas emissions. If Tanzania was to develop all of their natural gas deposits, you are looking at an increase of about 0. 4 to 0. 6% of global emissions. These are economies that do have access to these resources which they have an interest to develop, which they have a right to develop, and which is why we talk about a just transition. 00:08:00 Julia Streets: Rob, how realistic is it to expect developing nations to leapfrog traditional fossil fuels? 00:08:08 Dr Rob Charnock: To me, the critical point in that is how they're going to pay for it. Where is the financing going to come from to look at alternatives? And I think what's really interesting that we've seen from the Asian Development Bank recently is a project in Southeast Asia called the Energy Transition Mechanism. And this recognises that countries have already invested quite heavily in fossil fuel infrastructure, and the expected life of those assets, those coal-fired power stations, is always decades. So what the Asian Development Bank has done through the Energy Transition Mechanism, is provide the financing of the incentives to retire those assets early, and to replace that energy generation with renewable alternatives. Now, the critical piece in this as well is that when you retire a coal-fired power plant, for example, that often supports a community nearby or several communities. So the key piece is to retrain those communities as well to transition them into new jobs, potentially green jobs linked to the renewable energy sector as well. So it's not just about new energy capabilities being invested in, but also retiring fossil fuel, carbon-intensive assets, and replacing those with renewable. 00:09:17 Julia Streets: Mallika, how would you respond to that? 00:09:19 Dr Mallika Ishwaran: I think it's worth dividing the world up in this regard. We have advanced economies who've grown up, if you like, on traditional fossil fuels, and have a lot of infrastructure built around that, and that will take effort to change and to transform. But I think these are economies that have reached an advanced stage of economic development, have the financial resources to be able to do it. We also have another group of countries who are, if you like, on the development trajectory. And I think here there's a real opportunity for them to leapfrog over fossil fuels, and put in place infrastructures and other technologies that are low carbon to start with. So they don't start down the path of fossil fuel development, but leapfrog to something that's better and more sustainable. 00:10:03 Julia Streets: Yvonne, we can't have a discussion about this without referring to the question of carbon markets. So a two part question to you. Number one is, what are they, and secondly, how important are they? 00:10:15 Dr Yvonne Maingey-Muriuki: A carbon market is essentially an opportunity for organisations, companies, countries that have net- zero ambitions and targets to meet them by offsetting their emissions on a global market. So they pay to pollute. Essentially that's what the carbon market is. Is it a significant opportunity? Absolutely, particularly if you are coming from a continent like Africa, which is rich in natural resources, and we have opportunities to remove carbon from the atmosphere and we can actually be paid for those services, it absolutely presents an opportunity for the continent to generate much-needed finance for adaptation. 00:10:53 Julia Streets: I wonder if I could push the conversation on a little bit, because one of the energy solutions of choice is increasingly liquefied natural gas or LNG, which is produced by cooling gas. And such is the case in India where the number of customers using LNG is growing. And let's find out why. Dhirendra Mishra is Shell's LNG terminal manager at its site in Hazira in India. 00:11:20 Dhirendra Mishra: I'm speaking to you from the seawater area. You can hear the seawater pumps running in the background. What we do here is, we receive LNG in large LNG cargo ships, and this cargo is received at minus 160 degrees Celsius. At this temperature, it is transferred from the LNG cargo to the shore-based LNG tanks where it is stored. From these tanks, with the help of multiple booster pumps, we supply this LNG to LNG vaporisers, which use seawater to vaporise the LNG. Now, this regasified LNG is transferred through a 14-kilometre pipeline to a metering station, and it is supplied to various grids. We are connected to all the grids in the country, so we can reach to any customer who is connected to the grid. We are an integral part of the gas infrastructure and supply chain of India that supports various industries, like city gas distribution, steel manufacturing, fertiliser, refinery, chemicals, and other manufacturing sectors. Now, with the government of India's vision of increasing the share of natural gas in the fuel mix, and this coupled with the high growth of Indian economy, we expect the gas market to grow. And with this, we expect to supply more and more LNG fuel to the country in the coming years. 00:12:52 Julia Streets: As Dhirendra was just saying, the demand for LNG in the country is continuing to rise. What role, if any, do you see LNG playing globally in future energy systems? Mallika, can I come to you? 00:13:09 Dr Mallika Ishwaran: Yes, thank you. Great question. I think the key here is to acknowledge the fact that this transition is not going to happen overnight. You're changing an entire energy ecosystem. So it's not just the supply, you're also changing the infrastructure, you're changing patterns of demand, and that's going to take time to happen. And I think in that transition, there is a role for natural gas. We see that in our Shell scenario outlooks, we see it in the outlooks from other groups, like the International Energy Agency. And it's worth noting that within natural gas, LNG or liquefied natural gas provides a much more flexible source of gas, because you're not tied to pipelines going from point X to point Y. LNG is able to respond and be moved around where demand is, so it provides a more flexible way of delivering gas. Now, gas itself can help lower emissions during the transition, particularly in sectors like power generation where it could potentially displace coal. It could also help increase energy security of the new low carbon energy system by complementing renewables and the intermittent nature of their generation. So in both of these instances, gas provides a lower carbon alternative to, for example, coal. Now, it is important in the longer term to drive down emissions from gas itself, for example, through carbon capture and storage, as well as reducing methane emissions from the production transport and use of natural gas. And of course, Shell is very active in this space. 00:14:42 Julia Streets: So let's look ahead to the future. Some critics would caution against relying too heavily on technological innovations as a means to bridge the gap between economic growth and carbon reduction. Rob, love to get your thoughts on that. 00:14:54 Dr Rob Charnock: I suppose my thought is that the critics are quite right. If we put too much emphasis on technological solutions and don't explore all other options available to us, that's a huge risk to take. I think my attitude with tackling climate change is that it's not about one solution, it's much more about solutions on all fronts, and making steady progress on all fronts. Whether we can deploy technology at the scale that's needed across the entire globe, is very much in question. 00:15:21 Julia Streets: It's been phenomenal hearing all three of you and your points of view on this, and I think there's one undeniable thread that runs through all of this, which is the question of cost. I'm curious to get your views on how important it is for countries to build lower carbon energy systems that are secure and are affordable, without compromising economic competitiveness and arguably growth. Mallika, I'm going to come to you first as the chief economist. 00:15:48 Dr Mallika Ishwaran: If you want to have an energy transition that is sustained, and this is not something we want to do for one or two years. We need to sustain this level of effort over the next almost three decades. And in order to do that, you have to have a proposition where there is an economic benefit to countries from undertaking this. Clearly there are benefits from addressing the impacts of climate change, but I think what we are seeing now is that increasingly countries are seeing the economic benefits and the opportunities in the low carbon space for manufacturing the new kinds of solar panels or wind turbines that are needed, or the electrolysers, and becoming the manufacturing workshop for low carbon equipment, goods solutions. And that could be a basis of driving economic growth in a country, creating new types of jobs, and at the same time, you're creating a better natural environment in which citizens can thrive. 00:16:42 Julia Streets: It's been a phenomenal conversation because we've discussed this from so many different points of view. To close us out today, I would like to ask each of you in 20 seconds or less to share one key development, however big or small, that needs to happen this year to address this question of cutting world carbon emissions. Yvonne, your thoughts. 00:17:02 Dr Yvonne Maingey-Muriuki: Higher price on carbon. I think if we are able to achieve that and we can charge more for polluting entities, then we'd have a great incentive for them to stop. 00:17:12 Julia Streets: And Rob, your thoughts. 00:17:12 Dr Rob Charnock: I think to me, it's really critical to see how the Loss and Damage Fund is operationalised by the World Bank. This is a fund specifically about compensating developing nations who are already feeling the impacts of climate change, as well as needing to put adaptation measures in place. 00:17:32 Julia Streets: Mallika, can I come to you? 00:17:34 Dr Mallika Ishwaran: I would like the global stocktake to have impact, and I would like to see countries nationally determined contributions increased this year. 00:17:43 Julia Streets: My thanks to today's guests, Dr Yvonne Maingey- Muriuki, Dr Rob Charnock, and Dr Mallika Ishwaran. This episode marks the end of an amazing series where we've delved into some fascinating and some really challenging topics. From electric vehicle infrastructure to the future of oil and gas, from carbon markets and the impact of global tensions in cutting carbon. This season has demonstrated there are many lanes on the roads to net- zero. And if you've missed any of those or any previous episodes, you could still go back and download them for free wherever you get your podcasts. And don't forget to hit follow so you don't miss any future episodes. You've been listening to The Energy Podcast, brought to you by Shell. The Energy Podcast is a Fresh Air production, and I must remind you that the views you've heard today from individuals not affiliated with Shell, are their own and not Shell PLC or its affiliates. I'm Julia Streets. Thank you for listening and goodbye.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.See omnystudio.com/listener for privacy information.