What next, after Glasgow?

Bob Carr: Last November in Glasgow the discussions at COP26 dominated the hopes of the world and it's appropriate I think to ask what happens now? Was COP26 a compromise with coal or the end of fossil fuels as we know them? What of China and India? The end for coal? What about gas? What will happen now with green hydrogen and other technologies? What sectors might immediately be boosted by a new way of thinking of the world's energy and how we use it?  

We've got a panel to talk about these issues and I'm delighted that Sven Teske who's Associate Professor and Research Director at the Institute for Sustainable Futures UTS can join us, because he has been at every COP since the first one. That's a total of 20 all since Berlin in 1995. So, he brings a wealth of experience, so to do our other panelists and I'm delighted to welcome Tim Buckley who for 30 years has worked with financial markets including public interest related financial analysis in the coal and electricity sectors studying energy efficiency and renewables across China and India and the resulting stranded asset risks in Australia, he's published extensively. Alia Armistead is climate and energy researcher with the Australia Institute a progressive public policy think tank based in Canberra and she's conducted research on climate emergency declarations, climate risk, fossil fuel subsidies, negative emissions technologies and energy and maintenance. She has previously worked at the Breakthrough National Center for Climate Restoration and attended a previous COP, the one in Poland as a youth delegate in 2018. 

Well, the biggest decarbonisation project in the world, that's how Mike Cannon-Brookes described a proposed takeover of AGL in partnership with Brookfield Asset Management. It would mean shutting two coal-fired power plants by 2030 and maybe Tim it's because I see Mark Carney's name mentioned in respect of this headline grabbing initiative, but I just wonder whether COP26 has enabled people in the private sector, like Cannon-Brookes to think so boldly in these terms. He's saying we identified this as the biggest decarbonisation initiative the world had to offer. 

Tim Buckley: I'm sure that is exactly what's going through Mark Carney's mind. He has galvanized almost unbelievably large coalition in the Global Finance Alliance, 130 trillion dollars of capital has pledged not just to Paris alignment but limiting temperature change to one and a half degrees, now how you do that is yet to be seen and it's critical that Mark Carney and the Gobal Finance Alliance actually demonstrate through their actions the pledge that they have put on the table, but at the end of the day I'm bullish, I've worked in finance for 30 years and when financial institutions, the boards, the chair, the CEO, when they pledge something, when they actually have their feet held to the fire, it's amazing how fast finance can move and they bring a huge amount of capital.  

So, this is one opening shot of the Global Finance Alliance would be my reading of it, at the end of the day I think we saw Mike Cannon-Brookes mention very clearly that spending eight billion dollars to buy AGL and to take it out of the public domain is just round one, well round two because he's got to win the fight first and then he'll go on and spend potentially 20 billion dollars building renewable energy assets and the associated firming in order to drive down electricity prices for Australia and so AGL is the enabling agent to actually unlock a huge amount of extra capital and I wouldn't be surprised at all if Brookfield or the BlackRock's of the world end up throwing a huge amount of that capital into the ring because at the end of the day we've seen a huge opportunity here and we've seen what global finance can do. It just needs the right policy framework. 

Bob Carr: No direct link, but it could be seen as the spirit of COP26 reflected in corporate behavior in Australia? 

Tim Buckley: Absolutely and I mean I'd mention the EU ETS has written hit record highs virtually every week since COP26 and I think I'm looking at 2022 as being a year where we see the energy transmission mechanism that the world banks talked about, we see the unlocking of carbon pricing and as a result of that the leveraging of accelerated closure of coal plants around the world. Where better to start than in the developed world, a place like Australia, we caused the problem, we should deal with it first but I'm looking at the world bank to actually use players like the Global Finance Alliance to unlock capital to solve the energy needs of emerging markets so that we can actually accelerate the coal plant closure schedule beyond anyone's wildest dreams of maybe even a year ago. So that's a pretty positive ambition, we've got to see a lot of runs on the board, but let's start with two of the biggest dirtiest coal plants in the world, Mike Cannon-Brookes can drive the closure of them, we can show that the lights don't go out, we can see that the consumers will get lower electricity prices and that the world keeps moving forward and Australia embraces the opportunity rather than sits there procrastinating, pretending there's too many costs to be incurred when in fact finance is actually going to do this because it's profitable.  

Bob Carr: Yeah, we'll pick our way through all those fascinating issues. Alia you've analysed in your role at the Australia Institute the text that came out of COP26. What does it tell us about its effect in shaping private sector behaviour both the positive and perhaps the disappointing? 

Alia Armistead: Yeah, absolutely. So, a number of things came out of COP that were huge political achievements and naming fossil fuels in the final COP text, the Glasgow text was one of the biggest things that has never been done before at a COP. Naming fossil fuels as the problem and requesting countries to address that, however there are significant qualifications in the text and this is because COP is an agreement amongst all countries and so it has to be a compromise amongst all countries and so, the COP text specifically says about fossil fuels that we must phase down unabated coal power and phase down was a watering down from phase out coal power and the unabated coal power is a very  technical qualification that potentially will allow carbon capture and storage a very ineffective technology for reducing emissions to be used to justify future coal power stations in the world.  

The text also doesn't specifically mention gas so that's a concern and it does mention phasing out fossil fuel subsidies but specifically inefficient fossil fuel subsidies. So, those qualifications will potentially be used by governments around the world and may be negotiated at future COPs, but that will influence how the private sector responds to the push for phasing out fossil fuels. 

Bob Carr: Sven what's your take on this? You were there, you were in Glasgow, as I said earlier you've been at all the the COP meetings. How close are we to big corporates accepting a complete comprehensive, irreversible abandonment of fossil fuels? You'd agree with those those qualifications that Alia highlighted as being hints of going somewhat slower than the climate activists would have liked. 

Sven Teske: Yeah, I think first it's significant and I agree in all the documents fossil fuels never appeared it's and if someone who is not really familiar with the issue, if someone knows that they're negotiating 26 years now and the word fossil fuels never appeared in one of the documents. 

Bob Carr: It is astonishing, I was surprised by that fossil fuels did not figure in any of the previous texts  

Sven Teske: No, they always try to avoid that, so that is huge and I think it's sort of a few things come together. First renewable energy energies are finally cheaper, so it's more economic. So, there's a lot of pressure from energy companies and specifically electricity companies to actually move towards renewable electricity because it's significantly cheaper. It's significantly faster, so to build a wind farm or a solar power plant takes, including planning, maybe a year or two depending on how good the planning process is organised. A coal power plant takes five to seven years, a nuclear power plant on average ten to twelve. So, that's one argument for renewables, second one is it is significantly cheaper. It does not need any fuel and it is actually far more flexible. So, the private sector is convinced that this is a good thing and it's now ready to move on. 

The problem they have is that the government or governments around the world are not really clear and by re-shifting investments or assets you need to have a period of five- or ten-years investment certainty and I think Mike Cannon-Brookes, what he did and other initiatives, the net zero asset owner alliance or other net zero alliance. They basically just expressed their frustration that there is a vacuum basically in the public policy space and they want to move on now with the private sector basically clearly says please make a decision, please go long-term, we are ready to invest. I haven't seen that ever I have to say. I've been to COP one there are 26 COPs, I skipped six all together because after Copenhagen I was so frustrated that I thought I never ever go again so I left it a few years. But I have to say it's such a positive feedback and positive feeling now that we are moving on that we should actually tap into that and push with the private sector to have more renewable energy and energy efficiency projects and there's a whole lot of other technologies like storage technologies, electrification of processing, there's so much we still have to do but also, we can innovate and we have new technologies which also create new jobs so I think there's just positive, it's just positive for the majority of the of the population 

I would say that the initiative from the private sector does not replace policy because at the end of the day we need a long-term decision in energy transition because we also need to think about communities who right now, live around fossil fuel projects. They need certainty as well they need a transition and they need a plan, and so and that's something the private sector can't do. 

Bob Carr: Yeah, let's swing between some of these positives and some of the restraints. To go to a positive, Tim you're aware of a very interesting global trend and that's represented by the biggest IPO in South Korean history, which has created the second biggest battery company in history. Sven mentioned storage and I think we've all got used to the mantra wind solar and batteries, that's a combination we need to get us there. This seems a huge development in Korea and it addresses the role of batteries, the role of storage. 

Tim Buckley: It was a brilliant way to start the year. We saw an amazing 25 gigawatts of offshore wind ended in Scotland just coming back from holidays that was announced by the Scottish government unbelievable 25 gigawatts in Scotland and then all of a sudden Korea the, largest IPO in Korean history. They raised 11 billion US dollars of capital, the company's market cap is 65 billion US dollars and that was very much about raising new capital to build mega gigawatt factories in order to compete with the Chinese, because the Chinese deploy capital at an unbelievable amount right or nots and Korea wants to keep up with the Chinese.  

I just love the technology race that's going on, the capital race, the Chinese will probably win it because they can marshal capital and they can set the policy framework that's Sven talked about with decades and generations thinking whereas we're stuck in the mindset of two and three-year political cycles, but yes, the unlocking of capital in batteries in Korea that's just one example. 

Bob Carr: That means the world having the option of more effective, more efficient and cheaper battery power than up till now? 

Tim Buckley: Correct, which as you said it goes hand in glove with ever cheaper wind and solar. They're intermittent, we need firming and so the battery prices are coming down dramatically they've had a faster deflationary curve in the last five years than solar did, which is staggering and it will continue. So, I was seeing there is probably 20 or 30 new battery factories under construction in Europe right now, all of them designed to drive electrification of the transport fleet and to provide the massive scaling up of EVs across Europe the way Norway's done and the way Tesla is led in America, but the Chinese are actually the most aggressively embracing of new technology.  

China's EV sales are up 154 per cent year on year in 2021, again another brilliant way to start the year hearing the Chinese have just decided the internal combustion engine will be dead by 2035. Let's go for it and so they will drive economies of scale, they'll drive new technology development, they'll drive light weighting of the batteries and increase capacity and the Koreans are fighting to stay up with them and so it's a great technology race. 

Bob Carr: So, that's a very positive picture in 2022 of battery development, faster cheaper and driving something Alia that you've spoken about is as low-hanging fruit for Australia, perhaps for a new government and that is an expansion of EVs. 

Alia Armistead: Yeah, absolutely. I mean electric vehicles are the future and Australia's transport industry is one of our fastest growing sources of emissions. Our transport sector has become more emissions intensive not less and our current government has done very little to facilitate change in that area. So low-hanging fruit is how we're going to facilitate change the fastest we need to utilise change where we can possibly do it rather than pursuing technologies that have not been proven to work like carbon capture and storage to try and reduce emissions from old fossil fuel production facilities.  

Australian governments have invested more than four billion dollars in carbon capture and storage to date and we have one power one carbon capture and storage facility in Australia to show for it and it has consistently failed to reach sequestration targets. So, why would we be pursuing a technology like that when we can be facilitating change through transport, through electric vehicles and through electrification. 

Bob Carr: Yeah, so do you think a new government a Coalition or Labour for that matter might in looking at climate challenges on starting its new term be attracted to action on boosting infrastructure to facilitate EVs. 

Alia Armistead: I mean it makes sense Australia could have a domestic electric vehicle manufacturing industry if we wanted to. We used to be a huge exporter of cars and now we don't do that anymore but these are the industries of the future, so why would we be investing in technologies that are proven to not work when we could be investing in industries of the future instead. 

The Australian government's spent 10.3 billion dollars last year subsidising fossil fuels, that money could be going into clean industries that we will need and that if we don't domestically manufacture here then we will be looking for overseas to import those technologies. 

Bob Carr: So, if we've got a private sector in Australia that's proceeding to close coal-fired power plants and a government in Canberra that's saying as it can we're going to elevate these, that's going to be our number one climate target for 2022, would look like we were catching up with the world. Wouldn't that'd be a credible positioning for Australia? 

Alia Armistead: Yeah, we're far behind the world on electric vehicles, most countries are far more advanced in their transport transition than we are. 

Bob Carr: Well, let's look at another negative and that is something you just mentioned Alia, the the focus in Australia on carbon capture and storage. Now we've put you said four billion dollars into it, it figures in the rhetoric of government and there was acknowledgement of it at COP but just clarify for us one more time, there is no commercial application of this as I understand it anywhere in the world and as I see it as a former state planning minister and former premier, it'd be lovely to have next to every coal-fired power plant an empty aquifer conveniently located right next to the coal-fired power plant and then the theory could be clicked into place very quickly, but you don't have that convenience do you?  

Alia Armistead: No, I mean if the technology worked and if it was economic then it would, be it sounds wonderful and 10 or 15 years ago that's what people hoped for but it has not materialised. So, yes four billion dollars from Australian governments in the last two decades or so and globally there's been significant investment in carbon capture and storage as well but this is a technology that has been commercialised by the oil and gas industry actually to enhance oil recovery. So, captured co2 is used to enhance oil recovery from depleted wells and today we can capture and store 40 million tonnes in the world but 30 million tonnes of that is used to enhance oil recovery. So, any sequestration that happens is not actually reducing emissions because it's cancelled out by increased oil production. 

Bob Carr: So, carbon capture and storage applied to the gas sector doesn't deliver your climate goals? 

Alia Armistead: No and there is no coal-fired power station in the world that operates with carbon capture. 

Bob Carr: Still none? Not in Germany, not in Canada? 

Alia Armistead: There was one but it used the captured carbon to enhance oil recovery so it's cancelled out. 

Bob Carr: None in coal we can say with certainty? 

Alia Armistead: None. None in coal. 

Bob Carr: Okay let's switch to a positive, we've got to keep our spirits up and that is the prospect of clean steel. Tim it's something you've taken interest in drawing attention to recent developments with France, Sweden and Germany. Tell us about how quickly that shift to green steel is taking place. 

Tim Buckley: Well, another very exciting development at the start of this year was hearing the CEO of SSAB of Sweden announced that he was bringing forward the hybrid steel decarbonisation project by 15 years to full commercial deployment by 2030. So, a technology that he and his company along with but Vattenfall had talked about for the last four or five years they've invested in alignment with the Nordic governments to build this technology to try it, they were talking a 20–30-year time frame. 

Now that is critically important because we don't have 30 years to start the decarbonisation process and then all of a sudden SSAB says four years into it we're going to accelerate this project, we're going to absolutely implement it to its entirety by 2030 across the whole of Sweden that will reduce Sweden's emissions by I think the numbers eight percent or something but what it highlights is the dramatic acceleration of technology change and by the way the hybrid technology means that Sweden will be producing virgin steel with no coking coal at all and coking coal is Australia's third largest export and this is an existential threat to Australia's third largest export as we have an existential call the thermal coal and as we need for LNG.  

So, we need to develop new industries because it is inevitable if we're to have a livable planet these industries have to die and we need to transition so it was a brilliant announcement, it certainly had me cheering for the CEO of SSAB, but it was really rapidly followed up by the largest steel company in the world, ArcelorMittal announcing that they were going to close all three of their French blast furnaces by 2030 and they announced that with the prime minister of France and they said that they would reduce their French steel emissions by 40 percent in the next eight years. Now that is the biggest steel company in the world, the steel industry has been telling us for decades and decades that they can't decarbonise its eight percent of world emissions and heavy industry is just really the hard yards and now all of a sudden, the biggest steel company in the world is proving you can do it, a German company came out the next day, two days later and announced they were closing all three of their blast furnaces in Germany by 2033.  

Now in the space of two weeks we saw three leading European steel companies do what was we've been told for decades can't be done and I'm cheering for it. It's a brilliant way to start the year and technology coupled with finance, ideally coupled with policy and coupled with deflation of these technologies will make this an inevitable transition. The question is can we do it fast enough to actually make the planet livable. 

Bob Carr: Yeah, less happy is a trend you've highlighted Sven and that is the persistence of coal-fired power in China. Virtually all of coal-fired power investment and activity pollution can be identified as that generated by China, which developing country continues even with its big investment in wind and solar to devote itself to coal-fired power plants. Just describe the problem here and let's talk about what it might take to see a shift in Chinese reliance on the coal-fired means of keeping its houses warm and its industry turning. 

Sven Teske: Well in the last 10 years China was basically the only country who really invested heavily in new coal power plants. All the industrialised countries who had coal power plants, they built them in the 70s and 80s throughout the US, throughout Europe, the majority of coal power plants are 20-30 years old and they are closed down because of economic reasons. As you probably hear from my accent, I'm not only Australian since a few days but also German. 

Bob Carr: Congratulations on the Australian citizenship, you're very welcome. 

Sven Teske: Thank you. So, in my hometown Hamburg they built a new brand-new coal power plant and that became online 2015. It was super-efficient very expensive as well; it was like 1.6 billion euros or something and interesting enough is that Vattenfall the Swedish utility who is basically the main supplier of Hamburg, the grid operator of Hamburg was forced by the city council to actually build it and they said we don't want it and that was at that time because of the nuclear phase out which happens in Germany by the end of this year the remaining eight nuclear power plants go offline. So, they thought they needed replacement capacity. To cut the long story short, they did not need their replacement capacity. Offshore wind on shore wind and solar is much cheaper even in Germany which has half the sun shine hours than Australia, solar is cheaper than utility cost electricity for a private consumer. 

So, it took off basically and the coal power plant need needs to shut down or by I think they already shut it down but the decision has been made several months ago. So, the brand-new core power plant is shut down after seven years, so that is a huge stranded asset. China built, it was always said like every week a new coal power plant, that's not true for quite a while already anymore but they have built a lot and about 90 per cent of all new coal power plants built worldwide in the last 10 years were built in China. So, the situation is that it's not only all those coal power plants have been built in China but also always 50 percent roughly 50 percent of all new wind turbines, of all new solar installations as well. At the same time the electricity demand did not increase as projected, so right now China has a huge over capacity and a lot of coal power plants run with very low-capacity factors. That means they do not operate 24/7, they operate only a few hours a day and that is not very economic.  

So, I think what needs to happen right now is that those coal power plants need to be decommissioned ahead of time not just the old ones but also the new ones in order to give room to renewables, because there's also a problem in the grid that the grid is not strong enough to sort of keep the entire wind and solar into the power grid, plus all the coal produced. So, there's basically a bottleneck, the grid is the bottleneck, so they need to ramp down coal, that's not always possible because coal is very inflexible, very slow. So, sometimes they actually ramp down wind rather than coal because of technical reason so this needs to change. I don't think that there is a possibility to convince China from outside to ramp down their coal power plant but I think in terms of economic perspective at the end of the day wind and solar is much cheaper to operate as well because you don't need fuel and another argument is that a lot of coal comes from Australia for China.  

So, basically the money leaves the country so in terms of economic terms for China it is smarter to use a generator which does not need fuel so you don't actually need to invest money and sort of get it outside the country. So, I think there is hope that this will change, that coal will be ramped down, but I think we still see a lot of stranded assets in in the coal sector. 

Tim Buckley: Can I jump in there because I follow China pretty closely and a lot of coal apologists in Australia, meaning the entire federal government of Australia, constantly point to the fact that China is still building coal plants. But I started 2022 reading about how China overtook Germany and the UK to be the world's biggest developer of offshore wind in the world in 2021.  

China is the world leader in wind as Sven said. They're the world's leader in solar, they're the world's leader in electric vehicles, they're the world leader in green electrolysers, they're the world leader in smart meters, in grid transmission, in hydro, in nuclear. China is absolutely the world leader driving this technology transition. So, I hear that China is building a lot of coal-fired power plants, they have been doing that, but I think we need to put it in context. China is an enormous country, it has an enormous economy, they are a developing country, they have been growing their GDP at seven-eight percent per annum over the last decade that requires a lot of energy.  

But China is absolutely embracing all of the investment opportunities that decarbonisation is bringing and it's worth finishing on the point president Xi announced only a couple months ago, that China would no longer fund new coal-fired power plants or coal mines abroad with immediate effect and the bank of China the biggest bank in the world, the biggest bank of coal in the world turned around three days later and said they would no longer fund coal abroad either. So, that is the beginning of the end of the coal industry, when the president of China is no longer bankrolling coal, I would take that as a symbol of China's pivot to accelerating decarbonisation. 

Bob Carr: Alia there was discussion at Glasgow about South Africa and indeed a big, bold decision to subsidise South Africa in transitioning beyond fossil fuels, I think an 8 billion, 8.5-billion-dollar package to phase out fossil fuels in South Africa. That was something of a headline grabber in Glasgow, what's it intended to do and where might the next COP look at a similar intervention? 

Alia Armistead: Yeah, great question. So, the deal for South Africa was that a handful of developed countries including the US and the EU, Germany, would fund South Africa's decarbonisation from coal-fired power stations. So, they would collectively put forward 8.5 billion dollars to help facilitate South Africa's transition out of their very coal intensive energy grid, which is huge and developing countries have been calling for assistance with decarbonisation for years since COPs started through climate finance and through pushing for loss and damage and things like that and that will definitely be on the cards at COP27 which will be in Egypt in this November this year, so another developing country close to Africa and Indonesia have put up their hand and say that they will be interested in a similar deal to the South Africa deal and that if they were able to secure that it could help bring forward the closure of their coal-fired power stations by up to 15 years, which is extraordinary.  

Just to put that in perspective as well again the 8.5 billion dollars is less than Australian government spent last year on fossil fuel subsidies, so in the grand scheme of things it's not very much money for a collective of well-developed economies to help fund this transition in the developing world.  

Bob Carr: Yeah, so South Africa this year and next Indonesia, it is an exciting and very positive prospect. It'd be nice to think that an Australian government in an ideal world could take the money that they're subsidising fossil fuels with and put it into international projects of that sort. 

Alia Armistead: It would be nice but instead the major projects list for the Australian government currently has 1.7 billion tonnes of emissions annually embedded in those projects, which is more than three times our annual emissions and although the 1.7 billion tonnes annually may not go to our domestic emissions profile, we're exporting those emissions to the world and then pointing the finger at countries like China and saying that they're not doing enough. So really, we are very responsible for contributing to climate change through the emissions that we're exporting to the world and we should take responsibility for those rather than just looking internally. 

Bob Carr: Tim you follow India pretty closely, mixed messages out of India reliance on coal. But also, an intense interest in energy sovereignty through renewables, the most useful device for getting independence over your own energy requirements. Where does India stand? What direction is Modi taking? 

Tim Buckley: Prime Minister Modi is I think a little hamstrung. India is the largest developing country in the world, they are the most advanced in rolling out renewable energy but Prime Minister Modi is at pains to stress that the Paris agreement is predicated on common but differentiated responsibilities namely countries like Australia need to actually take responsibility. We’re as Alia just said, the third largest exporter of fossil fuels to the world, we’re the drug pushers of the world when it comes to climate destruction, we should take responsibility, America, Europe and China could take some responsibility and then India will help solve the problem.  

So, Prime Minister Modi gave his national Independence Day speech last year and he made it all about energy security and he said India needs to drive by 2047 energy independence and what he was referencing was that the country is drowning in fossil fuel imports. They import 85 percent of their oil, 50 percent of their gas, 20 percent of their thermal coal 50 percent of their coking coal. They are drowning in fossil fuel imports and with all of those commodities going up five-tenfold in the last 12 months it's crippling their budgets. They spent 21 billion dollars real US dollars in the last 12 months on imported fertiliser subsidies for the 800 million farmers of India. It's crippling the Indian government's budgets. So, Prime Minister Modi is all about common but differentiated responsibilities but then at the same time acknowledging that India can solve or help solve the world's climate crisis because the cost of renewables to the point that Sven made, the cost of renewables in India is now half the price of domestic coal, it's a third of the price of imported coal-fired power and so it's entirely economically logical that India actually develop renewables at the fastest rate possible and we've seen that this fiscal year, Indian renewable energy installs are up 100 year-on-year. It'll be a record high; we're still waiting on the last two months data but year-to-date there they've installed 11 gigawatts of renewables and their net thermal power ads one gigawatt. So, 93 percent of their capacity adds to the electricity grid of India in the last 10 months was zero emissions, domestic cheap renewables that have no water security problems and which are helping solve their air pollution problems.  

So, it ticks every possible box, what we need to see and what a what Prime Minister Modi needs to see is the west accelerate capital deployment into India so that they cannot put in 11 gigawatts but put in 30 gigawatts a year. That is Prime Minister Modi’s ambition, it's a very clearly enunciated ambition and again as fence Sven we need the government policy framework. Prime Minister Modi’s put the framework in, global capital is mobilising and I'm pretty confident India will actually lead the world in decarbonisation in the next couple of years. Modi's done a great job so far. 

Bob Carr: So, how far off before Modi can say net zero by 2060? 

Tim Buckley: I think he will refuse to say that until America says net zero by 2040, China then moves from 2060 to 2050 and then the next day Modi will announce India's moving 10 years forward because at the end of the day he's all about common but differentiated responsibilities. He's not just talking about 1.4 billion Indian people; he's talking about the poor people in Bangladesh, the poor people in Africa all of whom are wearing the consequences of the west's destruction of our atmosphere and he wants the west to actually take some responsibility. But I think India will actually lead the developing world and the international solar alliance, the international solar bank that Modi has talked about is a huge way of enabling distributed solar solutions, irrigated solar pumps for example into Africa, into Bangladesh. India is already a world leader in that, the Australian government's working on that project, India talks about it all the time but it could be one of their biggest exports. Let's solve energy poverty and water scarcity in Africa, that's the vision that Modi has, let's use solar to solve the problems.  

Bob Carr: Could India become a serious competitor of China's in generating solar wind, selling technologies to the world? 

Tim Buckley: Prime Minister Modi sees that. It certainly is objective Indian companies in the last 12 months have announced about 30 to 40 gigawatts of solar manufacturing capacity annually. I'm a little wary on that because competing with the Chinese is very dangerous. The Chinese they produce factories of 60 gigawatts annual manufacturing capacity of solar, everyone else in the world sitting at two, three, five gigawatts. The Chinese have such a technology capital scale, but at the end of the day Modi has put a 40 percent tariff on Chinese modules. China and India are a little at odds after a major border clash two years ago, that reinforced to the Indian people they need energy, security energy independence and they need self-reliant India, that is one of Modi's key objectives. So, India is going to manufacture solar modules because it's in their own national interest to do it and that is an important objective and at the end of the day it also employs tens if not hundreds of thousands of Indians and Modi needs to put 20 million new workers to work every year so they have to do manufacturing as well.  

Bob Carr: Let's talk about COP26 and gas. I notice agreements out of Glasgow about methane, better measurement of methane for example, and a specific agreement I found very encouraging between China and the United States that covered methane. So, that's positive, that's the world community saying this is a bigger threat than we previously perceived it to be and what we can find through these specialist satellites should be taken seriously.  

On the other hand, as I think one of you mentioned you've got a tolerance for gas, a reluctance to come down on gas reflected in some of the COP26 thinking. So, I just wonder Sven you might start. The status of gas, the sort of attitude a cabinet room or a corporate boardroom might be taking to investment in gas given that they've probably decided to veer decisively away from coal. 

Sven Teske: It depends a bit what you do with gas. So, to generate electricity I would say solar and wind is now actually cheaper and gas speaker, so just to be a backup for variable solar and wind generation, gas speakers are actually now more expensive than storage technologies.  

Bob Carr: Batteries. 

Sven Teske: Yes, batteries. 

Bob Carr: But what we were saying earlier the batteries are getting more efficient they're getting cheaper that's a problem for gas?  

Sven Teske: That's a problem for gas but they're also not just batteries. So, for example there was a company just started in Germany, they store in liquid metal and they have a thousand degrees. They store electricity in liquid metal and then you can produce process heat, you can produce hydrogen or you can produce electricity again. So, you have three different products, so that's quite smart. So, there are more technologies than just batteries but coming back to gas I think the main thing for gas in Europe and North America is actually not a power generation, it's actually heating. Because heating in the northern hemisphere is mainly based on gas and to change it to electric heating is difficult because it has been just phased out. So, because in the 70s and 80s a lot of electric heating has been built especially in France and in Sweden to get rid of the nuclear electricity at night because nuclear electricity is very sort of stiff. You have you have to operate it 24/7 and therefore they actually build up all those electric heating plants which were extremely inefficient.  

So, electric heating now is obviously based on heat pumps but the infrastructure to actually replace a gas heating system with a heat pump is not trivial, it’s possible but it's a bit slower. So, therefore I would say to phase out gas in the heating sector is a bit more difficult however.  

Bob Carr: We're talking about household heating, aren't we? 

Sven Teske: Very diffuse. Basically, in Eastern Europe you have district heating, district heating pipelines where you basically distribute the heat, the actual heat, that is not really common in Western Europe, it's a bit common in Denmark now, they actually build this but usually it's also only in Eastern Europe. But the infrastructure for gas could also be used for green hydrogen with some changes, but it's possible and that would be actually a smart move to replace natural gas, step by step with green hydrogen, especially for process heat. Because process heat is required for the chemical industry for example if you need 500 to 1000 degrees. Green hydrogen might be a very smart way to go because electrification is possible but then in the practice the capacity you need at this particular point, where the chemical factory increases significantly and the grid operator might not be able to actually supply the capacity to use or to operate electric heating system for process heat.   

So, I think green hydrogen has a good role to play in the transition of gas and I think gas companies can embrace that but unfortunately, I see more the idea that it's called blue hydrogen which is basically nothing else and you have the normal business and then you imagine that you can actually take the co2 off and put it in the ground and the rest goes as hydrogen, as an engineer I would strongly doubt that this is actually possible so easily in shape. But to transition to a green hydrogen, it would make sense for gas companies to transition without just shutting down their business. 

Bob Carr: Comments from Alia, Tim? 

Alia Armistead: Yeah, so picking up on gas, the Australian government has been pursuing a gas-fired recovery since the start of the COVID pandemic, which to be honest is quite absurd. 

Bob Carr: The Liberals report you fill a task force with people who work in the gas sector, they think gas is the way forward.  

Alia Armistead: Exactly, but the gas industry employs very few people in Australia, very few people. Most gas in Australia is actually used to process gas for export. So, the government has come up with new ways to utilise gas and one of them is blue hydrogen, which there's been very few studies on the emissions intensity of blue hydrogen but the ones that have come out have shown that is actually more energy intensive than if you just directly burnt the gas in the first place because of the energy costs of operating carbon capture and storage, which as we've discussed before is very ineffective at actually sequestering emissions. Then bringing it back to COP as well, there was little mention of gas at COP, there were mentions of methane and gas processing is one of the leading drivers of methane emissions in the world and methane makes up a quarter of all global emissions.  

We did have one side agreement at COP, the beyond oil and gas alliance, which was quite ambitious and as a result had very limited sign on, it was led by Denmark and Costa Rica and said that we will stop giving out new licenses for gas exploration and things like that. But the more ambitious the sign agreement is at COP or the more ambitious a text the less sign-on you actually end up having, but the International Energy Agency has said that we don't need any more fossil fuel projects and that includes any more gas projects in Australia, in the world and especially in Australia. 

Bob Carr: Yeah, Tim how do you rate that view from the International Energy Agency coming down against more gas approvals? 

Tim Buckley: I think it was a profound announcement from the IEA and I say that because half of the IEA’s funding comes from the fossil fuel industry. So, for 20 years the IEA has been one of the biggest apologists for the fossil fuel industry because they're paid for by the fossil fuel industry so half their funding comes from western governments, the other half from the fossil fuel industry, is it any surprise the IEA constantly parrots rhetoric for why we have to keep using fossil fuels, notwithstanding it's going to destroy our planet. 

But I'll also pick up on a point Alia made. Methane emissions are 25 percent of the world's greenhouse gas emissions, methane emissions accelerated the fastest rate in recorded history in 2021 and methane is what the gas industry calls natural gas, the marketing spin, let's call it what it is, it's methane gas and I was delighted in one respect to read the Woodside climate report this week and Woodside acknowledged that they consider it absolutely necessary that we use a 20-year convention on methane gas. The industry convention, the scientific convention, the fossil fuel convention is to use a hundred-year life cycle analysis and that says methane is nowhere near as destructive as it really is. Woodside acknowledges we've got a climate emergency, we've got 20 years to deal with it, let's use a 20-year measure and on that basis, methane is far, far more potent than any gas executive has ever admitted. So, Woodside one of the biggest fossil fuel companies in Australia, in the world, the largest exporter of LNG in Australia and they acknowledge that we actually have to go with a scientific convention that acknowledges the science and acknowledges a 20-year view.  

Now I'm sure that was hidden what was hidden right at the back of the Woodside climate report and of course not many people will have read that report but for a fossil fuel company to acknowledge it I think is an admission, that going back to your first question, the Global Finance Alliance has committed to 1.5 degrees when finance with 130 trillion dollars of capital say we're actually going to stick to our word, okay we've got to see them walk the walk not just talk the talk. But at the end of the day exactly as Alia said, the IEA said in a 1.5-degree world, the world cannot afford any new oil gas or coal projects with immediate effect and that includes Australia as you said. 

Bob Carr: But what do you think BlackRock is telling investors in Australia on this front? 

Tim Buckley: I think BlackRock is still absolutely deluding themselves and their investors on this point. Larry Fink's letter for 2022 very, very clearly said he would not divest oil and gas. What he hasn't said is what is he going to do instead and the private discussions that BlackRock is having every single day with every executive that they talk to is show us your 2030 interim targets show us a credible decarbonisation plan and if you don't, we might not divest the whole sector but we will divest you and that starts with Santos climate criminal number one, Woodside climate criminal number two in Australia and the executive discussions with the board of Woodside, with BlackRock, I would love to be in that room. I know what going on and I'm waiting for the new chairman to be appointed. I'm hoping it'll be someone who accepts the science unlike the last two chairmen and I think that will then free up the new CEO to actually deliver an interim target with some credibility because at the moment Woodside's got no credibility in my book, they just announced their result this week, 4 billion US dollars of capex in 2022 signed off by the board, signed off by the CEO and 99 percent of it is for more methane gas production. More gas does not lead to a livable planet so they are deluding themselves if they think that BlackRock is going to accept that. 

Bob Carr: Sven interesting that in all of this no one in Australia, few around the world are saying climate crisis, a lot of difficulties, a lot of hard policy choices, let's go nuclear. I find it striking that no one's saying in respect of all these coal-fired power station sites that are becoming available around Australia, no one's saying ideal for a nuclear power plant. 

Sven Teske: No, I'm very happy about that because I come from a country which just phases out nuclear and that has a reason and the main reason is that's very expensive. A nuclear power plant costs about two billion, three billion, four billion to build and cost exactly the same amount of money to close down and we have seen that in Germany that there are 21 reactors, 21 reactors need to be decommissioned and decommissioning takes about 15 to 20 years for each reactor. A nuclear reactor will take about 10 years to build even under the most optimistic assumptions. 

Bob Carr: That probably means 25 years in Australia. 

Sven Teske: Yeah, well I mean there are only two under construction right now, that's Flamanville in France and Olkiluoto in Finland and both of those reactors are seriously behind schedule. One I think should have been delivered electricity in 2015 and it's still not on sort of producing. 

Bob Carr: I think Finland's 13 years behind schedule and my view is that if Scandinavians can't do it there's something wrong with it. 

Sven Teske: Yeah, I mean they are about factor three over budget the last time EDF who actually built the nuclear reactor there basically said we're not talking about cost anymore because you know there's so much of a budget. So, I think it's a very logical reaction not to talk about it but I see it sort of in scientific debates and also you know I'm working on energy scenarios now more almost 30 years, you see or people look at you as biased if you say “I'm not including nuclear in in energy scenarios” even though the argument is a specific scientific one because it's too expensive, it's too inflexible it's, dangerous, you can't take a single box with nuclear. 

But still you're seen as a biased scientist if you say very clearly, I'm not going to be to include nuclear in an energy scenario because it doesn't make sense, but it seems to be still as something you have to consider even though I would say the technical assessment and the financial assessment clearly comes to the result it is not a viable technology. 

Bob Carr: Well, the clinching argument in Australia is that there is no consortium, merchant bank superannuation fund, private equity, construction company that is putting up its hand to build one. Gina Rinehart or one of the other right-wing billionaires in Australia could pick up one of these former coal-fired power station sites with their petty cash and say, this would be ideal to generate nuclear power but no one is doing it because the economic stack up against it. 

Final question of each of you. Alia, if you gave one sentence of advice to the incoming prime minister who will start the term after the next election, I presume in May on the climate front, what would it be? 

Alia Armistead: Australia has the opportunity to be a climate leader and emissions globally to 2030 will still increase and in the 2030s we will hit 1.5 degrees warming, which is the target that all countries agreed to try and limit warming to. So, we all need to get our act together and we need more climate leaders otherwise we are going to miss all of the warming targets that we have all agreed to. 

Bob Carr: Alia thank you, Tim?  

Tim Buckley: That Australia will be a renewable energy superpower and that it is absolutely negligent to fail to grasp with both hands the huge investment, employment, import replacement and export opportunities for Australia whether they're in green hydrogen, whether they're in green steel, green iron, green aluminum or lithium, rare earth, copper, I’llstop there. We will be a world superpower just get out of the way and let the industry and finance deliver that huge growth. 

Bob Carr: It becomes easier for a prime minister to pivot in that fashion given that the private sector, private investors are closing coal-fired power without instruction from government indeed over the grumblings and resistance of government, private investors are getting out of the coal-fired power business. 

Tim Buckley: Correct two of the three richest billionaires in Australia have both said they're all in on decarbonisation, they're all on the massive investment, employment and export opportunities for Australia. Let's take the lead from industry and money, no I don't often barrack for billionaires but I'm going go twiggy go Mike Cannon-Brookes, Australia needs them because we've got no leadership from Canberra and we can't afford that. 

Bob Carr: Well Sven you're not restraining giving advice now because days ago you became an Australian citizen, what would you tell the next prime minister? 

Sven Teske: I would say renewables are the cheapest option to generate electricity. Australia has probably the highest per capita solar and wind resources on this planet as a country and yes, it's economic but no we don't have to let go without policy. We actually need policy as well. So, there is a role for policy to play in a long-term energy and climate policy and I would advise to do so also to organise the transitions for all the communities out there who are now dependent on fossil fuels who actually need time to retrain their people and to have new jobs to basically make an orderly transition for the communities as well towards renewable energy. 

Bob Carr: Sven Teske of the Institute of Sustainable Futures at UTS, thank you. Tim Buckley and Alia Armistead, thank you very much for joining us. It’s been a terrific discussion; I hope you enjoyed it. Please join us for our next event here from the Institute of Sustainable Futures at the University of Technology Sydney. I'm Bob Carr, it's been a delight to host this discussion, thank you very much.