Our fiftieth episode wraps up the first season of Eight Minutes. To celebrate, Paul gets reflective on the challenges and his unwavering optimism on the energy transition. He delves into the hurdles we face in this momentous transition, from the considerable costs of renewable energy resources to the infrastructure changes needed to support this new era. But also expresses why this change is already happening and may have a momentum all of its own, at this point.
Our fiftieth episode wraps up the first season of Eight Minutes. To celebrate, Paul gets reflective on the challenges and his unwavering optimism on the energy transition. He delves into the hurdles we face in this momentous transition, from the considerable costs of renewable energy resources to the infrastructure changes needed to support this new era. But also expresses why this change is already happening and may have a momentum all of its own, at this point.
This is 8 Minutes a podcast helping you understand the energy and climate challenge. In just a few minutes, I'm your host, paul Schuster, so this is my 50th episode of 8 Minutes. What a privilege to share this past year with everyone, and I hope that you've all found these episodes to be as fun as I have in recording them. A special thank you to the guests, who have been very generous with their time as well. To wrap up this first season, I thought I would step back and give my own perspectives on how we're really doing in the energy transition. Are we making the pivot fast enough? What's holding us back, and why is it that I feel so optimistic that we can still make that change? 8 Minutes it's how long it takes the suns to race it, or about the length of time Taylor Swift and Travis Kelsey will likely remain a couple. Hey, I'm just saying it like it is. Let's get it on. This. Past September was the hottest on record by a lot. The global average temperature beat the previous record just back in 2020 by a full half a degree Celsius, and the Intergovernmental Panel on Climate Change had a harrowing report earlier this year, indicating that we were more likely than not to miss our one and a half degree Celsius target to stave off the worst effects of climate change.
Speaker 1:
The challenge facing us is real and it's daunting and, quite frankly, we're not moving very fast in responding to the criticality of the situation yet. And there are some good reasons why, some headwinds that have kept us back from moving as urgently as we need to. For one, this whole shift is costly the ramp up of new renewable energy resources, of new transmission lines, of new EV and solar and storage manufacturing. Trillions and trillions of dollars are required to fully transition into a clean energy economy. Now, that's not to say that those dollars are wasted. For the most part, renewable energy is now the cheapest source of electricity on the grid, so investing in these resources actually makes a lot of economic sense. But the intermittency of these resources, the risk that the wind won't blow or the sun won't shine that requires a rethinking of grid mechanics that we also have to invest behind Building out high voltage transmission lines to supplement local generation or developing long duration storage that can weather weeks of quiet wind activity. And that effort to build a new grid, one that gets renewable power from the planes or from offshore areas to big cities and load centers, a grid that can manage billions of interconnected, distributed resources, a grid that optimizes itself, based not just on reliability and cost but also on emissions attributes. That grid is also seriously underfunded. According to Bloomberg New Energy Finance, they expect that a modernized global grid could cost us over $21 trillion. To develop National grid, which manages the transmission infrastructure in the UK, estimates that they will need to develop five times more transmission over the next seven years than they've done over the past 30 years combined.
Speaker 1:
Even if we were able to overcome that investment issue behind our power grid, we're still faced with daunting challenges to reduce industrial manufacturing emissions. Quite frankly, none of the alternative technologies to replace fossil fuels for heavy industrial usage, none of them, are mature enough. Electrify everything Sure we could, but it's up to nine times less efficient today than our current fossil fuel systems. And hydrogen? Well, we're years away from seeing electrolyzer prices fall far enough for that to really be an option either. Which is not to say that neither of those solutions will exist someday, but the pace at which we can change over is just delayed. The International Energy Agency, the IEA, encouragingly indicates that the economics of the energy transition are so solid that eventually everything will transition, even if we just continue to operate business as usual. The problem that path could take another hundred years, which we don't necessarily have.
Speaker 1:
But things aren't truly so gloom and doom. For one thing, the world has truly galvanized around the need to transition over the past few years. Countries have committed to large reductions in their national admissions, with some, such as the UK, even enshrining their commitments into law, and massive amounts of national monies are flowing into the fight. The Inflation Reduction Act is estimated to provide over $400 billion into clean energy development in the US, and the Infrastructure Investment and Jobs Act similarly boosts large infrastructure investment across the states. The European Union responded with their own national infrastructure fund, and even China has been investing heavily. In 2022, china invested $546 billion into renewable technologies, more than half of the global total. The New York Times estimates that $1.7 trillion is being allocated to clean energy technologies in 2023, as compared to $1 trillion for fossil fuels, and those investments are having a real impact. Renewable generation, as I mentioned earlier, is now the lowest cost option almost anywhere in the world. Storage prices are dropping significantly. The economics of the clean energy transition are truly very positive and, what's more, those economics are likely to only improve, and probably faster than we think. The IEA has been releasing forecasts for solar adoption since at least 2000. In every year they've underestimated the growth in adoption. Seriously that 2000 solar forecast. We are today nine times higher in adoption than what the IEA had predicted back then.
Speaker 1:
See, the tough part is always about starting the change. Once it gets moving, it starts to have an inertia all of its own. Take EVs, for instance. In Germany in 2020, only about 6% of the market drove EVs. Two years later, that number was up to 18%. Germany is experiencing a 56% year-over-year growth in the EV market, which is just unheard of. Europe overall now has more than 20% of their vehicles as electric. Here in the US, we passed 7% of the car market just recently. We, too, are on that tipping point towards rapid adoption and turnover, which is why I'm optimistic on so many fronts.
Speaker 1:
The pace of certain parts of the energy transition is moving very quickly EVs, renewables. In the other areas that require urgency, such as industrial decarbonization or sustainable agriculture or retrofitting commercial buildings, these activities are on the front end of that same curve that took over solar or storage or EVs. The change will happen, and it will probably happen faster than we think, which leaves me with one other data point for us to ponder. Ember, a think tank based in the UK, announced that 2023 will see global power sector emissions peak and finally start falling. In fact, if it hadn't been for some global drought conditions that required China and some others to shift from hydropower to coal power, we would have peaked already. That is encouraging news. It's been a long, grinding road to get to this point, but the energy transition is happening. Does it require more Sure, more policy, more commitment, more financing, more action, more urgency? But I remain optimistic at the momentum that has already been created. I'm Paul Schuster and this has been your 8 Minutes.