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John Man, it's been a while since we talked. A lot has happened, and I was thinking, what are we going to cover in this tiny little bit that we get to chat before we move on Finthia. What's it going to be? So I've decided it's going to be absolutely everything, and I hope you're down with that decision because we've only got five minutes. So here we go. Are you ready?
Okay? Gold gold?
How do you feel about gold?
Oh? Amazing, it's been up like it isn't a rule, It's like, wow, this kind of you know, the gold bugs were right all those decades ago.
The way what you're saying is, Maren, you were right.
Just as West Japan. You just have to be patient.
In the end, wait twenty years, you get there. So new high after new high after new high. It's exciting, but we know it's not the or up until now, it has not been the Western retail investor, right, it's been the retail investors in China in particular, it's been central banks because we've seen outflows from from ETFs in the West year after year after year, flattened out, maybe turning around.
Yeah, the Japanese retail invested as well. I was reading this morning a good piece by Charles Gav's son guy his name escapes me visit Gavico, and he was pointing out that after the last Bank of Japan Central Bank meeting, where they were much more dubbish than expected, activity in the Japanese version of the physical gold ETF just went behind, as he puts it, And basically it sounds like the Japanese are fed up with the nbing devalued, and now
the Chinese are getting fed up with the yuan being devalued, and so everyone in those countries is basically reacting to what they see as ramping currency debasement by buying gold. So I mean, it's fascinating, Okay.
So everything that we've been talking about for is is sort of slightly coming to fruition. People are increasingly concerned and inflation is not going away, that the value of the currency is not going to hold, that the dollar is not what it was, that buying US treasuries is not the answer to everything. So I wrote a column about this earlier in the week where I said that effectively gold is the everything hedge for central banks. And if it's good enough for them, do you know what
it's good enough for us? So that's gold silver.
Silver was where is Sebastian Lion? Lion always described it as gold on crack, So I think you should take that exactly at face value, have a play with it if you want to, but be very careful and don't expect too much of it. You know, if it goes up an awful lot, then maybe you should look at taking Profit's definitely a trade rather than a buy and hold portfolio insurance.
That's just from John, don't take too much crack? Thanks John? Right? What else? The widening out of the US market. So we've had this incredibly intense concentration into the Magnificent seven. They're not all doing very well anymore. In fact, we're now down to I think the Magnificent three in terms of ones that are doing very well. And as to someone intro out to me yesterday that in dollar terms, gold has done better than the Magnificent seven so far
this year. So we're beginning to say the performance of the megatech slide relative to everything else, We're beginning to say widening out of the market, that seems like a good thing right or does it tell us there's a big crush coming right now?
If I'm one is that I think it's a good thing. I think it boils down the market currently terms, but the idea that maybe there's not going to be a recession, and also feeling broadly optimistic about the economy's ability to cope with higher interest rates. Maybe a bit of fear of inflation thrown in because you can see the commodities are coming back, and that's partly because China seems to be leveling out, if not bouncing back, and certainly Chinese
stocks have rebounded strongly. So overall, I wouldn't say it's something to be worried about, but you may have read something that I haven't.
I'm always worried. I'm always worried, and you know, if there is that if inflation is not defeated as you and I have been talking about for ages, and we've been talking for ages about higher for longer rather than lower sooner. We've been worried about energy markets. We've been worried about the oil price, in which we may well have been justified. Is there an energy crisis ahead? Et cetera. Will come to more of that in a minute. So you know, I'm watching the oil price pretty closely. That's
always a worry. But I'm also looking at looking at the big stocks and thinking, well, hang on, they've definitely gone far enough. This concentration is out of control. So what happens what happens next is that is there a mini crisis there or do we get the second order stock saying the ones that will definitely do very well out of AI, but aren't the ones making the chips, et cetera. Do we see them coming to the forefront,
which kind of what we saw in the nineties. Right, So there's lots of interesting things going on in the markets, which we will keep writing about. But moving on to the next bit, which is the wrappers inside which you keep those investments you've written about ices. We love ices, we don't like to see interference and ice is you're a bit worried about that? You I sed to say them just beginning by the way, get that twenty grand in.
The problemse So it's a kind of leftish think tank. The Resolution Foundation came out with a bit of an attack on I as saying that essentially attax breaks are too generous. So because not everyone can put twenty grand
a year in an ISA, and they do sympathize. The suggestion is that, well, it's all of this tax relief, if you like, is being weighted towards the wealthiest in society, blah blah blah, So we should cap the overall amount you can stick in an ISA the same way that they had a cap on the pension the lifetime allowance
to one hundred pounds exactly. And I mean, it's just it's a typical economist argument where they frame it in kind of number terms, but really it just boils down to your political viewpoint and they don't think about what the knock on that problem will be as soon as you start messing around with eyes as you get to the same problem we've got with pensions, which is that they are mercilessly messed up around with by governments on a kind a semi annual basis, and that is one
good reason why people don't trust them. And if you do the same way issis then that you know, you're just putting a big target on the the side of them for all future chancellors to either raid or mess about, and it really would be an extremely damaging thing. To do to what is a popular and still relatively simple savings product. So I just think is a bad idea.
And at the same time I'm worried that it's the direction of travel, because you know, we are getting a labor government most likely, you know, in the next expert.
The labor government that has started talking about tax dodging rather than dividing things up between evasion and avoidance, which is so important. What is legal, what isn't legal. No one can be criticized for tax avoidance. They can definitely be criticized for tax avision, which brings us, of course to poor Angela and Rna very briefly, and the I don't need to talk about the issues around whether she did or didn't or sort of shouldn't, because we have no idea. But what it does show up is the
extraordinary complication of the UK tax system. And this is the bit that I'm looking and going, well, hang on, you know, so what someone like Angela Raina had to do when living in a house with one person or not living in a house with one person, I don't know. But married, if you're married, you can only have one principle home for tax purposes. How do you even know that, How are people supposed to know that? And how are they supposed to choose which one it is? How are
they supposed to understand the nomination process? How all these things are impossibly complicated and difficult. And then you find you do have to play capital gains on one house because you didn't nominated, or because you live somewhere else, or whatever it is. And then there are a million
allowances that you can claim against that. So what might look like a twenty eight percent tax bill of a ten plus thousand pounds can be brought down to zero in the blink of an eye with exemptions and exceptions, et cetera. If I were in government, which is never going to happen because my Twitter account I'm sure would never allow it. If I would be in government, the first thing I would do is say, hang on. The lesson we could learn here as a new government is
that this system is out of control, complicated. Let's go, let's go simple, low and unavoidable. I've got a column coming out on why that means it's time. It really is time, And I'm sure at this point Angela Arena would agree it really is time for a low, flat rate of capital gains tax on all property sales in the UK we brought in hand in hand with the full abolition of stamp duty. Just agree with me, John, You know you want to wait?
Are you talking about whole home sales even my family home?
Yes, your family home. And you know, while I'm at it, I might withdraw that IHT exemption on your family home.
What melnha like bomb?
You know what I want you to do. Stop treating that house as though it's the greatest investment in the world because you don't have to pay any tax on it. It's not an investment, it's your home. Put your investment money somewhere else. That's all I want from you, John.
I think you should stand for prime ministers. So I totally agree with this. In case anyone thought I wasn't joking. That's a great idea.
No, simple, unavoidable. Let's do it. Talking to you, Kistarma, talking to you Angela Reina. Do you think they're listening?
Yes, of course, of course.
Okay, excellent. So John, for our first week back from our holidays, we've had this wonderful quick fire around. I know everybody's enjoyed it. We didn't get anywhere near the tax gap. I'm living that for next week. Actually know John, John's going to write a column about a tax gap, aren't you or am I? One of us is going to we'll one of us. Well, anyway, first week back, we're actually, unusually we are discussing a book by a colleague of ours. No one from the outside this time.
We're all inside this week. Actually Rathi he's a senior reporter on the team covering climate issues, and he hosts his own podcast Zero, which obviously you should listen to. He's written a book called Climate Capitalism, Winning the Global Race to Zero Emissions. Now, John, the bit I like about this, but I like about this, and I know, I know you've read the transcript, is that it's called climate capitalism, not climate destroy capitalism.
That works for me, Yeah, it's reassured as soon as I hear the word claim it. You know, there's a little bit of me that can daze and sage usually, but it's uh, well, I mean, clearly dis duty the uncontrolled effects of global warming. But other than that, it's but not I think when you see it campagned with capitalism, it's like we're starting to talk about this stuff like adults. So that's good.
Yeah, yeah, and it takes us away from the whole. In order to deal with climate change, we need to absolutely destroy the system that created it, because you know, you can either say, well that's just ridiculous because there's the only system that works, or you can say there isn't time for it anyway. Welcome to Merrin Dogs Money, the podcast in which people who know the markets explain the markets. I'm merensumset Web. Here's my conversation with Bloomberg
Senior reporter ak Chet Ratthi. Before Bloomberg actually worked for Quartz and The Economist, and his work has been cited in widely read global publications including The New York Times in New York at, the Guardian and the Wallbury Journal and the Financial Times. That's pretty much everything, actually, and I discussed the main thesis behind his book, climate Capitalism. So here we go. So thank you very much for
your book. I've enjoyed reading it enormously and I wanted to start with the with the big, big picture stuff, which is how you really feel about capitalism in that when when someone picks up your book, they go straight in. They're going to start at the introduction and the first couple of pages they're going to hear a lot about the extractive economic system built up to maximize profits, concentrate wealth,
and hands of the rich. They're going to go on to unfettered capitalism and some discussion about the conceivable possibility of overthrowing capitalism, etc. By the time they get to page three, they're going to think that this is going to be a book about overthrowing capitalism, changing the world completely and introducing a different system, which of course we know never works. But that's not for this podcast. That's
for another time. But of course, as we go through the book, that's not really how you feel, is it. So let's talk about your sort of slightly conflicted feelings around what capitalism represents.
In a way, the conflicted feeling of capitalism is what I observe in the audience right there, is all the evils are sometimes put into this basket of capitalism and
very rarely defined what it is. But I also wanted to start this book by taking the view that environmentalists have taken, which is that there is just no way to solve the climate problem without overthrowing capitalism, and they never offer an alternative that actually worked, and so you know by page three you also get Noam Chomsky, the famous anti capitalist, who tells you, well, if this is to be sold on a deadline, there is no way to overthrow capitalism. You just have to modify it to
make it work. And my reporting shows that in around the world, in countries of all types of economic and political contexts, in all types of affordability, from developing countries like India to rich countries like the US, there are tweaks being made to the market system so that it can start to finally address the climate challenge in a scale that is necessary.
Okay, but the key thing here is that capitalism is the solution to climate change, in that there is only one system that we know has worked long term to pull people out of poverty. Right about this yourself, about the way the combination of capitalism and fossil fuels has been the most extraordinary game changer for humanity in terms of making us rich, making us prosperous, pulling people out
of poverty. And so the best thing for us to do from here is to say, hey, this is really something, and we should use the power of this to pull ourselves out of the whole we've dug ourselves into we don't.
Have a better system to try and find this signal in the noise around the world. Right markets provide this really good sorting mechanism of connecting the buyers with the sellers at ideally the right price. But what has happened is that in this process we have as an economic system ignored the cost of the pollution, and that is now being incorporated into the economic system, and I think that's what's changing climate capitalism to work.
So what we're doing here is we're recognizing that occasionally the market doesn't include thing in the price, and we have to give it a nudge to get the last
bit in the price correct. Okay, all right, So then can we just talk before we go on to talking about the wonderful stories in the book, because I mean, I'm thrilled by your book, because John and I always talk about how we expect human ingenuity to solve all the problems, and you know, there's so much doom and gloom and less doom and gloom, but in the end, so far human ingenuity has always solved most of the problems.
But this is a slightly bigger problem than most, right in that moving to anything close to net zero involved the kind of transformation of global economics, global systems, global living standards that has really never happened before, particularly given the size of the global population.
Now.
So when we look back at previous transformations, you know, say into fossil fuels, etc. Populations have been much smaller, systems have been much smaller. It's a very different thing to changing an energy system that drives the population of say eight billion people. So it's a huge thing. So, even with all the sort of rather exciting things that you write about in the book, I wanted to get a sense here of what you believe is actually possible within say the next twenty thirty years.
Yeah, it's a very good question because previous transformations, say going from wood to coal or from coal to oil as the major source of energy, have happened over timelines that were driven by the economics rather than a deadline given to you by scientists. Right, that is the net zero framework we have that until we reach zero emissions, we keep warming the planet up and extreme weather events keep increasing. Now, what is possible Theoretically net zero by
twenty fifty is possible. And I'd say theoretically because there is a plan it's been put forward by the Intergovernmental Panel on Climate Change that is being signed off by one hundred and ninety five countries to deliver on that goal. So it's certainly doable. Now what is practical is a different question, because and let me.
Stop you there. Then when you say it's doable, what would the be the consequences of doing it inside that timeframe to that plan? I guess we'll move on to the extent that whether it's practical or not. But when you say it's doable, what do you mean?
So to think about the NAT zero challenge, it helps to perhaps split it into four parts. For pieces of the PI, say a quarter is electricity, a quarter is transport,
a quarter is industry, and a quarter is agriculture. And what we now have is solutions for at least half of them, which is how to get electricity sector to zero emissions using solar wind batteries, geothermal hydropower, a combination of large transmission across huge amounts of distances in transportation again through electric cars, through lithium I in batteries, through new modes of transport that are coming through in aviation and shipping. There is a plan to get to zero
emissions industrial sector. We are at a younger stage in those technologies, but those technologies are starting to become commercial. So either you apply carbon capture, which is an ability to take the emissions from the smokestacks of industry put it deep underground, or you move to hydrogen, which is happening in Sweden converting steel production from using coal to hydrogen, or just use electricity to be able to convert iron ore to iron, which is also starting to happen. That's
the industrial pie. And then agriculture is actually fascinating because there are big challenges in that there are hundreds of millions of farmers who need to be able to adopt these solutions. But if you do adopt those solutions, you actually start to use agriculture to store carbon into the
ground rather than be a producer of emissions. And so that's what I say that this plan exists, that there are technologies that are there, and slowly the economic systems are also being put to make these technologies be deployed.
Okay, skip, you quick give back to agriculture because on the previous three you explained what you meant, But when what are the systems in agriculture you're talking about we have we've done a podcast before on posture ad farming and that kind of thing and sequestration in the soil. Is that what you mean or is there something something else?
So agricultural emissions are split into perhaps two big gases. One is carbon dioxide that has come from losing carbon from the soil, and the second is nitrogen emissions that come from using fertilizers that are made synthetically. Right, we create ammonia from natural gas right now, So moving to ammonia that's made from hydrogen that is produced from green
electricity is now possible. It is slightly expensive, but you start to make it cheaper, you start to reduce the emissions that come from ammonia production, but you'd still have nitrogen emissions that are generated in the soil. Those need to be managed by a counterbalancing force, which is you
start to absorb ceoto rather than produce. And so what's happening on COO two, specifically on agriculture is there are methods called regenerative agriculture where you can actually increase the yield of a farm while increasing the amount of COO to that is absorbed by those soils. Is just a new way of thinking about how to do this, not
to say it's never been done in the past. Lots of people around the world, Indigenous communities have mastered these ideas, but we've moved to an industrial structure where it has been much more extractive and not thinking about the regenerative aspect as much. It just requires a change in thinking.
Yeah, it it seems ambition is good, but it seems an extraordinary ambition that you could achieve that across the global agricultural sector in a couple of decades. Correct, And when I look at the numbers, I mean, obviously what was absolutely christlist to remind everybody that net zero is not zero, right, because when you speak to people about net zero sometimes there is a sort of an odd assumption that it means that by net zero means that we don't use fossil fuels at all, and of course
it means absolutely nothing of the sort. It means that we work to get ourselves to a net level of zero. But when you look at the numbers for the last twenty years or so, and you see that we've worked so hard on, for example, renewable when solo biofuels, et cetera, and we've increased our use with them by fifty sixty times, but we are still over eighty percent dependent on fossil fuel.
So whenever we talk about all these wonderful, optimistic things, but then when we look at the raw data, it's hard to see progress because of the rising demand for energy.
Yes, it is, and let me give you the practical side of it in two forms. One, the challenge is actually not as big as eighty percent, and I'll tell you why. Because most of the fossil fuels that are burned today in cars, in factories, in power plants are wasted. And when I say wasted, the heat that is produced that is actually converted into useful work is a tiny fraction. In a car, it's like twenty five percent. In a
power plant, it's usually forty percent. And so when you move to an electrical system, it is just a ton more efficient. So for the same unit of energy in an electric car, you can go four times the distance as you would in a fossil fuel car. So you don't need to replace a system that is say one hundred un of energy today with one hundred units of energy in net zero system, you actually need to do only sixty units maybe, so that's one. But the second
side is absolutely right. The practicality of how quickly we change this system is really hard and there are again two sides to think about. This has always been the challenge, right moving to a renewable system that would have even ten or twenty or thirty percent on the grid was thought to be impossible. There will be blackouts, Well we are now. It's sixty seventy percent in some countries in Europe on an annual basis, and those blackout fears haven't
come true. So there's the reality of faction.
That's but that's because we still have the backup systems in place. We still have the you know, we've dealt with the intermittency by still having gas and coal et cetera in place. Correct, Yes, you know that there's a push to the push to to not recognize intermittency. That's where you run into trouble. And of course our grids are increasingly old and creaky and we can't really i mean, certainly in the UK, we can't really put up much much more in the way of renewable We can't connect
much more without revamping the grid. Right, So we've got to a certain point and we're very reliant on our backup systems, and we're very reliant on a crumbling grid. So I've interrupted you. I'm sorry, but I sort of slightly feel we've got as far as we can go without really doing some very significant building and without recognizing the problem of intermittency slightly more than we have so far. Is that wrong?
For sure?
I think you're absolutely right. We have done a significant amount of building just deploying renewable assets here in the UK, say offshore wind, but the interconnections need to come through, the technologies to store energy need to come through. But again, this challenge is a global challenge. So if the UK and Denmark are places where you get fifty sixty seventy percent and renewable electricity, you can make that happen in India, which currently gets less than ten percent from solar and wind.
Right.
So India has a huge way to go, and so you can start to see how this comes in place. But going back to the practicality, you know one point five degrees celsius and two degrees celsius. These are the two goals set in the Paris Agreement. The likelihood of us meeting one point five is becoming vanishingly small, but the likelihood of actually reaching two is still very much possible.
And so you may not get the perfect outcome of net zero by twenty fifty, but you might get net zero by twenty seventy, which is still so much better than the world we are headed towards right now, which is three degrees celsius of warming.
Okay, all right, So in practical terms, it's just going to take longer, be more difficult than the big optimist think, but it's still possible within a slightly longer timeframe. And of course we have no idea what happens next. We're incredibly bad at predicting the future. We I mean, as humans, we're really lousy at this. We think things are going in one direction, and mostly they're not. We think something's going to change the world, we find we've gone and
slightly the wrong direction. We think we've got everything under control, and then we have a pandemic and find we don't know how to make masks. You know, we're very bad at this. So all sorts of things could happen in the intervening period that show us that we're right or wrong. We've got got red heiring here or red heiring there, or gone down the wrong road with some kind of electric car or something like that. But in the round, in the round, you think that we are on the correct track.
Yes, we are bad at predicting the future. And that's why I think the capitalistic system is actually the better one to rely on, because instead of a government choosing a technology to back to get us to the answer that we think we have, it is so much better to have governments support a bunch of bets through market directly that we need to get to a decarbonized grid,
but don't pick up particular winner. They allow the market to have these signals and noise to come through and show us which one works, because the solution for a particular place may be different, you know. Or the UK has offshore win. India may not have so much off your win, but it has a ton of solar.
Yeah, you have an amazing solar and at least I know they get they get proper son.
Yes exactly. And so you allow for markets to participate in a solution that they are well capable of delivering on.
Okay, So which country do you think is doing the best job of nudging prices to make this work.
So climate capitalism sort of shows that this can happen in different context Let's take three examples. The US is doing it through the Inflation Reduction Act. Now it's the last one to come to the party. The US has dragged its feet on trying to do much on decarbonization. You can blame the politics, you can blame other factors, like it's become a fossil fuel giant, but now it
is at the party, at least under this presidency. The Inflation Reduction Act, which is passed in twenty twenty two, was passed despite the political divide between the Democrats and Republicans on climate and the likelihood of it lasting regardless of where the politics goes this year when the election happens is quite high because of the way it was structured. In this American system, it's all about tax credits, it's all about giving benefit to companies building clean energy technologies.
That's not the system Europe has adopted. Europe has a Green Deal which was signed over the last few years, and it is very much a cat and stick model, and the stick is typically bigger, and that's to do with European countries not having quite the capacity to spend like America does. But also because of the European system, where the European Union has only so much power, all the countries within it have to do the rest. And then you have the Chinese system, which is data.
And we should sorry, I should just interrupt you to say that despite all that a good news coming out of the US, it's still it's oil production is still at a record high, isn't.
It very much?
So not just oil productions, gas production is a record high too. And you know, we live in this two track world where you know, climate impacts will keep getting worse as we extract more fossil fuels and put more ginas gases into the atmosphere. But also because of the urgency of the problem and because many of these technologies are actually just cheaper, you're getting an acceleration of the
solutions that are being deployed. And so, you know, the Chinese version has not been so much driven by the emissions or by trying to meet climate goals. It's been driven by trying to create domestic industries, to create export industries and grow its economy. It did that with solar and wind, and then it did it with batteries and electric cars, and now it's starting to get into hydrogen.
And so because of its stayed driven capitalism and it's sort of political nature where leader stays in power for decades, it has had that ability to work on that problem for a long time. And that's starting to give dividends for that country and for the world because those technologies have become cheaper as a result.
It's interesting though, I mean, China remains the biggest polluta. It continues to burn what percentage of the planet's called and I don't know, fifty percent something like that, and continues to put up new coal plants at the same time. Is doing all this so obviously, unlike other countries, there isn't a feeling behind the Chinese shift of we want to save the world. The shift is we want to create new industries and control those industries and flog them
to the rest of the world. It's a slightly different dynamic. I see a very different dynamic.
Yes, I mean that is the primary driver. But it is also true that China recognizes the challenge because China is one of the most vulnerable countries when it comes to climate change. So, in this period where you had tensions between US and China grow, and they still remain. The one thing that through that tense period they continue to collaborate on was climate because they see this as
a global problem. Without the two biggest emitters on the planet actually working together, the rest of the planet doesn't come along.
Okay, And do you I mean there is much discussion about the problem that we create for ourselves when we allow China to become to control so much of the industry and the minerals around the transition. Is that a problem for the rest of the world.
Do you think, Well, this is where the geopolitics and the economics collide. Right in the economic model of trying to get to climate solutions, you'd want the cheapest solutions to win out, doesn't matter who produces them, And China currently does make the cheapest of all clean technologies. And if you just allow for only Chinese solar panels and winterbines and batteries to power the clean energy future, we are likely to pay a lower price to get to
net zero. But of course that's why the geopolitics collides, because that means taking away jobs from places like the US or Europe where they need to move away from the dirty industries to the clean industries. And so you're going to have to make difficult choices where it may not be the most economically efficient way to get to net zero, but it would be the most politically expedient way to get to net zero, while you have to pay a higher cost because you're going to bring that
manufacturing back to your shore. And some of that is starting to happen in the US with this Inflation Reduction Act money same things trying to be done by India but also by Europe to try and get more solar manufacturing in within those borders, or getting more battery manufacturing or recycling in those borders. So it's going to be a messy transition. I think that's a given, you know. So you see these parts of net zero going from where we are at forty billion tons of emissions to zero,
they look smooth. They're going to be nothing like it.
And do you worry? I want I want to get onto the exciting stories in your book in a minute, but before that, I want to ask you the extent to which you worry, because I know you watched this kind of thing all the time, much more, much more than I do about the backlash against net zero that we've seen a bit of in the UK, we've seen a bit of in other countries, and we've seen, particularly in the US, a major backlash against ESG, against investing
with environmental social governance factors and particular environmental factors at the top on the basis that it doesn't appear to outperform, etc. So we've seen that conversation around that. Do you feel a backlash against the transition that may impact the transition?
Yes, and that backlash is very real and it's playing out in multiple countries around the world right now. It's not the only story. There are other places, like in Brazil or in Australia where climate elections have driven governments to do more. You know, you might see that here in the UK later this year when the election happens and maybe the Conservatives are booted out and labor is
brought in. But yes, that backlash is real, and the reality is, perhaps if we were to find one answer is that governments have not been good at communicating to people what they have signed up to with net zero, that what kind of transformation it's going to involve. For
people's everyday lives. What are the costs that people will have to bear upfront, because many of these technologies are expensive upfront, even if they're long run, they're cheaper than fossil fuel alternatives now, And that these things will have to be done in a consistent manner over decades. That you can't just go this year, we are not focused on net zero. Next year, we are focused on net zero. These policies just have to stick around for much longer
for them to actually pay off. And that communication hasn't happened, That reality check hasn't come from politicians, and I think that may be perhaps the biggest reason to blame the backlash the cost.
One of the things isn't it is that governments consistently tell people that the transition will mean cheaper energy for them, but they never add the words on the end in the very long term, right, in fact, short term, that's not.
True, correct, Yes, And I think that conversation needs to happen, and I think that backlash is going to focus the minds of the politicians who understand the climate challenge to get to this communication. But there's the second thing I worry about, which as a climate journalist I have to worry about, which is the unknown impacts that come from the unknowns of climate science. There are tipping points and acceleration in the climate impacts that we really don't understand.
For example, the record temperatures we are experiencing over the past year around the world are not being explained by climate models, and that is really alarming. Because climate models have become better and better, our ability to understand where we are headed has become better and better. But if climate change and global warming is outrunning those models, then those impacts may come sooner, and that can cause all kinds of real world problems. Right, you might get more
migration because countries become destabilized. You might get agricultural production falling in places you don't want it to fall, and that could cause problems for net zero because imagine if you have ten times as many people wanting to get into America from the southern border, what the politics could look like.
Well, we know about model, don't We very rarely correct, but you never know which direction they're going to be wrong in. Okay, let's move into the positive bed. Let's talk about some of the fantastic examples of progress. You write about in the book, and one of the things that I've found one of the actually I found all the chapters inted it and we might go onto the reforma lator. I really like that. But let's talk about India and solar and the entrepreneurialism around that.
So India is a low middle income country. I grew up there. It's a very price sensitive market. If it's not cheap, it is not scaling. And so in India, you know, it came to the renewables party late, but when it showed up, it really showed up. And so the story that I chart is between twenty ten and twenty twenty off India starting to realize that solar is going to become the cheapest source of energy and that
it has a ton of potential. So governments brought in some of the policies that we've seen in the world where you have people being paid for producing so called feed and tariff. But India is also a very difficult place to do business. There is corruption, bureaucracy, government entities that have to pay for solar production are delayed in
their payments. And so I feature the story of Sumantsina, who's the head of renew which is one of the largest renewable energy companies in India right now, and how he went about finding his ways around the bureaucracy to
make solar deployment work at scale. And these are sometimes very small, silly things like having a team that to go and harangue the government officials to make sure the payments are coming in, or they are more systemic things where companies are informing governments on what kind of policy is needed so that companies can deploy solar and make the price of electricity cheaper for everybody and not things
that typically happen in the Indian market often enough. And now that it's happened and through what renew was able to do, it's really opened up the market. Solar story in India has just been one of the most interesting stories to watch as a technology story but also as a business story over the past decade.
And can that model be extended to other countries? Would it work elsewhere?
That was the hope that I wanted to see if there are lessons that you can draw from India and see if within that political economic context that is India, those lessons could be applied to Nigeria, to Kenya, to South Africa places which are rich and solar but are developing countries, and some of that is starting to play out. So in Nigeria, for example, which is an astonishing place given you know, Legos has about one gigawot off power production.
Same side city, which is Shanghai, has thirty gigawats of power production, and so you have this enormous population that wants electricity but doesn't have it. And what's happened over the past year is that diesel subsidies have been taken off and so suddenly there's a solar boom in Nigeria.
And many of the lessons learned from what's happening in India where you bring in some of the foreign capital, but you also bring in reform on the electricity markets are being applied now in Nigeria and we'll see over the next few years. The rate of growth of solar has been astonishing over the past year and it's likely to continue fascinating.
Now, I want to talk about one of the other chapters in the book about batteries, because none of this works. None of this works unless we can really find a way to store large amounts of energy over significant amounts of time. Right, This is the big problem with intermittency is if we can't store it, then we always have to have that cup systems. But here you've seen significant progress as well.
Right, Yes, So the battery chapter focuses on CTL, which is now the world's largest lithium ion battery company in the world. And it is an astonishing story given CTL was only formed in two thy eleven, and the story comes from a little bit of background in how China developed. Sorry, and perhaps the story actually starts a decade before that. So in its previous form, there was a company called ATL that was created in nineteen ninety nine and China
was just about to join the WTO. It was starting to become the factory of the world, and the founders of ATL wanted to make batteries for the gadgets that we were enjoying at that time. You know, I don't think podcasts had been invented, but you had those little workmen that we used for listening to music, and they were supplying those batteries to those devices, eventually to Samsung
and Apple when they started making smartphones. But as soon as they got into manufacturing lithium man batteries, they started getting incoming from electric car companies unusually. The earliest one they got was from an Indian electric car company called Reva,
which was running electric cars. These two seater cars on lead acid batteries and wanted to use lithium man batteries instead, and the founders realized that there's actually an opportunity in moving to cars where you're going to need thousand times the size of a battery we are putting in a gadget, and it seems their policies being put in place both in China but in other countries to move to electrification,
and so they created CTL. And unlike what other Chinese manufacturers have been blamed for, this wasn't about stealing technology or just making copycats of things that were being made elsewhere in the world. They actually went out and bought licenses for the technology early on, but also created a search department to bring in technology innovation within COTL, and that started to show up very soon. They landed contracts
with foreign car manufacturers. BMW was one of the earliest ones, and now it has huge contracts with pretty much every car maker, and so much so that its technology development now is becoming the source of jealousy for many of the large battery makers that existed before c ATL came around, the Japanese ones, the South Korean ones, and even American battery makers.
Do you think talking about batteries, one of the things that we talked about earlier was problems with the grid and the difficulties of delivering power and the difficulties of interconnectors, etc. And of course I've been writing recently about about the NIMBYs not in my backyard when it comes to the grid.
Nobody wants a great, big pylon in their back garden, and they have massive impact on house prices, etc. And so we've been looking at, you know, small modular reactors and looking at how nuclear can solve that problem by bringing the power to where it's needed rather than the power having to be transmitted long distances. I mean, you haven't written about this in the book at length, but is nuclear a big part of the answer here? Maybe a bad part of the answer?
Well, I wanted to write a chapter on nuclear. The only country that is scaling nuclear in the era of climate action is China, and I got no access to China's nuclear fleet. There's just that is one place where as a reporter you can't go, and so all these other ideas on small modular nuclear reactors or even a renaissance in trying to build large nuclear reactors is currently
a dream. And the costs of actually building nuclear are so high that if you're going to try and do that as a clean energy alternative with solar and batteries combined, you're not able to compete. So if you look at net zero projections, for example from BLOOMAGNEF, they see nuclear contributing one percent of electricity in the twenty to fifty net zero mix, which is nineteen percent lower than the electricity that nuclear provides today to the global grid.
Day depressing, isn't it. How can an individual invest in the transition take advantage of some of the exciting trends here.
The easiest way you could have done it maybe two years ago was to move to responsible investing to ESG investing, which is these options now are available in your pension parts, in the places you can put money in. But that's
getting muddled because of two things. One there's the political backlash that you're seeing from certain parts on ESG, and then there is also just the muddling of ESG itself, which is the metrics that it counts, and whether it's investing in the right places or making false promises to the investor that that money is going towards the transition. So right now, it's actually not a good time to think about how as an individual you can invest in
the transition. And it's a problem that investors need to solve if they want the amount of capital that needs to come through in the energy transition.
Okay, brilliant, Thank you so much for your time today and listeners, Climate capitalism winning the global race to zero emissions, highly recommend it, not least by the way by Bill Gates, who says on the front and important read for anyone in need of optimism. Thanks very much, Thank you, Right, John, I know that you and I both feel conflicted about a lot of the policy around climate change because we tend to think, well, you know, you're making it worse here,
you're making it better? Are you're affecting living standards in the way that you intended to? Are you making energy too expensive? Is this even possible? You know, we worry, don't we worry about some of the directions that have been taken in policy terms, But did listening to this conversation make you feel more rare assured.
If I'm honest. Yes, And the thing that stood out to me is, I guess what we were talking about in the introduction. It's like, actually makes the really important point, and the one that we are always making about why markets and capitalism are a good system is that it's all about signalant and so you know, it's his point is the capitalist system is the best one to rely on because it's the one that tells you the best
sorts the places in which to put your resources. And you know, and again, the whole point about this, and I think the other thing that concerns us a lot of the time when you talk about this is the capitalism is the only system for making the trade offs. There's an awful lot of the time when people talk about this, the act as if there aren't any trade offs.
You know, the act is I, oh, well, we could just do de growth without mentioning that that would mean about six billion people would die anyway, because you know, capitalism is the only thing that has made you know, the current global population sustainable, et cetera, et cetera.
And they talk about transforming agriculture such that it produces zero emissions without pointing out that would also mean many millions of people would stop to death. Would kind of be a bad Yes, great scheme exactly.
Yeah, Yeah, the growth is basically a death cult, whether people recognize it or not. Whereas this is good, this is a kind of healthy way of looking at how do we actually deal with the fact that we you know, we need to stop pumping as much carbon dioxide into the atmosphere, So let's do something sensible about it, rather than saying we're all just going to go back to the Stone age.
And he recognizes the recognizes that the difficulty of the time frames that we put in place, and the absurdity of saying we will meet net zero by a particular doubt, and we have no idea whether we'll be able to come up with the technologies to allow that to happen, as we say, without going the growth and death, and so all those contradictions are recognized in this conversation, which
is quite refreshing. We also talk about the problem of intermittency and the ridiculous idea that you can have renewables without backup and without batteries. It just can't work. We talk about that, which which is very interesting, I think because often you discuss these things with people and you don't hear these really important restrictions on the speed at which we can move.
Yeah, and I mean I think it's there's a lot of exciting stuff and as well, I mean the idea of countries with ample sunshine, etc. You know, can I be able to leap frog certain parts of the electricity system and just rely in solar. I mean one thing I would actually Lake explain to me in much more detail being honesty. And I know that some of our
lesseners are engineers and things like that. But I don't get why everyone who talks about this is still so resolutely opposed to nuclear And now it's expensive, But why is it expensive? Why is it less expensive and less more expensive and more infrastructure heavy than havingly stick a hole over the cables between different countries in the world, because you know, the Soviet produces lots of sign and we need in the UK. Do you know what I mean, I'm startingly thinking.
I mean, when we talked about this before, the answer is always regulation, and that the regulation around nuclear is so intense, so difficult, and we will not relax it in any way at all despite them. You remember our conversation with Catherine brought her back a few months ago when we talked about and about her that you know, the incidence of nuclear accents is incredibly low, and the incidence of death as a result of those nuclear accidents is also incredibly low, lower than in all other parts
of the energy industry. But nonetheless we cannot find it within us somehow to make it easier to build. But I mean, there is change coming here because you know, our big bad billionaires in the US. And we talked about this the other day when we were talking about AI and the extraordinary amount of energy that AI requires. And someone asked me the other day, which I thought was fascinating, said to me, has anyone done the sums on the video and the four cast sales of chips.
If all those chips were used, how much energy would be required? Well, I'm interested an insane amount, more than more than we have.
You know, this is nuts.
So we must have nuclear And we can already see in the US that the big billionaires are going there. I look at Bill Gates in his activity there for example. You know you can see that this is a solution that bad capitalists or possibly good capitalists are looking at very carefully. But from a public point of view, it's all about I think, as I understand it, regulation. But on the face of it, if an alien came down today and looked at what we were doing and what I well,
hang on a tech you could do. You don't need two hundred thousand acres for solo. You could just have three acres for nuclear and the interconnectors would be so much easier because the nuclear park can go where electricity is required rather than somewhere else. You know, we have our wind turbines, we have them way way way offshore, and the interconnectors we have to create for that to get them back to where we use the energy. This is massive. Well, you can just put a little, little, small,
modular reactor right next to the town. So I don't know, and I'm with you on this, I'm very confused by And it's something that actually and I didn't talk about. And I can only assume that governments have these conversations at high levels when they talk about infrastructure spend and how we simply can't afford that infructures spand obviously and in the UK we clearly can't afford to do what we need to do to revamp the grade in such a way as to use solar and wind in the
way that we're talking about. I've rambled.
I've rambled. No, that's sort of sorry, John, kind of topic.
Yeah, you speak, otherwise we'll get more of those emails that say, Marin, let them speak.
Well, no, I was literally just that sort of I was unrambling my head because I was thinking, everyone says, Race, if you can plug in your electric cars and then run the grid off the battery, why can't we plug the nuclear submarines in overnight and run the country off for their batteries.
Okay, this is exactly the kind of time when when our producer, Summer is going to interrupt and say, Marin, don't.
Try to him speak, don't let him bring this, Bring this to an end, stop the idiot from talking.
I think, bringing this to an end. If anyone knows the answer to John's question why we can't just plug the electricity grid into the submarines, let us know. Thanks for listening to this week's Maren Talks Money. We'll be back next week. In the meantime, you like our show, rate review and subscribe wherever you listen to podcasts. This episode was hosted by me Maren sumset Web. It was produced by Samasari, additional editing by Blake Maple. Special thanks
to Action Rathy and to John Stebk. And actually, seriously, the more I think about it, why can't we have submarines offshore all around the UK and the grip plugged into them? Answers to the usual email thank you