At the World Economic Forum Annual Meeting that ended days ago there was no bigger issue than the energy crisis - with its links to the challenges of climate change, geopolitics and the cost of living - what has come to be known as the ‘polycrisis’.
On this episode, we hear from two people immersed in the discussions at Davos on why the global conversation on energy has changed, with climate change and the energy transition now firmly centre-stage.
Roberto Bocca, Head of Shaping the Future of Energy and Materials, World Economic Forum
John Defterios, World Economic Forum energy fellow
Ursula von der Leyen, President of the European Commission (addressing Davos 2023)
António Guterres Secretary-General of the United Nations (addressing Davos 2023)
Subscribe on any platform: https://pod.link/1504682164
Join the World Economic Forum Podcast Club
Follow all the action from the World Economic Forum’s Annual Meeting 2023 at wef.ch/wef23 and across social media using the hashtag #WEF23.
Podcast transcript
This transcript has been generated using speech recognition software and may contain errors. Please check its accuracy against the audio.
John Defterios, World Economic Forum energy fellow: At the top of the priority list was climate, and what the energy industry and the sector and what the World Economic Forum can do to speed that process up. That's the first time I've seen that in an opening discussion at Davos.
Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them.
We've just come down from the mountain and the first winter Davos meeting for three years. At that World Economic Forum Annual Meeting there was no bigger issue than the energy crisis, with its links to the challenges of climate change, geopolitics and the cost of living - what's come to be known as the polycrisis.
To get an idea of what was said, and potentially what was achieved, on energy, in this episode we hear from two people who were immersed in those discussions. The head of energy at the World Economic Forum explains why, despite continued climate change denialism among some populist politicians around the world, the pendulum cannot again swing away from climate action.
Roberto Bocca, Head of Shaping the Future of Energy and Materials, World Economic Forum: What this crisis has created is the realisation that climate change is only one element for which it has to happen, the energy transition. Actually what is now for most politicians the important part is the element of energy security, it's an issue of national security. So I do believe that people realise that the energy transition that is now possible because of the technology, and also all of these incentives that are out there, creates jobs and creates the industry of the future. So you do want to be as any country in that journey of industrialising for the new energy system.
Robin Pomeroy: Forum energy fellow John Defterios detects a major shift in the conversation on the energy transition since the US launched its huge support scheme for green technologies.
John Defterios: The view is if it accelerates the transition, so much the better, because we can't sit on the sidelines. That narrative changed at Davos this year.
Robin Pomeroy: Listen back to our daily coverage of Davos 2023 by subscribing to Radio Davos wherever you get your podcasts or visit wef.ch/podcasts. And don't miss our sister podcasts: Agenda Dialogues, which carries the full audio of some of the best sessions from Davos, and Meet the Leader, which spoke to some of the most influential figures at the Meeting.
Catch up on all the action at Davos 2023 at wef.ch/wef23 and across social media using the hashtag #wef23.
I'm Robin Pomeroy at the World Economic Forum and with this look at what just happened on energy in Davos.
Roberto Bocca: If this Act helps the world to get there, that's most welcome.
Robin Pomeroy: This is Radio Davos.
Robin Pomeroy: Welcome to Radio Davos. As we record this, I'm still sitting in the Radio Davos booth in the middle of the Congress Centre. Looking out, there's still people milling around, but it's the final closing hours of the Annual Meeting 2023. But I wanted to, before we leave here, catch up again with my colleague Roberto Bocca, who's head of energy at the World Economic Forum. Hi Roberto, how are you doing?
Roberto Bocca: Very well, thank you.
Robin Pomeroy: And you're going to talk me through what's happened here. We talked ahead of it about what was needed to happen. You're going to help me find out what has happened here, what happens this year in energy. And you've brought with you, I'm delighted to say, John Defterios, who is a World Economic Forum energy fellow, also very well known as a journalist on CNN over the years. Hi, John. How are you?
John Defterios: Nice to be with you. Very well. It was a busy week, I'd say.
Roberto Bocca: Very busy.
Robin Pomeroy: Let's set out the stall then. What were the big headlines from this meeting? I don't know who wants to start.
Roberto Bocca: Well, certainly there were a lot of discussions at the beginning of the crisis. But quickly, I think it evolved to talk about energy transition in itself. And and so there were quite a few interesting themes that were developed. And I'm sure John will speak more to those.
But one thing that I would like to highlight is that the element of the demand. Often we speak about energy transition in terms of supply. This time there were a lot of conversation about the demand, and now the crisis actually has pushed Europe to reduce its demand, not reducing the benefit of what energy provides, but really taking away the waste and increasing efficiency.
John Defterios: Yes, to the tune of 20%, which is extraordinary. So that's if you have a demand of 100 million barrels a day for oil. So if you translated that demand would be going down to 80 million barrels a day for oil alone. But this was in the natural gas arena for Europe, they reduced supplies from Russia by 80% for natural gas, and looked for alternative supplies.
So we should try to take in the context of the Russia-Ukraine conflict. What do we learn here? You don't want to be overdependent on one supplier. Number two, you need to accelerate the transition. And clearly in this, my first year as an energy fellow with Roberto, is that the World Economic Forum is serving as an accelerator of that process. And it's not just talk anymore. Robin, I think, people are looking at how do we unlock the funds? How do we come up with a common policy for ESG or environment, social, governance, which I think is extremely important because it means something different in the United States, Europe, Asia, and particularly the developing world. So how do we get funding accelerated so we can push ahead with the energy transition.
Robin Pomeroy: Funding for things like renewable energies, for things that will increase energy efficiency? Is that the kind of thing you're talking about?
John Defterios: All of the above. Solar, wind and, I think Roberto would agree, the hydrogen initiative. How do you accelerate hydrogen and build the infrastructure around the energy systems to get it implemented as fast as possible?
Robin Pomeroy: I think this meeting for energy was framed, particularly obviously by the Ukraine war and all the impact that's had on European energy supplies and knock on effects around the world, but also by the fact that you've had these these big economic blocs having moved forward with very big policies on this area. In the US, the Inflation Reduction Act [IRA], the EU's Green Deal. These things have now come into reality. How important do you think those are going to be?
Roberto Bocca: Well, definitely it was very interesting the conversation on the IRA, Because there were some conversations before that was actually where IRA was seen negative.
Robin Pomeroy: That's the Inflation Reduction Act. Could you just, so anyone who doesn't know, I know it's a huge and complex thing, but is there a way of defining what is in the Inflation Reduction Act?
John Defterios: Well, in fact, it's nearly $400 billion. The original ambition was to be up to ten times that amount. So it was compromise across the board. We were looking at even $1,000,000,000,000, but they settled on something below $400 billion. But it's to build the modern day green infrastructure for the United States. So the electric grid would be fortified. It's introducing hydrogen to the system, battery chargers for electric vehicles. What is the sourcing that's going to go into power plants, reducing coal and oil into the power system, leaning on natural gas, but making the transition to green energy into the system as well. By the way, we have a Green Deal in the European Union as well.
But it was almost a wake-up call. As Roberto said originally, it was like, well, this was a national production in the United States, it was going to isolate other players from coming in. But then the view is if it accelerates the the transition so much the better because we can't sit on the sidelines. So I think it was, that narrative changed at Davos this year.
Roberto Bocca: It changed and it was very interesting to see Senator [Joe] Manchin that was behind this Act, in a way, with three Europeans in a panel. And in this panel, it actually came out that all Europeans were supporting it.
Robin Pomeroy: Is that right? Wow. That wasn't the conversation a couple of weeks ago.
Roberto Bocca: It wasn't. But people realised what also John was saying, that,you know, let's all compete for the better. And so if there is an incentive of $3 per kilogram of hydrogen that will take hydrogen competitive tomorrow, well that's good because then you will deploy at scale. Because when we talk about energy transition and the acceleration, it's only about speed and scale. And so if this Act helps the world to get there, that's most welcome.
John Defterios: The other thing I would add to that, when it comes to hydrogen, Roberto, is the language changed and the conversations we had in the private sessions and the public session is: in solar, Robin, we subsidised it for ten years in different markets and the same thing with wind turbines. And are we going to take the same approach to hydrogen because the price of hydrogen is too high at this stage? So if you have government incentives that are targeted, it would accelerate that infrastructure buildout, I think. And that was part of the conversation here. I think, you know, in a very positive way it stood out for me.
This is my 31st year at Davos. Ursula von der Leyen, the European Commission, the president, it was the opening speech after the first lady of Ukraine, a very emotional speech. She followed it on and acknowledged the role of Europe and Ukraine, then quickly suggested that we have to focus on climate. And she talked about the net security act for 2050, which is going to do what they did in the United States and accelerate the transition.
Ursula von der Leyen, President of the European Commission (addressing Davos 2023): A year ago, Europe had a massive dependency on Russian fossil fuels built over decades. This made us vulnerable to supply squeezes, price hikes and, of course, vulnerable to Putin's market manipulation. In less than a year. Europe has overcome this dangerous dependency. We have replaced 80% of Russian pipeline gas.
In less than three decades we have to reach net zero. But the road to net zero means developing and using a whole range of new clean technologies across our economy, in transport, in buildings, in manufacturing, in energy. The next decades will see the greatest industrial transformation of our time, maybe of any time. And those who develop and manufacture the technology that will be the foundation of tomorrow's economy will have the greatest competitive edge.
John Defterios: At the top of the priority list was climate and what the energy industry and the sector and what the World Economic Forum can do to speed that process up.
That's the first time I've seen that in an opening session at Davos. I mean, partially because of Russia-Ukraine, partially because the response we had in the last year, but the recognition that if we don't accelerate this process, the idea of getting to 1.5 degrees or capping global warming at 1.5 degrees by 2050 is a dream.
Robin Pomeroy: To take one step back from that, I wonder where the politics is now, because I've been covering energy and climate change for 25 years or something, and I've seen the pendulum swing on this issue. And particularly when it comes to American politics. people would agree a treaty, the Kyoto Protocol, and then pull out of it. When I say people, I mean the American government, when it changes from Democrats to Republicans. Is any of this at risk? The next time the Republicans come in, or do you think the die is now cast? This is the direction America has to go in.
Roberto Bocca: Can I give you the perspective from a non-American or not very in-depth knowledge of America? What this crisis has created is the realisation that climate change is only one element which has to happen for the energy transition. Actually what is now for most politicians, the important part is the element of energy security, is an issue of national security. So I do believe that people realise that the energy transition that is now possible because of the technology and also all of these incentives that are out there create jobs and create the industry of the future is a need of industrialisation. So you do want to be, as any country, in that journey of being industrialising for the new energy system. So that's why personally again, I'm not in that knowledge of US, but I think these will stand any party or different views.
John Defterios: Yeah, well, you cannot ignore the climate scares we've had over the last 24 months, right?
Robin Pomeroy: Some people still would though and there are politicians all over the world who would stand on that kind of populist, I would say, disinformed stance on climate change. It's a vote winner.
John Defterios: I think that has shifted, though, obviously, because of President Trump's 6 January incursion, that he's been getting the finger pointed at him on that issue itself. That's one reason I think people have recognised because of the wildfires we've seen in California, the flooding we've seen in the Gulf of Mexico and on the East Coast as well. But this is repeated in Europe with record temperatures. We saw what happened in Australia. It's pretty hard to say we're not going through a climate crisis right now.
I would like to see the evolution, and I hope the Forum has the influence on this even in democracies, if you make a decision when it comes to energy trilemma or the energy triangle, it goes into a bucket, Robin, that it can't be touched by a different administration or a different president. I think this would be fantastic for the world: in the United States, in Europe, Chinese policy has been consistent on this, right? They need energy. The Indian minister we had in one of our energy transition dialogues, and I know they have 150 years of coal. But the narrative coming out of India right now, it's accelerate it as fast as possible. They did net zero by 2070. Everyone was criticising Prime Minister Modi for it. The minister told us that in that discussion, we're going to beat that target. The idea is now to to introduce as much clean technologies to the system as possible. But you know, the anchors of the emerging markets, 1.4 billion in China, similar population in India, we need to get them to accelerate as well. And I think the language here has shifted dramatically.
Robin Pomeroy: You just mentioned the triangle there. Roberto, I know this is something you would like to define to me every time we speak. Could you just briefly for our listeners remind us why.
Roberto Bocca: Yes, it's very, very close to my heart.
John Defterios: All of ours!
Roberto Bocca: We have been reporting on this triangle for now more than a decade, The energy triangle is about the three dimensions that an energy system has to deliver everywhere in the world: is about sustainability, is about accessibility, and is about security. If an energy system fails in any of these side of the triangle, then there is a crisis, be it climate crisis or security crisis or access.
And maybe one more things to build on what John was talking about - India. One thing that they need to achieve in advance of that target, some of the renewable deployment, is really speeding up one of the critical elements that we have in this transition that is the permitting. One of the things that is slowing down or not enabling the acceleration that is needed is the permitting is the bureaucracy that we have.
Robin Pomeroy: Permitting for what kind of thing?
Roberto Bocca: For installing solar or wind. Sometimes we talk about ten years...
Robin Pomeroy: What, it takes ten years to get a permit?
Roberto Bocca: Before you have project and you put steel on the ground or concrete on the ground. And so that's not feasible when we talk about accelerating. This decade, in the twenties, we have to deploy at scale.
The other element that came out in this conversation is a bit less known by the general public. But when we think of the new energy system based on renewables, we do need a lot of material, a lot of new materials or materials at scale that are not available today. So when I talk about permitting think of the mining as well, you know, you can do sustainable mining, but also fast mining because you need all those elements that are needed for batteries or solar panel and so on. So really this issue of permitting came up as one of the enablers and successful factor for countries like India, but also as an impediment in other countries.
Robin Pomeroy: You've mentioned India and China. I'd like to hear a bit more on those and perhaps particularly China, which has led the way on renewables in many areas, if I'm right in saying that in terms of solar panels... We're seeing this, and it was Antonio Guterres, the head of the United Nations, was talking about this 'great fracture' between the US on one side and China on the other. Is this going to impact the development of those energy technologies and the scaling up? Or is it going to be a race to, you know, who can achieve net zero first?
John Defterios: I actually think this is one area, and I'd be curious what Roberto has to say about it, I think climate and energy security could be the great unifiers between the U.S. and China. Hopefully this is not part of that conflict between the titans when it comes to trade and technology and access and that front security. I think energy can bring them together.
China's quite unique in a sense that it needs a lot of energy. It has nuclear facilities. It has coal. It's the largest battery producer. It's rolling out electric vehicles. It's got phenomenal, as you say, solar penetration. It's building its wind penetration as well. So it needs all the above. I would say India is in that same category, right? So that I think it would be great if they would accelerate the transition and wind down coal.
I was in the coal pits for a special series, my last project at CNN, and travelled throughout India and China. They have 150 years of coal supplies. So if you talk to India Coal, they plan to use it. It's low cost. They need it. They don't have the clean technologies around coal or the infrastructure. And they are bringing all of the above, again, in India. But we'd like to see them wind down coal.
We also need to agree on a global policy. At COP27, as Roberto knows, in Sharm el Sheikh. They came up with the architecture for the Green Fund. Are they going to fund it? $200 billion. We've been talking about it for a decade. So we need to accelerate that and land on the least developed economies. That's not India and China. But also to say, what are we going to do to support these emerging markets that need to make the transition? Egypt, for example, Robin, is suffering its $17 billion bailout and we want them to make a transition. So we have to connect the dots.
Robin Pomeroy: Mentioning COP, another year, another COP. Where will that go from Sharm el-Sheikh, then we're going to the UAE, right? November, I'm guessing. What's going to happen in that COP? And can one of you talk a little bit about this controversy about the presidency of the COP that people will have read in the media?
John Defterios: Well, I'll take a crack at it, because I was living there for ten years and spent my time covering energy there, both oil and gas and renewables, because it's also home to the International Renewable Energy Agency. IRENA. There was controversy around the CEO of the national oil company, ADNOC [Abu Dhabi National Oil Company], Dr Sultan Ahmed Al Jaber, who's also chairman of a very large renewable energy investment fund called Masdar. He's also the minister of Industry and Advanced Technology. I know him personally. I've covered him. I've interviewed him. I've chaired events with him. I think he'll surprise the world, actually, because he's one that likes to get things done.
One of the things that frustrates me in the COP process, and again, I'd love to hear Roberto's thoughts, there's a language within the COP community that doesn't connect with the consumer, which I think we need to change. Like a global stocktake is kind of measuring what the countries are doing. Are they living by binding resolutions or commitments or not? I think the effort by the UAE is to say we have to be a low carbon producer of oil. We know, and I've talked officially to people, but also off the record, they're kind of planning on 20 years of oil. And they said if they got 30 years of demand and they're the low cost producers in the world, they'll be the last man standing, if you will, in the oil sector.
But I think they want to make a mark by saying let's invest as much as possible in renewables. Masdar is investing $100 billion, are putting their money where their mouth is all over the world, not just in the UAE. And they want to walk away and say, we did something to build a real, lasting coalition that's going to invest to make a difference, give a voice to the least developed countries, particularly Africa, because it's in the sphere of influence of the UAE and the Gulf states.
I think they're being transparent about that. And privately they say, look, we know this is the beginning of the transition. It needs to accelerate. They're vulnerable to, you know, the heating temperatures of the Gulf. You know, it gets up to above 50 degrees centigrade in the summer. So they're aware of it. And I think by the end of November, I think will be surprised at least by the efforts. And I think it'd be very wise, you know, with the sources I've been talking to, we need to put everybody in a larger tent - the environmental community, the oil gas producers, the bankers, the World Economic Forum, everybody should be in the same tent.
Roberto Bocca: And this is a one point I like to make, Robin. I think too often when we talk about energy transition, there are different camps, even ideological camps, you know, the activists versus the oil and gas and so on and so forth. I think that we have to all have in mind that energy transition is a team sport is not an individual sport. We'll not make happen the energy transition at speed and scale that we need in this decade mainly, and then the consequences in the following 20 years, if we don't play together.
So I really do hope that the COP28, as as John was saying, will be conducive for having everybody in the tent. It's a team sport. We have to win as a team or humanity will fail. And we don't want to have an energy transition without progress. So we still want development. So we still need energy, but we need the energy that is allowing to have sustainability as well. So a team spirit.
John Defterios: The only thing I would add to that is that the, you know, the national oil companies and the international oil companies now, the international energy companies, the IECs, they're the incumbents. But there's an advantage of being an incumbent. And Roberto worked in the business. They have expertise in engineering, project management. They have money from the oil and gas income they have today. They can deploy assets quickly and they know how to bring others into the field if they don't have the expertise.
So we shouldn't discard them and throw them out of the tent. So you're an oil and gas producer? I think, as you said, I mean, that's the perfect analogy. It is a team sport. We're not going to get there by 2050 with any hope, if not, everybody is kind of singing from the same hymn sheet, if you will, Robin.
Robin Pomeroy: Interesting to see. I mean, it's a bit unfair to put this to you, I should be putting it to the chief executives of those companies. But Antonio Guterres, to quote him again, said here in Davos that the pursuit of new fossil fuels exploration is the stuff of dystopian science fiction nightmare.
António Guterres Secretary-General of the United Nations (addressing Davos 2023): Today, fossil fuel producers and their enablers are still racing to expand production, knowing full well that this business model is inconsistent with human survival. Now, this insanity belongs in science fiction. Yet we know the ecosystem meltdown is cold, hard, scientific fact.
Robin Pomeroy: Oil and gas companies are still looking for and exploiting new oil and gas fields. So we could all be in the same tent. But there's going to be a wide difference of opinion in this.
Roberto Bocca: Yes and no. I mean, here is a couple of issues. First of all, let's remember that the problem is not oil or gas or coal for the sake of it, but is the emissions that there are once they are burned. So let's think about the emissions on one side.
The other thing is that today we are using a hundred million barrels of oil a day. If tomorrow we stop investing, we will not have a crisis like the one we had. We will have a war. We will have, you know, it will be the end because you can't think of having oil at $500. Right. So we have also to be realistic that while we will have to address the emissions and that probably a decline in the in the in the oil consumption and in the oil production in the medium term, we can't think that this will be an immediate element. So that's the issue where the reality hits. You know, we are using 100 million barrels a day is a huge amount. And all of the products and all of the things we are using around to transport and even in electric cars, there are a lot of components that come from it. So let's not be naive. Let's look at the complexity of it and deal with it instead of being, you know, forgetting the complexity, I think is is simple. It is not simple, but can be done. That's what is important.
John Defterios: The other thing I would add here is that both the International Energy Agency and IRENA and Abu Dhabi and others have scenarios to 2050, 2040. As Roberto knows, the scenarios now say 100 million barrels a day. You have a kind of 'we don't do too much over the next 25 or 30 years' and you end up at 80 million barrels a day. The middle range target is 60 million barrels a day. But to hit net zero by 2050, you got to get to 40 million barrels a day. So cutting demand by 60%, but you still will need 40 billion barrels a day. So you still need investment.
There's also another debate and I presented this to the energy commissioner of the European Union in one of the private sessions that we had. How do we define natural gas? Is it a baseload fuel? That's what I heard from the Minister of Energy of the UAE, Suhail Mazroui, who says you need it for a baseload, something you can rely on as you build the renewable infrastructure or low carbon infrastructure around the world- if it's hydrogen, you're still going to be nuclear using nuclear or not. So I think there's a discussion what is the role of natural gas? Is it a transition fuel or is it just a fuel? And if it is a fuel, how do you clean it up as fast as possible?
There's some hypocrisy in the system still. Those in Senegal discovered large gas fields, Mozambique, Tanzania. We have 600 million people, at least, on the African continent that don't have access to energy on a daily basis. So if they're responsible for less than 1% of the carbon bank we have today, Robin, shouldn't they have access to energy? There's a pretty strong case to say yes. Should we be supporting that with the development banks? We have not landed on the role of natural gas. I would even argue we have resources in the eastern Mediterranean, we're going to say natural gas is going to be needed for the next half century, should we be looking for alternative supplies then to Russia. You have the Eastern Med, they're engaging with Algeria, the Egyptian natural gas is come in the market, also Israel. But for the sake of security, as part of that triangle, you should say, should we be bringing more natural gas to the market? We have not landed on that. Am I correct?
Roberto Bocca: Yeah, But again, let's not fight the fuels we are using today. Let's fight the emissions. And actually it was very helpful because of the conversation we had here in Davos. There are quite a few technologies, quite a few start-ups really trying to address emissions, how you remove emissions from the atmosphere, by the way, not only emissions from the energy system, we shouldn't forget that big part of emissions is also coming from the agricultural sector. So really also looking at how we take away emissions from the atmosphere is the up and coming industry sector.
Robin Pomeroy: Yes, all those industry sectors. We could go on talking about this all day. Someone's just knocked, Linda Lacina, my colleague, the host of Meet the Leader, is wanting to do an interview in here while we're still got a few hours left at the Annual Meeting 2023.
But for now that's a fantastic round-up. It's going to be a very interesting year on energy movement, moving up to the COP, to see what happens to prices and supplies. It's not going away as one of the world's biggest subjects. So thanks for joining on Radio Davos, Roberto and John.
Roberto Bocca: Thank you, Robin.
John Defterios: Yeah, thanks for having me. I appreciate the invitation from Roberto as well.
Robin Pomeroy: We eventually let Linda into the Radio Davos booth - to find out what she was up to, check out our sister podcast Meet the Leader.
And if you are looking for other unique thought-provoking content with leaders - in this case in the field of artificial intelligence - seek out a podcast called In AI We Trust, it's co-hosted by the Forum’s Head of AI, Kay Firth-Butterfield.
Please subscribe to Radio Davos wherever you get your podcasts and please leave us a rating or review. And join the conversation on the World Economic Forum Podcast club -- look for that on Facebook.
This episode of Radio Davos was presented by me, Robin Pomeroy. With thanks to Juan Torán and Gareth Nolan.
We will be back very soon with more highlights from Davos 2023, but for now thanks to you for listening and goodbye.
Gayle Markovitz and Spencer Feingold
December 2, 2024