Latest / Saving the World From Bad Ideas / Bad Idea #31 "Climate crisis? It’s China that’s the problem!" with Lauri Myllyvirta

Transcript

Bad Idea #31 "Climate crisis? It’s China that’s the problem!" with Lauri Myllyvirta · Saving the World From Bad Ideas

0:00
China makes up more than 30% of global emissions, so incredibly
0:04
significant and even more significant when you look at
0:06
emissions growth. So over the past decade since
0:09
the Paris climate conference, China was responsible for more
0:13
than 2/3 of the increase in global emissions.
0:18
So if and when China's emissions do peak, that will bring the
0:22
global emissions peak at least to well within reach, if not
0:25
making it guaranteed. So this year, the newly added
0:30
solar, wind, hydro, nuclear power generation in China will
0:35
be enough to generate the annual power consumption of the UK
0:39
twice over or well over Germany's total power
0:42
consumption. Welcome to saving the world from
0:46
bad ideas. I'm Mark Linus and I've had a
0:48
few bad ideas in my time. I used to go out in the night
0:51
time to destroy GMO crops and I also posed nuclear power.
0:55
But then when I looked at the science I found I got it wrong.
0:57
Oops. I've learned the hard way that
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none of us are right all the time.
1:01
So now I'm here to challenge the assumptions that we all too
1:04
often take for granted because the future depends on us getting
1:07
it right. My guest today is Laurie
1:09
Melliverta, who's the Co founder and lead analyst at the Centre
1:14
for Research on Energy and Clean Air and someone whose work I've
1:19
admired for a long time because he really gets into the figures
1:23
about energy issues and particularly regarding China,
1:26
which is going to be mostly what we talk about today.
1:29
And you can read most of Lori's posts on Carbon Brief, which is
1:33
the go to site for climate information of all sorts.
1:37
So, Lori, welcome. Thanks so much.
1:40
Thanks for having me. It's a pleasure and thanks for
1:42
coming. You're in Finland, are you?
1:45
Yeah, that's where I'm based. I heard you speak a whole load
1:49
of languages. Tell me, tell me a bit about
1:51
your past career, because I know also you worked at Greenpeace.
1:53
Yeah, I did. So yeah, it's always hard to
1:56
define what, what's the bar for actually speaking a language.
2:00
But so I do use Chinese and Indonesian professionally and
2:08
used to be able to speak enough Swedish and French to do
2:12
interviews and and presentations and and so on.
2:17
A bit of German and I lived in in the Netherlands and Poland.
2:22
Picked up enough to be able to handle the day-to-day stuff, but
2:26
certainly not professionally. Well, that that and that's
2:29
pretty incredible. So you're clearly some kind of
2:32
mega brain, which is is even more exciting having you on the
2:37
show. As for that reason, obviously
2:39
this, we're all here saving the world from bad ideas.
2:42
And I thought given your recent work, the bad idea could be that
2:47
well, China's, China's burning more coal, China's emissions are
2:50
always going up. I'm not sure exactly how we want
2:53
to phrase it, but this idea that you hear all the time that
2:57
China's building 2 coal-fired power stations are weak.
3:00
So therefore we shouldn't do anything about climate, which
3:02
has been the kind of go to excuse for many people for, I
3:06
don't know, a decade or two at least.
3:08
And actually, it's your analysis, your latest analysis
3:11
of China, which was hit, hit the headlines this week.
3:15
And just pretty much as we're recording this, I won't break
3:19
the news, I'll let you do that. But it seems to me that this is
3:21
this is the biggest story in, in climate change right now.
3:24
It's bigger than COP 30. It's, you know, it's really,
3:28
really, really significant what's going on in China.
3:30
So tell me what your what your latest analysis says.
3:33
So my latest quarterly piece found that China's emissions up
3:38
to September 2025 had been stable or falling for 18 months
3:44
straight. And it's the first time that
3:46
emissions are falling while energy consumption and
3:49
electricity consumption are growing at or above their
3:53
historical norms. So, so their growth in clean
3:57
energy has has reached the scale wherein it can cover cover the
4:02
average growth in electricity and energy demand.
4:08
There's two really important sectors that stand out for the
4:12
progress. It's of course the power sector
4:15
where the additions of especially solar, also wind this
4:21
year have been absolutely staggering.
4:26
And then it's the transportation sector where electrification has
4:32
has really started to happen and started to eat into the use of
4:39
oil for transportation. There's a 5% drop in CO2
4:45
emissions from transport fuels in the first nine months of the
4:50
year. Yeah, because isn't China
4:51
something like 1/4 of global emissions?
4:54
I mean, it's absolutely huge, right?
4:55
So if China's, I mean, you can correct me because that's
4:58
probably wrong, but if China's, if China's actually peaking its
5:01
emissions this year, that will have effect on, on, on the
5:04
global emissions peak too. So what?
5:05
What are your projections about these two things?
5:07
Yeah, no, absolutely. So China makes up more than 30%
5:11
of global emissions, So, so incredibly significant and even
5:16
more significant when you look at emissions growth.
5:18
So over the past decade since the Paris climate conference,
5:24
China was responsible for more than 2/3 of the increase in
5:29
global emissions. So if and when China's emissions
5:34
do peak, that will bring the the global emissions big at least do
5:40
well within reach if if not making it guaranteed.
5:46
So it's a bit, it's a bit like an election, isn't it, where
5:48
it's too close to call. I mean, are you actually calling
5:51
a China emissions peak this year or is it still a bit premature
5:54
for that? Not yet, unfortunately.
5:57
So the counteracting forces are that the that China's decision
6:02
makers are in fact leaving the door open or even planning for a
6:09
rebound in emissions in emissions over the next few
6:12
years. So when China announced the much
6:17
awaited 2035 emission targets, they said that they are
6:24
greenhouse gas emission reduction target from
6:27
unspecified peak levels. So leaving open they are
6:34
possibility that emissions would still increase.
6:37
Fixing the, the emission reduction on the basis of 2024
6:41
or 2025 emissions would have been a much firmer basis.
6:48
And recently the Central Committee of the Communist
6:53
Party, so really the highest organ in the, in the country's
6:58
policy making, recommended that the next five year plan should
7:02
aim for peaking before coal and oil consumption during the five
7:11
year period and so on. So, so clearly there is this
7:16
space that, that the decision makers are still leaving.
7:19
And the background is that the, the clean energy boom in the
7:22
country has in fact progressed a lot faster that the government
7:26
was targeting. So their plan all along was to
7:29
gradually ramp things up so that they would be prepared to peak
7:33
sometime before 20-30, but not in 202425.
7:39
But they are basic basically the expansion of manufacturing and,
7:45
and deployment of solar electric vehicles and and so on to go on
7:50
a life of its own. And now it's it's got into the
7:53
scale where it seems to be driving a faster emissions peak.
7:58
So, so, so it's highly uncertain.
8:00
It's it's very clear that China has the capability to peak right
8:03
now. But the peaking target before
8:06
20-30 always evolved a kind of a bargain that there's still space
8:11
for the coal industry and the fossil industry to grow up to
8:16
late twenty 20s. And that's then after that is
8:20
the time that they really have to start downsizing.
8:23
So so to me, it seems that that decision makers are just not
8:29
prepared to override that implicit bargain between
8:34
interest groups by by actually acknowledging that emissions
8:38
might be peaking right now. It's weird though.
8:41
I mean, I'm a climate optimist so I'm going to call it I, I
8:44
think emissions are peaking this year and I'll, I'll put €50 bet
8:49
on this. Would you, would you bet against
8:51
me or or not? I probably wouldn't, not would
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would not I? I think it's very close to a
8:59
coin toss and I'm not the kind of person who bets on a 5050
9:07
chance. That's because you're a numbers
9:09
person. I'm a, this is probably why I
9:11
always lose money when I go gambling.
9:13
Umm, listen, you mentioned about the, uh, clean energy boom in
9:17
China and I think people have a sort of faint understanding that
9:20
this is happening and that China's turning into the world's
9:23
first electrostate, as it's been termed and of course China's
9:26
leading the world with solar and wind and batteries and so on.
9:29
Can you, I mean, I don't think, I think I, I really struggle to
9:33
appreciate the scale of this. I know it's like hundreds of
9:35
gigawatts, but what do they even mean?
9:37
So can you give us a sense of what the clean energy boom
9:41
actually looks like on the ground in China?
9:43
For sure. So let's start with the increase
9:46
the growth in clean power generation.
9:49
So this year the the newly added solar, wind, hydro, nuclear
9:59
power generation in China will be enough to to generate the
10:03
annual power consumption of the UK twice over or well over
10:12
Germany's total power consumption, say, say absolutely
10:16
huge numbers in terms of installed capacity.
10:24
Last year China added 270 gigawatts of solar alone, which
10:33
is roughly equal to what the EU had at that point.
10:41
So almost the the E US total solar capacity in one year and
10:46
then it accelerated from there there in the first half of of
10:51
this year. So over 200 gigawatts added in
10:54
in just six months, which is 100 solar panels added per second.
10:59
Wow. And this is all is solar in
11:01
particular. I mean, this isn't going on
11:03
people's rooftops, right? I mean, these are presumably
11:05
huge, you know, in industrial scale installations in desert
11:11
areas or something. I mean, what's this actually
11:12
look like in China? It's split 5050 between utility
11:19
scale, so large solar farms and distributed solar, which then
11:27
distributed solar. About half of that or a bit less
11:29
is, is residential, so actual rooftop.
11:32
And the other half is is industrial and commercial, which
11:36
is part of it. The roof is rooftop part of is
11:39
small installations on ground, but still distributed.
11:44
So, so it is really the, I, I would say that the, the amount
11:48
of distributed solar that that China's been putting on, so
11:54
about half of of the total is maybe even the more impressive
12:00
part. So China's total solar capacity
12:03
is, is 3 times that of the EU. And, and if about half of that
12:08
is distributed, then that's 1/2 times the EU's total capacity.
12:13
And it's based on this, this model of or, or 11 important
12:19
driver of it is this model of whole county solar, which means
12:25
that a county or a village will set a target of deploying X
12:31
gigawatts of, of solar panels covering X percent of roofs,
12:35
suitable roofs with solar panels.
12:37
And then they engage a firm to, to implement it that negotiates
12:45
with building owners, negotiates with grids, does the acquisition
12:51
of the, of the equipment, contracts the, the installation
12:56
and so on, which makes it much more, much lower caused and, and
12:59
much faster to deploy. So it's almost, you know,
13:02
centralized deployment of, of distributed solar, but it's a,
13:07
it's a very, a smart model, especially for places where the
13:11
great company might be the issue.
13:14
Um, so it could could work well in a lot of other countries as
13:18
well. And how are they dealing with
13:19
the intermittency issue with well, solar and winds both, I
13:23
mean as as renewables that that not dispatchable.
13:27
They happen when the weather happens to be favourable and
13:29
it's not night time in the case of solar.
13:30
So how, how do you actually create like a massive
13:34
industrialized country grid based on on this amount of solar
13:38
and in fact an increasing amount of solar?
13:40
China's starting point before the wind and solar deployment
13:46
started off was a grid dominated by by coal and hydro, part of
13:53
which can be ramped up and down, obviously.
13:56
So you have a system where you can add a fairly significant
14:02
amount of, of winter solar by making the, the generation from
14:08
the coal and hydro plants flexible and, and responsive to
14:14
the variations in demand and the the variations in solar and wind
14:21
supply. That has been a very gradual
14:25
process. So China first started to have
14:31
problems with accommodating wind in the grid almost 15 years ago.
14:38
So that what happens when you're having this problem is called
14:43
curtailment. So you're not feeding all of the
14:46
electricity that that a wind turbine or a solar panel could
14:49
generate into the grid. You're losing some of it.
14:52
And this this rates of curtailment went up quite
14:56
sharply in the early twenty 10's and and at that point China had
15:03
a miniscule amount of wind and almost no solar compared with
15:08
today. So the starting point was that
15:11
the grid and the power plants were operating in a highly
15:15
inflexible way. They were basically writing our
15:17
schedules. And that was because he hadn't
15:18
had intermediate generation and also because electricity demand
15:23
at that point had been incredibly stable and
15:25
predictable because it was so high, heavily dominated by
15:28
industrial consumption. And now then over the past 15
15:33
years, China's of course added a massive amount of wind and solar
15:39
and electricity demand has become a lot more variable
15:42
because you have a lot more demand for air conditioning
15:47
especially, which which causes spikes and so on.
15:51
And so China's gradually been making the the grid and the
15:58
power plants operate more flexibly, but there's still a
16:00
long way to go. Now there's a perception that
16:04
that the grid is running into limits on this, but China's
16:09
still at all only around 20% of power generation coming from
16:14
Windows order, whereas quite a few other countries have been
16:18
able to get into the high 20s or 30s bit without running into
16:25
these problems. So it still shows that China has
16:27
a long way to go, especially in making the power generation
16:31
between power transmission between provinces flexible.
16:37
So the the transmission between provinces still tends to run on
16:42
schedule. Whereas what what you would want
16:44
is that when you have high supply of wind in one province,
16:48
then other provinces generate less locally and import more
16:53
from that province and that would enable you to accommodate
16:57
a lot more. But so the other thing that has
16:59
started to happen is, is very large scale investment in
17:03
electricity storage. So the the amount of battery
17:08
storage just hit 100 gigawatts in the first half of this year.
17:14
So that's already almost 10. Now a 10% of the peak
17:21
electricity demand could be covered by discharging batteries
17:25
if all of them could were discharging at the same time.
17:28
Yeah, I was going to ask you about batteries because that's
17:30
the other sort of part of the story, isn't it?
17:32
Do you envisage a future where there's enough battery capacity
17:35
to balance the whole grid on a kind of clean energy basis
17:39
indefinitely, without any fossil?
17:41
Batteries have a kind of specific role.
17:45
So they, they're, they're amazing for covering especially
17:51
the night, evening peak in electricity.
17:54
So one time that electrical consumption tends to be high is,
17:58
is in the in the evening when people get home and, and run off
18:03
all of their appliances and so on.
18:04
And that tends to be a bit after the sun goes down or goes low
18:12
enough that, that you don't get a lot of solar generation.
18:16
So that's, that's the time where if you charge the batteries
18:20
during the day and discharge during the evening, that can,
18:25
that can increase the amount of solar that you can incorporate
18:31
into a power system a lot, especially in systems that have
18:35
a lot of need for air conditioning.
18:39
And there are a lot, but so batteries are not suitable for
18:47
evening out demand over and and supply over weeks or months
18:53
because the capacity required would be way too large.
18:57
China's also building quite a bit of pumped hydro storage and,
19:02
and one good, good thing is that in China the generation from
19:09
solar doesn't vary quite as much from summer to winter as in in
19:15
Northern Europe, for example. So you do get substantial solar
19:19
generation also during the winter.
19:22
And, and, and there are really good ways of, of managing this
19:30
into in the winter because China has, has a large district
19:34
heating system covering a lot of cities and, and that works very
19:39
well as a, as an energy storage as well.
19:42
So it's going to be a combination of a lot of
19:45
different things, but batteries will be 1 important piece in the
19:49
puzzle. I mean, China's so huge that
19:52
presumably the weather is different from different parts
19:54
of the country at the same time. So, so long as they've got the
19:57
ability to transmit electricity, you know, nationwide, which I
20:00
assume they do. I mean the grid, the grid is, is
20:03
there right to take energy from wind in, I don't know in a
20:06
Mongolia or? Xinjiang all the way over to to
20:10
Beijing and to the South. And does it does it work like
20:12
that or is it more kind of distributed?
20:14
Increasingly so China's made enormous investments into very
20:19
long distance transmission lines spanning spanning exactly from
20:23
Xinjiang all the way to the coast.
20:26
And so one thing that was just mentioned in the, in the most
20:30
recent quarterly press conference by the, the Energy
20:35
Administration was that they're using solar power generation
20:40
from the very West of China to cover the evening peak in the
20:45
eastern demand centers. So, so exactly what you're
20:50
describing, it's, it's starting to happen.
20:53
The, the challenge has been that those transmission lines run
20:57
very inflexibly. So what, what would need to
21:02
happen, especially for wind, is that when there's a lot of wind
21:08
bar generation in northern and western China that then that
21:13
they, the lines transmit more electricity to the east and
21:17
there the eastern provinces ramp down their own generation to
21:21
make space for that. But that has been hard to
21:24
negotiate. I, I think the, the country will
21:27
get there. They're creating our to our
21:31
electricity trading, which uses prices to incentivize this.
21:34
And they are also doing much more of that administratively,
21:38
but it's a long process involving a lot of negotiation
21:42
and and provinces that want to protect their own generation
21:47
from from imports and so on. Yeah.
21:50
You mentioned about pricing. I'm kind of curious about how
21:52
this all works. Like is China a communist
21:55
country which is now fully capitalist or is there still
21:58
state planning in, in, in energy or is it all based on the market
22:02
and the utilities are privately owned or what Can you, can you
22:06
kind of give me a sense of, of, of how, how this whole how China
22:09
works in this sense? Power generating companies are
22:14
state owned, or at least majority state owned.
22:18
You have and do National Grid operators, state grid running
22:25
most of the country and but they're very provincially
22:34
segregated so that the provincial grids operate quite
22:38
independently. And the reason that that's that
22:41
the state grid likes these long distance transmission lines are
22:46
one key reason is that they administer those directly rather
22:50
than going through the provinces.
22:52
But so then the the key electricity buyers are the
22:58
distribution companies, which are the the provincial grid
23:03
operators and large industrial electricity users, which are
23:08
also largely state owned. So the state owned sector plays
23:14
a big role in this. And the way that that state
23:19
owned firms in China operate is that they do have a profit
23:22
motive. They do have a share to prove a
23:26
motive to pursue market share, but they can also be directed
23:32
politically. And that that's that's why China
23:37
is able to execute so many of these, these coordinated plans
23:45
that involve manufacturing and generation and upstream
23:52
resources and so on. Because because all of these
23:55
state owned firms, they're basically running one market
23:59
incentives by default, but then they can be directed to pursue
24:04
the plans of the of the provinces and the central
24:11
government. And so, so that means that say
24:14
for example, the expansion of coal-fired power capacity that
24:18
is still taking place, that was very much something that the
24:22
state owned firms were told to do.
24:24
It doesn't matter if it makes money or not, you're going to
24:27
build them because we want to have that as an insurance.
24:30
And do you have newbies in China?
24:31
I mean, I mentioned it's not terribly democratic.
24:35
Obviously, it's not at a national level that I imagine.
24:37
It's not at a local level either.
24:38
So do you have a planning system where people can object or
24:40
anything like that? Or was it literally they just
24:42
somebody decides from higher up and then it gets built pretty
24:45
quickly? There is quite a lot of newbies,
24:51
so people will object. There are, there are famously
24:57
these land owners, building owners who have refused to sell
25:04
to a developer and then have gotten stuck in the middle of a
25:07
large development with their house and and so on.
25:12
And the the government at different levels is somewhat
25:17
sensitive to protests. So one example is that that
25:24
nuclear power is still not being built in inland locations.
25:31
And that's, that's partially because of genuine concern about
25:34
what would happen if you had some kind of an even minor
25:38
nuclear incident, let's say along a river, but but largely
25:44
driven by concern about the public acceptance of that.
25:49
There are also cases, if rare, of, for example, coal-fired
25:53
power plant projects not being built because of air pollution
25:58
concerns and so on. But so there's of course, of
26:03
course, the government does have an ability to to override or
26:08
ignore local protests and concerns in opposition when they
26:14
choose to, but their preference generally is to try to navigate
26:19
around it. Yeah, I mean, I asked because
26:21
people in China, you know, the same as anyone really.
26:24
And, you know, I did some work in the country on GMOs, and it
26:28
was a very fraught issue. And there was a lot of fear and
26:32
a lot of kind of conspiracy, conspiracizing about it.
26:35
And I remember when Fukushima happened in Japan, the Chinese
26:38
went crazy and were buying iodine, salt and you know,
26:41
things, even though of course there was no radiation at all
26:43
coming from, from, from Japan to China.
26:45
And so the risk was, was just not there.
26:48
But obviously there's a lot of kind of nuclear phobia and, and
26:50
all the rest of it. So there is no channel for that,
26:53
I guess, but it must affect the national government.
26:56
And I actually did want to ask you about other kind of at least
26:59
non fossil sectors, like what what's happening with nuclear in
27:02
China? You hear that they're building
27:04
huge numbers of reactors, but how significant is that?
27:07
And is it looking like it's going to continue into the
27:09
future? So the targeting the current
27:12
five year plan was to to start at least 10 new nuclear reactor
27:19
projects a year and that has been followed very precisely.
27:25
So every year from 2022 to 2025, this year 10 reactor projects
27:33
have been approved with total capacity of more than 10
27:38
gigawatts. So that's happening.
27:41
It's faster than before and it's it's significant.
27:45
So it will make a contribution of course to, to the clean
27:51
energy growth, but it's, it's a fraction of what what Windows
27:57
owner are developing are delivering in terms of added
28:02
annual generation. But then when you zoom in on the
28:06
province level, it becomes certainly becomes important for
28:10
some provinces and a very important part of their
28:13
strategy. And in general, I think it's
28:15
it's very valuable that the clean electricity strategy has
28:25
has three legs to stand on wind, solar and nuclear rather than
28:30
just do. There are also one thing that I
28:33
think is very interesting and could become important is
28:39
heating. So half of China's coal-fired
28:44
power plant capacity is combined heat and power.
28:48
So it provides both electricity and heat either for heating
28:52
buildings or for industrial processes.
28:56
And for that part, how you're going to decarbonize that
28:59
there's no clear consensus yet for, for power generation, it's,
29:06
it's quite clear that that wind is always going to be the brunt
29:11
of it. And then there's a bit of dying
29:14
news about how much of the rest you're going to cover with
29:18
carbon capture and storage applied on, on coal or biomass
29:22
and how much you're going to cover with, with storage and
29:25
nuclear and so on. But it's that they're, they're
29:28
at least for the next couple of decades, the direction is, is
29:31
much clearer. But for heat, it's still much
29:34
more open. So how much do you do with large
29:37
scale heat bumps? What's the role of of nuclear
29:44
and carbon capture and storage and so on?
29:47
The attractive thing about nuclear in this is that that
29:54
with this small medium reactors that are being being developed,
30:01
ideally you could replace the the coal plants that are that
30:08
are currently providing both heat and power with nuclear
30:13
reactors and just replace the the boiler the heat source.
30:17
Yeah, I mean, you mentioned SMRS.
30:19
I was, I was going to ask about that next because it's sort of
30:21
the one obviously globally there's been a huge amount of
30:24
hype about SMRS. I mean, the stock for Oakland, I
30:27
think it was, has gone through the roof.
30:28
And there's a lot of talk about the nuclear renaissance being
30:31
based on these small modular reactors.
30:34
But it's the one sort of clean tech sector that China hasn't
30:39
dominated in yet. It, well, nobody's dominated in
30:42
it because no one's actually made made the SMRS that
30:46
everyone's talking about. But where?
30:48
Where's how's China positioning itself on that?
30:50
So they have a model that is being deployed, I think 125 MW
31:01
models, so more medium sized reactor.
31:06
The the recent permeating that I was talking about in the past
31:11
few years that's that's large reactors, so more than one GW
31:17
capacity. So that's still the the mainstay
31:20
will certainly be still be for the next 5 years.
31:23
But then with with the small and medium reactors piloting now,
31:33
then you could see them being deployed in 20 thirties.
31:39
But the the location issue is the big one.
31:43
So, so far China's still stuck with only building building
31:50
plants on the coast and that really restricts site selection.
31:56
It doesn't doesn't play into the advanced advantages of small and
32:05
medium and and of course heavily restricted to the province east
32:10
where you can can build. So that will be the key
32:13
question, whether these new designs are deemed to be safe
32:19
enough and and publicly acceptable enough to be deployed
32:24
at very large numbers in inland locations.
32:28
What about hydro? I mean, obviously the Three
32:29
Gorges Dam was the biggest in the world at that time.
32:31
Isn't there some other ginormous hydroelectric dam now in the
32:36
offing? Yeah, there there is an another
32:40
even larger project that is progressing and and very
32:46
contentious because of the implications on downstream
32:50
countries. So that will it's another thing
32:54
that in any other country in the world would be a game changer.
32:58
In China. It's an it's a nice addition to
33:00
everything else that's happening in terms of the the teradours,
33:06
the the amount of electricity that it generates.
33:08
Of course, whether it's nice or not is, is subject to debate, as
33:12
I said, but, but in terms, in terms of the scale, it's, it's
33:17
just, everything is big in China simply because of the scale of
33:22
the energy system. And it's it's important to to
33:28
separate the the small bigs from the big bigs.
33:31
Everything's big in China. Also.
33:32
Everything's new in China. I mean, I was there, what, 5 or
33:36
6 years ago and I was just blown away by literally just how
33:41
modern it is. And it makes you, makes you feel
33:43
like, if you excuse the phrase, like coming back, it feels like
33:46
the third world. When you come to America,
33:48
infrastructure's, you know, degraded.
33:50
There's potholes everywhere, everything's dirty and things
33:53
don't work very well. Trains don't work in, in most of
33:55
Europe. I mean, it's just not like that
33:57
in, in, in China. And you've got huge gleaming
33:59
cities that with names no one's ever heard of in the West and
34:02
millions of people. And it's just like, I don't
34:05
think people really understand just how far China is ahead
34:08
really of the rest of the world and certainly ahead of the West
34:12
when it comes to it's not just energy, but the whole sort of,
34:15
you know, modern, modern infrastructure essentially.
34:18
Yeah, absolutely. They're, the amount of
34:20
investment that that goes into infrastructure is, is huge.
34:24
And of course, so much of it was built recently.
34:29
It's, it's a very different approach to, to running the
34:35
economy in general. So the Western market economy
34:42
approach tends to be you invest the you spent the bare minimum.
34:47
You can get a bit way, way with and you're very thorough in
34:50
making sure that not a single dollar or euro gets spent
34:55
without getting the the economic return from it.
35:00
And that's, you know, that kind of accountability for public
35:03
resources is of course good in, in China, it's more like
35:08
effectiveness. You you spend as much to make
35:10
sure that you hit your targets and, and, and don't worry too
35:16
much if if some of it is, it doesn't have the rate of return
35:22
that you would you would like for better or worse in.
35:30
Of course that has meant massive overinvestment in in things like
35:37
coal based steelmaking, now coal-fired power plants and and
35:44
in general a very energy intensive economic development
35:49
model. So the amount of steel and
35:51
cement and energy that China uses per unit of GDP is much,
35:59
much higher than than the West and and than most other emerging
36:06
economies. So their carbon intensity is
36:08
still really high. In fact, I think they missed
36:11
their government's carbon intensity targets.
36:13
The one target they did miss, I think in, in the, in the NDC
36:17
just to go back to coal, which you mentioned.
36:19
So they, as I understand it, they still are building in China
36:22
new coal-fired power stations. Presumably they're just not
36:25
going to use them or they're going to use all of the
36:27
coal-fired power stations less proportionally.
36:30
I mean, what's like, why, why they why build any new when
36:34
coal's peaking and you don't need it and you've got all of
36:36
this new clean power going and why still build more coal?
36:39
Right. So what happened is there was a
36:44
wave of coal-fired power plant construction around 2015 and
36:49
then after that the government realized we're building too many
36:53
of these things and then and started restricting permitting.
36:59
Then in 2020-2021 there were shortages of coal, the fuel and
37:08
and shortages of electricity in different parts of China.
37:11
The root root cause for that was problems with with how the
37:19
electricity system is managed and how electricity was priced
37:22
and so on. So it didn't pay for coal plants
37:29
to operate. They were, if if you run your
37:31
coal plant, you, you lost money. And so then a lot of plants were
37:36
just reporting that they're, they're out of order or they
37:43
didn't buy the coal that they needed to operate and, and were
37:46
not able to operate and so on. So then the government responded
37:51
with basically and all of the above response where they, they
37:59
launched a lot of reforms to address the root causes of of
38:03
these power shortages. And they launched a massive wave
38:08
of investment in electricity storage, of course in in a clean
38:12
energy and they launched a massive amount of new coal and
38:19
gas fired power projects. And so now that their shortage
38:24
issues have been essentially resolved and almost none of the
38:29
coal plants and gas plants permitted back then have come
38:32
online yet, they're just starting to come online this
38:35
year. So now you're left with the, and
38:39
this goes back to the effectiveness versus efficiency
38:46
thing that that when you have a problem, you'd rather do three
38:50
things when one or two would suffice then then risk not
38:54
solving the problem. But so that's left the the
38:58
policymakers in a bit of a dilemma where they just can't
39:02
keep the cleaner to boom going and keep adding coal plants and,
39:10
and they have to make up their minds, but they clearly haven't
39:14
yet. These coal plants are going to
39:16
come online in the next two or three years.
39:21
There's well over 200 gigawatts, 100 construction where China's
39:26
current installed capacity is 1111 hundred gigawatts.
39:32
So it's going to mean and around 20% increase in China's
39:39
coal-fired capacity. And if the demand for power
39:44
generation from coal is flat or declining, then that means that
39:48
the the average utilization of that capacity will go down by
39:52
more than 20%, which will cause financial issues for many of
40:00
those coal plants. Does coal still cause the extent
40:03
of air pollution, as was the case, you know, 10 years or so
40:06
ago and famously around the the Olympics?
40:11
I've, I've heard that China has reduced the sulfate emissions
40:16
from its coal-fired power stations.
40:18
And in fact, that's possibly one of the things that's
40:21
contributing to this rapid pulse in global warming because those
40:25
sulfates, you know, reflect solar radiation.
40:29
And so we've got this sort of sudden amount of warming,
40:32
obviously from shipping pollution controls as well.
40:34
I'm sure you know about this because you're, you know,
40:36
working also on clean air. So tell me what the what the
40:39
story is there? Jen obviously had a an enormous
40:43
dramatic air pollution problem 1015 years ago.
40:51
What happened was there was an effort to clean up at least
40:55
around Beijing in the run up to the Summer Olympics of 2008.
41:01
After that there was a huge industrial boom and the
41:05
pollution came back even worse. And and that that caused a
41:11
public uproar, a public call for for addressing the issue.
41:18
The most important thing, the government had already been
41:23
requiring the use of of a sulphur emission controls, SRT
41:31
emission controls in power plants, but their their use
41:33
hasn't hadn't been enforced. They ramped up enforcement, they
41:38
tightened the emission standards both for SO2 and for NOx, which
41:44
is the other major pollutant from from coal plants.
41:48
And then they introduced these ultra low emission standards,
41:52
which were even even stricter, but so very aggressively forcing
42:00
coal-fired power plants to reduce their air pollutant
42:03
emissions over the past decade. And then doing doing the same
42:08
thing for steel mills, which were an even bigger polluter
42:13
around, especially around Beijing.
42:17
And then the third big drive was eliminating the small scale use
42:24
of coal in buildings for heating, which was especially
42:28
during winter was it was a major source of air pollution.
42:32
And and so these steps resulted in a in a much bigger
42:40
improvement in air quality over a decade than I think anyone
42:44
could imagine. I remember in early 20 tens we
42:48
were were calculating that it would take Beijing to three
42:56
decades to to reach that reach China's national air quality
43:01
standards. And that happened in in early
43:03
twenty 20s in less than a decade after the action plan was it was
43:09
launched. So huge improvement.
43:15
But yes, a huge reduction in SO2 emissions, which which seems to
43:23
have led to a jump in, in global warming as well.
43:27
And to me, the well, to me, it's obvious that you can't require
43:34
1000 million people to breathe toxic air as a way of
43:40
geoengineering the planet and and cooling the planet.
43:44
But it does raise the question if we, if we were spraying all
43:49
of this sulphur into the atmosphere before then should we
43:53
actually be somehow maintaining the cooling effect of that?
43:58
But that's a very fraught without the health impact.
44:02
But that's, of course a very fraught conversation.
44:04
That is a very fraught conversation.
44:05
We've got a couple of podcast episodes on it, looking at the
44:09
solar radiation modification issue and and so on.
44:12
So let's let's not go down that rabbit hole here, but I'm
44:16
curious, where'd you get your data from?
44:18
I know you said you speak Mandarin.
44:19
I mean, is, is this all the published sources that you
44:22
happen to be able that you can access because you read Chinese
44:24
or do you have sources that you can go to in the government?
44:28
Because like I say, I mean, you're kind of the go to analyst
44:31
globally now on, on what's happening in, in energy in
44:33
China. And you know, how, how do you,
44:36
how do you actually do that? Like what's?
44:38
What's the secret? The main thing is that there's
44:40
an astonishing amount of publicly available data.
44:45
So or if you take all the different statistical releases,
44:51
all the the reports by companies, government data and
44:55
permitting of new projects, investments, all of these
44:59
things, of course customs data and so on, it amounts to a lot.
45:06
In addition, there is quite a bit of government data that is
45:12
not made available publicly, but that is available through
45:21
financial sector Information Services.
45:24
Often it's what happens is it's press conferences that take
45:28
place physically that you have to go to and, and you get the
45:34
data on paper or it's beamed or just read out from from a paper.
45:38
And then these financial data providers go to all of those
45:43
conferences and, and meticulously note down all of
45:47
those numbers and put them into databases that that we access.
45:54
So, so that's one a key source for for my work.
46:00
And so doing that lets us track China's fossil fuel consumption
46:09
it through using basically three different largely separate data
46:14
sets which give which gives you a sense of of how well they're
46:18
aligned and whether there are discrepancies.
46:20
And then you can go looking for the explanations for those
46:25
discrepancies. But so overall, not just for
46:29
China, but but China is a good example.
46:33
My sense is that there is a lot of data out there and we're very
46:40
way too few people making sense of it.
46:43
So besides just calculating year on year changes, whether it's
46:48
air quality data or all of this data that is reported on the
46:54
energy sector, we recently launched a similar tracking of
47:03
CO2 emissions for India that is also based on compiling data
47:08
from a very long list of government and commercial
47:12
sources, almost all of them publicly available.
47:16
But so that kind of effort is just something that we're we're
47:19
doing to try to provide a much more timely and disaggregated
47:24
picture of what's happening with CO2 emissions than is available
47:28
from elsewhere. I did want to also ask about EVs
47:32
and the electrification of transport, because that's
47:34
obviously the the other big story in China that we may even
47:38
be seeing peak oil in terms of consumption and, and, and
47:41
transport. So like what?
47:43
What's the latest situation on that?
47:45
For for passenger cars, EVs are already about 50% of vehicle
47:51
sales and their around already about 10% of of all the vehicles
47:57
on the road with the share going down going up fast.
47:59
So, so it's already making a very meaningful dent to to
48:05
gasoline consumption. The very latest was that in
48:07
October, which is an important holiday month in, in China, the
48:10
the 1st of October national holiday gasoline consumption
48:17
fell 8% year on year and also fell compared with the previous
48:21
month despite the the travel surge surge.
48:24
So it really showed that those people who drove for the holiday
48:27
were largely driving EVs. The the other area besides the,
48:35
the passenger, passenger cars are of course the segment that,
48:41
that you hear about the most. But electrification of heavy
48:48
vehicles is also really important.
48:51
So China has been electrifying buses for a long time and buses
48:57
because they have, they of course have very high
49:01
utilization. They're driven all day long.
49:04
They are electrifying them, makes a mates, makes a
49:08
disproportionate dent in oil demand.
49:11
And now the same thing is starting to happen with with
49:19
heavy trucks, which is really the big story of of this year in
49:23
terms of EVs that electric trucks.
49:28
So semis have really taken off in China and that's it's also
49:35
backed by really systematic investment in charging
49:41
infrastructure. So super fast charging and
49:46
expanding the networks, which then enables things like people
49:51
being comfortable driving for holidays.
49:54
These EVs are also increasingly being exported.
49:56
I mean, we've got BYD in in the UK and in Europe now and
49:59
elsewhere, other companies as well challenging Tesla and you
50:02
know, the other EV manufacturers.
50:07
Now there's a whole, the big story here, isn't there, about
50:10
China's clean tech exports. And, you know, obviously solar
50:13
and batteries maybe went to a lesser extent.
50:17
So like China, it seems, I don't know.
50:19
I mean, the big picture to me seems like China's not just
50:21
decarbonizing itself, it's also helping decarbonize the world.
50:25
What's your take on that? Yeah, absolutely.
50:27
So the drop in the cost of solar and batteries over the past few
50:34
years, I think it's the energy story of the decade because now,
50:42
now it's really gotten to the level where solar with storage
50:48
and EVs are competitive against fossil fuels just about anywhere
50:55
in the world or at least in those markets that matter.
51:00
So, so that's going to drive much more broad based and add
51:05
much more rapid adoption than than anyone was projecting just
51:11
a few years ago. And and China plays a huge role
51:13
in that. So basically what happened is
51:18
China's China's clampdown on real estate led to a lot of
51:25
capital, a lot of local governments, state owned banks
51:29
and and state owned enterprises and so on asking, OK, So what
51:34
are we going to do now? And they'd, they collectively,
51:38
so many of them decided we're going to do the clean energy and
51:42
that led to an increase in scale and reduction in costs that is
51:48
is having a massive global impact.
51:50
Yeah. And as you say, it's the
51:52
cheapest energy source. I mean, it's almost like solar
51:54
base load now solar plus batteries in in all of well, all
51:58
of the developing worlds, probably a lot of the global
52:00
North as well. I don't think people really
52:03
understand the extent to which this is a complete game changer
52:05
energy now. I mean, what do you think people
52:08
are beginning to get it? Or is it still like, you know,
52:10
because we're we're now part of the way towards solving global
52:14
warming with this. It's like, it's a really big
52:17
deal, right? You can, you can certainly say
52:20
that. So, So, yeah, I don't have the
52:24
sense that the the breakthrough is really appreciated.
52:29
And a part of that is that so many bar companies have been
52:34
slow to update their investment plans.
52:37
So many governments have been slow to update their their
52:42
policies, energy policies and say, as it happens, the day that
52:50
we're recording this, the International Energy agencies
52:54
has released or is just releasing its, it's the world
52:59
Energy Outlook. And and if, if that shows
53:03
anything, it it shows that that policy makers have not caught up
53:08
to this yet. And, and in in many countries,
53:13
they're the winners will be their solutions that consumers
53:18
and and electricity users and motorists can adopt themselves,
53:23
IE solar and batteries and EVs, because the governments are
53:27
going to be lagging behind for some time.
53:30
Well, and famously IEA and all the other conventional agency
53:34
forecasts of the uptake of renewables and clean energy
53:37
generally have always been pessimistic.
53:38
They've always had them levelling off.
53:40
You know, if you look back and there's that famous chart of
53:42
them all level, level, level. And in fact it goes up, you
53:44
know, almost, almost like a vertical line.
53:46
It's, it's a classic S curve. And do you think they're finally
53:50
appreciating that something really big is going on?
53:52
No, the IEA is has gone the other direction because of of
53:58
pressure from the Trump administration.
54:02
So they're stuck in this system where they basically rely on our
54:07
government experts not just to feed them the policy
54:12
assumptions, but also feed them the official fruit about what's
54:19
going to happen. And and so they're stuck with
54:22
treating renewables as policy driven or clean energy as policy
54:28
driven, whereas the economics will always favor fossil fuels.
54:34
And and that's exactly the the big picture assumption that has
54:38
become obsolete, obsolete in the past few years.
54:42
Yeah, And you mentioned Trump. I mean, that's sort of the
54:44
geopolitics here. I think is, is really
54:46
fascinating. You've got obviously China, you
54:49
know, dominating the sort of clean new world economy, if you
54:52
like, and the US at the same time doubling down in fossil
54:56
fuels and fossil fuel exports. And you've got this competition
54:59
really where the, the US is in, you know, in the old game,
55:04
essentially in China is, is leading the new game.
55:06
They don't like, they're not, they don't even begin to
55:09
appreciate this, do they? They're sort of, I think Trump's
55:11
the, the anti climate, anti clean tech for, for ideological
55:14
reasons. And it's almost like they don't
55:16
care about the economics. Yeah, no, it's very easy to
55:19
point out to things like stopping an offshore wind farm
55:24
that is already already underway.
55:28
There's absolutely no the economic upside do that and
55:32
there's a massive downside. You don't get the the clean
55:35
electricity out of it, but also you do incredible damage to to
55:40
the US as an investment destination.
55:43
So, so certainly no economic motive there.
55:48
There can be a much closer to home monetary motive for it, but
55:55
but certainly not the the national economy, but but so
56:04
China, yeah, China's certainly stepping into that, that vacuum
56:10
in a lot of a lot of ways. They are clean energy
56:14
collaboration financing that that the US used to engage in
56:18
many of those those countries, China's stepping up and so on.
56:22
I think though there are quite a few other countries that are
56:26
also concerned about the, the high share of Chinese supply in
56:33
a lot of the supply chains. And, and I think there's going
56:36
to be quite a bit of diversification effort from
56:40
others. India has already for the past
56:43
several years has been building its own solar supply chains and
56:48
and Europe will get get there at some point and so on.
56:54
So, so it's not going to be a China dominated picture to the
56:59
extent that that is portrayed, but but of course China will
57:04
remain the biggest player in all of this.
57:06
I just, I don't know whether you have a Direct Line to Xi
57:08
Jinping, but how, how does the Chinese leadership respond to
57:13
watching the US just self harm so, so obstinately?
57:17
I mean, they presumably they, they're celebrating, but do they
57:20
really get quite how stupid and crazy the Trump administration
57:24
is on this? I think by now they do so
57:27
they've they've studied, of course, what what Trump, Trump
57:34
does and and that has shown in in the way that they've
57:38
responded to, to Trump status and everything else.
57:44
I do think it's a mixed on on the clean energy front and
57:50
climate front. It's a mixed feeling.
57:55
So on one hand, if the US was, was trying to try to improve its
58:05
run on, on clean energy and, and trying to still trying to
58:10
seriously build its own manufacturing base for clean
58:15
energy and so on, I think that would put pressure on China to,
58:19
to go faster. And so, so they, they had a
58:24
sense that there's, they have competition.
58:27
So, so that's, that's a part of it.
58:31
If the US was putting forward strong targets, was pushing
58:34
others to do that, then then that would also raise the bar
58:38
for China in terms of offsetting climate targets and so on.
58:42
And of course, during a previous admin administrations, the Biden
58:46
and the, the Obama administration's climate change
58:50
was viewed as as a key positive aspect and opportunity for
58:57
maintaining a better relationship with, with the US.
58:59
So, so I don't think they're happy to see that part go.
59:03
But but yeah, of course the massive damage that the US is
59:08
doing to its, its stature in the world.
59:12
I'm I'm sure there's a well the the multi polar where well that
59:19
China's been talking about a long time has certainly been
59:22
fast tracked. Yeah.
59:23
So just finally, why doesn't the Chinese leadership more
59:26
consciously or self consciously assume the mantle of
59:30
international climate leadership like their their latest NDC, the
59:34
latest targets were actually quite conservative.
59:36
I mean, they're probably below what they're going to achieve, a
59:38
long way below. Why don't they just step up and
59:41
say, no, we're going to do this, We're the ones who are solving
59:43
this problem, and we're going to lead, you know, clean energy
59:46
transition into the 21st century.
59:48
I mean, that would seem to me to, you know, as a kind of PR
59:53
person to be the right way forward.
59:55
But they don't seem to be getting that advice.
59:57
I mean, do you have any kind of inside Intel on this?
59:59
I can't call it inside Intel, but my reading is that Xi
1:00:04
Jinping basically started to do that with the targets that he
1:00:10
announced in 2020-2021, the carbon neutrality target and.
1:00:16
Than the targets that he announced for, for this decade
1:00:20
as well, so reducing coal consumption from next year
1:00:25
onwards and so on. And, and those were decisions
1:00:31
that he took personally with a very small circle of people.
1:00:37
And and then what happened was that under 0 COVID during the
1:00:41
pandemic, China's energy consumption and emissions grew
1:00:45
much, much faster than before. China is now quite badly on
1:00:49
track, off track to the triggers that he announced in 2021.
1:00:54
So this time it seems to me that he was not willing to override
1:01:03
what was coming from the bureaucracy, which is inherently
1:01:07
conservative. And certainly the need, like,
1:01:10
what's the need to do that when if you see the US as your main
1:01:14
competitor for us as, as the, you know, global lead leading
1:01:22
power then and they're having a tantrum on the floor, then you
1:01:28
don't have to put your best effort forward.
1:01:32
You can afford to focus on other priorities and leave more space
1:01:38
for you to, to adapt what you're doing.
1:01:42
So, so that certainly lowered the bar for China.
1:01:47
And China's approach to, to climate and emissions also
1:01:52
morphed quite a bit under 0 COVID.
1:01:55
So, so XI Jinping's original idea was, was this talk down
1:01:59
control, strictly control carbon emissions, carbon intensity,
1:02:03
energy consumption and so on. What what it turned into is
1:02:07
this, this massive scale up of the supply of clean technologies
1:02:14
and and making them competitive against fossil fuels without
1:02:20
much explicit drive from the demand side.
1:02:24
So they just landed on a very different approach and and that
1:02:28
doesn't really fit with with strong emission targets.
1:02:33
Yeah, I remember when years ago Google had, I think they called
1:02:37
it wreck REC, like renewable energy cheaper than coal.
1:02:40
And they they failed to achieve that.
1:02:42
China succeeded and the world is changing dramatically as a
1:02:45
result. And Laurie, it's been just
1:02:48
fascinating hearing your, your insights on this.
1:02:50
You're, you know, at the forefront of what is probably
1:02:52
one of the biggest stories in the world right now and, you
1:02:56
know, will be for years to come. So if you don't mind, we'll come
1:02:59
back to you again and carry on saving the world from bad ideas.
1:03:02
But for now, I just want to say thank you so much.
1:03:05
Absolutely. Thank you so much, Mark, and
1:03:07
definitely happy to come on again.
1:03:12
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1:03:14
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1:03:36
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