Ep13: Morgan Bazilian 'Poet of the Low-Carbon Transition'

Michael Liebreich: Our guest today on ‘Cleaning Up’ is Morgan Bazilian. He's the Director of the Colorado School’s of Mines, Payne Institute, or as I like to call it - the institute of pain. He's got over 20 years of experience before that, working in energy policy in Ireland, in the US; he was also lead energy specialist at the World Bank, and there's a doppelganger on the Internet, if you search for his name, Morgan Bazilian, you'll find that there's another Morgan Bazilian, who is a published author of short stories and poetry. So, we're going to ask him also, whether he knows that other Morgan Bazilian. But Morgan is with us! I’m going to get my beer, and we're going to bring him into the conversation.

ML: Morgan, good to see you!

Morgan Bazilian: Nice to see you, mate.

ML: You know, we could start with your doppelganger, the other Morgan Bazilian. Have you met him?

MB: I have, so I’m a secret poet and writer…

ML: And it is you, isn't it?

MB: It is me, but I've had some success over the period of the pandemic. I've gotten quite a few poems published in literary magazines and journals, so that's been nice side gig.

ML: No, I’m sorry! I didn't mean to start off by embarrassing you, but here you go. I hope everybody can see that. ‘Quarantine’ by Morgan Bazilian and I love it, because it literally says your bio. It's got a much better version than mine. It just says: poet and physics professor.

MB: Yeah, that's right.

ML: That's great! Well, I’m all for multiple lives and integrating them as much as possible. But let's go back to when you and I first worked together, which was when you were special advisor, was it to Eamon Ryan? The Minister of Telecoms and Energy in Ireland at the time?

MB: Yeah, that's right. I had been working in Ireland for four or five years, helping to run the National Energy Agency there, and when Eamon Ryan became the Minister, the government switched over. He called me up and asked me to come on, as his ‘energy guy’. He had the brief over, if you remember, energy, natural resources and telecoms. It's a really interesting brief. And so I moved there and was working with him for two years, and we started when you were relatively early days at New Energy Finance.

ML: That's right, and of course for context: he was the leader of the Green Party - still is. But he was in government that was a coalition before the Great Financial Crisis. I suddenly got this, I think probably an email, from this guy Morgan Bazilian wants me to come to Dublin, and give a speech or do some stuff. And I was very honoured, but that

was our first time that I heard from you. And Eamon now of course is back in government, with an even bigger brief.

MB: Yeah, that's right. So he's now as the sort of third ranking minister, but he has a similar brief, over climate change, and transportation, and energy, so it's a terrific one for him and he seems to be going great guns with it.

ML: That's right. I think he also has transport and tourism and stuff like that, so I need to reconnect with him. I've stayed in touch and I need to ask him, if I could be of any help in his ministerial brief again. But you did that for a couple years and… am I right saying that you actually ended up getting, I don't know, it's not freedom of the city. You've got national, you're an honorary citizen now?

MB: Well I’m a real citizen of Ireland. I got it through services to the state and so… yeah, I've been. And then my son, Cillian, who you've met, he also has Irish citizenship and an Irish name.

ML: So you got that, but you did get it, full citizenship, for your services. That's true, absolutely tremendous. And the next time that we interacted, you left that role, and you told me there was this extraordinary guy, Kandeh Yumkella, who was at the UN. He was the director general of UNIDO, but he had this thing about energy and would I help, but how did you decide to sort of leave the green pastures, and you went to Vienna, right?

MB: Yes, so that's a great story. I was, at that time, one of the lead negotiators for the European Union at the climate talks on the technology side. So I was working with the entire EU at the climate talks and Kandeh…

ML: But still, had you been seconded to that by Eamon? Was that after your Irish role?

MB: No, I was part of the Irish government, so they do someone from the EU, and so I was working there and we were at the negotiations. And right around that time the… then Secretary General of the UN had asked Kandeh to take on the energy brief large across the UN. And that was a time you remember where the some of the climate negotiations weren't going so well. We were, you know, all the Copenhagen stuff and I think Ban Ki-moon wanted to help pivot by working on an area energy or energy for development, that he felt was central to the UN brief, and he given it to Kandeh. So Kandeh came up to me in the hallways, outside of the negotiations, and said ‘how about coming to Vienna and helping me stand up the energy brief at the UN?’. And so I thought that was something I couldn't turn down.

ML: And at the time it was a sort of coordinating thing and nobody knew what it was, and I mean certainly I had not come across Kandeh before, but he really is an extraordinary person, an incredible person and I can see the charisma that would have persuaded you to up sticks and head to Vienna.

MB: Kandeh was an amazing leader and still is. He's as you know… you see him sometimes, I think he's going to be on your show. He's a member of parliament in Sierra Leone now, but a really inspirational leader and it was a terrific experience, working for him. I stayed there working with him, and there's really interesting stories about that, for about three and a half years.

ML: That's right, and he's actually going to be on the show. Episode 16 will be with Kandeh and I’ll be catching up with him. When you say there's interesting stories, that kind of begs the question. Well, Morgan, what are those? Give us one of those because… you've had this theme about development and, although you've been working in Ireland for four years or five years, and then with Eamon for two years, but you've had this enduring commitment to energy for development, for international development in the developing world, not in Ireland.

MB: Yeah, that's right. I think for the beginning part of my career in Ireland and then earlier in Australia, I moved to Ireland from Sydney, I was working in more traditional energy space stuff, from electricity markets to oil and gas, but always really wanted to work in development, and work with those countries developing emerging economies, but had a difficult time finding the right gig. So when that came at the UN, it was a lovely fit, but you know, I think the most important, maybe the most important work and I’m not sure what Kandeh said about this to you. But when we were starting to try to embed, the energy… the idea of energy is an important concept in the United Nations, and I've done this previously in Europe. You would go around to the development agencies of each country, say you know, Irish Aid in the case of Ireland, or UK Aid or whatever, and you would say hey, I think you should be thinking about energy as a potential area for contribution, or for effort. And they would say to you well, no, we don't do energy, we work on poverty education and gender or something like that, you know, core development focus.

ML: And outcomes.

MB: Yeah, and that's where the money went, and that's where their expertise was. They thought of energy, as a you know, technical subsector basically. So the job over the first couple years anyway within the UN was really having lots of meetings in New York, with the various ambassadors from the 199 countries to the UN around why energy matters. So it was sort of high level discussions, those were great to see. Then interestingly, both Ban Ki-moon in post-war Korea and Kandeh in Sierra Leone growing up, had visceral and empirical understanding of what it was like to live with energy poverty. I grew up in Connecticut, near Hartford Connecticut and so I had no such experience of that, except for once they made a movie about it. But I learned a lot about both diplomacy and process, and content, and the mix of how those have to work in the UN system.

ML: That culminated ultimately with the… that became what is now SDG-7, where really energy is sort of regarded as almost an outcome in its own, right? Because it is so central to all these different development, you can't have education, you can't have health, you can't have any of these other goals without the energy, right?

MB: Yeah and that was Kandeh's vision from the very beginning. In other words, he had a very keen eye for the politics of the UN, and knew that while energy was not in the millennium development goals, it should be in the next iteration, whatever at that point, whatever those were, and worked pretty hard to get that on the books and I think was successful in it and can claim a lot of responsibility for that work.

ML: You and I then worked quite closely over there. There was this trip down to Mexico guests of Carlos Slim, that was fabulous! But we actually did some proper real work and it's still contested space intellectually. There are still people saying these countries should be not just allowed, but they should be financed to build massive coal-fired power stations because they've got the coal, they need the energy, the development we did it in the West, it's unconscionable, not to allow encourage finance and help them to do that themselves. And of course the other point of view is well, why would you build few more expensive solutions for the future stranded assets… but that was the battle then! It's still a battle now to a certain extent, isn't it?

MB: I think so, it's a very difficult, it's a very subtle space and so I have a lot of sympathy for the governments, who would make that argument in least or emerging economies. Especially in least emerging economies, where the resources are there not necessarily, the coal discussion has sort of moved on quite a bit, it's more difficult to get funding for and it's more clearly damaging. The discussion now is around… I think mostly around oil and gas, and maybe around gas most, and you can look at some of the countries like, say Ghana, who just put up a large offshore gas project, Sankofa Project, or their oil project. And I hope that with the support of development agencies and international community finds a better governance balance and better socioeconomic balance with their relationship to those resources, than say some other countries did. I think it's still going on and the battle… I don't like to think of it too much as a battle. I know there's an environmental battle around it, but I think as an example Power Africa weaved that line rather well in my opinion. Whereas they acknowledge the need to power these countries with clean energy, but also take into consideration natural gas for some of the work they were doing. There seemed to be a pretty reasonable balance on that but these days of course the decision-making process at the development banks for the World Bank, the regional banks and even places like KFW or the Chinese National Development Bank, the Brazilian National Bank it's quite common…

ML: The German Development Bank.

MB: Yes. There's a complex rule making at each of those organization, and then governance, and then where they get their pressure, and from to decide what kind of

things they're gonna invest in, and those decisions will then have onward effects on the countries themselves, without necessarily those countries feeding into those processes. So yeah, it remains a pretty big issue.

ML: Yeah, and I guess where I come down on it, there's a few sort of principles, like first of all, you know what I really, really dislike is when you have people who have effectively no exposure to these countries, there's at various sort of think tanks in the beltway in the US, or wherever. And then for ideological reasons they start pontificating about what those countries and they're always coming from a position of sort of defending the interest of the fossil fuel and incumbent industries, but trying to promote those as in some way… pushing them onto those countries. If it comes from the countries, at least that feels like those are decisions that the countries legitimately should be allowed to make for themselves. So then the second principle is. Well let's at least give them good data, let's at least given good information, which was sort of the business that I was in.

MB: Yeah, no, I think that's extremely important and right, you know these days at least at the World Bank. I think most of the other development banks…

ML: Because them you went to the World Bank, for our audience, but you went on to be the energy specialist, and so then became your… kind of your life's work for another few years, right?

MB: That's right. I moved from the UN with a quick stint in between at the National Renewable Energy Lab, here in the States, I’m sitting in Colorado. I’m pointing here down the road, and then I went to the World Bank in the extractives group. What you could say is that the paradigm for development changed over time to become much more reactive to the needs of the country. So the way it works at the World Bank is that there'll be a joint economic evaluation of the country, then the country decides the areas in which they will borrow money from the Bank, and those aren't always energy projects. They could be any infrastructure or social kind of projects, but it does very much come from the country themselves. We mentioned the Sankofa Gas Project that happened in that way. The World Bank gave a partial risk guarantee for that project but it was invested by… it was a 10 billion dollar project, so the capital wasn't there in the public sector to do it. That's how it worked and so far… from I think, from the Ghanaian perspective, it's not without hiccups, but it's a powerful resource for them politically and for their people, and now you can see the same sort of thing playing out with a much more difficult political situation, and Guyana as an example. But yeah, so those questions are all live, but right now as you know the World Bank - they can't invest in coal, they can't invest in nuclear, they can't invest in upstream oil and gas for straight investments. I’m not sure how they would go around thinking about risk guarantees or insurance products, and then to a certain extent they have a hard time investing in large hydro. So there's… the areas, the technologies become smaller and smaller and so what happens even in solar and wind is that you don't want to crowd out the private sector,

and therefore in some cases, because solar and wind are commercially viable as your company made clear and you've made clear over your career, not even those become in all cases, in all countries allowed. There is or there will become an issue around where those lending can be in the energy sector. Is it just infrastructure, TND transmission and distribution, infrastructure…

ML: There are lots of other pieces. The way I see it is that yes, wind and solar have become commercially viable on their own merits, but they require a lot of other investments in order to work. It's not always sunny, it's not always windy, so you need whether it's power storage, or whether… you certainly need transmission grids. The longer the distance, the better. You've got a huge switch of the developing world, where there are no regional grids, Africa could really do with a Southern Africa grid strengthening, and the West Africa et cetera et cetera. These are all areas, and then of course you've got batteries, you've got public transport, you've got all sorts of other areas that would still remain open, even if you don't finance the core wind and solar projects. I’ll frame this as a question, because you were within the World Bank group. Isn't one of the problems though that the size of the average asset in energy, and I guess also in transportation, it's just small compared to where it was? There just aren't that many 10 billion dollar projects in solar. There are a few coming along now but the World Bank isn't set up really to put money into aggregated groups of smaller… Certainly not. They really struggle the kind of solar rooftops and distributed power, which is also very vibrant and has a huge capital need, doesn't it?

MB: No, no, absolutely. That has definitely been an issue in the past. If you're below this sort of hundred million dollars, so not at the 10 billion, but at the 100 million or lower, then they look at instruments like seeding local banks for onward grants and things. But of course that kind of investment from the bank is still pretty complicated, in other words to go to a series of local banks for aggregated projects and it's arguably not the best instrument as you're indicating or alluding to. And something else, I worked on quite a bit at the Bank was I… maybe a couple years ago I wrote about the energy storage the battery needs for developing countries. Because of course you and I hear a lot about it, for European jurisdictions, or California or whatever, but a lot less in developing countries, which is true across the board. And so the Bank did launch a new battery, just as I was leaving, a new battery a program for developing countries. But one of the more interesting things I worked on while there was… If you think of the countries, they work with as least developed or lower income, middle, middle upper and upper income, that they would work on the bottom two of those. Emerging economies these days don't have the same need they used to, to go to places like the World Bank for funding. Because they can go to either capital markets or they have their own funding, or their own development banks etc., and so those kind of projects tend to be very different than the ones you see in least developed countries. The Bank has pivoted a little bit towards the least developed country angle, which I think is the correct pivot, using a very American slang. And one of the interesting things we did was

that if you're looking at those power system, how do you plan for a power system in South Sudan, Somalia or Afghanistan. So, how do you think about that? And what the math would tell you is okay, we can come up with the optimization, the math will find an optimization and in a country like South Sudan, what it would come up with? You feed the data to your numerical model and it will spew out put up large, cross-country transmission, high voltage transmission to link to large hydro in the north of the country on the border, say, with Sudan. So that's the same answer would come up with if you were in the northeast of England or in Rhode Island, or Colorado, or something like that. Because the math is agnostic and in that way very dumb. So I worked on several…

ML: Different risks, you're in an unstable country.

MB: Right, but we can lead on to other stuff like resilience to storms and things too. But yes, so the risk, there is conflict, in other words people blowing up infrastructure. And then other risks that people don't think about. So if you were going to… what's the cost of capital for putting up a cross-country transmission line in South Sudan, right? It approaches infinity, there is no cost of capital.

ML: I was just, sort of in my mind, just imagining that conversation with an infrastructure fund in Mayfair… I could probably get in the door because kind of like me, and then I’m like okay, so this opportunity we're talking about, this HVDC and it goes from Khartoum to and then I’d be like whoa why am I out on the landing already?! You know, what happened? I didn't finish my coffee!

MB: Yes, so you get it inherently, but when I would say that to people, I would go to into a room and I would ask them what's the cost of capital there, and they don't have your experience, and they've never been in that meeting, and I would say well, there is no answer to that question. No one's giving you that loan.

ML: That's a World Bank, I mean to a certain extent. If it's the right answer then that's the sort of thing exactly that the World Bank needs to be.

MB: Yes, but it turns out I don't think it to be the right answer and so to follow on with that analysis is what we did was, we wrote three papers on it, with increasingly more sophisticated mathematics. In other words, we went from very simple changing the weighted average cost of capital to doing things called two-stage stochastic modelling. But the answer, it turns out, going back sort of Ockham’s razor is that the simple math gave us the correct answer, which was: you really need to look at incremental, doable decisions. And so that led to things like city-wide grids, you could call them microgrids or whatever, but say a city grid with a contained thing, so that you could power government facilities, hospitals, schools and make an economy. And that turned out to be… that resonated very clearly with the people on the ground, who knew that was the correct answer, in other words.

ML: It feels right to me because I remember, I think probably talking with you, about I got it kind of the event horizon, which is once all the costs of the of the distributed

solutions gets really low. Then you're going to want to do some centralized solutions, because you've got cities, and you've got energy intensive industries, whatever, and you really need 24/7 reliable power to be able to balance it across a grid. But then there's some kind of an event horizon, where you're out into rural Niger, rural Ethiopia or whatever, where you just can say look, as long as we can do a mini grid for the clinic, the dairy producer, the food processing, and the homes, and the telecom towers… why do we need this huge, then exposed line, to link that into the rest of the grid? The answer is you just don't.

MB: No, that that's exactly right, except for you can extend it further, because you remember in these countries like you probably mentioned or Kandeh would have said to you, that the capital of Sierra Leone also needs one of these. So it's not just a rural thing and I think of it as that's the way you build economics and you build peace. So the place that we did the most in-depth work on was actually Afghanistan, and I remember sitting with the Minister of Energy in DC, in a very posh hotel and he had a beautiful suit on, very well put out, probably educated at Oxford or Cambridge, and he said to me: look, Morgan, you seem pretty reasonable and kind of new at this World Bank stuff. So I’m gonna tell you what needs to happen because your colleagues won't listen to me. And what he said was I do not need another report that tells me I need high voltage transmission systems across my country in 25 years, with clean energy feeding into them to meet climate targets. What I need is a five-year plan with one-year project management cycles to actually build stuff around the cities, period. I said well, that sounds very reasonable to me, I can't imagine not listening to you on that, but you know it doesn't meet all of the political and communications and PR tags. Just to pull that, Michael, so you have all those issues, but we can bring them back to current topics like resilience, which is very hot. You know that when we do that kind of modelling, it's the same kind of judgments on the numbers that say that the military makes… that the US military makes for bases either here, in the United States or abroad, right, say abroad in conflict zones, they worry about conflict here in wherever they have huge bases, in Colorado, or wherever. They have other issues, whether it's they can't be turned off the grid for critical mission, or they're going to sit in North Carolina and have a hurricane come and then they can't be offline. So it has resonance, that kind of thinking has resonance across quite a few different areas.

ML: And my sort of trial by fire on this was the project that I did in Bo, Sierra Leone, which was nothing to do with the fact that Kandeh is from Sierra Leone. I just saw a tweet, I was actually about to have dinner with the Taoiseach and with the head of the ESB in Ireland. And on the way there, in the car, I saw a tweet from a doctor, an Irish doctor saying: three of our babies died last night because of power cut in this hospital in Bo. And of course what's interesting for me, I mean, it was so much learning because I stepped in and we collected some money, and we put it together, and it's up and running. You know, it's not perfect, but there's babies alive today or kids alive today. But there was so much learning and one of it was all of our statistics are basically

rubbish, because you would have gone into… if you looked at the statistics on energy access, it would have said that Bo has access to electricity and you'd move on, right? The fact is that there were power cuts and a premature baby dies in 20 minutes, if it doesn't get warmth and oxygen. So the fact that you could tick it off on some World Bank index sustainable energy for all index… whatever, it actually didn't help those babies at all, because it wasn't resilient. There wasn't the resilience there to keep them alive.

MB: No, and that brings up a real point, I've been passionate about for a long time is all the statistics for as you said, for SDG-7, or energy access are binary statistic. Either you have access or you don't and there are complications with that, whether you have an overhead line going above your village, or…

ML: India is now 100% electrified, right?

MB: Right.

ML: Because the lines are over the village, but a lot of people can't afford to pull them down and actually have electricity.

MB: Well not only that, but one thing we found recently, and I just published a paper on this, this month. It was what if we tried to come up with an index for reliability and so what we did was we said look, this doesn't have a scientific basis of what's reliable or unreliable, we're going to make a guess and so we called it reasonably reliable electricity. And what we said was what if we took that number, the number stand you used to always be about a billion now, the numbers at whatever, eight or nine hundred million without access to electricity…

ML: Under 800 now. In the history of the planet that hasn't had electricity since before the population was a billion.

MB: Right, okay, great.

ML: So it's still 800 million people who don't have electricity.

MB: Well, that's what you and I would call it, or I would call, a beautiful number, right? The data's pretty good, but not great. It's an important number, because it gives you a sense of scale and therefore you can react, and you can create policy, et cetera. What we did was we said what if we took two metrics of reliability: SD and SF, so the system duration and the system frequency outage and we made a metric, in this case something like 12 hours and 12 days and we came up with a metric, and we said let's apply this and what's the new number who have access to reasonably reliable electricity?

ML: And where did you get the data from for that?

MB: So the data for SD and SF we got mostly from World Bank survey data. No, it's not perfect, it's not great, and we recognize that their utilities aren't reporting it etc. etc., but this was again just to get one of these beautiful numbers. What it turned out was if

we don't include India, so it mattered how we dealt with India because of such a population, but if we did not include India, we said that the total number of people without access to reasonably reliable electricity was on the order of 1.5 billion. So double the access number.

ML: Did you think about trying to use satellite data or even or telecoms data to say look, let's forget these surveys, because people don't report governments like to get involved and say they're doing well, when they're not… Did you think about getting direct collection of data? Because the lights - you could see it from a satellite, when there's a power cut the lights go out, you know you got it, right?

MB: Right, so thanks for that. So at the Institute, I run the Payne Institute for Public Policy at the School of Mines, we now have a group called the Earth Observation Group, which is a group of physicists that use an instrument called VIIRS v-i-i-r-s, that is a multi- spectral satellite that was originally designed to look at weather, so look at clouds during the day. What we use it as is at night to look at things that are bright, and so we look at among other things, we can see forest fires but because we have, and you'll appreciate this, because we have different bands, we have 22 spectral bands coming down. We can fit a Planck curve, so we can use fundamental physics of thermodynamics to fit a Planck curve so we can show not only the scale, because we can see the scale from the visible spectrum, but we can estimate the temperature, and so it's one of the only products so we have that, that's been running since 2012

ML: So you can see if this is just a farmer doing a flash burn, or whether it's really a dangerous fire that's going to do physical damage.

MB: That's exactly right. So we can see the difference between a smoulder and a full burn. And what we use the full burn for, is also is we provide all the data for the Global Gas Flaring Reduction Partnership, which is a global partnership and we provide the annual data to that. And then the most well-known of the products coming from the satellite team is the night time lights, so you can see the iconic images you see behind people, that we've all used in our presentation of nights at light. What we've been doing recently in the last two years is using those to distinguish between brownouts and blackouts, so we can see things that are rolling versus out. We also can see, as you can imagine, we're also using it for when storms come - we can see power outages, say, for the hurricane that came to the United States a couple weeks ago or right now, and we can also see when there's been bombing campaigns or conflict, so we use it a lot for security purposes as well. As an example, three years ago we published a paper where we estimated the amount of illegal oil production by the Islamic State or Daesh in Syria and Iraq using our flaring data, and it was incredibly well collaborated by an interview from a member of Islamic State that was held by US forces. But in any case: yes, what you're saying and we're working with the Rockefeller Foundation and the University of Massachusetts to look at how we can come up with metrics for reliability based on our satellite data.

ML: Is that Lorenzo Bernasconi at Rockefeller?

MB: It's mostly through Ashvin's Group, which is sort of the energy group there, but I was able to go to Rockefeller and present to their board once, which was terrific. So we're doing that, and then over the pandemic period what we did was we looked at the lights as a proxy, not for reliability or access, but for economic development. We looked across different states.

ML: It's truly a different world even from 10 years ago, when we were doing SE4All, just the use of data. Now the ability to pinpoint how much fugitive emissions is coming out of which wellhead, whether it's in the you know Permian, or Nigeria, or wherever. It's becoming… I wouldn't say it's trivial, but there was one of the reasons why Copenhagen COP fell over was because of the whole issue around verification. Was it they call it MRV monitoring, reporting and verification there was this big problem because China didn't want westerners to go in and MRV it well you do it now from a satellite, you don't have a choice. And the data is becoming incredibly granular and I’ll be honest, I was not aware that the Institute of Pain was actually a key player in that. Give us the move… okay so you're at the World Bank, you're doing this and then suddenly in my book you pop up at the at the Payne Institute, Colorado where, I've got to be honest, I think you are absolutely in your element, it's tremendous to see what you're doing. Give us the overview of all the different range, you know research group, what does it cover?

MB: I appreciate that. So, I left the World Bank about two years ago for various reasons, that included personal, and family, and quality reasons and…

ML: You mean you have a better quality of life in Colorado? I mean we've skied together, the audience doesn't know. So I can imagine part of it was being in Colorado versus in those sweltering summers in Washington.

MB: The quality of life is lovely and I've been able to cut down my travel quite a bit, especially you know when I left the Bank I was leading projects in places like Mongolia, and while I loved going to Ulaanbaatar it's not a quick jaunt. So I moved, I had the opportunity. I’d never been a real academic so I have a PhD, but I've never been an actual academic, although I've been publishing papers all along sometimes…

ML: 140 of them, I believe.

MB: Yeah. Now it's up a little bit, since I've been an academic, but…

ML: Including, sorry, I’m just going to say this.

MB: Oh yeah, please.

ML: I have published three papers. There's three, I’d say three papers and on every single one of them you are the lead author! One of them was very important, actually all good papers, they were all good papers. One was on the documenting the incredible

drops in the cost of solar, which nobody had done in 2013, and we did that with an amazing cast of characters Doug Arent from NREL, Jenny Chase from Bloomberg NEF. And another one really interesting that I still find myself more and more working on which is which is the open source, open data, open modelling, which… Let's get back to the Payne Institute, but if we have time, I’d love to hear your recent thoughts on that.

MB: Yeah, no, I’ll keep it brief on the Payne, but interestingly one of your other guests, Jigar Shah, was also on that photovoltaic.

ML: He was on the photovoltaic.

MB: Which is a really cool one, I think. But so I moved two years ago, the School of Mines is a fantastic university, it's a public in the US sense, a public research university, it's 99% technical. The Mining Department is now probably smaller than the Departments of Quantum Computing, so it has changed over time as science has changed. The focus - it's still almost all engineering and science, and my institute… We have about 15 or 20 people now and our role is to link that technical expertise at minds with context or the rest of the world, or we call it public policy. We have different programs ranging from some of the stuff we've talked about today, we have a program on the future of oil and gas, what oil and gas looks like in the energy transitions, we have a program on just and equitable transitions, we have a program on earth observation - so from the satellite group and we have a program on minerals and metals, and the energy transition as well as a new one we just launched this week, on carbon capture utilization and storage, which is an interesting one. Coming to a university you don't realize that universities don't have management structures in the way you or I understand them, either in the private sector or the public sector, and so there's quite a lot of freedom and that freedom is lovely and part of the deal. It also makes for the academics invented ivory towers of course and so there's a lot of this and not as much of this, right.

ML: And it's freedom, but in a sense… it's freedom to go raise some money, to stand up a team to look at x, right?

MB: That's right and that's why I’m so grateful to have the opportunity to be in a cross- cutting institute. So I've been working recently with our… the School of Mines has the only, and therefore the best space mining program in the world, and I now consider myself one of the top 10 space mining policy experts in the world, because there's only four other people or something. But you know that cross-cutting is great.

ML: The space mining I mean that's like capturing… I don't even know, meteorites or asteroids, one of the two, which everyone is small enough to grab, right?

MB: It's interesting because these days mostly what they focus on is the moon and water from the moon. Because of course from the H2O you can create hydrogen, you can create water, you can create oxygen and so that is their focus right now. And you're

hearing from one of the great experts on my space mining policy, so you've heard it here first.

ML: So when I go to visit that private equity infrastructure fund in Mayfair, shall I take your business plan for moon mining?

MB: You know, it's interesting because those people at Mayfair would listen to this, before they would fund that transmission.

ML: You’re absolutely right. They would be more interested in a way because it's kind of more way out. But let's talk about mining. Let's get back to earth if we can.

MB: Sure.

ML: Because there is this sort of some of the wonderful people that you and I interact with, that are very committed to renewable energy. They sort of think that if we move to renewable energy, we're going to heal the planet and it's going to be soft touch, and we're going to live, we're going to be nice. There's a bit of kind of Kumbaya to it, but actually clean energy is going to require massive amounts of minerals and some of them are only available in places, where governance is extremely risky and dubious at the moment, or am I wrong? Is your research group proving that's not the case, can we just recycle and…

MB: No, so like everything - it's complicated. What makes it uncomplicated, and what most people see in the media, is an announcement yesterday by Elon Musk that he's going to take all cobalt out of his lithium-ion batteries, go all nickel. And then he wants everyone in the world to mine for nickel and lithium. So he needs tons of lithium, so he's going to put up… and so that permeates through, and all today on Twitter or any social media you'll see lots of lithium miners being very excited at their new market, which just increased by a couple orders of magnitude. But the area is fascinating, so if you look at a graph of an upward facing energy demand graph over time, right, say, one of Nakicenovic’s graphs from 1850 to the present…

ML: Naki from IIASA, right?

MB: That's right. And so if you look at one of Naki's graphs of energy, which are lovely to use for pedagogy, you'll see it going up and interestingly, what you'll also see, is that the energy system, as it's progressed, has also become considerably more mineral dependent. So not only in scale, but also in type, so the diversity of minerals has increased and increased and now we're talking about the 17 rare earth elements and cobalt, and manganese, and nickel, and neodymium which is one of those rares.

ML: Well, just before we get on to those when you say this energy curve that goes up

- you don't think there's any chance that that we will just be smarter, because this is final energy. If you get primary energy, most of that is just thermal waste but you're talking final energy and you don't think that we can actually be energy efficient and make that flattened. So you're in the kind of ‘it goes up forever’ camp.

MB: No, no. So what I was saying was historically… if you look at a historical curve to the present, the future of course is much less sure, but what we can say is that if we look at these critical minerals and there's various ways to determine what is critical and not, and they're mostly sort of parochial national determinations around security, at least the one in the United States is. The one in Europe is a little bit better as you can imagine, and Japan is a little more similar to the US.

ML: But these are rare earths, but these are assessment. I mean rare doesn't just rare, because that's what they were called in the 90s.

MB: That's right. So rare earths aren't rare, but they're not all of them. So 35 of these things, and not all of them, are a rare earth, they range all over the place from things and they also… the demand is focused on the energy sector but also the defence sector, so in the US of course that's very important. And the issue is that if you ask me right now what's the price of crude in Dubai, or the price of natural gas LNG and the Asia market, we you would get it in two seconds and I would take three or four seconds.

ML: You would just go to a Bloomberg terminal.

MB: Thank you. We go to Bloomberg terminal. I’ll get that answer. But with these almost all of those 35 minerals they're markets, and I’m using quotes here, because they're not markets like we understand them, there's no real price discovery. There's oligopoly or monopoly behaviour in almost every one of them across the supply chain and then you have these complex supply chains, from digging rocks to putting up cathodes and anodes, and processing, and all the rest. And so it's very difficult to make big, homogenous statements about what's going to happen in the minerals and metal space, because it is so complicated.

ML: But doesn't it over time as the important, the sectors become more dependent the volumes grow? Some of those just become liquid market. Solar grade silicon was not a thing, when I started New Energy Finance and I went to the team and said ‘we are going to do price discovery and we're going to find out how much people are paying for this’. And they'll say no, no, you can't, it's all over the counter and there's no transparency at all, and I was like I don't care, get on the phone, I’m not hearing you dialling. I’m not hearing you dialling.

MB: That's right, Michael.

ML: You got that transparency.

MB: That's right. And there's a really cool firm called Benchmark Minerals, which is located in the UK also and it sort of it reminds me of the early days of coming to visit you in London, at the NEF office. So you have this three-storey office. And so I think yes, some of those markets will mature, some will get more transparency, some will get better price discovery and places like Benchmark are helping with that.

ML: Yeah, but can I also say that some of those people, and I’m not pointing the finger specifically at Benchmark, there is a syndrome here which is the people who know lots about the supply chain for ytterbium or whatever it is, they will tend to exaggerate the difficulty, the pinch points, the risk… because that makes them important. My view is these things are not rare and investment is needed, and work on the governance in the supply chain because clearly cobalt and the DRC, but it's not that. It's not really that different from clothing out of Bangladesh, it's not going to suddenly turn into a magnificent, safe supply chain, but we do have the tools to work on it, and improve it and make it transparent, and make it you know…

MB: Yeah, I share your optimism.

ML: We have those teams, how difficult these minerals are? Because I really don't think they are sui generis, more difficult than everything else that has ever been solved ever in the history of the planet

MB: I agree with you on most of that, especially on the optimism that there'll be a move towards that supply chain, security, and transparency and governance. But keep in mind that some of those issues are that one it takes a really long time to open a decent size mine. Not just technical reasons, but social license to operate reasons, and then the processing of these things is incredibly… for a lot of them is very environmentally difficult. And because that supply chain has this sort of big industry here and then this processing environmental issue, and then manufacturing alone… it does have some… and to be fair we are seeing massive demand growth recently, because of things like batteries and photovoltaics, but mostly batteries. The problem with those markets being not transparent now is that since there's no good price discovery, it's very hard to get a good investment signal on either direction. So to go back to the miner to go to the cathode making. I do see that there are some relatively serious issues in that, and then that's on the energy side. The defence side, of course, is much different. They don't need a lot of these things and I take your points, people are saying: oh well, we have to get these made domestically or the US military won't be able to get what they need. And I say to them: I’m pretty sure the US military could get it if they really wanted it, right? But they need some instruments themselves, so do they really want to be in the business of owning mines and processing, or do they want to be in the business of making some really great PPA type, some contractual arrangements, right?

ML: It's such a fascinating area. I worked in consumer goods and there was a time, when a large Anglo-Dutch consumer goods company owned cactus plantations, because the beetles on the cactuses made the red dye that was needed in various products. So the US military could go that direction.

MB: Right.

ML: But let's get come back to the… and by the way, when you say energy I mean this is also transportation, it's all these rare earths are also needed in all the motors. And

you know what worries me, I will be honest, is resilience writ large. I don't think that it's possible to say right, molybdenum or cobalt is the problem. I’m worried about it on a kind of systems spaces. We're taking the energy system, we're linking it to the transport system and not just of the electricity system linking it to transport, linking it to telecoms, linking it to payments, linking it to mining, linking it to food distribution, linking it to the remote medicine… you know everything is being linked in with a tightness that is unprecedented. Then you get a shock, and it doesn't have to be a cyberattack, or a pandemic, it could just be a tornado takes out a pylon, it could be just random noise, a bug. Literally, the old bug that goes into the system and takes out a computer and these systems… there's no firewalls anymore, right? We have police cars are going to be electric and then they have to get charged using the power system, that they are also supposed to be defending. This sort of thinking really worries me. Are you working on that at the Institute?

MB: Yeah, I mean…

ML: I hope someone is. I hope you are.

MB: Well, I think it's a great point, and adding to your list there are things that are getting tightly coupled, but not always in the right ways for policy. So say we have to tightly couple urban planning with that transport piece at the same time as the EV piece. I mean even how we couple them, or how it looks like we'll be coupling them might not be the right coupling. But yeah, those are macro security issues we've been working quite a lot on from both the perspective of the military. So we've done quite a lot of work on how the military not only leads on innovation, but how it deals with resilience in its various systems. But though that system of systems thinking is terrific and I don't have tons of research on it outside of the kind of seeing bits of it from the data we see from the satellites.

ML: Our guest on episode I think it was eight, Roger Dennis out of New Zealand, he worked on the pandemic preparedness and found it very difficult to get people to… even the government. New Zealand has done well during the pandemic, but it wasn't because of preparedness for a pandemic. And the question that we ended up examining was when it comes to resilience, do you sort of do lots of thinking and identify the problem and have a plan in the in the draw for it, or do you prepare more generically, so you build in firewalls, you just become nimble, you put more resource into sort of weak signals that you run, you spot things earlier and that gives you more time. What is it, is it kind of preparedness in terms of planning, or preparedness in terms of agility, if you like?

MB: I mean this… the resilience piece that's become so popular and thinking about in terms of climate change, mostly in terms of storms if you notice, I just did a piece with the Atlantic Council yesterday on resilience and power grids. But if you listen carefully the discussion mostly tended towards low carbon, and grid integration and maybe

reliability, but not necessarily this resilient speech piece would… which I think about is bouncing back, and how do you bounce back? And the two ways you bounce back are the two you just mentioned. So that's how I think about it, but what we're working on is how do you come up with metrics for that resilient, the bouncing back piece that you can then put into either endogenously or exogenously, into modelling or planning systems, so you can see what happens.

ML: Well when you have those metrics, you'll be able to answer. Maybe you have the answer already intuitively. If we shift to this kind of clean energy, clean transportation, smart infrastructure, whatever… is it going to be more resilient? Because more of the energy will be local, more will be distributed and so on… or would it be less resilient because of all these close linkages lack of firewalls etc. What's your gut? Does it tell you we're going to go… where are we going post transition? Are we going to be in a more or less resilient world?

MB: I mean my gut would say more, because at least at the beginning at this stage in the design and planning process, we at least have the vocabulary word as important. But I think it's really interesting one, as people think about say cybersecurity, which is one of those risks you've been talking about. Our centralized systems or decentralized systems more or less cyber secure, and then are developing countries or advanced economies more secure. And you know it's interesting, because you initially would just go to well centralized, whatever you would go to in your brain, you'd make some judgment on which corner of that you would think is correct. There are also arguments for each of the other ones and so I think how we think about cyber security should give us lots of clues about how we think of that that wider system. But I have no answers on that.

ML: Finally, I can't let you go without, or in fact seeing that exact question through a political lens, because you've got President Trump, whose view of energy security was going to be piles of coal, you had to have 90 days pile of coal at a power station. That is security. And then of course, on the other side of the argument, it's more about well… if you have something distributed and you think smartly, and you don't concentrate all your resources in one massive power station, but you do this, this and this. So that's my preamble to asking you what's going to happen in November?

MB: Oh, right. Well I think Joe Biden's going to win in a landslide, but we're all scared. I’m just making a non fivethirtyeight type of prediction, but yeah. We think about what security means, just like how we think about what resilience means is really important to the instruments we put in place. So if you believe security is about sovereign walls literally, and independence and dominance, which has been the language of the Trump administration in energy and in everything else. Then you think about the world in a very cut off, I think parochial way, where as you've said and I believe, the world is only getting more interconnected, more and more and more systems and supply chains and people. And the fact that you and I are having this conversation like this, without any

issue and exchanging ideas… If you change your framing and therefore your system boundary around what you're thinking, then you'll come up with I think much better answers to those questions, than going into a bunker with your pile of coal. I think that's a really interesting one for the minerals and metals thing is some people said: well what we need is domestic production or stockpiling. Well, who wants a bunch of rocks on their property?

ML: Stockpiling is a bad use of capital.

MB: Well it is absolutely, but it's even worse in this case, because think about it. You can actually you lose that oil or gas something that you stored, right? It's usable. Even though I agree with your economic case. But the pile of rocks is not usable to you, right, literally not usable, unless your children are going to climb on it or something. But so I think how you frame these questions and acknowledge interconnectedness, supply chains and approach it with some humility, you might have a chance of getting it right here.

ML: I said I was going to finish with a question about the election but, actually, I realized there's one other thing that I do need your view on. I've just been appointed as advisor to the Board of Trade…

MB: That's great!

ML: And you know those supply chains that you talked about. What do I need to know on trade, how do we ensure that the trade system sort of encourages accelerates the shift to these newer, more flexible, more smart and lower carbon systems?

MB: I think especially in that minerals and metals…

ML: Minerals specifically around minerals questions.

MB: Well it's a good example too, because you know all about the crazy tariffs the Trump administration has put on photovoltaics etc… and we've both written on that. The minerals and metals I think it's mostly you want to do things that move towards that optimism you spoke about, move towards the transparency, the liquidity, the price discovery, the governance functions.

ML: But very specifically: do you use trade to, say, we want to do that but we cannot have children in the mines, we cannot have these egregious pollution in the processing of those, because as you say there's a huge environmental footprint from processing some of these system or resources. So do we use the trade system or do we work in parallel, that's a question.

MB: I think it's a little bit of both like anything. I think that we're working quite a bit on understanding the full supply chains for these minerals and metals, as they relate to environmental social and government. So as they relate to ESG things and as it turns out right now, while there's a lot of different reporting going on, there's different

methodologies, the data is no good and you can't see it across the supply chain. So, if you can use trade to encourage that… but the one you also just to say you have to be careful about making our judgments on, say, what's happening with a child labour, and artisanal mining of cobalt in the DRC, because of course it's fundamentally bad and you and I wouldn't want our children doing that. But at the same time, it's relatively small scale as a percentage of the mining, but more importantly, if those people… it's not like the children or their families chose that this would be their child's life, that if they don't work in the cases where they are, there's possibility for starvation and death. So there are complex development questions to answer that shouldn't be only done through brute, western trade policies in my opinion.

ML: Or indeed by engineering all cobalt outside…

MB: That's right.

ML: The principle which leaves a child who really shouldn't be working in an artisanal mine, but it then withdraws all of the opportunity for the entire sector and parts of the industry of the country.

MB: Well that's exactly right. So good luck with that, I saw you around that.

ML: I’ll be honest, I’m still trying to form my own views, because it's not obvious what you can achieve via the trade system, versus what you could achieve via new technologies, distributed ledger technologies to trace minerals and all sorts of other approaches… I could keep talking to you for ages, I’m slightly worried that if I do, I’ll end up having to collaborate on many more papers, because we share so many interests and all of these require some proper work to flesh out. I’m absolutely thrilled with where you've ended up at the Payne Institute, because I think you've now got a clear line of sight to investigate so many important issues, as we've heard. So at this point though I would like to thank you for spending some time with me on ‘Cleaning Up’, and good luck with every single one of those research threads. Because there's probably nothing more important in the world today. Thanks, Morgan.

MB: Thanks, Michael. Thanks for having me so much, it's a pleasure and I hope your family is doing well and my regards to them.

ML: Thank you, very good. So that was my great friend and ski buddy, Morgan Bazilian, director of the Payne Institute at the Colorado School of Mines. His short form bio is ‘professor of physics and poet’, and as you've seen, he really is the poet of the transition to a low carbon energy and transportation system, including all the ramifications across natural resources mining and resilience and a just transition too. My guest next week on ‘Cleaning Up’ is Jonathan Maxwell. He's the CEO and founder of Sustainable Development Capital Limited, where I’m a senior advisor. SDCL is one of the world's largest investors in energy efficiency, helping corporates to secure cheaper, cleaner and more resilient electricity heat and energy services. Please, join me next week on ‘Cleaning Up’ to talk to Jonathan Maxwell.