Petrostate USA vs Electrostate China — Place Your Bets | Ep191

Michael Liebreich

Hello. I'm Michael Liebreich, in Switzerland.  

Bryony Worthington

And I'm Bryony Worthington, in California, and this is Cleaning Up.  

ML

Welcome to the first episode of Season 14. We're recording this just before Christmas, in fact, I've got my big glass of Christmas cheer right here. And so by the time the episode comes out, which will be January 8th, things might have happened, although it will still be before President Trump's inauguration. So if there's stuff that we do not talk about that has happened in between, we apologize. And with that, let's get started. Bryony, 2024, first of all, what were the things that you will remember about this year?  

BW

For me, I managed to get a little bit of travel in this year, including two trips to Asia, which really helped me to realize just how important that region is in terms of the things I care about, the energy transition that we're following on this show. And it was a fantastic opportunity to just take a little bit of a step back from the usual kind of dominance of what's happening in the US and view things from a little bit of a different angle. So I really valued those two trips to Asia, both of which involved a trip to China.  

ML

Yes, I've not been in China for a few years, and it's easy to lose sense of the scale and the speed of what they're doing in our sector. And you know, we'll talk, I think a bit later, about how they're also doing it in coal, but they are just operating at a speed and size that there's nothing else remotely like it in the world, is there?  

BW

That's right. And I really like this new phrase of 'they are the first electrostate' where, really, they've grasped the fact that the future is electricity, and they are using their domestic coal — and we'll touch on that, I'm sure — but they've managed to also bring down the carbon intensity of their power to a point where it still makes sense now to electrify everything, and you still get a benefit. You certainly get a benefit in balance of trade and using domestic energy rather than importing it, but you also get a climate benefit because their power is now clean enough that it means electrifying everything makes sense, and so that's what they're doing. And they're not just going to electrify themselves, they're also going to electrify all their neighbors and export technologies to the rest of the world, if they're allowed. But of course, we've got the question of trade wars and tariffs, which I'm sure we'll touch on too.  

ML

Absolutely, and whether they're actually allowed to import, not just to export, but they'll be there looking to import. We'll talk about AI later. And the GPUs, will they be able to get their hands on them? But the point about the electrostate is actually, for me, that is one of the most striking charts of the year. Where you see that since 1970 the rate of electrification has grown globally, and it's now around 20%, maybe a little bit over. But when you break it down, you see that in Europe and in North America, the rate of the use of electricity, the contribution to energy services of electricity, has actually stalled at about 20%. Whereas in China, it's just blown straight through that, and it's headed for, I think it's on 28%, headed for 30% and clearly just going vertical. So you know, when we talk about, 'Oh, do we electrify everything, or do we electrify nearly everything?' We're actually doing nothing of the sort, but China is.  

BW

Absolutely, and then also investing in the manufacturing capabilities to build the machines that allow us to run on electricity. So you know, what they lack in fossil fuel reserves in terms of gas and oil, they're making up for in manufacturing of machines that run on electrons and sending them around the world. So yeah, it's been a very thought through strategy. It insulates them in terms of the amount of money they spend on volatile imported products, and it plays their strengths. So yep, it feels like that is pretty much unstoppable.   

ML

So 2024, other big stories that you will remember, or maybe episodes of Cleaning Up that you'll remember. We're not allowed to have favorites, of course. But what are your favorites?  

BW

Well, the ones that we refer back to a lot are, for me, it's the John Marshall episode where we talked about, 'how do you communicate about climate change?' And it was before the US election that we recorded that. And John was being pretty clear about the fact that we tend, as our tribe, to talk in terms of very rational arguments, very logical arguments. And actually it's emotion that connects with the voting populace. And if we don't engage people on an emotional level, we will not win. And arguably, we have had some setbacks where it seems like the mood has gone against action on climate, so I think that episode and the whole narrative around 'how do we win hearts and minds?' For me, I keep coming back to that as a really important theme.  

ML

I'm not sure if I should pull you up on something, because you've just talked about 'our tribe.' And in another episode, you used the words 'the movement,' and I've assiduously avoided that. I don't have a tribe. I don't have a movement. I just try to sit on Mount Olympus and be an analyst, because that way I can play this persona of, well, I just follow what the data says. Of course, what I choose to analyze, what I choose to spend my time on, is heavily directed towards the transition and accelerating it and so on. But I don't use words like 'tribe' and 'movement,' but you do.  

BW

Yeah, but it's odd because I sit across a whole range of different types of tribes as well. I'm famously seen as quite a supporter of nuclear, which isn't common in the sort of left leaning green movement. And the fact is that it has its own tribe, you know, the sort of pro white heat of technology tribe, if you like. And I guess, yeah, maybe tribe's the wrong word, but identity politics exists, right? Naturally, we're social creatures. You tend to hang out with people who think similarly, and it helps, especially if you're feeling that there's adverse conditions, to feel that you're not alone. So maybe I have got a natural tendency to find support amongst like-minded people. But the breadth of who I consider to be in my camp is quite broad.  

ML

There's no question we're all tribal. I think we're all multi-tribal, and I find myself very definitely...  I'm definitely a conservative, that came out, actually, in a couple of the episodes, we talked about that. But also I'm an oddity within conservatives more broadly, because I do work every day, all day, on climate, which most conservatives, how can I put it, don't. So we're definitely multi-tribal. The John Marshall episode, I mean, he was saying, 'you win this by talking about the sense of loss.' But fast forward to today, and you know, you said it's arguably a bit of a setback. No, come on. I mean, there's been a catastrophic reversal in the US election, frankly, for those who care about the climate. That's not a political endorsement of anybody, it's just kind of a statement of fact. And I challenged, in the final episode of the year, with Lord Turner, I challenged him. I said, 'Have we lost the argument?' Because we talk to all these clever people, but fundamentally, have those who want climate change to be addressed simply lost the argument?  

BW

Well, yeah, that was a really excellent question, and Adair was typically upbeat about the fact that some of the aspects of the transition are going to happen anyway, whether it's because of climate or just because of the sheer economics of better technologies arriving now at a cost point we can all afford. But I think in terms of the narrative, you can't escape the fact that we're back to a point where people who are in positions of great influence are saying, 'Well, climate change might not be all that bad'. You know, 'we might actually save lives overall, because we'll have fewer deaths because of extreme cold.' That kind of cherry picking of data to make a case for stepping back a bit on climate, not putting climate in such a high priority. That's going to be the reality of the dominant narrative in the US now, and what happens in the US doesn't stay in the US. It has a habit of creeping out globally.  

ML

So if I look at memorable moments from the episodes that I hosted, you know there has to be one, which was Rory Sutherland, vice chair of Ogilvy. Ogilvy is part of WPP, between WPP and Ogilvy, the ad agency that has worked the longest, the mostest, with the most egregious oil and gas and fossil fuel companies. And I don't lay that at his door in any way. It was a fascinating conversation about how you sell all sorts of technologies and brilliant insights. But then when we talked about whether ad agencies should be working for — not just working for fossil fuels and not doing public information — but actually promoting fossil fuels... interesting conversation. But there was a point where he said, 'Am I 100% sure that climate change is actually happening and that we're responsible?' I was kind of aghast, and it took me a while to actually blurt out the words, 'Absolutely yes, of course, I'm sure, I'm a scientist. What are you talking about?' So that was a memorable moment for me.  

BW

And that's what we're going to see more of. And, I guess, from our perspective, you know, every kind of extreme weather event, the weakening of the North Atlantic Conveyor, or the loss of ice sheets and losing of glaciers, all of this feels like incontrovertible proof that this is happening. But we're in a world where you can have your own set of facts and your own narratives. And that anchoring back to science, unfortunately, is still going to be needed. There are parts of the world where it's not contested, and not to go back to China again, but there isn't this kind of debate. It's part of the fact that it's not particularly a free information society, so there's a consensus. And so they can make long term plans, and they can invest accordingly. That stability comes at the price of freedom. We've got, probably, now, arguably, we're going to be more free than we've ever been, but possibly the result of that freedom is chaos, and chaos in terms of stop-start plans, nobody really knowing what's going to happen next. How do you make investment decisions that are going to span 20-30 years, when every two to four years there's this huge upheaval in politics? And that's the US, but also, Europe's not looking particularly stable either, right? War on our doorstep, elections being contested, all sorts of issues that mean planning is hard.  

ML

I think there's a really interesting conversation there. It may not be for a year-end round up. It may be something we need to explore in future episodes, about the extent to which that polarization is not just caused by the 'bad guys,' as your movement, your  tribe would like to portray them — you know, those on the right, the oil and gas industry, the misinformers. But actually, it's kind of a symbiotic relationship between those on the, maybe more on the left, although I'm an exception, but over egging the pudding. Exaggerating so that every hurricane becomes incontrovertible proof of climate change, even though we've had them in the past, just as bad. You know, floods in North Carolina, whatever. And you know, every single wildfire, irrespective of what we've built in the way of the wildfire is incontrovertible proof of climate change. And that sort of over trading, which I struggled against when RCP 8.5 was being promoted as a business as usual scenario, when it was absolutely implausible. It's almost like a bad marriage, where both sides deserve each other in some ways.  

BW

Or I think of it in terms of being a parent. You know, when that three-year-old toddler just goes that one step too far and you snap, and you start becoming as bad as the toddler. I feel like we've reached that in terms of politics, where both sides now, toys are out of the pram. No one's behaving like an adult, and we need to calm down. Actually, yeah, there's definitely a period in which we probably need to de-escalate and focus on the things that we know to be true and are actionable. And something you've brought up and taught me over the last few months is focus, maybe on just making it energy affordable. The single biggest way out of this is to have a lot of affordable electricity and energy. That means that we can be resilient in going into whatever period we're going into, and that does mean focusing pretty squarely on making sure that everything is reducing in price, not increasing, and that we're making things available to people. And the cost of capital probably becomes the single biggest thing we need to work on, because it's so unfair that the wealthiest have the lowest cost of capital and the poorest have the highest. And we're going to need a lot more capital in people's hands.    

ML

That's right, I believe they say, 'to thems that have got get more,' or something like that. And no, I think the affordability point absolutely is going to be one area of potentially bipartisan support. But the question of how you de-escalate, I think again, that's a topic that maybe we should come back to to see if we can find some people who know how to do that. But you mentioned toddlers and tantrums. So we also have to talk about President Trump and the US election. How will we remember that election and why the result was the way the result turned out? You and I did an episode, we did the immediate reaction, we're now a month later, or whatever, and there's a little bit of time to reflect. It's not yet history, but we're in that kind of interregnum between news and history. What do you think are the messages that this sector, those who are concerned about climate, need to be taking from that election experience before we wrap it up and consign it to history?  

BW

As you say, we did an episode when it was quite new news. The dust is somewhat settling, but I think I go back to what I said before, which is the ability for the US to stay the course with a plan. It's really not clear that that's possible. Every four years there's an upset. And within that, there's a two-year window before the midterms where there could potentially be another upset. So you're talking about very, very short term planning cycles. And I don't think that's a healthy thing. And on either side, it results in, now, in the tail end of Biden, people trying to throw money out the door very fast, which generally speaking, isn't usually the best way of making sure that money is put to best use. And then on the other side, you've got people saying they're going to slash federal budgets by 50% or more to get spending back under control. And again, if you do that, not very sensibly, it can have a big economic effect, because these are lots of jobs. This is money flowing in the economy that could be stopped abruptly, and that will have a follow on effect on the economic health of certain parts of the world, so certain states and cities where there's a lot of public workers who are keeping the economy going. And we saw that with Liz Truss, right? If you do something radical in a short period of time, there can be quite a big knock on effect, lots of unintended consequences. I think the difference is that in the US, at the moment, the general economy, the city, Wall Street, are all very excited about a Trump administration, and so everything's booming. You know, the stock exchange is booming, everyone's expecting deregulation to bring about this American reinvigoration of the economy. And so unlike with Truss, where she did some crazy stuff and the city went, 'No,' here you've got people doing potentially crazy stuff with the city saying, 'Yeah, let's go for it in the short term.' But longer term, I worry about this lurching and the extreme nature of this uncertainty of the period we're living through, and I can't see how that's good in the long run.   

ML

I think you're speaking to one of the core trade offs, or the core tensions of the space in which we operate, which is that the world is getting more and more volatile, but the response to it needs to be infrastructure investment. And volatility and infrastructure investment are not good bedfellows, they just don't go well together. And so when you see China's leadership, and I abhor the Chinese political system, don't get me wrong. But when you see them taking these very long-term, almost centuries long perspectives on China's place in the world, and how it's going to be transformed, and so on. And then you have this ADHD going on in the US, where every two years it's between, as you say, an election, a midterm, or a midterm, and the next election. You get this kind of complete either paralysis or, you know, gung-ho behavior. So instead of moderating the volatility, it's actually pouring gasoline on it. I think that that is just, in and of itself, irrespective of who's saying what. You know, you could have both sides extremely committed to climate change, but changing the policies all the time, that would also be bad. But we've actually got a real whipsaw going on at the moment.  

BW

There are some consistent things that will happen there. One question, I suppose we should acknowledge, if China is the first electrostate, the US continues to be a petrostate. It's the biggest supplier of fossil fuels now to the world, and the sheer amount of affordable gas that the US has to bring to market and potentially to export... I mean, the big question is what will this new administration think in terms of gas? Do we hold on to it and use it to power our economy, or do we allow it to be exported, and potentially see prices rising? But we know there'll be a lot more gas around. And that part of the US narrative does seem to continue whoever's in the White House, fossil fuels get extracted and brought to bear into the market. So if you're in gas, it's good news, whatever.  

ML

That's very clearly going to be part of the next administration: LNG as a tool of foreign policy, and the fact that it cuts against the low-cost energy in the US. Because if you export it, tangentially, you must be pushing up the prices domestically. But it also sets up a really fascinating 30,000 feet big-picture tension. Because you've got China effectively dumping clean solutions on the world, and the US effectively dumping LNG on the world. Now the world could just say, 'Hey, this is fantastic, because we're going to get cheap gas, cheap LNG, and the LNG price is clearly going to come crashing down in that environment. But we're also going to get cheap clean technologies. And I suppose the question is, I almost feel like this ought to be perhaps a play by Ibsen or something. Because if you were a developing country, if you're a global south country, which would you take? Would you take the LNG and become addicted to it forever, or the clean technologies, install them and have an asset forever? Maybe that's the way they think about it, or maybe you just take the cheap LNG, because that's the easiest thing to fit into the existing infrastructure that you've got today. But that fight between clean dumping and fossil dumping, it could be a signature fight for the next five years, through to 2030 or through till the next election in 2028.  

BW

And I think people will take both, right? But what, I suppose is interesting, what does the signal for oil look like? If oil is going to probably be the squeezed commodity out of transport, because the clean dumping that China is doing really points towards transport as the low-hanging fruit that people want to get off. That gas is useful for all sorts of reasons, for industrial heat and fertilizer and power generation. But with oil, it is just transport, and transport is going through such a revolution that I think the future for oil demand is a really interesting question. What does that do in terms of global prices, and will we completely decouple those two commodities, or do they stay linked?  

ML

And I think that one of the worries that I really do have for the US is that if we're going to see four years of pretending EVs are not the future, pouring money back into internal combustion engines, that will end up proving not just a bad mistake, but potentially a fatal mistake.  

BW

Yeah and this may be dated by the time this goes out, but the Biden administration has just issued a waiver to say that it's okay for California to continue to set its very stringent standards on EVs. And that's been done deliberately to try and forestall what perhaps might have happened otherwise, which would have been the Trump administration saying California must cease and desist. And where California leads, other states follow. I think there's about six or seven states who follow the California standard. So that seems to be being shored up in the near-term to try to stop what you're describing from happening, which is perhaps relaxing back into an old era of the good old combustion engine is here to stay, which we just know isn't going to be the case because of the economics of the new system being so persuasively better. And China's brought the cost of batteries down to such a degree now that there's just no argument, right? This is just better cars that are cheaper to run, and the US could definitely get wrong footed in that expansive new China becoming a world dominant car manufacturer and selling to all its neighbors. And the South to South collaboration that they're unleashing means that that ship has sailed and we're moving on.  

ML

Indeed, and that question of whether the Biden administration is able to Trump-proof policies, that's clearly going to be one of the big questions for I don't know whether I should say 'this year,' because it's 'this year' when people are listening to it, but it's 'next year' for you and me as we record. But that's clearly going to be one of the big stories. I was just struck by, I've got to be honest, there was a scoop by something called Project Veritas. They got somebody called Brent Efron, who's an EPA Special Advisor for implementation, and they caught him in a bar talking about how they were going to get as much money out of the door as possible before the Trump administration comes in. And he described it as being like we're on the Titanic and we're throwing gold bars off the edge. And we're talking billions. We are talking $50 billion, I think there's now been $100 billion of grants. So never mind IRA programs of the tax rebates and so on that are locked in. But you know, there is definitely some egregious behavior going on of getting money out into the hands of NGOs and third parties, not even applied to projects, but just into the hands of other organizations so it can't be clawed back. But what do we know about President Trump's likely appointees? Because when you and I spoke a few weeks ago, in the aftermath of the election, we hadn't heard anything. We've now got Chris Wright, likely Secretary of Energy, and also Representative Lee Zeldin, likely head of the Environmental Protection Agency. Now I've looked at Chris Wright's background. He's the CEO, brilliant entrepreneur. He's incredibly charismatic and clearly a very smart guy. He's also, by the way, the business that he led was a fracking services company called Liberty Energy, very successful. But he's also been an investor in geothermal and an investor in nuclear, and has a background, when he was in grad school, of doing work on solar. He accepts everything about climate change, that it's happening, that we're causing it, but he believes that William Nordhaus is right, and it doesn't matter if we get 3.5°C of warming by 2100 and more thereafter... I'm paraphrasing. I don't think he says that it doesn't matter, but that economically, it would be much better if we just let that happen and we focus on bringing everybody out of poverty and providing cheap energy services. So he's a Nordhaus acolyte, when I think it's fair to say, most of the climate world thinks that Nordhaus is way out on a limb and, in fact, dangerously and downright wrong, despite being a Nobel Prize winner about the levels of warming that we should tolerate. But do we know anything about Lee Zeldin? Have you heard anything about the EPA head that's being proposed?   

BW

What you describe, I think, is common to all of these picks, which is, there's not an outright denial of climate change, there's now a more nuanced position, which is, 'yes, it's probably happening, but actually, on balance, it might actually be okay.' And we'll be richer in the future anyway, so we'll be much better if we focus on growth in the near term, and then we'll be able to ride out whatever storm comes our way. And there'll be some benefits along the way, in terms of plants absorbing CO2, whatever it is you want to focus on. But what you described is his kind of interest in a whole range of technologies is correct, right? He's not seen as someone who's only going to be focused on fossil fuels. The geothermal focus has been growing. We saw that in 2024 when geothermal started to come on the scene in quite a big way. Oil and gas executives find it a very proximate technology to the thing they're used to. If it can be done efficiently and affordably, I'm sure it will form part of the plan going forward. And then on nuclear, we can come on to that, but it does seem like we're going to have an all of the above approach and lots of energy being brought to market as affordably as possible. That's perhaps not a bad thing. I guess the question is the associated greenhouse gasses with the fossil element, there's going to be no interest in putting those on the balance sheet.  

ML

And I've parsed a few statements by Zeldin, and you know, he says things like, 'we will restore US energy dominance,' this macho talk that you see. 'Revitalize our auto industry,' which is again speaking to this idea of pushing away from electrification and  going for internal combustion and bring back American jobs. Funnily enough, of course, coming at a time when employment is actually good and the economy is not in the doldrums. But we're going to bring back American jobs and make us the global leader of AI, which we'll come on to. But what Zeldin says, which is interesting, is 'we will do so while protecting access to clean air and water.' So, you know, the kind of very primitive chest banging about getting rid of the EPA is perhaps not on the cards. What we've actually got is much more sophisticated operators this time. This is not, I think, Scott Pruitt, in Trump's first administration. He had these very kind of absurd figures who were talking about dismantling entire departments, but actually couldn't deliver that. Quite obviously. Now it's very much kind of 'everything but climate' is what I'm hearing. 'Everything but climate.' Well, that's kind of interesting, obviously not great if you think climate is the biggest crisis ever, but it's a much more nuanced set of picks. Forget RFK on health and all the people who are just, as far as I can see, designed to obliterate the news cycle and confuse everybody. But in our sector, it seems like it's going to be everything but climate.   

BW

And actually, having the people he has around him. It's a very Californian focused administration. I mean, Musk may be resident in Texas, but he made all his businesses happen in California. You've got David Sachs who is going in to advise on AI supremacy, and I think he's got some sort of roving science brief as well. I mean, these are the sort of glitterati of Silicon Valley who will bring with them a very Californian approach to life, which tends to be, 'We want the best of everything. We want the best air, the best water, the best jobs, the best everything.' It's not cheap, which might be where it falls down and does keep everything affordable, but this is actually going to be quite a Californian-styled form of administration, I think, yeah.  

ML

And the concern I have with that is that these are people who are absolutely committed to the idea that the whole world should simply follow California. So these are not people who've spent any time in the Global South, with anybody who's disadvantaged. I mean, they are simply in California, that is the model. The businesses that work in California are the ones that should be propagated around the world. It's as simple as that. It's a very sort of California-supremacist view of the world.   

ML

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ML

Tell us: 2025 what are we going to be looking forward to? What are we going to see? What are the milestones?  

BW

So yeah, here we are, the start of a new year. And it seems like 2025 has got that feel of being halfway between 2000 and 2050, these years that we've marked out as important. What am I excited about? Well, let's have a quick chat about nuclear energy. Because actually, I do feel like the return of demand for electricity, electricity demand has been sort of stagnant or flat in many parts of the world, and suddenly now we've got these very large predicted increases in demand for electricity, and that is meaning you've got more and more interest in a wide variety of technologies. And there's something of a renaissance. I know we often use that word, but in nuclear, with the demand-side pulling forward plans to invest in nuclear. Now you and I probably have slightly different positions on this. I've had a few conversations with real companies building real things. And there is definitely a shift. You know, concrete is being poured, reactors are being built, and that's in the US. I mean, if you turn to China, there's maybe half a dozen, maybe a dozen reactors of different designs, SMRs, large scale, mid scale, being developed and built. And so real projects are coming to the ground now. Can they get to an economy of scale? Can they be standardized and costs brought down? That's still an unknown, but compared to a year ago, there's a lot more actual concrete and steel being put on the ground into projects. And that gives me hope that somebody, somewhere will crack this because it's not going to be as cheap as throwing up solar panels and putting an inverter and off you go, but what it gives you is a much more resilient long-term infrastructure investment that will be, over time, certainly efficient and effective, because they last for so long and they are so resilient.   

ML

So I think at this point I need to state what my view is, because otherwise we'll get this sort of, 'you're gaslighting me' and all that kind of stuff, but we are not. I think you know my view, but for the audience, I studied nuclear, I very much believe that it's part of the future. I definitely think we should be keeping nuclear power stations that work and that are safe and that are producing low-carbon power at a low-marginal cost. It's insane to be shutting them down. One of the things that's interesting in the German election is that Friedrich Merz, the head of the CDU, who are ahead in the polls at the moment, is talking about potentially, well, he's talking about doing a study to see if two of those that were shut at the end of, I think, 2022, whether they could be brought back. And that would obviously be entirely sensible. Where we differ is in how much it's likely to cost. So the cost and speed issues, where I think it's fair to say you're much more optimistic than me, and I'm much more, I don't know, maybe I'm grizzled, and much more, I don't want to say pessimistic. I would like to think it's realistic. This is hard. I mean, even in China, which is going as fast as it can into nuclear, nuclear is losing market share in the electricity mix, right? That's what the data shows in China, which has absolutely thrown resources at it, by the way, there are hidden costs, presumably all over the place. We don't know, it's not transparent. And yet it's losing market share. So what I also know, and in the deep dive in AI that the audience may have read by now, and if not, they should, but you've not seen Bryony, in that I look at this idea that nuclear is going to be an easy solution to the need for dispatchable clean energy, clean electricity for AI, and there's this kind of consensus that we can get to 60 pounds per megawatt hour for plants that can be built within five years. That's a summary of a lot of stuff that I have read and that I'm reading from that sector. And that's just an act of faith, that's just a religious statement of faith that we could get there. There is no data that suggests that we can get there. In fact, there's a lot of data that suggests we can't get there. So it seems enormously risky. We should put resources into trying to do it, but it's enormously risky to assume that we can do it.  

BW

Yeah, I mean, single predictive costs, I wouldn't put any faith in that either. Because you don't build nuclear because it's cheap. You build nuclear energy because it lasts and because it gives you a strategic advantage if you need it. And if we didn't have nuclear power in Europe, our electricity prices would be a heck of a lot higher than they are. It's because we've got this flexible baseload that was built 40-50 years ago that means we can tolerate these huge swings in production from weather-dependent renewables that we have. And that, plus the hydro, these are assets that you don't build because it's the cheapest per unit. You build it because it gives you a very resilient system. And the whole system has got to work. We've got to keep the lights on, and it's got to be affordable. And that feels to me why people will want to restore their nuclear percentages. That's why they'll want to increase their nuclear percentages, if they find the right technologies. I mean, we can talk about China. The reason the percentage share is falling is because demand is still growing so fast, and it means that electricity is pushing out other parts of the fossil economy, in transport, for example, and so proportionately to electricity, nuclear might be falling, but it's still a really important aspect of why they're able to be an electrostate.  

ML

Bryony, what's happening in China is, yes, demand is growing, the electro state electricity penetration is growing, and nuclear can't keep up because it's too slow. Because wind and solar and batteries can keep up and nuclear can't keep up. And then you know, you say that it's resilient. The thing is this is what happens. This is why I kind of get riled up by the nuclear promoters, because they say things like, 'well, it's resilient.' Well, it wasn't resilient. In 2022, French nuclear fell over. Over half of it was offline. One of the reasons why our electricity costs in the UK  shot through the roof was that, essentially, France was sucking up all the excess power generated around Europe because its nuclear had fallen over. It's not resilient  

BW

No, it is resilient. And look at the dunkelflaute that we've just been through in Europe. Talk about not resilient. If that happens, then everyone's pulling in French nuclear and that study of what happened during the extreme heat is correct, but it's not static. The industry moves on. The industry is now preparing itself for those higher temperatures, and as a proportion of the amount of time of the year that they went out, it was a very small amount. Now no source of power is completely 100% firm, and every single technology has its outages. Now, does that mean that nuclear power is not resilient? No, it is incredibly resilient, because it's totally independent of your weather cycles, which will be affecting every other form of technology that you're relying on. So for me, that's it. It's decoupling weather dependency and keeping carbon low. That's its unique ability to provide for the system.  

ML

Bryony, I'm going to go in here. The French nuclear that fell over in 2022 did not bounce back after a few days. It was offline for months and months and months. It took a long time to bring it back, right? And, what I want to know from you is, how do you use nuclear to compensate for a dunkelflaute, when the dunkelflaute lasts one week. So nuclear as a backup for the dunkelflaute. I would just love to know how that works. I'd love to know I honestly would.  

BW

Ask the Swedes, right? They're having to bail out through using their reactors. They are bailing out Denmark and northern Germany, France is always bailing out Germany. And if it's not that, then it's Polish coal bailing out Germany. So this system has to have a certain amount of redundancy and a certain amount of zero-carbon power that can compensate for the fluctuations. We're not disagreeing about this, and if we didn't have nuclear in the European system, it would be a heck of a lot more expensive and harder to keep the lights on. You would be then calling in lots and lots of small thermal generation plants. Or you'd be hoping that your hydro was full and you've got a lot of hydro. But even the hydro now is showing that it's weather dependent and becoming more unpredictable. So in the context of all of that unpredictability, knowing you've got a nuclear plant there with its fuel on site capable of performing. And they have adjusted themselves to the now expected higher temperatures, plus reactor designs are becoming less and less reliant on water, or starting to use different forms of coolants and different designs that make them more resilient, because you can. You're an engineer, give an engineer a problem and they'll come up with a solution. It's going to be an evolving form of power. No one's going to regret having more of this on the system as we go forward.  

ML

So I was smiling there, because when you say 'you're an engineer, and you can solve problems.' Oh yes, you have to give us money as well, not just a problem to solve. So the two arguments that I like, or that don't push my hot buttons. I like the idea of diversification, right? It doesn't matter. You could have one technology, which is absolutely perfect. You know, we have a huge fusion breakthrough, right? The California bros all turn out to be right, and fusion can be rolled out in vast volume by 2030, and blah, blah. If we have one design or one technology, we still shouldn't put all our eggs in that basket, even if it's cheap and supposedly resilient. It's just wrong. Diversification I like as an argument. And the other argument is that nuclear power, it kind of works if you keep it on 24/7. As soon as you load follow, then two things happen. It becomes much more, even much more expensive, because you're now not getting the full output. But also it hates it, and it cracks and it goes wrong, as we've seen time and again. And can technology solve that? Yes, at a cost, right? Because cracking and thermal cycling is just a really bad thing to do. So the argument that I like for nuclear power is that you can pair it to sources of demand that can be switched off. That might be desalination, or it might be methanol, you know, hydrogen and methanol production. Or it might be refineries and industry, things that you can switch off so that the nuclear, when there's a dunkelflaute, one of the things that always happens in a dunkelflaute, of course, by definition, is the electricity price goes through the roof. It becomes €1000 per megawatt hour. Well, guess what? If you have nuclear power at that point, and if your source of demand for the nuclear power can switch off, you can then sell your power for €1000 per megawatt hour. Fabulous, make some money. But that is very different, because really the credit for that goes to the industry that can switch off, not to the nuclear, right? The nuclear is just working 24/7. It is not flexible, and it's not  providing backup. What's actually providing backup in that situation is demand response in industry, and that's what we should be focusing on, instead of this kind of, 'let's build nuclear because we'll never regret it.' Of course we'll regret it if it's too expensive. Don't be silly. In Australia right now, you have Frontier Economics producing this kind of bogus analysis that says that nuclear will be cheaper, 'all we have to do is stop building wind and solar for 15 years, and nuclear will be cheaper.' And it's just bogus.  

BW

I don't subscribe to any tribe that says, 'do it instead of something.' I said, do it as well. That's when you get less fossil burnt. That's basically it. You do renewables and nuclear, and you squeeze fossil out. That's the ultimate thing. I don't know why... Well, I do know why, because we've got identity politics in Australia as well. If you want to be seen as the strong man of Australian success, you've got to be anti-green renewables, which is exactly the kind of identity politics you want to try and avoid, and that nuclear has got caught up in. That is a regret I think. Should Australia allow nuclear power to be built? Yes. Should it come at the expense of renewables? No. And so it's perfectly possible.   

ML

That's an interesting question, because there is an upcoming election, and the pro nukes are leading 52 — that's the coalition — leading over Labor by 52 over 48. And used an interesting word, which is, should they be allowed? So there's a ban on building nuclear in Australia right now. Should they be allowed? Should they remove the ban? I think absolutely, yes. I'm all of the above, right? All of the clean of the above, right? Don't get me wrong, I'm taking an extreme position because I'm pushing back on some of the things that you said. I'm all of the above, as long as it's clean. And I think that Australia should remove that ban, it is an absurd lightning rod for opposition, for this tribal politics. So I believe they should remove it. But I also believe that if economics has anything to say about it, then Australia, with its extraordinary resources, in terms of just every clean technology that you could hope for, from hydro to wind to solar to battery minerals to even natural gas to fill in a few percent — if that's going to be what you need to do, to do backup with a couple of percent of unabated gas, so be it. The chance of nuclear economically being the answer for Australia, I consider to be nil.   

BW

I wouldn't disagree, but what I would say is that he's been incredibly clever, Dutton, right? Because one of the things I work on, and I am passionate about, is the repowering of thermal assets with alternative sources of heat. And that could be advanced geothermal. It could be heat stores, thermal-electric heat stores. It could be reactors — high temperature reactors are particularly well suited for this reuse of existing assets. So he's kind of taken that concept and said this is what we should be doing in Australia. We should be taking out the thermal assets and replacing it with  nuclear, which I happen to think is a great idea. Now, does it make any sense in the Australian context? No, because you've got vast tracts of land and natural resources, as you just said, where you can get the same number of electrons a lot cheaper and faster if you do it with wind and solar. But it appeals because it actually is a very sensible thing to do. Don't throw out that asset that you've already built and rely on and has employed lots of people. Repower it. And actually, that's what I want to see happen in China. I want China to say that, and for it to take out its coal stations and put nuclear in. And that will be a massive game changer. If China decides to do that, then their position as an electrostate becomes unassailable.  

ML

That's actually also an area where I think maybe you and I don't agree, because I actually don't care about this business that we have to repower to preserve the value of the asset. Listen, if somebody invested in something and then they use it for a bunch of years and they get a return, or they don't, frankly, Schumpeterian economics, I don't care if they've made a bad decision. That is their problem. There is nothing so substantial about stranded assets. It doesn't threaten the financial system. It doesn't threaten people's pensions. The idea that we should be optimizing... or that the solution to climate change should be dependent on whether we can or can preserve the assets of some subset of investors who were too stupid 10 years ago to think they should be doing something different. Call me out, I just don't buy into it.   

BW

Yeah, well, that's because you're not a politician. Because essentially, what happens in the conversation in China isn't just about what's engineeringly optimal, or what's even economically optimal. There are power blocks within any form of government. And the thermal asset owners and the coal industry within China has a huge amount of sway. So when it comes down to, you know, it happens everywhere. The incumbency can have a chilling effect on anybody who's coming in to challenge it. So the reason I like repowering the coal assets as a concept is because it joins up a powerful force within the Chinese government and another potentially powerful force, which is nuclear and says these two can go forward together, rather than in opposition to one another. And I didn't pick it up at the time, but you mentioned why is China not increasing its market share (of nuclear in electricity)? It's because if they did actually really lean in on nuclear, they know that it would have a destabilising effect on the very people who own those assets and the coal mining regions of China, and therefore they are deliberately slow peddling at the moment. Will they take their foot off the brake and do it properly? That's the question for me. And a signal of that would be, 'we're going to scan the country, work out where we can put these things inland, not just on the coast.' And if China shifts into more inland nuclear reactors, then I will sleep more easily if they do that.   

ML

By the way, there was a great episode with Professor Qi that you did, and I really enjoyed that one. So we could put a link in the show notes about Repowering. My worry is there's actually a resonance of that argument in the German elections in February, which is around e-fuels. Because one of the big arguments that I get hit with all the time on social media about e-fuels is they preserve the value of the assets of all of these vehicles that we've got. We'll do e-fuels, they're a drop-in they might be more expensive, but they preserve the value of the assets. And it's like, listen, by the time you build the e-fuels plants and the renewables because, of course, they're all German, so they only want renewables. They don't want e-fuels made with anything else. It's got to be direct air capture and purest of pure. By the time you build the renewables and then the plants and get those into the car, your car is a 40-year-old rusting wreck in some scrap yard somewhere. There's absolutely nil chance that you will be using e-fuels in current vehicles in the fleet today. If anybody's got a car and you are thinking, don't buy an electric car, because e-fuels will be able to drop in anytime in that car's lifetime, please wake up. Please wake up. It's not going to happen. Bryony, we're reaching that point, I believe.  

BW

Well, we haven't touched on... you mentioned e-fuels, and I just wanted to bring in:We've got a COP in Brazil, haven't we? Coming up in 2025, we'll see perhaps the return to something like normal COP proceedings. Although is there such a thing as a normal COP? But it will pass to Brazil. There'll be a lot of focus, I'm sure, on other aspects of the transition. But one thing I'm excited about is, if Brazil electrifies its transport fleet, it will release quite a lot of biofuels, essentially, that are currently being blended into the transport system in Brazil. What's going to happen to those biofuels, could they be then used to go into aviation or into another form of long-distance transport? That feels to me like it would be an amazing confluence. If Brazil realizes it's got all this cheap electricity, it should electrify its transport system and whatever it is using for bioethanol, it displaces that into the aviation sector. I'd love your thoughts on that.   

ML

So I've been fairly open, and something I've said over the years, that all the biofuels we currently do, and of course, Brazil is absolutely central to that. They're all wasted. They're all doing something that would be easier done by electricity, and they all become freed. And actually the calculation is, if you did that, all current biofuels, biodiesel and bioethanol, which can all be turned to jet — it's very complicated, and there's a bit of loss, but you can do it — that would already be enough to provide about a quarter of the world's jet fuel. So when people say 'biofuels nah, forget it'. No, actually, even though we've not developed biofuels fully, in fact, we could do a quarter of jet fuels if we got focused. And so that is very exciting. I'm not sure if it's connected to COP. And by the way, we can do the same with biogas into shipping fuels, which is another whole episode. COP, I didn't go to Azerbaijan, you didn't go to Azerbaijan. There was a fantastic episode, I think, with James Cameron, our editorial council chair at Cleaning Up, where we talked about COP and the future of COP. So there is a COP coming up. I will go, but I'm not sure what I'll find, if I'm honest. Because without the US and with Europe still mired in stagnation, making promises to invest hundreds of billions, without a plan for a low-cost, affordable transition itself, it just feels like we may be in some kind of surreal space that's actually not worth attending. I don't know, what do you think?  

BW

I mean, I'm quite cynical about COPs in general. They're useful and helpful for lots of people to meet and discuss things. The actual negotiations don't have any content really left in them, because we've given it all away. You know, we've said we're all going to do NDCs. They're all voluntary and blah. We will meet every now and then check how we're doing. But the mandatory nature, the rule of law that James Cameron loves has been thrown out the window, let's be honest. So maybe that's just the way things are. Multilateralism, across the board, is suffering. We're not in the era of there being enough urgency for us to do multilateralism. You know, it's all bilateral now going forward. So perhaps that's just the phase we're in. But will it be an interesting point? I mean, China will go and China always sends a huge delegation, makes a massive, big show of being there. And a lot of deals will be done, and it will be a lot of South to South deals. I think in the absence of American leadership and European chaos, South to South are just going to get on with it, I think. And that will be a good place to go and see that happening in real time.  

ML

So in the episode with James, I discussed a piece that I wrote called Ya Basta at the Durban COP about three, four years before Paris, after Copenhagen, before Paris, where I said, 'Forget it, this is pointless. Stop, it's embarrassing. The cop process has failed, and those of us working on climate action, it's not helping us, it's harming, so please stop.' And then, of course, we got Paris. So maybe it's always darkest before dawn, and maybe there will be a resurgence. I don't know, maybe James will lead some kind of Spartacus-style return to authentic COP values. I hope so. But we will be following, these are some of the stories we'll be following through 2025.  

BW

I was going to say that one of our former guests, Tzeporah Berman, who you brought on the show, and I was really delighted that you did. Because this is perhaps an unexpected voice for you to feature, where the call is for a non-proliferation treaty on fossil fuels. That's what Tzeporah is campaigning for. Now, arguably, that has taken a massive step back in that, as we just discussed, multilateralism is going to struggle. But just this last week, we've seen both Pakistan and the Bahamas sign up to this treaty, and enough small nations are now probably able to sit around the table that they could themselves start a negotiation around this concept of an orderly transition from fossil fuels. Now I'm not saying that's going to happen overnight, or it'll be a runaway success when it starts, but it's just the beginning of the negotiation that says we're calling time on fossil fuels. And then the US, Saudi and Russia will be the big petrostates who will hold out. And it will be difficult, as probably will India and China because of their coal. But it's an interesting moment, isn't it, when the small nations are saying, 'We're done, we don't want this anymore.'  

ML

Yeah, just Tzeporah Berman episode. It's interesting, you said she's a surprising guest. Tzeporah is an old friend of mine from, I don't know when during the process, we met. So unexpected is nothing on clean energy. We should have the most unexpected people. That's part of the formula. But also, I was really struck by that episode, and again, we'll put a link in the show notes. She was talking about moving nations beyond fossil fuel, the fossil fuel non proliferation treaty. And shortly after that, I had Fatih Birol, the head of the International Energy Agency who, by the way, is in the crosshairs of the Trump administration. And I hope he manages to navigate that, because we need the IEA. But he was talking about, effectively, the identical outcome, but in very different language. And I'd love to get those two together for a conversation.  

BW

Yeah, absolutely. But as you say, Fatih himself may well fall victim to this resurgent America-first, fossil fuels-first view of the world. So we'll see.   

ML

I would trust Fatih to be able to navigate and to demonstrate the value of this incredible institution, the IEA. And just as Trump 1.0, there were people who wanted to get rid of all sorts of things without understanding what they did. And I'm guessing that Trump 2.0, hopefully, will be more nuanced. And if it is, then I'm sure the IEA and the extraordinary work that he and his team do would — maybe not in its entirety — but would survive and prosper. But on that note, we've got a lot of homework, a lot of stories to cover next year. It's a pleasure meeting with you. As you can see, my Christmas cheer is exhausted, and that means we have to bring to an end this episode of Cleaning Up. So we'll see our audience, this will go out on January 8 next year. So if that's the day you're watching this, thank you for watching immediately, and for Bryony, I can wish you happy holidays.   

BW

Thank you, Michael. Listen, another enjoyable conversation. Looking forward to many more in the coming months. And as you say, we're always going to be featuring surprising guests, surprising ideas, and hopefully taking a non-tribal view of this transition, because we are members of many tribes. It's been a real pleasure working with you, Michael, thank you. Have a fantastic holiday.  

ML

Thank you. And for the audience, please join us at this time next week for another episode of Cleaning Up.  

ML

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