Trump vs The Transition, The Pope’s Climate Legacy & The High Price of UK Electricity — Ep205

Michael Liebreich  

Hello, I'm Michael Liebreich.

Bryony Worthington

And I'm Bryony Worthington.

ML  

And this is Cleaning Up.

BW  

So Michael, here we are kicking off Season 15 of Cleaning Up. Where are you? The background doesn't give much away. This yellow blank wall, where are you? 

ML  

So I'm actually in a place called Fougerolles in the east of France. A friend of mine runs a kind of hostel, it's actually an abandoned mill, so it used to be a flour mill, and we're in this valley, which is just full of water and teeming with life. It's kind of exciting. I might actually put a link into the show notes, because it's such an amazing place, and they run this sort of retreat, and it's all terribly spiritual, with healthy food and no alcohol. 

BW  

I was going to say, where's your customary glass of wine? It's not with you.

ML  

No, I've got a cup of some kind of herbal tea.

BW  

Well, I'm here in California. I'm still in California, despite having said that I would leave if certain events occurred in world politics. We've decided to stay in California a bit longer. You know the country is going to be made great again. So why not have a ringside seat? 

ML  

Well, there's certainly lots of water under the bridge since we had our last conversation to kick off season 14. I actually reviewed that preparing for today, and I just thought, my goodness, it feels like so much has happened. I think it was Lenin who said that there are 'weeks when decades happen in politics, and then decades where weeks happen.' This was definitely a season where a decade, or a couple of decades, seemed to have happened, if you go back to what we were talking about, it was only three months ago at the beginning of season 14.

BW  

Yeah, that does feel like a lifetime ago, and it's quite extraordinary how fast we've gotten to a point where, yeah, I mean... we really get sucked into the vortex, especially living here, of following the news almost on a twice daily basis to see what's happened. And yeah, in those short three months, so much does seem to have happened. But it's gotten to a point where already people are talking about a constitutional crisis, and everything's burning so hot it just feels like something's going to happen. It can't carry on like this. It's too exhausting for everyone involved. And there are these big constitutional questions now around how does the constitution manage a president that seems to be so intent on pushing through an agenda that may not even be legal. And what are the checks and balances? It's a really testing time at the moment.

ML  

Clearly, we're going to spend quite a bit of time talking about those things, but I do just want to hit the pause button for a second, because this morning, when we woke up, we heard the news that Pope Francis had passed away. And Pope Francis, he's been Pope since 2013, and was quite a big figure in climate debates, perhaps more so seven or eight years ago. You'll remember there was Laudato si', which was his — I'm going to use the wrong word, so I don't know if it was, I think it was a proclamation or, I'm not sure what it was — it wasn't a bull, I don't believe — but he was a climate figure, and at various times he's convened groups on the climate. I guess it's very much too early to know whether this might signal a difference in direction of the papacy or whether the new pope will be equally engaged on climate.

BW  

I mean, he was a 'Climate Pope,' if there is such a thing. He famously retrofitted the whole of the Vatican City with LED lights. And didn't just talk, he actually did introduce changes. But then, of course, he did issue this statement about climate, which was important, because there is a tendency, I think, perhaps, for some religious groups to think, 'well, you know, this is all ordained, we shouldn't worry climate change, it's just not something to be concerned about.' And he actually said, 'No, we should view this as God's creation that we are now imperiling, and therefore it's an important thing, as a religious person, to care about the Earth and not just leave it to some sort of ordained future.' So that was a big, big thing, and a lot of people took notice of that. And of course, there are so many Catholic people in the world, and talking to people from a new perspective, not just from a technocratic or scientific perspective, but something that had a moral dimension, which I think was really important.

ML  

I think it is very important. I love Laudato si' because it meant that I learned the words for long duration storage and solar photovoltaics in Latin.

BW  

But Michael, can you remember them?

ML  

I can't remember them anymore, but I'll now have to brush up, given the news cycle. But I think you're right, what is important is that it is tempting, particularly for those of us who work on this all the time, to take a very wonkish, technocratic, cost-benefits view. And to take a step back and say, 'No, it's just wrong to take that view. We should just deal with this because it's the right thing to do.' That's very important. That's an important point. We've got an awful lot that we need to get through. We've gone from the passing of the Pope, for which condolences clearly to our audience, you know, the Catholics amongst our audience. But I think anybody who's got a spiritual view or thinks about the philosophy of this. But let's come back to the US. We're just going to have to talk about some of the things that are going on. We're approaching the first 100 days. We're not even there yet. And as you say, we're already starting to hear about, 'is there going to be a constitutional crisis?' But in preparation, I listened to our conversation three months ago, and you said something very interesting, which was that you drew a distinction between the Liz Truss era — if you can call 40 or whatever days an era in the UK — where basically the capital market said 'it's not going to happen,' and she got booted out. And you said, but in the US, you've got the capital markets going, 'Oh, wonderful deregulation, and they're going gung ho on this, and there's a mini boom happening.' And that was only three months ago. What does it feel like now in the US? What do people think about the economy right now and how're the markets doing? 

BW  

I mean, it is incredible. There was this moment where there was this feeling that Wall Street was on his side, and then he came out with this very, very poorly thought through tariff policy, which sent the stock exchange in the US and globally plummeting in an extraordinarily short period of time. And most importantly, the bond market started to get scared. And that bond market signal seems to be the thing that made him pause and put a pause on those broad based tariffs and famously roll back. But still then doubling down on China, which, of course, the really big thing is what happens with China. So the mood, I would say, is not at all positive in the sense that uncertainty makes it very, very difficult to make investment decisions, hiring decisions. I'm sure there's probably almost a freeze on people making big calls as to whether they put their money into the US, because of the capricious nature in which policy seems to be being made virtually all through executive orders, bypassing Congress. And of course, this is a very litigious country, so virtually everything he's doing is going to then be sued by various parties that have been wronged, and then countersued and more suing. And it'll just gum everything up. But going back to the Liz Truss comment, yes, the markets did speak, and yes, they did cause a correction, but he's still there, and it's not clear that you can, like in the UK, quite quickly it was, 'all right, we need to get rid of this and move on.' That isn't going to happen here. We're stuck with this for quite some time. And I think that's the difference.

ML  

Main Street US has had this incredible shock, and we've seen consumer sentiment on the economy just plummeting, and business sentiment and jobs and hiring, and we're starting to see the data come through, the indicators coming through in the quarterly, monthly, etc data. Take a step back from CNN and MSN and all the kind of the liberal media that's going to be saying, 'Oh, it's all terrible, he's already the most unpopular that he's ever been and such.' Main Street US: are they generally happy with, I'll call it the other stuff, the deportations and the kind of the culture wars side of it. Because you also see stories of 'promises made, promises delivered.' And in fact, apparently, the MAGA movement is all upset because the Department of Justice hasn't opened lawsuits against all the people who "persecuted" — I'm using air quotes — President Trump last time round. So where is Main Street US in your estimation?

BW  

So, I mean, it is difficult to tell. If it were just the tariffs, then that just creates an era of uncertainty. But when you're looking at the more fundamentals of consumption and the things that drive the economy, simultaneously they are making the US feel like a very unwelcome place. So tourism is down, or people going to US universities are probably down. Being able to hire cheap labor is no longer a thing. They've made it very clear that they want to kick out all of that cheap labor that's been providing a lot of the services that the US doesn't want to do itself. So it's uncertainty on so many levels that I think... I mean, I haven't looked at the latest statistics, but you've got people being fired from federal agencies en masse, which is also creating a drag on the economy, people being unemployed. I mean, Trump came in with record high employment, but it feels like that's not going to be the case very much longer. So all of the signals you would look at, you'd want consumer confidence, you'd want a rising population, and you'd want the US to be open to people coming here, investing here, and visiting here. All of those things have been undermined in quite a short space of time. So I don't think business confidence is there.

ML  

There was this incredible... I think it was an Economist cover in October last year that said the US economy is the envy of the world. And now there's the cover of, I don't think it was The Economist say, saying 'are we due for recession?' So on the business side, the reason I switched though to Main Street USA is because that will determine whether he has enough time to try to push these projects through, which you refer to, which might end up creating jobs. Because at the end of the day, there are a lot of companies that are saying, 'well, we can't ignore the US market, and if there are going to be tariffs, we are going to have to manufacture in the US.' That might take 2-5 years to create a factory, but he's not going to get 2-5 years if Main Street US has turned against him. They can't boot him out like Liz Truss. But it does become impossible to operate in the teeth of popular resentment, without becoming super authoritarian.

BW  

Yeah and there's a few things that haven't been worked out yet. So we think the IRA subsidies, which were actually attracting investment and getting projects built, are going to be gutted. And the details of that haven't come through yet, but we do know that, you've said to me that the big story about the offshore wind farms being canceled, even after they've been licensed, gone through all of their legal hurdles, and they're just about... The tearing up of contract law has a chilling effect as well. Suddenly just because of the opinion of a select group of people in the White House, you can have a project that you're expecting to bring money into the US, homegrown electricity from the offshore wind resources not tapped yet, suddenly being ripped up and being stopped. That's having an effect. 

ML  

So this is Empire Wind, which was fully permitted. And in fact work was ongoing, and it was due to start producing electricity I think either later this year or 2026, and suddenly its federal permit is being removed, which is just extraordinary. But there's other examples of cancellation of grants that have been fully awarded. In the last season, I spoke to Jigar Shah, who was the head of the Loan Programs Office, and he was confident that the commitments that have been made by the Loan Programs Office, would not be pulled back, that those commitments would be honored, because he said, 'The US just needs electricity and needs energy and those loans were going to produce more. And he was confident, therefore that — in a sense, rationality — the need for energy, would win. But rationality would say, 'Well, if you've got a nearly built offshore wind farm, a big one, then you finish it.' So, I suppose it's this kind of vindictiveness and lack of rationality which really sends a chill up the spine of investors. I just don't know whether,as I say, Main Street America, the MAGA movement would just say, 'wind farms they're wrong, we should stop them, job done, who cares about the legal finessing of it, they'll figure something out.' 

BW  

I mean, this is it. Ironically, whilst attacking the states for taking so-called ideological positions on climate change, their ideology is 'we just don't like wind.' Because remember Donald Trump first fell out of love with wind because of his golf course and the fight that he had about the views being interrupted. And he lost that fight, and he's a man who holds a grudge. So the wind industry now is just on his list of things he hates. And when he passes executive orders saying 'we're in an emergency and everything's got to be fast tracked', he's silent on wind and solar, the cheapest forms of electricity that the US has available, that could be built the fastest and promotes instead a set of technologies, including trying to hold on to coal stations by removing environmental regulations that are protecting the US public from pollution. It is based on an ideology and it feels like it's very personal. Some of these things that the executive orders are a rag bag list of things that occur to Donald Trump as a priority. And that's what's unsettling.

ML  

Let me push back. I need to do this carefully because I don't want the casual listener to think that I'm a pro-Trump MAGA supporting American. Well, I'm certainly not American, you can tell from the accent. But we need to be careful that we are not just speaking from our priors, from our prejudices. Because I suppose the question is, 'is there a world where there is actually a boom that results from this?' Yes, it might be polluting, but it is cheap energy. And the US does have cheap energy, and you do get factories rebuilt in the US, and you do get country after country lining up to pay obeisance to the new king, the new emperor, and you get a fantastic American decade that results from it. Is that a plausible scenario? Or does that run so counter to our priors that we can't even consider it?

BW  

You know, to be honest, if it was being done in a way where you thought, oh yeah, wow, there's an executive order that's really going to, my favorite topic, get the US building nuclear again, and do that in a way that would be actually a new era of matching what China's doing in terms of bringing in new reactor designs and understanding that there's a value in having firm, clean power. I mean, there's geothermal as well, right? We're going to be having a conversation with Jamie Beard from Texas, who's single handedly promoted geothermal, almost got it on the top table of discussions. And in the executive orders, they talk about geothermal as being one of the things they want to see happen. But do you get the feeling that they're actually going to see it through, that it's not more than just performative. These are things we like, but unless you're actually going to then come up with a lever that changes the economics of these technologies, and that was what the IRA was there for. They're certainly not going to impose penalties. It's going to be an incentive based program. So until we see what they're going to do with these tax incentives, which in the US is the preferred way of making things happen, simply stripping out environmental regulations isn't going to cause those projects to go ahead. And I fear that there is definitely truth in what you say. The American energy prices are, generally speaking, quite low. And we also have to take into account that when I say things like wind and solar are the cheapest, increasingly now, as they're getting to higher penetrations, you are seeing more costs coming on from storage and from transmission requirements for settlement that's needed, dynamic demand needs to come in. They're a little bit behind on all of that, and that won't happen for free. There's going to have to be investment in making those flexibilities happen. So I'm definitely not saying there's not more that needs to be done. I just don't know that the DoE as it's constituted, plus the way that Trump is conducting himself, without using Congress, going straight through with executive orders in a collision course with the States, is going to actually result in an unlocking of what they say they want, what they purport to want. And then actually, when you look at what they're doing, really, it seems to be about tax cuts, which is increasing the national debt and tax cuts for the type of people who don't then keep the money flowing through the economy. Never bet against the US is a pretty good maxim, but we're in extraordinary times, and I just don't see the detail and the depth of policy that makes me feel confident this is going to actually result in what they say they want.

ML  

Yeah, I tried to make a convincing argument for a US decade emerging out of this, but it is very, very, very hard to see. Apart from, I think, as you mentioned, geothermal. I've worked with a company called Eavor, a global leader in closed loop. Actually a Canadian company that operates in the US and actually got great momentum in Europe. I would love it if geothermal really got a big boost from this. I would even love it if they could build some nuclear power stations, even though — you and I are not going to do nuclear today — but it is absolutely clear that they would be very expensive, more expensive than fixing the barriers to getting lots more wind and solar onto the system. But you know, I just can't make that convincing argument, particularly if we see the bond markets and the interest rates going up, because that won't just hurt wind energy. We know it hurts wind. It will hurt solar a bit less, because solar is so much cheaper. But it will hurt nuclear, because it's all upfront spending. It will particularly hurt nuclear. In fact, it will also hurt geothermal, and it will hurt the general economy. So it's very hard to see. And you know one thing that is extraordinary, I come back to my question about, 'How does Main Street USA see this?' Because what we don't see is the words 'humiliating climb down.' What the President has done is made these executive orders, made these extraordinary inflated tariffs against this, and tariffs against that. And then, actually, he's very quickly, within days, had to row back. And I don't really understand why the media is so supine, I guess is how I see it. They don't say this is a humiliating climb down. When you say you're going to put tariffs on Canada and you don't follow through, it's a climb down. There's no question it's a climb down. But they won't describe it as that. They're like, 'oh, there must be some master plan. It's a brilliant tactic.'

BW  

Yeah, that we all haven't understood the Art of the Deal, apparently. Ultimately, what it comes down to, and we talked about this in our episode last season, is it's all about China, right? Because what the US is doing is picking an old fashioned way of making America feel good about itself, which is othering — finding a villain and blaming all of our woes on somebody that isn't us. So in this situation, it's all China's fault — China's done this to us, and we're going to get our revenge. Again that doesn't work in an interconnected world. Now if you'd done that 20 years ago, maybe you could run that argument. But now the horse is well and truly bolted, and perhaps we shouldn't go down this rabbit hole again. But what we talked about in that first season opener of this year was the idea that China's taking a different approach. It's informed by science. It's massively invested in research and education, and it's basically trying to dominate the future industries. What we see Trump trying to do is hold on to the old industries. And you know which one's going to win out? There's still that framing of the petro state, or the fossil state, versus the electro state, which is where China's headed. So that's the big theme. And rather than acknowledge that and take a long view. We're just this very tactical, populist, they're all evil, it's us versus them, we've got to be strong, we'll be tough. And actually, it feels a little hollow.

ML  

So I will pick up on one thing. I think that with China, to say that they've just been science driven, I think is, I suspect you would agree, there's a bit of an elision of a whole bunch of other reasons. I think they've taken this route towards being the electrostate and dominating it because they don't have the fossil fuels.Yes, of course, there's climate change, but they're not doing it for climate reasons. They're doing it because otherwise, their balance of payments and their dependence, their resilience would be absolutely shot. If they had to achieve their economic growth based on importing oil and gas, then that would be terribly fragile. And they also see the geostrategic... they just seem to be so much further ahead in understanding the interrelationship. So we've got to talk about rare earths, because yes, there's this tariff tit-for-tat, but there's also the fact that China dominates the production of rare earths. And without their rare earths — they don't just go into electric vehicles, which the Trump administration clearly hates and wishes would go away — but they go into things like all of those GPUs for AI. So all of the chips that go into the IT sector do not work without rare earths. Nor do, by the way, your missiles, or your golden dome missile protection system that you want to roll out, or any of the above. Nothing happens without rare earths. What I don't get a sense of is whether there's anybody within the Trump administration who actually understands that fragility and that exposure. Or will there be another humiliating climb down vis-a-vis China? Because there's a realization that without rare earths, the US economy, I don't know, is it three months, six months, nine months or a year, but it's not longer than that, I don't think, grinds to a halt. 

BW  

There's a huge amount of speculation about this. And actually, on the supply chain side and on the minerals, especially, there is a feeling that the previous administration had been too complacent, and that actually it is important to have diversity of supply. And there are deposits in the US. I haven't looked at it precisely, but I suspect they correlate with areas of outstanding natural beauty that happen to be federal land or national parks, or there'll be other reasons why they haven't been exploited.But you are starting to see investment into lithium and copper mining and I don't think that's a Trump thing. I think that's been happening through Biden and now here to realize that you need to diversify and not be so dependent. And it is a tension, because sometimes there is going to be, as we talked about, litigation. If anything changes in the US, there's always gonna be someone that it affects. And the way things are set up is that you can object to that. So will that happen fast enough? I don't know. Certain states are certainly pushing ahead, and there's an acknowledgement that it's a problem.

ML  

It's very difficult to develop an entire supply chain, not just the extraction, but also the processing. And part of the problem is it's actually a tiny industry. Javier Blas, on Twitter, he put out the data that says it's something like the US imports $170 million worth of these very, very rare earths because there's only such tiny amounts needed in any component. Now, of course, the US imports a lot of magnets and a lot of chips from Taiwan that have got those rare earths in them, but the actual size of the industry is minuscule, which is why, of course, it's very difficult to get capital formation around it in the US. And China, has, to a certain extent, just dominated the processing through environmental dumping. They've just been processing away, and using approaches that we just couldn't do in Europe or the US. They're just too damaging, too polluting, too bad for the health of the workers in the factories. So there's this kind of understanding that it has to change, but there aren't the actual concrete sort of sausage making steps of saying, fine, I mean, if it's a tiny industry, it doesn't matter if they cost five times as much or 10 times as much. We'll do it with environmental protections, fine. But we don't have 5, 7 or 10 years to develop those deposits. And by the way, it brings us to another really interesting set of developments currently, which is a lot of those materials are available, and possibly even more quickly available in Canada, in Australia, in Latin America, even in parts of Europe, and certainly in Africa, and yet you've got the tariff wars against the very sources of the things that you might need to replace the Chinese supply. 

BW  

I mean, that's the other thing, right? That there was a sense in which North America, with its NAFTA agreement, had understood that there's strength in collaboration with its neighbors, and that what the US can't do, it can perhaps get from Mexico or from Canada, which has different demographics, different geographies. But what does Trump do? He picks a war with his neighbors, rips up the NAFTA agreement that he himself negotiated, creates all manner of uncertainty, and interestingly, then changes the political dimensions in Canada. We should talk about this. We've got a new prime minister, a former guest on cleaning up, and that's now being chalked up to the Trump effect.

ML  

Let's just be precise couple of things. It wasn't the NAFTA agreement that is being torn up now. Because it was actually the Trump replacement of the NAFTA agreement. That's just for any listeners trying to piece this all together. And we don't yet know the outcome of the Canadian election, so Mark Carney took over. You had Justin Trudeau, who was trailing by, I think it was 25 points trailing Poilievre in the polls. And Mark Carney is now ahead in the polls, largely because of two things I would say. There's the Trump aggression against Canada, but I will be fair to our honored alumnus of Cleaning Up — I can't remember which episode number, we'll put it in the show notes — he has played it very deftly, that handover. He has created clear water between himself and Trudeau and very strongly tapped into Canada's feelings of the need to be independent. And it's kind of the Great Canadian culture of self-reliance and being an independent and also a collegial nation, he's done really, really well. He's done one other thing, though, which I want to know what you think about. He's canceled the carbon fee and credit system on individuals. He's left the business carbon tax but removed the individual one. And I'm kind of gutted, because if carbon pricing was ever going to work, or carbon tax was ever going to work, a fee and dividend system was the only way to do it, where you taxed everybody for what they use, but distribute it on a per capita basis, so that it's not regressive, so that the less well off get more coming in from the carbon tax than they're actually paying. And so if it's ever going to work, that's how it's going to be done. And surely this is the death of carbon taxes? Are we going to see people stop talking about them because even in Canada, even when they're done as a fee and credit, they are clearly, politically, untenable.

BW  

Yeah, one of his first acts of becoming Prime Minister was to cancel that retail tax and it is a sign that he was signaling: I'm different from Trudeau. I've got a different set of objectives. I'm signaling that I understand the plight of Canadians who are feeling the pinch because of rising inflation and cost of living. And he took it off. Now he's kept it on industry. Of course, once you give a little you then are opening up — a bit of the defenses have been opened. So of course, now he's going to be attacked on the industrial carbon pricing, and they won't stop until all of it's gone. But at the moment, he's holding firm on that. I mean, personally, I don't think it is on the individual to try and change their behavior, to change the energy system. I think it has to be done upstream. And I'm not, having spent a long time thinking about carbon pricing, carbon regulations, I think allowing new entrants into incumbent markets, or forcing new entrants into incumbent markets, giving them the incentives and the certainty they need to grow, is a more direct way of getting systemic change than broad-based taxes or broad-based carbon markets, which have proven to be quite slow and very politically unpopular. So I'm not that worried about this. I'm worried that, having given ground on those so quickly, he's going to be on the defensive now on any climate measure. But then he also talked about adopting the Obama, all of the above energy strategy, right? We're going to try to bring about federal investment in electricity transmission. Try and think about electrification more — makes complete sense for Canada with all of its hydro and nuclear. But you know, they're not going to try and get off the oil tar sands, which are so egregious and environmentally damaging. It's going to be an all of the above strategy.

ML  

Cleaning Up is brought to you by members of our new Leadership Circle: Actis, Alcazar Energy, Davidson Kempner, EcoPragma Capital, EDP Portugal, Eurelectic, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live, that’s cleaningup.live. 

BW  

I want to just talk about the other neighbor to the US as well, the Mexican situation and Claudia Sheinbaum and what she's doing. Have you been tracking that?

ML  

Well, I haven't, but she's a really interesting figure, because she is an actual climate scientist who's gone on to be president of Mexico, and seems to be playing this whole situation fairly deftly. That's the only observation I have, but perhaps you've been tracking it more. Do you know Claudia Sheinbaum? Have you met her?

BW  

I don't, no, but I'm full of admiration for someone with that pedigree. And you know, it's a difficult time to be a prime minister of a neighboring country to the US with all the political connotations that come with that. But what I've been looking at is some of her statements on energy and transport, and it does feel like you do have a level of government engagement, government control. You know, she said things like, 'the government of Mexico is going to bring forward a cheap, affordable electric vehicle for the masses, so we're going to try and get it into a price point that everyone can afford.' So electrifying transport with active government investment seems to be on her agenda. And electrifying rail, putting in high speed rail to connect the cities. Then, of course, making more use of the solar resources that they have. They've been very, very slow, relatively, to get onto the solar investment boom, whereas other countries, like Chile, and other Latin American countries have gone further, faster. And even with wind as well, neighbors have done it better. So she seems to be positioning herself in a position — like many countries — where they're realizing the affordable energy that they could benefit from will also make them more energy secure, and they won't be reliant on importing gas for electricity, which going forward is likely to be volatile. I think something like 50% of Mexico's power comes from gas that's imported from the US. Now that might be cheap in the short term, but when you're starting to see all of this geopolitical uncertainty, your own home-grown solar might look a lot more attractive. 

ML  

Yeah, as a good conservative, I'm not sure that I agree with the idea of state investment in car companies to produce cars. I suppose it's the Mexican — I'm not sure how you would say Volkswagen in Spanish — but that doesn't feel like the right solution versus to be quite honest, just inviting some Chinese BYD to open factories, or whoever's got the right model strategy. But what is clear, and I've been doing this for 20 years, and you've been doing this for as long or longer, is that for all that the news can be terrible coming out of the US or wherever, there are always these examples of countries that just go, 'yep, this is not that hard.' We decarbonize electricity. We know how to decarbonize transportation. We know how to decarbonize heating, and we know how to decarbonize half of industry, and that's kind of 80% of the problem. And whenever things are really dark and dismal, there's always a country somewhere that's just getting on with it. And I will say it was the UK for quite a long time, but we've got, at the moment, this huge problem of electricity prices. And I've got to be honest, I'm not seeing a plan to get those electricity prices back into the affordable zone. Because it's marvelous to be decarbonizing faster than everybody else, but not if you've got the most expensive electricity and the most expensive heating. And really I'm not seeing the plan to deal with that. 

BW  

I can't stop also obsessing about the UK transition, and you and I have spoken about this. I think we're on the same page here, where I'm not convinced that focusing on getting to 100% clean electricity is a sensible strategy. I can see how it will potentially poll well or feel like it's somewhat like an ambitious thing to put some clear water between you and some other parties, but in practical terms, I think that just loads on costs when really the focus should be on other segments of the economy. So I worry about that.

ML  

Yeah, and you had that fantastic episode — a fantastic episode, I'm going to say that again, because it really was — and if anybody watching or listening to this has not seen it, with Emma, Pinchbeck. And I will say you could have pushed her harder on clean power 2030. I mean, she'd have been very political and not answered the question. She'd have said that it's up to the government to make those decisions, but clean power 2030 is going to be very expensive versus, funnily enough, the former Conservative policy, which was clean power 2035, and maybe clean meant 95%. And so to me that would have been a much cheaper and better policy. But you didn't get into the nuance around the cost difference there.

BW  

No and actually, perhaps we should have gone there. But I think there was some energy operator analysis that said because the electricity system is going to grow by 2035 because of electrification, transport and heat, in terms of gigawatts installed, it's not that much of a difference. Like it's hard in 2035, it's hard in 2030, you might as well win the political points and do 2030 before the big increase in demand starts. Now, I don't know whether I agree with that actually, but I would have rather seen let's do an electrification strategy. And actually the political blue water you want to put between the new government would have been, 'let's rip up that hydrogen strategy that was ridiculously put out and didn't actually mean anything, and let's write a proper electrification strategy and start to see the costs for consumers coming down in those other segments.' Cars running on electrons will save people money if they're doing a certain number of miles. And actually, that bit of policy is the one I would have focused on. And, you know, we actually have a policy that's going to be 80% EV sales, but that's been watered down recently because of a lack of understanding that where people going to feel the benefit of this transition, is when they don't have to pay as much money at the pump, and that's what they should be focusing on.

ML  

One of the most important developments of the last three months is that I'm now a commissioner on the Electrify Britain commission, and it is absolutely our mandate to push for an electrification plan. And the only thing I would say is that I'm not sure that that needs to involve banning. I'd much rather we thought very carefully about how to make it cheap rather than banning. That just feels like it's going to be much more effective politically. And actually, to be honest, it's going to surface the ideas that we really need to make electric heating cheap, make electric driving cheap, make electric industry cheap. And I think that's the way to go. Let's come back though, we were talking about the US having to bring in its rare earths. From there we swapped over to Canada, because that's one potential source. There's also big developments going on in Australia, with an election upcoming. And I'm going to tease you here because, of course, the liberals had this tremendous plan: they were going to go nuclear, and you were all excited about how Australia was going to become this nuclear superpower. And now the Liberals have stopped talking about that. They're now saying it's a dash back to gas. Gas is the answer. They're downplaying. Because it was shown that their nuclear plans were absurd and that it would be enormously expensive, and they started to take flak for that, so they switched to gas. But who's ahead and who's behind in that race? 

BW  

Well, firstly, I've never advocated that Australia needs to build nuclear. I think it's crazy that it's got a ban, but honestly, with that much sun, that much land, that much resources, you don't really need it, so it's fine. And I thought what Dutton was doing was just classic politics. He was basically looking at the polling results — and we saw these when I was back in my philanthropy days, we were looking at public opinion on climate in Australia. And Australians are generally quite pragmatic people. They quite like big engineering solutions, and they are not anti-nuclear. They're just like, "we've got the uranium, why is there a ban?" And I think he saw that coming back from the focus groups, and saw this way of looking like he could thread the needle of being pro action on climate, but not woke, not green — different from the accepted mantra. So he went down this route. But of course, he probably went too far, and it was too obvious that he was then pitting that against renewables. Instead of saying, 'let's become a renewables superpower. Oh, and by the way, let's stop banning nuclear, because that's not making any sense,' he actively started to impede investment in renewables and used all those outdated disinformation talking points about how renewables don't work, when clearly they do. And so I think that's where it went off the rails. You've got an interesting situation in Australia. We had that episode with Simon Holmes à Court. It's kind of, you know, Labor versus Liberals, but you've also got these independents, these Teal candidates, and Australia's just gone through another round of really extreme weather, really extreme weather, vast areas underwater. And of course, it's just come out of their summer where they had high temperatures. So climate is an issue. And let's see. I think they go to the polls in May, don't they, early May? 

ML  

My understanding is that Labor, that Albanese, is ahead, but it's very close, and that one of the swing issues is whether the Teals survive, whether their moment in the sun has come and is now going to go, and they'll go back to the coalition, the liberals, or whoever, we'll see on that one. There's a couple of issues before we close. There's been a number of things that we looked at last season that are going to clearly bubble through this season — the tariffs, the economy, how you get the politics aligned. We've also got, by the way, some great meat and potatoes of electrification and clean electricity coming up in the next season. We've got a whole bunch of episodes lined up. I'm not going to list all of them, because we leave a little bit of mystery. You've mentioned some of the guests coming up, but some great experts in just, as I say, the meat and potatoes, or you could call it sausage making. How do you actually build this stuff and get it connected to grids and get people using it and do that affordably? And I'm really looking forward to those episodes. We have a bunch of them. We're also going to continue to work on AI. That was something else that we started on last season. I did my episode The Power and the Glory about AI, which was not me, it was my AI alter-ego, if you remember, I had Mike Headroom, my fake Michael Liebreich voice. And there was a follow up, I don't know Bryony whether you saw it, but that episode came out first as a Bloomberg article, because I still write for Bloomberg. And then I got Mike Headroom to record it for our podcast and YouTube channel. But then, of course, we had Deepseek, the Chinese search AI model, come out. And also we had a response from the EU, which was much more muscular than I had expected. The EU made some big statements about how they would be in the AI game, and France in particular, wanting to be in the AI game. So I actually authored an update on my Substack. So I know you're a subscriber. There may be people out there who are not, but you've got the Thoughts of Chairman Michael. You can find it on Substack. We'll put a link. But I did an update where I basically said: My original piece was forecasting the demand, and I was more modest than some of the real kind of gung ho forecasters. But what I did say is that most of that demand would be in the US, and then with Deepseek and the EU, I now think it's going to be a bit more balanced.

BW  

Yeah, and that's right. I mean, we're going to keep focusing on our stock issue, which is electrification. How do you get money invested? And last season, we did have a whole great set of episodes about different forms of investment, whether that's Lucy at Actis with her overseas investment fund, which was fascinating about how they're navigating that and showing that she can get really great returns. Or whether it was Jiga with his Loan Programs, or even if it was just that episode with Google where Google were talking about how they're underwriting clean energy projects with advanced power purchase agreements. So yeah that bit about how we invest in the clean transition is going to be core, but we're going to do some fun things, as you say, we've gone down that path with AI. One thing I'm really interested in at the moment is the way in which the biosphere is going to be responding to climate impacts. And we're going to have an episode with Merlin Sheldrake, who writes about the underground mycorrhizal network, the fungi, and how nature is responding to climate and storing carbon or not storing carbon. So yeah, we're going to mix it up a bit and I'm really looking forward to the next season.

ML  

I will say, one of the things that I think we did well in the last season was talk about the global south. So we had Lucy Heintz really changing perceptions on risk. And we also had, at the end of the season, Project bo, a very different episode. I mean, in a way, I've been working on that project for seven or eight years, and this was putting solar and photovoltaics into a neonatal unit in Sierra Leone. Oscar, our fantastic producer, and I went down there and filmed. Really, it was a documentary, it wasn't a podcast, it wasn't even the usual YouTube fare of talking heads that we do, but it was a documentary. And I will say I found it incredibly moving to be down there and to see that this is not just some technocratic, "oh, we invest, we plug it into the grid, we've got a curtailment, we've got a return, IRR." This is actual medical staff unable to save lives because the power goes off and then a system which helps them. And we estimate that with this system, they are saving literally hundreds of lives a year more, in one hospital in one city in Africa. And I will say I'm enormously disappointed with the traffic that we got to that episode. So if anybody listening to this thinks that that is even vaguely interesting and hasn't watched it yet, please watch it, comment on it, tell your mates. And also, we are running an appeal, because that system needs to be expanded, made more resilient and so on.

BW  

I mean, Michael, I loved that episode. And everyone should watch it. And you know, what's so fascinating about it is that the fossil industry would like to tell you that life is impossible without fossil fuels and that fossil fuels are the bedrock of development and everything that's good in the world. And here you have an episode where, very clearly, the fossil based system was failing. They had these backup generators, they couldn't afford to keep buying the gas. 

ML  

Diesel.

BW  

Exactly, and the solar system with the batteries is, is working. It's not perfect, but it's better than the fossil system that is replaced. And it can get better still, and it's cheaper and more affordable and quicker to do. So that for me, quite apart from the humanitarian aspect of seeing these wonderful stories about these babies lives, it puts a lie to this idea that we can't live without fossil duels, clearly we can.

ML  

And it was obvious to the nurses and the mothers. In some of the interviews in that episode, they say, 'Oh, don't take away our solar.' And I did not prompt them, honestly, I did not prompt them. They are all absolutely convinced that this is the way to go. What I also find interesting, particularly when you say about this idea that that fossil is the way to go, the one that I'm really struck by is actually South Africa. Because South Africa's utility Eskom was the great utility in Africa. It was brilliantly run. It was, of course, not everybody was electrified and so on, but it was absolutely the premier utility across the continent. And it was run along very professional lines. And the World Bank, going back to the time when I was building New Energy Finance. I got into fights with the World Bank because they were determined to push through loans for two coal fired power stations, Medupi and Kusile, the biggest coal-fired power stations in the world, I believe. And they were disastrous, catastrophic. Went over budget. Haven't worked properly. They bankrupted Eskom, and have led to rolling blackouts across South Africa. And so to have people say the solution is fossil and coal, it's like, read about Medupi and Kusile please, before you Tweet, before you go on Bluesky, LinkedIn, whatever, and before you become the Secretary of Energy in the US. Because it's really important to be evidence driven. Whether it's healthcare in Sierra Leone or whether it's coal-fired power stations in South Africa, fossil is not the way to go.

BW  

No. And if you don't mind, I wanted to put in a little bit of a plug for the NGO that I work with, which is Ember. Ember put out their global electricity report in the last few weeks, and you know, it showed that the world now tops 40% clean electricity for the first time. And that this is not just a few countries doing it, but it's happening everywhere. And why is it? Why is it happening?Because solar is booming. And why is solar booming? Because it's cheap and it's fast, and countries like Pakistan and all around the world are realizing that if you need power and you want to make it reliable, you've got the components now to do this. You're not reliant on importing expensive traded fossil fuels, or waiting in line for some very expensive turbine ordering system and big infrastructure. You can get going fast. And I think we're going to see more and more of that, despite all these headwinds we've talked about, all the politics, all the grandstanding. Really, the economics now is if you want cheap power and you want it clean and you want it fast, then solar is still the best option. 

ML  

And that Ember report is absolutely appropriate to plug. I think it is a major milestone report. And there's an amazing chart in it, which people should really download the report and have a look at or find it on social media, because it shows that, yes, clean electricity went from 30 something percent, and it sort of dropped away as electricity demand grew. Nuclear output did not grow. And so the percentage of clean — there was hydro, which largely doesn't grow very much. So it dropped and dropped and dropped, and then suddenly in 2012 it turned around. It turned around, and it's now up to 41% and clearly accelerating. And there's this huge discussion about the troubled transition, and how it's all linear, and how you only ever add energy sources, you never replace energy sources. And you know, much of that is absolute nonsense. This is clearly a logistic function. It's a replacement function, a penetration curve, whatever you economists want to call it. And we're in the early stages, but we are very close to the point where all additional demand for electricity, and very soon, all the additional demand for energy, will be delivered by clean sources. And I don't care, you know, I would love it to be nuclear and renewables. I have a little bit of skepticism about the acceleration of nuclear, but it's clear that we're just about at that cusp point where all growth in energy demand, which is going to be huge in the developing world, Global South, AI, whatever, it's going to be met by clean. It's going to be met by clean and within a few years, not in 10 or 20 years. So I think there's a lot to be hopeful about.

BW  

Yeah, exactly. And the other thing in that Ember report, which is fascinating, is that they dig into why the demand is rising. And of course, we've got some fundamental things like electrification of transport, particularly in China, which is pushing up electricity. But you've also got weather effects. So last year, particularly, there was this correlation of heat waves in very densely populated urban populations, particularly in India and China, which pushed up demand for cooling and air conditioning. Now, obviously, we're entering a world where that isn't going to just be a freakish once in a blue moon occurrence, but it was a particularly bad year, and had that not been there, we would have had even more of an opportunity to meet all of that growing demand with clean electricity. But what I was going to say was — I don't want to do this with a smile, because it is serious — but the Trump interference in the global trade system may well trigger a recession, right? It could pull down demand for energy in a time when it was looking like it was going to be booming. But if everything cools down, and we do see this economic contraction, some people are saying he could be the most, in the short term, helpful to climate President there's been. He's going to be such a dampener on the drivers of energy demand.

ML  

I'm not sure... A recession in and of itself, of course, suppresses demand. But we've also seen that recessions in the past have correlated with periods of slower growth in clean energy. You know, if there's more money in the system people can do, you know, they have slightly more latitude to take longer term bets and to invest in technologies and so on. But I just think, and we're going back to the beginning of our conversation, if this is a US recession with US bond yields going up, whilst others, and we're seeing this, the bond yields are not going up in Europe in the same way and at the same time. If people are driven towards the electro state and driven into the orbit of China and the more electrified economies, I think it could mark an acceleration of the shift. I don't want to declare that it will, but it could.

BW  

Yeah, I completely agree. I think the question is: what happens to China as an economy? Because all roads in energy lead back to China. 50% of everything is done in China on a yearly basis. So if China's access to the US is severely constrained, and the Chinese economy starts to weaken, then that engine of demand in China might weaken, and that pulls the whole world down, because it's so large. 

ML  

So very clearly, what they would do, and they are doing, is exports that were destined for the US are now being, I don't want to use the word dumped, but dumped, on other countries. So other countries are going to accelerate. And there's little things that we saw, for instance, in Sierra Leone, I visited a college where they're training photovoltaic installers. So the skills after you've trained somebody, once you do some photovoltaic installations, or some wind, you can't put that genie back in the bottle. So anyway, there is a potential silver lining. I mean, I hate to say it, the storm cloud is this big, the silver lining might be much smaller. But there is a silver lining. And maybe we should just leave it there, because these are all going to be themes we're going to come back to during the next three months of the series.

BW  

Yeah Season 15, I think it's going to be as varied and interesting and as turbulent as the last season's been. And I'm really looking forward to exploring it with you. Thanks, Michael.

ML  

So there you have it. That is our opener, our opening shots in Season 15 of cleaning up. And I think I'm going to leave it to Bryony to thank the team, because frankly, I've been listening to her episodes, and she does it much better than I do.

BW  

Well, thank you. That was Cleaning Up, and I would just like to extend my thanks to you, the listeners, for tuning in, but also to Oscar Boyd, our producer, to Jamie Oliver, our editor, and the growing team of Cleaning Up experts who are helping us maintain this podcast, and the Cleaning Up Leadership Circle. Thanks to all who make these programs possible.

ML  

Cleaning Up is brought to you by members of our new Leadership Circle: Actis, Alcazar Energy, Davidson Kempner, EcoPragma Capital, EDP Portugal, Eurelectic, the Gilardini Foundation, KKR, National Grid, Octopus Energy, Quadrature Climate Foundation, SDCL and Wärtsilä. For more information on the Leadership Circle, please visit cleaningup.live, that’s cleaningup.live.