Transcript
Speaker: Welcome to HSBC Global Viewpoint, the podcast series that brings together business leaders and industry experts to explore the latest global insights, trends, and opportunities.
Speaker: Make sure you're subscribed to stay up to date with new episodes.
Speaker: Thanks for listening.
Speaker: And now onto today's show.
Speaker: Well, hi everyone and welcome to our EIG Talk series.
Speaker: Today, I'm very pleased to be joined by Professor Jessica Translick, who is in the Institute of Data Systems and Society at the MIT to discuss the progress of clean energy technologies.
Speaker: Jessica, thank you for joining us.
Speaker: Thanks for having me.
Speaker: It's great to be here.
Speaker: So today we were hoping to cover the progress of clean energy technologies.
Speaker: And especially with your scientific data-driven approach, how you think about it.
Speaker: Maybe we can start with some of the studies and research that you have worked on.
Speaker: Yeah, sure.
Speaker: So I run a lab here at MIT and we work on assessing different options for decarbonizing the economy.
Speaker: What we're interested in is understanding the role that technology can play and also how to invest strategically in technologies that can be very effective in drawing down greenhouse gas emissions while providing a good service and keeping costs low and so forth, minimizing overall environmental costs.
Speaker: impacts, et cetera.
Speaker: So that's what we work on.
Speaker: We develop bespoke data-informed models to investigate these questions with the goal of informing investment decisions.
Speaker: And I also offer online courses for a professional audience, and I consult for companies as well in helping them find a way to participate in this major transition that we're experiencing right now
Speaker: Great.
Speaker: Thank you very much.
Speaker: And looking at some of the research you have done, I think there was some interesting analysis into how much of the demand that we have for transportation with light vehicle could be covered by EVs without charging within a day.
Speaker: So how convenient currently EVs are for users.
Speaker: I think this research was for the US market.
Speaker: and then how much of the demand it can cover.
Speaker: And I think the number was quite high, actually.
Speaker: If you look at, you know, just a daily snapshot and you make the assumption that people have access to overnight charging, then, you know, on a typical day, most people will be able to go through their day, go about their activities without having to recharge.
Speaker: So if we look at the U.S., for example, a snapshot of the U.S., we take a low-cost EV,
Speaker: Within that US market, it's low cost relative to other cars in the US market.
Speaker: These are not the lowest cost EVs because there are many other markets where EVs are available at much lower costs.
Speaker: So if you take that daily snapshot, you see that upwards of between 90 and 95% of cars could be replaced by an electric vehicle without having to recharge during
Speaker: And if you look at a typical person, and most individuals fall within this range, you see that throughout the year on 90 to 95% of days, you don't have to recharge your car if you have one of these electric vehicles, even if it's one of the more affordable ones.
Speaker: And that's for the US.
Speaker: But those numbers are somewhat similar across many other markets as well, because they have to do with restrictions and the amount of sunlight, the sun rises, the sun sets, people need to sleep and so forth.
Speaker: But of course, not everybody can charge overnight.
Speaker: You also need, if you're going to use this as your only vehicle, you want to be able to go on long distance trips, you need charging along those trips.
Speaker: And so that's where you really need fast chargers.
Speaker: Workplace charging is really important for managing grid impacts.
Speaker: So there are very strategic locations where you can put chargers.
Speaker: One of the key layers, though, is to put chargers in places where people park.
Speaker: when they're at home overnight, because then you can make those chargers lower power, minimal grid impacts.
Speaker: And most of the time, you don't even have to think about recharging your car during the day.
Speaker: So that's an example of some of these strategic solutions that you can identify through data-informed models.
Speaker: It's very promising, actually, in terms of when we think about the trend of adoption, the fact that currently, even with, as you say, lower end of the range, you can already satisfy a lot of the demand.
Speaker: And that's, you know, ignoring the improvement that you will have in batteries and their capacity.
Speaker: Patrick, I should mention is that, of course, no technology is perfect.
Speaker: So if we take the example of EVs, if you look at the environmental factors,
Speaker: You do improve substantially relative to internal combustion engine vehicles because you can mitigate some of the emissions from extracting fossil fuels and the environmental impacts of that.
Speaker: But you do also have to mine materials for those electric vehicle batteries.
Speaker: But when you look at the overall lifecycle assessment, there's still an improvement with the electric vehicles over the internal combustion engine vehicles, a very substantial improvement.
Speaker: But it is important to kind of acknowledge that no technology is perfect.
Speaker: And it's important to try to mitigate those negative environmental and social impacts in the
Speaker: And that's something we also focus on in our analyses.
Speaker: So I don't want to paint a completely rosy picture.
Speaker: There's still a lot of work to be done.
Speaker: Thank you, Jessica.
Speaker: From your research, it seems like there is a lot of data and models and capabilities basically to help model this and get to the transition.
Speaker: So I wonder what you think about where we are in terms of state of the play with regards to technology for the clean energy transition.
Speaker: Yes, this is a question that often comes up and many of you may have heard that we have many or even all of the technologies we need to reach net zero emissions.
Speaker: And it is true that we have a lot of the technological tools we need.
Speaker: We see that the assessment is that about 50% of overall emissions could be addressed with current technological tools that are cost competitive and scalable.
Speaker: But of course, you have only to look as far as the global greenhouse gas emissions trends.
Speaker: So if we look at CO2, for example, we see that FURB hasn't bent down yet.
Speaker: So emissions are still rising.
Speaker: So I just told you that about 50% of emissions could be addressed with current technological tools.
Speaker: based on this assessment, but we're not seeing that happening overnight.
Speaker: So we're not seeing that emissions curve drop down suddenly to 50% of where it was last year.
Speaker: In fact, in 2023, we hit a record high in carbon dioxide emissions.
Speaker: So what's the discrepancy between this technical potential and what's actually happening?
Speaker: Well, there are obviously hidden costs and inertia in the system that are preventing this change from happening overnight.
Speaker: That's not to say that these changes aren't happening.
Speaker: We do see technologies that are growing rapidly, like renewable energy, electric vehicles that are contributing to changing energy systems and enabling greenhouse gas emissions reduction.
Speaker: But this shift isn't happening as quickly as suggested by that technical potential that I mentioned a minute ago.
Speaker: So what are these hidden costs?
Speaker: Yeah, we can go into that a little bit.
Speaker: But just briefly to say, I think some of what's contributing to these hidden costs is what I call soft technology.
Speaker: So those are the costs of processes for making these changes.
Speaker: You also have other sources of inertia that we could perhaps talk about.
Speaker: I mean, I guess the bottom line is I would say we're in a good place.
Speaker: We have a lot of the technological tools we need, but more needs to be done to develop the new technological tools we need for that remaining 50% and also to enable the tools that we have to scale more rapidly to make them even more attractive in the marketplace.
Speaker: Thank you very much.
Speaker: And that makes me think about some technologies that have actually developed and scaled well with very strong decrease in the cost of production like solar.
Speaker: And so that leads me to ask you about what we have learned with regards to strategically investing in clean technologies and what can we apply from this to some of these other technologies that we need to develop in the future?
Speaker: Yeah, if we look at the clean energy technologies that we have, really the ones that have improved the most in recent years and recent decades are solar energy.
Speaker: Costs have fallen by more than 99% over the last four decades.
Speaker: And wind energy costs have also fallen.
Speaker: Electric vehicle batteries, namely lithium-ion battery, costs have fallen dramatically more than 97%.
Speaker: So these technologies have shown exponential improvement trends.
Speaker: And it's useful to look at where that came from.
Speaker: So this is something we work on quite a bit in my group, looking at what were the drivers of these rapid rates of improvement.
Speaker: And it's a combination of policies that drove a lot of private sector investment that led to substantial innovation technology improvement.
Speaker: There were many different mechanisms in each of those cases that contributed to technology improvement,
Speaker: One takeaway that we see from this, well, actually, let me talk about two takeaways.
Speaker: One is that there is predictive power in trends and past trends that can be used to estimate different rates of technology improvement across these technologies.
Speaker: And interestingly, actually, that predictive power wasn't used in many forecasts historically.
Speaker: So many forecasts underestimated the rate of improvement and growth in solar and wind energy, for example,
Speaker: But I think that can be used going forward.
Speaker: And then, you know, another takeaway that we see is that part of what led to this continuing improvement was continued investment in research and development on the part of companies, but also government investment in research and development played a role there.
Speaker: That's great insight.
Speaker: And I think what is interesting is that some of these technologies at the time, they were not price competitive and it was very difficult to foresee their trajectory.
Speaker: As you just said, some were not expected to move that fast, but thank you.
Speaker: Clearly a lot more to do.
Speaker: And some of the other technologies are there or are maybe still nascent.
Speaker: Maybe two I will want to ask you about.
Speaker: One is nuclear.
Speaker: There was a target set triple nuclear capacity by 2050.
Speaker: And there's a lot of talk also about, you know, the small modular reactors.
Speaker: I think that's one question about nuclear.
Speaker: And the other question is about hydrogen, which is much less established.
Speaker: And there are question marks around, is it really going to happen?
Speaker: Is it really going to get to an industrial level when we can produce green hydrogen at the right price and in the right quantities?
Speaker: What do you think about those two?
Speaker: And do you think they are part of the solution to fill some of the gaps that you have?
Speaker: I do think both options can be very important and they're very different.
Speaker: So green hydrogen is something that many people are working on.
Speaker: Costs haven't come down enough yet for this to be used widely.
Speaker: Nuclear energy is used in many countries, or at least a number of countries, rely substantially on nuclear energy, and it's a significant contributor at the global level as well.
Speaker: But in many markets, costs have been rising.
Speaker: This is due to changes to soft technology that have led to these rising costs.
Speaker: In other markets, in Asian markets, data suggests that perhaps costs haven't been rising, though the data is quite limited.
Speaker: So it's an established technology in places where it's accepted, where people want it.
Speaker: I think it can be a real contributor today to reducing greenhouse gas emissions.
Speaker: It's really up to people in countries and regions whether they would like to have nuclear or not.
Speaker: And as you mentioned, many people are working on small modular reactors.
Speaker: The idea there is that some of the concerns that people may have could be addressed.
Speaker: We could bring costs down in places where costs have been rising.
Speaker: you could potentially also make regulation more streamlined, more centralized, more comfortable for people.
Speaker: So I think it's important to work on those technologies.
Speaker: What role they'll play in decarbonization is still unknown.
Speaker: So I would say it's unknown whether the small modular reactors will begin to grow, how quickly and so forth.
Speaker: So it's something I would keep in the portfolio.
Speaker: It's very important to do so because they could address
Speaker: a number of the challenges that it could be difficult to use electricity directly.
Speaker: So nuclear fission directly would not be a solution there, but it is a reliable source of electricity that could potentially be used to produce, to split water and produce hydrogen.
Speaker: So how
Speaker: Coming to hydrogen just really quickly here in the time we have left, I'll just say that this is something we're looking at in detail.
Speaker: The challenge can be that if you're using electricity to produce hydrogen, it's currently quite expensive, especially if you want reliable hydrogen, which is what most end users would want without interruptions.
Speaker: And if you're using steam methane reforming, you have substantial greenhouse
Speaker: gas emissions, and then you need to oversize your carbon capture and storage.
Speaker: And so there are challenges there.
Speaker: A lot of people are working on this progress is being made.
Speaker: I think it's definitely an important part of the portfolio that needs to be invested in, because if we can work it out, it's going to make a really big difference.
Speaker: It can be used in many different energy services, and it can be kind of the glue that weaves together a number of the other technological tools that we have, including, you know, solar
Speaker: and wind energy, batteries, nuclear fission where it's acceptable, hydro where it's available, and possibly even fossil fuels with CCS, with carbon capture and storage for some portion.
Speaker: Thank you for this.
Speaker: That was very insightful.
Speaker: And I think we will probably then close with a question that is forward looking.
Speaker: I think we'll be quite excited to hear about what do you think is the next frontier in terms of those technologies for the energy transition?
Speaker: There's a lot of exciting things happening.
Speaker: For me, one thing I'm really excited about going forward is, you know, the potential, as we talked about with hydrogen,
Speaker: you know, the potential to really put these technological tools together, weave them together, maybe with hydrogen, not just hydrogen, but other approaches as well, demand side management, that's something I'm really interested in.
Speaker: And then just generally soft technology, which is forms of codified knowledge that allow us to weave hardware together.
Speaker: So we're bringing hardware together through processes,
Speaker: effectively deploy hardware in the field, make the experience of using technology something that's enjoyable, that's productive.
Speaker: And so I think there's a lot of work we can do on soft technology.
Speaker: It's also the interface between hardware and humans.
Speaker: So this is something that I'm very excited about.
Speaker: Part of what's really slowing the energy transition down is the soft technology.
Speaker: It's the fact that
Speaker: There are so many delays in obtaining permits for projects, for interconnecting to grids and energy systems, and also the inefficiencies in acquiring customers and distributing information on what's possible that leads to less competitiveness in markets and overall inefficiencies.
Speaker: So I think it's really important, more than 50% of the costs of some solar systems and electric vehicle chargers
Speaker: are actually contributed by soft technology.
Speaker: So I think that's a really important next frontier that I'm focusing on a lot.
Speaker: Thank you.
Speaker: That's really, really interesting because it's not something we hear of a lot.
Speaker: As you say, it has a huge impact, in particular with some of the geopolitics that are happening and the tariffs and the regulation and the variability in the regulation across the world, which add to complexity and essentially to what you call soft technology and soft costs.
Speaker: which are become quite important component into the equation.
Speaker: So thank you for this.
Speaker: It has been very insightful and eye-opening.
Speaker: We look forward to the next conversation.
Speaker: Thank you, Jessica.
Speaker: Great.
Speaker: Thank you so much, Patrick.
Speaker: This was a lot of fun.
Speaker: I enjoyed it.
Speaker: Thank you for joining us at HSBC Global Viewpoint.
Speaker: We hope you enjoyed the discussion.
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