Video transcript: FT Webinar

Back to video

Emiliya Mychasuk [00:00:26]
Welcome. And thank you for taking part in this FT/PwC partnership discussion at what is a pivotal time for both global warming and energy security. I think we’re going to have a very engaging and informative session today with our expert panel. First, I would like to welcome Jeroen van Hoof from PwC, where he leads on Energy, Utilities and Resources, and invite him to frame our discussion here today. Thanks, Jeroen.

Jeroen van Hoof [00:00:55]
Yeah, thank you, Emiliya. And welcome, everybody, and thanks for joining this exciting kick-off of our partnership between the FT and PwC. And actually, this webinar is a kick-off of a campaign that will run for 18 months and which will try to discuss and solve to the extent possible some of the major challenges we are facing with the energy transition. So, I think it’s great that we have all come together, and the timing is more crucial than ever. I think we’ve never faced a time in history where we are facing so much crisis at the same time. I mean, crisis is not something new. Changes in energy and energy transitions have happened before, but the parallel crises we are facing now with climate change, with the Ukraine situation and many other challenges currently at the table, I think that is really causing a very complex situation.

So, as said, this webinar is the first in a campaign that will run for a full year. And it’s great to have these two great brands come together to work on this. And to have all of the speakers in the room today and you as our audience, to have a discussion and help solve this important problem. The complexities we are facing and we have at hand are actually so large that we strongly believe that we need sectors, regulators, policy-makers, digital experts and capital providers to work together in sync to achieve the results which are required to speed up the race against climate change and achieve net zero.

We strongly believe that requires courage—so, on the one hand, we see the urgency to move much quicker, but at the same time we need the courage to be real and actually come up with plans that can last for the medium- to long-term and then actually deliver. So that delivery, I think, will be part of our conversations and the collaboration we need to have to get delivery done.

Today’s issues around energy transition are framed twofold. First of all, we are all affected by the security of supply issue and the long-term focus to net zero that need to be balanced out. So, as we have seen the world changing over the past year, a lot of focus has been put, and also government intervention has been placed, into making sure that in the short-term we have security of supply in place, but at the same time cope with price volatility, and in the long term we need to remain focused on net zero. The second, of course, element in all of this is climate change, and climate change is at risk. It’s clear that we are not moving quick enough, and according to PwC research, we need to at least move 11 times quicker than we do today to make sure that we meet the targets we have all agreed around energy net zero move in the Paris Agreement. So, we need everybody on board, but also equally, we need to deliver this in a just and a fair way with real action. And I think if anything came out of COP, it is about real action.

So I look very much forward to discuss today—and also in the course of this campaign—how we can move faster, how we can deliver, how we can meet both short-term goals, meet the long-term target of net zero and keep everybody on board. And with that, I would like to hand over, back to you, Emiliya.

Emiliya Mychasuk [00:04:41]
Thank you, Jeroen. Certainly there are some monumental challenges before us for corporations and society. And I’m pleased in that effort to tap into the brains and good will of our expert panel. I’ll introduce you all—Elisabeth Brinton from Microsoft, the Corporate Vice President of Sustainability. We have Teresa Mattamouros of EQT Partners, the venture capital group; Angela Wilkinson, the Secretary General of the World Energy Council, and Ben Wilson in the hot seat at National Grid, the Chief Strategy and External Affairs Officer there. So, in fact, I’ll start with Angela, as you were at COP, and then go around the panel for reflections on the impact of the UN Climate Conference COP27. I know that you have done a blog post, which if people want to have a look for, it’s very easy to search for. I found it myself yesterday. Perhaps you could run through some of your thoughts, Angela.

Dr Angela Wilkinson [00:05:49]
OK, thank you. Thanks also to PwC and FT for hosting this conversation. Yes, I was at COP27; I was also at the Global Clean Energy Action Forum, Singapore National Energy Week at the ONS. So, I go around the world. COP is of course a climate meeting rather than an energy convening, although you wouldn’t have noticed that from the Blue Zone, it seemed to be more of a trade exhibition for energy. But, I think two outcomes I’ll flag—you can read the blog for the rest. The first is, not enough was achieved. 1.5-degree centigrade ambition is on life support at best. We keep talking about net zero, but we’ve got to get to net negative if we’re really going to keep 1.5 alive. And I think the second reflection is that it’s time for a new model. That the COP process is structurally flawed and the scope is too narrow. From an energy perspective the scope’s too narrow—we see blue, green and ministerial zoning failing to really connect the dots. There’s a dialogue of the death. Zero fossil doesn’t talk to net zero, doesn’t talk to net negative. And we don’t see climate, energy and human security being joined together sufficiently well and enough. And from an energy perspective the focus is very much on the supply-side solutions, there’s still not this engagement of demand-driven solutions. And there’s not this opportunity to use all levers and gifts by different countries who are in incredibly diverse positions. So, that’s my take of COP27. Having been pre-COP when I was doing my climate assessments, the science doesn’t change really so much; unfortunately, the actions seem to change even less.

Emiliya Mychasuk [00:07.37]
Continue to hold that thought, because I’m interested in the trajectory that we’re on through these convening summits, which everything seems to sort of hang on to but little develop. Ben, I’m going to turn to you, as Angela referred to the trade fair aspect of COP27. How do you see it at National Grid?

Ben Wilson [00:08:06]
Yeah, thanks, Emiliya, and again thanks to FT and PwC for organising this great panel. So, National Grid are one of the largest investor-owned utilities operating in the US and in the UK. Really very focused on grids and networks. I think I agree with Angela that whilst progress was made on addressing the impact on climate change, we still need to do a lot more addressing the cause, i.e., emissions and the 1.5-degree target. I think what I would say is there is a cause for optimism outside of the COP process, which is that I think we would argue now that there is no longer a trilemma. Typically, we’ve talked about a trilemma of reducing emissions versus maintaining affordability, versus maintaining security of supplies if those things were in tension. But if you look at the situation, certainly in the UK and Europe but also in the northeast United States where we operate, renewables will reduce emissions. They are also now by far the cheapest source of electricity generation, and in the case that they help us reduce our dependence on imported gas and ultimately on Russian gas, on the margin, they make us more secure and safe as well and help us improve our domestic sources of supply. So, I don’t think we just depend on the COP process anymore. I think we now have a kind of self-accelerating energy transition. Climate change is much more than energy, but in energy, I would argue, all levers point in the same direction, which is more and more renewables, and that is a cause for optimism.

Emiliya Mychasuk [00:09.42]
OK, so luckily we’re not waiting on the 45,000 people who go to far-flung parts of the world once a year. Elisabeth Brinton, can I bring you in there as we sort of look at the outcomes of COP for a company like Microsoft, which was ahead of the curve in tackling its emissions, albeit that of course, you have fewer than say an oil and gas producer?

Elisabeth Brinton [00:10.08]
Well, thank you very much, and I agree, thank you so much for hosting this wonderful event and to our panelists. I really agree with what Ben was just saying. One of the things that Microsoft has really leaned into from the very beginning is bringing a sense of positive optimism that is also very pragmatic. And so, indeed we see the renewables accelerating from a technology perspective. We have AI, we have machine learning, we have digital twin. We have core technologies and the cloud that enable the acceleration. I’ll give you a specific example related to energy is that now we can do advanced simulations to think about new sim fields and other inputs that make energy transitions speed up. These have huge compute demands, but now we have the technology that itself is also more affordable. So these things, not just the physical energy like renewables, which are now more affordable, but the computers as well. And so you don’t have to rely on supercomputers. For example, you can do high-performance compute to do simulations which enable the research to speed up and R&D to commercialise—shorten the window for commercialisation. So, again, these things are very practical and optimistic. Another comment from COP, I think in addition to energy, one of the things that was really important was that from a private sector perspective, the importance of supply chain and looking across from a systems perspective, and so from our perspective at Microsoft, we saw a lot of very pragmatic movement across how you actually address supply chain, because energy is essential, but we cannot forget food, we cannot have a global food crisis. Since COP was in Africa, a lot of the conversations were, I thought, very, very practical around solving for food and how we make sure that we’re mitigating water crises in drought-related regions. Which again, technology supports precision agriculture and preventing water waste, so these are all good practical steps.

Emiliya Mychasuk [00:12.12]
COP certainly tries to, it covers quite a lot of things, but perhaps as is arguable, too many things. Everything from biodiversity to food and nature, to emissions and industry. You know, practically speaking, money is at the root of many of these solutions. Can I turn to you, Teresa? How does EQT see the effect of COP when it comes to a practical level of assessing where to put your money?

Teresa Mattamouros [00:12:43]
Sure, absolutely. First of all, thank you, both FT and PwC for having me. I think, from our perspective, the world leaders could have been more ambitious on COP27. Right before the start of COP, there was a group of more than a hundred CEOs of multinational organisations—all members of the Alliance of CEO Climate Leaders—they shared an open letter for the world leaders at COP27. And, basically, what the letter said is that limiting global warming, we know that limiting global warming to 1.5 degrees requires significant collaboration and shared responsibility between private and public sectors. But we are ready to work alongside governments to accelerate the transition. The letter included a call to government to set bold and ambitious targets and follow through on the commitments to deliver on the Glasgow Climate Pact, the Paris Agreement contributions, and translate them into plans and policies. From our perspective at COP, we were barely able to preserve what was achieved at Glasgow, much less set even more ambitious goals. Finally, I don’t want to downplay the importance of the commitments to set up a loss and damage fund prior to COP28; I think that was a very positive development. Getting it on the agenda itself was a victory after three decades of trying to discuss it and showed that a concerted push for more ambition can bear fruit. The priority needs to be on stopping the cause, and from that perspective, I feel that COP fell a little bit short of the expectations.

Emiliya Mychasuk [00:14.40]
You’ve each touched on the two main outcomes as it’s been seen from COP27, which is the setup of this loss and damage fund in principle, creation of it to help poorer nations cope with the effects of climate change, and then the 1.5-degree limit, at which even worse weather events will occur, that seems to have slid a little bit. And, in doing that, I guess we should say that there were nearly 200 governments trying to come to an agreement, and that’s always going to be the significant challenge on the UN forum for anything—whether it’s security generally, global security, pandemic agreement, all of these big global issues. So, then it falls to individual policy and market responses of different parts of the world. And so, I’d like to turn to that question then of individual country responses and individual region responses. We’ve had in response to the current energy situation, diverging policies in the UK, the EU, and the US. The US of course has had this carrot versus stick approach, where rather than having, as they have in the EU, taxes and a subsidy system that is more penalising, under the new US Inflation Reduction Act, 370 billion dollars over the next ten years is dedicated towards tax reform, healthcare reform, but critically providing some sort of incentives for a switch to renewables. Bearing all of those geopolitical shifts in mind and that you have now the EU talking about putting in place its own by-EU proposal; here, you have a windfall tax, you have all of these different push and pull mechanisms in policy and government. Can I turn to you, Ben, to talk about from the perspective of National Grid what the effect of that is? I know National Grid has significant operations in the US as well.

Ben Wilson [00:16:50]
Yeah, thank you, Emiliya. We’re roughly 50/50 US, UK. We are, I think, very supported and very excited about the Inflation Reduction Act. In particular, we have a fossil free gas strategy for our gas networks in New York and Massachusetts, which involves a change over time for natural gas to renewable natural gas and to green hydrogen long term, and we aim to be completely fossil free well before 2050 if we can. And the Inflation Reduction Act is an absolute game changer on that and really it is the first policy in a major advanced economy that I’m aware of that really takes that leap in terms of hydrogen, particularly from, kind of pilots and demos to large utility scale policy support. I think it’s an absolute game changer, so we’re super excited about that. I will make one other comment on consumer regulation, which is to highlight the importance of grids. Very roughly, for every dollar that we need to spend on renewable-generation or zero-carbon generation by 2050, we need to spend approximately the same magnitude on grids to connect. Some people say it’s a bit less, 60 cents compared to a dollar, some people say it’s a bit more. But it’s a very similar amount we need to spend. If you take the UK, for example, 50 gigawatts of offshore wind by 2030, which is the government target. There are no customers in the North Sea, so we need to build a lot of transmission lines to bring the power down to where the people live. That requires regulatory support for grids to be able to invest, and typically in both UK and US, the regime for regulating networks is based on an assumption that supply and demand are not changing significantly, which was the pattern 20 years ago when regulation was set up. So it’s designed to slow grids down, to stop us over gold plating. That is not the situation we’re in now—we need to build as quickly as possible, otherwise grids will be the constraint. So we need regulatory systems to allow networks to get ahead and invest. And then, even more difficult, we need planning regimes that allow us, whilst respecting local communities, we need to be able to invest more in local communities that host this infrastructure. But we do need planning regimes that can deliver answers in a small number of years, rather than in close to a decade, if we’re going to hit our targets. So, IRA, fantastic, but we need more planning and regulation for grids to connect up all the new generation.

Emiliya Mychasuk [00:19.20]
I hear that we had a rival power producer into the FT today, and I hear that from them everywhere—they operate in many different parts of the world, and even in China, as I understand it. Although it’s quite easy, for example, to put up offshore wind because it’s fairly simple technology to put up a windmill, there isn’t sufficient, even in a controlled economy, sufficient grid capacity to distribute that energy. Can I turn to you, Angela, from the World Energy Council perspective, as you are going around different countries and to different forums? There seems to be, not an intractable problem, because of course, it can be solved, but it’s actually very difficult one, even, as I say, even in China, to raise villages and put up distribution systems. Do you see any other barriers like that that need to be overcome?

Angela Wilkinson [00:20:17]
Well, I think the other thing from COP27 was that it was supposed to be an inclusive implementation COP, and inclusive implementation means more than money and technologies, it means people and communities. And Ben was picking up that point. I’m going to disagree with Ben that there’s no trilemma. There’s a trilemma in every transition. Even when you’re in 100% renewables, you’ve got to balance security, affordability and sustainability. There’s no getting away from the trilemma. I think it evolves. I think what we’re seeing is that the diversity in energy systems has increased globally. The solutions, there’s no one-size-fits-all solutions. And the big challenge seems to be that we keep talking about supply-side generation, we’re talking about the backbone of the new energy system, which is great. But we’ve got to engage hundreds of thousands of smaller steps. Cities, communities, regions, all need to be involved. You need a regulatory enabling environment that enables those voices and choices to be understood. And if I—a stark example of that is we’re quoting the IRA, 370 billion with an opportunity for raising more capital in the market tenfold, right? Three point seven trillion, four trillion. Great goal. And we compare that with what’s been released from the US around how to involve communities. Five hundred and fifty million, right? It’s tiny. So, we’ve really got to re-balance our attention. All energy transitions and additions—some countries aren’t transitioning, they’re additioning. We need double or triple the size of today’s energy system to meet and support 10 billion people and one healthy planet. But we keep talking about big capital and technology plays, and not about how do we enable these hundreds of thousands of smaller place–based steps involving very diverse communities, with very diverse political economies. And the World Energy Council does that by collecting examples of leading best practices from around the world and sharing those so that regions and diverse communities can lead with and learn from each other. So, I can give you barriers, but they’re not the same everywhere. I can give you enablers, but they’re not the same everywhere.

Emiliya Mychasuk [00:22.30]
We’ll get to some solutions down the track. So, if you could hold that thought about what some of the enabling activities are so that we can look forward rather than the things we’re stuck in at the moment. I’m going to turn back again to the subject of money, as you brought it up, of the trillions that are needed. I did hear Lord Browne, former BP CEO, say recently at an energy transition summit that the FT held that he was not seeing this three to four trillion that’s required for the transition. How will investors, Teresa, be convinced that there is enough stability in the system and enough continuity of policy to invest?

Teresa Mattamouros [00:23:18]
My view is that the biggest policy breakthrough we had was the US Inflation Reduction Act. And the bottom line is that the US government took a longer time to take climate change seriously, but they are now committed, and this law just creates a runway for US energy transition investment. It just creates a lot more certainty around the fundamental policy incentives, which can be significant value drivers for these energy transition assets. Ben alluded to the fact that this bill will be game changing for some technologies, hydrogen being one of them, CCS carbon capture being another one, but there’s others, there’s battery recycling, lithium-ion battery recycling. I think people respond well to incentives, if it becomes more economical to use renewable sources than fossil fuels, market forces will drive the transformation. So from my perspective, this bill will be a strong kick-start that allows other technologies to go through the same journey that solar and wind went for the past ten, 15 years to allow for wider adoption and decline of the cost curve. We expect that to happen with some of these technologies.

Emiliya Mychasuk [00:24:46]
Are you making investments specifically on the back of the IRA?

Teresa Mattamouros [00:24:50]
We are. So I think, in practical terms, what happened is that there was a lot of private capital waiting on the sidelines to invest and deploy capital in hydrogen and carbon capture and other technologies, but the numbers just didn’t work. And I think with this bill, it makes more economical sense. And so we are starting to look at a lot of projects with a different set of eyes, because economically, it just makes sense. I just wanted to mention one more point on this bill, which I think is important to your point, Dr Wilkinson, is that the Inflation Reduction Act does prioritise investments in disadvantaged communities. And so we hope that it creates a positive impact on improving energy equity. So we’re just hoping that it’s a good example on how policy can accelerate the transition, but at the same time improve energy equity.

Emiliya Mychasuk [00:25:56]
Thank you. And, Elisabeth, is Microsoft taking any steps or is there any action that you see as a consequence of IRA or indeed even if it’s to do with shifting of focus from the EU to the US, which is another theme that we’ve heard at the FT—companies who were looking at investing in the EU and instead of investing in the EU in the next five-year-time horizon, they’re thinking, actually, maybe I’ll put that money over in America.

Elisabeth Brinton [00:26.25]
We see the IRA, again, echoing what our colleagues have said here on the panel, is that it is a game changer, but it doesn’t slow down Microsoft’s investment globally. We’re a global company, and being very practical, we have to solve the energy crisis in Europe. We’re a big user of energy. So it’s incumbent upon everyone to be focused on how we solve this at scale no matter where we are in the world. I think the practical thing that is really important to recognise is that we have the scale issues of big kit. So, for example, offshore wind has been mentioned and the grid and so forth, but to also really move the needle, I think advanced energy efficiency is really important. And so, the digitisation of so many of the practices and the operations of everything from buildings to ships to, you know, every different sector and processes, such as process manufacturing and across multiple industries, the digitisation of these things can actually improve energy efficiency, lower costs, really help improve the safety and quality of the products as output. So it’s a multiple benefit that you can achieve through digitisation and the application of technology. So, as a tech company, we’re a growth company too. So we have to be focused on the commercial outcome that echoes what Angela said and Ben said. There is a trilemma, and we all face it. We have to make sure that our products are affordable. We have to make sure that we’re sustainable, and we have to make sure that we’re driving economic value for the shareholders as a public company. How Microsoft is approaching this is also in how we green the technology itself. So, for example, we have a carbon dashboard for Azure, and the Surface laptop that I’m beaming in on to this panel discussion with now has smart sensors, so I can choose when I actually charge my laptop based on the energy supply mix in the grid where I happen to be when I plug it in. These are the types of things, this awareness, then we can trigger consumer behaviour to drive energy efficiency. We have to do all the low-hanging fruit that we have as a society, I think, to help solve this.

Emiliya Mychasuk [00:28:49]
I guess there’s the view that putting all of—I appreciate you’re not doing this—but putting all of the responsibility on the individual necessarily is a sort of avoidance by some companies in doing that. But of course, these tools are all enabling. Jeroen, there are much bigger actions that can be taken by the companies in your area. You know, it’s, changing a complete energy system really is going to require investment by energy companies, right?

Jeroen van Hoof [00:29:20]
Yes, that’s correct. And maybe also reflecting back to the previous comments that were made. Yeah, I do agree with Ben’s comment that renewables are now available at a price which is sort of self-driving the transition. But at the same time, I think the complexity—and this has come across in this discussion a few times—of the whole transition is so large that it goes beyond only bringing more renewables into the system. If you think about the hard-to-abate sectors—chemicals, aviation, mobility, and think about what needs to be done to transform those sectors and make them carbon neutral, there’s a lot more than only bringing more renewables, and also the thinking that we often see that this will lead to energy independency, I think is probably not the likely outcome. And if you look at the world in ten, 20 years, you will see that new dependencies are starting to emerge here. So there will be regions that export hydrogen, and there will be others that import, because simply producing the volumes that are required to address all those sectors will not be available in one single place. That means that, in my view, sector convergence is critical so the collaboration between energy companies and chemical companies, between producers of batteries and electric vehicles, that all needs to happen in sync with the right policy support at the same time. Now, this will not be done by start-ups only, and this will require the capabilities of large experts. And among those large experts are the energy companies. I think they will play a crucial role in making this transition happen. So on top of all the great things we are discussing, which will happen, to get to the scale that we need, let alone in the timeframe that we have, yes, I think that’s critically important.

Emiliya Mychasuk [00:31:39]
So this is it. We’re at the nub of it now, which is scale at speed. As quickly as possible, we need to achieve this. You refer to joint ventures and collaborations. Can you give me an example that you’re thinking of, Jeroen?

Jeroen van Hoof [00:31:36]
I think there are many happening. There are alliances between energy companies and technology companies bringing in efficiency. There are initiatives between chemical companies and energy suppliers on decarbonisation of steel production and using off-gasses to actually recycle them into the process. So I think we see those emerge more and more, and I think that the knowledge and expertise that is sitting between those sectors is crucial to achieving bigger steps.

Emiliya Mychasuk [00:32:35]
Do you think that everybody along the chain has to sacrifice a bit of margin to achieve that?

Teresa Mattamouros [00:32:49]
I think one can hope if you do well that you’ll do well by doing good. So our view is that we are actually improving these companies and making them better companies. So there’s no reason to sacrifice margins, is my opinion.

Elizabeth Brinton [00:33:07]
Well, I would agree with that. It’s actually about evolving business models that are quite exciting. So for example, Microsoft participates in a consortium called Northern Lights about carbon capture and sequestration with majors such as Shell, and these are emerging business models of where you can use carbon-capture sequestration essentially as a service. And again, there’s a digital backbone to that, but it’s bringing in, you know, really good oil and gas technology to sequester the carbon and think about then how you get those benefits out to the marketplace. So, these new business models that are actually cleaner and greener can create a tremendous amount of value. So again, it doesn’t have to be a zero-sum game. That’s where we have to change the conversation and say, yes, actually I love that. I use that phrase a lot: doing well by doing good. That is something that I think we just all have to as leaders just say, yes, that is the new standard, and we won’t accept anything less.

Emiliya Mychasuk [00:34:04]
The carbon capture is famously not a new technology. It’s an old technology. It’s very expensive, and it doesn’t exist at scale. So, how does one square that, Angela? How do you see that being conquered?

Angela Wilkinson [00:34:23]
Well, 25 years ago, renewables didn’t exist at scale. They still don’t. But they’re moving in that direction. I mean, it gets done through demonstration and research and deployment projects. Faster than ever before. We’re seeing Norway, the US, Saudi Arabia all doing very big capital projects in carbon capture and storage. They’re also doing them in clean hydrogen. I won’t call it all green but Net Zero Hydrogen, and you have the same in batteries in mobility in all these areas. Most of the conversations I hear is that for the next decade, we don’t have a shortage of technologies. We don’t have a shortage of money. We have a shortage of absorptive capacity.

Emiliya Mychasuk [00:34:04]
Well, except the money is not yet on the table for some of those big transformative steps.

Angela Wilkinson [00:34:23]
There is plenty of money around. The question is how do you incentivise that money? That’s not a shortage of money—it’s access to money like it’s access to energy, like it’s access to food. It’s an accessibility question and an affordability question. The question is what’s the enabling environment for that? But if we can just keep talking about new technology solutions and not the fact that we’re still talking about 2 billion people out of 10 billion people that will exist in 2050, and that’s the scale and scope of the challenge. And how do we develop an energy system which has a transition and an addition at the same time is a different financing story, which was the one that COP27 was trying to grapple with. And it got a little bit further on the loss and compensation but not really much further on what you do with 6 billion people who don’t have affordable access to energy?

Emiliya Mychasuk [00:36:09]
And what do you think some of the answers to that are?

Angela Wilkinson [00:36:14]
I think the answers are that there’s, you know, people talk about low-hanging fruit. I think Elizabeth was talking about low-hanging fruit. There’s lots of low-hanging fruit. There’s possibilities of working at the big project end, the giga project end, and you can work at the micro project end—what’s missing is the middle scale. I don’t see real financial models that really help cities or communities or really access capital. I still see that as a very, very small trickle-down effect that’s going on. I think you need societies to pull this technology forward. I’m sure, Ben, with National Grid, every time you try and strengthen the grid you’ve got to consult with communities. You want the regulatory framework to take that burden away so we can move faster. You know, this comes down to the social transformation in energy technology transitions, and we do very badly at engaging with a conversation around what is social transformation that we’re after? What does clean and just look like? And it looks very different in very different parts of the world. But we keep talking about it in terms of the US model of clean and just or the European model of clean and just. Well, wake up, world! Asia, the Middle East, Latin America, they’ve got their own versions of clean and just, and they want to bring them to the table.

Emiliya Mysachuk [00:37:33]
Ben, do you want to come in there on some of the issues that you see. I’ve heard, by the way, I had a discussion about Scottish wind power and the distribution of that south and the antipathy there is in some parts of Scotland for these giant windmills, because they don’t get the benefit of the cheap energy. And if you had a sense of, you know, involving the community, we say, Well, that’s your windmill, and you’ll get cheap energy from it, and you’ll be able to sell that on to the south, that might go a bit further. Is that a model for the future?

Ben Wilson [00:38:06]
Yeah, I think there’s a lot of things to comment on here. I think, on investment, I agree at the small end of the scale we have, you know, a very active venture capital community now supporting innovation, and at the National Grid, we have our own corporate venture capital vehicle based in California, National Group Partners, which sits along many others and does a great job at that small end of the scale. At the other end of the scale, you have the very large, you know, private sector investors like us—we’ll spend 40 billion pounds over the next five years on the energy transitions, 50 billion dollars, more than a million dollars every hour on the energy transition. It is that middle piece, and I think policy and regulation is how we bridge that gap, and we’ve already talked about the IRA. I’ll come to your point on wind farms and local communities in a minute. I want to just also emphasise that we should be looking for as many different vectors as possible to make this transition. This is a hard transition, and beware simple solutions to complex and difficult problems. We need as many tools as possible. So, carbon capture and storage. Let’s be clear, if we can get that to work that would be a very good thing for the world, a very good thing. And it is typically said that the capture piece is the expensive and difficult piece; and things like associated CO2 from gas fields, then cracking of methane to make blue hydrogen produce much more concentrated CO2 streams. And so, just because it has been difficult to get it off the ground for a generation doesn’t mean it’s not a great solution for other use cases. So we should all be behind CCS—the world would benefit from that working. New nuclear—the UK is pursuing new nuclear. Small modular reactors, I think, are very interesting and could go in places which really suit the grid. We need as many tools as possible, and we shouldn’t limit ourselves to individual vectors. I think on your comment on community investment, absolutely. And Octopus Energy, for example, in the UK, have an interesting model—they call it fan clubs, where if you sponsor onshore wind near your community, then you get some direct benefit from that; and I think things like that, which involve and empower the local communities, treat them as partners and give direct benefits to those communities for hosting infrastructure, which may be benefitting the country or the region as a whole, I think it’s a very important way to go, and it’s certainly what we’re looking at with some of our investments.

Emiliya Mychasuk [00:40:30]
Is there anyone else who’d like to come in on that? On what you can see?

Jeroen van Hoof [00:40:32]
Yes, well, maybe to add to what Ben was saying. I fully agree to the point of looking also at existing options that we don’t use, like, carbon storage and nuclear. If you take a bit of an outlook on what’s happening, I think large-scale hydrogen, however much we like it and it is a real solution for the future, will not be available at a large scale that is required to meet the Paris goals. So it will be the mid-30s or later before it becomes significant. And that means that if we want to stick to this route, we need to think about intermediate solutions. So that means natural gas is an option. It means carbon storage should be an option, and it means thinking about nuclear or new nuclear technologies should be an option. So, yeah.

Emiliya Mychasuk [00:41:30]
Well, with gas we may just be storing up for another problem. But I guess…please.

Jeroen van Hoof [00:41:33]
Well, that’s a question of course—if natural gas is replacing coal or brown coal, then I think we’re still making progress. And that’s what I meant with courage. We need also to be realistic, because you can exclude all technologies apart from the greenest of the green, but if we don’t have that at scale, we have an immediate problem that is even bigger. And I think that is something we have seen in the past few years that has started to emerge. Saying no to technologies that we have without having the large-scale, new green technologies in place, is now causing some of the tensions in the system we are facing, whether we like it or not.

Elizabeth Brinton [00:42.15]
A point that I wanted to make too about scale is that we have to have an accepted diversity of not only technologies, but I would call it sizes or form factors of technology. So in high tech, we refer to T-shirt sizes. We need lots of different T-shirt sizes, and the Rocky Mountain Institute has done a lot of fantastic work in this regard that in some cases, microgrids are going to be the answer. In other cases, it’s going to be big grids. So we need to be flexible and open-minded. And there is also a question in the chat about business models. This is where business models come in, because it’s not one-size and, Angela, you mentioned it earlier. It’s not a one-size-fits-all. What’s going to work in Tanzania as a really best commercial solution is going to be different in Singapore, etc. And so, if we think about a global perspective—that’s where I think the message loud and clear for policy-makers is, do not try to force one particular solution. We need all of the different creativity, all the different practicality of business models and technologies and financing structures. You know, that to me is where the optimism comes in is the ingenuity of people, and people know their local community, and they know their weather, and they know what’s available, and let’s unleash that creativity. And you know, that’s where both the physical technology and the digital technology can come to bear.

Tessa Mattamouros [00:43:44]
I was just going to add to Jeroen’s comment. The pure green investments are obviously a focus for us, and we’ve deployed a lot of capital on solar, wind, energy storage. But we are spending a lot of time in capital as well on brown-to-green transition, and I think that’s an important point, right? And I can give you a couple of very specific examples. Last year we acquired the largest, the leading North America student transportation provider. They have 45,000 school buses. They provide 900 million student journeys a year. And in what we did after we acquired the company is that we helped the company form a dedicated electrification team. We helped them leverage their scale—the industry leading scale—and their relationship with providers, and we helped them kick-start the process of the electrification of their fleet, right? And so right now they’re the largest electric project in North America. They have about 260 buses, and in Canada, they just last month applied for EPA grants with a clean school bus programme, and they were able to get 150 buses. So we help them kick-start the process of electrifying their fleet. And so this provides safer and healthier student transportation. It also helps the environment obviously; and we’re doing this across other industries. We have a very similar platform in the ferry industry in Scandinavia, in Norway, where we’re electrifying the fleet of ferries and also working with hydrogen technology to provide a solution for transportation as well. So these are just like very practical examples of brown-to-green transition that we’ve been spending quite a bit of time on.

Emiliya Mychasuk [00:45:43]
Is there any public money or support involved in those projects?

Tessa Mattamouros [00:45:48]
Absolutely. I just mentioned the student transportation—we just applied last month for EPA’s new clean school bus programme, and we got funding for 165 additional buses. So this is a great example of the collaboration that I was mentioning between public and private sector.

Emiliya Mychasuk [00:46:10]
So, I’d like to get into that a little bit—into the sort of blended finance. Jeroen…

Jeroen van Hoof [00:46:10]
Maybe one comment I wanted to make. In PwC, we’re also thinking about what is required in the system and the trust element. So in moving from brown to green, we need to come up with systems where we actually can label assets because assets are there—they don’t disappear if one company stops operating them, but they can contribute to the transition. So they might not be green, but they could be part of the transition, so building something that actually classifies those assets, and help the market, the financial markets and the regulator understand which purpose they serve during the transition might also help to, as a society, as a collective, make better decisions. Instead of saying, no, it’s either green or it’s brown or it should be gone or not. We need to help that, and that’s something where we, with the alliances we are having reporting, etc., try to come up with right frameworks that will then again also help others to do financing to qualify those assets in the right way.

Emiliya Mychasuk [00:47:20]
I suppose there’s a discussion there, which I have heard, about whether in creating the sort of transition assets, if you like, from brown to green, those assets that you’re building in between will end up being stranded assets down the track. In fact, I’ve even heard this about carbon capture, that given what an investment and a payback period it requires, that there are some projects in which it seems to sort of make sense but may not in the long run. Are you hearing any of that kind of discussion?

Jeroen van Hoof [00:47:56]
Well, I think inevitably, as always, there will be winners and losers as stranded assets. It depends also on the pace of technology developing—some might go quicker than anticipated, others slower. I think that when these investments are planned, there can be a positive business case with the right support from policy-makers. Carbon storage was mentioned. Under the right conditions, I can see variable business options emerging, and, yes, over time those assets will then become obsolete. But yeah, there’s no one answer to that.

Emiliya Mychasuk [00:48:36]
And, Angela, do you see public–private partnerships/blended finance as being part of the solution?

Dr Angela Wilkinson [00:48:45]
Of course they are, but we also have to remember that there’s an awful lot of capital moves around the energy system that doesn’t come from capital markets, that comes actually from states and from corporate investments. So when I talk about blended finance, I like to talk about public–private and people, because public and private can be large scale and small scale. But if it doesn’t really have useful energy and affordable energy outcomes, it’s not a very good public–private partnership in my view. I would really like to challenge this concept of brown-to-green transition. I know it’s very popular to talk in colour terms, but actually it’s a very prejudicial way of talking about energy transitions, which again are going to have to use all levers, all technologies and all gifts. I mean, the atmosphere doesn’t care whether it’s brown or green, it just cares whether it’s emissions positive or negative, right? But we keep using this language. Renewables are green. Are they? Let’s talk about the mining, the extraction, the distribution, the other infrastructure that’s needed to support taking renewables to scale, and you end up with this complex interdependency of needing clean molecules and clean electrons and clean infrastructures and a whole lot of affordability issues to come in, which is why I challenged Ben at the beginning of saying the trilemma is always going to be present whether you’re in transition, whether you’re all green, whether you’re all brown, or whether you’re moving from one to the other. I think we spend too much time talking about good versus bad and too little time talking about what’s clean, affordable, available, ready and could be deployed at scale now.

Emiliya Mychasuk [00:50:26]
Right. Well, in terms of good and bad, the good would be a reduction in emissions in the atmosphere, right? So, you know, that’s a starting point. So of course, that’s the big picture is how to do that as quickly and as efficiently as possible. We’ve got ten minutes remaining, and I’m looking through some of the questions on our screen which you referred to, Elizabeth. One of the ones that actually I was going to ask about is the storage question, Ben. Battery costs expected to continue to fall given that rare earth availability and costs are rising. There’s a rush for minerals at the moment in all countries. I was speaking to the Argentinian mining secretary who is the civil servant, not elected secretary, who said that Argentina is finding itself sort of overrun by different state departments from different countries looking at its lithium deposits and other such things. Given all that, given that rush and given the critical role of batteries playing, whether it’s small or large scale, in electrification, can you see costs falling? Can you see any breakthroughs there?

Ben Wilson [00:51:44]
I think we will continue to see costs fall. Prior to National Grid, I was running a large utility in Australia, including Western Australia, and we had, you know, enormous lithium projects under development there. So, there is a lot of resource that can be deployed to help with scaling up. So I do think we will see costs continue to fall. Also with major projects, it’s easy to overstate the contribution of the materials to the overall project cost. They’re critical, obviously. If we don’t have them, the project won’t go ahead, so there’s a dependency and supply chain risk there. But in terms of the total project cost, actually usually the raw materials are only a small fraction of the overall cost. In terms of storage, grid operators are making massive progress in the ability to run all 100% renewable or 100% zero-carbon electricity grids. And the storage, the sort of frontier issue with storage now, is that long-duration storage. The short- and medium-duration issue, I think we’re increasingly comfortable with; we’re also finding ways to provide things like inertia and frequency response from non-rotating generation. So there’s lots of excellent progress being made. It’s that long-duration storage, which is still the frontier issue. And I think, for example, hydrogen will be able to play a very interesting role in that long-duration storage space.

Emiliya Mychasuk [00:53:07]
And we had a question for Elizabeth specifically about what the IT industry should do itself. So not just in terms of helping other industries to become cleaner, but you know, it also obviously creates emissions, as we all do, and what are some of the specific steps not just at Microsoft but across the industry that could be taken?

Elisabeth Brinton [00:53:58]
Well, there’s two aspects of it at the high level. So first of all, it’s making sure that every aspect of what we produce, including the code itself, is as efficient as possible. So we’re investing in advanced R&D around low-code, no-code. So if you think about the automation of the production of the code itself. We’re also focused then on the energy that we do need and we do use. And Microsoft is focused on, we’ve been very, very clear about our commitment to actually become carbon negative and remove. So we’re investing in early pre-commercial projects such as direct air capture and looking at new technologies. Also putting forward market mechanisms that are going to be very important. The prices of carbon, for example. We talked about finance earlier. Part of how you get to business models and new projects that are different with different technologies is actually how you price the risk differently. How you think about actually the financial structures. If you have a price on carbon, that is going to change your financial calculus for a project that is lower emissions, for example—so it’s you know, sustainable finance—all these things coming together. As a tech company ourselves, we’re constantly looking at all the different levers: how we can take carbon out of the atmosphere, how we put an internal price on carbon ourselves, so we have a carbon tax essentially. So, we weigh all of our decisions against that carbon price—we just raised the price again. So it’s these practical mechanisms about not only what we make and what we enable, but then also what we do. So we’re looking at those two vectors constantly, and it’s complex, it’s tricky.

Emiliya Mychasuk [00:55:07]
So what do you judge to be an appropriate carbon price, internal carbon price?

Elisabeth Brinton [00:55:14]
That’s a good question. I mean it really—I think it depends on what you do, and I think you know, obviously, a high price is essential to motivate action that is going to, you know, be a lever for your business. And so here again, it’s not a one-size-fits-all. So you should have a price on carbon, but I think, you know—and this is something we talk openly about—that you should have a price on carbon as a company. We actually have technology called our sustainability manager tool that enables companies to create a baseline just like we’ve done. Because ultimately it’s about moving to capital, deploying capital, making decisions. So, you know, it’s not a matter of, you know, whether one should have one or not. I think one should have one and then, you know, make that price and actually challenge yourself as a company. Ratchet it up. And that’s what we’ve been doing. We’ve been continually making it tougher for ourselves.

Emilia Mychasuk [00:56:09]
I’ve heard from companies that, well, some of them are progressive ones, where they have multiple levels of pricing in their accounts, you know, an ongoing cost, and then if there’s an
R&D project, that they have to test it against a higher hurdle rate. So carbon pricing certainly seems to be one of the ways of the future of managing things. We’ve got five minutes, so I’m just going to go around each of you and I guess ask you what you feel positive about, because, of course, we’ve discussed the many challenges and pitfalls and so on. And that might also touch on a question that we’ve been asked, which is how we see further engagement of youth in the energy-transition process, given that they’re the heirs of the tomorrow world. And also, I find myself, of course, I’m sure you do too, you know, it’s not the preserve of the youth, but certainly they’re extremely engaged in the subject. So perhaps let me start with Teresa.

Teresa Mattamouros [00:57:11]
I think we’ll see youth becoming more and more engaged in driving these changes, right? The school bus is a good example. We’ve seen green shoots of different groups of students demanding their school districts to electrify their buses, just as an example. We feel very excited about the energy transition in general. Like I mentioned, the IRA. I focus in North America, but our fund is global, but I focus mostly in North America, so I spend most of my time here. I think there’s an interesting concept of the intersection of energy transition and circularity and how we can combine those. One area that we’ve been spending quite a bit of time on is lithium-ion battery recycling. Ben alluded to the needs of the storage and the accessibility to materials, the cost of materials. But how do we make the model fully circular? Right now in the US, there’s no lithium-ion battery recycling at a commercial scale. The technology exists, has been used in other industries for decades, in the mining industry, China is doing it, but we’re seeing a lot of people spending capital trying to build those capabilities in the US, not only that you can deal with the problem of end-of-life batteries and scrap material created from the manufacturing of batteries, but also create a full circular model where you can have access to those minerals that are used to manufacture the battery.

Emiliya Mychasuk [00:58:47]
So the circular economy is going to provide some solutions for us. I’m going to go boy girl, girl, boy. Ben, you’re next in the hot seat. What are you the most optimistic about in terms of what you can see on the horizon and how that might benefit the next generation?

Ben Wilson [00:59:03]
Yeah. Thanks. So yeah, I think as I said at the beginning, I’m very optimistic about the self-sustaining situation I think we’re now in with the renewables transition, because the economics point in the same direction as decarbonisation. So I really think we passed an inflection point with the greening of the electricity sector. I see us really in the UK now already and very close if not there already in the US, Northeast US, around a tipping point on electrification of transportation. So I think we are passing tipping points which are very positive. I’m also very positive about private capital, and I really think the main thing—because the economics now work—really, if we can clear away some of these regulatory and planning issues, there is a wall of private capital to get behind this transition, which I’m also very positive about. And on young people, you know, our mission at National Grid, one of our key strategic priorities is to deliver the energy transition. We find that extremely powerful as a recruiting tool. We find young people today, they want to work in a purpose-led organisation. They want to know what they’re doing is important and is of a net benefit to the world. It is a strategic advantage in terms of recruitment and retention to be focused on the energy transition.

Emiliya Mychasuk [1:00:22]
And, Elizabeth?

Elizabeth Brinton [1:00:24]
I’m excited, because young people are now part of the economy and they’re voting with their pocketbooks. Whether it’s for ethically sourced cotton or demanding circularity, and that is fantastic, because it’s that ingenuity, the human spirit, that I’m most excited about. I think we can do it. We have, you know, as human beings, we have demonstrated our ability to overcome crisis over and over and over again in history. And so I have to believe in us and I believe in the youth that are already creating that pull in terms of new products, new solutions, new energy, etc.

Emiliya Mychasuk [01:00:57]
And it might be said that they’re pushing as well as pulling. Jeroen, do you have some pushy youth that are making you feel positive about the solutions?

Jeroen van Hoof [01:01:08]
Well, building on what Elizabeth just said, I think the next generation is really conscious about the effect that the climate is having on the planet we are living on, as our most important asset; and they are passionate about it. They think in different ways—more innovative and more connected. So I think, like we discussed earlier, since this is such a complex challenge, we need connectivity, and therefore we need the next generation to really contribute. And once we do that, we are able to come together in different ways and make further progress. So I’m pretty positive about that—it is already happening, and it will not go away.

Emiliya Mychasuk [01:01:53]
So, Angela, last but not least, by any means, I’d like you to wrap us up with the positive thoughts that you have?

Angela Wilkinson [01:01:57]
Well, I think the future is there to be made and that it’s really about mobilising people and making them create the energy future. So, it’s not about markets or states or technologies or money. It’s about cooperation and co-creation. And just on youth, we’ve had a 40-year investment in future energy leaders and young professionals, and they remind us time and time again that energy transitions and additions are not for energy. They are for all of us. They’re for new models of circular, shared and regenerative development. That we’ve got a challenge with our mindsets and models, not just with our systems, and that actually what they’re trying to bring is a new model and mindset to bear, which is a challenge to maintaining existing systems and building new systems. And I think that’s the most exciting bit is that we’re changing our ideas and concepts. And that’s where we really get a big, bold, different future—it’s not just by tinkering around with the technologies, but by creating a whole new reality.

Emiliya Mychasuk [01:03:11]
I think that’s an excellent note on which to end, and I am actually looking forward to having another discussion about some of the big and the bold and the creative, and I thank you all for being here. We are over time. Jeroen, I will leave it to you to sign us off.

Jeroen van Hoof [01:03:28]
Well, I would like to thank all of you for the engagement and the questions we received. I think this is an example of what we call a community of solvers coming together. Meaning people with different backgrounds actually talking about the bigger issues, and that’s exactly what we envisage for this campaign together with FT. And I look forward to having further activities, further coming together and actually continue to work in this spirit. So thanks. Thanks all on this panel and also the audience for raising all the questions, and thank you, Emiliya, for guiding us through in this relation. Thanks.

Emiliya Mychasuk [01:04:07]
So thank you, all. I think our challenge is how to do all of this as fast as possible. That’s the challenge. Thank you, and with that I leave you to ponder all of this in your evening. Thank you all for being here. Goodbye.