The Energy Podcast

As countries across the world strive to reach their climate targets, they must make sure that the move to a cleaner energy system supports economic growth. The Energy Podcast explores this difficult balancing act. Presented by Julia Streets. Featuring Dr Rob Charnock of the Metis Institute for Climate Strategy, climate scientist and advisor Dr Yvonne Maingey-Muriuki and Shell’s chief economist Dr Mallika Ishwaran. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Eno Alfred-Adeogun. Episode Transcription: 00:00:00 Julia Streets: Today  on  The  Energy  Podcast.   00:00:07 Speaker 2: Economic  growth  and  developmental  sustainability  are  not  mutually  exclusive.   00:00:13 Speaker 3: With  a  strong  talent  pool  of  young  entrepreneurs  and  qualified  engineers,  we  are  pressing  forward  with  solutions  in  climate-smart agriculture,  water  conservation,  clean  energy  innovations,  and  more.   00:00:29 Speaker 4: Let us come  together  to  build  resilient,  sustainable  and  green  businesses,  communities,  and  countries  of  the future.   00:00:39 Julia Streets: The  dust  has  settled  on  COP28,  and  the  main  takeaway  was  clear;  the  world  is  falling  short  of  its  climate  targets.  But  as  the  leaders  who  gathered  at  the  conference  highlighted,  there  remains  an  appetite  to  do  better  while  simultaneously  ensuring  economies  keep  turning.  The  question  is,  how?  The  climate  summit  showcased  diverse  approaches.  Some  nations  prioritised  boosting  the  supply  of  lower  carbon  energy  to  meet  demand  and  remain  competitive.  Others  advocated  for  increasing  funding  in  renewables  to  attract  investment  and  spur  the  creation  of  more  jobs.  And  while  some  countries  pushed  for  a  complete  phase-out  of  all  fossil  fuels,  others  favoured  a  phase-down,  where  coal,  oil,  and  gas  usage  is  reduced  rather  than  eliminated  as  a  more  economically  viable  plan.  The  reality  is,  different  solutions  will  be  needed  in  different  places,  and  countries  will  move  at  different  paces  to  achieve  net- zero. Hello,  I'm  Julia  Streets,  and  today  on  the  Energy  Podcast  as  we  look  ahead  to  2024,  we  ask:  how  can  economies  thrive  while  the  world  cuts  carbon?  Joining  me  today  are  guests,  Dr  Yvonne  Maingey-Muriuki,  who  is  a  climate  scientist  and  strategic  practitioner  to  organisations  operating  in  Africa.  Dr  Rob  Charnock  who  is  director  of  the  Metis  Institute  for  Climate  Strategy,  and  Shell's  chief  economist,  Dr  Mallika  Ishwaran.  Now,  before  we  look  ahead  to  what  this  year  and  beyond  may  have  in  store,  let's  take  a  moment  to  reflect  on  where  things  currently  stand.  Rob,  I'm  going  to  come  to  you.  How  would  you  rate  the  current  global  progress  in  cutting  carbon?   00:02:27 Dr Rob Charnock: I  think  what  was  incredibly  interesting  to  see  at  the  recent  COP,  was  that  it's  the  first  global  stocktake,  so  we  really  get  a  sense  of  how  close  we  are  to  being  on  track  towards  the  targets  set  out  in  the  Paris  Agreement.  And  what  I  thought  was  very  encouraging  is,  previously  we  thought  we  were  on  track  for  somewhere  between  2. 7  to 3.6  degrees  of  warming,  but  as  we  get  more  and  more  commitments  coming  through  that  are  updated  as  well  after  a  few  years,  we  see  that  we're  getting  closer.  Now,  that's  not  to  say  we're  on  track  for 1. 5  or  even  well  below  two  degrees  at  the  moment.   00:02:58 Julia Streets: Some  areas  of  the economy  are  more  challenging  to  decarbonise  than  others.  I  mean,  I  think  particularly  industry  and  transport  as  well,  but  they  are  central  to  economic  growth.  I'm  curious  to  think  about  what's  the  way  forward,  and  Mallika,  I'd  love  to  come  to you  for  your  thoughts  on  that.   00:03:16 Dr Mallika Ishwaran: So  what  we  are  seeing  is  there's  a  sector  by  sector  difference  in  how  the  different  sectors  are  progressing  in  the  transition.  I  think  you  can  see  the  evidence  is  there  that  power  is  decarbonising,  renewables  are  coming  in  at  scale  and  really  are  changing  and  disrupting  the  system.  But  there  are  other  sectors.  I  would  put  passenger  EVs  as  part  of  the  transport  segment  as  something  that  is  changing  rapidly.  But  there  are  other  bits  of  the  transport  segment  not  transforming  as  easily,  and  these  are  areas  that  require  either  high  heat  or  they  require  dense  energy  molecules,  and  you  can't  do  that  with  electricity  unfortunately.  So  they're  requiring  things  like  hydrogen  or  sustainable  biofuels,  and  these  are  taking  a  little  bit  longer  to  bring  to  market  and  to  commercialise.  So  they're  still  quite  a  bit  more  expensive  than  the  fuels  we  use  today.  And  so  the  key  there  is,  how  do  we  accelerate  the  process  of  commercialisation  of  these  kinds  of  fuels  so  that  the  whole  world  is  changing  and  transforming  to  low  carbon  at  pace  at  the  same  time  by  2050.   00:04:17 Julia Streets: Rob,  I'd  love  to  get  your  thoughts  on  this.  The  incentives  that  are  needed  in  order  to  encourage  consumers  to  choose  lower  carbon  goods  and  services  that  will  drive  down  cost  and  also  increase  adoption.   00:04:29 Dr Rob Charnock: Over  time  we've  heard  this  narrative  that  low  carbon  might  be  more  expensive,  but  as  time  goes  by,  you  quickly  find  that  the  cost  profile  decreases  rapidly,  and  frankly  beyond  the  forecasts  as  well.  So,  I  would  say,  even  the  economic  reason  for  shifting  consumer  demand  is  already  coming  online  in  most  segments,  and  this  will  continue  to  do  so.  I  also  think  shifting  customer  preferences  and  shifting  demands  suggest,  if you are  not  properly  tackling  the  carbon  profile  of  your  products  or  even  the  recyclability  of  those  products  afterwards,  there  is  going  to  be  a  significant  shift  away  from  what  you're  selling.   00:05:05 Julia Streets: There's clearly  a  sense,  we  need  to  move  at  pace  and  we  need  to  move  at  scale.  I'd like  to  return  to  COP28,  because  one  of  the  key  topics  was  about  phasing  out  fossil  fuels versus  the  phasing  down  of  fossil  fuels,  but  the  final  deal  made  no  mention  of  either.  And  instead,  we  note  that  the  pledge  talked  about  the  transitioning  away  from  fossil  fuels.  So  not  phasing  out,  not  phasing  down,  but  transitioning  away.  And  Yvonne,  I  think  particularly  of  a  remark  made  by  Ruth  Nankabirwa  who  is  Uganda's  energy  minister.  She  had  a  very  interesting  take  on  this,  and  let  me  just  read  what  she  told  journalists  during  COP28: “To  tell  Uganda  to  stop  fossil  fuels,  it  is  really  an  insult.  It  is  like  you  are  telling  Uganda  to  stay  in  poverty."  I'd  love  to  get  your  thoughts  on  that.  How  would  you  respond  to  that?   00:06:00 Dr Yvonne Maingey-Muriuki: I  mean,  it's  a  really  sort of difficult  position  to  be  in.  I  think  on  the  one  hand,  African  governments,  and  I'm  speaking  specifically  about  the  Kenyan  government,  have  made  their  intentions  very  clear; we  are  going  to  foster  low  carbon  resilient  development  pathways.  If  you  look  at  Kenya  as  an  example,  where  I'm  based,  where  I'm  from,  80%  of  our  energy  is  already  renewable.  We're  looking  at  more  geothermal,  hydro,  solar.  The  majority  of  our  grid  is  actually  already  quite  green.  The  opportunity  within  the  continent  is  quite  significant  to  focus  on  it and  to  drive  renewable  energy  to  power  our  economy.  On  the  other  hand,  it's  important  to  think  about  how  Africa  is  powered  specifically,  because  this  is  where  the  root  cause  of  the  problem  is.  About  43%  of  the  total  population  in  Africa  lack  access  to  basic  electricity.  This  means  that  about  600  million  people  right  now  do  not  have  access  to  energy.  I  think  the  first  question  for  the  African  continent  is  just  ensuring  that  we  have  access  to  energy  first.  But, we  have  to  contend  with  the  reality  that  African  economies  for  the  first  time,  some  of  which  have  just  discovered  oil,  I'm  talking  about  Kenya,  looking  at  one  of  the  most  impoverished parts  of  the  country,  Turkana,  which  discovered  oil  four,  five  years  ago.  And  expecting  some  of  these  local  economies  to  not  exploit  this  resource,  I  think  is  a  bit  rich,  particularly  from  the  developed  countries.  But  then  we  also  have  to  think  about  in  the  context  of  what  is  the  actual  contribution  to  emissions.  Look  at  Tanzania,  another  great  example  where  they  have  natural  gas  deposits,  which  they  have  on  many  occasions  shown  a  desire  to  develop  and  to  exploit.  But  when  we  look  at  the  calculations,  Africa  already  accounts  for  maybe  less  than  4%  of  global  greenhouse  gas  emissions.  If  Tanzania  was  to  develop  all  of  their  natural  gas  deposits,  you  are  looking  at  an  increase  of  about  0. 4  to 0. 6%  of  global  emissions. These are economies that do have access to these resources which they have an interest to develop, which they have a right to develop, and which is why we talk about a just transition.   00:08:00 Julia Streets: Rob,  how  realistic  is  it  to  expect  developing  nations  to  leapfrog  traditional  fossil  fuels?   00:08:08 Dr Rob Charnock: To  me,  the  critical  point  in  that  is  how  they're  going  to  pay  for  it.  Where  is  the  financing  going  to  come  from  to  look  at  alternatives?  And  I  think  what's  really  interesting  that  we've  seen  from  the  Asian  Development  Bank  recently  is  a  project  in  Southeast  Asia  called  the  Energy  Transition  Mechanism.  And  this  recognises  that  countries  have  already  invested  quite  heavily  in  fossil  fuel  infrastructure,  and  the  expected  life  of  those  assets, those  coal-fired  power  stations,  is  always  decades.  So  what  the  Asian  Development  Bank  has  done  through  the  Energy  Transition  Mechanism,  is  provide  the  financing  of  the  incentives  to  retire  those  assets  early,  and  to  replace  that  energy  generation  with  renewable  alternatives.  Now,  the  critical  piece  in  this  as  well  is  that  when  you  retire  a  coal-fired  power  plant,  for  example,  that  often  supports  a  community  nearby  or  several  communities.  So  the  key  piece  is  to  retrain  those  communities  as  well  to  transition  them  into  new  jobs,  potentially  green  jobs  linked  to  the  renewable  energy  sector  as  well.  So  it's  not  just  about  new  energy  capabilities  being  invested  in,  but  also  retiring  fossil  fuel,  carbon-intensive  assets,  and  replacing  those  with  renewable.   00:09:17 Julia Streets: Mallika,  how  would  you  respond  to  that?   00:09:19 Dr Mallika Ishwaran: I  think  it's  worth  dividing  the  world  up  in  this  regard.  We  have  advanced  economies  who've  grown  up,  if  you  like,  on  traditional  fossil  fuels,  and  have  a  lot  of  infrastructure  built  around  that,  and  that  will  take  effort  to  change  and  to  transform.  But  I  think  these  are  economies  that  have  reached  an  advanced  stage  of  economic  development,  have  the  financial  resources  to  be  able  to  do  it.  We  also  have  another  group  of  countries  who  are,  if  you  like,  on  the  development  trajectory.  And  I  think  here  there's  a  real  opportunity  for  them  to  leapfrog  over  fossil  fuels,  and  put  in  place  infrastructures  and  other  technologies  that  are  low  carbon  to  start  with.  So  they  don't  start  down  the  path  of  fossil  fuel  development,  but  leapfrog  to  something  that's  better  and  more  sustainable.   00:10:03 Julia Streets: Yvonne,  we  can't  have  a  discussion  about  this  without  referring  to  the  question  of  carbon  markets.  So  a  two  part  question  to  you.  Number  one  is,  what  are  they,  and  secondly,  how  important  are  they?   00:10:15 Dr Yvonne Maingey-Muriuki: A  carbon  market  is  essentially  an  opportunity  for  organisations,  companies,  countries  that  have  net- zero  ambitions  and  targets  to  meet  them  by  offsetting  their  emissions  on  a  global  market.  So  they  pay  to  pollute.  Essentially  that's  what  the  carbon  market  is.  Is  it  a  significant  opportunity?  Absolutely,  particularly  if  you  are  coming  from  a  continent  like  Africa,  which  is  rich  in  natural  resources,  and  we  have  opportunities  to  remove  carbon  from  the  atmosphere  and  we  can  actually  be  paid  for  those  services,  it  absolutely  presents  an  opportunity  for  the  continent  to  generate  much-needed finance  for  adaptation.   00:10:53 Julia Streets: I  wonder  if  I  could  push  the  conversation  on  a  little  bit,  because  one  of  the  energy  solutions  of  choice  is  increasingly  liquefied  natural  gas  or  LNG,  which  is  produced  by  cooling  gas.  And  such  is  the  case  in  India  where  the  number  of  customers  using  LNG  is  growing.  And  let's  find  out  why.  Dhirendra  Mishra  is  Shell's  LNG  terminal  manager  at  its  site  in  Hazira  in  India.   00:11:20 Dhirendra Mishra: I'm  speaking  to  you  from  the  seawater  area.  You  can  hear  the  seawater pumps running  in  the  background.  What  we  do  here  is,  we  receive  LNG  in  large  LNG  cargo  ships,  and  this  cargo  is  received  at  minus  160  degrees  Celsius.  At  this  temperature,  it  is  transferred  from the  LNG  cargo  to  the  shore-based  LNG  tanks  where  it  is  stored.  From  these  tanks,  with  the  help  of  multiple  booster  pumps,  we  supply  this LNG  to  LNG vaporisers,  which  use  seawater  to  vaporise  the  LNG.  Now,  this  regasified  LNG  is  transferred  through  a  14-kilometre  pipeline  to  a  metering  station,  and  it  is  supplied  to  various  grids.  We  are  connected  to  all  the  grids  in  the  country,  so  we  can  reach  to  any  customer  who  is  connected  to  the  grid.  We  are  an  integral  part  of  the  gas  infrastructure  and  supply  chain  of  India  that  supports  various  industries,  like  city  gas  distribution,  steel  manufacturing,  fertiliser,  refinery,  chemicals,  and  other  manufacturing  sectors.  Now,  with  the  government  of  India's  vision  of  increasing  the  share  of  natural  gas  in  the  fuel  mix,  and  this  coupled  with  the  high  growth  of  Indian  economy,  we  expect  the  gas  market  to  grow.  And  with  this,  we  expect  to  supply  more  and  more  LNG  fuel  to the country in the coming years.   00:12:52 Julia Streets: As  Dhirendra  was  just  saying,  the  demand  for  LNG  in  the  country  is  continuing  to  rise.  What  role,  if  any,  do  you  see  LNG  playing  globally  in  future  energy  systems?  Mallika,  can  I  come  to  you?   00:13:09 Dr Mallika Ishwaran: Yes,  thank  you.  Great  question.  I  think  the  key  here  is  to  acknowledge  the  fact  that  this  transition  is  not  going  to  happen  overnight.  You're  changing  an  entire  energy  ecosystem.  So  it's  not  just  the  supply,  you're  also  changing  the  infrastructure,  you're  changing  patterns  of  demand,  and  that's  going  to  take  time  to  happen.  And  I  think  in  that  transition,  there  is  a  role  for  natural  gas.  We  see  that  in  our  Shell  scenario  outlooks,  we  see  it  in  the  outlooks  from  other  groups,  like  the  International  Energy  Agency.  And  it's  worth  noting  that  within  natural  gas,  LNG  or  liquefied  natural  gas  provides  a  much  more  flexible  source  of  gas,  because  you're  not  tied  to  pipelines  going  from  point  X  to  point  Y.  LNG  is  able  to  respond  and  be  moved  around  where  demand  is,  so  it  provides  a  more  flexible  way  of  delivering  gas.  Now,  gas  itself  can  help  lower  emissions  during  the  transition,  particularly  in  sectors  like  power  generation  where  it  could  potentially  displace  coal.  It  could  also  help  increase  energy  security  of  the  new  low  carbon  energy  system  by  complementing  renewables  and  the  intermittent  nature  of  their  generation.  So  in  both  of  these  instances,  gas  provides  a  lower  carbon  alternative  to,  for  example,  coal.  Now,  it  is  important  in  the  longer  term  to  drive  down  emissions  from  gas  itself,  for  example,  through  carbon  capture  and  storage,  as  well  as  reducing  methane  emissions  from  the  production  transport  and  use  of  natural  gas.  And  of  course,  Shell  is  very  active  in  this  space.   00:14:42 Julia Streets: So  let's  look  ahead  to  the  future.  Some  critics  would  caution  against  relying  too  heavily  on  technological  innovations  as  a  means  to  bridge  the  gap  between  economic  growth  and  carbon  reduction.  Rob,  love  to  get  your  thoughts  on  that.   00:14:54 Dr Rob Charnock: I  suppose  my  thought  is  that  the  critics  are  quite  right.  If  we  put  too  much  emphasis  on  technological  solutions  and  don't  explore  all  other  options  available  to  us,  that's  a  huge  risk  to  take.  I  think  my  attitude  with  tackling  climate  change  is  that  it's  not  about  one  solution,  it's  much  more  about  solutions  on  all  fronts,  and  making  steady  progress  on  all  fronts.  Whether  we  can  deploy  technology  at  the  scale  that's  needed  across  the  entire  globe,  is  very  much  in  question.   00:15:21 Julia Streets: It's  been  phenomenal  hearing  all  three  of  you  and your  points  of  view  on  this,  and  I  think  there's  one  undeniable  thread  that  runs  through  all  of  this,  which  is  the  question  of  cost.  I'm  curious  to  get  your  views  on  how  important  it  is  for  countries  to  build  lower  carbon  energy  systems  that  are  secure  and  are  affordable,  without  compromising  economic  competitiveness  and  arguably  growth.  Mallika,  I'm  going  to  come  to  you  first  as  the  chief  economist.   00:15:48 Dr Mallika Ishwaran: If  you  want  to  have  an  energy  transition  that  is  sustained,  and  this  is  not  something  we  want  to  do  for  one  or  two  years.  We  need  to  sustain  this  level  of  effort  over  the  next  almost  three  decades.  And  in  order  to  do  that,  you  have  to  have  a  proposition  where  there  is  an  economic  benefit  to  countries  from  undertaking  this.  Clearly  there  are  benefits  from  addressing  the  impacts  of  climate  change,  but  I  think  what  we  are  seeing  now  is  that  increasingly  countries  are  seeing  the  economic  benefits  and  the  opportunities  in  the  low  carbon  space  for  manufacturing  the  new  kinds  of  solar  panels  or  wind  turbines  that  are  needed,  or  the  electrolysers,  and  becoming  the  manufacturing  workshop  for  low  carbon  equipment,  goods  solutions.  And  that  could  be  a  basis  of  driving  economic  growth  in  a  country,  creating  new  types  of  jobs,  and  at  the  same  time,  you're  creating  a  better  natural  environment  in  which  citizens  can  thrive.   00:16:42 Julia Streets: It's  been  a  phenomenal  conversation because  we've  discussed  this  from  so  many  different  points  of  view.  To  close  us  out  today,  I  would  like  to  ask  each  of  you  in  20  seconds  or  less  to  share  one  key  development,  however  big  or  small,  that  needs  to  happen  this  year  to  address  this  question  of  cutting  world  carbon  emissions.  Yvonne,  your  thoughts.   00:17:02 Dr Yvonne Maingey-Muriuki: Higher  price  on  carbon.  I  think  if  we  are  able  to  achieve  that and  we  can  charge  more  for  polluting  entities,  then  we'd  have  a  great  incentive  for  them to stop.   00:17:12 Julia Streets: And Rob, your thoughts.   00:17:12 Dr Rob Charnock: I think  to  me,  it's  really  critical  to  see  how  the  Loss  and  Damage  Fund  is  operationalised  by  the  World  Bank.  This  is  a  fund  specifically  about  compensating  developing  nations  who  are  already  feeling  the  impacts  of  climate  change,  as  well  as  needing  to  put  adaptation  measures  in  place.   00:17:32 Julia Streets: Mallika,  can  I  come  to  you?   00:17:34 Dr Mallika Ishwaran: I  would  like  the  global stocktake  to  have  impact,  and  I  would  like  to  see  countries  nationally  determined  contributions  increased  this  year.   00:17:43 Julia Streets: My thanks  to  today's  guests,  Dr  Yvonne Maingey- Muriuki,  Dr  Rob  Charnock,  and  Dr  Mallika  Ishwaran.  This  episode  marks  the  end  of  an  amazing  series  where  we've  delved  into  some  fascinating  and  some  really  challenging  topics.  From  electric  vehicle  infrastructure  to  the  future  of  oil  and  gas,  from  carbon  markets  and  the  impact  of  global  tensions  in  cutting  carbon.  This  season  has  demonstrated  there  are  many  lanes  on  the  roads  to  net- zero.  And  if  you've  missed  any  of  those  or  any  previous  episodes,  you  could  still  go  back  and  download  them  for  free  wherever  you  get  your  podcasts.  And  don't  forget  to  hit  follow  so  you  don't  miss  any  future  episodes.  You've  been  listening  to  The  Energy  Podcast,  brought  to  you  by  Shell.  The  Energy  Podcast is  a  Fresh  Air  production,  and  I  must  remind  you  that  the  views  you've  heard  today  from  individuals  not  affiliated  with  Shell,  are  their  own  and  not  Shell  PLC  or  its  affiliates.  I'm  Julia  Streets.  Thank  you  for  listening  and  goodbye.See omnystudio.com/listener for privacy information.

As the world grapples with the urgent challenge of climate change, the energy industry is working to reduce greenhouse gas emissions while continuing to deliver the secure and affordable energy people need today. Is switching to renewables the answer, and do oil and gas have a role to play? Presented by Julia Streets. Featuring Dr Bassam Fattouh of the Oxford Institute for Energy Studies, Sian Lloyd-Rees of Mainstream Renewable Power and Shell’s Zoe Yujnovich. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis.   TRANSCRIPT Shell The Energy PodcastSeason 4, Episode 4 00:00:00Julia Streets: Today  on  The  Energy  Podcast. 00:00:07Bassam Fattouh: If  oil  and  gas  is  to  remain  part  of the  energy  mix,  the  key  issue  then  becomes  how  to  reduce  greenhouse  gas  emissions  from  hydrocarbon  related  activities. 00:00:16Sian Lloyd-Rees: If  we  want  to  achieve  net- zero  by  2050,  we  all  need  to  adopt  that  2050  mindset  now,  making  the  decisions  today  that  are  consistent  with  the  future  that  we  want. 00:00:26Zoe Yujnovich: The journey to net-zero must be achieved whilst at the same time providing a stable and reliable supply of energy. 00:00:34Julia Streets: The  science  is  clear  and  the  world  is  in  a  fight  to  avoid  the  most  serious  effects  of  climate  change.  Energy  and  the  use  of  it  is  one  of  the  biggest  contributors  to  global  greenhouse  gas  emissions.  And  this  means  that  the  oil  and  gas  industry,  which  supplies  much  of  that  energy,  is  under  pressure  like  never  before.  Many  countries  are  working  to  achieve  net- zero  carbon  emissions  by  2050,  while  continuing  to  meet  the  demand  for  secure  and  affordable  energy. The  impact  of  the  war  on  Ukraine  on  the  global  energy  market  has  shown  just  how  delicate  the  balance  is  to  maintain.  Some  critics  argue  that  only  a  drastic  scale  back  from  oil  and  gas  will  do,  advocating  for  actions  like  an  immediate  end  to  the  development  of  new  oil  and  gas  fields.  Others  believe  that  the  global  economy  cannot  be  decarbonized  without  the  constructive  participation  of  the  oil  and  gas  industry. On  one  thing,  there  is  broad  agreement  that  business  as  usual  is  no  longer  an  option.  How  can  the  world  manage  the  balancing  act  of  meeting  demand  while  investing  in  the  energy  of  the  future?  Does  it  need  to  go  further  and  faster?  Hello,  I'm  Julia  Streets,  and  today  on  the  Energy  Podcast  we  ask;  is  there  a  role  for  oil  and  gas  in  the  journey  to  net- zero?  With  me  to  discuss  this  are  Dr.  Bassam  Fattouh,  Director  of  the  Oxford  Institute  for  Energy  Studies,  Sian  Lloyd- Rees,  the  UK  Managing  Director  for  Mainstream  Renewable  Power  and  Shell's  Integrated  Gas  and  Upstream  Director,  Zoe  Yujnovich.  So,  Bassam,  let  me  start  with  you.  How  does  the  world  get  its  energy  today? 00:02:10Bassam Fattouh: Based  on  the  latest  statistics  for  2022,  hydrocarbons,  that  means  oil,  gas  and  coal,  accounted  for  the  bulk  of  primary  energy  consumption.  Oil  accounted  for  more  than  30%  of  primary  energy  consumption,  followed  by  coal,  which  still  account  for  more  than  25%,  and  then  the  share  of  natural  gas  is  not  far  away,  standing  at  around  25%.  The  share  of  renewables  in  the  form  of  solar  and  wind  has  been  rising  fast  and  accounted  close  to  10%  of  primary  energy  consumption,  surpassing  nuclear  energy  and  hydroelectricity.  But  Julia,  it's  important  to  focus  not  only  on  the  shares,  but  also  the  growth  rates.  For  instance,  if  you  take  coal,  the  growth  rate  between  2012 and 2022  was  close  to  zero,  whereas  renewables  grew  more  than  12%  per  annum  during  the  same  period.  So the  energy  mix  actually  can  evolve  faster  than  implied  by  historical  standards,  which  is  needed  if  we  are  to  meet  our  climate  targets. 00:03:12Julia Streets: So  in  support  of  the  UN  Paris  Agreement's  ambition  to  limit  the  global  temperature  increase  to  1. 5  degrees  centigrade,  above  pre- industrial  levels,  many  countries  have  set  net- zero  targets  and  I'm  curious  to  know  what  does  that  mean  for  the  energy  industry?  Sian,  can  I  come  to  you? 00:03:28Sian Lloyd-Rees: As  Bassam’s  just  talked  about,  the  energy  mix  today  includes  a  number  of  different  energy  sources  and  to  achieve  net- zero,  we  need  to  grow  our  cleaner  energy  mix  going  forward,  but  that's  going  to  take  time  and  it's  going  to  take  a  balance  of  different  things.  From  my  perspective,  as  a  wind  developer,  we  are  focused  on  trying  to  accelerate  the  uptake  and  the  introduction  of  wind  powered  energy  and  solar  energy  on  a  global  basis.  But  there  are  challenges. When  we  look  at  the  wind  resource  in  the  world,  a  lot  of  it  lies  in  the  northern- hemisphere,  the  greatest  need  is  in  the  southern- hemisphere.  It  lies  far  from  offshore  in  quite  deep  waters,  and  that  requires  different  technologies,  floating  technologies,  to  be  able  to  access  it.  We  then  have  the  challenge  of  transporting  that  wind  energy,  once  we've  managed  to  deliver  it at  an  affordable  price,  to  different  parts  of  the  world.  So  we  have  technology  challenges,  we  have  geographical  challenges.  We  also  have  the  challenges  around  the  supply  chain  and  the  materials  that  we  need  in  order  to  be  able  to  ramp  up  in  terms  of  renewables.  Yes,  we  need  to  grow  our  renewable  energy  percentage  in  terms  of  the  mix,  but  we  also  need  to  focus  on  the  energy  sources  today  and  we  need  to  decarbonize  those.  Oil  and  gas  today  needs  greater  decarbonization,  but  so  do  many  other  heavy  industries  as  well  around  the  globe. 00:04:39Julia Streets: And Zoe,  perhaps  I  could  bring  you  in  here.  I'd  love  to  get  your  thoughts  as  well  about  what  all  this  means  for  the  energy  industry. 00:04:44Zoe Yujnovich: The  journey  to  net- zero  must  be  achieved  whilst  at  the  same  time  providing  a  stable  and  reliable  supply  of  energy.  Whilst  the  global  energy  mix  is  changing,  demand  for  energy  services  will  continue  to  grow  and  it'll  need  to  be  met  by  a  combination  of  different  types  of  energy.  It's  certainly  going  to  be  critical  that  we  don't  dismantle  the  current  energy  system  faster  than  we  can  build  the  clean  energy  system  of  the  future.  We  are  very  focused  on  trying  to  understand  how  to  change  the  demand  patterns  and  indeed  how  we  therefore  supply  alternative  energy  into  those  different  demand  hubs.   Oil  and  gas  will  continue  to  play  a  crucial  role  in  the  energy  system  for  decades  to  come,  but  of  course  we  will  see  that  demand  reducing  gradually  over  time.  The  other  thing  I  think  I  would  say  is  of  course  it's  also  very  critical  that  we  actually  lead  by  example  in  how  we  drive  that  energy  efficiency.  And  we  are  very  focused  on  cutting  emissions  from  the  existing  operations.  So  in  short,  it's  absolutely  essential  that  the  energy  mix  will  change,  we  must  reduce  emissions  from  our  own  operations  and  also  find  those  profitable  sustainable  ways  to  transition  to  net- zero. 00:05:56Julia Streets: Just  building  on  that,  there's  some  warnings  from  environmental  groups.  The  continued  investment  in  oil  and  gas  infrastructure  can  risk  the  making  of  the  transition  to  cleaner  energies  even  more  difficult  or  even  too  expensive.  And  I'm  really  curious  to  hear  from  our  guests  today  whether  they  think  that  is  fair.  Sian,  can  I  come  to  you  first? 00:06:16Sian Lloyd-Rees: Yes,  and  there  is  a  lot  of  discussion  around  the  concern  that  infrastructure  decisions  and  investment  today  shape  the  energy  future  that  we'll  get.  So  from  our  global  wind  developer  perspective,  we  look  carefully  at  government  policies  and  the  subsidies  and  investment  areas  they  prioritize.  And  the  UK  move  faster  than  many  countries  in  focusing  its  fiscal  incentives  into  renewable  development  with  a  contract  for  different  commercial  mechanism,  which  they  initiated,  which  guarantees  a  long- term  contract  certainty  for  wind  developers.  Likewise,  in  the  USA,  we're  seeing  the  Inflation  Reduction  Act  focused  on  attracting  investors  and  infrastructure  developers  into  the  renewable  energy  space, and the  EU  has  got  a  similar  mechanism. So  we  certainly  are  seeing  a  subsidy  reallocation  trend  in  favor  of  renewable  energy  sources  and  the  growth  which  all  helps   to  address  the  argument  around  renewables  being  more  expensive  or  not  fit  for  purpose.  But  overall,  if  we  want  to  achieve  net- zero  by  2050,  we  all  need  to  adopt  that  2050  mindset  now,  making  the  decisions  today  that  are  consistent  with  the  future  that  we  want.  And  this  is  what  we  look  for  when  we  engage  with  governments  in  different  parts  of  the  world  in  terms  of  where  their  future  investment  is  going. 00:07:23Julia Streets: Bassam,  can  I  bring  you  in here, because  I'm  curious  what  would  be  the  impact  of  stopping  new  investments  in  oil  and  gas  altogether? 00:07:30Bassam Fattouh: Well,  at  this  stage  of  the  transition  where  we  haven't  seen  a  fundamental  shift  in  demand  and  in  fact  demand  for  oil  and  gas  continues  to  rise,  the  impact  of  stopping  investment  will  be  higher  and  more  volatile  prices  for  the  simple  fact  that  by  not  investing,  not  only  there  will  be  no  new  oil  and  gas  supplies,  but  also  existing  supplies  will  start  declining.  And  high  oil  and  gas  prices  have  multiple  effects.  It  raises  the  issue  of  affordability  and  governments  will  have  to  put  in  place  packages  to  protect  consumers,  which  will  affect  their  fiscal  balances.  Also,  energy  transition  policies  may  lose  support  from  the  general  public  if  this  results  in  high  energy  costs.  That  is  why  it's  key  to  have  an  orderly  and  just  transition.  But there  are  also  other  unintended  consequences.  For  instance,  higher  gas  prices  can  result  in  substitution  from  gas  into  oil  and  coal  which  have  higher  emissions. In  fact,  the  Russia- Ukraine  war  revealed  these  types  of  substitutions.  In  Europe  as  a  result  of  high  gas  prices,  we  saw  a  substitution  from  gas  into  diesel,  fuel,  oil  and  coal  in  power.  In  some  developing  countries,  which  were  priced  out  of  the  gas  market,  particularly  the  LNG  market,  we  saw  increased  reliance  on  coal.  Some  developing  countries'  access  to  finance  is  extremely  limited  and  they  face  high  cost  of  borrowing  and  don't  have  in  place  the  appropriate  regulatory  framework  to  attract  investment  in  renewables.  Also  has  been  chronic  underinvestment  in  distribution  and  transmission  networks,  which  actually  could  limit  the  rapid  deployment  of  renewables. 00:09:09Julia Streets: There's  one  other  element  to the  finance investment  discussion,  which  we  must  bring  forward,  because  the  profits  of  oil  and  gas  companies  regularly  hit  the  headlines.  And  following  from  the  energy crisis  brought  about  by  the  invasion  of  Ukraine,  energy  costs  for  households  have  soared  across  the  world.  Meanwhile,  companies  like  Shell  have  reported  record  gains.  So  I  suppose  my  question  is  shouldn't  oil  and  gas  companies  use  more  of  their  profits  to  fund  the  transition?  And  of  course  Zoe,  I  have  to  come  to  you  with  that  question. 00:09:38Zoe Yujnovich: As  we  mentioned  earlier,  today's  energy  system  is  still  overwhelmingly  comprised  of  fossil  energy  and  whilst  recognizing  the  need  to  continue  to  decarbonize  that  energy,  many  of  the  oil  and  gas  reserves  have  a  natural  decline.  So  we  have  to  continue  to  invest  to  essentially  ensure  that  we  can  have  that  stable  production  over  time.  Over  the  last  15  years,  as  well  as  maintaining  our  core  business  of  oil  and  gas,  we  have  been  investing  in  a  wide  range  of  low  carbon  energies,  from  hydrogen  production  to  de- risking  carbon  capture  and  storage,  biofuel  production,  electric  vehicle  charging,  as  well  as  wind  and  solar  generation.  We  have  invested  in  2022,  about  8. 2  billion  in  low  carbon  energy  and  non- energy  products.  This  is  about  a  third  of  our  total  capital  expenditures,  and  of  that  about  4. 3  billion  went  into  low  carbon  energy  solutions. 00:10:38Julia Streets: Bassam,  I'm  keen  to  get  your  voice  on  this  discussion  about  the  use  of  profits  as  well.  Your  thoughts? 00:10:43Bassam Fattouh: Well,  in  this  current  environment,  international  energy  companies  are  generating  very  healthy  cash  flows.  Part  of  these  cash  flows  will  be  directed  towards  investment  in  oil  and  gas  project,  because  the  demand  for  oil  and  gas  is still  rising.  But  there  are  also  expectations  that  companies  must  allocate  much  larger  part  of  their  cash  flows  and  capex  budget  to  clean  technologies.  And  I  think  the  amount  of  capital  allocated  to  renewables  has  become  a  key  metric  for  many  investors  and  NGOs.  The  challenge  really  is  how  to  allocate  cash  flows  to  these  projects  at  an  accelerated  rate,  while  achieve  attractive  returns  to  their  shareholders  as  some  of  these  technologies,  such  as  green  hydrogen  and  CCS is yet  to  scale  up.  If  the  alternative  opportunities  in  the  clean  technology  space  are  limited  and  evaluations  are  inflated  and  large  investments  in  hydrocarbons  are  not  particularly  rewarded  by  investors,  because  of  fears  that  investment  in  new  project  increase  the  risk  of  stranded  assets,  then  companies  will  use  these  high  cash  flows  to  reduce  debt,  return  money  to  shareholders  through  buybacks  and  dividends. Actually  a  trend  that  we  have  seen  in  this  cycle,  this  has  the  attraction  of  making  the  energy  firms  more  resilient  in  terms  of  lowering  their  leverage  ratios  and  making  these  companies  more  attractive  for  investors  and  shareholders.  But  of  course  for  many  investors  and  perhaps  observers,  this is  a  signal  that  companies  are  not  doing  enough  to  decarbonize  their  activities  and  they  are  not  transforming  their  activities  and  operations  fast  enough.  But  from  company's  perspective,  this  is  seen  as  ensuring  that  capital  is  not  destroyed  in  projects  that  don't  meet  their  profitability  criteria  and  where  scale  has  not  yet  been  achieved. 00:12:28Julia Streets: So, how is the oil  and  gas  industry  driving  down  emissions  from  its  existing  operations? 00:12:34Bassam Fattouh: If  oil  and  gas  is  to  remain  part  of the  energy  mix,  the  key  issue  then  becomes  how  to  reduce  greenhouse  gas  emissions  from  hydrocarbon  related  activities. And  this  requires  heavy  investment  in  areas  such  as  electrification  of  platforms,  reducing  venting  and  gas  flaring,  CCS  and  the  development  of  low  carbon  fuels  in  the  aviation  and  transport  sector.  This  also  requires  developing  and  harmonizing  standards  for  measuring,  monitoring,  reporting  and  verifying  emissions.  And  although  there  has  been  progress  made  in  this  area,  I  think  the  landscape  remains  very  fragmented,  which  make  it  difficult  to  measure  performance  over  time  and  compare  between  companies  and  countries.  So  that's  why  the  efforts  really  should  be  concentrated  on  how  to  reduce the  emissions  of  hydrocarbon  related  activities  while  demand  is  still  there. 00:13:24Julia Streets: Zoe,  keen  to  hear  your  thoughts. 00:13:26Zoe Yujnovich: There  are  many  things  that  we're  doing  recognizing  that  it's  critical  that  we  take  action  now  on  those  things  that  we  control,  while  also  of  course  influencing  the  way  demand  will  evolve  for  our  customers.  When  we  look  at  carbon  emissions,  we've  been  able  to  reduce  ours  from  our  own  operations  by  30%  at  the  end  of  2022,  compared  with  2016,  which  is  our  reference  year,  and  this  takes  us  more  than  halfway  toward  our  target,  a  50%  reduction  by  2030.  For  several  years  we've  also  been  transforming  our  remaining  integrated  refineries  into  low  carbon  energy  and  chemical  parks.  But  we  also  recognize  that  when  we  make  new  investments,  we  must  hold  a  really  high  bar  to  ensure  that  they're  not  just  economically  resilient,  but  they're  carbon  resilient  as  well.  So  for  example,  we  just  recently  brought  online  Timi  in  Malaysia,  our  first  wellhead  platform  in  the  country  that's  powered  by  a  solar  and  wind  hybrid  power  system. We're  also  growing  our  liquified  natural  gas  business  that  will  play  a  critical  role  in  a  balanced  energy  transition  in  the  way  it  also  compliments  renewables  production.  Liquified  natural  gas  can  be  easily  transported  to  places  where  it's  needed  most  and  that  picks  up  on  Sian's  point  that  not  all  countries  will  be  endowed  with  natural  resources,  whether  they  be  hydrocarbons,  wind  or  solar.  And  so  it  allows  you  to  actually  move  that  energy  to  where  it's  best  needed.  And  of  course,  on  average,  natural  gas  emits  about  50%  less  carbon  emissions  than  coal  when  used  to  produce  electricity,  making  it  the  natural  lower  carbon  substitute  in  the  near  term. And  we  also  are  trying  to  look  at  ways  in  which  we  can  re- scope  the  way  we  do  our  engineering.  In  our  US  Gulf  of  Mexico,  we  have  Vito,  a  completely  redesigned  platform.  We  see  by  actually  bringing  new  technology  and  integrating  the  way  our  scope  is  reviewed,  that  we've  been  able  to  reduce  by  70%  the  lifecycle  cost  from  the  original  host  concept,  a  true  demonstration  of  how  we  can  really  challenge  ourselves  to  improve  carbon  and  fiscal  returns  and  how  they  can  really  work  together  in  a  complimentary  way. 00:15:36Julia Streets: So  on  the  subject,  let's  go  offshore  to  hear  what's  happening  on  Shell's  newest  deep  water  platform,  Vito.  Vito  is in  the  Gulf  of  Mexico  and  has  been  especially  designed  to  deliver  greater  energy  efficiency.  Operations  Maintenance  Coordinator  Rodney  Townsend  is  there  to  show  us  around. 00:15:53Rodney Townsend: My  name  is  Rodney  Townsend  and  I'm  currently  standing  on  Shell's  offshore  platform  Vito,  Shell's  13th  deepwater  development.  I'm  around  150  miles  southwest  of  New  Orleans  in  the  blue  waters of the Gulf  of  Mexico.  Vito  is  an  amazing  facility,  four  bright  yellow  cylindrical  columns  hold  up  the  top  sides,  which  are  home  to  vessels,  separators,  pumps,  generators,  and  compressors,  all  the  processing  equipment  and  support  systems  that  we  use  in  oil  production. Vito  is  like  a  remote  island  made  of  steel  and  floating  in  the  water.  I'm  one  of  60  people  in  the  Vito  family  currently  offshore,  where  we  work  and  live  for  14  days  at  a  time.  The  platform  I'm  standing  on  today  is  different  than  the  original  plans  for  the  facility.  In  2015,  Shell  began  redesigning  the  Vito  Project  to  take  advantage  of  the  latest  technology  and  make  it  more  cost- efficient  while,  reducing  its  CO2  footprint.  It's  about  a  third  smaller  than  the  previous  platforms  we've  built,  consumes  less  electricity  and  features  energy  efficient  gas  turbines,  compression  systems  and  more.  These  measures,  along  with  others,  resulted  in  a  reduction  of  approximately  80% in  CO2  emissions  over  the  lifetime  of  the  facility.  Vito's  simplified  and  replicable  design  is  a  blueprint  for  future  deepwater  projects. 00:17:24Julia Streets: So,  could  the  world  switch  to  a  hundred  percent  renewable  energy  tomorrow?  And  if  not,  I'm  curious,  why  not? Sian,  what  do  you  think? 00:17:33Sian Lloyd-Rees: The  statistics  on  what  percentage  of  the  overall  energy  mix  renewables  makes  up  varies,  but  let's  say  it's  currently  contributes  up  to  25%  of  global  energy  demand,  and  that's  taken  us  40  years  to get to  that  point.  But  we  are  now  seeing  a  rapid  increase  in  seabed  leases  for  offshore  wind  being  allocated  and  more  solar  and  hydrogen  developments  as  well.  We're  also  seeing  government  subsidies  and  investment  prioritizing  renewable  energy  uptake.  So  good  progress,  but  as  I've  mentioned  previously,  there  remain  challenges.  And  different  parts  of  the  world  are  addressing  routes  to  market  for  the  energy  in  different  ways. In  the  UK,  we're  seeing  some  shorter  term  challenges  for  sure  with  inflation.  The  cost  of  development  has  increased.  There's  global  supply  chain  challenges,  and  today  we are  actually  seeing  wind  developers  put  their  field  development  plans  on  hold,  based  on  them  being  unaffordable  at  this  point.  And  then  you  marry  that  with  the  fact  that  the  average  time  to  take  a  wind  development  to  market  is  10  years.  Now  solar  is  much  quicker,  but  wind and  solar  both  will  need  to  be  included  in  the  energy  mix.  And  similarly,  hydrogen  will  play  a  key  role,  but  the  demand  for  hydrogen  and  the  routes  to  market  for  hydrogen  derivatives  are  yet  to  be  fully  understood.  The  industry  and  governments  are  working  together  on  how  they  can  also  accelerate  the  policies,  the  fiscal  measures  that  they  put  in  place  that  attract  the  inward  investment  that  we  see  going  forward.  So  I  think  we  can  pick  a  pace  and  scale,  but  I'm  not  sure  we  can  do  it  overnight. 00:18:57Julia Streets: Zoe  can  I  bring  you  in?  I'd  love  to  hear  your  thoughts. 00:18:59Zoe Yujnovich: Yeah,  I  think  about  this  in  terms  of  perhaps  three  time  horizons.  In  the  first  instance,  it  is  about  looking  for  ways  to  increase  electrification,  and  so  we've  globally  rolled  out  a  significant  footprint  of  EV  charging.  We're  second  to  Tesla.  And  we  also  look  at  things  like  biofuel  production,  which  can  be  drop- in  fuels,  which  can  use  existing  infrastructure  and  help  to  reduce  the  carbon  intensity.  So  that  is  where  you  see  things  like  sustainable  aviation  fuel,  which  is  also  helping  to  reduce  the  footprint  of  aviation. We  then  look  at  areas  like  carbon  capture  and  storage.  We  have  projects  that  are  actively  sequestering  carbon  in  Canada,  and  in  Australia.  And  we  continue  to  look  at  additional  opportunities  to  grow  and  scale  that,  recognizing  it's  such  a  critical  part  of  decarbonizing  the  existing  energy  system.  When  you  couple  something  like  carbon  capture  and  storage  with  liquified  natural  gas  for  example,  you  get  blue  hydrogen.  And  that  perhaps  brings  us  to  the  third  horizon,  which  is  in  hydrogen,  which  today  isn't  seen  as  competitive,  but  there  is  an  enormous  amount  of  work  that  clearly  we're  doing  around  how  we  could  de- risk  that. And  perhaps  the  best  example  to  bring  that  to  light  would  be  Holland  Hydrogen  1,  where  indeed  it'll  be  Europe's  largest  renewable  hydrogen  plant  once  it's  operational.  It's  currently  in  execution,  it's  a  200  megawatt  electrolyzer,  it's  expected  to  produce  about  80,000  kilograms  of  renewable  hydrogen  per  day.  So  I  think  the  time  horizons  will  vary,  much  of  which  will  be  influenced  by  things  like  demand,  but  I  think  it's  critical  nonetheless  that  we  do  de- risk  all  of  these  time  horizons  together. 00:20:34Julia Streets: Bassam,  can  I  bring  you  in  here?  Because  I'd  love  to  get  your  thoughts  about the  role  of  policymakers  when  it  comes  to  this  journey  to  net- zero. 00:20:43Bassam Fattouh: Well,  the  energy  system  has  always  been  transitioning  and  as  people  discovered  more  efficient  sources  of  energy,  they  switched  from  the  less  efficient,  the  higher  cost  energy  to  the  more  efficient,  lower  cost  energy.  I  think  this  transition  is  different in a  key  aspect  that  many  of  the  fuels  we  are  using  are  efficient.  The  infrastructure  around  them  has  been  built  over  many  years  and  many  of  the  assets  are  still  economical  and  operational.  But  of  course  there's  the  issue  of  externality  associated  with  emissions  that  need  to  be  taken  into  account.  And  that's  where  governments  play  a  very,  very  important  role,  because  this  needs  to  be  priced  either  through  carbon  taxes  or  emission  trading  systems. But  not  only  that,  we  need  to  achieve  a  decarbonized  system  fairly  quickly.  This  would  need,  for  instance,  early  retirement  of  assets.  If  you  leave  it  to  the  private  sector  and  without  governments  putting  in  place  incentive  through  subsidies  or  taxes,  this  will  not  take  place,  at  least  not  at  the  speed  needed.  Also,  some  of  the  technologies  that  we  need  to  rely  on,  to  reach  our  net- zero  targets,  need  to  be  scaled  up,  so  we  could  achieve  the  cost  reductions.  Again,  I  think  governments  need  to  play  a  key  role  here.  Of  course,  this  does  not  mean  that  the  private  sector  shifts  all  the  risk  to  governments.  That's  not  what  I'm  saying  at  all.  But  there  must  be  some  reasonable  allocation  of  risk  to  enable  investment  in  new  technologies  and  fuels  to  achieve  scale,  cost  reduction,  but  also  bankability  of  projects. 00:22:14Julia Streets: And Sian, your thoughts on this? 00:22:16Sian Lloyd-Rees: Well, let me  just  add,  I  think  strong  policy  certainly  encourages  the  investment  that's  needed.  And  again,  we  can  look  at  the  UK  as  this  is  a  good  example.  Very  early  policy  on  wind  encouraged  that  inward  investment.  It's  why  the  UK  currently  has  a  hundred  gigawatts  of  wind  under  development.  Sweden  moved  quickly,  they  also  have  the  same  amount. And then  of  course  we  saw  different  policies  in  different  parts  of  the  world.  In  South  Korea,  there  was  a  very  strong  policy  in  terms  of  local  content  provision  as  part  of  the  seabed  leases  and  the  encouragement  of  technology  to  be  developed.  So  South  Korea  will  never  be  the  largest  wind  development  region  in  the  world,  but  certainly  they've  moved  very  quickly  to  establish  a  very  strong  supply  chain  that  can  flourish  as  it  serves  global  markets.  So  we  do  see  policy  as  being  a  good  signal  for  where  the  government's  priorities  are  and  how  fast  they  want  to  move  and  how it differs in different parts of the world. 00:23:06Julia Streets: And  Zoe,  what  are  your  thoughts  on  this  question? 00:23:09Zoe Yujnovich: When  we  look  at  different  policies,  as  we  mentioned  a  bit  earlier,  we  have  seen  quite  a  change  in  things  like  how  the  Inflation  Reduction  Act  has  really  stimulated  opportunities  that  might  have  previously  been  on  the  fence,  but  are  now  more  interesting  because  of  the  tax  credits  that  are  being  provided.  And  then  perhaps  just  to  bring  it  to  life  in  terms  of  how  we  think  collaboration  can  work,  if  we  take  an  example  for  LNG  Canada,  which  is  an  asset  that  we  are  partners  in,  it's  on  the  west  coast  of  Canada.  It's  on  track  for  being  commissioned  by  the  middle  of  the  decade.  And  having  worked  with  customers,  predominantly  across  Asia,  who  still  rely  on  a  significant  aspect  of  gas  in  their  energy  ecosystem,  we  are  able  to  produce,  with  new  technology,  a  plant  that  actually  has  60%  lower  emissions  than  the  average  facility  that's  currently  performing  today.  And  so  an  example  of  how  collaboration  with  customers,  with  the  governments,  both  federal  and  provincial  level,  enable  us  to  develop  an  ecosystem  that  provides  the  right  incentives  and  really  drives  change  at  a  faster  pace. 00:24:15Julia Streets: But  I  wonder  if  we  could  just  look  ahead  a  little.  I'm  curious  to  hear  your  thoughts  and  Sian,  I'm  coming  to  you  first  of  all,  what  do  you  think  the  energy  mix  will  look  like  by  2050? 00:24:26Sian Lloyd-Rees: So  my  preference  would  be  that  the  energy  mix  in  2050  resembles  where  we  start  from  today,  which  is  to  have an  ambition  of  around  80%  renewable  energy  in  the  mix  by  2050  and  certainly  the  remainder  much  cleaner.  And  I  do  believe  we'll  take  a  mix  of  cleaner  energy  from  the  use  of  carbon  capture,  use  of  hydrogen,  et  cetera,  but  also  in  terms  of  the  uptick  in  renewable  energy,  predominantly  in  wind  and  solar  as  the  primary  sources. 00:24:53Julia Streets: And  Zoe,  can  I  ask  the  same  question  of  you?  What do you think the  energy  mix  will  look  like  by  2050? 00:24:59Zoe Yujnovich: I  hope  it's  radically  different  to  the  one  that  we  see  today.  I  do  hope  that  where  hydrocarbons  are  part  of  the  energy  mix,  they're  largely  decarbonized,  both  because  of  the  emissions  in  the  creation  of  the  hydrocarbons,  but  also  in  the  way  that  we  can  couple  that  with  things  like  carbon  capture  and  storage  for  customers.  I  hope  that  technology  will  play  a  really  significant  role  in  ensuring  that  that's  affordable  and  scalable.  And  I  also  hope  that  we  do  so  in  a  way  that's  quite  thoughtful  in  the  way  that  the  transition  is  navigated,  so  we  don't  see  these  volatile  moments  that  we've  experienced  that  are  incredibly  painful  for  the  world  to  endure  as  we've  seen  over  the  past  12  to  18  months. 00:25:40Julia Streets: Well,  it's  been  a  fantastic  discussion.  Thank  you  for  all  your  thoughts,  because  in  a  really  short  period  of  time,  we've  talked  about  supply  and  demand,  supply  and  value  chains,  security,  affordability,  technology,  and  innovation.  We've  thought  about  policy  and  also  ultimately  the  need  for  collaboration  in  the  ecosystem.  This  is  all  about  action  to  achieve  the  ambition.  So  my  thanks  to  Dr.  Bassam  Fattouh,  Sian  Lloyd- Rees  and  Zoe  Yujnovich.  You've  been  listening  to  The  Energy  Podcast  brought  to  you  by  Shell.  Listen  and  follow  for  free  wherever  you  get  your  podcast,  so  you  don't  miss  a  single  episode.  The  Energy  Podcast  is  a  Fresh  Air  Production,  and  I  must  remind  you  that  the  views  you've  heard  today  from  individuals  not  affiliated  with  Shell  are  their  own  and  not  Shell  PLC  or  its  affiliates.  I'm  Julia  Streets.  Thank  you  for  listening  and  until  next  time,  goodbye.See omnystudio.com/listener for privacy information.

The electric vehicle (EV) market is booming and widespread adoption of EVs is critical if countries are to realise their climate ambitions. But every new EV on the road increases the demand for convenient, affordable charging. The Energy Podcast investigates how the world is meeting this infrastructure challenge. Presented by Julia Streets. Featuring Elizabeth Connelly of the International Energy Agency, Lucie Mattera from ChargeUP Europe, Ingrid Malmgren of Plug In America and Shell’s Istvan Kapitany. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis.   TRANSCRIPT Shell The Energy PodcastSeason 4, Episode 3 00:00Julia Streets: Today on The Energy Podcast….. MUSIC BED COMES IN Istvan Kapitany: When  this  is  becoming  really  the  global  way  of  mobility,  finally,  we  really  need  to  be  sorting  out  public  charging.Ingrid Malmgren: Through  deliberate  planning  and  innovation  and  organic  growth, we're  going  to  have  chargers  where  we  need  them,  when  we  need  them,  and  we'll  have  a  cleaner,  more  sustainable  equitable  transportation  system. 00:29Julia Streets: There  can  be  little  denial  that  the  electric  vehicle  revolution  is  upon  us.  According  to  the  International  Energy  Agency,  sales  of  Electric  Vehicles,  or  EVs,  exceeded  10  million  worldwide  in  2022,  and  the  global  market  is  predicted  to  grow  even  further  this  year.  This  is  good  news  for  the  nations  relying  on  widespread  adoption  of  EVs  in  helping  them  to  realize  their  climate  ambitions.  If  global  carbon  emissions  are  to  reach  net  zero  by  2050  in  line  with  the  Paris  Agreement,  there  will  need  to  be  300  million  EVs  on  the  road  by  the  end  of  this  decade.Such  rapid  growth  intensifies  the  need  for  EV  infrastructure,  namely  access  to  reliable,  affordable  charging.  Ensuring  that  EVs  match  the  cost  and  convenience  of  running  a  conventional  fuel  vehicle  is  crucial,  not  just  for  existing  owners,  but  also  in  convincing  more  drivers  to  make  the  switch.  Governments  and  businesses  across  the  world  are  grappling  with  the  infrastructure  challenge  created  by  the  EV  boom  with  varying  degrees  of  success.Hello,  I'm  Julia  Streets,  and  today  on  The  Energy  Podcast  we  ask,  are  roads  ready  for  EVs?  MUSIC ENDS With  me  to  discuss  this  are  Elizabeth  Connelly,  transport  analyst  at  the  International  Energy  Agency.  Lucie  Mattera,  Secretary  General  of  the  infrastructure  industry  association,  ChargeUp  Europe.  Ingrid  Malmgren,  policy  director  at  Plug  In  America,  and  Shell's  Executive  Vice  President  for  Mobility,  Istvan  Kapitany. I'm  delighted  that  you're  all  with  me  today.  Elizabeth,  when  you  think  about  EV  infrastructure,  what's  the  global  outlook? 02:16Elizabeth Connelly: One  thing  to  note  about  charging  infrastructure  right  now  is  that  most  charging  of  electric  cars  occurs  at  homes,  but  a  lot  of  the  attention  is  around  public  charging,  of  course,  because  this  helps  enable  people  to own EVs  that  don't  have  access  to  home  charging.  Looking  at  the  picture  today,  worldwide  there  are  about  we  estimate  17  million  home  chargers  for  electric  vehicles  and  that's  compared  to  about  three  million  public  EV  chargers. In  terms  of  who's  leading  the  way  with  charging  infrastructure,  I  don't  want  to  say  any  one  country  is  doing  better  or  worse,  because  I  think  it  really  depends  a  lot  on  the  setup  of  homes  and  whether  people  are  living  in  detached  homes  or  in  multi- unit  dwellings.  So  for  example,  in  the  US  I  think  around  80%  of  EV  owners  live  in  single  family  homes  and  so  it's  really  easy  to  charge  at  home  and  there's  less  pressure  for  there  to  be  public  charging  infrastructure,  at  least  in  these  early  stages. While  on  the  other  hand,  in  China  only  about  50%  of  charging  occurs  at  home. So  I  think  there  are  factors  that  make  it  very  different  across  different  regions  around  what is  the  right  level  of  public  charging  infrastructure.  For  example,  China  accounted  for  50%  of  electric  light  duty  vehicles  last  year  but  65%  of  the  public  charging  infrastructure.  So  I  think  in  that  way  China's  leading,  but  I  think  there's  also  factors  that  make  it  you  need  to  be  leading  in  terms  of  public  charging. 03:45Julia Streets: I've  heard  some  people  talk  about  having  quite  deep- seated  concerns  about  what  they  might  call  range  anxiety,  in  terms  of will  you  be  able  to  get  the  mileage,  the  kilometrage  that  you  are  looking  for. 03:57Elizabeth Connelly: Sure.  So  at  least  in  terms  of  cars,  and  I  think  trucks  as  well,  range  anxiety  is  a  real  concern.  We  see  automakers  in  the  car  industry,  and  I  think  also  in  the  truck  industry,  really  looking  at  how  they  can  increase  EV  range,  especially  in  ways  that  maybe  don't  require  larger  and  larger,  heavier  and  heavier  batteries.  So  thinking  about  these  in-route  charging,  whether  it  be  highway  fast  chargers  like  we've  already  seen  across  highways  around  the  world  or  thinking  about  for  trucks  in  particular  rest  stops,  how  long  the  rest  time  is  and  building  in  infrastructure  that  can  facilitate  charging  in  whatever  amount  of  time.  I  think  the  US  and  the  EU  have  different  regulations  on  how  long  driver  breaks  should  be  for  these  long  haul  trucking  segments.  So  really  thinking  about  how  the  operations  need  to  work  in  order  to  design  the  adequate  infrastructure  in  a  way  that  could  help  reduce  as  much  as  possible  the  power  demand  on  the  grid. 04:55Julia Streets: Lucie,  from  your  point  of  view,  at ChargeUp Europe,  what are your  thoughts? 04:59Lucie Mattera: So  on  range  anxiety,  what  we  are  finding  that  this  is  a  factor  that  is  less  prevalent  today  in  terms  of  sort  of  slowing  down  the  switch  to  EV  charging.  There  was  a  recent  consumer  survey  that  was  commissioned  by  the  European  Commission  and  what  they  found  was  the  primary  obstacle  for  the  switch  to  EV  was  actually  the  price  of  the  car  rather  than the  range  anxiety  or  the  lack  of infrastructure. So in terms of  what  came  up  first  as  an  obstacle  for  a  driver  that's  considering  the  switch  to e-mobility,  that  was  firmly  on  the  top  of  the  list. 05:32Julia Streets: Ingrid,  what  do  you  think? 05:34Ingrid Malmgren: I think  that  with  regard  to  passenger  vehicles,  since  so  many  people  charge  at  home  in  the  United  States,  for  most  people's  day- to- day  driving,  range  anxiety  is  not  a  huge  issue.  Most  people  drive  around  30  miles  a  day  and  new  EVs  have  ranges  well  over  250  miles  a  day.  So  many  people  only  need  to  charge  up  every  several  days  or  once  a  week. 06:00Julia Streets: Istvan,  can  I  bring  you  in  here?  How  important  in  the  big  debate  about  whether  a  motorist  will  make  the  switch  to  EV  is  the  question  of  infrastructure? 06:10Istvan Kapitany: It's  very,  very  important  and  we are  already  charging  in  30  countries  in  the  world.  So  we  are  pretty  much  one  of  the  biggest  operator  in  terms  of  the  reach.  The  United  States  is  very  different  than  China.  So  in  China  we  have  already  well  over  20,000  public  chargers.  Most  of  the  people,  of  course,  are not  having  the  ability  to  charge  at  home,  so we really  need  to  be  catering  for  that  immediately. In  the  United  States,  in  different  parts  of  the  United  States,  you  have  the  picture  very  different.  And in  Europe,  we  just  did  a  survey  now,  whilst  a  year  ago  it  was  basically  33%  of  the  people  who  didn't  have  charger  at  home,  this  is  now  44%  of  the  people  who  are  driving  EV  cars  do  not  have  charger  at  home. Why  is  it  happening?  Of  course,  after  the  early  adapters  it  is  becoming  more  and  more  mainstream  activity,  which  is  great.  We  see  that  people  are  buying  this  for  commuting  and  therefore  public  charging  is  becoming  a  very  important  part  of  this  equation.  At  the  early  stage,  many  people  thought,  oh,  it's  going  to  be  all  home  charging.  It  is  just  not  possible.  We  are  in  84  markets  and  90%  of  the  people  who  fill  up  at  Shell  wouldn't  be  today  with  electricity  or  with  fuel  but  wouldn't  have  an  ability  to  charge  at  home.  So  when  this  is  becoming  really  the  global  way  of  mobility,  finally,  we  really  need  to  be  sorting  out  public  charging. 07:30Julia Streets: There's  a  huge  element  here  about  the  growing  availability  of  charging  needed  in  convenient  locations,  whether they're  from forecourts  and  streets  to  workplaces,  retail  car  parks.  I  just  want  to  pick  up  on  this  because  we're  going  to  take  a  quick  trip  to  Germany  where  Carlo  Cumpelik,  Shell's  network  delivery  manager  for  Germany,  Austria,  and  Switzerland,  has  been  at  an  EV  charging  site  in  Berlin. 7:53Carlo Cumpelik: I  stand  here  in  Berlin  at  Konrad -Wolf -Street at  the  parking  lot  next  to  the  REWE  Supermarket.  REWE  is  one  of  Germany's  leading  food  retail  companies.  This  location  is  the  very  first  REWE  Supermarket  where  we  installed  our  recharge  charge  posts. In  the  beginning  of  this  year,  Germany  crossed  the  magic  number  of  over  one  million  fully  electric  cars  registered  in  the  country.  The  German  government  expects  15  million  electric  cars  on  the  streets  by  2030.  With  this  number  of  electric  vehicles  growing,  our  aim  is  to  enable  as  many  people  to  drive  as  many  electric  kilometres  as  possible,  whether  that  is  at  home,  at  work,  or  on  the  go. REWE  opened  their  shops  at  our  service  stations  in  the  Czech  Republic  and  in  Austria.  In  Germany,  REWE  asked  us  to  deliver  a  fast  charging  experience  for  their  customers  at REWE  Supermarkets  and  Penny  Discounters.  Currently,  we  already  operate  our  charging  solutions  at  10  supermarkets  and  we  plan  to  install  Shell  recharge  charging  posts  at  a  minimum  of  400  REWE  Supermarkets  and  Penny  Discounters  across  the  whole  of  Germany. 09:15Julia Streets: Carlo  Cumpelik. I  suppose  one  of  the  things  that  we're  thinking  about  is  we  talk  about  private  charging  and  we  talk  about  public  charging,  I'm  wondering  about  almost  what  you  might  call  municipal  charging.  I'd  be  really  curious  will  we  see  some  infrastructure  innovation  in  terms  of  roads  and  road  infrastructures,  almost  like  the  railways  providing  some  charging  capability. Elizabeth,  I'd  love  your  thoughts  on  that. 09:40Elizabeth Connelly: Sure.  So  I  think  a  lot  of  the  conversation  around  charging  infrastructure  has  tended  to  be  about  light  duty  vehicle  charging,  but  obviously  electrifying  trucks  is  I  think  much  more  complicated  and  will  require  some  new  innovative  solutions.  So  in  addition  to  the  traditional  box  cable  charging  points  that  we've  been  talking  about,  I  think  particularly  for  these  heavy  duty  vehicle  segments  for  long  haul  trucking  or  even  just  medium- sized  delivery  trucks,  there  could  be  a  place  in  the  future  for  electric  road  systems. So  that  could  be  either  wireless  inductive  charging  built  into  the  road  or  it  could  be  something  that  is  a  throwback  where  we  have  overhead  cables  that  you've  seen  in  trolley  buses  of  the  past.  These  things  can  help  reduce  demand  on  the  grid  from  cable  charging  and  spread  out  the  power  demand  over  the  journey  of  the  vehicle  extending  its  range  without  needing  these  megawatt- scale  fast  chargers. 10:37Julia Streets: So  I  wonder  if  we  could  change  the  conversation  and  look  at  it  from  a  slightly  different  point  of  view,  which  is  the  obstacles,  the  hurdles  to  infrastructure,  because  this  ultimately  really  matters  when  it  comes  to  adoption.  Ingrid,  where  do  we  see  the  biggest  hurdles? 10:51Ingrid Malmgren: The  big  issue  in  the  United  States  is  for  charging  for  people  who  don't  have  access  to  home  charging.  People  who  live  in  multi- unit  dwellings  or  multi- family  dwellings.  It's  not  just  an  accessibility  issue,  because  it's  far  less  convenient,  but  it's  also  an  affordability  issue. For  people  who  can't  charge  at  home,  they  need  to  use  public  chargers,  which  typically  cost  between  three  and  four  times  as  much  per  kilowatt  hour  as  your  home  charging  rates.  It's  definitely  a  cost  issue.  So  there's  definitely  an  equity  issue  there,  and  that  I  think  is  the  biggest  hurdle  that  we're  facing  right  now,  particularly  in  cities. Obviously,  the  distance  between  chargers  is  an  issue  and  having  access  to  public  charging  in  places  where  there's  far  less  demand  for  it.  That  tends  to  be  the  issue  in  rural  areas.  And then  there's  always  an  income  issue.  So  if  you  rent  in  the  country  and  you  don't  own  your  home,  you're  less  likely  to  be  able  to  install  a  charger.  You'd  have  to  get  permission  from  your  landlord.  You  wouldn't  be  able  to  recoup  that  money.  So  the  income  issue  definitely  can  be  exacerbated. I  think  EVs  could  go  either  way.  They  could  make  transportation  more  equitable  or,  if  they're  not  implemented  well  with  charging,  it  could  make  it  less  equitable. 12:11Julia Streets: Lucie,  I'd  love  to  hear  your  thoughts  about  where  some  of  the  hurdles  may  exist. 12:16Lucie Mattera: In  Europe,  you  will  find  some  similar  difficulties  as  Ingrid  mentioned.  It's  about  how  do  you  make  it  a  little  bit  more  democratic  for  people  who  do  not  live  in  detached  house  but  in  multi-family  buildings.  You  have  examples  of  good  practice  across  Europe  to  basically  make  that  easier. In  France,  you  have  a  right  to  plug.  Basically  a  tenant  in  a  building  can  request  to  have  a  charging  station  installed  in  the  building.  You  can  also  prescribe  some  electrification  requirements  for  buildings  that  are  being  renovated  so  that  it  doesn't  cost  a  fortune  when  you  come  in  as  a  new  tenant  to  get  your  EV  charged at  home. On  the  point  that  you  were  making,  Ingrid,  indeed,  the  infrastructure  will  go  where  the  demand  is,  and  so  you will  have  some  of  that  imbalance  between  areas  where  you  have  a  lot  of EVs and  areas  where  you  have  fewer  EVs.  The  way  Europe  is  trying  to  address  that  is  by  setting  targets  by  law.  So  those  targets  are  both  capacity  based  and  distance  based.  So  they  are  dynamic,  which  means  they  will  increase  over  time  as  the  uptake  of  EVs  increase,  and  again,  as  the  number  of EVs on the  road  increases,  you'll  see  more  charging  infrastructure. Adding  to  that  a  distance  based  target,  which  means  you  need  to  have  enough  infrastructure  at  a  reasonable  distance.  They've  set  that  both  for  HEVs  and  for  EVs  and  that's  coming  into  force  next  year  and  hopefully  will  address  some  of  the  difficulties  or  inequality  in  the  spread of EV charging infrastructure  we're  seeing  today  across  Europe. 13:47Julia Streets: Istvan,  I'd  love  to get  your  thoughts are  on  what  are  the  main  issues  for  businesses  like  Shell? 13:52Istvan Kapitany: I  see  three  main  issues with EV  for  the  society  to  deal  with.  One  is  it  has  to  be  available.  Really  need  to  be  giving  and  offering  all  the  support  for  the  different  kind  of  commercial  ventures  to  build  out.  We  order  now  more  EV  chargers  at  Shell  Mobility  than  petrol  pumps.  That  always  surprises  people.  So  we  are  obviously  great  believers  of  letting  the  business  to  make  sure  that it  is  becoming  something  which  is  a  commercial  venture  that  you  can  make  money  out  of  it. Because  if  you  build  a  system  up  on  regulation  too  much,  it's  not  going  to  be  effective  and  not  efficient.  Therefore,  it  has  to  be  commercially  oriented.  It  has  to  be  reliable,  because  that's  our  main  job  to  make  it  a  reliable  experience  for  customers. I  was  recently  in  a  conference  and  I  asked  put  up  your  hand  if  you  had  a  problem  with  filling  up  with  petrol.  Nobody  put  it  up. Put  up  your  hand  if  you have  a  problem  with  using  a  public  charger.  Almost  everybody  put  up  their  hand. Finally,  it  has  to  be  investable.  So  it  has  to  be  a  business  case  which  is  making  it  profitable.  Because  if  you're  not  able  to  make  this  business  profitable  at  a  normal  price  which  people  can  afford,  it's  going  to  be  very  difficult  to  maintain. 15:05Julia Streets: I'd  love  to  bring  in  Elizabeth  at  this point. From a  public  sector  versus  private  sector  point  of  view,  what  more  can  policymakers  and  businesses  do  to  help? 15:14Elizabeth Connelly: Sure.  Well,  I  think,  I'm  not  going  to  say  regulations  are  bad  in  this  case.  There  can  be  carrots  and  sticks,  but  I  think  policymakers  can  do  a  lot  to  help  ensure  that  there  will  be  a  business  case. So  take  for  example  the  EU's  alternative  fuels  infrastructure  regulation.  This  is  basically  saying  we  need  a  certain  coverage  of  charging  infrastructure  while  at  the  same  time  they've  passed  CO2  standards  that  are  really  pushing  forward  zero-emission  vehicles,  including  electric  vehicles.  So  it's  taking  a  kind  of  comprehensive  approach,  a  suite  of  policies  that  help  build  demand  for  charging  as  well  as  putting  in  place  metrics  for  how  many  chargers  there  need  to  be  to  ensure  certain  levels  of  utilization,  and  of  course  ensure  that  that  drivers  are  able  to  recharge  their  vehicles. So  I  think  policymakers  play  a  big  role  in  helping  push  businesses  to  deploy  infrastructure,  invest  in  different  types  of  infrastructure.  So  I  think  taking  this  really  comprehensive  approach,  we've  seen  it  not  just  in  the  EU,  I  think  more  recently  with  the  IRA  in  the  US.  China's  been  doing  it  for  ages.  We've  seen  it  in  India  with  different  schemes  there.  I  think  a  lot  of  countries  are  really  seeing  how  this  works  well  and  I  think  it's  something  that  can  really  compliment  businesses  as  well. 16:29Julia Streets: Istvan,  could  you  give  us  some  examples  of  where  you  think  businesses  and  policy  makers  are  working  well  together? 16:35Istvan Kapitany: I  think  the  examples  that Elizabeth  used are  very,  very  good  examples.  So  basically  to  provide  the  policy  framework  is  fantastic,  and  you  use  the  example  of  the  United  States,  the  European  Union,  and  it  is  really  good  because  this  is  basically  incentivizing  you  to  do  the  job. Where  really  business  should  be  coming  in  is  that  then  the  playing  field  should  be  really  levelled  and  we  should  be  very,  very  careful  with  not  over  incentivizing  or  disincentivizing  different  kind  of  players.  That  is  I  think  very  important  going  forward. The  other  area  where  I  think  business  and  policy  makers,  but  particularly  governments,  should  work  together  better  is  really  areas  like  grid  capacity,  electrification.  We  do  have  over  150,000  chargers  in the  30  countries where they  are  operational,  but  as  we  speak,  we  have  hundreds  of  chargers  that  we  cannot  connect  because  there  is  no  grid  capacity  available  in  that  area.  In  some  instances  we  are  waiting  as  long  as  18  months  to  two  years  because  somehow  that  thing  is  really  lagging  behind. Two  areas  I  think  we  need  to  improve  the  game  is  the  grid  capacity.  It's  almost  every  country,  so  it's  not  country  specific.  Also,  of  course,  which  is  another  very  important  element  for  us,  because  we  clearly  would  like  to  achieve  our  target  to  be  an  net  zero  company  by  2050,  that  also  the  electricity  that  we  are  supplying  is  more  and  more  renewable  energy  based.  Because  in  some  of  the  markets,  the  electricity  grid and  the  electricity  production  is  not  green,  it's  quite  far  from  it.  So  we  need  to  be  working  on  that  as  well  and  incentivizing  that  it  happens. 18:12Julia Streets: Lucie,  would  you  agree  with  that  and  are  there  any  other  challenges  you'd  anticipate? 18:16Lucie Mattera: Istvan  is  making  a  very, very  good  point  about  the  grid  connection  and  the  need  for  grid  upgrades.  All  of our  CPOs  are  telling  us  this  is  the  number  one  bottleneck  for  the  deployment  of EV  charging  infrastructure  today.  I'm  talking  about  Europe.  Istvan  was  talking  about  delays  of  18  months up  to  two  years,  you  have  some  markets  in  Europe  where that  can  go  up  to  three  years  to  get  your  connection  and  permitting.  So  that  of  course  is  not  acceptable  in  a  context  where  you're  trying  to  deploy  as  fast  as  possible, and of course,  there’s a  cost  associated. 18:45Julia Streets: I'm  really  curious  to  think  about  what  we  believe  our  roads  will  look  like  by  2050.  Ingrid,  I'd  love  to  get  your  thoughts  on  this.  What  do  you  envisage? 18:57Ingrid Malmgren: If  I  think  ahead  to  2050,  I  think  that  we  won't  give  much  more  thought  to  driving  electric  and  thinking  about  charging  stations  than  we  do  now  to  driving  on  gasoline  and  pulling  into  a  gas  station.  I  think  that  through  deliberate  planning  and  innovation  and  organic  growth  that  we're  going  to  have  chargers  where  we  need  them,  when  we  need  them,  and  we'll  have  a  cleaner,  more  sustainable  equitable  transportation  system. 19:29Julia Streets: Elizabeth,  your  thoughts  on  what  we  think  the  roads  will  look  like  in  2050? 19:34Elizabeth Connelly: The  idea  is  that  by  2050  almost  everything  is  going  to  be  electrified  on  the  roads.  But  I  think  I  want  to  take  this  opportunity  to  mention  also  the  importance  of  reducing  private  vehicle  ownership  and  moving  to  this  public  and  shared  mobility  as  a  way  to  help  moderate  electricity  demand.  The  kind  of  challenges  we're  talking  about  with  building  out  the  grid  and  the  charging  infrastructure  can  really  be  addressed  by  reducing  the  demand  for  electricity  for  transport  in  terms  of  using  buses.  I  think  this  will  be  really  important  for  transport  in  the  future. 20:08Julia Streets: Lucie. 20:09Lucie Mattera: The  broader  context  is  climate  neutrality  by  mid- century  and  that  is  now firmly in the  books.  So  e-mobility,  which  has  become  even  more  mainstream,  it  is  becoming  more  mainstream  today,  but  it  would  be  so  mainstream  by  2050  we  won't  even  notice  it  anymore,  it  would  just  be  the  new  normal. Greener cleaner roads and a brighter future for all of  us. 20:31Julia Streets: Wonderful.  Thank  you  very  much,  Lucie.  Istvan,  your  thoughts  about  what  the  roads  will  look  like  by  2050? 20:37Istvan Kapitany: I  agree  with  everybody  who  was  saying  that  electric  vehicles,  whether  it's  passenger  cars  or  heavy  duty  vehicles,  will  be  playing  a  big  part  of  the  mobility  system  by  2050,  and  it  has  to  be  friction  free  and  easy  to  use.  More  and  more  smart  city  solutions,  more  and  more  ride-sharing,  car-sharing  activities  we will be  seeing  of  course  in  the  future. But  the  one  point,  and  the  last  point  I  would  make,  it  has  to  be  in  the  context  of  200  countries  in  the  world,  not  only  just  40,  and  therefore  we  need  to  be  ready  for  different  kind  of  solutions  all  around  the  world  to  cater  for  every  customers  in  this  mobility  journey. MUSIC BED COMES IN 21:18Julia Streets: Well,  I  have  to  say  it's  been  a  phenomenal  conversation,  because  in  a  really  short  period  of  time  we've  thought  about  the  ambition,  we've  thought  about  the  infrastructure,  the  dynamics  of  delivering  infrastructure.  We've  also  thought  about  some  of  the  challenges,  some  of  the  hurdles.  Clearly  the  opportunity  is  there,  what  the  future  may  hold. My  thanks  to  Elizabeth  Connelly,  Lucie  Mattera,  Ingrid  Malmgren,  and  Istvan  Kapitany. You've  been  listening  to  The  Energy  Podcast,  brought  to  you  by  Shell.  Listen  and  follow  for  free  wherever  you  get  your  podcasts  so  you  don't  miss  a  single  episode. Next  time,  we'll  be  discussing  what  role  can  oil  and  gas  play  in  the  energy  transition? The  Energy  Podcast  is  a  Fresh  Air  production  and  I  must  remind  you  that  the  views  you've  heard  today  from  individuals  not  affiliated  with  Shell  are  their  own  and  not  Shell  plc  or  its  affiliates. I'm  Julia  Streets,  thank  you  for  listening.  Until  next  time,  goodbye. MUSIC ENDSSee omnystudio.com/listener for privacy information.

Carbon markets are advancing on a global level, following the first country-to-country trades at COP27. The Energy Podcast investigates how carbon pricing works and examines what role it can play in the race to reduce greenhouse gas emissions. Presented by Julia Streets. Featuring Dr Hasan Muslemani from the Oxford Institute of Energy Studies, Andrea Bonzanni from the International Emissions Trading Association and Shell’s senior carbon pricing policy advisor, Dr Malek Al-Chalabi. With additional contribution by Stephen Kansuk, Head of Environment and Climate Change at the United Nations in Ghana. The Energy Podcast is a Fresh Air Production for Shell, produced by Annie Day and Sarah Moore, and edited by Molly Lynch and Sophie Curtis.   EPISODE TRANSCRIPT: 00:00Julia Streets: Today  on  The  Energy  Podcast... MUSIC BED COMES IN Andrea Bonzanni: Emissions must be reduced globally irrespective of where they take place. The atmosphere is one at the end of the day. Article VI allows reducing emissions where it’s more efficient. Dr Hasan Muslemani: We have solutions that are being praised as the holy grail of net- zero… The issue is that we need all the solutions that we can get because in the fight against climate change, we are really in a race against time. Julia Streets: The  cost  of  climate  change.  It's  a  phrase  commonly  used  by  governments,  companies,  and  campaigners  across  the  world  when  discussing  the  need  to  limit  global  warming  to  well  below  two  degrees  Celsius.  Quantifying  the  exact  cost  of  far- reaching  effects  of  climate  change  is  not  an  easy  task.  But  putting  a  price  on  emissions  is  viewed  by  many  as  an  effective  means  to  help  drive  down  levels  of  CO2  in  the  atmosphere.  The  idea  is  simple.  Putting  a  price  on  carbon  emissions  creates  a  financial  incentive  to  reduce  them.Carbon  markets  have  existed  for  decades.  There  are  many  carbon  pricing  systems  around  the  world,  but  at  present,  it  is  estimated  that  only  a  quarter  of  emissions  are  priced.  That  could  soon  change.  At  last  year's  COP27  climate  conference  in  Egypt,  the  first  country- to- country  carbon  trades  took  place.  Could  this  pave  the  way  for  further  uptake  of  carbon  trading  and  what  impact  could  that  have  in  the  fight  against  global  warming? Hello,  I'm  Julia  Streets,  and  today  on  The  Energy  Podcast:  How  can  carbon  markets  limit  climate  change? MUSIC ENDS   With  me  to  discuss  this  are  Andrea  Bonzanni,  who's  the  international  policy  director  at  the  International  Emissions  Trading  Association,  who  you  may  well  remember  from  a  previous  episode  of  The  Energy  Podcast.  He  is  joined  by  Dr.  Hasan  Muslemani, who is  the  head  of  Carbon  Management  Research  at  the  Oxford  Institute  for  Energy  Studies.  And  our  third  guest  is  Dr.  Malek  Al- Chalabi,  who  is  a  senior  carbon  pricing  policy  advisor  at  Shell. Hasan,  perhaps  I  could  start  with  you.  For  the  benefit  of  the  audience,  would  you  just  mind  explaining  what  we  mean  when  we  talk  about  carbon  markets? 02:18Dr. Hasan Muslemani: The  fundamental  concept  behind  a  carbon  market  is  really  to put  a  price  on  carbon,  or  in  other  words,  to  quantify  the  cost  of  damages  that  emissions  will  cost  our  society  over  time.  To  do  this,  we  have, at  the  heart  of  carbon  markets,  what  is  called  carbon  accounting  or  greenhouse  gas  accounting.  This  represents  a  set  of  standards  and  methods  that  help  us  quantify  but  also  verify  the  impact  that  each  business  creates  on  the  environment,  and  this  impact  is  reported  in  terms  of  tons  of  CO2  emitted. Now,  something  that  I  really  want  to  emphasize  here  is  that  today,  we  speak  of  carbon  markets,  but  we  need  to  differentiate  between  two  different  types  of  markets.  The  first  is  what  we  call  a  compliance  market,  which  is  a  market  that  is  heavily  regulated  and  corresponds  to  a  specific  region  or  jurisdiction,  and  where  companies  within  that  jurisdiction  have  to  take  part  in  the  market.  The  other  one  is  a  voluntary  one.  This  is  a  lot  less  regulated  and  where  participation  is  voluntary,  as  the  name  implies.  The  voluntary  carbon  market  is  based  on  the  concept  of  offsetting.  That  is  where  a  company  wishes  to  mitigate  or  neutralize  its  own  emissions.  So,  it  goes  out  and  invests  in  projects  which  are  reducing  equivalent  amounts  of  emissions  elsewhere  in  the  world. 03:30Julia Streets: Can  you  talk  to  us a little bit about how  they  work  in  practice  in  everyday  terms? 03:36Dr. Hasan Muslemani: Starting  on  the  compliance  markets, and  the  objective  is  really  to  put  a  price  on  carbon,  there's  two  different  ways  to  do  this.  The  first  one  is  carbon  taxation,  which  should  be  a  simple  concept.  We  have  countries  like  Norway  and  Denmark,  which  would  impose  a  specific  tax  on  every  ton  of  CO2  that  a  company  would  produce  within  those  countries.  The  key  here,  really,  is  for  that  carbon  tax  to  be  high  enough  to  incentivize  businesses  to  change  behavior  or  to  move  to  greener  production.  This  is  essentially  a  stick  form  of  regulation  where  businesses  have  to  lower  their  emissions  or  face  an  additional  cost. The  other  mechanism,  which  is  a  cap  and  trade  mechanism,  which  is  the  more  familiar  one,  and in  this  system  we  have  an  authority,  say,  the  European  Commission,  which  sets  a  cap  on  how  much  emissions  can  be  generated  as  a  whole  within  the  continent,  within  Europe,  and  then  allocates  a  number  of  allowances  or  carbon  credits  to  European  countries  and  companies  for  them  to  trade  amongst  each  other.  Here,  each  carbon  credit  or  allowance  is  representative  of  one  ton  of  CO2. This  allocation  process,  what  I  want  to  note,  is  done  using  the  historical  emissions  of  each  one  of  these  companies.  This  is  a  process  that  we  call  grandfathering.  The  overall  cap  is  reduced  each  year  in  order  to  meet  a  certain  European  climate  target  in  the  future.  The  way  this  works  is  where  companies  that  have  lowered  their  emissions  below  their  targets,  now  they  have  surplus  of  allowances,  which  they  can  go  into  the  market  and  sell  to  companies  that  did  not  do  so  well  and  will  require  to  buy  credits.  So,  this  mechanism  really  is  sort  of  a  carrot  but  also  a  stick  sort  of  regulation. 05:12Julia Streets: Thank  you  for  explaining  how  they  work.  I  suppose  my  next  question,  is  how  effective  are  they  proving  to  be? 05:19Dr. Hasan Muslemani: The  longest  running  and  actually  the  biggest  ETS  in  the  world,  that  is  the  EU ETS  or  emission  trading  scheme.  This  has  started  in  2008  and  has  gone  through  different  phases  over  the  years.  But  I  do  want  to  mention  that  it  has  suffered  from  a  number  of  setbacks  over  those  years.  To  give  an  overview,  the  carbon  price  at  the  beginning  was  around  30  euros  per  ton,  but  that  price  has  crashed  to  less  than  5  euros  around  the  financial  crisis  of  '09.  This  was  most  likely  because  of  two  main  reasons.  The  first  one  is  that  companies  had  to  report  their  emissions  in  such  a  regulated  manner  that  they  have  not  done  before,  and  so  they  might  have  overestimated  how  much  emissions  they  emit  and  hence  how  much  allowances  they  eventually  received  from  the  system.  But  also,  because  of  the  financial  crisis  itself,  it  meant  that  business  offices  aren't  lit,  emissions  aren't  as  high  as  usual,  so  they  did  not  need  to  surrender  as  much  allowances  at  the  end  of  the  compliance  phase,  which  eventually  meant  there's  an  oversupply  of  credits  in  the  market,  and  so  the  price  has  crashed. The  good  news  is  the  EU ETS  has  gone  through  sort  of  a  recovery  mode  over  the  past  10  years,  and  today  the  price  has  not  only  recovered  but  reached  the  level  which  is  believed  to  incentivize  most  sectors  to  lower  emissions,  and  that  level  is  around  100  euros  per  ton. 06:41Julia Streets: It's  been  so  helpful  to  get  a  sense  of  progress,  thinking  about  the  dynamics  of the  market  since  launch,  and  also  to  think  about  the  market  share. Andrea,  let  me  bring  you  in  here  because  this  is  about  the  world's  attempts  to  limit  global  warming  to  well  below  two  degrees  Celsius,  in  line  with  the  Paris  Agreement.  Are  we  likely  to  see  the  growth  of  carbon  markets  in  pursuit  of  this  great  ambition? 07:03Andrea Bonzanni: Well,  we  know  that  meeting  the  goals  of  the  Paris  Agreement  requires  a  radical  transformation  of  many  areas  of  our  economies  and  our  lives,  and  for  the  reason  outlined  by  Hasan,  carbon  markets  and  carbon  pricing  in  general  are  one  of  the  tools  that  governments  are  increasingly  considering.  Carbon  markets  are  spreading  from  a  core  of  rich  runs  economies  such  as  the  EU,  California,  South  Korea, and  New  Zealand,  to  middle- income  and  emerging  countries.  This  year,  we  had  Mexico  and  Indonesia  launching  their  emission  trading  systems,  and  the  two  schemes  are  expected  to  expand  and  evolve  over  time.  There  are  other  countries  in  Southeast  Asia  and  Latin  America  that  are  implementing  carbon  markets,  and  even  some  African  countries  are  starting  to  consider  them. 07:45Julia Streets: Andrea,  when  we  last  spoke,  you  would  just  at  COP27.  As  I  mentioned  in  the  introduction,  that's  when  the  first  country- to- country  carbon  trade  took  place.  Could  you  tell  us  a  bit  more  about  that and  what  happened  at  COP27? 07:58Andrea Bonzanni: Sure.  At  COP27,  Ghana  authorized  the  transfer  to  Switzerland  of  certified  emission  reductions.  This  transaction  was  the  first  of  its  kind  under  Article  VI  of  the  Paris  Agreement.  There  were  emission  reductions  generated  in  Ghana  thanks  to  the  implementation  of enhanced  rice  production  techniques  that  avoided  CO2  and  methane  emissions.  These  emissions  will  be  counted  towards  the  climate  target  of  Switzerland.  In  turn,  Ghana  commits  to  apply  a  corresponding  adjustment  to  its  emission  account. Mechanisms  like  this  have  vast  potential  to  generate  investment  flows  in  climate  change  mitigation  and  sustainable  development  from  the  Global  North  to  the  Global  South.  Article  VI is  still  a  small,  nascent  market,  but  we  expect  it  to  grow  and  countries  are  looking  to  buy  and  sell  emissions  to  each  other. In  addition  to  Ghana  and  Switzerland,  after  COP27,  another  transfer  was  authorized,  this  time  from  Thailand  to  Switzerland.  A  country  like  Japan  has  26  bilateral  agreements  with  countries  around  the  world  and  is  looking  to  import  emission  reductions  in  the  near  future.  Countries  like  Singapore,  South  Korea,  New  Zealand  and  Canada  are  all  looking  to  purchase  carbon  reduction  from  abroad.  Many  countries  around  the  world,  mostly  developing  countries,  are  preparing  and  getting  ready  to  become  sellers  in  this  market. 09:20Julia Streets: Andrea,  just  picking  up  on  one  of  the  comments  you  made  there.  One  project  being  implemented  under  the  Ghana- Switzerland,  Article  VI  carbon  pricing  deal  is  a  UN  initiative  that  aims  to  reduce  greenhouse  gas  emissions  from  rice  cultivation  by  training  local  farmers  in  sustainable  agriculture  practices.  Rice  cultivation  currently  accounts  for  over  10%  of  global  methane  emissions,  and  this  is  because  the  main  method  of  rice  farming  involves  flooding  the  fields,  which  prevents  oxygen  from  penetrating  the  soil,  causing  a  buildup  of  bacteria.  This  bacteria  emits  methane  into  the  atmosphere,  contributing  to  global  warming. The  United  Nations  Development  Program  aims  to  promote  climate- smart  rice  cultivation  for  Ghanian  farmers,  leading  to  a  significant  reduction  in  methane  emissions.  Stephen  Kansuk,  Head  of  Environment  and  Climate  Change at  the  United  Nations  in  Ghana,  speaking  from  the  capital  Accra,  told  us  more…. 10:18Stephen Kansuk: In  Ghana,  rice  is  cultivated  as  both  food  and  cash  crop.  Research  shows  that  in  2020,  Ghana's  total  rice  consumption  was  about  1. 4  million  metric  tons.  To  support  rice  farmers  to  reduce  methane  emissions  in  Ghana,  the  United  Nations  Development  Program,  the  Ministry  of  Environment  Science  Technology  Innovation,  the  Ministry  of  Food  and  Agriculture,  and  the  Environmental  Protection  Agency,  all  in  Ghana,  and  the  future  office  for  the  environment  in  Switzerland  are  implementing  a  climate- smart  rice  project. The  project  is  supporting  over  7, 000  rice  farmers  across  Ghana  to  adopt  an  alternate  wet  and  drying  technology  in  rice  cultivation  to  reduce  methane  emissions.  This  project  is  one  of  the  initiatives  under  a  partnership  between  the  government  of  Switzerland  and  Ghana.  The  agreement  is  to  allow  public  and  private  institutions  to  collaborate  to  invest  in  climate  change  mitigation  interventions  in  Ghana  and exchange  carbon  credits  with  Switzerland  for  payments. In  terms  of  benefits  with  this  climate  smart  rice  project,  our  target  is  to  achieve  about  1. 1  million  tons  of  carbon  dioxide  equivalents,  emission  reduction  targeted  by  2030.  The  project  will  also  provide  extra  incomes  for  the farmers  as  a  carbon  revenue  through  a  performance  bids  payment  system,  and  this  will  help  increase  their  resilience.  The  project  is  also  helping  to  create  a  number  of  jobs  at  the  rural  level  so  that  they  will  be  able  to  adapt  effectively  to  the  impact  of  climate  change. 12:14Julia Streets: Andrea,  I  wonder  if  I  could  bring  you  in  because  there  has  been  some  reaction  that  has  accused  governments  of  rich  countries  of  outsourcing  their  emissions  reductions  to  governments  of  developing  countries.  Is  that  fair? 12:27Andrea Bonzanni: Emissions  must  be  reduced  globally  irrespective  of  where  they  take  place.  The  atmosphere  is  one  at  the  end  of  the  day.  Article  VI  allows  reducing  emissions  where  it's  more  efficient,  deploying  capital  where  it  can  abate  or  remove  more  emissions.  Researchers  have  quantified  the  cost  savings  of  meeting  climate  targets  used  in  Article  VI  will  be  up  to  250  billion  US  dollars  a  year  by  2030. There  is  a  perception  out  there  that  projects  reducing  emissions  abroad  replace  strong  climate  action  at  home.  But  I  don't  think  there  is  evidence  supporting  this  thesis.  In  the  longer  run,  achieving  net- zero  means  that  every  ton  of  CO2  emitted  must  be  compensated  by a ton of  CO2  removed  from  the  atmosphere.  It  is  not  rational  to  believe  that  all  countries,  especially  European  ones,  can  get  to  net- zero  without  using  international  carbon  market  mechanisms.  International  carbon  markets  deploy  investments  in  things  like  natural  climate  solutions  or  emission  removal  technologies,  such  as  direct  air  captures,  bioenergy  with  CCS,  and  then  deploy  the  capital  where  these  projects  are  feasible.  Not  all  geographies,  not  all  jurisdictions  have  the  potential  to  scale  these  solutions  and  achieve  net- zero  within  their  borders. Rich  countries  need  strong  climate  action  both  at  home  and  abroad,  and  we  need  carbon  markets.  We  need  well- designed  one.  80%  of  countries  in  their  nationally  determined  contributions  said  that  they're  planning  to  use  carbon  markets  to  meet  their  goals.  So,  we  should  start  implementing  carbon  markets  soon  and  let  investment  flows  from  rich  countries  into  developing  countries. 14:02Julia Streets: So we've  explored  this  from  the  point  of  view  of  what  are  carbon  markets.  We've  thought  about  this  from  an  international  global  sort  of  point  of  view,  and  whether  or  not  this  is  fair  from  a  jurisdiction  point  of  view.  We've  also  heard  about  a  real  case  study  and  its  application  of  where  some  of  this  collaboration  comes  in. Malek,  could  I  ask  you,  from  a  corporate  point  of  view,  why  does  this  particularly  matter  to  a  company  like  Shell? 14:25Dr. Malek Al-Chalabi: Yeah,  thanks.  Thanks,  Julia.  At  Shell,  we've  set  a  target  to  become  a  net- zero  emissions  energy  business  by  2050,  and  our  policy  positions  on  climate  and  energy  transition  serve  as  a  global  framework  for  Shell's  advocacy  with  governments,  international  organizations,  and  associations.  This  includes  supporting  government  policies  that  will  help  the  world  to  achieve  net- zero  emissions  by  2050.  A  variety  of  policy  tools  are  required,  one  of  which  is  carbon  pricing,  and  at  Shell,  we  advocate  to  put  a  direct  price  on  carbon  emissions  as  part  of  a  broader  policy  framework  to  achieve  net- zero  emissions.  The  carbon  price,  whether  through  tax,  cap  and  trade,  or  hybrid  system,  should  apply  to  as  many  sectors  of  the  economy  as  possible  and  increase  over  time.  Additionally,  Shell  advocates  for  greater  international  cooperation  through  systems  that  transfer  carbon  credits  between  countries  and  ensure  that  international  carbon  credit  transactions  have  environmental  integrity  by  avoiding  double- counting  across  national  inventories.  In  summary,  a  carbon  price  can  be  an  effective  mechanism,  and  success  depends  on  it  being  part  of  a  comprehensive  energy  transition  policy  framework  that  incentivizes  innovation  and  encourages  commercialization  of  new  and  clean  technologies. 15:33Julia Streets: You  talked  there about  the  importance  of  collaboration.  I'm  curious,  what  needs  to  happen  to  get  more  countries  trading  carbon? 15:41Dr. Malek Al-Chalabi: If  we  look  at  the  data  from  the  World  Bank  and  look  back  30  years,  the  first  carbon  prices  took  place  in the  1990s.  If  we  fast- forward  today,  there's  approximately  70  carbon  pricing  initiatives  and,  as  you've  said,  covering  25%  of  the  world's  emissions,  which  represents  a  sizable  improvement.  But  this  still  means  that  75%  emissions  are  still  unpriced,  and  more  work  needs  to  be  done  in  this  space. I  think  it's  important  to  recognize  a  tremendous  amount  of  work  to  operationalize  carbon  pricing  policies  has  taken  place.  The  International  Chamber  of  Commerce  at  COP26  focused  on  global  carbon  pricing  principles  that  are  needed  to  help  deploy  carbon  markets,  and  at  COP27,  a  business  review  was  also  done  to  highlight  opportunities  for  decarbonization. There  are  10  principles  which  include,  but  are  not  limited  to,  focusing  on  greenhouse  gas  reduction  as  a  prime  target,  creating  a  reliable  and  predictable  overall  framework,  promoting  the  linkage  of  carbon  pricing  instruments,  and  ensuring  cooperation  for  greater  consistency  globally. 16:49Julia Streets: Hasan,  earlier  you  were  talking  about  some  of  the  market  dynamics  at  play.  I  would  love  to  get  your  thoughts  on  what  do  we  need  to  do  if  we  want  to  have  an  ambition  for  a  global  price  on  carbon? 17:01Dr. Hasan Muslemani: First  off,  I  would  say  it's  probably  not  easy  and  may  not  even  be  possible  to  have  one  carbon  price  that  fits  all  jurisdictions  in  the  world.  This  is  because  what  may  work  for  a  country  or  a  region  or a  jurisdiction  might  not  work  for  another.  We  might  have  some  that  prefer  a  carbon  tax  mechanism,  but  others  which  might  prefer  a  cap  and  trade,  or  an  emission  trading  scheme,  or  ETS  for  short.  Not  only  that,  but  the  sectors  which  are  included  within  these  different  ETSs  in  the  world  that  we  have  today  are  not  the  same  sectors.  Some  of  them  might  include  cement  or  steel  or  oil.  Some  others  might  include  different  sectors. To  give  an  example  from  my  own  background,  which  is  in  steel  production  in  China,  specifically.  Producing  steel  in  China  is  much  cheaper  than  in  Europe.  That's  the  first  thing.  The  second  thing  is  measures  which  we  have  that  we  can  take  to  lower  emissions  from  steel  production  in  China  versus  in  Europe  are  different  and  their  costs  are  different.  So,  that  means  that  the  abatement  costs  for  each  company  and  each  country  are  different. The  problem  with  not  having  a  global  price  becomes  important  when  trading  happens  between  these  regions,  so  if  you're  importing  or  exporting  steel  into  and  out  of  Europe.  For  that  reason,  I  think  carbon  prices  should  be  complemented  with  what  we  now  call  carbon  border  adjustments.  The  EU  has  already  introduced  such  a  mechanism  that  will  come  online  as  of  October  of  this  year.  Under  these  adjustments,  what  happens  is  any  steel  that  would  be  imported  from  China  into  the  EU  will  have  to  face  the  same  carbon  tax  based  on  its  carbon  footprint.  In  that  way,  the  steel  manufacturer  is  now  subject  to  the  carbon  price  in  Europe,  the  EU  ETS  price,  creating  what  I  would  like  to  call  an  implicit  global  carbon  price. 18:47Julia Streets: Andrea,  I'd  love  to  get  your  thoughts,  if  you  would,  about  some  of  the  risks  and  some  of  the  opportunities for Article VI? And what do  skeptics  say  about  its  limitations? 18:57Andrea Bonzanni: Well,  the  opportunities  generated  by  Article  VI  are  obvious.  They  go  down  to  basic  economic  theory.  We have  to  reduce  or  remove  emissions  where  it's  more  efficient  because  that  will  allow  us  to  do  it  faster  and  to  do  more  at  lower  cost.  So,  we  need  an  international  mechanism  that  brings  together  countries  with  access  to  capital  and  technologies,  but  without  access  to  cheaper  emission  abatement  options,  and  on  the  other  hand,  countries  without  capital  and  technology,  but  with  plenty  of  opportunities  for  reductions.  So  that's,  to  me,  very  clear;  it's  a  mechanism  that  can  work. Some  of  the  risks  around  Article  VI  are  related  to  the  complexity  of  these  mechanisms,  and  this  is  where  the  skeptics  are  coming  from.  Critics  have  magnified,  in  some  instances,  the  cases  where  carbon  markets  have  not  delivered  what  they  promised.  They  highlighted  cases  where  methodologies  to  calculate  carbon  reductions  were  not  robust,  or  measurements  overstated  the  impact  of  certain  projects.  However,  the  industry  is  aware  that  markets  need  to  improve,  and  there  are  many  initiatives  to  address  market  integrity. 20:06Julia Streets: Malek,  I'd  love  to  get  your  thoughts about what  are  your  hopes  for  the  carbon  markets  in  the  future? 20:12Dr. Malek Al-Chalabi: I  think  if  I  build  on  what  Andrea  has  said,  I  believe  further  operationalization  of  Article  VI  country- to- country  trades  increasing  in  the  future  would  be  a  welcome  development  to  take  place.  I  think  also,  as  some  may  know,  Article  VI. 4,  which  is  the  globally  led  carbon  market  by  the  UN,  looking  to  operationalize  in  the  next  one  to  three  years  would  also  be  another  welcome  development  to  help  facilitate  carbon  markets.  But  also,  as  Hasan  has  mentioned,  the  growth  of  compliance  and  voluntary  markets  would  also  be  a  welcome  development  where  countries  can  continue  to  use  implicit  or  explicit  carbon  pricing  mechanisms  to  help  further  incentivize  low  and  clean  technologies  at  a  price  that  is  helping  assist  decarbonization  efforts. 21:07Julia Streets: Gentlemen,  I'd  love  to  come  to  each  of  you  with  your  closing  thoughts  for  our  listeners. 21:12Andrea Bonzanni: Carbon  markets  need  to  grow.  Growth,  growth,  growth  is  what  we  need.  We  need  to  shift  gears,  scale  up  markets,  both  in  terms  of  coverage  and  in  terms  of  price  levels.  We  said  that  about  a  quarter  of  emissions  are  priced  nowadays,  but  the  World  Bank  estimates  that  only  4%  are  priced  at  the  level  that  will  allow  us  to  achieve  the  goals of  the  Paris  Agreement.  So,  whatever  the  economic  and  geopolitical  situation,  we  cannot  afford  to  put  carbon  markets  on  hold. 21:40Julia Streets: And Malek, what would be the one thing that you think that  the  audience  should  hang  onto  and  really  take  away? 21:45Dr. Malek Al-Chalabi: I  think  our  message  would  be  that  to  put  a  direct  price  on  carbon  emissions  as  part  of  a  broader  policy  framework  to  achieve  net- zero  emissions,  and  whether  it's  through  a  carbon  tax,  cap  and  trade,  or  a  hybrid,  they  should  apply  to  as  many  sectors  of  the  economy  as  possible  and  increase  over  time. 22:04Julia Streets: Hasan,  would  you  agree  with  that?  What  would  be  your  message? 22:07Dr. Hasan Muslemani: I  think  markets  have  already  picked  up  momentum,  and  they  are  here  to  stay.  The  next  step  is  really  to  ensure  integrity  of  what's  being  traded  and  sold  in  the  market.  That  word  integrity  has  really  become  the  buzzword  in  the  carbon  market  space  lately,  where  we're  seeing  a  lot  of  quality  frameworks  being  developed  to  define  what  is  integrity.  We  have  solutions  that  are  being  praised  as  the  holy  grail  of  net- zero  solutions,  such  as  capturing  CO2  directly  from  air  or  other  solutions,  and  they're  sort  of  being  put  in  competition  with  each  other.  The  issue  is  that  we  need  all  the  solutions  that  we  can  get  because  in  the  fight  against  climate  change,  we  are  really  in  a  race  against  time.  Because  this  task  is  so  critical  to  us  as  a  human  race,  if  anything,  it's  much  better  to  be  vaguely  right  than  precisely  wrong. MUSIC BED COMES IN 23:00Julia Streets: It's  been  a  wonderful  conversation  because  in  such  a  short  period  of  time,  we've  thought  about  the  dynamics  of  the  carbon  markets;  we've  thought  about  some  real  use  cases  of  how  there's  been  some  international  collaboration;  we've  thought  about  why  this  matters  for  different  people.  But  we've  also  been  very  considerate  in  terms  of  where are  some  of  the  limitations  and  perhaps  some  of  the  things  that  skeptics  are  talking  about.  But  this  is  about  integrity.  This  is  about  momentum,  and  this  is  about  growth.  Exactly  as  you  say,  this  is  all  about  us  using  all  the  tools  at  our  disposal  to  drive  change  at  pace  and  at  scale. Andrea  Bonzanni,  Dr.  Malek  Al- Chalabi,  and  Dr.  Hasan  Muslemani,  thank  you  very  much  for  being  with  us  today. You've  been  listening  to  The  Energy  Podcast,  brought  to  you  by  Shell.  Listen  and  follow  for  free  wherever  you  get  your  podcast  so  you  don't  miss  a  single  episode.  The  Energy  Podcast  is  a  Fresh  Air  Production,  and  I  must  remind  you  that  the  views  you've  heard  today  from  individuals  not  affiliated  with  Shell  are  their  own  and  not  Shell,  PLC,  or  its  affiliates.  I'm  Julia  Streets.  Thank  you  for  listening,  and  until  next  time,  goodbye. 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