COP26 is finally here!
With many countries and companies announcing net-zero goals that target 2035, 2050 or 2060, Tej Gidda joins the show to talk about why the next decade is critical for the energy transition. Tej, a vice president at GHD and also the firm's Global Lead for Future Energy, shares his thoughts on COP26 and what the people gathered in Glasgow need to do to make the next 10 years count. Tej also explains the concept of "The Missing Middle" ... and why policymakers and industry leaders must work to make the missing middle disappear.
Tej also shares the details of a paper the team at GHD released this morning -- A Supercharged Transition -- that puts forth 3 key ambitions for the next 10 years:
PODBRIEF: Energy accessibility and affordability tops the agenda for building a more resilient Africa.
GHD - A Supercharged Transition
GHD - Future Energy
McKinsey & Company - Green Africa: A growth and resilience agenda for the continent
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(Note: This transcript was created using artificial intelligence. It has NOT been edited verbatim.)
Sean McMahon 00:09
What's up everyone and welcome to the Renewable Energy Smart pod. I'm your host Sean McMahon, and my guest today is Tej Gidda. Tej is vice president at GHD. He's also the firm's Global Lead for Future Energy. Now, GHD does a ton of business and a lot of different areas of the energy sector. So Tej and I are going to get into what his team thinks needs to be a “Supercharged Transition.”
And of course, COP26 kicked off today. Well, I guess it technically started last night with a foofy reception full of you know, champagne wishes and net-zero dreams. But the real talks are getting underway today. Tasha and I are going to talk about what to expect for the next couple weeks in Glasgow, and where the most opportunity lies for the people at COP26 and around the world who drive big time changes in the energy sector.
One bit of exciting news I want to share with you is that smartbrief has launched two more podcasts. The Modern Money SmartPod is about all things finance, and seeing as how finance will play a big role at COP26. In fact, this Wednesday's Finance Day in Glasgow, the launch episode of this podcast is all about what the finance industry expects, or perhaps hopes will happen at the conference. The Modern Money SmartPod is co-hosted by yours truly, and Colin Hogan, SmartBrief’s Senior Finance Editor for Capital Markets.
Pivoting to the topic of health care, we've also launched theTouchpoints podcast. That show is hosted by Melissa Turner, SmartBrief’s resident health care guru. Right from the start with episode one I've learned a lot about how the health care system in the United States functions just by listening to that show. I'm going to put links to both of those podcasts in today's show. So check them out.
All right, now back to today's episode. Before we bring in Tej Gidda, here's a quick word from the exclusive sponsor of today's episode. GHD
Getting to net-zero won't be easy, but with the power of commitment, anything's possible. At GHD, we're making energy, water and urbanization sustainable for generations to come. Relentlessly pursuing a greener future with our clients and our communities. That's the power of commitment. That's GHD.
Sean McMahon 02:20
Hello, everyone, and thank you for joining me for this episode of the renewable energy smart pod. My guest today is Tej Gidda. Tej is a vice president at GHD and also the firm's Global Leader for Future Energy. Tej, how're you doing today?
Tej Gidda 02:35
I'm doing really good, Sean. How about yourself?
Sean McMahon 02:37
I'm doing well. Thanks. You know, there's a lot going on these days. I mean, a lot. So you're not got a lot of ground to cover today. I know your team at GHD released a report earlier this morning about the future of energy called the supercharged transition. So I definitely want to get to that later. But first, we got to talk about COP26. After waiting an extra year, because of the pandemic, the conference is finally underway. So what are you and other experts in the industry expecting or perhaps hoping we'll come out of the events the next couple of weeks in Glasgow?
Tej Gidda 03:05
Oh, you know, everyone's been waiting with bated breath for this. I mean, this is the big, big event. And there's just been so much stuff leading up to this particular event. You know, the IPCC report that came out in August, just put everyone on their air around, oh, my gosh, we need to do more, we need to move faster. So I think what COP really represent is an opportunity to discuss what it is we're going to do, how are we going to accelerate things? How are we going to really move on energy transition, because the IPCC report clearly indicated that we really, really need to. So I suspect a lot of the discussions will be around that, how are we going to accelerate things now? Because we really, really, absolutely need to how practically, can we do that?
Sean McMahon 03:49
In the past few weeks, you know, obviously, in the in the run up to COP26, there's been all kinds of net zero promises coming from, you know, various countries and companies, you know, but what comes to your mind when you hear announcements like that?
Tej Gidda 04:01
It's wonderful that people are setting goals, I would love to see really discernible plans on how people are going to reach those both from a nation level. And from a corporate level, I think there's a lot of work to do that. Next arrow is ambitious. Net Zero by 2050 is ambitious, because it's going to require a lot of changes to the way we live. But I think we really need to understand and appreciate what Net Zero really means. Net Zero does not mean the end of fossil fuels by 2050. It means that the emissions that we are creating, going up into the atmosphere accounted by however we're removing emissions from the atmosphere and we're balancing them, we're still emitting in that netzero future. We really need to focus on probably starting now is what comes after that. What is this concept of net negative? How are we actually reducing emissions very, very significantly to the point where depleting carbon dioxide concentrations in the atmosphere rather Then just maintaining limit the status quo. In my opinion, Shawn, it's too late to wait till 2015 When we hopefully achieve our nets or targets to then think about net negative, we need to be more aggressive now and think of things from that net negative standpoint are really, really aggressively reducing emissions, really thinking about electrification in a very holistic way, and bringing down emissions really aggressively. Now, I think that's a better goal. In my mind, I prefer to be more ambitious with goals. I'm hoping that that's part of what we talk about cup 26 as well, because I think the IPCC report that came out kind of says, maybe net zero is not quite enough. Maybe we need to do something much more than that. And if so, what is that set of actions that we need to take? And when do we need to start? We definitely need to start now. I think that next 10 years is going to be key if you really want entertainment and negative future. Alright, so
Sean McMahon 05:57
just take a second here and explain that a little bit more to our listeners, how does an individual corporation like your Googles or your Amazon, how do they go net negative?
Tej Gidda 06:06
While they could wean themselves off fossil fuels quicker, they could engage in sequestering carbon much more. For instance, when you grow biomass, like forests or trees, you're sequestering carbon dioxide out of the atmosphere? How much of that? Can you really do? I think that's an interesting question, can you really, really offset a lot of your emissions? By doing that? I think netzero kind of looks like well keep emitting and maybe I will grant, you know, plant lots more trees, and that will sequester the same amount of emission as were emitting. And that sounds like netzero to me. But we would if we said, well, let's just do a lot more on that side of it in terms of sequestering carbon and more aggressively reduce our emissions. That sounds like we're pulling more stuff out of the atmosphere that we're emitting up into it. That's net negative. So I think it's a dual focus on really aggressively reducing emissions, going to things like hydrogen going to things like electrification, and then really more aggressively looking at sequestration opportunities, because that's a really important part of it. The oceans, and the forests are the two things in the world that sequester more carbon dioxide from the atmosphere than anything else. How can we accelerate that kind of activity? What can we do there to really help the co2 that we've already emitted into the atmosphere that's hanging out there, and has been hanging out since the Industrial Revolution? I think there's an interesting discussion to be had around that. Possibly, possibly people will invest in technologies that actually do draw carbon dioxide directly out of the atmosphere, people are thinking about that. We're starting to take a look at some of those technologies, do they really work? Are they really economical? Can you really take carbon dioxide directly out of the atmosphere and then re sequester it? That sounds like net negative futures? Well, I think we need some technology development in that space, and really, to understand how viable these technologies are, but that's a net negative future as well.
Sean McMahon 07:55
So are there any specific commitments or initiatives that you're expecting to come out of the conference?
Tej Gidda 08:00
Well, I don't want to speak for the political class, you never know what they're exactly going to commit to. They've already made commitments. I mean, most countries have already made Net Zero commitments by various timelines. 2050 seems to be the the main one. I think the question is, is what are you committing to do to getting there? And what does that look like in the next short term? Like what is that next decade really going to look like? Forget 2050, I guess is maybe the message, what does that next 10 years look like? And I would really like to see some commitments around what that next 10 years looks like, because we can't be waiting a decade to start 2050 is right around the corner. So what is the immediate action that we can all take in the happen? Some countries that have done some really interesting things, right, the UK has said, you know, we're not going to have internal combustion vehicles on the road after 2035. You can't buy one that's a tangible action start in the next 10 years. That's a bit a bit further out. So I think the question is, what are we going to do now?
Sean McMahon 09:00
Alright, and speaking of what we can do now, as I mentioned earlier, this morning GHD released a paper kind of about the future of energy, that paper is called “A Supercharged Transition.” And it outlines three key ambitions. And they all very much drive home your point about what we need to do now. We're going to put a link to the paper in today's show notes, but do you want to take a second here today and kind of walk listeners through the key points.
Tej Gidda 09:21
Probably no surprise, I think there's going to need to be a lot of additional electrification of our lives. We all understand what electricity is, we rely on it. It's going to be a bigger part of our lives going forward. We're going to electrify more of our lives. A real tangible way of looking at that is sort of vehicles that we drive. Some of us, not all of us by any means, drive electric vehicles already, and then places where your electricity comes from green sources. That's a tangible benefit. You're not using fossil fuels for moving around in your day to day lives anymore. I think we're going to need to see a lot more of that as we electrify more of what we do on a day to day basis. But that raises a lot of questions. Where's the electricity going to come from? How are we going to distribute it down to our home level, so we can charge up our electric vehicles? If that's what we're gonna have sitting in our garages in the future. There's a lot of work to do just to do that component of electrification. I sit in Canada, Sean, it's cold in the winters here. We use a lot of natural gas. Natural gas is a fossil fuel as well. It is an important fossil fuel. How are we going to replace that over the next 10 years? Or start to replace that? How does hydrogen come into that equation? You know, am I got to start using bits and pieces of hydrogen in the natural gas that comes into my home and into my furnace? I think that's likely in the next 10 years. But that's the type of thing I think that we really need to think about at the consumer level, we need to be changing how we're consuming energy.
Sean McMahon 10:51
Okay, so you've laid out the importance of driving a pretty big time growth in renewables? How are we going to get there? How are we gonna make it happen?
Tej Gidda 10:59
I think there's lots of options. Those options can be at the big scale. I mean, I think about things like offshore wind. Offshore wind is a really interesting source of plentiful renewables. And there's only so much of it that's actually active around the world, right now. We're seeing a lot of in Europe, I think of the UK, there's a lot of offshore wind out in the ocean there, which is fantastic. Where I sit in North America, there's very little, but we have so much coastline, and so much wind resource that we could be using. That's something we can really turn on, throughout places like North America or places like Asia, China's really looking at offshore wind, so is Japan. So as Australia now, that's a button we can really push. But I think that's the big scale.
We can also think about large scale solar at the utility level and that's happening all over the world now as well. We can also think of it at the local level, I could, you know, consider it for my house.Rooftop solar is a possibility that we can actually turn on now. If you can make a financial business case, personally, as a homeowner, I'd like to know that I can pay that system back over time. There's some work to do there. But there's also the storage side of it as well. Can I include something in my home that can store some of the solar energy so that I can use it when I really need it because I need energy at night as well, in addition to during the day when the sun shines. So I think that suite of solar and wind and offshore wind for increased electrification can happen at that large scale, but can happen at the consumer residential scale as well. And I think both those things need to happen over the next few years.
Sean McMahon 12:38
It sounds like what you're really talking about is cost, right? For some of those things, there's a cost involved with its rooftop solar or battery storage or other consumer facing options. What kind of things are being done to drive down those costs,
Tej Gidda 12:49
Cost is being driven down naturally, the market is driving down costs. When I think about solar 20 years ago, we thought it was really expensive, and it was really expensive. And we didn't really know where it was gonna go, we had an inkling that price was going to come down, it came down a lot quicker than we could have foreseen to the point now where solar is the cheapest way to make electricity in the world, which is fantastic. So I think your point there is, is really valid when we think about this cost has to be a big part of this. Because the transition, the energy transition has to be a just transition. Not everyone can afford to spend lots more money on energy. So how do we balance that? Well, prices for these things are coming down, and they're continuing to come down. The price for hydrogen is coming down as well and that's highly tied into things like solar. So cost curves are continuing to come down just by market forces, which is fantastic to see more people are making these modules and these units, there's more supply out there of all these types of things. And that just is going to drive cost further and further down, especially compared to traditional fossil fuels. So that's gonna really make it a lot more affordable for a lot of us.
Sean McMahon 13:59
Yeah, so you've mentioned hydrogen a few times here. And you know, we've done a couple episodes in the past about green hydrogen and the growth it might see in the future. So how do you see the build out of all these wind and solar farms? You know, how will that boost hydrogen and make it more commonplace in the energy landscape?
Tej Gidda 14:13
Yeah, I think you know, I love hydrogen, I am learning a lot more about hydrogen, how it works. I always tell people, hydrogen is the most abundant element on the planet. And it's true. If there's more hydrogen than any other element on our planet. It's all bound up in water. Water is H2O, and that's where the hydrogen is, but it's there. And it's full of energy that we can access. So I think the more renewables we put on the grid, the more renewable electricity we have, the more electricity we have available to split up one of those water molecules into hydrogen and oxygen through an electrolysis process that's been with us for years. We've been doing that for years and years and years, but we've never done it at large, large scale and that's the real innovation in the market. Now people are building these so called electrolyzers, larger and larger scale, the price for them is coming down. So we can tie a renewable electricity source into one of these units and make a large amount of renewable hydrogen or green hydrogen, as you termed it. So that is coming because we still need gaseous fuels. As I mentioned before, I have a furnace. My furnace runs on gas. Right now it runs on natural gas. Well, is there a possibility of taking renewable electricity using the infrastructure and the appliance that I already have, with a view towards a just transition, just burn some amount of renewable hydrogen in the future. I think that's the way we're going. And costs are coming down for that as well.
Sean McMahon 15:40
So a lot of the folks I've talked to about hydrogen, you know, particularly green hydrogen, they say, OK, we've got this excess generation coming out of a solar farm or a wind farm, we can take that, use it to generate green hydrogen, and then store it for later in one of these awesome salt caverns somewhere. They always seem to talk about excess generation from wind and solar, you know, whatever is not sent to the grid immediately will be used for hydrogen. But I'm wondering, Tej, do you see a future where wind or solar assets might be built for the specific and dedicated purpose of producing green hydrogen around the clock?
Tej Gidda 16:13
I love that idea and I think that's going to happen. You know, I think about all these offshore wind developments where they're generating a lot of electricity, that electricity doesn't have to make electricity to go on the grid. That could be dedicated directly for hydrogen production. And that hydrogen, therefore gets delivered into the natural gas network that we've already paid for. We already have pipes in the ground in North America, there's 3 million miles of pipeline underground. We want to use that asset, it's there and it's available to us. Can we take some of these renewable sources and directly use them to pull in hydrogen into our daily lives and move through the pipeline network that we already have? I think that's definitely going to happen. There are a lot of people thinking about that. So it's not just, you know, here's what you do with your extra renewable electricity. This is a purposeful way of making hydrogen to displace things like natural gas, we have to address the natural gas equation sooner or later. And hydrogen is a great way of doing that through renewables.
Sean McMahon 17:14
We're gonna take a quick break, but when we come back, we'll hear more from Tesh about the supercharged transition, including the role carbon capture and energy storage will play.
Getting to netzero won't be easy, but we know we have to make the next 10 years count. At GHD, we're a global professional services firm committed to making energy, water and urbanization sustainable for generations to come. That means transforming with purpose locally and globally. It means relentlessly pursuing a greener future with our clients and with our communities. With innovation and technical expertise at our core, we believe net-zero can be achieved. That's the power of commitment. That's GHD.
Sean McMahon 18:06
And now back to our conversation with Ted Gidda. Now getting back to that paper from your team at GHD, it outlines three ambitions. And you and I have already talked about the first one in terms of doubling down on renewables. But then how do we plug all that extra generation into the grid? Is it batteries? Or is there some other kind of technology that still needs to be developed?
Tej Gidda 18:25
I think a lot of that technology is already out there. We're really good at making our grids, intelligent, smart grids, and the ability to understand when and how new renewables come onto the grid, and don't disrupt our day to day lives. That is a potential disruption, wind will happen when it happens, the wind blows when it wants to blow the sunshine during the day and not during the night. And that's just, that's just a fact of life. And the winter here where I fit, it gets pretty dark in the winters. Honestly, we don't see a lot of sun, which is unfortunate. So we need to have storage systems. But we do understand how to do batteries. Now, large scale batteries. When I think of, you know, the average, the little battery, I stick into one of my kids toys - we're not talking about that. We're talking about batteries that are hundreds of megawatts, that can store substantial amounts of power. Those things do exist, we just need to integrate them into the systems use the talent that we have to make sure those are integrated well, so that we are storing that renewable energy when we need it absolutely available. We can do this right now. It's just a case of making the business cases employing our brains to actually do it. And around the world where we are seeing lots of renewables come on to the grid that is happening. The really interesting part is the rest of the grid. Because electricity is not the only grid that connects us. We're also connected by liquid fuels, grids of people moving liquid fuels around to our gas stations. How does that grid change over time and get more intelligent and become sort of more aligned with biofuels? How does the natural gas grid become more intelligent over time as we start putting renewable product into it. I think there's a lot of analogies to the electrical grid that we can use for that. And I'm really confident that we can overcome that we're already seeing it with things like renewable natural gas, there is renewable natural gas in the natural gas grid in North America, and we figured out how to do it, we just need to increase that percentage now.
Sean McMahon 20:21
Okay, so you've made it clear that the time is now, you know, we've all got to stop talking about 2050 or 2060, and really focus on the next 10 years. But if that's the case, then something tells me carbon capture has to play a role somewhere, right? So how do you see carbon capture fitting into this equation?
Tej Gidda 20:38
Carbon Capture is a really important part of energy transition. I think we have so much reliance right now on manufacturing and industrial processes, and just how we create electricity right now. It's really going to be hard to turn that right off overnight. I don't think that's part of a just transition. Just imagine just turning off fossil fuel sources right now. And what that would do to people who are reliant on that for their day to day lives, for their jobs, for their heating, for their electricity. I don't think that's part of it, just transition. And I think we have to be really cognizant around people's lives as we deal with the urgency of climate change. Carbon capture, I think fits right in there. If we are going to have a natural gas power plant or a cement plant that's still using fossil fuels, can we as part of the transition, capture that carbon and do something with it, so it's not emitted into the atmosphere and absolutely true in my mind that we can do that. We have carbon capture technologies around the world that we can put on the end of a stack, and we can capture the carbon? We know how to move that carbon dioxide through pipeline. That's an interesting technical challenge. But we know how to do that. And then the question becomes, what do you do with that carbon dioxide to make sure it isn't re emitted into the atmosphere? Can you sequester it in soil or underground caverns or under the sea? We are seeing activity around that around the world right now. And it is possible this isn't this isn't sort of science fiction, this is real, this can be done. We have great people and talent, they're looking at this. So it's a really important part of the transition. It needs to come in right now. If we want to do something urgently in the next 10 years, because we can capture those carbon sources now. And we can sequester them now.
Sean McMahon 22:31
Yeah, so that topic of carbon capture, it often brings out some, shall I say, emotional responses from people who just want to cut off oil and gas right now. You know, they see carbon capture is kind of like a crutch to keep fossil fuels going for a certain amount of time. But the whole thing is, obviously a transition. And so fossil fuels aren't something that we can just flip off like a switch. I mean, we're seeing that in energy markets around the world right now. So Ted, at what point in that transition, do you see where maybe even carbon capture might slowly be phased out? Or we may be 1015 20 years away from reaching a point where carbon capture is no longer even needed? Because so many systems that currently run on fossil fuels will have switched to clean energy sources?
Tej Gidda 23:12
I'll give you a guess on that one, I'll give you my personal guess on that one, because that's almost like trying to predict the price of gasoline or something like that, right? It's kind of it's a big gas, right? The way I see it, we are going to be much more electrified as a world by 2050. The projections that you see say that, you know, while we 20% of our energy comes from electricity right now by 2050, is probably going to be about 50%. That's a big difference. I think that 50% to get there requires a significant transition. And carbon capture is a big part of that. The next 30 years for carbon capture really important is the way I see it, I think there will still be carbon capture after that, because there will still be fossil fuels on the grid. That's what netzero means. Net Zero by 2050 still says that there are fossil fuels on the grid. So carbon capture is probably a big part of that. I think after 2050, we need to start thinking about something like net negative for fossil fuels aren't part of the system anymore. And then fossil fuels don't become part of the system anymore. And we're looking at more and more electrification, than the importance in carbon capture will diminish as well. So I think we got a 30 year time horizon where it's really, really important. After that, I think it will diminish in importance as fossil fuel consumption diminishes significantly.
Sean McMahon 24:30
All right. And now circling back to that Supercharged Transition paper, you know, one of the key ambitions your team lays out is very much focused on small scale energy storage. So how do you see that market taking shape and continuing to evolve, I should say, because we're already seeing Tesla power walls and things like that at the consumer level. And meanwhile, utilities are also making big investments in batteries. So how do those two markets consumer level and utility scale? How do they meet in the middle?
Tej Gidda 24:54
I think it's easier right now for the utility-scale plants to really deal with energy storage because you can do the big batteries, you can do things like pumped hydro, where you use water as almost like a water battery for storage systems, those things exist. Hydrogen is an energy storage mechanism. And you can do it at very large scale, you can store excess electricity as hydrogen underground, potentially, in salt caverns, you can start above ground in metal hydride systems, there's lots of technologies for that. It's more economical at the large scale right now. And that's just because it's economies of scale. When you can do things much bigger, you can realize savings, you can do it more cost effectively, the real trick is going to be how do we do it at that localized level in the home? What are those storage systems going to look like? So you mentioned a power wall, Tesla has a power wall, and you can go out and buy it, it's not the cheapest thing in the world.
Sean McMahon 25:48
What do you mean, those aren't cheap? You know, I thought Elon was gonna make those free by like 2025
Tej Gidda 25:54
Nah, he’s to do busy blasting off in his rockets, I think I don't know, I think he wants to get to Mars. The price will come down, right price will come down. But there are problems there. Because batteries require lithium. And there's only so much lithium to go around. If we thought about all the lithium that we need to extract to supply everyone with an electric vehicle plus, having power wall inside your homes, I think that's going to get really difficult from an equation standpoint. So other options need to develop and enter the market. And we're already seeing them, there are technologies out there that allow you to store hydrogen in your home. So they'll take your excess electricity from solar, they'll turn it into hydrogen by electrolyzing, a bit of water in a little appliance, store it in some kind of solid matrix. And then when you need the power, the hydrogen goes back through a fuel cell and gives you your power back. Those are the types of things we really need to see. And I would love to see the day when I can go to, you know, the corner hardware store, and I can put my own kit for solar on the roof. And I can buy an appliance that allows me to store that electricity in the form of hydrogen or a battery or whatever it happens to be right in my home, I can just plug that in, like it would go by a microwave. You know, I think we need to get to that level of commoditization of this kind of technology. So it's really accessible at the consumer level. And it's cost effective at the consumer level. So when those two things happen, yeah, I'll be going to the hardware store, I think a lot of other people will and they’ll plug this stuff in at the residential level, it's just going to take a while from a cost standpoint, technology already exists.
Sean McMahon 27:30
So there's been a lot of talk about it just transition. And obviously, cost is a key topic. You know, when you're having that conversation, for example, with rooftop solar, some people say that technology has primarily benefited wealthy people, you know, because they're the ones who live in single family homes and other ones who can afford the upfront costs. So some people say policymakers should focus on the build out of utility scale solar and utility scale wind farms, you know, that way more people can benefit. You know, with that in mind, there was a phrase in your supercharged transition paper that caught my eye, and the phrase was the missing middle. It's used to describe this segment of the population, you know, that for one reason or another, is missing out on the benefits of renewables and the wider energy transition. So how do we solve that? You know, how do we get those folks out of that middle,
Tej Gidda 28:17
you need to look at it from both sides. So the middle is missing, if we can attack that middle. And that problem or that gap in the middle, from the large scale side and the small scale side and bridge that gap from both ends, I think that's the way to do it. Large electric utility scale production of renewable electricity definitely needs to become more and more prevalent in the market. Because once that happens, that means by virtue of that the electricity we're consuming at our homes, and our residences, will start having more of a renewable flavor. We need that to happen. So we need the big scale systems, the residential side of it, the other side of it, and our ability to actually produce our own electricity to have agency ourselves in how we control our destiny from an energy standpoint, incredibly critical. That needs to manifest itself as well. And that's the part that's slower to develop, because it's not that cost effective to actually do some of these things, much as I would love to be able to produce my own energy from my house and store my own energy and dictate my own destiny. I don't have the tools available to me right now just yet to be able to do that. That market really has to develop. But I'm really enthusiastic about that market. I remember, I don't know how old you are, Shawn. But you know, back in the day, I didn't have a cell phone. Look, I quickly cell phones developed and look how they've technologically advanced over time. We're talking about the same type of thing here. So once this starts, and this technology is available to us at our homes, solar, maybe even localized wind and energy storage, that will catapult as well and I think we'll see a technological revolution and a cost curve really coming down on that side of the world as well. And that's the other approach to closing that middle. I don't at the local level at the home level, I like the idea of sort of having agency over that side of my life, I can't grow all the food I eat, I can't produce all the water I drink, I'll never have full control over all those could have control over the energy side of the equation. If more tools are available, I really think we can, it's just a matter of time, in order for that part to help bridge the missing middle.
Sean McMahon 30:25
One of the words you hear a lot when we're talking about the energy transition is disruption. So bringing things back to what's going on in Glasgow, at COP26. You know, COP stands for Conference of the Parties. And that means parties large and small. So while the US and China and UK, India, Europe, places like that get all the attention, it seems to me like the conversation you and I are having, and conversations I have with other folks are about how renewables might kind of disrupt long standing views about which countries or regions are really going to become the big players on the global energy map. How do you see that disruption taking shape,
Tej Gidda 31:02
we're going to see a very large scale change. And we already are in who has energy resources to deliver to the rest of the world Industrial Revolution onwards really about fossil fuels in the countries that have access to fossil fuels, lots of oil, lots of coal, economically, they really had something to deliver to the rest of the world. And they did quite well. You think of the Middle East, and just how much oil reserves are over there. You think of the US and natural gas and shale gas and think Canada and the oil sands. These are deposits of fossil fuels that have been utilized to really spur the economies locally, what's going to happen is we're going to paint the picture around the world and energy supply and opportunity from a renewable standpoint, who can generate the renewables around the world, which countries are rich with renewable resources. So that completely reshuffles the map around who's got something very valuable to give to other people around the world. I think about what we're doing in Australia, Australia is really interesting. They are generating things like hydrogen for export to places like Japan, because Australia does have access to lots of renewables, where I sit in Canada, we have incredible amount of hydroelectric electricity, but we have access to lots of renewables as well, can we be an exporter of renewable energy to the rest of the world in the form of things like hydrogen, which is a wonderful carrier for that energy? The first exportable renewable, as I call it, you know, we can actually move it around on a ship, which is fantastic. We're going to redraw the map around the world around who's got access to their renewables and what they can do with it not to just fulfill their domestic needs. But for the export market. Tasmania is a wonderful example of this the large island off the south coast of Australia, they have not 100% Renewable Energy Target there, but 200% renewable energy target. So they're gonna
Sean McMahon 32:59
Hang on a second there, Tej. I wasn't a math major, you know, but I did pass, you know, sixth grade math. So how does that pencil out? What are they going to do to hit 200%?
Tej Gidda 33:08
Well, they're just going to produce way more renewable energy than they need. So they'll satisfy 100% of their own needs, and still keep making more of it and package that up and probably in the form of hydrogen, or maybe electricity directly. And they're going to export it to other people who aren't as fortunate. And that's where I'm talking about redrawing the map around who suddenly is going to be part of the energy equation going forward. It's not going to be the people who have lots of fossil fuel reserves. It will be the people who can produce lots of renewable energy, because like in Tasmania, you have lots of mountains, you have lots of water, you have lots of hydroelectric power, and they can export that to the rest of the world that needs it.
Sean McMahon 33:48
All right. Now, I know a lot of your clients GHD are in the oil and gas sector. And it seems like some of the big firms are in a different place than some of the others, you know, at least publicly. But what are some of the firm's in that sector doing to keep pace, you know, amidst all this talk about transition,
Tej Gidda 34:03
while they're thinking hard, really hard, because this is a big deal for these oil and gas companies. They've been around a long time. They're really big. They keep a lot of people employed. And a lot of people own shares in these companies. So they're really important parts of the overall business. One thing we've noticed with them is that they have been thinking about this for quite some time, but never more so than since COVID hit because once COVID hit, we all saw that oil prices went down. I mean, we weren't driving or flying around, and the price of oil went down to the point where it was actually negative for a period of time. But that's not a great situation for an oil and gas company to be in. You know, they have to pay someone to take the oil rather than get paid for it. Now prices have come up again, and I'm sure they'll stay up a little bit as well. But a lot of these companies did set netzero goals during COVID Which I thought was really interesting because they were stressed financially due to the price of oil, but they still made fairly bold commitments, to decarbonizing their businesses. And when you think of some of these companies throughout some of the European majors like shell or BP or totaal, if they're going to go net zero by 2050, they're not going to resemble the companies that they are right now. They will not be focused on liquid petroleum or, or anything like that, they're probably going to take on more of the character of electricity supply companies from things like renewables. So that's a very wholescale transition. And that's not going to be so easy because we have to think of the people, these companies employ a lot of people, how do we transition those people from a traditional economy that's been around since the Industrial Revolution began to something completely different. I think there's a lot of talent in these firms that they can really utilize to do that. And they are thinking about it, and they are moving. And that's why they're making so many investments in renewables. Now, shell and totaal. And BP, the three I mentioned are really aggressive in the space and many of the other oil and gas companies around the world are really plowing into this, we see an incredible amount of uptake and interest in hydrogen, oil and gas companies that own pipelines are thinking about, well, how do we how do we make this stuff? And where do we inject it into our pipelines? And how do we make sure we can do that safely? How can we do that economically? How will our customers feel about getting a blended product of natural gas and hydrogen down the road? They're all moving on this now. And they're really pushing into this area. So I would not be surprised if a lot of these oil and gas clients completely changed the character of their business going forward and felt there'll be energy companies, they won't be oil and gas companies anymore, they'll just be something different.
Sean McMahon 36:42
Alright, guys, well, looks like we're just about out of time. I want to thank you for everything you share with our listeners today. I know we'll both be watching what goes on in Glasgow the next couple of weeks. And maybe some of the things we talked about here today. Might inch a little bit closer to becoming reality, I guess we'll see. But thanks for your time.
Tej Gidda 36:55
My pleasure, Sean, really great talking to you today.
Sean McMahon 36:59
And now it's time for the PodBrief segment of today's show. And for the second episode in a row, I want to point you to a really great resource that focuses on Africa. The team at McKinsey has put together a fantastic paper called Green Africa, a growth and resilience agenda for the continent. Not only does this paper outline the current state of affairs across Africa, but it also details 10 opportunities that are just sitting there waiting to be seized. And number one on that list is expanding energy access and affordability.
So if you're at COP26, and perhaps sitting around killing time until the next panel starts, or if you just want to get smart about what's going on in Africa, give this paper a read.
That's all for today. Before we go I just want to say one more thank you to the exclusive sponsor of today's episode: GHD.
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