Host: Tom Raftery
Guests: Corinne Sawers & Eric Lonergan | Authors
Category: ☁️ Carbon Reduction
Podcast’s Essential Bites:
[3:00] CS: “Sustainability and climate has gone from being in the corporate world quite a niche sized topic to a board level priority. […] But we felt as many people feel this transition is not happening fast enough. And there isn't a clear manifesto for action. People say we need to end our reliance on fossil fuels. But how? And you ask the man on the street, he can't tell you how. And we have various ideas about how to fill that gap, but we need[ed] to write the manifesto.”
[8:20] CS: “One thing we were relentlessly tough on ourselves on is realism and pragmatism. […] Human behavior change is unbelievably hard. So we really came down in every domain bit the corporate world, the financial world, household spending, to first principles about how these different agents really change behavior. And that frames everything. We have this […] saying, humans change behavior if the alternative is cheaper, better, or their friends are doing it. Companies change behavior if they can make more money. And governments have to get elected and that guides their behavior.”
[9:48] CS: “Part of our framework is also […] that this is essentially the greatest reallocation of capital […] potentially in human history. We are rebuilding the vast majority of the economy to be a low carbon version. […] We frame that in the book by breaking down the types of problems in climate change to three categories, which helps us think about how we address them. The first category is where there is technology and it's relatively affordable. So that's kind of most types of clean energy generation and transmission. We call this simple math, because all you need to do there is really make the numbers work to allocate the capital. We have a second type of problem where technology isn't quite there. So that might be green cement, or green aviation fuel. […] And then the third type of problem is what we call herding sheep. And this is a mass payroll change. This might be where diets come in, less meat and dairy consumption.”
[11:17] CS: “Our analysis […] suggests that 70% of the problem, 70% of emissions falls into that first category of simple math. And that is really good news, because that is the easiest one to solve. We'd be in trouble if 70% of it was in herding sheep […]. Thank goodness, this is basically a capital reallocation problem. […] It's not that we don't have to solve that other 30%, we absolutely do. But given the timeframes, we've also got to do the easy stuff, asap. Because we can't solve aviation fuel just yet. We need to make sure we're doing everything else we can whilst that technology is evolving.”
[12:31] CS: “EPICs is one of the core concepts of our solutions. It stands for extreme positive incentives for change. And we got on to this idea of EPICs because we were looking at the success stories, […] where there has been a rapid transformation in a part of the economy. And this theme of extreme positive incentives came up. It came up in the rapid collapse in the cost of solar, which was driven by huge subsidies by the Japanese, Chinese and the Germans essentially. It was behind the Scandinavians, particularly the Norwegians, getting EVs to be 90% share of new car sales. It’s behind the success in offshore wind in the UK. So we thought, okay, there's something in this in practice. And it makes sense intuitively, it makes sense that […] people and institutions and companies respond better to a positive incentive.”
[14:41] EL: “Extreme positive incentive for change sounds complicated, but it's really, really simple. If you look at what the Norwegians have done with electric vehicles, they've said we're actually going to make […] the electric vehicle is going to be the cheaper alternative. And not only that they have like a 50% rule, which is big. That everything that you do with your car, whether it's parking, whether it's taxation, whether it's tolls will be 50% cheaper. […] And lo and behold, 95% of car sales […] in December last year were electric vehicles in Norway.”
[15:55] EL: “You're getting extremely rapid behavioral change based on an extreme positive incentive. So what we really say is that there's two dimensions to the problem. The first one is, we need to make electricity generation sustainable […]. And then the second one is […] we need to incentivize effectively everybody else to electrify to all intents and purposes. And what we're saying is, why don't we just go sector by sector, create an extreme positive incentive.”
[16:34] EL: ”If you look at plant based meats, […] I'm just deeply frustrated, why isn't the plant based burger, the Impossible Burger, 30% cheaper effectively, then the carbon intensive alternative? […] And I want to do that in every sector. When I look at steel, […] what's the job of policy? The job of policy here is to make green steel more profitable for the companies to produce, and cheaper for the consumer of steel. I mean, again, the consumer of steel doesn't care, […] it's just steel. […] And the evidence says that […] we will get very, very rapid change.”
[23:43] CS: “European economies by and large can borrow [money] at 1-3%. And emerging markets such as India can only borrow at, say, 10%. So why doesn't Denmark borrow at its low 2-3%, pass that capital over to India, who's going to invest it in a whole lot of green infrastructure, which Denmark then owns part of. And that's, that's an income generating asset. Denmark's making money and India has access to a lower cost of capital. So then, the number of projects that can finance goes from a small share, which makes sense on that 10% cost of capital, to a much bigger share, which makes sense on a 3% cost of capital.”
Rating: ⚡⚡⚡⚡
🎙️ Full Episode: Apple | Spotify | Google
🕰️ 48 min | 🗓️ 02/09/2022
✅ Time saved: 46 min
Additional Links:
Supercharge Me
Book: “Supercharge Me” (Corinne Sawers & Eric Lonergan, 2022)
