Decarbonizing the World Economy: A Conversation with Gregor Macdonald | EP171

Gregor Macdonald: 0:38

India's failure to build wind and solar fast enough, and the US has failure to do anything about existing transportation emissions. I identify those two things now, as the problem children the problem twins have of getting emissions to go down, solve those two things. We'll get emissions going down sooner. don't solve them. We're gonna have to wait for emissions to go down later.

intro: 1:05

Are you speeding the energy transition? Here at the Clean Power Hour, our hosts Tim Montague and John Weaver bring you the best in solar batteries and clean technologies every week want to go deeper into decarbonisation? We do too. We're here to help you understand and command the commercial, residential and utility, solar, wind and storage industries. So let's get to it. Together we can speed the energy transition.

Tim Montague: 1:33

It's a special treat to have such a story journalist and author on the show. I think you my listeners are really going to enjoy today's episode, my guest today is Gregor MacDonald. He is the author of oil fall, how wind and solar will gel break the power grid. And he is best known for his newsletter, The Gregor letter, welcome to the show, Gregor MacDonald.

Gregor Macdonald: 1:57

It's so great to be here. And I really look forward to our chat. And also, you know, any help I can give to your audience,

Tim Montague: 2:06

it's not often that I have guests who are so committed to the energy transition as I am, most of my guests are niched, down, you know, CEOs of technology companies. And of course, we cover many technologies, wind, energy, storage, solar, lots of solar, but But you are somebody who has a very big picture of the energy transition, especially as it relates to transportation. So give our listeners a little background on yourself. Gregor, in the in the pre show, I mistakenly said that you were from Europe, or I thought you were from Europe, but you're American. What's your story? And how did you come to be so interested in the energy transition?

Gregor Macdonald: 2:48

Yeah, so you're right. My angle on the energy transition is a big picture, global macro view. And it's also informed by some, you know, historical knowledge of the previous two energy transitions. And I'm, I go micro, at times, you know, I'll talk about California gasoline. But I really try to anchor myself towards that global view. Because, of course, emissions are global. And, you know, that's ultimately the thing we're trying to change. Just on background, you thought I might have been European. Because there are touches of UK and British friendly aspects to my newsletter, I use the word petrol. I publish on Monday mornings, every other Monday morning for the ATM time in London. And that's a habit that I formed over the years in part, because London, historically, from my view, has been a kind of center of energy and commodity investing. And my journey began trading oil and an oil related equities, and being very focused on oil, and natural gas, and coal. And of course, that's not where the hot action is. Now, all the action is in renewables. But I feel fortunate. And I think it's helpful that I have that fossil fuel knowledge. And, and it helps, you know, my understanding, and hopefully my readers understanding of energy transition, which sounds obvious to say, but yes, we're transitioning from fossil fuels, to manufactured energy to technological energy to, to infrastructure oriented energy, and I'm just a big fan of economic history. And, you know, the previous two historical transitions are very, very useful and helpful to my work.

Tim Montague: 5:04

I'm curious if you're a fan or a critic Vaclav Smil. 's work

Gregor Macdonald: 5:11

both I am a longtime admirer of his scope, and his productivity. He he produces a lot of very valuable historical perspectives he has brings a lot of interesting data, and I really admire the way he's anchored by history. His weakness tends to come them when he makes forecasts, I think is his ability to forecast is not as not as strong as his ability to understand history. And he's gotten himself, in my view bogged down in the face of the current energy transition, because I don't I don't think he understands the speed of it, I understand his criticisms that we're not going fast enough. But remember, that's not a unique view. So if you all agree, we're not going fast enough. So and that's his view. But he gets too over involved in that so well, one

Tim Montague: 6:16

of the things I appreciate about his work is that he points out that energy transitions historically, do take decades, you know, sometimes over 100 years. And I think the the cool thing that we forget sometimes is that we're 70 years into, for example, the PV revolution, right? Photovoltaics have been around since the 1950s, invented in 1954, in New Jersey, at Bell Labs. And, and so even if the, the renewable energy transition, so to speak takes 100 years, while we've, we're 70 years into that transition, as I see it. And now of course, we're going vertical, we're at the bottom of the S curve. And wind and solar are the fastest growing new sources of of great energy globally. And that is largely because of the technology adoption curve. It's combination, though, right? It is also a function of policies, because some societies are waking up to the reality of we need to incentivize the transition, so that we can perhaps avoid the worst of climate change. Now, will we avoid the worst of climate change is to be to be determined, because climate change is obviously and you rightfully point this out in your newsletter, that it is kicking our butt in many ways. Is it a? Is it an existential threat? That's debatable, right? Certainly not. Today, it's not an existential threat. Could it be in 50 years? Yeah, it could be for the good life that we have. And I also love to recognize that we got the good life from fossil fuels. I have nothing against fossil fuels. They're amazingly dense, rich resources. My own family was very involved in the fossil industry. My grandpa in Chicago, ran a magazine called The Black Diamond, Illinois is a coal state, and the Black Diamond was a coal industry publication. But I grew up in New Mexico where, you know, we had these massive four corners power plants, which caused major pollution, including pumping mercury into the environment. My father wrote a book on Mercury, the social negative impacts of mercury poisoning. And so I grew up learning about these things. It wasn't until 2016 that I got into solar, real, you know, for for real, working in the solar PV industry. So anyway, you write a lot about tipping points. And while we're still at a relatively small percentage, for example of Evie adoption in the United States, right, you think that these small numbers can be a bellwether for the coming tipping point, talk a little bit about that, and how you see the electrification of transportation globally and in the United States?

Gregor Macdonald: 9:08

Sure, I'll talk to that there. There's other tipping points that I'm interested in as well. Much of my work the past five years and 10 years has been very anticipatory about what could potentially happen with wind and solar, what could potentially happen with electric vehicles. I like to speculate in advance of these things happening. In some sense, the first chapter of my work on renewables over the last 10 years, in some sense is over now, because the S curve, as you say, is is rising. And we might even use a Charles Dickens title. It's a we're in a tale of two cities. So we, it's we must be sober and be legitimately concerned about how the effects of climate change are already landing. We should be really encouraged by how fast the leading edge technologies are going. So your question was about transportation and electric vehicles. Okay, I'll try to make this complicated subject as simple as possible. In any domain, the transition to electric vehicles is initially felt as a slow a very slight slowing of the rate of growth of oil demand. So you're still going to have oil demand growing or holding on to a plateau, you're not into a decline on. Yeah. But what I've started to notice is that once you get to the 678, year out, where after internal combustion engine vehicle sales have peaked. And you've got about six to seven, eight years of Evie adoption. What I think we're starting to notice now, and California is a perfect example of this is that after being on a, an oscillating 20 year plateau, California, gasoline demand has actually started to fall. And you're seeing that, again, were seven or eight years past peak ice sales in California, we've got wonderful S curve of Evie adoption in California, we're heading towards 25 30% of plugin sales this year in California. And finally, after all that time, you're starting to see the beginnings of a gentle decline in gasoline, that will get more accelerated. But it will be it will be somewhat slow for a time on a global basis. We're not there yet. on a global basis, we're we're we're not at the point where global oil demand can actually enter decline, because of what's happening in transportation. But we are, in my view at the point where global oil demand will stop growing. And let me just add a definition to that. Because these discussions have peaks and declines and so forth, I want to I want to tie myself down to that. It's my current view that 2019 began a oscillating plateau period of global oil demand. And by that I mean, demand will fluctuate between one and one and a half percent above the 2019 level. And we might that might happen this year, for example, and it will decline one and a half percent below that level. And it will do this for a while until the global auto fleet gets seven, eight years past peak is until the global auto fleet you know, it's those higher Evie things. So when I say Tale of Two Cities, it's so encouraging everything that we're doing. We're not yet at the point of fossil fuel declines. Okay, we're reaching the point where they're no longer going to grow. But then there's going to be this gray area where they don't decline yet they will decline but not yet.

Tim Montague: 13:16

And when you go to or when you look at Northern Europe, right, Evie sales are much further along. More than more than 50% of new car sales and upwards of 80 90%. In some countries like Norway. I think plugins accounted for 90 plus percent. Now Norway has strongly incentivized the adoption of EVs. It's very ironic. My family is half Norwegian. And my kids are by cultural Norwegian American. And you know, the economy in Norway is dependent on oil, right North Sea oil and gas make Norway wealthy and they have no plans to stop Burn Baby Burn. But they also are environmentally sensitive. And their their grid is very clean already on hydro. They have lots of native hydropower. And so they are they do have a clean grid. And now they have accelerated and leaned into electrification of transportation. But and I like to say, you know, if you want to see the future when it comes to electrification and clean energy, go to Northern Europe. What what do you see in Northern Europe?

Gregor Macdonald: 14:27

Yeah. So I'm glad you asked that. So it's really important for Americans to understand especially because I think it's obvious if you're sitting outside the United States that as we sit here today, America, Europe uses two policies to reduce oil demand, the adoption of electric vehicles alongside the build out of renewable electricity. So that's shifting demand for petrol over to electricity and there I am using my petrol word because we're, we're in Europe now. But Europe has also been steadily reducing oil demand in the EU for over a decade. And that's through efficiency policies and taxation policies, congestion pricing, and disincentives on ice vehicles. America doesn't do that. America In fact, I gave a corporate presentation to a corporate board several months ago, and I I explored a lot of these, you know, differences. And I, I worked up a case of how America does energy transition. America does energy transition with its technology forward, its adoption forward. It's we're going to do all these new things. But we're not going to penalize current automobile owners who drive ice cars, we're not going to do congestion charges, we're not going to do disincentives around oil, except on a state by state basis, like California, California. And unfortunately, Tim, what that means is that there's this very attractive presentation that surrounds our policy here in the United States, it's very exciting. We're going to subsidize electric vehicles and electric vehicle sales are going up. But because we're not doing anything about existing the existing ice fleet, it means we're waiting for that fleet to turn over. And in my view, that means the US could have greater reductions in emissions this decade. Without any change. We're pushing the, the harvesting of those emissions decades of those emissions into next decade. So there's a real difference between how Europe does it and how and how we do it.

Tim Montague: 16:54

Yeah, it's fascinating. You know, if you want to drive a car into a major city in Europe, there is a toll ring around that city and you pay upwards of $10 or more to, to take a vehicle into the city. And it is not, and it works, right. You think twice about driving a car. And they have good train systems so that you have options, trains and buses. It's a both and we have neither many or the

Gregor Macdonald: 17:26

chimp are most transit oriented, built out city in America, the New York City and the New York metropolitan region. They're having political problems putting in a congestion charge, not in all of New New York City, not in the other boroughs, not even in the top two thirds of Manhattan, just the bottom third of of Manhattan. And that really showed and remember this Democrat, you know, I'm a Democrat, is democratically controlled. And this is something I've been talking about recent issues. We've got a lot of democratically controlled cities and municipalities. You've got Democrat governors, Democratic mayors, democratic state senators, and we and even then, we can't do a congestion charge in New York City. You got the Democratic mayor, Democratic senators, Democratic congressman, all from New Jersey, complaining bitterly about a congestion charge going into Lower Manhattan. I mean, come on, you know. So that really is a measure of where we are, culturally, just one more thing on that. I live in Portland, Oregon, right? We're like, we're like the poster child for, you know, progressivism. We were totally bogged down here. We're a great cycling city. We just can't do anything about the cars. It's incredible. How did

Tim Montague: 18:50

you get interested in the energy transition anyway,

Gregor Macdonald: 18:54

I was living in London, and the price of oil hit an all time low. And it created a couple of those famous covers of The Economist magazine, which, you know, if you're in the field, it's somewhat, it's somewhat well known. And I was teaching creative writing, because that's part of my background. You know, journalists now that's true teaching creative writing to kids in London. And I was looking for other things to investigate. And I realized that I didn't know anything about energy, didn't know anything about oil. And I just decided to use that time to educate myself for the simple reason that I thought, well, oil prices at like, you know, $10 1112, or whatever, it was a barrel that just seemed so cheap to me. So that, that started me on my journey of learning about fossil fuels trading in in equity, and futures markets trading trading oil. And I, you know, I got very wrapped up in that oil bull market from 2002 to 2008, where of course, oil helped break, it helped break the world into its financial crisis. Obviously, that crisis had its had its main antecedents, its sources in the financial system itself, and mortgages and leverage and so forth. But I do think it's fair to say that $150 oil in the summer of 2008 was was a pretty good catalyst to break the consumer and and break things so So that's how I got. That's how I got started. And then I just began, you know, writing about energy markets because I had friends who worked in financial markets and they liked what I had to say. So

Tim Montague: 20:48

I think oh eight was the year that Tesla really got going. Sounds about right. And now they they control you know, upwards of what 85 90% Of the Evie market. It is amazing how Elon has cornered that market in the United States. There's other players and substantial companies, but they don't have really much market share in the US.

Gregor Macdonald: 21:15

And they also didn't get the Headstart that he you know, that Elon got, you know, one thing I write about in my newsletter is that the existing legacy automakers I know that they must have known this, but when they whenever it was, they decided that they were interested in making electric vehicles, they needed to understand that in the history of the internal combustion engine vehicle, you simply provided a a gas tank, a petrol tank, on board the vehicle, and your responsibility to figure out how to power the car that was over the Eevee drive train completely shifts the burden of who's providing the power in the car, it shifts it from an empty, simple petrol tank to as you know, a sturdier chassis and a big battery pack. And I, you know, I think the existing automakers didn't panic soon enough. I would say that VW panicked almost at the right time. You know, a couple years ago, they realized they needed to lock up battery capacity. They needed to lock up lithium, I think they went to a battery maker, is it North Gate, or it's North link, I may not have the right word. But they basically VW went in and said, We'll buy all your future production. And we'll double your market capitalization with a whole book about, you know, boatload of money, so you can make even more battery production. And we'll take that too. And you know, that's been okay for VW. But it would have been good if if VW had done that, you know, even five years before, by the way, that's northvolt. Yes. Yeah.

Tim Montague: 22:59

And very interestingly, now, here in 2023, the Tesla Model y became the number one car sale, number one car in sales year to date, displacing the Toyota Corolla. So when you look globally, yes, car sales, Toyota has fallen from number one, and Tesla is now King, I predicted this. When I owned a Tesla Model y a few years ago, I no longer do. Unfortunately, that's another story for another day. But I could see that this car was going to be immensely popular, I didn't know that it they would achieve this in 2023 on a global basis. And it's quite amazing because the Tesla Model y is almost twice as expensive as the Toyota Corolla. And yet it's seeing this wide adoption because of its utility, and the lifetime cost. Let's break this down a little bit like what is driving the transition to EVs. I think of two things. There's the operating costs, you know, your one year you're running a car on electricity, not on gasoline. And then there's, and then there's things like well, an Eevee has many, many fewer moving parts. And so the lifetime costs of maintaining and operating that machine are just going to be lower, right than an ice engine vehicle. And eventually, you know, sometime in the next five to 10 years, the ice engine goes by by completely right, purely because of economics. And consumers will go where it pays right?

Gregor Macdonald: 24:41

It will just get tougher and tougher to support the ice platform as it as its market share, you know, continues to shrink, if I recall correctly, ice vehicle sales peaked globally. I think 2000 either 2016 or seven, or 17. And then just on. Just to follow up on your remarks on Tesla. We're so fortunate in the United States to have Tesla, because without Tesla, we'd be almost nowhere. And I mean, we're still the laggard and Evie adoption, way behind China and Europe, although we're, we're starting to catch up. But I mean, without Tesla, we would have years and years ahead, before we could catch up unless we were willing to allow foreign automakers to really flood our market with with their products. So Americans have pretty much had Tesla as an option, and maybe something else if you could get it and we're still here. You know, somewhat there, I think the Volkswagen ID four is going going well, the Chevrolet Bolt is going well, of course, it doesn't help. When General Motors says, here's the bolt owner, we're going to take away the bolt. Okay, we're sorry, we made that mistake. Now we'll put it back on again, that's not the kind of thing that creates consumer confidence. And in that particular model, so that hasn't been, you know, so helpful. Yeah, our legacy automaker, there

Tim Montague: 26:05

was a period when I watched a lot of videos comparing the model y to the, you know, Maki, the Ford Maki, and the ID four, right, those three cars are competitors, and they they're shoulder to shoulder and in terms of performance, and, you know, overall experience for the consumer, but it's night and day, right? How consumers are reacting to those products, and buying them.

Gregor Macdonald: 26:32

Yeah, this this defect, this challenge of a legacy producer of something to try to make a new product, I believe, work was done around this by Clayton Christensen at MIT, maybe in the 50s or 60s. And he, he talked about the cultural challenge within an incumbent right inside that corporate culture of an incumbent to try to imagine what a different customer would want and how they would make a product for that new customer. I think he almost talks about it. And in terms of like a sympathetic, you know, a sympathetic view of the ability to adopt what they want. Musk has never had he doesn't have to deal with that he doesn't have to deal with trying to shepherd along and baby on previous existing line of technology. He also doesn't have the pension plans. And so it's clearly been very difficult for the legacy automakers to handle this, I thought Ford's move to electrify the 150 at one point, I thought okay, they're, they've that's pretty good. Actually, instead of trying to do all electrics, they just go with their top selling vehicle, which is the top selling vehicle in the United States for what the last 20 years, the F 150 They're going to electrify that good strategic decision. But Oops, no battery capacity, you know, it's for didn't do anything to make sure that they would be able to stamp out that drive train, and they don't have the capacity that Tesla does, or even, you know, VW has so

Tim Montague: 28:15

I had I had a Ford 150 reservation for over two and a half years before, before they sent me the signal that I could buy and then I was no longer in the market. Unfortunately. I love the the V to G aspects of that vehicle. I also can't justify driving such a heavy vehicle but but anyway, you make a very good point. Like they don't have the capacity. They can't make enough trucks. People would buy them gladly, right? Absolutely. Cannot make them. And Elon, meanwhile has been busy building Giga factories, right? And just announced another one in Mexico, right just on our doorstep. Man. Well, let's go

Gregor Macdonald: 29:00

in and when he builds a giga factory, he's he's duplicating. Right? You know, that's the that's the one way to talk about you know, the history of planet Earth and evolution is making copies. Once you have found the thing that you're going to make once you've optimized the thing you're going to make. You just have to make copies. And he got the head start before everyone else. So yeah,

Tim Montague: 29:24

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Gregor Macdonald: 32:00

Thank you for asking this because I, this has been a big focus of mine this year. And what I'd like to do is, try to answer your question in three parts that I think would be most helpful to your to your audience wonderful. First, I want to I want to use a more constrictive case. And that's just the case of global electricity, just the case of, of global power. So this doesn't include transportation and cement making and steelmaking. This is just the decarbonization of electricity. My current I mean, if I say model, I'm probably overestimating my sophistication. I'll say model, my current model shows that if the growth of wind and solar continues, its manic pace, and I'm, I'm sure I don't have to tell you, every one of us who've been following the sector for a decade, even we're blown away by the by the ability of global wind and solar, to keep tacking on huge amounts of new capacity on an annual basis. So my model says, if we continue to do that, over the next six and a half years, to the year 2030. And you plot that against what would be a reasonable compound growth, for system demand, right? For system demand, there's a really good chance that admissions, total emissions from global power will begin to fall by 2030. Now, I just want to clarify something about that. We're already moving into the phase where global emissions just from power are starting to level out. Right? So this isn't really, I'm going to focus more on the decline. So electricity is where we're making our greatest, fastest, most broad and concerted progress. Consider that however, how hard it's going to be to get to declines, even if we continue going bananas on creating wind and solar, and you just project a relatively normal to slightly stepped up growth rate in total system demand. Okay. That's a really good case for how everyone can frame up this problem, right? frame up the problem of how do we get to emissions declines? Right, that's what I'm really focused on. Now. I'm not as focused on getting to an emissions plateau. I think we're Tim, I think we're headed there. We're, whether it's even global electricity, or now we can expand it to everything global. We are heading right into peak emissions, globally. And that's very encouraging. What silver sobering is what it will mean to get to declines. Now. Let's go to the third piece, the economy. I've written a lot about this. And you may recall, I devote a whole section of this in my ebook oil fall, I devote a section to the really spectacular prize that awaits us, and that prize is running the same economy with the same services and the same demand on less energy. Because as we know, renewable energy and clean energy doesn't involve combustion. And every time you involve combustion, whether it's in an individual engine, you know, driving down Interstate five from LA to San Diego, or whether it's in a massive coal plant, you know, in Wyoming, the heat losses, which is just another way of saying energy losses is are catastrophic. When you drive from LA to San Diego, you fill up your car, and what's that going to cost now about 80 bucks, right? So you drive for every dollar you put in your car, to drive to San Diego, at least 50 cents of that just blows out the tailpipe you didn't use, you didn't get to use that energy, you didn't get to capture it, it's wasted energy. And that's our emissions problem. So we should not fear I used to fear, I used to fear that energy transition would mean a big step down in global growth in human, you know, it might cause an interruption in human progress for wealth, because it would be so disruptive. I that was 15 years ago, I thought that when I didn't know as much as I know, now, the prize that awaits us is that we can have the world that we have today, using less energy, we'll get there with electricity first, then we'll get there with transportation. And then there will be those hard to abate sectors like steel, and cement, where things get tricky and complicated. And let's remember to conduct energy transition is a global infrastructure project. And when you're building infrastructure, you need cement, and steel, and lots of it. So that's going to be the tougher thing. But I'm very encouraged, that we're going as fast as we are. And I'm not concerned at all about the economy. I'm in the boom, the energy transition economic boom, camp. And I know that some people when they hear me say that will vigorously disagree. They have some people have very negative views about renewable energy and what it can do for us. But I don't think that that view is a is a competitive view.

Tim Montague: 38:02

Yeah. I mean, we're going to triple the amount of electricity we use first and foremost when we electrify transportation, right. And that's a lot of economic activity. That's a lot of building of grid of solar, wind and batteries, and decommissioning dirty power plants, which is good for human health. Okay. Now, there is a there is a jobs transition here, right, we have to be sensitive to transitioning workers, that includes miners, and people that run these thermal power plants. But but states can do this. We have good legislation in Illinois, the climate and equitable JOBS Act known as Seija. That has provisions to incentivize power plant owners to shutter those dirty facilities, and help workers transition into wind, solar and battery. And, and it's happening.

Gregor Macdonald: 39:03

But just one small point there. You said, I think you said that your rough gauge or estimate was that we would triple electricity consumption because of the electrification of transportation. i i to see a potential tripling of electricity demand globally as we do this transition, because this transition, as your your audience also knows is really about the transition to electricity, right. But I kind of have more like a 50 to 70% increase in electrical electricity demand, just from that transportation piece. And that's because we reduce so much. You know, if you take California runs all the vehicles currently on about 15 billion gallons a day, just chop that in half and energy terms. When you electrify it all you're you're basically down to seven and a half billion gallons. Sorry, not per day, but per year, on a basis. So but if you have more to say about that tripling and maybe you can educate me about something I just wanted to let you know I use you know if it's x, we're going to 1.5 to 1.7x

Tim Montague: 40:24

Yeah, right. I think when I say triple I'm taking into account also HVAC and industry applications in industrial applications. Transportation alone. I don't know what what that does, but but it is It is. Well, I I'm not an engineer. I don't know. Exactly. I agree on that tripling though. Yeah, everything over. And I mean, the good news is, is there's plenty of of wind and solar to go around, we get five to 10,000 times more energy from the sun, then all of society uses on an annual basis, it's five to 10. Because I mean, at today's levels, it's 10. But because we're going to use more electricity, I say, five 5000. So anyway, we're swimming in energy from the sun. And now we have the technology in the form of solar photovoltaics, solar PV, and wind. And now storage technologies, including batteries, but also hot sand, heartbreaks, and various and sundry other concentrated technologies. Right, we have the technology as Tigger Shah loves to say, and I wanted to reverberate a little bit on a comment you had about about the economic growth opportunity. This is what people call a wealth transfer opportunity to the tune of $100 trillion. It is a great economic boon for the global economy. And yes, it's it we're going to shrink some sectors, okay. coal sector is dying. coal companies are going bankrupt, right? Coal mining companies are going bankrupt because the economics of coal are no longer there. And that's wonderful for human health. It's not great if you're a coal miner, or you live in a cold state, but trust me, there are opportunities, right. We see Joe Manchin in West Virginia getting behind the IRA, right? Because he knows that there is economic opportunity. And we see the battery factories getting built now in West Virginia, right? Form, energy form, energy, thank you

Gregor Macdonald: 42:34

home from my home base in Massachusetts, and their iron oxide of battery, flow, battery, iron flow batteries. And you know, we just speaking on economics, we have portions of this country that began to D industrialize as far back as 70 years ago. And there are recovery. And recoveries didn't come. You only have to drive through Pennsylvania and Ohio and West Virginia, and Illinois and Chicago, Detroit

Tim Montague: 43:10

Rust Belt. It's abysmal. Right?

Gregor Macdonald: 43:13

And yet, isn't it interesting? Those property values and buildings values, you know, probably dropped down in many places close to zero, I think form energy is going into an older steel plant, correct some West Virginia, right. And, you know, it's like land values are not high in West and you know, in West Virginia, that's a fan what a great resource we have. And it when you look at the map that's forming now, with all this investment from the IRA, where's it going? It's going into a lot of those states that have stagnated economically, for many years. And so yes, I refer to you said it's an energy, it's a, a wealth transfer event. Yep, that would be one term. The term I use is that a wealth creation event. Because if you look at the, if you look at the the first energy transition from biomass to coal, and then you look at the second one, from coal to oil, each The reason humans do energy transition, is because you get a gain in biological, physical terms. It's not imaginary, it's not theoretical. When you go from wood to coal, you're stepping up your energy density four times when you go from coal to oil, you're basically doing one and a half to doubling but you've but now you're going from a solid to a liquid, which allows you to do so many things. It's the exact same thing with wind, and solar, which are really just commodities. Now, wind and solar are like cheap commodities, they go up fast. And anyone who's an entrepreneur or who's in business knows, the faster you take your investment money and convert it into a machine that makes money for you. That's called return on investment. And the faster that you get return on investment, it just skews and changes all the economics in your favor. And that's happening here. It's happening in India, it's happening in China. It's happening in Northern Europe. It's wonderful. It's happening everywhere. And yeah, so that's why solar is exploding. And it is going to be a wealth creation event will become wealthier. And to one of your points. One of the ways will become wealthier is through health will become wealthier through health. And yes, it is tough when a coal miner loses his job. She You can't go back on YouTube and look at Bobby Kennedy campaigning in coal country in the 1960s, saying, I'm so sorry, you guys lost their jobs, and we got to do something for the coal miners. I mean, disruption to coal has been going on for a long time. So it's better for it's better for everybody. If we take the pain, help people out, I always help people out when they're have lost their jobs from a stranded industry. always help. retrain, retrain them. And I want to and I think we're doing that now. And I want us to see us do more of it.

Tim Montague: 46:15

Yeah, it's like we had nothing against horses, right? When we transitioned from horse and buggy to ice engine. And that happened over, over just over a decade, right? There's that wonderful photo of New York City in 1901. And then in 1913, right, it's all horse and buggy. And then it's all ice engine 12 years later. That's amazing. And, and then a whole industry in two decades just goes poof, right? And you point this out in your newsletter as well. And there's the book clean disruption, which I which I often refer to that that leans on this. And now we're so now we're transitioning from oil to electrons, right. And we happen to have a source of clean electrons, theoretically, emission free. I mean, there are omissions involved in making solar panels and wind turbines. And people, smart people, people much smarter than me have done the math on that. And yes, it is still carbon negative to do this, right. And it does work. It is paradoxical, Gregor, that places like China and India are still building coal plants. And leaning into the clean energy transition, do you think that those countries will transition faster away from coal, then the current trajectory predicts?

Gregor Macdonald: 47:30

Yeah, I'm kind of glad you brought that up, because it shows that even in a command economy, right, like, like China, which has more economy, by committee, and so forth, even there, they have the legacy approaches, like coal fired power generation, constituencies build up around that people have their careers in coal, they have their careers and coal plant equipment. And it's not easy politically, even for China, to simply say, we'll just dump all the, you know, we'll just dump all the coal, the one encouraging thing, the way it answer your question is, China can continue to build more coal capacity, it already has too much. So go ahead China and build more coal capacity, because, you know, with the exception of years, like 2022, when we had a global shortage of coal and natural gas, the capacity factor of the coal fleet is runs along at like an incredible is it like 30, or 35%? Or, or 40%. And, you know, I talked to Glenn Peters at Cicero. And I think that's in Norway, or Sweden or Denmark, I can't think of where that's located might be in Oslo, actually. And he he keyed me in on this about 10 years ago. And he said, the one thing, you got to be careful that China's that, yes, they're going towards clean energy, yes, they want to get rid of coal, they've got a cultural imperative to bring that coal down or make us up. But he said, they've got so much capacity that occasionally you'll see years, when there are shortages, they'll have to rely on that extra coal capacity. And it will suck basically, when you get the data on that. And that's what happened in 2022. We had, you know, global coal consumption peaked in 2013. We all thought it was over it when Gen into gentle decline for seven years. And then in 2021, and 2022, boom, it came back up again. Now, that's a short live thing, but it shows you the it, I like in my work, which is all about renewables. Now, I do like to remind people about structural dependencies, path dependencies, the way the world was set up last century, you know, the last century is still with us. It's still, you know, it's still a burden on us. And we're, you know, we're trying to try to handle it, but it's not easy even for China and India. Well, Modi, came to power in 2014. He had an energy minister named Piyush Goyal, they did one really big, right, correct thing. They said, our country is where all the people in the world were the most. If you try to find the most people in the world that have no access to electricity, it's everywhere. But the but the biggest chunk is here in India. Let's solve that problem. And India has done a very good job of electrifying but they are not doing a good job on building enough solar, they need to build solar like crazy like everyone else. And they're and they're behind. They're behind. And they're India's failure to build wind and solar fast enough. And the US is failure to do anything about existing transportation emissions. I identify those two things now, as the problem children, the problem twins have of getting emissions to go down, solve those two things will get emissions going down sooner, don't solve them. We're gonna have to wait for emissions to go down later.

Tim Montague: 51:19

Well, in our last few minutes together, do you have any opinions about the hydrogen economy? One of the things one of the means, or themes that I see on my show is with guests like Jim Tyler from Earth owes and Matt Campbell from Terra bass energy, these are executives who are focused on bringing the cost of solar energy down to two cents a kWh or even below that, at which point it becomes more economical to produce green hydrogen using solar electrons, right. And, and you take water and green electrons and you get green hydrogen, most of our hydrogen today comes from the oil industry by by taking, you know, like, the methane molecule and breaking it up, right? Because it's carbon and hydrogen, lots of hydrogen there. But what are your thoughts about the green hydrogen economy?

Gregor Macdonald: 52:15

Okay, two things. One, it is a big, sprawling subject, all the myriad ways that hydrogen might be able to help us and all the myriad ways that it probably won't help us. So that's a big, big subject. I went through a fairly intense learning curve on hydrogen. In 2018, and 2019, and 2020. I did a lot of work for petroleum economist publication in London. And I spent almost a whole year reporting on hydrogen news, you know, news stories. I find that the best way to answer a question like this, Tim, is to zoom forward and think about, what would things look like in its optimal state, here's what it would kind of look like to me with hydrogen. Number one, the world starts building a lot of electrolyzers, which is a big, expensive piece of capital equipment that you need to make hydrogen using electricity starts building a lot of those. And as a result, the price of that those electrolyzers goes down. That's number one. That's a really, really important piece, too. Now that we've got affordable electrolyzers, and we can erect them and set them up, we need to set them up in demand centers for the hydrogen that will be produced. What might what might two examples be of that one steelmaking? I've done work. Sweden, and Norway are already doing making green steel for for Volvo cars not as a blanket thing but demonstration and it's done in your displacing coal. The second place where I see a demand center is in short haul aviation. Not transcontinental not LA, to Boston, sure, but but Vancouver to San Francisco, Seattle to Los Angeles. You can make hydrogen on site and feed those engines, you can either do battery packs, or you can actually do hydrogen engines. What hydrogen needs is it needs that sturdy starting place. Affordable electrolyzer demand for the hydrogen and finding a way to make that hydrogen as green as possible, plugging in almost exclusively wind and solar, or mostly exclusively wind and solar. Once we get there, which I think is the first place we're going. And another example of demand center would be petrochemicals like Louisiana and Texas. Once we get that going, I think we'll have a clearer vision on how the hydrogen applications can flower upwards from there. But I have identified what I've described to you as the best most realistic, most plausible starting point. For hydrogen production. Of course, we want to make green hydrogen. We don't want to use coal plants to make the electricity to make the hydrogen.

Tim Montague: 55:25

Well, I think that's a great place to stop. Unfortunately, I am out of time and I want to remind our listeners to check out all of our content at clean power hour.com Please give us a rating and a review on Apple and Spotify. by those of the platforms that matter most in this regard, and tell a friend about the show, that is ultimately the best thing you can do is refer a friend to the Clean Power Hour, we're on audio platforms and on YouTube, please subscribe to our YouTube channel. We're dropping two videos a week, one pre recorded interview or two sometimes now that we have all this already plus content we're working through, and a live news roundup with John Weaver, my co host and journalist for PV magazine. Gregor MacDonald, how can our listeners find you?

Gregor Macdonald: 56:11

The best place to find me is that the Gregor letter that's on substack. I can also be found on twitter, although Twitter has its issues these days, and it's not quite as active as what it was. But I am Gregor MacDonald. That's ma c, d. O. N. ALD on Twitter. So you just type in Gregor MacDonald and Google and it all comes up.

Tim Montague: 56:35

And we will put links to those sites in the show notes. So I want to say thank you, Gregor McDonald, for all your work and for coming on the show. Really appreciate it.

Gregor Macdonald: 56:45

Tim, you're a great interviewer. And I really appreciate the conversation. Thank you so much.

Tim Montague: 56:49

I'm Tim Montague, let's grow solar and storage. Take care. Hey, listeners, this is Tim, I want to give a shout out to all of you. I do this for you twice a week. Thank you for being here. Thank you for giving us your time. I really appreciate you and what you're all about. You are part and parcel of the energy transition, whether you're an energy professional today, or an aspiring energy professional. So thank you, I want to let you know that the Clean Power Hour has launched a listener survey. And it would mean so much to me. If you would go to clean power hour.com. Click on the About Us link right there on the main navigation that takes you to the about page. And you'll see a big graphic listener survey, just click on that graphic, and it takes just a couple of minutes. If you fill out the survey, I will send you a lovely baseball cap with our logo on it. The other thing I want our listeners to know is that this podcast is made possible by corporate sponsors. We have chint power systems, the leading three phase string inverter manufacturer in North America. So check out CBS America. But we are very actively looking for additional support to make this show work. And you see here our media kit. With all the sponsor benefits and statistics about the show. You know we're dropping two episodes a week. We have now over 320,000 downloads on YouTube. And we're getting about 45,000 downloads per month. So this is a great way to bring your brand to our listeners and our listeners are decision makers in clean energy. This includes projects executives, engineers, finance, project management, and many other professionals who are making decisions about and developing, designing, installing and making possible clean energy projects. So check out clean power hour.com both our listener survey on the about us and our media kit and become a sponsor today. Thank you so much. Let's go solar and storage