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00:00Morning, morning everybody. You're nearly there, nearly lunchtime, I think. So one of the real joys of my job is I get to travel around the world a lot in the last few weeks in many parts of China, Southeast Asia, Japan, the U.S., Europe.
00:18And if there's one thing that's really, really clear, is that in the energy transition, each country is taking a very different pathway and moving at very, very different speeds.
00:30You could actually see that if you look carefully at last year's data. This was the $2.1 trillion that was invested in clean technologies last year, up 11%. But if you look at the dotted box, what you will see is that actually it grew 21% in Asia, it grew 7% in the Americas and minus 1.7% in Europe.
00:52So already very, very different rates of progress across geographies. And if you look at it by technology, it's even more stark.
01:02So 93% of the $2.1 trillion went into just four different technologies, renewable energy, batteries, EVs, and the grid, and 7% into everything else.
01:15So, again, depending on which technologies are getting deployed in your geography will tell you how quickly you are moving.
01:23And there's sort of four different trends that I wanted to, four different drivers I wanted to highlight around this.
01:30So one is technology costs. It's been mentioned a lot. Everybody talks about, you know, rapidly falling costs of renewable technologies.
01:39Solar modules were down 61% since 2023. So that's absolutely massive. Battery packs down 20% in the last year alone.
01:49So really steep. It's a slow wave change. So, again, it's easy to overlook.
01:56Policies are much more of a fast change, and particularly this year. So there's been lots of interest around tariffs.
02:01This is the U.S. tariffs sort of in blue where they started, where they were mid-year, and kind of where they are now.
02:07So very volatile, very, very fast change. And policy is either a headwind or a tailwind.
02:13Temperature is another one of those actually slow-moving changes.
02:18And actually, in the last 30 years, this is in Europe, temperature increased by 2.3 degrees C.
02:24So that's pretty a massive increase in just three decades. And we'll see the implications of that.
02:32And last but not least, probably the fastest change of all this year, AI.
02:37And again, this great quote from CEO of Anthropic, it's sort of how fast it's moving.
02:42So it certainly is moving very quickly.
02:44And this year, sort of every meeting has had a whole series of discussions around AI.
02:49So what does that do to the transition, if you take those, just an example?
02:54So let's look at the power system first.
02:58Actually, this first six months of this year has been another record six months of renewable energy implementation.
03:05So investment flowing into renewable energy.
03:08It's like two-thirds into solar, particularly small scale, and a third into wind, particularly offshore in this half.
03:15But again, considering what's going on, it's pretty amazing that it's still in record territory.
03:22That does vary by geography.
03:24So actually, in the U.S., that number was down 36% year on year for the first six months.
03:31And in Europe, that was up 63% based around some large offshore wind deals.
03:38So you can see the very different, again, by geography.
03:41And this is the U.S.
03:45This is our forecast for the U.S. for renewable build-outs.
03:48The dotted line was where we started the year with sort of consistent policy.
03:53The sharp line that drops was where the on-BBBA came in.
03:59And that was our prediction of the impact.
04:01We've just announced a re-forecast, which actually smooths that curve.
04:05And again, you'll see there's a dip where policies are being removed, support is being removed.
04:12But you'll see it actually does start to rise again.
04:14And that's really where the economics kick in.
04:17So the technology cost curves override the headwind of policy.
04:22And if you look at AI, so this was our forecast in April of the year of power demand for AI, what you'll see is it ends up being similar to EVs, growing more sharply.
04:36It goes from about 3.5% of power demand in the U.S. to 8.6%.
04:42So that is significant.
04:46It's not as wild as some people think.
04:49Our forecast is that blue line.
04:51So maybe we're being too modest and too low.
04:53But again, there is a lot of different estimates out there and forecasts out there.
04:59So very, very unclear.
05:01Let's see how it plays out.
05:02We're factoring in what can actually get built as opposed to where people would like it to go.
05:07And really what that means is that data centers, if you look on the right-hand side of that chart, joins air conditioning and EVs as a significant addition to power demand.
05:19It's not the only thing that matters.
05:21It's one of a number.
05:23But it is significant.
05:25But again, even that varies by country.
05:27So that's a global number.
05:29But if you look, say, at Indonesia, you'll see air conditionings double what data centers or EVs can be.
05:38So again, very different pathways for different geographies.
05:43So what about road transport?
05:46So this is EV sales continuing to grow.
05:50We saw battery prices falling rapidly.
05:53That's feeding into EV sales.
05:55You can see on the right there, year to date, again, you can start to see China and Europe being much more above the global average.
06:05But again, if you roll the clock forward a little bit, what you'll see is pretty much all of those start to curve upwards.
06:12Again, that's the cost of batteries really starting to drive uptake.
06:18And you'll see the highest rise actually there is Australia, which is going to see a seven-fold increase.
06:24And that's really driven by that openness to all technologies, all providers.
06:31So Chinese EVs in particular will be a big driver of that number.
06:35So again, moving at very different speeds depending on the geography.
06:40Costs.
06:41So the cost parity in China is already below that of internal combustion engines.
06:47And that's why it's already taken off.
06:49And other countries will cross that barrier.
06:52At the beginning of the year, this was the policy support across those all major markets.
06:59Again, EVs was the direction of travel for everybody.
07:03That's where we are now.
07:04So in China, those policies are still in place.
07:08The US, they're pretty much in reverse.
07:11And they're slowing down in Europe.
07:15But so in the US, what we think is we'll move by 2030, instead of almost half sales being electric vehicles, about a quarter will be.
07:24So it's 27%, just over a quarter.
07:27Again, it slows down, but it doesn't stop the economics takeover.
07:32And it still rises.
07:34And probably one of the clearest charts that show you the difference in geographies, this is Chinese EVs sales overtaking passenger vehicle sales in the US.
07:44So you really are seeing start the two different pathways being chosen.
07:49This will happen probably next year.
07:53In the hard-to-abate sector, so we've seen somewhat of a reset on that.
07:59This is for committed projects.
08:01So actually, this number of 3.3 million metric tons is actually a small number.
08:06But it is growing.
08:08So we're starting to see committed offtakers for production.
08:13The left-hand chart shows you what was announced.
08:16It's over 200 million metric tons.
08:19The bottom bar is there is what has an offtake agreement.
08:23The right-hand side, that's the 13.4 million metric tons.
08:28And the right-hand side shows you exactly who, you know, really where the offtake's firm.
08:33And again, that's the bottom slice of that.
08:36So it's about 2 million metric tons of sort of, if you like, you know, real business.
08:42And you're starting to see who the offtakers are.
08:44The offtakers are going to be people that use hydrogen today, so fossil-based hydrogen, also aviation and shipping.
08:52So these are the biggest deals.
08:54And you're seeing very different pathways, again, being chosen.
08:58So if you're in the U.S., you're going to have blue hydrogen, so gas and CCS.
09:03If you're in China, you're going to have renewables and electrolytes, so green hydrogen.
09:08Again, two very, very different pathways.
09:11It's early days.
09:12We'll see how those scale.
09:15And lastly, I just want to talk about adaptation, actually.
09:18It's a newer area to us, but it's a real area.
09:22And, you know, this is Europe.
09:24Fires in Europe in summer were really not heard of until very recently.
09:30But you can see how that has really started to become a real feature.
09:34So it's land burnt in Europe with wildfires.
09:38And our colleagues in Bloomberg Intelligence have crunched some numbers about what that actually costs.
09:43So last year, $1.4 trillion was spent on climate-related damages.
09:50So that includes, you know, damages to property, also the cost of outages of power, crop damage, inflation for buildback, those kinds of things.
10:02All factored in, it's $1.4 trillion.
10:04And again, we said $2.1 trillion last year was invested in clean technology.
10:08So this is a significant number.
10:12If you just look at the property damage pieces of it, just look at the last two full years, it's around $350 to $400 billion.
10:19You'll see the costs were borne.
10:22About 50% was government.
10:25About the next half of what's left was insured.
10:28And the other quarter was actually uninsured.
10:31So these are real damages going out to, you know, households or banks that have lent the money.
10:37So again, this is now becoming a sort of serious financial consideration.
10:41We just did some research to create a country adaptation framework.
10:45We looked at 25 different countries.
10:47That's the x-axis here.
10:49And we put that against the Notre Dame gain.
10:52So the sort of exposure, climate exposure rating.
10:58And what you'll see is a very wide distribution.
11:01Again, by country, the preparedness and the impact will be very different.
11:05If you look at the very right-hand edge, these are the people who we believe are the best prepared.
11:10One is Canada and one is Singapore.
11:13But then you see a long tail of other countries.
11:16So again, the pathway that's going to be taken, the approach to adaptation, the risks that people are facing, be it fires or floods or those kinds of things, or sea level rise, are going to be very, very different.
11:27So I think you'll find, you know, every geography now is really on a different pathway.
11:35It was mentioned before about country platforms.
11:37That's important because every, every country is different.
11:40And depending on the pathway chosen, the speeds are also very, very different.
11:45There's a number of key factors pointed out that are really going to have a major impact across all of the sort of key sectors that we think about when we think about decarbonization.
11:56So I hope that framing is useful for you as you go into COP in the next two weeks.
12:02You know, think, think through a country lens and what does that mean?
12:06And hopefully that will help us all to make progress.
12:09Thank you very much and enjoy COP30.
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