[Scott] Next on "Energy Switch," what would it take to get to net zero carbon emissions by 2050?

- When we talk about getting to net zero by any date, we need to electrify as much stuff as possible.

That's largely a technological solution.

And then we need to get rid of all that's left.

- The recent McKinsey report put a price tag on net zero by 2050 of $275 trillion.

That number is both stultifying large, but also possible.

Coming up on "Energy Switch," is net zero by 2050 possible?

[Announcer] Funding for "Energy Switch" was provided in part by The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

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- I'm Scott Tinker and I'm an energy scientist.

I work in the field, lead research, speak around the world, write articles and make films about energy.

This show brings together leading experts on vital topics in energy and climate.

They may have different perspectives, but my goal is to learn and illuminate and bring diverging views together towards solutions.

Welcome to the "Energy Switch."

You've probably heard net zero carbon emissions by 2050 a lot in the news lately.

To do this would require transforming our entire energy system, capturing carbon, and storing it underground.

A movement to electrify everything.

It could also require government intervention and international cooperation like never before.

And doing all this may not be affordable.

We'll discuss if this transition is achievable with Dr. Melissa Lott.

She's the director of research at Columbia University Center on Global Energy Policy, where she co-leads the Power Sector and Renewables Research Initiative.

She'll bring an engineering perspective to this conversation with Terry Keeley.

He's a former managing director at BlackRock, a leading global investment firm, and author of "Sustainable: Moving Beyond ESG to Impact Investing."

He'll offer a financial perspective on this important episode of "Energy Switch," Is Net Zero by 2050 Possible?

What is net zero?

What is net zero by 2050, which we hear all the time?

What does that mean?

- Well, it means the highest level, that by 2050, or whatever date you put in front of that, we're gonna find a balance between the emissions we put into the atmosphere and the emissions we pull out.

It doesn't mean we're not gonna emit anything, that would be really difficult, but it means that that balance will be zero.

So that's the net in net zero.

- And by 2050.

- That's the goal.

Or at least that's the goal that we set forth in the Paris Climate Agreement saying we're gonna hit net zero by mid-century.

That's a pretty important date when you look at the climate science of it all.

So in some countries we might get there sooner, and other countries might get there later, but the point is hitting net zero as quickly as possible.

- Yeah, yeah, you see it that way, Terry?

- Well, I think we know what the Paris Accord says.

I think one of the challenges, Scott, is that we tend to put precise definitions on the 1.5 degrees.

Oh well, or 2.0 if we slip up.

My sense of things is that this precision that we oftentimes project can be helpful and unhelpful at the same time.

- I agree with you.

We can get lost in these numbers and we say, oh, is it 2.0?

Is it 2.01?

You know, what are the differences?

We can get really fine on that.

The point is to keep that change as low as possible.

The higher we go in terms of the numbers, the more damage we see, the more health impacts we see.

- You know, in general, real high picture, there's technology, there's policy, there's investments that are required.

What are the big things needed to try to get to that net zero by 2050?

- The recent McKinsey report put a price tag on this net zero by 2050 of $275 trillion.

- Trillion with a T?

- Trillion dollars.

And part of what I'll share with you both is that number is both stultifying large, but also possible.

Finance will not be what holds back the transition would be an assertion that I would make.

I think how people behave will be a much bigger part of whether or not the transition is possible.

- When we talk about getting to net zero by any date, whether it's while we're developing or while it's actually making a developed economy more efficient, we need to electrify as much stuff as possible.

That's largely a technological solution.

And then we need to get rid of all that's left.

So that's decarbonizing all of our supply side things that we can and offsetting.

And I don't mean just kind of the traditional definition of offsetting.

I mean these technologies direct or capture other stuff to get rid of the balance to get to that net zero.

- Electrification is a big one.

- Yeah.

- And currently we make it from pretty carbon intensive sources globally.

- We do.

- So when we say electrify, what does it mean?

- So two things.

One, the answer is not electrify everything.

It's electrify everything that makes sense to electrify.

That is a ton of stuff.

In our homes, it's probably all of our heating and cooling, it's probably all of our cooking.

For personal vehicles, it's probably an electric vehicle.

But for other things, we're still gonna be using gaseous fuels, liquid fuels, other things that aren't electricity, but that electricity needs to come from a variety of technologies and sources.

Otherwise it becomes unaffordable or unreliable.

Or worse case, it becomes both of those things.

We don't want 100% nuclear.

We don't want 100% fossil fuels or carbon capture, 100% solar, wind, et cetera.

Like none of these things are ideal and the lowest cost and most reliable system on their own.

Every single one of them has trade-offs.

The first bucket, if we wanna get to an affordable, reliable electricity system is variable renewables.

Wind and solar are really cheap, when they're around, you want 'em.

If you've got that resource, you wanna use it.

They're not always around.

And I know we know the sun isn't always shining, the wind isn't always blowing.

But I'm talking about multi-week periods in large parts of the world where the wind and sun are just poor.

And when I say many parts of the world, I'm talking about Southern California, talking about Germany, I'm talking about all around.

- Texas.

- Absolutely.

The second bucket I will say is energy storage.

And the third is firm dispatchable power.

The third bucket is the one we haven't really leaned into in terms of policy yet.

- I think it's important that we agree on a couple of core things and that is that we want our electricity to be as clean, affordable, and reliable as possible.

Unfortunately, Vladimir Putin has reminded us that the reliability of one's own energy grid is dependent on geopolitical forces far more than we wish.

And so we have a circumstance today where 30 countries are still building new coal-fired power plants.

They are building those new coal-fired power plants not just because of cost, but because they know they have access to coal.

- There's a great article out there by Jason Bordoff, the director of our center, and Meghan O'Sullivan at Harvard.

It says, "When security and climate come in detention, security wins."

- Yeah, as it should.

I mean it's a far more approximate risk.

So displacing coal as a source for electricity has to go through this geopolitical prism in addition to an economic prism.

- You started to talk about transportation.

As I get bigger and bigger vehicles, it's harder and harder to move them on low density fuels, batteries, 'cause so much weight's there.

EVs are a part of it, are they the only part?

What do you see?

- Absolutely not.

So one of the perfect examples of this density challenge of course is aviation.

Like for short haul flights you could probably electrify some of that stuff.

But after a point, you've gotta lift to get off the ground.

It's just what it is.

We've gotta figure out something else.

And this goes back to the we electrify everything that makes sense to electrify.

I think what we're gonna see in that is actually heavy duty trucking doing kind of the opposite of what it does today, where a new truck comes on the road and it does the cross-country in the US trips first, and then it starts doing just between a couple states as it gets older, after half a million miles and then it starts being a port truck.

And that's where the least efficient trucks are.

When we electrify heavy trucking, I think we're gonna see them come into ports first.

- That's interesting.

- And then go from there.

It'll be the opposite.

Because if you're at a port, you can just charge right there.

You can build out the good infrastructure- - Fleets really, basically.

Interesting.

- But when you move into ships and planes, we're talking about different stuff and in some cases, that'll be creating hybrids.

I mean that's what the Dreamliner airlines are or airplanes are, right?

Effectively they're hybrid planes, so they electrified a lot of stuff in them, but they still use liquid fuels.

So the question is how do we decarbonize those liquid fuels?

Maybe it's some kind of synthetic hydrocarbon that is produced with bio resources though we get into some tensions there, everybody wants the biofuels for their part of the economy and we just don't have enough to go around.

Maybe hydrogen's a piece of it.

We'll see.

- Yeah, as we talking about electricity and you're getting into this, how do we pay for those changes?

The decarbonized emissions, how do we pay for it?

What does that do to the price of electricity realistically to the consumer?

- So there's price and there's bills.

And I think about both of 'em at the same time.

The price per like kilowatt hour of electricity, per unit of electricity coming to your house probably goes up a bit as we go to net zero.

- It is here.

- Probably.

But what is the final bill in your home?

And that goes back to the first bucket.

It's like, how efficient are you becoming?

How are you using that stuff?

I'll quote Amory Lovins for a second.

"I don't care about electrons, I care about," what is it?

"Cold beer and hot showers."

Like that's what I want.

So if I get my hot shower with less energy, then I'll do that.

We just replaced, it turned out it was a 43-year-old hot water heater in our home.

Our new one is a lot more efficient.

We save money every month.

Now we had to pay for that upfront.

And we paid an incremental cost to become more efficient, which goes to how do we make sure that everyone has access to that efficiency?

How are we all benefiting from this?

- We probably ought to talk about carbon reduction a little bit.

How we're really gonna make it happen, starting with efficiency.

- So I mean, first we're talking about efficiency.

We're not talking about doing less.

We're still doing all the things we wanna do in our lives and improving our lives over time.

We're just doing it using less energy.

Energy efficiency is one of those, they call it the forgotten fuel 'cause we forget about it so often.

But it's critically important.

So if we design this building in the first place, or retrofit it, refurbish the whole thing so it uses less energy, it makes everything else easier.

In particular, if we do that in a way that makes it so that our peak, the most energy we use at any instant time during the year is lower, that makes the entire system more reliable, cheaper.

It just makes everything easier.

- How do you see efficiency playing out, Terry?

- There's about $250 trillion of investible capital in the world, which is extraordinary.

The example I like to give is Bill Gates talks about 51 billion to zero.

That's the amount of carbon dioxide in tons that's emitted every year in his calculation.

And he started a group called Breakthrough Energy Ventures, which effectively promises early stage venture capital for any technology which may be able to reduce that 51 billion by 1%.

That's gonna cover farming, industrial challenges, smaller nuclear solutions.

It's absolutely clear, I think, to anyone who's looked at this problem thoughtfully, that more nuclear needs to be in the mix.

And if that can be done without building six, seven, eight billion-dollar plants, but rather smaller applications, that could be very meaningful contribution.

I like to come back to the Ford 150, the most popular truck in America.

It has been electrified.

That whole assembly line was actually reconfigured through the debt markets, through the green bond market.

And effectively, what green bonds are is a financing vehicle where capital from mindful investors who very much want to have verifiable green outcomes from their investments are guaranteed certain outcomes.

So Ford was able to raise $2.5 billion in a green bond.

The entire retrofitting of that plant cost one billion.

So to those who are looking for hope, which I think humanity needs, please know that the green bond market, there should be about one trillion in issuance this year.

By 2025, it's projected to have five trillion dollars of annual issuance.

These numbers are meaningful.

They start adding up and they will transform industries.

- Yeah, that's interesting.

You mentioned nuclear early, you said you don't see this happening really without it.

Say more about nuclear a little bit.

Its roles, full scale nuclear, small modular nuclear.

- So when we talk about nuclear, the question is what does nuclear become as we move forward.

And so from a technological standpoint, we continue to build big plants, but we also are leaning towards this idea of making smaller, more standardized plants.

And so the question is, how much nuclear will make it into the mix.

Interestingly, part of that answer comes from how much fossil fuels with capture do we have in the mix?

Because you need firm power to actually keep the grid reliable and affordable.

- And it's not just finance, again, here comes geopolitics, to get one, to get six, seven, eight billion dollars to build a nuclear power plant, which doesn't produce any income for quite a period of time, what does it take?

Six, seven, eight years to even come online?

That's a long time to wait for a return on one's investment.

But what's even more harrowing is what's going to happen to the regulatory environment during that time.

And can you actually be confident that that asset is going to come online as, you know, public perception changes.

- There are areas of the world that have concerns about nuclear.

Some are around safety, but also the questions about water availability for cooling.

- Right, fair.

- If you're in a very water-stressed area, it might just not be an option for you.

- That's right.

- But also as it gets hotter and that cooling water isn't as cool, there are impacts.

- Carbon sequestration, does it matter?

Will it work?

The cost worth it?

- I'm gonna actually zoom out a second and talk about carbon management.

So negative emissions technologies, things that carbon capture and storage were letting the emissions be produced.

They would go outta the smoke stack out of the top and instead we're capturing on putting 'em somewhere else.

We can also do things like direct air capture.

We actually pull that carbon directly out of the air.

Those technologies play an important role and the importance of that that role varies by geography.

So if you are in New Zealand or Iceland where you've got a lot of geothermal, a lot of hydropower, you might care about this a lot less than if you're in Indonesia with a huge domestic coal resource or if you're in a lot of emerging Asia with these resources and you wanna continue to use coal but also reduce emissions, that comes into play.

But also I think carbon capture's biggest role, we often focus on using it with power plants or something like that.

I think the biggest application is in industry and how do we actually take industry to zero?

So if we look at cement, concrete and cement, we need a lot of it.

As a part of that process, you're literally cracking limestone, right?

And you're producing emissions.

So even if I have zero carbon electricity or zero carbon heat in my system, I still need to crack some rocks and I need to capture that carbon.

So maybe that's where it comes in.

- To do all these things, we gotta pay for 'em.

You've talked a lot about the money that's available.

There's been many discussions for a long time about how you price carbon.

Is it a cap and trade system?

Is it direct tax?

Are there other clever ways to do that?

- In the context of Paris, I think we need to be concerned about how efficacious a carbon tax would be.

The whole purpose of a carbon tax is to put explicit, what are the implicit costs?

And that price transmission mechanism has quite a long lead.

We have a carbon tax now, Putin did three things that no one else thought could be done.

He unified NATO, he got Republicans and Democrats to agree on something, and he gave us a carbon tax.

- I think carbon tax is one of those tools that would be very useful to us.

But it's not the only option we have out there.

- We need to price carbon in other ways.

- Well, we need to acknowledge that carbon is detrimental and it's not free to just check it into the atmosphere.

Like that's what we need to acknowledge.

And if we acknowledge that- - But we also need to define we.

So if the United States puts on a carbon tax and Europe puts on a carbon tax, but China does not, or some other producers, we've just shifted the balance of trade in a very detrimental way, which is why a number of conservative economists are looking at this border carbon tax.

So we would have to now look at Chinese imports and say, well no, this actually has X amount of carbon in it that has not been taxed.

So we need to provide an even higher tax on those goods.

Everything I've just said is inflationary.

Everything that we've just talked about is higher prices, higher prices, higher prices.

Is price going to be an effective enough tool to achieve Paris in time?

Probably not.

- Decarbonization, how do we trade that with the land, the air, and the water?

- I think there would be a great deal to be gained, you know, Scott, by humanizing the conversation, as soon as we start talking about land, air, water or 1.5 degrees, in some ways we've already taken the humanity out of it.

Sustainability has always had two important components.

One is environmental, but the other is genuinely social, cultural.

It's human.

If the human species lives as long as other species have, there are 81 trillion human beings yet to be born.

So how should we be thinking about them and what life we want them to have?

- 81.

- That's a lot of people.

- Trillion?

- Yes.

When you start looking through these longer term lenses, I do believe we make better decisions.

- I will say on this, I don't, at least in the conversations I'm in, hear this idea of following Paris and ignoring every other thing, it's always in tandem with achieving at a minimum the sustainable development goals and having everyone have access to the- [Scott] The UN Sustainability.

- Poverty.

- Yeah, exactly.

- Seventeen of them.

- Yep.

And there's a bunch of 'em.

- It's a big list.

- It is a big list.

And it includes making sure that everyone's got access to what we term modern energy services so they can enjoy the lights that we're enjoying here as we sit here and have this discussion, that they can drive a car to get them to a job, or at least have mobility.

So there's a whole host of things that are in that conversation.

- Literacy rates, infant mortality.

Other important objectives.

- But I'll say, when we look at the health evidence and when we look at what my child is gonna be living in in their lifetime, it's not good if we don't mitigate climate change.

- It would be better if we did.

- It would be much better.

- It would be better if we did.

- And so the question is, and maybe this is where we have a tension about is it better or much better?

And is it worth paying things?

- We did a whole episode here on the good news in the IPCC report with two climate scientists from two universities.

And they were, and they said, things are better than they were.

- The trajectory?

- Yeah, to portray four and a half degrees is really wrong anymore.

We should be talking about the things that are lower than that because of what we've already done.

And then really pushing into those rather than the fear, I guess I'm leading us into adaptation strategies and mitigation strategies.

The cost of both and the cost of the damages.

How do we balance this out?

- Well, I think there's some important points here, which is one, we're in a better trajectory as in a healthier, more sustainable trajectory because of choices we've made and things we've done.

And some of them have been direct, like climate policies.

Some of them have been a bit less direct like investing in technologies and innovation that has led us to having cheap options that just win in absence of climate policy.

- Cheap gas replacing coal helped.

- It absolutely did.

When you look at the United States and why our emissions go down, that was a huge part of it.

And that was many decades of investing in something that has resulted in this very nice co-benefit.

'Cause I don't know that people when they're investing in the initial technologies were thinking this would be the outcome.

We are at a point now where we already need to adapt to the climate that is already changing.

I mean, we're going to adapt and if it's anything below the numbers we're projected to go to now, we're gonna be mitigating.

So it's both of those things.

- Can emerging and developing nations afford this stuff?

- I mean, when it comes to emerging markets where I am fairly optimistic about finding finances for new technologies, I'm less optimistic about the world finding, the number is one trillion dollars is needed a year, to decarbonize the grids in emerging markets alone.

That one trillion dollars is approximately 50 times the amount that the World Bank lends every year.

So the World Bank doesn't have the resources to lend, we're going to have to somehow reimagine a new type of global bank to provide that type of sovereign guarantees.

Because if you don't have the ability to repatriate in your currency, at least your capital- - Yep.

- You know, if all we're looking for is a return, we can deal with that.

But losses?

Right now, in particular, lending money to Pakistan, Sri Lanka, any number of Far Eastern countries is very fraught because China has been lending all sorts of money and it's unclear who's gonna get paid first.

- Given this, is it likely we're gonna hit net zero by 2050?

- To me, whether or not we hit it by 2050, it's not that that's not important, the point is we're going to get to net zero a lot faster than where I thought we would when I was thinking about this 15, 20 years ago.

Fifteen, 20 years ago, we are headed for a lot bigger numbers in terms of global temperature rise.

We've made choices that have brought that down.

That's good.

If you care about the health and environmental impacts of all of this, which I think we all do in this conversation, and I think most of us do around the world.

The point is whether it's 2050, slower, faster, we're gonna get there a lot faster than if we weren't talking about it, if we weren't focusing on inputting prioritization on it.

- Right.

- I think, Scott, if we want to again bring this back to is 2050 net zero possible, we have to embrace sustainable abundance, not sustainable austerity.

And I think that part of what I hope has come through today's session is that there are these win-wins.

It's possible actually to find these investments, these opportunities where those dual objectives, where we can actually promote inclusivity and sustainability along with growth, along with greater abundance.

- And how I think of it is we have so many people around the world who don't have access to the key differentiator between rich and healthy societies and sick, poor ones, which is access to modern energy services.

What we do moving forward is we lean into that.

We don't shy away from this tension between, okay, we need to get access so that people can live really healthy, wonderful, prosperous lives, so I think that's your abundance if I'm hearing you right.

And do it in a way that actually doesn't compromise that ability to live so comfortably and well.

So minimize those trade-offs where we can, but we can't say, on one hand, having access is very good, but we're not gonna give you funding to have access.

We need to do all of these things together.

So it's achieving climate goals while achieving sustainable development goals, while achieving other broader societal goals that are important to us.

And so I think, I am hopeful that actually we're leaning into those conversations now more than we have in the past.

- You just described a path of abundance, but also sustainability and mindfulness.

I think you just did too, a little different way to think about it.

But we can accomplish this thing without a either/or choice.

But it has to be thoughtful.

- Yep.

- Melissa, thank you.

- Thanks for having me on.

This was great.

- Really have enjoyed this visit.

- I really enjoyed this.

- I hope it was worth the carbon footprint that we put into it.

- Thanks so much.

- It's a good discussion.

[Scott] We heard that working toward net zero would require reducing carbon emissions in power generation, in industry and in transportation.

Capturing carbon at these sources or directly from the air, then using or storing it underground, increasing electrification, changing fuel types, expanding hydrogen production.

But it's worth remembering that much of this technology is experimental and making this kind of transition could cost nearly $300 trillion.

Terry, and leading financiers, thinks this scale of investment is possible, at least in the developed world.

In the developing world where other social problems are more pressing, it will be more difficult.

Both guests agreed we may not reach exactly net zero by exactly 2050, but they were optimistic that we're heading in a good direction.

[dramatic music] ♪ ♪ ♪ ♪ [Announcer] Funding for "Energy Switch" was provided in part by The University of Texas at Austin, leading research in energy and the environment for a better tomorrow.

What starts here changes the world.

And by EarthX, an international nonprofit working towards a more sustainable future.

See more at earthx.org.