NARRATOR Welcome to the DNV GL Talks Energy podcast series. Electrification, rise of renewables and new technologies supported by more data and IT systems are transforming the power system. Join us each week as we discuss these changes with guests from around the industry.
MATHIAS STECK Welcome to the next episode of DNV GL Talks Energy podcast. Today we want to discuss the impact of climate change, the urgency of the actions needed, and the opportunties ahead. My guests are Jose Maria Figueres and Christiana Figueres. Jose Maria, former President of Costa Rica and co-Chair of the Global Ocean Commission, and Christiana, former Head of the UN Climate Change Convention. Good morning.
CHRISTIANA FIGUERES Good morning, Mathias. Thank you for having us both.
MATHIAS STECK Very good. And I hear it's the first time for you to come together talking about these topics here in SIEW.
CHRISTIANA FIGUERES Well, we’re both over 60 years old, so we have come together many times over the past 60 years, but, yes, it was the first time. We have been on stage together, sort of, on panels and speaking about complementary things, but we have never done an integrated presentation, which we did yesterday for the first time as an experiment.
MATHIAS STECK Right and I want to come back to that presentation yesterday because I loved a few aspects there, Jose Maria talking about the oceans, so I hope we get to this during this podcast as well, but let’s jump right into our topic. We want to talk about, basically, COP 21, and latest after COP 21, the world has understood the imperative of decarbonization of the energy ecosystem to prevent climate disruptions.
CHRISTIANA FIGUERES And protect the oceans, you have to integrate these two things otherwise, Mathias, we’re not going to be able to do this podcast properly. We have to integrate the two topics.
MATHIAS STECK Okay, and the ocean. So, are you satisfied with the level of engagement we see worldwide to hit the 2 degree or even the 1.5 degree Celsius target?
CHRISTIANA FIGUERES So, you know, let me be very frank, I think many governments, and certainly many stakeholders in the private sector and in the investment and, broadly, in the finance sector, are making good efforts. But the fact is nobody is doing enough, because we still haven’t closed the gap of where we need to be, and that is why there is an urgency now for everyone to truly focus and accelerate actions over the next three years, because it is the next three years – the policies and the investment that we’re going to make over the next three years, that are going to largely determine whether we can get on track or not.
MATHIAS STECK Right, so I think we also heard a bit about the carbon budget and sometimes when DNV GL talks about this topic we are recommending to accelerate the actions we have to do in the next couple of decades, really, to use as less of the carbon budget as we should right now so that we get on track earlier. And, Jose Maria, maybe I get over to you because I heard a lot of who is conserving a lot of carbon for us, and you explained the very important role of the ocean in this whole equation, so maybe you could elaborate a little on this?
JOSE MARIA FIGUERES With pleasure. So, in this journey of humanity to leave behind 200 years of an industrial revolution that has certainly given us a lot of good things, but that as an unintended consequence has emitted the amount of carbon today we have in the atmosphere causing climate change. The one stabilizing element we have enjoyed, especially in the last decades, is, of course, the environmental service which the ocean provides the planet. It fixes 25% of carbon emissions, so, if you have a shadow price of $20 a ton, which is way below what energy companies are using today as a shadow price for carbon, it values that environmental service at $200 billion per year. And the ocean has also fixed about 90% of the increase of heat that the planet has had since 1970. So, together, that has bought us time in terms of being able to transition towards a low carbon economy.
CHRISTIANA FIGUERES At a price.
JOSE MARIA FIGUERES At a cost, of course, because an unintended consequence of that is the increased process of acidification in the ocean which is changing the physical and chemical characteristics of the ocean and its capacity to continue to fix the amount of carbon it does. That in turn has affected coral reefs, which have 30% of the biodiversity that we find in the ocean. And that in turn is poking big holes into our food chain, because without coral reefs, of which we have lost 50% since 1970, we’re losing an important amount of biodiversity in the ocean.
MATHIAS STECK Yes, I can relate to this because I saw the Great Barrier Reef last year and I was shocked how bleached it was.
CHRISTIANA FIGUERES One third gone.
MATHIAS STECK Yes, so, it's a terrible story and maybe that leads me to the urgency of the matter. I think one problem that we have when we discuss this in the society as such, is still that people don’t understand the consequences if we keep on talking and not closing the gap and getting there to the 2 degrees at least. So, what is your outlook when we would add only the 2.5 degrees? As for example DNV GL says in our Energy Transition Outlook, if we would only get there, how would this world tomorrow look like? How would the world look at the end of this century?
CHRISTIANA FIGUERES If we were to get to 2.5? Disaster. It's a disaster. We cannot go above 2. Anything above 2 has already been determined by the risk gurus of this economy, who is the insurance industry, they told me very clearly, and it wasn’t one company, the insurance industry determined before Paris that if we go above 2 degrees, the world would move into a situation that is systemically uninsurable. That means the premiums would not even have the elasticity necessary for them to continue as an insurance industry. They cannot continue and they could not continue offering the risk management service to the global economy. So, under no circumstance can we afford to think of a world that goes above 2, and this is for our benefit, it's not for the planet because here’s the thing, the planet has existed for billions of years before we ever got here. And if we cause situations that would no longer allow the humans to stay on this planet, the planet will continue in very changed form because, as you’ve just heard from Jose Maria, the planet is already changing. But the planet has a much greater capacity to adapt than human beings.
So, it's about the 2 degrees or in fact well below 2 degrees, in fact 1.5 is the threshold that we have to aim for in order to be able to give our children, our grandchildren, and several generations down the line a good chance of actually being able to have dignity and a profitable livelihood on this planet. MATHIAS STECK Right. We have a lot of advancements in technologies of course coming up, and there is hope that we can accelerate things. Would you think it is likely that we can maybe even reverse damage we have done at some point in time? Or is it irreversible, whatever we do up to now, what we can’t get fixed, the oceans, for example, will the coral reefs come back at some point in time? Is there a hope?
JOSE MARIA FIGUERES Look, there's a lot of things that we already know, and we should be implementing all of them. Replanting coral reefs is something that is being done in Asia and it is being done elsewhere, and that is a good promise for replenishing the biodiversity and the health of the ocean, but there are things that we still have to figure out. But the entire discussion, I think, has to be looked at in a positive limelight. You know, you can choose to see the glass half empty or half full, and if we look at it half full, as I believe it is, getting carbon emissions down, reversing the trend and restoring the health of the ocean is actually the most…
CHRISTIANA FIGUERES And the rest of the planet. You see, we both have to get used to this integration.
JOSE MARIA FIGUERES And the rest of the planet. It’s actually the most important economic and wealth creating opportunity that humanity has had in a long, long time. Think of the transition to this new economy, of the jobs that are going to be created, of the new business models that are going to emerge, of the opportunities for entrepreneurs to come up with businesses that we may not have seen in the past, and of all of the economic activity that that is going to create; at the same time that we improve the conditions of our ecosystems on the planet. Of course, there are going to be some disruptions, but we've always had those disruptions, that’s nothing new. What is new is the tremendous opportunity for the world to move on to a much better economic situation than we've ever had before and that is much less carbon intensive than what we’ve had before.
CHRISTIANA FIGUERES I would say that what is new, in addition to that, is the speed of change. So, we have never in the history of humanity been in a situation in which the demise of the natural infrastructure, be it land or be it water, has actually been in such a quick pace of disruption. But we've also never been in a situation in which we have the capacity, through finance policy and technology progress, to move as quickly into the solution space as we do now. So, we are irreversibly in an age of exponentials, whether it be exponentials for good or for bad, and, honestly, I think that we’re in a very tight race between the two, and we have to make every effort to make sure that we use the age of exponentials for the good, for the construction of new opportunities, and not just a safer planet, but a more just planet.
MATHIAS STECK Right. So, recently we had a lot of these storms which destroyed islands in America;we also had a storm coming in Japan just very recently. Would you see that already as a sign of our climate changing?
CHRISTIANA FIGUERES You know, it is not correct to say that any storm, any flood, any cyclone, any hurricane, is caused by climate change, because it is not. What is correct is to understand that what the increase in temperature and the increase in humidity, right above us – not in the upper atmosphere, but in the lower atmosphere, that increase in humidity, and the increase in temperature, maximizes the effect of floods, hurricanes, droughts. So, it's important to see that climate is not the cause, but it is an accelerator or a catalyst of naturally occurring events, but climate change takes these events outside of the natural boundaries of frequency and intensity.
JOSE MARIA FIGUERES But having said that, then there is an opportunity in the reconstruction of the Caribbean, for example, to put it together in a very different way towards the future, which is not only much more resilient, but which contributes to lower carbon emissions and makes, out of lowering carbon emissions, a good business opportunity. I’ll give you an example. In the Caribbean, energy traditionally has been produced by the import of fossil fuels, very inefficiently, in small quantities, old generators and distribution grids which are way back in time. So, energy costs in the Caribbean oscillate between 35 US dollar cents per kilowatt hour up to 67 cents per kilowatt hour. At those prices, any type of renewable energy is very competitive and a tremendous business opportunity.
And the Caribbean has two things, wind and sun. So, changing the model on energy not only gives you a Caribbean which is much more resilient, but it also creates jobs, brings down the cost of energy, therefore creating more competitive islands, a win-win for all. And those are the types of opportunities we need to identify and move fast on as Christiana has mentioned.
CHRISTIANA FIGUERES And two additional advantages of that is there are many islands that are using up to a third or maybe even 50% of their national budget to import fossil fuels in order to have energy. So, by the time you have renewable energy, that definitely needs the investment upfront, but later on the cost of fuel is zero, then you are saving the country those very expensive costs, and you make that country politically less dependent on those other countries from which they would buy fuels. So, the geopolitics really switches for them, as well as the balance in their national budgets.
MATHIAS STECK I think those were two very interesting points you just mentioned there, I'd like to go into a bit more detail. So, shift of geopolitics due to new fuels, definitely, but also the moral discussion about energy exporters. We were in Australia, where there seems to be a discussion now, “what is our moral responsibility to be a large coal exporter?” It's not only about them using coal in their own country, but they're also shipping it out of country. So, what about responsibilities of countries who are rich in fossils to kind of not make them available anymore to the rest of the world, is that something we could ask these countries to do?
CHRISTIANA FIGUERES Look, there's no doubt that there's a moral imperative, whether it’s about exporting coal in particular or burning coal. So, there's definitely a moral imperative, but the moral imperative works and is listened to or is reacted to by a very small subset of stakeholders. The important thing about coal is that in addition to the moral imperative, it is simply a sunset industry because it has lost both the social licence to operate, there are more public complaints about the burning of coal because of the impacts of health, because of the need of fresh water to clean the coal; it is simply not an industry that will continue to enjoy public tolerance. And, secondly, it has lost its economic competitiveness because we know that coal has actually now become more expensive in many jurisdictions than gas and than renewable energies. So, coal is an industry that will not continue into this 21st century. We are foreseeing, and I think DNV GL also, that we will see a peaking of coal in all countries, globally, by 2020.
MATHIAS STECK Unfortunately we are coming slightly to the end of the time of this episode already. Maybe very briefly on geopolitics, renewable rich countries could suddenly be the very important countries in the world. I mean, Middle East probably is still lucky because they still have a lot of sun and wind, but suddenly also regions like Africa maybe have a better chance. Do you foresee long term change of geopolitical gravity centres?
CHRISTIANA FIGUERES Definitely because, you know, this dependence – when we grew up we were always taught that geopolitics is largely influenced by fossil fuels, by the concentration of fossil fuels in a few countries, and by the need of the world to protect transportation routes of those fossil fuels. Now, as we move to a world in which we are democratizing energy as I call it, in which everybody will use the indigenous, their nationally occurring and nationally and naturally occurring energy sources, now you have a complete switch in that geopolitics. So, those countries that do have fossil fuels will lose their edge on geopolitics; those countries that have the mines for the metals and the rare elements and minerals that are necessary for the new technologies, such as China, Chile, Australia, will actually be the new geopolitical energy giants.
JOSE MARIA FIGUERES But geopolitics in the way that you are looking at it also implies good global governance. And that chapter of governance is specifically important when it comes to the high seas, that part of the ocean which covers about 50% of the planet surface, and because it belongs to all of us, none take responsibility. So, the detriment, the damage that we’re causing to the ocean in the high seas is tremendous, and it requires countries coming together to work out a governance structure for the high seas, that looks at the high seas as areas of replenishment for fisheries, and that sets international standards with respect to how we treat that part of the ocean, which is very important in terms of putting the entire ocean back on a path of recovery. At the end of the day here, our livelihoods outside of the ocean depend on the good health of what's in the ocean, and that’s a new component that we still haven’t come to grapple with in our thought processes about development, that we have to add.
MATHIAS STECK Right, thank you. So, unfortunately we are very pressed on time and I know you both are on very tight schedules here in Singapore. Last question, what are your main takeaways from SIEW 2017?
CHRISTIANA FIGUERES You know, I was quite pleasantly surprised that the bulk of the conversation was about renewables, not just about the incredible penetration and growth of renewables, but how do we integrate them more harmoniously into the grids because we all know that there is this mythical barrier of about 30 to 40% of renewables that can go into an electric grid before you begin to destabilize the grid. So, what I thought was a very interesting conversation is how there was already thinking about how do you extend that barrier? How do you go beyond 30 to 40 – which has to do with digitalization, which has to do with artificial intelligence, certainly has to do with changing the market structures, but we’re not longer accepting that barrier and pushing beyond was exactly we had to do to be able to decarbonize the economy by 2050.
MATHIAS STECK Thank you. Jose Maria, your takeaway?
JOSE MARIA FIGUERES I was very pleasantly surprised with SIEW in that for the first time ever they incorporated a conversation on the ocean. I see climate change and ocean as two sides of the same coin. The same way that the world has come to understand the necessities of mitigating climate change, lowering carbon emissions, is still the route that we need to take with respect to the ocean. And the fact that we could begin that conversation here at the Singapore International Energy Week, SIEW, is already a very good starting point. MATHIAS STECK Thank you very much, Christiana. CHRISTIANA FIGUERES Thank you, Mathias. MATHIAS STECK Thank you very much, Jose Maria. JOSE MARIA FIGUERES Mathias, muchas gracias.
MATHIAS STECK Thank you very much also to the listeners. That was Christina Figueres, former Head of the UN Climate Change Convention, and Jose Maria Figueres, former President Costa Rica and co-Chair of the Global Ocean Commision, about climate change, the urgency of that matter, and what opportunities we have to change. Thank you very much both of you to have you here. I hope you listen in for the next episode.
NARRATOR Thank you for listening to this DNV GL Talks Energy podcast. To hear more podcasts in the series, please visit dnvgl.com/talksenergy.