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Is Cheaper Electricity the Key to a Clean Energy Future? | Fully Charged Show Podcast
00:42:45
How is the UK really performing on its net zero goals? Can the UK make electricity cheaper and fairer for all? In this episode of the Fully Charged Show podcast, Imogen sits down with Dr. James Richardson, Chief Economist at the Climate Change...
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- [00:14]
Host
Hello and welcome to another episode of the Fully Charged show podcast, where today we're talking to Dr. James Richardson, the chief economist at the Climate Change Committee. Now, for those who may not be familiar, the Climate Change Committee is a statutory body set up in the UK in 2008 in order to set out the carbon budgets and advise the government on how to reach those net zero targets. They recently launched the seventh carbon budget and there are some absolutely fascinating insights in there. And we're going to be getting into all of that with our conversation with Dr. James Richardson. But before we get to that, first a very quick advert break. Try everything electric at our exhibitions in Australia, Canada and the uk. Next up, London. Thank you so much for joining us on the podcast. Can you kick us off by telling us what exactly who you are and what you do?
- [01:06]
Dr. James Richardson
Yes. I'm James Richardson. I'm the chief economist at the Climate Change Committee and the Climate Change Committee are the official advisors to the government on climate mitigation, so getting to net zero and on climate adaptation, so preventing some of the damage that climate change would otherwise do to the uk. So we exist to advise the government on what it needs to do, to advise Parliament on the level of targets for how we get there, and then also to do a report once a year to Parliament on how well the government is doing against the things that the government has agreed to do. So we kind of mark the government's homework, if you like.
- [01:46]
Host
And in terms of that homework, how is it, how are we currently performing against those targets?
- [01:52]
Dr. James Richardson
So I think there is a lot of good news here and it's important to say that because we don't often hear a lot of good news on the climate. The UK has halved its emissions since 1990, which is the kind of base year we use for these. And a lot of that has been driven by pushing coal out of the electricity system. So last year we closed the last coal power station on the electricity grid and coal use was the lowest in the UK since 1666. So the year of the Great Fire of London. So that has been tremendously successful. A lot of people have worked very hard to make that happen. But of course there's still a long way to go, so we can't be complacent here.
- [02:41]
Host
And in a way, I mean, I don't want to say that getting rid of coal is low hanging fruit, because it absolutely isn't it. Incredibly, it has been a very important power source for so many years. But that technology to replace coal with renewable sources, it's a reasonably easy fix compared to some of the other things that are now, say, in that seventh carbon budget.
- [03:03]
Dr. James Richardson
I mean, I think that is true to an extent, but as you hinted at there, when we started down the path of getting coal off the system, it seemed like a massive challenge. And a lot of the technologies that are now powering our electricity system, those giant wind turbines in the North North Sea, or solar panels like the ones on my house, those have become much, much cheaper over the last 10, 15 years. And therefore we've been able to deploy these at huge scale. And that's what's driven that part of the transformation. And the same kind of changes can happen across an awful lot of the rest of the transition. So we're now seeing last year about one in five cars that were sold was battery electric. If I'd said that to you kind of 10, 15 years ago, it would have seemed fantastic. But these cars, they're almost at the point now where an electric car costs the same to buy as a petrol car. That's already true in parts of the secondhand market. And of course they're much, much cheaper to run and cheaper to maintain. So we really expect to see, you know, that take off. And, you know, we're a little bit less far down the line on some of these other technologies, things like heat pumps. But a heat pump is much more efficient than a gas boiler, so there's a big saving to be had on the cost of running it. And actually last year we saw a big increase from a small base, but a big uptake in heat pump deployment. So a lot of these things, the same kind of patterns, can keep repeating and driving out these remaining fossil fuels from the economy.
- [04:48]
Host
So I want to ask you about the carbon budgets because you publish these each year, as they refer to kind of these five year chunks of time. And I wonder if you could just describe what exactly those five year chunks refer to and what the purpose of having those different carbon budgets is.
- [05:05]
Dr. James Richardson
Yeah, sure. So. So technically a carbon budget is a legally binding limit on the emissions from the UK of greenhouse gases, mostly carbon dioxide, but other things like methane as well, over a five year period. So the seventh carbon budget that we've just provided advice on is the five years centered around 2040, and that it serves several purposes. But I think the main thing I would say is it's a way of setting out the pathway to zero and giving households, businesses, government investors clarity on where we need to get to by when, because it does involve a lot of change and a lot of that involves upfront investment in new equipment, it involves changes in the way that we do some of these processes, like fueling cars, that we need chargers instead of petrol stations. So we need to give people enough notice of how quickly this is all expected to happen so that they can make those investments, so we can put in the charging infrastructure, we can build the wind turbines and so on. And so the carbon budget process provides that clarity. And it also requires the government to set out its plan. So the government can't just say, oh yes, yes, we believe in this thing, but then not do anything. Government actually is required by the Climate Change act to set out its policies and plans for how it's going to get these carbon budgets. So it kind of forces government's hand.
- [06:38]
Host
And so you say that it's a legally binding target, but as a target, presumably there aren't necessarily repercussions if that target is missed. What does happen if the target's missed? Apart from obviously the obvious, that 1.5 degrees C of warming remains out of reach?
- [06:57]
Dr. James Richardson
Yeah. So I mean, I should start by saying we've hit the first three carbon budgets that we set out. So, you know, progress to date has been encouraging. But really the kind of the legal constraints apply in more of a forward looking way. They are about saying to government, look, you are required by law to set out your plans for how you are going to meet these numbers. And if your plans aren't good enough, people can take you to court and make you come up with a better plan. And that's happened a couple of times now. So it's really about getting that pathway in place. If we get to a carbon budget and you just miss it, I mean, nobody gets arrested. But it does mean that government has to be serious about how it's going to get there. It has to set out those plans and has to take this seriously or it can be taken to court or forced to kind of redo its working.
- [07:50]
Host
So presently, do the planned policies put the government on the right pathway to reach those targets or is there a bit of a delta?
- [07:57]
Dr. James Richardson
Yeah, so we assess this once a year in our mitigation progress report. So the last time we assessed this was last summer, just as this government came in. So really we were assessing its inheritance. We said then that only about a third of the emissions reductions needed to hit the next big milestone, which is in 2030, had fully credible plans behind them. So that was a pretty big gap. Now, to be fair to this government, they've taken quite a lot of action. You know, we've seen progress, for example, getting rid of the ban on onshore wind in England, expanding the auctions for offshore wind, getting rid of some of the planning barriers that were getting in the way of things like heat pumps and electric vehicle chargers. So we have seen quite a bit of progress. And, you know, when we come to do that assessment again this year, I think, you know, we will see a much stronger set of plans. But there are still things that we have said to the government that we think these are important things for you to do quickly that we're still, you know, waiting for a detailed answer on. So there's definitely still more that needs to be done to get us on track.
- [09:10]
Host
Okay, so I want to turn our attention then to that seventh carbon budget, which refers to that kind of 2038-2042 period that you've described. What are some of the really key recommendations that are within that, that carbon budget, and where are the biggest opportunities to cut emissions? Because, you know, we've mentioned that electricity has had or decarbonizing electricity has huge amounts of progress, but there may be other areas which perhaps haven't had the same rate of progress with reducing emissions.
- [09:38]
Dr. James Richardson
Yeah, so the really big picture here is it's both about kind of finishing that job on decarbonizing electricity, but then also using electricity to decarbonize a huge range of other things. So particularly electric vehicles, heat pumps in buildings, and actually also quite a lot of use of electricity in industry, replacing fossil fuel. Again, a lot of that is for heat. So a lot of it is similar kind of technologies, but mostly at a higher temperature than you'd use to heat your home with. And together those kind of combination of decarbonizing electricity and then using electricity, that makes up about 60% of the measures in our pathway. So those are the really big picture things. And that's why our number one recommendation to government is about making electricity cheaper. So at the moment, we add a series of costs on top of the cost of electricity. So they're not the cost of making more electricity. Some of them are, you know, they're kind of social policy, or they relate to some kind of legacy costs from the past. But they're charged onto electricity. They're not by and large charged onto gas. And so the price of these things is wrong. And of course, that means then that when people are doing the things we want, when they're buying an electric car or buying a heat pump or an industry is installing a piece of electrified equipment, they're not getting the full benefit from that, that they ought to, they're being overcharged. So we think that government needs to move those costs so people get the true cost of electricity and then they can start to get the savings. Because these electric technologies are just much, much more efficient than fossil technologies. So there are savings to be had if the price is set correctly.
- [11:26]
Host
So in terms of getting that cost of electricity down, I mean, it's something that is so hotly debated here on the Fully Charged show, because whenever we talk about grid scale renewable energy, the first question is why on earth is the of electricity coupled to the price of gas? Obviously the likelihood of those instances where it is priced by the price of gas reduces when you have more renewables on the system, but it doesn't solve the problem entirely. There are of course, those other charges on top that you mention as well. But how? I guess my question is twofold. One, how do we actually meaningfully reduce the cost of electricity? And B, is there an awareness that this is something that we absolutely, absolutely must do to accelerate the uptake of some of these electric technologies?
- [12:12]
Dr. James Richardson
Yeah, so I think there's two different things going on here, and they're both really important, but they play out over slightly different timescales. So we think the thing that the government could do immediately is to shift off these extra costs, these levies, as they are known, and either you could move some of that onto gas or you could move it onto the Exchequer. There's various solutions that people have put forward for how you do this, but essentially that's a kind of policy. Choice. Government chose a long time ago when electricity was very carbon intensive, when we burnt a lot of coal, to put these costs onto electricity. And at that time it made sense, but it doesn't make sense anymore now that electricity is the low carbon choice. So we just need a decision on that to move those costs. And then you get an immediate effect on people's bills and on the incentives to go electric. You then also raise this really important point about the fact that the price of electricity is set by the price of gas. Because gas is the so called marginal producer. It's the last player in the market that will resolve itself, but it will resolve itself kind of gradually over time. So one of the reasons why electricity is so expensive in the UK at the moment is that basically all the time gas is setting the price, whereas in a lot of other countries you've got things like hydro, or in France you've got a lot of nuclear. And so gas is only setting the price some of the time. There but here it's basically all the time. But we should start to see probably this year, some hours of the year where actually we don't need that gas anymore, where we've got enough renewables on the system that the price is no longer set by gas because we're just not using it. And as you get more of that, then the price will fall a long way because gas is very expensive. But it will do that gradually because it'll be a few hours hopefully this year, and then more and more hours as we build out more and more of these renewables. But that should gradually pull down the cost of people. So you've got this kind of quick thing that government can just do and then you've got this more gradual process that should happen in the market anyway, but it will play out more slowly.
- [14:34]
Host
That's really interesting. So step one, remove those levies, kind of try and make it a little, you know, give it a good bump straight away. Step two, over time, more renewables on the system reduce the likelihood of those being priced by gas over time, bring the price down. But it does strike me that there's potentially the risk that we're going to see certain households who can afford to have an electric vehicle, heat pumps, solar panels, etc. Etc. Really, really benefit from self generation and virtually zero energy costs at home. And then there are going to be other households for whom they can't necessarily afford those technologies, who are going to have to wait a much longer period of time to see the financial benefit of low carbon technologies. How do we solve for that challenge? And is there a risk that we're going to see a period of time for which we have a bit of inequity in how people experience the clean energy transition?
- [15:31]
Dr. James Richardson
So I think there is a risk, but equally there are things that you can do about it. So I think the most important thing to remember here is that the biggest source of savings at the moment is around vehicles. So electric vehicles are so much cheaper to run, but that's the biggest single thing that drives down costs and of course people on lower income. In fact, most people buy their cars in the secondhand market. It's mostly fleets and so on that buy new. But we're already starting to see those electric cars coming through into the second hand market and actually they're at the same price in large parts of the secondhand market as the petrol car. So they've become affordable for people who would otherwise have bought a petrol car. And then you just make savings on running it. So there's already that big opportunity for a lot of people to start making savings by going electric. And of course, as we see more and more sales in the new car market, well, two or three or four years later, those cars end up in secondhand market. I mean, there's nothing you can do, of course, to accelerate how quickly a car goes from being new to secondhand. But the more we sell new, the more quickly those will end up in the secondhand market and everybody will be able to afford those and capture the savings from the lower running costs on something like a heat pump, that's a little bit more difficult. There is a big upfront cost, but the government is offering quite a lot of support for that with the so called boiler upgrade scheme, which is a grant that is payable to people who install a heat pump. It's £7,500. So that's a big chunk of support there available already. And if we go back, if the government does that rebalancing takes those levies off, then you start to see really quite significant running cost savings as well. Now, I appreciate that even with that grant, a lot of households are still going to find that quite difficult to finance. But so it will be something that not everybody gets immediately. But obviously the faster we make this transition, the faster those savings flow through to everybody. And lots of people of course, really struggling with their gas price at the moment. So the faster we can get people off gas onto electricity, the faster people will start saving.
- [17:53]
Host
So we need greater uptake of secondhand EVs, greater adoption of that really wonderful £7,500 boiler upgrade scheme to transition to a heat pump, for example. But do you think there's any additional support or. I don't know, I guess awareness building that's required to help people be aware that these things even exist, or even to kind of, you know, people who are buying those firsthand EVs, giving them the support to get, to get them going on their journey to electric.
- [18:22]
Dr. James Richardson
So I think this point about people understanding it is a really important one. One of the things that we did as part of the seventh carbon budget work was we convened what's called a citizens panel. So we got a group of people stratified by people with different opinions on net zero, people with different political opinions and so on different ages. We got them together, we gave them impartial information so that they were well informed and we asked them what kinds of things would government need to do to make this look affordable and accessible to you? And one of the things they kept coming back to was this need for reliable, accurate information. So I think there is a role, and we've started to see a bit more of this, both from this government and actually towards the end of its term, from the previous government, of trying to counter some of the misinformation that is out there. Because of course it puts people off if they hear stories about heat pumps or EVs that are deliberately spun in a negative way and it makes people kind of wonder. So it is important that there are sources of information that people can rely on because in the end these are just better technologies. They're much, much more efficient as well as being cleaner, they don't pollute the streets. A heat pump doesn't pump toxic gas into your house in the way that the boiler does. So you know, there's a lot of advantages for people beyond the impact on the climate. And we know that people care a lot about the climate as well. But understandably, you know, people are busy. They don't mostly have as much time as I have to look at these things. So they do want that simple information. And there is a role for government and the industry on this. You know, it's really great that people like the smmt, the motoring organization that kind of represents the car builders and so on, they're you know, going out there and running campaigns to try and get some of this accurate information out there. So it's great that the industry are doing this with government.
- [20:24]
Host
It's so interesting, isn't it? Because you know, if someone was to get a new iPhone or a new piece of consumer technology, it's always positioned as this is a better technology and people are like, wonderful. That's what I would like to purchase. But I feel generally as a kind of clean energy industry that has been, we haven't necessarily done that as well because absolutely, as you described, these technologies are better, they are more efficient, they are more pleasant to drive or more pleasant ways to kind of feel your home. And actually that has been, I think to some extent missing from the communications campaign of like, oh, well, do you want a more up to date better piece of technology? Yes. Well then this is the way to go. Kind of irrespective of the environmental angle as well.
- [21:11]
Dr. James Richardson
Yeah. And I think it's a really important point. I think people don't appreciate just how poor some of these fossil fuel technologies are. About two thirds of the energy you put into your car is just wasted. And actually across the economy as a whole, more than half of the energy that we use is wasted. It doesn't give us the things we want, like a comfortable home or mobility. And we think with an electric future, you can halve the amount of energy that's wasted across the economy. So you'd need less energy to go in at the beginning, as it were. You'd get more out because there'll be more people and so on in the future. And you can pull that trick off by this massive reduction in wasted energy. But people aren't necessarily kind of hearing that. I think, though, the positive side of this is we've all experienced these technologies, right? IPhones. I can remember when things like personal computers were new. And we've all experienced the way in which these things come into our lives and replace less good versions. Who has a landline these days? And so actually, it's not something that's kind of fundamentally new and difficult for people to think, well, actually, I'm going to replace my old gas boiler with a new heat pump. I'm going to replace my old petrol car with a new electric car. People are familiar with these kind of transitions and that I think, you know, does give us a lot of confidence that this, this can happen and it can happen very quickly because we know, you know, the first phones came out in like the 80s and nobody had them, right, apart from, you know, journalists and people in the 30s. And it took a while for that to really kind of get started. But now everyone has one, right? I mean, I'm carrying two, just sat here. Everyone listening to this show will have a mobile phone. We just take these things for granted. And at some point it just goes from being very rare to being everybody having one very, very quickly. And we're just about at that turning point on electric cars. You can really see take up beginning to really accelerate. We've still got a little way further to go before we get to that point on heat pumps. We're already clearly well past that point on renewable energy. I mean, low carbon sources last year made up more than half of our electricity generation. So these things can change very, very quickly when you get to that point. And that gives us confidence that the pathway through to net zero and the advice that we've given on those carbon targets for the 2000s are all deliverable.
- [23:47]
Host
One of the things that's interesting though, to me is that on the one hand, we obviously have this opportunity to use less energy overall because things are that much more efficient, but there is still going to be this huge requirement for infrastructure upgrades and these huge, very capital expenditure intensive projects which also require that absolute Firm commitment to a long term view. And yet you're advising governments, they are there on those four year, reasonably short cycles. And I wonder how for organizations such as yourself, you kind of are able to marry up that kind of long term view and commitment to it, whilst also working with these governments who are there for much shorter periods of time. How does that sort of work and how can we foster a mindset that seeks those long term benefits?
- [24:36]
Dr. James Richardson
Yeah, I mean, this can be a challenge for governments and it's one of the reasons why we have the Climate Change act and the structure of forward looking carbon budgets. Because we are setting out, this is what has to happen in the 2000s and parliament will get a vote on that. It will decide. But once Parliament has decided, that's then the law of the land and it binds on future governments, whoever wins the election. So it is designed to create that clarity, create more certainty for investors. And then we've also had things like contracts for difference, which is the way in which we fund these giant wind turbines. Again, that's a contract for 15 years. So government can't just come in and tear that out. You can take them to court if they tried to do that. So that gives investors that real certainty that if they build this thing, the revenues will come to pay it back. So there are these kind of instruments that are designed into those system to create that certainty. None of this though is really a substitute for a proper political consensus. Right. And we've been lucky in this country that, you know, regardless of which power, which party has been in power. So, you know, the Climate Change act was passed by the last Labour government. We've then had a coalition, we've had Conservative governments. We're now back with a Labour government. All of those governments have supported this framework because they've all understood the science. And actually you can see that even before, you know, Mrs. Thatcher made a famous speech in 1989 to the UN on climate change because she was a scientist, so she understood. So we've really had that consensus and that has been important in the UK's success story here. It's obviously something that we really hope will continue because in the end, these are the facts. The science is real and it's not an ideological issue. So that is important. That does give people confidence, it does bring down the costs of capital and ultimately that brings down the cost of electricity for households. So politicians should have a real interest in this because they want to be able to say, look, we'll make your bills lower and they can do that by sticking to the science and sticking to the.
- [26:54]
Host
When, I mean, and that's the thing that the benefits are so clear that we can have a much cheaper way to run our households super, super comfortably. We can drive more efficient cars that are more pleasant to be in and we can obviously work towards net zero in the process. And there is a point in time when it seems like, you know, all of these things are going to make total financial sense, because not only are individuals saving, but, you know, industry is saving, et cetera, et cetera. But getting to that point is going to cost quite a lot. Is there a point in time where it sort of tips over and we start saving from having. And by we, I mean sort of the UK economy from having transitioned to these technologies?
- [27:33]
Dr. James Richardson
Yeah. So that's one of the things that we look at as part of our carbon budget advice. So we do that kind of full cost of net zero to the whole economy. And yet two things are true. One is that our latest estimate of the cost of that is down quite a lot from our previous estimates. So we now estimate that it will cost on average about 0.2% of GDP a year between now and 2050. So that's a lot less than we thought last time around. Five years ago, when we last produced device, we thought it was more like 0.6%. So it's come down a lot. And that's because things like electric cars have become a lot cheaper as well as the fact that we've made some of the these investments already, so of course we don't have to pay for them twice. We think that by the time of the seventh carbon budget period, we will start to see that flip and the savings will outweigh the investment. So that is something that we can see happening now, of course, those investments, when we do that, we calculate the investments as it were in year, but actually if I'm a consumer, I pay for that gradually over the lifetime of those investments. And if you look at it that way around, actually some households could start to save almost immediately because of those big savings from electric vehicles.
- [28:53]
Host
So from a UK economy perspective, we will start to see that flip 2038 to 2042. But for any households considering these switch to any of these technologies, they'll start seeing that savings much more immediately and presumably the more so, the more of them that they have. So, you know, if you, if you want to feel the benefits of solar, you probably feel them more acutely if you've also got a battery, et cetera, et cetera.
- [29:17]
Dr. James Richardson
That's Right. And particularly, I mean, the two big winners in this at the moment are solar, particularly if you live in the sunnier parts of the uk, and electric vehicles. And of course, the combination of those two is particularly valuable in the electric vehicle kind of provides you with that battery on top of it. So it is harder to kind of make those savings at this point from a heat pump still. But as I say, there is that big government upfront support that helps out a lot with that. But certainly a lot of people can invest in a new electric car or buy a secondhand one, put solar on their roof, if they've got a roof, faces in the right direction and start to make savings on those things. I wouldn't want to pretend that, like, absolutely everything is going to save people money. Some parts of this inevitably are going to be more expensive. Some things like, say, manufacturing cement, is very hard to decarbonize and therefore it probably will push up the cost of that a bit. But overall, you know, there's big opportunities for savings here.
- [30:22]
Host
And in terms of where you see the biggest economic opportunities for the next between now and 2050, what would you be sort of betting on? I should probably shouldn't say betting. You're a much more strategic person. Where might you be thinking these are sensible areas to be paying very, very close attention to?
- [30:41]
Dr. James Richardson
Yeah. So I guess you've got to look at it in two kind of ways. I think for the economy as a whole and for most households, most businesses, the big story here is going to be in that electricity, electricity electrification story is going to be those efficiency gains from the way we heat our buildings, the way we provide our mobility and the way we generate our electricity. And that's going to be the kind of big picture. But if you ask me, kind of, well, where are British firms going to do particularly? Well, I think you're then probably looking at, well, which bits of this are the kind of things that British firms are really, really good at. So I think one thing that we should always remember this is that, you know, the UK is a services superpower. We're the second biggest exporter of services in the world. And so actually we should probably be looking to some of those parts of the transition. So actually we've talked about finance a lot, of course, finance and things like insurance and so on. These are huge UK success stories and the world is going to need those kind of services. So the faster we go, the more expertise we build up in how you finance these things, how you insure them, the more we can sell that expertise around the world. And then there are kind of technical things like that. So if I want to run an electricity system that's all driven by things like renewables, nuclear, a certain amount of kind of backup batteries and so on to make that work, that's a different set of skills than the ones that we've traditionally needed for fossil systems. By moving fast on this, we become one of the first countries in the world to develop those kind of skills. And of course then we can sell, everybody's going to need to do this, so we can sell skills like that all around the world. And then there are some bits of kind of manufacturing we shouldn't forget in all of this. So things like, for example, carbon capture and storage, it's a niche part of the overall transition. But again, if we can be people who pioneer that geologically, we're well placed to do that. We have a lot of holes in the ground, to use a not very technical term, that are suitable for storing CO2, so we can work out how to make that work, how to get the engineering to work. And then again, that's something that other countries will need. And of course there's a lot of skills there from the North Sea which will run down regardless because the oil is running out. But in terms of, you know, doing offshore engineering, we have a lot of people who know how to do that. So there are things like that where you can imagine the UK being very successful, but other people want these markets too. So, you know, we have to, we have to move fast to build those skills, to build that expert expertise and then we can be the people who sell it around the world.
- [33:33]
Host
And where do you think the biggest skills gaps are presently that risk not meeting those net zero targets?
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Dr. James Richardson
So inevitably you do need a lot of people trained up in some of these new skills. So heat pump installers would be an example. Now, it's not a very difficult thing if you're already a trained boiler installer, to cross train to become a heat pump installation, it takes about three days. Obviously it's more if you're coming. If you're an apprentice and you're just starting off in the workplace, it takes longer to learn how to do it. But, you know, these are not. It's not like becoming a nuclear scientist. We do need a few nuclear scientists as well, but we need lots and lots of heat pump installers. It's not that difficult a thing to do, but we do need to give people the confidence that if they invest in those skills, they will be a model market. This is why this kind of long term perspective we were talking about a minute ago is so important because people will develop new skills. We know, for example, that if I drop my iPhone on the floor, there's dozens of people who will fix the screen for me. That industry didn't exist 15 years ago. People could see that there would be demand for this. They could see that it would drop in these things and that they could make a good living fixing them for it. This, you know, the same is true if we can convince people that there's a good living to be had installing heat pumps. People will go out and learn how to do it. And big companies that install these things, people like Octopus and EDF and so on, they're training people to do it. We'll need them for new build homes. So hopefully some of the big building companies will start training people. But it's all driven by that certainty. The more we can create that kind of confidence that, yeah, if I do this, I've got a lifetime of work ahead of me, then people will invest in the skills and then we will sort these problems out.
- [35:26]
Host
Whenever I think about this particular discussion, I think about sort of two age groups and there's the 11 year olds who, many of whom it's a ridiculous statistic like 60% of them will have jobs in the future that presently don't exist, which is just mad to think about. And then I think about the 17 year olds who are having conversations with their parents and their parents sort of talking about a future that they may not particularly understand and sort of exercise that skepticism around, oh, you ought to do something with YouTube that feels very risky, which is 100% what would have happened in my instance. And you're right, those conversations are made infinitely easier if there is that kind of consensus that the direction of travel is somewhat agreed upon. I wonder how the analysis that's in the seventh carbon budget and all the carbon budgets is really phenomenal. And I'd recommend that anyone listening to this goes away and has a skim through it, even if you just look at the graphs. They all tell such interesting stories. But it must be almost like playing a bit of a game of whack. A mole in that policies or discussion around policies is constantly changing. Technologies have changed. The price of these technologies in the past five, 10 years has changed astronomically. And I think the really hot topic that's, that's come to light in the past 18 months or so is of course data centers. And I wonder how significantly does that need to feature in the next round of analysis. And is this the sort of discussions that have been had today? Are they. Are we kind of worrying too much about them, or are they going to, you know, former a really big part of this decarbonisation journey?
- [37:07]
Dr. James Richardson
So, I mean, they are going to be a growing source of demand for electricity in the future, but I don't think we should be overly worried about that. You know, we see total demand for electricity doubling between now and 2050. So within that context, data centers are, you know, they're a piece of that, but they're not by any means the. The largest piece of that. And we also see demand for other things diminishes because those technologies become more efficient. Even electric technologies get more efficient. Light bulbs, for example, just massively more efficient than they were 10, 20 years ago. So we've seen a long period in which electricity demand has been falling, not because we want less light or fewer appliances, but because they're becoming more efficient. We think that changes because electricity will suddenly start. Start powering our cars and our heating and our industry. So it's part of that overall story where electricity demand in total will increase and it may put some pressure on particular parts of the grid. So this is one of the things that has been a challenge, is that we struggled to upgrade the grid fast enough. So most of the problems that we hear about are not that there's not enough electricity, there's more than enough, enough electricity, but that you can't necessarily get it to where you want it fast enough. Now, both the government and the grid and the people who operate the grid are working pretty hard on trying to improve things. But it does mean, yeah, we do need to be able to build that infrastructure. We need to be able to get the power to where people want it, whether that's for a data center or an EV charging hub or. Or whatever it might be. And we need to do that a lot quicker than we've been doing today. But it's not actually the total amount of electricity that's going to be the biggest challenge here, even though it doubles. I mean, remember, we doubled the size of the electric system in the 1950s, coming out of the Second World War, when basic materials were hard to find. So we can surely do that again.
- [39:12]
Host
God, I'd not stopped to think of it in that terms because I think that is always the headline statement, isn't it, that electricity demand is going to double and people sort of go into a bit of a tailspin about that, that statistic. But that's not the problem. It's getting it to where it needs to be when you need it. That is. That's interesting. As you were talking, I've written myself a note, circled it and underlined it. So I will be using that elsewhere. So there are an absolute ton of recommendations obviously within the seventh carbon budget. That is the purpose that's meant to serve from, you know, decreasing the cost of electricity, removing barriers to accessing some of these technologies, providing that certainty, supporting households to adopt clean energy technologies, supporting businesses, which is something that I think we could have dedicated an entire podcast to in itself upskilling of that workforce and of course that engagement strategy as well. But I wonder if, you know, you could just gently whisper in the powers that be and say, this is just the one thing that I think you should take really, really seriously to ensure that we can continue on the right pathway and that the policies match the pathway and how we get there. What would it be that you would say?
- [40:25]
Dr. James Richardson
So I think if I was just allowed one thing, it would be this point that we've talked about a few times about making electricity cheaper. Because electricity is so central. I mean, it doesn't do absolutely everything right. We're not going to be flying across the Atlantic in an electric plane, but it does do, you know, the lion's share of the work. And it is so much more efficient. There's so much to be gained by having electric technologies that if we can just get that to work, you know, that's the biggest step. And at the moment these extra costs are just a barrier that we don't need there if you like, they're kind of human made, they're consequence of policy choices that we took a long time ago for reasons that are understandable at the time, but which we just need to remake for the times we're in now. So it's something, you know, politicians often find it hard to get things done because they often don't really have the levers they want. This is somewhere where they do have the levers. These are political choices. So they can, they've got control and it would make a big difference. It's something that could be done quite quickly.
- [41:31]
Host
I think that is an excellent note to end on and especially because who of our listeners wouldn't want cheaper electricity? And I think it is so fascinating that so many of these challenges are not technological ones at all. They are human made barriers that need to adapt and change for the world in which we live. So message to politicians. Pull that leverage. Make electricity cheaper. Well, thank you so, so much for joining us. We will of course, make sure to link to that seventh carbon budget in the episode notes. And thank you so much.
- [42:04]
Dr. James Richardson
Fantastic. Thank you.
- [42:06]
Host
Thank you so much to James for sharing all of those juicy nuggets of insight. I personally am very excited about the prospect of cheaper electricity, but that is it. That is all that we have time for today. Thank you so much to you for listening. Thank you so much to Andy from our team, who will be editing this particular podcast. Before you go, if I could ask one teeny tiny favor. If you could give this episode a like a comment, or subscribe or share with a friend, or all of the above. It is so appreciated. It really does make sure that we can keep on sharing the cool and interesting stuff in this clean energy transition. But that's it. If you have been. Thank you for listening.