The pace of change in the modern world is often rapid and dizzying. Technologies that seem integral to our lives can, in what feels like an instant, become redundant and irrelevant.
Energy is one sector where innovation and new ideas matter a great deal, as countries and companies try to find ways to shift to a society based around renewables like wind and solar rather than fossil fuels like coal, oil and natural gas.
During a panel discussion at last week’s World Economic Forum in Davos, Switzerland, one analyst expressed his fear that the market did not seem to have learned from other technological revolutions.
Thomas Hohne-Sparborth, head of sustainability research at Lombard Odier, highlighted the huge shifts taking place in the field of low and zero-carbon technologies and, by extension, wider society.
“We’ve seen past industrial revolutions, including past energy transitions,” Hohne-Sparborth said. “What we’re really seeing now is the complete transformation of our entire economy.”
“The demand side of our economy, the way we power vehicles, the way we heat our buildings, the way we use energy in industry — all of that needs to be transformed.”
We were, Hohne-Sparborth said, “looking at investment needs in the trillions of dollars.”
When it comes to the energy transition, the sums being discussed are indeed significant. Last year, the International Energy Agency’s “World Energy Outlook 2022” report said clean energy investment could be on course to exceed $2 trillion per year by 2030, an increase of over 50% compared to today.
As the discussion in Davos — which was moderated by CNBC’s Joumanna Bercetche — progressed, Hohne-Sparborth was asked if clean energy was now affordable at the scale required.
The answer to that question was, he replied, “very rapidly shifting, and today I would say, yes, it has become the cheapest source of energy.”
“What I think the market at large is underestimating is simply the pace at which this transition is unfolding,” he added, explaining that lessons could be learned from history.
“We’ve done some work looking at past technological revolutions, whether it’s the adoption of steamships, of mobile phones — any piece of major sort of new technology of infrastructure.”
All such transitions had, Hohne-Sparborth argued, “tended to follow a very similar pattern. They unfold very slowly … and then the transition completes in a span of 10 to 20 years.”
“Yet if you look today at what the market is anticipating — how long it will take us to electrify our buildings, to electrify our vehicle fleets — the timeframes there are still much longer.”
For Hohne-Sparborth, it didn’t seem to be getting through that, “when a new, superior technology emerges, that becomes cost competitive, that rollout can happen very quickly.”
Also appearing on the CNBC panel was Andrés Gluski, the CEO of energy firm AES.
“What we’re facing … is a dramatic change,” he said, adding that renewables now represented “the cheapest form of energy, in most cases.”
“The problem is capacity — how do you keep the lights on 24/7 — and that’s where you have to use lithium-ion batteries on a daily basis.”
Expanding on his point, he went on to emphasize the importance of adopting a variety of technologies.
“To really get to a complete decarbonization we’re going to need green hydrogen, we’ll probably need small modular nukes, etcetera.”
“And I also agree very much that what we need is for renewables to be more than just competitive — just better so that we lower costs, [and] equal in quality.”
“And that’s honestly what the corporate sector is demanding very much, and many consumers.”