The pace of change in the modern world is often rapid and dizzying. Technologies that seem integral to our lives can become redundant and irrelevant in an instant.
Energy is an area where innovation and new ideas matter a lot, as countries and companies try to find ways to transform a society based on renewable energies like wind and solar instead of fossil fuels like coal, oil and natural gas.
During a panel discussion at the World Economic Forum last week in Davos, Switzerland, one analyst expressed his fear that it seems the market hasn’t learned from other tech revolutions.
Thomas Hohen-Sparbarth, head of sustainability research at Lombard Odier, highlighted the big changes taking place in the area of low- and zero-carbon technologies and, by extension, in wider society.
“We’ve seen past industrial revolutions, including past energy transitions,” Hohen-Sparbarth said. “What we’re really seeing now is a 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 change.”
We were, Hohen-Sparbarth said, “looking at investment needs in the trillions of dollars.”
The quantities being discussed are really important when it comes to energy changes. Last year, the International Energy Agency’s “World Energy Outlook 2022” report stated that clean energy investment could certainly over $2 trillion per year by 2030An increase of over 50% compared to today.
As the discussion in Davos — which was moderated by CNBC’s Joumanna Barcheche — progressed, Hohen-Sparbarth was asked whether clean energy was affordable on the scale now needed.
To that question, he replied, “There’s a very rapid change, and today I would say, yes, it has become the cheapest source of energy.”
“I think the mass market is underestimating the speed at which this transition is unfolding,” he said, adding that there are lessons to 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 infrastructure new technology.”
Hone-Sparbarth argued, “All such changes tended to follow a similar pattern. They appear very gradually … and then the transition is complete over a period of 10 to 20 years.” “
“Yet if you look at what the market is estimating today – how long it will take us to electrify our buildings, to electrify our vehicle fleet – the time frame is still very long.”
To Hohen-Sparbarth, it didn’t seem like “when a newer, better technology emerges that becomes cost competitive, the rollout could happen very quickly.”
Energy firm CEO Andres Glusky also appeared on the CNBC panel aes,
“What we are facing … is a dramatic change,” he said, adding that renewable energy now represents “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.”
Elaborating on his point, he stressed on the importance of adopting a variety of technologies.
“To really get a full decarbonization we would need green hydrogen, we would probably need smaller modular nukes and so on.”
“And I also agree very much that for renewable energy we need more than just being competitive – we just better get the cost down, [and] Equal in quality.”
“And it’s honestly what the corporate sector is demanding from a lot and many consumers.”