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 a sector where innovation and new ideas matter a lot, as countries and companies try to find ways to shift to a society based on renewable energy like wind and solar instead of 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 concern that the market did not appear to have learned from other technological revolutions.
Thomas Hohne-Sparborth, head of sustainability research at Lombard Odier, highlighted the huge changes taking place in low and zero carbon technologies and, by extension, society at large.
“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 operate vehicles, the way we heat our buildings, the way we use energy in industry – all of this 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 significant. Last year, the International Energy Agency’s “World Energy Outlook 2022” report said clean energy investment could be on track to exceed $2 trillion per year by 2030, an increase of more than 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 changing, 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 one can learn from history.
“We’ve done a lot of work looking at previous technological revolutions, whether it’s the use of steamships, cell phones — any part of a larger type of new infrastructure technology.”
All such transitions, Hohne-Sparborth argued, “tended to follow a very similar pattern. They unfold very slowly … and then complete the transition in 10 to 20 years.”
“But if you look today at what the market expects — how long it will take us to electrify our buildings, to electrify our vehicle fleets — the time frames there are still much longer.”
For Hohne-Sparborth, that didn’t seem to come through, “when a new, superior technology emerges, which becomes cost-competitive, the roll-out can happen very quickly.”
Andres Gluski, CEO of the energy company, also appeared on the CNBC panel AES.
“What we are facing … is a dramatic change,” he said, adding that renewable energy 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.”
To expand on his point, he went on to emphasize the importance of adopting a variety of technologies.
“To really achieve complete decarbonisation, we need green hydrogen, we probably need small modular nuclear weapons, etcetera.”
“And I also very much agree that what we need is for renewable energy to be more than just competitive – just better so that we lower costs, [and] equal quality.”
“And that’s frankly what the corporate sector is demanding very much, and a lot of consumers.”