Endgame with Gita Wirjawan - Nicola de Blasio: Can AI & Blockchain Save Us from the Climate Crisis?

Episode Date: August 5, 2024

Thank you to The Belfer Center for Science and International Affairs at Harvard Kennedy School for supporting this episode. Visit the link below to learn more about research, ideas, and leadership programs for a more peaceful world: https://www.belfercenter.org/ About Luminary: Dr. Nicola de Blasio has been involved in the energy world for over twenty-five years. Currently, he is a Senior Fellow at The Belfer Center, Harvard Kennedy School, where he concentrates his research on renewable energy innovation and the transition to a low-carbon economy. In this conversation, Dr. de Blasio offers a macro perspective of the technology, economics, and geopolitics of energy transition. He dissects the prospects for hydrocarbon and nuclear energy, projected global oil and gas consumption, and how AI and blockchain can potentially save us from the climate crisis. #Endgame #GitaWirjawan #NicoladeBlasio Join Endgame YouTube Channel Membership! Support us and get early access to our videos + more perks in return: https://sgpp.me/becomemember Visit and subscribe: @Endgame_Clips | @SGPPIndonesia

We are not in the situation where we can pick and choose. We need to use everything that we have at our disposal. When you smell the inflection to take place? When people realize that we don't have any more time to lose? Niccolo Di Blasio. Nicola de Blasio. Nicola is a senior fellow at Harvard at the Belfa Center for Energy. More transparency, more accountability, more real-time usage?

Yes. Are you in the camp that believes that that's going to happen? Yes and no. People forget that it's called the energy transition because it's going to be a transition. It's not going to happen overnight. And there are going to be costs associated with this transition. At the rate that China is going to invest on AI, I just can't see how coal is going to disappear in the next 10, 20, 30 years. So, first one, you really don't want a private company to decide policies for you. Second, we also need to remember that there are hundreds of millions of people around the world that do not have access to electricity.

Absolutely. And it would not be fair to expect that they pay for the CO2 emissions that other people we have done. Hi, friends, I want to take this opportunity to thank you for being with us ever since we started Endgame some years ago. The conversations have been invariably elevating and animating. At least from my personal point of view, it's been a tremendously rewarding experience. And I'm hopeful that you could be further supportive of us by way of clicking on the subscribe button, watching every episode as much as possible, if not as fully as possible. and also joining us as a member of the Endgame channel.

I can only promise you that whatever we're going to be doing going forward will try to make Endgame a better experience for all of you. Thank you. Hi, friends. Today we're honored to have Nicola de Blasio, who is a senior fellow at the Belford Center at Harvard University. Nicole, a pleasure to have you. Thank you for having me.

I usually start off with a personal question on how you grew up, where you grew up, and how you ended up becoming intellectually curious about what you profess today. Tell us. So I grew up in Italy, in Milan. How I got involved in energy, it's actually funny story. I did part of my high school in the US and one of the classes that I loved the most was chemistry which I like what it would have been in Italy

that would have been just classroom was basically in the labs and I really liked it and when I went back to Italy after graduating I basically started at the Polytechnical Milan and chemistry that chemical engineering which is one of the degree was in chemical engineer as I said and I thought it was something that I would have wanted to do little I knew that at the time I think about 99% of the of us graduating for from the Polytechnical of Milan in chemical engineering would end up

working at E&I. And so I, in the end, even if I was doing my thesis and everything, I ended up, Amy. And I was Annie for about almost 18, 20 years. And I had an interesting career because I started as a process engineer in the gas and refining department

And then my boss at the time became a CTO of Ene and I moved to the economic feasibility department. Annie sent me around basically the world for six months to learn about economics. So they did an incredible job in training me. And then things evolved and I was lucky to end up being vice president in charge of R&D development around the world. So I was working with other major energy companies, but I was also managing university relations and the startup corporate venture arms of the company.

And then I got married to an American, and here I am. You spent time at MIT. Yes. You nurtured quite a number of ventures with MIT, and you came over here to the Belfour Center. How early was it, you know, during your time at any, that you detected the importance of renewables?

So what, what for some people is counterintuitive is the fact that, you know, big energy companies, or oil and gas companies at the time, they have always been looking at the future of technology because these companies, they want to be in business for the next hundred years or more. And so within all of the incumbents,

there are groups that look into the future, and it's one of the best jobs that you can have. And so it became clear because it was about, if you think, it was about in 2000. 2000 renewables were still expensive, but they were starting to be deployed in an increasing percentage. And traditionally, especially the Europeans, but I would say also the American,

all in gas companies were all in gas companies. And at one point there was a transition where they started to look into electricity. And then the step, and obviously the logic there was we sell energy, we don't sell just oil and gas. And then the moment you start to look at electricity

looking at renewables becomes an easy step. One of the reason why there was, from a business point of view, I think there was this transition, is that a lot of the majors in Europe were actually selling natural gas

retail. And so then you know you you want to add the electricity because you can increase your market share in your revenues. And so then as I said, renewables and if you to this you add the fact that there are entire groups within this company that look at to the future and how technology will impact the energy system of the future. that's why things are evolving the way they are. You know, if you talk to a hydrocarbon company, the large ones, there was an observation or there's a sense that they may not be allocating enough resources for renewables. Is that a misplaced perception or is it warranted by the fact that technologically it's just not as easy as it might sound.

I need to be careful how I phrase this. So I think that there is, if you look at from a pure economic point of view, today, the returns that you make on oil and gas are much higher than the returns you make on renewables. So especially in Europe, there was a transition where the incumbents, the majors,

were national champions. They're still owned by the local governments, but they were national champions. And the goal of this, the mission of these companies was to provide energy securities for the countries. Then this changed again before 2000, where it was more about

about growing as a business and providing returns. to the shareholders. So the challenge that, and I'm not trying to make a judgment here, I'm just stating what I see. The challenge that the CEOs, this company have, is the fact that they have two, because they're for-profit companies, they have to basically guarantee returns,

also to their own governments, not only to public and private shareholders, but to the governments as well. And they have to invest in renewables at the same time. And it's interesting to see how there are two different groups of shareholders, in my opinion. The ones that are willing to accept lower returns for the overall good or for driving renewable adoption

and the ones that don't. They just care about economic returns. And so it's difficult for these companies to match these two trends. And so I think that the reason is that right now, because we don't factor into oil and gas returns, the externalities like CO2 emissions or climate change, returns are higher. and so there's still a significant percentage of shareholders they're pushing for higher returns more than for addressing something that might be perceived

as a longer term issue. What you see, which is interesting, is that now a new trend is developing within majors where they're starting to spin off the, let's say, the renewable, part of the companies because of what I said before, because there is this feeling that certain shareholders will be happy to have lower returns but driving the transition to a low carbon economy with respect to others. And so the way we're trying to avoid these two trends to clash

is basically to spin-off companies that either do renewables or do oil and gas. You know, I took a look at the, one of the publications of Wood McKenzie. It's, you know, went into the future, take a look at the forward demand for fossil

coming from the aviation. It's not declining. Demand from, or for petrochemicals, it's not declining. For automotives, it will continue to decline. which, you know, gives the sense that demand for oil.

Overall, it's not going to decline, right? Well into the future. Is that the right way to think about it? I mean, today, you know, the world is consuming around 100 million oil, I mean, 100 million barrels of oil per day. Is that number likely to stabilize or increase or decrease in the next 10 to 20 years, just to give, you know, the broad brush stroke? Oh, you know, we move from peak oil to peak oil demand.

Right. It's not an easy question because, you know, when we think about the issue that you raised, we also need to remember that there are hundreds of million of people around the world that do not have access to electricity. And the truth is that, you know, we need to bring these people out of energy, poverty and poverty in general. And it would not be fair to expect that they pay for the CO2 emissions that other people we have done. So there will be a need to, if we don't want to keep relying on, on, for. fossil fuels, there will be a need for Western countries to provide financing and technology

to the Global South so that we can bring these people out of energy and poverty in general and do so in an environmental sustainable way. Have I answered your question? Yeah. it sounds like it's not likely to decline anytime soon. Right. And I'm with you on how the global north ought to behave going forward and how to global south ought to behave going forward.

But, you know, I come from the global south. I don't think it's constructive for the global south to just keep blaming the environmental legacy of the global north. I think we've got to be a lot more constructive than that by way of investing in the necessary building blocks so that we can be a lot more environmentally friendly, right? But the global north needs to help. Absolutely.

So the follow-up would be then, you know, if you want everybody on a planet to understand the narrative of sustainability, everybody, particularly those from the global south or the developing economies need to modernize because I think to understand and be able to embrace the narrative sustainability, one needs to be modern thinking. And unfortunately that represents about 80 to 85%

of the population of the planet, the developing world. And they only care about putting food on the table irrespective of how the energy comes from. Everyone would. Anyone would. And you take a look at the purchasing power of the typical developing economy. It's no more than $0.5 per kilowatt hour.

Whereas all these great technological options that are renewable in nature can only be availed at a cost at the least at $0.15 cents per kilowatt. So how do you reconcile these? I'll make a comment and give you an example. People forget that it's called the energy transition because it's going to be a transition.

It's not going to happen overnight. And there are going to be cost associated with this transition. And they need to be allocated at this cost in a just and sustainable way for all. So if we think about what happened in Europe when the war in Ukraine started, the EU was pushing for the transition, but again, a lot of people had forgotten, or were not considering that it was a transition. Countries were against nuclear, and then had to go back to coal. And then when the war started, Basically, because energy system, especially the ones that are developed from the bottom up,

so starting as regional and then they grow, like in the case of natural gas, they had never, the countries had never addressed how to make this system the most effective and efficient way a system level. Every country has been going on their own. And so when the war in Ukraine started, the prices of gas, natural gas in Europe, tripled in a very short time. And I mean, I remember seeing the gas bill of my mother, three times more expensive in the month.

It was a lot. And so governments started to have to put the billions of euros in deficit into basically subsidizing fossil fuels. And so the point that I'm trying to make is that we should really try to avoid replicating this inefficiency and mistakes every time. Because if this conversation would have happened before having more system level analysis in mind, we could have used that money in much better ways than ended up being used.

And until we don't have these conversations, where how technology is going to be key to accelerate the transition, how countries need to work together in order to have

a global energy system that are actually working, we are going to spend an awful lot of money to waste an awful lot of money instead of putting it to a product views. Special thanks to the Belfour Center for Science and International Affairs at Harvard Kennedy School for providing support for this episode. Check out links in a description to know more about research,

ideas, and leadership programs for a more peaceful world. Why did you choose hydrogen? Of all the optionalities out there. So it was a choice in part and a first choice because when I started before all the hype that we're having now. And so then when he exploded, I didn't have a choice. But having said this, the thing that I love about hydrogen, it's that for someone like me that has worked his entire career in energy, and I've been lucky to have been able to do this around the world,

This is a once-in-a-lifetime opportunity to be involved in the design and deployment of new energy system and scale, because we haven't done this for the past 100 years. And hydrogen is offering this opportunity as the beauty that it touches every single sector in the energy value chains. Now, it won't be the best choice for every single sector. So I think that we will have to have a mix of technologies and every single technology will have its use, is preferred used or optimal use in different sectors. But hydrogen touches every single sector. So from an intellectual point of view,

but also for the hope of accelerating the transition, it's a best topic to be in at the moment. Talk about this more in a sense that, you know, the Japanese are very passionate, seem more keen about hydrogen. And it's been very difficult for lay people like me to understand why, for example, a Toyota is of the world. They didn't want to jump on this bandwagon of electrifying

you know, vehicles as quickly as one might think they could have. Right. Or as quickly as the other, you know, enterprises. Why, is there some magic that the average people are not aware of about hydrogen? No, I think that, let me take a step back. We have had the hypes about hydrogen in the past. the latest one was in 2000 and it faded away why be for two reasons mainly the first one because at the time people were talking about using hydrogen

basically for mobility in the light duty sector so in passenger cars and already in 2000 development and deployment cycles of for battery electric vehicles were much farther down the innovation cycle than hydrogen. So hydrogen could not really compete. Governments were moving incentives from the vehicles and the batteries themselves to the infrastructure. The second reason why at the time it faded away was because in 2000 renewables were still very expensive. So the reason why we're talking about hydrogen today is due to the success of another technology renewables.

When the price of renewables started to drastically drop, penetration of renewables in the grid started to drastically increase. The problem is that the grid that we have today, and I say the grid, but if we think about the US, the US doesn't have a grid. It's a patchwork of different systems. that often don't even talk with each other. The greed as it was traditionally built around the world

was built around centralized power plants. And so it's difficult for this system to integrate a higher penetration of renewables which are intermittent. And so then you have issues of curtailment, you have an issue that, you know, they're intermittent, so you have a challenge to meet supply and demand and the right level throughout the day.

And so hydrogen started to be, and again, hydrogen has been a staple, even if we don't have hydrogen markets. So it's not a commodity, it's a staple. So, hydrogen has been in the energy systems and in the, in the, in the, in the, in the, chemical ones for 150 years, refining upgrading of heavy oils and fertilizer. So hydrogen is now seen as an opportunity to store energy. A lot easier. A lot easier because, you know, on a mobile phone, if you leave on your desk for too long,

the battery will die. Once you produce hydrogen, you can store it. You will have the cost of storing hydrogen, but ideally you can keep it there forever. And so when you had an increase of renewables

and you had curtail many issues and didn't know what to do with the electricity, hydrogen has a value proposition. So the In the short term, you could think about substituting gray hydrogen. So today, most of the hydrogen that is produced around the world,

which is about 75 million tons per year, it's produced from fossil fuels. So you still have CO2 emission associated with the production. To give you an idea, if you produce hydrogen from coal gasification for every kilogram or every ton of, hydrogen, you produce about 20 tons of CO2. If you use steam gas reforming, so starting from natural gas, without carbon capture and sequestration, you are about 11. But if you use renewable electricity and in a process, electrochemical process, there is basically water splitting,

you split a molecule of water into hydrogen and oxygen, emission is no emissions. So this hydrogen that we call green or renewable hydrogen. In Europe, it's about colors in the US. It's more about carbon intensity, but green hydrogen has the potential to the carbonize a lot of sectors, including hard-to-based sectors.

Sectors where electrification together with the carbonized electricity production might not be the preferred choice from a technological point of view. So this is why hydrogen, so you can think about decarbonizing refining, you can think about decarbonizing ammonia production in the short terms. People are talking about using green hydrogen in steelmaking because you use hydrogen as a reducing agent, but you could also imagine using hydrogen to produce electricity or heat.

When you burn hydrogen in a fuel cell, all you produce is electricity, heat, and water. So that's why the environmental value of hydrogen is high. Well, you know, the European Union has just come out with this framework called CBAN, right carbon border adjustment mechanism which basically will not force you but encourage you to decarbonize right anytime we want to export anything goods or services were mostly goods liminum steel fertilizer hydrogen and what you know into the european union you know, it's going to be effective in January of 2006. But my question is a fewfold.

First is, what has made it so slow for hydrogen to scale? I would argue that hasn't scaled yet, but trying to be diplomatic here. But why has it not scaled? as quickly as humanity would have wanted to. And, I mean, I'm a lay person here. You know, you talk about water. It sounds pretty easy, right, to just split the age from the oaf.

Not that easy. I mean, you know, I'm sure there's smart scientists out there that could figure out a less costly way of splitting up the atoms. So today, the cost of hydrogen, the main cost of hydrogen is actually the fuel. source. So it's either the electricity or the fossil fuels that you use to produce. If you have fossil fuels and then you have to add the carbon capture and sequestration, you would have the cost of that too. And then only then you have, you basically have capex and OPEX. So up to now it has been an issue of cost because the truth is that up to now the world

has been angry for cheap energy. And if you have cheap energy without considering the environmental cost of this cheap energy, then you're only seeing part of the picture and eventually you need to address also the externalities and I mean the CO2 emissions that you have when you use fossil fuels.

But it's, I think, it's a economic reality people have always been happier to buy energy at the cheapest price possible yeah at the moment coal is cheap but again it's just because you are not factoring in the the effects on climate change and so you might not pay it now, you will pay it eventually. And so... It's a deferred cost. Yes.

Yeah. And so why not buying an insurance now? Future for the convenience of today, right? Yes. But unfortunately, a lot of people in the developing economies can't think like that, you know, because of the priorities to put food on a table. Yeah. As you said, the moment when you have to feed your children and you don't even have access

to electricity, how you, what you come, you bring. to cook your food or to make your water drinkable is not your priority. I'll give you some picture about Southeast Asia. When at the moment it's collectively electrified to the extent of slightly less than one terawatt. And if every Asian country wants to be or needs to be or must be, electrified at a rate of at least 6,000 kilowatt needs to build an additional terawatt, which means we're going to need at least $2 trillion, you know, give and take, a few dollars.

We don't have that kind of much, right? So it goes back to your earlier point, and you've alluded to this in, you know, public domains in a past where I think there needs to be a conversation at least and a collaboration, between those that have the technological wherewithal and economic war with all, with those that need the technological world with all and economic war with all. How do you foresee the future

where this thing could actually come to fruition and could get fertilized a little bit better than what we might have seen in the last decade or two? I would say it's actually a little, even a little more complex because I think that in order to be successful, there needs to be a much closer conversation and partnership between the private and public sector. And I'll tell you why I think this is the case on average.

When we have seen in the past new energy infrastructure being deployed, 80% of the cost is being covered by the private sector. the private sector, especially large companies, work in 70, 80 different countries, so they have a global scale that policymakers in single countries don't have. Now, so the first part of my answer is that the public and private sector will need to work

much closer than they're doing today. The second one is, and, you know, long come as a surprise, I think that technology innovation is going to be key. We have seen how technology in the past have helped to scale new innovation, I mean, has helped to scale new technologies, bringing down the cost. Again, today, a lot of people say green hydrogen is very expensive. But the cost by itself doesn't mean much because those people never talk about what is the cost of doing nothing. And secondly, they forget that, again,

we're talking about hydrogen today because renewables for which people were saying the same thing in 2000, they're too expensive, they will never be successful, became non-expensive. And to address, as I mentioned before, the issues related to intermictancy, hydrogen became a solution, a possible solution. So,

public-private partnership, innovation, and I think finding mechanism to finance technology deployment, but the best technology. So the global North should provide not only financing, but also access to best

technologies available so that countries in the global south could leapfog dependence on fossil fuels and on carbon-intensive economies because they're given access to capital to deploy or to deploy the best technologies available. I'm with you in a sense that the private enterprises actually have a much better understanding of the pulse. And I think they can have greater velocity in moving forward than policy. And I'm also with you in a sense that I'm actually in the camp that believes that the technological capital deployment is the easier part. It's available.

But it's the economic capital deployment that's possible. problematic. That needs to go from this place to the other. There's a lot of concerns in this camp with respect to whether or not they're going to be able to get their money back. Right. And I think there's a way to structure this thing, at least conversationally. Right. And then you can frame it as a product that could be held to account, you know, for both parties. your reviews on this again we buy car insurance not because we want to crush our cars but absolutely why shouldn't be we be willing to pay for quote unquote climate change insurance that would allow to address what you're saying you can you can think out a

product to help bridge where this thing can be availed. Call it 15 cents and call it 5 cents here. You know, this will go up to 6, 7, 8. Who knows when? Those will come down to 14, 13, 12. This might come down faster than this thing going up. And then until such time that they interact. That intersection, I think, is the point until which you can create a product

to cover whatever risk exposure, either, if not both sides are exposed to. Also because eventually a growing number of the world population will feel the effects of climate change. Absolutely. And is prevention better than having to cure it? disease why it has exploded that i mean all the health insurance business i should not call it a business but it's about preventing and uh and again that the thing that i never understand is you cannot just be concerned about the cost that you have you have you have you can not just be concerned about the cost that you have in front of you.

There is also the cost that you have for not doing things, for not addressing climate change. And that cost is a cost that eventually you will have to pay. Look, I'm within the sense that there's not enough of a political culture at the household level, at the social institutions level, in the offices, in schools, that promote conversations along the lines of prevention as opposed to remedy. I sense that, particularly with respect to the young generation.

I don't think they see it. There's not enough political culture to sense that deferred cost that's significant. But at the same time, you know, one would argue that you know, it's actually not that difficult to re-engineer or to re-architect somebody's behavior to be more environmentally friendly as long as the alternatives are affordable. I think that and, I mean, to your point, the younger generation feel, and they're correct, that they are left with a bad,

inheritance and so they're right in saying that it's not it's not it's not it's not their fault but at the same time it goes to your comment about behaviors again using mobile phone as an example my first mobile phone was a Nokia I would charge my Nokia once a week now with the This is my smartphones. And again, not my generation. So I'm not being ready for that. You have to charge them every day.

I mean, that's energy that you're using. So again, we should stop to try to assign blame. The past is the past. We cannot change it. we should start talking about how going forward from now we can optimize our behaviors, optimize energy system, the balance between the global north and the global south in a way that we think that Earth as a planet and not as every single country or company or a family thinking for themselves.

I'm with you. I'm not talking about this. I understand. There's got to be some realism here. You know, at the rate that the world is becoming siloed, right? And polarization of conversations is so pervasive in every corner of the country, the province, the village, the city, you name it, man. But this just takes us to the next.

question, right? I mean, when you had your Nokia in the 90s, it didn't have internet capabilities. So the requirement for energy was not as much. So the requirement to charge it or recharge it was not as much as it is today. I actually had to go to the library to look at references for my thesis. Now I can do everything from my office.

But you know, if you take a look at the planet, right, it's probably electrified to the extent of what, 7 or 8 terawatt, right? And if you want everybody to be modern, it probably needs to go up to about 16 to 20 terawatt. This is before AI, right? If you add on to that, listening to the Jensen Huangs of the world

where the latest GPU requires multiples of wattage of electrification, then if everybody of the 190 or 200 countries wants to AI to the extent that perhaps the United States and China would like to. Oh my gosh. Then the terawattage for the planet, we're looking at, you know, 25 to 30 terawatt. Then how do you energize this? So because you mentioned, you said that I'm in Turkey.

Since I do consult a lot with companies and governments, let me try to give you the practical. So the low-hanging fruit is energy efficiency. There is so much that we can do there. Why we're not doing it? Baffles me, we should do it. Or let me put it in a more diplomatic way. We're not doing enough, we should do more.

Two, we really need to optimize energy system based on the underlying resource availability and market dynamics. So if we don't care about the rest of the world, then okay, do a country level. But if you think that you're going to be a member of a global community,

we need to start with conversation, how do we make this system working at global scale, not just in regions or countries. I'll give you an example. We finished a study for the European Union on the future of green hydrogen. And we looked at different scenarios. And what it meant in these three different scenarios

to adopt a green hydrogen scale? And what the cost would have been? So if I remember well, if we optimize. So we have developed a mathematical model that they optimizes fluxes between hydrogen trades between countries. If we optimize in the most efficient way, the cost by 2050 for the European Union to deploy energy market scale, hydrogen market scale, and by this I mean 10 to 15% of primary energy demand

covered by green hydrogen, it will cost $2.3 trillion for the infrastructure. if the single member states were to approach this in a non-cohesive way it would be from two to three times more expensive and I think I should not have to add anything else now sadly what is happening right now

every member state is going on this own let me guess wow sorry guys wow okay Nicola this is the next, you know, topic that I want to explore with you.

Nuclear. Right. I just kind of think that this is something that could be the solution for many people around the planet, because it's clean, scalable. It might be expensive, but if you amortize it correctly or properly, from an accounting and economic standpoint, it works out. And it's this sheer inability to take the long view sometimes that makes stuff like this disappear in conversations.

Of course, there's a geopolitical calculus, right? I want to seek your wisdom on this. So, as a technologist, I can, just say that nuclear has never been able to play on a level field because it's probably the true example of how if you don't evaluate assess a technology on its merits but on geopolitical non-proliferation issues so issues that don't have anything to do with the technology itself. What do we do with the waste? Do we reprocess? Do we not? You are not looking at the technology per se. You're looking

at technology with a lot of other how can I say, hardles that you put there, but they have nothing to do with the technology. So the technology has to be safe, has to be scalable, But again, I think that nuclear, like every other technology, will need to play a role. We are not in a situation where we can pick and choose. We need to use everything that we have at our disposal. So nuclear, for a series of reasons and application, in my opinion, makes total sense. Now, safety needs to be addressed. the geopolitical aspects, yes, but let's be

blunt here. It's not that if people want to build nuclear weapons they're not going to build them if we don't build the nuclear plants. And then in my experience, it's always better to be part of the conversation then try to pretend that the conversation is not happening. Because if you're not part of the conversation, you cannot influence the outcome. No, you can actually modularize it with SMR capabilities. And fortunately or luckily,

it's surfacing to conversations in more parts of Asia, right? It's not just the Chinese. They're talking about it, doing it, But now, I think the Japanese, the Koreans, even I think the Singaporeans, they're tinkering with this idea. You know, at the rate that perhaps from a geopolitical standpoint, there's greater exposure to risk, you know, in terms of what could happen in the South China Sea, you know, in terms of how the Chinese might, you know, energize their presence out there. But just for humanity's sake, you know, this is something that you can actually build incrementally so that you can actually be more sensitive to safety issues, geopolitical issues, and what?

You could argue that if there's smaller, they're more risky. But I think the end game is that this is clean and from a safety. standpoint, you could account for it a lot better than perhaps 20, 30, 40 years ago. And if you take a look at the number of casualties from nuclear as opposed to fossil, I think I would argue that it's a lot less with nuclear than it would have been with fossil. So from a technology point of view, energy density is key. Why are we using fossil fuels? they have a very high energy density compared to renewables.

They're easy to store. They're easy to transport. So nuclear has the same level of energy density. One of the challenges of hydrogen is that hydrogen from a mass point of view as one of the highest energy density, but in volume it's pretty low. So being able to have high energy density, it's important. important. And so nuclear helps on this. Now, one of the challenges that the nuclear industry, and here Harvard there are people that can talk about this much better than I can, but is that

we have lost over time the supply chain for building new nuclear plants. One of the value proposition that people mention about small modular reactors that you're going to substitute economy of scale with economies of mass production. The truth is that last time I counted there were at least 50 different designs for small modular reactors. There is no chance that 50 different designs will be approved to be built and it will be against the logic of economies of production. The truth is that today, because of the lack of a supply chain of the needed skills to build new nuclear plants, small modular reactors sometimes can cost as much as a big one.

So the value proposition is that if they're smaller, they're modular, you can even imagine to move them if you have to. But again, in the case of nuclear, the supply chain needs to be developed in order to develop the supply chain. We need clear rules on how to deal with nuclear, how to deal with nuclear waste. And I don't think we're there yet. When you smell the inflection? to take place. When people realize that

we don't have any more time to lose? Is that within our lifetime? And I hope so. Okay. One of the reason why I'm here is because I want to try to drive this change. You know, I want to go back to the AI

part of our conversation. If we take a look at AI, I think most of the value proposition is going to accrue to the U.S. in China, right? And we are in Southeast Asia. We've been selling a lot of coal to many parts of the world, the Japanese, the Koreans, the Chinese, the Indians, some other parts of Southeast Asia. at the rate that China is going to, you know, invest on AI, I just can't see how coal is going to disappear in the next 10, 20, 30 years. Until and unless you smell that inflection point,

taking place sooner. Infliction being defined by our ability to actually scale renewables. So with the I'm not an expert in AI I'll

try to give an example this same consideration were made about blockchain. blockchain which a lot of people conflate with cryptocurrency, but if we look at the technology itself,

it started with, I think, it was proof of work and then it moved to proof of stake. The energy consumption of the two is usually different. A proof of work is extremely energy-intensive, proof of stake, it's much less energy-intensive. intensive, but I started to look into into blockchain and the applications of blockchain to energy system because again, to the point

I was making before about efficiency and being the low-hanging fruit. And so the question of that with my team and my students, students we asked ourselves was could blockchain make energy system more efficient? Could the fact that it's an immutable decentralized ledger? Could it help? I mean, think about it. Decentralized.

Renewables are decentralized. So we started to think where there could be some connection. We looked at the different application of blockchain to energy. We did not get into the technology itself. I actually was lucky enough because there is a colleague of mine, Silvio Michali, who won the Turing Award for computer science he has actually developed a proof of stake blockchain he's at MIT and he has helped me a lot to understand this dynamics so but the our point was what would blockchain need to deliver in order to be

applied at the energy system we identified eight different applications i'll tell you the the the ones that I think are in a way longer term but that excite me. Because if we could do it, it might make a difference. So the first one is what we call energy for all. One of the challenge today, if you want to deploy renewals, let's say a power plant in the global south, is that you might not have access to a grid. And you need financing.

So one of the value proposition, and again, I'm not the expert in the technology, is that with the blockchain you can tokenize. So what about if we think about a new way of financing, where instead of having to find people that finance your plant for $1 billion, you tokenize it down to whatever you want, and you ask people to buy this token. Second, because blockchain allows what are called smart contracts,

where basically you don't have to have a central authority, you can have peer-to-peer transaction, well, you will not need a grid. If you have an area where there are enough clients or people that need energy, you could sell them energy through blockchain and you would have this contrast that would be automatic and so you could deploy energy in places where you cannot today.

The second one that I particularly like is this, and that's why I've been called down to DC many times. How are you going to certify the molecule is green? Or how are you going to certify that the molecule has a certain carbon content. I mean, today you do it with certificate of origin. Then when you have to have cross-border adjustment is crazy.

Certificate of Orange across-border means that you have to go to the custom officer of the exporting country, give a pile of paper. The same pile of paper has to be given by someone else to the importing country. You have double counting. So imagine if one of the value proposition could be

delivered, of blockchain could be delivered where you could certify and put them on chain and not, no one can tamper with them, you would have solved a huge problem. More transparency, more accountability, more real-time usage. Yes. Better democratization of energy. Yes. With the beauty that the regulator could have access. So when you think about blockchain, there is a public part,

but you could have also part that is not public. Because imagine if you have, when I talk about with companies about this private corporation, about this the challenge is that we don't want to put our own commercial know-how in the public domain. Well, you could imagine that you have a part of the chain, that it's only open to whoever you want, and then you have a part that is open to regulator,

it's open to customers, and so this is why I've been looking into blockchain. Interesting. Do you see it as something that's hopeful? Or more hopeful than others? So if technology can deliver what proponents say could, and we made a list of seven things or seven characteristics that needs to be made for blockchain to be applied in the energy sector yes because he really address there are a lot of overlaps

so right now I don't know where in which country in Europe there is there is a there is a a news company that has this sort of blog or whatever it's called I don't know exactly what it is but it's the AI that we like. So they try to highlight where AI could make a difference. So going back to the point that I made before, technologies are not bad or good by themselves. It's the use that you make of the technology

that makes the difference. Not every technology can be used anywhere. But if we are able to find and we need to find how and where the different technology fit best, we could make a big difference. Just to pick up on this democratization of energy, I mean, there's been some thought or observation about how solar could help with respect to the democracy. amoketization of energy, right?

Are you in the camp that believes that that's going to happen? Yes and no. Okay. Let me give you an example. And guess what? I'll use hydrogen again. So, from a geopolitical point of view, since I think the late 90s,

one of the reason why people saw value in renewables was exactly what you said, that you could democratize energy production because every country has access to solar and wind. My point is at a different cost, though. So one of the first question that we try to address in our work on hydrogen, we look both at supply and demand,

so application, but also how you could produce it is. Is it true that adoption of green hydrogen scale would make the energy world more democratized? And so we did, as I mentioned before, we did the study on the European Union about this. We have done it for India. we're finishing one in the US to look at competition or collaboration between states in hydrogen production. But the geopolitical realities of a renewable world or an hydrogen world are going, yes,

they're going to be different, but dependency will still exist. So if we look at the European Union from a purely cost point of view, Morocco, if we assume shipping by ammonia, would actually, from a cost point of view, be able to supply 40% of more of the demand of the European Union. So what's the difference, though, is that we know this today. So if we look at what adoption of the technology in the future will imply in terms of energy security, energy independence, cost,

we can try to optimize much better than what we've done in the past. So is the European Union willing to depend from Morocco for 40% of its hydrogen demand? If not, what can the European Union do today to address this? and selling up energy system optimized from the beginning is much less expensive than having to fix them afterwards. Again, the example of natural gas and Russia is the typical one.

So the European Union can start to think would it make sense for me to start to discuss today with the United States or India to have an export of hydrogen to the European Union so that I don't depend on one country for 40%. And I'm not making a merit evaluation on the dependence on Morocco. I'm actually going, as I told you to Morocco soon.

So I'm just stating, do we want to do this? Now, these are choices that policymakers need to make. It's not something that you can leave to a company. I actually would argue that you really don't want a private company to decide policies for you. Yeah. But at the moment, we're kind of exposed, right, to these silos. And what you're suggesting is some sort of a collaborative effort between Morocco and the EU. Which is happening.

Yeah, it's happening. But the big picture, it depends on the geopolitical calculus, right? So one of the issues of the European Union is that it's called the Union, but for a lot of things, it's not a union. That's a separate discussion. And I don't want to go there. I'm a chemical engineer. I'm happy to talk about technology. If you force me, I'll talk about politics.

Yeah. Okay, this is going to be my second last question. I'm going to go back to that democratization of energy. And I'm going to use solar because it's simpler. I mean, to the extent that you believe that it could help democratize, what could or what would happen to the pre-existing grid from a value proposition standpoint? It could plummet, right?

I mean, if some villager in some country could just serverize himself or herself without having to rely on the pre-existing grid, if you take a look at the balance sheets of most utilities companies, the asset side, it's mainly the grid. And so is a liability site. But then again, if we are going to decentralize the energy production,

it's not that grids will disappear. Centralistic, but of decentralistic. No, but I mean, this is a transition that will need to, even incumbents, grid operators will need to accept. Right. Because again, If you're not, if we're saying that we're not going to deploy solar where you can deploy it

because there are space of issues and all, you know, resource availability and all that, if we're going to say that we're not going to do it because otherwise the value of someone else, and I would argue that they would, the value for them will not, would not be impacted because they're so ingrained in the energy system today that in large city, you, I don't see, how you can go off grid. But so with the caveat, I don't think that they would lose their value of their assets.

I would argue that it's not a constraint that we can consider. Got it. Last one. A.C. Milan or Inter Milan? So my former best... No, it's a difficult question.

No, it's easy. My former boss is now the president of Milan AC, so I think since I like the guy a lot. The operative word being former. But as I said, I like the guy a lot. So I'll say Milan AC. I actually, being in the US, I'm lucky enough. I don't have to...

actually choose I'll watch whatever I can see on TV, which on US TV is very little. Are they going to win? I don't know. What I learned about Italian football is that you can never tell.

On that note. Thank you for having me. Nicola, thank you so much. Thank you. Thank you. That was Nicola de Blasio, senior fellow, Center Harvard University. Thank you.