In early September, Earth Set invited me to join its co-founder and podcast host, Amy Rennison, for an evening of conversation at Octopus Energy’s headquarters in London. The audience included founders, investors and people working on the practical business of decarbonization. Amy had read enough of my work to know where to push, and the questions from the room ensured that we covered more than my preferred set of talking points. We ranged from shipping and hydrogen to heat pumps, carbon removal and data centers, but kept returning to the assumptions that determine what people believe the transition requires.
For readers wishing to dig deeper, I’ve linked my projections through 2100, reports and Briefing articles throughout, including updated analyses where available.
The setting was appropriate. Octopus is a useful example of an organization whose contribution comes substantially from deploying existing technologies through better business models, software and customer relationships. It did not have to invent the electric car or the heat pump to make either more useful. Much of the evening concerned why we continue to finance elaborate attempts to solve problems that electrification is already making smaller, while underinvesting in the institutions and infrastructure needed to deploy what works.
My starting point was the way I build scenarios, decade by decade through 2100. I look across sectors because the future of one industry often depends on changes occurring in another. Shipping is an obvious example. Roughly 40% of maritime freight tonnage is coal, oil and gas, with another 15% being raw iron ore. Those commodities account for a still larger share of shipping fuel demand because of the distances they travel. An energy transition that reduces fossil fuel consumption changes the shipping market before anyone decides what to put into a ship’s fuel tanks.
Add the electrification of inland and short sea shipping, and the question changes again. We are no longer asking how to replace every tonne of bunker fuel consumed by an industry growing indefinitely along its historical curve. We are asking how much liquid fuel a smaller, differently organized, partly electrified system will still need. My shipping projection through 2100 leaves around 70 million tonnes annually. Other projections reach several hundred million tonnes. That difference determines whether a fuel pathway looks manageable, impossibly constrained or attractive enough to justify billions in investment.
Amy asked me to explain the importance of choosing the right denominator and comparator. This was the answer in practical terms: establish the size of the future problem, then compare the full set of ways to solve it. A beautifully engineered replacement fuel can lose most of its prospective market to changes that never appear in the fuel comparison. The questions that followed tested how far that reasoning could take us, and where it ran into the much harder problem of getting people and institutions to change.
Below, I work through the challenges raised that evening: how I check my own assumptions, where transition capital is being wasted, and why aviation, utilities and data centers expose the gap between a workable technology and a workable transition. Subscribe free to read the full discussion.