Ramez is a CleanTech energy investor and author, who contributed his perspectives to our Charting Disruption 2022 Outlook. This interview with Ramez has been edited for length and clarity.
We are seeing so much disruption around the world today, and a lot of that is occurring specifically within the area of energy and Cleantech. What are some of the areas that are most interesting to you right now?
Fundamentally, I’m interested in the economics of clean energy, how fast it’s plunging in price, how fast the cost of solar and electric vehicles have plunged and how that changes the world. It certainly changes the world for the better, but it also causes major disruptions to economies that are fossil fuel dependent – those in the middle east, Canada, Russia, parts of south America. And that’s going to cause a major realignment economically around the world.
There’s obviously phenomenal opportunity with the advancements in solar, wind and electric vehicles, but at the same time, the transition away from fossil fuels will have negative geopolitical impacts as well. Could you talk about some of those impacts?
As climate change gets more and more obvious and as clean energy technologies get cheaper and cheaper, they will displace the use of oil. That means that if you’re a nation that gets the majority of your foreign revenue from the sale of oil or natural gas, you’re going to see your revenue drop. Saudi Arabia gets 95% of its income from oil and natural gas. Russia gets 70% of its foreign trade from the sale of oil and natural gas. Other nations in the middle east and other areas around the world are going to be under pressure. They’re going to see their budgets shrink. They’re going to see disquiet from their citizenry if they can no longer provide the services that they’ve been providing through oil revenues.
If you see that drop off in revenue in a country like Saudi Arabia, what does that mean for their society?
A nation like Saudi Arabia is at risk. They are an entirely oil-dependent economy and you see in their economic plans, they’re trying to pivot away from oil. They’re investing in startups – that’s the SoftBank vision fund. They’re trying to get women in the workforce. Nevertheless, oil and gas are their bread and butter. And Saudi Arabia has a large population that it props up and keeps happy through social services. But the giveaways from the Saudi government will become unaffordable at some point, maybe towards the end of this decade, as the cost of oil goes down as oil demand falls.
And so what will that mean? Are we talking about the possibility of revolution, civil war, the fall of the House of Saud? Any of that is possible.
So how does a developing country like Saudi Arabia or Nigeria, or even developed countries like Norway or Canada address this issue? What can they do to prepare?
I think fundamentally the only driving economies of the future are knowledge economies. And so if you’re a resource-rich economy, if you’re an extraction-based economy, you have to think about how you develop your knowledge economy.
How do you provide services that are digital, that can span out of your country? How do you encourage entrepreneurship in your country? How do you build startups and new enterprises that depend upon people’s creations rather than extraction?
In this changing geopolitical landscape, you have the potential losers out there, which are oil exporters, but there’s also potential winners out there as we transition to more Cleantech. Who are some of those winners and why?
Well, I think the winners are the world overall in that we gain cheaper energy, that’s cleaner and reduces pollution. One country that has made intelligent decisions in this area is China. While it’s still the biggest polluter, it is also the number one manufacturer of solar panels, the number two deployer of batteries, the number one deployer of wind turbines. So the Chinese state and many entrepreneurs in China have seen the writing on the wall that clean energy is the future. And now 85% of the solar market is Chinese companies. So that’s a potential winner right there.
We’re seeing climate change start to impact different parts of the world, but it’s not going to be felt equally. What does that mean for the world, particularly for developing markets?
Climate change is a threat multiplier. In developing nations in Sub-Saharan Africa, in the Middle East, there’s already substantial amounts of water stress, population stress, food stress. And when you compound that with climate change, extreme weather, crop failure, you see a risk of state failure. You see a risk of situations like Syria happening throughout the region. And that again can fuel civil war. It can lead to mass migration. The issues in Syria led to a wave of migrants into Europe that fundamentally changed European politics. So these ripple events are very, very hard to contain.
Aside from all the technologies that are helping to prevent climate change, what are some of the other things that can be done to prevent the kind of ensuing socio-political and economic issues?
Well, we have to move as quickly as possible to decarbonize our economy, to stop the bleeding if you will. But in addition to that, we should be looking at ways to bolster these countries, to provide them buffers against the worst disruptions. And the worst disruptions are really related to crops and water. Crop failure leads to food insecurity. Droughts also lead to food insecurity. And so one thing that I think we should be doing is working hard to develop better crops and better technology that can survive in a warmer world and giving that away to the developing nations, because that will be in our own best interest.
Within the commodities markets, if oil is phased out, what are some of the commodities that might benefit?
It is interesting that as clean tech surges and we need less fossil fuels, we do need more of certain metals and minerals, especially in wind turbines and even more so in electric vehicles. Electric vehicles need copper, lithium for batteries, cobalt, nickel. All of those metals become much more in demand. And that’s an opportunity for mining companies for certain nations.
We’ve talked a little bit about the rare metals that go into batteries, but we haven’t talked about one element that is actually the most abundant in the universe – hydrogen. Can you talk a little bit about hydrogen as a future fuel and how it could be used?
We can take clean electrons and split water and get hydrogen and oxygen. And that hydrogen can store energy for very long periods of time, help us survive periods when there’s no wind and no sun. It can also be used to decarbonize industrial processes that are very hard to decarbonize today. For instance, making steel accounts are at 8% of global carbon emissions. That’s more than three times the emissions of all aviation. And today we use coal for that. In the future, we’ll use green hydrogen and electricity to do that and clean up that sector.
Another area where hydrogen is potentially very useful is in making fuel that we can put into ships and aircraft. We may not have hydrogen powered aircrafts, exactly. We might use hydrogen to make basically synthetic carbon neutral jet fuel that we can put into jet aircrafts and then fly without carbon emissions.