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Peak Oil and the End of Globalization

James Fleay

Wednesday, June 7, 2023

Chris Keefer  0:00  

Welcome back to decouple. Today I'm joined by returning guest James Fleay, an Australian engineer and project manager with experience in power and the oil and gas sectors as well as the solar industry. James is the founder of down under nuclear energy and I had the great pleasure of meeting James inperson in Toronto. As part of a globe trotting tour. He was on alongside the Shadow Minister of Energy and Climate Change in Australia, Ted O'Brien, will maybe chat about that for a second. But today, we are going to be doing a little bit of a digest of a recent episode with Nate Hagens, on the topic of peak oil and the end of growth. James actually introduced me to Nate Hagens as a thinker quite a while ago. And I didn't end up following up on that for some time, but have been quite enthralled. And a bit shook by some of the analysis coming from Nate. So I wanted to digest that with my good friend, James. Enough of an introduction here, James, how are you keeping my mate?


James Fleay  1:04  

Really? Well, really? Well, thanks, Chris. And we'll just say The pleasure was out catching up with you in Toronto. It was a terrific afternoon and evening. So, again, thank you for your time.


Chris Keefer  1:14  

Wonderful, wonderful, man, it seems like that tour was part of a pretty serious interest, if anything, certainly amongst this opposition Liberal Party, in nuclear energy in Australia, just very briefly, how are the prospects looking? Well,


James Fleay  1:29  

there's a determination to learn more, to fill in gaps in our collective knowledge, and to really see where the US and Canada what their plans for for net zero by 2050 entail? What the role of nuclear is, what the role of Allah technology is, you know, are we realistically going to get there, you know, what sort of carbon offsets and abatements are required. So, you know, we had a crush, I think we had 20 meetings across seven locations in, in maybe two and a half weeks, really productive. And it was a great trip.


Chris Keefer  2:06  

I've been asking you a few guests this recently. But what is your honest take on net zero in general, and net zero, say, by 2050, with all of the knowledge that you have as energy analysts? It feels very pie in the sky to me, I'm all for, I guess I shouldn't say I'm all for I'm compelled by aspirational goals and politics, but at the same time, feeling increasingly like, you know, we're essentially racing in a speeding car towards the brick wall of our expectations and are likely to be very disappointed, but just on on basic physics and your understanding of energy. That zero, yeah, I mean, possible, not possible timelines, it's


James Fleay  2:46  

certainly possible. Whether or not it's impossible, whilst we maintain our current levels of consumption, GDP, wellbeing, health, all of the all of the things that we actually take for granted is an entirely different map. And, you know, I have, I have serious doubts that we can maintain, as Nate would say, an oil, a fossil fuel civilization to clean all civilization and the standard of living and the UN and our way of life. In a netzero world,


Chris Keefer  3:23  

right, there was a, I have to look at the source material for this, but there was a claim made that global co2 levels dropped significantly. And that coincided with some colder weather. I'm not sure if it's the year without a summer in Europe. But that that was precipitated by essentially the great die off in the Americas from imported diseases from that Columbian exchange of, of North, sort of European settlers coming to North America spreading their disease and essentially a population collapse of something like 95% of the indigenous population. Anyway, that was the kind of fascinating anecdote but that that's potentially one, one route to net zero, but one that we'd really like to avoid. With that in mind, let's move on to the topic at hand. So certainly, the episode generated a little bit of controversy. You know, this, this podcast, it's titled draws its inspiration to some degree from the Eco modern manifesto. This idea that, that it is possible to decouple the gains that we've made as as an advanced industrial civilization, drops in childhood maternal mortality, etc, from ecological impacts that have been associated with industrialization. You know, a lot of people talk about the ways in which traditional religious beliefs have been supplanted by, you know, new ideologies and philosophies and, you know, when you step back and look at Eco modernism, there is a narrative there, which is maybe a little pseudo religious. Certainly, it's quite optimistic. This idea that there are no limits. That's, you know, super abundant So as possible, you know, the combination of you know, human ingenuity, technology, potentially resource substitution, and they pay against these, this really, really flies in the face of that. Maybe just for those who, you know, the episode was a few months ago, if you could kind of summarize your, your assessment of or your take on the on the great simplification thesis,


James Fleay  5:22  

this will be pretty quick, because I'll say from the outset, I find very little to disagree with, with Nate's thesis, it's very well researched, it's developed over a couple of decades, I've been listening to note and reading his material for must be about five years now. The, the fundamental premise is we live our civilization, our way of life. The way we structure ourselves, is based on hydrocarbons, in particular oil. I'm fortunate, I can see the industry from the inside. And so I know this, its scale. I know how many different products that come that are derivatives from oil, less from gas, but plenty from gas as well. And also know that we live in a world with abundant cheap, massive transportation. And, you know, maybe we can tease out a little bit later. But I think that's going to be that we have a lot of we talked about the you talk about decouple and I think it's a, I think is a, an idea that must be pursued. Seriously, but I don't think that we can hope to decouple completely and maintain our current civilization. And I would say that some things are going to some things are going to change. I think Nate's put his finger on it, that's probably going to happen. I mean, no, I'm probably one area of dispute we may have is the timeline. But that's, that's really quibbling, to be honest. The fact is, we know how the vast majority of oil in the Earth's crust got there, or we have we have a fairly, we have a fairly good working hypothesis, there's no reason to think that it got there any other way. And we know it's finite, how finite how to say there's still a lot of oil left Saudi Arabia, Russia, Venezuela, Iran, Iraq. Obviously, the problem for the West is many of those nations who hold the massive oil reserves that would underwrite our, our collective advanced civilizations for for several more decades, easily. I'm very well disposed to us, even Saudi Arabia, along our live the West is, is less well disposed to us than it once was. And so, you know, this may be visited this simplification that they talks about maybe visited upon us, sooner than we anticipate for resistance that, you know, and it will happen before the end of oil, we will see it before the end of oil, I believe. So, Min notes, notes thesis is that as oil becomes less plentiful. So he's not talking about running out, he's saying less plentiful, less abundant, and more expensive. That starts to create seismic movements in our financial system, and our monetary system that cascade through because of the monetary overlay, and the amount of debt that we've racked up, which is a future ship claim on energy, as Noah points out, that that really also completely have to has to change our sort of six continents supply chains. So you really need to spend months just thinking about the implications to to get your head around it. And I have, Nate has spent much longer than that, and I find very little to disagree with those thesis.


Chris Keefer  8:55  

I mean, we have had some oil shocks before. I mean, that wasn't related to the absolute supply of oil. This was, you know, political factors. You know, we're events around those oil shocks, some kind of foreshadowing of the implications of limits on particularly liquid hydrocarbons. Do we have any sense of what's coming? I guess, based upon on those experiences?


James Fleay  9:15  

I would say yes or no. And the Yes, part of it is sure we we saw prices go up, we saw many locations. You know, I wasn't alive at the time, and I'm thinking about the 1970s here. But many places where you couldn't get oil derivative products fuel your car at any price, it just wasn't available. And that changed the way people for for a period of time changed the way that worked, change the way they lived, changed the way they holidayed? No and um, I don't have a deep history of the episode, but I think it's a pretty safe bet to say that there would have been some sort of top down allocation One of your that as I as I go through that crisis, the problem is you're talking about substitutes, there's there's very few substitutes at scale, I would say no substitutes, actually at scale for, for diesel engines, for heavy fuel engines for aviation turbines, you know, maybe a personal transportation vehicles, you can use petrol or gasoline or electric vehicles. But for those, those transport applications that really provide that sort of essential layer, you know, that life support layer for transporting food and other goods around, we don't have a substitute for that. And so, yeah, we could probably roll back and read the history and understand what they did to cope with it. But that was short term. The other thing I'd point out is globalization really hadn't had straps by that point in time. Vehicles were simpler, supply chains were much, much shorter. And so, you know, particularly in the United States, which probably felt it maybe a little bit more than Australia did. They weren't as reliant on imports. At that point in time, and I still felt it, I think, I think now, it would be a totally different thing, because we just don't know where all of our consumer goods and essential goods come from, it's very hard to work it out.


Chris Keefer  11:29  

We certainly had these, you know, little tastes of supply chain disruptions. I've noticed that mostly in the medical area, but, you know, we had about a month, which coincided beautifully with our kind of viral flu, RSV season where, you know, there was no Tylenol or Advil on the shelves for children in particular. So our emergency departments are overrun by kids with just basic fevers that weren't being treated. But there's, I think, everyone, you know, probably more in relation to COVID. But also, to some degree, the energy crisis we've seen, we've seen some niggling of that, which, you know, at least in my life, feel pretty unprecedented. I wanted to insert we're going to follow up on on globalization, and its dependence on liquid hydrocarbons and globalization, which is a casualty of that. But so much of the energy debate, the clean tech discussions, the energy transition discussions, the journalism are based upon, you know, this idea of, you know, testing this hypothesis of, you know, are there substitutes, and, you know, frequently see breathless stories about pilot projects, without a good sense of scalability. So, I mean, you have, at least in how you speak, like a fair amount of confidence in what you're saying about the inability to substitute at scale for X, Y, and Zed, you know, diesel engines, you know, jet fuel, etc. I'm just curious about, you know, you're coming to that statement, and that confidence, based upon a life experience and engineering background working in, in these industries. That's not coming to you from, say, modeling or like a different sort of epistemology or way of knowing. I'm just curious about that, because it does seem hard for the lay public to grasp. And in terms of communicating that confidence, or showing the kind of evidence or the work behind that confidence, is that just kind of tacit knowledge from everything you've been exposed to, from, you know, working on the nuts and bolts side of energy? I don't know if you know, what we kind of get where I'm going with this question. But


James Fleay  13:29  

it's a good question. And it's something that the the engineering profession has, has struggled with, how to communicate, how to communicate issues of scale, and how to communicate, you know, issues of of non compatibility non non substitutability. How, what's the best way? What's the best way to explain it? I suppose, it's taken the Industrial Revolution. Well, the oil part of the Industrial Revolution, let's say started in the in the second half of the of the 19th century, the technologies that we have evolved in that time, an hour 150 160 years worth of refinement, worth of improvement, worth of finding better ways to do things, how to get more energy, more useful work, rather, from from the same amount of energy. And that's it. That's a difficult process. It, it takes countless billions of investment. It takes an extraordinary amount of time and industrial commitment. It takes years and years of prototyping, of making tiny, tiny little tweaks to things whether it's materials, whether it's finding new ways to control engines, you know, whether it's in ations, whether it doesn't really matter what it is, it's also to do with the infrastructure that's been built up over that time to supply liquid fuel. I mean, we don't even think about it, when we get in that car really doing we know, we're going to get and there's we're going to get to a fuel station, the fuel is going to be the, we're going to put it in our car, and a car's just going to go. And it's pretty cheap, all things considered. You know, very, very rarely do we stop to pause and think, what are all the steps that had to happen in order for that to be so reliable and so dependable, and so safe? That is not replicable in any meaningful timeframe? It is, it is 106 150 160 years of concerted, consistent, massive industrial effort. And so, you know, does that mean in 150 years time, 200 years time, we haven't figured out something different, that uses a different mode of technology and different fuel source, you wouldn't rule it out. But you would rule it out in the short term, you would rule it out by 2050. I don't see any credible alternative. Truthfully, I don't see a credible alternative the century you know, we have we have ways of making substitutes for for diesel. You know, there are there are definitely options to electrify, or shift some types of propulsion to natural gas, for example, which is far more abundant. These are, but these are all trade offs. Let's be under no illusions, none of these. None of these are silver bullets, none of these solve the underlying dependence we have on oil. And all it means is the cost of everything goes up. And you can't get away from that.


Chris Keefer  16:53  

And the last in the last 10 years have been easy street in terms of ultra low credit, in terms of kind of make this quote all the time that's from Adam, Adam Rosen swag, and Lee gearing their analysis, I think, their quarterly review of in 2021. And just referencing that every form of you know, primary energy drops from peak to trough by 90%, between 2010 and 2020, whether that was oil, gas, uranium, coal, things are shooting back up, you know, Bill Gates, in his book about climate change talks about this idea of a green premium that, you know, substitution will take place, there's this this premium this gap between, say, an Ice Vehicle an electric vehicle, it's closing, you know, we just have to it's very kind of consumeristic approach to solving climate change of, well, you know, how do we have the innovation that can close that gap, and then, you know, just the consumer choice will be a green choice, and the energy transition will just kind of happen by itself, if we have sufficient innovation,


James Fleay  17:50  

this, this, this to this two stories, there's two stories of innovation, right? Like there is the there is a story of innovation that I would call maybe the Henry Ford story, which is, you know, innovation, both technical and commercial, was instrumental in replacing horses with cheap, fairly reliable automobiles. And you know, that's an industrial and commercial, private sector success story. So that's one type of innovation. But there is another type of innovation, and that is the innovation of need. That is the innovation of, of desperation. And you know, and I would sort of, I would suggest that, that thesis of Well, the last 10 years, we've never had it so good. If we couldn't do in the last 10 years, we're not going to do it, I would say that's exactly the conditions that you're not going to try and shift the needle you have no, there's there's no real driver to you know, if you look at the you look at the massive advances, and leaps forward that you know, German, chemical engineers and scientists, industrial scientists made in the late 19th century, early 20th century, particularly between the world wars, that was from a position of desperation. So innovation comes from multiple means it doesn't just have to be, you know, you don't have to have everything cheap. Everything abundant. You know, I would say that there's not many. You need stresses for changing innovation sometimes.


Chris Keefer  19:19  

Yeah. Yeah. That's that's a great counterfactual there. Well, let's, let's talk a little bit more about the simplification. The great simplification as as Nate labels it. How would you do you foresee this playing out? What does it look like? You've mentioned a Nate mentions and stresses the sort of supremacy in the holy trinity of fossil fuels, which was my little turn there of of the liquid hydrocarbons, you have like magic carbons, gas and coal. You know, gas and coal seem to be still quite abundant, and more fungible, even by things like nuclear, as we've seen here in Ontario, where we swapped largely nuclear for coal. Making, quote illegal in this province. But in terms of the kind of non fungibility of those liquid hydrocarbons, how does it start to percolate across societies? And what do they start to look like? You mentioned the differences in the oil shock in the 70s. And now is largely due to the impacts might be exacerbated by globalization and six continents supply chains, but walk us through sort of how you foresee that looking like or patterning our societies.


James Fleay  20:26  

One thing I don't have a read on, and I think you will have a typical part of your conversation about this as was really good, was the manner in which we will get to what's beyond what's beyond our current form of civilization. So you know, talks about, you know, humanity will go on, we will have energy will have a civilization, it just won't be this civilization. So if we think about this civilization, and what comes after you to use us notes, framing the manner that individual nations communities even, or the entire globe gets from there to there, I don't have a good read on that. But we can we can talk about that, I would say, oil, what is the application of oil that is very hard to replicate. And the big one, of course, is transportation. You know, the amount of miles that the average person, average person in advanced nations, moves in a lot. And now in their life, there are a lot of fourscore, or whatever it turns out to be is another, I don't know the figures on this, but I'm gonna go out and say several orders of magnitude more than what it would have been 150 years ago, people just people just didn't travel long distances from their home. They didn't they didn't have the means of doing so. And it was it was prohibitively expensive. And that meant sort of trips were usually often one way, you know, my ancestors came back to Australia and never went back, mainly, probably because they couldn't afford to, you know, and that story is sort of replayed, you know, millions of times over. So we look at transportation, we say, well, what does, what does a civilization look like? We're transportation is less massive. Isn't has to be more selective, because it's more expensive. Whether or not it's more expensive, because you're you're trying to use synthetic fuels, or you're trying to use electric battery powered semitrailers, or nuclear plant powered Merchant Marine, it doesn't really matter. All of those technologies are going to be more expensive than the hydrocarbon equivalent. And so we're going to be incentivized to transport less things, less goods and less goods and people around the world. And what that means is, instead of having one super global economy that allows a massive degree of specialization, we're going to likely see that specialization and that industrial complexity decline, I believe it will decline. So instead of having an interview, drive, if you drive a vehicle of say, the 1970s or early 1980s, and you drive a vehicle today, they have very different cars. You know, they feel different one is much more comfortable, it's quieter, safer. You know, there's a lot more things to do in it, whether it's listening to, you know, you don't just listen to the wireless anymore, of course, you've got all the enormous screens and heated seats, you know. And so all that complexity in our products. Some of I think some of that will be rolled back, probably not all of it, but some of it certainly will be rolled back because a little country like Australia, it may be different for Canada, you're next to us. And so you've got industrial synergies and supply chains that will probably shield you from some of this, but smaller nations that aren't attached to really, really large industrial hubs, your Northern Asia, North America will either be paying top dollar for imported cars from those countries, in which case you have to find something to send them back that they want because can't just run trade deficits forever. Or, or they will manufacture cars locally that just are not as sophisticated, not as comfortable but can be largely manufactured. You know, we're in a smaller economy. And so I think, I mean, I use the example of automobiles but I think this plays out to a lot of things that plays out to building products. You know, the furnishings in your home, anything that's anything that's heavy and large to transport will be will be maybe come prohibitively expensive to import. And, you know, I think that another extension from that is, if, if there is a risk that we will lose some complexity, do we want to be purposeful? And do we want to be selective with, with the complexity that we lose that, you know, I guess, I guess, here, I'm equating the loss of complexity to a partial loss of human knowledge. And as an engineer, like, you know, I have a real fear that we will lose a certain type of knowledge in a process. And that's, like the subset of knowledge called know how, how to do things in the real world. You know, that's all knowledge is precious, and, and should be preserved, to the maximum extent possible. But there's a difference between, you know, let's say some obscure some third century French literature from a particular region. Extraordinary that might be from losing know how the ability to design and make and fix and provide useful services that improves people's lives, reduce human suffering, reduce human misery, and my fear is that we will, we will, we will start to lose No, hell, if we, if we're not purposeful about preserving it,


Chris Keefer  26:38  

I want to I want to deep dive this sort of deglobalization a little further. Peters I, Han, has, has written extensively on this, he has a book out, I think it's the the end is just the beginning, you know, hypothesizing this process. And I mean, it's interesting, because he says, globalization is going to be coming to an end, mostly because of changing geopolitics, and the US no longer playing the role of policeman of the seas, and assuring the fleet free flow of goods. But, you know, another limitation potentially, is we're discussing, as, you know, limits on plentiful hydrocarbons. And what he talks about is, is that, you know, the globalization era has allowed countries with sort of one of the four ingredients to industrialize, that never would have been able to before, so I think those ingredients are, you know, the, the proper minerals of proper energy, whether that's coal, gas, oil, you know, plentiful agriculture. And, and people essentially, I might be getting one of those ingredients wrong, you know, if you just have one of those ingredients now, so you have, you know, cheap, cheap labor, you know, that can become the basis for for globalization for sorry for industrializing your society. And so that that was interesting to me, because he's really positing a number of countries will not will not be able to maintain themselves as as industrial societies. You know, when I was reading his book, I was thinking seemed a bit far fetched that the US would completely back off, you know, being that global policeman of the oceans and providing that sort of stability of trade. But you know, what you're describing in terms of liquid limits on liquid hydrocarbons and making some hard choices about what we decide to ship? You know, earlier on, you were saying, we ship a lot of bulk iron ore around the world, maybe we should reserve that, that shipping capacity for, you know, later to transport specialty items. And in trying to localize some of the shipping of these kinds of heavy difficult to move goods. How does how does that, how does that jive for you?


James Fleay  28:38  

Yeah, I mean, I'm familiar with the work of Peter Zion. And, you know, I would be, I would be way, outside of my field of expertise to really dispute anything that he says with regards to politics, I do find it hard to believe that the US will give up globalization, because there's been there's been losers, globalization, no question, the American working class being one of them. And that that's been that's been repeated different scales with all sort of developed nations really. But that, you know, just having access to more people, and it's not just more labor, but it's more knowledge. It's more expertise. It's more specialization has given us better, cheaper products. And it's not just consumer products. It's not just consumer products. It's also essential things that we use for things that we use for healthcare. It could be an element a lot of antibiotics, for example, are manufactured in Southeast Asia and southern Asia. It's, you know, it may be it may seem simple by the standards of manufacturing a COVID vaccine in record time. But actually pharmaceuticals a sophisticated industry and the Indians are able have to produce really cheap and really high quality, basic pharmaceuticals, which by the way, all of us use, and we use a lot more of them than we use of COVID vaccines, right. And, you know, I just don't see it, the Americans are going to not I are going to choose to not continue to access those large skilled populations and can manufacture essential things like that. I talked about health care, but that plays out, that plays out 1000 times over in different industries and purchases of products. But it becomes really difficult when things are too expensive to ship. So, you know, the end of, and it won't be the end of globalization. I have a suspicion that because of the declining demographics, everywhere in the world, we will probably need the global labor force to be more coordinated, more seamlessly integrated than ever, as the global labor force as a percentage of the total global population that requires support decreases. You know, there's, there's good reasons why the global labor force has to be even, you know, more greasy and more like a sort of well on machine, we are not going to have the luxury to treat cheap transportation to sustain that. So what we will have to be very, very select, I believe in time, hope I'm wrong, by the way. But I believe in time, we'll need to be very selective about what we choose to transport, and where we choose to maintain complexity and sophistication, and retain human knowledge and expertise at sort of cutting edge levels and where we go, you know, maybe maybe some of these, I would say, more consumer oriented goods. Maybe that's not the best use of our time and expertise and know how


Chris Keefer  32:02  

it's interesting, just as a psychological frame, I mean, the tone that we're taking, and certainly the tone of Nate's work is pretty pessimistic about the future. It's certainly not Cornucopia in a world of endless possibilities. I don't, I much prefer to be in a different psychological frame, and I think encountering Nate's work. It frankly, wasn't pleasant. But I'm, I'm compelled to go to unpleasant places, I guess there's some cognitive dissonance there. And it's, it's interesting, noting that and noting a sort of shift in the tone of of, you know, this interview versus, you know, other ones. Let's, let's maybe reflect on that for a second. But I do want to shift to the role of nuclear. And the possibilities of nuclear in terms of maintaining some degree of complexity, Nate talks a lot about sort of this one time carbon pulse, which is really what underlies the last 200 years of, you know, skyrocketing progress from the Wright brothers to landing on the moon to everything that humanity has accomplished advances in science, materials, technology, etc. And, you know, that pulse will at some point, you know, and again, the timing you said is up in the air will be felt and will results in, you know, one of the phrases, I think it's Stephen Kean, an economist that he had on the podcast, that most struck me was, that's technology without energy as a sculpture. And that as we progress over that carbon pulse, you know, this, this is the the kind of basis of a lot of the simplification that we could see, we've constantly been able to push the petri dish walls further away from an expanding population base because of innovation, but that innovation has always been underpinned by, you know, increasing supplies of energy. Is there a role for a kind of uranium pulse to lessen the drop off of of the carbon pulse? That's been sort of my reaction to Nate's work and in terms of making sense of it and making sense of, you know, what I've been devoting my life to for the last few years as a nuclear advocate.


James Fleay  34:02  

Sure, I mean, if we look at what oil is really good at uniquely good at its transportation, and we look at what nuclear energy is really good at it is stationary applications. And so thinking through what does an economy How does an economy transition from one where many, a lot of its primary energy consumption is around the transportation of goods and products materials, to one where a lot of its energy consumption is used in a relatively confined geographical area? And in that sense, you know, yeah, I think uranium has got a really important role to play a really important role to play. I will also not discount the role of coal and gas in the in a sort of short to medium term in the long term for obvious reason. isn't to do with carbon emissions, we, we will have to stop using those fuels eventually. But But I wouldn't discount them in the short term, the Germans and other Europeans did so at their peril. And there is a role, I believe there's a role for solar and wind and more hydro, and you know, deep, deep heat reserves in the earth, geological, geological heat applications. That really, if you're talking about something that can scale, that's carbon free, that's reliable and stationary applications, it's pretty hard to go past nuclear energy. So I think it will have a significant role to play in the, in whatever civil, whenever our civilization starts to look a little bit more like when we, when we reduce the amount of energy we use for transportation, out of necessity, not out of choice, we're never going to do it out of choice. I mean, we have to be clear about that, to be able to get on a plane to come and see you. And, and, you know, stop at seven locations or whatever it was throughout the mainland us and then fly back is not something that anyone is going to give up readily. And so you know, price will price and availability of oil will dictate that and will be a more stationary, we may become a more stationary civilization.


Chris Keefer  36:22  

That's a really interesting framing, I hadn't thought about energy transition in those terms. I mean, we've been flirting and you know, I guess going around the edges of it in terms of discussing these implications of limits on liquid hydrocarbons on on transportation, but just that framing of nuclear and I guess coal as well and gas, although maybe a little more transportable to more stationary energy underpinning, and therefore how that ripples through and patterns are economies and societies, I think is pretty fascinating.


James Fleay  36:54  

One thing that deeply concerns me around becoming a more stationary civilization is particularly global food networks, you know, because so much food is transported around the earth to people who, who would perish without it. I don't mean, the Western Australian Rock Lobster that is that is caught where I live, and is rushed down in chilled salt filtered salt water to the local airport and then flown to Northern Asia, for the really wealthy northern Asian customers. You know, I think we can give that up and no one's going to be to worse off when it becomes prohibitively expensive, but like I mean, the massive green chips that leave the United States and Canada and Australia and other locations, particular South America, to go and feed the Middle East to go and feed parts of Africa to go and feed the subcontinent, Northern Asia. You know, we, we really will need to find a way to ensure that we can maintain enough transportation for for everyone to get more than enough to wait in different parts of the world.


Chris Keefer  38:07  

pivoting back to nuclear again, you were talking earlier about that interwar period in Germany, where so much innovation was unleashed, to solve a couple of crises that they faced. And again, this book, the alchemy of air is one that I just can't recommend enough really describing that period. But, you know, essentially been cut off from proving guano, Chilean nitrates needing to learn how to fix the air fix nitrogen from the air to make both explosives and fertilizers, and later being cut off from liquid hydrocarbons, figuring out coal gasification. totally fascinating period. You know, when one looks at a nuclear right now, there's not the drive for that innovation and not just technological innovation, but just I think regulatory innovation, to unleash the full potential of nuclear. I guess that's something, again, necessity being the driver of innovation. I'm probably butchering the phrase there. That's something that kind of looks as a possibility because you know, right now, it does look like its nuclear is impossibly slow, even when done well, that the permitting etc. And I guess we have some historical precedents to look back on when there was that pragmatic drive to denuclearize you know, France, France to the quake quickly, to a lesser degree, you know, my province that are quite quickly, but do you do you first see, you know, nuclear energy being unleashed? Or some people will say that, you know, where the lack of of specialization, maybe nuclear is not possible in a world of a great simplification. What What are your thoughts?


James Fleay  39:39  

Well, I guess, dealing dealing with the second part of that question, first is I think I mentioned earlier, I believe we will have to be selective in the complexity and the know how we decide to, to roll over. I mean, I'm not saying we're going to be losing all of our stuff. You will know how in all of our not just industrial but but but medical and scientific as well. We will lose some of the global population, global available working population is capable of doing that sort of work will shrink in time anyway. And of course, with reduction of supply chains that can leverage incredible specialization, to make sophisticated products, you know, our products will become simpler, as I mentioned. So that doesn't mean we can't choose to retain complexity in the areas that are strategically important. And I would say, energy is one of them. And I would say nuclear energy is one of them. The, you know, frankly, what, what other options do we have? Really, I mean, if we're, if we're really serious about reducing carbon emissions this century, I won't say by mid century, I think that's a frankly, I think it's a little bit silly, we could keep talking about that. So optimistically, but certainly by the end of the century, then I don't see that we can choose to not carry on nuclear expertise into the future and expand it and grow it. But But actually, innovation is not, not our immediate challenging in the nuclear industry. And, you know, you mentioned before, it's hard to get a nuclear plant built in, in North America, the same is true for Europe. It's impossible to build them in my country. But that's not just nuclear plants. That's transmission lines. That's Newport facilities. mean, any major project that you can think about? Really, it's just about, it's just about impossible to permit these days. So we have a real challenge. And I think this seems to be a uniquely Western thing, the Japanese and the Koreans and the Chinese don't seem to, don't seem to have this problem. It's not just we can't build nuclear plants. We don't want to build nuclear plants, we can't build very much of scale in the way of infrastructure, and wood. And that's by choice. We don't want to, and I don't know why we don't want it, but I think it's because there's large, really large portions of the population who don't think we need to do we need another port? Do we need another transmission line? Do we need another tunnel? under, under under Sydney? A lot of people don't seem to think so. But we will, as we transition from a highly mobile civilization to one that's a little less mobile, we will need that infrastructure. And I think crisis will precipitate a change of heart, I hope it will,


Chris Keefer  42:46  

you know, you know, in terms of the difficulty in getting things built, and I was referencing that 2010 to 2020 period, partially in regards to innovation, but also just, you know, cheap commodities prices, something that's going to delay, you know, rapid deployments of things like transmission generation, etc. It's just that the prices are going up. You know, we've seen that with offshore wind, for instance, with the Siemens, Gamesa announcing, you know, cost increases of 40%. Interestingly, the revised numbers on new scale, also an increase by 40%. You know, that that's gonna have implications. You know, wind and solar was deployed quite quickly in that decade period, partially because of cheap commodities, if we're facing constraints now, that infers that we need to make choices about what to wear to maintain that complexity, as you've said, Who decides that? I know, you know, in terms of our politics, you're coming more from the center, right? I'm coming more well, frankly, my early days coming from the kind of extreme radical left. But this infers that some degree of planning is going to come into play. Is your vision of that, that that would be mostly market based? You know, what do you think is how our politics are going to change? Or in terms of, you know, it sounds like you're wanting to say that, hey, maintaining pharmaceutical complexities is a value that we that I have that's important to me. Is that going to conflict with, you know, what the markets say? I mean, already, we see, we don't develop a lot of new antibiotics, despite them being very, very important medications, because you only need those for a week or two, and you're better. We want lifestyle drugs, like that's what the market prioritizes. So if we're coming into a world of constrained resources and simplicity, what do you think is the optimal kind of politics to navigate that big question?


James Fleay  44:35  

Question? No, the market is an extraordinary mechanism for coordinating information, resources, effort, basically. to satiate demand for something. But I don't think it's a flawless coordination mechanism for For all industries and for all human needs and wants, and I'm talking in the economic space, I'm not talking, you know, beyond our material needs, I'm talking just within the realm of material needs. We see this in the power system. In Australia, we have a power system that is as close to free market as we could, as we could get very similar to the system in Texas, and similar to the one in UK. And it just hasn't been very successful. We don't get timely, well targeted investment to replace the capital stock of assets that are that are retiring and getting to the end of their life. And we have a situation where the assets that we need to remain in the system don't make sense for the owners to keep them in the system. And so we have this, we're tactical decisions at the business level, going in the opposite, or isn't just opposite direction to decisions we need to make at a strategic level, about how to maintain a power system that functions and it's reliable, and it's affordable. And I think you can probably expand this to other other sectors. But you want to be really careful. I mean, would you ever let politicians in charge of the growing and distribution of food, I mean, like I think that's a, that's a show surefire way to kill a lot of people really quickly. So I don't know what the balance is, I suspect energy. Energy will be is already more strategic, it'll become more strategic, it'll need to be more coordinated, there'll be a role for the probably a role for a large, strong government to have an overarching framework of how energy is developed. And how we replace our legacy systems. But there's, there'll be a role for the private sector, they provide the technology, they're the ones who are going to operate the assets. You know, I don't know whether it mixes liquid fuels has always been well, in the West anyway, has always been the oil for a very long time has been the province of private capital. Because, frankly, the best geologists and Petro physicists in the world work for Western vertically integrated sort of super major oil and gas companies, whether it's sort of European or North American. So they know where the gas is. They know where the oil is. Could you replicate that? If you nationalize them? I don't think so. I find I find it unlikely. So if you really want to run down existing assets, maybe you could nationalize them. But if you want to go and find more oil and gas, tie you through a difficult period that you come out the other side of you, I think you need to let the private sector do what it does. So it's not that there is no answer that you can apply to all industries and all sectors, it's very much a what's the what's the expression I've heard lately? You know, it's the best athlete approach. You choose the best athlete for a particular job, sometimes it's government, sometimes it's private. Most of the time, it's probably going to be a bit of both,


Chris Keefer  48:16  

right, right. No, I mean, there's that quotes. Hard times make hard men hard men make soft times soft times makes off men. And I think it's easy to get sort of where we are in the cycle they're emerging into? I'll answer that question, I think emerging into new series of hard times, which require, as you're saying, in a more strategic thinking, and a more sober analysis of what's working, what's not, and some form of intervention. And I guess, you know, it's it remains to be seen, who will be making that intervention. Certainly, I think there's going to be a maturity that will come to policymakers, where we can no longer have, you know, ministers of the ecologic transition, we will have ministers of energy again, and that they will have some, if not technical, background, serious advisors, because it's too important of a portfolio to fumble. And I, are you seeing hints of that starting to happen or starting to play out? Or do you think that's still to come?


James Fleay  49:14  

Undoubtedly, undoubtedly, I mean, you can I mean, up, let's see most familiar with the Australian context, but you can go and read an energy policy from 2001. It was kind of like an energy. And I have I've actually actually had calls to look at it today was like, we have to have an energy policy. We can't not have one. But in reality, we're not really doing anything and maybe a bit of market reform. Yeah, we'll give renewables a bit of a try. You know, maybe will incentivize some crazy kind of Gas to Liquids technology and a million dollars for a study to export hydrogen. This is back in 2001. But it was it was not a policy that they were going to fight over an election. And energy just wasn't an election. issue hasn't been for the Western world I think for for many decades. It is now. It absolutely is now. And so the the amount of thinking and the amount of debate that goes on internally, the amount of outreach to industry to sort of try and fill in gaps in the knowledge of the various different parties has shifted gears over the last five or six years, just from conversations I've had, but also from what I've seen in the media and what I've been told by the people. So yep, histories is just catching up. Energy is important again,


Chris Keefer  50:40  

James, I've got to actually jump on a call with some local media. And it is around a new energy policy in Ontario. It's our pathway to decarbonisation. There you go, they are getting serious people to help them well, here's the thing, you know, what's what's being potentially forecasted or modeled, is a dramatic increase in nuclear energy adding another 18 gigawatts, we currently have about 13, or 14 installed, you know, an absolutely massive project of building with one historic precedent, and that is our historic CANDU build up, we've done some nice graphic that shows that if we were capable of doing what we did, in the 70s, and 80s, we could potentially meet that goal. But in terms of the seriousness of the document, they also say we should have about 16 gigawatts of hydrogen in the mix. Without much of an explanation as to how we synthesize and make that where that power comes from. So I've been I've been looking at that document and just shaking my head is an example of some profoundly unserious thinking, and, you know, a document, that's, if if, you know, energy planning was happening in the 70s, they wouldn't be making sort of pie in the sky, you know, we're going to base our plans on, you know, an energy carrier as an energy molecule. And, and not not sort of thinking that's the theory. But I think, you know, the, the desperation of dealing with climate change can lead to some pretty fantastical thinking. And, you know, I opened the interview with that question about, you know, what do you think the possibilities are net zero timeframe, etc. I mean, you have a lot more expertise in terms of analysis and engineering background, but, you know, my, my sort of Gestalt sense is that, you know, looking at, you know, fossil fuels as the pillars of modern civilization, if you've kind of beat around the bush a little bit that it could happen, but it won't look anything. Like what we have around us now. I think it's, it's pretty dystopian, and we're really dealing with these, these two challenges, where, you know, solutions to climate change involve massive costs, in terms of constraining fossil fuels that we are wedded to fossil fuels for our current civilization. And, you know, simplification may not mean you know, decrease in emissions even. But maybe that's fodder for for another conversation.


James Fleay  52:59  

We have a fossil fuel way of life. At some point, we will still have a way of life, it'll probably still be really good. It just won't be a fossil fuel way of life. It will be different. I think it'll be more stationary, amongst other things.


Chris Keefer  53:17  

Okay, let's leave it there. My friend. It's very late in Australia. Thank you for making the time. And we will chat again soon and hopefully meet again in person soon.


James Fleay  53:24  

My pleasure, Chris, good to talk to you. Thanks so much for having me.



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