Will Global South support oil/gas as demand falls in North?

Markham interviews Justin Locke, managing director of Rocky Mountain Institute’s Global South Program.

What is Energi Talks?

Journalist Markham Hislop interviews leading energy experts from around the world about the energy transition and climate change.

Markham: 00:05

Welcome to episode 180 of the Energy Talks podcast. I'm Markham Hislop, energy and climate journalist and publisher of Energy Media. And today, I'm gonna be talking to Justin Locke, who's the managing director of Rocky Mountain Institute's Global South Program. We were gonna talk about the energy transition and what's going on in the Global South. So welcome to the interview, Justin.

Justin: 00:26

Thank you, Mark. I'm happy to be here and talk about this very, very exciting topic.

Markham: 00:31

Well, I tell you, my entry into this conversation is the many discussions I've had with oil and gas supporters who, as part of their argument, their counterargument to peak oil demand, peak gas demand, and and eventual decline, say that, well, yeah. Sure. Of course, it's going to peak because electric, transportation, for instance, will catch on in in North America. It's already caught on in in Europe, and but that's going to be offset by growth in the developing countries in the and primarily the the global south, and they will stick with the old technologies. And to me, that sounds it's counterintuitive because we know what happened, with, telecom communication.

Markham: 01:16

Instead of adopting landlines and all of the centralized technology, everybody just went to cell phones. And it seems like this is, likely to be a repeat of that, but I don't it while that that seems to be the intuitive response, I thought I would talk to you and find out if that is actually a reasonable if that's what's happening there and likely to happen in the future. So that's how I got into this. Maybe you we could start with a little overview of your take on the energy transition and the global south.

Justin: 01:49

Yeah. Well, I mean, it's a great question. 1, I think many in our space are shifting to the focus on the global south where is where you're gonna see all the growth. So, I mean, just top line numbers in terms of what's forecasted. You know, I I think as you pointed out, markets in the global north, oil and gas markets are expected to decrease, and that that's indicative of all the oil and gas majors models.

Justin: 02:11

Right? As with the passing of the inflation reduction act in United States, measures by the government of China, measurement you know, what we're seeing in Europe, we're we're expecting significant and accelerated, transition to clean energy technologies in the global south. But in the in the sorry, in the global north. In the global south, it's it it at least the modeling is the opposite where we're expecting a 44% increase in emissions, by the end of the decade, and 70% of all emissions will be centered in the global south by 2050. That's due in part because of just the growth that we're seeing obviously in markets like India, Southeast Asia.

Justin: 02:53

In in Africa, you're we're expecting a a 1,000,000,000 more Africans to join, to to to to enter into the continent, in the next 15 years. So you're gonna see a huge increase and a huge spike in demand in the global south. The question is, obviously, is is how is that gonna be met? Right? How is that how is that energy demand gonna be met?

Justin: 03:16

Obviously, we've laid out a vision that that should be primarily met with clean energy technologies, as you rightly pointed out, leapfrog moving from 20th century technologies to 21st century technologies. But we are battling, you know, things like the political economy and significant subsidization and other strategies where the oil and gas majors, their their their mark their new market and their growth their growth or or projected growth is in the global south, primarily in the form of natural gas. And, obviously, that's, you know, in large part concentrated in the industrial sectors as manufacturing, and industrial development continues to move to the global south as we've seen in Southeast Asia as incomes have risen and moved into Southeast Asia and and also as Africa is industrialized as well.

Markham: 04:08

Now one of the points that, and I should mention that, again, my entry into this conversation is through a document that Kingsmill Bond, a friend of mine and someone we've, interviewed many times in the podcast. In fact, when I talked to your folks in the media department, I said, please don't you know, get me somebody to talk to, but not Kingsmill. Right. Right. We talk we talk to each other so much that we, you know, we let's let me talk to somebody different this time.

Markham: 04:34

So but he wrote a document, he and his colleagues, I guess, wrote a document about renewables revolution. And one of the points in there that I, I think is very interesting is that China is the leader of the new renewable revolution. They have they have spent the last 20 years basically building the industrial capacity to supply the technology that is the underpinning of the renewable revolution. So they they they build most of the the solar panels and the wind turbines and the batteries and electric vehicles and on and on and on. It seems to me that China must be looking at the global south and as a place where it can exert its leadership, and that it would move into those markets as a way of expanding.

Markham: 05:24

And and this and and, also, it's geopolitical leadership, and with industry and and economic growth, and with capital, it's it's capital leading the way. Is that, like, happening or likely to happen?

Justin: 05:38

I mean, it already is happening for in a lot of ways. Right? I mean, you're seeing China exert its influence in the Indo Pacific, in the Caribbean, in Africa, both in terms of its exhorting its geopolitical power to gain influence and control in, you know, in international forms, but also as, you know, as and as tensions have risen, I mean, what we're seeing is is a fight for the new economy, which is really around precious metals that will generate the the the, you know, the tools, the the, the capabilities to drive the the clean energy transition, a form of, you know, bat you know, the inputs into battery energy storage, for example, into, into solar panels, into electric vehicles. Most of the components and inputs into these materials, are precious metals that are found in the global south. You take, for example, Indonesia that has nearly 40% of all the world's nickel supply.

Justin: 06:41

And so you're already seeing the geopolitical position and really the what you're seeing is an expression of the increased intention between the west and China is is really a fight for these new resources.

Markham: 06:52

Well, goodness, it sounds like, like the fifties, you know, where the, the US was flexing its muscle all through Latin America and and basically protecting its its markets, in its own backyard. So here we once again, we've got geopolitical competition for resources for a new economy, for a new industrial revolution, and markets for a new industrial revolution. And and so but and I would assume at some point that the Americans and the Europeans will get their selves sorted out and build that industrial capacity. So they'll be looking for new markets as well and wanting to counter China in in the global south. But doesn't that argue then against the incumbency of of fossil fuels in the global south with China taking such an aggressive role?

Justin: 07:45

I mean, you would think so. You would think so. But what we're seeing again is all the oil and gas majors see the new market in the global south and particularly in the form of natural gas. And in absence of strong, institutions, what you see is the political economy often winning out where where the e where the economics are clear in the other direction. We see this debate clearly in natural gas where you find countries that should be investing in natural gas, countries like Vietnam for their industrial development are not because you're reducing the number of suppliers and making yourself more vulnerable to global energy markets, and we saw that obviously, when Russia gas came offline.

Justin: 08:33

So you're and so you're seeing energy security being paramount. At the same time, you're seeing countries like small countries in the Caribbean invest fully into natural gas where the economics are not clear at all. That's because the argument around the role of natural gas, particularly in the global south markets, is very tribal, where you have a subset of, petro states, supported obviously by narratives driven driven by, global global north, oil and gas majors, influencing the dialogue, tapping into colonials colonial orientated arguments. And on the opposite side, you have the international community saying, you know, public resources in the form of climate finance cannot be leveraged or utilized to invest in natural gas in any circumstance. Where we're trying to find is that there's somewhere in the middle where natural gas and and for other fossil fuels will have a specific role to play in certain markets and in certain industrial applications.

Justin: 09:36

But in absence of that more clear nuanced understanding and narrative of the role of fossil fuels in the future, what we find ourselves is in the political economy is driving these decisions, which only, you know, supports the intentions of certain petrostates and the oil and gas majors.

Markham: 09:57

Yeah. I I can understand why the, some of these the global south countries would be interested in in natural gas. And how often do we talk about, you know, And how often do we talk about, you know, the power the power sector and transportation are going to electrify? The power sector is gonna switch to, to renewables and and the new those new clean energy technologies, and then we're gonna see transportation be electrified, but it'll be buildings and industry that are considered hard to abate sectors. And so you could see where countries that want to that want to, industrialize say, look.

Markham: 10:36

Right now, the dominant technology or the dominant, energy, the fuel used for the industries that we wanna develop are natural gas, and therefore, that's what we're going to use now because we don't wanna delay it or maybe the, you know, the electric options aren't available or whatever the the the and then, of course, just as you say, you know, the the petrostates and the and the, northern oil and gas majors, controlling the the narrative. So I I can see where that, where that might take place. On transportation, though, if and and on the power sector, if I'm looking at these I mean, this as you point out or as pointed out in the in Rock Mountain Institute report, the south has tremendous renewable reserves, particularly around solar. And so if you were looking at electrifying, like, rural areas, then solar plus battery plus microgrids has gotta be a winning condition a winning combination.

Justin: 11:38

Yeah. I mean, when it comes to off grid electrification, we've proven and and it's well understood that, microgrids or mini grids in the form of solar plus battery storage is much more economical than extending the grid 100 of miles to remote communities. The question is is, you know, what role do electric vehicles, particularly in in 2 and 3 wheel electrification, play to support that? You know, rural electrification is a bigger challenge than just providing electricity to communities. Right?

Justin: 12:16

There's a element of what we refer to as productive use. You need an economic activity to to that requires that form of electricity that generates income for a specific community that then enables it to be electrified in a sustainable way. For example, in Africa where you have 600,000,000 people without energy access, there's, know, close to 800,000,000 globally without energy access, and then another 1,000,000,000 people with intermittent energy access. Agriculture is the dominant, economic activity. And when you tie that to to electrification, you look at, okay, what are the agricultural products coming into a community?

Justin: 12:57

How are they being refined mostly in the form of milling? And where do you have adequate volumes to electrify those mills as a as a kind of a, a foundation of electrifying that community? We're also exploring, the role that 2 3 wheelers, which is the predominant, form of transportation in these communities. How does that play a role if we electrify those 2 3 wheelers? How does that play a significant role, in actually providing the baseline, electricity demand for a community?

Justin: 13:27

And then you extrapolate that obviously to urban markets where, you know, air quality is a significant issue, not only health, but economic. Right? And electrifying 2 and 3 wheels makes complete sense. I think as we start to transition into, you know, other vehicle segments, particularly, you know, midsize and, you know, trucks and and some of the larger trucks, the economics get less clear. And, obviously, that's that's a big part of where the emissions are, but the economics fully aren't there yet.

Justin: 13:58

I think what we're trying to do is look at this system holistically where you don't decouple vehicle electrification from, you know, transitioning to to to clean, sustainable grids. We have to look at them in an integrated way. And, unfortunately, we're stuck in this messy phase where the electricity grids are predominantly driven by fossil fuels. And and we're we're finding in the global south too is that that, you know, most of people's electricity needs are not being met by the the electrical grids. Take, for example, Vietnam right now.

Justin: 14:34

There's this there is a historical drought in the north or sorry, the south of China, the north of Vietnam that is is taken offline all their their hydro also, all their hydropower, which is about 5 gigawatts, 20% of their entire electricity system. And what what does that mean? I mean, they're cutting their industrial generation or and and load by 50%. That means their industrial capacity is at 50% right now. So they need to significantly increase their their, electricity generation before they can even think about wholesale, electrical v v electrification of of vehicles because that's gonna require more demand of electricity.

Justin: 15:18

So you you have to solve multiple problems with an integrated and holistic solution, and that's what we're trying to bring. And I think it's been somewhat of a challenge in that. These are, grid operators, policymakers that have really built their whole, psychological paradigm around fossil fuels. So thinking more holistically is, in terms of the integration of these different sectors, is a bit of a jump. And that but, again, we're making significant traction, through our work on the ground.

Markham: 15:50

Is now if you look at the cost curves on the primary technologies that are that underpin the the energy transition, while they're more efficient and while they're now lower cost than their, fossil fuel based, replacement or alternatives, they're not done yet. You know, solar costs are still dropping. Battery costs are set to go to drop considerably in the next decade, and on top of that, to improve. Now have all sorts of different chemistries and and, all sorts of, niche batteries like zinc ion for stationary storage, that sort of thing. And might it be the case that this messy period that the global south in is in right now becomes less messy as time goes on and the economic advantage of the new, the new energy technologies becomes more obvious and the cost become lower and lower and lower.

Justin: 16:58

Yeah. I mean, in in large part, I mean, the economics are really clear. Obviously, part of it is scale. Right? Is is bringing more aggregated demand in terms of, you know, bankable portfolio to the market, to make things work.

Justin: 17:14

But the the bigger the issue why this we're in this messy phase and and you don't see the adoption of clean energy technologies like the economics would suggest is is not because of the technologies, the availability of those technologies, and at times, even the supply chain. It's the broader ecosystem in developing country context that prevent not only clean energy investment but other forms of investment. And as we we look at that in terms of the the from a clean energy perspective, I mean, you have broken utility systems and grid infrastructure. You have the predominant ownership modality of utilities in electric utilities in the global south is state owned. And every single state owned utility in the global south is either insolvent or bordering on insolvency.

Justin: 18:05

So they don't have access to liquidity, and they don't have proper, proper credit. You see very complex political environments. You see compounding debt crisis and macroeconomic risk, and you see the very finite amount of public financial instruments that are specifically designed to address the risk in these markets to allow private sector investment to to to, to be catalyzed is not being deployed properly, which is why you have so much focus these days on MDB reform to be fit for purpose. So, again, what what RMI is doing and and our partner ecosystem is actually trying to address the broader risks in these markets that are preventing private sector financing from from scaling rather than working on bringing down the cost curve of these technologies because it's the the the economics for, you know, 90% of geographies that that we work in across the global south are already clear. It's the broader investment ecosystem and environment that that needs to be addressed so that the private sector, particularly, you know, commercial finance you know, global commercial financiers feel comfortable, and that's the keyword, comfortable, investing in these markets because often there's more perceived risk than real risk.

Markham: 19:28

Now, mhmm, the the kind of issues that we're talking about here, the the both political and economic that are holding back development in the global south are not new. These issues have been around for a long time.

Justin: 19:40

Yep.

Markham: 19:40

And I'm wondering if the thing that has changed here is the commitment, amongst Nash amongst, you know, the international community, around climate. And so whereas before, their the global south was a you know, I don't know how much of a priority it is. I don't know much enough about that to say. But it seems that maybe now we we have mechanisms, we have capital, we have other, political pressure on and on and on to begin to help the global south address these issues in a way we didn't have before. Would that be a fair comment to make?

Justin: 20:20

I mean, I I I think so. Right? I mean, as you said. Right? I mean, you know, volatile markets, political uncertainty, obviously, high rates of poverty have always been indicative of the global south that's prevented all different forms of investment where you're talking about education, health, road infrastructure, etcetera, which is why, you have a a number of institutions focusing on this effort.

Justin: 20:45

I will say that, you know, development has worked. You you see a lot of countries graduating from these developed into into the middle income. I think the recent urgency that you see is twofold. 1, you know, we live on one planet. Right?

Justin: 21:00

And so the, the global north can't decarbonize and allow the global south, you know, to be either the dumping ground of 20 20th century technologies or, you know, the bay the the the center of significant oil and gas investments, taking advantage of the lack of, you know, strong institutions to allow the political economy to win. But the other element is that is migration. Right? I mean, it's not talked about as much, I think, in the North American context, because it's been overly politicized. But in Europe, this is a very open and mature conversation.

Justin: 21:38

I mean, the significant amount of European investment in Africa, particularly around clean energy as a conduit, to other sectors like health, like education, like workforce development and jobs, is seen as a centerpiece, primarily because of the migration issues that you're seeing. We're seeing the same thing here in in the United States and in Canada where, you know, Central America is in the midst of one of the most historic droughts in human history, which is causing those population pressures to to to pile up at the border. But rather than, you know, systematically addressing that through, you know, income generating activities, poverty alleviation, clean energy development as a as a conduit to all of those things, we tend to be focusing on the band aids at the border. So I think this is why you're seeing a a a much more significant, focus here coupled with the huge private sector investment potential, the global south. So I think I think we estimated the Global South needs around $30,000,000,000,000 of investment, by 2030 in order to meet, you know, net zero goals.

Justin: 22:48

I mean, that's a huge, huge market of opportunity. So I think all those things are combining to really focus couple I mean, paired with the numbers I mentioned. Right? I mean, as the global north decarbonizes, the the global south is gonna increase their emissions by 44% in aggregate. By by 2050, 70% of all global emissions will be centered in the global south.

Justin: 23:10

So we we're all this is a these are red this is these are not yellow blinking lights anymore. Right? These are red blinking lights, and I think you're starting to see, the international community, the global north, and in partnership with the global south really galvanize around real reform and change starting with the Bretton Woods system, to to to pro to be more strategic with how public sector investments are made in order to catalyze that infinite amount of private sector investment on the sideline.

Markham: 23:38

Well, follow the money they say.

Justin: 23:41

Exact Correct.

Markham: 23:42

Right? And, so if there's a focus on deploying capital, if there are opportunities for deploying capital in the global south, then my guess is that you're going to see, you know, people like Mark Carney and and, BlackRock and exert pressure on the international community to fix some of the problems in the global south from their point of view so that their cap essentially derisk their capital investments. Exactly. Exactly. Yeah.

Markham: 24:23

And in the process of doing that, fix some of these institutional problems and and political economic problems that have been holding back investment and development up to now. Is that a fair thing to say?

Justin: 24:36

Yeah. I mean and that's what I mean, that's kind of the the hidden narrative that you're seeing behind the scenes, right, beyond climate is is really the push towards the Bretton Woods reform, which is the multilateral development banks and the way they operate, the way they deploy capital, ensuring that it's fit for purpose to allow again, to address not only the macroeconomic but even, portfolio and project related risks to allow private sector investment to come and and derisk their capital. I will say, though, that there's been a lot of focus on the back end on on derisking capital, whereas where we see on the front end is the fact that there's there's simply a lack of bankable projects. So bankable projects are projects that are well thought through, that they've done their proper pre feasibility and feasibility studies that are considered financeable. Right now in the global south, there's very thin, amount of these projects, which means that number of different financing entities are competing for the very few bankable projects, which is just driving down the cost of capital and actually pushing out private capital because the MDBs, the multi level development banks, are actually competing for that those projects with the private sector.

Justin: 25:45

So what we're trying to do is actually address that by, creating portfolios of bankable projects and bringing those to the market.

Markham: 25:53

Well, let's talk about bankable projects because 30 years ago when I was living in Saskatchewan, I spent some time working in community economic development and and, with the the First Nation community there. Right. And at that time, I think it would be safe to say we didn't think in those terms, but I think you could you could make the comparison that there was a lack of bankable projects for First Nation communities in Saskatchewan. And there was a lot of talk 30 years ago about, and this is while my experience is in Saskatchewan, I think this is true for much of the the indigenous population across Canada, which should be about 600,000 people, and, hundreds and hundreds of of, indigenous nations. But the the point I'm gonna make here is that 30 years ago, the conversation was around building capacity.

Justin: 26:44

Yep.

Markham: 26:44

Right? So you had to have in order to build capacity, you had to have institutions. Like, you had to have development corporations. You had to have managerial skill to run those. You often you know, they would joint venture with existing, you know, trucking companies or mining companies or whatever would be so that they would their their members would learn.

Markham: 27:04

And they and then they would take those lessons, and they would and they would they would teach, you know, other members of the community how to be managers, and they would they would often, you know, get the the training, the education that they needed. And and over time, now what you see, like in British Columbia, for instance, where where I live, is, the indigenous nations have become so adept at doing solar, and to some in some extent, right of river and and some other clean energy projects, but particularly solar, that now as the, provincially owned, electric utility, BC Hydro, is is is now forecasting 2% growth again for the next, you know, 20 years, and it can't build any more hydro dams. It's looking to the indigenous communities to build solar and another forms of clean energy in or at which they will then enter into power purchase agreements. You you couldn't you couldn't have done that 30 years ago. If they if the capacity had not been built at the local level to to manage projects, to build and conceive of to conceive of projects, manage the projects, and build the projects, you you you what we see today would would not be possible.

Markham: 28:20

And I wonder if that's analogous to what's going on in the global south.

Justin: 28:24

Yeah. I mean, one, that's a great story. Right? And it's unfortunate that 30 years later, that capacity is still not built because, you know, many organizations that operate in the global south, including ours. Right?

Justin: 28:33

I mean, we have a whole program designed around developing the clean energy workforce of the future in the global south. And many organizations, you know, say that they're doing capacity building. But, predominantly, it's been a fly in, fly out model, you know, Global North, you know, providing kind of workshops for the Global South participants and saying, here's how we did it. You can do it too. Rather than building up really an indigenous, workforce and and really indigenous examples within the Global South of utilities, you know, regulators, policy makers that have done this and really elevate them, give them the platform so they become the educators.

Justin: 29:12

But, I mean, you're absolutely right. I mean, that's a big part of the barrier right now. I mean, we see from our work in the Caribbean, they're much more advanced, than, say, Southeast Asia grid operators in in incorporating intermittent renewables. You you often find that the communities that have to become the most adept at doing something. Right?

Justin: 29:31

Whereas, you know, many fossil fuel or petrol states in in in the global south, you know, they haven't learned these skills or because they haven't really really needed to. I will say I mean, in addition to capacity, which as you said, is is frankly, I think, the biggest, gap in in the global south when it comes to why more bankable projects aren't coming to the market. There is an issue of just access to liquidity. You know, it it costs money to develop a a clean energy project. You have to do feasibility studies.

Justin: 30:03

You have to do grid interconnection. You have to understand the soil composition, hydrology. You have to acquire land, right, in order for these things to happen. And and, frankly, most most utilities and and energy practitioners in the global south are are just frantic trying to keep the lights on because there's been such large growth. So and at the same time, you know, access to project development capital is just it's prohibitively expensive.

Justin: 30:29

And and so that's an area where, you know, we think that, you know, the international community can pay more attention as opposed to just focusing on derisking the cost of capital and and addressing those those macroeconomic risks is really addressing, you know, the capacity gap and and providing a little bit more support to the project development cycle so that, you know, more projects are are getting to the market.

Markham: 30:53

Is there a danger if the international community doesn't help in the right way, doesn't support the global south in the right way that essentially, all you do is replicate the petrostate model, but instead this time now it's with electricity. The elect you know, it's it's clean energy kind of model. So the, you know, they, I don't know, maybe, investor owned utilities move in, they invest, and they bring in their own they they bring in their own staff and and, you know, and and the local people are hired as janitors and truck drivers and things, but there there isn't a there isn't a sense that any kind of investment there is a means of building capacity and transferring skills and then supporting the growth of local institutions, local local businesses, local, you know, local, investment capabilities. I don't know. Is is that a is that a a risk?

Justin: 31:51

I mean, that's what happened during the 7 and seventies and eighties. Right? Predominantly driven by an organization I used to work for, right, with the World Bank in terms of its approaches of privatization, particularly of, you know, national utilities, water, you know, electricity, etcetera. Right? And you see that across Latin America, some of the impacts of that.

Justin: 32:09

What we've seen actually more recently is a trend in the opposite direction. It is more of a nationalistic view of, you know, national assets, particularly electric utilities where you see much more public sector buyouts of utilities. We've seen that, firsthand. And, again, you know, the predominant amount I mean, it's it's it's upwards of 90% of you of electric utilities in the global south are actually, government owned. Right?

Justin: 32:39

They are national utilities. I think the the issue is that though those utilities have become overly bureaucratic. They lack, obviously, liquidity. The policy environment that they've been operating in, hasn't you know, where whether they'd be subsidizing or or or or whatever. And, you know, the primary metric for success of those companies has really been around employment and not around, you know, return to shareholders.

Justin: 33:05

So you've seen an eroding of the public electricity infrastructure over time. You know? And as part of that, you know, we haven't seen the capacity built in electric utilities like we we have liked partly because, and this is my last point, is that the international community is mostly focused on the policy and regulatory framework as a conduit to opening up these markets as opposed to, you know, really addressing and focusing on the utility and the regulator to build their capacity and providing the necessary financial instruments to support them during that transition.

Markham: 33:39

You know, earlier in this conversation, we began talking about this. I was thinking, well, you know, maybe climate policy and the drive to reduce emissions, in the global south will will bring in expertise, will bring in investment by by, you know, investor owned utilities, whatever it might be, private companies, that sort of thing. But as we've been been talking, it occurs to me that really, maybe what's required is, yes, continue to decarbonize. That's great because we're in a climate crisis, and we're beginning to see, the effects of that. But to make this really work for the global south, the the hard work, the thankless work, the the the work that doesn't have a return to it, not a visible return of building capacity is maybe a prerequisite for building out clean energy, clean energy systems and developing a clean energy industry and and economy.

Markham: 34:38

I your your thoughts on that.

Justin: 34:40

I mean, Mark, I I couldn't have said it better. Right? I mean, I think that hard work in the trenches as you outlined is what really needs to happen right now. And, unfortunately, you know, oftentimes in the international community, we like to have, you know, easy wins or or low hanging fruit as we say or, you know, quick wins or you know, there's a lot of focus on kind of silver bullet solutions as opposed to really the hard work in the trenches that needs to get done is really reforming these utilities, restructuring their debt using using the the instruments that, the IMF and the World Bank have utilized to restructure economies is actually you restructure the economy through restructuring utility to enable the energy transition to happen, which is obviously, you know, you know, what we've been talking about is the conduit for broader, prosperity within these countries. And, again, that was exactly what's required at this state.

Justin: 35:35

And and also the global south countries coming together and learning from each other and not always being this global north, global south divide because, you know, I think probably something that you've seen in your work with indigenous communities and in in Canada is that people learn best from people who share the same problems, who often are from the same communities, or or look or talk like them, and I think, you know, that's always the best conduit for getting someone to really buy into something.

Markham: 36:03

Yeah. Sure. Fair enough. And, it it just it seems like that for a period of time, you know, maybe 10 years, maybe 20 years, who knows, that it's likely that the, you know, the global north oil and gas companies are going to find ready markets for their natural gas in in the global south, particularly if those countries want to industrialize in a hurry. And maybe that can't be avoided.

Markham: 36:31

But long term, they're going to wanna switch to the the better, cheaper, more efficient clean energy technologies, and maybe the best strategy here is just say, okay. There's only so much we can do in terms of keeping out natural gas, But if we build the local capacity and then eventually, the capacity be will be there to build out the competitive system that eventually displaces gas and and oil and and coal, whatever it might be. I what your thoughts on that?

Justin: 37:02

Yeah. I mean, I I think that that's part of it. Right? I mean, I think there is I mean, distributed clean energy tech developing and running and regulating a decentralized clean energy market is very different than a centralized fossil fuel market, which is why you haven't seen that shift. The concern is that you double down on that model even if it's a cleaner fuel like natural natural gas, that you continue those constructs, whether they be financial, whether they be by experience, whether they be content, and and that only prolongs the the inevitable transition.

Justin: 37:39

And so what we think needs to happen is really getting really crystal crystal clear where natural gas has a role to play. Obviously, there are certain industrial sectors that until green hydrogen is is is fully commercialized, just, you know, natural gas just makes the most sense. Or, you know, deep you know, very deep, urban environments, right, where just the the density of energy demands can't be met by renewables. They can be complemented by renewables. And I think that's the key here is that there it's not an either or.

Justin: 38:12

It's it's a it's a it's a and and. Right? And so how do you do how do you continue to deploy fossil fuels strategically while building out a complementary set of of renewable energy of investments to complement that that simply overtake the grid over time? Right? Because they become less they they're much less expensive and they can, and obviously, as that cost curve continues to come down, which we've seen, you know, both with batteries and wind and and and solar, it just simply overtakes.

Justin: 38:38

I think the biggest concern we have is, you know, when you make a natural gas investment, that's a 30 year investment. And and the and the and the the the kind of narrative within the political economy is that it's a bridge fuel. Well, you know, a 30 year bridge is not much of a bridge. I mean, that's 3 decades. And so I think part of it is narrative, part of it is making sure that we have balanced views, and and are really understanding the role of these technologies and what they can play rather than the and or strategy because that's a losing strategy.

Markham: 39:12

Well, let's end our conversation, Justin, by pulling back to my original question about will the global south be this, you know, burgeoning market for oil and gas that the, oil and gas advocates think it will be. We know from this conversation, I think, that it that for certainly on the gas side, there's going to be a big emphasis on that. But but is this is the global south going to be the thing that the market that sustains the the oil and gas industry as the North American and the European market shrink and eventually China mark Chinese market shrinks, is that gonna be the salvation of of what of the the majors and the and the, you know, basically, the global, oil markets and gas markets?

Justin: 40:06

I mean, we certainly hope not. Right? I mean, over the 5 to 7 years, that that will really be the determining factor of whether that that that case that you just outlined or that argument that you just outlined, it comes to fruition or not. I think, personally, if you know, it's gonna be patchy. It's gonna be it's you're gonna see traction in certain markets that, whether they be because of the economics or because of the political economy, there's just you know, the the oil and gas majors are gonna have significant share of that market.

Justin: 40:35

There's gonna be other markets that take a more progressive view, and we can already start to see the the kind of, first indicators of that. Right? The markets that are moving quite more more slowly or really more thoughtfully. You look at, you know, Latin America, for example, that has really embraced clean energy in a lot of ways. Obviously, the the agricultural sectors where you still have some issues.

Justin: 40:55

You know, I think Africa is gonna be a mixed bag, and and that's that's where we really hope that we can make some significant traction. But a big part of it is really gonna come down what direction is Southeast Asia gonna go, what at what direction is it it it is India gonna go? Right now, India may be taking some steps that, some good steps and not some good steps and that we are a bit concerned about that market. I think Southeast Asia, I think it really hasn't been you know, it really has not been shown yet what direction that region is gonna go. They are delaying natural gas investments.

Justin: 41:30

Right? You've seen huge natural gas investments in their pipeline, and those deals are falling through, and they're starting to get more risks associated with those investments. And so, you know, the question is do they just continue to rely on coal and double down on coal? But they are being much more thoughtful and pragmatic. And in some ways, it's actually stalling them from doing anything.

Justin: 41:50

But, obviously, you know, we hope that's a market that capitalizes on this huge growth that they've had as manufacturing has moved into the region from China to capture that low labor because they they need to have energy secure energy, and they even have low cost energy as manufacturing automizes. Right? And so, you know, that's that's the winning narrative. And so the direction they go there, I think, will be critical not only for the region, but really for global climate.

Markham: 42:17

Well, Justin, thank you very much. You've you've certainly clarified some things for me, about the global south and the trends that are going on there and and the role that it's going to play in sustaining or maybe not sustaining the, the global oil and gas, economy. So thank you very much for this. Really appreciate your insights.

Justin: 42:36

Markham, it was a pleasure to be with you.