This week Asim Hussain and Chris Adams are joined by Sara Bergman of Microsoft and Henry Richardson of Watttime.org to discuss the current global surge in oil and gas prices. Why is the price of oil and gas so damn high at the moment? How does intermittency influence the price surge? Are high gas prices actually good for society as a whole? How does Green Software come into play? All this including a wrap-up of the Green Software Foundation Summit.
This week Asim Hussain and Chris Adams are joined by Sara Bergman of Microsoft and Henry Richardson of Wattime.org to discuss the current global surge in oil and gas prices. Why is the price of oil and gas so damn high at the moment? How does intermittency influence the price surge? Are high gas prices actually good for society as a whole? How does Green Software come into play? All this including a wrap-up of the Green Software Foundation Summit.
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Chris Adams: We kind of do incentivize publicly traded companies like legally fiduciary responsibility wise to act a little bit like sociopaths. So we need to like hack that and do something about that. And like, this feels like maybe one way that you do need to resort to, but probably not the only one it's also useful to maybe talk about values.
Because, well, I know I respond to values more than most people, and there's lots of research, which says lead with values, but follow up with numbers, if you're gonna try and get any of these changes to actually be implemented or to see any change within an organization.
Asim Hussain: Hello, and welcome to Environment Variables brought to you by the Green Software Foundation. In each episode, we discuss the latest news and events surrounding green software. On our show, you can expect candid conversations with top experts in their field who have a passion for how to reduce the greenhouse gas emissions of software.
I'm your host. Asim Hussain.
Chris Adams: So my name's Chris Adams, I'm the executive director of the green web foundation.
Asim Hussain: My name's Asim Hussain. I'm the executive director of the green software foundation and the green cloud advocacy lead at Microsoft.
Sara Bergman: My name is Sara Bergman. I am a software engineer at Microsoft. I'm the chair of the writer's project at the green software found.
Henry Richardson: I'm Henry Richardson, an analyst at WattTime and also the chair of the specifications working group at the green software foundation.
Chris Adams: Okay. So I suppose Asim, I figured we would spend the time today doing a brief recap from the GSF summit here. And I figured that would be a relatively easy thing to talk about because there have been like how many hours of programming now from various people over the last month has seen.
Asim Hussain: I haven't got the stats yet, but there's quite a lot. There's quite a lot. I mean, it's 27, no, actually 20, 27 regions and 28 events cuz one region had two events over two days. So yeah, a lot of, a lot of people have been connecting and sitting and chatting and talking about green software. , which is just really incredible.
Actually, I, you know, I, everybody was just working so, so hard to get the summit together, that to actually just sit there for a second and think that, wow, you know, people all around the world are now sitting down and having conversations about this topic. I don't know. It was really inspiring. One of my hopes for this podcast has always been like, just getting a bunch of people on and just talking about something that's happened recently that's of interest.
And I think all of us kind of can have opinions on, on this topic. So I don't know. I mean, other than the foundation, other than the summit, because I think that Henry only took part in some of it and, and Sarah. Got hers canceled and I had a fraternity, so I kind of just checked out for most of it as well.
so I didn't really like doing much. Is there another topic, like something happening in the news recently that, that
Chris Adams: shit. There's loads. So in Europe you've seen a whole shift. This you've seen a kinda landmark rolling on things like right to. Hardware efficiency in that basically the Europe has decided to standardize on USBC for any kind of devices or devices for charging now. Right. So that totally affects that part of the S uh, of the se.
All right, that's gonna have a meaningful impact impact. There also, you've seen a. Some similar model legislation come through on the U on the us level. Now that's been put forward to actually say, well, if they can do it, why can't we do it? So you may end up with the Brussels effect that was being referred to in the previous podcast about, well, okay, you set a decent default and then this ends up being something that ends up having a meaningful effect on the hardware.
Part of a bunch of the tools that we do in the end user device part. That's actually one thing that I think is worth actually exploring.
Asim Hussain: Yeah, I think, and I think GDPR has proven that, uh, something can happen from Europe and just, you know, affect the whole, the whole world, you know, like regulation from there. Cuz everybody has, is forced. Everybody's forced to kind of follow. Europe's such a huge market in the world, but if something happens in Europe, everybody else, everybody else has to follow suit.
so, is that the only is that the only one is that the, I remember that the USBC came along and I'm, and I'm quite happy cuz I'm an Android user. So everything I, and at Android, Macs, everything I have is, is the USBC dramatically works.
Chris Adams: works. Yeah.
Sara Bergman: Also, but it might be too political, but we could talk about cutting off Russian gas and how that leads an energy shift in Europe.
Asim Hussain: That's interesting.
Chris Adams: Yeah, there's absolutely some fascinating stuff along that because, well, this is what I did. I did a talk at ripe RIPE 84, which is basically a event it's ripe is the European entity that issues IP addresses to people. And one thing that we were speaking about was, okay, well, what are the drivers that you might want to use to kind of.
Be thinking about, be thoughtful about your, your source of energy. And if you look up over the last 10 years, basically the cost of renewables has fallen more or less tenfold. And particularly in Europe, I'm not sure in America quite so much, but because it's a global market and global commodity, you are seeing this like oil and gas is like 14 times more expensive now than it was 10 years ago.
Right. So you basically have this scenario where something is either a 10th of the price or 14 times the price. And if you've been able to. Negotiate say green supply here you are exposed. You're not exposed to like 14 fold increase in your energy costs. So there's like one thing which you're totally seeing.
And there is some fascinating research that's come out of the RMI, the Rocky mountain Institute, where they've spoken about how this war in the Ukraine has essentially sped up. A bunch of the existing predictions about how quickly you'll see various parts of the grid, decarbonize are on a global basis.
So yeah, there's a bunch of stuff there, which will absolutely have a knock on effect to any large consumers of electricity, like data centers, which are in terms of energy usage per square foot. They're more dense than aluminums melt. And this is before we switch to kind of liquid calling, which is gonna increase the amount of energy per, per rack to be even even higher, because you can get away with it.
When, whereas previously the limiting factor has been, is it possible to kind of cool this stuff down? If you have things like liquid calling, which could be maybe 10 to a hundred times more E. In terms of moving heat around, then that's gonna have a knock on effect in the energy density inside a given data center, for example, and therefore the marginal stuff, which
Asim Hussain: But going back to the point of the wall that's happening right now. So, so the Rocky Mountain Institute is, is this, cause I think there's, there's lots of mixed information out there. Cause I've heard, I've heard there's other, other things that have come along. So the RMI is saying that this is gonna help accelerate the energy transition, but I'm also reading things that, you know, in the hunt for energy independence for, for, for entities that they're going.
On previous commitments to roll out renewables. And they're just, they're just rolling out gas and, and coal faster.
Chris Adams: We might wanna speak to the expert here. Yeah.
Henry Richardson: There were two, two things. I, the union of concerned scientists just came out with a report saying that natural gas, power plants are running at a loss, a financial loss kind of like coal was four or five years ago. Um, and so there it's following, following the same patterns where. It's uneconomic to run coal or natural gas at power plants at various times.
So I think we're starting to see the same fossil trends emerge. It of course, leads to self dispatch and other. Out of market AER. And then we're also seeing, I think Biden instigated the, uh, defense production act for heat pump, hot water heaters. So I think there is a movement towards like accelerating some of the electrification fuel switching trends that everyone's been talking about for a long time, but we'll see if there's actual action on.
Asim Hussain: if, if gas prices are increasing and that's making gas, power plants, less economical. I mean, I'm, I'm seeing my, my, my electricity prices increase. Isn't just gonna, just kind of, aren't just gonna pass them on to me and therefore we're just gonna pay for more gas and, and that's it.
Henry Richardson: so renewable energy generators. There's a whole bunch of problems with supply chain issues, which are starting to get ironed out with the tariff reductions in the us at least. they are so financially viable because as the gas price of gas rises, the price of wholesale electricity also rises making it more attractive to build more wind farms and solar farms.
So there's like, anecdotally, we've heard that traditionally, a lot of renewables in Europe and the us are purchased through power purchase agreements where there's a guaranteed off taker through a corporate partner. Anecdotally, we're hearing that a lot of the developers want to delay the start of their PPA.
Because they're making so much money in the wholesale market in electricity right now, because they're able to produce power and make a significant profit, and they don't need the guaranteed price to put steel in the ground. So there's a lot of like, because it's pushing the price of power up that makes other technologies much more attractive.
We don't know how protractive this will be. There are a whole bunch of caveats there. Of course.
Chris Adams: is basically one of the thesis put forward by the report from the RMI it's. From deep crisis, profound change by the accidently named Kings mill bond. And AIE Levins along with Alex Tako, Jules Khost and Sam Butler, SL it's a surprisingly short, but interesting read in this, in this discussion, but I'm not sure.
Henry, I'm glad you're on the call. Cause it might be worth actually asking to what extent does this end up affecting things like margin intensity? Because this is one thing that I haven't been able to understand quite so much. Cuz what I have seen recently in our world is I've read a, a blog post recently about from electricity map, talking about the choice of module versus average and the fact that there's a whole ongoing bunfight about that stuff here.
Henry Richardson: The price elevations can do a lot of weird things
to the dispatch order. So for example, natural. Might have been roughly the same cost as coal. So they might have been intermixed in the dispatch stack the order in which they're dispatched a significant rise in price may make coal cheaper than natural gas, so that you'll run coal before you run natural gas.
So it could affect the total emissions changes, or even if coal's lower in the stack, low cost periods could be dirtier than high cost wholesale periods because you're bringing on. Coal will respond to low cost changes, and then you bring on peaking natural gas. And if you increase demand, then they'll just burn more natural gas and not more coal.
So some weird dynamics like that, you can all see, see inversions. So the price effects are very, can be kind of dynamic and update in real time.
Sara Bergman: I think this is super interesting and I'm just using this to like, learn more, but coming from a, or currently living in a nation that sort of made our wealth from oil and gas, uh, because way for, and we have vast amount of resources that the government luckily decided to not. Dig to because they are destroying coastal areas, cetera, but what's to stop countries from just, oh, gas is lucrative.
Let's just bring up more.
Chris Adams: So it might be useful for context, for people who knew were new to this. Cuz we have a few kind of energy walks on this. There's a helpful blog post on the green software foundation website called understanding energy trends at the layer below the tech stack, where we talk a little bit about this. And if you are, you've never heard of what a dispatch stack is or any of this is there's a little bit there which might elucidate and provide a bit more background on this. So we can, if, if, if you're totally new to this.
Asim Hussain: Because this whole world is so complicated. We've got on one side there's right. There's rising energy prices. And on one level that is going to help accelerate the transition towards renewables because then, well, if you, if you. If you've got a renewables, your crane, electric renewables, you just can make more money from selling your renew energy.
But on the other hand, they're just, you're gotta make a hell of a lot more money by drilling oil and gas. So what I'm trying to get in my head is, is it better? You are saying the RMI saying they've done the maths. And they said, actually raising rising prices is better, period. Or are they saying that rising prices will just help the transition?
Chris Adams: Okay. So here's one of the issues is that over the last, say 10 years in Henry, you can probably back me up on this in a bit more detail. And what you have seen in America in particular is you've seen this kind of glut of kind of cheap gas coming onto the market. Right. But a lot of that has happened.
That a loss. So you had all these people who are like drilling, drilling, drilling, drilling, drilling, but they weren't necessarily turning a profit. They were just like going for like a little bit, like how, at our level, we incentivized to go for growth and worry about revenue or profit later. You've had the same thing happen for a long time.
But in the last few years you've seen in particularly the last like year and a half, I suppose you've seen a, you've basically seen all the people who actually do have been doing this. They said, oh, we need to kind of make a return to our investors. So rather than actually. Bringing more gas on stream, for example, to bring down the cost.
Every single large provider has basically said, no, we're not gonna do anything about supply. We're just gonna make sure we are gonna give a return to our shareholders. We're gonna exercise kind of shareholder. Discipline is the term that people have been using a lot. And this basically is why we have loads and loads of why you have such high prices right now.
So yes, you've had demand in lots of places go up that you haven't seen the corresponding increase in supply, even though there's lots. People there's lots of basically operators who have been able to do this and do have permits for drilling. They've said, well, we're gonna keep the price high and actually make sure that we can get return to our shoulders rather than increase the, uh, supply and therefore the cost, which would probably be good for like people who want to.
Buy cheap electricity or cheap, cheap fuel. Probably not so good for the climate, but definitely not so good for shareholders. Who've been quite annoyed about them not being able to make a return over the last say, say five to 10 years while there's been this mania to just expand, expand, expand, and drill, drill, drill.
But Henry, I'm happy to defer to you because you are in Houston and I'm not, and I'm in Berlin.
Henry Richardson: This is not something that I have a ton of expertise in, but if you think about you are seeing price increases across the board in, in like your natural gas delivered to your house for consumption, electricity costs, fuel costs. So like all prices are rising. So it's. Pressure on all forces. So for an electricity transition, going from natural gas, heating to electricity, heating there's, the forces are kind of equaling out.
That's like neither one is any more attractive than it was before, but we're seeing renewables as an enormously valuable hedge against the cost of power increases. So the fuel costs for renewables have not increased the fuel costs for everything else have. So there's still a huge benefit. To, to power systems that have already decarbonized to some degree.
Chris Adams: Also come from fuel and you don't have to pay for fuel with renewables. Then you kind of got quite a pretty good advantage, right? Like this is the, this is the key thing. And as long as you have a way to address the intermittency issues or the variability, and there are ways around that, then you can do something to basically do better financially than, than you otherwise would be.
Henry Richardson: a really interesting point about the intermittency and it's something, I guess the green software foundation actually talks about pretty frequently. Awesome. You coined the like carbon. Air, which means both time shifting and location shifting. And while we, we don't really talk about it very often. So we talking about software itself and like where it runs and when it runs.
But the things that software controls like heat pump, hot water heaters, EVs. Smart thermostats. And you have to build really sophisticated algorithms to take advantage of this. So it's still very much so software, those will be key in managing intermittency down the road. So if we have a ton of EVs, that's an enormous amount of storage that can be scheduled and managed.
If you think of a heat pump, hot water heater tank as kind of a thermal battery, if you either oversize that tank. Or include a mixing valve and overheat that tank. You can actually consider it a, a thermal storage. And I think those are two of the largest energy consumers in a household that have flexibility, but even generally two of the largest.
Sara Bergman: cuz I think that's a key difference from like when we think of data centers or software. Where that software requires. We need like electricity. That's what we need. But if you take the homeowner homeowner perspective, you don't like electricity, you need, but you also need heating, especially in, in cold places.
And if you're in more places, you need cooling. So you need not only electricity, but other things and, and oil and gas have this benefit, right. That you can use them for both. You can use electricity for heating. It's actually quite common where I live, but it. Much more expensive with these prices right now, and much less efficient use of it as well.
So that duality, I think, is quite interesting.
Asim Hussain: This might be a bit of a tangent. One of the, in I, in a previous podcast I used to have, I interviewed, I do. I'm gonna put in the show notes. I can't remember her name, but she was talking interview someone about the use of hydrogen as a replacement. For, for, for natural gas, for heating and actually most countries around the world, that's actually not possible.
The UK just happened to be one of the countries where it is possible because we have like essentially a grid for natural gas. Whereas a lot of other countries don't have a grid for natural, for natural gas. And apparently it just requires, you know, a 10 minute adjustment to a, a, a boiler to get it, to burn hydrogen instead of sort of natural.
I remember the other fun, fun fact. She told me, which was that hydrogen burns colorless. So they actually have to add color to it so that it, so, and I was like, well, you can have, we can have whatever color you want. You can have pink flames on your, on your gas, boiling your boiling, your kettle instead of, instead of blue ones.
So I think the question I'm asking myself in my head is, is, are rising prices for. energy. Is it better? And that's kind of like, I think one of the, the questions that's coming in, is it really better? And one of the,
Chris Adams: Is it better?
Asim Hussain: yeah, well, that's the thing. Is it better for what, what is it better for? I mean, it's obviously it's really, really hard for a lot of people in the world.
I mean, right now, I mean, right now in the UK, it's quite good. It's summer, you know, we're not gonna be hit with big heating bills when it comes to winter, it's gonna be really, really challenging. But the same level when the price of something is high, it means you're focused on efficiency. Is much, much more important things like intermittency is much, much more important.
If electricity was 10 times more expensive than what it is right now, how would that change our landscape and the conversations that we're having with people? How would data centers work? What would be the, the focus on green software is the problem that we have right now that electricity is too cheap and we're just wasting.
Chris Adams: This is my free idea and the thing I wish I had time to add a pool request for cloud carbon footprint, right? Cost of energy is absolutely a thing for like equity and people having access to like, you know, warmth and heat and, and cool. If you want, when you're in someone like say Texas, cause I suspect Henry you probably care about being cold rather than too hot right now.
Yeah. Like if, you know, if we might be okay in a, in a relatively separate place, but. It's like 54 degrees in some parts of the world right now, like Iran, for example. Right? So the dream feature for something like cloud carbon footprint or any of these tools would be allowing organizations to price this at the level of their organization really would price it.
So right now, if you were able to do something like, well, we value the cost of carbon emissions. That may be a hundred tons. And then you factor that into the price. When you saw a dashboard, this is how you can end up having the same ways to track this and measure this stuff within, inside a team. Because if you're gonna have like any kind of tools for track for in the same way that you might track say compute bills on a weekly basis to see, have you seen in a weird spikes, if you have some way to say, show me the full, the actual true cost that's who that's.
Push that, that that's, that's actually transferred to everyone else outside of the binder of, of our organization. I think there are ways that you can do this because every other organization or every other sector, or most other sectors are currently experimenting with things like internal carbon pricing shipping does this now aviation there's stuff around this and various organizations like say, well, Microsoft does it, you know, 15, 15 bucks per ton, a hundred bucks for trans for, for aviation, but like groups, like say Lloyds of London.
They have figures of like 250 pounds per ton for this stuff. And when you look at it like this, when you realize that it's actually the CO2 emissions, rather than the energy, that's the thing that we are really trying to reduce in the context of climate change. It makes sense to price it accordingly. So you have the right signals inside teams who are able to act upon it.
Really. I feel like that's a better way to think about this and like there's loads of precedence of us pricing, other things we value. So why would, why wouldn't we do it with carbon and, and expose it to our own metrics inside our teams to act.
Sara Bergman: Yeah, that really strikes a chord with me. I think. Actionability on. This is key, cuz when you are in a software team, whatever role you have, if you can't measure it, if you can't track it, if no one knows about it, it's incredibly hard to put it on the agenda to say that, yes, we should care the most about this.
And people are like, okay, great. How will we know we're doing better? And you say it's a gut feeling. It's not gonna fly with stakeholders. It's not gonna fly with management. It's not gonna maybe fly with the rest of your teammates either. So having this actionability, and we've spoken a lot about the, the energy grid now, and it's like super fascinated for people like us who are deeply interested in it.
Not everyone needs to be this deeply interested in it to act on climate, right? You don't need it if you want to. Great, but we wanna make it simpler and more actionable for people with like hands on desks in code rather than. Just the geeks, I guess I'm proudly a geek. So I'm saying that with all, all my love.
Henry Richardson: And I think we're seeing a lot of efforts towards that at the green software foundation, especially the SDK will hopefully make it much more accessible. So you. Have to think about the, the carbon intensity of the grid. You don't have to think about like, what tools do I need or the carbon intensity of different things.
It'll just kind of be built into a, an accessible tool. Awesome. Do you have an update on that? You were about to mention something.
Asim Hussain: You just said the SDK, I just gave the full name carbon or SDK. And I do know the team is, is working on an release in July. So we was keep an eye out for that. Cause I remember there was a report or a paper out a couple of years ago about, was it called the social cost of carbon? Cause you mentioned $15 for Microsoft.
It used to be seven. They just doubled it one day. Because you can, because it's so arbitrary, you can just double it and whatever, but like the social cost of carbon was that calculation, which is you actually put a dollar term on it. What is the impact on the environment, but also what the impact on my children and, and, and down the line, I think it was like $300 a ton.
If I remember rightly it was around that, that, that price
Chris Adams: So it's changed depending on who's been in power. All right. So with the Barack Obama administration, it was $50 a ton under Drumpf. It went down to $1 per to.
Asim Hussain: Oh,
Chris Adams: It's now gone higher up. I forget. I think it's actually close to 50, again, we're under the Biden administration, but what you might be thinking about assume is the UK.
I know in the UK they have a figure. They don't actually have, they, they use something called a carbon value, which is another price for this. And their figure is one that climbs over time. And basically they use it as a kind of way of checking the impact of the policies. So in 2022, the cost that they use is.
Yeah, they have a, they have ranged from 124 to 373 pounds, which is about what 500 bucks, 500 us dollars roundabout per ton, but that ratchets up. So every year it climbs up to the point where in 2050, you're looking at a hundred between 189 and 560 odd pound, which is close to eight or 900 us dollars. I think.
I mean, I'll let someone else kind of cut. Help me with the actual specifics, but yeah, they use that to basically make decisions about policy. So they don't charge people the way that say Microsoft does. So it's not like a heavy price in that sense, but is definitely used for framings. And this is actually some work that we're doing.
And we shared inside the group, the GSF slack about ways to think about carbon pricing. There's there's like high, you can think in terms of the height, like how, how high is the number? How broad is it as in. How much of your organization organizations operations, does it, does it impact? So a broad one might be 15 across the board, whereas a narrow one might be, say a hundred dollars, but only for aviation, like the Microsoft example.
And then you might think in terms of like weight, which is, does this. Impact me and my team or my organization right now, like with Microsoft, where the money is taken out of someone's budget and put into like this kind of carbon war chest for savings compared to a kind of shadow price that you might see, let's say shell uses or other oil companies where basically say we are gonna use this to factor in an investment decision, or maybe with the UK government where they use it as saying.
They're not taking money out of any purses, but they're using it to decide whether they should or should not go ahead with a particular policy decision because they've decided, and they're using this number to basically account for all the kind of other impacts that basically carbon mission can have because they have long reaching impacts in terms of health and well, the economy and everything like that.
Asim Hussain: can you buy anything in this world? When can you buy a ton of anything in this. for a couple of hundred dollars. That's why I'm just a tons, a large amount of something. So is that price? That price just, just feels too low. I mean, I, I can't, it doesn't feel right. I mean, does it really give you the incentivization to make those kinds of changes?
I'm not too sure.
Henry Richardson: This, this might go back to Sarah's point around like there's a, there's a, there's a significant difference between not considering carbon at all. And thinking about carbon in the optimization, that is a much larger leap than deciding what price to put on carbon, because it becomes a decision making factor versus one, not at all.
And I think that is a while we're talking about like, should it be 300? Should it be 50? I think the idea of just including carbon at all is a much more radical concept than, than picking the correct cost or the correct impact.
Asim Hussain: It's called a Maserati problem. I think it's what you usually called the Maserati problem. It's the startup space. I think it a long time ago in the startup space, like it's like a Maserati problem is, is a, is a problem you'll only have once you're driving Maseratis, cuz your startups made so much money.
there's not really much point worrying about it right now, but yeah. Hear your point. Yeah. So it's yeah. Hmm.
Sara Bergman: And that that's the flip side of it, right? Because if you are a small organization, then this number might matter a lot. If you're really, if you're a government, like this number becomes arbitrary very quickly, even when you price it super high, it's. Dropping the ocean compared to, to other things. And you maybe don't want it to be in direct competition with other things like basic healthcare, et cetera.
Chris Adams: Is basically I'm, I'm mindful that we getting way away from green software with this kind of tangent, but this is the idea, the reason the purpose of the carbon value, one of the UK is designed to kind of capture some of this stuff. There's a guy called, uh, John Cooey who talks about this. And he basically says the.
Absent other things, pricing stuff is one way to show what you're valuing things. And that doesn't mean that you wanna have this as your only kind of somewhat reductive lever for this. But if you, I think you can make an assumption that if you price something at $1, a ton versus $50 a ton, there is like a, an implicit value judgment there about, we think that the impacts don't really matter.
Versus we do think that the impacts actually matter here. So I think it's, it's, it's. I mean absent any other tools. This is one thing that may be more useful, and this is kind of what, Hey, I've seen people repeatedly use as a way as a mechanism to essentially help inform a decision. Cause if you're in, if, if you are in an environment where this is one of the only levers you actually have, and if you're say inside a organization, which is primarily driven around numbers, sometimes you'll need to speak a somewhat reductive language, even though it doesn't encompass the full gamut of human experience, just because.
Like we kind of do incentivize publicly traded companies, like legally fiduciary responsibility wise to act a little bit like sociopaths. So we need to like hack that and do something about that. And like, this feels like maybe one way that you do need to resort to, but probably not the only one it's also useful to maybe talk about values because well, I know, I respond to values more than most people, and there's lots of research, which says lead with values, but follow up with numbers.
If you're gonna try and get any of these changes to actually be implemented or to see any change within an organization.
Sara Bergman: And I think that's interesting if we think about the, like a global market where we actually price carbon really high and what that means for software, because we know data centers are big, big consumers of energy, which produces a. Of carbon. So if that means we're gonna see a rush of veiled and expansion in countries with hatch, a more renewable energy reducement yeah.
Like for example, what does that mean to the local grid here? Because typically they are kind of scaled for the usage that you have now. Cause the grid always needs to be balanced. How fast will that shift go and will the grids keep up or will there be a need to import other electricity? And how will that affect the price of both building new data centers, but also the people who live in that region.
And I think it's one, it can be a really good thing, right? Cause it syntheses the increased use of, uh, renew low carbon energy sources. But if this happens too fast, it can have the opposite effect for those specific regions.
Henry Richardson: Sure. We definitely see that where like a large increase in demand is tends to be backfilled with fossil because that's what's available and it is dispatchable. And then only over time do renewables start to get built to fill that gap. So I think that's a key point is that's that kind of gets back to the marginal question of when you make a change, what.
What fills that change and it tends to be fossil, unless there's already an oversupply of like, for example, in California, there's a huge oversupply of solar most of the year in the middle of the day. But the rest of the time you add demand and it'll be met with a fossil resource. I don't know exactly what the answer for Norway is.
You might know though.
Sara Bergman: We have only hydro basically, because we are a very mountainous, rainy country. So hydro is perfect. But with the cold winters that we had that would likely continue to have with climate change. A lot of that water is frozen and it's hard to make use of it. Also, it rains less or snows less in the late fall, which means there is less water.
So we're seeing more and more like local incentive wise people adding solar to the roofs, et cetera, because energy prices are going up and, and with climate change, actually, they may continue to do so, even though the energy source itself is renew.
Henry Richardson: And I think Norway exports a lot of its power to, I don't know if you call it mainland Europe, but so the more power that is consumed in Norway means there is less hydro to export to the rest of Europe. And that means that power that is not exported to Germany, for example, will now be fed by coal. So there's like, there are.
Global implications of local energy consumption or data center development. So understanding how those dynamics can be super difficult and.
Asim Hussain: That conversation's quite interesting. Cause that's making me think, well, the transition has to happen slow. Are we saying the transition has, has to happen slowly?
Chris Adams: No, it doesn't, it's not that it has has to happen slowly, but in the short term, if you don't have something to fill it in, then you may end up with something filling in that gap as Henry suggests, simply because even if you have loads of batteries and things ready right there, it's gonna take a bit of time to get planning, permission, getting all their stuff, getting them actually deployed into space until you have that people might be resorting to something else in the meantime.
And that means what one thing you need to have now is. Ways to either streamline that or make it ideally streamline that in a way, which does support some of the issues around equity so that you don't end up having a backlash against this or against people looking to do things. So, so for example, in Europe, right now, we have seen.
Like this new plan repower EU, where there's basically a plan in the next two and a half years to deliver three Germany's worth of solar in two and a half years. Now, even if we could make all that, that's like incredible amount of solar, but it's nowhere near as ambitious as China is doing. China's going way, way, way faster than this.
Right. But the thing that, that. Yes. Like there's a whole thing about some money being set aside for that. I think it's in the region of 300 billion euros has been kind of earmarked for this, but the thing that's probably gonna have, the bigger, biggest impact is changing of the laws. So it becomes faster and easy to get this stuff deployed.
Cuz a lot of the time you have this backlog of things of projects being able to get set up, usually because it takes a, a good few years and if you've set yourself two and a half years, then you'll need to do something to make those changes. The worry is if you don't, if you just kind of make it easy to steam, roll this stuff through, then you'll end it with a backlash a little bit later on, which will make it hard to get the rest of the way.
So this is one of the, I guess, challenges that we currently have at the moment, but. There are kind of ways around this. You can, you know, share the rewards with people in a more equitable fashion. And when you have seen that happen, then people are more prepared to deal with to, to accept say wind turbines and solar farms and stuff like that.
If they get to, if, if the, if the relationship isn't quite so extractive with the existing local communities, for example,
Sara Bergman: I, I think it's interesting here as well. Uh, Europe has kind of a complicated history with nuclear, but nuclear is a low carbon, uh, renewable energy source and, and that's also something. I think if I get to predict something, it will be a, a mitigation approach until we have that renewable capacity that we need, because we already have the power plants.
And I know Chris, you can probably speak more about this, but I know in Germany that there's been talks for a long time to shut down all the nuclear plant power plants, but, but the current energy crisis, those are not really going forward as planned anymore because you can't spare that energy that they can produce, which I think is interesting.
Cuz a lot of time we conflate. Environment and climate, they are not necessarily the same thing, at least in, in my language that I speak there, they don't mean the same thing because nuclear is not great for your local environment, cuz you need a final storage, but for climate, they are great. It's very low carbon.
Chris Adams: So there's some stuff I can share for this specifically in the German context. So we've had this whole energy vendor for a very long time and you are absolutely, you can absolutely make the argument that yes, having very useful, very, very low carbon or, you know, Basically carbon free energy available for a very long time is a really good idea.
The thing that it's worth bearing in mind is that in Germany specifically, it's not necessarily the energy, that's the issue. It's the heating, that's the issue, which is why you've seen there's such dependency on like fossil gas and stuff like that for heating. So heating is the problem more than electricity right now, or has been for most recently?
So it's not just as easy just saying, well, if only they'd switched on the new, it kept the nukes on it. It'd be fine. I. They absolutely are really, really helpful for that, but that's, it's not as simple as just saying, oh, if we had that, then that would, that would've solved all the problems. They still wouldn't really have solved some of the heat issues that we do have because Germany can be a cold temp, cold country at times.
Asim Hussain: The advice and the plan for the whole world is to electrify. So I think, you know, I hear your point, you know, and same in the UK, like I've actually got gas heating at home. It would cost me an insane amount of money to heat my house to electricity right now. But I kind of stayed away from it for a while, but I finally read the book from Michael Shellenberger - The Apocalypse Never. Yeah. As Chris, Chris. Yeah. As the eye rolls, I've been going through like a process recently of, of kind of reading stuff that people told me never to read, but he, he made a really solid argument for nuclear. I find it very, very hard to kind of question a lot of that. Because, you know, the amount of energy that we need in the world is, is phenomenal.
And, and especially the new, the new nuclear power plants, the new, the new stuff's being designed and deployed are, are, you know, it's not the same as the old ones. And just to kind of answer a point that was made that I, I, it really resonated in my mind with nuclear, was that the, the, all the nuclear waste from the entirety of the United States from history to.
Could could fill an Olympic size swimming pool and it's easy to manage and you just keep it there. Whereas coal and gas, it's just all goes in the atmosphere. So there there's this waste, there's this, this concept of waste and nuclear, and you really hate it. But then, and it's horrible waste, but at least it's self-contained whereas this other stuff is all out there.
So that was an argument I thought was really, really compelling.
Henry Richardson: I think everyone has their pet technologies and they're like, we need to build nuclear. We need to build geothermal. And like,
Chris Adams: Yeah,
Henry Richardson: yes, we need all of it. Like, we're gonna need nuclear. We're gonna need hydro. We're gonna need geothermal. Like we just have an energy shortage or a non fossil energy shortage.
Is that a better way of phrasing that?
Asim Hussain: non-fossil energy yeah.
Henry Richardson: deficit gap? However you wanna describe that. So I think. I, if, if nuclear is successful affordable, it would probably one of the solutions.
Chris Adams: If it arrives in time. That's the thing, assuming it arrives in time. Cause the first predicted thing to go on at a common stream in America, 2030, right? So that's, this is one of the issues, so much needs to happen this decade, that when we only talk about this thing, which at earliest could happen there, this basically we can fall into a discussion about, oh, it's just delay.
Let's just wait. Let's let's not make too many changes or be too fast. Like we really don't have that time right now. Like we're really, really late in the day, but we can also not forget the first fuel efficiency.
Asim Hussain: true. And, and by 23, we'll have cold fusion reactors. So don't worry about. I’m joking. That's a joke.
Should we do a wrap up?
Chris Adams: Okay. So what we've covered in this discussion is dived into all the trends happening at one there below. Most of us tend to work in the stack and there are all kinds of geopolitical implications of what we have of what what's going on. And they do affect not only people who are. Dealing with it day to day, but these also ripple out across the rest of the world.
And as a responsible software engineer, knowing about this makes it easier for you to prepare for turbulent times ahead.
Henry Richardson: Another way, phrase it, the war is happening and it's having wild effects on energy prices. And we're like, there's some, there's some thought out there that these increased prices could accelerate decarbonization of different sectors. Which might help mitigate climate change effects - full stop.
Asim Hussain: That works.
Sara Bergman: That was good!
Asim Hussain: That was good.
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