Exponential View: a conversation with Azeem Azhar
This week's episode of Cleaning Up was with an old friend and early investor in New Energy Finance, Azeem Azhar, who has spent ten years thinking about what happens when technologies go exponential.
For this week’s episode of Cleaning Up, I sat down with Azeem Azhar, the CEO and founder of Exponential View.
Azeem is a friend and former investor in New Energy Finance. For the past decade he has been thinking, writing, advising and podcasting on exponential technologies - those being technologies that grow and deliver reducing costs year on year for many decades.
Doing what I do, it is easy to over-focus on the short term and on what people think is happening but isn’t. There’s no EV slowdown; we don’t have an alternative to heat pumps; we aren’t building a ubiquitous hydrogen economy; SMRs are not the answer to everything; fusion won’t be powering AI data centres within five years; we are not running out of battery minerals; etc. It can be hard to spend enough time on what actually is happening, and how it will play out.
My conversation with Azeem made me stop and think again about the longer term trends in the clean energy transition - how things play out when multiple exponential technologies collide.
The exponential nature of cost reductions and performance improvements in so many clean technologies was the first of the Five Superheroes I wrote and audio-blogged about in my Five Superheroes of the Transition piece earlier this year. (And yes, Azeem and I both know they are not truly exponential. We talk about that in the episode, and I dealt with that in my Superheroes piece: they might as well be becuase you bet against them by indulging in “saturation thinking” at your peril.
So how is the Exponential View relevant to climate action and net zero?
Well, solar has already achieved huge scale; it very cheap and still keep getting cheaper, which could drive a “solar singularity” as I wrote in this piece as long ago as December 2018. Batteries are clearly following the same path, with a massive potential for further innovation and a long cost reduction runway still ahead. Business models (and regulations) that reward demand flexibility are still in the early days. There is no shortage of minerals - pinch points will be fixed by investment and innovation. When you recycle materials from previous generations of technology, they provide more output over time not less. All this is being enabled by digitization and is about to be turbocharged by AI: it will help us optimise demand response and discover new materials and catalysts. Bio-informatics and gene sequencing are going put bioenergy and bioplastics firmly in play as climate solutions.
One of the main things I learned from Azeem is that these sorts of exponential changes are not uncharted space.
We have case studies from other industries, in particular communications and computing, from which to learn. But we can learn from any industry that has delivered many decades of growth and transformed the world: the uptake of skyscrapers in cities in the twentieth century, containerisation’s transformation of shipping, the seismic changes caused by horizontal drilling and fracking in oil and gas [see what I did there?], and so on.
When it comes to low-carbon technologies Azeem is a bit more optimistic than me about the speed with which the future will arrive; I may be more anchored in the sheer physicality and asset intensity of energy, transport and infrastructure. But we agree on a lot. When something good grows by tens of percent per year for many decades, the world is changed out of all recognition, and changed for the better.
It was a fantastic conversation. Azeem published it on Exponential View too, so it reaches the broadest possible audience.
My only regret is that we couldn’t keep going for longer. I would have loved to explore what happens as different exponential technologies support and reinforce each other. And is there a problem when exponential technologies are not purely additive to wealth and wellbeing, but threaten to strand assets owned by powerful incumbents. Let us know if you think we should make these the topics of a follow-up episode.
I hope you enjoy our conversation as much as we did!
Selah.
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What we really want is for clean energy technologies to top out at or above total energy requirements. As an everyday adjective "exponential" works fine but reality will look more like an S-curve; they just look very similar for a while. That we are seeing solar and battery and EV growth that looks a lot like exponential suggests a lot of growth before we see any flattening out.
I think that at the micro level rooftop solar already does (in most places in the world) what we want to see from solar/RE at the whole of grid level - producing in excess of demand. Our solar + battery setup (a bit dated and not very large) makes multiples of our total household electricity demand and feeds in between 10 to 20 times to the grid what we draw out. What works at small scales will work a lot more cost effectively at large, commercial scales.
I suspect and speculate that the whole privately owned rooftop solar thing, that had a big "you care so much, you fix it (because we are NOT going to make power companies do it)" element to it got it's start initially with the expectation it would fail dismally and prove conclusively that RE isn't up to more than feel good gesturing. Good they were wrong, but with an alt history where the electricity industry showed leadership instead of stubborn resistance, we may have only seen privately owned and distributed rooftop solar as a minor market on the side.