JAMA G7 Event: Dr. Gill Pratt Keynote Speech (English)

Good afternoon everyone. Thank you very much for the opportunity to speak with you today. I want to tell you a story. It's a story about how hardship can lead to innovation and how lessons from the past can guide us today, particularly as we tackle climate change despite limited resources. The story I want to tell you begins with Japan and Japan's geography and history. Japan has faced many natural and man-made disasters, and as an island nation has had to meet those challenges despite limited resources. It is no accident that lean manufacturing was invented here in Japan, because limited resources made the need to minimize waste, or muda, particularly important. Today, I believe that the lessons of lean can also be applied to reduce carbon dioxide emissions as much as possible as soon as possible, despite short-term limitations of battery materials and renewable charging infrastructure. The scientific community has made clear that net carbon dioxide emissions must be reduced to zero by 2050. But on the road to 2050, does it matter how quickly we reduce emissions? The answer is yes, because excess carbon dioxide accumulates and remains in the atmosphere for hundreds or thousands of years. You can see on the chart on the right. In other words, the atmosphere acts like a bathtub with a very small drain. You can see the picture on the left. We must not only turn off the faucet of carbon dioxide emissions 27 years from now, but we must also turn down the faucet as much as possible as soon as possible. So the question is, how can we do so when battery materials and renewable charging infrastructure are limited? The answer actually comes from the bitter experience of war. During the last years of World War II in Japan and for two years after, the drop in imports and poor harvests caused severe hunger to become widespread. I'm sure those of you whose parents and grandparents lived during those years have heard stories about how difficult they were. And as you know, finally with hunger threatening to cause social upheaval, the United States and other nations started exporting significant but limited quantities of wheat to Japan. Hunger was averted thanks both to the wheat but also to several food innovations that made the most of the limited wheat. One of these innovations, I'm sure you all know, was okonomiyaki, which evolved from a traditional Buddhist food in several parts of Japan, including here in Hiroshima. Another was ramen, which actually originated in China and then evolved more in Japan. So what do these food innovations have to do with solving climate change despite limited resources? It is this: these foods became popular after the war not only because they tasted good, but also because they made efficient use of limited resources. For example, ramen usually contains some meat, but ramen's nutrition also comes from noodles, which are made directly from wheat flour, and those noodles are around 10 times more efficient at conveying nutrition than feeding that grain to animals and then eating the animal's meat. So when Japan's wheat resources were limited and meat resources were even more limited after the war, it was essential to use food efficiently. Now today, in the fight against climate change, battery materials are one of two near-term limited resources that we must also use efficiently. The other near-term limited resource is renewable charging infrastructure. As this chart from the latest report of the UN Intergovernmental Panel on Climate Change, the IPCC, shows, battery electric vehicles cannot by themselves significantly lower carbon dioxide emissions without renewable charging infrastructure. In fact, according to the IPCC, when BEVs are recharged from coal-fired power plants, they are on average worse for the climate than hybrid electric vehicles powered by gasoline. Furthermore, BEVs recharged from natural gas-fired power plants emit about the same carbon dioxide as hybrid electric vehicles fueled by compressed natural gas. Now please understand, BEVs are the best solution today for many customers. Japan will produce many of them, but for some time to come, other vehicle types will be better for other customers. And to be clear one more time, as eventually became true for food after World War II, both battery materials and renewable charging infrastructure will eventually be plentiful, but it's going to take decades for battery material mines, renewable power generation, transmission lines, and seasonal energy storage facilities to scale up. So in the meantime, how can we apply the lessons that Japan learned at the end of World War II to lower carbon emissions as much as possible as soon as possible despite these constraints on resources? Well, we can discover the answer for battery materials using open source peer-reviewed data. I'd like you to consider, for example, 100 existing non-electrified small SUVs that are shown in white in the picture that you see here. And for the sake of illustration, let's say that we have 110 kilowatt hours of batteries that are available. Now we can choose to put all of those batteries into a single long-range battery electric vehicle, which is shown in blue in the picture that you see here. It's like giving a single customer a 100% meat dinner. That car's average lifetime emissions will be reduced significantly, but unfortunately the 99 others will remain unaffected. So as you can see on the right, the net reduction of CO2 across 100 vehicles is actually very small. As an alternative, we can choose to distribute the same total battery capacity to six 18 kilowatt hour plug-in hybrid electric vehicles, which, if you want the food analogy, is like dividing up the meat of that single all-meat dinner into six bowls of ramen. Even though the average lifetime emissions of each PHEV will reduce carbon emissions less than a BEV, because we are replacing six internal combustion engine vehicles, not one, the total amount of carbon reduction will be over five times the reduction of the single BEV. So I want to let that soak in, kind of like letting the broth soak into the noodles in a bowl of ramen. Distributing the same number of batteries into six PHEVs instead of one BEV results in over five times greater net carbon reduction. And furthermore, just like ramen, each of those PHEVs will be more affordable than the BEV, which means the customers will be more likely to buy them, and you'll see why this is so important in a moment. Now we can even go further. We can choose to distribute the same battery resources into 84 1.3 kilowatt hour hybrid electric vehicles that are even more affordable, like 84 bowls of instant ramen with just a small taste of meat in each one. Even though the carbon dioxide emissions reduction of each HEV is less, the total emissions reduction will be around 33 times that of the single BEV. Now I want to make clear, of course, this does not mean that we should only make HEVs or that we should make HEVs forever. The world will have and has battery and renewable electric charging resources in excess of an HEV-only solution, even in the near term, and eventually, of course, resource limitations will end. But for many years, we will not have enough battery material and renewable charging resources for a BEV-only solution. Now finally, we also must be aware of this effect. It's an unintended, paradoxical consequence that can result from our good intentions. The purchase of cars is considered by economists to be elastic, because if a new car is too expensive, unavailable, or otherwise undesirable, a customer can choose to repair their old car instead of replacing it with a new car. For automobiles, a 1% increase in price usually results in a 1.2% to 1.5% drop in demand. Now this phenomenon is most obvious in Cuba, but it was also seen in the U.S., you can see the chart on the right, during the pandemic and the semiconductor supply shortage, when the average age of cars rose to over 12 years. If policymakers over-constrain the types of powertrains that customers are allowed to buy, and battery costs or lagging recharging infrastructure makes purchasing a new vehicle unattractive, customers will hold on to their older vehicles for longer and add excess CO2 to the atmospheric bathtub. And as we saw before, that CO2 will remain in the atmosphere for a very long time. And this is the reason that in the latest report of the IPCC, it lists fuel-efficient vehicles as having even more potential for lowering near-term carbon emissions than electric vehicles, and they mean battery electric vehicles here. Now let's take a look at how big this effect might be by doing an experiment. Let's say that a policy is proposed in a part of the world that has older cars, and that policy requires new car sales to be two-thirds BEV, with the remaining vehicles evenly split between PHEV and HEV. The average fleet emissions of this new car fleet, using the same peer-reviewed open source data as our last example, would be 86 grams per kilometer. Now in many parts of the world, BEVs presently cost around 20% to 30% more than comparable ICE vehicles, and charging infrastructure shortages make BEVs inconvenient for many customers. So under those conditions, the elasticity that I spoke about could conservatively cost 20% of potential buyers to hold on to their older vehicles. In that case, the unreplaced vehicles would raise the net emissions by nearly 40% to 119 grams per kilometer, and that is a lot of excess CO2 that will be around for centuries or more. And this is actually an underestimate of the problem, because the ICE cars that would be kept on the road would tend to be older cars with even more CO2 emissions, not the average internal combustion engine vehicles that we are assuming here. If instead of the policy that I just outlined, imagine the customers for whom BEVs are a poor solution were allowed to replace their old ICE with new HEVs or PHEVs. In that case, the average fleet emissions would drop to 94 grams per kilometer, which is only 10% more than in the original desired policy, and it's around one quarter of that paradoxical harm that's caused by the over-constrained policy. So here again, the history of Japan teaches us this same lesson. When wheat imports to Japan began after World War II, policymakers from the U.S. and Japan tried the command and control method, strongly promoting the consumption of a U.S. diet, a diet of bread, of milk, and beef. And as you can see in this picture, they even claimed falsely that children eating bread would become smarter than children that ate rice. You can see from the faces of the children in this picture that the children were not convinced. Now luckily, innovators in Japan understood that diverse circumstances call for diverse solutions, and what is good for one part of the world is not best for all parts of the world. Paying attention to local needs, the innovators turned imported wheat not only into bread but also into more locally desired foods, like okonomiyaki and ramen. Instead of limiting customer choice, those innovators focused on the real goal: averting hunger, and offered a diverse portfolio of products that customers preferred and that efficiently utilized limited resources. And as I'm sure many of you know, years later, Momofuku Ando went further and transformed ramen into an instant, low-cost food for many people around the world who face resource constraints. My message today is simply that we should heed these lessons from Japan's past. As hunger was the enemy then, not a particular food, carbon dioxide is the enemy now, not a particular powertrain. Instead of limiting what powertrains customers can buy, we should regulate the full life cycle amount of carbon dioxide that is emitted and give customers the flexibility to contribute the most that they can to minimize emissions, no matter their circumstances. For some customers, the best choice will be a zero emission vehicle, and as you can see in this chart here, Japanese manufacturers will be making millions of ZEVs. For other customers, in keeping with the lessons from the past, Japanese manufacturers will also provide the best way for them to reduce carbon emissions as much as possible as soon as possible. Giving every customer this ability will not only ensure that no one is left behind, but it will also result in the largest possible net carbon emissions reduction. So in summary, let me just say that here, as we stand in Hiroshima, we know that war and climate change are the greatest threats to human civilization. Thanks to the lessons from the past, we know that despite resource limitations, we actually can make the future bright, and I hope that you will join me in helping the world to understand the Japanese way of doing so. Thank you.

Hi, thank you very much. I think that there is tremendous diversity and heterogeneity between different parts of the world with regard to BEV demand and also the time scale of BEV demand. And it depends very much on the issue of renewable charging infrastructure and also to a great extent on the wealth of a particular nation or part of the world, and then finally on the circumstances of how people live and where their cars are. Let me just give you a few examples of this diversity. For instance, in many places in urban areas, there is not an attached garage where a battery electric vehicle can charge overnight, but instead the vehicle is parked some distance away from the home and sometimes on the street in different kinds of street parking. That creates a tremendous challenge for recharging overnight because you never know where the car will be parked, and it means that all of the places the car may be parked will need a charger. Let me stop there for the translation and then I'll continue. To continue, in other areas of the world, there is a lot of renewable charging infrastructure and the wealth of that particular part of the world is higher. I think Norway is a wonderful example of that, and in those areas, BEVs can make a tremendous positive difference in reducing climate change. I would love to talk to you for many, many hours about the complexity of the answer, but the summary is that we have a lot of diversity and the diversity will last for some time. Some parts of the world will continue to have coal-fired power plants, and as I showed you, in those cases actually HEV and PHEV are better than BEV for CO2 emissions. So it really depends on the part of the world that you're talking about. And even in the U.S., where I am from, there is diversity between the different states. So my prediction is that we will see, of course, ever increasing numbers of ZEVs, and I think all the Japanese companies, all the OEMs, are actually prepared to meet that demand, but also we must remember that on the global market, it will take quite some time before all the different parts of the world are ready for ZEVs.

Thank you for the question. I think that the issue of peace and the issue of carbon neutrality is actually a very similar issue. It is an issue of thinking globally and feeling empathy for other people. I think it's very easy to make a mistake and to believe that what is good for us is the right answer for everyone, and that's true for all people everywhere in the world. Nine years ago, I first visited the museum here in Hiroshima, and I just visited it again this morning after they renewed it. It is so obvious that the antidote for war and the terrible use of nuclear weapons is empathy. That if you realize that all people are humans just like us, even though their culture is different, their language is different, then it's inconceivable to have these kinds of wars and these kinds of weapons. I think that in the same way, carbon neutrality is really a question of empathy for the future and for everyone living in the world, because carbon dioxide goes everywhere in the atmosphere. So to finish my answer, the G7, to answer your question, has a responsibility with regard to peace to think about not just the G7 but about the whole world, and they are doing that. And I think in the same way, they have a responsibility to think about not just their own countries but the circumstance of everyone in the world with regard to carbon neutrality. And in the same way that imposing one culture on another is what leads to war, I think we have to not impose a solution that's good for one country on other countries with regard to carbon neutrality. Thank you.

Thank you very much. I think that the world is changing and opinions are changing. I will just give you a few examples. When I gave a talk before this one at the World Economic Forum in Davos, at the beginning of the talk almost everyone felt that battery electric vehicles are the only answer. But the moderator of the session decided by herself to do an informal poll by hands of how many people think that BEVs are still the right answer and how many people believe in multi-pathway. And the result was that 50% of the people had changed their minds. Now I should be clear, what convinced them was not me. What convinced them was the facts. So for example, many people hear a very simplistic idea of which vehicle is best for carbon neutrality, and they hear something like BEV is always better than ICE even if the power generation has high carbon intensity. But it's a bit of an unfair comparison because actually the comparison is not between ICE and BEV, but rather HEV and BEV, or maybe PHEV and BEV. And as I showed you in the charts here, depending on the part of the world, sometimes HEV is a better answer, sometimes PHEV is even a better answer, and sometimes BEV is the right answer. Thank you. And certainly the PHEV and the HEV use the limited resources much more efficiently to lower CO2 than the BEV. So to summarize, I think what is happening is that the world is understanding that the first view of electric vehicles, of BEVs, was too naive, and that when they see the facts, they realize a slightly more sophisticated view is necessary, and that is the multi-pathway approach.

Thank you very much for the question. I think the honest answer is I don't know. And the reason I don't know is that it's very difficult to predict the future beyond a certain number of years. So let me kind of give you an example. We don't really know what the practicality of synthetic fuels or low carbon fuels will be in the future. Presently, because of the lower energy efficiency of producing synthetic fuels or e-fuels, the cost is too high and the scale is too low. However, we don't know what the situation will be in the further future, 2050 like you say. Perhaps the cost of renewable energy will be so low that in fact producing e-fuel or synthetic fuel will both be able to be done at low cost and at scale, in which case it's not at all clear what the right kind of powertrain is for the future. And so I think it's important to understand that we don't have to make decisions too early. There is very little cost to actually maintaining flexibility for the future, and the idea of diversity is good not only so that we have diverse solutions for diverse customers, but also because diversity helps us deal with an uncertain future. If we don't know the best answer for the far future like 2050, the answer is to keep our options open. Of course, we will make many, many millions of BEVs in the meantime, and we will address the market to whatever ability it has to absorb BEVs, but it doesn't mean that we have to close off the other options while we're not sure of the practicality, the cost, the scale of other kinds of fuels that might be used. Thank you.

Thank you very much for the question. It's a great question. Certainly batteries are evolving more rapidly than in the past. Solid state batteries is one example, with tremendous innovation happening here in Japan, and I think likely in a couple years we will begin to see them in cars. They have a potential to reduce the need for lithium, perhaps up to a factor of two. It really depends on the particular design, but it doesn't eliminate the need for lithium. And there's also other innovation happening with different battery chemistry, like replacing lithium, for example, with sodium. But of course, what's important to understand about batteries is that there's a multi-dimensional way of measuring performance. It's not only one dimension like what is their energy density. There's what's their power density, what is their cost, what is their durability, what is the ability to recycle, what are the limits on materials, and on and on and on. So it's very important for all the media, when evaluating battery innovation, to ask the question about how about all of the other metrics of performance, and is there a trade-off of one versus the other? I'm sorry to speak so long, but I'll just finish as an example. Sodium as a replacement for lithium is extremely attractive, but because it's a larger molecule or a larger element than lithium, its energy density is not as high, and so it may make more sense for stationary applications while lithium is still used for mobile applications like cars. We don't know. A lot of innovation, a lot of research is going on on all of these things, and I think that has a potential for making a breakthrough that will help, but again we're not sure. So again, the answer to uncertainty is diversity. And so diversity is not only good to address diverse needs, it's also good to address the uncertain future. It's what nature does. If you look outside, all the different plants, there's not only one kind of plant, there's millions of different kinds of plants, each of which is exploring possible success in the future which is uncertain. Same idea.