A Conversation about Deep Decarbonization

Global Head of Research

On April 14, 2023, we had the pleasure of speaking with Nat Bullard, an independent energy analyst focused on deep decarbonization. The genesis of the discussion was around a specific set of slides that Nat tends to update on an annual basis, with the most current version, released in late January 2023, containing 141 slides.

Nat’s motivation, after building experience in the space working for New Energy Finance (the “NEF” in BloombergNEF, for those familiar), was to set somewhat of a manifesto, basically focusing on a critical part of the decarbonization story that was not being told and that he could use his 15 years of experience to shed light on. Nat hinted that he already has 50 new slides—though not yet published, so we’d note that those following the decarbonization topic may want to bookmark his site and check back regularly for updates!

Progress Is Already Being Made

The conversation was grounded in the fact that the world is on a journey, and a critical destination is getting to “net zero” carbon emissions by 2050. While news sources and reporting may vary, it’s important to try to take a step back and recognize the true progress that has been made so far.

In figure 1, Nat presents that primary energy demand growth in the United States is currently met by renewable sources—fossil fuel growth has actually been negative in the figure.

Figure 1: Energy demand growth can be green

In the discussion, we also talked about how each topic in the energy transition—if people are talking about transportation, construction, food, etc.—could be viewed as its own trillion-dollar ecosystem. At WisdomTree, we are frequently discussing different strategies through which to gain investment exposure to the energy transition, so we were excited to see Nat’s chart, shown in figure 2, indicating that energy transition investment is up 40x since 2004.

Figure 2: The first trillion is the hardest

The World Remains Awash with “Interesting” Policy Decisions

It is unlikely that political concerns can be decoupled fully from the progress the world is trying to make on decarbonization. We discussed, for example, the policy in Germany that is moving to shut down nuclear reactors, which admittedly may have been made prior to having the knowledge that Russia as a source of natural gas was no longer going to be an option.

We also discussed figure 3, where we see that the U.S. currently uses about 40% of its corn crop for ethanol, noting that “40% of [the U.S.] corn crop meets 10% of [the U.S.] motor gasoline demand.” This policy began at a time when the U.S. was not the world’s largest oil producer like it is today. It stays in effect because of political interests, rather than it being a good or efficient idea to use the corn this way—it’s possible that a better use of this corn could be food. Remember, the first U.S. presidential primary is held in Iowa, a major corn-producing state!

Figure 3: Our food and fuel choices matter

What Are Our True Priorities, and What Will We Permit?

Toward the end of the discussion, Nat posed an interesting question, stated above. We have to be clear on both our priorities and what we’ll permit on this journey that we are all taking to net zero carbon emissions by 2050. An important topic in that discussion is batteries. What Nat shows in figure 4 is that the biggest battery makers are all based in Asia currently—and a LOT of them are in China. This can be changed, but it won’t be simple, easy or inexpensive, and these types of activities may not always be “clean” or healthy for the environment in all facets.

Figure 4: Batteries are [Currently] Dominated by Asian Producers

Ultimately, it was clear at the end of the discussion that we’ll have to regularly catch up with Nat on his research as we continue to see the world (hopefully) making progress on decarbonization.


Listen to the full discussion below:


About the Contributor
Global Head of Research

Christopher Gannatti began at WisdomTree as a Research Analyst in December 2010, working directly with Jeremy Schwartz, CFA®, Director of Research. In January of 2014, he was promoted to Associate Director of Research where he was responsible to lead different groups of analysts and strategists within the broader Research team at WisdomTree. In February of 2018, Christopher was promoted to Head of Research, Europe, where he was based out of WisdomTree’s London office and was responsible for the full WisdomTree research effort within the European market, as well as supporting the UCITs platform globally. In November 2021, Christopher was promoted to Global Head of Research, now responsible for numerous communications on investment strategy globally, particularly in the thematic equity space. Christopher came to WisdomTree from Lord Abbett, where he worked for four and a half years as a Regional Consultant. He received his MBA in Quantitative Finance, Accounting, and Economics from NYU’s Stern School of Business in 2010, and he received his bachelor’s degree from Colgate University in Economics in 2006. Christopher is a holder of the Chartered Financial Analyst Designation.