WEBVTT - Starbucks Ousts CEO and Taps Chipotle’s Brian Niccol as Boss 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.960 Wait inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.319 America's most trusted business magazine, plus global business, finance and 0:00:18.400 --> 0:00:22.880 tech news. The Bloomberg Business Week Podcast with Carol Messer 0:00:23.040 --> 0:00:25.800 and Tim Stenebeck from Bloomberg Radio. 0:00:27.120 --> 0:00:29.560 Tim, let's get to one stock that is definitely on 0:00:29.640 --> 0:00:30.600 our radar big time. 0:00:30.760 --> 0:00:33.040 Yeah, that's Starbucks. The stocks soaring the most ever on 0:00:33.040 --> 0:00:35.600 an intra day basis as the company's board orders up 0:00:35.640 --> 0:00:38.960 a half cath latte with a new CEO. And that 0:00:39.120 --> 0:00:41.880 CEO is one well known to the fast casual space 0:00:42.240 --> 0:00:45.640 and with writing a ship that's got some pretty big issues. 0:00:45.720 --> 0:00:47.760 It's an individual that's really well known to us. It's 0:00:48.080 --> 0:00:50.600 Chipotle CEO Brian Nicol. We've talked to him a lot. 0:00:51.200 --> 0:00:54.200 Named the top job at Starbucks, will take over as 0:00:54.320 --> 0:00:57.680 CEO on September ninth, replacing the existing CEO, who was 0:00:57.720 --> 0:00:59.440 ousted after less than a year and a half at 0:00:59.440 --> 0:01:02.360 the helm. Through Monday, shares in the coffee chain had 0:01:02.400 --> 0:01:05.039 plunged twenty percent this year, following two straight quarters of 0:01:05.080 --> 0:01:08.000 comp sales declined. Shares of Starbucks, though right now we're 0:01:08.080 --> 0:01:10.399 up twenty two percent today. So let's get into it 0:01:10.520 --> 0:01:13.800 with Bloomberg News consumer reporter Dina Shanker here in studio, 0:01:13.800 --> 0:01:16.400 and also with us is Bloomberg Intelligence senior credit analyst 0:01:16.440 --> 0:01:20.080 Jody Lori in Bloomberg Got Intelligence headquarters out in Princeton, 0:01:20.080 --> 0:01:22.039 New Jersey. Dina, I want to start with you to 0:01:22.400 --> 0:01:24.759 the news. What do we know? What does this mean 0:01:24.760 --> 0:01:28.600 for Starbucks? And what the Chipotle CEO, who will soon 0:01:28.640 --> 0:01:31.319 be the Starbucks CEO, Brian Nicol brings to the table. 0:01:32.120 --> 0:01:36.000 Well, one analyst called him a dream hire. 0:01:35.840 --> 0:01:37.720 For CEO I believe was the quote. 0:01:38.480 --> 0:01:41.920 He really turned things around for Chipotle, and Chipotle is 0:01:42.400 --> 0:01:47.600 just outperforming the rest of the restaurant industry. So yeah, 0:01:47.920 --> 0:01:50.840 if you're sitting in a boardroom of a restaurant company 0:01:50.880 --> 0:01:53.040 and things aren't looking so good and you're like, who 0:01:53.080 --> 0:01:54.040 can save us? 0:01:54.280 --> 0:01:56.280 He would probably be at the very top of the list. 0:01:56.400 --> 0:02:00.480 So that was a great hire for them and any 0:02:00.520 --> 0:02:02.360 someone who's also had to deal with a company that 0:02:02.560 --> 0:02:06.480 was under stress for many years, had to beef up 0:02:06.480 --> 0:02:08.400 their digital strategy and came to the company. 0:02:08.440 --> 0:02:12.400 I'm thinking about Chipotle just as the pandemic was hitting 0:02:12.440 --> 0:02:14.040 and so he really had to learn how to kind 0:02:14.080 --> 0:02:16.440 of shift the ship, if you will, at Chipotle, and 0:02:16.480 --> 0:02:17.960 he's kind of got to do some of that here. 0:02:18.840 --> 0:02:21.800 Yes, definitely. I Mean, one thing that all of these 0:02:21.919 --> 0:02:26.200 restaurant companies deal with is productivity and how quickly can 0:02:26.240 --> 0:02:28.960 they turn an order into food and put that food 0:02:29.000 --> 0:02:32.440 into a customer's hands. And Chipotle has really improved on that. 0:02:32.480 --> 0:02:36.320 Starbucks really needs that kind of improvement. So I expect 0:02:36.360 --> 0:02:39.480 that that is going to be a big priority for 0:02:39.560 --> 0:02:40.519 him once he takes the job. 0:02:40.639 --> 0:02:43.520 Hey, Jody, come on in here. Just because Brian Nichol 0:02:43.560 --> 0:02:47.800 was able to succeed so well at Taco Bell before 0:02:47.960 --> 0:02:51.639 going to Chipotle and then totally exceed expectations I think 0:02:51.639 --> 0:02:55.760 of a lot of investors of Chipotle as well, doesn't 0:02:55.760 --> 0:02:58.280 necessarily mean he can do the same thing at Starbucks. 0:02:58.520 --> 0:03:01.760 What are the challenges that he faces at Starbucks? Given 0:03:01.919 --> 0:03:04.240 the environment over the last couple of years. 0:03:05.480 --> 0:03:08.440 I think there's actually quite a few challenges that they're facing. 0:03:08.440 --> 0:03:10.560 I mean, first of all, they have a reputational risk, 0:03:10.680 --> 0:03:14.079 right They've gotten hit by different headlines over and over. 0:03:14.160 --> 0:03:16.959 So first you had the union issues, then you had 0:03:17.160 --> 0:03:21.480 the grassroots effort to sort of, you know, rake Starbucks 0:03:21.520 --> 0:03:24.240 through the mud as it related to Middle Eastern conflict. 0:03:24.600 --> 0:03:26.920 And then you now have China, which was sort of 0:03:26.919 --> 0:03:29.760 their investment arm where they were kind of going to 0:03:29.960 --> 0:03:33.919 next and so all these sort of components just ended 0:03:34.000 --> 0:03:36.440 up in not the best situation for them. So I 0:03:36.440 --> 0:03:39.160 think what they're really hoping is that he will provide 0:03:39.160 --> 0:03:42.680 that expresso shot that they're hoping for that the prior 0:03:42.760 --> 0:03:44.720 CEO didn't quite get a chance to do over the 0:03:44.760 --> 0:03:45.520 past year and a half. 0:03:45.600 --> 0:03:47.880 Jody, what does the Starbucks balance sheet look like? 0:03:48.960 --> 0:03:52.640 Starbucks balance sheet? So, taking a step back, the company, 0:03:52.720 --> 0:03:55.080 you know, went through the pandemic, like all other companies, 0:03:55.120 --> 0:03:57.240 took on a bit of debt to have a little 0:03:57.240 --> 0:03:59.560 bit more cash going through the pandemic, and once the 0:03:59.600 --> 0:04:03.240 pandemic ended, they focused on deleveraging. They got leveraged below 0:04:03.360 --> 0:04:06.800 three times, which was their target. But now the expectation, 0:04:06.880 --> 0:04:09.320 if you look at MODL on the terminal, the expectation 0:04:09.440 --> 0:04:12.240 is that it will hit to three point four to 0:04:12.280 --> 0:04:15.080 three point five times by the end of the fiscal year, 0:04:15.120 --> 0:04:19.240 which is September. So definitely a reversion from where they 0:04:19.279 --> 0:04:21.800 were in terms of improving the balance sheet that said, 0:04:21.800 --> 0:04:24.960 it's not a company that we're necessarily worried about at 0:04:25.000 --> 0:04:27.760 the moment, being a triple B company, but it could 0:04:27.800 --> 0:04:30.919 be an issue as activists get involved and as management 0:04:30.960 --> 0:04:33.320 sort of gets creative and how they turn the company around. 0:04:33.520 --> 0:04:35.120 Okay, so let's talk a little bit about how the 0:04:35.120 --> 0:04:37.040 company gets turned around, Dina, and think about this from 0:04:37.040 --> 0:04:39.920 the perspective of you know, a company that I think, 0:04:39.960 --> 0:04:42.520 for a lot of people, over the last thirty is 0:04:42.520 --> 0:04:46.120 ish years, reinvented the way that coffee was consumed and 0:04:46.160 --> 0:04:50.520 delivered here in the US at Taco Bell, Dorito's, Locos, 0:04:50.560 --> 0:04:55.080 Taco at Chipotle did a lot, as Carol mentioned, with digital. 0:04:55.600 --> 0:04:58.080 Starbucks already has a robust digital platform and it has 0:04:58.080 --> 0:05:01.560 for years. There's the China element too, and the weakness 0:05:01.600 --> 0:05:03.880 that they've seen in China. What are the challenges that 0:05:03.920 --> 0:05:06.400 he has to overcome to turn Starbucks around. 0:05:07.240 --> 0:05:10.320 So one thing that I think is particular to Starbucks 0:05:10.400 --> 0:05:14.280 that he has to think about is that one of 0:05:14.320 --> 0:05:17.240 the ways Starbucks really differentiated itself out of the gate 0:05:17.480 --> 0:05:20.880 was they were going to be committed to high quality coffee. 0:05:21.680 --> 0:05:24.200 When they started to branch out into lots of other 0:05:24.279 --> 0:05:28.000 things like music and movies and Teddy Bears in the restaurants. 0:05:28.240 --> 0:05:30.800 Howard Schulz came in, came back and said, you know, 0:05:30.960 --> 0:05:33.720 we're a coffee company. We're going to focus on coffee. 0:05:34.640 --> 0:05:38.120 We've now seen them once again branching out into lots 0:05:38.120 --> 0:05:43.120 of other things. They have lemonade refreshers, they have energy drinks, but. 0:05:43.200 --> 0:05:44.400 A lot of people like those. 0:05:44.520 --> 0:05:49.320 So I am really curious to see how new management 0:05:49.680 --> 0:05:51.760 wants to what direction they want to go, and do 0:05:51.760 --> 0:05:53.839 they want to go back to basics what worked wants 0:05:54.000 --> 0:05:56.640 or do they want to see what's working now and 0:05:56.680 --> 0:05:58.239 then maybe cut the fat. 0:05:58.480 --> 0:05:58.880 I don't know. 0:05:58.920 --> 0:06:00.520 We'll just have to wait. 0:06:00.320 --> 0:06:04.080 And see new management. But yet they've got someone who 0:06:04.160 --> 0:06:06.040 has been associated with the company for a long time, 0:06:06.120 --> 0:06:09.200 and I'm thinking about Howard Schultz. He's not on the board, 0:06:09.240 --> 0:06:11.120 doesn't have a board seat, doesn't have a formal role 0:06:11.160 --> 0:06:15.760 with the company, but he's Starbucks' sixth largest shareholder, and obviously, 0:06:15.960 --> 0:06:19.280 you know this is his company, and for better or 0:06:19.279 --> 0:06:23.080 for worse, perhaps his involvement. I mean, is it is 0:06:23.080 --> 0:06:25.480 that a good thing for him to still in terms 0:06:25.560 --> 0:06:28.960 of understanding this company, or is this a case where 0:06:29.000 --> 0:06:32.400 you have to have an outsider who under understands DITA 0:06:32.440 --> 0:06:36.520 the fast casual space kind of do his thing read 0:06:36.760 --> 0:06:37.200 new Blood. 0:06:37.240 --> 0:06:40.000 I think the real question is whether the whether a 0:06:40.080 --> 0:06:43.640 new CEO wants to stand up to Howard, because just 0:06:43.680 --> 0:06:46.640 as an outside observer, it seems like Howard really likes 0:06:46.680 --> 0:06:49.000 to share his opinions on the company. 0:06:48.680 --> 0:06:50.080 And come back to the company. 0:06:49.960 --> 0:06:53.920 They come back in return over and over again, and 0:06:54.000 --> 0:06:58.240 so you know, they hired someone really strong. So hopefully 0:06:58.360 --> 0:07:02.760 Howard will take a hint and keep some opinions to himself, 0:07:02.839 --> 0:07:05.640 or at least give them a chance to run with 0:07:05.720 --> 0:07:06.039 some things. 0:07:06.080 --> 0:07:08.560 And apparently Howard Schultz had told Melody Hobson, who was 0:07:08.600 --> 0:07:11.400 on the Starbucks board, that I guess she had told 0:07:11.480 --> 0:07:14.600 him about a week ago about her decision for Brian Nickel, 0:07:14.600 --> 0:07:17.800 and that Schultz apparently said, Melody, that's a home run. 0:07:17.840 --> 0:07:21.240 So she seemed he seems to like it. Jody, how 0:07:21.280 --> 0:07:23.320 do you think about this company? Obviously you focus on 0:07:23.360 --> 0:07:25.840 the balance sheet, understanding the finances and kind of what 0:07:25.960 --> 0:07:28.520 needs to be done there, but you know it all 0:07:28.560 --> 0:07:31.400 goes back to management and how they manage, and that 0:07:31.480 --> 0:07:34.040 will ultimately play out in the balance sheet. How do 0:07:34.080 --> 0:07:36.840 you think about the leadership of Brian Nickel, maybe what 0:07:36.920 --> 0:07:39.200 he did at Chipotlet and what he can maybe do 0:07:39.320 --> 0:07:40.400 here or has to do here. 0:07:41.440 --> 0:07:43.000 So I think we have to take a step back 0:07:43.040 --> 0:07:45.640 and think about when he was actually at Young right, 0:07:45.720 --> 0:07:49.040 he was the Taco Bell CEO, So granted he was 0:07:49.080 --> 0:07:51.679 not the Young CEO, he was not at the home. However, 0:07:51.800 --> 0:07:55.560 he did ride through the spin off of Young China. 0:07:56.040 --> 0:07:58.840 And I can't say that that's necessarily the direction that 0:07:58.840 --> 0:08:00.960 Starbucks is going. I mean didn't see that at Chipotle, 0:08:01.040 --> 0:08:03.440 but it is something that sort of lurks in the 0:08:03.440 --> 0:08:05.560 back of my mind of Okay, what's management going to do? 0:08:05.640 --> 0:08:08.040 And if you remember what happened with them, not only 0:08:08.040 --> 0:08:09.680 did they spin off YM China, but they took that 0:08:09.720 --> 0:08:10.040 cash and. 0:08:10.040 --> 0:08:11.000 Gave it to shareholders. 0:08:11.200 --> 0:08:13.680 Now, Starbucks before this, going into this, had a three 0:08:13.760 --> 0:08:16.760 year plan of giving back to shareholders twenty billion dollars 0:08:17.360 --> 0:08:20.480 and they had the cash flow for it to some extent, 0:08:20.560 --> 0:08:22.480 but you also thought, okay, some of it might be 0:08:22.520 --> 0:08:27.000 financed with debt. And so I think my question is 0:08:27.000 --> 0:08:29.240 is do they pull back on that and go full 0:08:29.280 --> 0:08:32.320 on kepex? Do they get creative with how they sort 0:08:32.320 --> 0:08:35.400 of deal with licensed versus owned stores, you know, their 0:08:35.400 --> 0:08:38.679 international business versus their their domestic. I mean, I think 0:08:38.720 --> 0:08:40.800 there's a lot of different avenues that he can look at. 0:08:41.040 --> 0:08:43.920 Never mind, of course, you know, the the transition into 0:08:43.960 --> 0:08:46.840 things like dorritos, locos, breakfast sandwiches. 0:08:46.880 --> 0:08:54.959 I don't know, late, it doesn't really lat yeahs, I'll 0:08:54.960 --> 0:08:56.920 take the coffee upstairs. All right, guys, we got to run. 0:08:56.960 --> 0:08:59.400 Thank you so much. Bloomberg News consumer reporter Dina Shanker 0:08:59.559 --> 0:09:03.080 and bloom Intelligence senior credit analyst Jody Lori shares of 0:09:03.120 --> 0:09:05.360 Starbucks hovering, you know, their best levels of the session 0:09:05.360 --> 0:09:07.760 of almost twenty two percent. On the flip side, you've 0:09:07.760 --> 0:09:11.080 got Chipotle Mexican grill off its lows, but tim still 0:09:11.080 --> 0:09:12.079 down about seven percent. 0:09:12.160 --> 0:09:14.960 Yeah, it was Donalds, which is fourteen percent. Scott Boatwright, 0:09:15.040 --> 0:09:18.440 the COO, was named Chappole's interim CEO. So we'll follow 0:09:18.480 --> 0:09:20.520 that company and let you know any developments there when 0:09:20.559 --> 0:09:22.520 it comes to their executive suite. 0:09:23.080 --> 0:09:26.600 You're listening to the Bloomberg Business Week podcast. Catch us 0:09:26.640 --> 0:09:29.880 live weekday afternoons from two to five pm Eastern Listen 0:09:29.920 --> 0:09:32.079 on Apple car Play and then Brout Auto with a 0:09:32.080 --> 0:09:36.280 Bloomberg Business app or watch us live on YouTube. 0:09:36.520 --> 0:09:39.559 In Nantucket, there's a growing sense that the roughly fifty 0:09:39.600 --> 0:09:42.240 square mile island has become a casualty in the push 0:09:42.240 --> 0:09:45.960 for cleaner energy. So any accident, however minor it might be, 0:09:46.360 --> 0:09:49.240 involving the nearby farm, was bound to become a flashpoint 0:09:49.240 --> 0:09:50.760 in the broader fight over win. 0:09:51.080 --> 0:09:53.360 And that's exactly what has happened. Here to talk more 0:09:53.360 --> 0:09:56.760 about the Nantucket rage over a broken wind turbine blade 0:09:56.840 --> 0:09:59.680 is Bloomberg News Energy and climate disasters reporter Josh Saul. 0:10:00.080 --> 0:10:02.280 He's here in our studio. Before we get too far 0:10:02.320 --> 0:10:04.480 into this, remind everyone what happened a few weeks ago 0:10:04.520 --> 0:10:06.080 on Nantucket with this accident. 0:10:06.800 --> 0:10:09.560 We'll do. And I just want to mention everyone who 0:10:09.600 --> 0:10:13.160 can't see me. I did wear my Nantuckias sweater. It's 0:10:13.200 --> 0:10:17.080 pretty good, right, pretty good. No Nantucket red pants, though 0:10:17.160 --> 0:10:19.760 that's true. That would be a whole other step. Nope, 0:10:19.880 --> 0:10:23.840 just the Solomon's, just the dad shoes. So exactly, exactly 0:10:23.880 --> 0:10:27.360 one month ago, one of the blades on the Vineyard 0:10:27.360 --> 0:10:29.320 wind farms. So this is a big, big wind farm. 0:10:29.360 --> 0:10:33.280 It will eventually be sixty two wind turbines, each as 0:10:33.280 --> 0:10:36.280 big as the Eiffel Tower with the Statue of Liberty 0:10:36.320 --> 0:10:40.559 on top of them. Will one single blade fell apart 0:10:41.120 --> 0:10:43.719 and fell into the water, and pieces of that were 0:10:43.720 --> 0:10:46.240 floating in the water. Pieces of it eventually washed ashore 0:10:46.520 --> 0:10:50.880 on Nantucket and created a real uproar on the island. 0:10:51.040 --> 0:10:53.280 What happened though, beaches closed like what kind. 0:10:53.120 --> 0:10:56.360 Of closed for a very short amount of time. People 0:10:56.400 --> 0:10:59.360 on the island were very angry. I likened it to 0:10:59.600 --> 0:11:02.160 annoy spill. It was almost like Jaws approaching the beach, 0:11:02.280 --> 0:11:07.360 like just a really big deal. And the federal government 0:11:07.360 --> 0:11:11.240 shut down both construction and electricity generation at the Vineyard 0:11:11.240 --> 0:11:13.520 wind Farm, which is still ongoing. 0:11:13.800 --> 0:11:18.800 Okay, you're from Alaska, I'm from California. We've experienced oil 0:11:18.840 --> 0:11:25.160 spills in our day. Geographically, was this environmentally the same 0:11:25.200 --> 0:11:26.680 on the same level as an oil spill? 0:11:27.000 --> 0:11:30.160 So far, it seems to be a lot smaller, a 0:11:30.200 --> 0:11:33.720 lot smaller impact. It definitely freaked people out, but we 0:11:33.760 --> 0:11:39.000 don't have any reports of dead animals. They're you know, 0:11:39.440 --> 0:11:43.280 in comparison, solid chunks of fiberglass are a lot easier 0:11:43.320 --> 0:11:45.360 to clean up compared to oil in terms of the 0:11:45.400 --> 0:11:48.440 way it spreads, the way, the way it sinks. So yeah, 0:11:48.480 --> 0:11:53.280 it seems like a much more small scale failure compared 0:11:53.320 --> 0:11:54.559 to an actual oil spill. 0:11:55.040 --> 0:11:57.319 A couple of questions, I mean, how often are there 0:11:57.360 --> 0:12:00.120 accidents with wind farms. I'm just curious about the frequency 0:12:00.160 --> 0:12:03.440 of it. And also how important though, are these wind 0:12:03.480 --> 0:12:07.200 farms to power on the island in the region. How 0:12:07.240 --> 0:12:07.920 important are they? 0:12:08.160 --> 0:12:12.360 Yeah, the so wind backers, the clean energy advocates view 0:12:12.360 --> 0:12:15.439 these is extremely important because what they're going to be 0:12:15.440 --> 0:12:17.200 doing is they're going to be sending clean energy, so 0:12:17.240 --> 0:12:22.040 carbon free energy to the shore kind of at exactly 0:12:22.080 --> 0:12:25.840 the times, like the windy periods of the day when 0:12:26.000 --> 0:12:28.120 the grid really needs it. So you can have solar 0:12:28.240 --> 0:12:30.680 on land producing a lot of energy, you know, obviously 0:12:30.760 --> 0:12:32.480 in the middle of the day when the sun is up, 0:12:32.840 --> 0:12:36.440 but wind offshore can be sending energy in you know, 0:12:36.480 --> 0:12:38.720 in the morning and the evening and end at night 0:12:39.080 --> 0:12:41.680 when when that solar power isn't available. So it's seen 0:12:41.679 --> 0:12:44.640 as a really important part of the of the transition. 0:12:44.440 --> 0:12:46.280 Josh, is it powered just to the island? Is it 0:12:46.320 --> 0:12:47.000 to other areas? 0:12:47.000 --> 0:12:49.679 I'm just curious how far this stone actually the undersea 0:12:49.760 --> 0:12:52.960 cable will bypass Nantucket and Martha's vineyard kind of running 0:12:53.000 --> 0:12:56.760 right between them to the mainland, powering the equivalent, according 0:12:56.760 --> 0:12:58.960 to the companies, of about four hundred thousand homes. I mean, 0:12:59.000 --> 0:13:02.600 these things can produce huge, huge amounts of energy. So 0:13:02.679 --> 0:13:05.320 instead of you know, instead of the you know, natural 0:13:05.360 --> 0:13:08.800 gas plants or other you know, fossil climate changing types 0:13:08.840 --> 0:13:12.080 of generation on land, while we would have you know, 0:13:12.120 --> 0:13:16.360 the offshore wind you know, these clean electrons right flowing there. 0:13:16.520 --> 0:13:18.080 A big part of your story that you wrote along 0:13:18.120 --> 0:13:20.360 with Cam and the team at Bloomberg News has to 0:13:20.360 --> 0:13:24.240 do with the implications of an accident like this on 0:13:24.320 --> 0:13:27.920 other wind farm projects throughout the United States that are 0:13:27.960 --> 0:13:30.480 planned for the future. Talk a little bit about what's 0:13:30.640 --> 0:13:36.080 being planned right now, some community pushback to these and 0:13:36.120 --> 0:13:38.040 what it could mean to have an accident like this. 0:13:38.400 --> 0:13:40.880 That's exactly right because under Biden, who said are very 0:13:40.920 --> 0:13:45.320 aggressive offshore wind target of thirty gigawatts by twenty thirty, 0:13:46.160 --> 0:13:48.920 there are a lot of other about of a total 0:13:48.960 --> 0:13:52.760 of eight projects in development something like thirteen gigawatts you 0:13:52.800 --> 0:13:54.840 know coming on, you know, and you can imagine, you know, 0:13:54.880 --> 0:13:58.040 a gigawatt is about how much nuclear reactor produces, So 0:13:58.080 --> 0:14:00.880 it's a lot a lot of clean energy coming on, 0:14:00.960 --> 0:14:03.120 but Vineyard Wind was really seen or is really seen 0:14:03.200 --> 0:14:05.760 as kind of the marquee like kind of the first big, 0:14:05.800 --> 0:14:09.080 big project. There's been some very small pilot projects. There's 0:14:09.120 --> 0:14:11.600 a smaller a smaller wind farm off of Long Island 0:14:11.600 --> 0:14:13.559 built by other developers, but this was seen as kind 0:14:13.559 --> 0:14:16.320 of the first, like utility scale, like it produces as 0:14:16.400 --> 0:14:18.920 much power as a big gas plant. And the worry 0:14:19.040 --> 0:14:21.560 is that even these kind of small even these kind 0:14:21.600 --> 0:14:24.440 of relatively small hiccups like this, produce so much anger, 0:14:24.520 --> 0:14:29.080 produce so much pushback against this new energy source that, 0:14:29.520 --> 0:14:32.480 especially with a Trump election, he could, as he said, 0:14:32.520 --> 0:14:35.000 come in on day one and kind of drastically change 0:14:35.000 --> 0:14:38.120 the landscape for these big projects. 0:14:38.200 --> 0:14:40.480 I was thinking about that, how the outcome of the 0:14:40.520 --> 0:14:43.520 November presidential election, whoever is in the White House, that 0:14:43.640 --> 0:14:47.680 might determine the future path when it comes to wind energy, 0:14:47.720 --> 0:14:49.960 wind farms in the future, the growth of this industry 0:14:50.160 --> 0:14:52.920 or has the kind of horse left you know, the 0:14:52.920 --> 0:14:54.120 stable already. 0:14:54.200 --> 0:14:56.360 The way we think about it, projects that are already 0:14:56.360 --> 0:14:59.080 permitted and in construction would be a pretty big deal 0:14:59.120 --> 0:15:00.800 for anyone, even a p is it to sort of 0:15:00.840 --> 0:15:02.600 you know, tear out of tear out of the seabed. 0:15:03.480 --> 0:15:06.120 But projects that are you know, still have any kind 0:15:06.120 --> 0:15:08.600 of permits left to get not particularly hard for a 0:15:08.600 --> 0:15:12.640 federal agency to drastically slow down or even stop that process. 0:15:13.360 --> 0:15:16.240 Trump said at a big rally in New Jersey, like 0:15:16.320 --> 0:15:19.200 I would stop all this on day one. The worry 0:15:19.240 --> 0:15:23.000 with this is that the worry with incidents like this 0:15:23.120 --> 0:15:24.520 is that it just kind of makes it, you know, 0:15:24.560 --> 0:15:27.040 more at the forefront, more more top and hit, you know, 0:15:27.120 --> 0:15:30.000 in his mind or in his administration's mind. And just 0:15:30.040 --> 0:15:33.440 as Biden used presidential powers once he got to office 0:15:33.480 --> 0:15:37.240 to slow down or stop offshore gas and oil drilling, 0:15:38.040 --> 0:15:40.920 Trump could conceivably do the same thing with offshore wind. 0:15:41.240 --> 0:15:43.560 One thing that I was thinking about in reading your piece, Josh, 0:15:43.880 --> 0:15:46.200 is that there's kind of no free launch or no 0:15:46.320 --> 0:15:49.960 silver bullet when it comes to solving the energy needs 0:15:50.520 --> 0:15:54.000 in a renewable way here in the US and around 0:15:54.040 --> 0:15:56.600 the world. And it seems like there has to be 0:15:57.400 --> 0:16:00.520 with every project some sort of given to with a 0:16:00.520 --> 0:16:01.880 community or with a location. 0:16:02.200 --> 0:16:04.560 I think that's exactly right. No free lunch, no free energy, 0:16:04.600 --> 0:16:07.080 Like there's trade offs with all these projects, like you build, 0:16:07.240 --> 0:16:08.960 you know, even what we think of is, oh, a 0:16:08.960 --> 0:16:11.440 big solar farm in the middle of the desert. That's great. 0:16:11.560 --> 0:16:15.080 People who live nearby in Arizona are mad about, you know, 0:16:15.160 --> 0:16:17.760 all the desert tortoises being killed by the construction. And 0:16:17.760 --> 0:16:19.480 they're also like, hey, we like to ride our horses 0:16:19.520 --> 0:16:21.200 around here. It's more fun to ride your horses when 0:16:21.200 --> 0:16:24.400 it's not a solar farm. Like basically, anywhere you want 0:16:24.440 --> 0:16:27.360 to build energy, there are these tradeoffs and that's you know, 0:16:27.400 --> 0:16:31.120 one of the conservationists we spoke to on Nantucket who said, 0:16:31.120 --> 0:16:33.720 by the way, like, yeah, this is completely changed turned 0:16:33.800 --> 0:16:37.120 the tide, but like completely changed how the island feels 0:16:37.160 --> 0:16:40.160 about it. Like the island is pretty united against offshore 0:16:40.200 --> 0:16:42.920 wind at least right now. And he said, you know, 0:16:42.960 --> 0:16:47.160 and he said, there's trade offs any and there's benefits 0:16:47.200 --> 0:16:48.880 and costs with any energy source. 0:16:49.080 --> 0:16:50.640 You know, where does this leave Vineyard Wind? 0:16:50.720 --> 0:16:50.920 Right? 0:16:51.000 --> 0:16:52.640 This is the company behind the wind farms. And I 0:16:52.640 --> 0:16:54.960 also do think about like oversight. You don't want these 0:16:54.960 --> 0:16:56.880 things to fall apart. You want them to work, just 0:16:56.880 --> 0:16:59.040 like if you build a nuclear power plant, you don't 0:16:59.040 --> 0:17:00.680 want to melt down, Like you've got to make sure 0:17:00.680 --> 0:17:03.680 that there's oversight. Is there enough oversight or is it 0:17:03.720 --> 0:17:04.640 a company issue? 0:17:04.720 --> 0:17:04.919 Is it? 0:17:04.960 --> 0:17:07.119 What was it? And we just got about thirty seconds. 0:17:06.880 --> 0:17:09.720 Here Vineyard Wind and then the turbine maker, Gieve Vernova 0:17:09.720 --> 0:17:12.040 have been very active about both cleaning and cleaning up 0:17:12.080 --> 0:17:16.439 debris and also checking checking turbines to make sure this 0:17:16.480 --> 0:17:19.760 doesn't happen again. This could change some oversight or the 0:17:19.800 --> 0:17:21.919 amount of money that companies have to put forward. 0:17:22.280 --> 0:17:24.000 All right, something we're going to keep a watch on. 0:17:24.240 --> 0:17:27.679 Really good stuff, and the sweater totally appreciate that. 0:17:27.720 --> 0:17:27.960 Thank you. 0:17:28.320 --> 0:17:31.399 Josh Saul He is Energy and climate disasters reporter here 0:17:31.440 --> 0:17:33.880 at Bloomberg News. Joining us here in studio. 0:17:35.840 --> 0:17:39.720 You're listening to the Bloomberg Business Week podcast. Listen live 0:17:39.800 --> 0:17:43.160 each weekday starting at two pm Eastern on Applecarplay and 0:17:43.160 --> 0:17:46.160 Android Auto with the Bloomberg Business App. You can also 0:17:46.240 --> 0:17:49.400 listen live on Amazon Alexa from our flagship New York 0:17:49.480 --> 0:17:54.720 station Just Say Alexa playing Bloomberg eleven thirty Well. 0:17:54.720 --> 0:17:57.600 Our Bloomberg News colleague Will Wade, writing this week that 0:17:57.960 --> 0:18:00.920 even as temperatures on Earth smash new records and scientists 0:18:00.920 --> 0:18:03.320 warn the climate is reaching dangerous tipping points, the amount 0:18:03.320 --> 0:18:07.600 of coal being consumed keeps on growing. The basic problem 0:18:07.640 --> 0:18:11.000 is simple. Whenever the security of electricity supply is in doubt, 0:18:11.119 --> 0:18:13.880 Will writes, the imperative to contain global warming slips down 0:18:13.920 --> 0:18:17.160 the agenda. Coal, we should notice, the biggest source of electricity. 0:18:17.440 --> 0:18:19.600 It accounts for thirty five percent of the world's generation 0:18:19.680 --> 0:18:23.040 in twenty twenty three. That's according to Ember, a climate 0:18:23.240 --> 0:18:23.760 think tank. 0:18:23.960 --> 0:18:26.639 All right, so Randall Atkins knows all about this. He's founder, 0:18:26.720 --> 0:18:30.760 chairman CEO of Ramaco Resources, a publicly held six hundred 0:18:30.760 --> 0:18:35.320 and fifty million dollar market cap company that produces metallurgical coal. 0:18:35.359 --> 0:18:38.880 It's the type of coal used in steelmaking companies, also, 0:18:38.880 --> 0:18:41.800 in their words, exploring domestic production of rare elf element 0:18:42.080 --> 0:18:45.840 rear earth elements, which is what we are super interested 0:18:45.880 --> 0:18:47.879 in to hear a little bit more about. Randall joins 0:18:47.920 --> 0:18:52.320 us from Bluefield Coal Symposium in West Virginia. Randall, great 0:18:52.320 --> 0:18:53.360 to have you here with us. 0:18:55.400 --> 0:18:56.880 Yeah, I just want to start with the nuance here 0:18:56.880 --> 0:18:58.720 because and this is what I wanted. This was a 0:18:58.720 --> 0:19:01.159 really important conversation that I had with Alex Steel ahead 0:19:01.160 --> 0:19:03.720 of this interview, because I don't talk about coal every day. 0:19:03.840 --> 0:19:05.440 No you don't, but you guys were like going. 0:19:05.800 --> 0:19:08.040 I did some research. I talked to Alex Randall. There's 0:19:08.119 --> 0:19:11.919 important nuance here. I talked about electricity generation in my intro. 0:19:12.600 --> 0:19:14.480 But when, because that's when we talk about coal that's 0:19:14.520 --> 0:19:18.080 used for electricity generation, we're talking about thermal coal. You 0:19:18.119 --> 0:19:21.680 produce metallurgical coal. So explain the nuance here. 0:19:22.200 --> 0:19:25.960 Sure, well, as we say, first of all, we actually 0:19:26.000 --> 0:19:27.760 have come up with a new name. We don't call 0:19:27.800 --> 0:19:31.760 it coal. We call it carbon ore because we essentially 0:19:31.800 --> 0:19:34.760 approach it as to what its use is being from 0:19:34.800 --> 0:19:39.040 an underlying perspective. So you're absolutely correct. There's sort of 0:19:39.280 --> 0:19:41.359 three legs to the stool, as we call it for 0:19:41.440 --> 0:19:45.440 coal use. One is obviously for combustion and power, one 0:19:45.560 --> 0:19:49.960 is basically to make steel used in blast furnaces, and frankly, 0:19:50.200 --> 0:19:54.680 the third and somewhat less understood use is what we 0:19:54.720 --> 0:19:59.760