Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the B and EF podcast. Today we have an interview
Speaker 1: with a special guest. This was recorded at our B
Speaker 1: and E F New York Summit back in April, so
Speaker 1: we're joined by Michael Weber. He is many things, the
Speaker 1: current Josie Centennial Professor in Energy Resources and Professor of
Speaker 1: Mechanical Engineering at the University of Texas at Austin. He's
Speaker 1: authored books on energy and power in addition to multiple
Speaker 1: op eds for The New York Times. He served as
Speaker 1: the chief Science and Technology Officer at UNGIE in France,
Speaker 1: and he's the Chief Technology Officer of the investment fund
Speaker 1: Energy Impact Partners, which is backed by the Abu Dhabi
Speaker 1: Investment Authority and Microsoft. BNF's chief editor, Ben Vickers sat
Speaker 1: down with Michael and together they discussed a range of topics,
Speaker 1: including how Michael was turned from a hydrogen skeptic to
Speaker 1: a believer, his optimistic views on the energy transition, and
Speaker 1: the art of entrepreneurship. If you like this podcast, make
Speaker 1: sure to subscribe to receive updates on future episodes, and
Speaker 1: consider giving us a review on Apple podcas casts or Spotify.
Speaker 1: This episode was recorded at our New York summit, but
Speaker 1: we also have five other summits which take place around
Speaker 1: the world. The one coming up next is Munich, and
Speaker 1: following that is our summit alongside the B twenty in
Speaker 1: New Delhi. If you'd like to know more about these summits,
Speaker 1: their agenda, or even see videos from previous summits, visit
Speaker 1: us at about dot bn EF dot com, Forward Slash Summit,
Speaker 1: or just click on the link that we've included in
Speaker 1: this episode description. As a reminder, B and AF does
Speaker 1: not provide investment or strategy advice and are a complete disclaimer.
Speaker 1: Is it the end of the show, and right now
Speaker 1: we get to hear Ben's conversation with Michael Weber.
Speaker 2: Thanks for joining us, my pleasure, Thanks for having me.
Speaker 3: Now these sort of podcasts, we're interested in the diversity
Speaker 3: of people's experience as well. You often if you just
Speaker 3: come from the business side, it's all out business. You
Speaker 3: just come from the academic side, it's all that academia.
Speaker 3: But you're an interesting person to talk with because you
Speaker 3: span both of those. But just to give a little
Speaker 3: bit of background energy impact As for those who don't know,
Speaker 3: it's really really large fund actually sixty seven investments in
Speaker 3: the portfolio. Thirty two of those the technology, fourteen in energy,
Speaker 3: then there are seven in industrials, foreign materials, and foreign
Speaker 3: communications that's causing according to what we know, So that's
Speaker 3: a lot of technology thirty two investments. The funds they
Speaker 3: have includes Deep Decalbonization Frontier Fund, which is invested by
Speaker 3: companies such as Duke Energy and First Energy, Call and
Speaker 3: Microsoft as well. So an interesting little world of investment.
Speaker 3: And then of course it's the academic side as well.
Speaker 3: Now you can buy an education with hands on investing.
Speaker 3: How does that work and in what way is that
Speaker 3: an advantage other than to the students.
Speaker 4: So I'm kind of professor by day and venture capitalist
Speaker 4: by night. So I get to see the corporate world
Speaker 4: where action is taken to solve our energy problems, and
Speaker 4: are also in the world of research and teaching trying
Speaker 4: to create an ecosystem that has a lot of ideas
Speaker 4: that hopefully someday will become investable. These different ideas from
Speaker 4: these students who are innovative and they take the problems
Speaker 4: of climate change and energy security very seriously. So for me,
Speaker 4: it's really fun to be on different aspects. So the
Speaker 4: energy sector from the real world of getting things done
Speaker 4: and then the academic world of thinking about getting things done.
Speaker 4: And it hopefully is useful for the students because it
Speaker 4: shows in different pathways by which we might scale up solutions.
Speaker 4: Some of the students want to become investors, are in
Speaker 4: the investor world, or want to launch own startups and
Speaker 4: seek investment, so maybe it is a pathway to help
Speaker 4: them chase their dreams. And from the investor side, we're
Speaker 4: always looking for the next innovator, the next great entrepreneur,
Speaker 4: the next great team to invest in, the next great technology.
Speaker 4: And so being involved in the world academia, which is
Speaker 4: not just University Texas because I go visit students the
Speaker 4: universities helps us cast the net wider to find those
Speaker 4: great ideas that just need capitalization and then they'll change
Speaker 4: the world. So hopefully everybody benefits from this.
Speaker 2: Okay, so a bit of a scout as well, totally.
Speaker 4: Yeah, scouting for talent, scouting for technologies and teams, scouting
Speaker 4: for ideas from the venture investment side, but then also
Speaker 4: for the students, trying to help them scout for money,
Speaker 4: which might be energy by partners, but there are other
Speaker 4: queen tech funds out there, And this is sort of
Speaker 4: the thing I've realized in a very optimistic way, is
Speaker 4: that there are plenty of good ideas. We've got a
Speaker 4: lot of good ideas out there. It's just a matter
Speaker 4: of capitalizing the right ones, and then the markets will
Speaker 4: take over and we'll all be fine.
Speaker 3: Yeah, we can talk about how you do that and
Speaker 3: what are the so paramises you're maybe having to apply
Speaker 3: all the criteria using. I love the fact that you
Speaker 3: describe it as fun as well what you do. It's
Speaker 3: very fun.
Speaker 4: I would say there's a lot of reason to have
Speaker 4: doom and gloom around climate change that kind of thing.
Speaker 4: But I'm an optimist. I really think we've got this.
Speaker 4: I think we're going to solve it. I think we're
Speaker 4: going to solve it more profitably and quickly than people expect.
Speaker 4: I think we'll end up looking kind of seamless when
Speaker 4: we flash forward fifty years and look backwards. I just
Speaker 4: very optimistic. And one of the reason I'm optimistic is
Speaker 4: because I have the honor and privilege of teaching hundreds
Speaker 4: of students a year and they're great, They've got so
Speaker 4: many ideas. And then as an investor, we see the startups.
Speaker 4: They have to present their ideas to us. It's not
Speaker 4: a great idea, so it's hard to come away unenthused
Speaker 4: and in the.
Speaker 2: End is fun. That's interesting.
Speaker 3: I mean that enthusia on the optimism that you get
Speaker 3: from the younger people as well the generations coming in.
Speaker 3: That's good to hear and that's what gives a lot
Speaker 3: of energy to the whole idea of the energy transition.
Speaker 3: But then you've got these legacy systems right, and that
Speaker 3: goes for the investment community as much as the for
Speaker 3: the industrial network. As long as you defer the power
Speaker 3: grade and so on. Isn't the sort of a clash
Speaker 3: there that are we going to be able to change?
Speaker 2: Not the people.
Speaker 3: The people are changing obviously and the mindset is changing,
Speaker 3: but the infrastructure and the industry.
Speaker 2: Resistance we have.
Speaker 4: Yeah, there are two reasons for optimism and one reason
Speaker 4: for pessimism. So the two reasons for optimism as I'm
Speaker 4: an engineer, and to be an engineer means you have
Speaker 4: to be a problem solver. To be a problem solver
Speaker 4: means you have to believe the problem can be solved.
Speaker 4: You have to be optimistic to solve a problem. And
Speaker 4: then investors and investors have to be optimistic too. You're
Speaker 4: essentially investing in the future, so you have to be
Speaker 4: optimistic that the future will take you to a profitable
Speaker 4: are prosperous play. So optimism is at the root of
Speaker 4: the venture side of me and the engineer aside of me.
Speaker 4: But the reasons why we might have pessimism.
Speaker 2: Is for what you just said.
Speaker 4: There's a lot of legacy infrastructure and can we leverage
Speaker 4: it or do we have to replace it? And if
Speaker 4: you look at just a natural gas industry, just natural
Speaker 4: gas pipelines, compressors, tank some power plants in the United States,
Speaker 4: it is something like eight trillion dollars worth of capital investment.
Speaker 4: Maybe it's depreciated like two troyon or something like that,
Speaker 4: but the United States is one fifth of the world's
Speaker 4: natural gas infrastructure, so it's like forty trillion dollars is
Speaker 4: the value of the capital if we had to build
Speaker 4: it tonight for the gas infrastructure around the world, and
Speaker 4: then you had an oil and coal and nuclear other things.
Speaker 4: So clearly there's many tens of triyans or hundreds of
Speaker 4: trillions of dollars of stuff in the ground that we
Speaker 4: built up over the last one hundred and fifty years,
Speaker 4: and the question for society and the markets and entrepreneurs
Speaker 4: and finance and policy is do we get to leverage
Speaker 4: what we've already built or do we.
Speaker 2: Have to replace it?
Speaker 4: And if we had to replace it, that probably will
Speaker 4: be more expensive than leveraging what we built, at least
Speaker 4: that's my view. And so anytime you can have an
Speaker 4: existing solution or a new solution that leverages existing capabilities
Speaker 4: probably gets to market faster. Dropping fuels for pipelines, or
Speaker 4: hydrogen blends with methane or even using hydrogen to form
Speaker 4: methane that you'll move through the pipes, or fuels that
Speaker 4: have the same compatibilities with the materials you might need,
Speaker 4: or using right of ways for transmission lines or existing
Speaker 4: coal power plant sites for geothermal or small mondu reactors.
Speaker 4: Leveraging is more efficient if you can do it. The
Speaker 4: risk of what I just said, though, is the incumbents
Speaker 4: own it might not be on board with that change,
Speaker 4: or I'm pretty happy with the current system, or would
Speaker 4: just rather not do it, or something like that. So
Speaker 4: the inherent legacy mats might slow us down. So if
Speaker 4: we're looking for a reason to be pessimistic. That's one
Speaker 4: that this is different than software. Right, Software, if you
Speaker 4: make a new app, you can scale up and send
Speaker 4: it around the world tomorrow.
Speaker 2: It's by hitting send.
Speaker 4: With energy, you've got to do either wires and poles
Speaker 4: or pipes or something. They're still on the ground and
Speaker 4: so that builds in a delay and gives an advantage
Speaker 4: to encompensate.
Speaker 2: Yeah.
Speaker 3: Yeah, so people are optimistic. I suppose the IRA is coming,
Speaker 3: so there's some more money in there. But the sort
Speaker 3: of the volume of capital we're talking about it is
Speaker 3: absolutely massive.
Speaker 2: It's big.
Speaker 4: Yeah, and the US government maybe can be a big investor,
Speaker 4: but should be a tenth or fifth of the market
Speaker 4: or something.
Speaker 2: You really has to be private.
Speaker 4: Markets have to take over and so they can just
Speaker 4: get things nudge, but they can get the ball rolling downhill.
Speaker 2: Then it becomes an avalanche. Right.
Speaker 4: Yeah, that's the okay, exciting thing, and we've seen that
Speaker 4: happened many, many times with many technologies, including an energy
Speaker 4: where the government either by spending or.
Speaker 2: Policy as a first mover, then the markets take over.
Speaker 3: That's interesting. So that's where the investment fund comes in, right, Yeah.
Speaker 3: Energy Investment Plan sixty seven or sixty sixty to seventy investments.
Speaker 3: I think the largest investment I could find was two
Speaker 3: hundred and fifty million. So these these are small startups.
Speaker 3: These are things that hopefully going to snow at some point.
Speaker 3: But let's look up, maybe, what are the criteria, what
Speaker 3: parameters really do you apply nowadays looking at something that's
Speaker 3: going to transform this system so rapidly. What are the
Speaker 3: most promising things that you're really looking forward?
Speaker 4: It's a great question. So overall, there are several different
Speaker 4: funds within Energy Impact Partners, and some focus more on
Speaker 4: scaling up ideas that already improved. What's more focused on
Speaker 4: the business risk aspose of the technology risk. At the
Speaker 4: Frontier fund, we're focused more on the technical risk, not
Speaker 4: the business risk, and therefore we'll be earlier stage Series A,
Speaker 4: maybe Series B sometimes seed projects that are earlier. We
Speaker 4: have funds focused on activity in Europe, with some focus
Speaker 4: on non traditional entrepreneurs. We have a credit fund, we
Speaker 4: have an infrastructure fund, so we have different stages at
Speaker 4: capital at different risk profiles. All organize around energy transition,
Speaker 4: so we're all about energy, making energy better, which could
Speaker 4: in some cases include things like more robust wires and polls.
Speaker 4: For transmission systems sometimes it's better cybersecurity systems, and for
Speaker 4: Frontier Fund it's deep decarbonization, so it's all energy transition.
Speaker 4: We have different areas of focus within the different funds
Speaker 4: and different technology risk sort of appetites. Twohndre and fifty
Speaker 4: million dollars is a big investment that is not typical.
Speaker 4: Typical Series A investment might be four to twelve million
Speaker 4: dollars for the Frontier Fund. Earlier stage companies where they've
Speaker 4: got some good intellectual property, maybe they've demonstrated in the lab,
Speaker 4: they're going to their first pilot scale demonstration, or they've
Speaker 4: done their first pilot, doing a larger pilot, something like that.
Speaker 4: So we're looking for upside potential. Must be disruptive, must
Speaker 4: have the ability to really displace or avoid a lot
Speaker 4: of CO two emissions, and we're really focused on emissions.
Speaker 4: There are a lot of great ideas around sustainability, like Circularity,
Speaker 4: we won't invest because we're really around energy and climate,
Speaker 4: not sustainability, even though it's an investable idea and a
Speaker 4: great company, we often don't do those investments. And there
Speaker 4: are some companies that have a lot of technical risk,
Speaker 4: but they're too big already. It's hard for us to
Speaker 4: If it's already a two billion dollar company, even if
Speaker 4: they have a lot of technical risk, then we're already
Speaker 4: priced out of the market. Or some of the bigger ones,
Speaker 4: they might not be a fit for us because there's
Speaker 4: not enough business restaurant, enough upside potential. So they just
Speaker 4: kind of meet our criteria. In the end, we're investing
Speaker 4: in teams, not technologies. I really we have to believe
Speaker 4: in the team, and the team has to be innovative.
Speaker 4: They have to know how to run a company, like
Speaker 4: a bad CEO can really tank a company. And so
Speaker 4: we really think about the quality of the team. And
Speaker 4: if we believe the technology, we believe the market space,
Speaker 4: we believe the pathway, but we don't believe in the
Speaker 4: team we want to invest.
Speaker 2: Yeah, that's fascinating.
Speaker 3: So there's the people skills, right does that scout scouting
Speaker 3: part of your role as well.
Speaker 4: In the end, it's the most important determined whether we invest,
Speaker 4: because even if it's a great team with so so,
Speaker 4: technology will be tempted and we think, well, we see
Speaker 4: other technologies really good, maybe this team can.
Speaker 2: Look at that.
Speaker 3: So what can what should a great team be able
Speaker 3: to do and be able to prove there's being on board.
Speaker 4: So certainly by the time they come to us, they've
Speaker 4: already proved they have some innovation, they have some idea.
Speaker 4: Usually they have a patent or some intellectual property portfolio
Speaker 4: that gives them the ability to move in the markets
Speaker 4: and protect their ideas. So a lot of it will
Speaker 4: be innovation is the key to get to us. But
Speaker 4: then we wonder can they grow and can they scale?
Speaker 4: Can they keep the harmony in the team? If they
Speaker 4: come to us and they have seven people but they're
Speaker 4: going to grow to forty, Well that's a pretty difficult
Speaker 4: thing for a company to do, and is that the
Speaker 4: right management?
Speaker 2: Can they do it or not?
Speaker 4: And a lot of times they can, And so we
Speaker 4: just have to look at that. Or they're all technologists
Speaker 4: of this company, but they need to add HR or
Speaker 4: legal finance, they need to add other skills. So we'll
Speaker 4: look a lot at the team and people who've done
Speaker 4: it before. Of track record is very appealing.
Speaker 2: Right, the record is quite bold usiness. Yeah, we have
Speaker 2: this vision.
Speaker 4: I teach entrepreneurship for freshmen at the university, by the way,
Speaker 4: and they're eighteen year old nineteen year olds coming in,
Speaker 4: and if you ask them what does an entrepreneur look like,
Speaker 4: see all the stereotypes come through. They think it's a
Speaker 4: white male from the Bay Area who wears a hoodie
Speaker 4: and is twenty one years old at college drop out.
Speaker 4: And we'll say, okay, name some college dropout successful entrepreneurs,
Speaker 4: and they'll say Bill Gates and Michael Dell and Steve
Speaker 4: Jobs and Mark Zuckerberg. And I'll say, okay, name four more,
Speaker 4: and they can't because most entrepreneurs are forty or older.
Speaker 4: They have experience, they know what they're doing, and they're
Speaker 4: much more diverse than you think than what TV tells you.
Speaker 4: And so we're looking for that. It's that we're going
Speaker 4: to make a big investment in a college drop like
Speaker 4: this kind of thing is. It makes for great TV,
Speaker 4: but it's actually quite rare, and especially in the energy
Speaker 4: space where it's so complex, we want people with operational experience,
Speaker 4: so they tend to be older and more experience. But
Speaker 4: they say that I've been in the power sector for
Speaker 4: twenty five years and here's the problem I'm trying to
Speaker 4: solve it. I was an oil and gas I know
Speaker 4: how to do drilling and now I'm going to apply
Speaker 4: it to geothermal. We want that experience because energy is
Speaker 4: so risky and so complex. You want someone who has
Speaker 4: intuition built from years of making mistakes out in the field.
Speaker 2: Right, Yeah, real will experiences. But you're teaching entrepreneurship, I am. Yeah,
Speaker 2: I teach that as well.
Speaker 4: So it's actually so I teach entrepreneurship, I teach energy,
Speaker 4: and I teach thermo dynamics, which we call thermo dynamics.
Speaker 4: It's a it's a weed out class, Franger, it's really hard,
Speaker 4: enduring class. But so I teach the freshman entrepreneurship, and
Speaker 4: I've actually told them I'm not sure I can teach entrepreneurship.
Speaker 4: I'm not sure it can be taught, but I think
Speaker 4: it can be learned, which is a fascinating thing. I
Speaker 4: can teach them. I've got you laid on them. Yes, really,
Speaker 4: it can be learned. I'm not sure it can be taught,
Speaker 4: but I'll teach you what I know and the certain
Speaker 4: things to know about performers and finances and what are
Speaker 4: the terms of what's total addressable market or TAM or
Speaker 4: the different things that we use abscribe the entrepreneurial opportunity,
Speaker 4: and I sort of met up front that this is
Speaker 4: the only class I've taught for almost a decade. No howur,
Speaker 4: I'm not't even sure I can or should be. But
Speaker 4: the students come out of it really loving the course,
Speaker 4: and I guess one of the main ideas with the
Speaker 4: entrepreneurship with the class is anyone could be an entrepreneur,
Speaker 4: but it's almost up to you whether you are wired
Speaker 4: that way or want it. And a lot of students
Speaker 4: leave the course thinking I don't want to be an entrepreneur.
Speaker 4: That's actually very valuable too.
Speaker 2: That's very by the way.
Speaker 4: Yeah, right, And so at thirty students maybe ten emerge
Speaker 4: thinking oh yeah this is for me. Ten emerging and
Speaker 4: yeah I could do this, and ten are like not
Speaker 4: for me.
Speaker 2: That's fine.
Speaker 3: So well, to recognize that early on is pretty pretty
Speaker 3: usefulvery nice.
Speaker 2: Yeah exactly.
Speaker 3: But from what you're saying before, it's also about the team.
Speaker 3: So entrepreneurships is also about networking and having having the
Speaker 3: team to work with, right or is that something that
Speaker 3: comes off with.
Speaker 4: Yeah, network is important. So can you build the right team,
Speaker 4: can you identify the right skills, can you manage the team?
Speaker 2: Well?
Speaker 4: Can you set realistic goals. You want to push the team.
Speaker 4: You have to hit your milestones. In startups that we
Speaker 4: love to see are the ones that say here's our plan.
Speaker 2: They hit their milestones.
Speaker 4: That means their plan is very realistic and that they
Speaker 4: are able to make progress towards the goal and they're
Speaker 4: not having to have down rounds or go ask for
Speaker 4: more money unexpected because things didn't go the way they
Speaker 4: want it. So you just want people who can you
Speaker 4: can plan and then execute. But that's hard to plan
Speaker 4: and execute if you're in an innovative space because you
Speaker 4: don't always know how it's going to go. There's a
Speaker 4: lot of risk, especially for these early stage companies, and
Speaker 4: you have to build in room for that kind of
Speaker 4: risk for failing living with that. Yes, yeah, exactly, which
Speaker 4: is why it's venture investing. It's a different kind of
Speaker 4: risk profile than say a big one.
Speaker 3: Again risk profiles because you've got the Decarbonization Frontier Fund
Speaker 3: now as a Duke Energy and First Energy in Microsoft
Speaker 3: are invested in that fund. What sort of investment horizons
Speaker 3: are aiming form with it?
Speaker 2: From what does it? What does it do?
Speaker 3: Is it deep decarbonization? And in a way with companies
Speaker 3: like those coming in Duke Energy, First Engine, Microsoft. Are
Speaker 3: their criteria for investing in this sort of fund different,
Speaker 3: Their requirements different from what you normally get.
Speaker 4: So our investors don't get to dictate to us where
Speaker 4: we invest. We do it based on ours, so there's
Speaker 4: independence on them well to think about what's the future
Speaker 4: of energy and what are the market opportunities and does
Speaker 4: it start up meet the criteria for our investments or not.
Speaker 4: The frontier font in particular, has a longer horizon. Deep
Speaker 4: de carversation is going to take a little longer, so
Speaker 4: what do you have it a longer but like fifteen
Speaker 4: years instead of eight years, Like we're thinking longer in
Speaker 4: the future, a longer investment window than a longer harvest
Speaker 4: which years doesn't sound very much when you're talking about
Speaker 4: the comonanization that doesn't know, I think that's such little bit.
Speaker 4: Typical venture investing will be five to eight years or something, right,
Speaker 4: So it's longer horizon than typical venture And we see
Speaker 4: this sort of rising tide lifts all bo like we
Speaker 4: think the energy sector is where a lot of the
Speaker 4: investment's going to go for a few decades. There will
Speaker 4: be a lot of opportunity for prosperity while bringing people secure, cheap, reliable,
Speaker 4: meaner energy. I think this is very exciting to be
Speaker 4: part of that. But the horizons like you just to
Speaker 4: be practical, you have to get out of the lab.
Speaker 4: You have to have a pilot, you have to scale
Speaker 4: up your pilot. You have to get customers, you have
Speaker 4: to get a track record, then you get more customers.
Speaker 4: It just takes a while in energy in a way
Speaker 4: that we're not used to from say software or the
Speaker 4: seven detector world.
Speaker 3: Is this something that do kenergy for example, or these
Speaker 3: investments in this fund. Is this something they're particularly aware of?
Speaker 3: Is it something what are they what are there just
Speaker 3: for the returns or something else?
Speaker 4: Getting there are different. We have some pure financial investors
Speaker 4: they see that we're making better returns or we're going
Speaker 4: to have an opportunity for better returns. Others and they
Speaker 4: put their money in. They just want to get their
Speaker 4: money out. So there's some it's purely financial. But for
Speaker 4: others who are in the energy sector, there's value beyond
Speaker 4: the finances because they need to understand the change that's coming,
Speaker 4: because they might need to be the early customers or
Speaker 4: adopters of it and the change might be a threat
Speaker 4: to their business models, and therefore it's better for them
Speaker 4: to evolve and be nimble. I think it's the idea,
Speaker 4: and so it really sort of thinks about turning the
Speaker 4: requirements to track innovation from a cost center into a
Speaker 4: profit center as a way to think about it, Like
Speaker 4: all these utilities, these major NY companies, they spend money
Speaker 4: just keeping track of where innovation is. And one way
Speaker 4: to do that is to try out the technologies yourself
Speaker 4: with different pilot programs and that kind of thing. So
Speaker 4: so there's a real intellectual value to getting a front
Speaker 4: row seat to what kinds of investments are going on.
Speaker 3: So it gives them a little window into some of
Speaker 3: these things as well. Some of these companies are Yeah,
Speaker 3: they might have trouble finding the startups, but we see
Speaker 3: that thands of startups, so we can tell them the
Speaker 3: space you do. Yeah, yeah, and so, and that's valuable
Speaker 3: for these companies that wish to innovate right now or
Speaker 3: will be adopters of it. And I think this is
Speaker 3: the ones who want to be nimble and aren't stuck
Speaker 3: in their nineteen fifties view of what their business model
Speaker 3: should be and that's that's changed rapidly, Ablows, isn't it
Speaker 3: so energy in for some pond? Is is it the
Speaker 3: energy sector basically that you look into the Yeah.
Speaker 4: So we are energy oriented. We look at energy transition,
Speaker 4: different elements of risk profile versus business, risk for technology
Speaker 4: versus business, but all about energy transition. And then Frontier
Speaker 4: find more deep decarbonzation within the energy sector. But it's
Speaker 4: not always around energy production. Sometimes it's a new energy
Speaker 4: consuming technology that might make fertilizers in a more efficient
Speaker 4: way but would save a lot of energy at the
Speaker 4: massive fertilizer plants. So we invested in a small company
Speaker 4: called Nitricity, making nitage to based fertilizers at the farm
Speaker 4: and strib to wigh and so sometimes this on the
Speaker 4: consumption side, sometimes it's on the production side. And we're
Speaker 4: also looking at the transportation side, moving electrons or molecules from.
Speaker 2: Place to place. How do we move it?
Speaker 4: Do we move it in carriers, move by pilpy, move
Speaker 4: by wire or whatever. So we look all up and
Speaker 4: down the energy sector, but including the consumers, not just
Speaker 4: the production.
Speaker 2: You're also an author.
Speaker 3: I'm an author going to bring your books into this
Speaker 3: as well. The ones I know of probably many other
Speaker 3: things you've writen, but you've written something called Power Trip,
Speaker 3: The Story of Energy, that was published in twenty nineteen
Speaker 3: and also first for part energy, Water and Human Survival,
Speaker 3: which is sort of for me, another demonstration of you
Speaker 3: bridging that gap between the theoretical world and maybe the
Speaker 3: consumer and the real world of business and investment.
Speaker 2: And so one.
Speaker 3: Is that gap inevitable basically or is it a gap
Speaker 3: or is it actually a zone of creativity that you
Speaker 3: occupied where you're sitting between investment and education.
Speaker 4: Well, I feel like I have the privilege to see
Speaker 4: many different lines of sight with that story. Where do
Speaker 4: think about it with the different parts of the energy world,
Speaker 4: the industrial world, the investor world, the academic world. And
Speaker 4: by having that position where I see these things or anything,
Speaker 4: I feel like I could tell the stories that maybe
Speaker 4: we'll capture other people and reach other audiences, and a
Speaker 4: lot of people will read books. And that book actually
Speaker 4: aways turned it into our six part PBS documentaries. Yes,
Speaker 4: so people, somebodys prefer to watch it on TV. I
Speaker 4: supposed to read the book, but we've reached through the
Speaker 4: book and the television series probably ten million people, and
Speaker 4: so it's a very different way to sort of evangelize
Speaker 4: around energy. And I'm very pro energy and I'm very
Speaker 4: sad about energy. I want other people to share my
Speaker 4: passion enthusiasm, and so the books your way to make
Speaker 4: the story as accessible because not everyone wants to be
Speaker 4: a physicist s or an engineer or a finance person.
Speaker 4: And so by putting into story form, narrative form, having
Speaker 4: these anecdotes and these historical nuggets, it's more useful for people.
Speaker 4: We get more people on board with energy. It's important,
Speaker 4: it's cross cutting. Energy is changing, and this is very exciting,
Speaker 4: and so the books are a.
Speaker 2: Way to do that.
Speaker 4: And I've got other book projects I'm working on and
Speaker 4: Power Trip the TV series has season two coming out
Speaker 4: in September actually, so we did six hour long episodes
Speaker 4: before and now I got six more episodes coming out
Speaker 4: town and so it's just a way to reach more people.
Speaker 4: And it's kind of the professor's side of me, the
Speaker 4: teaching side. I want to teach people about energy. It's
Speaker 4: a way I do that. That's storytelling. It's really important,
Speaker 4: isn't it. I think getting the message out and is
Speaker 4: a little chalnge we all face because the energy transition
Speaker 4: is one of the biggest stories around. I mean, what
Speaker 4: is bigger than the climate change and the anti transitions soon?
Speaker 2: Yeah, I think so.
Speaker 4: I think it's the defining sort of sectoral growth for
Speaker 4: the next thirty years, defining challenge for the century.
Speaker 3: So I think it is important. It's a big opportunity too.
Speaker 3: But I wonder if it's becoming harder actually to communicate
Speaker 3: that narrative around the agency and what's going on. I'm
Speaker 3: thinking of the controversy around the ESTIE for example, and
Speaker 3: you know this pushback against some of the innovation has
Speaker 3: been in the investment world.
Speaker 2: Would what do you think about it? Is it becoming
Speaker 2: harder or is it becoming easy?
Speaker 4: Yeah, there's more land minds in the language. We have
Speaker 4: to watch out for. The audiences will arrive into a
Speaker 4: room where maybe I'm giving a seminar or something in
Speaker 4: the different viewpoints before I've ever spoken, and it does
Speaker 4: seem us more complex. But there's been a divide over
Speaker 4: climate change for a long time, so I've been at
Speaker 4: this for a couple of decades. There's been a generational
Speaker 4: divide where older people tend to care less about climate
Speaker 4: change than the younger people. And now we also have
Speaker 4: a political divide there depending on who you vote for
Speaker 4: might effect what kind of things you're hearing and whether
Speaker 4: you care or not. So there's a lot of loaded
Speaker 4: terminology words that if you say this, people interpret differently
Speaker 4: depending on how they vote or where they live or
Speaker 4: where they sit in the room and this kind of thing, right,
Speaker 4: And so it does feel like it's a lay mind
Speaker 4: talk about it and ESG is part of it, Climate
Speaker 4: change is part of it.
Speaker 2: Fossil fuels, renewables.
Speaker 4: People wear their jerseys for whatever side they're on, and
Speaker 4: they feel like they have to choose the side of
Speaker 4: fossil fuels or choose the side of renewables or something.
Speaker 2: They become bondstand in some of these ways. Totally.
Speaker 4: Yeah, yeah, And it's like a marker what team you're on.
Speaker 4: And I'm like, no, no, we need energy and we want
Speaker 4: energy to clean, safe and reliable. Let's figure out the
Speaker 4: different ways to get there. And so it's a challenge,
Speaker 4: I would say, for sure, it's a challenge, and it's
Speaker 4: gotten worse on social media.
Speaker 2: In many ways. Social media. Stay clear on social media.
Speaker 4: I'm on social media a lot, and I think, I think,
Speaker 4: I say my most regrettable things on social media. But
Speaker 4: I reach a different audience that way as well. Yeah,
Speaker 4: and there's some people who might follow me on Twitter
Speaker 4: but aren't going to read a book or watch TV
Speaker 4: or whatever. So it is a challenge for sure, despite
Speaker 4: the challenge of getting the language right and reaching these
Speaker 4: different audiences, for the most part, things are changing anyway,
Speaker 4: especially this cultural change where because younger people, as they
Speaker 4: get older, are taking positions of authority, they're serious about it,
Speaker 4: and as older people who were not serious retire their
Speaker 4: voice full matter less. So it seems like it's really happening,
Speaker 4: and it feels like the pace.
Speaker 2: Is picking up. Frankly, they just have a different worldview.
Speaker 3: Maybe, as I'm witkingly, we've given you circumstances led them
Speaker 3: to a different world view totally.
Speaker 4: So when I think of these suits, I've taught thousands
Speaker 4: of students in person, and I've taught thousands of people,
Speaker 4: probably ten thousand people at.
Speaker 2: This point online.
Speaker 4: So I've taught a lot of students, and they really
Speaker 4: see it as their Cold War, their multi decade generation
Speaker 4: defining challenge. That means that peace and prosperity on the line,
Speaker 4: and they have to win it is a fascinating thing
Speaker 4: to see in the same solutions will be We need
Speaker 4: technical innovation, we need collaboration, we need stronger institutions, the
Speaker 4: same answers for the Cold War, the same answers for
Speaker 4: climate change. And the students right, and they said, this
Speaker 4: is my career. I'm spend thirty forty years doing it.
Speaker 4: And my mentor when I was undergrad was a Cold warterer.
Speaker 4: He spent his entire career trying to win the Cold War.
Speaker 4: It was his career defining thing. And I see that
Speaker 4: repeating with students. And what's funny if you think of
Speaker 4: it like the Cold War, maybe even World War two.
Speaker 4: At some point it doesn't matter what it costs. You
Speaker 4: think peace and prosperity on the line to win doesn't
Speaker 4: matter what a cost. And then what you find out
Speaker 4: when you win is that was the economically beneficial path anyway.
Speaker 4: It was good for the economy to win World War Two,
Speaker 4: it was good for the economy to win the Cold War.
Speaker 4: It will be good for the economy, and already is
Speaker 4: good for the economy to tackle climate change.
Speaker 2: That's the way they see it. And I like, I'll
Speaker 2: power to you. We need you so it's really fantastic.
Speaker 3: Yeah, that's a really interesting idea that it can give
Speaker 3: some sort of direction to whole careers. So back to
Speaker 3: the reality of investment. I suppose I was going to
Speaker 3: ask you about the technologies that you find most interesting
Speaker 3: that are coming up over the next few years. But
Speaker 3: let's take bankability is the point that they need to reach.
Speaker 3: What is it the most excites you about? What's the
Speaker 3: innovations that you're looking at at the moment, but in
Speaker 3: terms of what actually is not too far out of
Speaker 3: there but is realizable within the next there are so many
Speaker 3: exciting First of all, the first excitement is there are
Speaker 3: so many good ideas, Like that is just like an
Speaker 3: overwhelming thing.
Speaker 4: Like, oh wow, there's a lot of good ideas that
Speaker 4: you don't get to see if you're not an investor.
Speaker 4: Because if you're an investor, people want your money. They've
Speaker 4: all show you their ideas, and so there's more good
Speaker 4: ideas than I realize, which is a good thing. I guess, Okay,
Speaker 4: there's a lot of ideas, which ones are going to
Speaker 4: cap There are very exciting ones that we know will
Speaker 4: change the world if they work, like fusion everyone vision. Yeah,
Speaker 4: and we have invested in sapp Energy, We have invested
Speaker 4: in fusion. If fusion works, it will change the world.
Speaker 4: We all know that that's a big one. That's a
Speaker 4: big one, though, very big one. Yeah, And it's also
Speaker 4: hard to invest early stage because fusion companies, as they
Speaker 4: make progress, come worth billions of dollars very quickly, so
Speaker 4: it's hard for a venture fund.
Speaker 2: Then how likely is that to come together?
Speaker 4: That it's unlikely a small likelihood, but its impact would
Speaker 4: be so largely you just have to invest. So in fact,
Speaker 4: there's been Bolti articles and Bloomberg just like two days
Speaker 4: ago all about the fusion companies out there that might change.
Speaker 2: The world pretty so many of them. Yeah.
Speaker 4: So there's a lot more at Tension in Bluemberg and
Speaker 4: other outlets really covering this.
Speaker 2: Which I think is really exciting. So it's become kind
Speaker 2: of mainstream.
Speaker 4: Doesn't mean we'll have a fusion plant next year, so
Speaker 4: it could be many years, a decade, right, But it's
Speaker 4: exciting to see private.
Speaker 2: Money coming to it, not just goverment money. That's exciting.
Speaker 4: I'm excited about energy storage. Energy storage has been this
Speaker 4: solution for.
Speaker 2: Like twenty years.
Speaker 4: We've been saying for twenty years if we just had
Speaker 4: a better battery for a better way to do stories right.
Speaker 4: And it feels like the markets have answered with lithium
Speaker 4: ion batteries for our smartphones and electric cards, But there
Speaker 4: are other chemistries out there that either don't degrade or
Speaker 4: have longer duration. We have vested in companies like Form Energy,
Speaker 4: which is a long duration battery. So this is very
Speaker 4: citing in the energy storage space. Another area of excitement
Speaker 4: for me that's really interesting is around hydrogen. And hydrogen's
Speaker 4: fascinating for me because the hydrogen's come and gone many times,
Speaker 4: oh many times. I mean if you go back to
Speaker 4: the eighteen hundreds in Phantom of the Opera and if
Speaker 4: you read the book or seen the movie. But they
Speaker 4: the author guests On wrote in nineteen ten about the
Speaker 4: late eighteen hundreds Paras opera house how they use hydrogen
Speaker 4: methane blends to change the brightness of the stage lighting.
Speaker 4: So we talked today about hydrogen methane blends as innovative
Speaker 4: and world changing, and in fact, French authors had tackled
Speaker 4: that by the eighteen eighties, and Jules Verne wrote about
Speaker 4: in the eighteen seventies with the mysterious islon. We're using
Speaker 4: hydrogen from water and electrol system run a fuel cell,
Speaker 4: so hygroen. It's not new, but it's attracting some private
Speaker 4: capital and there's new ways to go about it. And
Speaker 4: for me, I was a professional hydrogen skeptic for about
Speaker 4: ten years.
Speaker 2: When you read it.
Speaker 4: Thousand and seven in twenty eighteen, I just why were
Speaker 4: you think? Why it's just so thermodyamically stupid to take electricity,
Speaker 4: to split water to make electricity, And I just was
Speaker 4: really critical, like it's not an original resource. It is
Speaker 4: something you have to extract from other resource. Doesn't make sense.
Speaker 4: But then twenty eighteen, as I started to work with
Speaker 4: engine I realized how many different ways there are.
Speaker 2: To make and use hydrogen. This is NG Energy in Paris, France.
Speaker 4: I was their chief science and technology officer and we
Speaker 4: had a hydrogen laburnize meaning of the team.
Speaker 2: I just kind of have my eyes opened up.
Speaker 4: Okay, there's more to hydrogen than using a coal fire
Speaker 4: power plant to split water to make electricity, and in particular,
Speaker 4: there are many ways to make hydrogen, so electrolysis, use electricity,
Speaker 4: split water gets a lot of the headlines. Seam methane
Speaker 4: reforming actually is where we make a lot of our hydrogen,
Speaker 4: and actually coal gasifications another one, so cold natural gas
Speaker 4: or where we make our hydrogen today. Maybe we'll make
Speaker 4: it from electrolysis in the future, but there are other
Speaker 4: ways to make it. There's pyrolysis and photolysis and radiolysis
Speaker 4: and catalysis and thermolysis. There are all these other paths
Speaker 4: that are potentially much more efficient because there's a different feedstock.
Speaker 4: They use degraded waste teat or something. They're not using
Speaker 4: new energy. And so you start to open your mind
Speaker 4: beyond the two pathways we see, or the third that's looming,
Speaker 4: to all the ways you I make hydrogen. It gets
Speaker 4: pretty exciting. And then you start to think of all
Speaker 4: the ways we might use hydrogen. It gets pretty exciting.
Speaker 4: And then if you think of all the excess really
Speaker 4: cheap wind and solar electricity might have latrolls, it starts
Speaker 4: to make sense. Now, I think hydrogen is not going
Speaker 4: to place bulk energy, but there are things like chemicals
Speaker 4: and industrial heat and aviation and marinehipping where hydrogen might
Speaker 4: play a pretty important role.
Speaker 2: So that's kind of exciting for us. And we're looking
Speaker 2: at that as well.
Speaker 3: What was interesting We'll saying what you said is that
Speaker 3: up until twenty eighteen and in some of your eyes
Speaker 3: were opened by being somewhere and going to a lab
Speaker 3: and seeing something differently, and you had a career in
Speaker 3: this obviously the guy you brought it out to make
Speaker 3: fun of hydrogen and then I went to a corporate
Speaker 3: lab that was working on it.
Speaker 4: And that's where it's good for me as a professor
Speaker 4: to get into the real world, because the real world says, well,
Speaker 4: I know you're skeptical, but here's the progress they made
Speaker 4: in the last forty years. We've been look at this
Speaker 4: for a while and I just learned a lot and
Speaker 4: I'm sorry. Good for me to get that education.
Speaker 3: That's fascinating. This is a fascinating We could probably go on.
Speaker 3: We'll have to do another one at some point.
Speaker 4: We know the one do and follow on this so
Speaker 4: much to talk about energy as a rich topic.
Speaker 2: Hit to work with, Mike Webb. Thank you so much
Speaker 2: for your time. Thank you so much.
Speaker 1: Bloomberg n EF is a service provided by Bloomberg Finance
Speaker 1: LP and its affiliates. This recording does not constitute, nor
Speaker 1: should it be construed as investment advice, investment recommendations, or
Speaker 1: a recommendation as to an investment or other strategy. Bloomberg
Speaker 1: an EF should not be considered as information sufficient upon
Speaker 1: which to base an investment decision. Neither Bloomberg Finance LP
Speaker 1: nor any of its affiliates makes any representation or warranty
Speaker 1: as to the accuracy or completeness of the information contained
Speaker 1: in this recording, and any liability as a result of
Speaker 1: this recording is expressly disclaimed.