Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNAF podcast. BNF hosts a series of summits and
Speaker 1: forums around the world, and some of these events take
Speaker 1: on distinct themes within the energy transition. Our summit in
Speaker 1: Munich was a great example where the conversations on stage
Speaker 1: focused on industrial decarbonization. On today's show, we're bringing you
Speaker 1: the opening panel from the BNF Summit in Munich, which
Speaker 1: took place earlier in June. The panel was titled the
Speaker 1: Next Decade of Clean Industry Manufacturing Does Europe need to
Speaker 1: become more protectionist? The panelists were open about their views.
Speaker 1: They discussed policy from import tariffs to domestic content targets
Speaker 1: and whether these policies recently are showing a sign of
Speaker 1: a more protectionist stance coming out of the EU when
Speaker 1: it comes to manufacturing. They get into how these could
Speaker 1: impact clean energy and electric vehicles. On this panel, we
Speaker 1: were joined by Herbert Diese, Chairman of Infinion and the
Speaker 1: Mobility House, alongside Yasek Trucinsky, Deputy head of Unit net
Speaker 1: zero Industries Sustainable in Circular Products at the European Commission,
Speaker 1: along with Jan Vincent, Chief Executive officer of Automotive Sales Company,
Speaker 1: and Hawkan Voldaal, chief executive officer at Nell Hydrogen. The
Speaker 1: conversation was moderated by John Moore, chief executive officer at
Speaker 1: Bloomberg and EF. To find out more about BNF's events
Speaker 1: and to see some of the videos coming out of
Speaker 1: this and other events, head to BNEF dot com Forward
Speaker 1: Slash Summit. But now let's listen to this panel and
Speaker 1: hear what they think about the future of clean industry manufacturing.
Speaker 2: So the energy transition, it's a two hundred trillion dollar opportunity,
Speaker 2: it's multidecade. Also, you know, three four decades, the question
Speaker 2: of how will regions change, how will they be transformed
Speaker 2: is on everyone's lips. The IRA sort of eighteen months
Speaker 2: or so ago really changed the game and really raise
Speaker 2: the focus on manufacturing and what should be built in
Speaker 2: what region. So that's really what we're talking about here
Speaker 2: is how does Europe now position itself to be a
Speaker 2: winner and a leader in the new clean economy. And
Speaker 2: we're really going to talk about this in terms of
Speaker 2: two questions. One is what should be made in Europe?
Speaker 2: How do we decide what gets made? And then we're
Speaker 2: going to talk about trade and then how should things
Speaker 2: be bought and sold and traded from Europe with other
Speaker 2: parts of the world. So first off, I am going
Speaker 2: to talk to as Yes from European Commission about the
Speaker 2: net Zero Industry Act. So it's popularly described as the
Speaker 2: response to IRA. Maybe you could say a little bit
Speaker 2: about the act, the goal of the act and the
Speaker 2: key features.
Speaker 3: Thanks a lot.
Speaker 4: Indeed, it's part of the response, I would say. So
Speaker 4: the Nazer Industry Act, it's all about scaling up the
Speaker 4: production in the EU of nazero technologies solar, pv heat pumps,
Speaker 4: wind turbines and so on. It enters into force next month.
Speaker 4: This objective of scaling up production is quantified. We want
Speaker 4: to ensure that by twenty thirty at least forty percent
Speaker 4: of those technologies that we deploy in Europe are made here.
Speaker 4: This is the kind of a minimum that takes into
Speaker 4: account that some of these technologies like solar we are
Speaker 4: very low today, or some of the components like magnets
Speaker 4: for wind turbines.
Speaker 3: Two.
Speaker 4: Now, for other technologies where we already have a big
Speaker 4: market share, like heat pumps or wind turbines, we want
Speaker 4: to maintain that market share as the deployment grows. And
Speaker 4: that means that in absolute terms, since this deployment will
Speaker 4: have to grow, also the manufacturing by twenty thirty will
Speaker 4: have to be scaled up significantly. Very concretely, that means
Speaker 4: that for wind turbines we want to have an increase
Speaker 4: of factor three by twenty thirty, for batteries factor seven,
Speaker 4: for solar factor twenty And of course this is a
Speaker 4: big challenge, but we are setting in place the right
Speaker 4: rules to support that. The Nazer Industry Act is the
Speaker 4: central piece of that. And I don't have the time here,
Speaker 4: of course to present the datayls, just to mention two things.
Speaker 4: One thing permitting we have to make sure that the
Speaker 4: ease of doing business is really top notch. We heard
Speaker 4: in Europe in the past that some of those giga
Speaker 4: factories we're waiting for five years to get the right permits.
Speaker 4: Now public authorities will have from nine to eighteen months
Speaker 4: to deliver the permits. Second element, access to markets. By
Speaker 4: access to markets, we mean auctions for green power, public procurement.
Speaker 3: Subsidies to households.
Speaker 4: For all of those schemes, public authorities will have to
Speaker 4: make sure that through eligibility criteria or award criteria. They
Speaker 4: favor a diversified supply chain, so not everything from China,
Speaker 4: but diversified. These are not local content requirements. This can
Speaker 4: be US or other entities, but also so very specifically
Speaker 4: for procurement, authorities will have to ensure that not more
Speaker 4: than fifty percent of the contract value, including for solar PV,
Speaker 4: would come from a single source of supply on which
Speaker 4: we depend in this case China. Last point I would
Speaker 4: like to make in terms of the IRA comparison. A
Speaker 4: lot has been said about the lack of funding, but
Speaker 4: here this is not the Nager Industry Act, but other elements.
Speaker 3: We have relaxed state aged rules specifically for.
Speaker 4: That objective of manufacturing nazero technologies. As much as fourteen
Speaker 4: billion euros have been approved so far by the Commission
Speaker 4: for those schemes and we have to make sure that
Speaker 4: they are now deployed.
Speaker 3: Also for private capital.
Speaker 4: I have looked at the numbers venture capital this year
Speaker 4: three billion euros invested in or committed in those projects
Speaker 4: compared to four in the US. This is narrowest gap
Speaker 4: since the IRA was put in place. So things are
Speaker 4: going in the right direction, although of course there are
Speaker 4: major challenges that.
Speaker 2: Had right and those sort of relaxing state aid et cetera.
Speaker 2: The're sort of and some of the investment versus the
Speaker 2: sort of tax credit approach that the IRA is put
Speaker 2: in place.
Speaker 4: Yes, well, indeed, I mean we also I think one
Speaker 4: conclusion that we drove from the IRA is that we
Speaker 4: have to really simplify the way we channel investment supporting
Speaker 4: the EU, and so we have to move towards more
Speaker 4: like contracts. For difference, if you look at what France
Speaker 4: is doing for supporting manufacturing of batteries or solar pvs
Speaker 4: also through tax credits. So we are, you know, joining
Speaker 4: conclusions from the way the US is doing and trying
Speaker 4: to accelerate things here as well.
Speaker 5: Okay, thank you and Herbert.
Speaker 2: You've been involved in many different parts of this, as
Speaker 2: you mentioned, you've been involved in solar for a very
Speaker 2: long time and now you know also industry batteries, et cetera.
Speaker 2: What's your view in terms of Europe and sort of
Speaker 2: where it can be really competitive and so what should
Speaker 2: be done to make that realized?
Speaker 6: I think, first of all, and it is probably something
Speaker 6: very prerogative. I think we should be very very happy
Speaker 6: that China did that. They started very early. They probably
Speaker 6: invested more in renewables than the rest of the world together.
Speaker 6: They took over from Germany solar twenty twelve, and Germany
Speaker 6: was giving it up, and I think there was would
Speaker 6: be no other nation being able to scale it up
Speaker 6: so fast and to make it so cheap. And that's
Speaker 6: that's the same for solar. For batteries, EBIs let's wait
Speaker 6: and see. But wind for sure on sure wind off,
Speaker 6: sure wind may be And I think that's very good
Speaker 6: news for the energy transition because only China made it
Speaker 6: possible that now we have a basically a ban on
Speaker 6: coal fired plants in India, not because the Indians want
Speaker 6: to save the world, but solar is so much cheaper,
Speaker 6: and I think in hindsight, and there's.
Speaker 7: Probably also a bit provocative here.
Speaker 6: In handsight, we might say that China basically stopped climate
Speaker 6: change in handsight in ten or fifteen years. So now
Speaker 6: on the other side, yes, there's a lot of value
Speaker 6: add in China technology, in China scale and those industries
Speaker 6: are growing fast, and we are losing out on our
Speaker 6: participation in that value now because solar is said to
Speaker 6: become more important than our automotive industry by twenty thirty
Speaker 6: or thirty five. So this is a really big chunk
Speaker 6: of industrial meat which is to be newly reparted.
Speaker 7: So it's a concern I understand.
Speaker 6: That's why I'm still filing to bring solar back to Europe,
Speaker 6: which I think would make a lot of sense. But
Speaker 6: first of all, I think a great job by China,
Speaker 6: and don't let's say compromise it now with input duties,
Speaker 6: because that will make solar more expensive. Heb is more expensive,
Speaker 6: better is more expensive, and that will then slow down
Speaker 6: the energy energy transition.
Speaker 7: So that's that's the wrong way the.
Speaker 5: So what'should Europe do you?
Speaker 7: I'm I think you know we should.
Speaker 6: We should And if you look in those industry and
Speaker 6: SOLA have deep insights because I know most of the
Speaker 6: of the suppliers. Yes, China did a great job, but
Speaker 6: they're living poorly from it.
Speaker 7: Half of the solar.
Speaker 6: Energy manufacturers aren't aren't earning any money. The others are
Speaker 6: borderline when it comes to cash flows, and the same
Speaker 6: applies to batteries. There are two very profitable ones, which
Speaker 6: is COETL, but the rest of the battery manufacturers are
Speaker 6: making huge losses.
Speaker 8: Uh.
Speaker 6: And if you look then in the value chain, then
Speaker 6: in the value chain of solar, the solar cell and
Speaker 6: the module are not profitable. But then downstream selling, reselling, installing,
Speaker 6: running the solar manners is usually profitable. And this business
Speaker 6: normally is in Western hands in Europe. So I think
Speaker 6: it's a situation where which we can we can live on.
Speaker 6: Surely what we should do is encouraged to Chinese to
Speaker 6: come here and build up plants here in.
Speaker 2: Europe, okay, and then you'd have Europe focus on the
Speaker 2: downstream applications and integration and those kinds.
Speaker 6: And the other thing is but I just have been
Speaker 6: telling China is very strong in if it's not too
Speaker 6: complex to max all ourselves, which is a technology now
Speaker 6: fifty years or basically to refine.
Speaker 7: That and make it even better day by day.
Speaker 6: It's very difficult to compete against China with sixty percent
Speaker 6: of the world market now, with really extreme competition from entrepreneurs.
Speaker 6: When it becomes more complex, for instance, no software which
Speaker 6: makes use which combines the cars with the renewable energy
Speaker 6: flexible energy market they don't have.
Speaker 7: So the more sophisticated, the more complex the.
Speaker 6: Solutions become, the more Europe and the US have a
Speaker 6: chance to compete and probably have an advantage to compete.
Speaker 6: So we should do what we can do best, and
Speaker 6: we should have China making what they can do cheapest
Speaker 6: than inco quality.
Speaker 2: Okay, so I'm going to ask two people who are
Speaker 2: definitely involved in the manufacturing side and not just downstream. So, yeah,
Speaker 2: what's your thoughts in terms of what should Europe be
Speaker 2: doing to be to have a sort of strong, healthy,
Speaker 2: clean green industry in the future.
Speaker 8: Well, the first point is I would agree with your
Speaker 8: point of view. I don't know if we have to
Speaker 8: be happy with the Chinese supremacy, but it's a fact.
Speaker 8: It's a fact that on that way side, China is leading.
Speaker 8: China is leading the pack. I didn't say that, and
Speaker 8: that's the reason why a SEC what's created three four
Speaker 8: years ago. We have to acknowledge that for the immobility
Speaker 8: E affordable mobility, we can't rely on the supply which
Speaker 8: would be one hundred percent an Asian one, not to
Speaker 8: say you're Chinese one. So there's a need for there's
Speaker 8: a need for Europe to to build a strong battery
Speaker 8: uh industry, and that's what Norswall starts a few years ago.
Speaker 8: That's what we are doing nowadays with the with the
Speaker 8: ramp up or for first the first Giga factory.
Speaker 2: And that's for resilience. You're saying, sorry, that's for resilience.
Speaker 2: So you're not reliant on just sort of point sources.
Speaker 3: Yeah, yeah, yeah.
Speaker 8: So it's not to say that we are immediately competitive.
Speaker 8: There is there is a There is clearly an issue.
Speaker 8: All strong believe is that we shouldn't rely on tariffs.
Speaker 8: We shouldn't rely on tariffs because tariffs will will create
Speaker 8: an illusion in in the European market, an illusion to
Speaker 8: be protected. The customers will see higher prices. So we
Speaker 8: believe that we have to work hard. We have to
Speaker 8: work hard in order to catch up. And when we
Speaker 8: look at the the EV market for today, we've seen
Speaker 8: and it has been previously mentioned, we've seen a slow
Speaker 8: down of the growth. It's not stopping, it's not declining,
Speaker 8: but it's slowing down. And it's slowing down because the
Speaker 8: affordability of the e cars is not sufficient.
Speaker 3: So we need to we need to increase.
Speaker 8: We need to decrease the cost of the of the
Speaker 8: of the of the batteries. We need to decrease the
Speaker 8: cost of the E cars. And for that one, I
Speaker 8: strongly believe on partnerships within Europe, partnerships between labs, universities,
Speaker 8: in thus world companies. That's what we that's what we
Speaker 8: are doing in order to be able to catch up.
Speaker 8: And the last point, when we when we consider the
Speaker 8: let's say low cost solution for batteries, UH, we're not
Speaker 8: that far from a technological point of view at the time,
Speaker 8: being from A from A from Chinese companies, So it's
Speaker 8: we're not We're not ten years, tenures behind, one or
Speaker 8: two years behind, so it's possible to catch up.
Speaker 2: And the EV slow down is that causing you to
Speaker 2: to to sort of change the speed with which you're moving. Sorry,
Speaker 2: the sort of slow down in ev uptake is that
Speaker 2: is that having an impact on well.
Speaker 3: I mean.
Speaker 8: Investing in a in a giga factory is a huge cost.
Speaker 8: I mean it's a fifteen gig out hour does cost
Speaker 8: you one billion euros. So ans we need to be
Speaker 8: we need to be cautious under timing of of investment.
Speaker 3: Uh.
Speaker 8: And second point, which are the reasons for the slowdown
Speaker 8: of the market, They are very simple. The EV car
Speaker 8: is too expensive, very simple. I mean, if you look
Speaker 8: at the the thousand market in Europe, Spain, Italy, Greece,
Speaker 8: even France, I mean the market share of TV it
Speaker 8: is not that high. It's not that high. Italy two percent,
Speaker 8: Spain four percent, France hopefully a bit higher. But that's
Speaker 8: because fares on the infrastructure. But more important the fact
Speaker 8: that the cost of the EV is too too, too expensive.
Speaker 8: So we consider that to to to to improve the
Speaker 8: situation of the market, to to go back to a
Speaker 8: steep increase of this market, we need to bring affordable
Speaker 8: solutions and that's why we're take in some time.
Speaker 2: Okay, thank you and then hack on from a from
Speaker 2: your your electroizer. So hydrogen is a much more early
Speaker 2: stage industry, so we call it phase two technology. What
Speaker 2: are your thoughts on you know, you're at the beginning
Speaker 2: of the game.
Speaker 5: If you like, in many ways. What are your thoughts
Speaker 5: on what Europe should be focused on?
Speaker 9: Well, according to a lot of experts, I'm picking a
Speaker 9: suicide mission here and it's hard to fight against China.
Speaker 9: But as a European and probably also as an engineer,
Speaker 9: I have higher aspirations for Europe than you know, making
Speaker 9: food and cutting here you know, obviously I'm not a
Speaker 9: good customer, but I think in Europe we need to
Speaker 9: have the goal of doing more than just services. And
Speaker 9: I agree on the high value work, but that will
Speaker 9: not create enough jobs. I think we need to also,
Speaker 9: for resilience reasons, have certain core industries in Europe. And
Speaker 9: if there's one thing, you know, the past cop all
Speaker 9: of years have told us is that, you know, creating
Speaker 9: these dependencies on regimes that you cannot fully trust due
Speaker 9: to difficult geopolitical situations, we need to have some local
Speaker 9: production and content in Europe. So I'm not against important
Speaker 9: things from China, but I do think we need to try,
Speaker 9: at least in Europe to be involved in key industries
Speaker 9: going forward. We're not as disciplined, we're not as you know,
Speaker 9: strategic about it as the Chinese. They picked certain industries
Speaker 9: that they said, we've got to dominate these industries. Europe
Speaker 9: hasn't done the same, but we we still have a
Speaker 9: chance on the more difficult things. And I believe that
Speaker 9: hydrogen is much more difficult than solar. It's not only kapex,
Speaker 9: it's also efficiency. So the energy efficiency is much more
Speaker 9: important than just you know, the cost of steel and
Speaker 9: that's why we try to do it in Europe. And
Speaker 9: I think, you know, what we're asking for is sort
Speaker 9: of a level playing field where the Chinese are held
Speaker 9: to the same standards as I am as a European.
Speaker 9: So I think it's a bit fascinating that they are
Speaker 9: allowed to do things and sell it to Europe and
Speaker 9: if I did the same things, I will go to
Speaker 9: prison or see the big fine. And that's what I
Speaker 9: don't like about it, other than that's pro global trade
Speaker 9: and pro competition.
Speaker 2: Great so, and that level playing field is that? Yes,
Speaker 2: how you say it's sort of the goal of the
Speaker 2: European Commission.
Speaker 4: Yeah, absolutely, I think you know, speaking about the title
Speaker 4: of the session, should we be more protectionist? I think
Speaker 4: we all agree we shouldn't be protectionists, and I think
Speaker 4: this is not what the Commission aims at. It's all
Speaker 4: about indeed, resilience, it's all about level playing field. I
Speaker 4: heard the criticism of tariffs, but you know, tariffs they
Speaker 4: can play a role in those cases where there are
Speaker 4: unfair practices by third countries. We apply them to steal
Speaker 4: and it works rather well. We tried with solar there
Speaker 4: it didn't work. So tariffs have their advantages and droplets.
Speaker 4: We are complementing them with other tools to ensure that
Speaker 4: level playing field. We have, for example, the Foreign Subsidiest Regulation.
Speaker 4: We have the International Procurement instruments. So if EU companies
Speaker 4: do not have access to procurement in third countries, companies
Speaker 4: from those countries should not have access to procurement here.
Speaker 4: This is as simple as that, and so we will
Speaker 4: be applying that. And finally we have other instruments that
Speaker 4: try to ensure that we have a level playing field.
Speaker 4: Also across other dimensions such as climate protection or forced labor.
Speaker 4: We have the SEABUM, we have the Forced Labor regulation,
Speaker 4: and all of these tools will be increasingly applied in
Speaker 4: the coming years.
Speaker 2: Yeah, just to CLI, I think you alluded to this
Speaker 2: in terms of ownership of facilities, so sort of you know,
Speaker 2: Chinese ownership, Chinese companies setting up within Europe, so still skills, etc.
Speaker 5: What's your views on that.
Speaker 4: I mean, I think it's a classical yes, but you know,
Speaker 4: because I think for investments into existing companies, we heard
Speaker 4: that in Europe we are very good at innovative solutions
Speaker 4: and we have to be careful with Chinese companies coming here.
Speaker 4: Just to simply take over ips and shift production to China.
Speaker 4: And we actually have seen we have the so called
Speaker 4: foreign Investment Screening instrument, we had cases where such investments
Speaker 4: have been blocked. Of course, with this tool, we have
Speaker 4: to be very selective and careful because it's not always
Speaker 4: good for the companies. In terms of greenfield investments, indeed,
Speaker 4: again as we heard today, already China is the innovator currently,
Speaker 4: so we have to allow for those investments in the EU.
Speaker 4: But again we have to apply certain conditions. All of
Speaker 4: those battery manufacturing sites, for example in Hungary that are
Speaker 4: simple simply assembling cells from existing supplies located in China.
Speaker 4: This does not improve our resilience. Also, in terms of
Speaker 4: sharing intellectual property, I think we have to draw conclusions
Speaker 4: from what China was doing to our companies, so encourage
Speaker 4: Chinese companies to have joint ventures with local partners, share knowledge,
Speaker 4: share R and D and so on.
Speaker 2: So it's it's sort of leveling the pailfin I don't
Speaker 2: ownership level as well, thinking about that, okay, thank you
Speaker 2: and Herbert. In terms of there's been some discussion about
Speaker 2: what should we be done a country level versus at
Speaker 2: the European commission level. How do you how do you
Speaker 2: think about that?
Speaker 7: That's probably I'm not sure. I'm probably not the right
Speaker 7: one to answer the question. Europe is not the state.
Speaker 6: Now and and we have those aspirations that we would
Speaker 6: speak with one voice. But then we have all Chinese
Speaker 6: investing in Hungary because they are received more friendly there.
Speaker 7: So he said good, I said bad.
Speaker 6: I'm not sure because you know, at the end, I'm
Speaker 6: convinced that we need this Chinese investment with source conditions. Yeah,
Speaker 6: joint venturing, sharing technology, bring the technology over. Then we
Speaker 6: have a chance to restart like China basically try it
Speaker 6: now for thirty five years to get hold on the
Speaker 6: automotive industry. Yeah, inviting external Western investors like Volkswagen to
Speaker 6: joint venture voyks Wargen still is a minority investments in China,
Speaker 6: bringing the technology and then growing together.
Speaker 7: And we should do the same. And this is why I.
Speaker 6: Think it's positive what Hungary does, inviting China, subsidizing China,
Speaker 6: bringing the technology.
Speaker 7: And I agree at the first stage this is assembly.
Speaker 6: But it was at the first stage also assembly when
Speaker 6: we brought the cars to China. Yeah, we started this assembly,
Speaker 6: then we integrated. But I think to dream of building
Speaker 6: up a solar industry from Europe out of the most
Speaker 6: important market, which is China. Sixty percent of this is
Speaker 6: a cluster in itself. And I'm not sure whether this
Speaker 6: defense line of this is forced labor and this is
Speaker 6: not green energy we'll hold for long.
Speaker 7: I've seen most of the plants.
Speaker 6: The plants are excellent, they're highly automized. Most of the
Speaker 6: plants are running on green energy already now on solar
Speaker 6: and wind. And so this is something you just you
Speaker 6: have to be able to compete against the cluster where
Speaker 6: the smallest producer in viable conditions would produce twenty gigawards
Speaker 6: per year, and the European player would produce one, and
Speaker 6: the startups we are financing would produce one and then
Speaker 6: another one in a few years. That's not working, so
Speaker 6: it never be big competitive. You only can do it.
Speaker 6: Invite the Chinese to come here joint venturing, build up
Speaker 6: something serious twenty ten twenty gig others. We have the conditions,
Speaker 6: we can absolutely match the cospontition. You don't have energy
Speaker 6: much cheaper in China around four cent you need for
Speaker 6: solar production.
Speaker 7: We have it in Spain, we have it in Norway.
Speaker 6: Labor cost in Hungary is not so different from from China,
Speaker 6: so and the and the conditions regarding environment are very similar,
Speaker 6: so it can be done. Don't try to compete against
Speaker 6: a world power with a few.
Speaker 2: Startups, right right, and that you're you're sort of happy
Speaker 2: for that to be a sort of country by country decision.
Speaker 7: You know.
Speaker 6: I think to accept it, I have to. We have
Speaker 6: to accept it that Europe is not one block. And
Speaker 6: it's probably good that it's not one block.
Speaker 2: Okay, great, we have about ten minutes left. Gonna move
Speaker 2: a little bit onto sort of trade and supply chains
Speaker 2: and Hacker. I'm going to ask you in terms of
Speaker 2: again sort of hydrogen is sort of newer industry. People
Speaker 2: talking about importing, exporting, how do you think Europe should
Speaker 2: think about the supply chains for finish new industry.
Speaker 9: Well, China controls ninety percent of rare earth minerals, so
Speaker 9: im I do agree that China has certain competitive advantages
Speaker 9: where it doesn't make sense to compete against them. But
Speaker 9: I think we leave too much in the hands of China.
Speaker 9: I think we left too much in the hands of Russia,
Speaker 9: you know, especially Germany on the on the energy politics
Speaker 9: are we're going to do the same with China on
Speaker 9: everything else. I think that's dangerous. We need we need,
Speaker 9: we need a plan for how to get access to
Speaker 9: critical raw materials also in Europe, and we need to
Speaker 9: probably prioritize the technologies where we don't rely so much
Speaker 9: on these rare earth minerals. You know, ninety percent control
Speaker 9: by by China, and that's that is possible. But you know,
Speaker 9: supply chains for all energy transition technologies are franchile and difficult,
Speaker 9: whether it's batteries or electoralizers or other things. You know,
Speaker 9: there are certain special ingredients that you need, and I
Speaker 9: think that's where probably we can try to coordinate things
Speaker 9: on the European level, and I know there are initiatives
Speaker 9: to do that, but Europe needs a plan for how
Speaker 9: to access some of these metals and minerals over time. Otherwise,
Speaker 9: you know, we're not going to be able to produce
Speaker 9: anything out of Europe. Then it will all be imports.
Speaker 2: Okay, So you would definitely include that in scope in
Speaker 2: terms of industrial strategy.
Speaker 5: Yeah, and would you would you agree?
Speaker 8: All we are acknowledging the fact that for time being,
Speaker 8: most of the equipment are supplied by China Korea one
Speaker 8: hundred percent. Actually, most of the refining capabilities for a
Speaker 8: fight for lysium are based in China, and indeed I
Speaker 8: consider it as a as a threat. So from that perspective,
Speaker 8: we're trying to get as much as possible partnership between
Speaker 8: Chinese companies European ones in order to set up facilities
Speaker 8: in Europe. A good example of that is a supplier
Speaker 8: of castile active material, which going to be a joint
Speaker 8: venture between a Chinese company and Oranol, a French company.
Speaker 8: So setting up facilities in North or France. I think
Speaker 8: that's that the way to that the way to move forward.
Speaker 8: We have other other projects, other similar projects in Europe
Speaker 8: or close to Europe. It's the way to progressively move
Speaker 8: out of the of the Chinese hands. But it will
Speaker 8: take time. It will take time. It's not for tomorrow,
Speaker 8: it's not it's not happening all the night.
Speaker 2: Right, But that's sort of in scope supply chains, totally
Speaker 2: in scope.
Speaker 5: In terms of strategy.
Speaker 2: Yeah, and just one question actually on recycling and circularity,
Speaker 2: because I know that's part of your role. How do
Speaker 2: you factor that into the sort of supply chain thinking, Yeah.
Speaker 4: It's a key element. I think we will be working
Speaker 4: more and more on that. We have recently also greed
Speaker 4: the sorry I'm mentioning regulations a lot of the time.
Speaker 5: Yeah, yeah, my world.
Speaker 4: We have the battery regulation which sets certain requirements in
Speaker 4: terms of recycled content for batteries. We will be doing
Speaker 4: the same for other products in the future. For example, steel,
Speaker 4: we want to set eco design requirements, so called eco
Speaker 4: design requirements for steel in terms of recycled content, in
Speaker 4: terms of carbon content, in terms of you know.
Speaker 3: Maybe equality as well.
Speaker 4: And that will also allow creating so called lead markets
Speaker 4: in Europe, providing consumers with the clear reference they can
Speaker 4: use when they buy a car, and they in that
Speaker 4: way they can choice also on the base of the
Speaker 4: of those environmental dimensions of the steel.
Speaker 5: Okay, great.
Speaker 2: And in terms of SEABAM, you mentioned SEABAM earlier. How
Speaker 2: important do you see that? Really?
Speaker 4: I mean, that's that was nicely put in the introductory
Speaker 4: presentation by Bloomberg, that it's really a key thing, to
Speaker 4: key element to allow energy intensive industries in Europe to
Speaker 4: have a level playing field. It will start applying soon
Speaker 4: only to a limited number of products. So it's an
Speaker 4: important element of the puzzle. But as I said, I
Speaker 4: think we have to also think more about downstream products.
Speaker 4: You know, wind turbines, batteries, sprill do as well, but
Speaker 4: there's scope to do much more than those upstream products
Speaker 4: covered by SEBAM.
Speaker 2: Okay, So SEABAM does seem to be one of those
Speaker 2: level in the playing field type roles, and we actually
Speaker 2: saw my country. It seems to create different anxiety and
Speaker 2: depending on where you are in the world, they sort
Speaker 2: of they believe in SEABAM or they're more stressed about
Speaker 2: it actually some of the developing world, certainly as we
Speaker 2: saw with the prices going on. And then so could
Speaker 2: you characterize it in your view the trading relationship with
Speaker 2: China and US, how do you think we should think
Speaker 2: about that?
Speaker 7: That's a bit concern, That's a big concern. Now. I
Speaker 7: fully understand that.
Speaker 6: US have to and are willing and committed to contain China.
Speaker 7: There have been.
Speaker 6: Put under huge stress because of the growth in China
Speaker 6: and also techno knowledgy and military advancement, so they have
Speaker 6: to do something. I think they have really a tough
Speaker 6: grip on China because China is not growing because of
Speaker 6: the American sunctions.
Speaker 7: There are a lot of lots of growth in there.
Speaker 6: I mentioned stock markets are really down, a labor market
Speaker 6: is complicated. It so China is really suffering under the
Speaker 6: under the sanction scheme. I think we have to be
Speaker 6: careful because you know, if we, if we overs let's say,
Speaker 6: if we if this conflict gets out of control and
Speaker 6: too far, the whole world will suffer a lot. And
Speaker 6: what we what we currently say, and we have been
Speaker 6: and I was really concerned about the poll there that
Speaker 6: sixty percent would ask for higher input taxes now here
Speaker 6: in this room, which is educated people, and this is
Speaker 6: very concerning because then the energy transition will take much longer.
Speaker 6: Everything will become more expensive. We will have a continuous
Speaker 6: inflation if we really and I'm in a semiconductor industry
Speaker 6: and we're now trying to get all those companies out of.
Speaker 7: Taiwan here to Europe and to the US.
Speaker 6: That will double the prices of semiconductors. And if we,
Speaker 6: if we, if we get further into this conflict, and
Speaker 6: we had about three thousand constraints in text, constraints when
Speaker 6: it comes to free trade only the last two years
Speaker 6: built up mostly because of this tariff. And this for
Speaker 6: me is the biggest concern for the energy transition. I'm
Speaker 6: an optimist. I think we can stop climate change, and
Speaker 6: probably not at one point five, but probably one point
Speaker 6: seven or something like that, because we have very positive
Speaker 6: science as well. But if we have this conflict and
Speaker 6: we have continuous and we will have then continuous inflation
Speaker 6: because a lot of the zero inflation over the past
Speaker 6: years we had because of China, because China has become
Speaker 6: solar now two euros to ten cent in ten years,
Speaker 6: and batteries the same no cost degrees of twenty percent area.
Speaker 6: So if we take that away from the world and
Speaker 6: we have two or three ecosystems, everything will become more expensive.
Speaker 6: We will have continued inflation, and then we will have high.
Speaker 7: Cost of capital. And the high cost of capital is
Speaker 7: for me.
Speaker 6: We discussed it yesterday, the biggest concern in the energy transition,
Speaker 6: because we need so much capital for doing all those renewables,
Speaker 6: all those huge investments, even in hydrogen and other things.
Speaker 6: The biggest concern for me is continuous inflation because of
Speaker 6: trade barriers, because of the conflict between China and the US.
Speaker 2: My view, yeah, yeah, you trade as freely as possible,
Speaker 2: so I would wait, but.
Speaker 6: I would recommend no, we take them very seriously. We
Speaker 6: get tough with China, but we make.
Speaker 7: Use of China.
Speaker 2: Please can join me in thanking my panelist for discussing.
Speaker 2: Thank you.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
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