1 00:00:02,920 --> 00:00:10,799 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the 2 00:00:10,840 --> 00:00:15,000 Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 3 00:00:15,040 --> 00:00:17,520 Speaker 1: Eastern on fo card Playing and Broyd Auto with the 4 00:00:17,520 --> 00:00:21,400 Speaker 1: Bloomberg Business App. Listen on demand wherever you get your podcasts, 5 00:00:21,640 --> 00:00:24,000 Speaker 1: or watch us live on YouTube. 6 00:00:25,040 --> 00:00:26,119 Speaker 2: I'm looking at Tesla. 7 00:00:26,520 --> 00:00:29,480 Speaker 3: That stock has been in the news every day every 8 00:00:29,560 --> 00:00:32,960 Speaker 3: day this year. The stock is really underperforming, down thirty 9 00:00:33,000 --> 00:00:36,320 Speaker 3: seven percent, so it seems like an odd time for Tesla. 10 00:00:36,720 --> 00:00:37,760 Speaker 2: We'll ask shareholders to. 11 00:00:37,760 --> 00:00:41,000 Speaker 3: Vote again on the same fifty six billion dollar compensation 12 00:00:41,040 --> 00:00:44,239 Speaker 3: package for chief executive officer Elon Musk that was avoided 13 00:00:44,680 --> 00:00:48,839 Speaker 3: by a Delaware court early this year. Craig Trudell joins us. 14 00:00:48,840 --> 00:00:53,519 Speaker 3: He covers all that Auto stuff for Bloomberg. It's just 15 00:00:53,640 --> 00:00:56,400 Speaker 3: amazing here, Craig, it seems like an odd time to 16 00:00:56,440 --> 00:00:59,640 Speaker 3: be asking for this monster's payday here. 17 00:01:00,000 --> 00:01:01,960 Speaker 2: What's going on at Tesla? The board and Elon? 18 00:01:03,160 --> 00:01:05,839 Speaker 4: Yeah, it's it's not a huge shock in that we 19 00:01:05,840 --> 00:01:09,559 Speaker 4: we sort of heard the complaining about this ruling, uh 20 00:01:09,600 --> 00:01:12,240 Speaker 4: as as soon as it hit, you know, we saw 21 00:01:12,280 --> 00:01:14,520 Speaker 4: it play out on on X as you would expect. 22 00:01:15,280 --> 00:01:18,520 Speaker 4: But it is I guess I was surprised to see that. 23 00:01:18,840 --> 00:01:21,160 Speaker 4: You know, their their move here was to take the 24 00:01:21,200 --> 00:01:24,560 Speaker 4: same plan and just put it back to the shareholders. 25 00:01:24,880 --> 00:01:27,000 Speaker 4: It's a it's a fairly simple one, but it does 26 00:01:27,040 --> 00:01:30,399 Speaker 4: seem like a pretty bold one, just given the very 27 00:01:30,480 --> 00:01:33,800 Speaker 4: thorough uh you know case that was laid out by 28 00:01:33,840 --> 00:01:38,120 Speaker 4: the Delaware Chance record, uh you know against the company 29 00:01:38,120 --> 00:01:42,240 Speaker 4: in particular, particularly the board. I mean, the language that 30 00:01:42,360 --> 00:01:47,200 Speaker 4: Judge Kathleen McCormick used was was pretty uh, pretty notable. 31 00:01:47,360 --> 00:01:51,559 Speaker 4: She described the directors as and I quote, supine servants 32 00:01:51,600 --> 00:01:54,960 Speaker 4: of an overwinning master. I mean, she just had a 33 00:01:54,960 --> 00:01:59,320 Speaker 4: lot of mil zingers about this, about this board. And 34 00:01:59,400 --> 00:02:02,920 Speaker 4: for them to you know, respond to that by you know, 35 00:02:03,560 --> 00:02:06,160 Speaker 4: doing it over again is really something. 36 00:02:08,600 --> 00:02:11,520 Speaker 5: Just to be clear, we're talking fifty six billion, like 37 00:02:11,560 --> 00:02:13,200 Speaker 5: with a bee with. 38 00:02:13,160 --> 00:02:17,120 Speaker 4: A bee, yeah, I mean, how do we get to 39 00:02:17,160 --> 00:02:21,480 Speaker 4: that if you want to, if you want to defend 40 00:02:21,480 --> 00:02:25,080 Speaker 4: the board here, of course they did. We constantly referred 41 00:02:25,080 --> 00:02:28,359 Speaker 4: to this pay package as a moonshot award, right, and 42 00:02:28,360 --> 00:02:32,600 Speaker 4: and it absolutely was. It was setting targets that nobody 43 00:02:32,600 --> 00:02:36,560 Speaker 4: thought was was at all possible that the company wouldn't 44 00:02:36,560 --> 00:02:39,360 Speaker 4: be able to pull off. It was it was based 45 00:02:39,400 --> 00:02:43,239 Speaker 4: on performance of the company and its earnings and market value. 46 00:02:43,280 --> 00:02:47,279 Speaker 4: And I think there was a combination of Musk absolutely 47 00:02:47,320 --> 00:02:51,639 Speaker 4: pulling you know, miracles in terms of the earnings performance 48 00:02:51,639 --> 00:02:54,600 Speaker 4: of this company that no one saw company comping coming. 49 00:02:54,960 --> 00:02:57,079 Speaker 4: But it was also the case that you know, this 50 00:02:57,360 --> 00:03:00,480 Speaker 4: company was the sort of poster boy for the zerp 51 00:03:00,560 --> 00:03:04,600 Speaker 4: Era and you know, a mean stock, right, and we 52 00:03:04,680 --> 00:03:08,440 Speaker 4: don't get there without you know, the enthusiasm that Musk 53 00:03:08,600 --> 00:03:11,320 Speaker 4: manage to pull off. In addition to turning this company 54 00:03:11,440 --> 00:03:15,280 Speaker 4: into a car company to really you know, take seriously. 55 00:03:17,919 --> 00:03:21,799 Speaker 3: All right, So they're also looking to reincorporate I guess 56 00:03:21,880 --> 00:03:24,560 Speaker 3: in a friendlier jurisdiction, maybe get out of Delaware and 57 00:03:24,600 --> 00:03:26,520 Speaker 3: get to the great state of Texas. 58 00:03:26,560 --> 00:03:28,080 Speaker 2: Is that all tied together with this? 59 00:03:29,440 --> 00:03:32,919 Speaker 4: They interestingly do lay out in the proxy that they 60 00:03:32,960 --> 00:03:36,080 Speaker 4: wanted to sort of put this to shareholders together. They 61 00:03:36,120 --> 00:03:40,600 Speaker 4: didn't want to be perceived as basically running from Delaware 62 00:03:40,840 --> 00:03:45,840 Speaker 4: in response to the ruling and going to Texas where 63 00:03:45,880 --> 00:03:49,240 Speaker 4: they would be treated differently. They wanted to have shareholders, 64 00:03:49,840 --> 00:03:52,680 Speaker 4: you know, get another opportunity to say yay or nay 65 00:03:52,720 --> 00:03:55,600 Speaker 4: to this and give them an opportunity to weigh in 66 00:03:55,640 --> 00:03:58,760 Speaker 4: on whether they should change the incorporation. I think it 67 00:03:58,920 --> 00:04:02,240 Speaker 4: still remains to be seeing you know, just exactly how 68 00:04:02,280 --> 00:04:05,800 Speaker 4: this can can work out, uh legally speaking, this idea 69 00:04:05,840 --> 00:04:09,320 Speaker 4: that a court would make this ruling and and the 70 00:04:09,400 --> 00:04:14,240 Speaker 4: company would, you know, basically just have shareholders perform a 71 00:04:14,360 --> 00:04:18,440 Speaker 4: do over after the judge you know, said that they, 72 00:04:18,720 --> 00:04:21,120 Speaker 4: you know, did not look out for the best interests 73 00:04:21,160 --> 00:04:22,560 Speaker 4: of shareholders. 74 00:04:22,760 --> 00:04:22,960 Speaker 1: Uh. 75 00:04:23,279 --> 00:04:26,120 Speaker 4: You know, I guess if if you're Tesla, the argument 76 00:04:26,200 --> 00:04:28,800 Speaker 4: you make here is that, well, you know, you just 77 00:04:28,920 --> 00:04:32,520 Speaker 4: exposed this idea that that we apparently did enough and 78 00:04:32,600 --> 00:04:35,880 Speaker 4: broke it down and uh, you know, pretty damning detail. 79 00:04:36,480 --> 00:04:39,719 Speaker 4: The investors know. Now the shareholders can vote again, and 80 00:04:39,839 --> 00:04:43,040 Speaker 4: if they vote in favor, then uh, you know, what's 81 00:04:43,080 --> 00:04:45,440 Speaker 4: your what's your problem is essentially. 82 00:04:46,880 --> 00:04:52,400 Speaker 5: Yeah, hither too. I want to transition to Continental, which 83 00:04:52,600 --> 00:04:56,000 Speaker 5: is an autoparts company really that stuck us down over 84 00:04:56,080 --> 00:04:58,960 Speaker 5: five percent over in Germany. And I say that because 85 00:04:59,000 --> 00:05:02,200 Speaker 5: their results were worse than feared, and there's all points 86 00:05:02,240 --> 00:05:04,960 Speaker 5: to the current auto market isn't doing too great. And 87 00:05:05,000 --> 00:05:07,480 Speaker 5: then they also ev market isn't doing too great and 88 00:05:07,520 --> 00:05:09,680 Speaker 5: for Continental, that squeezes on both sides. 89 00:05:11,320 --> 00:05:14,160 Speaker 4: Yeah, I think they've been a company that really has 90 00:05:14,160 --> 00:05:19,080 Speaker 4: struggled with this transition, you know, really like very very 91 00:05:19,160 --> 00:05:23,440 Speaker 4: much been in a position of being caught flat footed 92 00:05:23,560 --> 00:05:28,000 Speaker 4: in terms of being ready for electrification, and has made 93 00:05:28,000 --> 00:05:30,640 Speaker 4: a lot of a lot of moves to try and 94 00:05:30,760 --> 00:05:34,800 Speaker 4: address that that haven't gone particularly smoothly. And so, in 95 00:05:34,839 --> 00:05:37,640 Speaker 4: addition to this idea that you know, the auto market 96 00:05:37,720 --> 00:05:40,800 Speaker 4: is showing some signs of strain under the pressure of 97 00:05:41,680 --> 00:05:45,880 Speaker 4: higher interest rates making it more difficult for consumers to 98 00:05:45,920 --> 00:05:48,679 Speaker 4: be able to afford big, big purchases like a new car, 99 00:05:49,520 --> 00:05:52,760 Speaker 4: it's also very much a case specific to this company 100 00:05:52,800 --> 00:05:56,240 Speaker 4: where they're really trying to remake themselves and struggling to 101 00:05:56,279 --> 00:05:59,120 Speaker 4: do so. 102 00:05:59,200 --> 00:06:00,880 Speaker 2: Craig, We're where are we now? 103 00:06:00,920 --> 00:06:05,200 Speaker 3: Just in kind of the markets perception of overall and 104 00:06:05,279 --> 00:06:07,760 Speaker 3: demand for evs. I mean, is this just a bump 105 00:06:07,800 --> 00:06:11,080 Speaker 3: in the road that an industry that's undergoing a long 106 00:06:11,200 --> 00:06:14,599 Speaker 3: term transition should we should expect to see, or there's 107 00:06:14,600 --> 00:06:16,240 Speaker 3: something more fundamental going on out there. 108 00:06:17,480 --> 00:06:20,320 Speaker 4: Yeah, it's a good question, because I think even folks 109 00:06:20,360 --> 00:06:24,560 Speaker 4: who covered this just religiously are our colleagues at Bloomberg 110 00:06:24,600 --> 00:06:27,919 Speaker 4: New Energy Financed. I think they were initially reluctant to 111 00:06:28,000 --> 00:06:30,960 Speaker 4: sort of come around to this idea of an ev 112 00:06:31,160 --> 00:06:35,560 Speaker 4: slowdown and sort of you know, had a view that 113 00:06:35,680 --> 00:06:39,839 Speaker 4: you know, people were more more pessimistic than was really warranted. 114 00:06:40,000 --> 00:06:42,599 Speaker 4: And this was as you know, a lot of headlines 115 00:06:42,640 --> 00:06:45,880 Speaker 4: were coming out late last year early this year, I 116 00:06:45,880 --> 00:06:49,240 Speaker 4: think when when Tesla reported their first quarter deliveries and 117 00:06:49,320 --> 00:06:53,720 Speaker 4: it came in so far short of of everyone's expectations. 118 00:06:53,760 --> 00:06:57,080 Speaker 4: You know, the consensus was coming down and down going 119 00:06:57,120 --> 00:07:00,840 Speaker 4: into that report, and yet even then the company came up, 120 00:07:00,880 --> 00:07:03,920 Speaker 4: you know, tens of thousands of vehicles short of where 121 00:07:04,279 --> 00:07:08,360 Speaker 4: people were seeing them, you know, report. I think even 122 00:07:08,440 --> 00:07:11,920 Speaker 4: BNF now is very much concerned about, you know, the 123 00:07:13,200 --> 00:07:17,600 Speaker 4: magnitude of deceleration that we've seen and the challenges that 124 00:07:17,640 --> 00:07:21,080 Speaker 4: we're seeing, particularly in a market like the US, where 125 00:07:21,280 --> 00:07:24,240 Speaker 4: you would think that at this point, you know, this 126 00:07:24,400 --> 00:07:27,800 Speaker 4: many years into this transition, and with all the investments 127 00:07:27,840 --> 00:07:30,800 Speaker 4: that companies are making, that surely we would start to 128 00:07:30,840 --> 00:07:35,360 Speaker 4: see you know, more momentum or at least a healthier 129 00:07:35,360 --> 00:07:39,040 Speaker 4: continuation of momentum. Instead, we've seen a real slow down, 130 00:07:39,360 --> 00:07:42,640 Speaker 4: and I think you know, even even Biden's Inflation Reduction 131 00:07:42,720 --> 00:07:45,320 Speaker 4: Act does a lot of the right things to try 132 00:07:45,360 --> 00:07:48,880 Speaker 4: and you know, uh, move this this part of the 133 00:07:48,880 --> 00:07:53,240 Speaker 4: industry forward, and yet executions has been a challenge. 134 00:07:54,360 --> 00:07:57,040 Speaker 5: Hey, Craig, thanks a lot, Craig Trudell Bloomberg a Global 135 00:07:57,120 --> 00:08:00,520 Speaker 5: Autos editor. Super appreciated and we are at a Bloomberg 136 00:08:00,760 --> 00:08:02,960 Speaker 5: Ye ANYF conference right now. But I think, but that 137 00:08:03,000 --> 00:08:05,840 Speaker 5: does point to the fact that we don't actually know 138 00:08:05,880 --> 00:08:08,440 Speaker 5: how this will play out, and things are really lumpy, 139 00:08:08,720 --> 00:08:11,200 Speaker 5: and you can be in a structural shift in different 140 00:08:11,200 --> 00:08:14,800 Speaker 5: industries and still be a cyclical industry like auto auto 141 00:08:14,800 --> 00:08:17,600 Speaker 5: industry is cyclical, right, so but you can still be 142 00:08:17,760 --> 00:08:19,840 Speaker 5: in a structural shift. So all of these things can 143 00:08:19,880 --> 00:08:22,160 Speaker 5: be true. It's just a matter of then how you 144 00:08:22,240 --> 00:08:24,920 Speaker 5: price it. If you're an investor, that gets complicated. 145 00:08:24,960 --> 00:08:26,000 Speaker 2: It does get complicated. 146 00:08:26,440 --> 00:08:28,880 Speaker 3: And I just wonder to what extent if any, this 147 00:08:29,000 --> 00:08:31,840 Speaker 3: ev transition, at least in the United States, has become 148 00:08:31,880 --> 00:08:36,480 Speaker 3: politicized blue red totally, you know, And if that's in 149 00:08:36,520 --> 00:08:39,040 Speaker 3: fact the case, then that really I think is a 150 00:08:39,080 --> 00:08:42,520 Speaker 3: significant roadblock for the mass adoption, the mass volume that 151 00:08:42,559 --> 00:08:45,520 Speaker 3: the economics demand to get the unit profitability there, because 152 00:08:45,559 --> 00:08:47,719 Speaker 3: it's not you barely make a profit. It seventy or 153 00:08:47,760 --> 00:08:49,240 Speaker 3: eighty thousand a car, and its Kevin Tyne and a 154 00:08:49,240 --> 00:08:51,160 Speaker 3: Bloomberg Intelligence points out. 155 00:08:51,160 --> 00:08:52,640 Speaker 2: How you're going to make a profit at thirty or 156 00:08:52,679 --> 00:08:53,360 Speaker 2: forty thousand dollars. 157 00:08:53,400 --> 00:08:54,560 Speaker 5: Yea, exactly, exactly. 158 00:08:56,120 --> 00:09:00,160 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 159 00:09:00,160 --> 00:09:03,080 Speaker 1: weekdays at ten am Eastern on applecar. 160 00:09:02,640 --> 00:09:05,360 Speaker 6: Play and Android Auto with a Bloomberg Business Act. 161 00:09:05,520 --> 00:09:08,360 Speaker 1: You can also listen live on Amazon Alexa from our 162 00:09:08,400 --> 00:09:12,760 Speaker 1: flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 163 00:09:13,880 --> 00:09:17,200 Speaker 5: We are at Bloomberg an ef A Summit, Day two. So, Paul, 164 00:09:17,200 --> 00:09:19,240 Speaker 5: one of my bigger takeaways from yesterday when we were 165 00:09:19,240 --> 00:09:23,640 Speaker 5: here is that you have a lot of money being 166 00:09:23,720 --> 00:09:26,680 Speaker 5: spent on stuff, and that's the good part. The other 167 00:09:26,720 --> 00:09:29,240 Speaker 5: part is there's still a lot of uncertainty in terms 168 00:09:29,240 --> 00:09:31,680 Speaker 5: of are we spending on the right stuff? Is the 169 00:09:31,720 --> 00:09:35,720 Speaker 5: demand really there? Permitting is an issue, connection to lays 170 00:09:35,840 --> 00:09:38,040 Speaker 5: trade issues. There's lots of stuff that we're trying to 171 00:09:38,120 --> 00:09:40,680 Speaker 5: unpack here. One way to look at it is the 172 00:09:40,720 --> 00:09:44,200 Speaker 5: importance of big energy in this space. So you need 173 00:09:44,320 --> 00:09:48,440 Speaker 5: exon Chevron Shell total BP. You need these guys to 174 00:09:48,480 --> 00:09:50,680 Speaker 5: put money in the right spot to really help turn 175 00:09:50,720 --> 00:09:52,800 Speaker 5: things around. So one of those individuals we're going to 176 00:09:52,880 --> 00:09:57,160 Speaker 5: talk to you right now is Jeff Gustavin. Nope, Gustafson, 177 00:09:57,400 --> 00:09:59,640 Speaker 5: I can't do it. I asked him to say, gust Ofsen. 178 00:09:59,760 --> 00:10:02,319 Speaker 5: It's V and the s Jeff, this is my problem. 179 00:10:02,760 --> 00:10:06,000 Speaker 5: He's president of Chevron New Energies. He's been at Chevron 180 00:10:06,040 --> 00:10:07,040 Speaker 5: for what was it twenty five years? 181 00:10:07,080 --> 00:10:07,959 Speaker 7: You said twenty five years. 182 00:10:08,080 --> 00:10:11,000 Speaker 5: We've belt lots of different positions. What brought you to 183 00:10:11,280 --> 00:10:15,000 Speaker 5: the new energy part of Chevron? What's that like for you? 184 00:10:15,480 --> 00:10:17,600 Speaker 7: Yeah, well, first of all, great to be here, thanks 185 00:10:17,640 --> 00:10:22,000 Speaker 7: for having me. We launched these new businesses about three 186 00:10:22,080 --> 00:10:25,360 Speaker 7: years ago. This is actually our third full year and 187 00:10:25,400 --> 00:10:28,880 Speaker 7: it's a suite of businesses that support our lower carbon 188 00:10:29,000 --> 00:10:31,960 Speaker 7: strategy as a company. There's two pieces to that. One 189 00:10:32,080 --> 00:10:35,400 Speaker 7: is lowering the carbon intensity of our traditional oil. 190 00:10:35,200 --> 00:10:36,040 Speaker 8: And gas business. 191 00:10:36,040 --> 00:10:39,400 Speaker 7: The other part is growing new low carbon businesses and 192 00:10:39,440 --> 00:10:42,840 Speaker 7: solutions to scale, and that's what Chevron New Energies is. 193 00:10:42,880 --> 00:10:47,280 Speaker 7: We're focused on renewable fuels, carbon capture, utilization and storage, 194 00:10:47,760 --> 00:10:54,160 Speaker 7: hydrogen carbon offsets, emerging technologies, and everything in between. This 195 00:10:54,200 --> 00:10:58,360 Speaker 7: is something that's always been a passion of mine, the 196 00:10:58,480 --> 00:11:03,000 Speaker 7: energy transition and low carbon energy. I love oil and gas. 197 00:11:03,120 --> 00:11:03,720 Speaker 8: I grew up in. 198 00:11:03,760 --> 00:11:08,680 Speaker 7: Oil and gas, but now shifting seeing a company like Chevron, 199 00:11:09,080 --> 00:11:12,640 Speaker 7: with the capabilities we bring to this space, growing these 200 00:11:12,679 --> 00:11:15,240 Speaker 7: new businesses. I couldn't be more excited about this role. 201 00:11:15,679 --> 00:11:17,640 Speaker 3: And I always looked to the educational background of our 202 00:11:17,679 --> 00:11:18,920 Speaker 3: guest because I think that's kind of fun. 203 00:11:19,160 --> 00:11:20,160 Speaker 2: University of Colorado. 204 00:11:20,160 --> 00:11:23,160 Speaker 3: He's a buffalo, that's big, and he's also got his 205 00:11:23,280 --> 00:11:26,040 Speaker 3: NBA from the Red Macombs School of Business at the 206 00:11:26,080 --> 00:11:28,320 Speaker 3: University of Texas. Red Macombs is a co founder of 207 00:11:28,320 --> 00:11:31,040 Speaker 3: Clear Channel, little radio company. I took public back in 208 00:11:31,040 --> 00:11:34,000 Speaker 3: the day, so I know read pretty well. And Larry 209 00:11:34,000 --> 00:11:36,040 Speaker 3: Mays like this, likes to say, Hey, I got my 210 00:11:36,559 --> 00:11:38,240 Speaker 3: name on the NBA program in Texas a and in 211 00:11:38,320 --> 00:11:40,680 Speaker 3: for ten million, Red you spent fifteen million. 212 00:11:40,720 --> 00:11:41,440 Speaker 2: I got a better deal. 213 00:11:41,520 --> 00:11:42,200 Speaker 5: You got a better deal. 214 00:11:42,320 --> 00:11:44,079 Speaker 2: Yeah, Jeff, what is I don't know. 215 00:11:44,080 --> 00:11:46,720 Speaker 3: If you fast forward five years from now, ten years 216 00:11:46,760 --> 00:11:50,360 Speaker 3: from now, how do you guys think about sustainable energy 217 00:11:50,400 --> 00:11:52,720 Speaker 3: as a part of the overall portfolio of Chevron. What 218 00:11:52,760 --> 00:11:54,600 Speaker 3: percentage do you think that might look like? 219 00:11:54,960 --> 00:11:55,360 Speaker 7: Yeah? 220 00:11:55,440 --> 00:11:56,040 Speaker 8: Good question. 221 00:11:56,160 --> 00:12:01,959 Speaker 7: And when we launched, we announced that we were allocating 222 00:12:02,080 --> 00:12:05,840 Speaker 7: or guiding to spending ten billion dollars over an eight 223 00:12:05,920 --> 00:12:08,120 Speaker 7: year period, right, this would be twenty twenty one to 224 00:12:08,280 --> 00:12:12,160 Speaker 7: twenty eight And that's just the starting point. So these 225 00:12:12,200 --> 00:12:17,080 Speaker 7: are already a significant part of our capital allocation strategy. 226 00:12:17,120 --> 00:12:19,480 Speaker 7: We have a very large oil and gas business, which 227 00:12:19,520 --> 00:12:23,000 Speaker 7: requires a lot of capital to maintain and grow that 228 00:12:23,040 --> 00:12:26,880 Speaker 7: business to meet global demand. But these these businesses are 229 00:12:26,880 --> 00:12:29,800 Speaker 7: We're spending anywhere from one and a half to two 230 00:12:29,800 --> 00:12:32,400 Speaker 7: billion a year to support these new businesses. And my 231 00:12:32,559 --> 00:12:35,880 Speaker 7: job and our job as a new segment is to 232 00:12:35,920 --> 00:12:38,760 Speaker 7: find the right opportunities that are investable so we can 233 00:12:38,800 --> 00:12:40,600 Speaker 7: grow this business even further. 234 00:12:40,720 --> 00:12:42,640 Speaker 5: So Paul asked this question and break and I actually 235 00:12:42,640 --> 00:12:44,079 Speaker 5: think it's a good one, so I'm gonna ask it. 236 00:12:44,480 --> 00:12:47,760 Speaker 5: You're based in Houston, and his question was, are guys 237 00:12:47,800 --> 00:12:49,040 Speaker 5: like you the new energy people? 238 00:12:49,120 --> 00:12:49,200 Speaker 8: Are? 239 00:12:49,280 --> 00:12:50,600 Speaker 5: Are you guys welcome in Houston? 240 00:12:50,960 --> 00:12:54,640 Speaker 3: Like the oil bar, like the oilman's bar, taking. 241 00:12:54,360 --> 00:12:56,960 Speaker 5: Like the cowboy guys who stick like a pipe in 242 00:12:56,960 --> 00:12:59,520 Speaker 5: the ground and get oil. He's thinking those people, are 243 00:12:59,520 --> 00:13:00,680 Speaker 5: you welcome in those bars? 244 00:13:01,720 --> 00:13:01,960 Speaker 8: Yes? 245 00:13:03,559 --> 00:13:06,160 Speaker 7: And I love being referred to as a new energy person, 246 00:13:07,120 --> 00:13:09,960 Speaker 7: but no, I mean this is I think this. Look, 247 00:13:10,000 --> 00:13:12,880 Speaker 7: there's three things that we're that we really need to 248 00:13:12,920 --> 00:13:16,240 Speaker 7: see in order to accelerate the growth of these businesses. 249 00:13:16,280 --> 00:13:20,240 Speaker 7: And that's a greater collaboration between private companies, between private 250 00:13:20,280 --> 00:13:25,080 Speaker 7: companies and policymakers, between governments around the world. It's lowering 251 00:13:25,120 --> 00:13:28,080 Speaker 7: the cost of these new technologies and solutions so customers, 252 00:13:28,240 --> 00:13:31,480 Speaker 7: large customers, large businesses or individual customers will buy them. 253 00:13:32,000 --> 00:13:36,360 Speaker 7: And it is bringing capabilities to bear the right capabilities. 254 00:13:36,720 --> 00:13:40,600 Speaker 7: And that goes to your Houston question. The energy industry 255 00:13:41,280 --> 00:13:46,040 Speaker 7: possesses a lot of the capabilities, technical, operating, commercial capabilities 256 00:13:46,120 --> 00:13:50,640 Speaker 7: that are required to grow these businesses profitably, to scale. 257 00:13:50,679 --> 00:13:52,640 Speaker 7: So absolutely, you know a lot of this, a lot 258 00:13:52,679 --> 00:13:55,080 Speaker 7: of activity in Houston, a lot of companies engaged in this. 259 00:13:55,200 --> 00:13:59,200 Speaker 7: So Houston it's an oil and gas capital that's out 260 00:13:59,280 --> 00:14:00,960 Speaker 7: thought of. It's also new energy capital. 261 00:14:01,920 --> 00:14:04,840 Speaker 3: So where are we in terms of I've been reading 262 00:14:04,880 --> 00:14:07,040 Speaker 3: a lot on this, Alex, she knows that she's the expert. 263 00:14:07,040 --> 00:14:08,240 Speaker 3: I've been reading up a lot on this over the 264 00:14:08,280 --> 00:14:10,800 Speaker 3: last several days. It seems like the US government's putting 265 00:14:10,840 --> 00:14:13,200 Speaker 3: a lot of money into this. That's the good news, 266 00:14:13,240 --> 00:14:15,520 Speaker 3: as Alex mentioned earlier, but I've also heard here of 267 00:14:15,600 --> 00:14:18,760 Speaker 3: the last couple of days, it's still not easy doing 268 00:14:18,800 --> 00:14:21,600 Speaker 3: business with the government. I'm thinking permitting for certain projects 269 00:14:21,640 --> 00:14:24,320 Speaker 3: and things like that. What's been your experience there is 270 00:14:24,400 --> 00:14:27,640 Speaker 3: to is the government doing the best it can to 271 00:14:27,880 --> 00:14:30,040 Speaker 3: kind of facilitate some of these investments in transition. 272 00:14:30,200 --> 00:14:32,600 Speaker 7: Yeah, So collaboration between the private sector and the public 273 00:14:32,680 --> 00:14:37,680 Speaker 7: sectors fundamental here. It helps lower the cost. Those are 274 00:14:37,960 --> 00:14:42,080 Speaker 7: you know, advocacy understanding politics, not just in this country 275 00:14:42,080 --> 00:14:46,160 Speaker 7: but around the world. Is a strength of our company 276 00:14:46,200 --> 00:14:49,000 Speaker 7: of energy companies, you know, more broadly, so it fits 277 00:14:49,080 --> 00:14:52,520 Speaker 7: one of our existing capabilities. But that is one of 278 00:14:52,560 --> 00:14:55,040 Speaker 7: the starting points here. You know, you need the right 279 00:14:55,360 --> 00:14:58,640 Speaker 7: policy support, the right incentives to get the private sector 280 00:14:59,080 --> 00:15:03,560 Speaker 7: investing even more heavily in this space. That will drive 281 00:15:04,280 --> 00:15:07,400 Speaker 7: the technology forward, That will drive innovation, that will drive 282 00:15:07,480 --> 00:15:10,520 Speaker 7: to building large scale projects which will lower the cost, 283 00:15:10,680 --> 00:15:14,920 Speaker 7: make it more consumable for the world, and that is 284 00:15:14,960 --> 00:15:17,560 Speaker 7: a cycle that will then you know, continue. So it 285 00:15:17,560 --> 00:15:21,080 Speaker 7: starts with policy, but it really is sustained by the 286 00:15:21,120 --> 00:15:25,000 Speaker 7: investment by the private sector in technology. Government's a very 287 00:15:25,000 --> 00:15:29,720 Speaker 7: important partner. We've seen We're having really constructive conversations with 288 00:15:29,800 --> 00:15:32,960 Speaker 7: the government, But you mentioned permitting. There's still a long 289 00:15:33,000 --> 00:15:36,520 Speaker 7: way to go to make all of this come together. 290 00:15:37,040 --> 00:15:40,520 Speaker 7: We've shown some progress, but there are many steps in front. 291 00:15:40,320 --> 00:15:42,280 Speaker 5: Of us, you know, Paulo. To your point, it seems 292 00:15:42,280 --> 00:15:44,720 Speaker 5: like the good part of this is that energy companies 293 00:15:44,760 --> 00:15:47,280 Speaker 5: in the new energy world are in the room talking 294 00:15:47,320 --> 00:15:50,240 Speaker 5: to people, typically the government and oil and gas of 295 00:15:50,280 --> 00:15:53,920 Speaker 5: a contentious relationship at past in certain administrations, and it 296 00:15:53,960 --> 00:15:57,880 Speaker 5: feels like in this area maybe that is dissolving a bit, 297 00:15:58,000 --> 00:16:01,600 Speaker 5: which would be helpful. Something that I've noticed too, is 298 00:16:01,640 --> 00:16:03,040 Speaker 5: that I think it was like three hundred and three 299 00:16:03,080 --> 00:16:05,160 Speaker 5: billion dollars has been spent I think it was last 300 00:16:05,240 --> 00:16:07,320 Speaker 5: year on all these new energy stuff. What I'm also 301 00:16:07,360 --> 00:16:11,400 Speaker 5: hearing is that demand is a forgotten problem. Like all 302 00:16:11,760 --> 00:16:13,440 Speaker 5: the money is being spent, all the money, but the 303 00:16:13,440 --> 00:16:16,600 Speaker 5: money being spent on supplying the stuff and getting that 304 00:16:16,680 --> 00:16:18,360 Speaker 5: cost down, but not enough it is being spent on 305 00:16:18,440 --> 00:16:22,160 Speaker 5: demand to incentivize a company signing up with you for 306 00:16:23,680 --> 00:16:25,960 Speaker 5: esaff for something along those lines. Is that true? 307 00:16:26,800 --> 00:16:28,680 Speaker 7: There is a lot of money being spent in these 308 00:16:28,800 --> 00:16:31,440 Speaker 7: in these new businesses. It's actually one point seven trillion 309 00:16:31,520 --> 00:16:36,080 Speaker 7: dollars globally compared to about one trillion dollars spent in 310 00:16:36,360 --> 00:16:38,920 Speaker 7: the traditional energy business last year, and we need even 311 00:16:39,000 --> 00:16:41,880 Speaker 7: more to grow these businesses to scale. And you hit 312 00:16:41,920 --> 00:16:44,920 Speaker 7: on a very important point. It is, and I'll use 313 00:16:44,960 --> 00:16:49,080 Speaker 7: hydrogen as an example. It's not hard to produce hydrogen. 314 00:16:49,440 --> 00:16:52,880 Speaker 7: It's harder to produce low carbon hydrogen at a low cost, 315 00:16:53,040 --> 00:16:55,280 Speaker 7: something that we're working on using natural gas as a 316 00:16:55,320 --> 00:16:59,600 Speaker 7: feedstock or using electricity and renewable power as feedstocks to 317 00:16:59,600 --> 00:17:04,280 Speaker 7: produce low carbon hydrogen. But transporting hydrogen to the market, 318 00:17:04,440 --> 00:17:06,560 Speaker 7: you need policy support in order to do that. You 319 00:17:06,600 --> 00:17:09,320 Speaker 7: need technological innovation to do that to lower the cost, 320 00:17:09,680 --> 00:17:14,960 Speaker 7: and then importantly, encouraging consumers to buy a hydrogen making 321 00:17:14,960 --> 00:17:18,639 Speaker 7: it easier for them to transition from a traditional product 322 00:17:18,680 --> 00:17:21,399 Speaker 7: that they're using today to a lower carbon product that 323 00:17:21,520 --> 00:17:24,840 Speaker 7: comes at a higher cost. That's where demand incentives and 324 00:17:24,920 --> 00:17:26,640 Speaker 7: policy support will also be required. 325 00:17:27,080 --> 00:17:29,320 Speaker 3: What's the biggest headwind you guys have been facing over 326 00:17:29,320 --> 00:17:32,480 Speaker 3: the last three years as you begin this transition. Has 327 00:17:32,480 --> 00:17:34,720 Speaker 3: it been on the regulatory governmental front? Has it been 328 00:17:35,560 --> 00:17:37,480 Speaker 3: capital getting capital from your CFO? 329 00:17:38,320 --> 00:17:39,240 Speaker 2: Where's it been now? 330 00:17:39,800 --> 00:17:42,399 Speaker 7: There's always a lot of challenges when you're starting up 331 00:17:42,440 --> 00:17:46,960 Speaker 7: new businesses, but it's very, very exciting, and we're making 332 00:17:47,040 --> 00:17:52,840 Speaker 7: tremendous progress. We've identified probably a dozen large foundational projects 333 00:17:52,840 --> 00:17:56,480 Speaker 7: and all of these sectors around not just the US, 334 00:17:56,520 --> 00:17:59,439 Speaker 7: but around the world. We're the second largest bio based 335 00:18:00,480 --> 00:18:03,399 Speaker 7: a diesel producer in the United States. We've got a 336 00:18:03,480 --> 00:18:06,400 Speaker 7: large you know, CCUS hub on the US Gulf Coast. 337 00:18:06,440 --> 00:18:09,600 Speaker 7: We've got a large hydrogen project in Utah that we're growing. 338 00:18:10,200 --> 00:18:12,080 Speaker 7: So we're making a lot of a lot of progress. 339 00:18:12,080 --> 00:18:15,440 Speaker 7: There's always challenges along the way. How do you prioritize 340 00:18:15,520 --> 00:18:19,520 Speaker 7: the best opportunities, how do you advocate for the right policies, 341 00:18:19,800 --> 00:18:23,879 Speaker 7: how do you create the right culture to support these businesses. 342 00:18:23,920 --> 00:18:27,200 Speaker 7: We have a fantastic culture in our company. We're using 343 00:18:27,520 --> 00:18:29,520 Speaker 7: all of that and more. But you have to think 344 00:18:29,520 --> 00:18:34,040 Speaker 7: about these businesses in a different way. So there are challenges, 345 00:18:34,080 --> 00:18:36,080 Speaker 7: but it has been very rewarding. 346 00:18:36,119 --> 00:18:38,880 Speaker 3: At the same time, He's not going to answer that question, Paul, Well, 347 00:18:39,760 --> 00:18:41,800 Speaker 3: I stock, I thought I did answer it. 348 00:18:42,320 --> 00:18:44,560 Speaker 5: We're looking for like, hey, what what's really hard? What 349 00:18:44,800 --> 00:18:45,600 Speaker 5: stresses you ask? 350 00:18:45,680 --> 00:18:46,560 Speaker 8: Well, it's I mean. 351 00:18:46,480 --> 00:18:49,879 Speaker 7: To go, it's all hard, yeah, and so all of that, 352 00:18:49,960 --> 00:18:52,600 Speaker 7: you know, how can we collaborate you know more uh 353 00:18:53,200 --> 00:18:57,680 Speaker 7: more aggressively. How can we lower the costs faster? How 354 00:18:57,720 --> 00:18:59,920 Speaker 7: can we bring all of the capabilities we have to 355 00:19:00,080 --> 00:19:03,000 Speaker 7: bear here. How do we make sure that everyone remains 356 00:19:03,040 --> 00:19:06,720 Speaker 7: committed to this, not just us, but everyone in this 357 00:19:07,119 --> 00:19:09,840 Speaker 7: ecosystem to drive these businesses forward. So those are all 358 00:19:09,840 --> 00:19:14,280 Speaker 7: big challenges. I'm not discounting that, but I'm very excited 359 00:19:14,280 --> 00:19:14,920 Speaker 7: about what we're doing. 360 00:19:14,960 --> 00:19:17,919 Speaker 5: Gotta leave it there, Jeff really appreciated Jeff Gustavenson. I'm 361 00:19:17,920 --> 00:19:19,919 Speaker 5: going to get it. President of Chevron New Energies. I'm 362 00:19:19,920 --> 00:19:22,480 Speaker 5: going to work towards that for sure. Thanks so much. 363 00:19:22,640 --> 00:19:24,680 Speaker 8: Thank you. 364 00:19:25,440 --> 00:19:29,320 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 365 00:19:29,400 --> 00:19:32,119 Speaker 1: weekdays at ten am Eastern on Affo car Playing and 366 00:19:32,240 --> 00:19:35,080 Speaker 1: Broud Auto with the Bloomberg Business App. Listen on demand 367 00:19:35,160 --> 00:19:38,800 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 368 00:19:39,920 --> 00:19:43,800 Speaker 5: We're at Bloomberg n e App Summit, Day two. We're 369 00:19:43,920 --> 00:19:47,960 Speaker 5: in the middle of the pubbabaloo. We're in our Intercontinental 370 00:19:48,000 --> 00:19:51,119 Speaker 5: Hotel on forty U Street down in Midtown Manhattan, and 371 00:19:51,160 --> 00:19:54,680 Speaker 5: it's all about getting world leaders and CEOs and thought 372 00:19:54,760 --> 00:19:58,200 Speaker 5: leaders and analysts together to sort of tackle this energy 373 00:19:58,280 --> 00:20:00,600 Speaker 5: transition where we are now, and then where do we 374 00:20:00,720 --> 00:20:02,320 Speaker 5: go to and how do we do that? 375 00:20:02,720 --> 00:20:02,840 Speaker 4: Well? 376 00:20:02,920 --> 00:20:05,520 Speaker 5: Doing us now? As our next guest, Andy Vessi, he's 377 00:20:05,560 --> 00:20:10,200 Speaker 5: president and CEO of Fordescue North America, and he joined us. Now, Andy, 378 00:20:10,240 --> 00:20:10,720 Speaker 5: good to see you. 379 00:20:10,920 --> 00:20:12,680 Speaker 8: Well, that's a pleasure to be here and thank you 380 00:20:12,720 --> 00:20:13,399 Speaker 8: for having me. 381 00:20:13,600 --> 00:20:16,040 Speaker 5: So I do follow this industry quite closely, and I 382 00:20:16,119 --> 00:20:18,399 Speaker 5: was like, what Fordescu is a metal company, what's going on? 383 00:20:18,520 --> 00:20:20,440 Speaker 5: It's based in Australia. What are you doing here talking 384 00:20:20,440 --> 00:20:21,160 Speaker 5: about hydrogen? 385 00:20:21,359 --> 00:20:24,560 Speaker 8: Well, Fortia something. Forlidescu was a metal company. In fact 386 00:20:24,600 --> 00:20:25,800 Speaker 8: it still is. 387 00:20:25,920 --> 00:20:28,360 Speaker 9: It's the fourth largest producer bron or in the world 388 00:20:28,400 --> 00:20:31,919 Speaker 9: and the lowest cost operator. What our founder, Andrew Forres, 389 00:20:32,000 --> 00:20:36,520 Speaker 9: came to the realization that carbon emissions was having a 390 00:20:36,560 --> 00:20:40,080 Speaker 9: significant impact on the planet and it was happening quickly, 391 00:20:40,200 --> 00:20:43,159 Speaker 9: and that his business contributed to that, and so he 392 00:20:43,240 --> 00:20:46,040 Speaker 9: made a commitment that he was going to decarbonize his 393 00:20:46,200 --> 00:20:50,600 Speaker 9: metals business, scope on and scope to emissions by twenty thirty. 394 00:20:51,800 --> 00:20:53,959 Speaker 9: And in thinking about doing that, he had to think 395 00:20:53,960 --> 00:20:56,600 Speaker 9: about all the technologies he needed to make that happen, 396 00:20:56,680 --> 00:20:59,040 Speaker 9: and many of them were n't available commercially. So he 397 00:20:59,160 --> 00:21:01,440 Speaker 9: decided that he would is going to create that ecosystem. 398 00:21:02,000 --> 00:21:06,080 Speaker 9: One component of that was green hydrogen because he needed 399 00:21:06,119 --> 00:21:08,399 Speaker 9: green hydrogen to do a number of things to replace 400 00:21:08,480 --> 00:21:12,040 Speaker 9: diesel fuel in his mining operations. But then he realized 401 00:21:12,040 --> 00:21:13,840 Speaker 9: there were a lot of other things he needed and 402 00:21:13,960 --> 00:21:17,120 Speaker 9: a lot of more things he needed. So what Fordeskew 403 00:21:17,280 --> 00:21:20,879 Speaker 9: is today, while it still has a metals group, it 404 00:21:21,000 --> 00:21:24,160 Speaker 9: now has an energy's group, but we describe ourselves as 405 00:21:24,200 --> 00:21:29,480 Speaker 9: an integrated green technology, energy and metals group and they're 406 00:21:29,480 --> 00:21:32,880 Speaker 9: all coming together and it's one Fortescue now. So that's 407 00:21:32,920 --> 00:21:36,000 Speaker 9: why we're here. And I happen to have the privilege 408 00:21:36,040 --> 00:21:38,560 Speaker 9: of trying to be on the side of the business 409 00:21:38,600 --> 00:21:41,439 Speaker 9: that produces green hydrogen specifically. 410 00:21:40,920 --> 00:21:41,680 Speaker 8: In North America. 411 00:21:42,040 --> 00:21:43,440 Speaker 2: Is green hydrogen? 412 00:21:43,800 --> 00:21:47,359 Speaker 9: Okay, well it's hydrogen, but it's made from green energy, 413 00:21:47,520 --> 00:21:53,520 Speaker 9: which would include solar, wind and hydro So just to alex. 414 00:21:53,320 --> 00:21:55,760 Speaker 5: Plain Youse, so you have some been called an electrolizer 415 00:21:55,840 --> 00:21:58,520 Speaker 5: where you get water in and you separate the hydrogen 416 00:21:58,560 --> 00:22:02,040 Speaker 5: from the water, and how you power that determines the 417 00:22:02,160 --> 00:22:05,840 Speaker 5: color of that hydrogen. So if you power with say cole, 418 00:22:06,240 --> 00:22:08,840 Speaker 5: it's going to be gray. If you power with natural gas, 419 00:22:09,000 --> 00:22:11,159 Speaker 5: it's going to be a blue. If you power with 420 00:22:11,240 --> 00:22:12,800 Speaker 5: solar and wind, it's going to be green. 421 00:22:12,840 --> 00:22:15,560 Speaker 2: And there's right, I learned something to get it. 422 00:22:15,680 --> 00:22:17,960 Speaker 3: But now I'm guessing there's a tax issue here. I'm 423 00:22:18,000 --> 00:22:22,200 Speaker 3: reading all throughout your notes forty five v. Dumb it 424 00:22:22,280 --> 00:22:24,280 Speaker 3: down for somebody like me, a media guy. 425 00:22:24,720 --> 00:22:27,879 Speaker 9: Yeah, So look, the bottom line is that seventy percent 426 00:22:27,920 --> 00:22:32,280 Speaker 9: of a green molecule made what would be called electrolytic 427 00:22:32,280 --> 00:22:35,440 Speaker 9: because it uses electricity. Seventy percent of the cost of 428 00:22:35,560 --> 00:22:39,680 Speaker 9: that molecule is the cost of that green electron. And 429 00:22:39,800 --> 00:22:41,280 Speaker 9: so if you're going to be in this business, you 430 00:22:41,320 --> 00:22:43,080 Speaker 9: would say, well, I'm going to go every place where 431 00:22:43,280 --> 00:22:45,800 Speaker 9: the renewable energy is really really cheap. Right, You're going 432 00:22:45,840 --> 00:22:48,520 Speaker 9: to go to North Africa, You're going to be in Australia, 433 00:22:48,720 --> 00:22:51,600 Speaker 9: you might be in parts of Latin America. But where 434 00:22:51,640 --> 00:22:54,560 Speaker 9: you would not be would be in the US, right, 435 00:22:55,040 --> 00:22:57,560 Speaker 9: because we know it's expensive. But there's another thing about 436 00:22:57,560 --> 00:23:00,600 Speaker 9: the US. It's probably one of the largest consumers of 437 00:23:01,480 --> 00:23:05,000 Speaker 9: gray hydrogen or hydrogen that's produced from methane gas. So 438 00:23:05,080 --> 00:23:08,000 Speaker 9: there's a huge market here. But the challenge is getting 439 00:23:08,040 --> 00:23:10,760 Speaker 9: to a price point where people will buy it well. 440 00:23:10,800 --> 00:23:14,439 Speaker 9: The US government also understood this and understood that to decarbonize, 441 00:23:14,520 --> 00:23:17,680 Speaker 9: hard to abate sectors, meaning sectors that can't use a 442 00:23:17,760 --> 00:23:21,960 Speaker 9: green electron to meet emission reduction goals need a green molecule. 443 00:23:22,440 --> 00:23:25,040 Speaker 9: And so the Bidy administration decided, well, what we need 444 00:23:25,119 --> 00:23:28,160 Speaker 9: to do is assist in getting the price down, get 445 00:23:28,240 --> 00:23:32,160 Speaker 9: the industry started, and then eventually, through scale and involvement 446 00:23:32,200 --> 00:23:34,080 Speaker 9: in the market, the price will come down naturally on 447 00:23:34,160 --> 00:23:36,600 Speaker 9: the learning curve. Right, So they came up with the 448 00:23:36,680 --> 00:23:41,600 Speaker 9: idea of providing a tax incentive a PTC that you 449 00:23:41,680 --> 00:23:43,640 Speaker 9: can get direct cash for it, so it would help 450 00:23:43,880 --> 00:23:48,480 Speaker 9: lower the end product price to customers. And the maximum 451 00:23:48,560 --> 00:23:51,119 Speaker 9: you can get would be three dollars a kilogram, and 452 00:23:51,240 --> 00:23:55,359 Speaker 9: that's based on the carbon intensity of that molecule. So 453 00:23:55,560 --> 00:23:59,920 Speaker 9: all non gray molecules, right, all those molecules not produced 454 00:24:00,440 --> 00:24:05,040 Speaker 9: or that don't have carbon emissions at some level, would 455 00:24:05,080 --> 00:24:06,560 Speaker 9: get a rising incentive. 456 00:24:06,880 --> 00:24:07,800 Speaker 8: Okay, brilliant. 457 00:24:07,960 --> 00:24:10,600 Speaker 9: Right Now, companies like Fordesky, who is investing all over 458 00:24:10,640 --> 00:24:12,280 Speaker 9: the world that sys, we're going to put capital in 459 00:24:12,320 --> 00:24:15,359 Speaker 9: the United States, right, We're going to develop technology in 460 00:24:15,400 --> 00:24:18,000 Speaker 9: the United States because this could be a big market. Right, 461 00:24:18,880 --> 00:24:21,240 Speaker 9: But there was an expectation of how that would come out, 462 00:24:21,560 --> 00:24:25,320 Speaker 9: and when the rules were written. It's now called forty 463 00:24:25,359 --> 00:24:27,560 Speaker 9: five V because it's a section in the IRS code 464 00:24:28,800 --> 00:24:31,840 Speaker 9: came out in such a way that it didn't actually 465 00:24:33,119 --> 00:24:36,440 Speaker 9: help us to some degree. It hurt early movers because 466 00:24:36,480 --> 00:24:38,359 Speaker 9: of how strict the rules were. 467 00:24:38,760 --> 00:24:41,200 Speaker 5: Meaning that from where I understand it is it Normally 468 00:24:41,280 --> 00:24:43,400 Speaker 5: you could say, look, I'm going to buy this much 469 00:24:43,640 --> 00:24:45,880 Speaker 5: wind and solar over the course of a year, give 470 00:24:45,920 --> 00:24:48,600 Speaker 5: me the credit. But they want hour for hour matching. 471 00:24:48,800 --> 00:24:52,080 Speaker 5: So if you use energy for an hour, that needs 472 00:24:52,119 --> 00:24:54,119 Speaker 5: to be solar, and that needs to be counted, and 473 00:24:54,200 --> 00:24:57,240 Speaker 5: that's very difficult because that's not predictable with wind and solar, 474 00:24:57,640 --> 00:24:58,280 Speaker 5: and you also. 475 00:24:58,160 --> 00:25:00,880 Speaker 8: Don't have it right. See you underst in as perfectly. 476 00:25:01,280 --> 00:25:06,720 Speaker 9: That's when that's one of the pillars, right, but probably 477 00:25:06,760 --> 00:25:08,920 Speaker 9: the most problematic. And I'll give you a reason why. 478 00:25:09,040 --> 00:25:11,919 Speaker 9: So you said it earlier. We use an electoralizer, right. 479 00:25:12,000 --> 00:25:15,840 Speaker 9: We take electricity and we split the water into oxygen 480 00:25:16,040 --> 00:25:16,760 Speaker 9: and hydrogen. 481 00:25:17,080 --> 00:25:17,879 Speaker 8: That's what we do. 482 00:25:19,520 --> 00:25:22,560 Speaker 9: In terms of when you're going to be using the energy. 483 00:25:23,400 --> 00:25:27,000 Speaker 9: That's called temporal matching, and it exists because there are 484 00:25:27,080 --> 00:25:30,280 Speaker 9: no one hundred percent green grids in the US, so 485 00:25:30,359 --> 00:25:34,120 Speaker 9: there's always the concern by adding additional load, you potentially 486 00:25:34,240 --> 00:25:39,000 Speaker 9: are going to use fossil based energy to meet it. Right, 487 00:25:39,680 --> 00:25:42,440 Speaker 9: So the view is, how are you going to do 488 00:25:42,480 --> 00:25:43,320 Speaker 9: the temporal matching? 489 00:25:43,520 --> 00:25:43,639 Speaker 8: Right? 490 00:25:43,720 --> 00:25:47,399 Speaker 9: So, if I have a one megawatt electoralizer, I need 491 00:25:47,480 --> 00:25:50,439 Speaker 9: to have three times that much capacity in the market 492 00:25:50,680 --> 00:25:52,719 Speaker 9: if I'm matching on an annual basis, because they get 493 00:25:52,760 --> 00:25:55,360 Speaker 9: to average it over the year, and over a year perfect. 494 00:25:55,680 --> 00:25:55,800 Speaker 10: Right. 495 00:25:56,840 --> 00:25:59,800 Speaker 9: If you go to monthly matching, you need five times 496 00:26:00,080 --> 00:26:03,199 Speaker 9: much energy, but an hourly you need seven times. 497 00:26:03,400 --> 00:26:03,560 Speaker 8: Right. 498 00:26:03,920 --> 00:26:07,520 Speaker 9: So if I'm building a gigot of electrolyizers in Texas, 499 00:26:08,920 --> 00:26:11,720 Speaker 9: I may only need a giggot of energy at any time, 500 00:26:12,040 --> 00:26:14,399 Speaker 9: but I have to buy seven times that to ensure 501 00:26:14,440 --> 00:26:17,119 Speaker 9: that I have all the probabilities working so I know 502 00:26:17,200 --> 00:26:19,240 Speaker 9: I can match in that hour, which means that the 503 00:26:19,280 --> 00:26:20,840 Speaker 9: bulk of what I buy I don't need. So I'm 504 00:26:20,840 --> 00:26:23,040 Speaker 9: gonna have to be buying and selling energy and that's 505 00:26:23,080 --> 00:26:25,879 Speaker 9: equivalent to almost, you know, between five and ten percent 506 00:26:25,960 --> 00:26:28,480 Speaker 9: of the annual I mean the daily load in the 507 00:26:28,520 --> 00:26:33,199 Speaker 9: AIRCOT system. I mean it's massive. So what are the implications, Well, 508 00:26:33,280 --> 00:26:37,119 Speaker 9: there are two the way forty five via structure today A. 509 00:26:37,720 --> 00:26:40,679 Speaker 9: It will absolutely increase the price of the product. Now, 510 00:26:40,760 --> 00:26:42,680 Speaker 9: remember the whole idea of this was to decrease the 511 00:26:42,760 --> 00:26:45,399 Speaker 9: price of the product. It will increase the price of 512 00:26:45,480 --> 00:26:47,920 Speaker 9: the project anywhere between one hundred and fifty to one hundred. 513 00:26:47,680 --> 00:26:49,920 Speaker 8: And seventy five percent to the consumer. Okay. 514 00:26:50,640 --> 00:26:52,639 Speaker 9: The second thing is because of the massive amount of 515 00:26:52,760 --> 00:26:55,520 Speaker 9: energy we have to buy, all right, we have to 516 00:26:55,600 --> 00:26:57,840 Speaker 9: make the project smaller so you can actually transact that 517 00:26:58,960 --> 00:27:02,520 Speaker 9: third point. Because of again annually this hourly matching, there 518 00:27:02,560 --> 00:27:04,159 Speaker 9: are only certain places you can do it, so there 519 00:27:04,200 --> 00:27:07,119 Speaker 9: are fewer opportunities to get it done right. And if 520 00:27:07,160 --> 00:27:08,880 Speaker 9: we have to do one other thing, which is part 521 00:27:08,920 --> 00:27:11,280 Speaker 9: of the forty five E we have to add new 522 00:27:11,400 --> 00:27:14,720 Speaker 9: green electrons, well that can take years and years. So 523 00:27:15,520 --> 00:27:20,520 Speaker 9: we are doing everything against the original intent. Right, And 524 00:27:20,680 --> 00:27:23,879 Speaker 9: why are we doing this Because we're thinking about the 525 00:27:24,000 --> 00:27:27,800 Speaker 9: perfect solution at the beginning, right, we want the perfect projects. 526 00:27:27,840 --> 00:27:28,600 Speaker 8: The idea should be. 527 00:27:28,640 --> 00:27:33,280 Speaker 9: No, we're building an industry which ultimately will work. Let's 528 00:27:33,359 --> 00:27:36,920 Speaker 9: not handicap it at the beginning. Because like any other industry, 529 00:27:37,760 --> 00:27:40,440 Speaker 9: the more market interactions you have, the more things you build, 530 00:27:40,480 --> 00:27:42,920 Speaker 9: the more things that fail. The more supply chains that 531 00:27:42,960 --> 00:27:45,399 Speaker 9: get created, the more people who get trained. That's what 532 00:27:45,520 --> 00:27:49,800 Speaker 9: building an industry is. And unfortunately we're thinking about projects. Yeah, right, 533 00:27:50,080 --> 00:27:52,000 Speaker 9: one off projects, and that's just wrong. 534 00:27:52,400 --> 00:27:55,600 Speaker 5: Andy, we really appreciate it. It's complex to break it down. 535 00:27:56,080 --> 00:27:58,680 Speaker 5: There's a lot of chemistry. It's actually weirdly good at chemistry, 536 00:27:58,680 --> 00:28:01,440 Speaker 5: but it's all forgotten of Cotant. Andy Vz, President and 537 00:28:01,560 --> 00:28:05,200 Speaker 5: CEO of Fortescue Industries here in North America, really appreciate it. 538 00:28:05,280 --> 00:28:07,280 Speaker 5: Thank you so much. I guess the takeaway and we 539 00:28:07,320 --> 00:28:09,080 Speaker 5: have to even dealt with the demand side. Then you 540 00:28:09,160 --> 00:28:11,239 Speaker 5: have to make the demand be there. People are going 541 00:28:11,280 --> 00:28:13,120 Speaker 5: to have to buy that product, and that gets really 542 00:28:13,280 --> 00:28:14,800 Speaker 5: and that's also very difficult. 543 00:28:16,400 --> 00:28:20,240 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 544 00:28:20,359 --> 00:28:22,119 Speaker 1: weekdays at ten am Eastern on. 545 00:28:22,240 --> 00:28:25,640 Speaker 6: Applecar Play and Android Auto with the Bloomberg Business app. 546 00:28:25,760 --> 00:28:28,600 Speaker 1: You can also listen live on Amazon Alexa from our 547 00:28:28,640 --> 00:28:32,920 Speaker 1: flagship New York station, Just Say Alexa, playing Bloomberg eleven. 548 00:28:32,760 --> 00:28:37,600 Speaker 5: Thirty Alex Thee alongside Paul Sweeney. This is Bloomberg Intelligence 549 00:28:37,720 --> 00:28:40,440 Speaker 5: Radio and we are live from Bloomberg n EF Summit 550 00:28:40,480 --> 00:28:43,840 Speaker 5: to Day two in the Intercontinental Hotel right here in 551 00:28:43,960 --> 00:28:48,000 Speaker 5: New York City. The summit really provides a chance for CEOs, 552 00:28:48,320 --> 00:28:51,120 Speaker 5: thought leaders, world leaders, politicians to kind of get together 553 00:28:51,200 --> 00:28:53,000 Speaker 5: in a room and talk about the issues facing the 554 00:28:53,120 --> 00:28:55,360 Speaker 5: energy transition. How you get from zero to one hundred? 555 00:28:55,440 --> 00:28:57,400 Speaker 5: How do you get from here to there in a 556 00:28:57,480 --> 00:29:01,360 Speaker 5: meaningful way that is also price efficient and makes profits 557 00:29:01,440 --> 00:29:04,480 Speaker 5: and does stuff and is cheap enough. We spent about 558 00:29:04,480 --> 00:29:06,400 Speaker 5: the US, I should say, spent about three hundred and 559 00:29:06,400 --> 00:29:10,400 Speaker 5: three billion dollars last year's position. Wow, worldwide over a trillion. 560 00:29:11,120 --> 00:29:13,400 Speaker 5: And there's still a lot of problems, things like but 561 00:29:13,640 --> 00:29:19,120 Speaker 5: permitting demand trade issues we just saw earlier today, maybe 562 00:29:19,160 --> 00:29:22,600 Speaker 5: President Biden will look at an increased terror from stale 563 00:29:22,640 --> 00:29:24,960 Speaker 5: aluminus in China. So how do you deal with that 564 00:29:25,000 --> 00:29:26,000 Speaker 5: if you're running a company? 565 00:29:26,080 --> 00:29:26,200 Speaker 10: Well. 566 00:29:26,240 --> 00:29:30,240 Speaker 5: Anna Moscolow is chief executive vice president of Low Carbon 567 00:29:30,320 --> 00:29:33,080 Speaker 5: Solutions over at Shell. She's been with Shell for about 568 00:29:33,120 --> 00:29:35,320 Speaker 5: twenty years and has had many different jobs within the 569 00:29:35,400 --> 00:29:37,400 Speaker 5: company and has landed here in the past two years, 570 00:29:37,480 --> 00:29:40,720 Speaker 5: right years, two or three years? Okay, Yes, how's it 571 00:29:40,840 --> 00:29:42,360 Speaker 5: going well? 572 00:29:42,960 --> 00:29:48,160 Speaker 11: So it's going well. We are progressing. Energy transition probably 573 00:29:48,240 --> 00:29:52,560 Speaker 11: is progressing well overall. And we've seen big strides in electrification, 574 00:29:52,760 --> 00:29:55,520 Speaker 11: but at the same time in my lifetive oil demand 575 00:29:55,720 --> 00:29:59,640 Speaker 11: is doubled, and we still see sectors like aviation, shipping 576 00:30:00,520 --> 00:30:03,560 Speaker 11: and commercial road transport buses and trucks where we see 577 00:30:03,600 --> 00:30:05,720 Speaker 11: demand increasing in the coming years, and. 578 00:30:05,800 --> 00:30:08,080 Speaker 12: These sectors need the hardware. 579 00:30:08,360 --> 00:30:13,560 Speaker 11: Sectors need solutions to support that, so biofuels or biogasses. 580 00:30:13,800 --> 00:30:16,640 Speaker 3: So I think what we've learned maybe over the last 581 00:30:16,640 --> 00:30:18,920 Speaker 3: several years with the invasion of Ukraine is just an 582 00:30:19,320 --> 00:30:25,160 Speaker 3: important you know, traditional energy, carbon energy is for the 583 00:30:25,320 --> 00:30:28,360 Speaker 3: global trade. So as we make this transition to a 584 00:30:28,520 --> 00:30:31,520 Speaker 3: more sustainable energy grid, we still have to invest there. 585 00:30:31,560 --> 00:30:34,200 Speaker 2: How does your company think about that? How does a 586 00:30:34,360 --> 00:30:36,080 Speaker 2: huge company like Shell think about that? 587 00:30:36,840 --> 00:30:40,560 Speaker 11: It's all about balance probably and making sure that we 588 00:30:40,800 --> 00:30:45,760 Speaker 11: have probably two things that we pace ourselves with our 589 00:30:45,920 --> 00:30:49,720 Speaker 11: customers in making sure that we transition with the right 590 00:30:49,760 --> 00:30:52,840 Speaker 11: pace in different places and that changes by country and 591 00:30:52,960 --> 00:30:57,520 Speaker 11: by geography, but also that we focus on the solutions 592 00:30:57,560 --> 00:31:00,760 Speaker 11: where we have a real competitive advantage. If I think about, 593 00:31:00,960 --> 00:31:04,240 Speaker 11: for example, the LNG market, we've seen LNG actually playing 594 00:31:04,320 --> 00:31:08,320 Speaker 11: a big role in being providing flexible and secure supplies 595 00:31:08,880 --> 00:31:09,800 Speaker 11: in the last two or. 596 00:31:09,800 --> 00:31:13,440 Speaker 5: Three years, and LNG is under your purview right. LG 597 00:31:13,640 --> 00:31:15,360 Speaker 5: is part yes of these, which is interesting because not 598 00:31:15,400 --> 00:31:17,720 Speaker 5: every company is going to look at LNG in the 599 00:31:17,880 --> 00:31:19,880 Speaker 5: new carbon low solutions business. 600 00:31:20,040 --> 00:31:23,720 Speaker 12: Yeah, so the traditional LNG business does not sit with me. 601 00:31:23,960 --> 00:31:27,240 Speaker 11: But what my team does is actually using the LNG, 602 00:31:28,200 --> 00:31:33,120 Speaker 11: for example, the marine sector. So we match LNG and 603 00:31:33,240 --> 00:31:37,360 Speaker 11: our traditional position globally in LERG trading with customers. So 604 00:31:37,440 --> 00:31:41,160 Speaker 11: the marine sector sits with me, and we are transferring 605 00:31:42,000 --> 00:31:46,240 Speaker 11: and selling LNG for the marine sectors instead of fuel oil, 606 00:31:46,320 --> 00:31:51,120 Speaker 11: and that provides for lower carbon intensity products. 607 00:31:51,640 --> 00:31:53,640 Speaker 3: Are there certain industries in your customers You mentioned the 608 00:31:53,680 --> 00:31:56,360 Speaker 3: marine industry and I didn't even think about that when 609 00:31:56,440 --> 00:31:59,120 Speaker 3: this discussion started ten years ago about how they burned 610 00:31:59,160 --> 00:32:01,360 Speaker 3: so much fuel. But when I see them off or 611 00:32:01,480 --> 00:32:03,320 Speaker 3: at on my beach, when I'm sitting on my pitch here, 612 00:32:03,320 --> 00:32:04,800 Speaker 3: I see the smoke at the back of the thing. 613 00:32:04,920 --> 00:32:09,040 Speaker 3: So what industries are doing a good job and making 614 00:32:09,080 --> 00:32:12,040 Speaker 3: the transition and what maybe industries still need some work 615 00:32:12,480 --> 00:32:13,240 Speaker 3: from your perspective. 616 00:32:13,480 --> 00:32:15,840 Speaker 11: So, as I said, we've made great progress on the 617 00:32:15,920 --> 00:32:17,640 Speaker 11: decarbonizing true electrification. 618 00:32:18,120 --> 00:32:20,840 Speaker 12: The areas that are a bit more stubborn are. 619 00:32:20,920 --> 00:32:25,840 Speaker 11: The planes, the trucks, the ships, and also the heavy industry, 620 00:32:25,920 --> 00:32:29,320 Speaker 11: so industry that need high intensity heat. 621 00:32:30,560 --> 00:32:32,800 Speaker 12: Cement like cement, steel. 622 00:32:32,640 --> 00:32:37,080 Speaker 11: Fertilizers, chemical industries, and in those cases you need what 623 00:32:37,160 --> 00:32:40,520 Speaker 11: we call drop in fuels like biofuels or synthetic fuels, 624 00:32:40,520 --> 00:32:44,920 Speaker 11: whether liquid or gas, so high energy intensity and different 625 00:32:45,000 --> 00:32:47,920 Speaker 11: sector is moving at different paces in different regions. And 626 00:32:48,000 --> 00:32:52,640 Speaker 11: of course we shouldn't forget that regulatory environments certainty around 627 00:32:53,240 --> 00:32:55,560 Speaker 11: how things should develop is very important. 628 00:32:56,080 --> 00:32:57,720 Speaker 12: Where it is carot or stick. 629 00:32:58,040 --> 00:33:00,440 Speaker 5: Yeah, we talk a lot carrot and stick on the 630 00:33:00,480 --> 00:33:03,080 Speaker 5: panel earlier today. You also mentioned when I was talking 631 00:33:03,120 --> 00:33:04,720 Speaker 5: to you about how you guys look at returns for 632 00:33:04,760 --> 00:33:06,840 Speaker 5: the different investments. So if you look at oil and 633 00:33:06,880 --> 00:33:09,880 Speaker 5: gas returns straight up to say fifteen percent plus correct, 634 00:33:09,880 --> 00:33:12,200 Speaker 5: then how do you judge the returns for different projects 635 00:33:12,280 --> 00:33:13,360 Speaker 5: in low carbon solutions. 636 00:33:13,600 --> 00:33:17,040 Speaker 11: Yeah, it's important to recognize that different products and different 637 00:33:17,080 --> 00:33:21,240 Speaker 11: solutions are available at different scales. So for our traditional 638 00:33:21,320 --> 00:33:24,720 Speaker 11: businesses we are looking upstream and marketing. We are looking 639 00:33:24,800 --> 00:33:29,160 Speaker 11: at fifteen plus for biofuels electrical vehicles where we have 640 00:33:29,400 --> 00:33:32,480 Speaker 11: positions today we are one of the biggest suppliers or 641 00:33:32,560 --> 00:33:33,960 Speaker 11: biofuels and traders. 642 00:33:34,080 --> 00:33:35,000 Speaker 12: Today for. 643 00:33:37,120 --> 00:33:41,360 Speaker 11: Ev we have already fifty four thousand charging points globally, 644 00:33:41,760 --> 00:33:43,760 Speaker 11: so for those one we are looking at at twelve percent. 645 00:33:44,880 --> 00:33:48,240 Speaker 11: And for solutions that are not quite there and they 646 00:33:48,320 --> 00:33:51,000 Speaker 11: need scale, and we've been a bit more selective in 647 00:33:51,080 --> 00:33:55,520 Speaker 11: our investments like hydrogen and CCS it's ten plus, So 648 00:33:55,600 --> 00:33:59,360 Speaker 11: we are being targeted around our approach on returns and 649 00:33:59,440 --> 00:34:02,200 Speaker 11: they are also will change over time as the industry changes. 650 00:34:02,600 --> 00:34:05,240 Speaker 11: And also when we look at our overall investment profile 651 00:34:05,560 --> 00:34:08,360 Speaker 11: last year with twenty three percent of our capital was 652 00:34:08,480 --> 00:34:14,000 Speaker 11: spent in low carbon energy solutions so IV, biofuels, biogases. 653 00:34:14,360 --> 00:34:17,280 Speaker 12: And renewable generations that was five point six billion. 654 00:34:17,320 --> 00:34:19,279 Speaker 3: By the way, you know, boy, I'm looking at your 655 00:34:20,000 --> 00:34:22,720 Speaker 3: revenue contribution where comes I mean, you're truly a global 656 00:34:22,760 --> 00:34:25,080 Speaker 3: company obviously show with roughly a third out of Europe, 657 00:34:25,080 --> 00:34:26,839 Speaker 3: a third out of Asian and Africa, and the third 658 00:34:26,880 --> 00:34:29,160 Speaker 3: out of I guess the America is so truly a 659 00:34:29,200 --> 00:34:32,080 Speaker 3: global company. Are there certain parts of the world where 660 00:34:32,280 --> 00:34:36,360 Speaker 3: you have had more success and maybe you know, in 661 00:34:36,480 --> 00:34:38,680 Speaker 3: terms of making these investments and seeing change versus some 662 00:34:38,719 --> 00:34:40,239 Speaker 3: other parts of the world, we. 663 00:34:40,360 --> 00:34:43,640 Speaker 11: See that it's easier when we have clarity from the 664 00:34:43,680 --> 00:34:49,560 Speaker 11: regulatory perspective. So Europe, US, Canada we've seen whether it 665 00:34:49,680 --> 00:34:53,719 Speaker 11: is charac or stick, We've seen clarity around mandates, tax 666 00:34:53,800 --> 00:34:56,880 Speaker 11: incentives and so on. But all this being said, by 667 00:34:56,920 --> 00:35:00,480 Speaker 11: the way, we are also seeing Asia picking up the 668 00:35:00,560 --> 00:35:04,520 Speaker 11: way China is going around evs for example, and electrical 669 00:35:05,000 --> 00:35:09,840 Speaker 11: charging points. We are seeing in Southeast Stasia development of 670 00:35:10,000 --> 00:35:13,360 Speaker 11: carbon capture and storage. India also, we've made an investment 671 00:35:13,440 --> 00:35:16,200 Speaker 11: recently in India Spring Energy, where we are investing in 672 00:35:16,280 --> 00:35:20,520 Speaker 11: renewable generation. So actually Asia and everybody knows that the 673 00:35:20,600 --> 00:35:23,600 Speaker 11: moment it comes and it picks up, the volumes will 674 00:35:23,640 --> 00:35:23,960 Speaker 11: be there. 675 00:35:24,760 --> 00:35:28,319 Speaker 5: What's it like being a company in Europe versus if 676 00:35:28,320 --> 00:35:31,160 Speaker 5: you were a company in the US. In that Europe 677 00:35:31,239 --> 00:35:34,520 Speaker 5: deals with a lot of sticks. US typically has the carrots, 678 00:35:35,560 --> 00:35:38,879 Speaker 5: but the governments are supportive in different ways. It's much 679 00:35:38,920 --> 00:35:43,680 Speaker 5: more bifurcated in the US. How do you yeah, what's 680 00:35:43,719 --> 00:35:45,320 Speaker 5: the hardest part of all of that? 681 00:35:45,960 --> 00:35:51,319 Speaker 11: Probably the hardest part is making sure that there are 682 00:35:51,560 --> 00:35:55,440 Speaker 11: clear trade offs between sectors. So let me give you 683 00:35:55,480 --> 00:36:00,560 Speaker 11: an example. If I want to use hydrogen greener hydrogen, 684 00:36:00,840 --> 00:36:03,960 Speaker 11: do I use it for commercial road transport? 685 00:36:04,480 --> 00:36:06,520 Speaker 12: Or do I use it for passenger cars? 686 00:36:06,719 --> 00:36:09,279 Speaker 11: Well, actually probably passenger cars that can use it for 687 00:36:09,360 --> 00:36:13,400 Speaker 11: ev so making sure that the regulatory environment matches with 688 00:36:13,560 --> 00:36:17,320 Speaker 11: the sectors you need to address. So hydrogen for commercial 689 00:36:17,400 --> 00:36:21,000 Speaker 11: road transport in the future or heavy industries, that would 690 00:36:21,000 --> 00:36:24,239 Speaker 11: be a solution. So trying to incentivize use of these 691 00:36:24,400 --> 00:36:27,560 Speaker 11: cars agyrogen we will have available, and we have available 692 00:36:27,920 --> 00:36:30,880 Speaker 11: into the industry that needs it most. And then the 693 00:36:30,960 --> 00:36:34,840 Speaker 11: other thing is probably the stability. So these are longer 694 00:36:34,920 --> 00:36:37,440 Speaker 11: term investments. You need to make investments that are multi 695 00:36:37,480 --> 00:36:40,880 Speaker 11: billion over ten, fifteen years, twenty years time. You need 696 00:36:40,960 --> 00:36:44,160 Speaker 11: to have certainty of the regulatory environment and direction of trouble, 697 00:36:44,719 --> 00:36:47,880 Speaker 11: and the industry needs to move in tandem supply and demand. 698 00:36:48,000 --> 00:36:52,920 Speaker 11: We cannot build projects if our customers also don't invest. 699 00:36:53,480 --> 00:36:56,359 Speaker 11: Carbon capture and storage is quite a good one where 700 00:36:56,440 --> 00:36:58,800 Speaker 11: our customers need to invest in the capture of the 701 00:36:58,880 --> 00:37:01,719 Speaker 11: CO two, invest in the transport and the storage to 702 00:37:01,760 --> 00:37:03,360 Speaker 11: bring the CO two under the ground. 703 00:37:04,200 --> 00:37:07,439 Speaker 3: What's the next big road a mile post that someone 704 00:37:07,520 --> 00:37:09,000 Speaker 3: like me who doesn't follow this day to day, what 705 00:37:09,000 --> 00:37:11,040 Speaker 3: should I look for? Is there a piece of news, 706 00:37:11,160 --> 00:37:14,719 Speaker 3: Is there a piece of legislation or something that's going 707 00:37:14,760 --> 00:37:16,920 Speaker 3: to be a big milepost that. Boy, this industry is 708 00:37:17,040 --> 00:37:18,560 Speaker 3: continuing to make progress. 709 00:37:19,280 --> 00:37:22,360 Speaker 11: We would want to see that carbon pricing is reflected 710 00:37:22,719 --> 00:37:26,279 Speaker 11: in in in and starting to see that there is 711 00:37:26,320 --> 00:37:30,239 Speaker 11: an opportunity and incentives for people to switch and move on. 712 00:37:30,680 --> 00:37:32,920 Speaker 11: That that's one one trend that you would be looking at. 713 00:37:33,960 --> 00:37:38,600 Speaker 11: Then stability of the regulative environment is another one. And 714 00:37:38,719 --> 00:37:40,920 Speaker 11: then the other thing I would say is there is 715 00:37:41,040 --> 00:37:43,959 Speaker 11: not a single solution that fits all. So for sect, 716 00:37:44,040 --> 00:37:46,120 Speaker 11: every sector, we have a roadmap and we work with 717 00:37:46,239 --> 00:37:49,120 Speaker 11: our customers to look at what is what is available. 718 00:37:49,160 --> 00:37:51,840 Speaker 11: And again we start from our position of strengths l 719 00:37:51,920 --> 00:37:54,400 Speaker 11: n G, e V, bio fuels and then building on 720 00:37:54,480 --> 00:37:57,800 Speaker 11: that with hydrogen ccs and probably in the future with 721 00:37:57,920 --> 00:37:59,959 Speaker 11: director capture, if and when that will happen. 722 00:38:00,160 --> 00:38:00,840 Speaker 12: That's Skate and. 723 00:38:01,040 --> 00:38:03,680 Speaker 5: Thanks so much, super appreciate Ana Moscolo. She is a 724 00:38:03,760 --> 00:38:07,440 Speaker 5: Shell executive vice president for Low carbon Solutions. Really interesting. 725 00:38:07,680 --> 00:38:08,400 Speaker 5: You more coming up? 726 00:38:08,520 --> 00:38:09,400 Speaker 2: I am more coming up? 727 00:38:09,480 --> 00:38:10,120 Speaker 5: More You into it? 728 00:38:10,280 --> 00:38:10,520 Speaker 8: I am. 729 00:38:10,800 --> 00:38:11,719 Speaker 2: I'm getting into it now. 730 00:38:11,880 --> 00:38:13,759 Speaker 3: You see, you need to get traditional entry companies and 731 00:38:13,840 --> 00:38:15,880 Speaker 3: new energy companies that got to be together, which they 732 00:38:15,920 --> 00:38:17,080 Speaker 3: are at this conference at least. 733 00:38:18,000 --> 00:38:18,800 Speaker 2: So we'll see. 734 00:38:21,080 --> 00:38:24,959 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 735 00:38:25,040 --> 00:38:26,919 Speaker 1: weekdays at ten am Eastern. 736 00:38:26,719 --> 00:38:30,319 Speaker 6: On applecar Play and Android Auto with the Bloomberg Business Act. 737 00:38:30,480 --> 00:38:33,279 Speaker 1: You can also listen live on Amazon Alexa from our 738 00:38:33,360 --> 00:38:37,640 Speaker 1: flagship New York station Just Say Alexa, playing Bloomberg eleven. 739 00:38:37,440 --> 00:38:41,279 Speaker 5: Thirty Alex de alongside Paul Sweeney. We are live at 740 00:38:41,280 --> 00:38:44,560 Speaker 5: the Bloomberg AF Summit right here in Midtown Manhattan, where 741 00:38:44,560 --> 00:38:49,600 Speaker 5: we're covering all the top regulators, official CEOs, analyst strategy 742 00:38:49,640 --> 00:38:52,839 Speaker 5: officers within the energy transition space. How do you get 743 00:38:53,320 --> 00:38:55,359 Speaker 5: from oil and gas to something different and what does 744 00:38:55,400 --> 00:38:57,719 Speaker 5: that actually wind up looking like. So here's a question 745 00:38:57,760 --> 00:39:00,200 Speaker 5: for you, Yep, what is the third best performing stock 746 00:39:00,239 --> 00:39:01,120 Speaker 5: in the SMP this year. 747 00:39:01,600 --> 00:39:03,560 Speaker 2: I'm going to guess it's an energy stock. 748 00:39:05,120 --> 00:39:08,320 Speaker 5: Calls the best. It is Constellation Energy, which is the 749 00:39:08,719 --> 00:39:13,440 Speaker 5: largest nuclear power facility in the country. It also is 750 00:39:13,480 --> 00:39:16,759 Speaker 5: the largest provider of power to like C and I customers. 751 00:39:17,360 --> 00:39:19,600 Speaker 5: And that's really interesting because you have super Marico is 752 00:39:19,640 --> 00:39:21,920 Speaker 5: the best performing stock, then in Vidia, and then you 753 00:39:22,040 --> 00:39:25,680 Speaker 5: have Constellation Energy GE and Energy Energy And what all 754 00:39:25,760 --> 00:39:27,960 Speaker 5: of this has in common is a lot of demand 755 00:39:28,040 --> 00:39:30,279 Speaker 5: for data centers. A boost and power demand and a 756 00:39:30,400 --> 00:39:32,640 Speaker 5: need for that power, and nuclear is really front and 757 00:39:32,719 --> 00:39:34,920 Speaker 5: center for that. So joining us now to discuss is 758 00:39:35,000 --> 00:39:38,560 Speaker 5: Kathleen Baron. She's executive vice president and chief strategy officer. 759 00:39:38,800 --> 00:39:41,000 Speaker 5: She joins us now here at the summit. Kathleen, it's 760 00:39:41,040 --> 00:39:42,120 Speaker 5: a pleasure, Thanks for joining. 761 00:39:42,360 --> 00:39:43,600 Speaker 10: Thanks, Alex happy to be here. 762 00:39:43,680 --> 00:39:46,120 Speaker 5: So funnily enough, I talked to her CEO yesterday on TV. 763 00:39:46,239 --> 00:39:47,680 Speaker 5: So if you guys want to hear more about nuclear, 764 00:39:47,760 --> 00:39:50,600 Speaker 5: you can check out that segment from Bloomberg Television The Clothes. 765 00:39:51,200 --> 00:39:53,960 Speaker 5: Let's talk about what other stuff you guys are doing 766 00:39:54,360 --> 00:39:57,720 Speaker 5: nuclear obviously bread and butter in the energy transition space 767 00:39:58,320 --> 00:40:00,520 Speaker 5: of which nuclear is a big part. What else are 768 00:40:00,560 --> 00:40:03,840 Speaker 5: you guys doing looking at paying money. 769 00:40:03,719 --> 00:40:06,759 Speaker 10: For well, one of the opportunities we see ahead of 770 00:40:06,920 --> 00:40:10,920 Speaker 10: our country is to find ways to decarbonize austrial sector. 771 00:40:10,920 --> 00:40:13,840 Speaker 10: It's a huge source of emissions. It's really hard to 772 00:40:13,880 --> 00:40:19,520 Speaker 10: find a way to run steel, manufacturing, agriculture, aviation, long 773 00:40:19,640 --> 00:40:22,879 Speaker 10: haul shipping on electricity, right, So we have to find 774 00:40:22,880 --> 00:40:26,360 Speaker 10: another way to decarbonize that sector and find a liquid 775 00:40:26,400 --> 00:40:28,160 Speaker 10: or gases or a solid fuel that we're going to 776 00:40:28,200 --> 00:40:30,920 Speaker 10: have at the ready at any moment to power those industries, 777 00:40:30,960 --> 00:40:35,239 Speaker 10: and hydrogen has emerged as an opportunity for the US 778 00:40:35,360 --> 00:40:37,640 Speaker 10: now that the Inflation Reduction Act has passed. There's a 779 00:40:37,800 --> 00:40:42,239 Speaker 10: production tax credit for hydrogen in that act, and we 780 00:40:42,480 --> 00:40:47,440 Speaker 10: see nuclear and hydrogen as an ideal pairing because, as 781 00:40:47,520 --> 00:40:51,080 Speaker 10: you pointed out, nuclear is clean, but it's also firm, 782 00:40:51,120 --> 00:40:53,719 Speaker 10: it's reliable, it runs twenty four to seven, and so 783 00:40:53,840 --> 00:40:56,560 Speaker 10: it can be a steady source of power to run 784 00:40:56,680 --> 00:41:00,600 Speaker 10: into an electrolyzer, split water into oxygen high and then 785 00:41:00,760 --> 00:41:04,360 Speaker 10: create that clean molecule that can power industrial applications. 786 00:41:04,440 --> 00:41:07,319 Speaker 5: What color fuel, Well, we're trying to. 787 00:41:07,400 --> 00:41:11,040 Speaker 10: Discourage the rainbow of colors and just talk about clean 788 00:41:11,200 --> 00:41:12,160 Speaker 10: versus emitting. 789 00:41:12,320 --> 00:41:15,320 Speaker 5: But it is called pink for what it's for just 790 00:41:15,400 --> 00:41:16,120 Speaker 5: to work clear, yep. 791 00:41:16,880 --> 00:41:19,960 Speaker 2: So I was fascinated to not just I didn't know 792 00:41:20,040 --> 00:41:20,880 Speaker 2: much about your company. 793 00:41:21,120 --> 00:41:23,719 Speaker 3: Your company has the largest or the biggest nuclear fleet 794 00:41:23,800 --> 00:41:27,719 Speaker 3: in the country with twenty one reactors. What is the 795 00:41:27,800 --> 00:41:31,680 Speaker 3: future of nuclear energy in this country as we again 796 00:41:31,800 --> 00:41:35,240 Speaker 3: think about more green types of energy sources. 797 00:41:35,560 --> 00:41:37,719 Speaker 10: You know, it has changed a lot, even just in 798 00:41:37,760 --> 00:41:39,920 Speaker 10: the last few years in terms of public acceptance for 799 00:41:40,040 --> 00:41:42,879 Speaker 10: the technology it makes. I mean not just our fleet, 800 00:41:42,920 --> 00:41:45,520 Speaker 10: but the nuclear fleet generally generates twenty percent of the 801 00:41:45,560 --> 00:41:48,239 Speaker 10: electricity that runs through this building we're in in our 802 00:41:48,320 --> 00:41:51,320 Speaker 10: economy every day. People don't really realize that, but it 803 00:41:51,400 --> 00:41:53,600 Speaker 10: is the backbone of the power sector, and it is 804 00:41:54,160 --> 00:41:57,200 Speaker 10: carbon free, and as we just talked about, very reliable. 805 00:41:57,320 --> 00:42:01,759 Speaker 10: It operates around the clock, no matter the weather, their sun, wind, brainstorm, 806 00:42:03,160 --> 00:42:06,920 Speaker 10: it's still operating. And we own twenty one reactors. We 807 00:42:07,560 --> 00:42:10,719 Speaker 10: operate T one reactors. We own twenty three and so 808 00:42:10,800 --> 00:42:14,880 Speaker 10: that's about a quarter of the US fleet. And the 809 00:42:15,000 --> 00:42:17,480 Speaker 10: beauty of these machines is that they can run for 810 00:42:17,560 --> 00:42:20,760 Speaker 10: a very long period of time. Most of our assets 811 00:42:20,880 --> 00:42:24,160 Speaker 10: are sort of in the thirty forty to fifty year 812 00:42:24,200 --> 00:42:27,600 Speaker 10: old time frame, but they can run up to eighty 813 00:42:27,840 --> 00:42:31,480 Speaker 10: years according to the Federal Safety Regulators in Washington, and 814 00:42:31,600 --> 00:42:35,879 Speaker 10: so they are constantly being rebuilt. We put in about 815 00:42:35,880 --> 00:42:37,680 Speaker 10: a billion and a half a new capital every year, 816 00:42:38,040 --> 00:42:40,000 Speaker 10: and we're replacing the components. It's kind of like an 817 00:42:40,040 --> 00:42:43,680 Speaker 10: old car that's having its plate its parts replaced regularly. 818 00:42:43,880 --> 00:42:46,080 Speaker 10: So these machines can run for a very long time. 819 00:42:46,160 --> 00:42:49,040 Speaker 10: They abate about five hundred million metric tons of carbon 820 00:42:49,080 --> 00:42:51,680 Speaker 10: every year, so it's in the nation's interest to keep 821 00:42:51,719 --> 00:42:55,520 Speaker 10: them running. In with this growing public acceptance, we're seeing 822 00:42:55,880 --> 00:42:59,000 Speaker 10: interest in corporate procurements, We're seeing interest from governments. We're 823 00:42:59,000 --> 00:43:01,759 Speaker 10: seeing people valuing this thing that we don't have enough of, 824 00:43:01,880 --> 00:43:03,600 Speaker 10: which is a clean firm megaal pour. 825 00:43:03,800 --> 00:43:06,160 Speaker 5: So when we talk about the hydrogen stuff, so pink. 826 00:43:06,440 --> 00:43:08,719 Speaker 5: So basically you would get the power to split the 827 00:43:08,800 --> 00:43:12,240 Speaker 5: hydrogen from the oxygen and the electrolyizer using nuclear stream. 828 00:43:13,400 --> 00:43:16,440 Speaker 5: Does that mean that if I'm building a hydrogen facility, 829 00:43:16,600 --> 00:43:19,320 Speaker 5: I have to go where your power plant is, or 830 00:43:19,440 --> 00:43:22,120 Speaker 5: are you going to be building a power plant, a 831 00:43:22,239 --> 00:43:25,680 Speaker 5: small modular power plant near me, or are we running 832 00:43:25,760 --> 00:43:28,200 Speaker 5: like a big tube of something in between me and you. 833 00:43:28,760 --> 00:43:31,200 Speaker 10: So what we're talking about is using the existing reactors 834 00:43:31,520 --> 00:43:36,040 Speaker 10: to power an electrilyizer, and as you said, split the 835 00:43:36,120 --> 00:43:38,360 Speaker 10: oxygen and the hydrogen. You could do that right up 836 00:43:38,440 --> 00:43:40,680 Speaker 10: next to the power plant, so you put the electricity 837 00:43:41,000 --> 00:43:44,279 Speaker 10: right into the electrolyzer, or you could put your electrolyizer 838 00:43:44,360 --> 00:43:48,319 Speaker 10: next to your manufacturing plant or whatever process you're trying 839 00:43:48,360 --> 00:43:50,520 Speaker 10: to use the hydrogen for. 's say you're making sustainable 840 00:43:50,520 --> 00:43:53,360 Speaker 10: aviation fuel, and we can shift the electricity over the 841 00:43:53,480 --> 00:43:57,240 Speaker 10: transmission line to your electrolyizer and the dedicated power purchase 842 00:43:57,239 --> 00:44:00,480 Speaker 10: agreement that sort of hydrogen by wire configuration. So either 843 00:44:00,600 --> 00:44:03,919 Speaker 10: co located with the plant or through the transmission line. 844 00:44:03,960 --> 00:44:05,800 Speaker 10: Either way you're going to have that steady source of 845 00:44:05,880 --> 00:44:08,560 Speaker 10: zero carbon electricity going. It's the electrolyizer every hour. 846 00:44:09,000 --> 00:44:11,040 Speaker 2: Can I go out and build a nuclear power plant 847 00:44:11,040 --> 00:44:11,839 Speaker 2: in this country today? 848 00:44:13,200 --> 00:44:17,880 Speaker 10: There is no reason why you can't. But thank you, Alex. 849 00:44:19,400 --> 00:44:20,879 Speaker 2: You know, there are. 850 00:44:22,600 --> 00:44:27,320 Speaker 10: A bunch of reactor technology developers who have new designs 851 00:44:27,360 --> 00:44:29,920 Speaker 10: you mentioned small modular reactors that are in the process 852 00:44:29,960 --> 00:44:33,560 Speaker 10: of getting licensed, and there are some utilities who have 853 00:44:34,520 --> 00:44:39,279 Speaker 10: created relationships with those technology developers for sort of you 854 00:44:39,360 --> 00:44:42,920 Speaker 10: know co development or you know, an advanced commitment, but 855 00:44:43,360 --> 00:44:46,160 Speaker 10: none of them are under construction just yet. Some of 856 00:44:46,239 --> 00:44:48,480 Speaker 10: them are going to be starting soon. For example, in 857 00:44:48,600 --> 00:44:52,400 Speaker 10: Canada that the Ontario Power Generator has partnered with the 858 00:44:52,520 --> 00:44:58,239 Speaker 10: GE three hundred megawatt reactor design too, and they think 859 00:44:58,560 --> 00:45:01,520 Speaker 10: they have been through regular Tory approvals and they will 860 00:45:01,640 --> 00:45:04,840 Speaker 10: start construction sooner. But in the US we're just we've lagged. 861 00:45:04,880 --> 00:45:07,920 Speaker 10: I mean, this is happening in Canada's happening overseas and 862 00:45:08,560 --> 00:45:11,680 Speaker 10: we don't have that market poll here. We don't have 863 00:45:11,840 --> 00:45:14,480 Speaker 10: commitments as much as we should to get those new 864 00:45:14,520 --> 00:45:17,400 Speaker 10: reactor designs through licensing and into construction and past that 865 00:45:17,520 --> 00:45:19,520 Speaker 10: first of a kind cost cycle. That's really the thing 866 00:45:19,560 --> 00:45:20,320 Speaker 10: that we need to overcome. 867 00:45:20,320 --> 00:45:23,080 Speaker 5: It kind of jumped over nuclear for a while, right 868 00:45:23,200 --> 00:45:25,399 Speaker 5: Like when I first started covering commodity seventeen years ago, 869 00:45:25,520 --> 00:45:27,719 Speaker 5: it was all uranium because of the nuclear stuff. And 870 00:45:27,760 --> 00:45:29,279 Speaker 5: then it was like, we don't talk about that right now. 871 00:45:29,400 --> 00:45:31,879 Speaker 5: And even Germany was like anti nuclear for a while. 872 00:45:31,960 --> 00:45:34,840 Speaker 5: They retired all their fleets and they're like, oops, oops, yep, oopsie, 873 00:45:35,080 --> 00:45:38,279 Speaker 5: what happens when Russian and Beidess Ukraine? Kathleen, so great 874 00:45:38,320 --> 00:45:39,960 Speaker 5: to get your perspective. That was really great. Love to 875 00:45:40,000 --> 00:45:43,000 Speaker 5: see how that relationship pans out between hydrogen A nuclear. 876 00:45:43,120 --> 00:45:46,000 Speaker 5: Kathleen Baron, she's executive vice president and chief strategy officer 877 00:45:46,080 --> 00:45:47,480 Speaker 5: over a Constellation Energy. 878 00:45:47,640 --> 00:45:49,200 Speaker 2: I'm learning a lot this past couple of days. 879 00:45:49,280 --> 00:45:50,960 Speaker 5: I thought you could be so bored. 880 00:45:51,440 --> 00:45:54,799 Speaker 2: Sibl. Yeah, a little bit more chemistry than I thought. 881 00:45:54,960 --> 00:45:56,799 Speaker 2: You know, I didn't think there would be math here, 882 00:45:56,880 --> 00:45:58,200 Speaker 2: but I'll figure it out. 883 00:45:58,800 --> 00:46:01,479 Speaker 5: It's helpful with the ag Oh, it's like right, okay, 884 00:46:01,560 --> 00:46:03,280 Speaker 5: yes to hydrogen one oxygen. 885 00:46:03,360 --> 00:46:03,719 Speaker 12: We got this. 886 00:46:03,880 --> 00:46:04,360 Speaker 5: We can do this. 887 00:46:04,680 --> 00:46:05,879 Speaker 2: Yep, we can do math. 888 00:46:06,320 --> 00:46:10,839 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, 889 00:46:11,040 --> 00:46:14,680 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 890 00:46:14,840 --> 00:46:17,800 Speaker 1: ten am to noon Eastern on Bloomberg dot com, be 891 00:46:17,920 --> 00:46:21,279 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 892 00:46:21,400 --> 00:46:24,520 Speaker 1: can also watch us live every weekday on YouTube and 893 00:46:24,719 --> 00:46:26,280 Speaker 1: always on the Bloomberg terminal