WEBVTT - Elon Musk Pay, Energy in Focus 0:00:02.920 --> 0:00:10.799 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:17.520 Eastern on fo card Playing and Broyd Auto with the 0:00:17.520 --> 0:00:21.400 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.000 or watch us live on YouTube. 0:00:25.040 --> 0:00:26.119 I'm looking at Tesla. 0:00:26.520 --> 0:00:29.480 That stock has been in the news every day every 0:00:29.560 --> 0:00:32.960 day this year. The stock is really underperforming, down thirty 0:00:33.000 --> 0:00:36.320 seven percent, so it seems like an odd time for Tesla. 0:00:36.720 --> 0:00:37.760 We'll ask shareholders to. 0:00:37.760 --> 0:00:41.000 Vote again on the same fifty six billion dollar compensation 0:00:41.040 --> 0:00:44.239 package for chief executive officer Elon Musk that was avoided 0:00:44.680 --> 0:00:48.839 by a Delaware court early this year. Craig Trudell joins us. 0:00:48.840 --> 0:00:53.519 He covers all that Auto stuff for Bloomberg. It's just 0:00:53.640 --> 0:00:56.400 amazing here, Craig, it seems like an odd time to 0:00:56.440 --> 0:00:59.640 be asking for this monster's payday here. 0:01:00.000 --> 0:01:01.960 What's going on at Tesla? The board and Elon? 0:01:03.160 --> 0:01:05.839 Yeah, it's it's not a huge shock in that we 0:01:05.840 --> 0:01:09.559 we sort of heard the complaining about this ruling, uh 0:01:09.600 --> 0:01:12.240 as as soon as it hit, you know, we saw 0:01:12.280 --> 0:01:14.520 it play out on on X as you would expect. 0:01:15.280 --> 0:01:18.520 But it is I guess I was surprised to see that. 0:01:18.840 --> 0:01:21.160 You know, their their move here was to take the 0:01:21.200 --> 0:01:24.560 same plan and just put it back to the shareholders. 0:01:24.880 --> 0:01:27.000 It's a it's a fairly simple one, but it does 0:01:27.040 --> 0:01:30.399 seem like a pretty bold one, just given the very 0:01:30.480 --> 0:01:33.800 thorough uh you know case that was laid out by 0:01:33.840 --> 0:01:38.120 the Delaware Chance record, uh you know against the company 0:01:38.120 --> 0:01:42.240 in particular, particularly the board. I mean, the language that 0:01:42.360 --> 0:01:47.200 Judge Kathleen McCormick used was was pretty uh, pretty notable. 0:01:47.360 --> 0:01:51.559 She described the directors as and I quote, supine servants 0:01:51.600 --> 0:01:54.960 of an overwinning master. I mean, she just had a 0:01:54.960 --> 0:01:59.320 lot of mil zingers about this, about this board. And 0:01:59.400 --> 0:02:02.920 for them to you know, respond to that by you know, 0:02:03.560 --> 0:02:06.160 doing it over again is really something. 0:02:08.600 --> 0:02:11.520 Just to be clear, we're talking fifty six billion, like 0:02:11.560 --> 0:02:13.200 with a bee with. 0:02:13.160 --> 0:02:17.120 A bee, yeah, I mean, how do we get to 0:02:17.160 --> 0:02:21.480 that if you want to, if you want to defend 0:02:21.480 --> 0:02:25.080 the board here, of course they did. We constantly referred 0:02:25.080 --> 0:02:28.359 to this pay package as a moonshot award, right, and 0:02:28.360 --> 0:02:32.600 and it absolutely was. It was setting targets that nobody 0:02:32.600 --> 0:02:36.560 thought was was at all possible that the company wouldn't 0:02:36.560 --> 0:02:39.360 be able to pull off. It was it was based 0:02:39.400 --> 0:02:43.239 on performance of the company and its earnings and market value. 0:02:43.280 --> 0:02:47.279 And I think there was a combination of Musk absolutely 0:02:47.320 --> 0:02:51.639 pulling you know, miracles in terms of the earnings performance 0:02:51.639 --> 0:02:54.600 of this company that no one saw company comping coming. 0:02:54.960 --> 0:02:57.079 But it was also the case that you know, this 0:02:57.360 --> 0:03:00.480 company was the sort of poster boy for the zerp 0:03:00.560 --> 0:03:04.600 Era and you know, a mean stock, right, and we 0:03:04.680 --> 0:03:08.440 don't get there without you know, the enthusiasm that Musk 0:03:08.600 --> 0:03:11.320 manage to pull off. In addition to turning this company 0:03:11.440 --> 0:03:15.280 into a car company to really you know, take seriously. 0:03:17.919 --> 0:03:21.799 All right, So they're also looking to reincorporate I guess 0:03:21.880 --> 0:03:24.560 in a friendlier jurisdiction, maybe get out of Delaware and 0:03:24.600 --> 0:03:26.520 get to the great state of Texas. 0:03:26.560 --> 0:03:28.080 Is that all tied together with this? 0:03:29.440 --> 0:03:32.919 They interestingly do lay out in the proxy that they 0:03:32.960 --> 0:03:36.080 wanted to sort of put this to shareholders together. They 0:03:36.120 --> 0:03:40.600 didn't want to be perceived as basically running from Delaware 0:03:40.840 --> 0:03:45.840 in response to the ruling and going to Texas where 0:03:45.880 --> 0:03:49.240 they would be treated differently. They wanted to have shareholders, 0:03:49.840 --> 0:03:52.680 you know, get another opportunity to say yay or nay 0:03:52.720 --> 0:03:55.600 to this and give them an opportunity to weigh in 0:03:55.640 --> 0:03:58.760 on whether they should change the incorporation. I think it 0:03:58.920 --> 0:04:02.240 still remains to be seeing you know, just exactly how 0:04:02.280 --> 0:04:05.800 this can can work out, uh legally speaking, this idea 0:04:05.840 --> 0:04:09.320 that a court would make this ruling and and the 0:04:09.400 --> 0:04:14.240 company would, you know, basically just have shareholders perform a 0:04:14.360 --> 0:04:18.440 do over after the judge you know, said that they, 0:04:18.720 --> 0:04:21.120 you know, did not look out for the best interests 0:04:21.160 --> 0:04:22.560 of shareholders. 0:04:22.760 --> 0:04:22.960 Uh. 0:04:23.279 --> 0:04:26.120 You know, I guess if if you're Tesla, the argument 0:04:26.200 --> 0:04:28.800 you make here is that, well, you know, you just 0:04:28.920 --> 0:04:32.520 exposed this idea that that we apparently did enough and 0:04:32.600 --> 0:04:35.880 broke it down and uh, you know, pretty damning detail. 0:04:36.480 --> 0:04:39.719 The investors know. Now the shareholders can vote again, and 0:04:39.839 --> 0:04:43.040 if they vote in favor, then uh, you know, what's 0:04:43.080 --> 0:04:45.440 your what's your problem is essentially. 0:04:46.880 --> 0:04:52.400 Yeah, hither too. I want to transition to Continental, which 0:04:52.600 --> 0:04:56.000 is an autoparts company really that stuck us down over 0:04:56.080 --> 0:04:58.960 five percent over in Germany. And I say that because 0:04:59.000 --> 0:05:02.200 their results were worse than feared, and there's all points 0:05:02.240 --> 0:05:04.960 to the current auto market isn't doing too great. And 0:05:05.000 --> 0:05:07.480 then they also ev market isn't doing too great and 0:05:07.520 --> 0:05:09.680 for Continental, that squeezes on both sides. 0:05:11.320 --> 0:05:14.160 Yeah, I think they've been a company that really has 0:05:14.160 --> 0:05:19.080 struggled with this transition, you know, really like very very 0:05:19.160 --> 0:05:23.440 much been in a position of being caught flat footed 0:05:23.560 --> 0:05:28.000 in terms of being ready for electrification, and has made 0:05:28.000 --> 0:05:30.640 a lot of a lot of moves to try and 0:05:30.760 --> 0:05:34.800 address that that haven't gone particularly smoothly. And so, in 0:05:34.839 --> 0:05:37.640 addition to this idea that you know, the auto market 0:05:37.720 --> 0:05:40.800 is showing some signs of strain under the pressure of 0:05:41.680 --> 0:05:45.880 higher interest rates making it more difficult for consumers to 0:05:45.920 --> 0:05:48.679 be able to afford big, big purchases like a new car, 0:05:49.520 --> 0:05:52.760 it's also very much a case specific to this company 0:05:52.800 --> 0:05:56.240 where they're really trying to remake themselves and struggling to 0:05:56.279 --> 0:05:59.120 do so. 0:05:59.200 --> 0:06:00.880 Craig, We're where are we now? 0:06:00.920 --> 0:06:05.200 Just in kind of the markets perception of overall and 0:06:05.279 --> 0:06:07.760 demand for evs. I mean, is this just a bump 0:06:07.800 --> 0:06:11.080 in the road that an industry that's undergoing a long 0:06:11.200 --> 0:06:14.599 term transition should we should expect to see, or there's 0:06:14.600 --> 0:06:16.240 something more fundamental going on out there. 0:06:17.480 --> 0:06:20.320 Yeah, it's a good question, because I think even folks 0:06:20.360 --> 0:06:24.560 who covered this just religiously are our colleagues at Bloomberg 0:06:24.600 --> 0:06:27.919 New Energy Financed. I think they were initially reluctant to 0:06:28.000 --> 0:06:30.960 sort of come around to this idea of an ev 0:06:31.160 --> 0:06:35.560 slowdown and sort of you know, had a view that 0:06:35.680 --> 0:06:39.839 you know, people were more more pessimistic than was really warranted. 0:06:40.000 --> 0:06:42.599 And this was as you know, a lot of headlines 0:06:42.640 --> 0:06:45.880 were coming out late last year early this year, I 0:06:45.880 --> 0:06:49.240 think when when Tesla reported their first quarter deliveries and 0:06:49.320 --> 0:06:53.720 it came in so far short of of everyone's expectations. 0:06:53.760 --> 0:06:57.080 You know, the consensus was coming down and down going 0:06:57.120 --> 0:07:00.840 into that report, and yet even then the company came up, 0:07:00.880 --> 0:07:03.920 you know, tens of thousands of vehicles short of where 0:07:04.279 --> 0:07:08.360 people were seeing them, you know, report. I think even 0:07:08.440 --> 0:07:11.920 BNF now is very much concerned about, you know, the 0:07:13.200 --> 0:07:17.600 magnitude of deceleration that we've seen and the challenges that 0:07:17.640 --> 0:07:21.080 we're seeing, particularly in a market like the US, where 0:07:21.280 --> 0:07:24.240 you would think that at this point, you know, this 0:07:24.400 --> 0:07:27.800 many years into this transition, and with all the investments 0:07:27.840 --> 0:07:30.800 that companies are making, that surely we would start to 0:07:30.840 --> 0:07:35.360 see you know, more momentum or at least a healthier 0:07:35.360 --> 0:07:39.040 continuation of momentum. Instead, we've seen a real slow down, 0:07:39.360 --> 0:07:42.640 and I think you know, even even Biden's Inflation Reduction 0:07:42.720 --> 0:07:45.320 Act does a lot of the right things to try 0:07:45.360 --> 0:07:48.880 and you know, uh, move this this part of the 0:07:48.880 --> 0:07:53.240 industry forward, and yet executions has been a challenge. 0:07:54.360 --> 0:07:57.040 Hey, Craig, thanks a lot, Craig Trudell Bloomberg a Global 0:07:57.120 --> 0:08:00.520 Autos editor. Super appreciated and we are at a Bloomberg 0:08:00.760 --> 0:08:02.960 Ye ANYF conference right now. But I think, but that 0:08:03.000 --> 0:08:05.840 does point to the fact that we don't actually know 0:08:05.880 --> 0:08:08.440 how this will play out, and things are really lumpy, 0:08:08.720 --> 0:08:11.200 and you can be in a structural shift in different 0:08:11.200 --> 0:08:14.800 industries and still be a cyclical industry like auto auto 0:08:14.800 --> 0:08:17.600 industry is cyclical, right, so but you can still be 0:08:17.760 --> 0:08:19.840 in a structural shift. So all of these things can 0:08:19.880 --> 0:08:22.160 be true. It's just a matter of then how you 0:08:22.240 --> 0:08:24.920 price it. If you're an investor, that gets complicated. 0:08:24.960 --> 0:08:26.000 It does get complicated. 0:08:26.440 --> 0:08:28.880 And I just wonder to what extent if any, this 0:08:29.000 --> 0:08:31.840 ev transition, at least in the United States, has become 0:08:31.880 --> 0:08:36.480 politicized blue red totally, you know, And if that's in 0:08:36.520 --> 0:08:39.040 fact the case, then that really I think is a 0:08:39.080 --> 0:08:42.520 significant roadblock for the mass adoption, the mass volume that 0:08:42.559 --> 0:08:45.520 the economics demand to get the unit profitability there, because 0:08:45.559 --> 0:08:47.719 it's not you barely make a profit. It seventy or 0:08:47.760 --> 0:08:49.240 eighty thousand a car, and its Kevin Tyne and a 0:08:49.240 --> 0:08:51.160 Bloomberg Intelligence points out. 0:08:51.160 --> 0:08:52.640 How you're going to make a profit at thirty or 0:08:52.679 --> 0:08:53.360 forty thousand dollars. 0:08:53.400 --> 0:08:54.560 Yea, exactly, exactly. 0:08:56.120 --> 0:09:00.160 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:00.160 --> 0:09:03.080 weekdays at ten am Eastern on applecar. 0:09:02.640 --> 0:09:05.360 Play and Android Auto with a Bloomberg Business Act. 0:09:05.520 --> 0:09:08.360 You can also listen live on Amazon Alexa from our 0:09:08.400 --> 0:09:12.760 flagship New York station Just Say Alexa playing Bloomberg eleven thirty. 0:09:13.880 --> 0:09:17.200 We are at Bloomberg an ef A Summit, Day two. So, Paul, 0:09:17.200 --> 0:09:19.240 one of my bigger takeaways from yesterday when we were 0:09:19.240 --> 0:09:23.640 here is that you have a lot of money being 0:09:23.720 --> 0:09:26.680 spent on stuff, and that's the good part. The other 0:09:26.720 --> 0:09:29.240 part is there's still a lot of uncertainty in terms 0:09:29.240 --> 0:09:31.680 of are we spending on the right stuff? Is the 0:09:31.720 --> 0:09:35.720 demand really there? Permitting is an issue, connection to lays 0:09:35.840 --> 0:09:38.040 trade issues. There's lots of stuff that we're trying to 0:09:38.120 --> 0:09:40.680 unpack here. One way to look at it is the 0:09:40.720 --> 0:09:44.200 importance of big energy in this space. So you need 0:09:44.320 --> 0:09:48.440 exon Chevron Shell total BP. You need these guys to 0:09:48.480 --> 0:09:50.680 put money in the right spot to really help turn 0:09:50.720 --> 0:09:52.800 things around. So one of those individuals we're going to 0:09:52.880 --> 0:09:57.160 talk to you right now is Jeff Gustavin. Nope, Gustafson, 0:09:57.400 --> 0:09:59.640 I can't do it. I asked him to say, gust Ofsen. 0:09:59.760 --> 0:10:02.319 It's V and the s Jeff, this is my problem. 0:10:02.760 --> 0:10:06.000 He's president of Chevron New Energies. He's been at Chevron 0:10:06.040 --> 0:10:07.040 for what was it twenty five years? 0:10:07.080 --> 0:10:07.959 You said twenty five years. 0:10:08.080 --> 0:10:11.000 We've belt lots of different positions. What brought you to 0:10:11.280 --> 0:10:15.000 the new energy part of Chevron? What's that like for you? 0:10:15.480 --> 0:10:17.600 Yeah, well, first of all, great to be here, thanks 0:10:17.640 --> 0:10:22.000 for having me. We launched these new businesses about three 0:10:22.080 --> 0:10:25.360 years ago. This is actually our third full year and 0:10:25.400 --> 0:10:28.880 it's a suite of businesses that support our lower carbon 0:10:29.000 --> 0:10:31.960 strategy as a company. There's two pieces to that. One 0:10:32.080 --> 0:10:35.400 is lowering the carbon intensity of our traditional oil. 0:10:35.200 --> 0:10:36.040 And gas business. 0:10:36.040 --> 0:10:39.400 The other part is growing new low carbon businesses and 0:10:39.440 --> 0:10:42.840 solutions to scale, and that's what Chevron New Energies is. 0:10:42.880 --> 0:10:47.280 We're focused on renewable fuels, carbon capture, utilization and storage, 0:10:47.760 --> 0:10:54.160 hydrogen carbon offsets, emerging technologies, and everything in between. This 0:10:54.200 --> 0:10:58.360 is something that's always been a passion of mine, the 0:10:58.480 --> 0:11:03.000 energy transition and low carbon energy. I love oil and gas. 0:11:03.120 --> 0:11:03.720 I grew up in. 0:11:03.760 --> 0:11:08.680 Oil and gas, but now shifting seeing a company like Chevron, 0:11:09.080 --> 0:11:12.640 with the capabilities we bring to this space, growing these 0:11:12.679 --> 0:11:15.240 new businesses. I couldn't be more excited about this role. 0:11:15.679 --> 0:11:17.640 And I always looked to the educational background of our 0:11:17.679 --> 0:11:18.920 guest because I think that's kind of fun. 0:11:19.160 --> 0:11:20.160 University of Colorado. 0:11:20.160 --> 0:11:23.160 He's a buffalo, that's big, and he's also got his 0:11:23.280 --> 0:11:26.040 NBA from the Red Macombs School of Business at the 0:11:26.080 --> 0:11:28.320 University of Texas. Red Macombs is a co founder of 0:11:28.320 --> 0:11:31.040 Clear Channel, little radio company. I took public back in 0:11:31.040 --> 0:11:34.000 the day, so I know read pretty well. And Larry 0:11:34.000 --> 0:11:36.040 Mays like this, likes to say, Hey, I got my 0:11:36.559 --> 0:11:38.240 name on the NBA program in Texas a and in 0:11:38.320 --> 0:11:40.680 for ten million, Red you spent fifteen million. 0:11:40.720 --> 0:11:41.440 I got a better deal. 0:11:41.520 --> 0:11:42.200 You got a better deal. 0:11:42.320 --> 0:11:44.079 Yeah, Jeff, what is I don't know. 0:11:44.080 --> 0:11:46.720 If you fast forward five years from now, ten years 0:11:46.760 --> 0:11:50.360 from now, how do you guys think about sustainable energy 0:11:50.400 --> 0:11:52.720 as a part of the overall portfolio of Chevron. What 0:11:52.760 --> 0:11:54.600 percentage do you think that might look like? 0:11:54.960 --> 0:11:55.360 Yeah? 0:11:55.440 --> 0:11:56.040 Good question. 0:11:56.160 --> 0:12:01.959 And when we launched, we announced that we were allocating 0:12:02.080 --> 0:12:05.840 or guiding to spending ten billion dollars over an eight 0:12:05.920 --> 0:12:08.120 year period, right, this would be twenty twenty one to 0:12:08.280 --> 0:12:12.160 twenty eight And that's just the starting point. So these 0:12:12.200 --> 0:12:17.080 are already a significant part of our capital allocation strategy. 0:12:17.120 --> 0:12:19.480 We have a very large oil and gas business, which 0:12:19.520 --> 0:12:23.000 requires a lot of capital to maintain and grow that 0:12:23.040 --> 0:12:26.880 business to meet global demand. But these these businesses are 0:12:26.880 --> 0:12:29.800 We're spending anywhere from one and a half to two 0:12:29.800 --> 0:12:32.400 billion a year to support these new businesses. And my 0:12:32.559 --> 0:12:35.880 job and our job as a new segment is to 0:12:35.920 --> 0:12:38.760 find the right opportunities that are investable so we can 0:12:38.800 --> 0:12:40.600 grow this business even further. 0:12:40.720 --> 0:12:42.640 So Paul asked this question and break and I actually 0:12:42.640 --> 0:12:44.079 think it's a good one, so I'm gonna ask it. 0:12:44.480 --> 0:12:47.760 You're based in Houston, and his question was, are guys 0:12:47.800 --> 0:12:49.040 like you the new energy people? 0:12:49.120 --> 0:12:49.200 Are? 0:12:49.280 --> 0:12:50.600 Are you guys welcome in Houston? 0:12:50.960 --> 0:12:54.640 Like the oil bar, like the oilman's bar, taking. 0:12:54.360 --> 0:12:56.960 Like the cowboy guys who stick like a pipe in 0:12:56.960 --> 0:12:59.520 the ground and get oil. He's thinking those people, are 0:12:59.520 --> 0:13:00.680 you welcome in those bars? 0:13:01.720 --> 0:13:01.960 Yes? 0:13:03.559 --> 0:13:06.160 And I love being referred to as a new energy person, 0:13:07.120 --> 0:13:09.960 but no, I mean this is I think this. Look, 0:13:10.000 --> 0:13:12.880 there's three things that we're that we really need to 0:13:12.920 --> 0:13:16.240 see in order to accelerate the growth of these businesses. 0:13:16.280 --> 0:13:20.240 And that's a greater collaboration between private companies, between private 0:13:20.280 --> 0:13:25.080 companies and policymakers, between governments around the world. It's lowering 0:13:25.120 --> 0:13:28.080 the cost of these new technologies and solutions so customers, 0:13:28.240 --> 0:13:31.480 large customers, large businesses or individual customers will buy them. 0:13:32.000 --> 0:13:36.360 And it is bringing capabilities to bear the right capabilities. 0:13:36.720 --> 0:13:40.600 And that goes to your Houston question. The energy industry 0:13:41.280 --> 0:13:46.040 possesses a lot of the capabilities, technical, operating, commercial capabilities 0:13:46.120 --> 0:13:50.640 that are required to grow these businesses profitably, to scale. 0:13:50.679 --> 0:13:52.640 So absolutely, you know a lot of this, a lot 0:13:52.679 --> 0:13:55.080 of activity in Houston, a lot of companies engaged in this. 0:13:55.200 --> 0:13:59.200 So Houston it's an oil and gas capital that's out 0:13:59.280 --> 0:14:00.960 thought of. It's also new energy capital. 0:14:01.920 --> 0:14:04.840 So where are we in terms of I've been reading 0:14:04.880 --> 0:14:07.040 a lot on this, Alex, she knows that she's the expert. 0:14:07.040 --> 0:14:08.240 I've been reading up a lot on this over the 0:14:08.280 --> 0:14:10.800 last several days. It seems like the US government's putting 0:14:10.840 --> 0:14:13.200 a lot of money into this. That's the good news, 0:14:13.240 --> 0:14:15.520 as Alex mentioned earlier, but I've also heard here of 0:14:15.600 --> 0:14:18.760 the last couple of days, it's still not easy doing 0:14:18.800 --> 0:14:21.600 business with the government. I'm thinking permitting for certain projects 0:14:21.640 --> 0:14:24.320 and things like that. What's been your experience there is 0:14:24.400 --> 0:14:27.640 to is the government doing the best it can to 0:14:27.880 --> 0:14:30.040 kind of facilitate some of these investments in transition. 0:14:30.200 --> 0:14:32.600 Yeah, So collaboration between the private sector and the public 0:14:32.680 --> 0:14:37.680 sectors fundamental here. It helps lower the cost. Those are 0:14:37.960 --> 0:14:42.080 you know, advocacy understanding politics, not just in this country 0:14:42.080 --> 0:14:46.160 but around the world. Is a strength of our company 0:14:46.200 --> 0:14:49.000 of energy companies, you know, more broadly, so it fits 0:14:49.080 --> 0:14:52.520 one of our existing capabilities. But that is one of 0:14:52.560 --> 0:14:55.040 the starting points here. You know, you need the right 0:14:55.360 --> 0:14:58.640 policy support, the right incentives to get the private sector 0:14:59.080 --> 0:15:03.560 investing even more heavily in this space. That will drive 0:15:04.280 --> 0:15:07.400 the technology forward, That will drive innovation, that will drive 0:15:07.480 --> 0:15:10.520 to building large scale projects which will lower the cost, 0:15:10.680 --> 0:15:14.920 make it more consumable for the world, and that is 0:15:14.960 --> 0:15:17.560 a cycle that will then you know, continue. So it 0:15:17.560 --> 0:15:21.080 starts with policy, but it really is sustained by the 0:15:21.120 --> 0:15:25.000 investment by the private sector in technology. Government's a very 0:15:25.000 --> 0:15:29.720 important partner. We've seen We're having really constructive conversations with 0:15:29.800 --> 0:15:32.960 the government, But you mentioned permitting. There's still a long 0:15:33.000 --> 0:15:36.520 way to go to make all of this come together. 0:15:37.040 --> 0:15:40.520 We've shown some progress, but there are many steps in front. 0:15:40.320 --> 0:15:42.280 Of us, you know, Paulo. To your point, it seems 0:15:42.280 --> 0:15:44.720 like the good part of this is that energy companies 0:15:44.760 --> 0:15:47.280 in the new energy world are in the room talking 0:15:47.320 --> 0:15:50.240 to people, typically the government and oil and gas of 0:15:50.280 --> 0:15:53.920 a contentious relationship at past in certain administrations, and it 0:15:53.960 --> 0:15:57.880 feels like in this area maybe that is dissolving a bit, 0:15:58.000 --> 0:16:01.600 which would be helpful. Something that I've noticed too, is 0:16:01.640 --> 0:16:03.040 that I think it was like three hundred and three 0:16:03.080 --> 0:16:05.160 billion dollars has been spent I think it was last 0:16:05.240 --> 0:16:07.320 year on all these new energy stuff. What I'm also 0:16:07.360 --> 0:16:11.400 hearing is that demand is a forgotten problem. Like all 0:16:11.760 --> 0:16:13.440 the money is being spent, all the money, but the 0:16:13.440 --> 0:16:16.600 money being spent on supplying the stuff and getting that 0:16:16.680 --> 0:16:18.360 cost down, but not enough it is being spent on 0:16:18.440 --> 0:16:22.160 demand to incentivize a company signing up with you for 0:16:23.680 --> 0:16:25.960 esaff for something along those lines. Is that true? 0:16:26.800 --> 0:16:28.680 There is a lot of money being spent in these 0:16:28.800 --> 0:16:31.440 in these new businesses. It's actually one point seven trillion 0:16:31.520 --> 0:16:36.080 dollars globally compared to about one trillion dollars spent in 0:16:36.360 --> 0:16:38.920 the traditional energy business last year, and we need even 0:16:39.000 --> 0:16:41.880 more to grow these businesses to scale. And you hit 0:16:41.920 --> 0:16:44.920 on a very important point. It is, and I'll use 0:16:44.960 --> 0:16:49.080 hydrogen as an example. It's not hard to produce hydrogen. 0:16:49.440 --> 0:16:52.880 It's harder to produce low carbon hydrogen at a low cost, 0:16:53.040 --> 0:16:55.280 something that we're working on using natural gas as a 0:16:55.320 --> 0:16:59.600 feedstock or using electricity and renewable power as feedstocks to 0:16:59.600 --> 0:17:04.280 produce low carbon hydrogen. But transporting hydrogen to the market, 0:17:04.440 --> 0:17:06.560 you need policy support in order to do that. You 0:17:06.600 --> 0:17:09.320 need technological innovation to do that to lower the cost, 0:17:09.680 --> 0:17:14.960 and then importantly, encouraging consumers to buy a hydrogen making 0:17:14.960 --> 0:17:18.639 it easier for them to transition from a traditional product 0:17:18.680 --> 0:17:21.399 that they're using today to a lower carbon product that 0:17:21.520 --> 0:17:24.840 comes at a higher cost. That's where demand incentives and 0:17:24.920 --> 0:17:26.640 policy support will also be required. 0:17:27.080 --> 0:17:29.320 What's the biggest headwind you guys have been facing over 0:17:29.320 --> 0:17:32.480 the last three years as you begin this transition. Has 0:17:32.480 --> 0:17:34.720 it been on the regulatory governmental front? Has it been 0:17:35.560 --> 0:17:37.480 capital getting capital from your CFO? 0:17:38.320 --> 0:17:39.240 Where's it been now? 0:17:39.800 --> 0:17:42.399 There's always a lot of challenges when you're starting up 0:17:42.440 --> 0:17:46.960 new businesses, but it's very, very exciting, and we're making 0:17:47.040 --> 0:17:52.840 tremendous progress. We've identified probably a dozen large foundational projects 0:17:52.840 --> 0:17:56.480 and all of these sectors around not just the US, 0:17:56.520 --> 0:17:59.439 but around the world. We're the second largest bio based 0:18:00.480 --> 0:18:03.399 a diesel producer in the United States. We've got a 0:18:03.480 --> 0:18:06.400 large you know, CCUS hub on the US Gulf Coast. 0:18:06.440 --> 0:18:09.600 We've got a large hydrogen project in Utah that we're growing. 0:18:10.200 --> 0:18:12.080 So we're making a lot of a lot of progress. 0:18:12.080 --> 0:18:15.440 There's always challenges along the way. How do you prioritize 0:18:15.520 --> 0:18:19.520 the best opportunities, how do you advocate for the right policies, 0:18:19.800 --> 0:18:23.879 how do you create the right culture to support these businesses. 0:18:23.920 --> 0:18:27.200 We have a fantastic culture in our company. We're using 0:18:27.520 --> 0:18:29.520 all of that and more. But you have to think 0:18:29.520 --> 0:18:34.040 about these businesses in a different way. So there are challenges, 0:18:34.080 --> 0:18:36.080 but it has been very rewarding. 0:18:36.119 --> 0:18:38.880 At the same time, He's not going to answer that question, Paul, Well, 0:18:39.760 --> 0:18:41.800 I stock, I thought I did answer it. 0:18:42.320 --> 0:18:44.560 We're looking for like, hey, what what's really hard? What 0:18:44.800 --> 0:18:45.600 stresses you ask? 0:18:45.680 --> 0:18:46.560 Well, it's I mean. 0:18:46.480 --> 0:18:49.879 To go, it's all hard, yeah, and so all of that, 0:18:49.960 --> 0:18:52.600 you know, how can we collaborate you know more uh 0:18:53.200 --> 0:18:57.680 more aggressively. How can we lower the costs faster? How 0:18:57.720 --> 0:18:59.920 can we bring all of the capabilities we have to 0:19:00.080 --> 0:19:03.000 bear here. How do we make sure that everyone remains 0:19:03.040 --> 0:19:06.720 committed to this, not just us, but everyone in this 0:19:07.119 --> 0:19:09.840 ecosystem to drive these businesses forward. So those are all 0:19:09.840 --> 0:19:14.280 big challenges. I'm not discounting that, but I'm very excited 0:19:14.280 --> 0:19:14.920 about what we're doing. 0:19:14.960 --> 0:19:17.919 Gotta leave it there, Jeff really appreciated Jeff Gustavenson. I'm 0:19:17.920 --> 0:19:19.919 going to get it. President of Chevron New Energies. I'm 0:19:19.920 --> 0:19:22.480 going to work towards that for sure. Thanks so much. 0:19:22.640 --> 0:19:24.680 Thank you. 0:19:25.440 --> 0:19:29.320 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:19:29.400 --> 0:19:32.119 weekdays at ten am Eastern on Affo car Playing and 0:19:32.240 --> 0:19:35.080 Broud Auto with the Bloomberg Business App. Listen on demand 0:19:35.160 --> 0:19:38.800 wherever you get your podcasts, or watch us live on YouTube. 0:19:39.920 --> 0:19:43.800 We're at Bloomberg n e App Summit, Day two. We're 0:19:43.920 --> 0:19:47.960 in the middle of the pubbabaloo. We're in our Intercontinental 0:19:48.000 --> 0:19:51.119 Hotel on forty U Street down in Midtown Manhattan, and 0:19:51.160 --> 0:19:54.680 it's all about getting world leaders and CEOs and thought 0:19:54.760 --> 0:19:58.200 leaders and analysts together to sort of tackle this energy 0:19:58.280 --> 0:20:00.600 transition where we are now, and then where do we 0:20:00.720 --> 0:20:02.320 go to and how do we do that? 0:20:02.720 --> 0:20:02.840 Well? 0:20:02.920 --> 0:20:05.520 Doing us now? As our next guest, Andy Vessi, he's 0:20:05.560 --> 0:20:10.200 president and CEO of Fordescue North America, and he joined us. Now, Andy, 0:20:10.240 --> 0:20:10.720 good to see you. 0:20:10.920 --> 0:20:12.680 Well, that's a pleasure to be here and thank you 0:20:12.720 --> 0:20:13.399 for having me. 0:20:13.600 --> 0:20:16.040 So I do follow this industry quite closely, and I 0:20:16.119 --> 0:20:18.399 was like, what Fordescu is a metal company, what's going on? 0:20:18.520 --> 0:20:20.440 It's based in Australia. What are you doing here talking 0:20:20.440 --> 0:20:21.160 about hydrogen? 0:20:21.359 --> 0:20:24.560 Well, Fortia something. Forlidescu was a metal company. In fact 0:20:24.600 --> 0:20:25.800 it still is. 0:20:25.920 --> 0:20:28.360 It's the fourth largest producer bron or in the world 0:20:28.400 --> 0:20:31.919 and the lowest cost operator. What our founder, Andrew Forres, 0:20:32.000 --> 0:20:36.520 came to the realization that carbon emissions was having a 0:20:36.560 --> 0:20:40.080 significant impact on the planet and it was happening quickly, 0:20:40.200 --> 0:20:43.159 and that his business contributed to that, and so he 0:20:43.240 --> 0:20:46.040 made a commitment that he was going to decarbonize his 0:20:46.200 --> 0:20:50.600 metals business, scope on and scope to emissions by twenty thirty. 0:20:51.800 --> 0:20:53.959 And in thinking about doing that, he had to think 0:20:53.960 --> 0:20:56.600 about all the technologies he needed to make that happen, 0:20:56.680 --> 0:20:59.040 and many of them were n't available commercially. So he 0:20:59.160 --> 0:21:01.440 decided that he would is going to create that ecosystem. 0:21:02.000 --> 0:21:06.080 One component of that was green hydrogen because he needed 0:21:06.119 --> 0:21:08.399 green hydrogen to do a number of things to replace 0:21:08.480 --> 0:21:12.040 diesel fuel in his mining operations. But then he realized 0:21:12.040 --> 0:21:13.840