1 00:00:02,920 --> 00:00:12,600 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Intelligence 2 00:00:12,640 --> 00:00:14,400 Speaker 1: with Alex Steinehl and Paul'sweenye. 3 00:00:14,520 --> 00:00:17,720 Speaker 2: The real app performance has been in US corporate high yield. 4 00:00:17,880 --> 00:00:20,240 Speaker 3: Are the companies lean enough? Have they trimmed all the fats? 5 00:00:20,320 --> 00:00:23,880 Speaker 2: The semiconductor business is a really cyclical business. 6 00:00:23,600 --> 00:00:27,200 Speaker 1: Breaking market headlines and corporate news from across the globe. 7 00:00:27,240 --> 00:00:29,880 Speaker 3: Do investors like the M and A that we've seen? 8 00:00:30,080 --> 00:00:31,000 Speaker 4: These are two. 9 00:00:31,040 --> 00:00:33,159 Speaker 2: Big time blue chip companies. 10 00:00:33,320 --> 00:00:36,920 Speaker 3: The window between the peak and cut changing super fast. 11 00:00:37,080 --> 00:00:41,680 Speaker 1: Bloomberg Intelligence with Alex Steinel and Paul'sweenye on Bloomberg Radio. 12 00:00:43,120 --> 00:00:45,479 Speaker 2: On Today's Bloomberg Intelligence Show, we dig inside the big 13 00:00:45,479 --> 00:00:47,839 Speaker 2: business stories impacting Wall Street and the global markets. 14 00:00:47,920 --> 00:00:49,960 Speaker 3: Each and every week we provide you inp research and 15 00:00:50,040 --> 00:00:51,720 Speaker 3: data on some of the two thousand companies and one 16 00:00:51,800 --> 00:00:54,440 Speaker 3: hundred and thirty industries our analysts cover worldwide. 17 00:00:54,480 --> 00:00:56,440 Speaker 2: Today, we'll look at what earning some of the world's 18 00:00:56,520 --> 00:00:59,160 Speaker 2: largest alternative asset manager tell us about the health of 19 00:00:59,160 --> 00:00:59,960 Speaker 2: financial markets. 20 00:01:00,000 --> 00:01:02,200 Speaker 3: Plus, we're going to discuss how energy companies are working 21 00:01:02,200 --> 00:01:04,200 Speaker 3: to satisfy high demand for power. 22 00:01:04,520 --> 00:01:07,759 Speaker 2: But first we dive into the eb space and Tesla. 23 00:01:07,760 --> 00:01:10,640 Speaker 2: This week Tesla announced it is slashing headcount by more 24 00:01:10,680 --> 00:01:13,880 Speaker 2: than ten percent. CEO Elon Musk cited duplication of roles 25 00:01:14,120 --> 00:01:15,480 Speaker 2: and the need to reduce costs. 26 00:01:15,520 --> 00:01:18,360 Speaker 3: We also heard that senior vice president Drew Baglino and 27 00:01:18,440 --> 00:01:21,440 Speaker 3: Rohan Patel, vice president of public Policy and business Development, 28 00:01:21,480 --> 00:01:23,560 Speaker 3: have also departed. So for more on this, we were 29 00:01:23,640 --> 00:01:26,800 Speaker 3: joined by Steve Mann, Bloomberg Intelligence Global, Autos and Industrial's 30 00:01:26,800 --> 00:01:27,560 Speaker 3: research analyst. 31 00:01:27,959 --> 00:01:30,360 Speaker 2: We first asked Steve for his take on this week's news. 32 00:01:30,440 --> 00:01:33,000 Speaker 5: It's actually worse than I thought I thought. You know, 33 00:01:33,040 --> 00:01:38,480 Speaker 5: the first quarter sales drop was you know, hopefully close 34 00:01:38,520 --> 00:01:41,280 Speaker 5: to the end, but you know, there's seems to be 35 00:01:41,520 --> 00:01:43,120 Speaker 5: the light at the end of the tunnel is not 36 00:01:43,319 --> 00:01:46,960 Speaker 5: really here yet. And it looks like their plans are 37 00:01:47,000 --> 00:01:50,840 Speaker 5: running just pretty much well below capacity at the moment, 38 00:01:51,560 --> 00:01:54,440 Speaker 5: and there's still a lot of cost headwinds facing them. 39 00:01:54,920 --> 00:01:57,200 Speaker 5: They're trying to balance a lot of things in terms 40 00:01:57,200 --> 00:02:01,240 Speaker 5: of deliveries, production, they're raising prices. I don't know how 41 00:02:01,280 --> 00:02:05,200 Speaker 5: long that's gonna last. So execution is key for the 42 00:02:05,240 --> 00:02:08,520 Speaker 5: company in the next you know, six to the nine months. 43 00:02:09,000 --> 00:02:11,080 Speaker 2: Steve, where are we now or where is the market? 44 00:02:11,080 --> 00:02:13,200 Speaker 2: When you talk to investors in terms of getting a 45 00:02:13,240 --> 00:02:17,040 Speaker 2: sense of where EV demand is in the US and 46 00:02:17,080 --> 00:02:18,640 Speaker 2: then maybe globally. 47 00:02:18,560 --> 00:02:21,720 Speaker 5: Well, EV demand is waning. I think the interest rate 48 00:02:22,440 --> 00:02:25,280 Speaker 5: is not helping, you know, it's uh they're looking to 49 00:02:25,600 --> 00:02:27,480 Speaker 5: you know, as you know, the FED is probably not 50 00:02:27,520 --> 00:02:31,120 Speaker 5: going to cut rates anytime soon in the next couple 51 00:02:31,120 --> 00:02:33,919 Speaker 5: of months, next quarter or so, so that's going to 52 00:02:33,960 --> 00:02:38,600 Speaker 5: condude away on big purchases like automobiles. We're seeing that 53 00:02:38,760 --> 00:02:43,240 Speaker 5: across the board in the US as well as in China. 54 00:02:43,639 --> 00:02:46,040 Speaker 5: Trying is a little bit worse for Tesla because there's 55 00:02:46,040 --> 00:02:50,480 Speaker 5: so much new competition there. But you know, sales is 56 00:02:50,520 --> 00:02:54,280 Speaker 5: slowing for GM, sales is slowing for Ford for just 57 00:02:54,280 --> 00:02:59,280 Speaker 5: had to cut production of their lightning recently announced about 58 00:02:59,320 --> 00:03:02,640 Speaker 5: a couple of weeks go. So I think this year 59 00:03:02,840 --> 00:03:05,600 Speaker 5: will be tough for the industry. Now, you know, we 60 00:03:05,680 --> 00:03:09,720 Speaker 5: probably won't see any improvement until as far as I'm concerned, 61 00:03:09,720 --> 00:03:10,600 Speaker 5: in twenty twenty six. 62 00:03:11,040 --> 00:03:13,560 Speaker 3: Steve, Why twenty twenty six, Why is it going to 63 00:03:13,600 --> 00:03:14,119 Speaker 3: take that long? 64 00:03:14,840 --> 00:03:15,120 Speaker 4: Yeah? 65 00:03:15,200 --> 00:03:18,560 Speaker 5: I think what the EV market is is facing today 66 00:03:18,840 --> 00:03:23,160 Speaker 5: is that we had early adopters, especially on the high end, 67 00:03:23,960 --> 00:03:26,720 Speaker 5: they're you know, they're pretty much tapped out. You know, 68 00:03:26,800 --> 00:03:29,880 Speaker 5: they've they can buy only so many the market is 69 00:03:29,919 --> 00:03:32,960 Speaker 5: relatively smaller than the mass market. I'm looking at twenty 70 00:03:33,000 --> 00:03:36,680 Speaker 5: twenty six because if you look at the Inflation Reduction Act, 71 00:03:37,120 --> 00:03:39,800 Speaker 5: it's bringing in on shoring a lot of the EV 72 00:03:40,000 --> 00:03:43,120 Speaker 5: battery production in the US. Hopefully it will cut costs. 73 00:03:43,560 --> 00:03:47,000 Speaker 5: And at the same time, in twenty twenty six, where 74 00:03:47,040 --> 00:03:51,200 Speaker 5: we're looking at more affordable evs coming into the market, 75 00:03:51,360 --> 00:03:55,200 Speaker 5: that's going to expand the addressable market for EV's And 76 00:03:55,240 --> 00:03:58,320 Speaker 5: that's why we're we're thinking, you know, twenty twenty six 77 00:03:58,800 --> 00:04:01,800 Speaker 5: will probably be a better, better time for the EV 78 00:04:01,920 --> 00:04:03,640 Speaker 5: market than it is today. 79 00:04:04,360 --> 00:04:07,760 Speaker 2: So how about profitability in that scenario, Steve, It's tough 80 00:04:07,760 --> 00:04:09,960 Speaker 2: to make an argument that, you know, these evs can 81 00:04:10,000 --> 00:04:13,800 Speaker 2: be profitably manufactured at a higher price point. How are 82 00:04:13,840 --> 00:04:15,800 Speaker 2: they going to adjust their cost structure to get be 83 00:04:15,840 --> 00:04:17,960 Speaker 2: profitable at maybe a lower price point, I don't know, 84 00:04:17,960 --> 00:04:20,480 Speaker 2: thirty thousand dollars or something like that. 85 00:04:20,480 --> 00:04:22,120 Speaker 5: That's a good question. I think if you look at 86 00:04:22,120 --> 00:04:26,400 Speaker 5: the EV startups in the US, the only one that's 87 00:04:26,560 --> 00:04:31,599 Speaker 5: really still profitable is Tesla. You saw Fisker being delisted. 88 00:04:32,080 --> 00:04:36,400 Speaker 5: There's risk of them filing bankruptcy. Both Lucid and Rivian 89 00:04:36,920 --> 00:04:39,640 Speaker 5: will need, you know, billions of dollars just to get 90 00:04:39,680 --> 00:04:42,040 Speaker 5: them through the next couple of years. We're not sure 91 00:04:42,080 --> 00:04:44,600 Speaker 5: if they're going to get that money given the slowdown 92 00:04:44,960 --> 00:04:47,960 Speaker 5: and the EV market. But on a bright side, I 93 00:04:47,960 --> 00:04:51,200 Speaker 5: think Tesla is still generating cash. You know, they're making 94 00:04:51,240 --> 00:04:53,960 Speaker 5: some of the cuts today I think really to maintain 95 00:04:54,120 --> 00:04:57,560 Speaker 5: cash generation so they can continue to invest for the 96 00:04:57,600 --> 00:05:00,680 Speaker 5: long term, you know, for them, I think what's really 97 00:05:00,720 --> 00:05:05,279 Speaker 5: important for them is the AI, the FSD, the full 98 00:05:05,320 --> 00:05:08,280 Speaker 5: self driving a system that they're trying to build out. 99 00:05:09,040 --> 00:05:11,440 Speaker 5: That that's gonna be the future of the automotive industry. 100 00:05:11,480 --> 00:05:16,480 Speaker 5: It's really those software based subscriptions that's going to drive revenue, 101 00:05:16,920 --> 00:05:19,880 Speaker 5: not so much of the automaking. So if they're trying 102 00:05:19,920 --> 00:05:23,120 Speaker 5: to get there, trying to maintain cash, maintain some level 103 00:05:23,120 --> 00:05:26,320 Speaker 5: of profitability to make those investments to get them there. 104 00:05:26,360 --> 00:05:29,559 Speaker 3: Let's go to the SVP departing. So Drew Baglino leaving 105 00:05:29,560 --> 00:05:32,880 Speaker 3: the company, as I mentioned, senior vice president. Who is he? 106 00:05:33,080 --> 00:05:35,000 Speaker 3: Do we care? Like how big a deal he was 107 00:05:35,040 --> 00:05:37,000 Speaker 3: in Tesla? What did he do walk us through it? 108 00:05:37,520 --> 00:05:40,200 Speaker 5: He looks like to be the right hand person for 109 00:05:40,360 --> 00:05:43,440 Speaker 5: Elon Musk. So it's a big loss for the company, 110 00:05:43,480 --> 00:05:46,560 Speaker 5: no doubt about it. But you know he's he's a 111 00:05:46,600 --> 00:05:51,280 Speaker 5: powertrain engineer for the most part, energy engineer, so he's 112 00:05:51,320 --> 00:05:53,320 Speaker 5: you know, he's really involved in the battery if you 113 00:05:53,320 --> 00:05:56,560 Speaker 5: saw him on battery day. I think, you know, if 114 00:05:56,600 --> 00:06:00,200 Speaker 5: you look at Tesla and what Elon Musk have been 115 00:06:00,279 --> 00:06:04,920 Speaker 5: saying about Tesla's future, which is on AI, which is 116 00:06:04,960 --> 00:06:09,400 Speaker 5: on full self driving, is it a big loss. I mean, 117 00:06:09,440 --> 00:06:12,160 Speaker 5: you can you can argue that, hey, you know, Tesla's 118 00:06:12,200 --> 00:06:16,040 Speaker 5: moving on to the next phase. It's not about building 119 00:06:16,600 --> 00:06:20,000 Speaker 5: the motors, not about building the batteries. They've gone through 120 00:06:20,040 --> 00:06:23,800 Speaker 5: that process over the past fifteen eighteen years. You know, 121 00:06:23,839 --> 00:06:28,320 Speaker 5: I think, you know, looking forward, they probably need somebody 122 00:06:28,440 --> 00:06:33,159 Speaker 5: more people around AI. You know, developed them algorithms for 123 00:06:33,279 --> 00:06:34,359 Speaker 5: the future of the car. 124 00:06:34,560 --> 00:06:37,360 Speaker 2: Our thanks to Steve Man Bloomberg Intelligence, Global, Autos and 125 00:06:37,360 --> 00:06:38,679 Speaker 2: Industrials research channels. 126 00:06:38,720 --> 00:06:42,640 Speaker 3: We move next to the world's largest alternative asset manager, Blackstone. 127 00:06:42,720 --> 00:06:45,680 Speaker 3: Blackstone reported higher quarterly earnings than expected, and the firm 128 00:06:45,720 --> 00:06:48,440 Speaker 3: also collected more fees from big retail funds and credit 129 00:06:48,480 --> 00:06:50,920 Speaker 3: strategies during the first quarter and all of this helped 130 00:06:50,960 --> 00:06:53,479 Speaker 3: compensate for a slower pace of deal exits. 131 00:06:53,760 --> 00:06:56,440 Speaker 2: For more, we were joined by Paul Goldberg, Bloomberg Intelligence 132 00:06:56,440 --> 00:06:59,279 Speaker 2: senior equity analyst. We first asked him for his take 133 00:06:59,360 --> 00:07:00,760 Speaker 2: on the latest coutally results. 134 00:07:00,920 --> 00:07:03,159 Speaker 6: The numbers, I would break them up in three buckets. 135 00:07:03,240 --> 00:07:07,160 Speaker 6: One the fee growth, which was fairly decent, but not 136 00:07:07,360 --> 00:07:11,440 Speaker 6: the double digit bracknate growth that we've seen in years 137 00:07:11,520 --> 00:07:16,160 Speaker 6: prior to the painful twenty twenty three and late twenty 138 00:07:16,240 --> 00:07:19,000 Speaker 6: twenty two. The second one is key themes, and those 139 00:07:19,040 --> 00:07:21,880 Speaker 6: things are getting better. So you do get a private 140 00:07:21,920 --> 00:07:26,640 Speaker 6: credit business that was working pretty well. You have a 141 00:07:26,640 --> 00:07:29,720 Speaker 6: wealth management business that you mentioned that's working pretty well. 142 00:07:29,760 --> 00:07:32,560 Speaker 6: They've reached two hundred and forty billion dollars in assets 143 00:07:32,560 --> 00:07:35,040 Speaker 6: in the wealth management with their goal of to fifty, 144 00:07:35,120 --> 00:07:39,520 Speaker 6: so they're pretty much at their goal. And lastly, the 145 00:07:39,560 --> 00:07:42,720 Speaker 6: painful part is the deal activity in terms of deployments 146 00:07:42,760 --> 00:07:47,320 Speaker 6: and particularly realizations that produce performance fees, and that sort 147 00:07:47,360 --> 00:07:50,440 Speaker 6: of becomes still a pain point for Blackstone and that's 148 00:07:50,680 --> 00:07:53,120 Speaker 6: a drag on their earnings. 149 00:07:53,600 --> 00:07:55,720 Speaker 2: Paul, what have they been saying about that, because again, 150 00:07:55,920 --> 00:07:57,360 Speaker 2: you're right, we haven't seen a lot of m and 151 00:07:57,400 --> 00:07:59,680 Speaker 2: a activity. We haven't seen a lot of IPO activity 152 00:08:00,120 --> 00:08:03,880 Speaker 2: types of exit events that would allow them to realize 153 00:08:03,920 --> 00:08:06,360 Speaker 2: some returns on their investments. What are they saying about 154 00:08:06,440 --> 00:08:07,680 Speaker 2: the next six to twelve months. 155 00:08:08,720 --> 00:08:11,040 Speaker 6: Well, I would actually look a little bit beyond that, 156 00:08:11,200 --> 00:08:14,000 Speaker 6: because on the call they were really talking about twenty 157 00:08:14,040 --> 00:08:17,600 Speaker 6: twenty four and before they were really hopeful for the 158 00:08:17,640 --> 00:08:19,960 Speaker 6: second half of twenty four to get better. But then 159 00:08:20,040 --> 00:08:23,600 Speaker 6: Jonathan Gray was actually unplumber tivity. He kind of mentioned 160 00:08:23,600 --> 00:08:27,080 Speaker 6: that the more activity, return of activity is probably going 161 00:08:27,120 --> 00:08:29,280 Speaker 6: to be more of a late twenty four and into 162 00:08:29,320 --> 00:08:31,760 Speaker 6: twenty five matter. So I would look a little bit 163 00:08:31,800 --> 00:08:34,840 Speaker 6: beyond the next six months, maybe the next nine to twelve. 164 00:08:35,240 --> 00:08:38,800 Speaker 3: If they have a hard time exiting investments, how do 165 00:08:38,880 --> 00:08:40,920 Speaker 3: they then raise more money for new funds? How does 166 00:08:40,960 --> 00:08:41,400 Speaker 3: that work? 167 00:08:42,760 --> 00:08:45,719 Speaker 6: Well, I think it's the issue not just we're kind 168 00:08:45,720 --> 00:08:47,920 Speaker 6: of very focused on the private equity when we talk 169 00:08:48,000 --> 00:08:50,920 Speaker 6: about that, but the third of their business is private equity. 170 00:08:51,000 --> 00:08:54,960 Speaker 6: The third of their business is real estate, and there 171 00:08:54,960 --> 00:08:57,800 Speaker 6: are still there are some opportunities, and performance in real 172 00:08:57,920 --> 00:09:00,960 Speaker 6: estate gotten a little bit better, so they fundraising came 173 00:09:01,000 --> 00:09:03,600 Speaker 6: back to some extent, the b read b cred the 174 00:09:04,200 --> 00:09:08,319 Speaker 6: retail funds. The outflows kind of stopped there, so perpetual 175 00:09:08,400 --> 00:09:13,120 Speaker 6: vehicles are doing pretty well for them. And the last category, 176 00:09:13,200 --> 00:09:16,440 Speaker 6: the credit category, that had just been a very strong 177 00:09:16,480 --> 00:09:19,079 Speaker 6: grower and that's reached out about a third of their 178 00:09:19,080 --> 00:09:20,000 Speaker 6: assets at this point. 179 00:09:20,520 --> 00:09:20,760 Speaker 4: Paul. 180 00:09:20,880 --> 00:09:24,800 Speaker 2: Yeah, you mentioned real estate, and of course historically Blackstone's 181 00:09:24,800 --> 00:09:26,880 Speaker 2: been a big, big player in the real estate business. 182 00:09:26,880 --> 00:09:29,400 Speaker 2: What is their call on office A Do they have 183 00:09:29,440 --> 00:09:32,320 Speaker 2: a lot of exposure there? And B how concerned are 184 00:09:32,360 --> 00:09:32,839 Speaker 2: they about it? 185 00:09:33,480 --> 00:09:36,600 Speaker 6: There was nothing discussed in terms of office really on 186 00:09:36,679 --> 00:09:40,560 Speaker 6: the cold they have about one or two percent of 187 00:09:40,679 --> 00:09:44,200 Speaker 6: total assets in commer in office space, maybe even less 188 00:09:44,240 --> 00:09:47,319 Speaker 6: than that, so it's a fairly small amount. They are 189 00:09:47,640 --> 00:09:50,880 Speaker 6: super focused on the multifamily. During the quarter they made 190 00:09:50,920 --> 00:09:53,959 Speaker 6: it ten billion dollar deal for air communities that take 191 00:09:54,040 --> 00:09:57,080 Speaker 6: private deal, so they're still very focused on that. That've 192 00:09:57,080 --> 00:10:00,199 Speaker 6: been for over the last ten to fifteen years. They 193 00:10:00,240 --> 00:10:06,240 Speaker 6: also tooked gave some specific numbers around the logistics and infrastructure. 194 00:10:06,520 --> 00:10:09,320 Speaker 6: So there's about fifty billion dollars of investments in that 195 00:10:09,440 --> 00:10:13,240 Speaker 6: already we're talking about. That's five percent of the total 196 00:10:13,240 --> 00:10:15,480 Speaker 6: assets just in that private credit. 197 00:10:15,559 --> 00:10:20,360 Speaker 2: Paul, what's Blackstone say about this business. It's obviously just 198 00:10:20,400 --> 00:10:23,680 Speaker 2: a booming business. Assets under management is skyrocketing. There's some 199 00:10:23,720 --> 00:10:27,040 Speaker 2: calls for maybe some greater transparency, maybe in some regulation 200 00:10:27,080 --> 00:10:29,520 Speaker 2: of the private credit business. What's the Blackstone take on 201 00:10:29,559 --> 00:10:30,480 Speaker 2: that part of the business. 202 00:10:30,600 --> 00:10:33,559 Speaker 6: It's been very strong. As I mentioned, it reached about 203 00:10:33,600 --> 00:10:36,719 Speaker 6: thirty of their assets three hundred plus billion dollars. They 204 00:10:36,720 --> 00:10:39,600 Speaker 6: do have a lot of different vehicles there that do 205 00:10:39,800 --> 00:10:42,320 Speaker 6: a lot of direct lending, but they also have the 206 00:10:42,440 --> 00:10:45,839 Speaker 6: largest business development company which is geared towards retail b 207 00:10:46,000 --> 00:10:49,280 Speaker 6: cred that's a huge vehicle for them. There was a 208 00:10:49,280 --> 00:10:52,120 Speaker 6: lot of growth first quarter. There are actually some questions 209 00:10:52,120 --> 00:10:55,719 Speaker 6: because you had a syndicated loan market with blending from 210 00:10:55,760 --> 00:10:58,560 Speaker 6: the banks. Come back to some extent reclaim in some 211 00:10:58,679 --> 00:11:01,720 Speaker 6: of the module that the private credit got last year. 212 00:11:02,280 --> 00:11:05,200 Speaker 6: But it's a long term game, so over time there's 213 00:11:05,200 --> 00:11:07,719 Speaker 6: still a lot of opportunity for private credit. We ran 214 00:11:07,800 --> 00:11:10,680 Speaker 6: some numbers, but think if you think of investment credit 215 00:11:10,760 --> 00:11:14,600 Speaker 6: potential for replacement, especially for those insurance companies, it could 216 00:11:14,640 --> 00:11:18,760 Speaker 6: be a forty trillion dollars addressable market. When private credit 217 00:11:18,880 --> 00:11:21,920 Speaker 6: is we're talking about one point six one point seven 218 00:11:21,960 --> 00:11:25,680 Speaker 6: trillion right now, So there's a lot of opportunities still 219 00:11:25,720 --> 00:11:28,320 Speaker 6: to take the incremental one two three percent of that 220 00:11:28,480 --> 00:11:29,520 Speaker 6: market still. 221 00:11:29,720 --> 00:11:31,839 Speaker 3: Before we let you go. So Blackstone set the tone. 222 00:11:32,040 --> 00:11:34,040 Speaker 3: What do you think the other big asset managers are 223 00:11:34,040 --> 00:11:34,679 Speaker 3: going to come out with. 224 00:11:35,320 --> 00:11:37,960 Speaker 6: It's a little bit difficult because the earnings for them 225 00:11:38,040 --> 00:11:41,640 Speaker 6: kind of idiosyncratic to some extent because these are private investments, 226 00:11:41,640 --> 00:11:46,160 Speaker 6: they're large, and sometimes they move in different different directions. 227 00:11:46,360 --> 00:11:48,880 Speaker 6: There's about two weeks until the next one report, so 228 00:11:48,960 --> 00:11:51,640 Speaker 6: there's most of them reforced over the end of April 229 00:11:51,679 --> 00:11:55,000 Speaker 6: and early May. I think from what we've seen from Blackstone, 230 00:11:55,000 --> 00:11:57,440 Speaker 6: the private credit is going to hold fairly well, which 231 00:11:57,520 --> 00:12:01,680 Speaker 6: is a positive for companies like Apolla and error private 232 00:12:01,679 --> 00:12:04,880 Speaker 6: equity realizations exits is still a little bit more difficult, 233 00:12:04,920 --> 00:12:07,720 Speaker 6: so it might give some pain to the guys like 234 00:12:07,800 --> 00:12:12,000 Speaker 6: Carlisle KKR. They actually pre announced their realizations a few 235 00:12:12,040 --> 00:12:13,640 Speaker 6: weeks before the end of the quarter, so we know 236 00:12:13,720 --> 00:12:17,200 Speaker 6: the numbers were pretty light, so that's not going to 237 00:12:17,200 --> 00:12:19,400 Speaker 6: be a surprise. But on the other hand, the rates 238 00:12:19,400 --> 00:12:22,000 Speaker 6: is stained higher for longer. They brought out the Global 239 00:12:22,360 --> 00:12:24,520 Speaker 6: the rest of the business from Global Atlantic, so the 240 00:12:24,520 --> 00:12:27,520 Speaker 6: insurance business is going to do well and provide them 241 00:12:27,520 --> 00:12:29,079 Speaker 6: some earnions in that area. 242 00:12:29,280 --> 00:12:32,840 Speaker 2: Our thanks to Paul Goldberg Bloomberg Intelligence Senior Equity ANAST. 243 00:12:32,679 --> 00:12:34,640 Speaker 3: Coming up, We're going to discuss how energy companies are 244 00:12:34,679 --> 00:12:36,840 Speaker 3: working to satisfy a high demand for power. 245 00:12:37,000 --> 00:12:39,760 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 246 00:12:39,800 --> 00:12:42,440 Speaker 2: depth research and data on two thousand companies in one 247 00:12:42,520 --> 00:12:45,400 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 248 00:12:45,480 --> 00:12:46,560 Speaker 2: b I go on the terminal. 249 00:12:46,679 --> 00:12:49,559 Speaker 3: I'm Paul Sweeney and am Alex Steel and this is Bloomberg. 250 00:12:53,760 --> 00:12:57,640 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 251 00:12:57,720 --> 00:13:00,480 Speaker 1: weekdays at ten am Eastern on fo car playing and 252 00:13:00,559 --> 00:13:03,440 Speaker 1: broud Otto with the Bloomberg Business App. Listen on demand 253 00:13:03,480 --> 00:13:07,800 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 254 00:13:08,320 --> 00:13:11,680 Speaker 3: This week, Bloomberg Intelligence Radio visited Bloomberg a neipp's annual 255 00:13:11,800 --> 00:13:14,400 Speaker 3: Energy and Climate Summit in New York. The summit brings 256 00:13:14,400 --> 00:13:17,720 Speaker 3: together corporate executives, government officials, and industry leaders. 257 00:13:18,000 --> 00:13:20,480 Speaker 2: This year, speakers at the event covered topics ranging from 258 00:13:20,520 --> 00:13:25,040 Speaker 2: clean power, trade, federal US policy, hydrogen and climate technology. 259 00:13:25,320 --> 00:13:27,360 Speaker 2: We begin with power and we were joined by David 260 00:13:27,400 --> 00:13:31,439 Speaker 2: Crane Undersecretary for Infrastructure at the US Department of Energy. 261 00:13:31,240 --> 00:13:33,320 Speaker 3: David says, the demand growth of power in the US 262 00:13:33,400 --> 00:13:34,880 Speaker 3: is going to be more than we thought. So for 263 00:13:34,880 --> 00:13:37,160 Speaker 3: the last ten years, power demand was up just fifty 264 00:13:37,160 --> 00:13:39,040 Speaker 3: basis points a year, and now we're looking at five 265 00:13:39,040 --> 00:13:41,440 Speaker 3: to six percent a year. And we first asked David, 266 00:13:41,679 --> 00:13:42,720 Speaker 3: what all of this means. 267 00:13:43,040 --> 00:13:45,360 Speaker 4: Well, five to six percent in our world is huge. 268 00:13:45,360 --> 00:13:48,600 Speaker 7: I mean that's like tiger economies from the nineteen nineties. 269 00:13:48,679 --> 00:13:51,360 Speaker 7: And because of the long lead time of most things 270 00:13:51,400 --> 00:13:55,000 Speaker 7: in the electricity sector, those five to six percents per 271 00:13:55,040 --> 00:13:57,720 Speaker 7: year pile up if you're not getting after it. So 272 00:13:58,520 --> 00:14:01,520 Speaker 7: what it means is and what's very important all this 273 00:14:01,600 --> 00:14:04,560 Speaker 7: as we look at these transitioning to the clean energy economy, 274 00:14:04,559 --> 00:14:07,480 Speaker 7: all these new technologies, is you always have to ask 275 00:14:07,480 --> 00:14:10,760 Speaker 7: the time question, what you need and what time frame 276 00:14:11,000 --> 00:14:14,000 Speaker 7: and what are the solutions that fit that land within 277 00:14:14,040 --> 00:14:14,800 Speaker 7: that time frame. 278 00:14:15,480 --> 00:14:15,720 Speaker 4: You know. 279 00:14:15,800 --> 00:14:18,160 Speaker 2: A couple of summers ago, my summer read was the 280 00:14:18,240 --> 00:14:23,360 Speaker 2: grid Frame Wires between Americans and our Energy Future. I 281 00:14:23,400 --> 00:14:25,360 Speaker 2: read that on the beach and people are laughing like 282 00:14:25,680 --> 00:14:27,160 Speaker 2: a geek. So I feel like I know what I'm 283 00:14:27,160 --> 00:14:29,760 Speaker 2: talking about here, and what I know is we need 284 00:14:29,920 --> 00:14:33,760 Speaker 2: constant investment in our energy grid. And if Alex is right, 285 00:14:33,800 --> 00:14:36,400 Speaker 2: the energy demand is going to keep increasing. That's even 286 00:14:36,400 --> 00:14:39,000 Speaker 2: more so. What are some of the key issues that 287 00:14:39,040 --> 00:14:41,080 Speaker 2: you need to tackle or trying to tackle at least 288 00:14:41,120 --> 00:14:42,160 Speaker 2: in the short term here. 289 00:14:42,160 --> 00:14:44,120 Speaker 7: Well, first of all, I need to tackle what your 290 00:14:44,200 --> 00:14:47,200 Speaker 7: summer reading is, beach does Paul, I think you got 291 00:14:47,200 --> 00:14:48,720 Speaker 7: to get a life exactly? 292 00:14:49,000 --> 00:14:49,560 Speaker 4: If that's what. 293 00:14:51,240 --> 00:14:54,120 Speaker 7: I think, Well, I mean one big one, the missing link, 294 00:14:54,880 --> 00:14:57,680 Speaker 7: and I mentioned this on stage as well, is permitting reform. 295 00:14:57,720 --> 00:15:00,280 Speaker 7: The I mean, we're very supportive permitting reform. It takes 296 00:15:00,280 --> 00:15:03,920 Speaker 7: a lot of different permutations. I'm personally not a policy person. 297 00:15:03,920 --> 00:15:07,680 Speaker 7: I'm the implementation person. But we just need to do 298 00:15:07,760 --> 00:15:12,040 Speaker 7: things faster because just the scale of infrastructure that exists 299 00:15:12,120 --> 00:15:16,120 Speaker 7: under this new legislation, just in my area, by the 300 00:15:16,200 --> 00:15:19,560 Speaker 7: end this year, we will have invested in over one 301 00:15:19,600 --> 00:15:22,880 Speaker 7: hundred infrastructure projects that are over one hundred million dollars 302 00:15:22,920 --> 00:15:28,360 Speaker 7: each and so we're straining the system in many different ways. 303 00:15:28,440 --> 00:15:31,920 Speaker 4: But permitting it should not be the bottleneck. 304 00:15:32,080 --> 00:15:34,200 Speaker 3: So to break that down a little bit, when we 305 00:15:34,240 --> 00:15:37,360 Speaker 3: say permitting, what are we talking about? And I say 306 00:15:37,360 --> 00:15:38,920 Speaker 3: that in terms of like are we going to have 307 00:15:38,960 --> 00:15:41,560 Speaker 3: to move power lines underground? For example? Do we need 308 00:15:41,600 --> 00:15:43,920 Speaker 3: more transmission lines if we're going to set up that 309 00:15:44,000 --> 00:15:46,720 Speaker 3: hydrogen hub or a new nuclear facility and we need 310 00:15:46,720 --> 00:15:48,560 Speaker 3: to get that to the grid. Does it mean we 311 00:15:48,600 --> 00:15:50,720 Speaker 3: need to just kind start over and like do a 312 00:15:50,720 --> 00:15:53,040 Speaker 3: new grid. Like there's a lot of ways that infrastructure 313 00:15:53,080 --> 00:15:55,480 Speaker 3: can be used. What does it actually mean for you? 314 00:15:56,200 --> 00:15:59,720 Speaker 7: Well, of the two that you mentioned specifically, any of them, okay, 315 00:16:00,120 --> 00:16:04,680 Speaker 7: I would leave aside undergrounding wires because that's more of 316 00:16:04,720 --> 00:16:06,280 Speaker 7: a climate mitigation thing. 317 00:16:06,400 --> 00:16:08,880 Speaker 4: It's where you need to do it. It's very important. 318 00:16:08,880 --> 00:16:12,440 Speaker 7: But in terms of solving the demand issue, the transmission 319 00:16:12,440 --> 00:16:14,480 Speaker 7: thing breaks into sort of two parts, and the answer 320 00:16:14,560 --> 00:16:16,720 Speaker 7: is yes and yes we need both. One is we 321 00:16:16,760 --> 00:16:21,000 Speaker 7: need more transmission lines to move the energy around the 322 00:16:21,000 --> 00:16:25,000 Speaker 7: country or at least around regions. But then we also 323 00:16:25,280 --> 00:16:29,880 Speaker 7: need this thing which is grid innovation, which is a 324 00:16:29,960 --> 00:16:33,400 Speaker 7: series of technologies which are not in the popular mindset, 325 00:16:33,400 --> 00:16:37,520 Speaker 7: things like reconductoring where you basically take in existing rights 326 00:16:37,560 --> 00:16:41,000 Speaker 7: away in the towers and you take down the ceramic 327 00:16:41,720 --> 00:16:44,960 Speaker 7: circular things and in some cases the wires, and you 328 00:16:45,120 --> 00:16:48,480 Speaker 7: what we call reconductoring, and you can get two to 329 00:16:48,600 --> 00:16:52,160 Speaker 7: three times the amount of power over the same line, 330 00:16:52,480 --> 00:16:54,640 Speaker 7: and you don't need a right away. It's cheaper and 331 00:16:54,680 --> 00:16:57,160 Speaker 7: that's good for rate payers. And we just in fact 332 00:16:57,160 --> 00:17:00,560 Speaker 7: publish a report about this at the DOE called Grid 333 00:17:00,560 --> 00:17:03,760 Speaker 7: Innovation Lift Off Report, And so there's that, and there's 334 00:17:03,800 --> 00:17:06,080 Speaker 7: a host of other things. But basically we need all 335 00:17:06,119 --> 00:17:07,240 Speaker 7: of the above right now. 336 00:17:07,400 --> 00:17:10,040 Speaker 2: And is this a federal funded issue or is this 337 00:17:10,119 --> 00:17:12,719 Speaker 2: a federal end state issued How local does it get? 338 00:17:12,760 --> 00:17:15,439 Speaker 2: Because I think of Texas with its own grid, and 339 00:17:15,440 --> 00:17:18,280 Speaker 2: I'm wondering how should they be integrated, for example, for 340 00:17:18,359 --> 00:17:18,960 Speaker 2: the national grid. 341 00:17:19,119 --> 00:17:22,200 Speaker 7: I mean, we're not gonna want that, Yeah, exactly, Yeah, Paul, 342 00:17:22,240 --> 00:17:24,840 Speaker 7: that's what I'm not touching. I mean, there's a reason 343 00:17:24,880 --> 00:17:28,439 Speaker 7: that Texas is a sovereign onto itself when it comes 344 00:17:28,440 --> 00:17:31,959 Speaker 7: to their electric system. But we have a lot of 345 00:17:32,080 --> 00:17:34,480 Speaker 7: financing tools in the tool chests, but most of them 346 00:17:34,520 --> 00:17:37,480 Speaker 7: are set up as sort of matching funds. We put 347 00:17:37,560 --> 00:17:41,520 Speaker 7: up up to fifty percent against fifty percent coming from 348 00:17:41,600 --> 00:17:45,520 Speaker 7: basically anywhere else that's not federal government. So we say 349 00:17:45,840 --> 00:17:49,800 Speaker 7: fifty plus percent from non federal sources. And if it states, 350 00:17:49,840 --> 00:17:52,000 Speaker 7: if it's the private sector, that's all good. 351 00:17:51,920 --> 00:17:53,359 Speaker 3: With us, and that's what you need to see in 352 00:17:53,440 --> 00:17:55,719 Speaker 3: order to commit the money after that. Yes, yeah, So 353 00:17:56,320 --> 00:17:58,720 Speaker 3: how does this all square? So stuff you're talking about, 354 00:17:58,720 --> 00:18:01,240 Speaker 3: like reconstituting the grid like that, like that's not sexy 355 00:18:01,240 --> 00:18:04,320 Speaker 3: cool stuff like clean tech and hydrogen. Right, how much 356 00:18:04,359 --> 00:18:07,440 Speaker 3: of your job is on the energy that we're gonna 357 00:18:07,480 --> 00:18:09,719 Speaker 3: need in fifty years and how much of that is 358 00:18:09,840 --> 00:18:12,840 Speaker 3: how do we get more transmission mechanisms? How do we 359 00:18:12,880 --> 00:18:15,560 Speaker 3: get that plug that we can't get so we can 360 00:18:15,680 --> 00:18:16,439 Speaker 3: change the grid? 361 00:18:17,440 --> 00:18:19,320 Speaker 7: You know, Alex, I was getting a little hung up 362 00:18:19,320 --> 00:18:22,639 Speaker 7: on what's actually sexy in the world of electricity, But 363 00:18:22,760 --> 00:18:26,000 Speaker 7: I'm glad that you can distinguish between hydrogen on one 364 00:18:26,200 --> 00:18:28,880 Speaker 7: in transmission. But what I'd say is, first of all, 365 00:18:28,960 --> 00:18:32,080 Speaker 7: nothing that if I thought that what I was doing 366 00:18:32,200 --> 00:18:35,119 Speaker 7: was just affecting things in twenty fifty, like you know 367 00:18:35,400 --> 00:18:37,000 Speaker 7: at my age, I wouldn't be doing it. 368 00:18:37,280 --> 00:18:37,760 Speaker 4: But we are. 369 00:18:37,800 --> 00:18:41,440 Speaker 7: We're aiming for the Biden administration goal of zero carbon 370 00:18:42,119 --> 00:18:45,640 Speaker 7: electric sector by twenty thirty five, and so the premise 371 00:18:45,680 --> 00:18:48,959 Speaker 7: of your question is correct because of this new awareness 372 00:18:49,000 --> 00:18:52,520 Speaker 7: of demand issues. I would say that what I've been 373 00:18:52,560 --> 00:18:54,880 Speaker 7: focused on my two years at the DOE is what 374 00:18:54,920 --> 00:18:57,639 Speaker 7: does the system look like sort of between twenty twenty 375 00:18:57,640 --> 00:19:01,359 Speaker 7: eight to twenty thirty five first of a fast following 376 00:19:01,880 --> 00:19:06,160 Speaker 7: commercial But because of this new concern, I think we're 377 00:19:06,200 --> 00:19:09,240 Speaker 7: going to be even looking at more. 378 00:19:09,080 --> 00:19:10,639 Speaker 4: Three to five year solutions. 379 00:19:10,640 --> 00:19:13,040 Speaker 7: And that's where things like the grid innovation is important, 380 00:19:13,040 --> 00:19:14,040 Speaker 7: because that's a three to. 381 00:19:14,040 --> 00:19:14,879 Speaker 4: Five year solution. 382 00:19:15,119 --> 00:19:17,879 Speaker 2: Our thanks to David Crane, under Secretary for Infrastructure at 383 00:19:17,880 --> 00:19:19,640 Speaker 2: the US Department of Energy and. 384 00:19:19,640 --> 00:19:22,119 Speaker 3: Staying on Power at Bloomberg's Any App Annual Energy in 385 00:19:22,160 --> 00:19:25,159 Speaker 3: Climate Summit, we were also joined by Pedro Pizarro, President 386 00:19:25,200 --> 00:19:27,040 Speaker 3: and CEO of Edison International. 387 00:19:27,280 --> 00:19:30,119 Speaker 2: Pedro discussed the transition to clean energy and how to 388 00:19:30,119 --> 00:19:33,080 Speaker 2: satisfy the demand for power that we're seeing right now. 389 00:19:33,320 --> 00:19:36,000 Speaker 2: With regards to demand, we first asked Pedro just how 390 00:19:36,080 --> 00:19:37,560 Speaker 2: high it is and who's calling. 391 00:19:37,840 --> 00:19:40,360 Speaker 8: I can tell you from a Southern California Edison perspective, 392 00:19:40,400 --> 00:19:44,280 Speaker 8: our utility we had had flat growth for the last 393 00:19:44,359 --> 00:19:47,000 Speaker 8: fifteen years. We're now seeing something like two percent load 394 00:19:47,000 --> 00:19:50,240 Speaker 8: growth and in our state a lot of atas transportation electrification. 395 00:19:50,880 --> 00:19:53,639 Speaker 8: I'm also chair of the Edison Electric Institute, which represents 396 00:19:53,680 --> 00:19:56,399 Speaker 8: the investor owned utilities across the country. About seventy percent 397 00:19:56,440 --> 00:20:00,840 Speaker 8: of the load two years ago. EI members. We're forecasting 398 00:20:00,920 --> 00:20:03,160 Speaker 8: something like a two percent load growth over the next 399 00:20:03,240 --> 00:20:06,679 Speaker 8: years ahead. The most updated numbers are four point seven percent, 400 00:20:07,080 --> 00:20:09,000 Speaker 8: and I have colleagues in some states that are seeing 401 00:20:09,080 --> 00:20:12,119 Speaker 8: five six seven percent. So who's who's calling it? Is 402 00:20:12,240 --> 00:20:16,520 Speaker 8: electrification in places like California more broadly across the country, 403 00:20:16,520 --> 00:20:18,879 Speaker 8: but I think we're more leading edge there. It is 404 00:20:18,960 --> 00:20:21,119 Speaker 8: data center growth that you read a lot about that. 405 00:20:21,880 --> 00:20:24,720 Speaker 8: And then it's also the repatriation of manufacturing. You know, 406 00:20:24,760 --> 00:20:28,560 Speaker 8: the bipartisan Infrastructure Law is working and it's bringing back 407 00:20:28,600 --> 00:20:31,080 Speaker 8: a lot of of you know, manufacturing into the country, 408 00:20:31,160 --> 00:20:32,080 Speaker 8: and that's another source. 409 00:20:32,200 --> 00:20:36,240 Speaker 2: Oh interesting, So can you, being your company and your industry, 410 00:20:36,359 --> 00:20:38,440 Speaker 2: can you handle that increase in load? 411 00:20:39,560 --> 00:20:43,800 Speaker 8: Yes? There will be there, yes, and there will be 412 00:20:43,800 --> 00:20:44,720 Speaker 8: some bumps in the road. 413 00:20:44,960 --> 00:20:45,160 Speaker 2: Right. 414 00:20:45,800 --> 00:20:47,919 Speaker 8: I was sharing with Alex earlier that it's not the 415 00:20:47,960 --> 00:20:50,440 Speaker 8: first time in our history of the industry we've seen this, right, 416 00:20:50,800 --> 00:20:55,639 Speaker 8: rural electrification, air conditioning load. So we've lived through these periods. 417 00:20:55,880 --> 00:20:58,320 Speaker 8: It's been the last fifteen years or so that it's 418 00:20:58,320 --> 00:21:01,280 Speaker 8: been fairly flat. So how do we handle it in 419 00:21:01,359 --> 00:21:02,080 Speaker 8: the near term? 420 00:21:02,280 --> 00:21:02,440 Speaker 1: Right? 421 00:21:02,480 --> 00:21:04,679 Speaker 8: You see a lot of focus of utilities working in 422 00:21:04,720 --> 00:21:08,840 Speaker 8: their various regions, power companies, working with regional transmission organizations, 423 00:21:09,480 --> 00:21:12,440 Speaker 8: and working with customers to make sure we're using every 424 00:21:12,440 --> 00:21:17,080 Speaker 8: tool available. Demand site management is important. Energy efficiency is important, 425 00:21:17,440 --> 00:21:19,720 Speaker 8: but so is making sure that we can maintain and 426 00:21:19,800 --> 00:21:23,440 Speaker 8: in some cases expand existing resources, and ultimately we need 427 00:21:23,480 --> 00:21:25,080 Speaker 8: to add new resources to the system. 428 00:21:25,200 --> 00:21:27,960 Speaker 3: How do you pay for that? Because as yields have 429 00:21:28,000 --> 00:21:30,640 Speaker 3: moved higher, stock moves lower and then it's more expensive 430 00:21:30,640 --> 00:21:32,320 Speaker 3: to borrow. How do you do it? 431 00:21:32,720 --> 00:21:35,520 Speaker 8: Well, you know, it is an investment in infrastructure that's needed, 432 00:21:35,560 --> 00:21:37,320 Speaker 8: and this is an industry that's been investing for a 433 00:21:37,359 --> 00:21:40,720 Speaker 8: long time. Our members at EI have invested over a 434 00:21:40,800 --> 00:21:43,680 Speaker 8: trillion dollars over the last decade on infrastructure, one hundred 435 00:21:43,680 --> 00:21:45,520 Speaker 8: and sixty eight billion dollars last year alone. 436 00:21:45,600 --> 00:21:47,160 Speaker 3: Right, So it eventually the rate pair, right. 437 00:21:47,160 --> 00:21:49,160 Speaker 8: It isn't eventually the rate pair, right, and so we 438 00:21:49,240 --> 00:21:52,080 Speaker 8: have a responsibility to make sure that that investment is 439 00:21:52,200 --> 00:21:55,600 Speaker 8: economics being done thoughtfully. It has been doing done efficiently. 440 00:21:56,080 --> 00:21:59,400 Speaker 8: But importantly, this investment has multiple uses. 441 00:21:59,520 --> 00:21:59,720 Speaker 5: Right. 442 00:21:59,760 --> 00:22:02,879 Speaker 8: There is the near term need to keep up with demand, 443 00:22:03,440 --> 00:22:06,880 Speaker 8: but there's also the longer term need for investing towards 444 00:22:06,920 --> 00:22:10,040 Speaker 8: the carbonization. Right, then the industry's been going as clean 445 00:22:10,080 --> 00:22:12,040 Speaker 8: as we can, as fast as we can, but while 446 00:22:12,080 --> 00:22:15,760 Speaker 8: maintaining reliability and affordability. And so those investments are the 447 00:22:15,760 --> 00:22:18,480 Speaker 8: same investments that are needed to build out the transmission grid, 448 00:22:18,600 --> 00:22:23,080 Speaker 8: to add renewable resources, to add storage, and that helps 449 00:22:23,119 --> 00:22:26,480 Speaker 8: with climate change mitigation. There's also investment that we're needing 450 00:22:26,520 --> 00:22:29,560 Speaker 8: to put in to deal with climate change adaptation, right, 451 00:22:29,560 --> 00:22:32,800 Speaker 8: the effects of extreme weather, the effects we've seen initially 452 00:22:32,800 --> 00:22:35,560 Speaker 8: in California and now across the country in wildfire. Right, 453 00:22:35,960 --> 00:22:38,840 Speaker 8: So my own company has been investing billions of dollars 454 00:22:38,920 --> 00:22:42,040 Speaker 8: to redesign the system to harden it against wildfires. Other 455 00:22:42,080 --> 00:22:44,320 Speaker 8: colleagues are having to do that now. So all of 456 00:22:44,359 --> 00:22:47,880 Speaker 8: these investments accrue to the customer, a customer benefit, whether 457 00:22:47,920 --> 00:22:50,919 Speaker 8: it's to keep the system safer, keep community safer, and 458 00:22:51,000 --> 00:22:53,119 Speaker 8: also to support the demand growth that we're seeing. 459 00:22:53,280 --> 00:22:56,719 Speaker 2: Alison I spoke to David Crane, under Secretary for Infrastructure 460 00:22:56,840 --> 00:22:58,520 Speaker 2: the Use Department of Energy, and he said one of 461 00:22:58,560 --> 00:23:01,080 Speaker 2: his major goals over the next several years is to 462 00:23:01,119 --> 00:23:05,080 Speaker 2: make permitting easier, presumably to allow companies like yours to 463 00:23:05,160 --> 00:23:08,520 Speaker 2: make these investments. And maybe in a quicker manner, are 464 00:23:08,560 --> 00:23:10,639 Speaker 2: you seeing that or what do you need to see? 465 00:23:10,880 --> 00:23:13,240 Speaker 8: Absolutely needed? Okay, And so if you gave me a 466 00:23:13,280 --> 00:23:15,360 Speaker 8: magic one, then gave me one wish for the industry, 467 00:23:15,400 --> 00:23:15,919 Speaker 8: it would be that. 468 00:23:16,119 --> 00:23:18,160 Speaker 3: Okay, I don't blame you, all right, And. 469 00:23:18,119 --> 00:23:21,240 Speaker 8: We have other challenges supply chain, labor availability, but it's 470 00:23:21,240 --> 00:23:23,399 Speaker 8: really siting and permitting the needs the most help. Just 471 00:23:23,440 --> 00:23:25,840 Speaker 8: to frame it for a little bit, Paul, the analysis 472 00:23:25,840 --> 00:23:28,879 Speaker 8: that we've done as Edison for California and what we 473 00:23:28,880 --> 00:23:32,000 Speaker 8: will take to the carbonise the whole California economy by 474 00:23:32,040 --> 00:23:34,320 Speaker 8: twenty forty five. You know it stays ned zero goal 475 00:23:35,160 --> 00:23:40,000 Speaker 8: still feasible, right, but it will require significant investment for renewables, 476 00:23:40,040 --> 00:23:42,920 Speaker 8: for storage for the grid, three hundred and seventy billion 477 00:23:42,960 --> 00:23:46,760 Speaker 8: dollars of investment state wide through twenty forty five. That analysis, 478 00:23:46,800 --> 00:23:49,120 Speaker 8: by the way, from an affordability perspective, back to your 479 00:23:49,240 --> 00:23:52,399 Speaker 8: comment earlier, Alex, we do see that will put pressure 480 00:23:52,440 --> 00:23:56,040 Speaker 8: on the electric rates and bills, but because it's a transition, right, 481 00:23:56,280 --> 00:23:59,119 Speaker 8: a lot of that electrification will be removing uses in 482 00:23:59,160 --> 00:24:03,160 Speaker 8: the economy that they are using combustion processes with fossil fuels. 483 00:24:03,640 --> 00:24:06,240 Speaker 8: These are more efficient technologies, right, The electric car is 484 00:24:06,280 --> 00:24:09,920 Speaker 8: more efficient than an internal combustion engine car. We see 485 00:24:09,960 --> 00:24:13,440 Speaker 8: the total energy bill for our average customer electric plus 486 00:24:13,480 --> 00:24:16,520 Speaker 8: gas plus gasoline going down by forty percent in real 487 00:24:16,560 --> 00:24:19,120 Speaker 8: turns between now and twenty forty five. So that goes 488 00:24:19,160 --> 00:24:23,160 Speaker 8: to these investments having a co benefit of affordability. As 489 00:24:23,160 --> 00:24:26,920 Speaker 8: we look at how we proceed with this kind of investment, 490 00:24:27,359 --> 00:24:29,159 Speaker 8: you know, we have to keep in mind that it 491 00:24:29,200 --> 00:24:29,679 Speaker 8: has those. 492 00:24:29,560 --> 00:24:32,199 Speaker 3: Multiple benefits, so all of it has to work at 493 00:24:32,200 --> 00:24:35,520 Speaker 3: the same time for that to be that forty percent decline. 494 00:24:35,560 --> 00:24:37,280 Speaker 8: Absolutely, and we need to be able to get the 495 00:24:37,280 --> 00:24:39,879 Speaker 8: steel in the ground through setting and permitting, and so 496 00:24:40,040 --> 00:24:42,480 Speaker 8: part of our analysis showed that the rate at which 497 00:24:42,520 --> 00:24:45,080 Speaker 8: we add transmission will need to be four times the 498 00:24:45,080 --> 00:24:48,240 Speaker 8: annual rate that it's been historically. The rate at which 499 00:24:48,240 --> 00:24:51,639 Speaker 8: we add distribution the lower voltage wires will need to 500 00:24:51,640 --> 00:24:54,400 Speaker 8: be ten times a rate. So when David Crane talked 501 00:24:54,400 --> 00:24:57,240 Speaker 8: about its heading on permitting, absolutely needed and it's help 502 00:24:57,280 --> 00:24:59,080 Speaker 8: that we need at both the federal and the state 503 00:24:59,119 --> 00:24:59,960 Speaker 8: and even the local level. 504 00:25:00,359 --> 00:25:04,919 Speaker 2: Our thanks to Pedro Pisado, President and CEO of Edison International. 505 00:25:04,480 --> 00:25:07,480 Speaker 3: Coming up on the program a conversation with Jeff Gustavsen, 506 00:25:07,640 --> 00:25:10,520 Speaker 3: president of Chevron New Energies. He believes the future of 507 00:25:10,640 --> 00:25:11,959 Speaker 3: energy is lower carbon. 508 00:25:12,080 --> 00:25:14,919 Speaker 2: You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in 509 00:25:14,960 --> 00:25:17,080 Speaker 2: depth research and data on two thousand companies in one 510 00:25:17,119 --> 00:25:20,040 Speaker 2: hundred and thirty industries. You can access Bloomberg Intelligence via 511 00:25:20,040 --> 00:25:22,160 Speaker 2: Bigo in the terminal Paul sweet. 512 00:25:21,840 --> 00:25:24,000 Speaker 3: Am, Alex Steele, and this is Bloomberg. 513 00:25:30,520 --> 00:25:34,400 Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live 514 00:25:34,480 --> 00:25:38,040 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 515 00:25:38,040 --> 00:25:40,800 Speaker 1: Auto with the Bloomberg Business App. You can also listen 516 00:25:40,920 --> 00:25:44,040 Speaker 1: live on Amazon Alexa from our flagship New York station, 517 00:25:44,400 --> 00:25:47,160 Speaker 1: Just say Alexa Play Bloomberg. Eleven thirty. 518 00:25:48,800 --> 00:25:51,359 Speaker 3: We continue with some of our best interviews from Bloomberg's 519 00:25:51,400 --> 00:25:53,760 Speaker 3: nef's annual Energy and Climate Sumit in New York. 520 00:25:53,920 --> 00:25:57,600 Speaker 2: The summer brings together corporate executives, government officials, and industry leaders. 521 00:25:57,840 --> 00:26:00,200 Speaker 2: This year, speakers at the event cover topics ranging from 522 00:26:00,200 --> 00:26:04,240 Speaker 2: clean power, trade, federal US policy, hydrogen and climate technology. 523 00:26:04,400 --> 00:26:08,160 Speaker 3: We were joined by Jeff Gustavisen, president of Chevron New Energies. 524 00:26:08,200 --> 00:26:10,800 Speaker 3: Now he believes the future of energy is lower carbon. 525 00:26:10,840 --> 00:26:14,439 Speaker 3: He thinks that energy should be affordable, reliable, and ever cleaner. 526 00:26:14,640 --> 00:26:18,000 Speaker 3: We first asked Jeff what Chevron's new Energy unit actually does. 527 00:26:18,400 --> 00:26:22,360 Speaker 9: We launched these new businesses about three years ago. This 528 00:26:22,440 --> 00:26:25,640 Speaker 9: is actually our third full year and it's a suite 529 00:26:25,680 --> 00:26:29,600 Speaker 9: of businesses that support our lower carbon strategy as a company. 530 00:26:29,960 --> 00:26:33,040 Speaker 9: There's two pieces to that. One is lowering the carbon 531 00:26:33,080 --> 00:26:35,840 Speaker 9: intensity of our traditional oil and gas business. The other 532 00:26:35,880 --> 00:26:40,000 Speaker 9: part is growing new low carbon businesses and solutions to scale, 533 00:26:40,080 --> 00:26:43,040 Speaker 9: and that's what Chevron New Energies is. We're focused on 534 00:26:43,119 --> 00:26:48,960 Speaker 9: renewable fuels, carbon capture, utilization and storage, hydrogen, carbon offsets, 535 00:26:49,760 --> 00:26:54,240 Speaker 9: emerging technologies, and everything in between. This is something that's 536 00:26:54,280 --> 00:26:59,280 Speaker 9: always been a passion of mind, the energy transition and 537 00:26:59,600 --> 00:27:02,840 Speaker 9: low car energy. I love oil and gas. I grew 538 00:27:02,920 --> 00:27:06,960 Speaker 9: up an oil and gas but now shifting seeing a 539 00:27:07,040 --> 00:27:10,320 Speaker 9: company like Chevron with the capabilities we bring to this 540 00:27:10,440 --> 00:27:14,000 Speaker 9: space growing these new businesses, I couldn't be more excited 541 00:27:14,040 --> 00:27:14,680 Speaker 9: about this role. 542 00:27:15,040 --> 00:27:17,280 Speaker 2: Jeff, what is I don't know. If you fast forward five 543 00:27:17,400 --> 00:27:20,320 Speaker 2: years from now, ten years from now, how do you 544 00:27:20,359 --> 00:27:22,879 Speaker 2: guys think about sustainable energy as a part of the 545 00:27:22,880 --> 00:27:25,879 Speaker 2: overall portfolio of Chevron. What percentage do you think that 546 00:27:25,960 --> 00:27:26,600 Speaker 2: might look like? 547 00:27:26,960 --> 00:27:30,879 Speaker 9: Yeah, good question. And we when we launched, we announced 548 00:27:31,480 --> 00:27:35,680 Speaker 9: that we were, you know, allocating or guiding to spending 549 00:27:35,880 --> 00:27:39,000 Speaker 9: ten billion dollars over an eight year period. Right, this 550 00:27:39,040 --> 00:27:42,560 Speaker 9: would be twenty twenty one, twenty eight, And that's just 551 00:27:43,040 --> 00:27:46,200 Speaker 9: the starting point. So these are already a significant part 552 00:27:46,240 --> 00:27:50,080 Speaker 9: of our capital allocation strategy. We have a very large 553 00:27:50,119 --> 00:27:53,120 Speaker 9: oil and gas business, which requires a lot of capital 554 00:27:53,400 --> 00:27:56,560 Speaker 9: to maintain and grow that business to meet global demand. 555 00:27:57,320 --> 00:28:00,840 Speaker 9: But these these businesses are We're spending you know, anywhere 556 00:28:00,840 --> 00:28:02,400 Speaker 9: from one and a half to two billion a year 557 00:28:02,480 --> 00:28:05,239 Speaker 9: to support these new businesses. And my job and our 558 00:28:05,359 --> 00:28:08,480 Speaker 9: job as a new segment is to find the right 559 00:28:08,560 --> 00:28:11,720 Speaker 9: opportunities that are investable so we can grow this business 560 00:28:12,080 --> 00:28:12,600 Speaker 9: even further. 561 00:28:13,000 --> 00:28:15,800 Speaker 3: You're based in Houston, Guys like you, the new Energy 562 00:28:15,800 --> 00:28:17,639 Speaker 3: people are Are you guys welcome in Houston? 563 00:28:17,960 --> 00:28:21,080 Speaker 2: Like the oil bar, like the oilman's bars taken. 564 00:28:20,960 --> 00:28:23,560 Speaker 3: Like the cowboys, guys who stick like a pipe in 565 00:28:23,560 --> 00:28:26,120 Speaker 3: the ground and get oil. He's thinking those people, Are 566 00:28:26,160 --> 00:28:27,240 Speaker 3: you welcome in those bars? 567 00:28:27,880 --> 00:28:28,120 Speaker 1: Yes? 568 00:28:29,720 --> 00:28:32,280 Speaker 9: And I love being referred to as a New Energy person, 569 00:28:33,280 --> 00:28:36,080 Speaker 9: but no, I mean this is I think this. Look, 570 00:28:36,119 --> 00:28:39,040 Speaker 9: there's three things that we're that we really need to 571 00:28:39,040 --> 00:28:42,400 Speaker 9: see in order to accelerate the growth of these businesses. 572 00:28:42,400 --> 00:28:46,400 Speaker 9: And that's a greater collaboration between private companies, between private 573 00:28:46,400 --> 00:28:51,240 Speaker 9: companies and policymakers, between governments around the world. It's lowering 574 00:28:51,240 --> 00:28:54,240 Speaker 9: the cost of these new technologies and solutions so customers, 575 00:28:54,360 --> 00:28:57,640 Speaker 9: large customers, large businesses or individual customers will buy them. 576 00:28:58,120 --> 00:29:02,520 Speaker 9: And it is bringing capabilities to bear the right capabilities. 577 00:29:02,880 --> 00:29:06,760 Speaker 9: And that goes to your Houston question. The energy industry 578 00:29:07,400 --> 00:29:12,200 Speaker 9: possesses a lot of the capabilities, technical, operating, commercial capabilities 579 00:29:12,280 --> 00:29:16,720 Speaker 9: that are required to grow these businesses profitably, to scale. 580 00:29:16,840 --> 00:29:18,800 Speaker 9: So absolutely, you know a lot of this, a lot 581 00:29:18,800 --> 00:29:21,280 Speaker 9: of activity in Houston, a lot of companies engaged in this. 582 00:29:21,320 --> 00:29:25,320 Speaker 9: So Houston it's an oil and gas capital, that's how 583 00:29:25,320 --> 00:29:27,120 Speaker 9: its thought of. It's also a new energy capital. 584 00:29:28,080 --> 00:29:31,000 Speaker 2: So where are we in terms of I've been reading 585 00:29:31,040 --> 00:29:33,160 Speaker 2: a lot on this, Alex, she knows that she's the expert. 586 00:29:33,200 --> 00:29:34,360 Speaker 2: I've been reading up a lot on this over the 587 00:29:34,440 --> 00:29:36,960 Speaker 2: last several days. It seems like the US government's putting 588 00:29:37,000 --> 00:29:39,320 Speaker 2: a lot of money into this. That's the good news, 589 00:29:39,360 --> 00:29:41,680 Speaker 2: as Alex mentioned earlier, but I've also heard here of 590 00:29:41,720 --> 00:29:44,920 Speaker 2: the last couple of days, it's still not easy doing 591 00:29:44,920 --> 00:29:47,800 Speaker 2: business with the government. I'm thinking permitting for certain projects 592 00:29:47,800 --> 00:29:50,480 Speaker 2: and things like that. What's been your experience there is 593 00:29:50,520 --> 00:29:53,760 Speaker 2: to is the government doing the best it can to 594 00:29:54,000 --> 00:29:56,160 Speaker 2: kind of facilitate some of these investments in transition. 595 00:29:56,360 --> 00:29:58,800 Speaker 9: Yeah, So collaboration between the private sector and the public 596 00:29:58,800 --> 00:30:03,880 Speaker 9: sector's fundamental here. It helps lower the cost those are 597 00:30:04,080 --> 00:30:08,240 Speaker 9: you know, advocacy understanding politics, not just in this country 598 00:30:08,240 --> 00:30:12,280 Speaker 9: but around the world. Is a strength of our company 599 00:30:12,360 --> 00:30:15,160 Speaker 9: of energy companies, you know, more broadly, so it fits 600 00:30:15,200 --> 00:30:18,680 Speaker 9: one of our existing capabilities. But that is one of 601 00:30:18,720 --> 00:30:21,160 Speaker 9: the starting points here. You know, you need the right 602 00:30:21,520 --> 00:30:24,760 Speaker 9: policy support, the right incentives to get the private sector 603 00:30:25,200 --> 00:30:29,720 Speaker 9: investing even more heavily in this space. That will drive 604 00:30:30,440 --> 00:30:33,520 Speaker 9: the technology forward, That will drive innovation, that will drive 605 00:30:33,640 --> 00:30:36,680 Speaker 9: to building large scale projects which will lower the cost, 606 00:30:36,800 --> 00:30:41,080 Speaker 9: make it more consumable for the world, and that is 607 00:30:41,120 --> 00:30:43,680 Speaker 9: a cycle that will then you know, continue. So it 608 00:30:43,720 --> 00:30:47,200 Speaker 9: starts with policy, but it really is sustained by the 609 00:30:47,240 --> 00:30:51,160 Speaker 9: investment by the private sector in technology. Government's a very 610 00:30:51,160 --> 00:30:55,880 Speaker 9: important partner. We've seen We're having really constructive conversations with 611 00:30:55,920 --> 00:30:59,120 Speaker 9: the government, But you mentioned permitting, there's still a long 612 00:30:59,160 --> 00:31:02,680 Speaker 9: way to go to make all of this come together. 613 00:31:03,160 --> 00:31:06,240 Speaker 9: We've shown some progress, but there are many steps in 614 00:31:06,240 --> 00:31:06,920 Speaker 9: front of us. 615 00:31:06,880 --> 00:31:08,520 Speaker 3: You know, paul O. To your point, it seems like 616 00:31:08,520 --> 00:31:10,960 Speaker 3: the good part of this is that energy companies in 617 00:31:11,000 --> 00:31:14,000 Speaker 3: the new energy world are in the room talking to people, 618 00:31:14,600 --> 00:31:17,120 Speaker 3: typically the government and oil and gas of a contentious 619 00:31:17,200 --> 00:31:20,560 Speaker 3: relationship at best in certain administrations, and it feels like 620 00:31:21,000 --> 00:31:24,800 Speaker 3: in this area maybe that is dissolving a bit, which 621 00:31:24,880 --> 00:31:27,880 Speaker 3: would be helpful. Something that I've noticed too, is that 622 00:31:27,880 --> 00:31:29,520 Speaker 3: I think it was like three hundred and three billion 623 00:31:29,560 --> 00:31:31,600 Speaker 3: dollars has been spent I think it was last year 624 00:31:31,680 --> 00:31:33,760 Speaker 3: on all these new energy stuff. What I'm also hearing 625 00:31:33,840 --> 00:31:38,000 Speaker 3: is that demand is a forgotten problem. Like all the 626 00:31:38,040 --> 00:31:39,760 Speaker 3: money is being spent, all the money, but the money 627 00:31:39,840 --> 00:31:43,280 Speaker 3: being spent on supplying the stuff and getting that cost down, 628 00:31:43,320 --> 00:31:46,160 Speaker 3: but not enough. It's being spent on demand to incentivize 629 00:31:46,520 --> 00:31:50,600 Speaker 3: a company signing up with you for ESAF, for something 630 00:31:50,600 --> 00:31:52,080 Speaker 3: along those lines. Is that true? 631 00:31:52,960 --> 00:31:54,800 Speaker 9: There is a lot of money being spent in these 632 00:31:54,960 --> 00:31:57,600 Speaker 9: in these new businesses. It's actually one point seven trillion 633 00:31:57,680 --> 00:32:02,239 Speaker 9: dollars globally compared to about one trillion dollars spent in 634 00:32:02,520 --> 00:32:05,080 Speaker 9: the traditional energy business last year, and we need even 635 00:32:05,120 --> 00:32:08,040 Speaker 9: more to grow these businesses to scale. And you hit 636 00:32:08,080 --> 00:32:11,040 Speaker 9: on a very important point. It is, and I'll use 637 00:32:11,120 --> 00:32:15,240 Speaker 9: hydrogen as an example. It's not hard to produce hydrogen. 638 00:32:15,560 --> 00:32:19,080 Speaker 9: It's harder to produce low carbon hydrogen at a low cost, 639 00:32:19,200 --> 00:32:21,440 Speaker 9: something that we're working on using natural gas as a 640 00:32:21,440 --> 00:32:25,760 Speaker 9: feedstock or using electricity and renewable power as feedstocks to 641 00:32:25,800 --> 00:32:30,440 Speaker 9: produce low carbon hydrogen. But transporting hydrogen to the market, 642 00:32:30,560 --> 00:32:32,720 Speaker 9: you need policy support in order to do that. You 643 00:32:32,760 --> 00:32:35,480 Speaker 9: need tech, technological innovation to do that to lower the cost, 644 00:32:35,840 --> 00:32:41,080 Speaker 9: and then importantly encouraging consumers to buy a hydrogen making 645 00:32:41,120 --> 00:32:44,800 Speaker 9: it easier for them to transition from a traditional product 646 00:32:44,800 --> 00:32:47,560 Speaker 9: that they're using today to a lower carbon product that 647 00:32:47,680 --> 00:32:51,000 Speaker 9: comes at a higher cost. That's where demand incentives and 648 00:32:51,040 --> 00:32:52,800 Speaker 9: policy support will also be required. 649 00:32:53,040 --> 00:32:56,560 Speaker 3: Our special things to Jeff Gustavsen, president of Sevrun New Energies. 650 00:32:56,880 --> 00:32:59,880 Speaker 2: Staying at Bloomberg and eif's annual Energy and Climate Summit, 651 00:33:00,120 --> 00:33:03,160 Speaker 2: Let's have a look at Constellation Energy. It's an American 652 00:33:03,280 --> 00:33:06,560 Speaker 2: energy company that provides electric power, natural gas, and energy 653 00:33:06,600 --> 00:33:07,560 Speaker 2: management services. 654 00:33:07,640 --> 00:33:10,280 Speaker 3: It also operates the largest nuclear reactor fleet in the 655 00:33:10,360 --> 00:33:12,360 Speaker 3: United States. So for more on the company, we were 656 00:33:12,400 --> 00:33:15,280 Speaker 3: joined by its executive vice president and chief strategy Officer, 657 00:33:15,360 --> 00:33:17,760 Speaker 3: Kathleen barn and we first asked her about some of 658 00:33:17,800 --> 00:33:19,520 Speaker 3: the other things that the company is doing in the 659 00:33:19,600 --> 00:33:20,760 Speaker 3: energy transition space. 660 00:33:21,080 --> 00:33:23,360 Speaker 10: Well, one of the opportunities we see ahead of our 661 00:33:23,400 --> 00:33:26,560 Speaker 10: country is to find ways to decarbonize. It's really hard 662 00:33:26,560 --> 00:33:31,560 Speaker 10: to find a way to run steel, manufacturing, agriculture, aviation, 663 00:33:32,040 --> 00:33:35,480 Speaker 10: long haul shipping on electricity, right, so we have to 664 00:33:35,520 --> 00:33:38,600 Speaker 10: find another way to decarbonize that sector and find a 665 00:33:38,760 --> 00:33:40,880 Speaker 10: liquid or gases or a solid fuel that we're going 666 00:33:40,920 --> 00:33:42,960 Speaker 10: to have at the ready at any moment to power 667 00:33:43,040 --> 00:33:47,560 Speaker 10: those industries. And hydrogen has emerged as an opportunity for 668 00:33:47,600 --> 00:33:50,120 Speaker 10: the US now that the Inflation Reduction Act has passed. 669 00:33:50,160 --> 00:33:53,960 Speaker 10: There's a production tax credit for hydrogen in that act. 670 00:33:54,160 --> 00:33:59,640 Speaker 10: And we see nuclear and hydrogen as an ideal pairing because, 671 00:34:00,120 --> 00:34:03,880 Speaker 10: as you pointed out, nuclear is clean, but it's also firm, 672 00:34:03,880 --> 00:34:06,560 Speaker 10: it's reliable, it runs twenty four to seven, and so 673 00:34:06,600 --> 00:34:09,440 Speaker 10: it can be a steady source of power to run 674 00:34:09,440 --> 00:34:13,239 Speaker 10: into an electrolyzer split water into oxygen and hydrogen and 675 00:34:13,280 --> 00:34:17,200 Speaker 10: then create that clean molecule that can power industrial applications. 676 00:34:17,200 --> 00:34:21,160 Speaker 10: What color clean fuel, Well, we're trying to discourage the 677 00:34:21,320 --> 00:34:25,000 Speaker 10: rainbow of colors and just talk about clean versus emitting. 678 00:34:25,080 --> 00:34:27,120 Speaker 10: But it is called pink for. 679 00:34:27,120 --> 00:34:28,960 Speaker 3: What it's for just to work clear, yep. 680 00:34:29,680 --> 00:34:32,759 Speaker 2: So I was fascinated to not just I didn't know 681 00:34:32,800 --> 00:34:35,360 Speaker 2: much about your company. Your company has the largest or 682 00:34:35,400 --> 00:34:38,640 Speaker 2: the biggest nuclear fleet in the country with twenty one reactors. 683 00:34:40,120 --> 00:34:43,720 Speaker 2: What is the future of nuclear energy in this country 684 00:34:43,760 --> 00:34:48,080 Speaker 2: as we again think about more green types of energy sources. 685 00:34:48,360 --> 00:34:50,520 Speaker 10: You know, it has changed a lot, even just in 686 00:34:50,560 --> 00:34:52,759 Speaker 10: the last few years in terms of public acceptance for 687 00:34:52,800 --> 00:34:55,680 Speaker 10: the technology it makes. I mean not just our fleet, 688 00:34:55,680 --> 00:34:58,360 Speaker 10: but the nuclear fleet generally generates twenty percent of the 689 00:34:58,360 --> 00:35:01,040 Speaker 10: electricity that runs through this building we're in in our 690 00:35:01,080 --> 00:35:04,160 Speaker 10: economy every day. People don't really realize that, but it 691 00:35:04,200 --> 00:35:06,480 Speaker 10: is the backbone of the power sector, and it is 692 00:35:06,960 --> 00:35:10,040 Speaker 10: carbon free and as we just talked about, very reliable. 693 00:35:10,120 --> 00:35:14,560 Speaker 10: It operates around the clock, no matter the weather, sun, wind, brainstorm, 694 00:35:14,880 --> 00:35:18,760 Speaker 10: it's still operating, and we operate twe reactors. We own 695 00:35:19,239 --> 00:35:21,319 Speaker 10: twenty three and so that's about a quarter of the 696 00:35:21,440 --> 00:35:25,319 Speaker 10: US fleet and the beauty of these machines is that 697 00:35:25,360 --> 00:35:27,720 Speaker 10: they can run for a very long period of time. 698 00:35:28,120 --> 00:35:31,840 Speaker 10: Most of our assets are sort of in the thirty 699 00:35:31,920 --> 00:35:35,480 Speaker 10: forty fifty year old time frame, but they can run 700 00:35:35,600 --> 00:35:39,200 Speaker 10: up to eighty years according to the Federal Safety regulators 701 00:35:39,239 --> 00:35:43,799 Speaker 10: in Washington, and so they are constantly being rebuilt. We 702 00:35:43,840 --> 00:35:45,279 Speaker 10: put in about a billion and a half a new 703 00:35:45,320 --> 00:35:48,279 Speaker 10: capital every year, and we're replacing the components. It's kind 704 00:35:48,280 --> 00:35:51,480 Speaker 10: of like an old car that's having its parts replaced regularly. 705 00:35:51,560 --> 00:35:53,839 Speaker 10: So these machines can run for a very long time. 706 00:35:53,840 --> 00:35:56,760 Speaker 10: They abate about five hundred million metric tons of carbon 707 00:35:56,800 --> 00:35:59,359 Speaker 10: every year, so it's in the nation's interest to keep 708 00:35:59,400 --> 00:36:02,840 Speaker 10: them running. In at this growing public acceptance, we're seeing 709 00:36:03,120 --> 00:36:06,239 Speaker 10: interest in corporate procurements, We're seeing interest from governments. We're 710 00:36:06,239 --> 00:36:09,040 Speaker 10: seeing people valuing this thing that we don't have enough of, 711 00:36:09,160 --> 00:36:10,839 Speaker 10: which is a clean firm megawont hour. 712 00:36:11,040 --> 00:36:13,440 Speaker 3: So when we talk about the hydrogen stuff, so pink 713 00:36:13,680 --> 00:36:15,960 Speaker 3: so basically you would get the power to split the 714 00:36:16,040 --> 00:36:19,480 Speaker 3: hydrogen from the oxygen and the electrolyizer using nuclear stream. 715 00:36:20,640 --> 00:36:23,719 Speaker 3: Does that mean that if I'm building a hydrogen facility, 716 00:36:23,840 --> 00:36:26,640 Speaker 3: I have to go where your power plant is or 717 00:36:26,680 --> 00:36:29,440 Speaker 3: are you going to be building a power plant, a 718 00:36:29,480 --> 00:36:32,920 Speaker 3: small modular power plant near me, or are we running 719 00:36:33,000 --> 00:36:35,520 Speaker 3: like a big tube of something in between me and you. 720 00:36:36,000 --> 00:36:38,480 Speaker 10: So what we're talking about is using the existing reactors 721 00:36:38,719 --> 00:36:42,320 Speaker 10: to power an electrilizer. As you said, split the oxygen 722 00:36:42,320 --> 00:36:44,399 Speaker 10: and the hydrogen. You could do that right up next 723 00:36:44,400 --> 00:36:46,919 Speaker 10: to the power plant, so you put the electricity right 724 00:36:46,960 --> 00:36:50,000 Speaker 10: into the electrolyizer, or you could put your electrolyizer next 725 00:36:50,040 --> 00:36:53,680 Speaker 10: to your manufacturing plant or whatever process you're trying to 726 00:36:53,800 --> 00:36:56,640 Speaker 10: use the hydrogen for, say you're making sustainable aviation fuel, 727 00:36:56,840 --> 00:36:59,680 Speaker 10: and we can shift the electricity over the transmission line 728 00:36:59,719 --> 00:37:02,920 Speaker 10: to your electoralizer with a dedicated power purchase agreement, that 729 00:37:03,000 --> 00:37:06,480 Speaker 10: sort of hydrogen by wire configuration. So either co located 730 00:37:06,520 --> 00:37:09,600 Speaker 10: with the plant or through the transmission line. Either way 731 00:37:09,640 --> 00:37:11,680 Speaker 10: you're going to have that steady source of zero carbon 732 00:37:11,719 --> 00:37:13,839 Speaker 10: electricity going. It's the electrolyizer every hour. 733 00:37:14,239 --> 00:37:15,960 Speaker 2: Can I go out and build a nuclear power plant 734 00:37:16,000 --> 00:37:16,800 Speaker 2: in this country today? 735 00:37:17,200 --> 00:37:21,880 Speaker 10: There is no reason why you can't, But thank you, Alex. 736 00:37:22,400 --> 00:37:27,319 Speaker 10: There are a bunch of reactor technology developers who have 737 00:37:27,440 --> 00:37:30,080 Speaker 10: new designs. You mentioned small modular reactors that are in 738 00:37:30,120 --> 00:37:33,600 Speaker 10: the process of getting licensed, and there are some utilities 739 00:37:33,600 --> 00:37:38,040 Speaker 10: who have created relationships with those technology developers for sort 740 00:37:38,080 --> 00:37:42,080 Speaker 10: of codevelopment or you know, an advanced commitment, but none 741 00:37:42,080 --> 00:37:44,279 Speaker 10: of them are under construction just yet. Some of them 742 00:37:44,320 --> 00:37:46,920 Speaker 10: are going to be starting soon. For example, in Canada 743 00:37:47,000 --> 00:37:50,720 Speaker 10: that the Ontario Power Generator has partnered with the GE 744 00:37:51,320 --> 00:37:54,719 Speaker 10: three hundred megawatt reactor design and they think they have 745 00:37:54,800 --> 00:37:58,760 Speaker 10: been through regulatory approvals and they will start construction sooner. 746 00:37:59,080 --> 00:38:01,000 Speaker 10: But in the US we're just we've lagged. I mean, 747 00:38:01,040 --> 00:38:05,080 Speaker 10: this is happening in Candide's happening overseas, and we don't 748 00:38:05,120 --> 00:38:08,480 Speaker 10: have that market poll here. We don't have commitments as 749 00:38:08,560 --> 00:38:10,680 Speaker 10: much as we should to get those new reactor designs 750 00:38:10,680 --> 00:38:13,239 Speaker 10: through licensing and into construction and pass that first of 751 00:38:13,280 --> 00:38:14,320 Speaker 10: a kind cost cycle. 752 00:38:14,360 --> 00:38:14,600 Speaker 5: All right. 753 00:38:14,600 --> 00:38:17,680 Speaker 3: Thanks to Kathleen Baron, Executive vice president and chief Strategy 754 00:38:17,719 --> 00:38:19,320 Speaker 3: Officer at Constellation Energy. 755 00:38:19,840 --> 00:38:24,360 Speaker 1: This is the Bloomberg Intelligence Podcast, available on Apples, Spotify, 756 00:38:24,560 --> 00:38:28,240 Speaker 1: and anywhere else you'll get your podcasts. Listen live each weekday, 757 00:38:28,360 --> 00:38:31,320 Speaker 1: ten am to noon Eastern on Bloomberg dot com, the 758 00:38:31,440 --> 00:38:34,880 Speaker 1: iHeartRadio app, Tune In, and the Bloomberg Business app. You 759 00:38:34,920 --> 00:38:38,120 Speaker 1: can also watch us live every weekday on YouTube and 760 00:38:38,280 --> 00:38:39,920 Speaker 1: always on the Bloomberg Terminal