Speaker 1: This is Dana Perkins and you're listening to Switched on
Speaker 1: the BNF podcast, and today we bring you a recording
Speaker 1: from our summit in London, which took place on the
Speaker 1: eighth and ninth of October. The panel featured on today's
Speaker 1: show is titled Cleaning Up Heavy Transport. So while electrification
Speaker 1: has been well established in other parts of the transport
Speaker 1: sector like passenger vehicles, there are some limits to how
Speaker 1: far the technology can reach, and heavy transport is one
Speaker 1: of the tougher ones for it to decarbonize. Cleaning up aviation,
Speaker 1: maritime shipping, and long haul trucking will likely require clean
Speaker 1: fuels like biofuels, resulting in sustainable aviation fuels or saff
Speaker 1: for short or ammonia methanol and synthetic fuels. This variety
Speaker 1: of options gives us a lot of pathways to a
Speaker 1: lower carbon heavy transport sector, but it's also with its
Speaker 1: own challenges, including elevated prices and some confusion among investors
Speaker 1: as they struggle to understand exactly which technologies they should
Speaker 1: be putting their money behind. So with all of this
Speaker 1: to consider, the panelists you'll hear from on this recording
Speaker 1: explore which clean fuels are currently seeing the greatest uptake
Speaker 1: and whether existing government policy is extensive enough and clear
Speaker 1: enough to support growth in the sector. They also discuss
Speaker 1: what feedback they have been receiving from investors, and this
Speaker 1: results in some suggestions on how to stimulate growth across
Speaker 1: the wider sector. You'll hear from Freya Burton, chief sustainability
Speaker 1: Officer at Lanztech, Chris Johnson, chief commercial officer at C
Speaker 1: two X, and Lara Nashquinbondi, chief executive officer at ET Fuels.
Speaker 1: The panel was moderated by Colin mccherricer Bloomberg, nef's head
Speaker 1: of Transport and Energy Storage. For more information regarding BNF's summits,
Speaker 1: including our upcoming BNF Summit taking place in Shanghai on
Speaker 1: the third and fourth of December, and to view recordings
Speaker 1: from this and other events in the past, head to
Speaker 1: about dot BNF dot com forward Slash Summit. Now let's
Speaker 1: hear from our panel on cleaning up heavy trains and
Speaker 1: sport from the BNF Summit, London.
Speaker 2: We've heard a little bit about clean fuels and shipping
Speaker 2: in aviation throughout the session so far, but we're going
Speaker 2: to get a little further into it right now, and
Speaker 2: just to kind of set the scene. Right now, both
Speaker 2: shipping and aviation are around two and a half percent
Speaker 2: of global CEO two emissions, but that share is set
Speaker 2: to rise, depending on the forecast to use maybe double
Speaker 2: over the next ten or twenty years. Right now, aviation
Speaker 2: uses about ninety three billion gallons of jet fuel a year,
Speaker 2: and three hundred and twenty million of that is saf
Speaker 2: so less than zero point five percent. On the shipping side,
Speaker 2: eighty four billion gallons of marine fuel used and for
Speaker 2: low carbon fuels, and that's being a bit generous with
Speaker 2: the definitions. It's about one hundred and thirty million gallons,
Speaker 2: so less than zero point two percent. So a lot
Speaker 2: of work to do, but luckily there's a lot of
Speaker 2: people on the case. So I want to ask, as
Speaker 2: a sort of opener to each of you, where you're
Speaker 2: seeing the most activity, interest uptake on the clean fuel side.
Speaker 2: So Laura will start with you.
Speaker 3: Sure, well, it feels like a kind of funny time.
Speaker 3: So by way of background, we co founded ety fuel's
Speaker 3: green fuels developer a couple of years ago, and I
Speaker 3: remember when we did that, there was this huge buzz
Speaker 3: around hydrogen you know, we like to say that we
Speaker 3: co founded the company the day that Merce could come
Speaker 3: out with this big announcement, And there were all these
Speaker 3: projects and it was just this really exciting, optimistic time
Speaker 3: in the hydrogen space. And I think sort of two
Speaker 3: and a half years on, i'm much aged. But beyond that,
Speaker 3: I think on the supply side, you've seen a real shakeout.
Speaker 3: So you know, we as a developer would often get
Speaker 3: other developers coming to us saying, do you want to
Speaker 3: partner up or co invest or whatever. And I'd look
Speaker 3: at the projects and you'd see that someone maybe done
Speaker 3: an engineering study, or they got an option over a
Speaker 3: field that happened to be a bit sunny, but the.
Speaker 4: Projects were not robust.
Speaker 3: You know, the feedstock hadn't been secured, maybe the engineering
Speaker 3: hadn't been done at all, the TRL of the technology
Speaker 3: was a bit dodgy. But there was just this huge
Speaker 3: hype that was kind of providing this wave to all
Speaker 3: these on the supply side. And I think what you're
Speaker 3: seeing now is two years on, maybe people have got
Speaker 3: a bit of seed funding, but that's run out, and
Speaker 3: so you're really just seeing a bit of the wheat
Speaker 3: separating from the chaff on the supply side. On the
Speaker 3: demand side, it's also quite different. So obviously we're targeting
Speaker 3: the marine sector and a lot of discussion around, you know,
Speaker 3: demand signals, is anyone going to buy the fuel. The
Speaker 3: conversations that we're having, though are really also quite different
Speaker 3: to where they were two years ago. So whereas two
Speaker 3: years ago people were talking about, you know, I want
Speaker 3: to buy my green fuels, and the way I'll price
Speaker 3: them will be here's how much I play for a
Speaker 3: heavy fuel oil, and then I'll pay a bit for EUETS,
Speaker 3: and then I'll pay for debucks more just to be
Speaker 3: a good citizen. Right now, the conversations are either one
Speaker 3: of two one type of conversation with that let's just
Speaker 3: call them less sophisticated or less resource shipping companies. Is
Speaker 3: I'm dealing with the eu ETS, I'm being told it's
Speaker 3: leg it's biofuels, it's e methanol, it's ammonia. I have
Speaker 3: no idea what's going on, and quite frankly, it doesn't matter.
Speaker 3: I'll wait until twenty thirty somebody will figure out nuclear fusion.
Speaker 3: I'll be fine, and anyway, I'll just pass the whole
Speaker 3: thing onto my end customer. It's the one size fits
Speaker 3: or tax. We'll all deal with it together. The more
Speaker 3: sophisticated are doing a few things, so they are running
Speaker 3: the maths on fuel EU, which is bloody complicated regulation
Speaker 3: but actually does some amazing things to incentivize e fuels.
Speaker 4: So they're running the mass on that.
Speaker 3: They are waiting for IMO, and they are looking, at
Speaker 3: least in our space around this shortage of fuel supply
Speaker 3: where some people have done the maths on the lack
Speaker 3: of biofuels have not, and they are thinking about how
Speaker 3: they're going to secure their supply. But everyone's still kind
Speaker 3: of waiting because we haven't quite got there yet on IMO.
Speaker 4: So it's kind of a funny time.
Speaker 2: So those are quite big shifts on both the supply
Speaker 2: and demand picture. Chris, does that kind of line up
Speaker 2: with what you're seeing.
Speaker 5: I think there's a consistency of you there. But first
Speaker 5: of all, thank you for the opportunity to be here,
Speaker 5: particularly as a very young company.
Speaker 6: We might be a young company.
Speaker 5: C two x our roots and is a company with
Speaker 5: one hundred and twenty year history, and that's mrsk On
Speaker 5: the shipping company.
Speaker 6: You know.
Speaker 5: Interestingly, we heard yesterday afternoon and one of the panels
Speaker 5: you're talking about, you know, a lot of it is
Speaker 5: driven by supply. We're very much as a company. It
Speaker 5: came from the demand musk. We're making the commitments to
Speaker 5: to green methanol container vessels and needed to assure that
Speaker 5: the supply was in place. And you know we were
Speaker 5: spun out about a year ago is away per by
Speaker 5: ap Mala Holdings and twenty percent now a ap mil
Speaker 5: a MRSK. But being driven actually by a customer on
Speaker 5: setting this up. It meant we were coming in at
Speaker 5: this technology agnostic. So you know, there's a lot of
Speaker 5: work being done over the last year or two to
Speaker 5: try and think through the most competitive pathways to producing
Speaker 5: green methanol. And I think for me that's really where
Speaker 5: the interest is in particular, you know, Lara's describing the
Speaker 5: more sophisticated customers who are really beginning to understand this
Speaker 5: is we need to demonstrate we can be competitive, and
Speaker 5: we're driven by one of our chahlders is very focused
Speaker 5: on that this is a highly competitive industry. Someone was
Speaker 5: saying to me yesterday pointing out they're harder to debate
Speaker 5: sexors are those with some of the thinnest margins and
Speaker 5: the customers are very sensitive and authorship shift a container
Speaker 5: from one shipping line to another if those rates change,
Speaker 5: so they're very cost focus. So we had to make
Speaker 5: sure we were building the most competitive pathways. So that's
Speaker 5: what we're getting in our interests is by demonstrating that
Speaker 5: we do have those pathways. Now we've gone down a
Speaker 5: route initially, we've we've got three projects Egypt, Spain, but
Speaker 5: our focus at the moment is on us and looking
Speaker 5: at the gasification of biomass, which we see as being
Speaker 5: one of the best pathways. It's a well proven technology
Speaker 5: in other services and we are now seeing some of
Speaker 5: the cost space to produce methanol that way. Now, the
Speaker 5: interesting thing is we look at it. We've gone for methanol.
Speaker 5: It is driven by shipping and that's where a lot
Speaker 5: of the conversation is today. But methanol has a big advantage.
Speaker 5: It is a pathway whether it's into the chemical sectors,
Speaker 5: and we do expect it in a similar way for
Speaker 5: sort of landstect to play into the sustainable aviation fuels
Speaker 5: on the methanol to jet in a later stage. But
Speaker 5: the conversation as well, we're having this, how do you
Speaker 5: get these projects off the ground? How do you get
Speaker 5: these commitments of the ground, Because all of these projects
Speaker 5: depend on long term commitments.
Speaker 6: So a lot of our conversation on where's the right right.
Speaker 5: Price point to actually make those commitments, which is going
Speaker 5: to get those projects off the ground and get those
Speaker 5: products off the ground at scale because scale is going
Speaker 5: to be important to keep in those costloads. There's a
Speaker 5: real sort of tension here to actually to originate those projects.
Speaker 2: So yeah, even when you feel like you've identified the
Speaker 2: right pathway, that that's only the start of the journey,
Speaker 2: and it's a start, yeah for it. I want to
Speaker 2: come to you on that. What are you seeing right now?
Speaker 7: Well, I think one of the things too, I'm sort
Speaker 7: of reflecting back what it was like sort of ten
Speaker 7: plus years ago and what it's like today. And I
Speaker 7: think back to some events where they were investors coming
Speaker 7: to see technology producers and we literally had to bribe
Speaker 7: people to come into the room who were doing fuels
Speaker 7: because everyone wanted to talk about solar and wind. Nobody
Speaker 7: was interested to yours because everyone was terrified after clean
Speaker 7: Take one point zero and they're like, oh god, no,
Speaker 7: don't want to go there. Fast forward to today, everybody, No,
Speaker 7: I'm not being disparaging to marine, but SAFF is the
Speaker 7: sexy fuel. Everybody's talking about saf We love marine and
Speaker 7: we're working on marine as well, but everybody comes to
Speaker 7: us wanting to talk about SAFF. And so sustainable aviation
Speaker 7: fuel has had the most incredible rise in attention that
Speaker 7: we've ever seen. But I think we still have a
Speaker 7: problem in that we're still looking at one sort of
Speaker 7: silver bullet hope, one solution.
Speaker 2: And.
Speaker 7: To the point of finding the right pathway, there are
Speaker 7: lots of right pathways and so today, unfortunately, there are
Speaker 7: still sort of focuses, either from the investor community or
Speaker 7: from a policy standpoint, that we're really focusing on single
Speaker 7: solutions when there are no single solutions. There are lots
Speaker 7: of solutions, And there is a slight realization coming now
Speaker 7: because you're having these broader discussions going, hey, it's not
Speaker 7: just fisher trops technology.
Speaker 6: There's alcohol to jet.
Speaker 7: Yes, Heifer's probably king right now, but that will transition
Speaker 7: as more pathways sort of scale up. So it's really
Speaker 7: interesting to see that there is more interest in fuels today,
Speaker 7: but there's still this kind of focus on trying to
Speaker 7: find a winner, and if we do.
Speaker 2: That, we're all going to lose. That's really interesting that
Speaker 2: you bring up sort of cleantech one point zero. I
Speaker 2: started out my career in biofuels early two thousands, and yeah,
Speaker 2: there was this huge amount of interesting time time straight
Speaker 2: down shortly after that. So a lot of people got burned,
Speaker 2: and that reverberated for quite a while. Let's stay on
Speaker 2: this pathway discussion a bit, because I understand that, as
Speaker 2: you say, there's many different pathways, many of them are viable.
Speaker 2: But at the same time, you've got to put a
Speaker 2: stake in the ground and you have to do something,
Speaker 2: and you have to get investors on board. And so
Speaker 2: how do you manage that tension between saying, yeah, there's
Speaker 2: these different pathways and there's lots of different things we
Speaker 2: can do with we have to do something now, Laura.
Speaker 3: I mean, maybe I don't think this is a controversial
Speaker 3: statement to say, I don't think there are maybe rephrase,
Speaker 3: there aren't.
Speaker 4: That many end states.
Speaker 3: The end state has to be e fuels, and the
Speaker 3: simple reason is fussiled and decarbonize and bifuels are in
Speaker 3: short supply, right, so we can talk about the pathways
Speaker 3: and whether it's energy or biofuels. But in my personal,
Speaker 3: completely unbiased opinion, they're all just really faffing around.
Speaker 4: Because the end of to day it has to be
Speaker 4: e fuels.
Speaker 3: That's the only way you get the scale on the
Speaker 3: decarbonization you need, right and so you know, two percent decarbonization,
Speaker 3: six percent here or there. Really what we need to
Speaker 3: focus on is how do we get the e fuels
Speaker 3: up and running as quickly as possible. And my view
Speaker 3: on that is there's really two things. One is, of course,
Speaker 3: we need the demand signals. We need the off takers.
Speaker 3: You know, as Frey has said, it's already happening in
Speaker 3: saf and you can sort of see the explosion in
Speaker 3: terms of the investment pouring into that sector.
Speaker 4: In marine.
Speaker 3: I mean bluntly, it will happen because the fuely you
Speaker 3: maritime legislation is already incredibly incentivizing for ethuels. I know
Speaker 3: this sounds ridiculous. People have not done the matter yet.
Speaker 3: When they do the math and they figured out how
Speaker 3: to actually put that into contracts, that will incent ethuels.
Speaker 3: One of the issues I think though, in the e
Speaker 3: fuel space is that often the developers are approaching it
Speaker 3: the wrong way. So when we started the business, i'd
Speaker 3: sort of I mean just by way of careers, so
Speaker 3: I'd done a lot of stuff in finance, banking, pe
Speaker 3: hedge fund. I then spent most of my career in
Speaker 3: the commodities industry, and I was sick of commodities because
Speaker 3: all we were doing for ten years was five percent
Speaker 3: cost reduction, doing the same thing that we've been doing,
Speaker 3: and it just got boring.
Speaker 4: So I went to Google and I was like, I'm
Speaker 4: done with this. I'm going to go and sell advertising.
Speaker 3: But I guess the learning from my journey is if
Speaker 3: you want to win in the commodity space, the only
Speaker 3: thing that matters is where you are on the cost
Speaker 3: curve and do you have scale. And so we actually
Speaker 3: didn't necessarily come at this from how do we get
Speaker 3: a green hydrogen productup and running. I knew nothing about hydrogen.
Speaker 3: We just came at this and thought, how do you
Speaker 3: produce e fuels in the absolute cheapest way? And really,
Speaker 3: all you know the way you do things cheaply in
Speaker 3: commodities you find the cheapest feed dark or the best resource.
Speaker 3: And so I think one of the challenges has been
Speaker 3: much of the innovation in the space has happened in
Speaker 3: places that are not particularly cost effective to produce e fuels,
Speaker 3: So you know, it's an amazing pioneering work. For example,
Speaker 3: that it's not particularly a sunny or windy place. And
Speaker 3: so I think, you know, as Chris has sort of said,
Speaker 3: the regions now where people are focusing the US, Egypt,
Speaker 3: these are much more cost effective places to produce the fuels,
Speaker 3: and I think that will actually help us get some
Speaker 3: more traction.
Speaker 2: I'm going to come back to the cost curve part,
Speaker 2: but Chris, do you want to weigh in on that,
Speaker 2: On that same question of sort of tension between pathways
Speaker 2: and doing something now.
Speaker 5: The first thing to say is I fully agree with
Speaker 5: what Freyer said. There isn't a silver bullet out here,
Speaker 5: you know, and it is a transition for the industry.
Speaker 5: I mean, it takes shipping. It has been one fuel
Speaker 5: for most of those years until I was involved putting
Speaker 5: energy in the ships in my shoulders ten.
Speaker 6: Twelve years ago. But before that there really wasn't a
Speaker 6: fuel choice.
Speaker 5: It was fuel, and I think we're now in a
Speaker 5: world where there are multiple fuels that will go into
Speaker 5: whether it's pathways, into aviation, or whether it is into
Speaker 5: the marine sector.
Speaker 6: But you know, I think for companies.
Speaker 5: Such as ourselves, yeah, the focus is important whilst we
Speaker 5: have options and we you know, I would say it's
Speaker 5: pathways for us on the methanol into two different sort
Speaker 5: of markets, which is a good set of options to have.
Speaker 5: But you know, we have some options. Our project in
Speaker 5: Egypt is around e methanol by going through gasification, you
Speaker 5: actually have some options because of the imbalance of the
Speaker 5: carbon dioxide and the hydrogen and the sincastream. So we
Speaker 5: sequestraight biogenic carbon and generate BEX or we can add
Speaker 5: green hydrogen into that to create a combination of biomethanol
Speaker 5: and emethanol. So we have some options. So we do
Speaker 5: have some options on the pathways there. But I think
Speaker 5: this cost point is we've got absolutely clear that we've
Speaker 5: got to hit the right cost points for the customers.
Speaker 5: You know, lots of people say it's all down to subsidies. Well,
Speaker 5: it's a lot easier to have those conversations if you're
Speaker 5: at the right cost point on the cost curve, and
Speaker 5: so we've been very very focused on that, on meeting
Speaker 5: the customers needs. We're not pushing a technology. We're not
Speaker 5: pushing a location. We're we're trying to.
Speaker 6: Find the roots which actually solve for the customer's needs.
Speaker 2: Yeah, and I mean, Freya, let's talk a bit about
Speaker 2: Lends of Jet and what for the people who are
Speaker 2: not aware Alcohol to jet technology plants up and running
Speaker 2: and invest taken on external investment as well. Tell us
Speaker 2: a bit about that journey in building that up, because
Speaker 2: you've been at Lens of Tech since the beginning and
Speaker 2: that's a more recent part of the business sort of
Speaker 2: spun out. How has that gone.
Speaker 7: Yeah, so you know, we spun out Lands of Jet
Speaker 7: in twenty twenty, probably the worst time to spin out
Speaker 7: an aviation furel company, but we structured it with a
Speaker 7: sort of an interesting investment opportunity for the investors to
Speaker 7: sort of invest in early and then we build the
Speaker 7: demo and then there'd be a sort of cash call
Speaker 7: so we could move forward in a faster way. We
Speaker 7: can really show how we can accelerate the scale up
Speaker 7: of the Alcoulta jet process. But again it comes down
Speaker 7: to the off takes, the long term agreements, but also
Speaker 7: the environment that you're producing the fuel in. So to
Speaker 7: Lara's point on the you know, having policies that can
Speaker 7: create incentives. You know, the US is an attractive location
Speaker 7: for SAFF producers with the blenders tax credit. You know,
Speaker 7: provisions made in the IRA for certain carbon utilization technologies
Speaker 7: still not given as much money as ccs, but that's
Speaker 7: a different discussion. You know, these are the things that
Speaker 7: support that kind of scale up. So you know, sadly,
Speaker 7: you know, I'm talking to you in a week where
Speaker 7: we're getting the second massive hurricane hitting that part of
Speaker 7: the US and the area where our facility has been
Speaker 7: hit really badly by Helene over the last couple of weeks,
Speaker 7: and so there's a lot of cleanup and devas station
Speaker 7: in the community. So our focus right now is not
Speaker 7: on the operating of the facility but just you know,
Speaker 7: getting the community back on its feet. But you know,
Speaker 7: I know we don't often talk about climate change. You know,
Speaker 7: in these environments we're all we all know what's going on.
Speaker 7: But I mean, this is if we look at it
Speaker 7: from an energy transition perspective, and this is another massive
Speaker 7: climate event. And if any of you saw the pictures
Speaker 7: from the space station last night, I mean it looked
Speaker 7: like the beginning of a disaster. Movie, you know, but
Speaker 7: it's real and it's happening, and it's impacting not just
Speaker 7: lives and communities, but also the technologies that are building
Speaker 7: the energy transition.
Speaker 4: You know, first time i'd really.
Speaker 7: Learned about the courts, mining and the Appalachians, which is
Speaker 7: so important for chips, you know. So we've got to
Speaker 7: think about the broader picture, not just how we're going
Speaker 7: to meet our targets, because I mean, that ship's almost
Speaker 7: sailed for the industry, but how we're going to stop
Speaker 7: these massively devastating events happening again and again.
Speaker 2: It's a good reminder that none of this stuff is abstract.
Speaker 2: It's getting very, very real, and as John our CEO
Speaker 2: said in the opener yesterday, we're sort of midway through
Speaker 2: this decisive decade and some of this stuff really has
Speaker 2: to pick up quickly. I want to just stay for
Speaker 2: a second on corporate structure. Because Chris owned your C
Speaker 2: two X, owned by am A. Miller is the largest
Speaker 2: shareholder lands of jet spun out.
Speaker 4: What what what?
Speaker 2: What were the advantages and what was the decision process
Speaker 2: in treating those as separate entities rather than just keeping
Speaker 2: them as part of the parent.
Speaker 5: Happy to take it I think it's it's one of focus,
Speaker 5: skill set and a breadth of customer base. You know,
Speaker 5: I think we've I probably would say this, but I
Speaker 5: think we've got a good balance. We call that support
Speaker 5: from a very strong corporate and a customer but we've
Speaker 5: you know, separately, we're building up a capability and we're
Speaker 5: focused and I think Mark has been a very innovative
Speaker 5: company over the years. The parent Apemal Holdings are major parent.
Speaker 5: You're supporting a lot of growth projects in different businesses.
Speaker 5: They announced last week, you know, a method of green
Speaker 5: methano or to plastics.
Speaker 6: Business for example.
Speaker 5: So we've got that support and we've got that commitment
Speaker 5: to the transition there. But we've got that focus and
Speaker 5: the ability to operate more entrepreneurially, much more as a
Speaker 5: sort of startup type theme, but with a slight sort
Speaker 5: of corporate overpinning and support. So there's a balance there
Speaker 5: to I think bring in some of that capability and
Speaker 5: we may work with other investors over time as you
Speaker 5: know as well. And we're not just focused you know
Speaker 5: now on sort of one customer. We've broadened our base.
Speaker 5: We're thinking about those other pathways, other marine customers, other
Speaker 5: sectorial customers and beginning to think, you know, longer term
Speaker 5: and you know, methanol to jet a different alcohol to jet.
Speaker 2: And for any other comment on just the decision to
Speaker 2: make that a separate spine.
Speaker 7: Echoing Chris's thoughts on the skills side, I mean, Lansa
Speaker 7: Jet was really focused on the aviation sector and while
Speaker 7: we've got a great team with sort of history of
Speaker 7: working in the space, we really wanted to hire into
Speaker 7: this entity, you know, the skills to scale it. And
Speaker 7: you know, Lanser Tech is building facilities around the world
Speaker 7: to get the feedstock. So in our case alcohol ethanol,
Speaker 7: you know, a low cost as I said, is you know,
Speaker 7: got to have a low cost feedstock, especially for something
Speaker 7: like jet fuel. And you know we're focused on that side.
Speaker 7: So Lansa Jet is focused on that second part, the
Speaker 7: conversion from the ethanol to the jet fuel. And again
Speaker 7: the attracting investment into bad entity. And we were talking backstage.
Speaker 7: I mean Chris was actually involved back in the day
Speaker 7: in its shell days, as we're part of one of
Speaker 7: those investors Interjet. It's one big happy family in this space.
Speaker 2: Lo's of crossover. Laura, I want to you mentioned sort
Speaker 2: of the lower cost and your commodity background coming in
Speaker 2: and just being like that is the critical thing when
Speaker 2: you look at coming back to this pathways question, sometimes
Speaker 2: when we've looked at the economics of some of the
Speaker 2: things for both shipping and aviation, there's also this question
Speaker 2: of whether some sort of book and credit system with
Speaker 2: VEX or CCS or director capture might be more competitive
Speaker 2: in the long term than the fuels. I don't know
Speaker 2: what's your what's your view on that.
Speaker 3: I guess yeah, I mean there's a lot of space
Speaker 3: between now and the long term, right, and I mean
Speaker 3: I'm hoping to be retired in the long term, So
Speaker 3: I guess the way I see it, right is there's
Speaker 3: actually a disconnect between what people think they need to
Speaker 3: do now. I want to say people the shipping industry
Speaker 3: does go with that what they think they need to
Speaker 3: do now, what they actually need to do in the
Speaker 3: relatively short term.
Speaker 4: Maybe to talk to that.
Speaker 3: So, you know, I don't know if Chris would agree,
Speaker 3: but I get the sense that most whether it's aviation
Speaker 3: or marine, what they're doing now is kind of let's
Speaker 3: do some stuff that looks good, doesn't cost us too much,
Speaker 3: and we'll deal with this by twenty thirty five. Reality
Speaker 3: is they kind of need to act by twenty thirty
Speaker 3: to meet their targets.
Speaker 4: And I'll talk about that in a second.
Speaker 3: Now, if you're in a world in twenty thirty where
Speaker 3: you've got six percent, you know, in marine you've got
Speaker 3: a six percent carbon intensity reduction target in twenty thirty,
Speaker 3: you cannot do that with energy because you basically have
Speaker 3: to replace out half of your half of your fleet
Speaker 3: almost to do that. You can't do that with bi fuels,
Speaker 3: and I'll talk about why, and so you have to
Speaker 3: do that with V fuels E fuels projects take I
Speaker 3: think the panelist said, or any guy said three to
Speaker 3: five years.
Speaker 4: It's not three to five years, it's six years.
Speaker 3: Six She has minimum in Texas, which is one of
Speaker 3: the best places in the world to do business. And
Speaker 3: so what that means is if you want to secure
Speaker 3: your supply in twenty thirty, you have.
Speaker 4: To be acting now.
Speaker 3: And most in the shipping industry are not drawing those
Speaker 3: dots together and maybe to sort of put some numbers
Speaker 3: to that, right. So one of the things I that
Speaker 3: I the shipping industry loves to do is to talk
Speaker 3: about the flavor of the month. You know, people wake
Speaker 3: up and there's a new podcast and now we're all
Speaker 3: doing LNG. And then you wake up next month and
Speaker 3: it's biofuels is where the future?
Speaker 4: And then you know ammonia.
Speaker 3: And the reality is when you look at the landscape,
Speaker 3: ammonia is not ready for twenty thirty. If shipping was
Speaker 3: to meet it's IMO targets for twenty thirty using biofuels,
Speaker 3: the numbers are just baffling, right, So you'd have to
Speaker 3: go from a world where shipping today uses about zero
Speaker 3: point two zero point three percent of the.
Speaker 4: World's global biofuels to.
Speaker 3: Meet the low end of what the im I was
Speaker 3: talking about by twenty thirty, you'd have to see that
Speaker 3: go from about zero point two zero point three percent
Speaker 3: to sixty percent of the world's global biofuels. I mean,
Speaker 3: you guys have the data, so you know that right
Speaker 3: that is never going to happen. And then, like I said,
Speaker 3: with LNG again, you do the mass. You look at
Speaker 3: the data to decarbonize an entire fleet by six percent,
Speaker 3: Each LG gives you fifteen percent. So you do the
Speaker 3: mask and you're like, okay, how do I get six
Speaker 3: percent if I've got a fleet of one hundred ships,
Speaker 3: fifteen percent, you've got to move forty of those ships
Speaker 3: onto LNG.
Speaker 6: It's huge.
Speaker 4: And that's by twenty thirty.
Speaker 3: So I think this point around what are we're doing
Speaker 3: in you know, twenty fifteen net zero is great, but
Speaker 3: the industry is going to have some real penalties to
Speaker 3: pay in twenty thirty. And the other bit that I
Speaker 3: think people aren't realizing is, at least you know, in
Speaker 3: the in the maritime space, the legislation is not one
Speaker 3: size fits all. The legislation incentivizes first movers and penalizes
Speaker 3: those who are late. So my expectation is that by
Speaker 3: twenty thirty you'll see real disruption in terms of the
Speaker 3: haves who have prepared and the have nots who have not.
Speaker 3: And you know, I think what we do in twenty
Speaker 3: fifty is kind of it's kind of neither here nor there.
Speaker 4: We have to do stuff now.
Speaker 2: Yeah, this gets the sort of challenge between decision windows
Speaker 2: and impact windows and long asset lives in these sector sectors. Chris,
Speaker 2: what do you think of that kind of same topic
Speaker 2: around book and credit versus implementing things now, yeah, that's there.
Speaker 5: I think it comes back a little bit to sort
Speaker 5: of Forez, but there isn't one pathway, so I think
Speaker 5: offsets will play a role. And I've certainly heard the
Speaker 5: same conversations about the aviation sector. I mean interestingly, as
Speaker 5: a project we can generate some of those high quality
Speaker 5: technical credits. But I think Lara's point on lee time
Speaker 5: is a really important thing. And we just talk about
Speaker 5: L and G, but I was involved when do we
Speaker 5: started twenty twelve twenty thirteen on the shel days of
Speaker 5: putting LERG into ships, And there's a whole lot of
Speaker 5: chickens and eggs running around, the eggs not running around,
Speaker 5: the chickens running.
Speaker 6: Around and.
Speaker 5: Or what comes first. And as a company, Shell could
Speaker 5: take that decision. It invested in break bonk facilities and
Speaker 5: in Rotterdam and a bunker barge, but it had the
Speaker 5: LNG portfolio to stand behind that and deliver that, and
Speaker 5: it took a number of years for that to really
Speaker 5: take off. And if it hadn't been for those first moves,
Speaker 5: we wouldn't probably be talking about Ellergy in the shipping sector.
Speaker 5: So this this sleetime is important. It is important. On
Speaker 5: the facilities, it is a minimum probably of six years
Speaker 5: to get project off the ground, possibly longer, and it
Speaker 5: is and is a challenge for our customers on the
Speaker 5: shipping side as well to make the decisions. It's a
Speaker 5: it's a big bit of whether you go down to
Speaker 5: ammonia ship, do we commit on an energy ship? Is
Speaker 5: the energy ship method already? What's is the engine technology there,
Speaker 5: the bunkering facilities, you're there. So there's a lot of
Speaker 5: things which actually have to come together to make this work.
Speaker 6: So credits may bridge some of this.
Speaker 5: It's probably it's not going to be the silver bullet,
Speaker 5: like anything else is not going to be the silver bullet,
Speaker 5: but this timeline is important. We are almost too late
Speaker 5: for twenty thirty now.
Speaker 2: Yeah, it sounds like similar similar views to what Laura
Speaker 2: was saying. For any thoughts on the same topic.
Speaker 7: Well, I mean credit only to take you so far.
Speaker 7: I mean, you've got there's so much fuel to replace,
Speaker 7: and I know we're just talking about fuels, but let's
Speaker 7: you know, there's chemicals that need to be replaced as well.
Speaker 7: So you know, if we're looking at we actually need
Speaker 7: to make the transition and keep fossil in the ground.
Speaker 7: That's you know, the key part of the transition. We
Speaker 7: need to start making stuff. You know, we can't just
Speaker 7: make it go away by buying a credit. There's a
Speaker 7: place for credits and quality offsets, and that's a whole
Speaker 7: nother discussion. But we actually need fuels, we need chemicals,
Speaker 7: and we need them to be done in a different
Speaker 7: way to the way they're done today.
Speaker 2: I want to shift yours have been and ask there's
Speaker 2: a lot of investors in the room, and I want
Speaker 2: to ask what you're hearing each of you is hearing
Speaker 2: from investors when you're when you're pitching right now, you
Speaker 2: spend time in front of investors and you're pitching projects
Speaker 2: or or raising rounds. What are you hearing and kind
Speaker 2: of how has that changed over the last few years.
Speaker 2: You hinted at the beginning about how it's a world
Speaker 2: of difference versus five years being five years ago being
Speaker 2: in a back room somewhere that no one wanted to
Speaker 2: come to, versus now. But maybe we'll start here, Laura,
Speaker 2: and then work our way down around what you're hearing
Speaker 2: from investment.
Speaker 7: Yeah.
Speaker 3: I mean so, I've often wondered if there was a
Speaker 3: way to go long emethanol without having to do this
Speaker 3: job like how would I do it something that's just
Speaker 3: a bit less hiring. And I think I've sat on
Speaker 3: the other side most of my life where I've had
Speaker 3: the checkbook and given it out, And I think the
Speaker 3: thing that's interesting on the investment side is this. So
Speaker 3: what Freya said about SAF being the sexy thing, right,
Speaker 3: that is absolutely where investors' mindsets her up right, And
Speaker 3: so I'm sure Chris doing the same. Right, We're all
Speaker 3: talking a great game on methanol to jet. It's not
Speaker 3: even a STM certified. It will be, and that's all fine,
Speaker 3: But the reality is people want to go into the
Speaker 3: SAFA space and the reason is they look at the
Speaker 3: headline on the regulation and they say, oh, there's quotas
Speaker 3: for ethuels in SAF there's real penalties, whereas Marinia you
Speaker 3: haven't got actual quotas for ethiels. Most of them, like
Speaker 3: ninety nine at nine percent, have not actually looked at
Speaker 3: the marine legislation and done the back calculation, which is
Speaker 3: that you cannot meet twenty thirty targets where there are
Speaker 3: punitive penalties, you cannot meet those without a substantive portion
Speaker 3: of e fields. So this whole thing about SAF having
Speaker 3: binding quotas. I think it's a bit of a meme,
Speaker 3: but that's kind of where the investment community is at.
Speaker 3: The Second thing, and this, I think is more of
Speaker 3: a valid point, is investors are saying, unless you've got
Speaker 3: a revenue line, what kind of a business are you?
Speaker 3: And I think there's been a lot of kind of
Speaker 3: you know, a lot of sort of lack of robust
Speaker 3: projects in the pipeline that didn't actually have the feedstock
Speaker 3: or you know, a good cost model, and so that's
Speaker 3: kind of clouded the whole space and people are shying
Speaker 3: away and saying, I can't really assess which of these
Speaker 3: projects is actually good from a sort of project development perspective.
Speaker 3: There is no revenue line because the shipping companies aren't
Speaker 3: signing long term off take and so I'm just going
Speaker 3: to stay out of space until someone figures it out.
Speaker 3: And I think the challenge on the off take side
Speaker 3: is I joke about this with some of my old
Speaker 3: colleagues who still have, you know, stable jobs at Rio Tinto.
Speaker 3: One of the jobs I used to have was I
Speaker 3: was in charge of setting the procurement policy and risk
Speaker 3: management for our freight and and our bunker. And I
Speaker 3: would literally spend all of my days telling people not
Speaker 3: to take positions no fixed prices. We've got to retain
Speaker 3: our exposure in line with the market. And the real
Speaker 3: challenge is the risk exposure for these procurement teams has
Speaker 3: fundamentally changed and they haven't adapted their procurement strategies to
Speaker 3: deal with that. And so until we sort of see
Speaker 3: all of the regulation play into procurement strategies, the investment
Speaker 3: community won't move.
Speaker 2: Chris any thoughts on that. On the same question about
Speaker 2: investors and how that conversation is changing.
Speaker 5: I think, I mean, it does come down to some
Speaker 5: of the fundamentals. Who's the customer, who's underwriting in the
Speaker 5: long term contracts, on the revenue SAR, the feedstock, the
Speaker 5: quality of the project execution, where you sit on the
Speaker 5: cost curve is really important. And all of these things,
Speaker 5: by the way, are not mutually exclusive. Of course, the
Speaker 5: quality of the teams and the capabilities and the experience
Speaker 5: of the teams is very important. But the other thing
Speaker 5: I would add, and it plays into this pathways point,
Speaker 5: is focus is focus on what you need to deliver.
Speaker 5: Getting that first project off the ground is really important.
Speaker 5: You know, you may have growth you know, you need
Speaker 5: to demonstrate you've got a view on growth, but you
Speaker 5: don't get that right to growth unless you deliver those
Speaker 5: first projects and take the time to set those up appropriately.
Speaker 5: But once you're there and you get some of the
Speaker 5: support there, that offers a platform of growth. And I
Speaker 5: think the other piece that you know, I've seen this
Speaker 5: because I've sort of also been involved here over the
Speaker 5: last years and advising some funds on investments, is a
Speaker 5: focus on your what is the support are you really
Speaker 5: capturing some of those supports to just get over this
Speaker 5: sort of critical phase to get those contracts in at
Speaker 5: the right price points and get the projects off the
Speaker 5: ground and to get those fundamentals.
Speaker 2: There and free. I mean, you've seen this go from
Speaker 2: the full arc of early days at Landstech to now
Speaker 2: many years on with a very different stage of the
Speaker 2: commercial process. Where how have those conversations changed, particularly in
Speaker 2: the last two or three years.
Speaker 7: Well, I mean, I think you know, echo what the
Speaker 7: others said. You know, making money very important, but how
Speaker 7: do you know, if we backtrack, how do you make money.
Speaker 7: You've got to have off takes, You've got to be
Speaker 7: able to sell it at the right price and what's
Speaker 7: that dependent on. So just looking at the staff space,
Speaker 7: that's dependent on unfortunately policy, And I don't mean that
Speaker 7: you want to have a technology that's dependent on incentives
Speaker 7: and handouts.
Speaker 4: You don't want that.
Speaker 7: But you want to be able to sell your product
Speaker 7: at least, so you want to have a market that
Speaker 7: is going to help you know, the market environment where
Speaker 7: you can sell your staff or whatever type of fuel
Speaker 7: you have. And up until now that hasn't really existed.
Speaker 7: It's been incredibly unstable because of the sort of tumultuous
Speaker 7: time of biofuels excuse me one point zero. And then
Speaker 7: with SAFF in the UK, which is interestingly one of
Speaker 7: the more progressive countries in terms of their staff SAFF legislation,
Speaker 7: you know, investors were waiting to see what would happen
Speaker 7: with this so called revenue certainty mechanism, you know, in
Speaker 7: a SAFF mandate. And this has only just been sort
Speaker 7: of buttoned up in the last couple of months, so
Speaker 7: there was this incredible uncertainty. And looking at European legislation,
Speaker 7: I mean, I've been working on one policy in renewable
Speaker 7: energy for ten plus years, and what kind of investor
Speaker 7: is supposed to you know, be forthcoming. When policy is
Speaker 7: unstable and there's no clarity and the Commission is still
Speaker 7: putting out sort of FAQs about the policy frameworks because
Speaker 7: nobody really understands what it means or it's too vague,
Speaker 7: and until these things are kind of clear, investors are
Speaker 7: always going to have a challenge in knowing where to
Speaker 7: put their money. But luckily, in the saf space, a
Speaker 7: lot of that has you know, moved forward, but that
Speaker 7: is still a problem and it all comes down to
Speaker 7: how much money you're going to make. I mean it's
Speaker 7: pretty it's a pretty straightforward answer, but also the other
Speaker 7: things that what they're looking for.
Speaker 2: To on that policy runt. I mean, there's a lot
Speaker 2: of policy makers in the room. Is there any any
Speaker 2: of you have some requests you'd like to air to them?
Speaker 2: Grievances as well, if you'd like speed.
Speaker 4: Yeah.
Speaker 3: I mean I think policy makers and investors always get
Speaker 3: a bashing. You know, people complain that the regulation is
Speaker 3: not clear, the regulation has not been finalized. I mean
Speaker 3: the regulation will never be finalized by definition, right, I
Speaker 3: mean regulation evolved.
Speaker 4: I actually think the regulator is well done.
Speaker 3: Regulators, I think it's done a really good job today
Speaker 3: at least in Europe. And if the IMO, even on
Speaker 3: the low end of the targets, if the IMO comes
Speaker 3: out where people are talking about.
Speaker 4: Them coming out, that will be a real win.
Speaker 3: So I actually don't think the issue is necessarily policy makers.
Speaker 3: I think the issue is as fair I said, sometimes
Speaker 3: people actually have to understand what that policy means, and
Speaker 3: you know, help sheets and all that stuff, and the
Speaker 3: regulation is complicated, and I think if I sort of
Speaker 3: had a, you know, an ask for policymakers, I would say,
Speaker 3: we all know e fuels is going to be the
Speaker 3: end state.
Speaker 4: I mean, we can talk.
Speaker 3: About multi fuel pathways together, that's fine, but you know,
Speaker 3: really e fuels is the only way, as I've talked about,
Speaker 3: that you can decarbonize at scale. And so what I
Speaker 3: think would be incredibly helpful, and we've seen it in
Speaker 3: Staff as a great case study, is to have specific
Speaker 3: parts of the policy that very clearly call out ethuels. Now,
Speaker 3: we can get to the same place by having absolute
Speaker 3: emission and reduction targets that don't specify a pathway, but
Speaker 3: from an investor interpretation point of view, having those really
Speaker 3: clear signals, it's just night and day in terms of
Speaker 3: being able to move money into the sector.
Speaker 4: So that would be that'd be my ask.
Speaker 5: A Decho frays point on time and times not on
Speaker 5: our side from a transition. But I do keep a
Speaker 5: degree of optimism here. You know, I think we saw
Speaker 5: some positive moves, you know, on the IMO when they
Speaker 5: were meeting two weeks ago here in London. But I
Speaker 5: keep some optimism. You know, there was a reason you
Speaker 5: started talking about elergy and hipping. It wasn't actually really
Speaker 5: decarbonization ten twelve years ago.
Speaker 6: It was about emissions.
Speaker 5: It was about socks, it was about Knox, and it
Speaker 5: came because of the emission controller is the echos. And
Speaker 5: this was IMO legislation which has brought change, whether it's
Speaker 5: scrub as loads, sulfur fuels, et cetera. So you do
Speaker 5: see some of this come and when it comes, you
Speaker 5: get that change and furely you is actually an example
Speaker 5: of this is as Laras talks about. So I yes,
Speaker 5: it takes some time, but actually when it comes, it
Speaker 5: does lead to change. So I do keep some degree
Speaker 5: of optimism here. But the things that can support just
Speaker 5: getting over this first hurdle are also.
Speaker 2: Important as well for any other final requests for policymakers, ease, Yes.
Speaker 7: Don't let perfect be the enemy of the good. I mean, yes,
Speaker 7: end state Great, we've got to get there, or else
Speaker 7: we're totally screwed, and so speed things up.
Speaker 4: Let's move forward.
Speaker 7: And you know, using a sporting analogy, we don't just
Speaker 7: need the home runs to win. You need the singles
Speaker 7: and doubles. So you know, that's what's important on the
Speaker 7: policy side, to let things sort of move forward.
Speaker 2: Okay, I've got one more question. I'm going to ask
Speaker 2: just to quickly hopefully end on a bit more forward
Speaker 2: looking note. If you were to sort of look back,
Speaker 2: we're ten years into the future. What was obvious about
Speaker 2: clean fuels that isn't obvious now? So any sort of
Speaker 2: bold prediction you'd like to make there about what we're
Speaker 2: going to think was obvious but isn't now.
Speaker 3: I don't think it's particularly bold, but I will I'll
Speaker 3: put it out there.
Speaker 4: I think.
Speaker 3: I think people are underestimate how differentiating this legislation. I'd
Speaker 3: say this being all of the decarbonization type legislation, is
Speaker 3: going to be on customers.
Speaker 4: And what I mean by that is.
Speaker 3: We are entering a world where there are now U
Speaker 3: risk exposures. It's not just how much do I pay
Speaker 3: for my energy? And can I get the same energy
Speaker 3: price as everybody else? It is now, do I have
Speaker 3: access to that energy that is going to also give
Speaker 3: me decarbonization? Do I have security of supply on that
Speaker 3: for more than just six months? And do I have
Speaker 3: a good visibility on the chain of custoder as to
Speaker 3: where that energy has come from? And I think those
Speaker 3: are all things that are not relevant today but will
Speaker 3: become such differentiators for whether it's shipping or aviation or
Speaker 3: anyone else who has a punitive decarbonization target to meet.
Speaker 3: And I think when we roll forward to twenty thirty,
Speaker 3: which is for a lot of these sectors, the next
Speaker 3: kind of step up, we're going to see that play up.
Speaker 4: And I think a lot of companies.
Speaker 3: Will wake up not having prepared and be completely stung
Speaker 3: by that, and others will be sitting there basically raking
Speaker 3: in and actually making you have a lot of money
Speaker 3: out of decarbonization because they started early for that reason,
Speaker 3: as opposed to because they tried to do it to
Speaker 3: be good citizens.
Speaker 2: So very differentiated out comes.
Speaker 5: Chris quickly over, I think I'm going to keep it simple.
Speaker 5: I wish we'd started sooner.
Speaker 7: YEPA, we underestimated how much hydrogen we needed.
Speaker 2: Laura Chris Freya, thank you very much for sharing your
Speaker 2: expertise with us. I have a feeling this is a
Speaker 2: topic that we're going to continue to talk about more
Speaker 2: and more at our summits in the future. So to
Speaker 2: all of you, please join me in thanking our panelisties.
Speaker 1: Today's episode of Switched On was produced by Cam Gray
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