1 00:00:10,480 --> 00:00:14,960 Speaker 1: Hello, and welcome to another episode of the Odd Lots Podcast. 2 00:00:15,000 --> 00:00:19,640 Speaker 1: I'm Joe Wisenthal and I'm Tracy Hallaway. Tracy, have you 3 00:00:19,720 --> 00:00:25,480 Speaker 1: seen Tesla's chart lately? I have, actually, I think because 4 00:00:25,520 --> 00:00:28,640 Speaker 1: you tweeted it. Um it's it's a pretty crazy chart. 5 00:00:29,040 --> 00:00:32,879 Speaker 1: Do you know that, at this moment that we're recording this, 6 00:00:33,240 --> 00:00:36,680 Speaker 1: just this right precise moment, that if Tesla opens up 7 00:00:36,680 --> 00:00:39,200 Speaker 1: today where it's trading in the pre market, it could 8 00:00:39,200 --> 00:00:41,480 Speaker 1: be a one billion dollar company for the first time. 9 00:00:42,760 --> 00:00:45,680 Speaker 1: That's amazing considering, you know, just a few months ago 10 00:00:45,720 --> 00:00:49,080 Speaker 1: people were talking about Tesla actually going bankrupt, and of 11 00:00:49,120 --> 00:00:51,040 Speaker 1: course there are a lot of people out there who 12 00:00:51,120 --> 00:00:54,640 Speaker 1: still think that the company might go bankrupt. Did you 13 00:00:54,680 --> 00:00:58,120 Speaker 1: know that Tesla bonds are trading above par for the 14 00:00:58,160 --> 00:01:01,639 Speaker 1: first time since they were issued. I wasn't aware of that, 15 00:01:01,720 --> 00:01:03,960 Speaker 1: but I'm not surprised that you were on top of 16 00:01:04,319 --> 00:01:08,520 Speaker 1: the bond angle and following that, and that stocks are 17 00:01:08,840 --> 00:01:11,320 Speaker 1: I like stocks, they're just simple, they go open down, 18 00:01:11,360 --> 00:01:16,440 Speaker 1: you know. Well, together, we provide a holistic cross asset 19 00:01:16,959 --> 00:01:21,959 Speaker 1: overview of Tesla. So job. So that's obviously big news 20 00:01:22,160 --> 00:01:25,000 Speaker 1: in the world of electric vehicles. There was other also 21 00:01:25,040 --> 00:01:28,160 Speaker 1: another big thing in the world of sort of climate 22 00:01:28,280 --> 00:01:31,120 Speaker 1: and energy and renewables this week? Did you did you 23 00:01:31,120 --> 00:01:35,520 Speaker 1: happen to catch it? Would that be the launch of 24 00:01:35,560 --> 00:01:40,280 Speaker 1: something called green? Yeah, so exactly right. So are our 25 00:01:40,360 --> 00:01:44,679 Speaker 1: colleagues in within Bloomberg News have launched a new green vertical. 26 00:01:44,720 --> 00:01:48,080 Speaker 1: It's called Green. It's on Twitter at the handle at climate, 27 00:01:48,400 --> 00:01:52,760 Speaker 1: and it's a major endeavor to cover climate in a 28 00:01:52,760 --> 00:01:57,320 Speaker 1: whole new way all kinds of unique fresh data should 29 00:01:57,320 --> 00:02:00,440 Speaker 1: be a pretty interesting endeavor. Our colleague got Aaron rut Cough, 30 00:02:00,600 --> 00:02:04,120 Speaker 1: is launching that and it looks pretty cool. Yeah, there's 31 00:02:04,120 --> 00:02:06,960 Speaker 1: been a lot of great coverage already, and I'm particularly 32 00:02:07,000 --> 00:02:09,800 Speaker 1: interested to see us try to break down some of 33 00:02:09,840 --> 00:02:14,120 Speaker 1: the numbers and stats behind a lot of the I'm 34 00:02:14,120 --> 00:02:18,560 Speaker 1: going to say corporate pr guff behind environmentalism. I think 35 00:02:18,600 --> 00:02:22,359 Speaker 1: that's important. Yeah, I think it's important to exactly, as 36 00:02:22,400 --> 00:02:24,920 Speaker 1: you put it, break down the corporate pr guff. We 37 00:02:24,960 --> 00:02:28,360 Speaker 1: also happened to be uh this week. It's Davos week, 38 00:02:28,520 --> 00:02:31,639 Speaker 1: so it is certainly a very big week for corporate 39 00:02:31,639 --> 00:02:35,079 Speaker 1: pr around and say, yeah, it's a ball market in 40 00:02:35,200 --> 00:02:37,800 Speaker 1: guff this week, so it's kind of the perfect week 41 00:02:38,120 --> 00:02:44,280 Speaker 1: for us to do an episode, uh talking about climate, 42 00:02:44,960 --> 00:02:48,400 Speaker 1: renewable energy, electric vehicles, all of these things that are 43 00:02:48,400 --> 00:02:52,240 Speaker 1: suddenly the sort of confluence of things happening right now. Great, 44 00:02:52,440 --> 00:02:55,880 Speaker 1: I'm into it. So here's Uh, there's one one piece 45 00:02:55,880 --> 00:03:00,480 Speaker 1: of good news before we get into the the actual discussion, 46 00:03:00,520 --> 00:03:02,720 Speaker 1: which is that although there is a lot of corporate 47 00:03:02,720 --> 00:03:05,880 Speaker 1: pr guff, as you so eloquently put it, related to climate, 48 00:03:06,200 --> 00:03:09,240 Speaker 1: there are real things happening. And it's easy to be 49 00:03:09,280 --> 00:03:13,760 Speaker 1: cynical and say politicians aren't doing anything and business leaders 50 00:03:13,800 --> 00:03:16,639 Speaker 1: it's all just lip service and greenwashing and press releases 51 00:03:16,639 --> 00:03:20,760 Speaker 1: that sound good. But there is some good happening in 52 00:03:20,800 --> 00:03:23,120 Speaker 1: the world, and there's actually a lot of progress being 53 00:03:23,120 --> 00:03:27,880 Speaker 1: made on the transition to renewable fuels and renewable energy sources. 54 00:03:28,080 --> 00:03:31,360 Speaker 1: And that is what we're going to be talking about today. Great, 55 00:03:31,440 --> 00:03:33,680 Speaker 1: And this is why I think it's so important, by 56 00:03:33,720 --> 00:03:37,480 Speaker 1: the way, to identify the bad actors in this space, 57 00:03:37,560 --> 00:03:40,880 Speaker 1: because then you can actually find the things that are happening, 58 00:03:40,960 --> 00:03:43,920 Speaker 1: the companies that are changing their practices, the policies that 59 00:03:44,000 --> 00:03:47,720 Speaker 1: actually work around this and funnel more capital to them. 60 00:03:48,000 --> 00:03:51,920 Speaker 1: So this should be interesting. Yeah, absolutely, So, without further ado, 61 00:03:52,000 --> 00:03:55,240 Speaker 1: I want to bring in our guest for the week 62 00:03:55,360 --> 00:03:59,600 Speaker 1: or for the episode. He's Gregor McDonald. He is a journalist, 63 00:03:59,640 --> 00:04:02,320 Speaker 1: he is an analyst. He is the editor of the 64 00:04:02,360 --> 00:04:06,160 Speaker 1: Gregor Letter, which is a newsletter that everyone should subscribe to. 65 00:04:06,280 --> 00:04:09,760 Speaker 1: It's about the world of energy, both the sort of 66 00:04:09,760 --> 00:04:13,360 Speaker 1: conventional energy and the shift to renewables, published in many places. 67 00:04:13,720 --> 00:04:16,160 Speaker 1: And he has been tracking for as long as anyone 68 00:04:16,279 --> 00:04:20,880 Speaker 1: I can remember, the evolution of the world's energy balances 69 00:04:20,920 --> 00:04:23,920 Speaker 1: and the trends happening and what's driving the trends. And 70 00:04:24,200 --> 00:04:26,160 Speaker 1: we're going to be talking about to him about what 71 00:04:26,200 --> 00:04:28,599 Speaker 1: he sees. So Gregor McDonald, thank you very much for 72 00:04:28,640 --> 00:04:32,040 Speaker 1: joining us. Oh thanks Joe. It's great to be great 73 00:04:32,080 --> 00:04:34,600 Speaker 1: to be with you and Tracy today. Really look forward 74 00:04:34,640 --> 00:04:38,320 Speaker 1: to our chat. How long have you been following energy? 75 00:04:38,400 --> 00:04:41,080 Speaker 1: I mean I've been following your stuff on Twitter and 76 00:04:41,120 --> 00:04:45,400 Speaker 1: newsletters for years and years. What got you first looking 77 00:04:45,520 --> 00:04:49,479 Speaker 1: into this space and how and why? I lived in 78 00:04:49,560 --> 00:04:52,880 Speaker 1: London about twenty years ago, and that was written around 79 00:04:52,920 --> 00:04:55,240 Speaker 1: the time that the price of oil fell to about 80 00:04:55,279 --> 00:04:59,960 Speaker 1: ten dollars apparel. You may recall the the famous economy 81 00:05:00,040 --> 00:05:04,200 Speaker 1: this cover drowning in Oil. Yeah, I was living in London, 82 00:05:04,440 --> 00:05:07,039 Speaker 1: and um I was a writer and a teacher. I 83 00:05:07,120 --> 00:05:12,040 Speaker 1: was teaching poetry writing too children through a Royal Parks 84 00:05:12,160 --> 00:05:16,000 Speaker 1: education program. But you know, my educational background and my 85 00:05:16,120 --> 00:05:19,640 Speaker 1: family background had all been in finance, and I just 86 00:05:19,880 --> 00:05:23,080 Speaker 1: I couldn't I couldn't resist getting interested in why oil 87 00:05:23,160 --> 00:05:27,720 Speaker 1: was so cheap? Um and Um I began to research 88 00:05:27,800 --> 00:05:32,120 Speaker 1: that and started started writing about that, and that's how 89 00:05:32,160 --> 00:05:37,320 Speaker 1: I took my unexpected journey into energy. When did that 90 00:05:37,480 --> 00:05:41,680 Speaker 1: journey into I mean, I'm guessing that was traditional types 91 00:05:41,760 --> 00:05:45,159 Speaker 1: of energy twenty years ago. When did your interest in 92 00:05:45,240 --> 00:05:50,200 Speaker 1: energy sort of flip into alternative sources such as solar 93 00:05:50,400 --> 00:05:56,400 Speaker 1: or environmentally friendly energy generation methods. Right, So, around two 94 00:05:56,440 --> 00:06:00,600 Speaker 1: thousand six two thousand seven, the world felt like it 95 00:06:00,680 --> 00:06:05,120 Speaker 1: was in energy crisis, Part two because of the price 96 00:06:05,160 --> 00:06:09,880 Speaker 1: of oil. And I had a couple of people who 97 00:06:09,960 --> 00:06:15,480 Speaker 1: wanted to help me design portfolios to capture what was 98 00:06:15,520 --> 00:06:19,360 Speaker 1: about to happen in clean energy. And that was quite 99 00:06:19,360 --> 00:06:22,440 Speaker 1: a challenge because, as you may recall, clean tech or 100 00:06:22,680 --> 00:06:24,799 Speaker 1: or clean energy sort of had a had a little 101 00:06:24,839 --> 00:06:28,640 Speaker 1: mini bubble and bust in two thousand six through two 102 00:06:28,640 --> 00:06:31,680 Speaker 1: thousand nine as a result of the Great recession, but 103 00:06:31,800 --> 00:06:35,720 Speaker 1: I could see them doing a lot of research then 104 00:06:35,760 --> 00:06:38,800 Speaker 1: talking with experts in the field. I could see that 105 00:06:38,920 --> 00:06:41,280 Speaker 1: if the price of solar and if the price of 106 00:06:41,400 --> 00:06:45,279 Speaker 1: wind power were to ever get down to certain levels, 107 00:06:45,440 --> 00:06:49,000 Speaker 1: that it could be very transformative. And yeah, that's where 108 00:06:49,240 --> 00:06:52,800 Speaker 1: that's where we are today. So, as Tracy mentioned in 109 00:06:52,839 --> 00:06:57,159 Speaker 1: the beginning, this anything to do with renewables or clean 110 00:06:57,240 --> 00:07:01,600 Speaker 1: fuels is associated with a lot of corporate pr guff 111 00:07:01,800 --> 00:07:04,880 Speaker 1: And I'm sure you'd agree, And I based on knowing you, 112 00:07:04,960 --> 00:07:08,800 Speaker 1: I don't think you have tons of patients for sort 113 00:07:08,800 --> 00:07:12,600 Speaker 1: of lip service or sort of corporate green messages. But 114 00:07:12,640 --> 00:07:15,920 Speaker 1: you wrote a piece it was actually published in BuzzFeed 115 00:07:16,120 --> 00:07:19,840 Speaker 1: last year, and you've written on your newsletter that in 116 00:07:19,880 --> 00:07:23,960 Speaker 1: the real world there is a major transformation going on. 117 00:07:24,080 --> 00:07:26,040 Speaker 1: As you put it, there is kind of a green 118 00:07:26,080 --> 00:07:30,640 Speaker 1: new deal happening, even before we're seeing anything policy wise 119 00:07:30,680 --> 00:07:35,040 Speaker 1: really being put into plays. What what excites you? What 120 00:07:35,200 --> 00:07:37,720 Speaker 1: is this positive transformation that you're seeing look like on 121 00:07:37,760 --> 00:07:40,520 Speaker 1: a big sort of big picture level. Yeah, So, I 122 00:07:40,520 --> 00:07:43,600 Speaker 1: mean you're absolutely right, so that the energy transition really 123 00:07:43,680 --> 00:07:46,840 Speaker 1: kicks off in earnest at the start of the last decade, 124 00:07:46,840 --> 00:07:49,240 Speaker 1: around two thousand ten, it gets it, it gets a 125 00:07:50,320 --> 00:07:55,840 Speaker 1: a push from from policy, but then traditional learning curves 126 00:07:55,920 --> 00:07:59,360 Speaker 1: or the learning rate kicks in and as more as manufactured, 127 00:07:59,440 --> 00:08:02,360 Speaker 1: the cost of every of every unit of solar and 128 00:08:02,360 --> 00:08:07,080 Speaker 1: every new unit of wind drops. Unfortunately, we're still in 129 00:08:07,120 --> 00:08:10,040 Speaker 1: a period where a lot of people have they're sort 130 00:08:10,040 --> 00:08:13,360 Speaker 1: of anchored to that memory of the policy support, and 131 00:08:13,440 --> 00:08:17,760 Speaker 1: they're just gonna ware that we're departing the domain of 132 00:08:17,800 --> 00:08:22,480 Speaker 1: policy support. We have. We have utilities in the United 133 00:08:22,520 --> 00:08:27,720 Speaker 1: States that are running sophisticated software modeling programs. They're doing 134 00:08:28,120 --> 00:08:31,920 Speaker 1: Monte Carlo stimulations, if you will, and they're they're just 135 00:08:32,040 --> 00:08:36,199 Speaker 1: reviewing their entire portfolio, and they're they're discovering that they 136 00:08:36,200 --> 00:08:40,200 Speaker 1: can shut coal and build new wind, build new solar 137 00:08:40,240 --> 00:08:44,320 Speaker 1: and storage and actually save rate payers money. So, yeah, 138 00:08:44,360 --> 00:08:47,800 Speaker 1: my op ed last year in BuzzFeed was just trying 139 00:08:47,840 --> 00:08:52,120 Speaker 1: to explain to a sort of a broader audience that 140 00:08:52,240 --> 00:08:55,960 Speaker 1: there are really good things happening already, and you know, 141 00:08:56,040 --> 00:08:57,880 Speaker 1: with something like the Green New Deal, which I hope 142 00:08:57,920 --> 00:09:00,240 Speaker 1: we get to talk about a little bit more, I 143 00:09:00,320 --> 00:09:03,240 Speaker 1: was sort of, I was politely suggesting that the New 144 00:09:03,280 --> 00:09:06,199 Speaker 1: Green Deal doesn't need to get out a big sledge 145 00:09:06,200 --> 00:09:10,760 Speaker 1: hammer and hit something hard. The New Green Deal can 146 00:09:10,840 --> 00:09:15,840 Speaker 1: just really take advantage of the cost alignment and the 147 00:09:15,880 --> 00:09:20,160 Speaker 1: favorable cost curves that really give everything that's happening, you know, 148 00:09:20,200 --> 00:09:22,240 Speaker 1: sort of its own wind at its own back. At 149 00:09:22,240 --> 00:09:25,880 Speaker 1: this point, can you give some examples of those cost curves, 150 00:09:25,920 --> 00:09:28,040 Speaker 1: because I think when a lot of people think about 151 00:09:28,200 --> 00:09:32,280 Speaker 1: the transition to clean energy, they start thinking that it's 152 00:09:32,360 --> 00:09:35,120 Speaker 1: very expensive and we're going to have to replace all 153 00:09:35,120 --> 00:09:38,640 Speaker 1: our old power generators with something new, and we just 154 00:09:38,800 --> 00:09:40,840 Speaker 1: don't have enough money for that. So if you could 155 00:09:40,840 --> 00:09:45,480 Speaker 1: explain exactly how costs are changing, that would be interesting. 156 00:09:45,920 --> 00:09:48,760 Speaker 1: So at one point in time, you might have thought 157 00:09:48,800 --> 00:09:51,959 Speaker 1: the main determinant of what it costs to run a 158 00:09:51,960 --> 00:09:55,959 Speaker 1: coal fired power plant would be the price of coal, 159 00:09:56,240 --> 00:09:58,679 Speaker 1: and that was true at one time. That's why China 160 00:09:58,720 --> 00:10:01,640 Speaker 1: built a lot of coal starting in the late nineties. 161 00:10:01,679 --> 00:10:03,920 Speaker 1: That's how we sort of got a coal two point 162 00:10:04,000 --> 00:10:07,880 Speaker 1: oh globally because the price of coal is cheap and 163 00:10:08,000 --> 00:10:10,480 Speaker 1: China could build a lot of coal fired power plants. 164 00:10:11,320 --> 00:10:15,080 Speaker 1: As it turns out, the main cost of coal is 165 00:10:15,120 --> 00:10:19,679 Speaker 1: the infrastructure and the supply chain and the maintenance and 166 00:10:19,840 --> 00:10:24,080 Speaker 1: the operational cost. Right now, coal is very cheap right now, 167 00:10:24,160 --> 00:10:27,520 Speaker 1: but that doesn't make coal power cheap now alone. Comes 168 00:10:28,600 --> 00:10:32,840 Speaker 1: clean energy. Wind and solar, and the sort of the 169 00:10:32,960 --> 00:10:36,800 Speaker 1: very nature or the very soul of wind and solar 170 00:10:36,880 --> 00:10:42,880 Speaker 1: are very different investment propositions then coal. When you build 171 00:10:42,880 --> 00:10:46,079 Speaker 1: a coal plant, you've got to feed that coal plant 172 00:10:46,360 --> 00:10:49,520 Speaker 1: twenty four hours a day, seven days a week, twelve 173 00:10:49,559 --> 00:10:51,400 Speaker 1: months a year, and you've got to have an elaborate 174 00:10:51,440 --> 00:10:54,560 Speaker 1: supply chain that feeds that coal plant, and you've got 175 00:10:54,559 --> 00:10:58,000 Speaker 1: to operate and maintain that coal plant. When you build 176 00:10:58,040 --> 00:11:01,560 Speaker 1: a solar plant, all you're in investment comes in sort 177 00:11:01,600 --> 00:11:05,719 Speaker 1: of a lump sum up front. It's such an enormous 178 00:11:05,760 --> 00:11:09,240 Speaker 1: steep hill that you climb rate at the outset, and 179 00:11:09,280 --> 00:11:13,120 Speaker 1: then once the solar plant is built, it starts running 180 00:11:13,160 --> 00:11:17,880 Speaker 1: at extraordinarily low operational costs. I sometimes think of a 181 00:11:17,960 --> 00:11:20,720 Speaker 1: large utility solar plant is sort of like a long bond, 182 00:11:20,960 --> 00:11:24,040 Speaker 1: where we sort of push a pile of money towards 183 00:11:24,040 --> 00:11:27,840 Speaker 1: an investment, and then you wait for the interest payments 184 00:11:27,880 --> 00:11:31,559 Speaker 1: to start giving you a return on your capital. So 185 00:11:32,600 --> 00:11:36,160 Speaker 1: that's sort of what's happening right now in like the 186 00:11:36,200 --> 00:11:41,360 Speaker 1: American utility business. The crossover point has now been reached, 187 00:11:41,400 --> 00:11:44,000 Speaker 1: and and it's happening so fast. I mean even for 188 00:11:44,040 --> 00:11:47,960 Speaker 1: those of us who followed this only three or four 189 00:11:48,040 --> 00:11:52,680 Speaker 1: years ago, the main question was, well, sure, utilities can 190 00:11:52,720 --> 00:11:55,520 Speaker 1: build new wind and solar at a competitive cost, but 191 00:11:55,600 --> 00:11:59,520 Speaker 1: their existing coal plants are still running very economically. How 192 00:11:59,520 --> 00:12:01,880 Speaker 1: are you going to push those out? And now just 193 00:12:01,960 --> 00:12:04,880 Speaker 1: three late three, two to three years later, we've reached 194 00:12:04,920 --> 00:12:08,800 Speaker 1: a point where utilities are, as I said, running uh 195 00:12:09,679 --> 00:12:13,560 Speaker 1: stimulations and calculations, and they're discovering that just having to 196 00:12:13,679 --> 00:12:17,080 Speaker 1: run the existing coal plants for another year or two 197 00:12:17,320 --> 00:12:22,839 Speaker 1: is now become uneconomic. So I mean, I could get 198 00:12:22,840 --> 00:12:25,120 Speaker 1: into some of the utilities that have started to do this, 199 00:12:25,200 --> 00:12:29,079 Speaker 1: but I think Uh. Having set in on a presentation, 200 00:12:29,200 --> 00:12:33,560 Speaker 1: for example, recently from Pacific Corp here in Portland, you 201 00:12:33,720 --> 00:12:37,559 Speaker 1: almost had the sense that Pacific Corp itself was surprised 202 00:12:38,040 --> 00:12:40,680 Speaker 1: when they got the answer about what to do with 203 00:12:40,720 --> 00:12:45,000 Speaker 1: their power portfolio, which, as I said, was accelerate the 204 00:12:45,080 --> 00:12:49,680 Speaker 1: closure of coal and accelerate the build out of wind swords. 205 00:12:50,360 --> 00:12:54,040 Speaker 1: What happened to something that I heard about a lot 206 00:12:54,120 --> 00:12:56,880 Speaker 1: a few years ago, like, yeah, the cost curve is 207 00:12:56,960 --> 00:13:00,800 Speaker 1: plunging rapidly with solar and wind, but sometimes the wind 208 00:13:00,840 --> 00:13:04,040 Speaker 1: isn't blowing, and at night there's no solar power and so, 209 00:13:04,640 --> 00:13:07,600 Speaker 1: and battery tech is still really expensive. So even if 210 00:13:07,600 --> 00:13:10,640 Speaker 1: all these things are getting cheaper, that doesn't provide a 211 00:13:10,679 --> 00:13:15,560 Speaker 1: sustainable seven electricity grid. How does that How is that 212 00:13:15,640 --> 00:13:19,199 Speaker 1: problem getting solved? The way it's getting solved is like 213 00:13:19,679 --> 00:13:24,839 Speaker 1: more like an evolutionary process rather than a revolutionary process. 214 00:13:24,880 --> 00:13:29,880 Speaker 1: In other words, the world just presses forward now at 215 00:13:29,880 --> 00:13:32,360 Speaker 1: a pretty good rate building out new wind and solar, 216 00:13:32,960 --> 00:13:35,320 Speaker 1: and the cost of wind and solar continue to drop 217 00:13:35,440 --> 00:13:37,960 Speaker 1: very fast. But you're right, show that the cost of 218 00:13:38,080 --> 00:13:41,840 Speaker 1: storage has not dropped is fast. But I'll tell you 219 00:13:41,880 --> 00:13:44,880 Speaker 1: one thing that's kind of curious that's happened is that 220 00:13:45,440 --> 00:13:49,080 Speaker 1: even though the price drop of storage has been slower, 221 00:13:49,520 --> 00:13:52,360 Speaker 1: because the price drop of wind and solar so fast, 222 00:13:52,400 --> 00:13:56,199 Speaker 1: it's made an all wind system more affordable and so. 223 00:13:56,800 --> 00:13:58,440 Speaker 1: But to get to the other part of your question 224 00:13:58,559 --> 00:14:02,000 Speaker 1: about how do we make use of wind power that 225 00:14:02,080 --> 00:14:05,480 Speaker 1: tends to blow at night and and solar power which 226 00:14:05,520 --> 00:14:09,960 Speaker 1: tends to come up and peak during the daytime, the 227 00:14:10,040 --> 00:14:14,880 Speaker 1: system is already finding ways to sort of route that traffic, 228 00:14:15,160 --> 00:14:18,240 Speaker 1: if you will, almost like air traffic control, routing those 229 00:14:18,280 --> 00:14:22,680 Speaker 1: surpluses and gaps into various markets. So I'll give you 230 00:14:22,680 --> 00:14:26,160 Speaker 1: one example right now, California tends to produce surplus solar 231 00:14:26,200 --> 00:14:31,760 Speaker 1: power midday around lunchtime, when when when the grid isn't 232 00:14:31,760 --> 00:14:34,960 Speaker 1: demanding as much electricity, And so you get a utility 233 00:14:35,040 --> 00:14:39,440 Speaker 1: like Arizona Public Services, who two years ago thought they'd 234 00:14:39,480 --> 00:14:43,880 Speaker 1: build new get natural gas plants to give Metro Phoenix power. 235 00:14:44,360 --> 00:14:47,040 Speaker 1: You know, then they thought they would build some wind 236 00:14:47,080 --> 00:14:49,600 Speaker 1: and solar to get Metro Phoenix power. And then they 237 00:14:49,600 --> 00:14:52,400 Speaker 1: look at all that surplus power coming from California, they 238 00:14:52,440 --> 00:14:55,400 Speaker 1: just decided to build storage. They just decided to build 239 00:14:55,680 --> 00:14:58,600 Speaker 1: utility scale to storage. And then you're in fact your 240 00:14:58,840 --> 00:15:03,480 Speaker 1: arbitraging cheap electricity at lunchtime and selling it back to 241 00:15:03,520 --> 00:15:07,800 Speaker 1: the grid at dinner time. So they'll just pull the 242 00:15:07,800 --> 00:15:11,680 Speaker 1: electricity off the grid when it's cheap, when it's offered midday, 243 00:15:11,920 --> 00:15:16,760 Speaker 1: then they'll sell it into Metro Phoenix during peak time 244 00:15:16,880 --> 00:15:21,680 Speaker 1: around dinner. So the way it's getting solved is we're 245 00:15:21,680 --> 00:15:24,240 Speaker 1: not going to solve that storage problem all in a 246 00:15:24,320 --> 00:15:26,840 Speaker 1: big bang, in a flash. We're gonna sell it. We're 247 00:15:26,840 --> 00:15:29,880 Speaker 1: going to solve it incrementally as we go along through 248 00:15:29,880 --> 00:15:36,560 Speaker 1: examples like that. You mentioned that policy gave the start 249 00:15:36,600 --> 00:15:39,880 Speaker 1: of this process a little bit of a nudge, but 250 00:15:40,240 --> 00:15:44,120 Speaker 1: you're you're obviously emphasizing the market forces here and how 251 00:15:44,240 --> 00:15:48,400 Speaker 1: those cost curves are coming down. What is the role 252 00:15:48,680 --> 00:15:53,800 Speaker 1: of policy in this process? What should it be? That's 253 00:15:53,800 --> 00:15:57,040 Speaker 1: a great question. So a good way to think about 254 00:15:57,160 --> 00:16:01,520 Speaker 1: the world's energy system is that there's basically there's electricity, 255 00:16:02,000 --> 00:16:04,800 Speaker 1: right and and all the things every the world uses 256 00:16:04,840 --> 00:16:09,840 Speaker 1: electricity for. Then there's transportation, and then there's heating and 257 00:16:09,960 --> 00:16:15,080 Speaker 1: industrial processes. And we've got really good clarity and visibility 258 00:16:15,160 --> 00:16:19,640 Speaker 1: now on how we're going to decarbonize the world's electricity system. 259 00:16:19,720 --> 00:16:22,640 Speaker 1: And even in a country like China, which is still 260 00:16:23,240 --> 00:16:27,440 Speaker 1: largely running its power grid on on coal, the wonderful 261 00:16:27,440 --> 00:16:30,520 Speaker 1: thing about having established and built such a huge power 262 00:16:30,560 --> 00:16:33,240 Speaker 1: grid is that you can plug in a new energy 263 00:16:33,280 --> 00:16:36,840 Speaker 1: source to that, and that's exactly what China has been doing. 264 00:16:36,880 --> 00:16:40,960 Speaker 1: It's increasingly plugging into wind and solar, and so policy 265 00:16:41,080 --> 00:16:43,960 Speaker 1: has less to do now in the in the area 266 00:16:43,960 --> 00:16:47,320 Speaker 1: of electricity. And you've you've kind of heard this articulation 267 00:16:47,440 --> 00:16:51,640 Speaker 1: from people at Bloomberg New Energy finance and so forth 268 00:16:51,720 --> 00:16:55,120 Speaker 1: talking about the energy system this way. What policy needs 269 00:16:55,160 --> 00:16:59,960 Speaker 1: to do now is something about transportation, and then unfortunately 270 00:17:00,000 --> 00:17:02,480 Speaker 1: it's going to be the really harder area is heating 271 00:17:02,520 --> 00:17:06,880 Speaker 1: and industrial processes. I would say right now, what policy 272 00:17:06,920 --> 00:17:11,000 Speaker 1: can do most is in the area of transportation, making 273 00:17:11,080 --> 00:17:16,879 Speaker 1: sure that drivers of cars pay a fuller cost for 274 00:17:18,000 --> 00:17:22,679 Speaker 1: the common areas. We'll call it the atmosphere that the 275 00:17:22,800 --> 00:17:25,600 Speaker 1: car drivers are using. And so you know, we don't 276 00:17:25,640 --> 00:17:27,760 Speaker 1: have a carbon text yet, but like in a city 277 00:17:27,800 --> 00:17:30,240 Speaker 1: like London, you have a day charge, you have a 278 00:17:30,320 --> 00:17:33,840 Speaker 1: road charge that came in about twenty years ago. That's 279 00:17:33,840 --> 00:17:36,560 Speaker 1: the form of a carbon text, and it's been enormously 280 00:17:36,680 --> 00:17:42,000 Speaker 1: helpful in pushing London towards better use of transport and 281 00:17:42,040 --> 00:17:45,960 Speaker 1: better use of bicycle back. London has really exploded with 282 00:17:46,440 --> 00:17:50,280 Speaker 1: bicycles and it should just become a much cleaner city 283 00:17:50,840 --> 00:17:54,240 Speaker 1: right now. Policy needs to focus on transportation, and then 284 00:17:55,480 --> 00:17:58,200 Speaker 1: research and science really needs to think about the hard 285 00:17:58,280 --> 00:18:04,080 Speaker 1: problem of austrial processes, steelmaking and so forth. That's that's 286 00:18:04,119 --> 00:18:25,800 Speaker 1: going to be very tough. Let's talk a little bit 287 00:18:25,800 --> 00:18:31,200 Speaker 1: more about electric vehicles and the transportation problem. Mentioned at 288 00:18:31,240 --> 00:18:34,399 Speaker 1: the outset that this week, shares of Tesla hitting an 289 00:18:34,400 --> 00:18:38,600 Speaker 1: extraordinary that hundred billion dollar level sentiment towards them really 290 00:18:38,600 --> 00:18:42,520 Speaker 1: swinging towards the positive. You wrote last year in your 291 00:18:43,080 --> 00:18:47,560 Speaker 1: newsletter that the Chinese EV market, let's start there. We 292 00:18:47,600 --> 00:18:50,320 Speaker 1: also know which is a we know that's a market 293 00:18:50,320 --> 00:18:53,160 Speaker 1: that Tesla wants to expand in. When I'm in Hong 294 00:18:53,240 --> 00:18:55,639 Speaker 1: Kong visiting Tracy, I see a lot of Tesla is 295 00:18:55,640 --> 00:18:58,440 Speaker 1: on the road there, but that that the Chinese EV 296 00:18:58,640 --> 00:19:01,280 Speaker 1: market was at some sort of tipping point that people 297 00:19:01,320 --> 00:19:03,720 Speaker 1: weren't paying attention to it. But that's something very big 298 00:19:04,200 --> 00:19:07,480 Speaker 1: was happening in China, with the number of e vis 299 00:19:07,600 --> 00:19:10,440 Speaker 1: being sold as a percentage of the total automobile mix. 300 00:19:11,119 --> 00:19:13,439 Speaker 1: Let's start there. What what do you see happening in 301 00:19:13,760 --> 00:19:17,439 Speaker 1: the Chinese market that got you excited? Great? Yeah, So 302 00:19:17,680 --> 00:19:21,040 Speaker 1: the Chinese EV market is a classic example of what 303 00:19:21,040 --> 00:19:24,000 Speaker 1: we were talking about, where you you kick off these 304 00:19:24,040 --> 00:19:28,920 Speaker 1: trends with with a policy push and and you theorize 305 00:19:29,359 --> 00:19:32,560 Speaker 1: that once once you get going, the cost curves will 306 00:19:32,600 --> 00:19:36,119 Speaker 1: kick in. And that's exactly what's happened um in China. 307 00:19:36,440 --> 00:19:39,160 Speaker 1: So for example, if you go back to two thousand fifteen, 308 00:19:39,760 --> 00:19:43,119 Speaker 1: e V sales were just about one and a quarter 309 00:19:43,200 --> 00:19:47,239 Speaker 1: percent of the market. By two thousand seventeen, there were 310 00:19:47,359 --> 00:19:50,399 Speaker 1: two and a half percent of the market. And last year, 311 00:19:50,560 --> 00:19:56,080 Speaker 1: although sales of EV were hit in the second half, 312 00:19:56,960 --> 00:20:01,280 Speaker 1: partly because China's economy has struggled last year, but also 313 00:20:01,400 --> 00:20:05,560 Speaker 1: because of a short term policy change, EV sales didn't 314 00:20:05,640 --> 00:20:08,439 Speaker 1: grow quite as much last year, but they did get 315 00:20:08,440 --> 00:20:12,240 Speaker 1: close to what a lot of energy and and sort 316 00:20:12,240 --> 00:20:16,240 Speaker 1: of business researchers identify as sort of this tipping point 317 00:20:16,280 --> 00:20:21,440 Speaker 1: in substitution curve. EV almost got to five of of 318 00:20:21,480 --> 00:20:25,600 Speaker 1: the market for new cars last year in China, And 319 00:20:26,160 --> 00:20:28,320 Speaker 1: when we look at across a lot of this space 320 00:20:28,320 --> 00:20:30,720 Speaker 1: was a build out of wind power in the UK, 321 00:20:31,320 --> 00:20:36,400 Speaker 1: build out of solar power in California, that five tipping 322 00:20:36,440 --> 00:20:40,800 Speaker 1: point tends to point to something. So, you know, Joe 323 00:20:40,880 --> 00:20:46,280 Speaker 1: I declared that China somewhat single handedly killed the internal 324 00:20:46,320 --> 00:20:49,600 Speaker 1: combustion engine. And by that, I don't mean the internal 325 00:20:49,600 --> 00:20:53,040 Speaker 1: combustion engines going away. It's not going away, going to 326 00:20:53,160 --> 00:20:56,920 Speaker 1: be with us for another couple of decades, but if 327 00:20:56,960 --> 00:21:00,400 Speaker 1: we do have it does look like and it's sort 328 00:21:00,400 --> 00:21:04,720 Speaker 1: of stuck a peak into the sales of global internal 329 00:21:04,760 --> 00:21:08,920 Speaker 1: combustion engines around the two thousand, sixteen, two thousand seventeen points, 330 00:21:09,080 --> 00:21:11,040 Speaker 1: and there's just no way we're going to get back 331 00:21:11,080 --> 00:21:14,679 Speaker 1: there because the e V platform is just such a 332 00:21:14,720 --> 00:21:18,760 Speaker 1: superior platform in many ways, especially in China where they 333 00:21:18,800 --> 00:21:23,040 Speaker 1: have what are known as minis and super minis. These 334 00:21:23,080 --> 00:21:28,040 Speaker 1: are like little tiny evs that are highly affordable and 335 00:21:28,359 --> 00:21:31,960 Speaker 1: are very popular in like the second, third, fourth, and 336 00:21:32,080 --> 00:21:36,960 Speaker 1: fifth year fifth tier cities in China where incomes aren't 337 00:21:36,960 --> 00:21:40,520 Speaker 1: as high. So just bringing this back to Tesla, the 338 00:21:40,600 --> 00:21:44,960 Speaker 1: Tesla will Tesla will concentrate on the higher income strata 339 00:21:45,119 --> 00:21:49,960 Speaker 1: in the Chinese market. But but the e V platform 340 00:21:50,200 --> 00:21:53,520 Speaker 1: has really had its greatest success at the lower price 341 00:21:53,560 --> 00:21:57,439 Speaker 1: tag end in in the whole of China. Uh, you know, 342 00:21:57,560 --> 00:22:01,919 Speaker 1: listening to you talk about evs being a superior platform. 343 00:22:02,040 --> 00:22:04,040 Speaker 1: I think it was last year, maybe two years ago, 344 00:22:04,119 --> 00:22:08,920 Speaker 1: I actually drove one for the first time. It wasn't 345 00:22:08,920 --> 00:22:11,400 Speaker 1: a Tesla, it was I think it was an Audie 346 00:22:11,480 --> 00:22:15,600 Speaker 1: maybe hybrid e V i CE type thing, and I 347 00:22:15,640 --> 00:22:18,639 Speaker 1: remember thinking, and I know I'm not the first person 348 00:22:18,680 --> 00:22:21,120 Speaker 1: to make this analogy, but then when I went back 349 00:22:21,160 --> 00:22:23,920 Speaker 1: and drove my car, which is just a regular I see, 350 00:22:24,000 --> 00:22:27,520 Speaker 1: it felt like going from a smartphone to a flip 351 00:22:27,520 --> 00:22:30,600 Speaker 1: back to a flip phone after that, Like, regardless of 352 00:22:30,600 --> 00:22:34,680 Speaker 1: the environment and of the environmental issues aside, the smoothness, 353 00:22:34,760 --> 00:22:38,359 Speaker 1: the quietness of the EVA was just so clearly felt 354 00:22:38,400 --> 00:22:42,720 Speaker 1: like a superior technical experience. Definitely, if I ever buy 355 00:22:42,840 --> 00:22:45,920 Speaker 1: another car environment aside, like there's no way I would 356 00:22:45,920 --> 00:22:49,280 Speaker 1: get another uh engine that has to like sputter in 357 00:22:49,320 --> 00:22:52,359 Speaker 1: the beginning and stuff like that. It's just so clearly superior. 358 00:22:52,480 --> 00:22:54,080 Speaker 1: So when you talk about when I when you were 359 00:22:54,080 --> 00:22:59,679 Speaker 1: talking about an obviously better platform, clearly resonated with me. Okay, 360 00:22:59,720 --> 00:23:02,080 Speaker 1: I'll take your word for a Joe Uh. Just to 361 00:23:02,080 --> 00:23:05,119 Speaker 1: play Devil's advocate for a second, Gregor. I mean you 362 00:23:05,160 --> 00:23:08,600 Speaker 1: mentioned to shift in Chinese policy, which I think was 363 00:23:09,119 --> 00:23:13,360 Speaker 1: the removal or the reduction of subsidies for electric vehicles. 364 00:23:13,400 --> 00:23:15,680 Speaker 1: A lot of people will look at the China example 365 00:23:15,800 --> 00:23:19,119 Speaker 1: and say, well, China is a command economy. They're able 366 00:23:19,240 --> 00:23:22,400 Speaker 1: to put in place these big policy initiatives, and they're 367 00:23:22,440 --> 00:23:27,920 Speaker 1: able to create the infrastructure of electricity distribution for electric 368 00:23:28,040 --> 00:23:32,600 Speaker 1: vehicles to make this happen. So for that particular example, 369 00:23:32,600 --> 00:23:35,680 Speaker 1: could you just break down a little bit more the 370 00:23:36,000 --> 00:23:42,680 Speaker 1: market forces versus policy incentive when it comes to China, right, 371 00:23:42,760 --> 00:23:47,320 Speaker 1: it's a good question. So when policy support sort of 372 00:23:47,480 --> 00:23:51,960 Speaker 1: resolves or transforms into a market that can stand on 373 00:23:52,040 --> 00:23:57,240 Speaker 1: its own two feet, you still have the antecedent influences 374 00:23:57,280 --> 00:24:00,600 Speaker 1: of policy, you know, sort of fliquor ring through the 375 00:24:00,640 --> 00:24:04,399 Speaker 1: market as you transition to a market that can stand 376 00:24:04,400 --> 00:24:07,040 Speaker 1: on its own. The one thing I would say is 377 00:24:07,040 --> 00:24:11,359 Speaker 1: is that when you talk to experts that I do 378 00:24:12,320 --> 00:24:16,200 Speaker 1: to get into the details of the of the Chinese market, 379 00:24:16,640 --> 00:24:21,200 Speaker 1: it does look as though the mini and the super 380 00:24:21,240 --> 00:24:26,840 Speaker 1: Mini sales really are happening simply because those vehicles are cheaper. 381 00:24:27,240 --> 00:24:30,760 Speaker 1: They're just cheaper, and and they're especially cheaper to run. 382 00:24:30,800 --> 00:24:33,080 Speaker 1: And this is something we might want to get into 383 00:24:33,119 --> 00:24:36,800 Speaker 1: about the e V platform versus the ICE platform, and 384 00:24:36,440 --> 00:24:41,479 Speaker 1: and why energy transition may very well represent a cost 385 00:24:42,000 --> 00:24:45,919 Speaker 1: savings rather than a cost outlay. So you have to 386 00:24:45,960 --> 00:24:50,600 Speaker 1: imagine that consumers in China who are able to purchase 387 00:24:51,160 --> 00:24:55,639 Speaker 1: a super Mini for seven thousand U S dollars or 388 00:24:55,720 --> 00:24:58,840 Speaker 1: six six to eight thousand U S dollars, once they 389 00:24:58,880 --> 00:25:04,200 Speaker 1: start running that vehicle, their fuel costs are so significantly lower. 390 00:25:04,440 --> 00:25:07,160 Speaker 1: And of course this is something that's true not only 391 00:25:07,280 --> 00:25:11,000 Speaker 1: for a n evy driver in a in a smaller, 392 00:25:11,359 --> 00:25:13,920 Speaker 1: less well known Chinese city, it's also true for someone 393 00:25:13,960 --> 00:25:18,680 Speaker 1: in in in San Francisco. And so China announced that 394 00:25:18,760 --> 00:25:23,640 Speaker 1: it wouldn't hit electric vehicles in the way they hit 395 00:25:23,680 --> 00:25:27,840 Speaker 1: them in, which I think was I read as sort 396 00:25:27,880 --> 00:25:31,200 Speaker 1: of a they're sort of a wake up call occurred 397 00:25:31,200 --> 00:25:34,520 Speaker 1: and they realized that they they've got this new EV 398 00:25:34,680 --> 00:25:37,240 Speaker 1: industry going and the last thing they wanted to do 399 00:25:37,720 --> 00:25:41,200 Speaker 1: is puncture. You know, it's growth rate. So I think 400 00:25:41,240 --> 00:25:44,680 Speaker 1: you know, most people, including Bloomberg analysts and so forth, 401 00:25:44,680 --> 00:25:49,600 Speaker 1: they're expecting a fairly significant rebound this year. And yeah, 402 00:25:49,640 --> 00:25:52,240 Speaker 1: I don't think that's going to be something that we 403 00:25:52,280 --> 00:25:55,159 Speaker 1: can point to and say, oh that just because of 404 00:25:55,240 --> 00:25:59,240 Speaker 1: policy or or price. I think still in a policy 405 00:25:59,320 --> 00:26:05,480 Speaker 1: and price driven driven market. Talk to us about evis 406 00:26:05,480 --> 00:26:09,919 Speaker 1: outside of China. So again, Tesla doing very well. But 407 00:26:09,960 --> 00:26:13,280 Speaker 1: I've seen questions about whether the markets say in the 408 00:26:13,400 --> 00:26:17,800 Speaker 1: US there is a big appetite for evs per se, 409 00:26:17,880 --> 00:26:20,800 Speaker 1: or whether it's mostly there's a Tesla phenomenon and then 410 00:26:21,160 --> 00:26:25,360 Speaker 1: people don't really care about it. What do you see happening? Um, 411 00:26:25,400 --> 00:26:28,960 Speaker 1: just in general with evis in the West and in 412 00:26:29,000 --> 00:26:31,359 Speaker 1: the US, and then how does it also connect to 413 00:26:31,359 --> 00:26:34,040 Speaker 1: the grid in terms of as you mentioned, you know, 414 00:26:34,080 --> 00:26:37,840 Speaker 1: the grid is slowly becoming uh more based on renewables. 415 00:26:37,920 --> 00:26:41,000 Speaker 1: But obviously that's an important question because if everyone is 416 00:26:41,000 --> 00:26:44,040 Speaker 1: plugging in their evs at night at home, but that 417 00:26:44,160 --> 00:26:47,800 Speaker 1: power isn't particularly clean, then maybe it'll be a marginal 418 00:26:47,880 --> 00:26:52,520 Speaker 1: improvement on the ice platform, but doesn't necessarily get us 419 00:26:52,640 --> 00:26:55,760 Speaker 1: very far. So what do you see developing here? Let 420 00:26:55,760 --> 00:26:57,399 Speaker 1: me go to that part of the question first, and 421 00:26:57,400 --> 00:27:01,080 Speaker 1: then I'll address the market itself, which is less interesting 422 00:27:01,119 --> 00:27:03,000 Speaker 1: in the US. The US is a little bit of 423 00:27:03,000 --> 00:27:06,359 Speaker 1: a disappointment in terms of the market, But let's let 424 00:27:06,359 --> 00:27:08,840 Speaker 1: me talk about that bigger picture, Joe, because I think 425 00:27:08,880 --> 00:27:11,760 Speaker 1: that would really help tie up a lot of the 426 00:27:11,760 --> 00:27:15,320 Speaker 1: themes that we're talking about. Yeah, so e V have 427 00:27:16,080 --> 00:27:20,679 Speaker 1: come up above five of the California market. They're up 428 00:27:20,680 --> 00:27:24,200 Speaker 1: around uh six to seven. Now I have to check 429 00:27:24,240 --> 00:27:28,320 Speaker 1: the number. But it's important for people to understand how 430 00:27:28,400 --> 00:27:34,200 Speaker 1: much energy savings we can harvest by just transitioning from 431 00:27:34,280 --> 00:27:38,600 Speaker 1: ice vehicles to too e V. And the reason is 432 00:27:38,600 --> 00:27:41,679 Speaker 1: is that you know, fossil fuel combustion, which occurs in 433 00:27:41,720 --> 00:27:46,040 Speaker 1: an individual engine. It's very powerful, but it's also very wasteful. 434 00:27:46,560 --> 00:27:50,000 Speaker 1: So you know, at least half of what you spend 435 00:27:50,080 --> 00:27:54,399 Speaker 1: on petrol on road fuel, gasoline, diesel, it tends to 436 00:27:54,480 --> 00:27:57,880 Speaker 1: just get lost into the atmosphere through waste heat. It's 437 00:27:57,920 --> 00:28:02,680 Speaker 1: probably more like sixty or sixty. So when we think 438 00:28:02,720 --> 00:28:06,840 Speaker 1: about transition, we want to never for loose sight of 439 00:28:06,840 --> 00:28:10,640 Speaker 1: the fact that when we transition eventually, let's say, all 440 00:28:10,680 --> 00:28:15,520 Speaker 1: of California's thirty five million vehicles two electric vehicles, you know, 441 00:28:15,560 --> 00:28:18,439 Speaker 1: we we want to imagine that the fifteen and a 442 00:28:18,440 --> 00:28:23,399 Speaker 1: half or sixteen billion gallons of gasoline that California is 443 00:28:23,880 --> 00:28:27,320 Speaker 1: consuming each day, that that goes away. But it only 444 00:28:27,400 --> 00:28:30,200 Speaker 1: it only takes us about half and maybe even only 445 00:28:31,400 --> 00:28:34,199 Speaker 1: of the energy to run that same fleet. They can 446 00:28:34,240 --> 00:28:36,880 Speaker 1: do all the things they normally do, drive to work 447 00:28:36,880 --> 00:28:39,440 Speaker 1: every day, but you know, on a on a different 448 00:28:39,560 --> 00:28:43,920 Speaker 1: energy platform. And that's because we've we've moved away from combustion, 449 00:28:44,480 --> 00:28:47,720 Speaker 1: and that's that's just a very important sort of concept 450 00:28:47,800 --> 00:28:52,680 Speaker 1: that you can keep applying and reapplying to the decarbonization process. 451 00:28:53,240 --> 00:28:55,960 Speaker 1: But just in terms of the market, the US e 452 00:28:56,120 --> 00:29:01,320 Speaker 1: V market suffers from over concentration by slap. It's sort 453 00:29:01,360 --> 00:29:04,480 Speaker 1: of it's sort of a story where the market has 454 00:29:04,480 --> 00:29:09,040 Speaker 1: become overly dependent on Tesla sales. Without huge booming Tesla 455 00:29:09,080 --> 00:29:12,040 Speaker 1: sales in the US, the U S e V market 456 00:29:12,040 --> 00:29:16,120 Speaker 1: would be way behind other other markets. And so, yeah, 457 00:29:16,160 --> 00:29:19,240 Speaker 1: the US had another disappointing year last year, and I 458 00:29:19,280 --> 00:29:22,880 Speaker 1: would say the simple reason is this lack of consumer choice. 459 00:29:24,000 --> 00:29:26,000 Speaker 1: And you go into a you go into a showroom 460 00:29:26,000 --> 00:29:28,840 Speaker 1: and you've got a couple of Teslas to choose from, 461 00:29:28,880 --> 00:29:31,320 Speaker 1: and you have a Chevy Bolt and a Leaf and 462 00:29:31,440 --> 00:29:35,600 Speaker 1: some hybrids. That's just not enough for people to choose from. 463 00:29:35,680 --> 00:29:38,600 Speaker 1: Why do you think we haven't seen a stronger competitor 464 00:29:38,680 --> 00:29:43,640 Speaker 1: to Tesla emerge in the United States Because certainly in China, again, 465 00:29:43,720 --> 00:29:46,560 Speaker 1: we have so many e V startups that people are 466 00:29:46,560 --> 00:29:50,320 Speaker 1: actually talking about the market being crowded and that's actually 467 00:29:50,360 --> 00:29:52,840 Speaker 1: caused some problems for some of those companies. But it's 468 00:29:52,880 --> 00:29:56,520 Speaker 1: it's a different picture in the US. Yeah, that's a 469 00:29:56,520 --> 00:29:59,720 Speaker 1: good question. So the e V ecosystem in China of 470 00:30:00,120 --> 00:30:05,240 Speaker 1: slee get started through state support. The e V ecosystem 471 00:30:05,280 --> 00:30:10,680 Speaker 1: in Europe is waiting for its existing automobile industry to 472 00:30:10,880 --> 00:30:14,600 Speaker 1: retool which is happening apparently, and in fact, in some 473 00:30:14,640 --> 00:30:18,800 Speaker 1: ways some people feel that that the emissions crisis that 474 00:30:18,920 --> 00:30:22,800 Speaker 1: Volkswagen had wound up working in a positive way. It 475 00:30:23,360 --> 00:30:28,760 Speaker 1: helped Volkswagen get sort of shocked into retooling for a 476 00:30:28,840 --> 00:30:32,160 Speaker 1: world VV. And then you have the US market, which 477 00:30:32,240 --> 00:30:37,720 Speaker 1: is sort of a lazy fair market. And and I 478 00:30:37,760 --> 00:30:40,640 Speaker 1: think what the Tesla example shows is how high the 479 00:30:40,720 --> 00:30:45,880 Speaker 1: hurdles are trying to create a new capital intensive company. 480 00:30:45,880 --> 00:30:50,560 Speaker 1: I mean, America's Forte is creating software companies and non 481 00:30:50,600 --> 00:30:56,880 Speaker 1: capital intensive companies. Muscas created a company that's just admittedly 482 00:30:56,960 --> 00:31:00,520 Speaker 1: very difficult to create. And and we have a regulatory 483 00:31:00,560 --> 00:31:05,080 Speaker 1: environment where the process is slow by which foreign models 484 00:31:05,080 --> 00:31:09,320 Speaker 1: of ev can come in to this market. And so 485 00:31:09,480 --> 00:31:13,040 Speaker 1: I think we've got a pretty big mismatch between demand 486 00:31:13,120 --> 00:31:16,640 Speaker 1: and availability. And I've I've written in my newsletter that 487 00:31:16,800 --> 00:31:21,640 Speaker 1: once the market has what's called a crossover, which is 488 00:31:21,680 --> 00:31:26,120 Speaker 1: sort of this popular short wheelbase sort of mini suv, 489 00:31:26,920 --> 00:31:29,480 Speaker 1: the Mazda makes I think something called the c X five, 490 00:31:29,560 --> 00:31:31,640 Speaker 1: which is sort of seems like the archetype of what 491 00:31:31,720 --> 00:31:37,040 Speaker 1: would be popular. Hyundai and Kia both have a couple 492 00:31:37,080 --> 00:31:40,920 Speaker 1: of crossover models that have started to come into European market, 493 00:31:41,120 --> 00:31:43,840 Speaker 1: and I think once they're here, you'll sort of see 494 00:31:43,880 --> 00:31:50,320 Speaker 1: that uprush of of adoption in the United States that 495 00:31:50,600 --> 00:31:52,840 Speaker 1: you know we're still waiting for the US is the 496 00:31:52,920 --> 00:31:58,680 Speaker 1: US TV market is still trapped down at that two level. 497 00:31:58,800 --> 00:32:02,000 Speaker 1: And unfortunately, you know, just getting back to adoption curves 498 00:32:02,000 --> 00:32:05,400 Speaker 1: and substitution curves, markets can get trapped at that one 499 00:32:05,440 --> 00:32:08,760 Speaker 1: to two to three percent level for years before finally 500 00:32:08,960 --> 00:32:12,080 Speaker 1: you know, breaking out above five. So yeah, it's not 501 00:32:12,120 --> 00:32:15,160 Speaker 1: that encouraging in the in the US how dependent we are. 502 00:32:15,680 --> 00:32:19,040 Speaker 1: So before we wrap it up here, I just want 503 00:32:19,040 --> 00:32:21,720 Speaker 1: to go back to policy, and I think this uh 504 00:32:21,920 --> 00:32:25,480 Speaker 1: sets it up well. What you're talking about about the 505 00:32:25,600 --> 00:32:28,320 Speaker 1: sort of disappointing e V market, And you said in 506 00:32:28,360 --> 00:32:31,400 Speaker 1: the beginning that you given the progress that we're seeing 507 00:32:31,840 --> 00:32:36,600 Speaker 1: towards a renewable energy mix, the policy makers don't need 508 00:32:36,640 --> 00:32:40,080 Speaker 1: to take a sledgehammer to improve the system, that there 509 00:32:40,120 --> 00:32:43,760 Speaker 1: are things that can be done. So let's say, um, 510 00:32:43,800 --> 00:32:46,280 Speaker 1: you know there's a new president at some point and 511 00:32:46,320 --> 00:32:48,120 Speaker 1: they are listening to this podcast. Look all right, I 512 00:32:48,200 --> 00:32:52,480 Speaker 1: one UH to have Gregor be one of my energy advisors. 513 00:32:53,240 --> 00:32:56,600 Speaker 1: What are some of the things say in the US 514 00:32:56,720 --> 00:33:00,280 Speaker 1: that you would recommend in terms of put shoot the 515 00:33:00,320 --> 00:33:05,320 Speaker 1: gas pedal, so to speak, on on this acceleration or 516 00:33:05,360 --> 00:33:08,680 Speaker 1: on this transformation. Okay, Well, the main thing the federal 517 00:33:08,680 --> 00:33:11,440 Speaker 1: government can do is it can smooth the siting and 518 00:33:11,480 --> 00:33:16,040 Speaker 1: permitting process for utility scale solar and offshore wind, and 519 00:33:16,040 --> 00:33:19,760 Speaker 1: that has started to happen to a certain extent. The 520 00:33:19,760 --> 00:33:24,320 Speaker 1: other thing they can do is actually either provide financing 521 00:33:24,560 --> 00:33:30,000 Speaker 1: or create green bond markets, or partly back green bond markets, 522 00:33:30,400 --> 00:33:32,680 Speaker 1: or perhaps the United States might even want to take 523 00:33:33,080 --> 00:33:38,800 Speaker 1: minority stakes in new and new energy infrastructure. Also, I 524 00:33:38,840 --> 00:33:43,200 Speaker 1: think the transportation system is sort of right for a nudge. 525 00:33:44,040 --> 00:33:46,680 Speaker 1: You know, it wouldn't hurt to dip back into some 526 00:33:46,720 --> 00:33:51,080 Speaker 1: traditional twentieth century technology like trains and so forth. You know, 527 00:33:51,400 --> 00:33:55,520 Speaker 1: upgrading our train lines would be enormously helpful. And the 528 00:33:55,560 --> 00:33:59,920 Speaker 1: reason for that is is that urban planners are increasingly 529 00:34:00,560 --> 00:34:06,080 Speaker 1: discovering that you can use existing rail lines in in 530 00:34:06,480 --> 00:34:10,600 Speaker 1: a network effect to sort of layer up or build 531 00:34:10,640 --> 00:34:14,600 Speaker 1: on top of those existing rail lines to build out 532 00:34:14,680 --> 00:34:18,720 Speaker 1: bike lanes and other forms of transportation that gets people 533 00:34:18,760 --> 00:34:21,560 Speaker 1: from houses to the train stop. This is happening in 534 00:34:21,600 --> 00:34:24,760 Speaker 1: Los Angeles by the way, where whereas l A builds 535 00:34:24,760 --> 00:34:29,120 Speaker 1: out its Metro, the planners at Metro, for example, think 536 00:34:29,239 --> 00:34:34,760 Speaker 1: hard and do things to foster pedestrian and bicycle networks 537 00:34:34,760 --> 00:34:37,320 Speaker 1: that get from the neighborhoods to the you know, to 538 00:34:37,440 --> 00:34:40,440 Speaker 1: the train stop. So I think those two things alone 539 00:34:40,960 --> 00:34:45,640 Speaker 1: would be enormously helpful. There are a couple of wonky things. 540 00:34:45,680 --> 00:34:48,960 Speaker 1: It might be helpful if we let utilities own more 541 00:34:49,000 --> 00:34:52,720 Speaker 1: of their assets. Um that could get them building storage 542 00:34:52,719 --> 00:34:56,480 Speaker 1: and wind and solar a little bit faster. It would 543 00:34:56,480 --> 00:35:00,880 Speaker 1: help if the US would help provi i'd financing to 544 00:35:01,000 --> 00:35:03,719 Speaker 1: upgrade our power grid. So, for example, we have a 545 00:35:03,760 --> 00:35:10,000 Speaker 1: new offshore wind industry that's going to start appearing on 546 00:35:10,239 --> 00:35:16,479 Speaker 1: the eastern seaboard between Virginia and Massachusetts. Very exciting job 547 00:35:16,520 --> 00:35:20,040 Speaker 1: opportunity and so forth. As the supply chain forms, but 548 00:35:20,120 --> 00:35:22,479 Speaker 1: that's going to be a lot of new electricity coming 549 00:35:22,520 --> 00:35:24,839 Speaker 1: into the power grid. It would be good if our 550 00:35:24,880 --> 00:35:31,000 Speaker 1: government bostered or encouraged or help us upgrade and modernize 551 00:35:31,040 --> 00:35:33,520 Speaker 1: the power grid so that we can do things more. 552 00:35:34,320 --> 00:35:37,520 Speaker 1: What's the word algorithmically if you will. Getting back to 553 00:35:37,560 --> 00:35:40,400 Speaker 1: what we were talking about with storage, buying and selling 554 00:35:40,440 --> 00:35:45,800 Speaker 1: and arbitrage ng of power perhaps on a more automated basis. 555 00:35:46,480 --> 00:35:49,759 Speaker 1: The main idea would say is our government needs to 556 00:35:50,120 --> 00:35:55,200 Speaker 1: accept that we're going to electrify. Electrification is the efficient, 557 00:35:55,320 --> 00:35:58,319 Speaker 1: the most efficient way to de carbonized. So we want 558 00:35:58,320 --> 00:36:02,800 Speaker 1: to electrify as many processes as possible, and that means 559 00:36:03,440 --> 00:36:08,440 Speaker 1: some increase of some good chunk increase in electricity demand, 560 00:36:08,680 --> 00:36:10,520 Speaker 1: and that means a power grid that needs to be 561 00:36:11,120 --> 00:36:17,040 Speaker 1: more eventually. Uh, Gregor, that was a really great conversation. 562 00:36:17,200 --> 00:36:20,560 Speaker 1: Really enjoyed talking to you and hopefully have you on 563 00:36:20,600 --> 00:36:24,000 Speaker 1: again at some point. Really appreciate it. Thank you. Pleasure 564 00:36:24,040 --> 00:36:39,400 Speaker 1: for me as well. Thanks. Yeah, that's great. You know, Tracy, 565 00:36:39,520 --> 00:36:41,600 Speaker 1: as we were saying in the beginning, I think both 566 00:36:41,600 --> 00:36:45,680 Speaker 1: of us are a little bit um cynical about a 567 00:36:45,680 --> 00:36:50,239 Speaker 1: lot of corporate pr guff around uh, clean energy and 568 00:36:50,320 --> 00:36:53,840 Speaker 1: renewables and sustainability and all that. But I think that 569 00:36:53,920 --> 00:36:56,080 Speaker 1: conversation was a good reminder that you can kind of 570 00:36:56,120 --> 00:36:58,279 Speaker 1: be a little bit cynical at the same time, but 571 00:36:58,400 --> 00:37:02,839 Speaker 1: not necessarily pessimistic, if that makes sense. Yeah, I think 572 00:37:02,880 --> 00:37:05,080 Speaker 1: that's right. I mean, I think all of these projects 573 00:37:05,600 --> 00:37:10,600 Speaker 1: wererant close scrutiny and analysis for obvious reasons. There does 574 00:37:10,680 --> 00:37:13,239 Speaker 1: seem to be a sense out there that if we 575 00:37:13,320 --> 00:37:16,120 Speaker 1: just throw a bunch of money at the problem, things 576 00:37:16,160 --> 00:37:19,200 Speaker 1: will improve. But I think when it comes to stuff 577 00:37:19,239 --> 00:37:23,880 Speaker 1: like the Green New Deal or other big climate change initiatives, 578 00:37:23,880 --> 00:37:26,160 Speaker 1: I think it's really really important that we actually sit 579 00:37:26,200 --> 00:37:28,440 Speaker 1: down and think about the problems that we're trying to 580 00:37:28,560 --> 00:37:32,040 Speaker 1: solve and design the program around it. So for the 581 00:37:32,040 --> 00:37:35,040 Speaker 1: Green New Deal, I maybe you know the answer to this, 582 00:37:35,120 --> 00:37:37,120 Speaker 1: but I've missed out on a lot of the conversations 583 00:37:37,120 --> 00:37:39,840 Speaker 1: in the US. But is the point to boost economic 584 00:37:39,880 --> 00:37:44,080 Speaker 1: growth or is the point to tackle climate change? Yeah? 585 00:37:44,120 --> 00:37:47,120 Speaker 1: I mean I think they would the advocates would definitely 586 00:37:47,120 --> 00:37:49,719 Speaker 1: say it's both to tackle climate change, but in a 587 00:37:49,840 --> 00:37:54,640 Speaker 1: manner that doesn't impair the economy, but that actually puts 588 00:37:54,640 --> 00:37:57,200 Speaker 1: people to work. One of the things that I like 589 00:37:57,360 --> 00:38:02,160 Speaker 1: about Gregor's framing is well and I think that, uh, 590 00:38:02,320 --> 00:38:04,440 Speaker 1: for a lot of climate activists it should be positive, 591 00:38:04,440 --> 00:38:07,720 Speaker 1: which is that there's a lot of alarmism about climate 592 00:38:07,800 --> 00:38:10,600 Speaker 1: But there's also the risk that if there's so much 593 00:38:10,640 --> 00:38:15,120 Speaker 1: alarmism that people just become throwing the towel that Okay, 594 00:38:15,280 --> 00:38:18,120 Speaker 1: the earth is burning and the oceans are boiling, So 595 00:38:18,320 --> 00:38:20,880 Speaker 1: what good does it do to sort of always complain 596 00:38:21,040 --> 00:38:23,960 Speaker 1: and show up? And I think that is why it 597 00:38:24,120 --> 00:38:27,080 Speaker 1: is good to highlight some of this transition that we're 598 00:38:27,120 --> 00:38:31,200 Speaker 1: already seeing that A it's not unrealistic that we actually 599 00:38:31,520 --> 00:38:35,880 Speaker 1: do we can economically transition to different energy sources, and 600 00:38:35,960 --> 00:38:39,000 Speaker 1: B that there already is progress being made in some 601 00:38:39,080 --> 00:38:43,759 Speaker 1: respects on reducing carbon emissions and things like that. And 602 00:38:43,880 --> 00:38:45,560 Speaker 1: so even if there is more work to be done, 603 00:38:45,640 --> 00:38:48,000 Speaker 1: and even if there is a lot of tension uh 604 00:38:48,040 --> 00:38:52,720 Speaker 1: in terms of reducing emissions overall, there are sustainable models 605 00:38:52,719 --> 00:38:54,359 Speaker 1: that show how it can be done. So I think 606 00:38:54,719 --> 00:38:58,320 Speaker 1: Gregor's work and some of his insights are very useful 607 00:38:58,360 --> 00:39:02,239 Speaker 1: from that perspective. It is definitely heartening to hear from 608 00:39:02,239 --> 00:39:06,479 Speaker 1: someone who thinks that minor policy pushes or policy sort 609 00:39:06,480 --> 00:39:09,440 Speaker 1: of around the edges can lead to big shifts in 610 00:39:09,520 --> 00:39:12,680 Speaker 1: how the market actually functions, so that eventually market forces 611 00:39:12,760 --> 00:39:16,919 Speaker 1: sort of takeover and these things start happening naturally. I'd 612 00:39:16,960 --> 00:39:20,880 Speaker 1: like that I did too. Okay, this has been another 613 00:39:20,960 --> 00:39:24,120 Speaker 1: episode of the All Thoughts podcast. I'm Tracy Alloway. You 614 00:39:24,120 --> 00:39:27,640 Speaker 1: can follow me on Twitter at Tracy Alloway, and I'm 615 00:39:27,719 --> 00:39:31,320 Speaker 1: Joe Wisenthal. You can follow me on Twitter at the Stalwart, 616 00:39:31,719 --> 00:39:34,839 Speaker 1: and you should definitely follow our guests on Twitter. He's 617 00:39:34,880 --> 00:39:39,120 Speaker 1: Gregor McDonald. His handle is at Gregor McDonald. You should 618 00:39:39,120 --> 00:39:41,920 Speaker 1: also follow sign up for his newsletter. You can find 619 00:39:41,960 --> 00:39:45,480 Speaker 1: it on his Twitter page. Definitely one of my favorites. 620 00:39:45,520 --> 00:39:47,759 Speaker 1: I read it every time I get it in my inbox. 621 00:39:48,120 --> 00:39:51,600 Speaker 1: And check out the new Bloomberg Climate coverage, the New 622 00:39:51,640 --> 00:39:56,400 Speaker 1: Green coverage at the handle at Climate. Very impressive snag 623 00:39:56,480 --> 00:39:59,600 Speaker 1: they got there with that Twitter handle, along with, of course, 624 00:39:59,640 --> 00:40:03,160 Speaker 1: all of the Bloomberg podcasts at Podcasts, and be sure 625 00:40:03,200 --> 00:40:06,000 Speaker 1: to follow our producer on Twitter, Laura Carlson. She's at 626 00:40:06,080 --> 00:40:09,120 Speaker 1: Laura M. Carlson, as well as the Bloomberg head of podcast, 627 00:40:09,160 --> 00:40:12,720 Speaker 1: Francesca Levy at Francesca Today. Thanks for listening.