WEBVTT - Looking Back at 30 Years of Art, Combatting Climate Crisis

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<v Speaker 1>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 1>Jason Kelly on Bloomberg Radio. Because indeed Carol Master along

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<v Speaker 1>with Jason Kelly and our Bloomberg Interactive Broker studios. So

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<v Speaker 1>it's always good to get a longer term perspective on

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<v Speaker 1>a market, which is what we're doing today. This time around,

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<v Speaker 1>it's the art market back with us as Jacob Pops

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<v Speaker 1>he is CEO at art Net. It's an art database

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<v Speaker 1>at track sales in the secondary market. He joins us

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<v Speaker 1>to talk about the firm's Intelligent Report, which looks at

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<v Speaker 1>changes in the art market of the past three decades.

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<v Speaker 1>He's back in our Bloomberg Interactive Broker studio. Welcome back, Well,

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<v Speaker 1>thank you. Thanks kind of wrap up our day. It's

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<v Speaker 1>been chuck full of news. Tell us little bit about

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<v Speaker 1>the art market, because Jason I spent a lot of

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<v Speaker 1>time I feel like talking about alternative assets and certainly

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<v Speaker 1>the art market is part of it. What are you

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<v Speaker 1>seeing in terms of a longer perspective about what's been

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<v Speaker 1>going on there and in terms of valuations and and trends.

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<v Speaker 1>Yeah sure, um, yeah, and all report we're looking back

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<v Speaker 1>at thirty years in the market. And it's actually the

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<v Speaker 1>time when we started the company, and the market has

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<v Speaker 1>completely changed since then, I think. Um, you know, now

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<v Speaker 1>we had over sixty billion and in total art sold

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<v Speaker 1>per year, and back in the day it was one

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<v Speaker 1>one six of that. So the market has grown a lot. Um.

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<v Speaker 1>We have given the market transparency, We've introduced you know,

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<v Speaker 1>the art the database um as we have discussed last

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<v Speaker 1>time also and m and given the market access to

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<v Speaker 1>price and that helped, you know, the market grow. How

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<v Speaker 1>is that transparency changed the market there? Um? Yeah, Well

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<v Speaker 1>you have to you have to imagine, you know, someone

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<v Speaker 1>wanting to buy a piece of art in nine and

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<v Speaker 1>you know he had to rely on you know, the

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<v Speaker 1>people selling selling it to him, or you know, on

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<v Speaker 1>friends and can I trust them exactly? So it's it's

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<v Speaker 1>it's been very, very complicated and and you had actually

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<v Speaker 1>people profiting from from that in transparency, you know. And yeah,

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<v Speaker 1>and so you know, giving people access to data is essential,

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<v Speaker 1>you know, for any market to grow. And so when

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<v Speaker 1>you think about especially over the last thirty years, it's

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<v Speaker 1>safe to say the contemporary art world has radically changed.

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<v Speaker 1>The values placed on contemporary artists, which the Born Post

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<v Speaker 1>ninety five. Is that how you uh, sort of how

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<v Speaker 1>do you define the contemporary art market? Do I have

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<v Speaker 1>that right? Yeah, that's have that very right, and it's

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<v Speaker 1>it's it's a it's a very good point. Um. You know,

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<v Speaker 1>the contemporary market has totally exploded and um and and

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<v Speaker 1>it's been driving the entire market a little bit. And

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<v Speaker 1>in the last thirty years. And you know, in nineteen nine,

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<v Speaker 1>auction halls has didn't even so contemporary are that notched it?

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<v Speaker 1>That was what what galleries did and you know they

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<v Speaker 1>only recently started doing that. And you know that has

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<v Speaker 1>really completely transformed to market. And why why was that?

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<v Speaker 1>I mean, what what accounts for that change? Because I

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<v Speaker 1>think when you say it, it's obvious, and yet the

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<v Speaker 1>catalyst is not obvious. What was it? Well, you know,

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<v Speaker 1>traditionally galleries are you know, it's it's it's sort of

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<v Speaker 1>their job to discover artists and you know, and to

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<v Speaker 1>manage their careers and and and to make sure that

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<v Speaker 1>they become popular. And you know, auction hallses, you know,

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<v Speaker 1>typically come in once once you know, they have a market,

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<v Speaker 1>and you know, and the contemporary market is the market

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<v Speaker 1>that really has a lot of potential and you know

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<v Speaker 1>where you see tremendous growth rates, and you know, and

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<v Speaker 1>and and that's why the auction hall is of course

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<v Speaker 1>are interested in it. When it comes to growth, if

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<v Speaker 1>you look around the world, I mean, I'm assuming it

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<v Speaker 1>follows the trends where there's wealth creation because I think

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<v Speaker 1>about how, um, the Asian countries and the Asian markets

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<v Speaker 1>have become much more involved in the art markets. I

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<v Speaker 1>think about China, right, we do stories day in and

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<v Speaker 1>day out about you know, millionaires and billionaires being minted

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<v Speaker 1>over in China as that economy has become much more

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<v Speaker 1>of a capitalistic and and developed economy. So I'm curious

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<v Speaker 1>what you've seen in terms of who are the buyers

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<v Speaker 1>where the market, the art market in particular, is really

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<v Speaker 1>seeing some significant growth. Yeah, sure, it's a it's a

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<v Speaker 1>good question. Um, the US is the market leader, has

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<v Speaker 1>always been number one. Yes, Um, China is number two.

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<v Speaker 1>Third is the UK and together they make around seventy

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<v Speaker 1>of the total market. And yeah, China particularly was very

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<v Speaker 1>very has been very very interesting. You know, if we've

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<v Speaker 1>seen a lot of growth until about two thousand fourteen,

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<v Speaker 1>and you know, and since then a little bit of decline,

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<v Speaker 1>you know, when you know, the government cracked down on corruption.

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<v Speaker 1>So the middle of the middle market has disappeared a

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<v Speaker 1>little bit, but you know, in the in the top segment,

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<v Speaker 1>we even in China still see a lot of demand.

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<v Speaker 1>What's also interesting is that China is more and more

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<v Speaker 1>interested in Western art traditionally, and five years ago even

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<v Speaker 1>you know, Chinese wouldn't wouldn't even be interested in Western

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<v Speaker 1>What like, what are they buying? Like, you know, is it, um,

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<v Speaker 1>contemporary Hackney? Is it? What is it that they want

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<v Speaker 1>you mean today? Um? Yeah, like the the big the

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<v Speaker 1>big names, Yeah, Warhol, Hackney and and so on. Yeah.

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<v Speaker 1>And what about demographically, I mean, is this a market

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<v Speaker 1>especially as technology gets introduced, You're able to see online

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<v Speaker 1>catalogs and whatnot. You don't have to show up at

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<v Speaker 1>the auction house necessarily. Are you seeing the demographic exchange.

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<v Speaker 1>We've got a lot of wealth that's created, say out

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<v Speaker 1>in Silicon Valley by the tech bubble. What what are

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<v Speaker 1>the sort of contours of who's buying the art? Yeah? Um,

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<v Speaker 1>I think that a lot of the same people are

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<v Speaker 1>buying the art. You know, we um, you know, we

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<v Speaker 1>have a very strong core of people who are very

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<v Speaker 1>interested in art and regularly buy and that's always stayed

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<v Speaker 1>the same. But outside of that, the market has grown

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<v Speaker 1>a little bit. And you see, you know, of course

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<v Speaker 1>Silicon Values is one example, and you know, and then

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<v Speaker 1>other other countries China, Russia and so on. I have

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<v Speaker 1>to say this art report, it's really comprehensive. I think

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<v Speaker 1>it's like something over fifty pages here. But what's fascinating

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<v Speaker 1>is I think when you kind of get into, you know,

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<v Speaker 1>who are today's most bankable artists? And you know, is

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<v Speaker 1>it still in the art market where you want to

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<v Speaker 1>find And we're talking with Eli Broade about this, you know,

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<v Speaker 1>and his team that you know, he really went after

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<v Speaker 1>some artists that weren't necessarily well known but bottle out

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<v Speaker 1>of their art and they eventually became really well known.

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<v Speaker 1>And I'm just wondering, what's the strategy are people are

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<v Speaker 1>art collectors still looking for that unknown trying to get

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<v Speaker 1>in on their work early, or is it that in

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<v Speaker 1>terms of you want to go after those reliable, bankable

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<v Speaker 1>artists that's where they want to invest. Well, it's it's

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<v Speaker 1>it's both. But you know what I find very interesting,

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<v Speaker 1>if you know, looking for artists that are not really

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<v Speaker 1>famous yet and and discovering them, and you know, and

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<v Speaker 1>and and you know, and taking a bet on that.

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<v Speaker 1>That's that's I think, what what is an interesting of

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<v Speaker 1>course all the time anytime. Alright. Jacobops is chief executive

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<v Speaker 1>officer of art Net. They have just released their thirtieth

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<v Speaker 1>anniversary intelligence report, looking Back, looking forward, and a lot

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<v Speaker 1>has changed in the art world, for sure. Yeah. Absolutely.

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<v Speaker 1>I was thinking about the story of the magazine. Recently

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<v Speaker 1>we profiled an artist, uh and her story. Um, it's fascinating.

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<v Speaker 1>It's photographs, its drawings, um, but it's also a supplied

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<v Speaker 1>demand thing. She doesn't put out a lot of work.

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<v Speaker 1>She's been known and I forgive me, I forget her name,

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<v Speaker 1>and I'll try and tweet it out. But it's just

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<v Speaker 1>interesting to see some of the dynamics. It's not easy

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<v Speaker 1>being green Daily. Great week this week because all week

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<v Speaker 1>we've been featuring stories, reporters and guests on climate change.

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<v Speaker 1>Is part of our participation in the Covering Climate Now initiatives.

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<v Speaker 1>It's a global collaboration of more than news outlets to

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<v Speaker 1>highlight climate change and it's led by the Columbia Journalism School.

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<v Speaker 1>So with us having said that, Garvin J. Bush is

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<v Speaker 1>back with us. He's co founder chief investment officer of

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<v Speaker 1>Green Alpha Advisers based in Boulder, Colorado. Returning to our

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<v Speaker 1>Bloomberg Interactive Brokers studio. So we have been talking about

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<v Speaker 1>climate change, and one of the interesting stories I thought

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<v Speaker 1>was when we talked about renewables and how it's really

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<v Speaker 1>become a viable industry. Whereas twenty years ago, thirty years ago,

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<v Speaker 1>forty years ago, maybe it was kind of a cool thing.

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<v Speaker 1>It sounded like a nice thing to do, but people

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<v Speaker 1>were not all in it financially, it didn't quite make sense.

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<v Speaker 1>That's not the case anymore. Yeah, that's extremely true, Carol.

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<v Speaker 1>The rise of renewables and the plummeting of the cost

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<v Speaker 1>of renewables has been dramatic just in the last ten years.

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<v Speaker 1>You know, you said twenty but it's really been even

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<v Speaker 1>more recent than that. And it's and it's all about

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<v Speaker 1>scale right rights law and a different version of Moore's

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<v Speaker 1>law in the case of of silicon p V photovoltaic panels,

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<v Speaker 1>means that every time there's a doubling of deployment, because

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<v Speaker 1>comes down about and so there's been enough doublings in

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<v Speaker 1>the last ten years that now you know, the cheapest

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<v Speaker 1>power purchase agreement the utilities are signing with solar is

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<v Speaker 1>under two pennies that kill a lot hour. You know,

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<v Speaker 1>this comes up against natural gas at five pennies and

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<v Speaker 1>coal at five to ten. So it's extremely economically an

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<v Speaker 1>amazing math right there. No, and it's and it's why

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<v Speaker 1>it makes a fantastic forward investment because if your utility,

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<v Speaker 1>what do you want to buy twopenny power or fivepenny

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<v Speaker 1>power because you get to keep the difference because what

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<v Speaker 1>you can charge your rate payers is mandated by law.

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<v Speaker 1>And so you were testifying just recently down in Washington

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<v Speaker 1>the House Select Committee on the Climate Crisis, and it

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<v Speaker 1>does feel like, and this goes to your exact point

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<v Speaker 1>a minute ago, we seem to be at a moment

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<v Speaker 1>where people are starting to take notice a little bit.

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<v Speaker 1>And it's not just because of UH initiatives like we're

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<v Speaker 1>talking about this week, but lawmakers started to get more

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<v Speaker 1>serious about it. It's not just celebrities being like, hey,

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<v Speaker 1>save the earth, that's cool, we don't want it to disappear. Um.

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<v Speaker 1>Why is that? Because the risks are now so much

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<v Speaker 1>more apparent. You know, we were talking about how fast

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<v Speaker 1>renewable energy economics have changed in the last ten years,

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<v Speaker 1>will so to have the risks associated with the climate crisis.

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<v Speaker 1>There's so much more evident now that people really are

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<v Speaker 1>taking notice. That's that's part one. In Part two is

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<v Speaker 1>the younger generation that are really going to have to

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<v Speaker 1>live through the worst outcomes of the climate crisis are

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<v Speaker 1>becoming politically aware, and so they are starting to make

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<v Speaker 1>a lot of noise. Well, and you know, I even

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<v Speaker 1>think about this, it's interesting, you said, because I think

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<v Speaker 1>about this from a consumer perspective. We just had an

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<v Speaker 1>author on a couple of weeks ago last week, I believe,

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<v Speaker 1>was new book out called Fashionopolis that's really about consumption

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<v Speaker 1>and production and manufacturing and consumers, especially younger consumers seem

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<v Speaker 1>to be voting with their feet. That that feels like

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<v Speaker 1>an investable theme there, right, Yeah, no question between. A

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<v Speaker 1>lot of the sustainability topics are very investable right now.

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<v Speaker 1>It isn't you know, like Carol, like you were saying,

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<v Speaker 1>with renewable energy, it's a super viable investment right now,

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<v Speaker 1>not because it's green or green or warm and fuzzy,

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<v Speaker 1>but because it makes economic sense all across follow the

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<v Speaker 1>money essentially right, and it tries. But okay, So having

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<v Speaker 1>said that, I'm just thinking, if I'm running a business

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<v Speaker 1>and I'm looking at cutting my costs right to improve

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<v Speaker 1>my you know, profit structure. If I see that difference

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<v Speaker 1>between that gas versus solar, why isn't everybody ramping up?

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<v Speaker 1>Or is it just a case it's not as viable

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<v Speaker 1>maybe in the northeast as it is in the southeast. Like,

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<v Speaker 1>what's tell me the dynamics there? As we look at

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<v Speaker 1>our country and maybe the world, a handful of things

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<v Speaker 1>going on there. But yeah, one is just the geography.

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<v Speaker 1>Some places it's windier than others, some places it's sunni

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<v Speaker 1>or than others. In the sunniest places, solar makes no

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<v Speaker 1>sense economically, not just in terms of how will it works,

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<v Speaker 1>although those things go together. Uh, the same could be

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<v Speaker 1>said for wind. Now. The other part though, is that

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<v Speaker 1>there is political structure. There are some places where the

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<v Speaker 1>local government doesn't want to see it coming and so

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<v Speaker 1>they put up barriers to prevent it. So even historically

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<v Speaker 1>I understand what the wind like, the pushback because they

0:11:41.960 --> 0:11:44.319
<v Speaker 1>don't want them, you know, you know, off of Martha's

0:11:44.360 --> 0:11:48.559
<v Speaker 1>vineyard or what have But solar the same reason. Yep.

0:11:48.679 --> 0:11:50.599
<v Speaker 1>Sometimes it's numbism like that they just don't want to

0:11:50.600 --> 0:11:52.800
<v Speaker 1>be able to see the solar panels out out their window.

0:11:52.960 --> 0:11:55.400
<v Speaker 1>And other times it's a little bit more ideological. You know,

0:11:56.080 --> 0:11:59.160
<v Speaker 1>maybe it's an older generation that grew up with the

0:11:59.160 --> 0:12:01.280
<v Speaker 1>fossil powered utility and they just saying that's how the

0:12:01.280 --> 0:12:03.120
<v Speaker 1>world should be in so they sort of will put

0:12:03.200 --> 0:12:05.839
<v Speaker 1>up regulatory barriers to to block it. What about lobbying

0:12:05.840 --> 0:12:08.839
<v Speaker 1>in terms of political by the energy space, and that,

0:12:09.120 --> 0:12:12.360
<v Speaker 1>of course is a big factor because the fossil energy

0:12:12.400 --> 0:12:15.480
<v Speaker 1>space still has more money and more political clout than

0:12:15.480 --> 0:12:18.880
<v Speaker 1>the renewable energy space forgiving. I mean, everybody's lobbing, but

0:12:19.040 --> 0:12:23.440
<v Speaker 1>fossil versus Yeah. So speaking of politics, tells about your

0:12:23.440 --> 0:12:26.880
<v Speaker 1>experience testifying. What were the questions like, what was the tone?

0:12:27.040 --> 0:12:30.080
<v Speaker 1>What was your takeaway? You know, first of all, I

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<v Speaker 1>want to compliment Kathy Castor, the congresswoman from Tampa who

0:12:34.440 --> 0:12:36.640
<v Speaker 1>is the chair of that committee, the House Selight Committee

0:12:36.640 --> 0:12:39.400
<v Speaker 1>on the Climate Crisis. I thought it was interesting that

0:12:39.440 --> 0:12:42.920
<v Speaker 1>she wanted to invite an asset manager to testify before

0:12:42.960 --> 0:12:46.040
<v Speaker 1>the climate crisis. It shows that she's perceptive, you know,

0:12:46.559 --> 0:12:50.680
<v Speaker 1>investing where capital is deployed is where the economy flows from.

0:12:51.240 --> 0:12:54.200
<v Speaker 1>Where you invest is where stuff happens. And she correctly

0:12:54.240 --> 0:12:58.440
<v Speaker 1>perceives that if you can fix investing, you can fix

0:12:58.480 --> 0:13:01.440
<v Speaker 1>the economy and maybe solve the climate crisis. Right, And

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<v Speaker 1>so that's what I told them, you know, they to

0:13:04.480 --> 0:13:07.640
<v Speaker 1>answer your question directly. They asked me, what's the biggest

0:13:07.679 --> 0:13:10.200
<v Speaker 1>risk coming from your industry? And I said, from the

0:13:10.240 --> 0:13:13.560
<v Speaker 1>investment management industry, the biggest risk related to the climate

0:13:13.600 --> 0:13:16.439
<v Speaker 1>crisis is that, by and large, my industry is ignoring it.

0:13:16.880 --> 0:13:18.880
<v Speaker 1>But I also think, you know, it would be interesting

0:13:18.880 --> 0:13:21.280
<v Speaker 1>to look at the portfolios of various lawmakers too to

0:13:21.320 --> 0:13:25.280
<v Speaker 1>see how many exposure to fossil energy companies At this point.

0:13:25.360 --> 0:13:27.720
<v Speaker 1>My guess is they all do. And that's the problem,

0:13:27.800 --> 0:13:30.880
<v Speaker 1>because it's just so endemic to simply buy an index

0:13:30.880 --> 0:13:33.400
<v Speaker 1>fund and forget it. You know, the SMP five has

0:13:33.440 --> 0:13:36.360
<v Speaker 1>sixty fossil fuels companies. Correct, And if I'm thinking like

0:13:36.400 --> 0:13:40.000
<v Speaker 1>a fiduciary, I don't want to own the causes of

0:13:40.040 --> 0:13:42.400
<v Speaker 1>the climate crisis because those are going to be dramatically,

0:13:42.440 --> 0:13:44.960
<v Speaker 1>Like Mark Carney says, there's gonna be a Minsky moment

0:13:44.960 --> 0:13:47.400
<v Speaker 1>from the carbon facing economy and they're going to be

0:13:47.480 --> 0:13:49.400
<v Speaker 1>dramatically repriced at some point. You don't want to be

0:13:49.400 --> 0:13:51.000
<v Speaker 1>in front of that. It's so fun to talk with you.

0:13:51.200 --> 0:13:53.720
<v Speaker 1>Thank you so much, Garvin. Great to see you, Garvin J. Bush.

0:13:53.720 --> 0:13:56.559
<v Speaker 1>He's a founder, chief investment officer over Green Alpha Advisers

0:13:56.559 --> 0:13:59.760
<v Speaker 1>based in Boulder, Colorado. Back in Oar, Blomberg Interactive Brokers

0:13:59.840 --> 0:14:03.200
<v Speaker 1>to video. On this Thursday, you're listening to Bloomberg Radio

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<v Speaker 1>m