1 00:00:00,480 --> 00:00:03,080 Speaker 1: Okay, so the Dull Men's Club. I first stumbled on 2 00:00:03,200 --> 00:00:05,280 Speaker 1: it on YouTube or something years ago. But it's a 3 00:00:05,360 --> 00:00:08,840 Speaker 1: club that quote celebrates the ordinary, like I recall seeing 4 00:00:08,880 --> 00:00:11,720 Speaker 1: something about a post box appreciation society, or one guy 5 00:00:11,720 --> 00:00:14,800 Speaker 1: who collected soda bottles, or another member who was really 6 00:00:14,840 --> 00:00:17,560 Speaker 1: interested in those brown tourist site signs you see along 7 00:00:17,600 --> 00:00:21,400 Speaker 1: the highway. Calendar items featured on the website include National 8 00:00:21,400 --> 00:00:25,040 Speaker 1: Punctuation Day or the annual Dullis Airport plane pole asking 9 00:00:25,200 --> 00:00:28,680 Speaker 1: were you there? Or the World Stone Skimming Championship. Okay, 10 00:00:28,720 --> 00:00:31,360 Speaker 1: those last two sound pretty cool. Today we'll be talking 11 00:00:31,400 --> 00:00:33,400 Speaker 1: with Nat Bullard about a piece he wrote with Liam 12 00:00:33,440 --> 00:00:36,920 Speaker 1: Denning for Bloomberg Opinion called energy stocks are now duller 13 00:00:36,920 --> 00:00:40,600 Speaker 1: than utilities. It opens with quote, utilities are, by design 14 00:00:40,680 --> 00:00:43,199 Speaker 1: a bit of a snooze. We feel no excitement of 15 00:00:43,240 --> 00:00:47,159 Speaker 1: the miracle of instantaneous light, television and coffee grinding, expecting 16 00:00:47,159 --> 00:00:49,360 Speaker 1: those things simply to happen when we want them to, 17 00:00:49,560 --> 00:00:52,360 Speaker 1: which virtually all the time they do. Reading this, I 18 00:00:52,360 --> 00:00:54,440 Speaker 1: thought for sure there would be a Dull Men's Club, 19 00:00:54,480 --> 00:00:58,600 Speaker 1: appreciation society, or electrical things that worked as expected. I checked, 20 00:00:58,720 --> 00:01:01,720 Speaker 1: there's not listening back to this interview. I kept pressing that, 21 00:01:01,880 --> 00:01:04,480 Speaker 1: trying to get him to say energy or oil stocks 22 00:01:04,480 --> 00:01:07,000 Speaker 1: are duller than utilities because utilities are doing all kinds 23 00:01:07,000 --> 00:01:10,760 Speaker 1: of cool, new exciting things leading to really exciting growth stories. 24 00:01:10,959 --> 00:01:13,839 Speaker 1: But no, he held his ground, wouldn't go there. Turns 25 00:01:13,840 --> 00:01:15,800 Speaker 1: out it seems utilities are just the less dull of 26 00:01:15,840 --> 00:01:17,480 Speaker 1: the two. So maybe we have a candidate for the 27 00:01:17,480 --> 00:01:20,559 Speaker 1: Dolmen's Club. I don't know. The interview itself is actually 28 00:01:20,640 --> 00:01:23,360 Speaker 1: quite interesting, so stay with us. We'll also discuss a 29 00:01:23,360 --> 00:01:26,280 Speaker 1: piece called big Energy Companies see Cole's Last Stand that 30 00:01:26,360 --> 00:01:29,640 Speaker 1: he wrote with David Fickling, also for Bloomberg Opinion. We'll 31 00:01:29,640 --> 00:01:31,759 Speaker 1: talk about the future of coal and where and why 32 00:01:31,880 --> 00:01:35,120 Speaker 1: it still make makes sense or not and we mentioned 33 00:01:35,120 --> 00:01:37,080 Speaker 1: it last time. But Not is global head of executive 34 00:01:37,080 --> 00:01:39,240 Speaker 1: Insights for BANF. He wears many hats for beanof one 35 00:01:39,280 --> 00:01:41,559 Speaker 1: of which is writing a weekly op ed called spark Lines, 36 00:01:41,600 --> 00:01:44,520 Speaker 1: published do Bloomberg Opinion. You can find them on terminal 37 00:01:44,600 --> 00:01:47,800 Speaker 1: under Ni Bullard or on Bloomberg dot Com under spark Lines. 38 00:01:48,040 --> 00:01:50,320 Speaker 1: In either location you can sign up for a weekly distribution. 39 00:01:50,720 --> 00:01:53,120 Speaker 1: And as always, BENIF does not provide investment or strategy 40 00:01:53,160 --> 00:01:54,680 Speaker 1: advice and you can hear the full disclaimer at the 41 00:01:54,720 --> 00:01:57,320 Speaker 1: end of the show. Him Mark Taylor here with Dana Perkins, 42 00:01:57,440 --> 00:02:01,480 Speaker 1: and you're listening to switch On the benf podcast. NAT. 43 00:02:01,520 --> 00:02:03,680 Speaker 1: Welcome back to Switched On. Thanks for having me, folks, 44 00:02:03,560 --> 00:02:05,440 Speaker 1: it's going to be back. So this first one we're 45 00:02:05,440 --> 00:02:07,840 Speaker 1: going to talk about today actually has the word dull 46 00:02:07,920 --> 00:02:09,880 Speaker 1: in the title that it actually was one of your 47 00:02:09,880 --> 00:02:12,600 Speaker 1: best read pieces and I actually really got quite interested 48 00:02:12,600 --> 00:02:13,600 Speaker 1: in it. Tell me why it was one of your 49 00:02:13,600 --> 00:02:15,919 Speaker 1: best red pieces. What happened there? So what I wrote about, 50 00:02:16,040 --> 00:02:18,959 Speaker 1: and I'll give you the exact title is energy stocks 51 00:02:19,000 --> 00:02:23,120 Speaker 1: are now dumber than utilities. Wah wah wah. I know 52 00:02:23,200 --> 00:02:24,760 Speaker 1: that from many of you out there in radio man, 53 00:02:24,880 --> 00:02:28,520 Speaker 1: that doesn't sound that interesting. However, within the financial community, 54 00:02:28,520 --> 00:02:30,400 Speaker 1: and when you consider the scale of these two industries 55 00:02:30,400 --> 00:02:32,800 Speaker 1: that we're talking about, like two of the biggest on 56 00:02:32,880 --> 00:02:36,120 Speaker 1: earth in terms of stock market capitalization, in terms of 57 00:02:36,440 --> 00:02:39,400 Speaker 1: fixed and long term assets, in terms of cash flow, everything, 58 00:02:40,200 --> 00:02:44,120 Speaker 1: there's quite a bit of implication in the financial market 59 00:02:44,160 --> 00:02:47,560 Speaker 1: for what is, to be honest, that's sort of dry 60 00:02:47,800 --> 00:02:51,360 Speaker 1: sounding thing, which is there is a dividend yield paid 61 00:02:51,400 --> 00:02:54,720 Speaker 1: out by oil and gas companies, there's a dividend yield 62 00:02:54,720 --> 00:02:59,480 Speaker 1: paid out by utilities. Historically, utilities have had a relatively 63 00:02:59,560 --> 00:03:02,960 Speaker 1: high it end and relatively lower growth compared to oil 64 00:03:02,960 --> 00:03:05,560 Speaker 1: and gas. Oil and gas companies have had a relatively 65 00:03:05,840 --> 00:03:10,440 Speaker 1: no dividend and relatively high growth in equity prices and valuations. 66 00:03:11,240 --> 00:03:12,959 Speaker 1: And what we've seen in the last four months is 67 00:03:13,000 --> 00:03:16,639 Speaker 1: that that has switched and now utilities are actually paying 68 00:03:16,639 --> 00:03:20,120 Speaker 1: out less in dividend than oil and gas companies are paying. 69 00:03:20,320 --> 00:03:21,760 Speaker 1: And what that means for those of you out there 70 00:03:21,760 --> 00:03:24,440 Speaker 1: in radio land is that you can think about this. 71 00:03:24,560 --> 00:03:28,520 Speaker 1: A company can reward its shareholders in two ways. It 72 00:03:28,560 --> 00:03:31,920 Speaker 1: can either reward them with a stock price that is 73 00:03:31,960 --> 00:03:34,519 Speaker 1: going up all the time, so you're benefiting from growth. 74 00:03:34,920 --> 00:03:37,160 Speaker 1: Or you can reward shareholders for holding your stock by 75 00:03:37,240 --> 00:03:39,640 Speaker 1: paying them a fixed amount of cash based on the 76 00:03:39,640 --> 00:03:42,840 Speaker 1: share price. That would be a dividend. And historically utilities 77 00:03:42,840 --> 00:03:44,800 Speaker 1: are said, well, you know, we're very very stable, we 78 00:03:44,800 --> 00:03:47,760 Speaker 1: have a very predictable market. We're going to give you 79 00:03:47,960 --> 00:03:49,760 Speaker 1: a lot of cash, one in the form of dividends 80 00:03:50,120 --> 00:03:52,160 Speaker 1: as a way of saying thank you for owning our stock. 81 00:03:52,480 --> 00:03:54,320 Speaker 1: And oil and gas companies have saying, goin, we need 82 00:03:54,360 --> 00:03:55,840 Speaker 1: money to invest, so we're not going to pay you 83 00:03:55,840 --> 00:03:58,920 Speaker 1: a lot of cash. We're going to then return an 84 00:03:58,920 --> 00:04:02,040 Speaker 1: advantage to you in terms of an increasing stock price. 85 00:04:02,200 --> 00:04:05,280 Speaker 1: And that's the way that you're going to benefit from 86 00:04:05,280 --> 00:04:09,480 Speaker 1: owning a share in x y Z company. Now, when 87 00:04:09,560 --> 00:04:11,920 Speaker 1: those things shift, it's a really really big deal. When 88 00:04:11,920 --> 00:04:14,600 Speaker 1: a company makes a decision that it needs to start 89 00:04:14,640 --> 00:04:18,360 Speaker 1: paying out more in a dividend, it implies all kinds 90 00:04:18,400 --> 00:04:22,640 Speaker 1: of things. One is you need to reward shareholders for 91 00:04:22,680 --> 00:04:25,200 Speaker 1: holding onto you more, so they in order to do that, 92 00:04:25,240 --> 00:04:28,040 Speaker 1: you pay them more money. But within that, there's also 93 00:04:28,360 --> 00:04:31,800 Speaker 1: a question about the nature of your future growth prospects. 94 00:04:32,560 --> 00:04:35,800 Speaker 1: It's saying, maybe there's less of an option to have 95 00:04:36,360 --> 00:04:39,040 Speaker 1: a high amount of growth in the share price, and 96 00:04:39,279 --> 00:04:41,640 Speaker 1: if people want to hold onto this equity, we need 97 00:04:41,680 --> 00:04:43,240 Speaker 1: to give them a reason, and the reason is give 98 00:04:43,279 --> 00:04:46,320 Speaker 1: them more money in cash. And you're seeing this industry 99 00:04:46,320 --> 00:04:48,840 Speaker 1: wide for the energy stocks, that's right. So what I 100 00:04:48,880 --> 00:04:50,560 Speaker 1: did is I took the S and P five hundred, 101 00:04:50,560 --> 00:04:53,640 Speaker 1: which has within its sub indicase one for utilities, one 102 00:04:53,720 --> 00:04:57,320 Speaker 1: for what they confusingly call energy that's actually oil and gas. 103 00:04:58,040 --> 00:05:01,640 Speaker 1: Yet sorry, everybody, out there, SMB energy is actually oil 104 00:05:01,640 --> 00:05:04,600 Speaker 1: and gas, it's not energy, and you can just very 105 00:05:04,640 --> 00:05:07,320 Speaker 1: easily pull the dividend yield on those for it's going 106 00:05:07,400 --> 00:05:08,680 Speaker 1: as far back as you want. In this case, I 107 00:05:08,680 --> 00:05:11,000 Speaker 1: went all of that to and you can see this 108 00:05:11,080 --> 00:05:14,720 Speaker 1: this nice trend, this compression over time or rather convergence 109 00:05:14,760 --> 00:05:16,880 Speaker 1: I would say, over time between the yields and these 110 00:05:16,880 --> 00:05:19,520 Speaker 1: two sectors. And then this crossover point which happens sort 111 00:05:19,520 --> 00:05:22,360 Speaker 1: of midsummer, ends up being quite a big deal. Can 112 00:05:22,400 --> 00:05:25,560 Speaker 1: you go back and describe why this change started to happen? Well, 113 00:05:25,560 --> 00:05:28,120 Speaker 1: the change started to happen because what my co author 114 00:05:28,160 --> 00:05:30,320 Speaker 1: and the indenting said is roughly that the oil price 115 00:05:30,440 --> 00:05:33,800 Speaker 1: option in equities is pretty much gone, so companies are 116 00:05:33,800 --> 00:05:38,359 Speaker 1: really no longer pricing their their future vision with a 117 00:05:38,440 --> 00:05:40,400 Speaker 1: huge amount of upside in the oil price. That's not 118 00:05:40,440 --> 00:05:42,800 Speaker 1: to say that it might not happen, right, you might 119 00:05:42,880 --> 00:05:45,719 Speaker 1: get spikes in oil that go to who knows what 120 00:05:46,000 --> 00:05:48,279 Speaker 1: a hundred and fifty three hundred dollars a barrel or 121 00:05:48,279 --> 00:05:51,279 Speaker 1: something like that, but it's not viewed as structural. The 122 00:05:51,279 --> 00:05:54,720 Speaker 1: way that the oil market activity of the early two 123 00:05:54,760 --> 00:05:58,839 Speaker 1: thousands was wherein you had primary energy demand and fuels 124 00:05:58,839 --> 00:06:02,760 Speaker 1: demand in excessive economic growth. So you gave people a 125 00:06:02,839 --> 00:06:05,240 Speaker 1: reason to invest in a growth story. And if that 126 00:06:05,440 --> 00:06:07,560 Speaker 1: is sort of coming off the boil and you were 127 00:06:07,640 --> 00:06:11,200 Speaker 1: expecting nowhere growth, then you're now competing with the whole 128 00:06:11,200 --> 00:06:14,440 Speaker 1: host of other low growth industries like let's say real 129 00:06:14,560 --> 00:06:18,120 Speaker 1: estate or utilities and things that traditionally return a lot 130 00:06:18,160 --> 00:06:21,520 Speaker 1: of benefit to investors in the form of cash. And 131 00:06:21,600 --> 00:06:24,960 Speaker 1: so now you're having to compete with that message to 132 00:06:25,040 --> 00:06:27,960 Speaker 1: the market in a very straightforward way with money by 133 00:06:28,040 --> 00:06:30,520 Speaker 1: just paying people in the form of the dividend. I 134 00:06:30,600 --> 00:06:33,080 Speaker 1: thought it was really interesting that you called the utilities 135 00:06:33,160 --> 00:06:36,080 Speaker 1: of the past, or our interaction as consumers with the 136 00:06:36,160 --> 00:06:39,800 Speaker 1: utilities and mindless transaction. What has changed with the utilities 137 00:06:40,000 --> 00:06:42,680 Speaker 1: now are going forward to make them a bit more exciting. Well, 138 00:06:42,720 --> 00:06:45,960 Speaker 1: I'm not certain that they're necessarily that much more exciting, 139 00:06:46,040 --> 00:06:48,240 Speaker 1: although in a relative sense, they're more exciting. Right. This 140 00:06:48,320 --> 00:06:51,040 Speaker 1: is like from a financial markets perspective, they're being priced 141 00:06:51,480 --> 00:06:54,080 Speaker 1: more excited. And I should clarify, a mindless transaction is 142 00:06:54,080 --> 00:06:56,040 Speaker 1: that you don't really think about your monthly electricity bill. 143 00:06:56,080 --> 00:06:57,640 Speaker 1: We did it. We did an episode a little while 144 00:06:57,680 --> 00:07:01,279 Speaker 1: back about the changing business models and utilities, but for 145 00:07:01,320 --> 00:07:03,040 Speaker 1: the most part, we don't tend to think about our 146 00:07:03,040 --> 00:07:05,320 Speaker 1: monthly electricity bill. And that's why we said mindless transaction. 147 00:07:05,360 --> 00:07:07,520 Speaker 1: That's right. Well, listen, we are all sitting here in 148 00:07:07,560 --> 00:07:12,240 Speaker 1: this lovely climate controlled studio, the beneficiaries of trillions of 149 00:07:12,280 --> 00:07:16,360 Speaker 1: dollars and more than a century worth of investment in property, 150 00:07:16,400 --> 00:07:22,040 Speaker 1: plant equipment, uh, synchronization, optimization, all of that sort of 151 00:07:22,080 --> 00:07:24,720 Speaker 1: stuff to make sure that these things work without us 152 00:07:24,720 --> 00:07:28,520 Speaker 1: really knowing about it. We're not hand cranking a dynamo 153 00:07:29,160 --> 00:07:32,480 Speaker 1: to have flickering lights and recording under wax disks here 154 00:07:32,480 --> 00:07:35,240 Speaker 1: in the studio. You know, We're actually, we're actually the 155 00:07:35,280 --> 00:07:39,320 Speaker 1: beneficiary of something that has embedded itself into every other 156 00:07:39,400 --> 00:07:42,560 Speaker 1: sort of process and subprocess that we have in modern day, 157 00:07:42,640 --> 00:07:45,600 Speaker 1: which I would say was very apparent um just earlier 158 00:07:45,680 --> 00:07:49,360 Speaker 1: this month when my family out in California had their 159 00:07:49,400 --> 00:07:52,600 Speaker 1: electricity shut off, and we could say that that's exciting 160 00:07:52,800 --> 00:07:55,240 Speaker 1: in a way and not dull, but all jokes aside. 161 00:07:55,600 --> 00:07:57,840 Speaker 1: It's a It's a sign of a couple of things. 162 00:07:57,840 --> 00:08:02,640 Speaker 1: One inherent physical brittleness in the power infrastructure and architecture 163 00:08:02,680 --> 00:08:06,600 Speaker 1: of northern California. In particular the WUI, the wild land 164 00:08:06,760 --> 00:08:09,400 Speaker 1: urban interface where so many of these homes are being 165 00:08:09,400 --> 00:08:12,920 Speaker 1: shut off for wildfire risk, but also the sense that 166 00:08:13,000 --> 00:08:15,200 Speaker 1: there is a great deal of things that need to 167 00:08:15,320 --> 00:08:20,040 Speaker 1: change and can change within the utility, the utility business 168 00:08:20,120 --> 00:08:23,440 Speaker 1: and its physical stuff. If you want to invest to 169 00:08:23,880 --> 00:08:28,480 Speaker 1: harden PGENS infrastructure in order to not have these fire 170 00:08:28,480 --> 00:08:31,440 Speaker 1: shut offs, it's on the order of I don't even 171 00:08:31,440 --> 00:08:34,280 Speaker 1: know the exact numbers, but at the minimum, tens of 172 00:08:34,320 --> 00:08:36,880 Speaker 1: billions of dollars, if not hundreds of billions of dollars 173 00:08:36,960 --> 00:08:38,959 Speaker 1: worth of investment, which is all capital that needs to 174 00:08:39,000 --> 00:08:42,320 Speaker 1: be deployed, which is probably capital that you cannot be 175 00:08:42,360 --> 00:08:44,800 Speaker 1: paying out to shareholders as you used to know. Is 176 00:08:44,880 --> 00:08:47,040 Speaker 1: that the reason for the growth story, you know, to 177 00:08:47,040 --> 00:08:49,240 Speaker 1: to maintain status quo or get back up to the 178 00:08:49,240 --> 00:08:52,160 Speaker 1: status quote or is it a you know, exciting, bold 179 00:08:52,160 --> 00:08:56,040 Speaker 1: new frontier. It's a transformation narrative for sure. And and actually, 180 00:08:56,120 --> 00:08:59,479 Speaker 1: as you can see from whale and gas interest and utilities, 181 00:08:59,559 --> 00:09:03,040 Speaker 1: there's a sense of competition with you know, at the 182 00:09:03,080 --> 00:09:06,720 Speaker 1: margins within these two very established businesses. Let's think about 183 00:09:06,720 --> 00:09:08,839 Speaker 1: it as as you change the way that you energize 184 00:09:08,840 --> 00:09:12,360 Speaker 1: the vehicle fleet, So you're no longer pumping distalates, you know, 185 00:09:12,440 --> 00:09:16,439 Speaker 1: through a network of physical pipes, and your essentially substitutingal 186 00:09:16,480 --> 00:09:20,360 Speaker 1: nectron sent through wires. It's unclear who exactly is going 187 00:09:20,400 --> 00:09:22,760 Speaker 1: to own that end point, but one of the other 188 00:09:22,800 --> 00:09:25,200 Speaker 1: company can't. We see plenty of oil and gas companies 189 00:09:25,240 --> 00:09:29,240 Speaker 1: buying charging networks, for instance. Um, you could also argue 190 00:09:29,240 --> 00:09:31,679 Speaker 1: that they're buying charging networks and tagging into the end 191 00:09:31,679 --> 00:09:34,200 Speaker 1: of trillions of dollars worth of power infrastructure already owned 192 00:09:34,200 --> 00:09:38,080 Speaker 1: by big companies who could probably do it on their own. So, uh, 193 00:09:38,120 --> 00:09:41,560 Speaker 1: there's there's more. There's more excitement in this part of 194 00:09:41,559 --> 00:09:44,080 Speaker 1: the margins than there would have been ten years ago. 195 00:09:44,440 --> 00:09:47,360 Speaker 1: What should we be watching for in this particular dynamic, 196 00:09:47,480 --> 00:09:51,240 Speaker 1: Just well, watch watch my my simple squiggling line chart 197 00:09:51,320 --> 00:09:55,040 Speaker 1: and see see how this goes over time. Watch as well, 198 00:09:55,160 --> 00:09:58,120 Speaker 1: the waiting in the s the SMP five hundred that 199 00:09:58,200 --> 00:10:01,920 Speaker 1: energy companies get in the early nineties. This is going 200 00:10:01,960 --> 00:10:05,360 Speaker 1: way back now, but in the early nineties the energy 201 00:10:05,400 --> 00:10:10,119 Speaker 1: sector had a higher weighting in the SMP than technology stocks. 202 00:10:10,240 --> 00:10:12,959 Speaker 1: It now has barely any more than utilities. I think 203 00:10:12,960 --> 00:10:15,960 Speaker 1: it has less than pharmaceuticals. And healthcare, which is really 204 00:10:16,000 --> 00:10:19,080 Speaker 1: an extraordinary, extraordinary tangle about the transformation of the U. 205 00:10:19,160 --> 00:10:21,839 Speaker 1: S economy. But it's also just a sign that these 206 00:10:21,920 --> 00:10:25,160 Speaker 1: these are not, you know, the double digit percentages of 207 00:10:25,240 --> 00:10:28,400 Speaker 1: the proxy for the global or the United States economy 208 00:10:28,400 --> 00:10:30,880 Speaker 1: and the market that they used to be so pivoting 209 00:10:30,880 --> 00:10:33,040 Speaker 1: a bit the energy story that we're talking about, his 210 00:10:33,120 --> 00:10:35,360 Speaker 1: energy story that those of us who listen to a 211 00:10:35,360 --> 00:10:39,280 Speaker 1: podcast right now probably experience. There's another article that you 212 00:10:39,360 --> 00:10:42,720 Speaker 1: also wrote for Bloomberg Opinion that's called big Energy Companies 213 00:10:42,760 --> 00:10:45,400 Speaker 1: see Cole's Last Stand. And one of the things you 214 00:10:45,400 --> 00:10:48,840 Speaker 1: really point out in this particular piece is that they're 215 00:10:49,040 --> 00:10:53,400 Speaker 1: that Cole's story is one actually of countries that are 216 00:10:53,480 --> 00:10:57,320 Speaker 1: developing energy infrastructure in places where maybe there wasn't as 217 00:10:57,400 --> 00:11:00,560 Speaker 1: much or there wasn't these predictable all the lights are on, 218 00:11:00,679 --> 00:11:03,280 Speaker 1: all the electricities available. Can you delve into that a 219 00:11:03,320 --> 00:11:06,360 Speaker 1: little bit? Sure? So that if you watch the long 220 00:11:06,440 --> 00:11:08,840 Speaker 1: term narratives that go through that go through sectors, it's 221 00:11:08,840 --> 00:11:11,000 Speaker 1: always interesting to watch how they change. Right So, from 222 00:11:11,040 --> 00:11:13,120 Speaker 1: the early days of the analyzes that Mark and I 223 00:11:13,160 --> 00:11:15,400 Speaker 1: were doing, you can look at the coal sector and 224 00:11:15,480 --> 00:11:19,240 Speaker 1: its argument is what we're the cheapest right, like like 225 00:11:19,880 --> 00:11:21,800 Speaker 1: you don't, We don't need to have any debate about 226 00:11:21,800 --> 00:11:26,040 Speaker 1: any other merit. We are the least cost provider of 227 00:11:26,600 --> 00:11:29,560 Speaker 1: the synchronized electron on the grid. There you go, As 228 00:11:29,600 --> 00:11:34,600 Speaker 1: you have competition from other resources, you see another sort 229 00:11:34,600 --> 00:11:36,800 Speaker 1: of layer that adds on that narrative. You can probably 230 00:11:36,840 --> 00:11:38,760 Speaker 1: still make that argument and many plates. But then the 231 00:11:38,800 --> 00:11:41,760 Speaker 1: next one is, well, we're reliable. Right, Um, we may 232 00:11:41,760 --> 00:11:44,960 Speaker 1: be domestic in some cases. Right, this is the molecules 233 00:11:44,960 --> 00:11:47,200 Speaker 1: of freedom argument. More on us in the United States. 234 00:11:47,280 --> 00:11:51,440 Speaker 1: We we we are, we are reliable, we're domestic, we're 235 00:11:51,440 --> 00:11:55,480 Speaker 1: predictable in terms of supply, we're not intermittent. And look 236 00:11:55,520 --> 00:12:00,160 Speaker 1: as technology to uh synchronize to the grid every they're 237 00:12:00,200 --> 00:12:03,040 Speaker 1: kind of renewable and intermittent energy you might have becomes 238 00:12:03,040 --> 00:12:05,240 Speaker 1: better and better, and those are simply so cheap that 239 00:12:05,320 --> 00:12:08,679 Speaker 1: even the integration costs are not really a problem. Then 240 00:12:08,720 --> 00:12:11,199 Speaker 1: the argument has to continue to shift in some way, 241 00:12:11,280 --> 00:12:14,160 Speaker 1: and the argument has shifted out of a domestic argument 242 00:12:14,280 --> 00:12:16,439 Speaker 1: in the higher cost markets in Europe and in the 243 00:12:16,559 --> 00:12:21,319 Speaker 1: United States too. Well, you know, China still builds a 244 00:12:21,360 --> 00:12:23,720 Speaker 1: coal plant every week. This is not only not true, 245 00:12:23,760 --> 00:12:26,800 Speaker 1: it hasn't been true for quite some time. Then the 246 00:12:26,920 --> 00:12:29,280 Speaker 1: argument becomes, well, you know in India, f India is 247 00:12:29,280 --> 00:12:31,360 Speaker 1: going to will actrify in the same way that China did, 248 00:12:31,400 --> 00:12:34,360 Speaker 1: then it's going to turn out that same way. Fair Enough, 249 00:12:34,480 --> 00:12:37,079 Speaker 1: China has like China, it's like four times the amount 250 00:12:37,080 --> 00:12:40,200 Speaker 1: of energy capacity that that that India does per capita. 251 00:12:41,040 --> 00:12:43,120 Speaker 1: Is it going to grow to the point and you're 252 00:12:43,120 --> 00:12:45,000 Speaker 1: going to grow to the point where it becomes just 253 00:12:45,080 --> 00:12:48,720 Speaker 1: as much an energy economy in terms of power generation 254 00:12:48,720 --> 00:12:51,880 Speaker 1: capacity per capita as what you would have in China. 255 00:12:53,080 --> 00:12:56,760 Speaker 1: Potentially potentially not. But at the same time it's also 256 00:12:56,760 --> 00:13:00,320 Speaker 1: the beneficiary India is in this case of into acting 257 00:13:00,360 --> 00:13:03,959 Speaker 1: with all of these technologies as they're really really mature, 258 00:13:04,160 --> 00:13:06,800 Speaker 1: right so finding wind and somewhere as the cheapest cost 259 00:13:06,800 --> 00:13:10,360 Speaker 1: of new build electricity and markets like this. So the 260 00:13:10,480 --> 00:13:14,240 Speaker 1: shifting rationalizations and justifications are a sign of a market 261 00:13:14,240 --> 00:13:17,200 Speaker 1: that is very, very mature and that is being intersected 262 00:13:17,200 --> 00:13:20,479 Speaker 1: in multiple ways and in multiple places by new technologies. 263 00:13:21,080 --> 00:13:22,760 Speaker 1: One of the things you also bring up are the 264 00:13:22,800 --> 00:13:26,760 Speaker 1: different scope one two in this case three emissions of 265 00:13:26,800 --> 00:13:30,120 Speaker 1: the steel industry and various industries. And I think I 266 00:13:30,160 --> 00:13:33,720 Speaker 1: have a sub question here, which is not just about 267 00:13:33,840 --> 00:13:37,080 Speaker 1: the utility industry, but just generally how deeply anybody's going 268 00:13:37,160 --> 00:13:40,280 Speaker 1: to look at Scope three because it's so difficult for 269 00:13:40,400 --> 00:13:44,360 Speaker 1: companies to actually calculate out should we do it, should 270 00:13:44,400 --> 00:13:47,160 Speaker 1: we do a family roundtable? And what Scope three emissions 271 00:13:47,200 --> 00:13:51,199 Speaker 1: actually are? Absolutely, go for it, Mark, I'm not I'm 272 00:13:51,200 --> 00:13:55,160 Speaker 1: not your guy. Scope three emissions. Scope three missions for 273 00:13:55,160 --> 00:13:57,360 Speaker 1: for those of you out there in radio land, are 274 00:13:57,640 --> 00:14:01,280 Speaker 1: emissions from the value chain of your customers. If you're 275 00:14:01,280 --> 00:14:03,600 Speaker 1: a company, right, So there are the emissions in the 276 00:14:03,640 --> 00:14:07,480 Speaker 1: case of take, for instance, BHP the mining group, the 277 00:14:07,520 --> 00:14:12,400 Speaker 1: emissions that people make from using your product, so that 278 00:14:12,559 --> 00:14:15,640 Speaker 1: it's it's possible to have very very low Scope one 279 00:14:15,679 --> 00:14:17,800 Speaker 1: emissions and two emissions which are related to your own 280 00:14:17,960 --> 00:14:21,760 Speaker 1: use basically, but have extremely high Scope three emissions because 281 00:14:21,920 --> 00:14:24,520 Speaker 1: you're selling coal into a market that uses it to 282 00:14:24,560 --> 00:14:27,080 Speaker 1: make steel or to make power. And in the case 283 00:14:27,200 --> 00:14:31,040 Speaker 1: in particular of coal's use and steel, uh, the reason 284 00:14:31,120 --> 00:14:33,480 Speaker 1: that it's used as is that it's hard to substitute for, 285 00:14:33,840 --> 00:14:37,840 Speaker 1: it's cheap, it's reliable, and there are, as Mark can 286 00:14:37,840 --> 00:14:41,840 Speaker 1: tell you, like physical chemical reasons why you need to 287 00:14:41,920 --> 00:14:44,160 Speaker 1: use it in a lot of processes. What's interesting to 288 00:14:44,200 --> 00:14:46,520 Speaker 1: see is we begin to see some of these big, 289 00:14:47,240 --> 00:14:53,480 Speaker 1: publicly englisted, internationally diversified mining metals and mining companies starting 290 00:14:53,480 --> 00:14:56,640 Speaker 1: to address this issue, mostly from a research and development perspective, 291 00:14:57,240 --> 00:14:59,960 Speaker 1: but as a way to I think, start working around 292 00:15:00,000 --> 00:15:02,760 Speaker 1: own the inherent issues that might come from their very 293 00:15:02,880 --> 00:15:05,280 Speaker 1: very large scope three emissions. And if you think about 294 00:15:05,280 --> 00:15:08,040 Speaker 1: it in the case of steel, there's there's really two 295 00:15:08,080 --> 00:15:12,720 Speaker 1: ways to do that. One is substitution at the combustion level, 296 00:15:12,800 --> 00:15:15,480 Speaker 1: right like that the process level to make steal the 297 00:15:15,520 --> 00:15:19,040 Speaker 1: way you traditionally do, and that is a hydrogen argument 298 00:15:19,120 --> 00:15:21,480 Speaker 1: for the large part. But then there's another argument that 299 00:15:21,560 --> 00:15:23,440 Speaker 1: might call ether for this piece David Fickling looked at 300 00:15:23,480 --> 00:15:26,760 Speaker 1: pretty closely, which is the same thing that really gutted 301 00:15:26,880 --> 00:15:29,440 Speaker 1: the primary steel industry in the United States, which was 302 00:15:30,360 --> 00:15:35,120 Speaker 1: electric arc furnace recycling is probably going to take hold 303 00:15:35,320 --> 00:15:38,680 Speaker 1: in China, in particular, given the fact that China has 304 00:15:38,680 --> 00:15:41,280 Speaker 1: been deploying half the world steel for about ten years now. 305 00:15:42,000 --> 00:15:46,400 Speaker 1: So you you have substitution and you have essentially non 306 00:15:46,480 --> 00:15:49,600 Speaker 1: consumption as you're as you're competing. Thing that might start 307 00:15:49,640 --> 00:15:53,360 Speaker 1: changing that scope three emissions landscapes in theory and theory, 308 00:15:53,400 --> 00:15:58,160 Speaker 1: one could make steel that has zero emissions for most 309 00:15:58,160 --> 00:16:01,840 Speaker 1: of the process if you use an entirely renewable electric 310 00:16:01,920 --> 00:16:05,840 Speaker 1: arc furnace in the process of making recycls deal scope 311 00:16:05,840 --> 00:16:09,200 Speaker 1: three emissions, as I previously stated, are difficult to calculate, 312 00:16:09,200 --> 00:16:12,680 Speaker 1: and I think that companies in the energy industry, if 313 00:16:12,720 --> 00:16:15,440 Speaker 1: they started to integrate this in this may have an 314 00:16:15,480 --> 00:16:19,640 Speaker 1: impact on their attractiveness from an E s G standpoint. 315 00:16:20,480 --> 00:16:22,640 Speaker 1: Tying it back to the first article that we were 316 00:16:22,640 --> 00:16:25,560 Speaker 1: actually talking about earlier, how do you see this potentially 317 00:16:25,640 --> 00:16:29,920 Speaker 1: having an interplay with these balance and dividends and stock 318 00:16:29,920 --> 00:16:34,080 Speaker 1: price and just attractiveness of these companies overall. So as 319 00:16:34,160 --> 00:16:36,400 Speaker 1: as a as a proper commentator, I don't get to 320 00:16:36,440 --> 00:16:39,080 Speaker 1: talk at all about whether or not this makes companies 321 00:16:39,120 --> 00:16:42,040 Speaker 1: better investments or not. But what it can definitely do 322 00:16:42,640 --> 00:16:45,440 Speaker 1: is that a labor of distinction, right, So I think 323 00:16:45,480 --> 00:16:50,040 Speaker 1: you could you the institutional investor will ask yourself in 324 00:16:50,080 --> 00:16:55,160 Speaker 1: the process of doing analysis whether this whether and focus 325 00:16:55,280 --> 00:16:58,600 Speaker 1: on E s G. Environmental, social, and governance is a 326 00:16:58,640 --> 00:17:00,640 Speaker 1: matter of alpha. So it's a way of making an 327 00:17:00,640 --> 00:17:03,760 Speaker 1: outsized return compared to peer groups. If it's a matter 328 00:17:03,760 --> 00:17:06,720 Speaker 1: of beta, if it's a matter of producing risk and 329 00:17:06,800 --> 00:17:09,600 Speaker 1: sort of uncorrelating your risks from your peer group, or 330 00:17:09,640 --> 00:17:13,760 Speaker 1: whether it's just something that is essentially preparing you better 331 00:17:13,800 --> 00:17:15,919 Speaker 1: for the future. Let's put it in another way. If 332 00:17:15,960 --> 00:17:18,960 Speaker 1: you had I don't know, a thirty five percent growth 333 00:17:19,080 --> 00:17:22,520 Speaker 1: rate as an industry, and you had increasing gross margins 334 00:17:23,200 --> 00:17:26,680 Speaker 1: and you had decreasing unit costs, you can probably get 335 00:17:26,680 --> 00:17:29,240 Speaker 1: away with saying we are just the growth story. You 336 00:17:29,280 --> 00:17:31,719 Speaker 1: don't really need to think about e s g. As 337 00:17:31,760 --> 00:17:35,880 Speaker 1: a major lens on the performance or the future prospects 338 00:17:35,880 --> 00:17:39,639 Speaker 1: of the company. If, however, you have less of a 339 00:17:39,680 --> 00:17:44,080 Speaker 1: growth story, and you're in a mature industry with well 340 00:17:44,240 --> 00:17:47,040 Speaker 1: analyzed peer groups, so without a lot of sort of 341 00:17:47,080 --> 00:17:52,320 Speaker 1: disruptive innovation frontier around you, then it's probably sensible to 342 00:17:52,400 --> 00:17:57,000 Speaker 1: start start applying lens is like this to that sector, 343 00:17:57,640 --> 00:18:00,479 Speaker 1: because there they are ways of making distinctions, right they 344 00:18:00,520 --> 00:18:03,000 Speaker 1: could they could lead to better returns, that's a matter 345 00:18:03,040 --> 00:18:06,480 Speaker 1: of deep financial analysis. They could be reducing risk or 346 00:18:06,560 --> 00:18:08,680 Speaker 1: un correlating it from the rest of the sector. So 347 00:18:09,560 --> 00:18:11,520 Speaker 1: I think I think we'll start to see that more 348 00:18:11,520 --> 00:18:14,760 Speaker 1: and more applied the very mature industries, not just because 349 00:18:15,800 --> 00:18:19,159 Speaker 1: they might have the very technical exposures around emissions and 350 00:18:19,240 --> 00:18:22,320 Speaker 1: things like that, but simply because it's another way of 351 00:18:22,359 --> 00:18:26,520 Speaker 1: analyzing things that are otherwise quite well analyzed. Okay, so 352 00:18:26,600 --> 00:18:28,960 Speaker 1: let's go back to the emerging markets team for a minute. So, 353 00:18:29,000 --> 00:18:31,280 Speaker 1: if you'll indulge me, I heard this thing yesterday that 354 00:18:31,560 --> 00:18:35,560 Speaker 1: Southeast Asia, who has historically built been the ones promoting 355 00:18:35,600 --> 00:18:39,400 Speaker 1: coal these days. Right, they've stopped and they've completely shifted 356 00:18:39,440 --> 00:18:42,080 Speaker 1: their focus to hydro Right, which carries its own set 357 00:18:42,080 --> 00:18:44,000 Speaker 1: of problems. But at least it's not they're saying, at 358 00:18:44,080 --> 00:18:46,880 Speaker 1: least it's not coal. Right, So it was the kind 359 00:18:46,920 --> 00:18:51,600 Speaker 1: of last stronghold of coal new build um, but it's 360 00:18:51,600 --> 00:18:54,520 Speaker 1: gone for the most part. Well, there's there's a there's 361 00:18:54,520 --> 00:18:57,000 Speaker 1: an element in all of these things that doesn't really 362 00:18:57,040 --> 00:18:59,800 Speaker 1: make its way into a lot of macro modeling, which 363 00:18:59,840 --> 00:19:04,720 Speaker 1: is what do people want? So people, people, people. If 364 00:19:04,720 --> 00:19:07,800 Speaker 1: we think about energy from a very classical perspective is 365 00:19:07,960 --> 00:19:10,840 Speaker 1: energy is just the ability to do work. So I 366 00:19:10,840 --> 00:19:13,480 Speaker 1: don't go out and buy a quantum of fuel or 367 00:19:13,560 --> 00:19:16,880 Speaker 1: a you know a certain number of electrons. I actually 368 00:19:17,400 --> 00:19:20,520 Speaker 1: I actually hire them to do a job, which is 369 00:19:20,760 --> 00:19:25,120 Speaker 1: run the lights. Uh, you know, energized rotating machinery, help 370 00:19:25,160 --> 00:19:28,679 Speaker 1: me move, help me heat, whatever it might be. And 371 00:19:29,320 --> 00:19:32,280 Speaker 1: again you can make the argument when the spread in 372 00:19:32,320 --> 00:19:38,280 Speaker 1: economics between something renewable or zero carbon and something high 373 00:19:38,320 --> 00:19:41,400 Speaker 1: carbon but very very reliable. When that spread is very 374 00:19:41,480 --> 00:19:44,760 Speaker 1: very wide, you can make the argument that mitigates in 375 00:19:44,840 --> 00:19:48,000 Speaker 1: favor of let's just do more cold because it's cheap, reliable, 376 00:19:48,080 --> 00:19:52,119 Speaker 1: domestic whatever. When the economics of those can press forward 377 00:19:52,680 --> 00:19:55,760 Speaker 1: quite a bit such that there's either very little or 378 00:19:55,840 --> 00:19:59,280 Speaker 1: no difference in the levelized cost of energy from one 379 00:19:59,400 --> 00:20:01,919 Speaker 1: versus the There, I think you sort of start to 380 00:20:01,960 --> 00:20:05,080 Speaker 1: look into sort of secondary characteristics that are imputed to 381 00:20:05,119 --> 00:20:08,840 Speaker 1: each of these different sources. So people say I want 382 00:20:08,920 --> 00:20:11,760 Speaker 1: something clean because now I know that there's no difference 383 00:20:11,800 --> 00:20:17,200 Speaker 1: economically between them. Uh. But in another way, people have preferences, 384 00:20:17,680 --> 00:20:21,160 Speaker 1: and as incomes rise, as people are past the point 385 00:20:21,200 --> 00:20:23,880 Speaker 1: of sort of abject poverty and more into the sort 386 00:20:23,920 --> 00:20:28,640 Speaker 1: of approaching middle income country status, people don't want air pollution. 387 00:20:29,640 --> 00:20:33,000 Speaker 1: People have a sensitivity around baking in thirty years worth 388 00:20:33,040 --> 00:20:36,160 Speaker 1: of worth of emissions, and it actually is much more 389 00:20:36,280 --> 00:20:40,480 Speaker 1: localized than it is than it is sort of generalized 390 00:20:40,520 --> 00:20:44,080 Speaker 1: and climactic you can think of it is it's more 391 00:20:44,080 --> 00:20:47,480 Speaker 1: of a local environmental issue than a global climate issue 392 00:20:47,560 --> 00:20:51,720 Speaker 1: that you see people manifesting all of this objection around, 393 00:20:52,080 --> 00:20:55,800 Speaker 1: so people saying, look, okay, they may not actually care 394 00:20:56,480 --> 00:21:01,600 Speaker 1: in the least about the global war, the carbon emissions 395 00:21:01,680 --> 00:21:04,800 Speaker 1: aspect of having a coal plant in one's back yard. 396 00:21:05,280 --> 00:21:08,240 Speaker 1: What people do care about is local air quality. Look, 397 00:21:08,320 --> 00:21:09,840 Speaker 1: you can walk on the street here in London and 398 00:21:09,880 --> 00:21:11,600 Speaker 1: see that we're soon to be and what is it, 399 00:21:11,720 --> 00:21:16,000 Speaker 1: the no emission zone. We already are. We are in 400 00:21:16,080 --> 00:21:19,440 Speaker 1: the ultra low emission zone we're recording today and where 401 00:21:19,480 --> 00:21:23,000 Speaker 1: Mark and I live separately outside of a little bit 402 00:21:23,040 --> 00:21:25,600 Speaker 1: further out, we will be an ultra low emission zone 403 00:21:25,600 --> 00:21:28,720 Speaker 1: in and it does ultimately come down to air quality 404 00:21:28,760 --> 00:21:31,840 Speaker 1: and human health. That's right, now, let's be is that 405 00:21:31,960 --> 00:21:34,320 Speaker 1: the bow you can tie around all this Sorry, well 406 00:21:34,440 --> 00:21:36,440 Speaker 1: it's it's it's part of the bow because it's the 407 00:21:36,520 --> 00:21:38,800 Speaker 1: next thing to look for, right, It's the thing to 408 00:21:38,920 --> 00:21:44,800 Speaker 1: watch for the intersection of behavior that's not institutional investor 409 00:21:44,880 --> 00:21:50,040 Speaker 1: behavior but is personal aggregated personal preference behavior. Right, So, 410 00:21:50,240 --> 00:21:53,080 Speaker 1: from a climate perspective, your ultra go emission zone in 411 00:21:53,200 --> 00:21:56,639 Speaker 1: London does basically nothing. It's not that big of a 412 00:21:56,720 --> 00:22:01,040 Speaker 1: deal from an air quality, from a children's health quality perspective, 413 00:22:01,080 --> 00:22:04,480 Speaker 1: it does quite a bit. Now, London had the Great fogs, 414 00:22:04,920 --> 00:22:07,760 Speaker 1: you know, as recently as I believe the nineteen fifties, right, 415 00:22:07,840 --> 00:22:11,080 Speaker 1: so just the big smoke, the big smoke, appawning air 416 00:22:11,240 --> 00:22:14,440 Speaker 1: quality issues at a time when there was no alternative 417 00:22:14,800 --> 00:22:18,359 Speaker 1: to energize and heat, so you use coal for everything. 418 00:22:18,880 --> 00:22:20,720 Speaker 1: Coal plants were local, you know, the ones that have 419 00:22:20,840 --> 00:22:25,040 Speaker 1: become both swanky apartments and a museum here in London. 420 00:22:25,080 --> 00:22:29,399 Speaker 1: We're both operating. But London, relatively speaking, got rich, and 421 00:22:29,600 --> 00:22:34,840 Speaker 1: so it's stopped really wanting that you had alternatives somewhere else. 422 00:22:34,880 --> 00:22:37,119 Speaker 1: In an extent, you just sort of globalize the pollution 423 00:22:37,200 --> 00:22:39,280 Speaker 1: issue by sending it somewhere else. You build the nuclearor fleet, 424 00:22:39,320 --> 00:22:42,520 Speaker 1: you built gas whatever. But we're going to see more 425 00:22:42,560 --> 00:22:46,280 Speaker 1: and more I think awareness of issues at a local 426 00:22:46,400 --> 00:22:49,000 Speaker 1: level that when you aggregate them start to be significant 427 00:22:49,040 --> 00:22:51,680 Speaker 1: for change. And what's very interesting about them is that, um, 428 00:22:52,160 --> 00:22:55,720 Speaker 1: you can't really litigate them away, like I don't know, 429 00:22:55,920 --> 00:22:58,800 Speaker 1: I don't know that there are they're probably forces trying 430 00:22:58,880 --> 00:23:01,360 Speaker 1: to intervene and prevent the ultra and the emission zone 431 00:23:01,760 --> 00:23:06,160 Speaker 1: from expanding. Good knock right, good luck to them. There 432 00:23:06,359 --> 00:23:10,560 Speaker 1: is the element though, where change does take a long time, 433 00:23:10,640 --> 00:23:13,080 Speaker 1: and I think you pointed this out specifically in reference 434 00:23:13,119 --> 00:23:15,359 Speaker 1: to India, where the average age of a coal fired 435 00:23:15,520 --> 00:23:19,359 Speaker 1: power station in India's ten years. So because these are 436 00:23:19,400 --> 00:23:22,480 Speaker 1: such big infrastructure projects, you know, we may end up 437 00:23:22,520 --> 00:23:26,840 Speaker 1: seeing a coal industry that actually has a reasonably flat, 438 00:23:26,920 --> 00:23:31,000 Speaker 1: maybe not growth, reasonably flat future for some time to come, 439 00:23:31,320 --> 00:23:35,200 Speaker 1: and tell the lagging installations of new builds actually catches potentially. 440 00:23:35,480 --> 00:23:38,480 Speaker 1: I would also I would also raise the possibility for 441 00:23:39,280 --> 00:23:44,080 Speaker 1: analytical thinkers that, um, the frameworks we've used in in 442 00:23:44,400 --> 00:23:48,240 Speaker 1: our economies wherein we operate stuff for forty years past 443 00:23:48,320 --> 00:23:51,920 Speaker 1: its economic life, may not necessarily be the paradigm in 444 00:23:52,000 --> 00:23:55,640 Speaker 1: a lot of different markets. If if there are enough 445 00:23:55,720 --> 00:23:58,159 Speaker 1: environmental changes out there that, say, I don't know, impair 446 00:23:58,280 --> 00:24:00,560 Speaker 1: the watershed that you need to cool your coal plant, well, 447 00:24:00,600 --> 00:24:02,280 Speaker 1: then it doesn't matter if it's eight years old or 448 00:24:02,320 --> 00:24:04,919 Speaker 1: eighty years old. You may not be able to operate it. Um, 449 00:24:05,040 --> 00:24:07,359 Speaker 1: if there's enough local objection to it, then people may 450 00:24:07,480 --> 00:24:10,440 Speaker 1: want things to go away. So we've already been through 451 00:24:10,480 --> 00:24:12,600 Speaker 1: this phase of shifting things quite a ways out. And 452 00:24:13,000 --> 00:24:15,080 Speaker 1: you know, this is economic modeling that says that the 453 00:24:15,119 --> 00:24:17,960 Speaker 1: coal point has a forty year life. There are plenty 454 00:24:17,960 --> 00:24:22,080 Speaker 1: of things that are lemons or elephants shortly after they're 455 00:24:22,119 --> 00:24:25,800 Speaker 1: completed and they and they really may not be may 456 00:24:25,840 --> 00:24:28,040 Speaker 1: not be doing that. So I I think it's prudent 457 00:24:28,240 --> 00:24:32,280 Speaker 1: to still model things based on you know, inexpected economic lifetime. 458 00:24:32,320 --> 00:24:35,720 Speaker 1: I think it's also worthwhile to consider a counter argument 459 00:24:35,760 --> 00:24:37,960 Speaker 1: about whether or not things are actually going to be 460 00:24:38,040 --> 00:24:40,800 Speaker 1: operating for forty years just because they've been built. Um, 461 00:24:40,960 --> 00:24:43,960 Speaker 1: there are plenty of examples of oil fired power plants 462 00:24:44,000 --> 00:24:47,439 Speaker 1: that were built. Uh, they were built at certain periods 463 00:24:47,480 --> 00:24:50,640 Speaker 1: of time that are now essentially absolute immediately in many 464 00:24:50,680 --> 00:24:54,359 Speaker 1: cases because they were substituted for coal. Uh. You know, 465 00:24:54,440 --> 00:24:57,159 Speaker 1: there are there are plenty of times and places when 466 00:24:57,200 --> 00:25:01,160 Speaker 1: substitution can happen, when there are alternatives, and where people 467 00:25:01,200 --> 00:25:04,200 Speaker 1: make their own economic decision, which is I'm just not 468 00:25:04,320 --> 00:25:06,520 Speaker 1: going to do this anymore. We had this happened throughout 469 00:25:06,560 --> 00:25:09,520 Speaker 1: throughout the United States fleet, right, We've even got a 470 00:25:09,560 --> 00:25:11,320 Speaker 1: time right now, it's almost like a great test case 471 00:25:11,359 --> 00:25:15,600 Speaker 1: in which we've been sort of stripping regulations around around 472 00:25:15,640 --> 00:25:18,680 Speaker 1: particular emissions and things like that. That in theory should 473 00:25:18,680 --> 00:25:21,080 Speaker 1: be great for a coal plant, But investors making a 474 00:25:21,160 --> 00:25:24,040 Speaker 1: rational decision look forward and say, well, not only am 475 00:25:24,119 --> 00:25:26,560 Speaker 1: I not going to build anything new, I'm also going 476 00:25:26,640 --> 00:25:28,639 Speaker 1: to shut down something old because I have I have 477 00:25:28,720 --> 00:25:32,080 Speaker 1: an alternative. I have an alternative to that service that's 478 00:25:32,119 --> 00:25:35,680 Speaker 1: being provided. And that's kind of what's well in a way, 479 00:25:36,240 --> 00:25:41,280 Speaker 1: driving the growth story for the utilities in a way, yes, 480 00:25:41,440 --> 00:25:44,040 Speaker 1: because actually more investment is good. And you know, utilities, 481 00:25:44,359 --> 00:25:46,840 Speaker 1: as you add wires, you're you're adding a recurring and 482 00:25:46,880 --> 00:25:49,120 Speaker 1: for restable cashflow to investors in needs in the United 483 00:25:49,119 --> 00:25:52,520 Speaker 1: States paradigm of investor on utility. But as things get cheaper, 484 00:25:52,560 --> 00:25:55,080 Speaker 1: as you get more options, you you have other areas 485 00:25:55,119 --> 00:25:57,840 Speaker 1: you can expand that's right, right, I mean, in theory, 486 00:25:57,840 --> 00:25:59,840 Speaker 1: if I'm a utility, I should be the beneficiary of 487 00:26:00,080 --> 00:26:02,480 Speaker 1: every new wire that gets built. Exam. I may not 488 00:26:02,680 --> 00:26:05,440 Speaker 1: be capturing the value of every new electron that's generated, 489 00:26:05,480 --> 00:26:09,000 Speaker 1: but I should be getting value out of every electron 490 00:26:09,040 --> 00:26:12,000 Speaker 1: that's being delivered. Right now, I could be competed away 491 00:26:12,000 --> 00:26:13,679 Speaker 1: at the margin or maybe even at the heart by 492 00:26:14,080 --> 00:26:17,040 Speaker 1: highly distributed energy, or I could have a plane that myself. 493 00:26:17,240 --> 00:26:21,920 Speaker 1: I could be providing the electrons and the infrastructure to 494 00:26:22,160 --> 00:26:25,000 Speaker 1: energize an electric vehicle fleet, or I could be competed 495 00:26:25,000 --> 00:26:28,280 Speaker 1: away by by an oil and gas company doing that, 496 00:26:28,520 --> 00:26:32,400 Speaker 1: or by a technology company doing it, or any number 497 00:26:32,440 --> 00:26:35,240 Speaker 1: of other people that decide to tap into the existing 498 00:26:35,400 --> 00:26:38,600 Speaker 1: electricity network, build in points onto it, and come up 499 00:26:38,640 --> 00:26:41,800 Speaker 1: with a different business model than what you might already 500 00:26:41,800 --> 00:26:45,240 Speaker 1: have right now, Nat, thanks for joining us. Always a pleasure, guys, 501 00:26:45,359 --> 00:26:49,639 Speaker 1: See you next time. I'm on another Bloomberg Anya is 502 00:26:49,640 --> 00:26:52,359 Speaker 1: a service provided by Bloomberg Finance LP and its affiliates. 503 00:26:52,520 --> 00:26:55,160 Speaker 1: This recording does not constitute, nor should it be construed 504 00:26:55,240 --> 00:26:58,960 Speaker 1: as investment advice, investment recommendations, or a recommendation as to 505 00:26:59,240 --> 00:27:01,720 Speaker 1: an investment or other strategy. Bloomberg an e F should 506 00:27:01,760 --> 00:27:04,360 Speaker 1: not be considered as information sufficient upon which to base 507 00:27:04,400 --> 00:27:07,879 Speaker 1: an investment decision. 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