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On Today's Bloomberg Intelligence Show, we dig inside the big business stories impacting Wall Street and the global markets.
Each in every week, we provide in depth research and data on some of the two thousand companies and one hundred and thirty industries our analysts cover worldwide.
Today, we'll look at why the planemaker Boeing reported am moreer than expected loss last quarter, plus.
Well discuss why the Dutch brewing company Heineken reported a decline in beer volume sales.
But first we begin with news in the railroad industry.
This week, Union Pacific agreed to buy Norfolk Southern and a seventy two billion dollar cash in stock transaction. The merger would create the first and only US transcontinental Railroad.
For more on this in.
The Future of the Railroad Industry, guest host Isabell Lee and I were joined by Lee Clascow, Bloomberg Intelligence senior Transport Logistics and chipping analysts. We first asked Lee to give us his outlook on how this mega deal can get done.
Yeah.
I think the whole speculation before the deal was formally announced about a possible consolidation, and I think people are just trying to take maybe a breather right now because there are some execution risks. Right this deal is not going to close. If it does close until early twenty twenty seven, it needs regulatory approval, which is not an easy thing to do. There were certain rules that were created at the Surface Transportation Board to make it very
difficult for large Class one rail mergers to happen. That was because at one time in the eighties and nineties, those sorts of deals resulted in terrible service. I think that the rails today were much more cognizant of service as it relates to integration. And I don't really think you know, either company once once, assuming a merger does happen, are going scorched earth in terms of, you know, what
they're going to do to their networks. You know, they mentioned on the call that they had earlier today that they're really not going to lay off any uh, you know, frontline workers. Most of the probably layoffs are going to happen you know, in in in in the offices. So you know, that would just mean that services would prevail. And one of the reasons why they are doing this, you know, from an outsider looking in, you know, it
does make complete sense. Between the two of them. They interchange around a million and car loads a day and if they're just able to if that's that car load is able to be on the same network, it's not only going to improve network fluidity, it will actually lower the railroads their costs. Let's hope they pass on some of that cost savings to their shippers. I think that's what shippers might be concerned about.
And it'll it'll provide probably a better service product that they can go out and compete against other modes such as trucks, and you know that's you know, also a good thing because you know, from an environmental standpoint, railroads are less fuel efficient, you know, trucking kind of deals with you know, turnover issues and trucker availability issues.
Right now that's not an issue, but at times it can be. And so you know, it is definitely a very interesting deal. It will create the first trans continental railroad. But you know, they do have their work cut out for them to get that regulatory approval.
So the deal is worth eighty five billion dollars, How do they plan to make money back? What are the financial wins so to speak, to justify that happy price?
Tad.
Yeah, they laid out two point seven five billion in synergies, about one point seven five and that two point seventy five is going to be from revenue. So what they're saying is that, you know, we can probably get more volume onto the network because it all of a sudden becomes a much more compelling service offering, and then about a billion dollars in cost savings and some of that. Again, you don't need to CEOs, you don't need two CFOs.
You don't need two corporate headquarters, you know, the dimension. They are going to have their headquarter in Omaha where Union Pacific is located, and keep a I think they worded a major presence in Atlanta where Norfolk is currently So but you know, obviously they're not going to need as much space as they once have. And then there's technology benefits, you know, so you're only you know, money in technology once, not twice to get those productivity improvements.
So I think those are the major aspects of it. And you know, they mentioned that you know, they could be you know, EPs a creative after year or two.
Well, he mentioned a lot of regulatory agencies are going to weigh in here on this deal. I also think President Trump is likely to weigh in. Do we know anything about how he might view this deal or just consolidation in general?
What's the views as to the Trump administration?
I mean, we don't. The language that management noted on the call is like they wouldn't have moved forward with this transaction if they felt that it was impossible to get regulatory approval. So whether that means they were talking to the administration, whether that means they were talking to the STB or the DOJ, or everybody in between. That's kind of you know, if you read between the lines,
is what they were saying. The fact that they're not going to lay off any union folks is probably a net positive for a Donald president Donald Trump to say, you know, this is okay with me.
You know.
So there's a lot of unknown still and again this is this is going to take a long time. So we have a deal. It has to get Surface Transportation Board approval, which you know won't happen at least for a year and a half.
Could this park more railroad mergers in the US? And if it goes through, what will shipping look like in five to ten years? You said, absolutely, please elaborate.
Yeah. So, so the other railroads in the US are Burlington Northern, which is you know, owned by Berkshire Hathway. They may make their own bid for Norfolk Southern or decide, you know, we're just going to go after CSX because if they do not merge, then they're going to be at a competitive disadvantage. Why would you want to send your freight across two railroads when you can send it across one. So it just would make sense. And if there is regulatory appetite for this kind of a transaction.
You know, you could see a Berkshire hacked the way and CSX coming and you know, if their competitors were able to get a deal, there's no reason why you wouldn't get a deal done between the two. A lot of ifs and butts and candies and nuts, but we'll see what happens.
Our.
Thanks Salie Clascow, Bloomberg Intelligence Senior Transport, Logistics and shipping analysts.
Move next to news in the drug and pharmaceutical space.
This week, the Danish drug maker Novo Nordisk announced that insider Masier Mike Dustar would need to take over as the company CEO. This came after Novo cut its full year outlook, stating that it's seen a decline of its blockbuster weight loss drug wig Goovi for more.
Guest host Isabel Lee and I were joined by Michael Shaw, Bloomberg Intelligence Senior pharmaceutical and biotech analyst. Your First asked Michael to break down Novo's a recent guy.
It's reported guidance now is calling for some percent sales growth six percent operating profit growth after adjusting for currency, and that compares to fourteen and fifteen percent respectively previously. Now a lot of that is related to the US market. There, they're still seeing headwinds from compound and GLP one, which seems to be the main driver that's affecting wegov growth.
And there's a lack of visibility here. So all of that creates uncertain z for investors and also kind of questions around not only only twenty twenty five numbers, but the exit rate into twenty six. So there's concerns about you know, mid to long term growth given how concentrated or how reliance orry Novo is on WE'REGOVI for growth. The other headwind is competition to a zepic, So that's the GLP one for diabetes and that's another you know,
key growth driver for the for the company. Second piece of news new CEO appointment. So they went with an internal candidate. I think the market was perhaps expecting them to go for an external candidate, so you know, perhaps a bit of disappointment there. But that said, you know he's been at the company. So this is Mike Dudster. He's been at the company since ninety two. He's been heading up international operations since twenty sixteen and over that time.
You know, we've seen international operations sales double to around eighteen billion dollars, So you know, he's an internal higher, he's familiar with the company culture. I think it's a bit too early to to, you know, to write him off before he's even started. Now, his focus is going to be on re get gaining ground to Lily in the obesitie space, maintaining leadership in a diabetes space, and
then improving execution. And that's something that's going to be key ahead of the Cagary Semma launch as well as the launch for its oral JP one in a in obesity, particularly given you know Cagary Summer perhaps isn't as differentiated as we had hoped for, and then the oral JLP one profile perhaps trails of Lily's.
The new CEO said he's planning to review the company's cost base with outstting specific targets and metrics. So could this indicate indicate that Novos preparing for a period of solar growth after the initial surge and demand, especially the blockbuster we Go V drug.
I mean, I think it will be hard to slash R and D to be honest, So I mean, and they would need to you know, continue marketing, continue to do DTC in order to you know, in order to compete with Lily. They're obviously healy heavy investing into Capex at the moment, but there is probably some operating leverage in there, you know, to provide some sort of relief. I mean, the company's got a margin about forty five, which is at the top end for large farmer.
Hey, Mikey, is there any reasons to believe that maybe the marketplace has been over estimating the size of this OBC drug market?
I think, I mean, yeah, I think there's always a risk with it with an indication this size when you look at the market potential. You know, in the US alone, it's one hundred and thirty one hundred and forty million patients, which which is a target population.
There is a population head.
Yeah, I mean there is a risk that you know, perhaps consensus did get ahead of itself. But the difficulty here is, you know, you have you know, huge runway of patients. There's obviously limited supply, so that it's difficult to know kind of you know, how quickly that supply can come on board. Now, you know, Nova gives guidance
around you know, the growth prospects. You know, where they think sales et cetera are going to go, but they keep they don't necessarily quantify, you know, the cadence supply and how that how quickly that's going to come online. So that kind of makes forecasting quite difficult. And obviously they don't want to give that information because it's competitive information and they want, you know, lily to know about it.
Our thanks to Michael Shaw, Bloomberg Intelligence senior BARMA biotech analysts. Coming up, we'll discuss the importance of Samsung producing AI chips for the ev giant Tesla.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in research and data on two thousand companies in one hundred and thirty industries.
You can access Bloomberg Intelligence via b I go on the terminal. I'm normal Inda and I'm Paul Sweeney, and this is Bloomberg.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
I'm Paul Sweeney and I'm normal, Linda filling it on Bloomberg Intelligence. We move on to earnings and the aerospace and airline industries.
This week, planemaker Boeing recorded a smaller than expected loss for the second quarter, along with revenue that beat analyst expectations. Going also said it almost halted its cash burn last quarter.
Separately, Jet Blue Airways posted a smaller than expected lost in the second quarter as the man rebounded.
For more guess Isabel Lee and I were joined by George ferguson Bloomberg Intelligence. Senior Aerospace, Defense and Airlines analyst. First asked George for his key takeaways on Boeing's earnings.
The free cash flow is still a little bit negative, not much cash from operations positive a little bit two hundred million. I think it was roughly on two hundred negative free cash flow to a positive and cash flow, I think roughly. So we're seeing an inflection point here in cash flow.
So cashflow had.
Been negative for the last I think it was six quarters before this, and I think that's just the sign of they're getting more aircraft delivered. They're gonna you know, they've got a lot of inventory still, they'll pull off the shelf to build aircraft going forward to pull a bigger report proportion of stuff off the shelf than they would during normal times, which should juice that cash flow up. Uh, you know pretty well. So I think it's you know,
the turnaround is still in uh is underway. It looks like it's you know, well in you know, in swing in the results we saw and the way you know, company management commented on the end of the year and so you know, I think it was a pretty good results quarter for Boeing again, turn around intact.
How are they addressing quality in safety issues, especially when it comes to the seven three seven MAX program.
Yeah, I mean there it's you know, as Kelly Oprok said, it's a process. I think just the sign of seeing increased deliveries is showing us that the quality improvement at Spirit you know, has has seen success. And they're talking about you know, they're at thirty eight seven thirty sevens a month now. Kelly Opork says he's going to approach the FA in a short period of time and work on the forty two. It's seven thirty sevens a month.
So again he must have some level of confidence that his quality and his engineering is good in order in order to go further. It's not perfect. They've been slowed down a little bit in the certification of seven three seven DASH ten and DASH seven. They've pushed them into twenty twenty six. I think it's okay. It's not a
big move. You know, we'd like to see them come faster because seven thirty seven DASH ten is a large competitor to the Airbus A three twenty, which is very successful and one of the reasons they saw United place a big order with Airbus. But again, I think that you can't expect this stuff to go in a straight line. And the fact that they think twenty twenty six is when they could get certification, it doesn't tell me anything's broke.
It just tells me the process is nonlinear, and I think to be expected in aerospace, all right.
Also, jet Blue posted a smaller than expected loss. Here, what's going on with Jet Blue and the airline business? He's aces because I know the last quarter, Boy, these airline companies are really reticent to give any kind of guidance.
Yeah, I mean a lot of them have come back with guidance in a lot of cases is lower a lot you know, the airline business right now is really counting on less capacity in the second half of twenty twenty five, and we'll see how that goes. Last time I looked at domestic capacity plans for three Q it's kind of about zero growth. I mean, I think they
need to cut capacity in the marketplace. If you look at jet Blues results, load factor fell by I think it was around three hundred basis points down to the low eighties from mid eighties they and they held fares pretty much flat, yields were kind of just up a little bit. So that just tells me that there's too much capacity in this market. They just can't fill airplanes at the right price. Jet Blue has other problems like you know, the gear turbo fan keeps them from expanding.
That means costser ballooning on them. But I don't see how they'd want to expand right now. What I see as a market that has can't fill airplanes at the price that's going to keep them very profitable, and so someone's got to cut. And the question is who the full service carriers are saying, Hey, we got premium to
subsidize us. We don't care. The low costs are going to have to jet Blue will cut in three Q but every time they cut, their costs go high or per seed, so they're a bit of a challenging position.
It does seem like the issues just compound for the companies in this space from aircraft shortages.
Delivery delays, pilot shortages.
Wage inflation, labor and negotiation and so on. Are there differences in how Boeing and Jet Blue addressing the issues or is really an industry wide consensus and problem.
Well, I mean if you talk to Boeing, everybody wants an airplane, right and they're sold out in the seven thirty seven and seventy eight seven to the end of the decade. Everybody wants the newest, and I think what needs to happen is, again the airlines are just putting too much capacity in the marketplace, especially in the US, and someone has to cry uncle and say, hey, you know,
we can't take the profitability at these levels. Park some airplanes get them out of the business so they can write size compacity, and I think nobody wants to do it. You have some competitors that are in a situation where they they've you know, some of them are declared Chapter eleven it's like spirit and then and then refashion themselves
and got back out in the marketplace. But it's either someone's gonna have to go away or the market's going to have to get negative enough and profitability that people start to park airplanes. As we get into laid end of this year, four Q and one Q, those are weak quarters for the US airline industry. If something doesn't improve, If you've got a Jet Blue that's barely positive and profitability in two Q without a change in this market,
that's that's a strong negative. Near the end of the year, people will start to cut capacity and try to boost fares.
So, George, who does that? Is it one of the big three? I mean, Jet Blue can't drive capacity in this industry.
It's got to be one of the big three, right, Yeah, Look, I don't think it's. The big three are in a game of chicken with the low cost right they think that they've got pole position here and that they just keep capacity and someone's going to fail on the low cost side because the low cost doesn't have this premium seating. They might be right right right now, it looks like their profitabilities hanging in there. The low cost carriers are the ones taking it on the chin our.
Thanks to George Ferguson, Bloomberg Intelligence Senior Aerospace, Defense and Airlines analysts.
We moved to news from the ev giant Tesla.
This week, we heard Samsung will make AI chips for Tesla in a sixteen point five billion dollar multi year deal. That's according to Tesla CEO Elon Musk, must be the statement on x where he stated that the strategic importance of this deal is hard to overstate.
For more guestos, John Tucker and I were joined by Craig Trudell, Bloomberg Global Autos Editor. We first asked Craig what this deal between Tesla and Samsung will do for the carmaker.
Samsung is an existing supplier of these high powered semiconductors that are used for its driving systems that it markets as a full self driving and autopilot. Contrary to those names that you know, you cannot buy a Tesla today and have to drive itself for you. You still need to pay attention and keep your hands on the wheel
and eyes on the road. But uh, it is the case that those systems are are becoming more more capable and that Tesla's trying to kind of press the issue with them to the point where uh, you know, they're they're taking people out of out of the driver's seat and and having uh you know, supervisors in the in the passenger seat of cars in Austin, Texas, and and trying to to take that elsewhere as well. Uh this
this will be interestingly. Musk announced that they will be going to a T S M C chip for for the next generation of Semis that they use and then go to Samsung, relying on on supply from from this plant in Texas that that Samsung is boys to to open, uh in the near future.
And what near future? How how long does it take to build a fab plant? The cool kids say fab right.
Yeah, that's right. Yeah, I mean I think, uh, you know, the the this is a project on Samsung's part that's been in the worse for some time, right, and and so uh they they you know, were sort of moved actually by the Chips Act under the Biden administration, and Trump uh was was critical of of the Chips Act, you know, on the on the campaign trail. And yet we've seen uh sort of a continuation and somewhat of
an embrace of it. Uh you know, as we've we've seen a change in the White House, uh in terms of the exact timing of when exactly this new AI chip uh you know, will will be coming out of that Texas factory. It's it's not yet clear, and the companies have have not said much because uh, you know, they of course agreed to uh you know, some some privacy here that must proceeded to to sort of loosen up on you know, at least over social media.
Craig, do we know at this stage to what extent Elon Musk is engaged in the day to day the strategic of Tesla and any stepped back from his doze responsibilities.
I mean, I think you can you can glean so much from his his you know activity on x as to what he's paying attention to. And it absolutely is the case that we're seeing him him posting more about things like this deal with Samsung, and I do think that that's helpful sort of for for sentiment around Tesla.
And yet I would say too that you know, if if there was a sort of you know, scorecard, sort of an informal scorecard that you'd be keeping track of where he's sort of devoting most of his time and attention to I would say it's as much or more on XAI and just ai in general than it is on Tesla specifically. You know, you heard from him a few months ago that he would really be turning his attention back to Tesla, you know, as he was making
his way out of the White House. But I think you know, the amount of attention and emphasis he's put on trying to catch up to the likes of open AI and Google in our artificial intelligence and LMS is you know, definitely exceeds you know, the amount of you know, noise we're hearing from him about the day to day interworkings of Tesla.
Our thanks to Craig Drudell, Bloomberg Global Autos Editor. Coming up, we'll discuss the impact of President Donald Trump's a big, beautiful bill on green hydrogen.
You're listening to Bloomberg Intelligence on Bloomberg Radio, providing in IF research and data on two thousand companies and one hundred and thirty industries.
You can access Bloomberg Intelligence via b I go on the terminal, I'm normal, Linda.
And all Paul Sweeney and this is Bloomberg.
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I'm Paul Sweeney and I'm normal into filling in on Bloomberg Intelligence.
We moved next to the consumer goods industry this week.
The Dutch brewing company Heineken reported a decline in beer volume sales during the second quarter. This came as Heineken feest disputes over price increases with regional buying groups in Western Europe.
The More guest host John Tucker and I were joined by Duncan Fox, Bloomberg Intelligence senior consumer products analysts. First, they asked Duncan for his take on honingg it's most recent guidance.
Essentially, European retailers decided not delayed pushing the prices up after I suppose last year wasn't particularly big on pricing the last three percent of the local Heinegen brown, but the previous two years when inflation was raging, you know, they did get fourteen and ten percent respectively. In twenty
two and twenty three. Costs of goods are not really going up, so I think the retailers just pushed back and he took them longer to push to get a small price through in Europe and that's just hit the So it's about fifty of the overall business.
What is what is a Heineken class in the pub?
Well, if you're in London, a heck of a lot. It's it's probably eight pounds plus I can be about ten, which they are either the Dorset, you'd be lucky to get it. You know, it's sort of around five to six pound. But nonetheless, you know, when you're pushing the price up the premium Heinegen brand, which is probably twenty percent more expensive than any other sort of mainstream beer that they've got on the pulfo, you can see why the volumes struggled in the short term given cost of
living crisis. So it's something they will resolve and hope they have evolved in fact on the pricing, so one hope it will get better as we go to the second half. With that's a weather that we've found in Europe.
So we we had I guess the announcement of a trade deal between the US and the EU, I don't think what's it mean for the spirit's business, the beer business, line business asking for a friend.
I hope you've already stocked up that fifteen percent is probably is probably a good outcome given some of the rumors that were going around from April on was that he could have gone up to two hundred percent. But obviously the cost of beer coming in for someone like harnek and they basically ship in from either Holland or Mexico. Some of the Mexican beer may well be tariff free on the us NCA agreement, but then you've got the out sort of the cans, So lord knows how much
that will push the price up. But yeah, they'll just have to push prices up on beer and spirits. Spirits at fifteen percent probably say it's not huge, but it'll mean pushing prices up three four percent something of that order on top of what they would normally try and get.
So it's it's not going to be easy to do, but it's not as disastrous as thirty percent or something like that, which Renby said would take thirty five million euros, So a little bit better than expected or feared, but it's still not going to be great and use wine.
There really isn't.
Anybody that exports wine that's quoted, so it's a bit difficult to say all the impact is, but it will certainly make it more expensive compared to your good, US great varieties that come on the market. So I would have thought you'd see people switch to US lines.
I find that's kind of disturbing. This part of the story where you quote the CEO of Heineken beer markets have declined that a pace Heineken has rarely seen any time before. Is this the end of humanity as we know it?
Well, if it carries on you, I think there was. There's been stories that, you know, the gen Z's have given up and drink. I think that's wildly wrong. But there's certainly people are abstaining during the week a little bit. But the real problem is that people are drinking more at home going to the pub, and that's sort of change. That's the big change from COVID. So you've got to
make sure you get your pricing at retailer's right. Goes back to your original question, because people that know it's sort of more like eighty percent drinking at home in the US, it's anywhere between sort of fifty and twenty percent,
depends on where you're on in the world. There are a lot more people drinking at home and going to pugs and clubs, so the mix is poor really or has been, and it needs the good summer would help and in these people to have a bit more money in their pocket as well, so maybe feeling a little bit more confident that they can go out and spend with their friends rather than buying it cheap from retailers and entertaining at home.
Don't get are one of this is a national phenomenon because it's a phenomenon on the Jersey Shore, which is people are drinking like these iced tea vodka things, the White Claws, all this stuff that's not beer.
Are you seeing that? Is that a trend around the world?
Unfortunately, it seems to be that is a trend. You get a lot of ready to drinks being being pushed and they big for sort of twelve eighteen months, and it does tend to go against the beer volume more than anything else. Spirit companies are doing it with no alcohol spirits now and they're also pushing you in bigen and tonic or already drink gin and tire and stuff
like that. So there's just a lot more choice to the consumer than there was, you know, when I was a kid, So it just takes a little bit of a shine off. You can try new things, and I'd say people are spending more or spending a similar amount of arcoli just buying less of it in terms of volume.
So it's all about getting the value right. Premium brands are doing well in Premium brand did very well in these results, but it's only twenty four percent of their overall volume, So you know, four point five percent on twenty four percent doesn't sort of help.
Part thinks Sid Duncan Fox Bloomberg Intelligence Senior Consumer Products analysts.
Each week we look at research from Bloomberg n EF, previously known as a New Energy Finance.
They're the team at Bloomberg that tracks and analyzes as the energy transition from commodities to power, transport, industries, buildings, and agriculture sectors. This week, we looked at the impact of President Donald Trump's Big Beautiful Bill on US clean energy spending and on hydrogen For more.
Guest host John Tucker and I were joined by Martin Tangler, Bloomberg n EF's head of hydrogen Research. First to ask Martin how the Trump administration is impacting the hydrogen sector.
Hydrogen was being portrayed, as you've kind of implied, as this huge economic opportunity until recently, and if you've been following the news, then you may have noticed that there was There has been a lot less news on hydrogen these days, with a couple exceptions, and I think this was to be expected. The industry right now is what we have called it bn EF and what Gardner of course has called in their high cycle theorem a truffle disillusionment.
So previously people were too excited. We had this this inflated expectation about how much hygiene we were going to use, and we were going to use it in cars, We're going to use it in heating, We're going to use it everywhere, and b and EF Bloomberg NEF you're saying, no, that's not going to happen. Let's take a step back. And now we're kind of there. So we're seeing projects canceled and fid's final investment decisions turning out not to be final and being taken back. So what's the was
the problem? I would say problem number one is low demand. So a lot of producers, a lot of companies want to make this stuff, but not so many want to buy it. Why do they not want to buy it? Because it's turned out to be more expensive, especially the green kind hydien made from water with renewed electricity, And why is that? Why is it expensive Because there's less insufficient policy than people expected, which kind of brings us now to Trump. So you're asking, what's going on with Trump?
What's going on in the US. So, of course the obb B A but got the right number of bees and one big beautiful bill Act got passed just recently, and that had a lot of impact on of course clean energy and hydrogen as well. In one sentence, I would say it cemented the dominance of blue hydrogen over green. Of course, gray hydrogen one that we make from fossil fuels without any carbon capture and storage. We don't care how much we release. That's the one we make most of today.
Hydrogen.
Yeah, so blue hydrogen is hydrogen that's made the same way as gray from fossil fuels, which is made from natural gas, but where we try to capture some of the CO two that's released in the process and as you may be aware and of the Trump administration, they like the CO two or CO two capture, so they've improved some of the conditions for the forty five Q
tax credit. Many of the tax credits got canceled or revised, but the forty five Q for capture, carbon capture and storage actually got better for blue hydrogen producers who now can make more money if they do the enhanced oil recoveries that they pumped the CO two back into an old field and extracted, they may now get the same amount of money as if they were just to bury that underground. So that's an improvement for blue hydrogen that's come out of the obbb A.
The credits favor hydrogen that's kind of polluting and not the stuff that's the good stuff.
I think I know that I wouldn't I would not go that far. So there's another kind of hydrogen's green, which I also want to talk about, which is made from renewables and the tax credits. There were very generous tax credits for that called forty five V, and those got scaled down very significantly. So you now must start construction by the end of twenty twenty seven, as opposed to end of twenty thirty two in order to be eligible for this very generous tax credit that was passed
by the Biden administration in twenty twenty two. So that's been a reduction in support for the green kind, which is lower emissions, and improvement for the support very very limited improvement, but some improvement in the support for blue and then blue. There's a lot of questions around how much of the carbon you actually capture, but you could argue that you could capture ninety five percent, as much as ninety five percent in some situations has not been
done yet but could be done. Then actually it's not so unclean. So there's lots of people. Some say it's it's it's very dirty, but others say it's it's it can be quite clean.
Martin.
To the extent that this administration is not as supportive of the energy transition that led let us say, is maybe some other administrations, What does that mean for the global trends here?
How important is.
The US in terms of this global transition to alternative energy sources?
Well, I don't think I have the expertise to talk about more broadly alternative energy sources more broadly, but certainly in terms of hydrogen again, which is my field. I would argue the US is very important to the people. When the tax credits were announced back in twenty twenty two, everybody was really really afraid that the US would jump
in and take over everything in hydrogen. And then people were waiting and waiting for the final guidance on these credits, which came very very late, and the US actually did not become a leader, but it can still be a leader on exports of especially that blue hydrogen that I talked about. The Japanese, the Koreans they're keen to import some of it to burn in power plants, which we have a whole series of report reports that says bad idea.
But if the Japanese, Japanese and the Koreans want to do it, then I think the US is there and ready to sell that, and that actually happened. So we had a deal between for example, CF Industries and a couple of Japanese companies to sell that blue ammonia, which is a chemical made out of hydrogen to be burned in Japanese power plants are used in steel plants in Japan. And then you've got Europe, which is very very focused on green hydrogen. They really want to adopt green as
opposed to blue to reduce dependence on fossil fuels. But we still see an opportunity for blue hydrogen from the US being exported to Europe if the carbon price is here in Europe rise to the levels that we expect them to rise to in twenty thirty at bnf.
R thanks to Martin Tangler, beenap's head of hydrogen research.
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