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In terms of earnings outs, it's another big day for the big banks Bank of America and Morgan Stanley Alson Williams joins us. She is the senior bank analyst for Bloomberg Intelligence. She is the expert on these big banks. Alex, let's start with one of my former employers, Bank of America, Merrill Lynch. I'm going to keep that name in the in the name, there wouldn't be an investment bank that work for Merrill Lynch.
Talk to us about what we saw the Bank of America, Allison, So.
I think the Merrill Lynch side of things did very well, so making you proud there. Thank the wild fees came in better than expected. Equities trading and equities fees also better than expected. So continuing to build on some of those investments in the investment banks. So everything going well there, and actually on the net interest income sort of a standout result in the sense that their net interest income actually increased from the prior quarter. It was better than expected.
So that all sounded great until we got to the conference call and the bank really just kept their guidance study and so I think that's what the stock maybe reacting to today. But really, I mean, that's consistent with the other banks, and frankly, I think makes sense. We had look at the change we had since the last time the banks reported. Last time they reported, it was
six to seven cuts expected. Today, I mean it's been three and drifting lower, right, So those expectations keep getting pushed out, and with things changing so dramatically, I don't think it's surprising that they kept their guidance stable. I would point out that their guidance is a little bit more positive in the sense that they do expect growth
in the second half. I think just maybe ahead of the call, people got excited and thought, you know, could we have already seen the trough and they're saying, no, second quarter is going to.
Be the troughs.
Maybe it was the seventeen uses of strong in a statement that kind of raised that expectation. Also, what was interesting, though, was the charge off so that increased by about three hundred and six million dollars to one and a half billion. Can you talk us through I know that's the that's the bank side of the business, the everyday banker side of the business.
But what's that what's that going on there?
And that you know, that is the other part of it. And so you know, when we think about core lending income, it's the net interest income is the revenue side, and provisions are a key part of the cost side of things. Obviously operating costs the other part. And what we saw was charge us came men higher than expected. Part of that was Card. We do expect that from Card. It's a seasonally higher quarter. Delinquencies tend to be lower, and
they are signaling improvement from here. So that's a negative. But as I said, sort of in line with the trends on the commercial real estate, charge offs higher than expected, and the bank talked about changing some of their revaluation and their models sort of feeding into this. But basically, you know, looking forward to the future quarters, they think that things might look a little bit better, but for the quarter, things weaker. On commercial real estate. We know
that that's a hot button issue for investors. It's something we've said, it's going to be a long story to play out, so sometimes a little better, sometimes a little worse. But Wells Fargo we did actually see some improvement in their non performers, and so I think that was more negative for Bank of America.
Also, what is Bank of America saying about loan growth? I mean, are their.
Corporate bankers are they making loans or do the customers need capital?
What are they seeing they are?
But it's your friends at Merrill Lynch that are making the loans and not you know, sort of that middle back, middle market, asset based type of business. So we saw, you know, the debt issue ince this quarter we saw very strong and we've heard mixings from banks in terms of if they think some of that has been pulled forward. But the bottom line is capital markets very strong, but you know, the bread and butter lending business, those loan
balances coming in weak and weaker than expected. And so that's another piece to the interest income is you know, how much of it relates to securities and higher yielding securities, whereas the loan growth you know, has been weak, and if we don't get those fed cuts, you know, are we going to get some improvement, and so Bank of America I think has some improvement baked into its net interest income guidance. But I think there could be some skepticism out there, you know, if the rates stay high.
You know, we're already seeing that impacting demand. Could that continue to be soft?
And then wrapping up here, Morgan Stanley, that stocks up by about three point seven percent.
What stood out to you? They seem to kind of fire on all the cylinders they did.
I mean, they delivered on all of their key metrics. Number one, the wealth flows. We had really strong wealth flows first half of last year. That's softened, so we're showing a little bit of a rebound. So that's definitely a positive. Equity trading coming in better than expected, Equity fees coming in better than expected pretty much, you know, all of the investment banking lines except for M and
A coming in better, so that's all good. And then the profit margin, which is the other key thing investors focus on, coming in you know, about twenty six percent, and so that's in line with the revised guidance. Keep in mind they do have a thirty percent target near term. They said, excuse me, long term near term, they said it's going to be a little bit lower because of investments, So coming in beating the consensus and within their target.
So you know, there are some select modest negatives in the quarter, but in general hitting all the high points and some I think restoring some confidence for Morgan Stanley.
So Allison, where are we just in terms of the big investment banks in terms of headcount? Are they where they need to be? Do they need more downsizing?
Where are they?
I think, Paul that really is going to depend on if we can get some sustained momentum investment banking fees. So you know, all the managements generally spoke very positively in terms of what we're seeing, you know, talking about the IPO is getting better reception. Maybe there's some better outlook there. Morgan Stanley today just talking about the fact that you know, at some point companies need to execute on things that they need to do in terms of
either going public or doing deals, et cetera. But I do think that a lot of the headcount has really been conservative in terms of the cuts we've seen since the boom, because we had such a scramble in that you know, record a twenty twenty one time period. As you recall all the headline stories about the scramble for talent and ratcheting up of pay of junior talent, and so it's really going to depend on if we can see that sustained momentum and investment banking, and then that
that headcount gets put to work. If we are disappointed, there could be sort of another look at things.
Unfortunately, and didn't they all they paid up for that though, right Like I feel like they had to definitely shell out the money to those bankers this quarter in a different way, No.
And compensate revenue in general has been a lot stickier, and so we definitely saw that last year. This quarter we saw the compensation ratios coming in, you know, about in line, showing some good cost control at companies like Morgan Stanley and Goldman where we have the most visibility. However, keep in mind it was a really strong revenue quarter, so again we're going to want to see that revenue continue to support the compensation.
Hey, just real quickly thirty seconds.
I see the City Group is the best performing of the big banks here here to date. Is this finally Jane Fraser getting listening moving?
I mean I think it is, and I think they do have you know, they have a positive story and they have the most potential for improvement. So even though their returns are the weakness, they have a path and you know, Jane Frasier really making some tough moves. We know that City Group has been you know, a story of restructuring it seems like forever, but really making some dramatic cuts and layers, you know, focusing on the core businesses, you know, really taking an acts to some poor markets.
So I think there there is a story there.
Also.
Credit Card, as we said, you know, we've talked about cart is the business that's growing in loans, not the commercial and so that's helping City Group.
They're the most exposed. They're a big player there. Yep.
All right, Allison, great stuff has always Alison Williams, senior bank analysts for Bloomberg Intelligence breaking down some of the big banks again today Morgan Stanley Bank of America.
We had JP Morgan.
Last week, So some pretty solid results coming out of the big banks.
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So we're here at the Bloomberg and EF Annual Energy and Climate Summit. So it brings together corporate executives, government officials, industry leaders to talk about the stuff that's going on in the energy industry, in particular clean power, trade, federal US policy, hydrogen, clean tech, all the stuff. Now, a key figure in all of this comes from DC and his name is David Crane. He's Under Secretary for Infrastructure
in the US Department for Energy. He was also CEO of NRG for about twelve years back in the day. And his job is to make all of this stuff work in a realistic fashion.
Good luck, David, that's a gun.
Thank you. Well. I said, there's a lot of stuff, a.
Lot of stuff.
So something was you had a speech and a panel and something that you said that really stuck out. You said, demand growth in the US for power is going to be more than we thought for the last ten years. So twenty twelve to twenty twenty two, power demand was up just fifty basis points a year, and now we're looking at five to six percent a year.
I tell that to Paul and his eyes glaze over. But it's really important. What does that actually mean?
Well, five to six percent in our world is huge. I mean that's that's like tiger economies from the nineteen nineties. And because of the long lead time of most things in the electricity sector, those five to six percent per year pile up if you're not if you're not getting
after it. So what it means is and what's very important all this as we look at these transitioning to the clean energy economy, all these new technologies, is you always have to ask the time question, what you need and what time frame, and what are the solutions that fit that land within that time frame?
You know.
A couple of summers ago, my summer read was the Grid Frame Wires between Americans and our Energy Future. I read that on the beach and people are laughing me like a geek. So I feel like I know what I'm talking about here, and what I know is we need constant investment in our energy grid. And if Alex is right, the energy demand is going to keep increasing.
That's even more so.
What are some of the key issues that you need to tackle or trying to tackle at least in the short term.
Here, Well, first of all, I need to tackle what your summer reading is each Paul, I think you got to get a life exactly.
If that's what.
I think, well, I mean one big one, the missing link, and I mentioned this on stage as well, is permitting reform. I mean, we're very supportive permitting reform. It takes a lot of different permutations. I'm personally not a policy person.
I'm the implementation person. But we just need to do things faster because just the scale of infrastructure that exists under this new legislation, just in my area, by the end this year, we will have invested in over one hundred infrastructure projects that are over one hundred million dollars each and so we're straining the system in many different ways. But permitting it should not be the bottleneck.
So to break that down a little bit. When we say permitting, what are we talking about? I say that in terms of like, are we going to have to move power lines underground? For example, do we need more transmission lines if we're going to set up that hydrogen hub or a new nuclear facility, and we need to get that to the grid. Does it mean we need to just try less start over and like do a new grid. Like there's a lot of ways that infrastructure can be used. What does it actually mean for you?
Well, of the two that you mentioned specifically, any of them, okay, Well, I would leave aside undergrounding wires because that's more of a climate mitigation thing.
It's where you need to do it.
It's very important. But in terms of solving the demand issue, the transmission thing breaks into sort of two parts, and the answer is yes and yes we need both. One is we need more transmission lines to move the energy
around the country or at least around regions. But then we also need this thing which is grid innovation, which is a series of technologies which are not in the popular mindset, things like reconductoring, where you basically taking existing rights away in the towers and you take down the ceramic circular things and in some cases the wires and you what we call reconductoring, and you can get two to three times the amount of power over the same line and you don't need a ride away. It's cheaper
and that's good for rate payers. And we just in fact publish a report about this today at the DOE called the Grid Innovation Liftoff Report, and so there's that, and there's a host of other things, but basically we need all of the above right now.
And is this a federal funded issue or is this a federal end state issue?
Doesn't go how local does it get? Because I think of.
Texas with its own grid, and I'm wondering how should they be integrated, for example, the national grid.
I mean going to want that, Yeah, exactly, Yeah, Paul, that's what I'm not touching. I mean, there's a reason that Texas is a sovereign onto itself when it comes to their electric system. But most so, we have a lot of financing tools in the tool chest, but most of them are set up as sort of matching funds. We put up up to fifty percent against fifty percent
coming from basically anywhere else that's not federal government. So we say fifty plus percent from non federal sources, and if it states, if it's the private sector, that's all good with us.
And that's what you need to see in order to commit the money after that. Yes, yeah, so how does this all square?
So the stuff you're talking about, like reconstituting the grid like that, Like that's not sexy cool stuff like clean tech and hydrogen.
Right, how much of your job.
Is on the energy that we're going to need in fifty years, and how much of that is how do we get more transmission mechanisms, how do we get that plug that we can't get so we can change the grid?
You know, Alex, I was getting a little hung up on what's actually sexy in the world of electricity. But I'm glad that you can distinguish between hydrogen on one in transmission. But what I'd say is, first of all, nothing that if I thought that what I was doing was just affecting the twenty fifty like you know, at my age, I wouldn't be doing it.
But we are.
We're aiming for the Biden administration goal of zero carbon electric sector by twenty thirty five, and so, but you're the premise of your question is correct because of this new awareness of demand issues. I would say that what I've been focused on my two years at the DOE is what does the system look like sort of between twenty twenty eight to twenty thirty five, first of a kind, fast following commercial but because of this new concern, I think we're gonna be even looking at more three to
five year solutions. And that's where things like the grid innovations are important, because that's a three to five year solution.
David, what are you seeing from the major utility companies in the United States? Are they making the investments they need to make to make this transition?
Will they be allowed to maybe allow exactly.
Well, it's I mean, first of all, I think what I would say just in the last year and talking to the utility cos and I would bet a lot of money that you're going to be talking to some here on your show today so they can probably speak for themselves, is first of all, there's now universal concern about this, where that didn't exist a year before. I think they're still in the situation where their chief financial officers are saying, look, this is a really expensive time
to raise money in the private sector. And we have a program within our Loan Program Office called the seventeen oh six program, which utilities qualify for and at current prevailing interest rates, the interest advantage, but I'm told by utilities is somewhere between one hundred and fifteen and two hundred basis points and we go large. I mean, we have two hundred and fifty billion dollars of loan capacity. So we're working with a bunch of utilities to see
if that could become part of their cap structure. But as you say, they're under pressure not to raise rates. And it's just the nature of investment in electric infrastructure is like you build something today, you know it has to be paid for today. The benefits of it, you know, play out over fifty years.
But so it is attention.
But no one wants to run out of power.
No, And I guess one of the key issues that I feel like has really pivoted interest in the sector is AI and data centers. Right, Like we all knew you got to plug in an EV that's going to use electricity. We all knew that stuff. But now that people really seem to care, because tech companies care. Do you spend a lot of time talking in tech companies? Do they call you oral they call someone else in your office?
Increasingly? If you would, I would say, you know the dee why I got their head? Sort of their natural constituencies, like you know, traditional energy companies, new energy companies, but the tech companies have loomed larger and larger and have become more and more frequent visitors and at very high levels too, not just you know, the data center person, like the senior executives of these and that's very important
because I think they're a huge partner in this. And you know, the thing about electricity is we always say the era of big power plants, supply would be added in big chunks, but demand would grow and there'd be
occasional imbounces. But now with these data centers, demand is growing in these big chunks and in specific places which they won't tell you where they are, right because that's that's one of their competitive secrets, right, So we need to have a partnership with them, and overall, I think it's a great thing.
All right, David, thanks a lot. It was really great to get your perspective. I really enjoyed talking to you. Thank you so much for David Crean, Undersecretary for Infrastructure at the DOE.
You really read that book, I'm I did.
Yep. Keith grossmaner recommendation, you win, yeps. Very good.
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Paul and I we are here in our Continental Hotel right here in midtown Manhattan at the Bloomberg a NEF Summit. We have global leaders, you have thought leaders, you have CEOs kind of getting together and discussing the clean energy, green energy transition, how to get there, and also how to satisfy the demand for power that we're seeing right now, which is enormous. Joining us here now on site is
Pedro Pizarro, President and CEO of Edison International. And that's just two buckets for you, right like, how do you decarbonize the grid and get to that goal? And then how do you match the power demand today from data centers AI to people wanted charging their evs at home. Let's go to the ladder first. What kind of demand are you seeing? Who's calling you up?
Well, I can tell you from a Southern California Edison perspective, our utility we had had flat growth for the last fifteen years. We're now seeing something like two percent load growth and in our state, a lot of vatas transportation, electrification I'm also chair of the Edison Electric Constitute, which represents the investor own utilities across the country, about seventy percent of the load UH. Two years ago, EI members were forecasting something like a two percent load growth over
the next years ahead. The most updated numbers are four point seven percent, and I have colleagues in some states that are seeing five six seven percent. So who's who's calling it is electrification in places like California more broadly across the country, but I think we're more leading edge there. It is data center growth that you read a lot about that. And then it's also the repatriation of manufacturing.
You know, the bipartisan Infrastructure Law is working and it's bringing back a lot of you know, manufacturing into the country. And that's another source.
Oh interesting, So can you, being your company and your industry, can you handle that increase in load?
Yes?
There will be there, yes, and there will be some bumps in the road, right. I was sharing with Alex earlier that it's not the first time in our history of the industry we've seen this, right, rural electrification, air conditioning load, So we lived through these periods. It's been the last fifteen years or so that it's been fairly flat.
So how do we handle it in the near term? Right, you see a lot of focus of utilities working in their various regions' power companies, working with regional transmission organizations, and you know, working with customers to make sure we're using every tool available. Demand site management is important. Energy efficiency is important, but so is making sure that we can maintain and in some cases expand existing resources, and ultimately we need to add new resources to the system.
How do you pay for that?
Because as yields have moved higher, stock moves lower and then it's more expensive to borrow.
How do you do it?
Well, you know, it is an investment in infrastructure that's needed, and this is an industry that's been investing for a long time. Our members at EI have invested over a trillion dollars over the last decade on infrastructure, one hundred and sixty eight billion dollars last year alone.
Right, So it's eventually the right pair, right.
It isn't eventually the rate pair, right, and so we have a responsibility to make sure that that investment is economics being done thoughtfully. It's been doing done efficiently, but importantly, this investment has multiple users. Right, there is the near term need to keep up with demand, but there's also the longer term need for investing tordsy carbonization.
Right.
Then, the industry's been going as clean as we can, as fast as we can, but while maintaining reliability and affordability. And so those investments are the same investments that are needed to build out the transmission grid, to add renewable resources, to add storage, and that helps with climate change mitigation.
There's also investment that we're needing to put in to deal with climate change adaptation, right, the effects of extreme weather, the effects we've seen initially in California and now across the country in wildfire. Right, so my own company has been investing billions of dollars to redesign the system to harden it against wildfires. Other colleagues are having to do
that now. So all of these investments accrue to the customer customer benefit, whether it's to keep the system safer, keep community safer, and also to support the demand growth that we're seeing.
So Pedro just before early this morning, Alison and I spoke to David Crane, under Secretary for Infrastructure at the US Department of Energy and he said, one of his major goals over the next several years is to make permitting easier, presumably to allow companies like yours to make these investments that maybe in a quicker manner.
Are you seeing that or what do you need to see?
Absolutely need it? Okay, And so if you gave me a magic one, then gave me one wish for the industry, it would be that.
Okay, I don't blame you, all right, And.
We have other challenges supply chain, labor availability, but it's really citing and permitting the needs the most help. Just to frame it for you little bit, Paul, the analysis that we've done as Edison for California and what we'll take to the carbonics the whole California economy by twenty forty five, you know, it says stas net zero goal still feasible, right, but it will require significant investment for renewables, for storage for the grid, three hundred and seventy billion
dollars of investment state wide through twenty forty five. That analysis, by the way, from an affordability person, back to your comment earlier, Alex, we do see that that will put pressure pressure on electric rates and bills, but because it's a transition, right, A lot of that electrification will be removing uses in the economy that they are using combustion processes with fossil fuels. These are more efficient technologies, right.
The electric car is more efficient than an internal combustion engine car. We see the total energy build for our average customer electric plus gas plus gasoline going down by forty percent in real turns between now and twenty forty five. So that goes to these investments having a co benefit of affordability. And so as we look at how we, you know, proceed with this kind of investment, you know, we have to keep in mind that it has those multiple benefits.
So all of it has to work at the same time for that to be that forty CLINEB.
Solute, and we need to be able to get the steel in the ground through setting and permitting, and so part of our analysis showed that the rate at which we add transmission will need to be four times the annual rate that it's been historically. The rate at which we add distribution the lower voltage wires will it to
be ten times a rate. So when David Crane talked about its heading on permitting, absolutely needed and it's help that we need at both the federal and the state and even the local levels.
Before we let you go.
When you talk about types of energy, what are you looking at? What means green to you?
A lot of things and we need all of it right. It's the traditional renewables that are commercially available today, like onshore wind, solar, geothermal. It's new technologies offshore wind, next generation geothermal that might be using you horizontal drilling techniques. It's nuclear right because nuclear is carbon free, and so investments needed their storage.
Today we're really.
Relying on lithium ion chemistry. We need different chemistries and the Department of Energy has been a prime mover in investing, putting our tax dollars to good work to find alternate chemistries. So it really is all of the above.
If I'm an investor, do I invest in the utility industry? It seems like you guys got years and years and years of investment. What do you tell investors as to the returns that you try to deliver.
It's a long, good road ahead in terms of the infrastructure investment that's needed through our industry. At our company, we talk about how we have set a you know, growth rate guidance five to seven percent earnings per share growth rate from mouth through twenty twenty eight. We see that that need for investment is supported both by these immediate needs but also by long term state policy in California.
I think, you know, my peers across the country are all seeing a similar sort of phenomenon where the investment is absolutely needed. It's core to the economy. The electric sector is five or six percent the GDP, but it powers the other ninety four to ninety five percent.
There you go, all right, Pedro Pizzaro, thank you so much for joining us. Really appreciated.
Pedro Pisato, President and Chief executive Officer of Edison International, here at the Bloomberg New Energy Finance Conference here in the Intercot at the Hotel in Midtown Manhattan, looking at the energy transition to cleaner energies.
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We are live from an Intercontinental Hotel right here on fortieth Street in Midtown Manhattan. We're at Bloomberg's any F annual Energy and Climate Summit, bringing together corporate executives, government officials, and industry leaders all to talk about how we get to clean energy, what the policy is like, what the clean power is like, and how we get there. A big part of that story is actually going to be technology.
It's the AI and the data centers that are in part responsible for the huge bump and power demand that we're going to see over the next few years. So luckily we have someone who has to deal with this on a day to day basis. We're joined now by Amanda Peterson Coreo. She's a global head of Data Center Energy at Google.
So great to be here with you.
Thank you so much for having me.
My pleasure.
So you're the person that has to power the data centers and call up the power providers and energy companies and be like, guys, help me out.
It's not me, it's a whole team of people.
So I am not the sole person doing that, but yes that our job is really to figure out how do we enable Google to grow and how do we do that in a way that's sustainable load growth over time.
All right, So what we hear what Alex and I hear from really we've just started learning about this over the last couple of years, is the demand from a lot of these technology companies. And we've had CEOs of utilities say, I'm talking to you tech executives these days.
I've never talked to them in the past. Yeah, what are you trying to do?
You think about the next five to ten years of Google's energy needs.
You're not just going to plug into a coal plant, I'm guessing now, absolutely, what are you thinking about these days?
So I think we're doing a number of things, right. We see, as you mentioned, a wave of demand growth that we haven't seen in the last two decades in the US, it's been pretty flat to stagnant. Data centers, as you mentioned, are getting a lot of attention. But actually they're just a part of really what's reindustrialization and electrification of manufacturing, transport, heating, right, and digitization is just
one role of that. And so we have to look at that and think about how are we going to grow in this new market landscape.
We do a few things.
We see our role in working in partnership with our utilities to figure out how can we bring new firm capacity, so not just clean energy, but firm clean capacity to the grid so that we can really meet those demand needs over the next decade. We also look at how we can do things more efficiently because really what we're trying, what the challenge we're seeing is the amount of growth we have over the next decade total collectively on the system.
So what we're trying to do is make new efficient processes. So last year we innovate a new way to buy and sell electricity, reducing the time by eighty percent with our partners at Level ten Energy, and this enabled us to get one and a half gigawatts again in eighty percent of the time it used to take us in just one year. So things like this is how we're working in partnership to meet that need.
Oh so many questions.
Okay, so the first one is do you is it going to be just for the data centers we take that Is it going to be let me just plug that data center into the grid, or is it going to be that these data centers become their own sort of mini power generators, either by having like a small nuclear reactor near them to power it.
How do you see that relationship evolving?
Yeah, I mean there's many forms to get power as you as you pointed out, the most efficient and the best is to be grid connected.
Right.
The reason we have an electricity grid is the evolution of is it doesn't make sense to have all of these.
But does that imply that if you turn on your data center, I lose my electricity?
Absolutely not, not at all. Actually, data centers actually provide a lot of voltage stabilization to the grid because as we're a firm and constant load over time. Now when we connect to a grid, we ensure that we're also bringing in new generation, new transmission to help power and expand the grid. Definitely not take away from the electricity that's already providing services to others.
So I'm guessing you can't do it alone.
I'm guessing there's can be some partnerships along the way, and they've got one with Microsoft and new Core.
Yeah. Tell us about that and how that could be a template for Yeah.
So one of the challenges we saw is exactly what I just touched on, that we're seeing a lot of intermittent capacity from new clean generation but we're not seeing the same uptick and firm clean capacity onto the grid. And that's because this technology is still more nascent relative
to more traditional thermal assets like gas generators. And so we said, we've got to show that the demand is there, and so we've partnered with Microsoft and new Core to say, let's aggregate our demand and think about how we can can drive scale basically for this new and get that onto the grid faster. So we announced this a few weeks ago. We're here with them today. We're going to speak out a lunch session today to say more about what we're looking for, how we can help and really trying.
To drive that.
Going back to how data centers provide stability to the grid, how I've heard that a lot that like a data center can help provide electricity because you price sensitive, I don't know, I've heard lots of things.
How do you help?
I mean part of it is that unlike you who may be turning on your lights early in the morning or late at night and then dropping the day, that's hard for the grid to manage and frequency regulation, a data center is predictable and having predictable load is something that utilities and the grid greatly value because then they can plan better around it and not have to turn on and off generation resources.
I see, okay, all.
Right, So when I look at the capex line of Google and it's the GDP of more than most countries here and a lot of us building new data centers and capacity there, do they come to you like day one and say we're going to get the cheapest energy, We're going to get the most efficient energy. How does the energy aspect come into all the capex that they're spending in terms of day data entergy.
Yeah.
Absolutely, they were part of the data center team that goes out and decides where do we cite our next data center? What makes sense and power is absolutely at the core of everything we do. As mentioned, it's where do we have access to that clean capacity that can really deliver us growth, but also what markets can we participate in that give us the ability to have customer choice. We operate in over eighty electricity grids around the world.
No two unfortunately are the same, but some we have a lot of choice and deregulated markets and ourtos, But there's a lot more we can do and partner with and in markets that are fully regulated we were looking to partner with our utilities to say, hey, how can we innovate, how can we evolve? How can we take what the same old tariff that we did for ten years, how do we make that different to meet the needs of our time.
That's what I was wondering about.
Being your own little power generator, like partnering with a company and having its own your own nuclear power station, for example, to power that data center. Is that something that we're going to see that kind of model.
I think we're exploring absolutely all options. As you've seen, it's been very hard to grow nuclear in this country, so we have to look at that and we're hoping that's one of the technologies we're absolutely looking at in this partnership with Microsoft and New course.
Have you had to be turned away at all?
Like have you like been sourcing an area and then you talk to the utility and until he's like, I can't do this for you.
I'm sorry. Is that happened yet? I think it's more.
You know, I like to talk about the grid and meeting capacity is you can do it with time. So it's just a matter of when do you need to serve load versus how quickly can you build whatever it is, transmission or generation to serve that load. And so what we have found is maybe we can't always meet our time schedules on the time that we would like, and so we have to look at a tion that's interesting.
How's the US grid versus others you've seen around the world.
Oh boy, that is a big question that we do not have time today. Well, first of all, the US is it one grid, as you know, it's minigrids and so I think in explaining that to people, it's hard for them to understand. Again, you have a mix of everything here in the US, which is very different when we talk about the rest of the world.
We talk about Europe.
Europe is a really interesting integrated system because you're actually going cross countries and I think it actually there's a lot of things that work really well there within our own country. We have trouble going across states y Okay and building that transmission to deliver the generation to where the loads are actually located. So I think that's some of the interesting challenges other places in the world. Each
country really has its own unique system. It's only Europe that you really see that multi country grid really playing out.
Something that works for Europe.
Honestly, that's something you're usually known here before we let you go. When you talk about sort of the advanced clean technology and how you're working with Microsoft and new Core, what do you think those advanced clean technologies are.
Yeah, there's a number of them. We talked about maybe seeing advanced nuclear. We already last year just had our first enhanced geothermal extraction project come online with Ferbo here in the US, and so we're buying energy from that project. We're also looking at new texts, including carbon sequestration. It's going to have to be part of the solution in our view, and we continue to look at hydrogen and in long duration energy storage.
So interesting, Amanda, Thank you so much.
Madam Peterson COOREO, Global head of Data Center Energy over at Google.
You don't get much sleep, do you?
I do not.
Actually I took a red eye here, so.
Oh, there we go.
Okay, I was just kidding, but I guess that's true.
That's just so interesting because I feel like when I talk to my energy guys, you need these guys. You need big tech companies to say take this seriously or else it's gonna be very hard to move the needle.
So what is your summer book going to be? The Grid?
The Grid, The Grid. I will read it and we will compare notes.
Yes, the could talk to now, we could talk to Amanda, like at a little higher level.
Okay, we'll do that. We'll do that.
It's actually a pretty good grid.
I learned a lot about electricity in the United States.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on applecar Play and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa playing Bloomberg eleven thirty.
I'm Alexi alongside paulse meeting. We are at Bloomberg Intelligence Radio and we are live in an Intercontinental hotel right here in Midtown Manhattan for Bloomberg an ef summit where we talk to all the leaders and policymakers and CEOs and how we get from where we are now and then to decarbonize in the next three decades. Well, joining us now is a very special guest, Ethan Zindler, Climate Counselor for the US Department of Treasury, which is already cool.
But the cooler part is he used to work at Bloomberg an EF and it's been a while, so they've seen you.
How are you?
I'm good? How are you?
How's your different job in DC?
It's definitely different.
But it's great.
Do they have snacks like they did?
I bring bags of almonds.
In from time to time. He doesn't get them, which we share.
Well, that's one that's so nice. All right, So let's talk about what you're working on right now.
What is your job as a climate counselor to the US Department of Treasury.
So you know, the Treasury Department is across a lot of different things in the climate space, and we have multiple divisions that are working on things everything from the International Affairs Office, Domestic Finance Office. We have a Federal Insurance Office that thinks about some of these climate issues
as well. So my job really is to try to coordinate some of those activities across the department, to collaborate on some of the key issues, and most often that's been on the Inflation Reduction Act, but other things as well, and also to provide some council to the Secretary, as the title implies, on some of these key issues.
What are the key issues you guys are focusing on now? What are the most important mandates right now as we try to navigate this change.
Yeah, so there's a lot of things going on, but certainly the implementation of the Inflation Reduction Act as front and center for US Treasury a good deal, and the majority of the funds overall that are aimed at clean and green initiatives would go through the tax code with all the rules written and implemented over time, and so a lot of what we spent our time on doing is writing some of those rules. So that's one thing.
Other things, indeed, on the international front, working with some of our partners and some of the multilateral development banks on some of the work that they're doing around evolution and thinking more around climate issues. The Treasury also works very closely with the Green Climate Fund and the other funds that are focused on multi climate development, so working
with them on that stuff. And then finally, maybe one last topics on insurance, which you've been doing a lot of work and thinking about as well.
So let's go the IRA for a moment, because the big hubblebloo was about hydrogen for a little while, so was how do you qualify for the hydrogen tax credit. Does a hydrogen need to come from clean energy? Can it be sort of carbon captured natural gas or can
it be to straight up natural gas? That part of it sort of skated by, okay, But then everyone started talking about how you qualified clean energy when it comes to hydrogen an hour for hour or like sort of a yearly base load, and that was a big deal for a lot of these producers. And talk me through how you guys thought about it, would you think about it?
What the problem was?
Sure?
So first I'm going to stop and take credit for the fact that the IRA is, to be clear, the most important piece of climate legislation ever passed in the United States, and the level of investment that we've seen overall has been really pretty terrific. Two hundred and fifty billion by one count in the first twelve months after it passed, and we've seen over six hundred billion in
manufacturing since the start of this term. On the specifics of the forty five V Hydrogen Tax Credit, look, the way we wrote the rules, and to be clear, a draft version of the rule and we've drafted it, was that we effectively took our Q entirely from the law, and the law is very clear about saying that you had to think about what CO two emissions were and
referenced the clean air. It also referenced not to get too wonky, a particular model for tracking emissions called the Greek model, and so we really wrote our draft guidance to be as compliant with that as we could, and that included taking into account what we called induced emissions, that's emissions that might be created by taking some of existing zero carbon generation and allocating it to something else. So we really sought to be, you know, as clear
as we could. But again, to be clear, it's draft guidance, and we've certainly received comments. We've received I would say no less than thirty thousand comments plast I checked. So we're working our way through those and standby will eventually have the final rule drafted this this year.
So Ethan, as we make this transition to a cleaner sourcing of energy, one of the objectives I think is to reduce reliance on China and maybe some other folks around the world and maybe Onshore or Friendshire more of our energy infrastructure.
How does that factor into your work?
Quite a lot, I mean, and I think it's something that the second Scretary has been very out front on. I was with her last month in Chile where we were having conversations with government leaders there about some of the opportunities around so called French shoring, and we visited a lithium hydroxide processing plant where those that lithium is being exported to the US and elsewhere to make batteries.
We are also the Secretary has also had some very directing, candid conversations with Chinese leadership and just got back from Beijing last Wednesday, and these issues around over supply and
ore for capacity or things that have come up. But it's also our view that it's a very important and productive to continue to have conversations, and so actually at this literally almost at this very moment, we're continuing with those back at the Treasury Department through two working groups that we have ongoing with the Chinese to continue those conversations.
I was at an energy function in Houston a couple of weeks ago and Secretary of Grand Home was there and she was basically like, guys, there is money in DC, come get it. Are we spending too much money in a short of amount of time, like, not that we don't need the money over time, but there's a condensed period with which it can be spent. Are you worried about throwing money into bad stuff for things that aren't going to get the job done? Are things that not going to return as much?
I would just say this that I think this is a really critical and important time. I think the Inflation Reduction Act has created an inflection point where we have an opportunity now to be supportive of these technologies in the way we've never done before. And it's important that we see that going forward. And I think we feel pretty good that we're doing that.
At this point.
There's a lot more work to be done, and to be honest with you, we're working around the clock the rest of this year and beyond. But no, I think that this is a unique opportunity. And look that the clock's not you know, the clock's not getting any quieter on climate change, and we really need to have these technologies developed further and deployed further, particularly some of the ones and the harder to decarbonized sectors like industrial processes.
Ethan just thirty seconds, what's the next mile post? People like me should be looking for people that don't track this every day.
Good question.
I mean, I think you know, we work in increments, I guess of the Treasury Department, where you're kind of on a day to day basis trying to get as much out as we can. I think I certainly would want to keep an eye on the levels of private capital flows. And like I said, we feel quite good about that and we want to see more of that going forward. There was a lot raised by venture funds several years ago. I think we'd like to see more
of that investment taking place. We'd like to continue to see financial institutions think about how they can take into account the energy transition. But I wish I could pick a single moment, but we're kind of working data down.
It's a big story.
Arthin thanks a lot. It's so good to see you in a different role. Really good to catch up with you. We give Smiler from the Treasury Department. He is a Climate counselor the West Treasury Department, formerly of Bloomberg and ef YEP.
That's right enough here at the Enough conference here in midtown Manhattan, talk about the transition to cleaner energy.
This is the Bloomberg Intelligence Podcast. Available on Apple, Spotify, and anywhere else you'll get your podcasts. Listen live each weekday ten am tonoon Eastern on Bloomberg dot com, Beheartradio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal