With Laurent segel And from London and Gerard Reed from Berlin.
This is redefining.
Energy today on really if any energy. This is a super special show for the end of the summer. Jow, what are we going to talk about.
We're going to talk about the seven deadly sins of the energy world.
And in order to do so, we need to bring our blue flame thinker, our friend colleague from Canada, Michael Barnard.
Welcome, Welcome, I'm so glad to be here.
As always, I know coined the term seventh scene. It's a Pope Gregory or something in the sixth century. But we have decided and I don't know who, because we're kind of a changing during the summer, and that just popped up, the seventh scenes of the energy transition.
It must have been me, because I'm the creative one, just that, you know, So it must.
Have been me, that's sure. It was not me.
I certainly remember it being Girardi who was pushing, okay, happily receiving.
Yeah, okay, great question for it was somebody else that came up with the idea, but it was very good.
The seven Sins are Michael.
I'd just like to say, assertions that I have personal and extensive experience with all of them are completely true. The list is greed, bluttony, sloth, cry lust, wrap and envy.
Okay, I know you were educated in the seminar, but how does it translate for investment?
For investment, what we have to think about is the sins are the things which we're really subject to, which aren't good for us or good for others around us. And so in the energy world, as we consider the exemplars of sloth or greed, what we have to say is if the analogy fits, then it's going to be hobbling your investments.
Well, said Michael, Well said, we told you so.
What are they? Please? Number one, number two, number three.
As we go through these. For greed, we have carbon capture, sequestration and direct air capture, avarice and pipelines. For gluttony, nothing fits gluttony better than hydrogen the calorie bomb energy carrier. For slough, it's nuclear and small modular reactors. And then there's pride. This is fusion Kubri's with a torus. It's very interesting research, but it has nothing to do with the energy transition or decarbonization. For lust, biofuels everywhere at
the drop in sirensaw. It's a nice idea that we don't have to replace the engines or the vehicles. But while we need biofuels for the really hard to decarbonize segments, we're just going to electrify everything else. Then there's wrap. This one leans into the United States right now, canceling offshore wind its reprise of rage against the turbines, and then finally envy the greenhole costplay of the past five
years of ESG reporting. As somebody said, I've got a guy in the sub basement who fills in those forms for us. That's the list.
Well, it's a why don't we start with greed, which you know, I think i'd better describe at subsidy mining in a lab coat. You might call it cobbon capture and direct our air capture, but for me it's subsidy mining.
No, No, it's regulatory capture, not carbon because they capture most sipsids than CO two.
I have to say the entire climb work scandal where they can't actually get it to work and it's such a tiny amount of expected targets. What they found is they're actually going to be capturing and sequestering less CO two than it's costing to capture and sequester the CEO two in terms of emissions. It's just a dead act. While four hundred and twenty parts per million is really problematic from a global warming perspective, it's really also engineering problematic.
It's trying to strain a drop of urine out of an Olympic sized swimming pool. It just have to accept that that's going to be hard.
Mike, I want to add on to this, and I'd like to hear you Todd on it. I mean, here we are during this podcast, and Germany is bringing in carbon capture regulations.
We will need some carbon capture. It will pencil out in some places, like where there is a industrial source of purish carbon of CO two at reasonable pressures that can just be put into a sequestration site which is effectively underneath that site. That's probably going to be a
cheap way to do it. If we think of electrified cement, for example, or using the sublime process, the electrochemical process, which produces a fairly pure stream of CO two, and it's beside the ocean, and there's a pipeline leading to offshore seaquestration that actually pencils out in terms of being
fairly low cost, low carbon cement. And unless you have a sequestration site directly under the facility or your seashore and you can put it in a pipeline off, sure, it just gets more and more expensive and less and less likely.
And at the end of the day, it just costs, except when you do the enhance soil recovery, which has been going pretty good. Oxy is the big specialist of that. But otherwise it's just basically you as the taxpayer, to capture the carbon and that's pretty much it. Well it's not.
I love that, but I don't know. It needs to bring us to the next one, which has glut me. I just love it. Three killer?
What ours to make?
One killer?
What hour?
And I know you two guys love this topic.
Yeah, it's hydrogen. There's a lot of technical conversation around hydrogen. And I'm not a technical guy. I'm a trader. So what I do know and I have checked on CHGPT and so on, is basically one dollar per kilo hydrogen equal fifty dollars per barrel of oil in terms of energy content. You can go and say no, no, it's not fifty, it's forty eight point nine, but I make it fifty because that's easier. So you've got those guys they say, oh, that's great, We've got hydrogen at eight
dollar pokiro. I say, okay, fine, so eight del parkidro. You're trying to set a bil of oil at four hundred upper barrel. The market price is sixty. Just ten mew is going to pay the three forty of difference, and they're like, ugh, it's just too expensive. Period.
It is once again regulatory capture. The nice thing about hydrogen is while a lot of people invested in the narrative about hydrogen, it was based upon fallacious assumptions that green hydrogen would be cheap. If hydrogen could be delivered at a buck a kilogram, that would work out. But what happened was in the twenty tens people said how cheap does hydrogen have to be in order to be used? And then they invented a bunch of ways to make
it beem like it could get there. They were invested in the one dollar per kilogram of hydrogen and instead of saying, well, we can't get there, it's never going to get there, which I luckily did the math and figured out then they wouldn't have actually spent the last five or ten years trying to make hydrogen into something and it's not an energy carrier.
Well said Weldside Michael and Laurand I've got a bit of numbers which are funny.
You know. In Australia they had booked two years ago five gigawat for electoralizers, out of which they will get zero, and now those five gigawatts in moving to AI. And that said, they add project in Australia, Gladstone, fortesqu In Germany, arcel Or Metal canceled, in On cancel. In the US, bp X all cancel their Indorgent project, air Products canceled and the CEO to be fired, Tison Hope, Newserra, all projects abandoned, repsol. It goes on and on and on
and on. Whatever the money throw at it, people just won't do it. So for me, you know, it's dead.
And we can see that with the major industrial players that we're supposed to be the demand areas. Astilantis walked away from its hydrogen sprinter vans. It's now saying battery electric for the entire range. Airbus walked away from its hydrogen aviation efforts. What we're seeing is that everybody who's been attempting to make hydrogen work as an energy carrier on the demand side is discovering it doesn't. There are probably as many hydrogen bus fleets that are not being
used as being in case. Another case point in Lower Saxon Ees passenger train organization famously ignored the neighboring province's assessment that hydrogen trains would be three times as much as battery plus overhead hybrid systems and bought fourteen hydrogen trains through Alstom. Well, only four of them are in operation now Alstam can't get new fuel cells from Cummings who took over the hydrogen fuel cell manufacture.
Great guys.
So then I want to talk about slothes and actually it's one of my favorite topics because it's always in time and always in budget, and that of course is nuclear. So where do we start that, guys? I want to start with twenty twenty nine, the first SMR is meant to be online. What do you think will it be on in twenty twenty nine or be twenty thirty nine or forty nine? Will it be on budget or not.
Well, pick the project you're referring to, So which one the one in an Ontario, Ontario? Yeah, yeah, the one in Ontario. Well, SMRs are interesting. The premise of small modular reactors is that the problem with nuclear was big reactors, and that's why they went over budget and stuff. And instead, what we're going to do is build small modular reactors as much as factories as possible and kind of churn them out like crackerback jack boxes. But it's been very
funny to watch. Small modular reactors were in many cases positive to be twenty to seventy megawatts in capacity, and all of those have fallen by the wayside. Now a small mode modular reactor is three hundred megawatts, and three hundred megawats is a hard to call particularly small. It's a third the size of the typical gigawatts scale one B. At three hundred megawatts, it's a multi billion dollar construction
project regardless, it's not something you manufacture and deliver. And three, A big part of the small modular reactors theory was Right's law. Every time you double production of something in a manufer a manufactured object. For more complex objects like fuel cells, it might be ten percent. For silver panels and batteries it's about twenty percent. Well, when you get to the three hundred megawatt nuclear reactor, you're just not going to be doing that many of them. A. It's
more of a custom engineering project. B. So you're not getting the economies of the experience curve. And you're just not going to do that many. So you're just not getting the doublings very much. So it loses out time and time again.
Still announce of the question though, twenty twenty nine, do they do it? It's a Canadian project? Are you going to back your fellow countryman?
It's true.
I have been to that site, Bruce Nuclear, and I will say that it is a wonderful jobs program for the twelve thousand person that the nuclear site is in. It is not going to be benefiting Ontario's electrical generation. If it's in up and running by twenty thirty five, I'll be surprised.
Oh they haven't.
I love it. I love it.
Laurn Yeah, give me a number, Yeah, give me a year.
They don't have construction yet, Getachi. They will put it out. I really wonder about the cost because the aiding cost of new nuclear is already two hundred up and make it what hour, and those guys might be even more expensive three hundred four hundred. If somebody is willing to pay five times market price, that's good. Now, what I'm fascinated is not that g Tachi or horse Hoys. And by the way, these are mostly submarine design which have
been kind of reshuffled. It's all those startups news Keros, x Nergy, Terrestrial Lead called Oaklo Ultra safe Nuclear. Okay, so I guess the others are not allow multics no no, no, no, no, no on. And I see Breakthrough, Open Ai, Amazon throwing a lot of money at those guys. That's fascinating.
The US venture capital industry has become a great way for people to get rich without having to deliver anything. If you can get funding, the Wall Street guys make money. The venture capitalists maybe they make money. It doesn't seem to matter that much. But if you can get a big VC like Breakthrough to put five hundred million dollars into your fund, you can coast three years on that without delivering anything.
That leads us to pride. And the way I would describe pride is we will bottle the Sun. We will go back to the source of all energy.
What's that fusion.
I'm gonna say I agree with that premise. We are going to bottle the song. We're going to work off fusion energy. But we're going to position the fusion energy at a safe distance from anything about ninety three million miles, and we're gonna make sure it's gravitational pull keeps us at a safe distance in kind of the Goldilock zone for our planet, so that enough energy hits to warm us out of glaciation, but not bake us like mercury. We're going to capture that fusion energy. I think that's
what we'll do. But yes, we are. We are going to depend on fusion energy.
No, but again, I mean here, if I look at those startups Elion Energy five hundred million dollar rays backed by some altan common Well Fusion two billion, General Fusion Vancouver, twenty million, Tokamac Energy, ox Watsch one hundred and seventy two million, zap Energy three hundred and thirty million, Renaissance Fusion,
microfusion THAE Technology one point two. I mean, this is absolutely phenomenal and disgrace is the EE Project in front, which is what is it like thirty years late, twenty times of a budget.
I think it's up to eighty billion, and I looked into it a couple of years ago. Because here's its target for success for twenty forty. The target for success is to maintain fusion for five minutes with thermal net energy delivery. But the thermal net energy delivery, if you actually bolted a generation device onto that, it would actually get down to the amount of energy required to run the process is equivalent to the amount of electricity you get back out of it. So that's their target for
sustained fusion five minutes with no electricity net delivered. All these breakthroughs you hear about fusion and look into them, nobody's actually doing fusion yet. We've just gotten to the point where really hard, weird engineer problems are being exposed. We're so far from doing that. I also like to say there is a place for fusion energy we will require in spaceships past the orbit of Jupiter sometime in
the next two hundred years. I'm glad that research departments are investigating it and that money is being spent on research, but it has nothing, nothing to do with the energy transition.
Great, well, let's not brings us on to last And what we really want to talk about here is what we describe is that drop in fantasies for every engine biofuels.
So where do we start. Guys, that all biofuels started twenty five years ago. First you have two big biofuels. You've got a sugar based channel which is in Brazil and relatively cheap. But that you get corn based channel, which is an absolute disaster. Half of the acreage for corn in the US going to biofuels. And of course it was designed at a moment where the US was importing a lot of oil and they were peak oil
and they thought oil would go to three hundred. And of course big a grow was there and so we'll get a solution with com based eight and ol. And that created a constituency. Plus, as you know, the first round of the US election is in Iowa. So I was big on the biofuels and that systems fossilized itself. Now in Europe, I think at some points they say okay,
stop the blending. And still today it's designed for a baryl of oil at one hundred and fifty upper barrel and because as much cheaper, but basically you have to force it into the system through blending mandates.
Michael I am actually a strong advocate of biofuels for SATH and maritime fuels without getting into that subject deeply, but I just have to say that some of the first generation biofuel stuff has led to a lot of negative press, which doesn't hold up when we start looking at second generation biofuels. In third generation biofuels, we're now
the plant where we can do or crap. We can take the corn husks and the corn stalks and feed them into the biofuel processing and get ethanol out of there or methanol, and we can feed the corn into the food system. It turns an agricultural waste into a valuable product. Similarly, we can take the corn stalks and put them through biodigestors and create biomethane for manufacturing of methanol or long duration energy storage and a couple of
other things. We've got uses there. I think that demonization of biofuels as an agricultural food displacer don't stand up to scrutiny. I think Europe is far too precious on the subject. It's just calories, whether they're consumed by animals, humans or motors, and we need calories of some sort, and we need liquid fuels with some sort of future. But imagining that we're going to run our trains on
them or trucks or cars, well that's nonsense. All ground transportate and electrified direct here with batteries.
So, Michael, I certainly agree with you, and I'm not going to add anything at that, but I will what I do really want to talk about is rats, and in particular, I really want to talk about the rat of mister Trump. So what's he got to do with our space? It's what we call the culture war at sea?
Oh sure, wind, And we just had a series of ban news for those Osteda who really were because of yourpen developer in the US. They took five out of the thirty gigawad of project and that cancelation in New Jersey which caused them a lot, and now they are a revolution project which is eighty percent completed, has been stopped and they're trying to raise money. But the delusion is going to be phenomenon. So I'm just going to say one thing equinor instead very good, Lauren, could happen?
Could happen?
I'm going to lean into something else. I'm going to blame golfers. Basically, a lot of the rage against wind turbines comes down to golfers being pissed off at missing a potts or something goes on with golfers anyway. A lot of Trump's anger about wind turbines are that he was building another golf course in Scotland and at the same time, a long way offshore there was supposed to be a wind farm going in and some golfers would be exposed on the tee to somewhere in the horizon
a wind turbine blade or two. And this turned into a fourteen years of Trump thinking wind turbines of the devil's pitchforks and fighting against them constantly. Trump doesn't care what he says is true or not. He cares if it'll get hit a wedge that he's trying to communicate to for votes or for gain at the moment when he says something. So when he's attacking wind energy, he's feeding into the anti wind ragtag band of Zelitz in the United States and telling them what they want to hear.
And he's also telling the people who were worded in the fossil fuel industry about displacement by renewables what they'd like to hear, except that the fossil fuel industry doesn't want wind and solar to go away either. Many cases, they're invested in them and they need electricity for operations of their facilities, and they want cheap electricity and wind and solar to provide that. So Trump is irrational on the subject, but he's feeding into the irrational leading in the United States.
There's another view which I'd maybe like to talk about on offshore wind, which is just the economics of it. If I look at the United States, I go, oh, why do you even need it?
To see?
The United States? North America gets so much low cost electricity as it is, whether it's some gas, wind or solar, Yeah, why do it? So that's my set of thinking on that. And by the way, sorry, if I was Trump as well, it's the easiest fight to pick is offshore wind because this and all the players are farm so it's a win wind from in every way. Right.
It's not true though, so geev Veranova has the wind farm and operation at offshore. Second, early Gerard you're forgetting that the United States is finding impossible to build transmission. They've got all that lovely wind in the prairies, but they can't get it to the coastlines. It's much easier to put a submarine of HVDC cable from thirty kilometers off shore into New York than it is to get one from Iowa to New York.
And that's a fair point. So you could also just say, well, let's just put an undersea cables right along the east coast and move electricity up right. But the US, you know as well as I do, it's just very difficult to get anything done because it's all state level policies and you've got state interests, you know, not aligned with the state beside, and it's just really complex.
After talking to Jigar Shah a couple of years ago on a new into his role with the Department of Loan's Office for the US Department of Energy, my takeaway there was the United States has devolved the ability to say no down to the county level and off an the individual. Yeah, and transmission is a victim of that.
If I compare the Norse, where you have shallow waters, you have an exiting oil supply chain. And this is an energy poor region, but it's not hesitated around the NORSEEA. And as Jarr says, they've got so much options in the US that whatever push was extremely political and the moment the politics change. And I think that the Europen developers who went to the Nazi did not fathom the
difference in the mindset. So they went there, It's okay, there's you know, have the contract and we're going to do this, and and they just thought that because people spoke English, they thought the same way. They didn't think the same way. So off showing the US. Our heart is bleeding for hosted, but it's lost for our generation.
Let's move to the last one. Envy And actually, really this is my pet hate, which is ESG park tecking. And what you've seen in the last few years really is companies box ticking and chasing ratings and enables and telling the world that they're better than their competitors and their peers. And actually what you realize is, you know, it's that real world decarbonization. I don't think so has
it really improved the way brisinesses are governed? Know? Has it really had a positive impact on society questionable.
My exemplar for this was when Exxon Mobile scored high on ESG rankings and Tesla didn't. There's a lot to say about where Tesla has gone and where a Musk has gone. Labor practices weren't great, but this is the leading driver of electrification of transportation in the world that created the industry as much as anything else. Tesla also does battery storage and it also does solar at residential, commercial,
and utility scale. It is a very virtuous company by most standards, and when it fails the ESG ranking, there's probably something wrong with the ESG ranking.
What as you reminder that at the beginning the guy who said that was the sea of gencore, you know es the guy ticking boxes in the sub basement. But yet created such a bureaucracy. It's absolutely insane, the bugs created. Of course, the European Commission has put some lows and lows and lows, and it's it's totally out of control. But anyway, I would say it should be e WP. Okay, we need electrician, welders and plumbers, not the ESG specialist. Were you electricians?
Well, there's a popus I like it.
I will say that right now, there's a lot of indicators that now that were past the ESG bubble, real consideration for the right doing the right stuff is still proceeding because ESG was well intentioned. One of the exemplars is that despite Trump being in office and saying drobaby drill, well, Wall Street has cut funding for fossil fuels investments twenty five percent. There are many many billions less flowing into the fossil fuel industry from investors than there were a
year ago. You know, that's a very good sign. And I would say that right now there's a lot of green hushing going around. A lot of corporations are doing very good things in terms of decarbonizing their operations. It's just not being touted because it's not the time to tout that. They know the needle's going to swing on this. They know they need to do it, and they know that they are at risk globally regardless of what the
United States does. Big corporations have to operate around the world, and if the United States is this retrograde pool of polluted smoke and carbon dioxide emissions, that doesn't mean much. If they also have to operate in China, Indonesia, Australia and Europe.
Michael, what I'd like to add, as well as going back to just me putting my economist out on is what is ESG? What was it about? Well, the E is environmental and the S s societal, And there's no doubt what we can say is that we have what's called externalities, which is that you know, economic life as we know it can have a negative impact on societies and environment. So being able to actually measure that and show that to investors makes a lot of sense to me.
And again, you know what we tend to do is governments tend to often tax, you know, they tax pollution and stuff like that. That's how we generally deal with it. But giving that visibility is very import But the G is very interesting for me because and you gave the example of Tesla and Exon, Well, Tesla did very bad on the G. Why because that you could argue that the corporate governmance is not good based on the way
they're rated. On the other hand, I say, well, why would you invest in a badly government business in the first place? Because for me, governments is also about management and leadership. Why would you do this It's a key task of a fund manager is to invest in good businesses. But somehow this G got completely mixed up in and around good governments. It was mixed up in and around and moved really in towards diversity and a whole four pile of other areas that are actually not to do
with good governments and leadership of business. And I think the G is the thing that's disappearing the E and the s. Most people across the word will say, listen, yeah, we do have to take care of.
The E and es. Yeah. And look, the G has been totally trampled by a Silicon valley. Now there's a god founders, and you know, they have ten votes per share, and they had such a success over the past fifteen years in terms of wealth creation that nobody cares about governance anymore as long as the stock's going up.
What I will say is in the United States, there was a shareholders only governance model for a couple of decades in the eighties through the twenty tents, and that is starting to shift away. And they've got b corps and other types of corps which allow fiduciary responsibility by the board and corporation not just to be the shareholders, but to multiple stakeholders, including employees, including societies they live
in and stuff. And so we are seeing a broadening of that stuff, and we're seeing that the shareholder only rights the United States are going away. There's a revolution going on there. So the United States is moving more towards what more, what Europe is doing, and that's positive, I think, and greet Todd.
Okay, Jack, can you summarize the seven scenes of energy transition before we wrap it up? I can, indeed, just to summarize greed, which is questionable, carbon capture technologies, bluttony for us as hydrogen sloth is particular, small modular reactors, but nuclear I could say in general, just because they have not been able to deliver on time around budget
over the last twenty years. Pride is all about taking that energy from the sun, and I think we're all clear in our heads that the best way to do this is with solar panels as opposed to fusion, which yeah, it's great to invest in science, but don't budget on miracles. Is the way we would conclude on that lust is
that we're going to have biofuels everywhere. We do believe biofields are very, very important, but the whole thing is let's keep them for the heart to electrify edges, not as a universal fix.
And then we got rats, and the rat really is what's going on offshore wind. And then the final one is envy, which is ESG box ticking, which I think we all hope changes in the next few years. In fact, I think we're all agreeing it's already is changing. Right as you said, Michael, we definitely have a real revolution in the whole area of governance and what's going on there.
Okay, guys, was a pleasure looking to you.
Have a good evening, enjoy the rest of summer.
Ear Will you take care.
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