Unintended Consequences of Energy & Chemical Policy with Michael Kolodner of Marsh - Ep. 204

Welcome to a special bonus episode of The Chemical Show. I'm Victoria Meyer, your host. And I recently had the opportunity to engage in a series of really enlightening discussions at the Marsh North American Energy and Power Symposium. Today, I'm excited to share a standout conversation with Mike Kolodner, who is the U S Energy and Power Leader at Marsh, as well as the Global Renewable Energy Leader.

So I am speaking with Mike Kolodner, who is the US energy and power leader and global renewable energy leader at Marsh. So you're doing a lot of great things across the company. I know you're getting ready to lead a session on wildfires, which we're not talking about today, although it is certainly in the news as we record this with The, um, fire out in California, Pacific Palisades and, uh, you know, a lot of Loss that's taking place. It's pretty, pretty crazy.

Yeah, I'm responsible for Marsha's U. S. Energy and Power business. Um, I sit on our Global Energy and Power Executive. We're a little unique in that our energy and power business is an actual global business. Um, and so we're fully coordinated. And many of our clients are multinational. Um, so we, you know, that makes a lot of sense for us. Um, so in that capacity, I oversee kind of our global renewable energy efforts as well.

And they've hired you back.

Yeah, I would say it's, um, well It was in the best interest of

the client

and my career and, uh, Marsh, I would think, uh, you know, that I take those roles, but it was good. I worked for, um, a company called, uh, Exelon Corp, which was, uh, you know, we acquired a company called Constellation Energy, which is also in the news today, but,

uh Oh, I missed that, okay. I'll have

they've got, uh, there's, uh, there's a, uh, potential, uh, Merger that's pretty significant in the energy space that's that's happening. Anyway, so I spent five years there. It was fantastic Came back to Marsh Left again to go essentially be the chief underwriting officer and head of member relations for an industry mutual insurance company

Um,

So yeah, I mean I've kind of but I've Basically, I'd like to say I've been at Marsh since 2006. Um, yeah, and that's, that's what I do.

what's interesting is a number of the people I've spoken with, both for the podcast, but just, um, in the conference, uh, these last couple of days, have a military background. Really? Yeah. Interesting.

Interesting. Yeah.

I was gonna, is there a connection? I

there's definitely, I mean, I would say it's, uh, within the energy space, broadly defined, you know, The, the, the military, the navy in particular, it's um, you know, but really all Branches of military service, they're incredibly technical. So, you know, engineers tend to do really well, a lot of discipline, but also I think the energy industry broadly defined has always been a place that has attracted and gone out of their way to make opportunities available for transitioning veterans.

the time. That's cool. That's really cool. So I know one of the things we were talking about as we were teeing up for this conversation here was, uh, Peter Huntsman was the keynote speaker yesterday, um, to kick off the event. Really great. And, and he talked a lot about, Energy and just the realities of where we are from an energy usage perspective, how it ties into climate and, uh, in carbon emissions, et cetera, but also just the energy transition and what's really where we really are.

no, I, I think he was, well, one, he

he

fantastic. I think, um, initially, I mean, this is a, this is an energy and power.

conference.

So, for, for the

chemical, a little bit of

well, so this thing, so for the layperson, it's like, so, so again, what, where's chemical fit in this? And it's, well, no, chemical is energy. It is, I mean, chemical is energy, right? So when we think about, What, the words we're using here, I would just say, there were a lot of folks who were initially kind of like, all right, so Peter Huntsman's your keynote at an Energy Empowered Well, I don't understand that a little bit.

and started talking, you

500 people now have a full appreciation for why this is so critical to talk about. And I think the best part about his. entire conversation was it was grounded in the realities, you know, Huntsman is a business that does incredibly important things for all

of us. And

we are making it really difficult

for

for him to continue to compete and for his business to be successful in support of many of the very things that we are claiming to want. And I was comments around, you know, the, the, the carbon footprint associated with. building and deploying a wind turbine, for example. he is not wrong. That is reality, right? So

Right. And the, and the number of chemical products that are needed for it. Um, and then

And don't even get me started on batteries and solar panels cause

going to say, and that, and then the end of life. aspects of it, which, which shows up, but it's, um, it does, it's not really showing up from a regulatory perspective as far as I can tell. From where I sit. I don't really know. Uh, you

it is, but I would say the other one though, and this is the one that, um, it didn't really occur to me until I was really kind of. Digesting his comments with, with some folks last night over, over dinner. But actually, um, one of the things that I learned when I was, when I was at Exelon was like, I got kind of deep in, um, utility holding company and utility operations. And it was fascinating to me.

these large companies, right?

companies, right? What drives it

is our.

commercial and industrial

Yes, but the industrial complex, so to

and like if you look at uh, Lawrence Livermore Labs puts out every year the sources and uses of energy, you know, where it's generated from, how it's consumed, um, and it's a fascinating, it's a very simple chart, I use it. like with my kids, it's awesome, yeah, it's very cool. Um, but when you look at who the consumers are, right, so industry, whether it's tech or chemical, right? That's who we create the energy for. They're the ones who need it.

Promise.

So you had this great mix of people. But I was listening to the Next Air Energy comments and one of the things that

things that, uh, that

That they said was you know We're in this business and I know it may be tough over here, but we're really doing well. And I was like, of course you are. Energy demand is

high.

And you're good at what you do. So next year is great at what they do. And yeah, so they're doing great. That was not the issue. It made me think of Huntsman, Not as an energy company. No, no, no. They're a consumer of energy. They're the, they're the. They're the, not, not, I mean, obviously Huntsman's a client of Marsh's but it's not, they're the client. They're the customer. The customer is telling the energy industry, These are the realities of the world I live in.

Well, and I think, as a global business leader, um, of which, Peter Huntsman is obviously leading a global business. There's a lot of global businesses across chemicals. And one of the real challenges, and that came up yesterday, is, um, is European policy. Yes. European, uh manufacturing and energy policy, which is basically encouraging companies to shut, stop manufacturing. And it's, and it's actually, it's a little bit of this not in

my backyard

because the

other piece is,

and, and I heard this before, I heard this from Peter's talk, which is around the, um,

China continues

to build coal fired Electricity. It is the most efficient way for them to get what they want,

Well, and he did, he did sneak in to, you know, Germany, they, they turned off the nuclear plants and they started building renewables and they too are burning more coal today than they were before. So it's not just China. It's, it's the unintended outcome of policy. Yeah. My

father worked for Exelon, a predecessor ComEd in, uh, in Illinois, right? So that's where I grew up. My dad's a, a ComEd guy. I was a, you know, appreciative of, really appreciative of electricity growing up, um, and of nuclear power. And right, so, cause, cause they had nuclear power up there. I think,

Illinois, Illinois

still operating,

it is, It is.

Great. Uh, there was a, you know, so fully appreciative of that. And I think actually when you look at nuclear power today and what's available, it's super efficient when we're trying to achieve the goals that we're trying to achieve, we should be encouraging more nuclear. Um, Rather than discouraging it. Um, but, but I think it is, the transition is a transition, right? Because when you talk about, he talked about the amount of energy that's still consumed from wood, right?

a defunct

whaling town.

You know, we used to

burn that for a living.

know, whale oil, right? Like it's a,

blubber, yeah, was a

yep. Oh no, it was huge, yeah. Um, I, I think the um, You know, it's fast. It is a transition. It's also one that doesn't play out over like, you know, one

administration cycle, No,

definitely doesn't play out. Yeah, I mean, exactly as you said, we're still burning wood like we did a thousand years ago, right? And two thousand years ago, whatever. Um, so there, it's not like there's an end state. Um, I do think that the thing that is worth talking about though is, and this, I need to touch on this too, is, you know, if you just look at, And we make, make this as simple as possible supply and demand.

reality

is we're putting constraints on supply and we are driving demand up exponentially at a rate that we probably haven't seen, um, in multiple generations. So there isn't really even humans on the planet who have firsthand experience of seeing the kind of. Transition, transformation, energy additions that are going to be needed just to support where we're going. We've decided, we've let AI out of the box. It's going to consume an enormous amount of

energy. It's a, it is a enormous consumer, right? Enormous. Consumer of energy and of water.

Right. And his comments around, uh, you know, he used the, he used the, the He talked a little bit about, you know, we once thought That we'd run out of food here, right? And then we made advance with there, right? Yeah, so okay So, you know, it's it's a similar thing I do think we will solve the problem of how do we some how do we supply this increasingly exponential demand? but I think his key message, the thing I took away

is,

it's not as simple. We got to stop pretending that you can just build a bunch of stuff and it's all going to be fine. There are unintended consequences and it's a far more complex ecosystem when we talk about global energy infrastructure, energy security, um, then I think a lot of folks are prepared to acknowledge, but anyone who was in that room yesterday.

room yesterday, well, it was a wake up call. Well, and I would say it was a wake up call at the beginning of the day and a wake up call at the end of the day when we talked about, uh, cyber security.

Yes, that was a good one

That was a good one as well. Um, so. But when we come back and think about the energy and the energy transition, what's your role and what's Marsh's role in this? How are you engaging players across that, that system?

because it's the simplest answer I can give you, which is Marsh's role is the same

the

as it ever was, right? Which is supporting our clients in being more successful in what they want to do, right? We just happened, like our job is to support them in the risk space, right? So we're global leaders in the risk and insurance space. If it falls in that ecosystem and we do our things right and we make Marsh work for a client, then ultimately our clients are more successful as a result. They get great advice, great counsel. They optimize cost of risk. They do lots of things.

right?

I imagine I want every single one of my Marsh clients to be there at the finish line. And frankly, to the extent they have competitors who are not Marsh clients, I'd rather they not be there. Right. And then I think, so I, you know, and I think we share that with our clients. Right. So we just want our clients to be successful. Um, and we want. Uh, to create value for them. Uh, it's less about selling them stuff and more about helping them create value.

help them thrive. Yeah. I love it. So, um, if you were advising a chemical executive on, you know, sitting here today or tomorrow when you go back to your day job, um, What's one thing they can be doing and should be doing or thinking about here in 2025 as it relates to energy, energy transition risk, etc.

Yeah, I, I think, um, I mean it's a. One, I always say, it always depends on who we're talking to and what their issues are. Every single one of our clients presents different issues. But at a high level, you know, for the chemical industry, I would say probably one of the most important things that they could be doing, particularly executives, is exactly what Peter Huntsman did yesterday. We have to. to be communicating across multi, multi, in a multi dimensional fashion.

right?

He said what he said, and he got that word out. And I think the more, the more that executives, um, in what I'll say is energy adjacent industries, appreciate the complexity of the situation, the better informed we'll be when we tell policy makers what it is we're looking for, um, you know, a lot of what Marsh does is help build consensus.

with policy, um, but, I

I think that to me is the most important one, uh, some of the underwriters who dared to raise their hand and challenged him yesterday, uh, interestingly enough, one of them in particular was, you know, was a renewable energy underwriter,

Yeah Like we've got to pierce

the veil. We've got to accept some hard truths We can be passionate about our role in the transition, but we've got to acknowledge the reality of the broader. And so I just love that we he pulled people out of their silos yesterday. And I think we've got to do that. And that's what I would say, you know, for executives in the chemical

space, They're the largest consumers

of energy. They're out there using it. They got a stake in it. They need to be part of the conversation, um, around. around what we're using and how. Um, so

about. Yeah. Love it.

thank you so much.

appreciate your time. It's been great.