Hey, it's Sukshat. I'll be going to COP twenty eight in Dubai later this month. I'd love to find a way to answer the many questions you may have of the United Nations Climate Conference. Check out the show notes for details on how to send us your questions. Thanks for listening, Welcome to Zero. I am Akshatrati. Big businesses have a huge role in reaching global climate goals. That's why it's important to hear from the leaders of those companies about how they are actually going to meet their
own targets. So for this bonus episode, I wanted to share an interview I conducted last month with Jim Snaber at the Bloomberg Tech Summit here in London. You probably don't know Jim's name, but he has been called Europe's top industrialist and he has led some of the biggest companies in the world. Between twenty seventeen and twenty twenty two, he was the chair of shipping giant Maersk, which is
responsible for around twenty percent of global shipping. Since twenty eighteen, he has been the chair of German technology conglomerate Semens, which has more than three hundred thousand employees. Working across health, transport, energy and industrial manufacturing, and in late twenty twenty two he was appointed the chair of Northwold, which has grown from a plucky Swedish startup in twenty fifteen to Europe's largest battery manufacturer today with more than four thousand employees
and fifty five billion dollars worth of orders. I asked Jim about how industrial behemits like Maersk and Semens can meet climate goals, whether zero missions shipping will ever become a reality, and whether Northwold can ever outcompete the Chinese battery industry. Welcome to this live recording of the Zero podcast. Maybe we start wads your childhood because some of what do you do today is informed by your time in Greenland.
Well, that is correct. When I was two years old, my parents decided to move the family to Greenland, of all places. My father was a helicopter pilot and we lived there for seven years. So as a child, it was a wonderful environment, a big playground full of snow. I remember Greenland as this cold place with an incredible amount of snow and not green at all. I think it's the first example of greenwashing actually in history and
of course that does influence your view on things. I've always had a love for that country because it's one of the most beautiful countries. If you've never been, you should go. But it's also one of the places where you can actually get a feel for climate change, not in theory, not in numbers, but in reality.
And you visited Greenland thirty years after you first lived there, and then twenty years after that, that's twenty twenty twenty two roughly. What were the changes that you saw and how does that affect you as a business person leading major companies in the world.
Well, it does have a big effect because it's a place where you've grown, you know, a love form, and you see the change. I was back in Greenland last time in April last year, and I was uniquely invited to this expedition to northeast Greenland where there is nothing but nature, and it was in April, so it's pretty tough nature. And I was there with a small group of people who know how to survive in environments like that, with a tenth and thirteen dogs, and so it's really
survival and you get very close to nature. You first of all, you realize how nature doesn't need you, you need nature to survive. And secondly, normally in April you will have have minus twenty degrees in average during the day, and we had two days where the temperature was plus Now you can almost hear the ice melting. And it got to me and I went back to study. I know that you know sea levels would rise if the inland eyes would melt, but once you study that, it
gets pretty scary. The ocean levels would rise six to seven meters. So I think we're in an unsafe place here, and it gives you that urgency and the way you think about your leadership. And I have decided to now dedicate my leadership to accelerating the decarbonization of the world, because first of all, we must otherwise we'll have a disaster. But I actually begin to believe that it is becoming maybe the biggest business opportunity ever and certainly in my lifetime.
So there's good reasons, to very good reasons to pursue this opportunity.
And earlier this year we met in Davos, and you're told me that from a semen's perspective, the energy transition is going well, that your role as a technology provider is going well, do you still hold that view ten months on, Yeah, no doubts. Technology has always been, in my mind the solution to issues. It is when we innovate for a different pattern that we create new opportunities and we create new, let's say, ways of looking at the world. Semens today is not the semens that many
know from the household appliances. It is an industrial semens. We basically do the infrastructures around cities, around manufacturing, and around transportation, and.
So you could argue we are in all of the infrastructures that consume energy, and we begin to see that the portion of our portfolio that helps companies get to zero carbon, that reduces their footprints and saves them money because they use less energy, is by far the fastest growing portion of our portfolio. We recently want a huge train system in Egypt, where we are delivering almost two hundred trains, fifty four fast beeed trains, there's cargo trains,
there's regional trains. We're building two thousand kilometers of rail, sixty stations. We will create employment of forty thousand people in the country. But most importantly, when this transportation system is up and running, not only will Egypt have the most modern transportation system in the world potentially, but they also will save seventy percent of the CO two emissions coming from transportation of people and goods, and so it's
a good business case. It's a great business opportunity for Semens, but it's also a path to a decarbonized future. And I think when we marry the two, we get out of this dilemma that you know, if we think of it as a cost, it's kind of too expensive and we don't want to do it too much. When it becomes a business opportunity, you want to do as much of it as possible because you actually is the way you make your money. And hence the transition happens at
scale the scale we need. When we talk about opportunities for Semens to provide solutions to companies, it's also an opportunity for Semens to look at itself and make sure its impact on the world is as small as possible. Now, Semens has.
A target to reach net zero by twenty fifty and you're going to talk about common accounting. So there are three types of emissions. There's scope one to and three. Those are emissions that either you're burning natural gas in your buildings. Scope one, you're getting natural gas power from somewhere else. Scope to. Those are typically less than in
your case, ten percent of your total emissions. Scope three, which is what services you provide to your customers, the products you provide to your customers that contribute ninety percent of your emissions, and they actually went up last year by two point five percent. Why is that happening when you have a clear plan to get to net zero.
Well, first of all, I think this is a very very important discussion to have. I still remember a shareholder meeting in twenty twenty. It was in February, just before COVID, so we actually had six thousand people in the Olympia Hall in Munich, and we were excited to go there. We had great business results, and we also were proud that we had reached a milestone in our CEO two emissions. Siemens was one of the first industrial companies to commit
to net zero. We did that in fifteen and we said we'll be net zero by thirty but there was Cope one and two, and in twenty twenty we had reached fifty two percent reduction, so we were like, I was super proud to be in front of you know,
our shareholders and talk about fifty two percent. And yet at that meeting we had a one hundred and twenty a climate activist scolding us for having sold some software that controls a train that we didn't build, but the train was actually used to transport coal from a mine in Australia, And for me that was the wake up call that Scope one and two is just not enough.
So with Scope three, you take responsibility for how your products are being used and what they're being used for, which of course is much more complicated, and if you grow your company, your emissions in Scope three could easily go up. Now, what we calculated is the following interesting math.
When we deliver an electric train or a hydrogen train like the deal in Egypt, one train in its lifetime, which is zero carbon train will actually reduce two emissions more than the annual combined seal two emissions of siemens. So the more trains reproduce of that kind, the better
the world becomes. And therefore we are now shifting our focus two Scope three and trying to take responsibility for what our products do because there's a much bigger business opportunity when you think of the problem that way than if you just think about your own emissions.
And one way you could do that is to not work with industries that are high polluting. But it's the exact opposite. On the Semen's website, you advertise that you would like to work with oil and gas companies, with cement companies, with mining companies.
Why is that Yeah, so I'm not aware of that sentence on the website, But if you look at our portfolio today, we estimate that ninety percent of our portfolio is being used to reduce carbon emissions. So we don't have a preference to work with any of those industries. In fact, we are even selling off businesses that are too deeply involved with oil and gas. So it's simply not the case. Now here's the dilemma. If we just scold the companies that emit a lot and don't try
and help them reduce their emissions, we'll get nowhere. It doesn't help that we just let someone else do it. We do need to engage with those companies and reduce their emissions as well, and you can't go from one hundred to zero in one second. You have to have a responsible path to that future. I do believe we're at the tipping point where we will stop burning fossil fuels to get energy.
Well, the most recent international Energy Agency report, the World Energy Outlook, just came out today and they agree. They say all fossil fuels, coal, oil, and gas will peak this decade and that after that they see what they call a structural decline, which is that it's not just a cyclical economy has gone down the drain. That's why we're going to consume less fossil fuels, but there'll be a decline coming through.
Now.
One place where you are helping that decline happen is the other hat you wear with Northwold, which is a battery company that is trying to build batteries for the auto industry here in Europe, which is a big employer. How does Siemens work with Northwold to try and make that happen, because that's a size of emissions reduction that can have a massive impact.
Yes, I think this is a very important a problem to solve because as you increase the share of renewable energy in an energy system, you get fluctuations in the energy system because you produce energy when there's sun and wind, and therefore you need intelligent infrastructure to transport energy. But most important, you need scalable, affordable storage opportunities, and so
batteries will play a role. The first revolution is in the automotive industry with the electric vehicles, and the issue is that while an electric vehicle is carbon neutral, if you don't make the battery carbon neutral, then it doesn't help much. So Northfold was created with this vision, this
dream to do it right. Let's start a completely new green battery company that not only produces the batteries with green electricity because there's a lot of energy going into building a battery, but takes the batteries back once they are done in a vehicle, crushes them to we call it black powder, and then extracts the lithium, the copper nickel of that battery and use that to build the
next battery. We are at a stage now with our technology at Authold where we can reuse up to ninety seven percent of the raw matials in a battery, which means we can get away from this idea that we need to dig out the raw materials in the soil and then use the battery for seven, eight or ten years and then throw it all out and create a
very big disaster in terms of waste. We actually just take them back, and it's a great illustration of the difference between the fossil world and the renewable world, in that in the fossil world, when we burn the fossil fuel, it pollutes the air and disappears. In a green battery like this, with this approach, the atoms stay at our disposal. We can use them to build a battery, take them back and build the next battery and the next barrier.
There is no deterioration of atoms, it's the same atoms. In fact, according to our calculations, when we get to scale, the raw materials that we get from a used battery will be cheaper than the one we mine in a mind, and then, as you can see, this becomes not only good for the environment, it becomes a great business case.
Now, the challenge for Northwold, and the solution you've just outlined is a necessary one, not just from an environmental perspective, which is important if you're going to build green technologies, you make sure they themselves are green. But the challenge is really for regions like Europe, but also North America is to have their own manufacturing of batteries in the
first place. Now, China has overtaken the world combined on batteries, and not just in manufacturing them, but also controlling the very materials, the processed metals that go into batteries. And so if you get recycled material you can keep it on shore and use them, but you will still have to start somewhere where you're going to need virgin materials.
So what is it that Northwold is doing now to try and manage what is a real severe supply domination by China in an era where geopolitics is causing more rupture to happen between Europe and China and America and China.
Yeah, we've seen what happened with the solar panel industry when China went in there and basically dumped the prices, which made manufacturing elsewhere irrelevant. And therefore China today is by far the biggest leader in this. Maybe there's a comeback in the horizon, I don't know, because of the generations of technology. But let's see, we should not let
that happen to the battery. The battery will be a very important ingredient in the energy system as well as in the transportation system, so we must have the capacity in Europe in North America to do that. What we're basically doing at Norswald is we are sourcing the raw metis. Of course in the ramp up phase you do need more, but we ask our technology to recycle the batteries is
not dependent on the Norswald battery itself. As long as it's a lithium ion battery, we can take the batteries back, crush them to powder and extract the atoms and build the next battery. And we expect that already by twenty thirty. And don't forget this company is only six years old. By twenty thirty, half of our ramachills will come from
our own recycled batteries. And I think this actually, with the increased geopolitical tensions, it's going to be strategically important for each region to be self sufficient with the critical ra machills that are necessary to create a sustainable infrastructure of the future.
And one way where we are seeing at least a movement from governments to try and overcome what is a China challenge on matteries is the Inflation Reduction Act in the US, there's the European Green Deal, very different kinds of policies that are being set out to enable manufacturing all of these green technologies to happen on shore. Inflation Reduction Act is very much driven at giving you lots and lots of subsidies to try and make that happen.
Europe not quite so much as a European company that now has announced a Canada plant and has global ambitions, how are you using the policy changes across the Atlantic?
So I actually see the RA as a positive, and it might sound, you know, strange for European leader to think that way. For me, it's not necessarily a barrier, It's an opportunity. The IRA is not limited to American companies. Any company can apply, and it's actually an accelerator of the transition to green technologies. And I welcome any accelerator we can have. Coming back to my experience on Greenland, we exponential curves here. We cannot do linear, you know,
and maybe we'll do a little bit tomorrow. We need exponential curves. We need to be courageous in our leadership to dream big about what we could do and then get on with it. And the IRA is an a catalyst for that Europe should do something similar. It's in fact trying. It's a little bit more complicated, but we will.
We have the first factory in northern Sweden that was without those subsidies, were now having committed a plant in Canada with IRA similar conditions, and we will also be looking for an opportunity in Europe and with that create the necessary capacities for green batteries in Europe and in the US. So why is this important? I often say that in a joke, the Stone Age didn't end because
we ran out of stone. And when you have new technologies that are better and more sustainable and maybe even cheaper eventually, you just need the incentives to be put in place to accelerate that future or disincentives. If I was a policy maker, I would also put a price on SEW two and with that innovation goes in avoiding it rather than today where we kind of accept it and hope to limit it in good faith.
Going back to the start where you were the chairman of Meersk until twenty twenty two, giant shipping company, which under your championship, was able to create a clear roadmap for what is an industry that has done very little on reducing emissions. What have you achieved when you set those goals out and how are they playing out now?
I think that story of zero carbon shipping is a great example of the courageous leadership that I believe business leaders need to have. I still remember the board meeting in eighteen when management said, you know, why don't we commit to zero carbon shipping. You know, Mask alone, which is twenty percent of shipping, consumes ten million tons of
bunk oil. It's still the least polluting way of transporting goods, but it's a lot of CO two and you know, the board would say, so, how we're going to do that, and management said, we don't know. And then the board would say what's the business case? And the management say, we don't know. We don't even know the technology. And yet in twenty eighteen the company committed to zero carbon shipping by twenty to fifty. Now, twenty fifty is a
long way out in the future. But to do that you needed the first vessel sailing in twenty thirty, and it felt very, very challenging that first vessel sales now seven years ahead of that originally impossible plant. We have ordered more than twenty eight vessels now in total. And interestingly enough, in twenty eighteen, nobody thought sero carbon shipping would be possible. In twenty three we now have the first vessel sailing and the industry have now ordered one
hundred and twenty eight methanol vessels. Methanol is a green fuel is produced by green electricity. You basically take it through electrolyzer. You get hydrogen. You add Z two to hydrogen, you get methanol, or you add nitrogen to hydrogen and you get ammonia. And these are fuels that will have zero carbon impacts on this world. Vessels with a new engine can sail on that and with this we can
solve zero carbon shipping. And my conclusion as a leader, if you can do zero carbon in shipping, you can do zero carbon in any industry. So it's just for us to have the courage to lead that way.
So in these three companies, in these three companies that you've led, have you seen when you take this step which is bold, ambitious, risky, but then eventually pays off and people see it pay off being copied by others. Are you seeing that leadership spread out?
It's beginning, and it's interesting to see that. It's almost like for two hundred years, industrialization has taught us to specialize, but you can't redo an entire value chain for zero carbon shipping if everyone is doing their piece. It's almost like asking a symphony orchestra to play a new tune, where the trumpets start with their new tune and the others play the old tune at the same time. It
doesn't sound very well. I think that's the time when in the world right now it doesn't sound that well. So you need someone to orchestrate the reinvention. Mask orchestrated the reinvention for shipping, and it's working. Siemens is trying to do it in manufacturing in urban areas and in transportation. Noswald is doing it in the battery space, and they're taking a end to end view of the industry and
inviting everyone to play. I think that's the approach we need, and when that happens, you de risk the project and you get exponential scale.
Thank you, Jim, thank you, Thank you for listening to Zero. If you enjoyed this episode, please take a moment to rate or review the show on Apple Podcasts and Spotify. Share this episode with a friend or with someone who loves shipping containers. You can get in touch at zero port at Bloomberg dot Net. Zero's producer is Oscar Boyd and senior producer is Christine driscoll Our. Theme music is composed by Wonderly Special thanks to Kira bindram I am Akshatrati. Back next week.