WEBVTT 1 00:00:08.240 --> 00:00:14.599 You are listening to Redefining Energy. Your co hosts from Berlin Gerard Read and 2 00:00:14.759 --> 00:00:20.879 from London Laurent Sagan Laurn. Happy Christmas. It's the last episode of the 3 00:00:20.960 --> 00:00:23.640 year. It's been a good year and lost and lots of different ways. 4 00:00:23.839 --> 00:00:29.079 And I believe have passed one million downloads. Amazing. Yeah, in twenty 5 00:00:29.120 --> 00:00:34.359 three we will have four hundred and seventy thousand downloads, which is up thirty 6 00:00:34.359 --> 00:00:38.880 four percent compared to tour twenty two. So I like really to thank all 7 00:00:38.920 --> 00:00:43.159 our listeners. I still can't believe that people actually tune and listen to us 8 00:00:43.159 --> 00:00:47.960 every week. Thank you very much, everybody. It's great. We'll having 9 00:00:48.000 --> 00:00:52.840 fun still. And there's one in particular, Jan Cornelie, who says I've 10 00:00:52.880 --> 00:00:58.560 listened to every minute of the show. Well done, Yan, well done, 11 00:00:58.600 --> 00:01:03.119 An well done. But first over from our partner. Equittter Capital is 12 00:01:03.159 --> 00:01:07.120 a sustainable investment company headquartered in Hamburg, Germany. Equit a capital investment real 13 00:01:07.159 --> 00:01:12.400 assets such as clean energy, sustainable infrastructure, energy efficiency and growth private equity 14 00:01:12.400 --> 00:01:15.719 on behalf of its clients. Lauren, And we have a big announcement for 15 00:01:15.760 --> 00:01:21.680 next year. Yeah, we go weekly. Wow, Well, explain what 16 00:01:21.680 --> 00:01:26.400 that means we're going to merge this show with our second show, which is 17 00:01:26.439 --> 00:01:32.280 called Redefining Energy Minutes. We created that little sister show two years ago a 18 00:01:32.280 --> 00:01:36.760 bit of a separate experiment, and because we've been pleased with the progression, 19 00:01:36.959 --> 00:01:41.359 I think it's time for the Minutes to go mainstream. He looking forward. 20 00:01:41.719 --> 00:01:44.680 So how it's going to work is we still have our main show, but 21 00:01:44.760 --> 00:01:47.159 it's not going to be the first under of fifteen of each months. It's 22 00:01:47.159 --> 00:01:49.719 going to be the first and the third Monday of each months, and then 23 00:01:49.959 --> 00:01:55.200 we will have the Minutes, which are just you and Meat ten minutes every 24 00:01:55.319 --> 00:01:59.400 second and fourth Monday of each months. And the all idea is to have 25 00:01:59.439 --> 00:02:02.159 a just to of us, a free, willing discussion on the news or 26 00:02:02.200 --> 00:02:07.439 a certain topic. Exactly looking forward, Okay, the title of this episode 27 00:02:07.560 --> 00:02:13.039 is Weaponizing Energy the en of Innocence, Jard. I don't want to growth 28 00:02:13.520 --> 00:02:17.960 how great we are. We are great, You're great, You're great, 29 00:02:19.000 --> 00:02:23.039 You're great. Okay, Okay, good. We saw it coming, Charred. 30 00:02:23.599 --> 00:02:27.960 Remember two years ago in October to twenty one, we did the episode 31 00:02:28.000 --> 00:02:32.080 sixty called the Nutgas Pokealypse, and as a guest, the picture was put 32 00:02:32.120 --> 00:02:36.560 in it's crazy. And by the way, that was five six months before 33 00:02:36.639 --> 00:02:40.759 the war broadcast. Yeah, exactly. Personally, I support Ukraine one hundred 34 00:02:40.759 --> 00:02:44.560 percent and on what they've been doing, We've tried to help. We had 35 00:02:44.759 --> 00:02:49.080 the CEO of d Tech Ukrainian Utility on the show. Our heart goes with 36 00:02:49.280 --> 00:02:53.080 Ukraine, especially through another hard winter, right, Yeah, very tough. 37 00:02:53.360 --> 00:02:57.560 So two years into that weaponization of energy, I think it's time for us 38 00:02:57.599 --> 00:03:01.719 to look back and assess what I've been the short term impact of the crisis. 39 00:03:02.520 --> 00:03:07.520 How are the responses and type of market supply chain, government behavior of 40 00:03:07.639 --> 00:03:14.919 fuel choices. Did the energy system show an incredible resilience or have we just 41 00:03:15.000 --> 00:03:17.680 been lucky? I'm looking forward to have this discussion, my friend. So 42 00:03:17.719 --> 00:03:20.960 how are we going to bring in the show. Well, we're going to 43 00:03:20.960 --> 00:03:27.199 bring a super expert called Andy Summer. Andy is head of fundamental Analysis, 44 00:03:27.360 --> 00:03:34.879 modeling and Meteorology at Axpo. An Expo is a Swiss based energy, utility 45 00:03:35.000 --> 00:03:38.080 and trading business. Yeah, it's really on the top of it is responsible 46 00:03:38.199 --> 00:03:44.039 for the short and mid term analysis of all global energy markets. So not 47 00:03:44.080 --> 00:03:46.680 only we're going to talk on boild energy, We're going to talk about oil. 48 00:03:46.800 --> 00:03:50.039 We're going to talk about gas, We're going to talk about coal emissions 49 00:03:50.080 --> 00:03:54.039 and everything. So let's bring them on the show. Andy, welcome to 50 00:03:54.080 --> 00:03:59.120 the show. Thank you very much, and thanks for having me. Good 51 00:03:59.120 --> 00:04:01.000 and it's good to see you. So let me kick off by just asking. 52 00:04:01.479 --> 00:04:04.120 I mean, if I reflect over the last year and a half, 53 00:04:04.560 --> 00:04:12.159 it's for me it's been the most incredible period in terms of energy price volatility. 54 00:04:12.479 --> 00:04:15.360 Just as we enter this winter here, it all seems pretty calm. 55 00:04:15.800 --> 00:04:17.959 I'd love to hear your thoughts because you've been in the midst of this over 56 00:04:17.959 --> 00:04:20.920 the last year and a half, and your reflections and what you see going 57 00:04:21.000 --> 00:04:26.000 forward. Yeah, indeed, it was a very, very crazy ride. 58 00:04:26.600 --> 00:04:33.759 Analyst, market observers, everybody around energy was extremely busy. Yeah, it 59 00:04:33.839 --> 00:04:39.879 was a very interesting period. I'm more than thirty years in a business and 60 00:04:40.040 --> 00:04:46.120 haven't ever seen a situation like that, even during the COVID times. So 61 00:04:46.160 --> 00:04:48.120 tell me just if you look back with that, what surprised you and what 62 00:04:48.199 --> 00:04:53.079 didn't surprise you over the last year and a half. I think surprise was 63 00:04:53.519 --> 00:05:01.199 basically the complexity of the whole system, how it evolved. We've seen politicians 64 00:05:02.000 --> 00:05:13.399 jumping into trying to steer energy markets, partly with success, partly making matters 65 00:05:13.439 --> 00:05:21.040 worse. We've seen developments like Russian GUS flows that never happened before even in 66 00:05:21.199 --> 00:05:30.800 other crisis times. We've seen not only market impacts prices gone crazy, we've 67 00:05:30.839 --> 00:05:39.279 seen a very direct impact on the macroeconomic picture on energy flows that effected suddenly 68 00:05:39.680 --> 00:05:46.480 not only European continent, but a global energy world from China to the US, 69 00:05:47.079 --> 00:05:56.000 and a huge volatility that actually reached every part of our society. And 70 00:05:56.279 --> 00:06:00.720 the end of the day, right the first events start swilar to twenty one 71 00:06:00.800 --> 00:06:09.959 when the Russian flows stopped arriving and Russia decided to weaponize the gas and you 72 00:06:10.000 --> 00:06:14.319 know, left their German storage empty. For me, that's a trigger point. 73 00:06:14.319 --> 00:06:17.279 And of course that was six months before the invasion, so there was 74 00:06:17.639 --> 00:06:23.000 in my opinion, it's not a coincidence. And then of course when the 75 00:06:23.120 --> 00:06:30.120 it's the fan, you start having other factors like low hydro availability, the 76 00:06:30.199 --> 00:06:35.600 debacle in the French nuclear fleet that we addressed the months ago, and weirdly 77 00:06:35.879 --> 00:06:43.240 the system managed to survive despite those three shocks. How do you analyze the 78 00:06:43.279 --> 00:06:46.800 resilience of the system. But of course we had to pay for that resilience, 79 00:06:46.959 --> 00:06:53.360 absolutely, and I think that was the biggest shock to the world in 80 00:06:53.399 --> 00:06:58.360 itself. We had that happenings at the same time that, as you said, 81 00:06:59.360 --> 00:07:05.199 Russian reduction of energy flows. It was not only gas. It was 82 00:07:05.279 --> 00:07:13.199 also from August twenty twenty two onwards, the stop of all coal deliveries to 83 00:07:13.360 --> 00:07:19.439 Europe because the EU was banning that. We've seen a strong reduction of electricity 84 00:07:19.560 --> 00:07:25.959 flows to Nordic countries for example. We've seen a reduction of oil flows to 85 00:07:26.079 --> 00:07:31.519 Europe. We've seen a reduction of wood for biomass power production, and a 86 00:07:31.560 --> 00:07:38.879 lot of different topics on the supply side, and a macroeconomic picture had to 87 00:07:38.920 --> 00:07:46.319 react to that, not only via significantly higher energy prices in itself, but 88 00:07:46.399 --> 00:07:53.079 also simply to rebalance demand and supply. That consumption site had to take a 89 00:07:53.279 --> 00:07:59.199 good hit a brunt of that imbalance as well. And so at the end 90 00:07:59.199 --> 00:08:03.279 of the day, it also came down to a recession in many countries around 91 00:08:03.319 --> 00:08:09.279 the world, at least a very very very strong job in economic activities. 92 00:08:09.560 --> 00:08:16.560 And I think that was the other main consequence of that weaponing of energy as 93 00:08:16.600 --> 00:08:20.800 you called it. Can I ask you look at the day. You're working 94 00:08:20.839 --> 00:08:24.160 for a big energy trader, right and your job is to see the future 95 00:08:24.240 --> 00:08:30.199 and then to help your company through it. So when did you see what 96 00:08:30.360 --> 00:08:35.919 was going on and what did you do to manage the risks in and around 97 00:08:35.120 --> 00:08:41.919 your own business. Of course, we did see those very early warning signs 98 00:08:41.960 --> 00:08:46.840 that something is happening. As you described correctly, GUS from suddenly slowed the 99 00:08:48.120 --> 00:08:54.440 storage injections in its German storage sites. Then later on GUS prompt came up 100 00:08:54.600 --> 00:09:01.960 with all that new contractual requests payers in rubles instead of dollars or euros and 101 00:09:03.039 --> 00:09:07.759 all those kind of stuff. So it developed over time. We always followed 102 00:09:07.840 --> 00:09:13.639 that we were surprised by many of those actions, to be honest, but 103 00:09:13.720 --> 00:09:20.320 in order to react to that to make the right or strategic decisions, of 104 00:09:20.360 --> 00:09:26.360 course, we had spent a lot of hours in those months in working groups, 105 00:09:26.399 --> 00:09:31.759 in strategy groups, on the financial side, on the operation side, 106 00:09:33.000 --> 00:09:39.240 across all the different desks, and that was very busy times, of course, 107 00:09:39.320 --> 00:09:46.840 with many many many in our sitting in those rooms and discussing strategic consequences 108 00:09:48.200 --> 00:09:54.759 and positioning and how do we handle and operate around all those issues that suddenly 109 00:09:54.960 --> 00:10:01.600 we were facing everybody of us. The question is, how do you realize 110 00:10:01.159 --> 00:10:07.159 or when do you realize that you're not into a plus thirty or plus forty 111 00:10:07.159 --> 00:10:11.240 percent, which already would be in the normal courses of things enormous, But 112 00:10:11.279 --> 00:10:16.960 you're in a times two times three times four literally something you've never seen in 113 00:10:18.000 --> 00:10:22.360 the past fifteen years. So at what moment you realize that you are opening 114 00:10:22.399 --> 00:10:28.639 a totally new chapter in the way those markets and prices are opening. It 115 00:10:28.720 --> 00:10:37.480 was latest when Russia started invading Ukraine in those moments that it's not only kind 116 00:10:37.519 --> 00:10:46.159 of a threatening there is actually military action happening. Then later on when all 117 00:10:46.200 --> 00:10:54.159 those first requests for changing contracts arrived, when we saw really or so direct 118 00:10:54.320 --> 00:11:01.120 flows of energy commodities into Europe starting to slow down, starting to reduce, 119 00:11:01.600 --> 00:11:05.600 and the highlight was, of course, then later on that explosion of the 120 00:11:07.000 --> 00:11:13.240 nord Stream gas pipeline. That was basically the tipping point, the highlight of 121 00:11:13.320 --> 00:11:20.879 that saga. It came along already with that strong increase in prices way beyond 122 00:11:20.039 --> 00:11:30.480 everything that is clear from a pure demand supply cost of supply classic consideration side, 123 00:11:30.879 --> 00:11:35.399 there was a lot of risk premium put in us, so there was 124 00:11:35.440 --> 00:11:41.759 a lot of last minute buying from different other sources are suddenly coming into the 125 00:11:41.799 --> 00:11:48.360 market. That added to that pure classical drivers of the market. And that 126 00:11:48.600 --> 00:11:54.000 was exactly then, laters. That was the point where it was very clear 127 00:11:54.120 --> 00:12:00.759 we are living in new times and the world will in the next coming years 128 00:12:01.320 --> 00:12:05.039 not look nearly the same as it did in the past. Yea. And 129 00:12:05.080 --> 00:12:11.600 of course that's the moment where government's step in. Correct. Governments have a 130 00:12:11.679 --> 00:12:16.559 relatively light touch in well supplied markets, but in crisis they step in exactly 131 00:12:18.039 --> 00:12:24.600 and their job is basically to distribute the pain. How much can they take 132 00:12:24.639 --> 00:12:30.279 on themselves taxpayer? Are they going to bail out companies? Are they going 133 00:12:30.360 --> 00:12:35.919 to pass through to consumers or not? Who to shield? And of course, 134 00:12:35.320 --> 00:12:39.919 for better or worse, trying to tweak the market rules because they don't 135 00:12:39.919 --> 00:12:43.000 believe that the market is delivering the good signals. So how do you analyze 136 00:12:43.000 --> 00:12:48.399 that? Was it coordinated or a bit of a panic mode? It was 137 00:12:48.720 --> 00:12:54.960 panic somewhere. Absolutely. We from the analytical side, from the trading side, 138 00:12:54.960 --> 00:13:00.919 of course, we try to keep a cool head around, tried to 139 00:13:01.000 --> 00:13:07.000 observe things, tried to be as close to the decision makers in Brussels as 140 00:13:07.080 --> 00:13:13.000 much as as what we can do, so we tried to understand firsthand what's 141 00:13:13.200 --> 00:13:20.279 going on. We also tried to discuss with the politicians as much as we 142 00:13:20.440 --> 00:13:26.919 could in order to avoid worse decisions. But you said it, politics were 143 00:13:26.039 --> 00:13:33.080 extremely active around the time, not always in a very coordinated way in itself, 144 00:13:33.799 --> 00:13:41.240 and this was another topic, another layer of complexity to the markets as 145 00:13:41.279 --> 00:13:46.639 we knew it. You said it correctly. Politics came in and made a 146 00:13:46.720 --> 00:13:54.320 lot of different decisions that again affected both the consumption side, both the supply 147 00:13:54.559 --> 00:14:03.679 side of all those markets, sometimes not necessarily so sometimes of course with the 148 00:14:03.919 --> 00:14:07.080 good thought in the back. And we tried to make sense out of that 149 00:14:07.240 --> 00:14:15.480 from analytical side, tried to really understand that complexity that was brought in additionally 150 00:14:16.039 --> 00:14:22.159 and take our strategic decisions around it. And the one of the reflections I 151 00:14:22.240 --> 00:14:24.799 have was how well we've come through that this crisis. I mean, that's 152 00:14:24.879 --> 00:14:28.200 the reflection I have was when it started, it could have gone anywhere. 153 00:14:28.480 --> 00:14:33.200 We could have had blackouts across Europe, we could have had not been able 154 00:14:33.200 --> 00:14:37.600 to heat our homes, but we had very mild winter. Let's be really 155 00:14:37.759 --> 00:14:43.399 really clear. We're speaking now and I'm looking where I live outside Berlin, 156 00:14:43.440 --> 00:14:48.440 it's minus fourteen degrees a year ago. We never hit minus fourteen degrees where 157 00:14:48.440 --> 00:14:50.759 I live. So one other words, the weather is different this year than 158 00:14:50.799 --> 00:14:54.679 it was last year. And I suppose the question I'm asking is, really, 159 00:14:54.399 --> 00:14:58.480 is this crisis over at this point in time that we all sort of 160 00:14:58.720 --> 00:15:01.960 sleep well now for the next year and a half, or how are you 161 00:15:03.000 --> 00:15:07.799 looking? So, first of all, reflection on last year, we made 162 00:15:07.840 --> 00:15:13.240 it through last winter mostly also with a little bit of luck. All that 163 00:15:13.639 --> 00:15:18.639 weather that you talk about. It was milder and normal last year. We 164 00:15:18.639 --> 00:15:24.399 were lucky that it was this way. The other point, also concerning last 165 00:15:24.480 --> 00:15:28.399 year was from that point of view, we were lucky to some extent that 166 00:15:28.600 --> 00:15:37.559 China was still in its own corona shut off crisis mode, did not need 167 00:15:37.879 --> 00:15:43.799 an awful lot of energy for itself because their microeconomic situation was not good at 168 00:15:43.840 --> 00:15:50.919 the time already. So that left Europe with a good bit of overhang in 169 00:15:52.039 --> 00:15:58.240 terms of oil, coal and LNG that we could pick up over here us. 170 00:15:58.440 --> 00:16:04.679 That came in our favor that China was still at that stage. Over 171 00:16:06.000 --> 00:16:11.679 the course of the year twenty twenty three, China also again is a continuation 172 00:16:11.879 --> 00:16:17.799 of that. They opened the country, but they're struggling to really get the 173 00:16:17.919 --> 00:16:23.759 car on the road. The microeconomic picture is still rather muted. I would 174 00:16:23.759 --> 00:16:29.159 say, it's not coming in like a big boom. Of course, the 175 00:16:29.279 --> 00:16:34.320 Chinese would that take on more energy for themselves from their long term contracts, 176 00:16:34.759 --> 00:16:41.960 but they're not that desperate that they have to buy a lot of flexible volumes 177 00:16:42.000 --> 00:16:48.320 aggressively. And again that leaves and left us in Europe with the ability to 178 00:16:48.440 --> 00:16:56.919 pick up cargoes at fairly good prices. That's the one. The other point 179 00:16:56.320 --> 00:17:03.240 really when we talk about security supply this winter and also the next one or 180 00:17:03.279 --> 00:17:10.799 two more winters to come. Besides the whole weather topic, is as one 181 00:17:10.880 --> 00:17:17.079 consequence of that war and all that happened over the last two years, we 182 00:17:17.240 --> 00:17:22.519 have to keep in mind that we lost a big bit of flexibility in Europe's 183 00:17:22.720 --> 00:17:30.839 energy system. We used to get a lot of supply increases in winter time 184 00:17:32.279 --> 00:17:37.599 from places like the Netherlands, they just a couple of months ago closed that 185 00:17:38.000 --> 00:17:45.839 joining in gas field gone. We used to get winter profile from the Norwegian 186 00:17:45.960 --> 00:17:52.680 Troil gas field, which now runs runs baseload at maximum capacity, so has 187 00:17:52.839 --> 00:18:00.400 no possibility to really increase output when it's cold, when demand is picked up. 188 00:18:00.160 --> 00:18:07.000 And we lost Russia, who worked as the single largest supplier of winter 189 00:18:07.160 --> 00:18:12.000 flexibility in the past, we don't have all that anymore. That means the 190 00:18:12.160 --> 00:18:22.079 big short term balancing item for the European energy system are the gas storages plus 191 00:18:22.200 --> 00:18:26.519 the LERG with a little bit of a time leg to it, And that 192 00:18:26.680 --> 00:18:34.720 means weather is becoming a significantly more influential factor, not only European weather, 193 00:18:36.119 --> 00:18:44.559 but also global weather because it affects on how much LLG coal oil is available 194 00:18:44.720 --> 00:18:49.240 to us. And the other point is really that the market is still very 195 00:18:49.359 --> 00:18:56.000 very tight in terms of demand versus supply. It doesn't need much to bring 196 00:18:56.039 --> 00:19:03.599 the market back into a deficit that is very hard to feel. From currently 197 00:19:03.839 --> 00:19:10.319 unutilized sources. There are simply none of those. So we are depending on 198 00:19:10.519 --> 00:19:18.839 availability of energy supply. We are dependent on weather. Globally, we are 199 00:19:18.880 --> 00:19:26.160 dependent even more than in the past on global macroeconomic situations and of course global 200 00:19:26.319 --> 00:19:33.559 policy decisions as well. We are now starting the winter on a very good 201 00:19:33.640 --> 00:19:37.880 footnote here in Europe, but it doesn't mean that we can write off the 202 00:19:37.920 --> 00:19:44.640 winter already as success. There are still a couple of weeks and months to 203 00:19:44.799 --> 00:19:49.720 come until we end the winter, and then can really look forward into the 204 00:19:49.839 --> 00:19:55.960 new year, can know and have a better view of how much energy do 205 00:19:56.039 --> 00:20:00.240 we have to buy during twenty twenty four to make sure that enter next winter 206 00:20:00.680 --> 00:20:07.000 on a similarly well prepared state as we are now. I understand your conscious 207 00:20:07.079 --> 00:20:11.759 because that's your daily job, and me I'm not such a granular analyst as 208 00:20:11.759 --> 00:20:15.079 you are. But if I look at the picture where we at the end 209 00:20:15.079 --> 00:20:18.359 of two twenty three compared to where we were at the beginning of the year, 210 00:20:18.480 --> 00:20:25.599 I'll tell you, Wow, hydro reservoir full again. The new clear 211 00:20:26.160 --> 00:20:32.559 is progressively getting better nuclear availability. The price of gas. We end up 212 00:20:32.680 --> 00:20:37.200 with a price of gas at the lowest level in the year. The price 213 00:20:37.240 --> 00:20:41.400 of oil has gone up and down during the aul year, but finishes in 214 00:20:41.440 --> 00:20:45.200 a well supplied market to the point that the Middle East have to reduce production. 215 00:20:45.799 --> 00:20:49.039 And it's probably at the same time you have the US who are bumping 216 00:20:49.079 --> 00:20:56.000 out like never and other new players like Brazil. So if I look at 217 00:20:56.000 --> 00:20:57.119 the big picture, I say, well, out of the woods. So 218 00:20:57.559 --> 00:21:03.440 am I too optimistic? I think you are too optimistic on that end, 219 00:21:03.000 --> 00:21:08.920 You're absolutely right where today at a significantly better situation compared to where we've been 220 00:21:10.279 --> 00:21:15.920 a year ago. Absolutely the corerent aligned on that end. Again, what 221 00:21:15.960 --> 00:21:23.079 I'm saying is the system is right now not so well prepared and not well 222 00:21:23.480 --> 00:21:32.279 buffered that we can withstand a prolonged cold period or that we can withstand without 223 00:21:32.319 --> 00:21:40.039 any problem an unexpected supply disruption from somewhere. So the system is still very 224 00:21:40.119 --> 00:21:47.599 sensitive to any demand supply deltas and situations, and the buffer is not that 225 00:21:47.759 --> 00:21:53.240 big. If all went well, if winter turns out to be close to 226 00:21:53.440 --> 00:21:59.880 normal here in Europe and around the world, if we don't see unexpected supply 227 00:22:00.119 --> 00:22:03.200 out diaches, yes, you are right, then we also will end the 228 00:22:03.319 --> 00:22:10.960 winter on a very comfortable level than we have. But it's too early to 229 00:22:11.079 --> 00:22:15.000 say so. We still have two three more months to go through the winter, 230 00:22:15.440 --> 00:22:19.960 and a lot can go wrong, and that's my message. We are 231 00:22:21.359 --> 00:22:26.240 not so safe in that respect. Talking about the future, what do you 232 00:22:26.359 --> 00:22:33.400 think market participant and governments have learned from the weaponization of energy by Russia, 233 00:22:34.000 --> 00:22:42.200 which apparently has failed. I believe the whole European society's point of view and 234 00:22:42.319 --> 00:22:48.000 with that also, a lot of the politicians focus we see it in many 235 00:22:48.039 --> 00:22:56.519 of those recent elections in different European countries shifted from focus number one on the 236 00:22:56.599 --> 00:23:03.359 priority list energy transition to towards energy security. I think that's the big society 237 00:23:04.000 --> 00:23:11.759 shift in focus right now, and that means we are a bit more cautious 238 00:23:11.799 --> 00:23:19.839 in terms of investments in green energies directly because we also know that this brings 239 00:23:19.920 --> 00:23:27.680 us into other layers of dependencies, especially with China and their hand on many 240 00:23:27.759 --> 00:23:33.920 of those transition fuels and commodities and components. It also brings us to a 241 00:23:34.079 --> 00:23:42.039 level where policy is shifting the focus to how can we secure demand. We've 242 00:23:42.160 --> 00:23:48.559 seen a strong increase in public support public opinion again towards the nuclear topic. 243 00:23:48.640 --> 00:23:53.720 For example, when we look back two years ago, most of the service 244 00:23:53.880 --> 00:24:02.400 across Europe by tendency where neutral or bias towards no new player. Now, 245 00:24:02.440 --> 00:24:07.000 if we would do that service, it swing to the other side. And 246 00:24:07.079 --> 00:24:12.920 so that is for me a signal that policy, society, industry shifted as 247 00:24:12.960 --> 00:24:18.319 a consequence of that last two years. So Ali, maybe just to wrap 248 00:24:18.400 --> 00:24:22.480 up, we obviously want to talk about the future, but what I'd really 249 00:24:22.559 --> 00:24:26.880 like to ask is Laurent has talked about the weaponization of energy. I like 250 00:24:26.920 --> 00:24:30.960 the phrase he uses, and I'd be interested to know what long term impacts 251 00:24:30.000 --> 00:24:34.960 do you think this whole crisis with Russia is going to have. And I'm 252 00:24:36.000 --> 00:24:41.240 coming from because I feel that the people in the street don't realize the extent 253 00:24:41.359 --> 00:24:44.960 of the crisis, and there's been a lot of reasons for it. One 254 00:24:45.079 --> 00:24:48.200 is because the governments have done a really great job of intervening in the market. 255 00:24:48.400 --> 00:24:52.640 But the other thing is the governments have basically sheltered the customers from price 256 00:24:52.880 --> 00:24:56.839 volatility. Right, you can't subsidize customers forever, so you have to stop 257 00:24:56.839 --> 00:25:00.839 that. Yeah, so I'm be interested to hear just what you see what 258 00:25:00.920 --> 00:25:07.759 happens next. People are now much more aware of energy costs and deprices, 259 00:25:07.079 --> 00:25:14.720 energy relationships, Who is producing, who brings us energy into the system. 260 00:25:14.839 --> 00:25:18.160 It's not only that, yeah, power comes from out of the world in 261 00:25:18.240 --> 00:25:26.079 my house. It's people are more educated on that, and probably people will 262 00:25:26.319 --> 00:25:32.680 react more sensitive. I would hope, and I would expect that this whole 263 00:25:32.920 --> 00:25:40.119 development gave us a boost in terms of working more efficiently with our energy sources. 264 00:25:40.440 --> 00:25:44.680 That this stays in the minds of many people, I hope. So 265 00:25:45.079 --> 00:25:53.480 it definitely already led to a shift in energy intensive industries out of Europe into 266 00:25:53.599 --> 00:26:00.519 other places in the world that we then have to re import with all that 267 00:26:00.000 --> 00:26:07.720 negative consequences for the employment and economic situation that we have in Europe. We've 268 00:26:07.759 --> 00:26:17.759 seen that politics increased targets in terms of wind, solar, new energy technologies 269 00:26:18.000 --> 00:26:23.880 as well. Also that is here to stay. Hopefully it works out in 270 00:26:23.920 --> 00:26:32.000 a way that the acceptance in the society on renewables, building wind farms, 271 00:26:32.319 --> 00:26:37.920 building solar parks is increasing and will support that transition as well. And the 272 00:26:38.039 --> 00:26:45.839 discussion around nuclear energy is picked up. It's a slow discussion definitely, but 273 00:26:47.000 --> 00:26:51.759 it will stay with us the coming couple of years. And also that is 274 00:26:51.839 --> 00:26:56.240 back on the agenda definitely. Well Andy, thank you very much for this 275 00:26:56.440 --> 00:27:03.920 great panorama on the weaponization of energy and how we sometimes by luck, sometime 276 00:27:03.000 --> 00:27:10.200 by market forces, sometime by technology invention, we go through it. And 277 00:27:10.279 --> 00:27:12.759 it was a great last episode of two twenty three, so hopefully we'll have 278 00:27:12.880 --> 00:27:18.480 a better tour twenty four. Thank you for coming. Thank you very much, 279 00:27:18.839 --> 00:27:22.240 Thank you, Thanks all, Alie, great Chile. Did you enjoy 280 00:27:22.279 --> 00:27:26.279 the conversation. I didn't do it, absolutely, it was good to recap 281 00:27:26.359 --> 00:27:30.680 on what's happened over the last period of time. Yeah, how about you? 282 00:27:30.200 --> 00:27:36.160 What was what was your takeaways? What I really appreciated is how that 283 00:27:36.440 --> 00:27:42.240 impact shock of weaponizing energy has allowed us to reframe the eternol debate between climate, 284 00:27:42.319 --> 00:27:48.720 security of supply and affordability. That's number one, And what we've been 285 00:27:48.759 --> 00:27:53.039 saying for quite some time now is the new one physicism security of supply. 286 00:27:55.000 --> 00:28:00.559 That's how about the whole area renewable What was your thoughts there? What we've 287 00:28:00.640 --> 00:28:06.400 seen and that was also part of the conversation is now the absolute complexity of 288 00:28:06.440 --> 00:28:10.720 the energy markets. They're very important. Why because they can move points of 289 00:28:10.799 --> 00:28:15.720 GDP from one country or one zone to the other in a matter of months, 290 00:28:15.759 --> 00:28:18.640 which is probably the only thing that can move points of GDP, you 291 00:28:18.680 --> 00:28:25.000 know, make nation rich or poor very very rapidly. After ten years where 292 00:28:25.000 --> 00:28:29.799 the markets were very very well supplied, now that they are shocking the system, 293 00:28:29.920 --> 00:28:33.119 the JEO politics is back in the game. Of course, no doubt 294 00:28:33.279 --> 00:28:37.200 that. As we speak at the end of this year, the system is 295 00:28:37.240 --> 00:28:41.400 easy. If I look at the open market, we get TTF below fortop 296 00:28:41.599 --> 00:28:45.400 or maya what hour, which has not happened for quite some time. We 297 00:28:45.480 --> 00:28:48.839 have German power of futures back below one hundred euro. Of course that's still 298 00:28:48.920 --> 00:28:52.200 very expensive, but you know it's not a crisis anymore. I agree with 299 00:28:52.240 --> 00:28:57.200 you that I think the thing that I reflect on is is still the power 300 00:28:57.279 --> 00:29:02.839 the fastil field industry and particularly oil industry. We can think of it like 301 00:29:03.079 --> 00:29:07.000 with OPEC. Plus you know, they really can, whether we like it 302 00:29:07.079 --> 00:29:10.400 or not, they can decide that the price of a power of oil is. 303 00:29:10.440 --> 00:29:14.559 What they do is reduce supply and increase supply, etcetera, etcetera. 304 00:29:15.279 --> 00:29:18.759 That's number one I take out of it. And I was also the power 305 00:29:18.759 --> 00:29:22.759 of innovation, if I may say, because let's be clear, could we 306 00:29:22.960 --> 00:29:26.759 really have predicted in two thousand and eight the United States would be the biggest 307 00:29:26.759 --> 00:29:29.880 fossil fuel produced from the world. And by the way, if we didn't 308 00:29:29.920 --> 00:29:34.559 have it, I'm sicken. In terms of liquid oil on top of biofuels 309 00:29:34.079 --> 00:29:37.480 and all forms of oil, I think they must have been about eighteen million 310 00:29:37.480 --> 00:29:41.359 barrels a year. This is just just my motive. Really, what they've 311 00:29:41.359 --> 00:29:45.400 done innovation. So they're the two things and by the way, I say 312 00:29:45.440 --> 00:29:49.000 that, and as we talk about the whole shale gas without the United States, 313 00:29:49.240 --> 00:29:52.920 we would have we've been a real mess in Europe. That's what we'll 314 00:29:52.000 --> 00:29:59.440 just say, which means that and I also called you episode the end of 315 00:29:59.480 --> 00:30:03.440 Innocence. We need to face the fact that now we're in a cold war 316 00:30:03.480 --> 00:30:08.440 with Russia and it's ally Iran. Iran is providing the drones every night who 317 00:30:08.480 --> 00:30:17.000 are trying to destroy the infrastructure of Ukraine. Iran is providing the weapons to 318 00:30:17.119 --> 00:30:22.359 the Yeminese who are shelling boats in the Red Sea. Whether we can consider 319 00:30:22.519 --> 00:30:26.960 that we're not at war with them, they consider that war with us. 320 00:30:26.400 --> 00:30:29.920 I'm always infra solutions, So let me give you a little bit of a 321 00:30:29.920 --> 00:30:33.640 solution. I think North America and Europe have to become much closer together. 322 00:30:34.759 --> 00:30:40.559 I think over this decade we're going to move towards some form of energy between 323 00:30:40.559 --> 00:30:44.839 North American and Europe with no choice, and there's win win for everybody. 324 00:30:45.039 --> 00:30:48.799 In the United States obviously is a big producer of fossil fuels of huge amounts 325 00:30:48.799 --> 00:30:52.960 of renewables kinda the same thing. And then it's all about getting the energy 326 00:30:53.039 --> 00:30:56.359 from east to west. And west to east. Yeah, and look, 327 00:30:56.519 --> 00:31:02.559 I mean going back to Russia and Iran, action for decades have been to 328 00:31:02.640 --> 00:31:07.359 push their own interest. They are run by thugs. Okay, they use 329 00:31:07.880 --> 00:31:12.359 thirty percent of their GDP to oppress their population and reach a clique. Store 330 00:31:12.440 --> 00:31:18.960 problems everywhere. But why do they do that Because fifty percents of their resources 331 00:31:18.039 --> 00:31:23.359 is to sell us energy plus dirty energy. Okay, using that lever to 332 00:31:23.799 --> 00:31:30.480 corrupt politician to try to blackmail us into submission. Who is creating problem on 333 00:31:30.519 --> 00:31:36.359 this planet? These are autocatic regimes who have oil. So I would say 334 00:31:36.480 --> 00:31:41.480 enough, if it is enough, I am sick of being an herbivore dealing 335 00:31:41.519 --> 00:31:45.160 with carnivore, so I would say gloves are off. And here I'd like 336 00:31:45.279 --> 00:31:52.720 to quote the US Deputy Secretary of State for Energy Resources, Jeffrey Payette, 337 00:31:53.200 --> 00:31:59.240 and he said, the United States government aim to halve the Russia oil and 338 00:31:59.279 --> 00:32:02.839 gas revenue by the end of this decade. Well, thank you very much, 339 00:32:04.039 --> 00:32:07.559 Socretary Payette. And this is exactly what we need to do. And 340 00:32:07.599 --> 00:32:09.240 not only is going to be good for Europe for the US, is also 341 00:32:09.279 --> 00:32:14.319 going to be good for India and China. We need to import all that 342 00:32:14.440 --> 00:32:17.880 dirty energy from those thugs. By the way, I like that statement because 343 00:32:19.000 --> 00:32:22.640 let me just go let's talk about the howard that and the how are that? 344 00:32:22.799 --> 00:32:25.559 For me? Is innovate, innovate, innovas That's what we have to 345 00:32:25.559 --> 00:32:30.640 do. And it's not the energy transition or energy security, it's both. 346 00:32:30.240 --> 00:32:36.000 Because it's great that on one hand the US pump more oil because that's going 347 00:32:36.079 --> 00:32:38.279 to keep the price down. But on the other hand, we need to 348 00:32:38.319 --> 00:32:44.160 embrace renewables. We need to embrace evs. We need to reduce our consumption. 349 00:32:45.039 --> 00:32:49.440 They want to weaponize energy supply. We're going to weaponize energy demand. 350 00:32:50.079 --> 00:32:52.960 I like it. Good way to finish here, my friend. Oh yeah, 351 00:32:52.000 --> 00:33:00.200 I'm on fire. Okay. Chard a few announcement. We thank our 352 00:33:00.279 --> 00:33:06.759 long term partner, Aquila Capital for supporting the show. Thank you, guys, 353 00:33:06.839 --> 00:33:10.440 it's been great. We love you, and I talk to you the 354 00:33:10.519 --> 00:33:14.519 second of January, and we have a special guest and we do all our 355 00:33:14.559 --> 00:33:20.240 predictions. We see who has been forecasting properly or not. And I can 356 00:33:20.319 --> 00:33:23.079 tell you one of the two of us got it right and the other one 357 00:33:23.079 --> 00:33:25.759 totally wrong. I have to go and look them up again. I can't 358 00:33:25.799 --> 00:33:39.599 even remember yeah, prepare Okay, cheers, Enjoy Christmas. Thank you for 359 00:33:39.680 --> 00:33:45.240 listening to Redefining Energy. Don't forget to read the show and subscribe on Apple 360 00:33:45.319 --> 00:33:50.160 Podcast, Spotify, or the platform of your choice.