WEBVTT 1 00:00:08.240 --> 00:00:14.000 You are listening to Redefining Energy. Your co hosts from Berlin, Gerard Reed 2 00:00:14.519 --> 00:00:21.519 and from London Laurel Segalam. Today on Redefining Energy, Jihob, we're going 3 00:00:21.559 --> 00:00:27.600 to talk about Japan and the challenges of the energy transition Japan. Yeah, 4 00:00:27.760 --> 00:00:30.839 thank you very much for actually doing this, Laurent. This is a special 5 00:00:30.879 --> 00:00:35.520 one for me because I went and took a week earlier on the year and 6 00:00:35.679 --> 00:00:38.920 spent it in Tokyo, and I was I was quite taken back by the 7 00:00:38.920 --> 00:00:42.280 place. It was an enigma in lots and lots and lots of different ways. 8 00:00:42.640 --> 00:00:48.039 And obviously the energy situation is an incredible enigma to all of us because 9 00:00:48.159 --> 00:00:51.759 let's let's be really clear, is thirteen years ago, almost to the date 10 00:00:52.119 --> 00:00:56.240 Fukushima happened. And so I thought it was very interesting just to explore what's 11 00:00:56.280 --> 00:01:00.640 happened in Japan over the last thirteen years and then what's going to happen going 12 00:01:00.719 --> 00:01:03.520 forward. That was sort of what was in my head anyway. But first 13 00:01:03.520 --> 00:01:07.159 of all, from our partner, Equalitor Capital is a sustainable investment company headquartered 14 00:01:07.159 --> 00:01:11.480 in Hamburg, Germany. Equalit Capital investment real assets such as clean energy, 15 00:01:11.519 --> 00:01:17.599 sustainable infrastructure, energy efficiency and growth private equity on behalf of its clients. 16 00:01:17.840 --> 00:01:23.040 But yeah, the relationship between Japan and energy has been a conundrum for the 17 00:01:23.079 --> 00:01:26.799 past one hundred years, if not more. The first half of the twentieth 18 00:01:26.799 --> 00:01:30.359 century, they tried it the hard way. I think they got punished along 19 00:01:30.400 --> 00:01:36.079 the way. So after nineteen forty five they're trying the smart way, which 20 00:01:36.120 --> 00:01:40.799 is not easy because if you consider that they probably have to import ninety percent 21 00:01:40.840 --> 00:01:44.879 of their energy, and also considering the fact that their neighbors, their direct 22 00:01:44.920 --> 00:01:49.760 neighbors, are not very collaborative. That requires a very deep thinking about what 23 00:01:49.840 --> 00:01:55.280 you can do, and you cannot rush any policy. So they're to play 24 00:01:55.560 --> 00:01:59.640 a very balanced game, considering the fact that, of course we're going to 25 00:01:59.640 --> 00:02:01.000 talk about about it, but you know, they have no coal, they've 26 00:02:01.040 --> 00:02:06.439 got no gas, they have limited place for wind. The sun got a 27 00:02:06.439 --> 00:02:09.000 bit of sun the south. It's a tough one, it is. You're 28 00:02:09.039 --> 00:02:14.759 absolutely right. And the one thing we also need to add is that Japan 29 00:02:15.080 --> 00:02:17.080 is an island. Actually it's a series of islands. That makes it even 30 00:02:17.080 --> 00:02:22.919 more difficult. And in terms of natural resources, it's very mountainous, it's 31 00:02:22.919 --> 00:02:25.719 got lots of forests and it's got lots and lots of people, and it's 32 00:02:25.719 --> 00:02:31.000 surrounded by very deep waters. That makes it a little bit difficult. It's 33 00:02:31.280 --> 00:02:36.199 very very challenging. I agree with you. But what's also interesting is don't 34 00:02:36.240 --> 00:02:42.360 forget Japan is home to amazing innovation, an amazing company. Let's think the 35 00:02:42.360 --> 00:02:46.759 lithium ion battery, which is revolutionizing our world. Ultimately, that's a Japanese 36 00:02:46.800 --> 00:02:52.479 invention. If you think companies like Panasonic have been leading in these areas for 37 00:02:52.520 --> 00:02:55.960 decades, and you've also got other areas, and just thinking in the whole 38 00:02:57.000 --> 00:03:00.280 heat pump area, you've got Dyking and companies like that. They've got some 39 00:03:00.479 --> 00:03:06.400 very very interesting businesses in and around this energy transition. So you met a 40 00:03:06.400 --> 00:03:10.120 lot of people in Japan and you had a bit of a romance with our 41 00:03:10.159 --> 00:03:14.680 guests today. Can you introduce him please? I can, indeed, so 42 00:03:15.120 --> 00:03:20.479 I'm very happy to bring on the show. Shoe Cava Mora and Shue is 43 00:03:20.800 --> 00:03:25.520 the head of EE Investment and that is a growth equity stroke venture capital business 44 00:03:25.560 --> 00:03:30.759 in the energy space in Japan. What's interesting about them is they don't just 45 00:03:30.840 --> 00:03:34.840 invest in Japan, they also invest globally and part of the reason they do 46 00:03:34.919 --> 00:03:38.520 that, and it is to actually learn because they realize listen, as an 47 00:03:38.520 --> 00:03:42.719 island, you have to go and learn from people outside your country. And 48 00:03:42.800 --> 00:03:46.319 this is part of their strategy to do this to basically to find big business 49 00:03:46.319 --> 00:03:49.400 models in other countries and bring them back to Japan, you know. Yeah, 50 00:03:49.439 --> 00:03:54.000 and that all investor private equity mindset. That's really rare for Japan. 51 00:03:54.039 --> 00:03:57.360 I mean, you will find a lot in your hope and probably even more 52 00:03:57.400 --> 00:04:03.080 in the US. But here, that's very interesting that he has very deliberately 53 00:04:03.479 --> 00:04:08.319 adopted a model which is not natural in Japan, where you have a lot 54 00:04:08.360 --> 00:04:13.280 of monopolies or big companies and there's a lot of vertical thinking, and he 55 00:04:13.360 --> 00:04:16.959 thinks orizantal and so I think we're going to have a quite interesting discussion with 56 00:04:17.160 --> 00:04:21.199 Shoe. And also I want to say he thinks in the future, and 57 00:04:21.279 --> 00:04:26.240 that also is very very important. So he's investing in innovation. That's what 58 00:04:26.279 --> 00:04:30.160 he's doing. Let's bring him in. Shoe. Thank you very much for 59 00:04:30.199 --> 00:04:33.240 coming on the show. Thank you. I'm pretty honored to be here today. 60 00:04:33.720 --> 00:04:36.680 What we really want to do is talk about the energy transition in Japan 61 00:04:38.439 --> 00:04:44.879 and just by chance or thirteen years after the Fukushima disaster. I'd love you 62 00:04:44.920 --> 00:04:48.519 to maybe talk a little bit about how that's changed Japan. I would change 63 00:04:48.519 --> 00:04:54.319 the energy landscape and just give us a little overview. Yes, it was 64 00:04:54.360 --> 00:05:00.120 a disaster, as you can imagine, has made a significant and change in 65 00:05:00.160 --> 00:05:08.480 the energy sector. Up until Kushima, about the thirty percent of girl ours 66 00:05:08.800 --> 00:05:14.079 was composed of nuclear generation. But all of a sudden, because of the 67 00:05:14.120 --> 00:05:19.079 disaster of Gushima, that went to zero, which you might imagine the magnitude. 68 00:05:19.720 --> 00:05:25.519 So as a system we had a very SEVERI act respect to the lack 69 00:05:25.600 --> 00:05:30.879 of generation all of a sudden. This has made the beginning of the discussion 70 00:05:30.560 --> 00:05:39.879 of how we recreate the entire energy system, including how we increase the capacity 71 00:05:40.079 --> 00:05:46.120 of renewable generation, which was probably at the time less than hypercentos. In 72 00:05:46.199 --> 00:05:50.839 fact, it has enhanced the necessity to rethink how we pushed the idea when 73 00:05:50.879 --> 00:05:56.800 the transition, which at the time was already occurred in our European countries. 74 00:05:57.360 --> 00:06:00.120 Can I ask you there just about maybe if you moved to present today right 75 00:06:00.360 --> 00:06:04.399 talking a little bit about the electricity system today? I mean, are the 76 00:06:04.480 --> 00:06:08.439 nuclear plants all back up and running now at this point in time, are 77 00:06:08.439 --> 00:06:11.160 they closed, tell us a little bit about what's going on in the energy 78 00:06:11.240 --> 00:06:15.480 mix today, and then also how did you get through it? I mean, 79 00:06:15.600 --> 00:06:18.639 having forty percent of your generation just goal and you're an island. It's 80 00:06:18.680 --> 00:06:21.800 not as if you can certainly take power in from your neighbors. What did 81 00:06:21.839 --> 00:06:27.079 you do? So two questions. Really, Yeah, it's related. Japan 82 00:06:27.639 --> 00:06:32.319 has lack of natural resources, including oil and gas. The policy try to 83 00:06:32.399 --> 00:06:39.439 diversify the generation mix, a mix used to be composed of nuclear and manie 84 00:06:39.519 --> 00:06:46.040 hydros and energy based yes generation and coal and oil, and the mixed nuclear 85 00:06:46.120 --> 00:06:49.399 genation the handle largest portion. Suddenly they were gone down to zeros. So 86 00:06:50.040 --> 00:06:56.720 what happened was increase the import of energy as well as increase the import of 87 00:06:56.920 --> 00:07:01.920 coal to compensate for the loss of the new GRA generation, now very limited. 88 00:07:02.279 --> 00:07:08.120 Part of the new grad generation has come back, but still the composed 89 00:07:08.279 --> 00:07:13.759 poorly around ten percent or less than temper cent renew holes has been increasing, 90 00:07:13.839 --> 00:07:18.639 but compared to the European situation, we still without the level of any European 91 00:07:18.639 --> 00:07:25.120 countries respect to the portion of being able energy in this moment. As we 92 00:07:25.199 --> 00:07:29.759 are financiers, the market response is also of interest to US, And if 93 00:07:29.759 --> 00:07:33.680 I understand, well, before Fukushima you add a series of vertically integrated original 94 00:07:33.839 --> 00:07:41.120 utilities and since then we've seen a market develop. We'll see more private actors. 95 00:07:41.399 --> 00:07:45.720 They will probably not really price signals before, but now you start having 96 00:07:45.800 --> 00:07:49.519 price signals. And of course Japan being the archipelago, and you have you 97 00:07:49.600 --> 00:07:54.439 found the part in fifty earths and all the part in sixty earths, so 98 00:07:54.800 --> 00:08:00.079 it's a complex grid. How would you qualify the way the interscale actors and 99 00:08:00.079 --> 00:08:05.160 the financial actors have been also evolving the past ten years in respect to the 100 00:08:05.279 --> 00:08:11.519 deregulation of the power industry, kushimaid has justly promoted the deregulation of the industry 101 00:08:13.199 --> 00:08:18.319 resembled the German system or the US system. There were nine large utilities regional 102 00:08:18.399 --> 00:08:24.079 molo police and they had all the functions including generation, transmission, distribution and 103 00:08:24.160 --> 00:08:31.600 retail, so it was integrated utty. But after Kushima we had a dregulation 104 00:08:31.240 --> 00:08:37.000 still integrated U eighties, but the grid has become open access and the one 105 00:08:37.039 --> 00:08:45.039 can enter into both generation or in the trading at the wholesale market. And 106 00:08:45.080 --> 00:08:50.720 also the retail is entirely open. So like six hundred companies new entrants came 107 00:08:50.799 --> 00:08:56.919 in as a new retail company or at once, say sixty six hundred, 108 00:08:56.600 --> 00:09:03.200 six hundred. Yeah. Ok so, including the large ones like telecom companies, 109 00:09:03.759 --> 00:09:07.519 as well as proper and mamber small companies that believe that they can tell 110 00:09:07.519 --> 00:09:13.799 electricity. So we went through that process. Now the number keep down listen, 111 00:09:13.360 --> 00:09:20.320 and probably I think the meaningful bricktail companies are like twenty or so new 112 00:09:20.360 --> 00:09:26.519 ages plus the ten hours in companies. So we have been through that drastic 113 00:09:26.600 --> 00:09:31.440 transition. That's not the German model. That's the British model. Yes, 114 00:09:31.519 --> 00:09:35.960 yes, yes, when it comes to industry. Look at Germany when covered 115 00:09:35.039 --> 00:09:39.720 markets, Look at England. By the way, she says a Frenchman, 116 00:09:39.840 --> 00:09:45.159 says a Frenchman. Can I return to something you said, because I was 117 00:09:45.240 --> 00:09:48.919 quite surprised by it. If I look at the impact that Fakushima had in 118 00:09:48.960 --> 00:09:52.120 Europe. Okay, firstly the country of living in Germany, they decided to 119 00:09:52.120 --> 00:09:56.799 get out of nuclear, but it actually really speeded up the transition to renewables, 120 00:09:56.840 --> 00:10:00.159 and the reason was we haven't And then actually what then, how some 121 00:10:00.240 --> 00:10:03.519 days we've had this Ukrainian crisis not even accelerated even more. But you said 122 00:10:03.720 --> 00:10:09.480 something which interesting was that Japan has not accelerated as much as Europe. And 123 00:10:09.480 --> 00:10:13.120 I suppose my question to you is why surely Japan has to do it, 124 00:10:13.279 --> 00:10:18.720 So why didn't they include some kind of late goal or issues. But the 125 00:10:18.000 --> 00:10:24.840 incumbents used to promote nuclear and they still do, and they had some kind 126 00:10:24.080 --> 00:10:31.039 of distrust to like pvs or winds because it was unstable, so they were 127 00:10:31.080 --> 00:10:35.919 not from all the renewable energy, so that incorporated some way into their PNA. 128 00:10:37.039 --> 00:10:41.679 In the past, the question was who will promote including the finance part 129 00:10:41.080 --> 00:10:46.519 of the new renewables. Then the startup Probably, unlike in other countries, 130 00:10:46.720 --> 00:10:52.720 the gap was filled partly by the startups. There were several startups that had 131 00:10:52.759 --> 00:11:01.360 started to develop renewable projects pvs and winds, some of them very very large 132 00:11:01.480 --> 00:11:07.399 in the Japanese energy landscape resemble some part of Europe. But the incomers were 133 00:11:07.799 --> 00:11:13.559 a bit reluctant to promote the even after Fukushima and maybe come just switching topics 134 00:11:13.559 --> 00:11:16.000 a slight bitch. What you do for a day job is you invest in 135 00:11:16.039 --> 00:11:22.320 businesses. Now you're very unique because you invest in Japanese businesses and you also 136 00:11:22.360 --> 00:11:26.200 invest in the international business so can I ask you to talk a little bit 137 00:11:26.279 --> 00:11:31.639 about what you're investing in and why. Initially, we have looked at what 138 00:11:31.840 --> 00:11:37.639 business has worked in Europe and plant of US for example PPP businesses or third 139 00:11:37.679 --> 00:11:43.879 party old renew war projects, and since we didn't have that kind of businesses 140 00:11:43.919 --> 00:11:48.960 in Japan, we have created a couple of companies from STRETCH to do the 141 00:11:48.000 --> 00:11:54.159 similar businesses. For example, we have invested in the energy efficiency companies that 142 00:11:54.279 --> 00:12:01.639 provides escort services to supermarkets to six thousand, seven thousand stores in Japan. 143 00:12:01.919 --> 00:12:07.240 Large supermarkets. At one time realized that all the supermarkets have rooms stops and 144 00:12:07.600 --> 00:12:13.519 we can use that. So we have created a company called VPP Japan together 145 00:12:13.639 --> 00:12:18.960 with the ESCO company was a sales and marketing as well as finance play. 146 00:12:18.080 --> 00:12:24.879 We have like third party owned pvs on the rooftops of thousands of supermarkets. 147 00:12:24.159 --> 00:12:31.159 This is like a business model based investment, nothing new in terms of technology, 148 00:12:31.559 --> 00:12:35.159 but they worked and the company got pretty big. Now they are entering 149 00:12:35.279 --> 00:12:41.519 into the second stage where they are starting to put storages in some stores evs 150 00:12:43.039 --> 00:12:48.159 so that we can sort of you know, maximize the output of the renewables 151 00:12:48.159 --> 00:12:52.120 as well as optimized the storage, went to store and went to the electricity 152 00:12:52.279 --> 00:12:58.600 generated on the roof stops. So it's becoming a VPP And while we invested 153 00:12:58.679 --> 00:13:03.720 in Europe and other parts world, I think in the field of example PPP 154 00:13:03.600 --> 00:13:11.279 Europe has tested all kinds of technologies including software, how to maximus optimize the 155 00:13:11.559 --> 00:13:16.600 generation and the storage, and how to predict generation, etc. So we 156 00:13:16.960 --> 00:13:22.559 have been looking, for example, in those areas through are the winners and 157 00:13:22.679 --> 00:13:28.200 losers, what kind of system might work when we bring the system back into 158 00:13:28.320 --> 00:13:33.080 Japan. So that's an example how we look at the investment opportunities. So 159 00:13:33.320 --> 00:13:39.519 and again that's one of my first principle is look at the geography. Japan 160 00:13:39.559 --> 00:13:43.440 has to adapt to his geography, which means that we don't have the choice 161 00:13:43.440 --> 00:13:48.399 of having those big planes in the US where you could put a lot of 162 00:13:48.440 --> 00:13:52.200 wind, or the North Sea we're same, it's shallow, we can put 163 00:13:52.200 --> 00:13:56.080 a lot of wind. Just physically, the number of additional generations you'll be 164 00:13:56.080 --> 00:14:01.080 able to put on mainland Japan is going to be limitted. If I understand 165 00:14:01.120 --> 00:14:09.000 correctly. The old thinking has been really around demand management, energy efficiency, 166 00:14:09.559 --> 00:14:13.399 and this is where you've seen the opportunity and the most technological pot Guys, 167 00:14:13.919 --> 00:14:20.039 what of those sectors would you say that Japanese is really world class right now? 168 00:14:20.600 --> 00:14:26.559 Yeah, energy efficiency related technologies. When it comes to a startup investment, 169 00:14:26.960 --> 00:14:31.840 the ecosystem is still developing stage. But as a company as a whole, 170 00:14:31.039 --> 00:14:37.960 we have created and there are abundant efficiency technologies Japan. The supply side, 171 00:14:39.080 --> 00:14:43.279 we used to have PB technologies, but all of them are gone to 172 00:14:43.440 --> 00:14:46.399 China or our career or other parts of the world. And also we did 173 00:14:46.519 --> 00:14:52.639 have city the art battery technologies in the past, but I think that that 174 00:14:52.720 --> 00:14:58.600 has been shifted to other parts of the world. So demand side is probably 175 00:14:58.720 --> 00:15:03.480 one area we still have the interesting technologies. We also when it comes to 176 00:15:03.519 --> 00:15:11.480 the next generation decarbonization, like the couple culture, all the new membranes or 177 00:15:11.519 --> 00:15:15.919 capitalists and so on, I think there will be a possibility for the Japanese 178 00:15:15.960 --> 00:15:20.039 tecnmogency is to be been interesting. So the technology in the future, and 179 00:15:20.080 --> 00:15:22.879 she was probably a good thing to do to talk a little bit about the 180 00:15:22.919 --> 00:15:26.679 future. So because you maybe just as we look in the future, just 181 00:15:26.879 --> 00:15:31.559 I'd be interested to hear your thoughts on how Japan decarbonizes going forward. Come 182 00:15:31.559 --> 00:15:35.840 back to what Moronzols said earlier is that Japan's strength and also its weakness is 183 00:15:35.840 --> 00:15:39.240 its geography. How does the government see then, how do you personally see 184 00:15:39.279 --> 00:15:45.679 it going forward? And just to piggyback on jart question, there's a word 185 00:15:45.759 --> 00:15:50.159 I would like to hear in your voice. It's the word hydrogen to see 186 00:15:50.159 --> 00:15:54.919 if you consider it's part of the future or not. Please at the macro 187 00:15:54.039 --> 00:16:00.440 level, since you have rightly indicated we lack the things your land for pvs 188 00:16:00.840 --> 00:16:07.279 and also we not be too like North Sea or other parts of US California, 189 00:16:07.240 --> 00:16:11.600 the good places put within projects. At the macro level, there are 190 00:16:11.879 --> 00:16:17.159 opportunities, of course because as a business the demand supply situation, I think 191 00:16:17.159 --> 00:16:22.399 the demand will access the tought supply as an investment that I think you make 192 00:16:22.440 --> 00:16:26.360 sis. But as a country we have to think about what we can do 193 00:16:26.399 --> 00:16:33.159 outside Japan. Just looking at the decobalization in the Japanese land is quite limited. 194 00:16:33.879 --> 00:16:37.879 So political argument is we have to either go back to nuclear or we 195 00:16:37.960 --> 00:16:42.200 have to do something abroad. So that that's a discussion, and abroad goes 196 00:16:42.240 --> 00:16:48.200 back to Laurent's point. Is it hydrogen or do you take electricity into interconnectors? 197 00:16:48.200 --> 00:16:53.679 From your neighbors and the macro level. Hydrogenal ammonia is discussed at the 198 00:16:53.720 --> 00:17:00.399 policy level, government level. If you look at all the heavy industries or 199 00:17:00.440 --> 00:17:06.000 there are a huge portion of industry. Is a heavy industry in Japan. 200 00:17:06.240 --> 00:17:10.319 So when we look at the steel, chemical, paper and power cement, 201 00:17:10.799 --> 00:17:17.240 all the industries or automobiles should look at not just that ACTU see but also 202 00:17:17.519 --> 00:17:22.440 other things including hydrogen ammonere and other technologies. And maybe the last question, 203 00:17:22.480 --> 00:17:26.880 because we did start with Fokushima talk certainly in the Western world talks about a 204 00:17:27.039 --> 00:17:33.640 renaissance and in nuclear talks about moving to small modular reactors. And how is 205 00:17:33.640 --> 00:17:37.920 the view from the industry in Japan? Is there innovation taking place in this 206 00:17:37.000 --> 00:17:41.680 industry? Are people looking forward positive about it? Or how does the industry 207 00:17:41.759 --> 00:17:47.839 viewers and then how does the customer viewers? The innovation in the small nuclear 208 00:17:47.920 --> 00:17:53.079 system is probably not so popular in Japan compared to a US or other possible 209 00:17:53.119 --> 00:18:00.359 world, but the incumbent as well as the industries looking forward in the future 210 00:18:00.480 --> 00:18:06.680 for those technologies as well as the nuclear system that is now some root nuculders 211 00:18:07.480 --> 00:18:14.000 get back into operation, but the consumers are relatively cautious, which we also 212 00:18:14.200 --> 00:18:18.039 had not as big as cush. Well, we had a huge earthquake on 213 00:18:18.319 --> 00:18:25.279 the first of January this year in the region of Kurku area. Consumer knowing 214 00:18:25.319 --> 00:18:30.440 that we are living in a landscape with full of earthquakes and natural disasters, 215 00:18:32.119 --> 00:18:37.480 very litically, people are quite concerned and probably a bit cautious to go back 216 00:18:37.599 --> 00:18:41.720 into the days of Yukorea operation. Fully, we have a mixed idar mixed 217 00:18:41.759 --> 00:18:47.200 feeding this moment. Sure, compared to Geran, I'm a very pragmatic man. 218 00:18:47.400 --> 00:18:49.279 I'm not a big thinker, so I'm going to ask you a very 219 00:18:49.279 --> 00:18:53.079 direct question. Sure, I want to make money in Japan in energy. 220 00:18:53.400 --> 00:19:02.160 Where do I put my money? Now? Renewable PPA business first, because 221 00:19:02.400 --> 00:19:11.000 companies like Amazon or Global Japanese companies just started to procure renewable power with additionality 222 00:19:11.279 --> 00:19:18.200 which is literally zero in Japan, so that business will grow. Secondly, 223 00:19:18.960 --> 00:19:25.079 second business is the BPP businesses with batteries. That's the business that you should 224 00:19:25.160 --> 00:19:30.680 invest. We have like four main islands and one of the island which is 225 00:19:30.279 --> 00:19:37.079 like probably a size larger than whales. They have too many PV solar systems. 226 00:19:37.359 --> 00:19:41.200 So fifteen to twenty percent of the generation is wasted. Oh right, 227 00:19:41.400 --> 00:19:47.319 okay, yeah, so someone could make a business out of there's fifteen twenty 228 00:19:47.519 --> 00:19:51.599 two hours that are not used. People will make a business up a bit. 229 00:19:52.359 --> 00:19:57.039 Third, we are living in an Asian society and we lack drivers, 230 00:19:57.200 --> 00:20:03.920 especially in the transport seas them. So if someone can do something in that 231 00:20:03.480 --> 00:20:08.680 transportation business with BABS, it's going to be interested. Within like three to 232 00:20:08.759 --> 00:20:15.160 five years, we're gonna circle back where we started before pushing the button record. 233 00:20:15.559 --> 00:20:22.839 I believe that the best investments for Japan is a subsecable with Korea. 234 00:20:22.519 --> 00:20:26.279 You will see your money in one year, but it will take you twenty 235 00:20:26.359 --> 00:20:30.599 years to convince the politician. But you have it auchally, you have the 236 00:20:30.599 --> 00:20:33.920 best technology in the world, and Korea has a lot of great technology as 237 00:20:33.960 --> 00:20:38.240 well. It's not a technological problem, it's politics. Am I just dreaming 238 00:20:38.400 --> 00:20:44.039 because I love subsecables? Yeah, it makes sense, totally makes sense. 239 00:20:44.160 --> 00:20:48.640 And with Japane career, we're living in this relatively similar time zone, so 240 00:20:49.359 --> 00:20:53.920 I think you will make more sense to connect to other auts of Asia, 241 00:20:55.400 --> 00:20:59.960 which is a long distance of course, but we live in a slightly different 242 00:21:00.240 --> 00:21:06.720 pig zones with respect to pvs or probably make a lot of sense. So 243 00:21:06.839 --> 00:21:10.319 I just want to ask, would you put money in Lauran's cable to South 244 00:21:10.400 --> 00:21:17.359 Korea from Japan? YEP, looking forward to well you. It's been very 245 00:21:17.359 --> 00:21:19.920 good having you on. Thank you very very much. Thank you. It's 246 00:21:19.920 --> 00:21:23.519 been an on hour and we wish you the best. And for our listeners. 247 00:21:23.960 --> 00:21:29.039 Some people are blessed with a good geography or the need to fight, 248 00:21:29.079 --> 00:21:33.440 and I respect a lot of Japan to be able to thrive and having to 249 00:21:33.559 --> 00:21:37.519 fight for every electrons which are given away in other parts of the world. 250 00:21:37.559 --> 00:21:41.920 So a lot of respect. Thank you very much, Thank you so much. 251 00:21:41.240 --> 00:21:45.599 Enjoying the conversation. Thank you. So Lauren, what's your take. 252 00:21:45.039 --> 00:21:49.400 Well, it's a tough one. It's a tough one because on the generation 253 00:21:49.680 --> 00:21:56.799 side, with all those vertically integrated utilities, and I'm in their obsession with 254 00:21:56.920 --> 00:22:00.240 nuclear, which I can understand by the way before for Kushima they really got 255 00:22:00.240 --> 00:22:06.119 flat footed and they had very limited alternatives. The good side of thinking long 256 00:22:06.200 --> 00:22:11.720 term is that all their energy supply contracts were long term and linked to a 257 00:22:11.799 --> 00:22:15.839 noil formula. And I'm not going to go into the weeds, but basically 258 00:22:15.880 --> 00:22:18.839 you pay seventeen percent of the price of a barrel, which means they didn't 259 00:22:18.839 --> 00:22:23.279 have the energy shock that we got in Europe after Ukraine. They managed to 260 00:22:23.319 --> 00:22:29.920 continue to buy energy at a reasonable price. That said solar. They already 261 00:22:29.960 --> 00:22:34.599 put something like seventy gigawad of solar, and they're trying to do floating offshore 262 00:22:34.960 --> 00:22:38.720 wind, but that's going to take some time. So I really appreciate the 263 00:22:38.759 --> 00:22:45.119 fact that was clear in his mindset. It's all about efficiency, so all 264 00:22:45.160 --> 00:22:49.000 the work is midstream and downstream. Yeah, well, listen, I think 265 00:22:49.000 --> 00:22:52.680 you've done a very good summary of the challenges. I just want to maybe 266 00:22:52.839 --> 00:22:56.799 take a step back a little bit from now. They's a fascinating thing. 267 00:22:56.039 --> 00:23:00.039 The enigma in Japan starts with its economy, because what you've got is this 268 00:23:00.279 --> 00:23:07.960 incredible export led economy and then you've got this government running this massive government budget 269 00:23:07.000 --> 00:23:11.559 deficit, right, which is economists you sort of look in this and go 270 00:23:11.640 --> 00:23:14.839 on, how does this work? Well, actually, how it works is 271 00:23:14.880 --> 00:23:19.079 that the result has been that the currency has devalued and the economy has stayed 272 00:23:19.240 --> 00:23:25.799 very competitive. Like that was for me quite mind boggling and mind opening really 273 00:23:25.839 --> 00:23:30.720 to go there and just realize how low cost everything is. I was quite 274 00:23:30.759 --> 00:23:33.759 taken back by in a lot of ways. I would say forty to fifty 275 00:23:33.759 --> 00:23:37.400 percent lower costs in Europe, which means that for an export type economy, 276 00:23:37.440 --> 00:23:41.519 that's great. However, there's a very very big butt, and the very 277 00:23:41.839 --> 00:23:48.000 big butt is they're selling stuff from companies and let's say, positions that were 278 00:23:48.000 --> 00:23:52.079 built up in the twentieth century, and I'd really concern about the positioning of 279 00:23:52.119 --> 00:23:56.359 this country in the twenty first century. The best way I can describe this 280 00:23:56.720 --> 00:24:00.799 is just in and around electric vehicles. I did not see any electric vehicles 281 00:24:00.839 --> 00:24:04.079 there. You go anywhere in Europe and you see electric vehicles in Japan's I 282 00:24:04.119 --> 00:24:08.079 did not see any. And if you actually look at the statistics, five 283 00:24:08.079 --> 00:24:14.400 percent of automobile sales last year were electric. Okay, well, China was 284 00:24:14.440 --> 00:24:18.720 at thirty percent. Europe we were at fifteen percent. And I think Europe 285 00:24:18.759 --> 00:24:22.960 is being slow in this transition, and that gives me a sort of concern 286 00:24:22.039 --> 00:24:26.440 really, because he's sort of say, you're living on the past as opposed 287 00:24:26.440 --> 00:24:29.960 to living in the future. That was one of the conclusions I had of 288 00:24:30.039 --> 00:24:33.039 my time there. That's what I'd say, I don't know what much thinking 289 00:24:33.079 --> 00:24:36.640 of that is in the automotive sector. Of course, it's so lit by 290 00:24:36.720 --> 00:24:41.440 Toyota and their opposition with hydrogen. Now they might be right in relation to 291 00:24:41.640 --> 00:24:45.400 hybrids, especially if the grossy V is not as fast as we can so 292 00:24:45.519 --> 00:24:49.240 maybe they still have a way around the eyebrids where there were the pioneers. 293 00:24:49.440 --> 00:24:55.240 But something you told me which I found fascinating is that you said there's no 294 00:24:55.440 --> 00:24:59.839 chimney in Tokyo. Yeah. The interesting thing about the chimneys is with he 295 00:25:00.119 --> 00:25:03.279 pumps. Every single building has done my heat pumps, so it's not gas 296 00:25:03.400 --> 00:25:07.160 or anything like this. And that's pretty pretty interesting because the one thing that 297 00:25:07.160 --> 00:25:12.119 the Japanese have done incredibly well is focus on efficiencies. Let's take that unit 298 00:25:12.160 --> 00:25:15.880 of energy and get the most out of it, which goes back to your 299 00:25:15.880 --> 00:25:18.119 whole point about toilet and the hybrid car. That was the thing about It's 300 00:25:18.160 --> 00:25:22.799 not about going and doing something radical, it's about can we improve can we 301 00:25:22.839 --> 00:25:26.359 improve efficiency coming through And they've certainly done that in the heat sector. And 302 00:25:26.359 --> 00:25:30.839 if you just look, it's a very simple point about it is that if 303 00:25:30.839 --> 00:25:33.799 you take the case of Germany, Germany's eighty million people and it's called peak 304 00:25:33.839 --> 00:25:40.400 demand at eighty gigawats. Japan has peaked demand of two hundred and fifty gigawots 305 00:25:40.680 --> 00:25:44.000 and it's not twice the size of Germany. Well, the point I'm making 306 00:25:44.160 --> 00:25:48.720 is it's all going into heat. Okay, so terms of heat incredible. 307 00:25:48.720 --> 00:25:52.920 So they've done a great job in terms of energy efficiency, Lauren, because 308 00:25:52.920 --> 00:25:56.720 they've had to. While if I contrast what we've done in Europe, we've 309 00:25:56.720 --> 00:26:00.559 sort of said, well, let's go and renewabilize our generation. Well, 310 00:26:00.599 --> 00:26:03.799 what they've done is I've made their system more efficient. I think that's the 311 00:26:03.920 --> 00:26:07.839 if i'd say the philosophical difference, I would say between as a Western Europe 312 00:26:07.880 --> 00:26:12.160 and Japan. When I look at the statistic from the Energy Institute, the 313 00:26:12.200 --> 00:26:18.839 power production in Japan is one thousand what hour, which is roughly fifty percent 314 00:26:18.960 --> 00:26:22.240 more than Germany. Like Eurepe, the generation has been flat over the past 315 00:26:22.279 --> 00:26:26.720 ten years. But if you compare with India, for instance, in two 316 00:26:26.839 --> 00:26:32.519 or twelve, Japan was producing a bit more power than India and now India 317 00:26:32.599 --> 00:26:36.920 is eighty percent bigger. Yeah, it's a conservative model. It's an efficiency 318 00:26:36.920 --> 00:26:41.039 model, it's not really a growth model. But you know that was part 319 00:26:41.039 --> 00:26:44.279 of the discussion, what are we going to do if we have the data 320 00:26:44.319 --> 00:26:48.519 centers, the AI, the evs, growing that production is going to be 321 00:26:48.599 --> 00:26:52.440 difficult. So how much can they squeeze more about energy efficiency? That's an 322 00:26:52.440 --> 00:26:56.720 interesting debate. Actually, by the way, that's the point I make. 323 00:26:56.839 --> 00:27:00.039 I actually think if sort of you can't anymore, you have to change technologies 324 00:27:00.640 --> 00:27:03.880 if you're going to do it. So in other words, the case of 325 00:27:03.920 --> 00:27:07.000 the car, it can't get more out of the internal combustion engines. You 326 00:27:07.039 --> 00:27:08.880 can only so much hybridize. If you want to take the next day, 327 00:27:08.960 --> 00:27:14.359 you have to go on electrifi it right fully electrified. But I want to 328 00:27:14.359 --> 00:27:15.920 go back to the one thing that I also said to you. Yeah, 329 00:27:15.920 --> 00:27:18.799 you're rhapsode right. I didn't see a lot of chimneys, but I was. 330 00:27:19.119 --> 00:27:22.759 I was up, and I was very high up in the building I 331 00:27:22.799 --> 00:27:25.880 was staying, and I could see across the whole of Tokyo, and I 332 00:27:25.920 --> 00:27:29.400 was quite taken back by the fact that I didn't see any solar or any 333 00:27:29.440 --> 00:27:33.319 of the roofs Okay, even though Japan has a huge amount of solar, 334 00:27:33.839 --> 00:27:37.160 but I didn't see it in the city of Tokyo. And actually that was 335 00:27:37.160 --> 00:27:41.240 pretty interesting, and I actually asked you a question, Rong, how much 336 00:27:41.240 --> 00:27:47.279 renewable do you think they installed twenty twenty three on you know the size of 337 00:27:47.279 --> 00:27:48.720 the country, right, if you've talked about it, right, Oh, 338 00:27:48.759 --> 00:27:52.359 okay, let's say five gig, Yeah, five gig. But just to 339 00:27:52.519 --> 00:27:56.920 put it into perspective, Germany did three times that. I spent a lot 340 00:27:56.960 --> 00:28:03.480 of time comparing Germany to Japan, because both were very clearly impacted by Fukushima. 341 00:28:03.640 --> 00:28:06.480 Both decided, hey, listen, we're going to close our nuclear plants. 342 00:28:06.759 --> 00:28:08.480 Germany said, okay, well, we're actually going to have to change 343 00:28:08.480 --> 00:28:11.200 the way we're going to do stuff, and we're going to go and renewabilize 344 00:28:11.359 --> 00:28:15.000 really really quickly. You didn't see this in Japan, and I find that's 345 00:28:15.039 --> 00:28:18.640 quite strange. So I think the only conclusion I can get to is a 346 00:28:18.640 --> 00:28:23.480 little bit what you said earlier on what you've got is these old monopolies, 347 00:28:23.920 --> 00:28:29.519 they've got huge amounts of power and they're just blocking change. And actually really 348 00:28:29.519 --> 00:28:33.079 what they want to do is turned the nuclear power stations back on. Right. 349 00:28:33.440 --> 00:28:37.000 Well, I'm going to conclude by the words of Tim Marshall in his 350 00:28:37.119 --> 00:28:44.200 book, and as the books called prisoners of geography. Japan is the prisoner 351 00:28:44.480 --> 00:28:48.599 of its geography. But on a positive note, when you talk to guys 352 00:28:48.640 --> 00:28:55.359 like Shuan and others, don't count them out because they're very as suit very 353 00:28:55.440 --> 00:29:00.960 dynamic engineers and they're probably not going to be the innovative, but when they 354 00:29:00.200 --> 00:29:04.240 take any system, they can really bring a lot of efficiency to it. 355 00:29:04.400 --> 00:29:07.839 So I see it live in Japan. Yeah, I go along with that 356 00:29:07.920 --> 00:29:11.519 as well. I would actually see them as they're not the first movers, 357 00:29:11.559 --> 00:29:14.680 but what they are is the fast follower. That's what they are, right, 358 00:29:14.880 --> 00:29:18.799 There's no doubt about that. Okay, job got my friend. That 359 00:29:18.039 --> 00:29:25.000 was an interesting conversation and we thank Aquila for supporting the show and I talk 360 00:29:25.079 --> 00:29:33.480 to you next week forward. Thank you for listening to Redefining Energy. Don't 361 00:29:33.519 --> 00:29:38.720 forget to rate the show and subscribe on Apple, Podcast, Spotify, or 362 00:29:38.759 --> 00:29:41.359 the platform of your choice.