WEBVTT 1 00:00:04.759 --> 00:00:08.320 With Laurent's segle And from London and Gerard Reed from Berlin. 2 00:00:08.839 --> 00:00:11.400 This is redefining energy today. 3 00:00:11.400 --> 00:00:12.599 I'm redefining energy. 4 00:00:12.720 --> 00:00:16.760 We're going to talk about molecules now, Laurn, we don't 5 00:00:16.760 --> 00:00:18.960 talk about this very often, but obviously it is a 6 00:00:19.000 --> 00:00:21.559 critical part of our energy system and it's going to 7 00:00:21.600 --> 00:00:24.359 continue that going forward. What we do need to do 8 00:00:24.480 --> 00:00:26.679 is we need to make them a little bit more green, right. 9 00:00:27.640 --> 00:00:30.440 Yeah, So it's all about that segment of the energy 10 00:00:30.440 --> 00:00:33.520 transition that we don't address a lot because we are 11 00:00:33.520 --> 00:00:36.359 a very electron guy. We're going to talk about waste 12 00:00:36.399 --> 00:00:40.079 gas management, We're going to talk about bio fuel sustainabilization, 13 00:00:40.320 --> 00:00:46.119 fuel emission capture. It's really a sector which is nascent 14 00:00:46.679 --> 00:00:51.920 and it's very American, much more than your opinion. And interestingly, 15 00:00:52.240 --> 00:00:55.280 you have some privatic de fund who are pretty good 16 00:00:55.320 --> 00:00:57.799 at developing those type of project. 17 00:00:58.280 --> 00:01:00.719 Great and we've got a really great character that we 18 00:01:00.799 --> 00:01:04.959 decided we bring on the show, Chris Roselle, who is 19 00:01:05.040 --> 00:01:08.840 the managing partner of a US business called Cresta Funds, 20 00:01:08.920 --> 00:01:10.760 which is a big investor in this area. 21 00:01:10.840 --> 00:01:12.439 So yeah, let's bring them on the show. 22 00:01:13.200 --> 00:01:14.760 Chris, Welcome to the show. 23 00:01:15.040 --> 00:01:16.519 Thanks for having me, Chris. 24 00:01:16.560 --> 00:01:20.239 When you created Christ Funds, you're a certain thesis around 25 00:01:20.840 --> 00:01:23.400 energy infrastructure investing, So what was it? 26 00:01:24.040 --> 00:01:27.480 My two founding partners and myself we started our careers 27 00:01:27.480 --> 00:01:32.519 together as operators and then founders and then became private 28 00:01:32.519 --> 00:01:35.480 equity investors. And so because of that, we started in 29 00:01:35.519 --> 00:01:40.799 the energy infrastructure sector, building midstream as sets, with a 30 00:01:40.799 --> 00:01:44.000 big focus around the gas sector in particular, so waste 31 00:01:44.040 --> 00:01:46.480 gas was a big focus of ours. At one point 32 00:01:46.519 --> 00:01:49.359 we had one of the largest footprints of assets and 33 00:01:49.400 --> 00:01:55.359 plants dealing with CO two nitrogen sulfur gases. And so 34 00:01:55.400 --> 00:01:58.920 when we went to build our first firm and started 35 00:01:59.000 --> 00:02:02.120 meeting with private equity, we found that there was a 36 00:02:02.159 --> 00:02:04.599 bit of a gap culturally from what we were looking 37 00:02:04.640 --> 00:02:09.000 for in venture capital. Firms have spent decades trying to 38 00:02:09.039 --> 00:02:12.400 put the founder mentality into the venture capital world, but 39 00:02:12.479 --> 00:02:15.479 in the real assets world, where real essets capital was, 40 00:02:16.000 --> 00:02:19.639 it seemed like most of the folks leading those sectors 41 00:02:19.680 --> 00:02:23.319 had come out of project finance, and so here we 42 00:02:23.319 --> 00:02:26.759 were as founders having the problem that founders have trying 43 00:02:26.800 --> 00:02:29.520 to raise capital for real asset investments, and we're having 44 00:02:29.560 --> 00:02:32.800 a very difficult time bridging that gap. So when we decided, 45 00:02:32.960 --> 00:02:37.159 after a decade of success as founders and operators to 46 00:02:37.240 --> 00:02:40.719 go raise a fund, we recognized where we could really 47 00:02:40.759 --> 00:02:44.960 add value is building a firm that brought real asset 48 00:02:45.000 --> 00:02:49.439 expertise with an appreciation for what founders go through. And 49 00:02:49.439 --> 00:02:51.159 that's really the gap that we try to fill as 50 00:02:51.240 --> 00:02:53.240 earlier stage real asset investments. 51 00:02:53.840 --> 00:02:57.840 So basically you're saying you're better building things running in 52 00:02:57.919 --> 00:02:58.560 next send sheets. 53 00:02:59.280 --> 00:03:02.240 Yes, a team, we're better at building things than running 54 00:03:02.240 --> 00:03:03.199 Excel spreadsheets. 55 00:03:04.319 --> 00:03:07.719 You managed almost two billion now and can you describe 56 00:03:07.800 --> 00:03:11.080 the various sector you've been investing in. 57 00:03:11.479 --> 00:03:15.000 Yeah, specifically in sustainability. You know we have this as 58 00:03:15.000 --> 00:03:18.680 I mentioned this long background in dealing with waste gas, 59 00:03:18.960 --> 00:03:24.120 both energy gas, industrial gas, and as energy transition began 60 00:03:24.159 --> 00:03:27.599 to take hold over the last few years in a 61 00:03:27.680 --> 00:03:31.719 very big way, we saw a specific need for our 62 00:03:32.159 --> 00:03:36.000 waste gas expertise Outside of just the energy sector. We 63 00:03:36.039 --> 00:03:40.719 started seeing that same need in agriculture, in waste management, 64 00:03:40.840 --> 00:03:44.719 in chemical production and fertilizer production. Then in twenty one, 65 00:03:44.759 --> 00:03:48.120 we were fortunate enough to be joined by a fourth partner, 66 00:03:48.560 --> 00:03:52.479 John Skriner, who had a decade of experience in low 67 00:03:52.520 --> 00:03:54.759 carbon fuels, which was an area we did not have 68 00:03:54.800 --> 00:03:57.400 a lot of experience in. But when we combined his 69 00:03:57.840 --> 00:04:01.800 low carbon fuel experience with our or waste gas experience, 70 00:04:02.400 --> 00:04:05.759 we felt like we could address this second transition that 71 00:04:05.800 --> 00:04:09.199 had been overlooked. Everyone's focused on power and the needs 72 00:04:09.199 --> 00:04:11.919 for power, but to get to net zero, we have 73 00:04:11.960 --> 00:04:14.919 to deal with a lot of other challenges. We have 74 00:04:14.960 --> 00:04:18.000 to deal with ag waste and chemical waste and other 75 00:04:18.040 --> 00:04:20.279 things that really weren't being addressed, and so that's our 76 00:04:20.319 --> 00:04:21.920 focus area for our fund. 77 00:04:22.639 --> 00:04:25.399 Can you give a specific example, so you're like into 78 00:04:25.480 --> 00:04:29.360 bio fuel or saff or something that I can understand. 79 00:04:30.040 --> 00:04:31.959 Yeah, if you had to break it down, there's sort 80 00:04:32.000 --> 00:04:35.279 of three areas that we really focus on. One is 81 00:04:35.959 --> 00:04:39.720 circular economy, waste management upcycling of waste. You know, can 82 00:04:39.759 --> 00:04:42.079 we take plastic waste and do something more than just 83 00:04:42.160 --> 00:04:45.000 make plastic. That's an area that we see value add 84 00:04:45.040 --> 00:04:48.920 solutions right now. The other is various kind of liquid 85 00:04:48.959 --> 00:04:53.720 and gas fuels. So obviously batteries play a role in mobility, 86 00:04:54.279 --> 00:04:57.360 but there are applications out there that we just don't 87 00:04:57.399 --> 00:04:59.879 think batteries are well suited for because of their dense. 88 00:05:00.120 --> 00:05:03.040 Either're just so heavy, and so we see need for 89 00:05:03.199 --> 00:05:06.759 things like SAFF. You mentioned sustainab aviation fuel, and that's 90 00:05:06.759 --> 00:05:09.839 an area that we focus on. And then lastly, it 91 00:05:09.920 --> 00:05:13.639 is in just dealing with direct emissions. That may be 92 00:05:13.720 --> 00:05:17.000 methane emissions from a dairy farm, it may be CO 93 00:05:17.279 --> 00:05:21.519 two emissions from a fertilizer producing plant. Those are the 94 00:05:21.519 --> 00:05:26.120 three big areas. Waste up, cycling, liquid and gas fuel alternatives, 95 00:05:26.560 --> 00:05:28.279 and then waste gas management. 96 00:05:29.000 --> 00:05:32.040 Okay, so if we're going between two SAFF, recent news 97 00:05:32.079 --> 00:05:36.560 have not been very positive and NESTA is an absolute disaster, 98 00:05:37.959 --> 00:05:40.639 you know, air products or so considering a certain number 99 00:05:40.680 --> 00:05:45.240 of plants, So how can you survive in that environment? 100 00:05:45.959 --> 00:05:48.079 I mean, MESSI is a good case study. I think 101 00:05:48.120 --> 00:05:50.759 about fifteen percent of what they make is SAFF. They 102 00:05:50.759 --> 00:05:53.240 make a lot of HBO and diesel and other products. 103 00:05:53.240 --> 00:05:56.519 But you know, they certainly struggled the last year. But 104 00:05:56.560 --> 00:05:58.439 if you go back to twenty twenty, you know they 105 00:05:58.439 --> 00:06:01.519 were up two hundred percent. You're same in twenty two 106 00:06:01.600 --> 00:06:03.800 they were up again. So what you're really looking at 107 00:06:03.879 --> 00:06:06.879 is just a tremendous amount of volatility, and the reason 108 00:06:06.920 --> 00:06:10.240 it's so volatile, we believe today is you have a 109 00:06:10.360 --> 00:06:13.800 rapidly growing demand, and this is not just for sustainable 110 00:06:13.800 --> 00:06:18.319 aviation fuel, but also for renewable diesel and ethanol and 111 00:06:18.439 --> 00:06:21.600 lots of other liquid fuels. You have a rapidly growing demand, 112 00:06:21.800 --> 00:06:26.319 but it's on a very small starting base, and so unfortunately, 113 00:06:26.439 --> 00:06:30.839 we can't add supply in this market ten gallons at 114 00:06:30.839 --> 00:06:33.399 a time. We have to build very large plants, and 115 00:06:33.480 --> 00:06:36.240 so as people bring these plants on to meet demand, 116 00:06:36.879 --> 00:06:39.879 you find yourself whip sawing between a market that is 117 00:06:40.000 --> 00:06:43.079 undersupplied and oversupplied, and undersupplied and oversupplied. 118 00:06:43.759 --> 00:06:44.519 As we look. 119 00:06:44.399 --> 00:06:48.480 Forward to twenty thirty, we see that market correcting because 120 00:06:48.519 --> 00:06:51.480 eventually this base gets big enough that one or two 121 00:06:51.560 --> 00:06:55.079 new plants isn't enough to move the market. In fact, 122 00:06:55.160 --> 00:06:57.879 even as early as twenty twenty six, with Canada coming 123 00:06:57.879 --> 00:07:01.519 on as a new demand center and EU and UK 124 00:07:01.680 --> 00:07:05.680 continue to grow in their requirements for sustainable aviation fuel, 125 00:07:06.160 --> 00:07:08.519 we see that market correct and you're actually in an 126 00:07:08.639 --> 00:07:13.800 undersupplied market in twenty six. By twenty thirty, there's a 127 00:07:13.920 --> 00:07:17.160 very healthy deep market. So we are long term bullish, 128 00:07:17.480 --> 00:07:20.279 but there's a lot of turbulence between here and there. 129 00:07:21.240 --> 00:07:23.680 Chris, Really, I'll tell you there's two things I'm really 130 00:07:23.680 --> 00:07:26.160 interested and i'd love to hear your view on. One 131 00:07:26.319 --> 00:07:29.639 is is the United States and the future a sort 132 00:07:29.639 --> 00:07:33.680 of infrastructure investment in energy as you see it. And 133 00:07:33.720 --> 00:07:36.319 then the second thing is I'd love to talk about Texas. 134 00:07:36.360 --> 00:07:36.920 At the end of the day. 135 00:07:36.959 --> 00:07:39.000 You come from Texas and a lot of your investments 136 00:07:39.000 --> 00:07:41.639 are in that area. But maybe we just talk about 137 00:07:41.680 --> 00:07:44.000 the US first and foremost and just give us your 138 00:07:44.079 --> 00:07:47.360 view on how you see the landscape over the. 139 00:07:47.279 --> 00:07:47.959 Next few years. 140 00:07:47.959 --> 00:07:50.360 So you look at it positive from an investment point 141 00:07:50.360 --> 00:07:51.759 of view, do you look at it cautiously? 142 00:07:51.800 --> 00:07:52.600 How do you see it? 143 00:07:53.480 --> 00:07:55.639 What I think is clear is there's a lot of 144 00:07:55.680 --> 00:07:59.759 uncertainty right now. This existing administration has had a lot 145 00:07:59.759 --> 00:08:03.959 of activity in the first month, and the markets globally 146 00:08:04.040 --> 00:08:06.680 are trying to digest that and predict where it's headed. 147 00:08:07.240 --> 00:08:08.839 I'm not going to be able to predict the future, 148 00:08:08.879 --> 00:08:11.199 but what I will say is there are some areas 149 00:08:11.199 --> 00:08:15.000 that we focus on that we believe are really not 150 00:08:15.160 --> 00:08:17.720 in the spotlight of a lot of the changes that 151 00:08:17.759 --> 00:08:21.720 are happening today. So one of those areas is carbon capture. 152 00:08:22.399 --> 00:08:26.560 That's an area in particular that the incentives that drive 153 00:08:26.639 --> 00:08:30.240 a lot of the support behind carbon capture are not 154 00:08:30.519 --> 00:08:34.279 new incentives. These are not created by the Biden administration. 155 00:08:34.440 --> 00:08:38.480 They go back a decade or more. And also most 156 00:08:38.480 --> 00:08:41.679 of the benefit of these incentives tends to flow into 157 00:08:41.759 --> 00:08:46.120 conservative districts or conservative states, and so we see a 158 00:08:46.159 --> 00:08:49.840 lot of bipartisan political support in the United States for 159 00:08:49.919 --> 00:08:52.960 carbon capture. I don't know exactly how that will play out. 160 00:08:53.039 --> 00:08:56.759 One of the big secular trends we see driving power 161 00:08:56.919 --> 00:09:01.960 right now is AI and we're seeing hyper scalers need 162 00:09:02.360 --> 00:09:05.240 massive amounts of twenty four to seven based load power, 163 00:09:05.720 --> 00:09:09.559 which tends to lend itself away from wind and solar 164 00:09:09.759 --> 00:09:14.200 and more towards solutions like natural gas fired power with 165 00:09:14.360 --> 00:09:17.639 carbon captures something along those lines, and so I could 166 00:09:17.679 --> 00:09:21.000 see that being a big growth area. Areas that are 167 00:09:21.039 --> 00:09:24.679 a little just from a US sort of investment standpoint, 168 00:09:24.679 --> 00:09:27.279 that are a little more uncertain, are areas that tend 169 00:09:27.360 --> 00:09:29.039 to get caught up in some of the trade friction 170 00:09:29.120 --> 00:09:31.720 that we see we have as I think, you know, 171 00:09:32.440 --> 00:09:37.960 a large refinery in Canada that produces renewable diesel and 172 00:09:38.039 --> 00:09:42.120 could produce sustainable aviation fuel as well. Historically, all of 173 00:09:42.159 --> 00:09:44.639 that product that's produced has come to the United States. 174 00:09:45.200 --> 00:09:48.840 We may have a tariff on that product that obviously 175 00:09:48.840 --> 00:09:53.639 creates a big headwind, but we're already seeing responses. The 176 00:09:53.679 --> 00:09:57.879 Canadian province of British Columbia announced a change to their 177 00:09:58.000 --> 00:10:02.919 Low Carbon Fuels Act that requires the satisfaction of their 178 00:10:03.559 --> 00:10:06.879 fuel demand be met with Canadian fuel. So right there, 179 00:10:06.919 --> 00:10:10.759 just opened up a new market for our Canadian refinery. 180 00:10:11.600 --> 00:10:14.080 So what's going to happen is there's just like with 181 00:10:14.240 --> 00:10:16.759 sustainab waviation fuel broadly, there's a lot of near term 182 00:10:16.879 --> 00:10:20.799 uncertainty and turmoil. As the rules become known, the markets 183 00:10:20.879 --> 00:10:22.480 will settle out and it will. 184 00:10:22.279 --> 00:10:25.200 Be business as usual. When I look at the set 185 00:10:25.200 --> 00:10:27.759 of policy that US government is, you hear this drill, 186 00:10:27.879 --> 00:10:30.440 baby drill, I don't think that's what it is. 187 00:10:30.960 --> 00:10:32.639 I think it's cheap, baby cheap. 188 00:10:32.879 --> 00:10:35.759 In other words, energy has to be cheap. I don't 189 00:10:35.759 --> 00:10:36.840 care what it is. 190 00:10:37.000 --> 00:10:38.919 It has to be cheap. Do you look at it 191 00:10:39.000 --> 00:10:39.240 like that? 192 00:10:39.480 --> 00:10:42.519 How would you sum up the policy as you see 193 00:10:42.559 --> 00:10:44.000 it going for the next few years. 194 00:10:44.720 --> 00:10:49.000 There's probably a couple of sentiments behind that policy. On 195 00:10:49.039 --> 00:10:52.879 the one hand, the traditional energy sector tends to lean 196 00:10:53.000 --> 00:10:57.080 very conservative, so I think there is an internal desire 197 00:10:57.120 --> 00:11:02.039 from the administration to find way to support this industry 198 00:11:02.080 --> 00:11:05.759 that's been supportive of the Republican administration. Right, So there's 199 00:11:05.759 --> 00:11:08.000 a little bit of that, But I think you're right 200 00:11:08.120 --> 00:11:12.039 when you're looking longer term. The big concern that's really 201 00:11:12.200 --> 00:11:16.679 started to plague renewables globally, but it's being brought to 202 00:11:16.720 --> 00:11:19.480 the spotlight in the US is inflation. Right, we have 203 00:11:19.720 --> 00:11:25.120 a large risk of inflation. There are solutions within energy 204 00:11:25.120 --> 00:11:29.840 transition that can be implemented with very minimal cost impact, 205 00:11:29.919 --> 00:11:31.519 and then as you start to move to the right 206 00:11:31.559 --> 00:11:34.679 of that curve, the costs go up dramatically. You hit 207 00:11:34.720 --> 00:11:37.879 a wall pretty fast. Our own view has been for 208 00:11:37.919 --> 00:11:43.399 some time that pragmatic solutions that can be impactful will 209 00:11:43.440 --> 00:11:48.159 get built eventually. Though when we hit that inflationary wall, 210 00:11:48.639 --> 00:11:52.159 there are hard decisions to make. It's easy to dismiss 211 00:11:52.240 --> 00:11:55.279 these things as saying, well, economics shouldn't matter. We're in 212 00:11:55.320 --> 00:11:57.679 a crisis here, and like the end of the day, 213 00:11:57.720 --> 00:12:01.240 this crisis could impact sort of lie. But the reality 214 00:12:01.279 --> 00:12:03.759 is inflation does too. Right, When the cost of food 215 00:12:03.840 --> 00:12:07.279 is too high to bear, then people starve, and so 216 00:12:07.399 --> 00:12:10.320 the reality is this inflation is not just greed or 217 00:12:10.360 --> 00:12:14.080 people's money in their pockets. It's a real concern whether 218 00:12:14.159 --> 00:12:16.720 or not sort of lowest income producing people in the 219 00:12:16.720 --> 00:12:21.399 world will suffer inordinately to try to achieve these larger 220 00:12:21.399 --> 00:12:24.039 climate goals. I do think you're right. I don't think 221 00:12:24.080 --> 00:12:27.000 that the Trump administration is anti climate. I think they 222 00:12:27.000 --> 00:12:29.559 are pro traditional oil and gas. And I also think 223 00:12:29.600 --> 00:12:32.200 they are anti inflation, or at least, you know, ostensibly 224 00:12:32.200 --> 00:12:36.080 anti inflation. I think the tariffs could drive inflation, but 225 00:12:36.320 --> 00:12:39.080 the ultimate goal is to try to find ways to 226 00:12:39.120 --> 00:12:41.840 curb inflation. And so when you say cheap, baby, cheap, 227 00:12:41.919 --> 00:12:45.159 that's probably in line with where the goals are. 228 00:12:46.320 --> 00:12:48.879 The other thing related to that is Texas. At the 229 00:12:48.960 --> 00:12:51.000 end of the day, is that you guys are based 230 00:12:51.000 --> 00:12:55.000 in Texas. If I'm just looking across the world of energy, 231 00:12:55.080 --> 00:12:57.799 I sort of have to look at Texas and say, well, 232 00:12:57.840 --> 00:13:00.559 maybe these guys are really showing us the way forward. 233 00:13:00.720 --> 00:13:04.120 And it's for me amazing that Texas seems to be 234 00:13:04.159 --> 00:13:07.840 at everything to do with energy. They're not just leading, 235 00:13:07.960 --> 00:13:10.799 but the winning right and the whole economy is basic. 236 00:13:11.120 --> 00:13:12.279 So could you talk a little bit. 237 00:13:12.159 --> 00:13:15.080 About how you see Texas, and I suppose what makes 238 00:13:15.120 --> 00:13:15.960 it special. 239 00:13:15.759 --> 00:13:19.720 Right, And in some cases there's some advantages Texas has. 240 00:13:19.759 --> 00:13:22.200 It's a very large land mass, it gets a lot 241 00:13:22.240 --> 00:13:25.320 of sun coverage. There's a lot of open areas in 242 00:13:25.360 --> 00:13:27.679 the plains with big wind right. So we have a 243 00:13:27.720 --> 00:13:31.200 lot of the resources that lend themselves well to renewables. 244 00:13:31.679 --> 00:13:34.919 We also have access to low cost natural gas and 245 00:13:35.000 --> 00:13:40.919 a very stable long term grid that's been integrated within Texas. 246 00:13:40.960 --> 00:13:44.799 So the ARCOT grid is largely self contained, and so 247 00:13:45.120 --> 00:13:48.200 it's almost a country under itself, right, So it has 248 00:13:48.240 --> 00:13:50.919 a lot of resources that has been taken advantage of. 249 00:13:51.840 --> 00:13:54.360 I don't think all of the growth that Texas has 250 00:13:54.399 --> 00:13:56.679 had has been driven by ideology. It's a lot of 251 00:13:56.720 --> 00:14:00.240 it's just driven by economics. It's an area with an 252 00:14:00.279 --> 00:14:04.559 abundance of resources, and it's had people with very low 253 00:14:05.000 --> 00:14:08.759 barriers and very low amounts of friction. It's given companies 254 00:14:08.919 --> 00:14:12.519 ways to access those resources and develop them fully. 255 00:14:13.799 --> 00:14:14.639 That's great help. 256 00:14:15.200 --> 00:14:20.039 Yeah, Look, it's always interesting to confront your Texan or 257 00:14:20.200 --> 00:14:23.519 American view with what we have in Europe, which is 258 00:14:23.559 --> 00:14:29.360 basically squeeze between America and Algie dominance and Chinese technology. 259 00:14:30.320 --> 00:14:32.639 And to tell you the truth, ch and I were 260 00:14:32.679 --> 00:14:36.519 investing in a chairman off top solar company and the 261 00:14:36.639 --> 00:14:39.639 German they went to see their US counterpart and they say, 262 00:14:39.960 --> 00:14:44.000 those guys are morons. They don't know how to put 263 00:14:44.240 --> 00:14:46.960 sela on the roof. It costs forty thousand dollars a 264 00:14:47.080 --> 00:14:50.080 roof in California. In Germany it costs half this price. 265 00:14:50.480 --> 00:14:53.000 I don't know if they are disorganized or not, but 266 00:14:53.080 --> 00:14:56.639 the reality is we were just dealing with Chinese solar 267 00:14:56.679 --> 00:15:01.240 panels and there was no from Tarif from them, and 268 00:15:01.279 --> 00:15:01.799 there was no. 269 00:15:01.759 --> 00:15:04.000 One bargo or whatever band. 270 00:15:04.759 --> 00:15:06.559 So at some point if you want to do the 271 00:15:06.679 --> 00:15:10.120 energy transition, because unfortunately we don't have the permium basin 272 00:15:10.240 --> 00:15:14.200 in Bavaria as big energy importer, we need to use 273 00:15:14.240 --> 00:15:16.960 whatever is on the hand, and a lot of Chinese 274 00:15:16.960 --> 00:15:21.759 technology are good. Now the old mantra we hear are 275 00:15:21.840 --> 00:15:23.919 I mean they're gonna spy on us and so on 276 00:15:24.440 --> 00:15:27.600 is bs because there is a law in your rope 277 00:15:27.600 --> 00:15:30.120 which call a cyber security law, and you cannot have 278 00:15:30.480 --> 00:15:35.559 the Chinese software controlling any equipment. So in fact there's 279 00:15:35.600 --> 00:15:38.159 this very limited world way in vertors and so on. 280 00:15:38.639 --> 00:15:41.720 But there are basic parts, whether it's batteries or solar 281 00:15:41.960 --> 00:15:44.600 where we are happy to get a lot of cheap 282 00:15:44.720 --> 00:15:47.600 Chinese and build value on the top of them. And 283 00:15:47.720 --> 00:15:50.919 in the US it's not. The US is importing less 284 00:15:51.000 --> 00:15:55.440 Chinese solar panels than the Dominican Republic. So that's ridiculous 285 00:15:56.320 --> 00:15:59.600 ideology on one side and ideology on the other. Sorry, 286 00:15:59.639 --> 00:16:01.240 I mean this, there's no question there, it's. 287 00:16:01.039 --> 00:16:06.559 Just no no. I think the challenge we run into is, 288 00:16:06.960 --> 00:16:10.200 you know, in politics, there's conflicting goals. If the unilateral 289 00:16:10.240 --> 00:16:12.879 goal of all politicians was to create the lowest cost 290 00:16:12.960 --> 00:16:18.679 energy transition, then you have to eliminate trade friction. The 291 00:16:18.720 --> 00:16:21.480 best way to do that is there are companies that 292 00:16:21.519 --> 00:16:24.200 specialize in the production of products. There are companies like 293 00:16:24.279 --> 00:16:27.120 your German counterparts, that specialize in the installation itself and 294 00:16:27.159 --> 00:16:30.679 the systems and the efficiency and to get the best 295 00:16:30.720 --> 00:16:33.360 of all worlds, would we would ultimately end up with 296 00:16:33.399 --> 00:16:35.639 the lowest cost product. I think when you run up 297 00:16:35.639 --> 00:16:39.440 against other political goals that that starts to conflict with 298 00:16:39.960 --> 00:16:42.240 the transition. And I think that's what we're running into 299 00:16:42.639 --> 00:16:44.399 in the US and. 300 00:16:44.000 --> 00:16:44.759 In Europe as well. 301 00:16:44.840 --> 00:16:47.799 Right, you do have anti dumping duties on US products, 302 00:16:47.840 --> 00:16:51.159 and you do have things that drive your European cost 303 00:16:51.240 --> 00:16:54.559 up as well, where you may be bringing in components 304 00:16:54.559 --> 00:16:58.240 from Asia, you know, duty free. You're not bringing in 305 00:16:58.480 --> 00:17:00.559 fuels duty free, right, So there are there are areas 306 00:17:00.559 --> 00:17:03.759 where that friction does exist. So in a perfect world, 307 00:17:03.759 --> 00:17:07.000 we would eliminate that friction for purposes of hitting this 308 00:17:07.119 --> 00:17:10.359 energy transition at the lowest possible cost. But I think 309 00:17:10.400 --> 00:17:14.720 we just have to deal with those practical inefficiencies, Chris. 310 00:17:14.839 --> 00:17:16.640 I wanted to go back to your portfolio. 311 00:17:16.720 --> 00:17:16.920 Right. 312 00:17:17.279 --> 00:17:19.799 A lot of what we talk about is about electrons, 313 00:17:20.000 --> 00:17:23.279 and a lot of what you're doing is molecules. And 314 00:17:23.359 --> 00:17:27.119 we realize this is incredibly important. But I'd love to 315 00:17:27.160 --> 00:17:29.519 ask you how you see that in the light of 316 00:17:30.039 --> 00:17:31.960 if we look again from the outside of the US, 317 00:17:32.000 --> 00:17:34.960 what you've got is a surplus of molecules and that 318 00:17:35.160 --> 00:17:38.799 purpose to increase, not decrease in the next few years. 319 00:17:39.039 --> 00:17:40.079 So how do you sort. 320 00:17:39.880 --> 00:17:42.799 Of invest in that type of area when you've got 321 00:17:42.799 --> 00:17:46.119 that over capacity maybe looming? And if you look at 322 00:17:46.119 --> 00:17:50.400 the gas prices, they're incredibly low compared to everywhere else 323 00:17:50.440 --> 00:17:51.079 across the world. 324 00:17:51.200 --> 00:17:51.440 Right. 325 00:17:52.240 --> 00:17:55.119 A couple of things. One, while we do talk about 326 00:17:55.279 --> 00:17:58.400 drill baby drill, and there's this big sort of ethos 327 00:17:58.440 --> 00:18:02.599 shift around traditional energy. In the US, we haven't really 328 00:18:02.640 --> 00:18:06.559 seen drilling constraints in the last few years. Most of 329 00:18:06.599 --> 00:18:10.720 the drilling pacing is still driven by global pricing, which 330 00:18:10.759 --> 00:18:14.319 is I still think more influenced by OPEC's decisions than 331 00:18:14.480 --> 00:18:18.440 US policy decisions. So I don't know that you'll necessarily 332 00:18:18.480 --> 00:18:24.480 see a big flood of incremental growth without a market 333 00:18:24.519 --> 00:18:28.319 to support that globally, because we are already exporting products 334 00:18:28.359 --> 00:18:32.119 right as we've already overrun our own refining capacity. On 335 00:18:32.240 --> 00:18:36.960 the natural gas side, the need for these hyper scaling 336 00:18:37.279 --> 00:18:42.200 of data centers is likely to chew up most new 337 00:18:42.279 --> 00:18:45.359 supply that we can generate in natural gas and on 338 00:18:45.400 --> 00:18:47.240 the crude side, I think you're going to still be 339 00:18:47.319 --> 00:18:51.319 just driven by global demand for product. If I think 340 00:18:51.480 --> 00:18:55.400 really long term, though, we still have a limited amount 341 00:18:55.440 --> 00:18:58.319 of finite resource in the ground. I don't know how 342 00:18:58.400 --> 00:19:01.079 much that is. It seems like you can always squeeze 343 00:19:01.079 --> 00:19:03.480 a little more juice out of this lemon, but at 344 00:19:03.519 --> 00:19:08.960 some point these resources deplete, and where we see things 345 00:19:09.319 --> 00:19:15.440 like biofuels coming into place are to help supplement longer term, 346 00:19:15.599 --> 00:19:20.039 as those lower cost molecules either deplete or become higher 347 00:19:20.079 --> 00:19:23.200 and higher cost to get to where all of a sudden, now, 348 00:19:23.240 --> 00:19:26.920 if we're using waste products or cover crops like camelina, 349 00:19:27.359 --> 00:19:30.920 we may be able to see a cost parity on 350 00:19:31.559 --> 00:19:36.400 biofuels that's in line with traditional That's really the endgame 351 00:19:36.559 --> 00:19:37.200 for biofuels. 352 00:19:37.240 --> 00:19:37.359 Now. 353 00:19:37.359 --> 00:19:41.559 The challenges there's not enough biomass in the world to 354 00:19:41.599 --> 00:19:44.240 meet our energy needs. Right, you have to have solar, 355 00:19:44.680 --> 00:19:46.720 you have to have wind, you have to have these 356 00:19:46.759 --> 00:19:49.960 other things. But it can be a nice stop gap 357 00:19:50.000 --> 00:19:53.680 and bridge and quite low cost as well over the 358 00:19:53.720 --> 00:19:57.119 long enough time period. Compared to the lowest cost oil 359 00:19:57.160 --> 00:19:59.599 in the world. No, it's expensive, but compared to where 360 00:19:59.599 --> 00:20:02.559 oil is been in the last ten years at times, 361 00:20:02.599 --> 00:20:04.359 I mean, I've seen one hundred and forty dollars oil, 362 00:20:04.400 --> 00:20:08.359 I've seen negative forty dollars oil. When you get oil 363 00:20:08.400 --> 00:20:10.039 prices that are on the high end of that, we 364 00:20:10.079 --> 00:20:13.759 can actually make renewable diesel and sustainableviation fuel at true 365 00:20:13.839 --> 00:20:16.400 cost parity to those numbers. And so that's where I 366 00:20:16.480 --> 00:20:20.440 think we're headed long term. So you're right, we're flooded 367 00:20:20.440 --> 00:20:22.720 with molecules today. I don't believe we'll be flooded with 368 00:20:22.720 --> 00:20:26.240 them forever, and I do think there's a global recognition 369 00:20:26.319 --> 00:20:26.559 of that. 370 00:20:27.720 --> 00:20:31.720 Let's assume I have a beautiful project or something, what 371 00:20:31.799 --> 00:20:35.039 would interest you as an investment the next three years? 372 00:20:35.240 --> 00:20:38.519 Say like, I can feel something because what I really 373 00:20:38.519 --> 00:20:41.680 appreciate with your approach is you have a real dominic expertise, 374 00:20:41.960 --> 00:20:45.200 which means that you might see trends at least a 375 00:20:45.240 --> 00:20:51.119 few months ahead before the behemoth of Black Blackstone, KKR 376 00:20:51.200 --> 00:20:53.359 and so on. I think you have a feel of 377 00:20:53.359 --> 00:20:56.000 the grantity of the market. So why are you're editing now. 378 00:20:56.680 --> 00:20:59.960 One area that's early stage for us but pretty excited 379 00:21:00.680 --> 00:21:04.720 is there's been a lot of megascale early venture work 380 00:21:04.960 --> 00:21:08.440 in things like carbon capture, and in some cases there 381 00:21:08.480 --> 00:21:12.880 are projects out there where they're taking the carbon from 382 00:21:13.240 --> 00:21:18.079 carbon capture and making other products like graphene from those carbon. 383 00:21:18.880 --> 00:21:21.519 We're not likely to be competitive on those multi billion 384 00:21:21.559 --> 00:21:25.599 dollar type projects, but what we find is they've been 385 00:21:25.680 --> 00:21:29.160 built quickly, and they've been built to address a specific problem, 386 00:21:29.680 --> 00:21:33.000 and in that case, they end up with a waste 387 00:21:33.039 --> 00:21:37.400 stream or a waste product that was unintended. So, for example, 388 00:21:37.440 --> 00:21:39.440 in some of the projects we've seen where they're building 389 00:21:39.480 --> 00:21:43.200 graphene out of captured CO two or methane, for example, 390 00:21:43.640 --> 00:21:46.960 you end up with hydrogen that's just being vented into 391 00:21:47.000 --> 00:21:50.119 the atmosphere. So we're looking at ways to take that 392 00:21:50.400 --> 00:21:54.400 waste hydrogen and turn that into a usable product like 393 00:21:54.440 --> 00:21:57.279 an e fuel or an ammonia or something that can 394 00:21:57.599 --> 00:22:02.039 then be utilized one example. But there are lots of 395 00:22:02.480 --> 00:22:06.839 ancillary examples to that approach, which is we go and 396 00:22:06.880 --> 00:22:09.559 we sort of chase where the big whales have gone, 397 00:22:10.119 --> 00:22:12.480 and we look to see, in their rush to get 398 00:22:12.559 --> 00:22:16.359 something that works, where have they left inefficiency laying around 399 00:22:16.359 --> 00:22:18.480 that we can come in on a smaller scale and 400 00:22:18.519 --> 00:22:20.799 help to patch up. And I think that's a big 401 00:22:20.839 --> 00:22:23.720