WEBVTT 1 00:00:04.719 --> 00:00:08.279 With Laurent Sagoland from London and Gerard Reed from Berlin. 2 00:00:08.800 --> 00:00:12.160 This is Redefining Energy today. 3 00:00:12.240 --> 00:00:18.280 On Redefine Energy, Jard, we are releasing the excerpt of 4 00:00:18.359 --> 00:00:22.719 a John conversation we had with our friends at Open Circuit. 5 00:00:24.000 --> 00:00:27.679 Yeah, it's a great conversation. They actually inspired us to 6 00:00:27.719 --> 00:00:29.640 set up the podcast in the first place. 7 00:00:30.039 --> 00:00:33.359 Yea absolutely Open Circuit is the new name of the 8 00:00:33.679 --> 00:00:37.679 old Energy Gang that they have recreated with the original 9 00:00:37.840 --> 00:00:42.039 team Cigar Shah, Katrina Milton. Once Jigar left the DOE 10 00:00:42.079 --> 00:00:44.560 because when he was working for the government he could 11 00:00:44.600 --> 00:00:49.240 not come. And Katherine's charm and wit and Gigar's laugh. 12 00:00:50.399 --> 00:00:54.719 It was a great conversation but lasted like an hour plus, 13 00:00:54.759 --> 00:00:57.840 which is much too much for us. So I've just 14 00:00:58.000 --> 00:00:59.479 selected excerpt. 15 00:01:00.039 --> 00:01:02.880 And don't forget Steven Stephen ac right, No, but I 16 00:01:02.920 --> 00:01:05.359 said it. No, No, you didn't mention Steve. I'll er 17 00:01:05.400 --> 00:01:05.840 the other two. 18 00:01:06.599 --> 00:01:11.680 Okay, Stephen Lacy organize everything. He's a great producer. We 19 00:01:11.760 --> 00:01:14.760 love them a lot. Okay, let's listen to the tape. 20 00:01:14.439 --> 00:01:18.120 From Latitude Media. This is Open Circuit. We'll revisit the 21 00:01:18.159 --> 00:01:21.560 new dual Order with a European twist. As America dismantles 22 00:01:21.560 --> 00:01:24.439 the post World War two global security order and leans 23 00:01:24.439 --> 00:01:27.760 into its role as a petro state, how will Europe respond. 24 00:01:28.159 --> 00:01:30.799 We'll look at how security is reshaping the EU's role 25 00:01:30.840 --> 00:01:38.719 as an emerging electro state. I'm Stephen Lacy. I'm the 26 00:01:38.719 --> 00:01:40.439 executive editor at Latitude Media. 27 00:01:40.480 --> 00:01:40.920 Welcome. 28 00:01:41.200 --> 00:01:43.799 I'm joined as zolways by my two co hosts, Katherine 29 00:01:43.799 --> 00:01:46.680 Hamilton and Jigger Shaw. Catherine's the co founder and chair 30 00:01:46.719 --> 00:01:50.120 of thirty eight Norse Solutions. Hey, Catherine, Hey, so excited 31 00:01:50.120 --> 00:01:53.519 to be doing this. Indeed, Jigger is the co managing 32 00:01:53.519 --> 00:01:56.280 partner of Multiplier and former director of the doees Loan 33 00:01:56.359 --> 00:02:00.480 Program's Office. Hey, Jigger, Hey, this week we have special 34 00:02:00.519 --> 00:02:03.959 treat We have not one, but two leading European energy 35 00:02:04.040 --> 00:02:07.879 investment experts here with us. Laurent Segolen and Gerard Read, 36 00:02:07.920 --> 00:02:12.120 the co hosts of the Redefining Energy podcast. Laurent Segolen 37 00:02:12.400 --> 00:02:16.400 founded megawatt x, a London based energy transition investment platform. 38 00:02:16.439 --> 00:02:19.159 He's been trading and investing billions of euros and clean 39 00:02:19.240 --> 00:02:22.639 energy for over two decades. Laurent, welcome, Well, thank you 40 00:02:22.680 --> 00:02:24.479 so much for having us. You know it's a very 41 00:02:24.639 --> 00:02:29.080 emotional moment for us because the Energy Gang, the origin 42 00:02:29.199 --> 00:02:33.159 Energy Gang, was our inspiration when we set up our podcast, 43 00:02:33.240 --> 00:02:36.759 and we are getting very emotional. So I just have 44 00:02:36.879 --> 00:02:39.840 to say one thing and then I'll let you speak. 45 00:02:40.360 --> 00:02:45.199 Times of change and times are strange. Here I come, 46 00:02:45.439 --> 00:02:50.919 but I ain't the same Mama. I'm coming home. What 47 00:02:51.000 --> 00:02:53.520 a good way to start the show. I love it, Gerar, 48 00:02:53.639 --> 00:02:54.319 can you beat that? 49 00:02:55.080 --> 00:02:56.599 Oh my god? What can I say? 50 00:02:57.319 --> 00:03:00.759 Jared also going to sing yes, I have definitely, But 51 00:03:00.840 --> 00:03:04.800 I do want to say he's dead right because myself 52 00:03:04.800 --> 00:03:07.280 and Laurent, you know, we're in a pulp one night 53 00:03:07.360 --> 00:03:11.080 having some beers and we were talking about your podcasts 54 00:03:11.199 --> 00:03:12.080 and we think of taxis. 55 00:03:12.120 --> 00:03:15.240 We could do something Simna couldn't we so we did. 56 00:03:15.719 --> 00:03:19.199 And it's so great to be with you guys here today. 57 00:03:19.240 --> 00:03:21.599 It's brilliant. Really looking forward to this exchange. 58 00:03:22.039 --> 00:03:25.159 Excellent well. Jared Reid is a founding partner of Alexa 59 00:03:25.199 --> 00:03:29.000 Capital and an expert on commodities and energy and mobility transitions. 60 00:03:29.039 --> 00:03:29.960 It's really good to see you. 61 00:03:30.360 --> 00:03:32.479 Great to be here. Great to be here. 62 00:03:32.840 --> 00:03:35.639 Let's move on to a much bigger story about European 63 00:03:35.759 --> 00:03:38.400 energy security. So back In April, we had a conversation 64 00:03:38.439 --> 00:03:41.840 about a report from the investment firm Carlisle called the 65 00:03:41.879 --> 00:03:44.800 New Dual Order, which argued that global investment flows and 66 00:03:44.840 --> 00:03:48.280 clean energy would be more influenced by security and localization 67 00:03:48.319 --> 00:03:52.080 of supply than decarbonization, and we asked are we leaving 68 00:03:52.159 --> 00:03:56.319 the net zero era into the energy security era? And 69 00:03:56.439 --> 00:03:59.080 one of the precipitating factors of all this was America's 70 00:03:59.120 --> 00:04:02.560 changing role in the Gloe stage. As the US leans 71 00:04:02.560 --> 00:04:05.639 into its role as a dominant petro state and pulls 72 00:04:05.639 --> 00:04:08.360 back on its post World War Two security commitments to 73 00:04:08.439 --> 00:04:12.599 protect supply routes, countries are reevaluating their energy security and 74 00:04:12.800 --> 00:04:15.599 creating what Carlisle's Jeff Curry says is peak trade of 75 00:04:15.639 --> 00:04:18.240 fossil fuels. So a sequel to that report is out 76 00:04:18.360 --> 00:04:21.040 is focused squarely on Europe. It looks at Europe's defense 77 00:04:21.040 --> 00:04:24.480 imperative as America pulls away, and the plan argues so 78 00:04:24.480 --> 00:04:27.480 that Europe needs to spend nine trillion euros over the 79 00:04:27.480 --> 00:04:30.079 next decade to build a very different economy, one with 80 00:04:30.120 --> 00:04:33.480 electrons and local supply chains at the center, largely for 81 00:04:33.519 --> 00:04:37.800 security reasons. And this pairs really nicely with another analysis 82 00:04:37.800 --> 00:04:40.319 from two Columbia University scholars arguing that we're in the 83 00:04:40.360 --> 00:04:43.519 middle of this split between two fundamentally different economic models, 84 00:04:43.720 --> 00:04:47.040 the petro state versus the electro state. And petro states 85 00:04:47.079 --> 00:04:52.000 like America, Saudi Arabia, Russia control energy through scarcity through 86 00:04:52.240 --> 00:04:56.279 dominance of choke points, power through barrels and pipelines, and 87 00:04:56.360 --> 00:05:02.399 electro states, particularly China and Europe, build abundance through manufacturing, 88 00:05:02.800 --> 00:05:07.439 advantages through technology and generate value through innovation rather than extraction. 89 00:05:07.680 --> 00:05:10.240 It's a very simplified way of looking at things, but 90 00:05:10.240 --> 00:05:12.519 I think that's how you sort of define the difference 91 00:05:12.519 --> 00:05:16.000 between petro states and electro states. So America is now 92 00:05:16.040 --> 00:05:19.000 really leaning into, as I said, the petro state strategy. 93 00:05:19.399 --> 00:05:22.720 And the question is can Europe join China as a 94 00:05:22.800 --> 00:05:26.199 leading electro state and increase both its security and competitiveness. 95 00:05:26.240 --> 00:05:28.759 And as it does, what can we learn from Europe's 96 00:05:28.759 --> 00:05:32.079 malinvestment in renewables that was clearly pioneering but also very 97 00:05:32.199 --> 00:05:35.560 very costly. Firstly, Laurent, do you agree with the assertion 98 00:05:35.800 --> 00:05:39.360 that security is becoming a more powerful force for Europe's 99 00:05:39.439 --> 00:05:42.519 energy transition than decarbonization. How is that unfolding? 100 00:05:42.959 --> 00:05:47.879 Yeah, everything changed so nothing changes. It's still EESG EESG 101 00:05:48.120 --> 00:05:52.360 except now. And I quote Liam Dinning from Bloomberg. ESG 102 00:05:52.519 --> 00:05:56.839 means economic security and geopolitics, So that's the new ESG. 103 00:05:57.600 --> 00:06:01.319 The second is the Jeff Curry Report was delivered in 104 00:06:01.360 --> 00:06:05.079 person by Vice President Jig Evans at the Unique Conference 105 00:06:05.600 --> 00:06:07.959 and jah the what you in Munich, I mean the 106 00:06:08.040 --> 00:06:09.720 message was kind of loud and clear. 107 00:06:10.560 --> 00:06:12.959 Well, the message was loud and clear, which is the 108 00:06:12.959 --> 00:06:15.120 future is fossil fuels. 109 00:06:15.199 --> 00:06:17.959 Right, That's what we got from the US. And I 110 00:06:18.040 --> 00:06:18.560 think what I. 111 00:06:18.560 --> 00:06:21.720 Would say is Europe's in a sort of a difficult situation 112 00:06:21.879 --> 00:06:25.120 because at the end of the day, we outsourced our 113 00:06:25.560 --> 00:06:29.839 energy future to Russia. That hasn't worked out, and now 114 00:06:29.959 --> 00:06:32.959 we're very dependent on the United States, but we're also 115 00:06:33.040 --> 00:06:36.600 dependent on Saudi Arabia, etcetera, etcetera. And with sort of 116 00:06:36.600 --> 00:06:40.040 the geopolitical situation, you're in a present just so they say, oh, 117 00:06:40.160 --> 00:06:42.040 what can we do, Well, there's only one thing we 118 00:06:42.040 --> 00:06:44.160 can do, and let's move towards energy independence. And the 119 00:06:44.199 --> 00:06:46.920 only way you can do that is to electrify. Now 120 00:06:46.959 --> 00:06:50.040 that's the big picture, Stephen. So I think we're all clear, 121 00:06:50.079 --> 00:06:52.920 that's what we have to do. It's not clear whether 122 00:06:52.959 --> 00:06:54.360 Europe is going to do that or not. That's what 123 00:06:54.439 --> 00:06:56.439 I just want to say to here. It is clear 124 00:06:56.480 --> 00:06:58.439 that China has gone that route, and we do need 125 00:06:58.480 --> 00:07:02.079 to go that route. Geopolitics are difficult. What I mean 126 00:07:02.120 --> 00:07:05.319 by that is the geopolitical situation is that Europe's very 127 00:07:05.480 --> 00:07:08.959 very tied into the United States, and to break away 128 00:07:08.959 --> 00:07:12.240 from the United States means also breaking away from fossil fuels. 129 00:07:12.279 --> 00:07:14.839 That really gonna have happen. I'm not one hundred percent sure. 130 00:07:14.920 --> 00:07:15.920 I hope it does. 131 00:07:17.000 --> 00:07:19.639 And what I would add though, is that the way 132 00:07:19.680 --> 00:07:22.240 forward is definitely We have examples of the way forward 133 00:07:22.240 --> 00:07:25.319 in Europe, and it's called the Nordic countries because if 134 00:07:25.360 --> 00:07:29.720 you're Norway, Denmark, Sweden, these countries have electrified their economies. 135 00:07:29.720 --> 00:07:32.920 Already France to a certain extent as well, but particularly 136 00:07:33.199 --> 00:07:36.360 the case of Sweden. Sweden was totally unimpacted by what 137 00:07:36.439 --> 00:07:39.040 happened with the Russians cussing off the gas to Europe. 138 00:07:39.319 --> 00:07:42.199 The reason was because they don't use gas, they use 139 00:07:42.279 --> 00:07:45.240 minimum amounts of it. So it's very clear that is 140 00:07:45.279 --> 00:07:48.839 the way going forward. But I would say the bottleneck 141 00:07:48.879 --> 00:07:53.120 and all of this is Germany because germany strategy was 142 00:07:53.160 --> 00:07:58.079 always to integrate close to the Russians, and industry has 143 00:07:58.120 --> 00:07:58.800 been really. 144 00:07:58.560 --> 00:07:59.959 Badly impacted by the fact. 145 00:08:00.000 --> 00:08:02.839 So then I take an expense of LNG and and 146 00:08:02.879 --> 00:08:05.480 I've got, you know, the German economics ministry who wants 147 00:08:05.519 --> 00:08:07.000 to go and build more and more. 148 00:08:06.920 --> 00:08:11.160 Gas power stations, which sort of doesn't break the addiction. So, 149 00:08:11.399 --> 00:08:15.079 as I said, definitely, we know the path forward, and 150 00:08:15.120 --> 00:08:18.240 we hope that Europe goes this down this road, but 151 00:08:18.439 --> 00:08:19.959 it's not clear where we're going to go down there. 152 00:08:20.120 --> 00:08:22.160 Now. Lauren might have a different opinion on this, but 153 00:08:22.480 --> 00:08:23.839 I certainly don't think it's clear. 154 00:08:24.439 --> 00:08:27.519 Yeah, look, it's a change of paradigm. And if you 155 00:08:27.560 --> 00:08:31.240 look twenty years ago, the registration in the US and 156 00:08:31.279 --> 00:08:38.399 Europe was absolutely the same. Were literally importing molecules. And 157 00:08:38.440 --> 00:08:40.600 if you look at the price of power in the 158 00:08:40.799 --> 00:08:45.159 US twenty years ago, it was above Europe. When people say, oh, 159 00:08:45.159 --> 00:08:48.279 the price is crazy now in Europe, no, if you 160 00:08:48.480 --> 00:08:50.320 just take the price of power twenty years ago, you 161 00:08:50.320 --> 00:08:52.840 had inflation, this is the price you get now. So 162 00:08:52.879 --> 00:08:56.919 the price has kind of followed inflation. But in the 163 00:08:57.039 --> 00:09:00.480 US ECOTT was above sixty twenty years ago. If you 164 00:09:00.559 --> 00:09:03.039 add inflation, that's one hundred dollars on the price is 165 00:09:03.080 --> 00:09:06.399 around middle thirty. So in fact, in the US, the 166 00:09:06.559 --> 00:09:09.159 price of power has gone down. In factor three, the 167 00:09:09.320 --> 00:09:12.360 reality is, and it's all because of racking and the 168 00:09:12.399 --> 00:09:16.480 Permian and everything, there's been an energy divergence, and of 169 00:09:16.519 --> 00:09:20.519 course the politics follow, and the politics is. The reality 170 00:09:20.600 --> 00:09:23.360 is now our interests are not aligned anymore because you 171 00:09:23.840 --> 00:09:28.080 enjoy energy dominance, and you know, we're left holding the 172 00:09:28.080 --> 00:09:31.799 bucket like morons. Yeah, of course we're going to do 173 00:09:31.840 --> 00:09:35.159 something about it now. The allans with China. Yeah, we 174 00:09:35.200 --> 00:09:38.399 take a lot of Chinese batteries or Chinese panels. There's 175 00:09:38.399 --> 00:09:41.480 no tariff, no problem. Look, at some point you need 176 00:09:41.519 --> 00:09:45.399 to bring answers. They're not pretty, but that's what it is. 177 00:09:46.000 --> 00:09:50.440 Certainly, historically, Europe, more than in the US, has been 178 00:09:51.000 --> 00:09:55.240 motivated in its energy transition for environmental reasons. And I'm 179 00:09:55.240 --> 00:10:00.320 wondering how you think security plays into Europe's motivations now 180 00:10:00.360 --> 00:10:06.039 compared to environmentalism and climate action. So are we seeing security, 181 00:10:06.200 --> 00:10:10.840 urgency and ownership of supply chains becoming the dominant force 182 00:10:11.039 --> 00:10:12.799 like this report suggests. 183 00:10:13.279 --> 00:10:19.240 Oh yeah, security after the invasion of Ukraine by Russia. Yeah, 184 00:10:19.279 --> 00:10:23.679 of course it changed everything, all of a sudden change everything. 185 00:10:23.720 --> 00:10:26.440 And then you add AI and all those types of things. 186 00:10:26.879 --> 00:10:31.799 The two twenties are harder, they are more digital, they 187 00:10:31.840 --> 00:10:35.320 are more disruptive, and people who stick on their two 188 00:10:35.519 --> 00:10:40.360 tense software view of the world with kumbaya, let's go 189 00:10:40.440 --> 00:10:43.759 to cup let's de carbonized, let's all be friends. This 190 00:10:43.919 --> 00:10:49.799 area is done. It's gone. The all ESG thing, which 191 00:10:49.919 --> 00:10:53.240 was basically you build a portfolio of shares, you go 192 00:10:53.360 --> 00:10:56.720 long tech, short oil, and then you say, oh, look, 193 00:10:56.960 --> 00:11:00.559 ESG is so profitable, that was not true. So we 194 00:11:00.600 --> 00:11:03.320 had a bit of a series of shock and we're 195 00:11:03.320 --> 00:11:05.120 adapting to those shocks. 196 00:11:05.480 --> 00:11:07.600 I think the part of the story that people miss 197 00:11:08.080 --> 00:11:10.120 is that the United States coming out of World War 198 00:11:10.200 --> 00:11:15.000 Two really had extraordinary amounts of manufacturing capacity, and we 199 00:11:15.000 --> 00:11:17.000 were able to use a lot of that manufacturing capacity 200 00:11:17.039 --> 00:11:19.080 to make planes and tanks and all sorts of other stuff, 201 00:11:19.080 --> 00:11:21.519 and then you know, when peace time came, we turned 202 00:11:21.519 --> 00:11:24.600 it into an engine for the world. The reason our 203 00:11:24.679 --> 00:11:27.600 defense was so strong, though, was it was less than 204 00:11:27.600 --> 00:11:30.639 five percent of the supply chain, so most of it 205 00:11:30.759 --> 00:11:34.200 was used to make a civilian equipment and five percent 206 00:11:34.240 --> 00:11:38.360 of it was used to make defense equipment. Today, our 207 00:11:38.480 --> 00:11:42.240 defense supply chains are used only for defense, and they 208 00:11:42.279 --> 00:11:46.039 are horribly mismanaged today. I'm not even sure we could 209 00:11:46.080 --> 00:11:49.320 make a carrier if we wanted to. That is how 210 00:11:49.399 --> 00:11:52.679 bad our ports are in our shipbuilding capacity is right, 211 00:11:53.159 --> 00:11:55.120 and so one of the things that Europe has to 212 00:11:55.120 --> 00:11:57.840 figure out how to do is to avoid some of 213 00:11:57.879 --> 00:12:02.320 the problems that the United States is in today. So 214 00:12:02.519 --> 00:12:05.240 it needs to make sure that when it increases its 215 00:12:05.279 --> 00:12:09.120 budgets to five percent of GDP to defense, which many 216 00:12:09.120 --> 00:12:13.840 European countries have done, that it is based upon civilian 217 00:12:13.879 --> 00:12:18.200 supply chains, not based on defense supply chains, because defense 218 00:12:18.240 --> 00:12:22.919 supply chains are horribly corrupt and horribly inefficient, and so 219 00:12:23.120 --> 00:12:25.679 it's just one of those things that you just cannot 220 00:12:26.320 --> 00:12:29.519 build a modern society on pure defense supply chains. In 221 00:12:29.559 --> 00:12:32.320 the US is falling off a cliff because we've ended 222 00:12:32.399 --> 00:12:36.320 up there. That takes real planning. And that's the part 223 00:12:36.360 --> 00:12:38.639 that scares me the most. Right is that when you 224 00:12:38.679 --> 00:12:42.320 look at what Japan has done around its industrial strategy, 225 00:12:42.799 --> 00:12:46.399 it has done things through these corretzus right in Koreas, 226 00:12:46.440 --> 00:12:50.320 through the Kybals, and these are major industrial powerhouses that 227 00:12:50.440 --> 00:12:51.360 play both roles. 228 00:12:51.360 --> 00:12:52.200 So you start to. 229 00:12:52.200 --> 00:12:57.399 See conversations around VW taking some of their factories and 230 00:12:57.440 --> 00:13:00.799 turning them into defense facilities. That makes sense. They know 231 00:13:00.840 --> 00:13:03.679 how to manufacture stuff at scale at very low cost. 232 00:13:04.200 --> 00:13:07.120 But if VW starts getting eighty percent of its revenues 233 00:13:07.159 --> 00:13:11.120 from defense, you will see VW becomes sclerotic, which is 234 00:13:11.159 --> 00:13:13.960 what's happened to many of the supply chains in the 235 00:13:14.080 --> 00:13:16.799 United States. And so I just think that people have 236 00:13:16.840 --> 00:13:20.080 to be careful. We have this extraordinary opportunity in front 237 00:13:20.120 --> 00:13:24.039 of us to use technology that have largely been invented 238 00:13:24.039 --> 00:13:27.039 in the West and scale them up in these places. 239 00:13:27.440 --> 00:13:30.240 The other thing I would say is the European experiment, 240 00:13:30.279 --> 00:13:34.240 which is this sort of you know, EU hybrid but 241 00:13:34.320 --> 00:13:37.399 each country sort of runs itself. Has sort of led 242 00:13:37.440 --> 00:13:40.120 to the fact that you don't have this transfer capacity, 243 00:13:40.159 --> 00:13:43.039 for instance, between countries and the transmission grid. It has 244 00:13:43.120 --> 00:13:45.519 led to a lot of these other challenges. But one 245 00:13:45.519 --> 00:13:48.000 of the other opportunities that it presents is there are 246 00:13:48.039 --> 00:13:51.360 many low cost areas of Europe. So whether it's Hungary 247 00:13:51.519 --> 00:13:54.039 or Serbia or some of these other places, you can 248 00:13:54.080 --> 00:13:58.279 manufacture stuff really dirt cheap there even today. So the 249 00:13:58.360 --> 00:14:01.159 question becomes, how do you get the place polytical consensus 250 00:14:01.200 --> 00:14:05.519 across all of these countries to actually manufacture things in 251 00:14:05.559 --> 00:14:09.759 places of low cost in Europe, because right now Europe 252 00:14:09.840 --> 00:14:14.080 really still operates as if France needs to manufacture its 253 00:14:14.080 --> 00:14:16.720 own stuff and Germany needs to manufacture its own stuff, 254 00:14:16.759 --> 00:14:19.799 and other people need to have their own companies that 255 00:14:19.879 --> 00:14:23.480 are dominant in their countries, and that's not really the 256 00:14:23.519 --> 00:14:26.159 lowest cost approach. That's one of the benefits of the 257 00:14:26.240 --> 00:14:28.919 United States is that you don't need a passport to 258 00:14:29.279 --> 00:14:32.559 cross state lines. You have this ability to just do 259 00:14:32.600 --> 00:14:34.559 stuff in Georgia, or do stuff in Florida, or do 260 00:14:34.600 --> 00:14:37.320 stuff in Wyoming. And so one of the big challenges 261 00:14:37.360 --> 00:14:40.519 with the EU experiment in this moment is that they're 262 00:14:40.559 --> 00:14:42.679 going to need to figure out whether this moment is 263 00:14:42.720 --> 00:14:45.919 the time where they tighten up the coordination across all 264 00:14:45.960 --> 00:14:49.440 of the countries or they still operate as a confederation 265 00:14:49.519 --> 00:14:50.679 of independent countries. 266 00:14:51.480 --> 00:14:55.440 Geraud lent, what are Europe's advantages or disadvantages in scaling 267 00:14:55.519 --> 00:14:59.360 up manufacturing, specifically in energy and clean energy? What do 268 00:14:59.399 --> 00:15:00.200 you make of them? 269 00:15:00.480 --> 00:15:03.720 Well, let's maybe talk about the difficulties that we have right, 270 00:15:04.000 --> 00:15:06.240 and then we can talk about the advantages. So the 271 00:15:06.279 --> 00:15:11.519 difficulties that we have are really geopolitical, which is, remember 272 00:15:11.679 --> 00:15:15.879 we outsourced our energy to Russia, We've outsourced our tech 273 00:15:16.279 --> 00:15:22.000 to the US, and we've now exported our industrial technology 274 00:15:22.039 --> 00:15:25.200 base to China. And we're stuck in the middle between 275 00:15:25.279 --> 00:15:28.480 these three nations. That are these three countries that we've 276 00:15:28.480 --> 00:15:31.200 precarious relationships with each of them. And that's the real 277 00:15:31.320 --> 00:15:33.200 big challenge for us going forward is how do we 278 00:15:33.200 --> 00:15:36.519 manage the relationships between these three countries going forward. I 279 00:15:36.519 --> 00:15:38.679 don't know what the answer to that is, but it's 280 00:15:38.679 --> 00:15:41.279 the critical challenge because we don't have the technology. 281 00:15:41.639 --> 00:15:44.559 You know, well ry on Microsoft, Google, etc. Etc. 282 00:15:45.600 --> 00:15:48.679 If you want to talk about electric vehicles for example, sorry, 283 00:15:48.679 --> 00:15:51.120 the best electric vehicles in the world are Chinese. 284 00:15:50.720 --> 00:15:53.480 Are bid without a doubt. That's a challenge for the 285 00:15:53.519 --> 00:15:57.440 automobile industry in Europe. So that's the challenging environment we have. 286 00:15:57.919 --> 00:16:01.480 Now let me talk about the advantages. What we have 287 00:16:02.240 --> 00:16:06.360 is in certain industries we are still we're leaders. So 288 00:16:06.399 --> 00:16:08.600 if you take the case of wind, Vestus is still 289 00:16:08.600 --> 00:16:11.480 the biggest wind turbine manufacturer in the world. We've got 290 00:16:11.639 --> 00:16:15.919 incredible grid companies across Europe, whether it's a Semens or 291 00:16:15.960 --> 00:16:18.759 an ABB or you know, if you want to build 292 00:16:18.799 --> 00:16:22.480 power cables or something like this again, Prismium, all these words. 293 00:16:22.519 --> 00:16:25.000 So we've got great advantages there and I think the 294 00:16:25.080 --> 00:16:27.840 other area that we've got strength is is the whole 295 00:16:27.840 --> 00:16:32.559 area of controls and actually power controls, whether they be 296 00:16:33.120 --> 00:16:36.840 semiconductors or whether they be software. That's the strength that 297 00:16:36.879 --> 00:16:39.720 Europe hasn't so we have to build on that. But 298 00:16:39.799 --> 00:16:42.240 that requires us to change our attitude a little bit 299 00:16:42.279 --> 00:16:45.480 to realize that this and we're not necessarily going to 300 00:16:45.519 --> 00:16:48.000 be the biggest in the world at something, and maybe 301 00:16:48.039 --> 00:16:50.639 we need to partner up with China, maybe we need 302 00:16:50.679 --> 00:16:52.679 to partner up with the US, you know. So there's 303 00:16:52.519 --> 00:16:55.679 a thinking change that's also need in Europe. But we 304 00:16:55.840 --> 00:16:58.960 definitely still have industries in the energy space where we're leading, 305 00:16:59.240 --> 00:17:01.879 and that's the advantag still health we. 306 00:17:01.759 --> 00:17:05.200 Were absolutely amazed when the IRA came out, and this 307 00:17:05.240 --> 00:17:11.559 is really rich people luxury and analyzing the IRA, probably 308 00:17:11.920 --> 00:17:14.599 from your open point of view, fully Persent, made absolutely 309 00:17:14.680 --> 00:17:20.240 no sense because you are so profiligate, which unfortunately we 310 00:17:20.279 --> 00:17:23.200 can't do. And now you're back to reality, and they 311 00:17:23.319 --> 00:17:26.079 going to take all the subsidies, and you know, and 312 00:17:26.119 --> 00:17:28.720 that's it. You know, we're a mature industry. Okay, so 313 00:17:29.759 --> 00:17:32.119 read the band aid and do it in one go 314 00:17:32.400 --> 00:17:34.640 and go with it. And the price of power is 315 00:17:34.640 --> 00:17:36.480 going to go up in the US. It's a very 316 00:17:36.480 --> 00:17:39.559 tough moment. But look, I count on your animal spirit 317 00:17:39.680 --> 00:17:42.200 and you'll get through it. A lot of things are 318 00:17:42.200 --> 00:17:45.920 going to be done by reaction. The advantage we have 319 00:17:46.039 --> 00:17:48.799 compared to the US is much more compact. You know, 320 00:17:48.839 --> 00:17:51.880 everything is two hours flight from where we are, and 321 00:17:52.319 --> 00:17:56.039 you know, people speak different language, but they think the 322 00:17:56.119 --> 00:18:01.039 same way. And when we see Russia, we see your administration, 323 00:18:01.240 --> 00:18:04.079 we see China. I can tell you people understand very 324 00:18:04.079 --> 00:18:08.519 fast whether interest is so we'll moddle through that, not brilliantly, 325 00:18:08.920 --> 00:18:09.839 but we'll get through it. 326 00:18:10.799 --> 00:18:15.440 Catherine, we've talked in multiple episodes, in our most recent 327 00:18:15.440 --> 00:18:18.960 episode with Kim Zoo about how a lot of investors 328 00:18:19.000 --> 00:18:21.119 from around the world and in the US are looking 329 00:18:21.119 --> 00:18:23.680 to Europe. How do you think Europe might benefit from 330 00:18:23.680 --> 00:18:26.519 America's current retrenchment and clean energy. 331 00:18:27.559 --> 00:18:31.000 Well, I don't think anybody in the globe benefits from 332 00:18:31.039 --> 00:18:35.079 retrenchment from clean energy. But I would say that the 333 00:18:35.240 --> 00:18:38.720 US spends thirteen percent of our federal budget on the military, 334 00:18:39.240 --> 00:18:43.200 and that sounds terrifying, except that the military is also 335 00:18:43.279 --> 00:18:46.720 the source of a lot of innovation that has big 336 00:18:46.759 --> 00:18:50.200 impacts on civilians, not just from a military standpoint. So 337 00:18:50.599 --> 00:18:54.000 for example, DARPA, the Defense Advanced Research Projects Agency, of 338 00:18:54.000 --> 00:18:57.839 course famously help inspired ARPA E, which is the Department 339 00:18:57.839 --> 00:19:00.960 of Energy. And that's kind of like startup technologies because 340 00:19:01.000 --> 00:19:03.640 the Department of Defense can take a little more risk, 341 00:19:04.000 --> 00:19:05.880 you know, they can say, you know, we're willing to 342 00:19:05.920 --> 00:19:08.279 try this experiment if it's going to help us somehow 343 00:19:08.599 --> 00:19:10.920 deploy what we need to deploy, and if it has 344 00:19:11.000 --> 00:19:13.640 other benefits, that's great. We also, of course have a 345 00:19:13.680 --> 00:19:16.240 system where the private sector is very very involved, so 346 00:19:16.240 --> 00:19:20.480 it's not like state owned technologies state owned resources. But 347 00:19:20.559 --> 00:19:23.559 the other big piece is the Defense Production Act, and 348 00:19:23.640 --> 00:19:26.920 so this is a fund that does go to private 349 00:19:26.960 --> 00:19:32.160 sector companies based on national defense emergency response essential goals 350 00:19:32.160 --> 00:19:35.119 and services that are declared by any president as being 351 00:19:35.519 --> 00:19:37.839 a crisis. And it doesn't have to be a wartime crisis. 352 00:19:37.839 --> 00:19:39.960 It could be any crisis. So for example, during a 353 00:19:40.000 --> 00:19:42.440 Biden administration, he said, we have a climate crisis, so 354 00:19:42.559 --> 00:19:44.880 how what are we going to fund through the Department 355 00:19:44.920 --> 00:19:50.720 of Defense. So they funded critical minerals, heat pumps, electronics components. 356 00:19:51.359 --> 00:19:56.400 They're still funding like workforce, mining, geological, environmental engineering, metallurgical, 357 00:19:56.440 --> 00:19:58.960 all this workforce that we need because we need so 358 00:19:59.119 --> 00:20:01.559 many critical men les right now no matter what we do. 359 00:20:02.240 --> 00:20:06.079 Fabrics they've done, aluminum battery materials has been a big thing. 360 00:20:06.759 --> 00:20:07.039 Now. 361 00:20:07.200 --> 00:20:10.440 The President Trump now has said our emergency is for 362 00:20:10.559 --> 00:20:14.039 energy supply and infrastructure. Well, that could be mean transmission. 363 00:20:14.039 --> 00:20:16.200 It doesn't necessarily have to mean coal plants. I think 364 00:20:16.200 --> 00:20:18.160 he would like for it to mean coal plants, but 365 00:20:18.319 --> 00:20:22.079 supply chains, et cetera. So we can put our Department 366 00:20:22.119 --> 00:20:25.799 of Defense to work on things that are considered important 367 00:20:25.839 --> 00:20:28.720 from a national security standpoint that are also from an 368 00:20:28.799 --> 00:20:32.400 energy security standpoint, and work our innovation through that. So 369 00:20:32.519 --> 00:20:36.480 we see my companies sees the folks that we work 370 00:20:36.519 --> 00:20:39.799 with that are really always interested in non deluted funding 371 00:20:39.960 --> 00:20:42.960 and programs to the federal government. They see them drying 372 00:20:43.079 --> 00:20:45.640 up on the civilian side in a lot of ways, 373 00:20:45.640 --> 00:20:48.759 but then on the defense side, they see those growing. 374 00:20:49.000 --> 00:20:50.920 And I think that's something to keep in mind. Is 375 00:20:50.960 --> 00:20:53.720 like our Department of Defense does a lot more on 376 00:20:53.799 --> 00:20:58.000 innovation than we necessarily think about when we think about security. 377 00:20:58.640 --> 00:21:01.279 The one thing I would say that the Carlisle piece 378 00:21:01.640 --> 00:21:04.960 focuses on is supply chains, and I feel like that 379 00:21:05.079 --> 00:21:08.680 is something that Europeans never care about, and it's something 380 00:21:08.720 --> 00:21:10.920 that they're going to have to care a lot about. 381 00:21:10.960 --> 00:21:15.480 I'll give you an example. The Europeans love getting solar 382 00:21:15.480 --> 00:21:17.759 panels for nine cents a lot right now from China. 383 00:21:18.400 --> 00:21:22.599 There are so many solar panel manufacturers that can manufacture 384 00:21:22.640 --> 00:21:27.720 in Turkey, in Jordan, in Ethiopia, in India at thirteen 385 00:21:27.839 --> 00:21:30.680 cents a lot instead of nine cents a water that 386 00:21:30.799 --> 00:21:33.920 is more expensive. I get it, But they should want 387 00:21:33.920 --> 00:21:37.319 the diversification of the supply chain for a technology that 388 00:21:37.359 --> 00:21:41.400 they depend on to decarbonize their grid, and I think 389 00:21:41.440 --> 00:21:45.759 that they will need to be very vigilant around not 390 00:21:45.880 --> 00:21:49.400 getting addicted to China. Like it is not good for 391 00:21:49.480 --> 00:21:52.240 them to have eighty percent of their supply chain coming 392 00:21:52.319 --> 00:21:55.920 from one country. It is important for them to strategically 393 00:21:55.960 --> 00:21:59.839 invest in other regions in the world, especially where USAID 394 00:21:59.960 --> 00:22:01.759 is taking a step back out of the United States, 395 00:22:01.799 --> 00:22:05.000 and like the Europeans can play this critical role in 396 00:22:05.079 --> 00:22:08.400 being the off take agreement for other countries building up 397 00:22:08.400 --> 00:22:11.880 their manufacturing base in their countries, and the Europeans have 398 00:22:12.039 --> 00:22:15.000 all of the expertise that they can share with those 399 00:22:15.119 --> 00:22:19.640 countries and help them to industrialize their countries. But I 400 00:22:19.640 --> 00:22:21.839 think we're in this weird spot where the US has 401 00:22:21.880 --> 00:22:24.000