Endgame with Gita Wirjawan - Julio Friedmann: All Climate Solutions Exist, And Yet…

Episode Date: May 5, 2025

We have everything we need to manage climate change: the technology, labour, and capital. What’s lacking is the collective will. Julio Friedmann challenges us to rethink the role of developed nations, the moral compass of money, and the need for inclusive, cooperative frameworks to create an abundant and just future.About Luminary: Dr. Julio Friedmann is one of the world’s leading experts in carbon technologies and clean energy transition. He previously served as Principal Deputy Assistant Secretary for Fossil Energy at the U.S. Department of Energy, overseeing R&D programs in carbon capture and storage (CCS) and CO₂ utilization. Currently, he is the Chief Scientist at Carbon Direct and a senior research scholar at Columbia University.About the Host: Gita Wirjawan is an Indonesian entrepreneur, educator, and Honorary Professor of Politics and International Relations at the School of Politics and International Relations, University of Nottingham. He is also a visiting scholar at The Shorenstein Asia-Pacific Research Center (APARC) at Stanford University (2022—2024) and a fellow at Harvard Kennedy School's Belfer Center for Science and International Affairs.Explore and be part of our community https://endgame.id/Collaborations and partnerships: https://sgpp.me/contactus

We are in the middle of suffering the climate impacts we have already brought on ourselves. So we are all on the clock. Climate change is about time as much as about anything else. I fear increasingly that the heroic narrative from the North is just bankrupt and is not going to deliver anything. I worry that, again, the geopolitical establishment, whether it's in the ivory tower or in think tanks or in government, really sees all of this still as a contest of great powers. I think that's missing something, of course. I very firmly believe that nuclear will play a very large role in the energy transition,

if not the lead role, certainly is starring. I think the lead role is going to be solar. It doesn't matter whether I'm optimistic or pessimistic, the work looks the same. I think we are building a world in which countries collaborate and cooperate more. So it's not U.S. versus Russia. it's a bunch of nations. Working with a bunch of nations, we have everything we need to manage climate and to make a just verdant world, one that is full of abundant, sustainable cheap energy. We have all the tools we need. We do. We have the technologies we need.

Hi, friends. Today we're visited by Julio Friedman, who is the chief scientist at Carbon Direct. Julio, thank you so much. It's such a joy to be here. Thank you. I want to start off with how you grew up, your childhood. It's fascinating. that you took up music at MIT. Why? So I'll give you a somewhat abbreviated version. So I am a child of immigrants. My parents came from Colombia and from Venezuela, but they met in the Catskills in New York. I was born in Detroit. But I really polarized positive to science early on. And I really enter the world today as a scientist. I think of myself as a scientist. But as a child, I love that. I have an older sister,

younger brother, but that was my jam. I was very much into that. I also always played music. From the age of five, I was playing piano. I started composing in my teens, just loved it. So fast forward, I had the good fortune of being accepted to MIT. I went there to study physics. After two weeks, I said, my God, physics sucks. Why would I do that? So I tried a handful of other majors, genetics, biology, urban design, and development. I'd always wanted to be a music minor for all of those. And at one point I just said, I've got this backwards. I want to be a music major instead. This, by the way, is a terrible decision. I don't recommend this to anybody. MIT has great music theory. I don't want to denigrate the program at all, but it's not a great

choice to go to MIT two major in music. And again, my father, who is also a scientist by training, also a musician by training, had good advice. He said, you know what, you're at MIT. Why don't you just visit professors? Just knock on their doors, introduce yourself, say, hey, tell me what you're doing. If you have a professor, take him out to lunch. And I started doing that. I would take faculty out to lunch. They love talking about their work, ceramics or whatever. And I literally walked in to an earth scientist, a professor named John Southerd years ago and said, oh, sorry, Dr. Southerd. Hi, you don't know who I am. My name's Leo Friedman. I was hoping you could tell me a little bit about your work. And he got this huge grin on his face and stood up out of his chair and said, come on to my lab.

I got two projects ready to go. And he basically like brought me on right then. So even though I love playing piano, even though I'm very proud of my compositions and my training at MIT, I ended up pivoting what in bridge you would call a jump shift and went from an undergraduate in music to a masters in geology. Any regrets on dropping music as a major? Not as a major, and I have never dropped music. I've continued to compose. When I was at University of Southern California,

I wrote a film score for a friend, a student, and I wanted to become a conductor to conduct my own pieces. That was how I met my wife. I started sitting in on conducting classes as an auditor. She was in the conducting classes, and she's an orchestra conductor. So that worked out well. I can say with confidence, like I am still playing piano, I am still writing music.

It is very much a part of my life. But Robert Schumann, the composer, said, respectable people do not make love or music for a living. I have sort of agreed with that ultimately. So I make my living a different way, but spent a great deal of time listening to music, performing music. helping music. Keep at it. And let's talk about your part-time job. You know, you gave a beautiful talk at TED. You talked about abundance, cheapness, and sustainability, right? Talk about the abundance part. Yes. So most of us have grown up thinking about energy backwards. Most of us have grown up thinking about energy as a scarce resource that we have to be

very careful with. No aspect of that has proven true. It is the opposite. The surface of the earth has abundant energy all the time. There are other issues with energy that we would like. We would like it to be cheap. That is increasingly important for many people around the world. Energy access requires cheap energy and not just cheap electricity, but you need heat, you need fuels. It has to be cheap. It also needs to be sustainable. We are in the middle of suffering the climate impacts we have already brought on ourselves. Global climate change is real. Predictions made 25, 30 years ago about the consequences have manifested. And we are seeing those impacts, definitely for the worse, definitely globally, and associated costs. So we can't keep doing that

either. And we can't chop down rainforests to make palm oil plantations. That's just a bad idea. So we need energy that is abundant, sustainable, and cheap. And to have a wealthy, vibrant global economy with a high standard of living for 10 billion people, that is 1.5 billion more than we've got on Earth today. So a lot of people, we need roughly 60 kilowatts of energy. And Richard Smalley, the Nobel Prize-winning inventor of nanotubes and buckyballs and these sorts of things, wrote a paper in 2003 in which called the terawatt challenge in which he said, look, for everyone on Earth to live well, we need 60 terawatts. And by well meaning basically U.S. or European standard of living. Today, on the Earth's surface, we as people use 24 terawatts of energy, about 8

terawatts is electricity, but every day the earth receives 163,000 terawatts. Wind energy in the world is 80 terawatts of energy. So if we just harvested the wind, it would be more than enough for all people on Earth. 80,000. 80 terawatts. But that is what the sun turns into wind. We have also learned that we're not running out of fossil fuels. When we were growing up, we were running out of oil.

It was Hubbard's Peak. We were running out of gas. People like Sam Bodman, former Secretary of Energy, said using natural gas for energy is like bathing in champagne. We shouldn't do it. It's so scarce, we should save it for the good stuff, which is petrochemicals. Fast forward, we're in a world where we have cheap, abundant gas many places in Argentina, in Australia. My part of the world. In Indonesia, absolutely.

And of course, the shale revolution has brought gas forward in many, many, many places all of a sudden. And it is now cheap and abundant. It is dirty. We can't keep using it the way we use it. We need to manage the carbon. We need to manage soot and sulfur and other things. But we're not running out of it. It is abundant.

So we need to re-change our institutions, reimagine the world, and say, okay, well, we have abundant energy. It could be sustainable. It could be cheap. how do we make it that way? What investments do we make so that everybody benefits from the abundant energy at the Earth's surface? I didn't even talk, by the way, about nuclear or geothermal or these other abundant sources of energy we have. But what do you think is structural in terms of trying to reconcile that abundance with our requirement to get to 60 terawatt? So we are all on the clock. Climate change is about top.

time as much as about anything else. Right. And so the question is not, can we get there eventually? The question is, can we get there really fast? Yeah, like 2050 or whatever, right? Or whatever. Yeah. And it is also the case that the world population wants a lot more energy quickly.

I give, for example, very high marks to Narendra Modi for championing bringing clean energy to people. He's brought, what, I think, electricity to 600 million people in India or something like that. China has done something similarly. They've bought energy access to huge numbers of people. Like, we're not going to do less of that. We're going to do more of that. I was just in sub-Saharan Africa. My gosh, they need way, way, way more energy of all kinds, electricity fuels, heat. So we have to grow energy rapidly to serve human needs, and at the same time, we need to dramatically, rapidly cut emissions. Conventional project finance doesn't lend itself to either of these things. And it's not a knock on conventional project finance.

It's done great for a very long time, but we have to sort of reimagine the public compact. We have to reimagine the way that money enters. of the world in order to get to abundant sustainable cheap energy. And if we do that well, then in fact, we will also have cheap, clean goods like concrete and steel and apparel and all these other sorts of things. We will also have higher standards of living. We will also have dramatic economic growth. If, however, it is always one bank that is making this decision, they will assess the risks in conventional terms and then say, sorry, we can't do that. You know, you mentioned India, and I'll add to that Indonesia, right?

These two countries are electrified at less than 2,000 kilowatt hour per capita. And if these two large developing economies were to become modern, and I defined that at 6,000 kilowatt hour per capita, it's going to need about more than 100 years each, at the rate India builds about 20,000 megawatts per year, Indonesia, about 3,000 megawatts. That just doesn't seem realistic, right, in terms of how you're trying to reconcile with this abundance and this aspiration to move up the global order, to move up the value chain, to become better. Correct.

Yeah. And this is exactly what I mean about conventional finance. in order to create a new power plant of any kind in any country. Let's say it takes a billion dollars. You call the development banks or you call the JPMorgan Chase

they say, hey, we have a billion dollars. We'd love to give it to you. How do we get our money back? One question and only one question. If we can get our money back, we will give you a billion dollars. To do that, they immediately say, well, what's the existing market?

And if the market is too small, they're like, sorry, we won't give you a billion dollars. And it's not that there couldn't be a market. There's people. There's industrial growth. There's demand. The bank is perfectly happy to wait for those markets to mature before investing. That leads to more suffering. That leads to more climate impacts.

That doesn't help the situation. So the question becomes actually, how do you firm up the markets? and almost always that looks like a commercial offtake. In my TED talk, I pointed to Namibia as one example. It took them a long time to pull together a big commercial offtake for a big hydrogen project. And the commercial offtake was basically European companies and a couple of banks. That's a great project. It's going to be 3,000 megawatts of solar, 3,000 megawatts of wind.

They're going to make 1.8 million tons of ammonia every year. and they're going to ship it to the Port of Rotterdam for use there. That's great. Awesome. That is 10 times too small to help Namibia as a country. So the question is, because you finance 10 times bigger, not without commercial off-takes. Yeah. The banks just won't pay for it, and that's reasonable?

So I'm trying to turn the question on its head. How do you make large commercial off-takes of various kinds? So let's go to a place like Indonesia. Indonesia has solar, as wind, as biomass, as geothermal, as coal, has natural gas, has places to store CO2. So it has abundant energy, could be sustainable, could be cheap. Is there enough demand today in Indonesia? No, nowhere close. So how do you create that demand?

I actually learned this. I'm going to quick shout out to a friend James Mwangi. in Africa, he realized in his home country of Kenya that, what's the right way to say this? That the only pathway to rapid electrification and rapid energy access in Kenya was industrialization, just like everybody else. He's like, if we're going to do it clean, though, we need to make clean steel, we need to make clean aluminum, we need to power data centers, we need to do direct. air capture. We need to make chemicals. We need to do all these things, clean fertilizer,

whatever it is. But that industrialization is a pathway to energy access. It actually creates the infrastructure, which creates the market. So if you were to do something like that in Indonesia, you could go to Kalamantan. It's great natural gas resources there, deep water ports. Hey, great, could you make zero carbon ammonia there? Yes, you could. Combination of hydro solar and gas with CCS. Is there a market for it? There actually is. Singapore is looking at that.

Korea is starting to buy. Japan is already buying, right? Yeah. Could you do one project there? Yeah, but you should really do 10. So how do you get these buyers to increase their ambition? And we're starting to see that kind of architecture come together. I'm actually not that concern with a region with 700 million people in Southeast Asia, with a country such as Indonesia with 280 million people.

The demand is there. It's just hiding, right? It sounds to me that we may have to be a little bit more proactive in terms of creating supply side economics. Right? You create the supply. then the demand will come because these 280 million people or 700 million people in Indonesia and Southeast Asia respectively they're not as busy as they should be right right and I think I think we can get them busier as long as they can get energized no pun intended yeah the first of all I strongly agree with the point that the workforce in

these countries is grossly underutilized, horribly underutilized. I've been so impressed everywhere I've gone with the degree of education, the capability, the entrepreneurship, the drive, the desire to change their circumstances, to make a better world for themselves and their families. The workforce is not a problem, actually. There are nits around that point you could pick, but fundamentally, the workforce is ready to go, right? And if they got paid, they would buy. They would buy electricity. They would buy goods.

And so that's not particularly opaque either. Often the question is really who pays the green premium. So Kalamontan could export dirty fertilizer. It's hard to get those investments to compete with the rest of the world, but to make it clean will simply cost more money. We finally have a real buyer of scale in the market. That's new. I should tell your audience, by the way, I'm not a finance guy.

I only ape this publicly. Like, you're a finance guy. You understand this. So please correct me if what I'm saying is off base. Japan has finally done the climate arithmetic. I'm going to take a step back and explain what that means and then the implications of that in terms of money. Climate arithmetic is hard and it's unforgiving. You have to get to zero fast.

That's climate arithmetic. And if your economy is growing like everybody likes, getting to zero fast is super hard. And if you're a big economy that makes things like Japan, that makes steel, that makes concrete, that make cars, it's really hard to get to zero. Because you have industrial base and you have assets and those assets run and they emit.

And you can't just wave them away to some idealized Jeffersonian ideal of the future where you have happy farmers next to ponds. Like, no, like there are factories in the world they make things and people buy things. That ain't changing either. So if a country like Japan does the climate math, they realize they need to spend a bunch of money.

They also realize they do not have the resources they need in Japan. They don't have oil. They don't have coal. They don't have solar. They don't have wind. They have shut off their nuclear plants. And the offshore wind is harder to develop than they thought, and they're not getting that either, right? They're importing LNG, like it's the opposite of this.

So they look around and say the climate math is hard for us, but we're not just going to impoverish our country. We're not going to do it by suffering. we're going to make everybody rich in Japan. We're going to do it by investing money in a way that creates abundant, sustainable, cheap energy in our context. And that's exactly what they've done. Basically, last February, the Japanese government announced very large plans to do stuff. And in June or July, I can't remember, I think it's July, they announced the creation of the GX League, which is a federation of all the big companies, in Japan, including the banks, including the big conglomerates like Mitsubishi and Mitsui and Sumitomo and so forth and Kawasaki. They have also put on the table a very big bag of cash. They've put a trillion

dollars. For your listeners, they did not put a trillion yen on the table. They put a trillion dollars on the table to be spent over 10 years. And they created a carbon exchange, the GXETS, which is like the European trading system. In doing this, Japan, Inc. is gearing up. They're like, we're going to do this by selling services, like EPC contracting, selling financial services, selling heavy equipment, selling boats, operating boats, buying ports, refurbishing ports. There's all this stuff that Japan knows how to do.

And they're like, we're going to do this. Well, where could they do this? Indonesia. could they then import the clean ammonia? 100% they could. Are they prepared to pay extra money for that? Today they are. And basically Korea is about a year or two behind them,

and Singapore is about five years behind them. And these countries are all doing the climate math. Northern Europe has basically run this same exercise. Germany has put 3.3 trillion, sorry, 3.3 billion euros on the table for carbon capture for their own industries. but they're also looking at the export import banks. How do we finance projects in the rest of the world so we can get abundant, sustainable, cheap energy into Germany?

Denmark is doing the same. Norway and Sweden are doing the same. We are starting to see the world embrace this very difficult but rational choice. And that will lead to investments with, I sincerely hope, very large off-take agreements. And Japan's done this before. They did this for LNG.

30 years ago, they said, we need a bunch of natural gas. Hey, we're going to invest in ports. We're going to invest in projects. We're going to have 25-year off-takes. Yeah. They've reap the benefits for all that. And they are running that same play now.

I get it with respect to the countries that you've mentioned. These are all developed economies, though. Right. Each one of them would have earned at least $13,000 per capita. But 85% of the planet lives on a lot less than $13,000 per capita per year. Inclusive most of Southeast Asian countries, much less sub-Saharan countries, right? So these guys have no issues with respect to moving away from anything that it carbonizes to anything that's renewable, decarbonizing and all that, right?

But the problem, it goes back to your second point of cheap, right? We can only afford about five cents per kilowatt. And then, you know, all those countries that you've mentioned, they could afford very easily 20 cents per kilowatt. How optimistic are you in terms of moving that needle down from 20 to five so that the remaining 85% of the planet will be able to embrace this narrative of sustainability? Right. So let me start by saying one of my favorite things, it doesn't matter whether I'm optimistic or pessimistic, the work looks the same. Yeah, I saw that.

You have good days and bad days too. And we have good days and bad days. Also true, right? So some days I'm like, we're going to do this. And other days I'm like, gosh, gosh, it's just harder than I thought. We certainly can develop geothermal power in Indonesia for less than five cents kilowatt hours. That, however, requires another handful of things. One of them it requires is it requires lower capital costs. One of the challenges the Global South faces is just elevated capital costs. I would encourage your listeners to look up a name Avonash Persaud. And he has sort of crunched the numbers.

He's basically said, yeah, there is some elevated currency risk in developing nations. but they are unfairly taxed based on perception of risk, not real risk. And when you look at developed countries, there's plenty of risk there too, and that's not priced in, right? So I believe that the increased numeracy around this topic will help, and it'll make it easier for countries in the global south to have lower capital costs. That's only part of it. They also need demand. And what I was trying to tell a story to your audience here is that the demand, I think, will start in the global north. Yeah.

But it won't end there. The real demand is in the global south. Because that's where the people are. India is going to be the world's most populous nation. Oh, already is. Already is. Right. And the second most populous nation, China, not a surprise to anybody.

Most people are surprised when I talk about the third most populous nation in a couple of years. That's Nigeria. Yeah. 2040, Nigeria is projected to have 420 million people. That is a whole lot more than the United States. A whole lot more. That is latent demand. That is also an awesome workforce.

And they are sitting on a treasure trove of natural resource and infrastructure that has not been marshaled. So clever people are going to figure this out. And those clever people will, in part from me, come from the global north, but mostly not. Mostly the clever people will come from Brazil and Uruguay. They will come from countries like Namibia and Angola and Nigeria and Kenya and Tanzania. They will come from countries like Malaysia and Vietnam and Laos and Indonesia and Pakistan. There are so many smart people who want to do interesting things.

And the smarts will come in two different ways, if I may. one of them is technical innovation. I've been very impressed with the degree of technical innovation in a country like India brings to the world. My favorite example, paper microscopes. They invented paper microscopes. Yeah, the lenses aren't made out of paper, but everything else is. That means that you can have microscopes kind of everywhere for real cheap, right?

They also invented very low-cost cataract surgery and on and on. They also invented the number zero. Yes, that was useful. It turns out. They are currently innovating around AI and simulation in an astonishing way. But they are driven by the fact that it has to be a lot cheaper than it is today. And that impetus is equal everywhere in the world. So many countries, so many people are like, we have to make it cheap.

We have to make it cheap. How can we make it cheap? This comes to the second degree of innovation. It's not just technical innovation, it's business model innovation and financial structure innovation. I've been very impressed with this. Again, India was a groundbreaking here with Grameen Banks, which have gone a long way. Bangladesh, right? I'm sorry, Bangladesh.

Yes. Apologies. But microfinancing unlocked human capital and real capital in very real ways. The kind of financial innovations that Avonash Prasot is bringing into the world, things like the pause clause have helped. And for those of you who are unaware of what that means, the pause clause seems obvious in retrospect, but took us all of human history to invent.

That was sort of instantiated last year. So I guess all of human history minus one year was the pause clause. What it basically said is, hey, if you're hit by a natural disaster, like a hurricane in Honduras or an earthquake in Turkey, or whatever it is, we're going to pause your debt finances for a couple of years. So while you're rebuilding, you don't have to pay back the debt as well. And whoever's your lender will make it up in the out years.

So if instead of paying for two years of debt, you end up paying for 2.1 years of debt, but you pay for it like in 2045 as opposed to now, right? The pause clause is an incredible financial innovation. It will greatly reduce human suffering. Why did it take so long to figure this out? Well, maybe because the finance minister from Hydros wasn't in the Bretton Woods meetings. Like we need to sort of have more access to these kinds of discussions. As the countries like India are building companies like Tata and Adani and Reliance Industries Limited and InfoS, global players with global reach,

these ideas are beginning to enter the world. And the same thing is true in Southeast Asia, in Latin America and sub-Saharan Africa. These real titans of industry are starting to bring this innovative spirit to business model, to finance, to entrepreneurship, to human capital development, as well as technical innovation.

Are you worried that stuff like climate change, which is something that requires long-termism, that it's not shackled by the fact that politicians or policymakers around the world are more worried about political cycles of four or five years as a result of which, you know, there's so much short-termism here. And the issues that need to be remedied are actually requiring long-termism that they don't reconcile. Yeah, I certainly do worry about that. And I grieve the losses that short-termism brings us. I am not sort of catastrophically worried about it. There's a couple of reasons why one of them, technical findings don't go away. It's not like short-term politics

are going to erase the realities and go away. And arithmetic is a powerful tool. The arithmetic doesn't change either, right? And the longer you wait, the harder it gets. A couple of years ago to do the energy transition the world needed to invest $4 trillion a year in clean energy, at the time it was investing about $1.3 trillion. Well, we had a major milestone this year. We reached over $2 trillion of investment in energy transition solutions, substantially more than conventional energy. Hey, that's great.

Problem is we waited too long, so now we need $6 trillion. So it is still the case that we need to triple the amount of money that's going in, even though we've made all this progress, even though the costs have come down like, it It's always hard. Am I worried about the short-term politics? I am, but not, again, catastrophically worried. We are going to see cycles around all these things. What I am worried about is how do we really keep the companies that have the most at stake doing stuff?

when the politics threaten corporate gains, for example, when Texas bans ESG funds or something like that, I worry about how that, like, the consequences of that kind of thinking. If a country like China suddenly froze certain kinds of investments for political reason and the companies couldn't do what they wanted, that will lose money, will lose time and speed. But all of these investments are 30-year investments. You build a power line, you build a power plant, you build a refinery or a Haberbosch plant or a steel mill. That asset lives a long time. And to get your money back, it has to run for 30 years. So the people who are putting money into these transitions need it to be stable for that long. You need to be profitable for that long.

That's the opportunity as well. because once the banks and the companies are saying, well, hey, we need that to make money for us, they work with decision makers, they work with policy makers to enable positive outcomes. And in the United States, that looks like the bipartisan infrastructure law and the IRA. In Japan, that looks like the GX League.

In China, it looks like Belt and Road. There are these things that sort of continue to prompt virtuous spending of money towards human benefit and climate benefit. How should a layperson interpret the decision by Trump to pull out of the pairs of court? Is I going to rattle scientific pursuit for climate change? No, it won't. Let me say he did this before. Consequences were effectively zero.

Right? So there's enough moving inertia. You know, that he announced that in 2016. It is nine years later, right? More money has been committed. More companies are committed. More countries are legislated to do more. So it's not like it will automatically unravel.

I also don't want to undersell the importance of that decision and the potential downside. For starters, the United States is the largest economy, second biggest emitter. And it will have knock on effects that people don't automatically understand. So, for example, how will this affect our aviation commitments to the UN under the International Civil Aviation Organization, ICAO? Will we still honor that treaty? How will that work? Pulling out of the Paris Agreement is not pulling out of the United Nations Framework Convention on climate change. We are still obliged for a lot of things under that.

Trump is considering that, that would be much more damaging. For me, the question is, does another nation or two join him? If a country like Argentina decides to pull out of the Paris Accord, eh, not so worried. If a country like Russia decides to pull out of the Paris Accord, that is more worrying. if a country like China does, that is very worried. And so we'll have to see sort of how that pulls together. But in the near term, I don't think it will prove material.

One of the things we have begun to see already is what people are calling green hushing. Green hushing means the companies keep doing the same stuff they're doing. They just don't talk about it. They don't post it on social media. But they still make the investments they make in abundant, sustainable, cheap energy. That looks distorted to an outside observer, but it is the same business as before. The same investments happen. I do not think we are going to see a retreat from $2.1 trillion, quite the opposite.

We're going to continue to see growth. That growth was never as fast as it needed to be. It might be slower following Trump's withdrawal, but the ratchet goes one way. Yeah. I want to go back to the pulse on the developing economies, right? Such as Southeast Asia. Indonesia's signed what was called the JetP.

Yes. You know, a little over two years ago at the G20 meeting in Bali. in November of 2022 for about $20 billion, right? I think the risks of the United States pulling out of that is not small. That will represent a portion of the $20 billion, right?

But I can tell you that until today, there's not a whole lot of grandinality right on JetP, right? So it just strikes me that the rhetoric is somewhat elitist. It doesn't get executed the way we would have liked. Well, 100%, I agree with it. And I want to take this to the next level, right? Southeast Asia needs $2 trillion if it needs to go to 6,000 kilowatt hour per capita,

with the exception of Singapore and Brunei. They're at 9,500. But all the rest are way below 6,000 Malaysia 5,000 Indonesia below 2,000 or all the rest are below 2,000 or 1 hour per capita. We're not getting that kind of money. We don't have that kind of money. So it takes us to that realism, right? As much as the rhetoric is so loud and clear about the commitments, you know, in terms of putting money on the table for sustainability purposes. but it's not happening. Right.

Right. So I think you make very good points here. So let's start with a little bit with JetP. Yeah. I personally didn't care for it much. I applauded Secretary Kerry's innovative spirit and trying to get something going. The sensibility behind it, and I think the moral implication and impetus behind, it was the right one, but I think the mechanism was born broken.

The idea that you can crowdsource shutting down cold plants through the voluntary carbon market never made sense. We actually want to shut these down, but give us the alternatives. That's affordable. Precisely. It is also the case that a lot of these kinds of agreements like JetP were debt relief, which is not the same thing as actual money. So again, that's kind of not great to say, hey, I know that you owed us billions of dollars.

Now you owe us a couple of billion less. That doesn't actually allow Indonesia to build in a constructive positive way. And the loss and damage fund is not a great way to go about this either, really. The sums are too small. The points are sort of misplaced. So how do you get two trillion dollars to Indonesia? not through that. And again, those kinds of mechanisms

are arguably elitist. They're certainly self-serving for the North. A fair question for nations in the global South broadly and nations like Indonesia specifically is, will the money really come? Yeah. And where will it come from?

I fear increasingly that the sort of heroic narrative from the North is just bankrupt and is not going to deliver anything. So the question is, where's the money going to come from? I've been impressed by a couple of things that I think look different. I've mentioned things like the Japanese and Korean markets, like that's its own thing. I've also been impressed by South-South investment. So I was quite pleased, for example, to see Indonesia and Egypt cut a deal. associated with a whole bunch of

hydrogen and green fertilizer production. That was, I think, $8 billion of investment or something like that, but it's a lot of money. November last year. Yeah, but that was from India to Egypt. Yeah. Because even if Norway doesn't see the investment opportunity in Egypt, India did, right?

And I think that's a, real opportunity. We're going to start seeing some of that. And we're going to start seeing nations like Abu Dhabi and the Emirates, nations like Saudi Arabia and Oman and Qatar, which have a lot of money, which see the global South opportunity, they can marshal for real. There are worries about a nation like Indonesia falling into a debt trap around such things. I'm not worried about that. Oh, great. We're fiscal relatively healthier, much healthier than we would have been 20, 25 years ago and others in Southeast Asia.

But I'm sorry, but just quickly, like instead of something like JetP, a company like First Abu Dhabi Bank or Aramco could just buy all those coal fire power plants, shut them down and repower them with gas. Like immediately. Absolutely. And that would be output for their product. It would be substantially less emission. and it would be energy rich. Whether or not that pencils out to be determined, but Muhammad bin Salman could just do that.

I also look at a place like India and say, you know, to electrify the vehicle fleet, we did a calculation at this at Columbia University. Our estimate was it was something like $4 billion to do like all the two- and three-wheel vehicles. vehicle charging infrastructure. That's nothing. Tiny.

Any one of the sovereigns could do that. For one.5 billion people. Yeah. Any one of the sovereigns could build that charging infrastructure and make money on it. I don't know why it hasn't happened, but maybe my math is wrong. I'm prepared to be wrong. Like, not an expert on everything, but, you know, somebody should snap up that opportunity because it's not that much money and it would help human misery a lot.

It would help climb it a lot. Right. I think that the client. narrative or a climate change narrative is going to work much better when private money is in play. And private money is in play or will be in play when the affordability reconciles with what's being procured. At the moment, that gap is just way too high. This is five cents. This is 15 to 20 cents per kilowatt.

When this thing comes down to anywhere within that neighborhood, oh boy. I mean, and I'm optimistic about this in a sense that, you know, there's massive liquidity within the G7 countries. Yes. That needs to be reallocated. Capital needs to be reallocated for diversification purpose and all that. It's just not moving. And this, I think, takes us to what you alluded to earlier. I think we can be optimistic, but we should also be pessimistic about anything that's multilateralized, anything that's governmentalized.

I think that's correct. I would say we should be optimistic, but we show. to be clear-eyed. Yeah. Multilateralism is not going to deliver this, really. It is also the case that if you look at sort of G7 financial constructs as you laid them out, there's a lot of money just sitting on the sidelines. Huge amounts of capital, just waiting.

I cannot tell you how many times I received a call that said, Julio, I got lots of money. please bring me a perfect de-risk project and I'll put in all the money I need. There you go. And then I say, could you give me like $3 million to shore that up? And they're like, oh, no, no, no, we don't do that. They do billions or hundreds of billions. Right. But thing one, like, who could finance a pipeline to mature some of these projects to investment grade?

Like, that is not what the G7 does, but they could. That is a structural question. And the risk capital associated with that is small. It is risky, but it's small. I mean, if you take a look at the asset under management by all the transnational investment firms, we're talking about something in excess of $70 trillion. Right. That needs to be reallocated somewhere. As long as the IRR makes sense.

And the IRR will only make sense if the purchasing power of that particular. country matches what the technology is being procured at. At the moment, it's not. It's a wave-off. The other thing you can do is you can bundle projects together. And this is what I was saying, when you do sort of individual project finance, it's a very high hurdle. And it's really hard to make happen. I had a conversation with a Danish investment fund about a year and a half ago in which they said, we are only going to invest in developing countries and we're going to take that risk on, but we're going to dilute that risk by doing 22 different kinds of projects in a bunch of different places. And we're going to do some wind and some solar and some battery

and some fuel and cookstove's hydrogen unit. We're going to have lots of different kinds of things. And what they learned from that was that some of their assets really overperformed. The iconic example is Lake Turkana, in which they were expecting a certain return. They got way more than that because the wind was better than they thought. And the asset overperformed. Also, Kenya was a stable government. They were able to get their money out. So they weren't able to do that with all the countries they invested in.

Getting the money out turned out to be challenging here and there. But they built a portfolio that was risk-adjusted and they invested in lots of projects. that's another way to think about this. And you need to sort of, if you're a bank, if you're looking at these things one at a time, like, well, is this project pencil out? Does this project pencil out? The answer will be no too often.

Is there a smart way to reimagine that risk? And since I'm not a finance guy, I don't know what a smart way means. I can say that was word, but I don't really know what that means. But the bank should take this on as a real challenge. Absolutely. because they are not investing their resources well.

They are sitting on the sidelines. And they are prepared to dump $300 billion into OpenAI, which is every bit as risky as everything else, you know? And I understand why they're doing that. But perhaps, perhaps there's another way to think about that investment. You know, if you charge your BYD in Beijing, they'll charge you five cents per kilowatt. You take your Tesla to Brian Street here to the supercharger.

It will charge you 48 to 58 cents per kilowatt hour. It just tells me that China as a developed economy, things like a developing economy. And that strikes me as something that's caused for optimism. And I think whatever climate change issues we have will only be resolved when everybody can start thinking more. as a developing economy as opposed to a developed economy. So first of all, I agree with that. In my visits to projects in developing countries around the world, I have always been struck by how innovative the teams on the ground are

and how cheap they are able to make things, that they will deliver a solution that is a quarter of the price, or less even than what you might get out of Switzerland or out of Japan, right? And they just think differently. They're like, we don't have that, so we have to do it differently. And they really innovate hard, but come up with cheaper solutions. And those cheaper solutions then have new markets that are not the global north,

but doesn't have to be. There's plenty of other markets in the world. That is true. I would also say that China and Japan are sort of opposite sides of the same coin in that they have internalized the lesson I've been talking about. They do not do individual project financing. China and Japan both think about China, Inc. And Japan, Inc.

When they come up with these plans, right? So it's part of the reason why China continues to burn coal. People in the ivory towers keep saying, like, they're stupid. Like, they should just be doing renewables because renewables are cheaper than coal. Only if you look at it in an individual project finance basis. If you look at it an economy-wide basis, that's not true. Because China employs coal miners. They have a whole coal ecosystem.

They pay the railroads to do this. The power plants do more than just generate electricity for a price. They serve industries that the rest of the world pays for. So they think about these things in an integrated sense. And because of that, China will make decisions that to an individual, project finance basis don't make sense, but an economy-wide basis do. And maybe that's the way a developing country thinks about it. They do continue to develop rapidly.

But also, they have a different investment thesis as a nation. They're like, we got to keep making stuff because growth is our legacy. Japan kind of does something very similar. The electricity tariffs there are bonkers high because they don't have the natural resources a place like China has. China has abundant solar and wind, has abundant coal. Japan has none of those things, right? China's building nuclear power plants. Japan is not. But they take the same investment thesis. They say, we're not going to get rich when, you know, JXNepon invests into one project. we're going to invest in lots of projects

provided that those investments use Japanese technologies, Japanese EPC contractors, Japanese debt, you know, that Japanese ships to move the goods around. They wire the rest of their economy into an investment and that allows them to get rich as a nation, even if the one project doesn't pencil out,

it doesn't matter. Everybody else is doing great. And so they have a way of ingesting money and socializing money and building a social contract and working together that is collaborative, that is distinct. And I think that those kinds of models should stand of models for the rest of the world. And if you're in India, you're seeing that, right? You know, we produce a lot of coal in Indonesia, Sepetunumous.

And every year we sell more coal to China and India each. Yes. And last year, to my recollection, I think we sold more than 200 million tons of coal to China. And China, to my recollection, I think they built about 43,000 megawatts worth of coal-fired power generation capabilities, 13 times the amount that Indonesia built in terms of coal-fired. Yeah. Now, I want to get to two things, right? The spirit of the global south to help reduce the 54 gigatons of carbon emission. every year, but also to usher this new narrative called the AI narrative.

Why is China that's investing so much in renewables still buying a lot of coal? Is it, you think, mainly because they want to attain supremacy and AI, which requires a lot of energy, or is it something else? So I think that these are largely decoupled, but not fully decoupled. Okay. One of the interesting outcomes of the deep seek hype lately was the recognition that China was able to train a large language model with much less energy. Less money, less energy. Yes.

But on the order of like a hundred times less energy, way less energy. Again, innovation from an innovative part of the world. that doesn't translate automatically into a whole lot less compute because training a model is not the same thing as tasking the large language model or the compute associated with the jobs. As a result, Nvidia stock is back up again. What is true is that dominance in computation of all kind, especially in AI, simply requires a lot of energy right now. So anybody, anywhere, is getting energy right now. You can fault China for building more coal plants.

To be fair, like their industrial base still grows, their internal demand still grows, their economy still grows. They need the energy. They have invested way more than any other country on Earth in not only innovating in renewable energy, but building renewable energy. And the same thing for nuclear. But their emissions continue to grow because they just need electricity.

They just need energy, not just for power, but for heavy industry, steel, chemicals, all these things. They use coal because they don't have natural gas. The United States is kind of doing this in a slightly different way. We have gas. So we are suddenly seeing a massive ramp up in gas. Only about a quarter of that's associated with AI by the. way, in data centers. And by the way, data centers, only a fraction, maybe 40% goes to AI, but the rest of it goes to other data center stuff, 5G networks, you know, web searches,

these other sorts of things. So people have sort of misrepresented these numbers in absolute terms. But in the United States, what we're building is cheap natural gas, power plants of all kinds, aeroderivative turbines, natural gas combined cycle, very large Peaker, small peaker, who's building natural gas, and we are extending the life of coal plants that we're going to shut down. So the United States is used in coal, too. And that's being driven in part by this near-term surge, which I think is real. I also don't think that's permanent. InVIDIA's new chip uses 25 times less electricity than the old chip. They may, that may yield 30 times more compute, which means energy demand will grow. But I mean, we're innovating at such an incredible pace on all these things.

it is premature to decide that these things are locked in, right? But I do think what China's purchase of coal, continued purchase, imports of coal represent is this fundamental point that energy demand grows. Energy demand grows always, kind of everywhere. There are very few examples in the world where the energy efficiency gains have outstripped the demand growth. And in the United States, we had a good run of that for a long time. But hey, if we're going to electrify everything, we need more electricity. We are onshoreing manufacturing, like electrification, unshuring manufacturing, that is 75% of the demand

growth in the United States. It's not all AI, right? We need to do the numbers. We need to be numerate, we need to use arithmetic to sort this stuff. And I bridle a bit when anybody starts saying, well, it's just AI. It's like the numbers don't reflect that. And you end up in the wrong place when you make those conclusions. Does it sound like coal is going to be around for the next few decades? Let's be clear, we are going to peak coal soon globally. That's, is true. Peak coal is upon us. I think when people say, well, peak in 2027, or it is already peaked. If you count it this way, I'm like, eh, no, we've, we've been down this road before. Like, I think that pronouncement is premature. We're probably going to peak coal globally by 2030.

I think that's pretty likely. And part of the reason why is because we're getting better at producing and selling natural. Is that going to taper off? That's the hard part. Peking coal. is not the same thing as rapid reduction of coal. It kind of sounds like peak oil, though. Right. You know, oil has not really tapered off. It's still a hundred million barrels per day. Right.

And it may be for a long time. Even if EVs penetrate very rapidly, which they're kind of in parts of the world and kind of not in other parts of the world. Yeah. There's still going to be demand for petrochemicals that's quite real. That is not going away. jet fuel is not going away. Heavy-duty trucks,

still a challenge. In Europe, less of a challenge because the hall is smaller. I think we will see medium and large heavy-duty trucks in Europe go all batteries and pretty fast. China, the trucks go a long distance. The United States, the trucks go a long distance. The batteries haven't quite caught up with that no matter how cheap they are. One of the facts that is hard to shake is that a long-rength. haul vehicle fully electrified with batteries, you lose 40% of the cargo space. That didn't help much.

Yeah. But that's going to reduce to overtime, right? Maybe. Right now the weight is also a real problem. Just the mass of those batteries is tearing up tires, adding particulates, damaging the roads. Like, those costs haven't been fully internalized either, right? But let's say that even all the heavy-duty trucks get there and soonish, soonish, maybe 2035, 2040. I think, it's very possible, right? Will that lead to precipitate decrease in oil demand? Substantial decrease, yes. Precipity? No. Complete? No. And the same thing's going to happen with coal. There will be in some places rather steep coal declines. The UK has shut down its last coal plant forever. They're not going back. The United States will retire the coal plants that are going to retire.

China will slowly start winding its way off of coal. But those new plants in China, in India, in Indonesia, in Vietnam, those have a long capital life. They're going to wrong for a long time. And no one's going to shut down those plants without a substitute and a bunch of money. But you've made the point earlier that they don't necessarily emit much less carbon. Right. The new generation coal mines, I mean, coal plants. Well, the new generation coal plants still emit a lot of carbon.

If you want to reduce their emissions, repower them with gas, repower them with geothermal and batteries and solar. That would actually reduce those emissions. Or you could just capture the emissions and store that. If you're in a country like Indonesia, that's a very low priority. You're not going to spend the money and the energy to capture CO2 in a coal plant. You're just not. Someone else has to pay for that.

JetP could have done that but didn't right so we have to get real about the arithmetic and them you've alluded to the fact that coal is one of the highest

density, right, energy but nuclear is the highest I kind of like nuclear because it's scalable its highest density what's the prospect of that getting you know, commercialized.

Right. More massively. I very firmly believe that nuclear will play a very large role in the energy transition. If not the lead role, certainly a starring role. I think the lead role is going to be solar. But it's going to play a starring role in this movie. The big challenge with nuclear is not what most people think it is. It is not public acceptance.

It is not waste. If you're in Indonesia, public acceptance isn't the issue. If you're in Abu Dhabi, public acceptance is not the issue. Nor is waste. Dry cask storage works. It's good for 150 years. We got a lot of, you know, freeway. We got a lot of ramp on the waste issue.

And there's many technologies to manage the waste, which we could develop if we were serious about it. The real issue is cost. And only one country has really cracked the code on cost, really. And that's Korea. Korea's cracked the code on cost of nuclear. And they figured it out for real, I don't know, 12, 15 years ago. And they basically said, we're going to make one design and we're going to do all the engineering up front.

And we're not going to build any plant anywhere until 90% of the engineering is done. that is very different from like size well in the UK in which the engineering was not done or the oriva plant in Finland where the engineer they started construction 10% 50% into it and suddenly they had engineering challenges which lead to delays and cost overruns and all these things right so when we're still building these things one at a time like Santa's toy shop that's not a great way to build nuclear power right um so korea figured this out and they built an enterprise to do it. The challenge that Korea has faced since then is their national politics,

in which there was a corruption scandal associated with nuclear power. And they exited the president. And the new president came in and said, we're going to shut down everything nuclear. And then was found corrupt in a different way and was kicked out. And a new president came in and said, nuclear is back on, boys. Like, that's also not a way to run a railroad.

We need constancy and consistency. but something that I thought speaks exactly to what you talked about. Now the UAE wants to export nuclear power production because they bought nuclear power plants from Korea and the prices came in reasonably. How much was it? It's about 4.4 cents per kilowatt hour. No kidding. Yeah. That's like the price of these things.

That resonates to many of us in the global south. Correct. I should restate that. That's the cost. Not the price necessarily, but that's the cost. The cost is 4.4 cents, but that's within shooting distance, right? And UAE is like, hey, we know something about nuclear now. We care about nonproliferation.

We do not want a world to wash with fissionable materials. So we will go through the one, two, three agreement. We will do everything that needs to be said. But, hey, we're open for business now. And we're not Russia. And we're not China. Not the US either. Like, we have a slightly different understanding of these things.

If they can start bringing small modular reactors to market or AP 1000 equivalents to market, that starts to look like a pretty different business model. And will it be born at 4.4 cents? No. But can that be useful for a country like Indonesia? Well, Singapore is already talking about SMRs. Right. Right.

I mean, these are modularized at what, 10, 20 megawks? wants each. Right. Suitable for data centers. Suitable for stuff like that. I think the time to market for some of those solutions is longer than people think. I will be happy to be proven wrong. If we can start getting SMRs really shipped around the world in the substantial scale in five years,

I will be wrong and gladly so. I think it's going to look more like 10 years. That's fine. We can wait 10 years. Correct. time does not end in 2035. It is also the case that if we have an uptick in fossil fuel consumption for data centers and AI that lasts five years, A, we can capture that CO2.

And if it's done in the United States, you better capture that CO2. If it's done in Germany, it better capture that CO2. If it's done in China, it should capture that CO2. But if it's done in Sri Lanka, no. Like, no one should expect that. But conversely, if we have small modular reactors for real in 10 years, or if we just have large reactors at a reasonable price that are banked by sovereign wealth, like the Korean government's prepared to back that loan, if the Emirates government or the Saudi government is prepared

to back that loan, that is a change in the financial model as much as in the technical innovation. And that unlocks opportunities. Doesn't it make more sense now the way to geopolitics is going, right? At the rate that China and the U.S. are becoming more decoupled.

Regions like Southeast Asia with 700 million people for a trillion dollar economy they need to have option value without which I think they could be more vulnerable to any one of the two. I agreed. with that, I worry that, again, the geopolitical establishment, whether it's in the ivory tower or in

think tanks or in governments, really sees all of this still as a contest of great powers. I think that's missing something important. I agree. I think we are seeing the emergence of a multipolar world. Yeah. Well, it's already become multipolar. Right. But people think that the polls are three and only three.

Like, eh, wrong. More than that, actually. I keep coming back to the Gulf states. That is a very interesting emerging poll that has resource, intellect, money, and not just resource in terms of oil and gas. They have leadership. They have leadership. They have a young workforce. They have solar and wind resources and mineral resources.

Why can't Saudi Arabia make green steel? They totally can. They become a major player in the global steel market if they just decide to. And that kind of boils down to does Mohammed bin Salman think that's a good idea or not. What is true is his new city, Niam, is already the largest consumer of steel outside of China. So why not? All the cranes are moving from China to Saudi Arabia. Correct.

But the same thing in Southeast Asia. Southeast Asia is emerging as its own sort of geostrategic point. whole for a lot of reasons. Part of it's the resource base, part of it's the money, part of it's the 700 million people who are there. Some of it's the Straits of Malacca. Some of that's other geopolitical sort of opportunities and benefits there. Some of it's a willingness to work together. I think we are building a world in which countries collaborate and cooperate more. So it's not U.S. versus Russia, it's a bunch of nations, working with a bunch of nations, competing with a bunch of nations.

We're not great storytellers, and we need to tell our stories a little bit better. I think we've been at the periphery of global consciousness for a little too long. We need to show ourselves a little bit better. But I'm not over-promising, but under-promising, but getting real, getting realistic about stuff. I want to switch to CCS. You're known famously as the Carbon Rangler. Explain that. Right.

So I encourage your viewers to go to my LinkedIn publications. I've written the origin story of the Carbon Rangler there. The short way of telling this story is I was at an event adjacent to COP 22 in Marrakesh. It was an event called the Dew Fest pulled together by Lorraine Powell and the Emerson Collective. And it was a countergambit, actually, to the Trump administration's election. They basically said, we don't need governments to do this. There's a lot we can do all on our own. Private industry, civil society can do a lot.

And I had an epiphany there. And I went running up to the organizer, a friend named Andy Karsner, who lives nearby here, and said, Andy, Andy, I know what I am. I'm a carbon wrangler. And he just started laughing. The job of a Wrangler is to take something that's in the wrong place and put it in the right place. People like carbon just fine when it's in food. We add CO2 to our beer.

That's not a problem, right? So it's not, the problem is not carbon per se. There's just too much of it in the wrong place. The carbon wrangler takes carbon that's in the wrong place and puts it in the right place. There's a couple of places that qualifies the right place. Some people want to put it back into soil. That'd be good. We have lost something on the order of 600 billion tons of carbon from soil, CO2 equivalent numbers.

We should put that back. We should put a bunch of carbon into soils. We have way too much soil in the carbon in the air and oceans. We should take it out of the oceans because that's not a good place for it either. But we could put it into biomass. We're still deforesting. chopping down trees. Maybe we should reverse that, put it into trees. However, really, where we need to put the carbon is in the geology. It is in the subsurface. And I am a card-carrying geoscientist.

I stand by that pronouncement. I will die on that hill. We pulled the carbon out of the ground. That's where it should go. Most of the carbon needs to go back in the deep subsurface. And we know how to put it there. Conventional storage, like back in the St. Land aquifers or oil and gas fields, we could put 10 to 20 trillion tons of CO2 into that. Right now, everything we have emitted over human history is about two and a half trillion tons, less, actually, 2.2 trillion tons. So we got five to ten times the capacity.

That's about 2,200 gigatons? Yeah. Yeah. most of which is still in the air and oceans. Let's get it out of there. But instead of emitting it today, we could unamit it. We could just take what we're emitting and stop doing that. What's our rate of capture on a yearly basis?

So right now we're capturing on the ballpark of 60 million tons a year. We need that to be, according to the Intergovernmental Panel on Climate Change, we need that to be a lot more. something like 4 to 7 billion tons a year. So factor of 100 scale up. Is that hard? Yes. It is very hard. Is it the climate math?

Yes, it's also required. And it's required for stuff that's hard to electrify. For fuel production, for aviation, for fertilizer, for steel mills, and most importantly for cement and concrete. The recipe for cement today is you add heat and you get byproduct CO2. 60 or so percent of the emissions from cement production are just the recipe. It's not fossil fuel use, it's just making the cement. And we use 30 billion tons of concrete a year.

That is also increasing. That's not going out of style. So we need carbon capture at point sources for heavy industry and for a bunch of the coal plants that we've built and a bunch of the gas plants that we've built. That, by the way, is not business as usual. That's the opposite of business as usual. Business as usual is continuing emitting. This is not emitting.

On top of that, we know we have to remove 5 to 10 billion tons a year from the air and oceans too. And is that easy? No. Who's going to pay for it? We're working on that. 5 billion tons a year. That's a 10th of how much we're emitting a year, right? Yeah, so global emissions today

are about 57 billion tons of greenhouse gas equivalent. Yeah. Right? So let's call that 42 billion tons of CO2 plus the other stuff. So yeah. And part of the reason why that number keeps coming up,

five to ten billion, that is what the scientists of the world have clocked as the irreducible fraction. Nice. By I say irreducible fraction, I mean we either have no solution for it, like using fertilizer. Fertilizer grows half the food in the world.

We're going to keep doing that. Could we use less? Yeah, but we're not going to use zero. Using fertilizer emits nitrous oxides. We have not innovated our way out of that problem. Things that are super expensive to mitigate things like ape airplanes. The real cost for decarbonizing aviation is between $803,000 a ton. That's just a lot of money. We can do it much cheaper than that through things like biomass with CCS or direct air capture or mineralization or

biochar or any of these durable removals. So instead of spending way too much money to a debt to counter aviation emissions, we can be smart and spend less money. When you add all that stuff up, you get 5 to 10 billion tons a year. What's our current rate of capture per year now? 60 million. Wow. A lot less than 5 billion.

Yeah. We're off by a factor of 100, basically. Now, from an investing standpoint, is it worth more money in capture or renewables? All of these things are basically subsidized. So what you're actually asking is what's the policy design? So if you look at the United States, for a very long time, the policies did not support carbon capture at a sufficient level. So we did, none of it.

All carbon capture was subsidized by enhanced oil recovery because that was the only revenue stream. Renewables started with the production tax credit wind in 1992, the investment tax credit for solar in 2005, renewable mandates in the form of renewable portfolio standards in many states. So it didn't matter what the price was. You had to pay for it. So the question is not, is it too expensive? The question, is it financible? Is it a different question? And is it financeable in Europe?

Well, the energy vendor was paying originally the equivalent of $560 a ton. They could have done CCS for that, but they didn't. They subsidized wind and solar. That was because they wanted a wind and solar industry. They wanted to lean the world. They had a philosophy, but they just left a lot of money on the table there. There were other reasons. I'm simplifying the story.

Right. But that was excluded from. from their policy design. Now it's not. Now the German government was like, oops, we're late to the party, but yeah, we need to do carbon capture too. And all of our solar and wind investments have not created a domestic industry and we're still falling short of our climate targets. So we're just going to have to do more. The same things happened in the UK, in Denmark, and Japan has come around to that. and they are now incentivizing CCS. China has begun to do CCS.

Here, that is being done chiefly as a response to the European border adjustments. The carbon border adjustment is driving those investments in China. It is not to reduce their emissions. It is to meet a European Union. Do you see that as more of an anti-China?

Posture? Seabam. So, kind of. First, let me say that I want to stick a pin on the other point. These are all policy design questions. So right now the Trump administration may unravel aspects of 48, I'm sorry, 45X, right?

The renewable production credits. They may undercut aspects of that. Europe may double down on that as a consequence. Right. But basically, you are actually choosing winners and losers. This is not technology agnostic design of policy. If these things were done just on the carbon avoided or the carbon abated, we would a very different kind of structure. To date, there isn't a place anywhere in the world that quite

does that. So can you make money doing carbon capture? If the incentives are right, yes, you can. You asked a different question a moment ago, is the carbon border adjustment anti-China? Yeah. First and foremost, it is pro- Europe. It is meant to- That's a more diplomatic way of saying it. Well, it's not, that is not just diplomatic. They're worried about offshoring jobs. They are worried about manufacturing leaving Europe. So the carbon border

adjustment is an attempt to shore up domestic manufacturing. Second of all, it is pointedly designed not just counter China, but also counter Russia. So when they said we're going to design a threshold for

steel production, that's going to be the carbon border adjustment. That threshold was meant to include the U.S. and Canada and Europe and exclude China, India, and Russia. Yeah. Right. And so I wouldn't say it was deliberately anti-China, but I wouldn't say they like that aspect of it.

The fact that it disadvantages Chinese production. You mentioned steel, right? They impose that on Indonesia also. But knowing Indonesia, I mean, it's still consumed steel at a rate of a lot less than 100 kilograms per capita per year. Yes. Rule of thumb is, for any nation to be modern, needs to be consuming at least 500 kilograms. We're not likely to be an exporter of steel to places like Europe or anywhere.

Right. Why is the imposition upon us then? Right. So this was a poorly recognized consequence of the C-BAM, actually. Again, when you think of it as a struggle of great powers, you're like, this is how we position ourselves as a great power and maintain our ascendancy, and this is how we smite the other great power. And then India was like, hello?

Hello? Right behind India. Hello. You know, exactly. You're not alone. There's like a long list of countries because they're like, the consequence for us as we suffer, that's it. If you're in South Africa, the CBM just makes you suffer. The price for everything goes up.

Fertilizer goes up so food costs go up. If you're in Egypt, same thing. If you're in Indonesia, same thing. It's just fertilizer, the costs go up. That's the consequence of the CBM. And they're like, we are importing this stuff. We're not even manufacturing it, but the costs are going to go up for us. Thanks, Europe.

Yeah, it will hurt Chinese production, but it'll really hurt Indian production. And in part, India's partial response to this will be, well, where are there other markets? Maybe we shouldn't really be selling to Europe. There will still be global increase in price because of this. But maybe we should be looking at other markets. instead of a European market. That will lose jobs in India. That will save jobs in Europe,

but it will accelerate this multi-nodal world, actually. It will accidentally create groups of nations working together that become their own trade blocks. And I don't think it's been thought through very deeply. That's a separate conversation about the Europeans. But I want to come to something that you mentioned before we turned on the microphones here, which is around spirituality, which is around moral positioning. Climate change must, must be a team sport, right? It's the only way that everybody wins.

It's the only way. It's a team sport. And one of the things you learn playing team sports is you don't have to like all of your teammates to play with them, but you got to play with them. Right. And you don't have to like, say, using a American football analogy, you don't need to like tight ends to realize that you have to have a tight end, right? You don't have to like a running back to know that you need a running back. I guess in the actual football analogy, you don't have to like goalies. You don't have to like strikers to realize that you need these people on the team. Right. So, We need to figure out how to cooperate together as a world much more aggressively. And I don't mean to imply that that means we will not compete. We absolutely will compete strategically, viciously, economically for every dollar through trade. That is not going away either.

But while we're competing on some fronts, we also have to figure out how to cooperate and work together. So as important as the G7 is and as important as the G20 is, my eyes on the G77. What are they going to do? 77 nations, that's a big number. It represents a lot of people. It represents a lot of economy, right? I am interested in the bricks as a actual enterprise. Brazil, Russia, India, China, and South Africa.

Well, now, you know, a few more countries have joined, including Indonesia. And, you know, Indonesia's joint, other countries are joining, but what does that actually look like? I think it's a continuation of the expression of not just interest, but revisionism. Yes. Right. With respect to the pre-existing order. And this is part of the characteristics of a much more multilateral, multi-polar old order. and you're right, the 77 countries, they have a say.

Not each one of them would have to have a seat at the table, but I think this revisionism is going to be inevitable for the next five to ten years. Right. And we've seen the U.S. for all of its richness and all of its resource and its people and its wealth doesn't always marshal and pull in the right direction. Just doesn't always do that. And I can say that about the left or the right. I can say that about Democrats or Republicans.

We don't always pull in the right direction, right? That limits us. Chinese is the same. China is a brittle system. Right now, the risks to their economy from debt, the growing nationalism are very real. those are risks to the whole enterprise. And the real estate bubble could really undermine an awful lot of what China hopes to achieve for itself as a nation.

The same thing is true for other Western nations. Europe, the Draghi report really shook up the gumball machine over there. And he said a lot of things that people didn't want to hear but are grounded in terms. truth in numbers, right? And Europe is scrambling to try to figure out how to remain relevant, how to remain powerful and impactful. It wasn't that long ago that the Dutch were global leaders in so many things. You can say it out again. And now they're like, huh, how do we remain relevant? Like, the Netherlands, like, we're a small, homogeneous country with some wealth and some ships and some ports. How do we really remain globally,

relevant. It's a good question. But we're going to see blocks like the Middle East or the MENA region, perhaps writ large, like, holy cow, what an incredible base of resource and human capital and wealth. Are they going to create a Eurozone equivalent? Probably not. No. But could they marshal and collaborate together in a new way in a way that brings a new sense of mission to those nations and the people in them. Absolutely they could. And I worry that we do not think enough about how to help each other while we're competing. Ultimately, we are going to have to come together. We are going to have to partner in new ways. I made a case recently for a Green New Deal. I'm sorry, not a Green New Deal, a Green Marshall Plan. Okay.

Apologies for that. A green Marshall Plan. If the U.S. had a strategic countergambit to the Belt and Road, it could look like that. The Marshall Plan was a complicated thing. In some cases, it was incredible generosity to the world in which we said, we are going to give you the equivalent of now about $180 billion in today's money. Trillions.

To shore up collapsing democracies. Oh, 180 billion in today's money. That was like $13 billion at the time. There was $130,000. Hey, like $180 billion in foreign aid? Like, who's doing that? Like, nobody. But in fact, the money didn't go to other countries. It went to U.S. companies that gave goods to other countries.

So we didn't give money to France to buy a tractor. We gave a U.S. company money to build a tractor and give it to France. They also had to rebuild the balance sheets in their bank. For every good they received, they had to make a deposit in their bank, so they short up their financial resources. Also, it was a very clever strategic countergambit against Soviet Russia and the Soviet Union. It was meant to be geopolitical and Keynesian and generous at the same time. That was its genius.

Hasn't really been replicated since, but the Belt and Road is kind of close. Well, sorry, just to finish that, if the United States did something like that in sub-Saharan Africa and Southeast Asia and Latin America, if they're like, we're going to give a bunch of money to U.S. companies to bring you green solutions, that would be generous. It would be geopolitically strategic. Yeah. And it would be generous. I'm with you.

But at the rate that we're witnessing so much political neuroses in so many countries, it's just not likely to happen. No. And, you know, recognizing that there's tremendous tremendously, much more liquidity in the G7 countries than there would have been in China. And I can talk about the Belt and Road. The Belt and Road was announced in 2013. For Southeast Asia, it would have been for about $740 billion.

The realization is only $72, $73 billion. It tells me that there is a structural capital exportation limitations from China, which China and that may have some bearing on the limited liquidity and then this this goes to the conscious dual circulation economic philosophy right where they have wanted to further domesticate their economic activities meaning they're not too interested in exporting capital they want to focus on their domestic economy whereas the u.s and the west i think they're sitting on top a lot of liquidity yes make it work.

Right. So as a nation, we decided not to do that. It was on the table for this year, but it's not on the table anymore. And so it goes, right? That doesn't make it a bad idea, but it makes it unactionable today. As much as I love a green marshal plan, as much as I've been plumping for it for the better part of 12 years, it is at best a dream deferred and the

liquidity is the core of the issue actually. And again, this gets to the question of like, where is there money in the world? Look around, there's money in the Middle East. Yeah. So could they bring that liquidity to a solution set

that looks like this? To some extent they could. Yeah. But I think they would rather get their act together for themselves. And there's enough leadership. There's enough cohesiveness, I mean, barring certain countries out there. But I think you're right. I think it's likely to happen much more vividly in that part of the world. And, you know, people think about these things so simplistically.

We just saw radical realignment in the Middle East in Syria. Yeah. astonishing, unexpected. Within days. Within days. The implications of that are not yet understood across the MENA region. We are looking perhaps, I don't want to make a pronouncement, we are looking perhaps at the collapse of Iran.

What are the geopolitical implications for that? I have no real understanding of it. I'm not a scholar of those things. But one could imagine that if Syria and Iran, change their geopolitical stance in one year, what are the implications for that across the Gulf states where so much resource today is marshal towards a Shia-Sunni split towards supporting groups like Hezbollah or Hamas. If that money was going into other kinds of investment.

Yeah, like climate change. My gosh. Not even necessarily climate change. Think about green development. Yeah. Right? Yeah. Making clean goods.

Yeah. Some of that could be made in those states everywhere from Morocco to Turkey to Oman, but some of that could be made in East Africa. Yeah. As well. In Ethiopia, in Kenya, in Tanzania. Yeah. Which have the ports, the resources,

resources human capital and natural resources in form of energy minerals. Like, all they needs the money. So there's a lot more to do. do here. And I encourage your audience, not to be optimistic, but to be creative when they think about the work of climate and energy transition. There are opportunities right in front of us that are unrealized and it won't necessarily take much to activate them. Hulie, you've mentioned before that carbon capture has been around since the 30s. Yes. I was shocked. Explain that. Why would the world not know about this?

Again, the reason it was invented was for industrial applications. The first carbon capture design was patented in 1930. The first carbon capture plant was built in 1938, right? Out of Norse Kedro, actually, it was a Norwegian company that built the first project. It's been used to do things like Makeurea, which is a fertilizer. In countries like Sri Lanka, it's used by Coca-Cola. They actually will burn bunker fuel, capture the CO2 at like 500 bucks a ton

and use it to carbonate their beverages because shipping CO2 to Sri Lanka is impossible. So like the reason why people didn't know about this is we didn't need to know about it. I see. When people started thinking seriously about climate change, and I would really say that in like 1998, when enough people started thinking seriously about climate change. climate change. They're like, what are the things we can do? They laid out the menu of options. And it included correctly, solar, wind, efficiency, biomass, hydrogen, and carbon capture and nuclear. Like, they were all on the table back then. Everybody knew it. And when it was efficiency,

it was building efficiency and vehicle efficiency and all kinds of industrial efficiency. Like, all these things were recognized and sketched correctly. Back then. And so by the time that 2001 rolled around, the IPCC's regular reports laid out the work pretty darn clearly. And carbon capture was one of the important options said then. Okay? Fast forward to 2018, 2018 was the point the world started getting serious about it. The Paris Accord was a couple of years old at that point.

So a bunch of nations said, we're going to do a weight loss club. We're going to be serious about climate change. We're going to make our own commitments for our own goods. The IPCC put out a report that said net zero is the only path, and we're way off base. We basically already failed. So we're going to have to do not just point source capture, but CO2 removal at an enormous scale. In 2018, they said between 100 billion and a trillion tons of CO2 by the end of the century. That number has just gone up.

Right. Right. So even then it was known. But you couldn't get paid. There was no way to get paid by this. I will also say that carbon capture has a narrative problem because it doesn't actually make stuff. Nuclear makes stuff makes clean electricity. Solar makes stuff.

Makes clean electricity, right? Even if you look at these new industrial pathways like molten oxide electrolysis for metal making or something like that, it makes something. super expensive. It's kind of crazy. E-fuels. It turns biomass or you turn CO2 from the sky into jet fuel. Hey, awesome. Like you're making something. Carbon management doesn't make anything. What about mangroves? What about peatland? Those are restoring nature and there's not enough volume in that. You can restore peatlands, but the total potential for mangroves is like 100 million tons. We're off by a factor of a thousand, right? So,

You should do it because you get benefits to people and you do improve ecosystems and you do store carbon. Like those are good things to do. And in fact, where's the best place in the world to do mangrove projects? Southeast Asia. Very much we're seeing Japan investing in mangrove projects in Indonesia, in the Philippines, in Malaysia. Like, that's smart. Is that? Not enough of scale.

No. Yeah. Because as I said before, you can put some carbon into biomass, but we really got to to put it in the subsurface, right? And so that's just the arithmetic, guys. You can like it or hate it. That's the math. So, yeah, we should do all those things, but it's not enough. So we have to do carbon capture now because we are not on track. And it was always known as an option, but it was not taken seriously. And it was not taken seriously because you couldn't finance it. Those were policy design decisions. I'll say that again. In 2006, Unglomerical could have bit hard on

carbon capture, but didn't. And there were good reasons why. I'm not blaming Angela Merkel, hugely valuable, important politician. At the time, she was grappling with how do we reunify Germany. That was a very big task. Germany spent $2 trillion doing that. The primary focus was efficiency. East Germany was grossly insufficient and dirty. So efficiency gains delivered immediately lead to her economy. And she's originally from East Germany. She was originally from East Germany. Carbon capture was not her priority at the time.

They were trying to build new industries. They were trying to build a solar panel industry, a wind industry, so they're like, let's invest in solar and wind. They did not imagine creating a carbon capture industry. They could have, but they didn't. But we are where we are. The technology has existed for a long time. Was it commercial?

Yes. Was it scaled? No. Why? You couldn't get paid. You need to pay. people to clean up trash. Money matters.

Money matters. And the way that we clean up trash in most advanced economies is you require it. Right. Like waste management, the company, waste management has been Fortune 10 for a very long time. But it's built on a mandate by the government that says you can't throw trash in the street. You have to. And you get hygiene from that. you get, you know, human health benefits.

It's pleasant. It doesn't smell. You don't have vermin. Like, there's other reasons why you do it. But at the end of the day, you pay for trash collection. Something the world should be thinking about is CO2 utilities that do the same job. We have sewage utilities. We have trash collection utilities.

We could have CO2 utilities that is paid by the government to gather and store these things. If we had that, it would be invisible. It would be paid for and it would be done. Is Indonesia going to do that anytime soon? Certainly not. No. I hope not because Indonesia has better things to do with its money. Absolutely.

Should that be done across North America and Europe? 100%. It should be done today. And in places like Japan, should they pay to do that in other countries? Yes. Well, yeah, it's almost two hours. You've got to go. Any final messages on carbon?

I want people to realize that I wake up every morning happy. And it's not because I am demented. It's just I'm optimistic. We have everything we need to manage climate and to make a just verdant world, one that is full of abundant, sustainable cheap energy. We have all the tools we need. We do. We have the technologies we need.

Carbon capture was invented in the 30s. Solar was invented in the 50s. Wind was invented hundreds of years before that. nuclear was invented in the 30s. We have it all. We have all the technologies we need, including CO2 removal. We now have the technologies to do that at enormous scale. So we have the tech. We have the workforce, for the most part. Do we need more people doing more things? Yes, we need more electricians. We need more welders. We need more scientists. We need more communicators. But we have the workforce, really, and especially in the global south, we have the workforce. Do we have enough money? Yes.

to go from $2 trillion a year of clean tech investment to $6 trillion a year in a world that has a $100 trillion economy, we can do that. We can triple that investment. So we have the tech,

we have the people, we have the money. The scarcest resource here is the goodwill. Yeah. And so I wake up every day happy that we have all the things we need, but I wonder, I worry,

how do we build the goodwill, how do we build the genera, How do we build the cooperation? How do we build the collective story that we need to make the world the way that we want it? So again, I have good days and bad days, but I'm happy most days. My glass is 75% full because we have three quarters of what we need in abundance. Your theory about carbon wrangling could apply to money. Money is just focused on one location.

It needs to be relocated or reallocate it. Right. And money exists. Money exists not to make more money. Money exists to serve the human condition. Right. Right. Should we be putting more of it into the human condition in smart ways? Yes. Should that money get a return? Almost always. Yes. But I think the money people should ask themselves a question, are we trying to make a living or are we trying to make a killing? Sometimes, like it's nice to make a fortune, but we could also just be making a living for a lot of people. And if we're making a living for everybody, then everyone's happy and everyone has money to spend. I have a friend Lee Stein. I'm going to end on this note. Lee Stein is one of the most remarkable people you will ever meet. Among other things, has helped get multi-gold, multi-platinum albums out there, has an innovator himself, a lawyer, an investor, a philanthropist. He has put a lot of his recent money. into health care and medicine.

One of the things he realized is that with AI, COVID unlocked an opportunity. That because we were all locked down, we did all these things by phone. Now the apps on our phone are actually human health resources like we've never seen before. Anyways, Lee asked me a question point blank. He said, you know how you make a billion dollars? I said, no, I do not. How do you make a billion dollars?

He said, help a billion people. make a dollar off each, so you'll make a billion. Right. Like if you reimagine fortunes that way, it shifts your opportunity set. The people in sub-Saharan Africa who brought wireless phones to people were that kind of genius. The people who are bringing globalized health care to people through their phones are that kind of genius. We should be bringing that kind of genius to the energy transition as well. and I see enough things that keep me optimistic,

keep me positive, but I wake up happy every day. I'm with you, man. Thank you so much. That was Julio Friedman from Carbon Direct. Thank you. This is Endgame.