How China is the Big Winner in the Energy Transition

Irina Slav International Author writing about energy, mining, and geopolitical issues. BulgariaDavid Blackmon Principal at DB Energy Advisors, energy author, and podcast host.Principal at DB Energy Advisors, energy author, and podcast host.Tammy NemethEnergy Consulting SpecialistStuart TurleyPresident, and CEO, Sandstone Group, Podcast Host

David Blackmon [00:00:08] Well, hello, everybody. Welcome to the Energy Realities podcast. I’m your host for the week, David Blackmon. With me today is the gang of four, as always, Dr. Stu Turley. You are a magician with with all the links and videos for our podcast today. And and no doubt a conspiracy theory or two, I hope, Irina Slav in Bulgaria. The wittiest energy writer working today anywhere. How are you today?

Irina Slav [00:00:41] Thank you. I’m great. Thank you.

David Blackmon [00:00:43] So good. It’s great to see you and Stu. It’s great to see you, too. I’m sorry I didn’t welcome you. How do you doing?

Stuart Turley [00:00:50] I’m doing fabulous, David. I’m enjoying your misery today. So that’s.

David Blackmon [00:00:54] It’s pretty busy. It’s always miserable. And I’m the host. I’m sorry, folks. And, of course, rounding out the gang of four is Dr. Tammy Nemeth, a real doctor, Tammy Nemeth from Canada, the UK, and parts unknown. How are you today?

Tammy Nemeth [00:01:11] I’m doing good, thank you. How are you all doing?

David Blackmon [00:01:15] Man, it’s just beautiful day in Texas. I tell you what, my Dodgers made it to the World Series last night. I’m just, you know, like a pig in slop today. This week’s this week’s topic for the Energy Realities Transition podcast is something it’s a topic we’ve touched on repeatedly since we began this podcast, what, two and a half years ago, almost like running up on three years ago now. And that is how the energy transition as it is currently being conducted and constructed is a recipe for for the rest of the world to end up subservient to China for its energy security and energy needs. China is truly winning in every aspect of this energy transition, and I think it’s becoming increasingly clear as time goes on. And Stu, I think I just interrupted you, so I’m going to turn to you for the first comment.

Stuart Turley [00:02:12] I don’t think you interrupted me. I was laughing because I just was like, yeah, China, China is winning the whole thing here. In fact, with all the research that’s going on, I have how the energy transition is going on in about a 15 second clip. Also, let’s take a look at this. This is how.

Video Speaker 1 [00:02:33] We are now.

Stuart Turley [00:02:33] This is the energy transition in action.

Video Speaker 1 [00:02:36] And see what everybody around the shop is up to. Let’s go check it out.

David Blackmon [00:02:40] There we go.

Tammy Nemeth [00:02:43] My gosh.

David Blackmon [00:02:45] Okay. That’s so, so dangerous looking it.

Stuart Turley [00:02:48] She put it out there. So I have to do it when we sit back and take a look. David, you have all the energy policies that came out of with Trump and putting in the tariffs and now tariffs are a bad thing. When they left, the tariffs in the Biden administration left the tariffs in. So you have the de-industrialization going on of the UK, Germany, New York, New Jersey, California, anybody putting in the renewable energy agenda instead of energy, all types of energy, then you have the political ization in alignment. David We had Governor Greasy hair. Newsom just signed that bill. And what happened last week, we had Conoco Phillips close the refinery, bookmark this podcast because we will see California importing gasoline and diesel from the increased refineries in China. That is not good for the global environment. So the energy transition is being nothing more than a wealth transfer. How’s that so far that I’m

David Blackmon [00:04:17] Irina What do you think? Is China really winning or there’s all in our imagination.

Irina Slav [00:04:22] It’s not. China is winning. And I’ve been thinking about this topic today. And I think the big mistake of the West is that when they started outsourcing everything to China, they thought nothing will ever change. China will just keep on making. Things equipment, components, products more cheaply than they could be made in Europe and North America. And it would never you know, it would never be smart enough to turn this to its advantage. Which was a massive a huge mistake. Assuming that the Chinese are, you know, some different species that would not put two and two together. And so this is it. And I apologize if I’m offending anyone’s feelings, but this is a glaring example of why the so-called global cells, in which I include Bulgaria, doesn’t really like the West because there’s this sense of aloofness of the people from the West looking down on the rest of the world. How is it going now with China? These people do not study history.

David Blackmon [00:05:44] Yeah.

Tammy Nemeth [00:05:44] Yeah. Yeah.

Irina Slav [00:05:46] Yeah. So, yes. China winning Everyone depends on China. The the pro transition research firms are starting to say out loud. What was in Wood Mackenzie that said no China, no transition. I think, was with Mackenzie. Yep.

David Blackmon [00:06:03] Yeah, I think so. Yeah.

Irina Slav [00:06:04] Yeah. And just because now go. The European Union and the US and Canada are trying to build their own supply chains from scratch. So delusional. They all are. You can do this in five years. China has been doing it over decades. Not without the massive help of that saying. West That depends on China to manufacture a lot of stuff more cheaply.

Tammy Nemeth [00:06:34] And they’re doing it with cheaper energy.

David Blackmon [00:06:37] Cheaper and cheaper.

Irina Slav [00:06:39] Than doing it with cheaper energy. This was not a problem 20 years ago, and now it’s it’s a problem.

Tammy Nemeth [00:06:46] Yeah.

Irina Slav [00:06:47] If it’s happening anywhere. But in China, nobody’s saying anything about solar panels produced in China because, you know, you can have a transition with solar panels produced in Europe because they’re prohibitively expensive.

David Blackmon [00:07:02] Right. Right.

Tammy Nemeth [00:07:04] where would they get all those components from anyway? So if it’s it’s not just that they’re manufacturing them, they control the supply chain of all of it. So if you have the rare earth minerals, the the silicon, the all of these different elements are controlled by China. So even if Europe and the United States and Canada and the West as we know it, wants to take up that that production itself, it would still be dependent upon China for that supply.

Irina Slav [00:07:34] Exactly. They are supply chains.

Tammy Nemeth [00:07:37] Exactly. So I would like to just show a couple of slides here I put together because I think some people will be like, where are you getting all this information from? So I’m going to add this one. So first of all, China has decided to build BYD, which is is the car company. They’re building its first manufacturing assembly plant in Hungary, and they’re calling this a vehicle bridgehead so that they will assemble these Chinese vehicles in Europe to bypass some of these tariffs. But the thing is, it’s an assembly plant, which therefore means that it’s highly likely the materials and all of the different the components of putting together these vehicles are actually still all made in China. They’re just being assembled in the European Union.

David Blackmon [00:08:32] Can I make a quick point about that? This is exactly the same strategy China is doing Bhiwadi and other Chinese companies are doing in Mexico building exactly the same kind of plant in Mexico. Yeah. To to be able to import their cars into the United States market and avoid all the tariffs anyway. Go ahead.

Stuart Turley [00:08:52] Right.

Tammy Nemeth [00:08:52] But, you know.

Stuart Turley [00:08:53] And Joanna brings up a great point. Sorry, we’re all big piling on your great comment.

Tammy Nemeth [00:08:58] Okay.

David Blackmon [00:08:58] That’s a good. Yeah. Even the factories here Chinese don’t. Yes.

Tammy Nemeth [00:09:01] Right. And so to be fair. Automobile assemblies have been. They they make their components all over the world and then they assemble them in factories, whether it’s in the United States or Canada, for example, with Canada, they would import parts of it from Mexico, parts from Europe, parts from America, and then they would assemble them all in a Canadian plant or an American plant or whatever. But I think what’s different in this case is that they will all be solely sourced from China. It’s not like it’s being spread around the world or something like that. All the different components. It is just all from China. And so then my second slide is about the battery electric car trade in Europe. So in 2023, 20, almost 22% of the battery electric vehicles sold in the European Union were made by China. Seven almost 8% of it were actually made were from Chinese manufacturers like like BYD or whatever. But the remaining percentage, almost 22%, were they might be BMW or VW or whatever that are actually made in China and then exported to the EU with the with the mark or label of a European manufacturer, even though it’s actually made in China or by China. So I thought those stats were really interesting. It comes from Eurostat. So they’re projecting that for 2024, 25% of European Union battery electric vehicles will be made by China, which is like a quarter of the market. That’s insane.

Stuart Turley [00:10:57] And then in places are 50% to 60% less than other manufactured around the world. EVs cannot compete if they use anybody else’s batteries.

Tammy Nemeth [00:11:15] Exactly. Exactly. So which is why, you know, they’re they’re kind of dishing on Trump to talking about tariffs. But the EU has just put on significant tariffs to Chinese electric vehicles, as has Canada. I think Canada’s like 200% or I don’t know. Some ridiculous.

Stuart Turley [00:11:35] So for you. But not for us so and so. And. Yeah, and.

Tammy Nemeth [00:11:40] Yeah, exactly. And so then this brings me to the third one, which is China, the main partner for imports of solar panels and liquid biofuels. So here they. Eurostat has put together some great stats where it talks about the percentage of wind turbines manufactured in China and then exported to the EU, though those numbers are a bit lower. I think it’s something like 30% or 40% or something like that. The solar panels are incredibly significant. It’s like 90% of the solar panels installed in Europe are made in China. And then we have liquid biofuels, which is actually interesting, where the EU actually imports a lot of or the European Union imports a lot of biofuels from China. So China then, as you can see for this transition, which is dependent on wind and solar and electric vehicles, China’s leading the way. And it really undermines the economic and energy security of the West by depending so much upon China And these things, as are both Iryna and Stu and David have said.

Stuart Turley [00:13:04] You know, Tammy, on October 13th, the story went out, quote, Anger at UK’s bonkers plan to reach net zero by importing fuel biofuel from North Korea. And then we had stories of pellets being shipped from the Northeast, Canada and the US to.

David Blackmon [00:13:28] The southeastern United States.

Stuart Turley [00:13:31] what is going on with the green policies of absolute horrific environmental damage to the in the name of green. It does not make sense to me.

David Blackmon [00:13:46] Now, we have to be clear that the climate zealots, the climate alarmist community, even though it’s mostly the same people, they’re not environmentalists, as we have traditionally understood. Yeah, environmentalist. They’re all in favor of killing endangered species, whales, birds, whatever with wind turbines. As long as it’s in pursuit of lowering carbon emissions, they’re all in favor of polluting the hell out of everything cutting down for us as long as it’s with real pollution, particulate matter, socks and NOx, whatever. They don’t care about that anymore. They care about. They have this obsession with plant food in the atmosphere and it is literally a religious exercise now. Well, and even though so even though these these are the same people, the same organization, Sierra Club. I mean, Peta, where’s Peta talking about the wind offshore wind killing all the whales and millions of birds every year. Peta says nothing about that because it’s in pursuit of this craziness, this mania to reduce the amount of plant food in the atmosphere, which is really in geologic time at near all time lows. And so, yeah, it’s it’s crazy. What brought me to this topic this week was a story out of Germany, and I think it illustrates the related story out of England too related to in Germany teaching group to have this plan to convert one of its steel plants which is, you know, this huge industrial company in Germany, a big part of their industry for a long time, going to convert one of their steel, making factories from using coal to reach the 2900 degrees you have to to get to in the end, the plants, what are they call them? I can’t even remember what they call them now. But anyway, they were going to convert from cold hydrogen and of course it was going to be green hydrogen generated only with wind and solar. And there’s a big article this past week about, well, they’re having to delay that plan. Probably won’t ever do it because it’s too expensive. And it’s like nobody could have seen that coming, right? I mean, how could they not know it was going to be more expensive to try to try to run a steel plant with green hydrogen than it is with coal. It’s just it’s insane. It’s literally an insane business plant in in Great Britain. What is British Steel, I guess had a plan to convert to using. What were they going to use? It wasn’t hard. Eugene, Tammy, what was it they were going to do? But their plan to remember what they were going to do now.

Stuart Turley [00:16:40] Whoa, whoa, whoa, whoa. This is a question Tammy doesn’t know. Excuse me. The president. This is the first time I Wow and had coffee yet this morning it was in the UK.

Tammy Nemeth [00:16:51] They wanted to use the electric arc furnace. Right. Because when you say that it wasn’t about hydrogen, it was this electric arc furnace. And I would just like to clarify that at some point British Steel was bought by China.

David Blackmon [00:17:04] Yeah, right. And so it’s basically. Yeah, I mean, it’s already a Chinese company, right? Yeah. But the point is this, and the point I was trying to get around to is this We have these Western countries with, you know, pursuing this mania to reduce carbon dioxide in the atmosphere in their own countries so that they can meet their, quote, net zero goals that they’ve committed to under the Paris Accord and with the U.N. and the World Economic Forum. But what are they doing? Are they really cutting global carbon dioxide? No, All they’re doing is transferring the emissions to China because we still need steel. We have to have steel. So it’s going to get made somewhere. China doesn’t have a problem making steel, right? So what’s going to happen? Every steel plant we close in the United States or in Europe or anywhere else in the Western world is going to be a commensurate increase in coal making capacity in China alone with the emissions that go with that. And this is.

Tammy Nemeth [00:18:06] they’re going to have to pay for it. They’re going to have to pay for it in the European Union with the Russian border adjustment mechanism.

Irina Slav [00:18:13] That’s going to work. Yeah. Yeah, that’s.

Tammy Nemeth [00:18:16] Steel, concrete, iron, aluminum. And there was two other things that are included initially with their carbon border adjustment mechanism. So but I mean, what will China say? We’re getting all of our electricity for that steel plant from that solar array over there or that wind array over there. Right. Because how are they going to verify? Are they going to know?

David Blackmon [00:18:43] There’s no way.

Tammy Nemeth [00:18:44] And the Chinese government? I don’t think so.

Stuart Turley [00:18:45] Well, no.

David Blackmon [00:18:46] There’s no way. And to be clear, China is building more solar and wind than anybody else. Right. So there there’s plenty of that for them to point to. Yeah.

Irina Slav [00:18:55] And also building more nuclear and coal.

David Blackmon [00:18:58] Yes.

Irina Slav [00:18:58] Anyone? Right. You know what’s interesting, I just saw this story is some some politicians are kind of waking up. Good morning, Robert.

David Blackmon [00:19:06] Good morning, Robert.

Irina Slav [00:19:08] The energy ministers of Cambodia and New Zealand just warned there’s there’s an energy conference going on in Singapore, I think, right now. And they’re warned that the transition may cause political problems because of its cost. And they tried to do that. And it might be time to start thinking about this instead of blindly following Paris agreement targets or whatever. Maybe stop and think whether it’s going to be at least relatively affordable for the people who vote for governments suggesting that.

David Blackmon [00:19:48] Well, you know, that that’s just one more thing nobody could have possibly seen coming, right?

Irina Slav [00:19:53] Absolutely. Yeah. It’s a shocker. Yeah.

Tammy Nemeth [00:19:57] And David, in what you were talking about, British Steel, their delay in the electric arc furnace conversion. It’s delayed until 2032. Yes, I know. Someone mentioned Tata Steel. That’s where they’re trying to convert that coal. That coal furnace, which has already been shut down to be electric arc as well. And they’re I think they’re looking at 20, 28, 2029. So it’s it’s basically closed until they can get the the new furnace up and running.

David Blackmon [00:20:31] Yeah. And we’ll get to 2026 or 2027, they’ll delay that to 2032 and it’ll just keep getting delayed and it’ll never happen because, because the grid is not going to have the generation capacity to accommodate their needs, especially with all the data center needs popping up now. EV Charging, assuming we continue to convert TVs and for people in the U.S., you need to be aware. Back to the EV question in China and the thing about building the plant in Mexico, I just want to clarify one point about that. We have this trade agreement, the US, Canada, Mexico trade agreement. And so it it provides an exemption from any tariffs we put directly on China for any automobiles that are actually assembled in Mexico or in Canada. They’re going to be exempt from the tariffs to get into the U.S. market unless changes are made. And that’s what the all the contra. Mercy back in April was about when Donald Trump said there was going to be a bloodbath in the movie industry if he’s not elected.

Stuart Turley [00:21:39] But he has also said that he is renegotiating that because at the he put in that original kind thing, saying that he can renegotiate it in six years and it is about to be canned. So, you know, as we vote in the next few weeks for the United States, we have to vote your heart. And if you vote for the man cooking French fries, I’d say we’re all good. In fact, I do have the cats called me and they were saying, wait a minute, we have got to protect this man from being shot again. So if you don’t mind me showing showing this, and the cats came together and they they really wanted this. So so, I mean, when the cats are on board, I got to get me a cat now.

Tammy Nemeth [00:22:40] I live on the golf course. That’s awesome.

David Blackmon [00:22:53] Who does this? This is awesome. Dudley Dodo.

Stuart Turley [00:23:03] Now I’m going to turn the sound down because Tammy, after 10s. I didn’t mean it. Bring it all the way back. So I’m going to turn the sound down because you’re evidently and your YouTube feed, it got canned by sound, so I’ll try to be a little more that I don’t get how they can do this. I love Grok a I. And Tammy, you had asked about this on Grok a I. And now for our podcast listeners, we have a PDF showing from Brock’s response. The question was China derives several benefits from the G7 countries transition from hydrocarbons to wind and solar by seven point.

David Blackmon [00:23:54] Wow.

Stuart Turley [00:23:55] It was a great job, Tammy. You want to go through those?

Tammy Nemeth [00:23:58] Yeah, I thought that. I just wanted to see because Grok, of course, just trains itself on other X posts. Right? And so basically the answers are drawn from the the numerous ex post out there. So it’s kind of limited in what it can say or at least the the information it gets. And so the first one, it says that the it’s a market expansion for renewable energy products and China’s become the leading manufacturer of both solar and wind turbines and so on. And it gives the the data of 96% of solar panels installed in Europe came from China. So, yes, they have a strong export market. And then how it contributes to economic growth in China because we’re basically purchasing all of these different things from China so it can keep its manufacturers going and so on. It also increases technological and industry leadership, which is something they committed to building up since about 2015. So there was a directive in China that they were going to dominate and control these supply chains to be the technological and industry leaders in this. So they convinced a lot of European companies to set up in China and then just kind of borrowed the technology is the kind way to say that. And then it talks about that if if G7 countries do this transition, it’ll reduce global hydrocarbon demand, which then can make things cheaper for China because they’re a large importer of hydrocarbon. So then they can make it actually beneficial for China. And then the main one, right? And then the fifth point is environmental and public health benefits. And it talks about how if the G7 transition actually leads to global reduction in greenhouse gas emissions, then China could benefit environmentally. I’m not really clear sure how they see that because China will still be using that thing. Yeah, I thought that was was pretty funny. And then number six was the geopolitical influence. So if you’re swapping dependency from one type of supply chain to another, you’re basically swapping from OPEC or oil and gas producers to a dependency on China that controls the supply chain of most of the technologies involved in the transition. And then the last point they talk about is strengthening energy security. And it it talks about how the G7, because if they have their own wind and solar energy production, then they’ll be able to have less reliance on imported fuels. But that might be so for the European Union, which doesn’t have a lot of domestic oil and gas supplies. But when you’re looking at countries like Canada, the United States and even the UK, if it wanted, they actually do have quite a lot of oil and gas resources. And so this energy security argument doesn’t really work. And then it talks about different nuances like the transition challenges, global market dynamics and trade relations and backlash, which is, as we’re seeing, is with these tariffs and protectionist measures. So can we basically grow our concluded China gains economically and strategically?

David Blackmon [00:27:29] Hard to believe. Let’s go back to point number six, because I want to emphasize one thing about number six point, the geopolitical influence that China is able to wield. We all need to recognize the expanding role now, increasing role BRICs, the BRICs alliance is going to play in enabling China to exert even more influence over global geopolitics, because one reality is that now, with its expanded membership, BRICs now in the total totality of its membership controls more global oil production, a higher percentage than OPEC does. Okay, That’s what’s in BRICs right now. And so China is really the dominant player in BRICs. And so when it comes to the global oil trade climate, China is going to be able to influence greater and greater influence over geopolitics related oil, which is the most traded commodity on earth through the BRICs alliance, in addition to its own national power in that realm. So it’s a lot of things are developing here that just it’s all in China’s favor. And you bring about how the West seems to be too awake to it.

Stuart Turley [00:28:42] You bring up an excellent point. And this week, as energy authors or otters, authors or research folks, you have Bric. Meeting this week. You have the Fed meeting this week and you have swift meeting this week. You also have several other meetings going on. There is something going on around the world. And we realize that the devaluation of the U.S. dollar is really accelerating thanks to the current administration. I never thought that would get it’s accelerating.

Irina Slav [00:29:24] Can I just go back to one comment because I thought it’s important. I have been asked this question before. So this LinkedIn user, I guess, is Travis Lynn says, I catch myself that I come here regularly to have a laugh about the absurd examples in your cynical, funny comments book deals with preaching to the choir. And in the meantime, nothing is changing. How do we get the public and politicians on board? We can’t get politicians on board while they’re blinded by, you know, by their agenda. But I think this is how we get the public on board by by talking about all of this, by talking about these absurd policies that are making life more expensive. People do not like their lives made more expensive. Yeah, they people like things to be stable and cheap. Or if possible, if that’s not possible, then not more expensive than they were yesterday. And these energy policies, as the New Zealand and the Cambodian energy minister said, are making everyone poorer. And people will start wondering why this is and this is where we come in. Those who are watching, you know, breaking it down, example by example.

Tammy Nemeth [00:30:41] Exactly.

Irina Slav [00:30:42] At least I hope so. I mean.

Stuart Turley [00:30:44] There is no coincidence that I believe it was last week or the week before when we had the video of, what’s his name, saying that the deindustrialization of the UK and the energy is twice as much as you know as what is the US is. So comfort companies will not flourish, countries will not flourish. The deindustrialization of green energy policies. We are seeing that in real life with the failure of the global economic. The International Monetary Fund is now meeting as well, trying to say how can we be more relevant? I’d say put people’s lives first rather than putting green energy policies and you might stand a chance.

Irina Slav [00:31:43] No.

David Blackmon [00:31:44] Well, that’s a very good point. All wonderful points. And I think we have finished our discussion on China being the big winner and concluded that China is the big winner.

Stuart Turley [00:31:57] So all those in favor.

David Blackmon [00:32:00] Those in favor say now it’s time to go to our articles, our favorite articles of the week.

Stuart Turley [00:32:09] I want to give Joanna a shout out. And then she goes. Then we go to the politicians and talk to them. We bang our heads against the wall, but we keep doing it. Make the politicians understand from our point of view. I want to give Senator Ted Cruz a shout out right now. That man. I thoroughly enjoyed meeting him with you, David, on that day. And he is a class act. He’s in the battle of his life. Go to ted Ted cruz.org and donate for that man because the republican rhinos are not helping him and he is being outspent by his Democratic opponent who has horrible energy policies. And senator Ted Cruz is absolutely leading the charge for low cost energy and he’s in the battle of his life as a senator. Sorry. Thank you, Joanna. And I’ll shut up.

Irina Slav [00:33:10] Thanks.

David Blackmon [00:33:11] Yes, Be sure and sure and vote for Ted Cruz. Let’s go to the well. Looks like Irina’s up first.

Irina Slav [00:33:18] Yeah. So Ford launches tool to help businesses go electric, save money. This is where it comes down to. They have no other way of selling that EVs except creating a special software tool that tells businesses that calculates, as far as I understood it, how much they would save by replacing a certain portion of their fleet with electric vehicles. Where exactly will these savings come from? And the author of this article leads with so many assumptions. It was hilarious. He had it all the lower maintenance, which is not true unless you mean oil change changes and stuff like that. The what was it, Jeep charging. Yeah. And my favorite apparently the you know that these are better than petrol cars. In a hurricane?

Stuart Turley [00:34:27] Yeah.

Tammy Nemeth [00:34:30] My Gosh.

Stuart Turley [00:34:31] Is he stream of videos? Has he seen the videos of everybody saying those are salt water bombs waiting to go off?

Tammy Nemeth [00:34:41] My Gosh.

Irina Slav [00:34:42] No. Apparently among the reasons that better is that you can use their AC for days, if not weeks, without the battery running out. So it’s the middle of summer. There’s this hurricane, you lose power, but you can go and cool off in your E bay because the battery will never die. Another reason is that you won’t have to wait in line. And the fuel station. You are wrong. You don’t have to wait in line at the fuel station because you don’t use fuel. Last but not least, the ones I remember. Entertainment you can put the kids into and turn on a movie to keep them entertained. This is the intellectual level that even websites offer their readers. And I mean, judging by the fact that people reading them, these websites are still alive, it’s long questions about the level of the readers. If the readers buy this, if they think this, these are genuine arguments. Then there’s that. There’s no hope. Full of people. But then. Let’s go on to the two big insurers still still betting on fossil fuels. So, you know, environmentalist like to pressure insurers to stop insuring oil and gas projects and insurers are complying. In fact, the industry overall has significantly decreased its exposure to the oil, gas industry and coal, with two notable exceptions, one of them being Berkshire Hathaway and State Farm. And they these two have while the rest of the industry has been, you know, decreasing its exposure to oil and gas, both in terms of insurance and securities buying, because that’s what insurance apparently also do. These two have been losing their exposure to oil and gas so much that it has more than offset the decline in all other insurers.

David Blackmon [00:36:59] Yeah.

Irina Slav [00:37:03] So in the U.S., insuring that though the global insurance industry has actually increased its exposure to the oil and gas industry just because of these two. I wonder what they know that the rest of the insurers don’t know. Like French AXA, it has been great. It’s very, very green and very pro transition and it has severely reduced its exposure to the oil and gas industry. And as chief executive says, that exposure to future claims related to the oil and gas industry makes it, you know, makes it stupid to insure their projects now. So he’s so sure that the future is full of claims related to the activities of the oil and gas industry, that he sees no point in keeping the firm’s exposure to the oil and gas industry because these claims will lead to so, you know, so many losses. It’s amazing what such a senior executive at a global insurance company assumes and his views. It is a fact.

Tammy Nemeth [00:38:19] But yeah, I mean, it’s mostly the European ones, right? So like, sorry. And

Irina Slav [00:38:26] I don’t. Know. There were 32 firms surveyed, I think.

David Blackmon [00:38:30] Yeah. And Berkshire Hathaway is owned by Warren Buffett. Everybody and Warren Buffett.

Irina Slav [00:38:38] Has.

David Blackmon [00:38:39] Always been a big investor in oil and gas and his personal portfolio, too. So.

Irina Slav [00:38:45] nobody wonders why. Nobody asks why. Yeah. Not that that’s it for me. I’m done.

David Blackmon [00:38:57] This is me. Holy cow. So I wrote a couple of piece about. But this is one I wrote the first one, ESG driven green hydrogen risk at the center of air products dispute. Air Products is a big provider of industrial gas of several different kinds based in the United States. They have invested so far now $4 billion in a green hydrogen project in conjunction with Saudi Arabia. It’s part of the Saudi Arabia’s No. One project where they’re going to build that enormous straight line city, supposedly next to the Red Sea. Their big plan is part of that green hydrogen, the making of green hydrogen in Saudi Arabia, with supposedly going to do it with windmills and solar arrays. They’re going to take the green hydrogen they produce in Saudi Arabia and they’re going to put it on ships and they’re going to ship it to California halfway across the world to compete with American hydrogen producers for the California market. Now they air products, major investors are now in full rebellion against current management that they installed in there. And these same investors installed at the company ten years ago. Now they’re in rebellion against it for this lunatic plan that cannot economically possibly be profitable. They’ve still got seven more billion dollars to invest in this Saudi Arabian boondoggle, and they’re doing it all just to burnish their ESG credentials. This is the central point of this is this is the kind of misallocation of capital you see all happening all over American companies. And I’m sure European companies as well, because they’re trying to dig in mind these federal subsidies provided in the Inflation Reduction Act. Amazingly, the CEO at Air Products told the Ceraweek conference last year that this boondoggle shipping this hydrogen into the California market, it’s going to be subsidized by the IRA subsidy. Okay. And they’re going to be able to take advantage of the enhanced investment tax credit for a project built in Saudi Arabia. And that was not at all the intention of the of Joe Manchin and other boosters of the Inflation Reduction Act. But that’s how the language is written and how it’s being interpreted by the U.S. Treasury. So this big boondoggle marine hydrogen project in Saudi Arabia is going to be fully subsidized by the American government in competition with companies trying to make green hydrogen in the United States. So that’s that’s just absolute insanity. I wanted to highlight that. Then the other one is also related to green hydrogen. Kevin Killough, if you do not follow Kevin Kelly, he said just the news.com now, and he’s just a wonderful energy writer and reporter. He started at Cowboy State daily up in Wyoming and was just so great. Just the news came in and gave him a job. And he wrote this story this week about these all these crazy not just green hydrogen, but energy transit, USG projects in general, you know, going belly up after 2 or 3 years of these multibillion dollar investments. And those of us who warn about them being frustrated, you know, because we we sit here on this podcast or we all do writing and we warn that this is an economic it’s going to fail and then it fails and everybody acts surprised. I just highly recommend everybody needs to bookmark everything. Kevin Guillot does it just the news, it’s very entertaining, tremendous stuff and really good analysis. So I just wanted to highlight that. I’ve got to burn my blanket on green hydrogen this week.

Tammy Nemeth [00:43:02] Okay, so if anybody here’s another shout out. If people aren’t subscribed to the newsletter from the Institute for Energy Research, I highly recommend it. They they have such great stories and they pull together a lot of data and information from lots of different sources. And I’ll do the second story first. So the the second story is that Canada opens its first commercial rare Earth Elements refinery. Now, this is a project that was funded by the Saskatchewan Provincial Government in Canada, and it was put together by the Saskatchewan Research Council. And I’m not exactly sure all of the different idiosyncrasies involved with it, but there was there was some talk that they were going to create this thing and then sell it. And then there was rumors that China was going to buy it. And then it turns out that they were where they were sourcing their materials from was a Canadian company. But then China was going to buy that company and then closed down the production. And it was all very complicated. But in any event, they things worked out. They got they sourced North American rare earths and they refined it at a commercial scale for the first time, I think it was August or September. So it’s actually quite an accomplishment. But the problem is that it took government intervention in North America to make this a reality. And you have to ask yourself why, if it’s now producing commercially, why didn’t somebody else from a commercial perspective develop it? Why did it have to come from government? So on the one hand, it’s good that they’re trying to disrupt the dominance of the Chinese supply chain, but I think you would need an awful lot of these to compete with what China is doing. And then the first story is a sort of overview of the International Energy Agency’s World Energy Outlook that was released last week. And the title is Western Climate Mitigation Policies Increased Electricity Demand, making it Harder to Slash Emissions All.

Irina Slav [00:45:19] Unbelievable.

Tammy Nemeth [00:45:21] So this story is awesome. They go. Through. Like they have three key takeaways from the World Energy Outlook and they talk about how the how the agency expects global electricity demand to be 6% higher in 2035 than it forecasted last year. There’s a surprise. So then it’s like, okay, where are you going to get this energy from? And they’re saying that oil and gas are going to peak in 2030. You know, the mantra repeated over and over again that it’s going to peak, demand is going to peak. But, of course, as we just talked about, where are we getting the solar panels and the increase in the wind turbines from? Well, they’re coming from China, which is using hydrocarbons to build these things. So we’re getting more electricity. It’s supposedly going to be generated by these emissions free sources, but they’re constructed with high emissions energy. So how this all works out in the end, as we’ve been talking about a lot, it’s unlikely that that global emissions are going to fall, except if we kill the economies in the G7 and always CD countries, which is seems to be the trajectory. So anyway, I highly recommend subscribing to the ICR, the Institute for Energy Research, because they really do have great information there.

David Blackmon [00:46:55] Yeah, it’s a great organization.

Stuart Turley [00:46:57] Great job.

Tammy Nemeth [00:47:00] Now, Stu what do you have.

Stuart Turley [00:47:02] I got two fun stories here. And and I’ve been watching and stealing all of your all’s material over the last several years and and realizing that we all know Moore’s Law. Moore’s Law is the number of transistors will double every 18 months, I believe. And is the technology is that law has still held fast. Turley’s law now says that the more we go renewable, the more fossil fuels we use. You and I, it has been going on for the last four years. I’ve been tracking it. There is now no death to fossil fuels. Suddenly I’m not quite dead yet. We’ve had that before on this podcast. I’m feeling quite better with an arrow hanging out of me here. Let’s go to my buddy, Governor Newsom. Governor Newsom. I love Grok because you can come up with some cool pictures here. California’s energy dilemma and how we laws sparked even higher gas prices. The new law requires oil refiners to maintain higher fuel inventories, plan for maintenance outages and allow the Energy Commission to approve maintenance schedules while in general to stabilize gas prices. You know what happened? Conoco Phillips said We’re out there closing their refinery. And what you’re going to see out of this is a second order of magnitude is the increased downstream or refineries in China has been geared up. And you’re going to see. Bookmark this. You will see imports in California from China for diesel and gasoline because it is not going away any time soon. It’s going to be worse for the environment. And Gavin Newsom will be profiting from it. Follow the money. All right. Let’s go to the next story. Did I just say that out loud?

David Blackmon [00:49:06] I think you did.

Stuart Turley [00:49:07] Holy smokes, Batman.

David Blackmon [00:49:09] And I’m not arguing with it.

Stuart Turley [00:49:11] Follow the money. China forfeits resource security with Strategic Mineral Energy reserve gains. This one I got to give a shout out to Meredith Chan. Over the last year, Beijing has also tightened its grip on critical mineral shipments, including autonomy, gallium, germanium, graphite. You can’t have a transition. You can’t do anything without graphite. It’s just going nuts. They’ve also create they found four new oil fields were discovered in China, each estimated to have more than 100 million tons. I hate this. Tons. The barrel. Yeah. Sorry. 746 million barrels of capacity in addition of four gas fields with a capacity of 100,000,000,000m³ each. Wow. China is buying everything they can. They’re developing every oil and gas field they can. And they’ve now encircled Taiwan in a war game. What in the world Where is that on the news going on? Countries that go to war fill all their reserves.

David Blackmon [00:50:25] And what is made in Taiwan that’s so critical to U.S. national security and European national security.

Stuart Turley [00:50:31] Call that cement video chips.

David Blackmon [00:50:34] Yeah, all the computer chips, folks.

Stuart Turley [00:50:37] I think here we have the energy transition again.

David Blackmon [00:50:45] We should have held this one back to the.

Stuart Turley [00:50:51] Snap. Okay. Now, in honor of You know, I cannot let my dogs get all upset because I’m still got a dog and I’m looking for a cat. So if anybody’s got a cat that looks like that thinks he’s a dog, I’m in. But here we go.

David Blackmon [00:51:07] But you can’t have it.

Stuart Turley [00:51:10] Now, this cute. I don’t know who does this. I can’t read the big dog guy. Now I want this kind of Hollywood. I want to see these. But none of these preppies have them with any party, I guarantee. And so this is the part of Hollywood, I would say. And that go for them.

David Blackmon [00:51:38] The amaze to me.

Tammy Nemeth [00:51:39] They’re so cute. Yeah,

Stuart Turley [00:51:41] I made me some dogs like that. I guarantee you and I love AC DC too. I mean, yeah, I’m an AC DC kind of fan. So.

David Blackmon [00:51:56] So to sum up, China’s waiting. This video will probably be deplatformed on LinkedIn and Facebook due to their conflicts with China and all of you are going to pay the price for it. So have I missed anything?

Irina Slav [00:52:16] Nope. Nope.

Stuart Turley [00:52:18] And Google has pulled a fast one on me over the weekend. My new site has 20 to 50,000 people a day on it and they firewalled it to the US. I am not kidding. So here I am. I had to go to the UK on a VPN to get to my own news site. They are pulling some crap now, guys.

Irina Slav [00:52:46] Well.

David Blackmon [00:52:47] I would say what I think about Google, but then we’d be canceled on YouTube too. So I’d better know. I think Google owns . Right. And they do.

Irina Slav [00:52:58] Yeah

David Blackmon [00:52:59] Well, I’m getting us in trouble here, folks. This has been wonderful discussion. Thanks to everyone who chimed in with questions and comments. It’s always wonderful to hear from everybody. And we’ll be back. Good afternoon from Nigeria. Hello. Promise? I think I hope it’s promise it be a promise, I guess. Anyway, I apologize if I mispronounced names. That’s it from the Energy Realities podcast for This Day in History, October 21st, 2024. Thank you all for being here. And we will talk to you next week.

Stuart Turley [00:53:35] From Abilene.

Tammy Nemeth [00:53:36] See you then.

Irina Slav [00:53:38] See you.

Tammy Nemeth [00:53:39] Bye Everybody.

Irina Slav [00:53:40] Bye bye.