The Future of Clean Energy: Insights from Michael Liebreich
Michael Liebreich is the host of the podcast Cleaning Up, focused on leadership in the age of climate change. Michael was previously the CEO and founder of Bloomberg New Energy Finance. He has been involved with the organization for 20 years, still serving as a senior contributor. Michael also runs an advisory firm, Liebreich and Associates, focused on clean energy and sustainable development, and he's an advisor to the UK Board of Trade. All of this is just scratching the surface of Michael's background, which also includes having been a member of the British Ski Team and a participant in the 1992 Winter Olympics.
This episode explores Michael’s accomplishments and how he came to focus on climate and clean energy topics, how he started New Energy Finance and the decision to sell the business to Bloomberg, as well as the legacy that he created with the business. Michael and Cody then cover a hit list of topics, including recent climate legislation in the US and the EU, the topic of green protectionism and Michael's “five horsemen” of big challenges the world faces as we try to decarbonize.
This conversation merely grazes the surface of Michael's climate-related interests, including his deep focus on hydrogen. So, for more from Michael, you'll need to check out his conversations on the Cleaning Up podcast.
Get connected:
Michael Liebreich Twitter / LinkedIn
Cody Simms
MCJ Podcast / Collective
*You can also reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
Episode recorded on May 10, 2023.
In this episode, we cover:
[01:58]: Michael's unique background
[06:49]: Transitioning to journalism in the early internet era
[08:48]: Michael's personal climate epiphany in the Swiss Alps
[12:34]: Starting a data-driven media company to fill the clean energy information gap
[18:05]: Pivoting to insight services
[18:57]: Bloomberg's acquisition of New Energy Finance (NEF)
[22:21]: Running Bloomberg NEF as CEO
[25:27]: Stepping away from NEF and growing his professional network
[26:53]: Paid speaking engagements and transitioning to podcasting during COVID
[28:10]: Michael's approach to the Cleaning Up podcast
[36:31]: The struggles and advantages of being generalists
[38:34]: Europe's energy situation over the winter of '22-'23 and the urgent need to address dependence on Russian energy
[40:54]: The role of Liquid Natural Gas (LNG) terminals in Europe
[42:58]: European response to the Inflation Reduction Act and "Green Protectionism"
[48:08]: Caution around the practice of recycling and re-exporting items for credits
[51:22] Michael's main concerns for clean energy deployment, including rare metals and recycling
[52:38] Addressing the speed with which societies can approve and build transmission
[56:43]: Limited access to capital in developing countries
[01:00:41]: Resilience and intermittency issues
[01:03:49]: Closing thoughts and how to follow Michael's work
-
Cody Simms (00:00:00):
Today's guest on My Climate Journey is Michael Liebreich, the host of the podcast Cleaning Up, focused on leadership in the age of climate change. Michael was previously the CEO and founder of Bloomberg New Energy Finance, and has been involved with the organization for going on 20 years as he still serves as a senior contributor. Michael runs an advisory firm, Liebreich and Associates focused on clean energy and sustainable development, and he's an advisor to the UK Board of Trade. All of this is just scratching the surface of Michael's background, which also includes having been a member of the British Ski Team and a participant in the 1992 Winter Olympics.
(00:00:39):
Michael and I traverse a lot of ground, covering his background and how he came to focus on climate and clean energy topics, how he started new energy finance and the decision to sell the business to Bloomberg, as well as the legacy that he created with the business. And then we cover a hit list of topics, including recent climate legislation in the US and the EU, the topic of green protectionism and Michael's five horsemen of big challenges the world faces as we try to decarbonize.
(00:01:08):
I think we could have continued recording for another hour or two and still only scratched the surface of Michael's climate-related interests. We barely even mentioned hydrogen, which is one of the topics he's been spending the most time on recently. So, for more from Michael, you'll need to check out his conversations on the Cleaning Up podcast. But before we start, I'm Cody Simms.
Yin Lu (00:01:28):
I'm Yin Lu.
Jason Jacobs (00:01:29):
And I'm Jason Jacobs. And welcome to My Climate Journey.
Yin Lu (00:01:36):
This show is a growing body of knowledge focused on climate change and potential solutions.
Cody Simms (00:01:41):
In this podcast, we traverse disciplines, industries, and opinions to better understand and make sense of the formidable problem of climate change and all the ways people like you and I can help. With that. Michael, welcome to the show.
Michael Liebreich (00:01:56):
Cody, it's a huge pleasure to be here.
Cody Simms (00:01:58):
Michael, you have an incredibly diverse background, clearly an entrepreneur in terms of the areas you focus on. I don't know if you still identify as an entrepreneur, but the way I see it, you clearly are. I know you're now focused on deploying capital, you're doing high level government advisement work all around the clean energy transition. But before we get to all that, I want to hear and learn a little bit about how you got there, how this problem became the problem that you wanted to focus your life around, because it didn't seem like it started that way based on what I see of your earliest background. So I saw that you grew up in West London, you studied fluid dynamics and thermodynamics and nuclear engineering at Cambridge, and then you are some kind of crazy world competitive level skier. So maybe walk us through kind of the early days of Michael Liebreich.
Michael Liebreich (00:02:47):
You ask, am I still an entrepreneur? I mean, the answer is yes, but I'm really a bit of everything. As you've also pointed out, it's kind of like the Steve Jobs talked about, you can't join the dots looking forward, you can only join the dots looking back. So, when I look back now, it's absolutely obvious that I was predestined to do exactly what I do today.
(00:03:05):
Yeah, so family background, modest background. Father was a mechanic. I knew I wanted to go to university, so had no idea what to do, but what's a mechanic with a degree? Well, it's an engineer, so I studied engineering and I happened to actually really love it. So, it's really fun. The things that I was doing age 19, 20 was drawing all of the boxes and arrows, diagrams for heat pumps, and here I am nearly 60 and I'm still in love with heat pumps.
(00:03:30):
Looking back, that was definitely a big piece, but there is this other thread. My professional career was very standard. It was engineering and then management consulting because a lot of engineers around then didn't go into engineering, in the UK at least, and then through various businesses that was fairly standard, business school and so on. But the other thread is that I just was this obsessive keen skier. So, both sides of my family are from Central Europe, Holocaust survivors, refugees, and my grandparents on my mother's side still lived in what was then Czechoslovakia when I was a kid. We used to go and visit and my grandfather was this in incredible skier. Even before the war, he'd been one of Czechoslovakia's top skiers. I started to get into competition and I started to do well, my grandmother ... And I would come back and say, "Hey, I've just been on the podium at Europa Cup." And she'd be like, "Well, of course," because her husband was this great skier, so why wouldn't I be?
(00:04:26):
And I really pushed that to the extreme. I mean, I went to business school at Harvard, but after business school, suddenly my discipline, freestyle moguls, was an Olympic sport and I was the British champion and I was, I'd done well at Europa Cup. So, I kept going and I went all the way to the Olympics 1992 whilst working for McKinsey and then became a climber and an outdoors person. So, there were more dots to join up there.
Cody Simms (00:04:50):
Where does one train? Living in the UK, where were your main training grounds?
Michael Liebreich (00:04:54):
Switzerland, France, Austria. I have skied and competed in Scotland, but the conditions were very variable and actually, it cost as much to get to the Alps to train and ski as it cost to get to Scotland. So it's like, "Well, that's a no-brainer." Yeah, so mainly in the Alps, but then once I was on the World Cup tour, skied in Scandinavia, Canada, US, the White Circus.
Cody Simms (00:05:15):
There's something about spending your winters in the mountains in heavy snow that I think also does attract a real interest in what's going on with our world around us. You'll have to listen to a recent episode we did on the pod with Will Steger, who's a polar explorer. He's led multiple dog sled expeditions to the poles. He's now dedicated his life to climate education and focusing people on that. So, I don't know if there's a thread there, where being up there helped you recognize what's going on in our world, but surely connection with nature is part of it.
Michael Liebreich (00:05:46):
For sure. Look, I'm not really a hardcore environmentalist. I'm not a tree hugger. I don't come out of that tradition, but I'm an outdoorsman and mainly a mountains outdoorsman. So, I went from skiing, did a bunch of high altitude mountain climbing, so Mount Elbrus in the Russian Federation. I did a whole bunch in Central Latin America, some quite high mountains, Kilimanjaro in Africa. When you're up there, first, it's absolutely clear that these are fragile environments. You look down and you can see the pollution, and then if you do it long enough, you can also see the changes, the climate changes.
(00:06:18):
When I was a kid, we used to go skiing at Christmas in the Alps and there was snow and there was always snow and it never rained. It wasn't a thing to go at Christmas and to be rained on. Now, we go to the Alps and you may or may not have snow at Christmas, and if you do, it's just as likely to snow as to stick or to snow more. And so this is, in my lifetime, palpable differences in these fragile environments. So, it's very hard, again, joining the dots, looking back, it was pretty obvious that I would become switched onto these threats to the environment that I loved.
Cody Simms (00:06:49):
So, let's talk about how you then made that transition professionally. So, you said you were a management consultant at McKinsey. You'd had these other roles, I think you worked at the Arnault Groupe in venture capital, and then in 2004 you started New Energy Finance. What said, "Oh, I'm going to now focus on journalism for the clean energy economy." How did that happen?
Michael Liebreich (00:07:09):
Right, so there was a extended period of epiphany, and I can't claim that it was just one thing, but I had this ... After I quit skiing in '93, I was still at McKinsey. I then went on to Associated Press, and I was having this I would call it a reasonably standard career in media then because I went to Associated Press and started a whole bunch of businesses for them, helped to turn around the video news agency piece, which was really struggling, they just started it. It smelt of death within a year of being started. And I was the fool who came in to try and turn it around. And we did.
Cody Simms (00:07:43):
The '90s in media was an interesting time, for sure.
Michael Liebreich (00:07:46):
It was. And I was very early on the internet, just by chance. And as I was leaving McKinsey, McKinsey was starting to ... Funny, the media partner at one point came into my office and said, "Michael, I hear you have a thing called an internet on your computer, could you download it onto mine?" And I'm like, "Yeah, it doesn't work that way." So, that was what was going on then. But what happened then was the whole thing went completely hyperbolic as the whole dotcom boom, and then ultimately the bust and I got sucked off out into all these fascinating businesses, Groupe Arnault, startups. I was investing. And then of course, the whole thing bust, and that's really the beginning of the epiphany because I was really tired. So, I was just traveling, trying to recharge my batteries and trying to figure out what to do next.
(00:08:31):
I had really lost a lot of confidence as an entrepreneur, nothing I had touched ... Funny thing is a lot of the businesses that I had founded or helped to found, or supported, or invested, they're actually really good businesses, but I didn't make any money off them and nobody ... It was a very traumatic period. So, around 2000, 2003, I'm traveling a lot and I'm thinking about what to do, and I hadn't heard that Steve Jobs ... I don't know if it's commencement or a graduation speech, but just following what I was interested in and what I was interested in, all seemed to have energy at the heart.
(00:09:04):
So, I went climbing in Bolivia and there had just been literally a shooting fight between the Bolivian police and army about whether they should sell their natural gas to North America. And I then came back through Brazil and there were brownouts because the country was growing very fast and couldn't meet the energy, the electricity needs.
(00:09:25):
And then there was this power cut, while I was in Brazil. The news was full of this huge power cut in the northeast of the US and there was a similar one in Europe, which is all to do with aging infrastructure. And then you had the climate change story, which was gathering pace, and I had the time to actually read the IPCC report, I think it was the third AR III, assessment report three at the time, but also to go back and read a lot of the underlying science. Then there was, of course, there was the second Gulf War, which is an energy war quite clearly. It was like everything suddenly started to point and it was like, whoa, I used to be really good at thermodynamics. I used to actually know some of the science behind the energy side of things. So, all of these things started to just point in one direction.
Cody Simms (00:10:07):
I always think the pop culture moment for climate change is Al Gore's Inconvenient Truth, but that was 2006. So this is before any of that.
Michael Liebreich (00:10:14):
That was '06, or '07. That's right, because there was Hurricane Katrina, but that was already, I think 2005 or '06, and the Inconvenient ... No, because I was thinking about this 2003, '04, and if there was a single epiphany, it might have been, I started to organize these cross-country ski trips. It's very strange for a mogul skier, a bump skier. But I took up cross-country skiing because I was getting fat, having retired from the British team and from all that crazy skiing. And so, I started to do a lot of running and some cross country, and I entered this thing called the Engadin Skimarathon. It's like a mass start race in Switzerland. Beautiful thing to do. And I started inviting other people and we were collecting money for charity, which is how I ended up on the board and helping this colorectal medicine hospital and doing some of the other things you've mentioned.
(00:11:01):
But I went for a training ski up a side valley from a beautiful village called Pontresina, and there was a sign and it said something like 1811, and I thought, "Oh, well that must be the altitude, 1,811 meters, 1,800." And I went a bit further and it said 1835. And yeah, we were climbing, maybe it was the altitude, and then it said 1878, and then it said 1910. And I suddenly realized this was the year when the glacier reached to those points. That's what they were doing, is memorializing that glacier, which was receding. And I got all the way to the end, and this was 2003 or 2004, and it was miles and miles of cross country to get to where the glacier had receded over that period of under 200 years. And I thought, "Holy moly, this is fast." I mean, we all know we're at the end of an ice age and the glaciers are receding and so on, but this to me was like-
Cody Simms (00:11:56):
And this was bottoms up. This was from the bottom going upward. Is that correct?
Michael Liebreich (00:12:00):
From the valley up, just passing these signs and passing these signs for an hour, or more than an hour and then just thinking, "This stuff is not theoretical. This is coming after environments that I love, and it may be too late for some of them." That was probably the ... If I ever had any doubts about the sector I want to work in, then they were gone. That was it.
Cody Simms (00:12:22):
Well, the personal insight there is super helpful, and to me it just shows the importance of getting outside, experiencing the world and seeing what may come of it from that, which I think is a great takeaway. Why don't you then talk about what it was starting this media company? You had a wild ride for five years or so as an independent company, and then you eventually sold it to Bloomberg. How did it really get going?
Michael Liebreich (00:12:44):
I would like to think that I came back from my epiphany trip and I knew exactly the business model and I knew the pricing, and I knew exactly who I would hire. It wasn't like that at all. You got to remember, this was also still the period post dotcom. So, it was almost like there was a a few of us who were deeply scarred and traumatized, but we knew that we had to pick ourselves up and do something.
Cody Simms (00:13:04):
So, while you were doing this, just so you know, at that time I was at the New York Times on the digital team managing the New York Times, going through this whole digital transition in 2003, 2004, 2005. So, definitely understand that it was a completely chaotic time for you to be starting a media ... an online media company post dotcom boom. So, explain, okay, you maybe didn't have the whole business model figured out or everything. So, what did those early days look like?
Michael Liebreich (00:13:32):
Yeah, so had I known you back at that point, I probably would've asked for a job, but I didn't. What happened was that I really just followed what I was interested in. And at the time, there was lots of talk actually about hydrogen and fuel cells. So, I started to research around who was investing in it, what were they doing? And there was no good source of information. So, these technologies were all ... If you went to some of the data sets, it was like VentureSource, then they would be electrical equipment, not elsewhere specified. And they didn't differentiate between a fuel cell stack, or balance of plant, or a fuel cell car. It was all just kind of like, "Whoa," they didn't know anything. So, I started to create data sets, and I'm a very, very left brain, data-driven person.
(00:14:13):
So, I started to create data sets and get insight and understand more about what was going on. And then I did this with a few like-minded people. So, there was a guy that I had worked with at Groupe Arnault, Boscot Adinolu, who's now a substantial batteries investor in his own. And we started to create these data sets and think about raising a fund.
(00:14:35):
But my background was more media, Boscot was more of the venture capital type. But as we went and talked to people and they asked, "Well, why do you think you'd be good investors?" We said, "Well, we've got this amazing tool and database." And they all said, "Wow, that's amazing. Can we subscribe to that?" And so, I thought, "Okay, well, you got to listen to what you're being told." We were clearly a data and information business.
(00:14:57):
We hooked up with some other similar dotcom flame outs. Nobody got a salary. We worked for two years. I hired a ton of interns. We were highly intern powered at the beginning, so we had people hammering in data, but the quid pro quo was they were having input into the branding of the business. They were learning a ton. We were having a lot of fun. We were in Notting Hill Gate, and the services emerged based on what didn't work. So, trying to sign people up for paid newsletters, there just wasn't enough revenue. And the database, the problem with selling a database, marketing a database, is nobody knows what's in it and it's too painful for them to find out.
Cody Simms (00:15:37):
I was just about to ask, what kind of data were you cataloging? What was in this data repository?
Michael Liebreich (00:15:42):
So, what we did was really interesting. So, we would scrape around the internet or the news that we were getting from wherever, and we would do what I would call extracting the DNA from each news story. So there'd be an investment in, I don't know, plug power. And we're like, "Okay, who invested? What was the value of the round? Who was the lawyer? Was there a debt piece?" Maybe not in the plug power, but if it was a wind farm or whatever. And what we created was a really elegant database architecture where each of these kind of objects had its own structure and fields, but they were all relational. They related to each other so that if you clicked on plug power, you would find everybody who had invested in that round, you would find all their rounds. But if you clicked on an investor, you would then find what else they had invested in. And if you clicked on a lawyer on the deal could go through to what else they ... So, it was a bit like X-raying a crystal from all these different directions, and you could very quickly get a sense of who was doing what.
Cody Simms (00:16:41):
This was coming online during what ultimately became this sort of clean tech 1.0 boom cycle, I suppose, yeah?
Michael Liebreich (00:16:49):
That's right. I mean, we started building these data sets around 2004, and I very quickly realized that hydrogen and fuel cells was not enough to build a business in, I mean, it was ... At the time I thought, "Well, maybe it's premature." You probably know that now I've got my very fixed views on which bits of hydrogen will work and which bits won't. But I just thought at the time, I've just had this huge flame out in a dotcom time. At one point I was worth $30 million and then I was worth $300,000. And then at one time I had lots of friends and then I had none. I can't afford another 20 years wasting my time on anything.
(00:17:23):
So, I went over to renewables conference in New York called Renewable Energy Finance Forum, and I spotted that the wind industry lawyers were the only people wearing really good suits. And I came back and I said, "Hey, team, we're doing wind as well." And they said, "Okay, wind, what about solar?" I'm like, "Yeah, we'll do solar too." "Well, what about biofuels?" "Yeah, we'll do ... " So, we ended up doing everything.
(00:17:45):
That was one of the key pivots, to go from hydrogen and fuel cells to all clean technologies. 2004, we did that, and it was a bit early, a bit before the real clean tech 1.0 bubble. Our timing was just very, very lucky.
Cody Simms (00:17:59):
Amazing. And then in 2009, the acquisition happened with Bloomberg. How did that come together?
Michael Liebreich (00:18:05):
Well, so let me just ... There's one other pivot along the way, which was we built the data sets and it's very hard to market data sets. We built newsletters, very low price point. You can't make money on that. But in 2007, we started to do insight services. So, what will the cost of solar power be in Year X? Or where's the pinch point on the value chain on, the supply chain? Or what's the difference between what Germany's doing and what the US is doing? Suddenly people are like, "Okay, I know that Michael's team has got all this data, but now he's prechewing it and predigesting it, and I can actually use that in an investment committee meeting or with my board." And so, suddenly the price point went from $1,000 for a newsletter and $5,000 for a database, to $50,000, $250,000, half a million dollars for the really big subscribers. And then you're off to the races.
(00:18:57):
From then to selling the business. 2007, the pivot to insight, we sold the business in 2009 and we sold it well. That was not a distressed sale. That was a good sale and we sold it to Bloomberg.
Cody Simms (00:19:09):
And then Bloomberg, still today, Bloomberg New Energy Finance is its own thing in Bloomberg. It didn't get fully sucked into the Bloomberg machine. It is its own business. Is that the right way to think about it?
Michael Liebreich (00:19:20):
That was something we fought very hard for at the time of the acquisition because Bloomberg, the Bloomberg terminal, is something that sits on an individual's desk. It's an individual productivity tool in a sense, whether you're a trader or an equities analyst and so on. Whereas what we were doing was actually informing teams. So, ours was more strategic rather than individual. So, it would be the strategy team at a utility, or it might be the M and A team at an investment bank that were working on a transaction.
(00:19:48):
And so, we were delivering via the web to teams. And if we would've taken all of that and stuck it into people's individual desktops into our terminals, then I think we would've lost all the customers, all the momentum that we had. So, I fought very hard job, educated and worked very hard to make sure that it was retained. Also, because of the spirit of the team that we'd built, we were actually saving the planet and doing these exciting things. Just to be fully absorbed instantly would've been pretty disastrous. It became Bloomberg New Energy finance, now BNEF, or Bloomberg NEF. And now, it still is available through the terminal, but there was a proper transition and you can still use it in the team environment.
Cody Simms (00:20:30):
Were there any other vertically oriented flavors at Bloomberg or was there something about the clean energy transition that made it unique for them strategically to want to have this capability set?
Michael Liebreich (00:20:42):
So, there were no other verticals at that time. There was something called Bloomberg Research, but that was more like a sort of sell side analysis, but done by Bloomberg people, a bull case on different equities and sectors, but it was generic. We were the only vertical. And I think that the reason why Dan Doctoroff, who actually I had on my podcast, on Cleaning Up about a year ago, he really liked it because first, it was obvious which way the world was going. That energy was going to go to clean energy. Carbon markets at the time were going to be this huge thing. And so, the idea that you could acquire a leading position, the leading seat around the table, was attractive.
(00:21:18):
And I think the other thing that was interesting about us was that we were this teeny weeny little company, and yet we were pulling out half a million dollar tickets from one or two of the big oil companies, from the DOE in the US. These were people that Bloomberg was not able to sell a terminal to, or would maybe sell one or two terminals, but there were we coming in and nobody had ever heard of us, and yet we were pulling out these big tickets. And there was something that was intriguing, I think for the Bloomberg folks about what is it they're doing and is this something that we could do more of? Is this something that scales to other sectors?
(00:21:51):
I think it's fair to say for a few years, there was something of a feeling within Bloomberg that they had overpaid for this tiny scrappy little team. It was very small. The multiples when we sold were very high. But I think when you look at it now, it's like, "Oh my God, the fit is just so, so, so good." Not just as a service, but also, dare I say it, I'm not going to speak for him, but Mike Bloomberg and his work with the UN, and it's just so on brand in every way and on brand, on product. It's been a really good acquisition I think, for them.
Cody Simms (00:22:21):
And Michael, you also went from that acquisition and ended up running the division for many years, but then since then, have then advanced your career into work in the public sector as well as now running your own podcast and media company, and running your own growth equity firm. So, let's follow the 20 teens and sort of how your career moved after that chapter was coming to a conclusion.
Michael Liebreich (00:22:45):
So I ran Bloomberg NEF for three more years, so I sold ... No, more than that. I sold in 2009, the end of 2009. So, I ran it, I was CEO of that bit until 2014. And then I became executive chairman halftime until 2017. And then I left my executive roles. And it was interesting because I had always built the business knowing that I would sell it. I don't know how many entrepreneurs do this, but I'd always had one eye, or half an eye, or one of your 17 eyes as an entrepreneur, on the handover to an eventual acquirer. I was pretty sure it would not be an IPO. And therefore for all that you want to say, "Hey, we are new energy finance. We're better than everybody else. They're all stupid, and they're all big and slumbering and idiotic." I never did that because I knew I'd end up working for one of them because I wanted not just to sell it and sell it well, but actually to hand it over well.
(00:23:42):
So, if I ever as an entrepreneur start something else and somebody wants to buy it, and they go to Bloomberg and say, "Well, what's he like as a selling executive, as a selling entrepreneur?" And if they say, "Oh, he was terrible. He was out the door instantly. He bad mouthed us, he broke his confidentiality, et cetera," et cetera, that's no good. As an entrepreneur, you have to take the full life lifecycle of your investment of your startup is starting it, but it's also selling it and handing it over.
(00:24:09):
One startup complete, team complete, products complete, integrated into the acquirer's systems. And when I look at my position that I'm able to be an advisor to the UN, or I'm on the board of Transport for London for a while, or now Board of Trade, it's because I'm trading off my background having built that thing. It did not blow up. It went from strength to strength. People can still look at it and it's still the dominant information provider in the sector. That is, to my credit now, it's still [inaudible 00:24:39].
Cody Simms (00:24:39):
That's right. I mean, it's a legacy play, right? It's not, "Oh, he made a bunch of money on this thing that doesn't exist anymore." It's no, he created something that has ongoing value.
Michael Liebreich (00:24:47):
Cody, it's "yes, and". I did make a bunch of money. I won't say no, but the legacy play I think is really important. It was designed in, and it was very explicitly, work on making sure that my team started to glom onto Bloomberg from day one. Even though of course there are frictions and they had this kind of weird email system, which I could never master, but getting the team to glom on so that I could then go halftime. My number two at the time, John Moore, now runs it. It's now grown enormously. I have no idea what revenue or no notional revenue it is, but it's 300 plus people. The value, it's clearly of unicorn type value within the orbit of what it does within Bloomberg.
(00:25:27):
But I stepped away, other than I still write four Bloomberg four times a year. So, I have my blog or my ... We used to call it the VIP briefing, rather pompously now it's just Michael's Blog, but that's four times a year. And I really try to change the agenda of the sector. That's my last legacy with Bloomberg is four times a year I can say, "Wait, everybody, the next big thing is not so much hydrogen, it's the electrification of heat." And then everybody can run around agreeing or disagreeing, but we are still driving the agenda there.
Cody Simms (00:26:00):
I love it. Let's talk about now what you're working on actively today.
Michael Liebreich (00:26:04):
What I managed to do through that process of after selling New Energy Finance, then chairing it and then beyond, I managed to keep the network. I was becoming just very well connected. In fact, my first non-exec or my first public role, even while I was still running Bloomberg New Energy Finance, was the board of Transport for London. And I went to Dan Doctoroff, this is before Mike Bloomberg came back from being mayor and said, "Look, I've got an opportunity to be on the Transit Authority of London. I'd like to do it. How does that play?" And he was like, "You absolutely must do it." Enormously supportive. It just felt like I kept growing and growing the network.
(00:26:40):
So, then the question is how do you use that? How do you monetize that? What do you do? Similar to how I started New Energy Finance with no real plan, I was writing, I was advising. The podcast was an accident of fate, COVID, during the pandemic, been doing some paid speaking. They never told me this when I was at high school or at university that you can actually earn good money doing paid speaking. And so suddenly, I'm putting my kids through their school by doing paid speaking engagements with banks and infrastructure funds and some big conferences and suddenly in COVID, that went away.
(00:27:18):
And so, what I did there was to keep some momentum around the ... They were fantastic occasion. When you go and you speak at a bank and you meet their clients, you meet their executives, you maybe meet some politicians. That's how I was growing my network. So, then the podcast, what happened was that I was finding myself, I had all these incoming opportunities as well, just like you and Jason, you suddenly find yourself in the middle of this ecosystem and people are coming to you with investment opportunities, startups. And I had not enough money and absolutely no time to invest in them all. I was building an angel portfolio.
(00:27:54):
So, about two years ago I said, "Okay, wait, let's structure this." And I now do three things. It's very clear. I've got a media business, which is my podcast, my writing, mainly for Bloomberg, some other bits and pieces and my paid speaking, which has come back. That's Libra.
Cody Simms (00:28:10):
The podcast for listeners is Cleaning Up, make sure you listen to it, it's what ... You've done 125, 150 ish episodes I think, right? You've covered a wide range of topics.
Michael Liebreich (00:28:19):
That's right. It's Cleaning Up. I now turn the rest of this podcast into an extended plug for Cleaning Up. You can find the website, it's cleaningup.live. I think that the main point of differentiation is actually not the topics, so much as the people. I mean we've had everybody from Tony Blair to Jigar Shah, you obviously know extremely well, to Alex Honnold who climbed El Cap without a rope. He has a solar foundation and I got him on the show. We've had Dan Yergin who wrote the classic books on the energy sector. We had the woman who glued herself to the Shell headquarters and the guy who's in charge of the Shell scenarios.
(00:28:59):
We had Bill McKibben, the founder of 350.org, and one of the great protesters, I don't know how many times he'd been arrested, but also Tony Abbott, the self-avowed climate ... I don't use the word denier, but super skeptic, former minister of Australia. Prince Albert of Monaco, one of the most recent ...
(00:29:17):
So, it's just this huge diversity of people. So, that that's over in the media business. It's sponsored, sponsored by the way, by somebody you probably also know, Capricorn Investment Group, who are behind so many great companies that you've had on your show.
Cody Simms (00:29:30):
Sure.
Michael Liebreich (00:29:30):
So, podcast, speaking, writing, that's media. Angel portfolio, which is now about 20 companies. Most of it is startup, some of it is a bit later stage. If anybody's concerned that I promote them on one, on the media business and invest in it, absolutely, you betcha. That's part of the business model. But I do disclose. I've got a disclosure page on my website, liebreich.com, you can find my register of interest. I'm very transparent about that.
(00:29:56):
And then the third piece is advisory. And we will raise a fund, just like yourselves, when the timing is right and we get the right constellation, the right people around the table, we'll raise a fund. It will be probably a later stage growth fund, not a deep tech VC fund. But we advise some startups and we also advise some hedge funds, banks, infrastructure funds. So, we advise sell side and buy side.
(00:30:23):
The startups want money, but they also want this kind of growth hacking because me and also the other two people that I do that with, Henry Lawson and Henrietta Jowitt, we're all business builders. We're not deep tech. We've got science background, but really we're business builders. So, we've stood in the shoes of a startup, entrepreneur, who needs to, I don't know, hire a sales team in Latin America, or register some patents, or fire somebody who's being difficult. So, we can do all that coaching. We do that. We do the growth hacking with the entrepreneurs and then also advise the buy side, the people with the money, a lot of family office, so many people coming into this space, they don't know what they really want to be investing in. They talk to us.
(00:31:05):
And what I would say how it fits together is I talked about the network, but it's also the worldview. I've developed a very, very, I think integrated, internally consistent view of how the net zero transformation plays out. What works, what doesn't work, who's going to win, who isn't, more or less. And people disagree with it, that's cool because I can learn and what whatever. But if they agree, then they're either going to hit the media business or the advisory business, or perhaps come in via one of the startups, co-investing or whatever.
Yin Lu (00:31:37):
Hey everyone, I'm Yin, a partner at MCJ Collective, here to take a quick minute to tell you about our MCJ membership community, which was born out of a collective thirst for peer-to-peer learning, and doing that goes beyond just listening to the podcast. We started in 2019 and have grown to thousands of members globally. Each week, we're inspired by people who join with different backgrounds and points of view. What we all share is a deep curiosity to learn and a bias to action around ways to accelerate solutions to climate change.
(00:32:04):
Some awesome initiatives have come out of the community. A number of founding teams have met, several nonprofits have been established, and a bunch of hiring has been done. Many early stage investments have been made, as well as ongoing events and programming like monthly women in climate meetups, idea jam sessions for early stage founders, Climate Book Club, art workshops and more. Whether you've been in the climate space for a while or just embarking on your journey, having a community to support you is important. If you want to learn more, head over to mcjcollective.com and click on the members tab at the top. Thanks and enjoy the rest of the show.
Cody Simms (00:32:38):
Well Michael, I find it fascinating because at MCJ we say our three pillars are content, capital, and community with community leading the charge across all of those. And I'm hearing you say quite similarly, content, capital and network with network being the way you all have managed to ... You personally and people around you have managed to drive community, which is being this connective tissue in the industry as it's transitioning.
Michael Liebreich (00:33:01):
There's something generalizable from this because there may be investors, there may be some hedge funds that are incredibly secretive about what they do. But we do see this model of people investing but also needing a media presence, needing a brand, needing to attract community, needing a network so that they can actually growth hack their portfolio companies. We do see it, I think, not just in climate, it may be particularly valuable in climate because climate goes across everything. It's like biochemistry to infrastructure. Bringing it all together is hard.
Cody Simms (00:33:35):
The way I view it is we're in this moment of transition. So, getting cross-pollinization of ideas and breaking down vertical industry silos is incredibly valuable right now, at this moment in time. Learning how someone with a fermentation background leans into the chemistry space, for example, is that silo busting nature that works through community and through network.
Michael Liebreich (00:33:56):
I'll give you a funny story about joining the dots, looking back. When I was at McKinsey, I got sent off, I was kind of the foreign legion because I kept on going skiing. So, when I came back I had to accept whatever horrible study in some the out of town location. And I got sent to Southern Germany to work on the German soft cheese industry. These are like brie style cheeses, also cream cheeses and hard cheese and whatever. And I spent nearly a year doing that.
(00:34:24):
And there's no way at the time that I would've thought that that would be useful in any way. It was interesting. But you know what? It's bioprocessing. You're using enzymes, you're using fungi. You are processing a natural product. In this case, it's grass. The cows eat the grass, the cows make the milk. And you're trying to produce a product which is high quality and standardized across the year. And then you're trying to get it out into a distribution system.
(00:34:48):
Well guess what? It's biofuels. Not exactly, but there's a lot of learning. Now, never in my wildest dreams would I have thought that it would be useful, but you know what? It was.
Cody Simms (00:34:57):
I love it. I think it's a unique skill to be able to pull disparate dots and connect them together, to see how to leverage them. And I think that's where you've been able to be that dot connector for people that helps you as you continue to be a significant nexus point in this space.
Michael Liebreich (00:35:16):
That's exactly how I see it. So it's nice to hear it mirrored back. The stories, I mean I was working on perestroika in Russia and now of course, you've got Russia sadly producing some of the most appalling news, but it also ricocheting around the energy sector. And I've been there, lived there. I've met some of the people who are horrendously doing or supporting some of these things. So, I do have these weird dots in my background that I can draw on and hopefully learn from just a little bit faster than the next person.
(00:35:46):
So, I have done thermodynamics and I have done living in Russia and I have done the cheese industry and I have done just ... And I've done a lot of mechanical engineering. And here's another dot, just extraordinary good fortune. My first job, I was calculating learning curves, just by chance.
(00:36:03):
In the 1980s I did learning curves for things like printed circuit boards, but also rock quarrying and oil rigs. And so, I became just passionately, not passionately a believer, but just convinced. And I got a very strong analytic background in learning curves. So, then you come into the people worrying about solar and what does it do and what does it ... And I'm the guy that says, "I don't know all the ins and out. I don't know, quantum dot and whether it's going to be cadmium telluride or ... I do know it's going to get cheaper on this curve forever."
Cody Simms (00:36:31):
And to me, the takeaway from this portion of our conversation is when I was in my 20s, I had a lot of angst. I'm now in my mid 40s, so that was a while ago, but I had a lot of angst about being a generalist. It's like, "Oh, do I need to pick a path and go really deep?" Frankly, I didn't. I would call myself quite the generalist. And I think the takeaway is for folks who feel that they have lots of interests, being a generalist is okay, if you can figure out how to harness that as a superpower. Lean into that, don't shun it because you can use it in a very positive way.
Michael Liebreich (00:37:00):
I don't know if I should say yes or no, or perhaps the caveat is a different one. You used the word angst. I mean, I would actually even take it further and talk about mental health because I found this process of being a generalist really, really hard, particularly in the context that I left Cambridge having done extremely well in engineering. I was the only person who didn't go into a graduate training program because I went skiing. Now, everybody was like, "Wow, he's a ski bum. How cool." And I'm sitting there going, "Oh my God, I've probably blown my entire career."
(00:37:29):
And a few other times, and leaving McKinsey, I did not have the job with the AP lined up. That was angst. The dotcom when that blew up and I had years when I didn't know what I was going to do, it's really stressful because the problem with being the generalist is you're not the best at marketing, you're not the best at finance, you're not the best biochemist, you're not the best cost engineer. Whatever it is, you're not the best. And so you seeing these other people coming past you and doing really well, it is that Steve Jobs point, it will make sense. It will come back together.
(00:38:03):
And maybe the generalists, as long as you can keep slugging, maybe it's later in your career that you can accelerate. Some people are lucky, they become entrepreneurs in their 20s. But most don't. Mostly it's in the 40s and the 50s, when suddenly you're like, "Hang on a second, I've got the character, I've got the network. I understand, maybe I've even got a little bit of a financial cushion. I've got the resilience and I can put this together. Maybe we get to accelerate. Please tell me it's so."
Cody Simms (00:38:30):
Michael, we could continue on this conversation of generalists. I appreciate it. What I want to do for the last little bit is dive into a couple topics related to the clean energy transition, just to hear your thoughts. Recognizing you are not an expert in any one of these, but that you are able to speak across many of them. We talked a little bit, you brought up Russia, so let's start there.
(00:38:50):
We just finished the winter for the most part of 2022, 2023. There was a lot of conversation heading into the winter season about what was going to happen in Europe related to energy because of natural gas, Russia, Ukraine. What ended up happening? What did the winter in Europe look like from an energy perspective?
Michael Liebreich (00:39:12):
So largely, I was going to say we dodged a bullet, but I think that's an inappropriate thing to say in the context. I mean, this is just a horrendous, horrendous situation. It's an unprovoked, barbaric invasion. But we had a mild winter and that really helped because we were not ready. And I would say that a lot of our leaders, first of all, it was absurd, the extent to which they had become dependent on Russian oil, gas, coal, fertilizer, food stuffs, et cetera.
(00:39:41):
But then even when that war started, when Russia invaded, we had these conversations about fracking, or nuclear, or hydrogen as a solution to this incredibly urgent problem and urgent not just for clearly, Ukraine and for Europe, but really around the world. There are so many countries that were importing food stuffs and the energy and food stuff and fertilizer price spike is tragic around the world. It took far too long, I think, for our leaders to get to grips with it.
(00:40:11):
We started really only last summer. We've done a bunch of stuff, rerouting, energy supplies, et cetera, but we were really lucky because of the mild winter. Really, really lucky. So, we have to not be lucky this coming winter. We've got whatever it is, six, seven months to get ready and we have to be ready and we have to purposefully eliminate our dependence on ... or maintain our independence from particularly Russian pipeline gas. Everything else can be rerouted.
Cody Simms (00:40:39):
How does that happen? Does that mean an investment into fracking and gas infrastructure in Europe? Does that mean incredibly fast deployments of renewables and storage? What do you see happening over the next six months?
Michael Liebreich (00:40:54):
Fracking in Europe wouldn't be big enough or fast enough to make any difference. But LNG terminals, what we need to do is, and they are I think Germany now has got five LNG terminals. And so that's a big chunk of the answer. I mean a big chunk, it's not more than half, but it is a chunk and we have to do it in such a way that it doesn't lock us into fossil fuels forever. But what we're seeing is a rewiring. So those Russian energy supplies which were coming into Europe, they will ultimately end up going east and south and costing more to distribute and taking hopefully decades to build that infrastructure.
(00:41:28):
And then the LNG that doesn't go into Japan and India and Korea and so on, South Korea, that will come into Europe. So, that's what's happening on the fossil side. And we are friend-shoring. Suddenly you can buy a bit more from Norway or even North Africa rather than from Russia or from ... Now, I think people are reassessing the risk of other geographies as well. But the other thing that we have seen is this incredible acceleration of the clean energy sector. So, energy efficiency and the rapid acceleration in renewables in heat pumps. I mean, heat pumps are going ... They're growing at 35%, 36% year on year in Europe I think, actually no, that was the IEA figures are, I think, 36% worldwide. So, we're now really seeing heat pumps go and that's probably the best single energy efficiency technology that we've got, is actually the heat pump. And so, that's really great to see.
Cody Simms (00:42:23):
Isn't it amazing to think about it that way though? So, it's converting the sources of energy from Russian to more localized sources and accessing them. So, basically rewiring the supply chains for gas as you mentioned, but it's also reducing dependency on gas of course, and doing that by leveraging technologies and rolling out technologies fast. What are you seeing that are beyond just the imperative need to do it? Is there a policy environment that is helping deployment of heat pumps and other efficiency related technologies quickly across the EU?
Michael Liebreich (00:42:58):
Definitely. So, there'd been a lot of policies that were working their way through the sausage machine in Brussels. So, they had the Fit for 55. So their target is a 55% reduction in emissions between 1990 and 2030. But then after the Russian invasion and the period of running around, not really addressing how dramatic it is, in fact, I would say understanding perhaps how dramatic, but still thinking, "Well, surely we'll be allowed to use some Russian gas and some Russian oil." And it took them until the summer to say, No, the correct number is zero."
(00:43:28):
But then they have new package of policies called Repower EU, and that's taking even further the imperative of 55. But what's really thrown an absolute curve ball at all of that, is of course your US Inflation Reduction Act. So, now everybody's running around going, "How do we respond to that in the UK? How do we respond in the EU? How do we respond in Germany?" And there's something refreshing about the worries that the US is moving too fast.
(00:43:56):
There's something also slightly worrying about it, in that some of those IRA subsidies supports are so generous that they become distortive. They risk us wasting a load of money on stupid stuff that doesn't go anywhere. And of course, there's a protectionism concern.
Cody Simms (00:44:13):
Yeah, I was going to say, I've heard the phrase green protectionism coming out of Europe with respect to the Inflation Reduction Act. Maybe unpack that a little bit for us, just so listeners who haven't heard this point of view can understand it a little bit more.
Michael Liebreich (00:44:25):
So, I'm a longtime fan of free trade, particularly in clean energy, or sustainable, or climate related technologies and services. And I think that's also vitally important. And I was pushing that and promoting it back in 2009. And amazingly, we nearly got an environmental goods agreement in 2016, and then I think the Trump election victory put the kibosh on that and China pulled out of the negotiations.
(00:44:52):
But the point about free trade is it pushes the costs down. And if you want cheap solar, if you think about where does the silicon come from? The silicon might come from the US, it might get refined in the US or in Europe. The wafers may get made in China, turned into panels in, I don't know, Abu Dhabi. And all of this drives down the cost. Same with electric vehicles.
(00:45:13):
You might have spodumene being mined in Australia, that's turned into the lithium carbonate and turned into a battery that goes into a Tesla, that rolls off the factory in California or Texas or whatever. And we need that.
(00:45:25):
This idea that we're going to be able to home-shore, that we're going to be able to capture the whole value chain in one geography, we will put up the cost of the transition and we will slow it down. Now, we have to deal with overdependence on China. I'm also a defense hawk, so don't get me wrong, but we have to ... If in doubt, we need to make sure that we preserve free trade. And of course, when you look at the provisions of the IRA that the jobs have to be in the US, the factories have to be in the US that is so core to the Biden philosophy of good jobs, union jobs, which I understand is the political constituency out of which he comes. But there is a danger there. And if everybody around the world does the same thing and says, "Nope, you've got to have ... The jobs have to be in the UK, the jobs have to be in Germany, the jobs ... " and of course China is not going to just sit there.
Cody Simms (00:46:10):
India has a whole thing that has gone live in India called the Production Linked Incentive scheme, there's a ... It's happening, right?
Michael Liebreich (00:46:16):
Yeah. And local content rules tend to push up the cost. They sometimes work, but they often don't work in terms of creating domestic industries.
Cody Simms (00:46:25):
I mean, I'm curious, not that you're a super policy expert, but at the highest of levels, in order to get something through a local policy environment, you have to make it good for that locale. And yet, we're at this tragedy of the commons issue where if everyone did that, it would halt progress. And so, how do you think we as a collective, we should be finding that balance?
Michael Liebreich (00:46:47):
I think the answer is that we're going to muddle through, if I'm honest. Trying to overdesign it and saying we need unfettered free trade in anything that in any way is related to green, is going to just get allergic reactions. Even if it's just around dual use technologies, digitization, whatever. But equally, trying to grab the whole value chain and say, "Well, we must mine rare earths in Australia, process them in Australia, turn them into magnets in Australia and hell, we must build wind turbines." That's not going to work either. I think it's challenging.
(00:47:18):
What I would say is that competition between the blocks, it's not obvious to me. We've had 27 COP meetings at the UN FCCC COP meetings. We've had endless coordination and cooperation and I don't want to say there's not much to see from it because there is, there's the Paris Agreement and there's some very good cooperation that's come out of that. But we got the space race. The US put a man on the moon because of the space race, not because of the space cooperation. And so, it's this kind of ... I want to say muddling through is probably being disparaging. We will negotiate, we will problem solve. Hopefully we'll keep the lines of communications and cooperation open, but equally we'll compete ruthlessly where possible and try to capture the value add from these technologies and these emerging sectors.
Cody Simms (00:48:08):
One thing that I'm seeing that does make me a bit optimistic with respect to this protectionist potential problem, at least in the US right now, is these policies. Because they're incentive-based policies, they're not punitive, they're incentive based, they're creating tax credits when a production pipeline meets a certain criteria around domestification of the materials or the production. What we're starting to see is an incredible amount of investment into, particularly in the battery space, recycling technologies.
(00:48:36):
So, even if the battery was originally sourced in mined and created in China, if it's then brought into the US and then recycled, it is considered US supply chain at that point. That circularity should be considered a positive development for all, I would think, because it's requiring less mining out of the ground.
Michael Liebreich (00:48:55):
Yeah, let me unpack that because there's two different pieces. One is recycling important. Yes. The idea that you sort of bring something into the US, recycle it and then re-export it and that you get these credits, I would be very careful with that. I'd be very careful.
(00:49:08):
So, tonight I've got an episode of my podcast with Marco Alvera. He's taking hydrogen from the US, capturing CO2 in the US, combining them into methane, putting them on the ship and bringing them to Europe. The fundamental driver of the economics is that to get one kilo of hydrogen in Europe, he has to create two kilos over in the US, so that's two times $3 in the US. And then he gets a credit for capturing the carbon as well, which simply goes across the Atlantic and gets emitted. So, it's enormously distortive.
(00:49:40):
I don't know what the number is, but it may be a thousand dollars per ton of carbon CO2 avoided. And I wonder if I was a policymaker in the US I'd be going, "Wait a minute, why are we giving what is effectively $6 per kilo in Europe? You have $6 of tax break in the US and more for the carbon capture. Why are we doing that?" And during the first biofuels bulge, 2007, 2008, there was something called splash and dash. And what happened was, in Europe there was a mandate to use biofuels. In the US there was a mandate to blend. So, what you did was you grew something in the Caribbean, brought it into the US to blend and then shipped it to Europe, which just these ... enormously effective at hoovering up subsidies. But I would like to think that that will go away. I mean, that is not solving the problem, that is regulatory arbitrage.
(00:50:33):
I want to just come back to the recycling point because there are a few things. I'm generally very optimistic. We've bent the curve enormously on emissions. I mean, most people even listening to this may not know that global emissions have been flat for a decade or more. Actual energy and land use emissions overall, you always hear these news stories. Emissions keep growing. They don't, they're actually flat. We're at peak emissions. Not peak concentrations, right? Those keep going up.
Cody Simms (00:51:03):
Right. And not peak reduction, but flat.
Michael Liebreich (00:51:06):
We need to get down to zero, net zero. If you want to get something from something that's growing to something at zero, you've first got to go through a peak or a plateau. So, we're there. So, I'm very optimistic and I can see tons of opportunities. Your guests time and again, impressive and we'll be able to bend the curve further.
(00:51:22):
There are about five things I worry about though. I worry about transmission, the speed with which societies can approve and build transmission. I worry about cost of capital, particularly in the developing world. I worry about regulatory capture. There are just these things that I think are potential showstoppers. And I worry about rare earth metals or minerals because although there's plenty of them in the world, the supply chains are not there.
(00:51:50):
And so, recycling and that circularity piece is incredibly important because yes, we can mine more ... Not hopefully, we must mine justly. There's no point in the developed world being all virtuous and net zero and blah, blah blah. But we've trashed Papua New Guinea and Bolivia and it's just ghastly in other parts of the world. Absolutely not. So, we've got to do it in a just way. And of course in China, all those ... We've got slave labor in the supply chain and Xinjiang and that's got to be eliminated.
(00:52:19):
But recycling and energy efficiency actually are our superpowers because they reduce the scale of all of the problems that you ... Anytime you think, "Sheesh, this is actually going to be really, really hard." Why wouldn't you look over there and recycle or do energy efficiency and reduce the scale of that problem?
Cody Simms (00:52:38):
I want to hit the rest of these concern items that you laid out. You said rare earth metals was one and recycling fits into that. You mentioned transmission being one of your big concern items. Unpack that for us.
Michael Liebreich (00:52:48):
Right, so I did a really interesting conference. I helped to create on behalf of a Swedish bank called Swedbank, and we had three panels and I helped to populate them and I moderated a couple of them. And broadly speaking, the first one was how do we get lots more clean energy, clean electricity? And the answer was, yeah, there's lots of things we can do. Lots of wind, lots of solar. Geothermal I think is having a moment. And these projects take about five years.
(00:53:16):
The third panel was all hard to abate sectors. How are we going to do, I don't know, shipping and aviation fuels and fertilizer and steel? And do you know what? It was amazing. This was only a year or so ago, but there were loads of projects and they take about five years. That was great.
(00:53:35):
But the panel in the middle was how do we actually get the clean electricity and energy to where it needs to be and the transmission? And do you know what? It takes 10 to 15 years. So you've got five years to produce supply, five years to stimulate demand and 10 to 15 years to move the stuff around. And that's not good enough. And that's everywhere. That's everywhere in the world.
Cody Simms (00:53:57):
I assume you include storage in this transmission problem set?
Michael Liebreich (00:54:01):
Yes. I mean, it's funny because I don't jump to storage as the solution for variability. I think the issue is resilience and when you broaden to the question of resilience, you realize that you can start with demand response and the software solutions which are really cheap, you can look at all the batteries that are going to be in our vehicles, which again are going to be cheap to use for resilience. You can bite off pieces of the resilience problem. You really only end up with a two or three days and longer problem. And also, the national security, the strategic stockpile type problems.
(00:54:34):
So, it's not just storage, but yes, that's one of my five horsemen of the apocalypse. I've listed four. The fifth is variability and how we deal with it. Well, resilience rather. But the transmission one, what we really need to be doing is we need to be thinking about these transmission corridors that for sure are going to be needed and we need to be pre-permitting and we need to be getting the state to play a role. Because private money isn't going to do five years or seven years of consultations and prep work for an interconnection or a clean energy corridor with merchant risk.
(00:55:11):
We just don't have the pools of capital for that and risk capital for that. That's a role where I think governments, policymakers need to really step in and the whole process is, I don't want to say broken, but it's focused on speeding up a 15-year process. We really need to be thinking about what does the three-year process look like??
Cody Simms (00:55:29):
I mean, it's broken in enough in the US that it got completely slashed out of the Inflation Reduction Act. It was left on the floor of the bill. And part of that I think was a distrust that permitting reform would actually accelerate clean energy and wouldn't be a pawn of increased oil and gas permitting. How do you manage that?
Michael Liebreich (00:55:48):
Remember though, that you've got federal permitting for oil and gas pipelines but not for electricity. So, I'm not across the in and outs of beltway politics, but one thing, just bringing electricity into the same planning frameworks as exist for oil and gas would be a big thing. But as I say, one of my five horsemen or five horsepeople to be correct, is regulatory capture. And that could be bribery and corruption around the world. It could be, well, I mean, I don't know what buying senators and Congress people ... It's not called bribery, but it seems bizarrely close to an outsider.
Cody Simms (00:56:24):
It's called dark money and it's pretty close.
Michael Liebreich (00:56:26):
But if you were to give me one Christmas wish, it would be actually probably, campaign finance reform in the US. The one single thing that would accelerate the net zero transition is probably campaign reform. Campaign finance reform.
Cody Simms (00:56:40):
Yeah, that is such under-talked about topic in the climate space. But I would tend to agree with you, let's talk about your next horseperson, capital in the developing world into clean energy.
Michael Liebreich (00:56:50):
Right. And that one's something I've been working on for well over a decade. I was asked to go to Mexico, another great join the dots backwards situation, as the guest of Carlos Slim, who was at the time the wealthiest person in the world, to work with a group within the UN who were trying to get energy integrated into the UN's, the millennium development goals. The ones we had from the year 2000 to 2015 did not include energy and they were trying to rectify that.
(00:57:20):
And this was around, I don't know, 2000 and probably '08, '09, and I went over there. That eventually became Sustainable Energy for All and eventually we managed to get that to be SDG 7 under the brilliant leadership of Kandeh Yumkella, Rachel Kyte, some other people that if you haven't had on your show, you definitely should. Now, Damilola Ogunbiyi runs Sustainable Energy for All, but you've got SDG 7 and that's all about renewables and energy efficiency and energy access. Vitally important, vitally, vitally important.
(00:57:50):
The problem is for all that solar and wind and it's going to be geothermal and batteries, EVs, but for all that they get cheap in places where capital forms and where interest rates are moderate. If you've got a 15% interest rate in Malawi, or 12% in Ghana, or whatever the rates are, that is not a cheap source of electricity. And we see this enormous bias, where these clean energy projects are being built. Yes, in the developing world, but if you look at it, big chunk of that is China and Chile and places that I don't think you and I would really agree developing. There're certainly not slow developing. You go to the slow developing countries and there is almost none going on. So, we've got these blended finance solutions, the World Bank, the Africa Development Bank, the Asia Development Bank, but we will have won this thing when Jamie Dimon, when it's J.P. Morgan that is hoovering money into clean energy in Africa and not just some very good, well meaning, I don't want to use the word pseudo bankers, but there you go. I've said it. The development banks play a vital role, but their balance sheets are minuscule compared to the trillions and trillions that really need to flow.
(00:59:07):
During COP 26, I had a meeting with Larry Fink and it was like the guy's biggest problem, he's got $10 trillion, how do you put that into clean energy solutions? It's like, well, figure out how to get a big chunk of that into these very rapidly growing countries, where this stuff is just not happening or not happening anywhere near fast enough.
Cody Simms (00:59:27):
For listeners, I highly encourage you to go back to our archives and listen to the episode we recorded with Emily McAteer of Odyssey Energy Solutions, who is actively helping to drive more of this capital via a software platform currently into Nigeria, but also looking at multiple other developing market economies as well. And it's so interesting to hear how the role that software and financial marketplaces can play in accelerating that.
Michael Liebreich (00:59:52):
We need to share some potential guests because we had an extraordinary entrepreneur working out of Africa, Ana Hajduka, and she has spent the better part of, I don't know, eight or nine years, pushing for the opening up and the development of power pools. So, this is the ability ... So, you can sell some offtake via a PPA to a buyer, but if they have a poor credit rating and they go bankrupt, you need physically and from a market perspective, to be able to sell to somebody else. That's your only protection. And that was not possible in a lot of the African countries, between African countries. And she has just done brilliant work and it's now finally ... This capital's starting to flow 50 million, 80 million, 120 million and it's starting to happen. There are the success stories, there really are, but we got to get those stories out, shared through communities like ours and more of it happening.
Cody Simms (01:00:41):
Fantastic. And let's hear, I think it's your last horseperson.
Michael Liebreich (01:00:44):
Resilience, and resilience I think is such a big one. Right now, we are having a debate in the UK because we're about to have a lot more offshore wind. As in, we've got 12 gigawatts of offshore wind. The goal is to have 50 gigawatts by 2030. I think we may get to 40, 45.
(01:01:02):
And the issue with wind is that you get these two week periods, what the Germans call the dunkelflaute, the dark doldrums. And then the question is what do you do when most of the year you're absolutely fine, but then in those periods you're not? And again, a guest on Cleaning Up, on my podcast, Professor Sir Chris Llewellyn Smith, has done a load of work on deep salt cavern, hydrogen storage. So, if you're looking for a technological solution to resilience, then it's going to be all of the things we've talked about.
(01:01:32):
Another one, I have a personal angel investment in a company called Xlinks, which is an undersea cable from Morocco, bringing very cheap wind and solar, little bit of batteries to smooth it out. And then bringing that all the way around the European coastline, offshore and into the UK to provide dispatchable clean energy. So there's a electricity market solution.
(01:01:54):
So, I mean, this is back to my saying, it's not all about storage. There's some different technologies, there's some market developments, but we're going to be in a deeply electrified future.
(01:02:06):
As you know. I'm not one of these people who thinks hydrogen is going to do everything up and down the stack, cars, buses, scooters, heating, et cetera, et cetera. That's going to go electric. So, we really, really have to keep the lights on. We really have to. And not just the lights on because now the electricity is charging the police cars and it's keeping the old people warm so they don't get into hypothermia in the winters, or they don't get heat shock in the summers. So, we have got to keep the electricity flowing. So, we are not investing enough in those resilience solutions and the resilience thinking.
(01:02:41):
What is the policy framework if you have a really bad year? I'm talking about a once in 40 years, bad year for wind. Is it okay if lots of your economy shuts down for three months? No, it's really not. So, what are we going to do?
Cody Simms (01:02:56):
I mean, you think about, we started the conversation talking about transitioning to digital and the internet, and I remember those early days when all of a sudden the WiFi's out in the office and everyone just has to go home because there's nothing to do. When you fast forward that to, oh, now our entire world is powered by electrons, and if the electrons aren't happening right now, what happens? It certainly can be incredibly impactful.
Michael Liebreich (01:03:17):
Think about it, you won't even be able to go home, because you won't be able to charge any vehicles or you might be able to go home once, but that's it. But you won't even be able to go to the coffee place because the payment system isn't going to work. Or the coffee machine, which is electrical, isn't going to work. We are going to be so electrical. Okay, it's fine, put all your eggs in one basket, but then guard the basket. And we also have to have a conversation in that context about nuclear, largely just because it's going to be a vector of diversification of risk. The fact that you have some power stations like this and some like that, is a good thing.
Cody Simms (01:03:49):
We haven't dived into nuclear, we haven't dived into hydrogen. We could go on for another hour. I think we probably are at the point where we should call it for now. Maybe we'll schedule another one of these. I encourage people to go to the Cleaning Up podcast. Michael has a wealth of episodes covering many of these topics. Any other places you want to point our listeners to follow up on your work, Michael?
Michael Liebreich (01:04:11):
So first of all, Cody, bless you for not diving into hydrogen. I just seem to spend most of my life in the hydrogen cage fight because I've been a vocal proponent of being sensible and only doing the things we really have to with hydrogen.
(01:04:23):
I think, look, there's the podcast, the show notes of the podcast. The pieces I write for Bloomberg, every single one takes me two, three weeks to write. It is really the distillation of my thoughts on, there's nuclear, there's trade, there's finance, there's resilience, there's a whole bunch of this. So, I would like to think those have a shelf life of more than fish and chip wrappers, more than the daily newspapers, if such a thing still exists and some of them are worth reading. I wrote one in 2015 about inclusion, about how we will move faster and better on this journey if executives no longer look like you and me, Cody. If they actually are diverse across gender and minorities and so on. So, some of these things are real classics, seek them out. I would love for people to do that and let me know what you think.
Cody Simms (01:05:08):
Well, Michael, I so appreciate you taking the time to come on. Hopefully our listeners have learned more about your podcast, your points of view, your writings, learned a little bit about what it's like to navigate your career, trying out what's interesting to you and expanding on it from there. And feeling inspired that there are pathways for all of us to harness the things that we're interested in and turn them into productive uses. So, thanks for your time today.
Michael Liebreich (01:05:34):
Absolutely. It's a great pleasure. Thanks for your time.
Jason Jacobs (01:05:37):
Thanks again for joining us on the My Climate Journey podcast.
Cody Simms (01:05:41):
At MCJ Collective, we're all about powering collective innovation for climate solutions by breaking down silos and unleashing problem solving capacity.
Jason Jacobs (01:05:50):
If you'd like to learn more about MCJ Collective, visit us at mcjcollective.com. And if you have a guest suggestion, let us know that via Twitter @mcjpod.
Yin Lu (01:06:03):
For weekly climate op-eds, jobs, community events, and investment announcements from our MCJ Venture funds. Be sure to subscribe to our newsletter on our website.
Cody Simms (01:06:13):
Thanks, and see you next episode.
