Making waves

Summary

Marketplace Podcast Summary: "Making Waves" (February 12, 2025)

Host: Kai Ryssdal

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Federal Reserve and Economic Policy

Overview: In the episode, Kai Ryssdal delves into recent developments surrounding Federal Reserve Chair Jay Powell's testimonies before Congress. Powell emphasized the strength of the U.S. economy and the Fed's commitment to monitoring inflation and adjusting interest rates accordingly. However, his remarks were met with politically charged questions from senators, extending beyond the Fed's typical economic focus.

Key Points:

• Powell’s Testimony: Powell maintained that the Fed is solely focused on its economic mandate, refraining from commenting on tariffs or presidential statements. He stressed the importance of the Fed's independence in shaping monetary policy.

• Senate Interaction: Senators shifted the discussion to more political topics, questioning tariffs and administration policies, which Powell redirected back to economic fundamentals.

• Small Business Optimism: Despite a slight dip in the Small Business Optimism Index for January, small businesses remain relatively optimistic. However, uncertainty remains high, particularly in hiring, as over a third report unfilled job openings.

Notable Insights:

• Labor Market Challenges: The conversation highlighted a significant skilled labor shortage, especially in industries like construction. Small businesses struggle to compete with larger firms on labor costs, exacerbated by uncertainties in tariff and immigration policies.

Quotes:

• “It can feel in these early days of 2025 like nothing can slow AI down.” – Sam Altman, CEO of OpenAI (05:08)

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AI Acceleration and Regulation

Overview: The podcast explores the rapid advancements in artificial intelligence, highlighting the tension between techno-optimists and those advocating for regulatory measures to mitigate potential risks.

Key Points:

• Accelerationism in AI: A faction within Silicon Valley pushes for the rapid development of AI, often viewing regulations as impediments. This group aims to achieve superhuman intelligence swiftly, disregarding potential large-scale harms.

• Regulatory Challenges: Despite gatherings like the AI summit in Paris, there remains a notable absence of discussions on large-scale risks associated with AI systems. This indicates a possible shift towards prioritizing acceleration over safety.

• Industry Perspectives: Leaders like Marc Andreessen advocate for minimal regulatory interference, emphasizing continuous technological improvement without constraints.

Notable Insights:

• Balancing Innovation and Safety: The episode underscores the difficulty in controlling AI advancements while fostering innovation, suggesting that current regulatory frameworks lag behind technological progress.

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Labor Force Participation in New England

Overview: The discussion shifts to the labor force participation rate in New England, which remains significantly lower than the national average due to an aging population and high retirement rates.

Key Points:

• Demographic Challenges: New England faces a substantial recovery gap in labor force participation, primarily driven by an older population and high retirement rates among experienced workers.

• Business Impact: Companies like Windows and Doors by Brownell in Vermont struggle to fill positions, leading some to consider relocating operations to states with more favorable labor markets.

• Population Growth Goals: Efforts are underway to increase Vermont's population by attracting more working-age individuals and expanding housing to support economic growth.

Notable Insights:

• Retention Strategies: Businesses are incentivizing workers to stay longer, but this alone won't bridge the significant demographic gaps unless accompanied by broader population growth initiatives.

Quotes:

• “It's really, really difficult to work in the ocean and to have things operate in the ocean.” – Dr. Lisa Johnson (26:50)

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Mega Factory Farms and Environmental Impact

Overview: The episode examines the rise of mega factory farms in the Midwest, focusing on their environmental repercussions and the challenges faced by communities living nearby.

Key Points:

• Scale of Operations: Farms like the one in Malcolm, Iowa, house millions of animals, drastically exceeding regulatory thresholds and contributing to significant environmental pollution.

• Regulatory Gaps: Agricultural exceptionalism exempts large animal farms from many environmental regulations, leading to unchecked pollution of air and water resources.

• Community Struggles: Residents near these farms report severe odor issues and health concerns, but regulatory bodies often fail to address their complaints effectively due to industry influence.

Notable Insights:

• Consumer Responsibility: The surge in demand for meat, dairy, and eggs has fueled the growth of these large-scale operations, indicating a shared responsibility between producers and consumers in addressing environmental impacts.

Quotes:

• “Some of it comes back to us. Americans have been pretty quickly increasing their consumption of meat, milk, dairy, and eggs over the years.” – Holly Wade (17:51)

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Renewable Energy Innovations: Harnessing Ocean Waves

Overview: Highlighting advancements in renewable energy, the podcast features a pilot project at the Port of Los Angeles aiming to utilize ocean wave energy as a sustainable power source.

Key Points:

• Technology Deployment: Alta Sea is testing wave-powered devices designed to generate consistent energy without relying on traditional batteries. These floats convert wave motion into pressurized air, which then drives turbines to produce electricity.

• Challenges Faced: The harsh marine environment poses significant hurdles, including corrosion, mechanical wear, and regulatory compliance. Additionally, the current output is modest, powering roughly 80 households.

• Future Prospects: While still in the early stages, proponents believe wave energy could follow a similar developmental trajectory as solar and wind power, gradually overcoming initial obstacles to become a viable energy solution.

Notable Insights:

• Sustainability Efforts: The project underscores the importance of diversifying renewable energy sources to create a more reliable and stable energy grid, especially in regions prone to fluctuations in wind and solar availability.

Quotes:

• “The floaters at the port of Los Angeles will get dropped in the ocean and brought online next month.” – Hamza Choudhary (27:47)

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Steel Tariffs and Global Market Dynamics

Overview: The episode addresses President Trump's new 25% steel tariffs, exploring their implications for the U.S. steel industry and the broader global market.

Key Points:

• Historical Context: The U.S. once dominated global steel production but has since been surpassed by countries like China, which now produces more steel than the rest of the world combined.

• Market Impact: While domestic steel producers may experience short-term gains, the overall influence of U.S. steel in the global market remains limited. Additionally, U.S. steel employment has declined due to technological advancements rather than solely because of import competition.

• Trade Relations: The majority of steel imports come from political allies, ensuring a steady supply even amidst tariff impositions. However, reliance on foreign steel continues to pose challenges for achieving significant market dominance.

Notable Insights:

• Competitive Edge: The decline in U.S. steel employment is attributed to increased efficiency and automation, allowing producers to remain competitive without a large workforce.

Quotes:

• “We are much closer to getting to advanced AI than knowing how to control it.” – Kai Ryssdal (07:48)

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Financial Markets Snapshot

Overview: A brief segment covers the day's financial market movements, highlighting key indices and asset performances.

Key Points:

• Stock Market: Dow Industrials rose by 123 points, nearing 44,593, while the Nasdaq experienced a slight dip of 70 points. The S&P 500 showed minimal movement.

• Commodities: Gold reached a new 24-hour high at $2,950 per ounce, reaffirming its status as a safe-haven asset. Bond yields also shifted, with the 10-year Treasury note yield rising to 4.54%.

Notable Insights:

• Market Volatility: The mixed performance indicates ongoing volatility and investor uncertainty amidst various economic and geopolitical factors.

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Closing Remarks

In its final notes, the podcast touches upon the substitution effect in corporate strategies, exemplified by Coca-Cola's flexible packaging solutions in response to fluctuating input costs due to tariffs.

Key Points:

• Corporate Adaptability: Companies like Coca-Cola are diversifying their packaging options to maintain margins despite rising costs, showcasing adaptability in supply chain management.

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Conclusion: The "Making Waves" episode of Marketplace provides a comprehensive overview of current economic policies, labor market challenges, technological advancements, environmental concerns, and global trade dynamics. Through insightful discussions and expert analyses, the podcast offers listeners a nuanced understanding of the multifaceted forces shaping the business and economic landscape in early 2025.

Transcript

[Dr. Lisa Johnson]

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[Kai Rysdal]

How many ways do you suppose can Jay Powell say nothing? From American Public Media, this is Marketplace in Los Angeles. I'm Kai Rysdal. It is Tuesday today, the 11th of February. Good as always to have you along, everybody. We begin with the long and the short of it from Fed Chair Jay Powell. Quite literally the long and the short. Actually, the head of the central bank went up to Capitol Hill today for one of his regularly scheduled sessions in front of lawmakers. The Senate today, the House tomorrow. And Jay Powell being Jay Powell, he clearly had every intention of sticking to his monetary policy knitting, saying in his prepared remarks that the economy is strong and that the Fed's still keeping a close eye on inflation and in turn what it ought to do with interest rates. Senators, though, had other ideas about what they wanted to talk about. The vibe was more political than economic. Here's Powell the longer after a question about tariffs. It's not the Fed's job to make or comment on tariff policy. We, you know, really, that's for elected people and it's not for us to comment ours. Ours is to try to react to it in a thoughtful, sensible way and make monetary policy so that we can achieve our mandate. Knitting sticking to it. Another question. Same vibe, just shorter. I'm not going to comment on things that the President says. This too should be said. Powell did tell senators that the administration's Government Efficiency Group has not yet tried to get into the Fed or its systems. We got an update today on how small businesses are feeling amidst all the economic agita. The National Federation of Independent Business is out with its monthly Small Business Optimism Index down in January. But those small businesses are still more optimistic than they usually are. The index, though, also measures business uncertainty, which hit its third highest level ever. And among the biggest challenges hiring. More than a third of businesses surveyed said they had job openings they couldn't fill last month. Marketplace's Megan McCarty Carino has that one.

[Megan McCarty Carino]

The good news is that small businesses want to hire, says Holly Wade at the NFIB Research Center. The bad news?

[Holly Wade]

It's been a really tough road over the last number of years to find.

[Nick Tremper]

Applicants for those high level of job.

[Holly Wade]

Openings that they continue to have.

[Megan McCarty Carino]

The survey found 90% of the small business owners trying to hire in January reported few or no qualified applicants. Federal data show the ratio of open jobs to unemployed workers has been around one to one in recent months. But several industries, like construction, are struggling with a shortage of skilled labor.

[Kai Rysdal]

You don't even get people to apply anymore.

[Mark Thompson]

I've pretty much given up.

[Megan McCarty Carino]

Bruce Jovag owns Norse Construction in St. Louis, Missouri. His crew of three to four guys do mostly kitchen and bathroom remodels, room additions and basement finishes. But if you're dreaming of updated cabinets, you'll have to be patient. His wait list is about four months long.

[Kai Rysdal]

I would love to be able to run a much shorter wait time, but I just simply can't, he says.

[Megan McCarty Carino]

Finding specialized workers like carpenters is bad, basically a lost cause. So he turns to subcontractors.

[Kai Rysdal]

I just had an interview recently with a gentleman, but his demands were just astronomical.

[Hamza Choudhary]

You know, health insurance and vacation right.

[Kai Rysdal]

Away and all this stuff.

[Mark Thompson]

I can't afford that.

[Megan McCarty Carino]

There's been a labor shortage in the skilled trades for years, but it's particularly tough for small firms, says Nick Tremper, senior economist at Payroll Platform Gusto.

[Nick Tremper]

Small businesses have to compete with the big guys on labor costs, and a lot of times they just, they can't do that.

[Megan McCarty Carino]

And questions about tariffs and immigration policies are making it even harder to plan for the Future. I'm Megan McCarty Carino for Marketplace.

[Kai Rysdal]

Speaking of which, planning for the future Wall street today Traders were of mixed minds. We'll have the details when we do the number. I made a quick mention of this at the end of the program yesterday that amid all the stuff that he is doing in Washington, Elon Musk has somehow found time to make a bid to buy Open AI for just under $100 billion. Sam Altman, the CEO of OpenAI, not so politely declined the offer saying, and this is a quote, I think he's probably just trying to slow us down. It can feel in these early days of 2025 like nothing can slow AI down. And there is a group of techno optimists in Silicon Valley that wants to push even harder on the gas pedal. Marketplace's Matt Levin has more now on the AI accelerationists At parties or conferences.

[Song Yi Yoon]

Or pretty much anywhere in the Bay Area. The AI accelerationists are kind of everywhere.

[Mark Thompson]

I mean, I think you cannot avoid it in Silicon Valley, I guess.

[Song Yi Yoon]

Song Yi Yoon is managing partner at Principal Venture Partners, which invests in AI companies. She says there's degrees of accelerationism and most people in tech want AI to get better in one way or another. But for louder and prouder accelerationists, the working definition is something along these lines. Let's make superhuman intelligence as quickly as possible.

[Mark Thompson]

And anything that slows down the adoption of the technology is viewed as roadblock and negative.

[Song Yi Yoon]

It's especially true of regulations and guardrails, which AI accelerationists view as unnecessary and over cautious. Hamza Choudhary is national security lead at the Future of Life Institute.

[Kai Rysdal]

One thing that's been really interesting to see in the accelerationist discourse is there's.

[Song Yi Yoon]

A notion that AI can't cause large scale harm. It's not just tech Bros. On X posting accelerationist memes, Venture capitalist and major Trump donor Marc Andreessen counts himself as an accelerationist. And while Chowdhury says it's too early to tell what President Trump will do on AI, the technology is getting better every day.

[Kai Rysdal]

We're unfortunately much closer to getting to advanced AI than knowing how to control.

[Mark Thompson]

It or to make it work for folks.

[Song Yi Yoon]

This week in Paris, billionaires and policymakers gathered for an AI summit similar to one held in London a couple years ago. Although Chadhury noticed one important difference in the conference declaration, the complete absence of.

[Kai Rysdal]

Any language on large scale risks from.

[Song Yi Yoon]

AI systems, Chaudhry says that's not necessarily a sign of acceleration is winning, but things are shifting. I'm Matt Levin for Marketplace.

[Kai Rysdal]

Five years ago, as the pandemic was really starting to bite, the American labor force was one of the early signs of big trouble a coming. Specifically the proportion of the population that was either working or actively looking for work that cratered. And the proportion is officially called the labor force participation rate. And after that sharp drop in the spring of 2020, it has been climbing back pretty steadily, except in the six states of New England. The Federal Reserve bank of Boston lays it out like this. Between 2019 and 20 and the country as a whole, the labor force participation rate was down a half a percent. In New England, it was off 2.3%. The Boston Fed says a big portion of that recovery gap, as they call it, is thanks to the region's aging population, which is a reality that could hurt the area's labor force in the years ahead as well. From Vermont Marketplace's Henry Epp reports.

[Nick Tremper]

Not long after Kelly Krajewski took over as general manager of Windows and Doors by Brownell in Williston, Vermont, last year she realized something about its employ.

[Mark Thompson]

We have about a third of our workforce will retire in 10 years, and that's across the organization.

[Nick Tremper]

Carpenters, salespeople, lots of longtime employees and all of their institutional knowledge will be heading out the door.

[Mark Thompson]

It's not like I can hire somebody in and bring them up to speed in six weeks on what these folks are doing.

[Nick Tremper]

Folks like Charles Pelsu in the sales department. He's been at the company so long, he says, that he got the job through a classified ad in the newspaper.

[Holly Wade]

And it was literally about 38 of.

[Kai Rysdal]

An inch tall by an inch and a quarter wide.

[Holly Wade]

And my friend Tom had cut that out and he handed it to me.

[Kai Rysdal]

He said, I think you should go.

[Holly Wade]

Talk to this guy.

[Nick Tremper]

Over 30 years later, he's still here, but he's starting to think about retirement and how he could help the company find somebody to replace him.

[Kenny Torella]

I think that's a big piece of.

[Kai Rysdal]

The puzzle of not just saying, okay.

[Kenny Torella]

I just turned 65 and I'm done.

[Kai Rysdal]

Yeah, that's probably not my gig.

[Nick Tremper]

He expects that finding the right people to fill his role won't be easy. Some recent openings at the company have gone unfilled for months, so Pelsu might eventually cut back his hours and stick around for a while.

[Holly Wade]

I would probably spend a little bit of time working a little bit less than a full week before I completely segue into retirement.

[Nick Tremper]

If Pelsu decides to stay in the labor force past traditional retirement age, he'd be doing the opposite of what many workers in the region chose to do when the pandemic hit five years ago.

[Mark Thompson]

We had more people in the right.

[Hamza Choudhary]

Age range who would have been like.

[Kai Rysdal]

Oh, I lost my job.

[Mark Thompson]

I'm age 60, I'm going to retire five years early.

[Nick Tremper]

Mary Burke is a senior economist at the Boston Fed and co authored the report on the region's labor force participation rate. Because the population of New England is older, so called excess retirements in the pandemic had a big impact on its participation rate. Burke says if more people like Pelsu decide to stay on a bit longer.

[Mark Thompson]

Then that would offset a little bit of this demographic pressure. It would not be enough to create.

[Nick Tremper]

No drag, meaning New England is likely to have a worker shortage unless the region sees some big demographic changes, which is exactly what Kevin Chu of the Vermont Futures Project thinks needs to happen.

[Kai Rysdal]

Specifically, we set a goal to grow Vermont's population to 802,000 by 2035. It's currently at about 650, 48,000.

[Nick Tremper]

Chu is the executive director of the project, affiliated with the state's Chamber of Commerce. He says the state needs to attract more working age people and add to its housing stock because Chu says if it doesn't, it's going to be harder.

[Kai Rysdal]

To find medical appointments, it's going to be harder to dine out because restaurants.

[Song Yi Yoon]

Are only open three days a week.

[Nick Tremper]

And it's going to be harder for businesses here to grow. That's already apparent at onlogic, a company that makes computers built to withstand harsh environments. It opened new headquarters last year here in South Burlington with growth in mind. In part of its building, it has three assembly lines set up, but there's room for more, says Lisa Grunewald, the company's co founder.

[Dr. Lisa Johnson]

We can push these lines closer to each other and add in. I believe we have planned six lines total to fit in this space.

[Nick Tremper]

But finding qualified local workers is challenging, she says. So is attracting people from out of state, mostly, she says, due to Vermont's high cost of housing.

[Dr. Lisa Johnson]

Some of the more recent recruits we've had, they've had to be very high paid in order to feel like they could make Vermont swing. And so those are our, you know, executives but people in the middle. It's just Vermont's just not working for middle income Americans.

[Nick Tremper]

So a few years ago the company opened a second US location in North Carolina, and it's already found it easier to fill some positions there.

[Dr. Lisa Johnson]

Ultimately, OnLogic is going to do what's right for the overall corporation, and if that means we need to shift hiring to North Carolina, that's what we're going to do.

[Nick Tremper]

As a native Vermonter, she says it breaks her heart. I'm Henry App for Marketplace.

[Kai Rysdal]

At the peak 90 some odd years ago, there were 6.8 million farms in this country. Today, just under 2 fewer but far bigger farms, growing more grains and more produce and more meat. Kenny Torella wrote about the rise of the mega factory farm for Vox the other day. Kenny, thanks for coming on.

[Holly Wade]

Thanks for having me.

[Kai Rysdal]

We all know the phrase, I think factory farms, but mega factory farms was a new one for me. Give me a sense of scale here, would you?

[Holly Wade]

Yeah, so a sense of scale is seven and a half million egg laying hens at one farm in Malcolm, Iowa that is 90 times larger than what the U.S. environmental Protection Agency considers a large egg farm.

[Kai Rysdal]

The thrust of this piece is the people living near these farms and we'll get there in a second. I do want to talk though about of these things because with all 50 states, as you say, having right to farm laws, regulation becomes a little challenging.

[Holly Wade]

Yes, that's right. Yeah. The agricultural industry kind of benefits from something called agricultural exceptionalism where they've been carved out of a lot of key laws. So just as an example, the EPA enforces the Clean Air act and yet the agricultural industry is generally exempt. And when it comes to the Clean Water act, only about one third of large animal farms have to get clean water permits. So the laws that we should have in place to prevent agricultural pollution just aren't doing the trick.

[Kai Rysdal]

Let's get then to the air and the water part of this. You spend a good amount of time, I gather, meandering around sort of the Midwest and the upper Midwest near some of these farms. First of all, you get close to one. Give me a sense of what it smells like.

[Holly Wade]

It's, it's overwhelming, especially on days when they're moving the manure, it just stings your nose and you want to get inside as fast as you can.

[Kai Rysdal]

And in fact there are people you talk to who basically stay inside. This one woman but a, but a grill and can't use it because she doesn't want to go outside. Tell me about her.

[Holly Wade]

Yeah, that's Jennifer McNeely in Decatur County, Indiana. And she has one farm near her that has 8,000 cows and then she has about 13,000 hogs on a number of different farms around her. And for her the stench is just overwhelming. When she gets home from work, she many days has to cover her nose with her T shirt or with a scarf and run indoors. She even has to take the long way to work because she doesn't want to drive by these factory farms and get a whiff of them.

[Kai Rysdal]

She and others call and complain, and yet it doesn't seem that they get much traction. How come?

[Holly Wade]

From really the local to the state to the federal level, regulators have really dropped the ball, whether it's at public health authorities or environmental regulators or departments of agriculture. And that's not across the board. There are some exceptions, there are some States that are, that are trying to do better on this. But generally the problem is one that the industry is exempt from a lot of key environmental regulation laws. So regulators hands are tied. But the other problem is that policymakers have really enabled kind of the growth of these mega factory farms by not putting safeguards in place to protect people from this pollution. The ag industry has put an incredible amount of money into getting ag friendly candidates elected. And as a result, that means that people who live near these factory farms and suffer from the pollution, the air and water pollution, they don't really have a lot of people standing up for them.

[Kai Rysdal]

Yeah. One is obliged to point out here that we American food eaters, we like our eggs, we like our chicken, we like our pork, and we like our beef.

[Holly Wade]

Yeah, that's right.

[Dr. Lisa Johnson]

Yeah.

[Holly Wade]

This is not just all on the corporations or on the policymakers. Some of it comes back to us. You know, Americans been pretty quickly increasing their consumption of meat, milk and dairy and eggs over the years. And that has helped give way to these mega factory farms in order to meet the demand.

[Kai Rysdal]

Kenny Torella at Vox, he covers livestock there, writes about it too. Kenny, thanks a bunch. Appreciate it.

[Holly Wade]

Thank.

[Dr. Lisa Johnson]

Coming up, it is really, really difficult to work in the ocean and to have things operate in the ocean riding.

[Kai Rysdal]

The green energy waves. But first, let's do the numbers. Dow Industrials up 123 points today. Three 10%. Close to 44,593. The Nasdaq dipped 70 points, a third percent. 19,643. The S&P 500 inched up 2 points, less than a 10th percent. 6,068 gold hit another record high in the past 24 hours. The OG safe haven asset topped $2,950 an ounce at its peak. Bonds fell Yield on the 10 year T note also another safe Haven asset, by the way, rose to 4.54%. You're listening to Marketplace.

[James Quincy]

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[Kai Rysdal]

This is Marketplace. I'm Kai Rysdal. It's going to take a while to figure out all of the downstream effects of President Trump's new 25% steel tariffs. As a reminder, that is steel from every other country in the world coming into the United States. No exemptions or excuses. Domestic steel producers do have something to celebrate in the short term. But even if these import taxes do help the American steel industry, the United States is far from the dominant force in the global steel market it once was. And steel is far from the great American employer that it once was. And as Marketplace Elizabeth Troval reports, there is not much that's going to change that.

[Mark Thompson]

U.S. steel once dominated the global market. Raymond Monroe with the Steel Founders Society of America says, before the 1970s, we.

[Kai Rysdal]

Made more steel than anybody else in the world.

[Mark Thompson]

Then other countries started to lead the pack, like Russia, Japan, and nowadays China.

[Kai Rysdal]

This year we'll make 90 million tons. They'll make 1 billion tons. They make more steel than the rest of the world combined.

[Mark Thompson]

China really needs steel, says Purdue's Amy David.

[Kai Rysdal]

China has been using a lot of.

[Hamza Choudhary]

That steel as China rapidly rapidly industrialized.

[Mark Thompson]

But Philip Bell with the Steel Manufacturers association says the problem is China makes.

[Kai Rysdal]

So much steel and doesn't really have a domestic market for all of it.

[Mark Thompson]

So it exports it for cheap in an oversupplied market. And the U.S. does depend on some foreign steel. Dartmouth's Doug Irwin.

[Kai Rysdal]

The import market share was about 25%.

[Mark Thompson]

Most of it comes from political allies.

[Kai Rysdal]

Like Canada, Germany, Japan, Korea, who were not going to cut us off from steel if there was a national emergency.

[Mark Thompson]

The US was still the fourth biggest producer globally in 2023, according to the World Steel Association. It's just production hasn't grown much, and US Steel employment has shrunk significantly, which Tom Prusa with Rutgers attributes to technology.

[Holly Wade]

Yes, there's a lot fewer workers.

[Kai Rysdal]

Is that because of imports or is that because they've gotten way better at producing steel? I think it's the latter.

[Mark Thompson]

Prusa says American steel just takes a lot fewer people to make than it used to, which helps it stay competitive. I'm Elizabeth Troval for Marketplace.

[Kai Rysdal]

Renewable Energy, solar and wind here, specifically for all their many virtues, have a big drawback. The wind doesn't always blow and the sun don't always shine. Yes, batteries, but you know what I mean. The holy green energy grail is a source that's always available. Ocean waves, for instance. There's a steady supply of those in particular here in Southern California. And there's a company down at the Port of Los Angeles aiming to harness all that power. Marketplace's Kelly Wells went to check it out.

[Hamza Choudhary]

The Port of Los Angeles is a giant maze of birds and keys and channels, and Terry Taminin weaves through them to get to work every day. The view outside his office has been consistent for more than a century.

[Nick Tremper]

These are the boats that come in from Central and South America with fruit during the winter.

[Hamza Choudhary]

But the pier Taminan and I are standing on has changed a lot. He is president and CEO of Alta Sea, which is a nonprofit that develops the sustainable ocean economy. And right now he's really excited about this blue sedan sized piece of metal sitting on the pier waiting to get put in the water. Its whole purpose is to bob up and down on the ocean's waves. The top of it is connected to a giant piston that acts like a bicycle pump.

[Nick Tremper]

So as the float goes up and down, so does this bicycle pump arm.

[Hamza Choudhary]

When a bunch of these floats sit next to each other, they look like a series of piano keys that move up and down like scales. Every time a Wave comes in, and.

[Nick Tremper]

Then the pressure created by that, instead of going into a bicycle tire, goes in here into these accumulator tanks.

[Hamza Choudhary]

Behind the piano keys are a series of what look like really long, bright red scuba diving tanks. They're just holding the pressurized air that gets shoved in there every time a wave comes in.

[Nick Tremper]

And when you want the energy, you release the pressure from here. It spins the turbine. And now you have stored intermittent renewables without a battery.

[Hamza Choudhary]

These its floats are designed to attach to a breakwater or a jetty. They'll be mounted to a concrete pier on the port's main channel. They come from a company called Eco Wave Power. Its founder, Ina Braverman, says most wave energy companies so far have failed because they've set up installations way out at sea. That was extremely expensive because you need ships, you need divers, you need underwater mooring, you need cables. It was breaking down all the time because in the offshore, you get extra extremely high waves like tsunami waves, in other words. Samantha Quinn with the climate solutions nonprofit Pacific Ocean Energy says there is a lot of breaking and fixing in wave energy.

[Dr. Lisa Johnson]

It is really, really difficult to work in the ocean and to have things operate in the ocean, especially things that.

[Hamza Choudhary]

Have to move, because, yes, the ocean moves, floats up and down, but it also jostles them side to side and the salt water corrodes them. On top of all that, different states and countries have different environmental regulations.

[Dr. Lisa Johnson]

And so then you sometimes have to, like, redesign parts of your devices to be able to go into a specific location.

[Hamza Choudhary]

So it's expensive. It can only be built in specific spots. It's prone to breaking. And this pilot project will generate enough energy to power about 80 households. So it's not even close to competing with, say, wind and solar. But Quinn says that's not a fair comparison. Those technologies are decades ahead in this race.

[Dr. Lisa Johnson]

Solar and wind didn't just happen overnight. It really did take a long time for those to be developed. And we are following a very similar, like, innovation path that solar and wind did.

[Hamza Choudhary]

The floaters at the port of Los Angeles will get dropped in the ocean and brought online next month. There isn't a penny of federal money going into the pilot project. In fact, it was paid for in part by Shell, the oil company in Los Angeles. I'm Kaylee Wells for Marketplace.

[Kai Rysdal]

This final note on the way out today. Economists call it the substitution effect. Companies call it gotta keep our margins up. This item today from the Coca Cola company on its earnings call this morning. If one package suffers some increase in input costs, CEO James Quincy said. We continue to have other packaging offerings. For example, he went on, if aluminum cans become more expensive, we can put more emphasis on PET bottles, that is Plastic. FYI tariffs, of course, were the subject at hand. Companies are thinking about it. Our Digital and On Demand team includes Kerry Barber, Jordan Manji, Dylan Mientanen, Jana Nguyen, Olga Oxman, Ellen Rolfus, Virginia K. Smith, and Tony Wagner. Francesca Levy is the executive Director of Digital and On Demand and I'm Kyle Rysdal. We will see you tomorrow, everybody. This is apm.

[Kenny Torella]

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