The high cost of business loans for women and people of color

Summary

Marketplace Episode Summary: "The High Cost of Business Loans for Women and People of Color"

Release Date: December 21, 2024
Host: Kai Ryssdal
Podcast: Marketplace
Description:
Every weekday, host Kai Ryssdal helps you make sense of the day’s business and economic news — no econ degree or finance background required. “Marketplace” takes you beyond the numbers, bringing you context. Our team of reporters all over the world speak with CEOs, policymakers, and regular people just trying to get by.

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Introduction

In this episode of "Marketplace," host Kai Ryssdal delves into the pressing issue of the high cost of business loans for women and people of color. Through insightful discussions with experts and real-world examples, the episode sheds light on the systemic challenges these groups face in accessing affordable financing. Additionally, the episode touches upon the broader economic landscape, including Federal Reserve policies and their impact on various sectors.

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Federal Reserve's Recent Rate Cuts and Economic Outlook

The episode opens with Kai Ryssdal discussing the Federal Reserve's recent decision to cut interest rates by 25 basis points. Despite the Fed's efforts to communicate its intentions clearly, the markets remained surprised.

Key Points:

• Rate Cuts: The Federal Reserve cut interest rates by 25 basis points as expected.
• Inflation Concerns: Inflation remains sticky, leading the Fed to adjust its projections for rate cuts in the upcoming year.
• Market Reactions: There was significant market volatility due to uncertainties about future rate cuts.

Notable Quotes:

• Courtney Brown (Axios):
  "[01:30]... the next year it's probably just going to be two cuts, not four."

• Gina Smilek (New York Times):
  "[02:59]... the American economy has been an outlier, driven by the resilience of the consumer and investment by American companies."

Insights: Gina Smilek and Courtney Brown discuss the delicate balance the Fed must maintain in adjusting interest rates amidst persistent inflation and geopolitical uncertainties. They highlight the challenges in forecasting economic trends, especially with the incoming Trump administration potentially altering fiscal policies.

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The High Cost of Business Loans for Women and People of Color

A significant portion of the episode addresses the disparities in loan interest rates faced by minority-owned businesses. Recent research from the University of Washington reveals that businesses owned by women and people of color are subject to higher interest rates, resulting in approximately $8 billion in excess interest payments annually.

Key Points:

• Loan Disparities: Black-owned businesses face up to 3% higher interest rates, Hispanic-owned businesses around 2.9%, compared to their white counterparts.
• Collateral Requirements: Minority-owned businesses are more likely to be required to provide co-signers or additional collateral.
• Economic Impact: Higher loan costs deter entrepreneurs from minority communities from entering capital-intensive industries, stifling job creation and economic growth.

Notable Quotes:

• Kimberly Adams (Marketplace):
  "[13:36]... Black owned businesses paid upwards of 3% more in interest than white business owners."

• Andre Perry (Brookings Institution): "[13:43]... lenders were more likely to require co-signers for loans to minority-owned businesses."

Case Study: Niyako Pearl Perry, co-owner of Comfort Kitchen in Dorchester, Massachusetts, exemplifies these challenges. It took her three years to secure funding, necessitating crowdfunding before traditional lenders would consider her application. Perry attributes her struggles to both her race and gender, highlighting systemic biases in lending practices.

Insights: The episode underscores the systemic barriers that minority entrepreneurs face, which not only hinder individual business growth but also perpetuate broader economic inequalities. By limiting access to affordable capital, these disparities prevent diverse voices from contributing to various industries, especially those that could drive significant economic expansion.

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RV Sales as an Economic Indicator

Shifting focus to consumer behavior, the episode examines the downturn in RV sales as a barometer for economic sentiment. Winnebago reported an 18% drop in quarterly revenue compared to the previous year, attributing the decline to reduced unit sales and lower average selling prices.

Key Points:

• Revenue Decline: Winnebago's revenue fell by 18% year-over-year.
• Consumer Confidence: High-priced, discretionary purchases like RVs are sensitive indicators of consumer optimism.
• Interest Rates Impact: Persistently high interest rates are discouraging consumers from making significant investments in big-ticket items.

Notable Quotes:

• Stephanie Hughes (Marketplace):
  "[11:09]... II think persistently high interest rates aren't encouraging many would-be buyers to let go of their present vehicles."

• Michael Hicks (Ball State University):
  "[11:12]... when interest rates started to rise, this had the effect of depressing consumption and thereby reducing demand, which slowed inflation."

Insights: The decline in RV sales serves as a microcosm of broader economic trends. As consumers become more cautious with their spending amidst economic uncertainties and rising borrowing costs, industries reliant on discretionary spending feel the pinch. This trend not only affects manufacturers like Winnebago but also signals potential slowdowns in other sectors dependent on consumer confidence.

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Global Coal Demand and the Hydrogen Economy

The episode briefly explores the paradoxical state of global coal demand amidst the rise of renewable energy sources. While coal usage is declining in many developed nations, driven by environmental policies and a shift towards renewables, countries like China continue to increase coal consumption to meet rising electricity demands.

Key Points:

• China's Coal Consumption: China accounts for more than half of global coal usage, fueled by industrial growth and the rapid adoption of electric vehicles.
• Renewable Integration: Despite expanding renewable energy sources, the surge in electricity demand keeps coal relevant in the energy mix.
• Hydrogen Hubs: The U.S. Department of Energy is investing $7 billion in clean hydrogen hubs to reduce the carbon footprint of heavy industries.

Notable Quotes:

• Greg Nemet (University of Wisconsin, Madison):
  "[19:33]... as its economy electrifies, coal is kind of coming along for the ride."

Insights: The continued reliance on coal in certain regions underscores the complexities of transitioning to a fully renewable energy landscape. The development of clean hydrogen technologies presents a promising avenue to mitigate carbon emissions, but the transition requires significant investment and technological advancements to replace existing fossil fuel dependencies.

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Conclusion

In this episode of "Marketplace," Kai Ryssdal navigates through the intricate web of economic policies, consumer behavior, and systemic inequalities. From the Federal Reserve's cautious approach to interest rate adjustments to the stark disparities in business loan costs for minority entrepreneurs, the episode paints a comprehensive picture of the current economic climate. Additionally, by examining indicators like RV sales and global energy consumption trends, listeners gain a multifaceted understanding of the forces shaping today’s economy.

The episode not only highlights the challenges but also implicitly calls for more equitable financial practices and informed policy-making to foster a more inclusive and resilient economic future.

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This summary captures the essence of the episode, focusing on key discussions and insights while omitting advertisements and non-content sections.

Transcript

[Sponsor]

This podcast is supported by Fortune, dedicated to empowering leaders to make intelligent business.

Decisions and delivering unbiased reporting since 1929. Subscription options, email newsletters and more [e-mail].

[Kai Ryssdal]

It is a Friday of a Fed week. We will make it all make sense. From American Public Media, this is Marketplace in Los Angeles. I'm Kyle Ryssdal. It is Friday today. This one is the 20th of December. Good as always to have you along, everybody. The board of Governors of the Federal Reserve System spends as a unit a whole lot of time trying to make sure nobody is surprised by what it does or what it says it is going to do with interest rates. And yet this week, somehow people seemed surprised. So there we will begin. Gina Smilek is at the New York Times. Courtney Brown is at Axios. Hey, you two.

[Gina Smilek]

Hey, Kai. Hey, Kai.

[Kai Ryssdal]

Courtney, let me start with you. The Federal Reserve cut interest rates 25 basis points this week as expected, but with inflation sticky, as we all know, they said, hey, you know what? Next year it's probably just going to be two cuts, not four. As we said a couple of months ago, the markets lost their mind. People were surprised. Why?

[Courtney Brown]

I think that, you know, I should start. One of the things that I thought was interesting that Fed Chair Powell told reporters on Wednesday was that the decision was a close call. He said ultimately it was the right call, but it was, in fact, a close call. You had Beth Hammock, who's at the Cleveland Fed and relatively new to the Fed, she dissented. She preferred to keep rates on hold. But I do think there was this idea that 2025 was going to be the year of rate cuts, more rate cuts. And as you say, they wrote down four rate cuts in September. And we got the new summary of economic projections and that was chopped in half. And I think there's fear that, you know, based on the inflation data being more sticky, does the Fed raise rates at all? I think that is something that sparks some concern in financial markets this week.

[Kai Ryssdal]

Does the Fed cut rates at all, you mean to say?

[Courtney Brown]

Exactly.

[Kai Ryssdal]

Right.

[Sponsor]

Yes.

[Courtney Brown]

Does the right.

[Stephanie Hughes]

Yes.

[Kai Ryssdal]

Right. If it raises rates, that's, that's a whole different ballgame. And we'll have a special and bring you both back. Gina, let me ask you this. You and your colleague Anna Swanson had a piece in the Times this week saying this economy is strong. You quote Chair Powell saying, I think it's remarkable. But, but as you point out, it doesn't necessarily have to stay that way, given what is happening abroad in this country and in this economy with the politics thereof?

[Gina Smilek]

Yeah, absolutely. I think it's really interesting just how strong the American economy has been and how much of an outlier that is. And it's really all sort of based on the sort of resilience of the American consumer and the fact that American companies are investing when other companies, really, around the world, we're just not seeing that happening in the same way. And so I think those twin pillars of strength could really come under assault next year. If you see a, a situation where the fiscal policy situation changes a lot, where you see big tariffs or you see something else that disrupts the. Disrupts the consumer. And I think, B, if you see a real slowdown around the world that sort of spooks the business sector, I think that that could also be something that, that sort of calls this into question. And so I think we're sort of at this moment where everyone is watching with bated breath and saying, you know, what is the incoming Trump administration going to do? And is that going to change up this trajectory?

[Kai Ryssdal]

Gina, do you think. And look, not to cast aspersions on what the Fed does, because running this economy is really difficult, but do you think, Gina, to some degree, they got lucky with the way things turned out?

[Gina Smilek]

I think it's probably some combination of luck and judgment, as monetary policy and economic policy kind of always is. It's certainly the case that inflation came down quite a bit because of good luck, just the way that it went up because of bad luck. A lot of this was about the pandemic. And when the pandemic reversed and sort of supply chains healed, we saw a lot of inflation coming down. Clearly, some of it is also that they tackled the problem pretty head on. They were a little slow to start, but they eventually got their arms around it and that they kept with it and that helped to bring inflation down. But I think we're now at the tricky part. Like, this is the hard part. This is the part where they could really mess up. And this is the part where it gets hard to decide what to do next. And so I think it's going to be really interesting heading into 2025.

[Kai Ryssdal]

Courtney, I think that's so interesting that Gina points out that this, for a lot of people, is the hard part, because it was like a year ago, maybe 18 months ago, that Rafael Bostic said on this program and elsewhere, this is the really hard part. And it was like 18 months ago.

[Courtney Brown]

Right, right. And I feel like last year was when talk of. Or earlier this year was when talk of, like, the last mile is Going to be the hardest. That rhetoric started and there were a lot of people who were like, well, why would the last mile be the hardest? And here we are. And it kind of looks like the last mile might be. Might be the hardest. And so it's like, on the one hand, you have this inflation stickier than I think all Fed officials wanted at this point. And on the other hand, you have this great uncertainty about what the incoming administration is going to do. And it's not like you just have to worry about tariffs. You have to think about how tariffs interact with what he might possibly do on immigration, with mass deportations, as he's promised, and tax policy and how all of these things blend together and what comes out as far as how the economy will perform. So just a lot of unknowns. It's uncomfortable.

[Kai Ryssdal]

Well, you know, so Gina, on that whole unknowns thing, Powell said on Wednesday, we're in a new phase. Right. Everything from here is a new phase. And John Williams, I think today or yesterday, the head of the New York Fed said there's lots of uncertainty out there. We are still, as Powell said, which was a great turn to phrase. Right. It's like walking into a dark room or driving in the fog.

[Gina Smilek]

Yeah. And so you, you move carefully. I think this is part of the reason why markets were so freaked out this week, honestly, is this new phase language. I think we knew that the Fed was planning on sort of shifting the way it was thinking about the world. They have been in this situation where they were recalibrating. They knew they wanted to get rates down a bit. They've been pretty clear that they were going to do it relatively quickly. That was the world we were in. We're now in this new place where they're going to kind of rely on the data and decide meeting by meeting in a way that they haven't really been up to this point. But I think markets really looked at that and said, oh, you're only going to cut rates if inflation comes down, AKA you may not cut rates at all, or you may cut rates a lot less than we were thinking. And so I think this new phase is a much more uncertain one if you're an investor.

[Kai Ryssdal]

Right. Courtney, just real quick on inflation. Personal consumption expenditures came out today as regular listeners know, the Fed's preferred gauge of inflation, 2 points in 2.8% annually, which is in line with prior and month to month. It was pretty good. So bumpy, I guess, but bumpy on a good. In a good way.

[Courtney Brown]

Yeah. Well, I mean, bumpy this was I think better report if you look at some of the underlying details of the top line, less so. The top line details. Less so. But I think it's, it's, is this bumpy? Is it in fact bumpy or is there a real kind of stall out in progress? I mean we'll have to see what the, what the data ultimately says. But I think, you know, that's kind of the reason why we don't really know what's going to happen next year. We don't know if recent months data are bumps or if in fact there is going to be kind of, you know, lack of progress going on.

[Kai Ryssdal]

Lack of progress, not what you want to hear. Courtney Brown and Axe, your host Junius Malik at the New York Times. Thanks you two.

[Gina Smilek]

Thanks guy.

[Courtney Brown]

Thanks, Kai.

[Kai Ryssdal]

Have a nice weekend. Wall street to end the 51st workweek of the year by the dip, I believe is the phrase you are looking for here. We will have the details. When we do the numbers. We are in what you might call if you had a mind to the doldrums of corporate earnings season. All the biggies have reported already. The banks and the retailers and such and markets have reacted as markets will. But there are still companies of note letting us know how they have been doing. Today it was Winnebago, maker of motorhomes, travel trailers, pleasure boats too. And let's just say the open road has been a bit bumpy in the start of their fiscal year. The company reported this morning quarterly revenue down 18% over a year ago, quote driven primarily by lower unit volume and a reduction in average selling price per unit. That is investors speak for selling fewer RVs at lower prices because another quote here of the challenging macroeconomic environment, Marketplace's Stephanie Hughes is on the RV as economic indicator beat for us today.

[Stephanie Hughes]

In 2021, the RV business, like the economy as a whole, got hot. Consumers had cash to burn and the open road before them. So they bought RVs because people wanted.

[Sponsor]

To get away from everybody.

[Stephanie Hughes]

David Whiston follows the RV industry for Morningstar. At the end of 2021, Winnebago's quarterly revenue hit record highs. But that didn't last. And across the industry, sales fell and fell drastically in the last couple of years.

[Sponsor]

That boom has ended and we're waiting for the next cycle.

[Stephanie Hughes]

Whiston says many consumers are still holding tight to the steering wheels of the perfectly fine RVs they already have, which he says can cost from tens of thousands to more than a million dollars. He says persistently high interest rates aren't encouraging many would be buyers to let go of their present vehicles.

[Sponsor]

We need more relief on that, I think, to encourage people to buy what could be a second or third home for them.

[Stephanie Hughes]

Whiston says. People are still feeling jittery about the economy, which makes them pause before buying a new Winnebago or any rv.

[Sponsor]

It's I don't want to say boom, bust, but it's definitely boom and then some of the air coming out of the balloon in a big way.

[Stephanie Hughes]

The slowdown in RV sales shows that consumers are still reluctant to make major purchases because they don't know what's going to happen with the economy and how much disposable income they'll have in the future. Michael Hicks is director of the center for Business and Economic Research at Ball State University.

[Kai Ryssdal]

The way economists think about these, these are luxury goods. An RV is something that you buy when you're feeling economically confident. You have a little bit of extra.

[Sponsor]

Money in your pocket.

[Kai Ryssdal]

If you can't afford now, you might hold off for a year or two.

[Stephanie Hughes]

Hicks points out that when interest rates started to rise, this had the effect of depressing consumption and thereby reducing demand, which slowed inflation.

[Kai Ryssdal]

Increased interest rates over the past two years are designed to do precisely this, and we see them in action.

[Stephanie Hughes]

The Fed is now cutting rates slowly, but RVs are still a big purchase, and Hicks says instead of buying one now, people might wait until interest rates drop again next year, making one more affordable. I'm Stephanie Hughes, Marketplace.

[Kai Ryssdal]

This has been on this program a big week for interest rates. The Fed decision on Wednesday, of course, we did a couple of pieces on the bond market, too. All of that matters because what the Fed does and how the bond market reacts is often what lenders use to help decide how much they are going to charge individuals and businesses to borrow. But those lenders have plenty of leeway in setting their rates. And despite laws banning discrimination in lending, disparities do exist, especially when it comes to race and gender. Some new research out from the University of Washington found that businesses owned by women and people of color are charged markedly higher rates for their loans, which then winds up costing them about $8 billion a year in excess interest payments. Marketplace's Kimberly Adams has that one.

[Kimberly Adams]

It took three years for Niyako Pearl Perry to get funding to start the restaurant she co owns, Comfort Kitchen in Dorchester, Massachusetts. She had to do some crowdfunding first, before regular lenders would even give her a shot. Even so, I know that our lending.

[Stephanie Hughes]

Terms are probably not the best.

[Kimberly Adams]

For one thing, she had to put up her house as collateral. And Perry, who also works with the center for Women and Business at Bentley University, believes a lot of the struggle was because of her race and gender.

[Stephanie Hughes]

It was as if I had to.

[Sponsor]

Justify our decades of experience, our background, where I know that there are other.

[Kai Ryssdal]

Restaurants that that's not the case, frankly.

[Stephanie Hughes]

Because of their background.

[Kimberly Adams]

The University of Washington study backs up her experience. Bill Bradford is emeritus dean of the Foster School of Business and led the.

[Kai Ryssdal]

Study for black, Hispanic, Asian and well known businesses. They paid higher interest rates after you.

[Sponsor]

Adjust for attributes that a lender would say affected the risk of the particular firm.

[Kimberly Adams]

Black owned businesses paid upwards of 3% more in interest than white business owners. Hispanic owned 2.9%. Andre Perry, a senior fellow at the Brookings Institution also noted how the study found lenders were more likely to require co signers for loans to minority owned.

[Sponsor]

Businesses, which suggests that black, brown and Asian owned entrepreneurs aren't really trusted with money. White owned firms committed the least amount of collateral relative to the loan amount, so they're more likely to be trusted with money.

[Kimberly Adams]

These disparities can also shape what kind of business someone decides to start. The study authors say more expensive loans push people into less capital intensive industries. Industries that could be creating more jobs and more economic growth for everyone. In Washington, I'm Kimberly Adams for Marketplace.

[Kai Ryssdal]

Coming up, there are different cycles of pressurizing and depressurization. Let's call it the hydrogen business cycle, shall we? First though, let's do the numbers. The Dow Industrials up 498 today 1.2%. 42,840. The NASDAQ increased 199 points at his 1%. 19,005 72. The S&P 500 jumped 63 points. 1 1/10 of 1%. 5,930 there for the week. The Dow subtracted 2 1/4%. The NASDAQ slipped 1.8%. The S&P 500 dip 2%. Winnebago drove down 3 1/4% today. Camping World holdings elevated 5%. Thor Industries, which is one of the world's largest RV manufacturers in case you didn't know, picked up 1%. Carnival Corporation cruised up, screws up. I like that 6.4% today after posting strong quarterly results. Annual revenue for the cruise provider hit an all time high of $25 billion. That is up 15% from from last year. Bond prices went up. That means the yield goes down. The Yield on the 10 year treasury note down 4.53%. You're listening to Marketplace.

[Henry Epp]

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[Stephanie Hughes]

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[Courtney Brown]

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[Stephanie Hughes]

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[Courtney Brown]

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[Stephanie Hughes]

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[Courtney Brown]

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[Henry Epp]

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[Kai Ryssdal]

This is Marketplace. I'm Kai Rysdal. Time now for another in our semi regular series. Market forces are going to do what Market forces are going to Do Global demand for coal grew about 1% this year to a new all time high. That's according to some new analysis from the International Energy Agency. The IEA also figures global demand for that most dirty of fossil fuels will plateau by 2027, which is good, except that plateau has been predicted before, only to have demand continue to grow even as solar and wind and other renewables become larger parts of our energy supply. But demand for electricity is growing, too, so coal is sticking around as marketplaces, Henry Epp reports.

[Sponsor]

To understand why coal continues to be a major energy source, we have to look across the Pacific Ocean. The biggest story is China, because China consumes more coal than the rest of the world combined. Daniel Cohan is a professor at Rice University. To power their industrializing economies, China, along with India, Indonesia, and a few other nations, keep growing their coal use, while the rest of the world has been moving in the opposite direction. Coal use in the US peaked in 2007. It's fallen by more than half since then. The UK has closed its last coal plant. Germany and other countries are planning to close their remaining coal plants. But in China especially, coal is sticking around largely because demand for electricity is growing so fast, says Greg Nemet, a professor at the University of Wisconsin, Madison. And it's been driven by very rapid uptake of electric vehicles in China. In addition, rapid uptake of using electricity for industrial heat in China and also for data centers, China is also adding solar, wind, and nuclear power to its energy mix at a rapid rate. But as its economy electrifies, Nemet says, coal is kind of coming along for.

[Stephanie Hughes]

The ride on the drive to electrification.

[Sponsor]

Even though renewables are the ones that.

[Kai Ryssdal]

Are really driving it.

[Sponsor]

Some of these trends are happening in the US too. Electricity demand is also growing here, in part due to the energy needs of new data centers that power artificial intelligence and other cloud computing. That has some coal plant operators reconsidering their plans for shutting down, says Christine Shear, a research analyst at Global Energy Monitor.

[Kai Ryssdal]

So existing plants saying, well, maybe we won't retire next year, you know, maybe.

[Stephanie Hughes]

This we can sell some of our power to this data center and generate.

[Gina Smilek]

Some revenues that way.

[Sponsor]

What's tricky about that, Scheer says, is a lot of American coal plants are 40 to 50 years old.

[Kai Ryssdal]

There's a lot of maintenance costs in.

[Stephanie Hughes]

Trying to keep them online.

[Sponsor]

So depending on how quickly power demand grows, she says, utilities could opt for other, cheaper sources, including renewables and natural gas. I'm Henriett for Marketplace.

[Kai Ryssdal]

Continuing with energy here. A word now about element number one on the periodic table hydrogen, which is present naturally in the atmosphere to the tune of not quite six tenths of a part per million. In other words, not a whole bunch. And that presents something of an industrial problem because hydrogen is Essential for a number of things, including petroleum refining. That's in part why the federal government is investing $7 billion in regional clean hydrogen hubs around the country to get more of it. The biggest such hub is set to be on the Gulf Coast, Texas and Louisiana, home obviously to a whole lot of oil and gas processing. It launched a month ago, aimed at cutting the carbon footprint of some of this economy's most carbon intensive industries. Marketplace's Elizabeth Trovall got a look inside the existing hydrogen ecosystem.

[Sponsor]

I'm at a hydrogen production facility in La Porte, Texas. It kind of looks like a giant outdoor industrial jungle gym because, because of all the metal tubes and cylinders. What you're hearing is new hydrogen molecules made from steamed natural gas that are being purified by pressure.

[Kai Ryssdal]

There are different cycles of pressurizing and depressurization.

[Sponsor]

That's Erico de Francesco with Airliki, a hydrogen hub partner. This is one of their plants.

[Kai Ryssdal]

These are the valves for the beds.

[Henry Epp]

That are opening and closing, opening and closing.

[Sponsor]

Once it's ready, the hydrogen will make its way to the customers concentrated along the Gulf coast through the company's pipeline. It's part of a hydrogen ecosystem that's been developing for decades.

[Kai Ryssdal]

I mean, there is natural gas, it is abundant, it is price competitive and so on. Here you have a large number of industrial plants in chemical, in refining, in material sector, and so on.

[Sponsor]

In fact, it's petroleum refiners who are the big consumers of hydrogen, says Brian Murphy with S and P Global commodity insights.

About 70% goes into refining in chemicals. And it's used to take impurities out of crude oil, so sulfur or nitrogen out of that crude oil so it doesn't end up in the gasoline you burn in your car. And then we use about 30% of it to make ammonia, which is the main component of chemical fertilizers.

That's right. Hydrogen is essential to feed and fuel Americans.

It's a sort of this hidden feedstock. It's behind some of the food you eat. It's behind some of the gas that you put in your car.

The problem is, while hydrogen has helped clean the sulfur from our fuel, the way we typically make hydrogen today, using super hot steam to transform natural gas emits planet warming greenhouse gases.

It's usually about 10 kg of CO2 produced for every kilogram of hydrogen.

That's a lot. Which is why the idea behind the new hydrogen hubs, expanding the use of new clean hydrogen technologies is so important. Brett Perlman is with the Economic Development Organization center for Houston's Future So if.

[Henry Epp]

We basically substitute these cleaner forms of hydrogen for the existing hydrogen that emits a lot of CO2, we can both continue to have an oil and gas.

[Sponsor]

Industry, but have it reduce the carbon intensity.

Just from the Department of Energy investment, the Gulf Coast Hydrogen Hub will build four clean hydrogen production facilities. Ted Barnes is the hub's program manager.

There's one production project that will use natural gas with carbon capture and sequestration to produce clean hydrogen. And there'll be three that use electrolysis, using water with renewable electricity to create hydrogen.

With these projects and new tax incentives, the idea is to bring down the cost of clean hydrogen and boost supply and demand for this more expensive, environmentally friendly product. Back at the airlakeyed hydrogen production plant in La Porte, the promise of clean hydrogen is right there. You can see it because in the middle of the cylinders and tubes and machinery, there's this giant open area. And one day, says Erico de Francesco.

[Kai Ryssdal]

There'S not going to be an empty space there because there will be a cryo cap.

[Sponsor]

Cryo cap carbon capture technology that could remove roughly 95% of the CO2 emitted from this hydrogen plant that's currently being released into the air. Timing is still tbd, but from the.

[Kai Ryssdal]

Inception of the vision that we brought with this plant, it was to have a plant that was capture ready.

[Sponsor]

Clean hydrogen at the plant has been years in the making. Still, the transition across the industry is just beginning. In Houston, I'm Elizabeth Troval for Marketplace.

[Kai Ryssdal]

This final note on the way out today, shutdown or no shutdown, we know not at the time this program goes to air. But I direct your attention now to 31 United States Code, Section 1341, paragraph C2, which says in relevant part, each employee of the United States government furloughed as a result of a covered lapse in appropriations shall be paid for the period of the lapse in appropriations at the earliest possible date after the lapse in appropriations end. So people are going to get paid eventually. You know who does get paid on time? Yeah, that's right. Congress. Just the members, not their staffs. It's in the Constitution. Our theme music was composed by BJ Lederman. Marketplace's executive producer is Nancy Fargoli. Donna Tam is the executive editor. Neil Scarborough is the vice president and general manager. And I'm Kai Rizdal. Have ourselves a great weekend, everybody. We will see you right back here on Monera. This is apm.

[Kimberly Adams]

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