← Shift Key with Robinson Meyer
Shift Key with Robinson Meyer
What J.P. Morgan’s Chief Climate Advisor Is Telling Energy Startups
00:46:02
Rob talks with Sarah Kapnick about our new era of energy insecurity.
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- [00:01]
A
You are listening to Shift Key heatmaps weekly podcast about decarbonization and the shift away from fossil fuels. On this week's show we are talking about the new era of energy insecurity with JP Morgan's top in house climate scientist. How are the geopolitics of energy changing? What energy resources will matter in the future? And what do the bank's climate tech and clean energy clients want to know in our bizarre new era? It's all coming up. All that and more on ShiftKey. America's future depends on reliable power provided where and when it's needed. It depends, in other words, on long duration energy storage. Hydrostor's advanced compressed air energy storage technology is helping build the grid of tomorrow with secure, reliable power and thousands of American jobs. With bipartisan support and a flexible supply chain, long duration energy storage is the missing puzzle piece to scale energy independ. Learn more about Hydrostor's Willow Rock project and the future of energy storage at Hydrostor CA Hi, I'm Robinson Meyer, the founding Executive editor of Heat Map News and you are listening to shiftkeep, Heat Map's weekly podcast about decarbonization and the shift away from fossil fuels. My co host Jesse Jenkins is off this week. Well, you've probably noticed because you are an alert and thoughtful consumer of the news and of energy news in particular. You listen to Shift Key, but we are in a new era of energy and geopolitics, an era where the inputs and technologies of clean electricity production matter to some of the biggest questions in geosecurity. I think we are used to, as energy thinkers, oil playing this role in the price of gasoline playing a very hegemonic role in American politics. Oil is of course part of what drove the United States to be so ensnared in Middle Eastern politics. Politics starting in the 1970s and frankly a lot of what drove American power in the first half of the 20th century through the Second World War as well. But it's not just oil anymore when you think about the international markets and the global economy and energy. Lately, of course, just in the past few years, the ability to trade natural gas overseas has become a much bigger driver of geopolitical maneuvering. It's part of what allowed Europe to take such a strong stand against Russia in the Ukraine war. And it's a huge factor in Western, Pacific and East Asian security as well. But now too, we're seeing minerals, solar and batteries play a similar role. The Chinese government can use Chinese companies ability to sell cheap solar and batteries as well as set up EV manufacturing facilities as a tool in international diplomacy. And most saliently, Trump's ability to negotiate a so called trade deal with China has been heavily limited by China's ownership of the rare earth supply chain. He hasn't been able to do many of the things he promised because China.
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B
Could just cut off rare earth exports.
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A
To the US So on this week's show we are talking about this new era, this new dynamic with a great guest. Dr. Sarah Kaepnick is the global head of climate advisory at JP Morgan where she advises the bank's clients on sustainability, geopolitics, energy resilience. She's the co author of a new paper called the New Map of Energy and Geopolitics which came out yesterday. We'll be talking with her about that paper, but we're also going to talk to her about what she's telling climate, tech and energy companies now about this current environment and how she's thinking about the political economy and the future of US climate policy in this moment as well. Dr. Kabnik was formerly chief scientist at the national oceanic and Atmospheric Administration and before that she spent a decade at NOAA's Geophysical Fluid Dynamics Laboratory in Princeton. She's a perfect shift key guest and I'm so excited to welcome her to the show. Dr. Sarah Kaepnick, welcome to Shift Key.
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C
Thank you so much for having me.
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B
So your new paper written with the bank's center for Geopolitics is all about this new energy security age.
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A
And I was thinking, let's just start.
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B
What do you mean by new energy security age? What are you talking about?
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C
Well, energy has always been intrinsic to geopolitics. That's not new. But what we're saying here is that because of the advanced demand for AI and the expectations that AI could really transform economies and be the future of the economy and economic growth assumption people are making right now, we will see if it continues to play out. But because of that it is leading to these focuses on energy and energy growth to meet the growing demand. Needing to make sure that supply meets demand is leading to that being a fundamental national security issue to ensure that one can actually also develop out AI and economic security. And it is leading to differences in thinking around how one needs that. But also it is reshaping how allies are working and creating new blocks geopolitically around the world. In response to this, do you think.
- [05:22]
B
AI is the biggest driver of this trend or is it kind of just the leading edge maybe of what I almost think was a post Covid turn to greater concerns around sovereignty, around supply chains, around geoeconomics. Is this is the world getting more dangerous, so to speak? And so countries are starting to think about these questions, more or less. Is AI really, really the engine of this transition?
- [05:49]
C
All of the above. I think AI is accelerating this transition that we had seen starting to develop and is accelerating it, bringing it to the forefront because of the rapid growth of it right now. And that's where the large growth in demand is coming from and expected to come from over the next few years. But that's also where the massive spending is now taking place in the United States and elsewhere to be able to build out the infrastructure for AI. And so it's making it much clearer and it's heading this forcing mechanism that is pushing this to happen faster and for decisions to be made faster. But you're. I agree with you completely that we were starting on this trend before deep sea, before advancements in generative AI.
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B
It seems like of a piece with a moment, there's this author, Carl Polany, who was a kind of center left right around the 1940s, and he wrote a book called the Great Transformation, which is all about how the 19th century economy no longer resembled the 20th century economy. And it has good parts and bad parts. It's not worth talking about now. Except that he made this observation that has really stuck with me. And I remember reading it 2021, 2022, and thinking, oh, this is happen where after World War I countries just realized that they needed to think about their food supply. That basically 50 or 100 years of general peace, at least in Europe, depending on the country, had made countries not really think about where their food came from anymore. And after World War I, it wasn't like countries were gearing up for a more militarized world. Although that is what happened. It's just like as a piece of almost common sense economic policy making, people were just thinking about, oh, where is the food going to come from? Where are we going to grow crops in a much more involved way than they had been before the war. And his argument is basically that continued even after the war ended. And it seems to me like something similar happened with COVID where Covid brought this extremely heightened awareness to supply chains around medicine and medical gear specifically, but.
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A
That at this point, it's kind of.
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B
Tipped over into supply chains around all manufactured goods and into all forms of energy. And I wonder how much of that is around this broad global transition that's happening and how much of it is around China specifically.
- [08:22]
C
Again, I think it's all of the above. I think when the economy is hunting long and everything is working well, you don't think about the problems that are potentially around the corner. And Covid gave this moment of realizing where the cracks in the system could be or where supply chains might break down. And so it put everything under a microscope of people realizing where if you want to ensure you have self sufficiency or where you want to ensure the supply chains work because it matters for the economy, you then figure that out and you see some of the reactions that we see now. And thank you for the book recommendation. I'm going to go read that. Adding to that, though, I'll add I'm actually also working right now, thinking a lot about food security because I think energy security and food security go hand in hand. It's interesting that you mentioned that realization because then there was all of this technology and advancement around food, around fertilizer for food, around how do you ensure that you have productivity. But now from a climate and environmentalist background, now we're also realizing that there's been environmental degradation of land, that that is also leading to new issues of food production and nutrition. I would recommend Back the Third Plate by Dan Barber goes into this about how we're realizing the nutritional issues in food. And so there's also, I think, a coming wave of interest in investment and dealing with that problem when we have food security issues in the coming years as well. So it's not at the forefront that AI is and energy security is, but I don't think it's far behind.
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B
You know, Germany had to give up, or there were discussions of Germany giving up the Fischer traps process as part of the Treaty of Versailles negotiations. And I think ultimately they didn't. But that's only because someone smuggled it out of the Germany and gave it to France. Yeah, because their ability to like make artificial fertilizers was so key to Germany's ability to wage the war for as long as it did anyway.
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C
Technology, I was gonna say it talks to the importance when you have times of scarcity, scientific innovation and technological innovation become really important to be able to expand natural resources, critical resources that you need no matter what. And in the national security sense, those are energy, that is shelter, that is food. And also I would add, water increasingly is added to that as well. And so I would say in this moment, also for the talk that we want to talk about too, on energy security, that's also why we're seeing so much pouring into scientific advancement around the World on this right now as well.
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B
I wanted to take a step back and just ask. You're a climate scientist by trade, I suppose, but now you're global head of climate advisory for JPMorgan Chase. What does a climate scientist do at a bank? What do you do all day?
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C
I bring in former chief scientist Energy into the bank. It's a quick way that I say it. So I write these reports every roughly four to eight weeks on different topics related to climate. And I write them based on the conversations I'm having. So I have conversations with our clients, which in the commercial investment bank, those are startup companies all the way to established companies like Fortune 500 companies. I have conversations with C suites, with boards. I also have conversations with our senior leaders across the investment bank, but also across the entire bank. So I also am talking to leaders on our investment side of the house, leaders at Chase. I pool all of these types of questions that I'm getting and I see trends and questions like the reason I wrote this paper with head of the center for Geopolitics is that I was getting so many questions about national security and how does national security work? Tell us how decisions were made on the National Security Council. Like how should we be thinking in this moment in time when it's not just finance? So I pull all those questions together, I write on it and then I go talk to it, our clients about it. And so this is really client driven and client demand driven that I am working on these different topics and talking about climate all day.
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B
What other big questions do people have right now? Not asking you to reveal future reports, but just like what. What are the other big trends and what people are thinking about at the moment.
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C
Another big one also related to national security is on ports and port development, both from a perspective of what does the future of maritime look like, particularly with the IMO with their requirements for decarbonization in the maritime sector, how do I see that taking place? But then also because global trade is expected to at least double by 2050 from today's values. What does port build out look like and how is that resilient under climate change, particularly sea level rise. I've been giving a lot of discussions and education on what is sea level rise and how does it start to manifest. And one of the points as a scientist I make there and from my time at NOAA is that your infrastructure doesn't become unusable or go from totally usable to totally unusable overnight. You have the gradual flooding that start taking place, that starts eroding your usability. And then you can either have catastrophic failure or that slow erosion leads to inoperability for so long that actually becomes financially unviable. So you have to spend on investment. And then because we were also at NOAA rebuilding our peers and thinking about our infrastructure, I also explained the timing and process to do that can take years to decades. And so if you want to start planning for sea level rise and infrastructure along the coast, the time to do it is now. Because if you don't start planning and spending now, that infrastructure will not be useful 20 years from now.
- [14:33]
B
In climate, like the normal kind of divide is between adaptation and mitigation, right? Between preparing for the physical effects of climate change and changing the energy system, decarbonizing, reducing emissions so that climate change is as mild, shall we say, as it can be in terms of who comes to you to talk to the bank? Are people mostly interested in adaptation right now or mitigation? Do you feel like, and even more than that, do you feel like people, your clients, folks you're advising? Which one are they undercounting at the moment?
- [15:13]
C
I get a lot of questions right now on resilience and adaptation, and part of that is also the fact that I am a physical scientist by background and that has been most of my career. But I would also say that there is nuance emerging as people are realizing it's not one or the other. And in the Venn diagram of climate, there is an overlap between mitigation and adaptation. And I have had both clients ask me to think through that because they, you know, majority of clients, and this is the same also for countries and cities that are creating climate plans. They created mitigation plans before they built adaptation plans, and now they're realizing with extreme weather, with chronic climate change, that they have to have both. And, and that actually at a local level, elected officials are going to get in trouble if they haven't built resilience in their communities. And people have experienced floods or heat waves or power outages and they are going to be angry. But also people may start leaving those cities which would erode their tax bases. And so they're realizing they may have to do both. And, and there's now more nuanced conversation also about I have X number of dollars and I have these both goals. Are there ways that I can effectively think through how I do adaptation and mitigation and how should I effectively be spending my money and thinking about this?
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B
What's an example of how a city or a state can do both? Adaptation, mitigation at the same time?
- [16:59]
C
Well, I want to give an example actually on utilities. So utilities and thinking through how they're going to put electrons on the grid, they need to ensure that they are always producing that. And so they are installing solar and storage because they have spikes of energy demand when it's the hottest, when it also typically is also the sunniest. And so you are producing at the very time when you need it most versus as they're thinking about their grid build outs, perhaps if they have wind, the wind actually doesn't necessarily blow during heat wave and so they need the storage to get them through that time. And so they're thinking through all the different pieces of what they need to be able to ensure that they have the electrons in the grid to meet demand. But those solutions can also be the mitigation solutions. So they're dealing with the heat wave and dealing with the demand spike, but they are also actually thinking through their decarbonization at the same time.
- [18:01]
A
This episode of ShiftKey is brought to you by Hydrostor. The US economy is growing fast and so is its demand for reliable energy. But generation alone isn't enough. Long duration energy storage is the key to building a resilient, secure grid that.
- [18:16]
B
Can meet tomorrow's needs.
- [18:17]
A
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- [19:07]
B
It's been interesting watching I think campaigns in the US this year so far turn a focus to affordability because it's actually changed how I think about climate politics too and maybe how politicians should approach climate politics and that I think a lot of politicians historically for the past 25 years and I'm not blaming them, I would, this is where my brain would go to talked about how climate change was real and a threat and we therefore we needed to reduce emissions and reducing emissions is really important but it does remain a fact that the US is only 13% of global emissions. And I just wonder if going forward we're going to see more politicians, more leaders kind of go, climate change is real, it's here. And what makes me different from other politicians who don't say that is I want to adapt as much as possible because that's actually what's going to manage what's going to affect your lives. And yeah, they'll talk about decarbonization and changing the grid and changing energy system.
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A
Too, but it's actually adaptation where like.
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B
At the local or state, sub national political level and even frankly at the national political level, leadership and policy can make the most difference in people's lives based on the fact that there's going to be some amount of warming no matter what.
- [20:21]
C
Yeah, it's basic behavioral science that you don't. Yeah, on a mitigation side because the total effects that one's actions, it's really the collective action problem, an issue, but also the benefits aren't necessarily necessarily fully realized for yourself. But adaptation and resilience is a local issue. If you address it, you see the benefits. And sometimes it's very difficult to explain the nuance of it before events happen because you're telling people we're avoiding a risk of the future potentially and doing this, but particularly after natural disasters. I've been there in communities post natural disasters and I've talked to the business leaders and to politicians after a disaster has taken place. And the number one thing is how do I deal with this problem today? But the number two question they ask is how do I make sure this never happens again and what is the future going to look like and how do I ensure that if this event is greater in magnitude or if it happens more frequently, how do I stop these types of events from happening? And then that leads to the adaptation, resilience discussion. And that's when there are big calls from their constituents as well. Be it shareholders for a company or voters for a politician are then saying, we demand this at this moment because now we realize what our risk is and we have to adapt.
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B
Let's talk about the paper. One of the big themes in the paper is that as you put it, North America has broad competitive advantage across energy sectors. North America's really actually quite well positioned. No matter which energy technology you're looking at. Can you talk a little bit more about that? And then are we as North Americans making the most use of that kind of competitive advantage as we could right now?
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C
So that idea process was in a national security thinking, you think about competitive advantages and you try to build those competitive, competitive advantages out and then you use them for self sufficiency in your own country, but then with allies, use it for trade and you build strength through that. And so the analysis within North America and why energy has developed so much in North America and grown is because first there was a lot of coal that led to coal development, and then there was the wave of oil and then the wave of natural gas with fracking and technological advances that took place. However, we can't just think about energy in terms of those resources. We also need to think about energy in terms of water resources and the availability of water for hydropower, sun for solar and wind for the creation of wind power. And in North America, we have really high resources of all of those. And that is also why in spikes of prices and supply issues of fossil fuels in the past, the United States invested so much in developing out solar power technologies and also wind technologies. And we also in the US but also in Canada, have had this strong investment into energy technologies broadly. And I also forgot to add in there, we also originally developed nuclear power. And there was a time in the 60s where if you talk to the nuclear power scientists and Department of Energy leaders, they thought that nuclear power was going to be the only power. But it was because of a few events that led to that build out not taking place, regulation, slowing the speed of building, and then the price went up and then it didn't happen. But if you look at all of the capabilities, we have the potential to be able to build out what we want in North America and to have access to that. And at this moment in time, we have choices to make if we want to build it all out strategically or not. And we are seeing different choices happening that might optimize all of it.
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B
What kind of choices specifically, to the.
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C
Degree you can answer, something that I put in this report was a figure of wind power potential of a map. Because in my discussions with clients, I realize most people have never seen a map of wind power potential and don't understand why people want to build offshore wind. But also that wind doesn't blow with the same frequency around the world. And in those maps it shows that there are certain parts of North America that would be really effective for wind power. And actually, if you look at it around the world, you also recognize that's why China is one of the biggest developers of wind power right now, is that they have regions where they could exploit for massive amounts of wind power. And also one of the largest wind power operations offshore that is being developed is also off of Australia, where That is an incredible location. The cost is really high. But those countries are not thinking about costs. They're thinking if I figure out how to unlock this technology and I figure out how to build power there, I will have steady massive amounts of power coming from offshore wind in the future. And so there are choices about do you invest and do you build that out as much as possible or do you look at other sources of energy? The other energy source that I think is big choice right now and is we are seeing funding going into, we are seeing being built out in the US is geothermal. And there's, there have been advancements in geothermal that now instead of just drilling down straight and having a single well, you can also drill horizontally to be able to have a single well now access far more heat. And so you could actually unlock geothermal in many more places than have been available in the past.
- [26:37]
B
What role do you see fossil fuels playing in this new era? Because the paper is quite clear, they're not going away. They're not going away anytime soon. They've just been joined by these other technologies. But what does a world or these other energy sources really, but what does a world where we have this diversity of energy sources, some of them depend on minerals, some of them depend on local natural availability of the underlying asset like geothermal or wind. But then you also have fossil fuels. What does that world look like for fossil fuels?
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C
I think we're going to increasingly see in certain parts of the world that don't have access to fossil fuels, that they are going to build out nuclear, wind, solar storage, geothermal, because they will want self sufficiency, because they no longer want to have to be be beholden to fossil fuel politics. And that's what we're seeing really happening in Asia right now with development of nuclear, build out of solar really quickly. And that is because in some of those regions that have not had those trading partners, have not had the access, do not have the capability to build out themselves, they're doubling down on self sufficiency through the technologies that they have available. And that is also driving the investment around the world right now in nuclear technologies as well. And many different types of nuclear technologies to fit the various needs that are emerging.
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B
Let me ask a devil's advocate question and say for the US or for any large scale country, why not just think about energy as fossil fuels if you have the fossil fuels to burn? Obviously there's an emissions angle here and.
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A
I find the emissions angle to be quite important. But let's say I don't think about emissions at all.
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B
Why not just say, look, we have all these fossil fuels, we're going to burn them. We don't really need to invest in these other alternative energy sources because we have these fossil fuels and I'm happy to burn them.
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C
That's where cost starts coming into play in the finances of it versus other forms of energy. And that's also where trade becomes important, is that if you end up being able to develop your trading partners, that's driving some of the interests of the producers, is being able to have trading partners in if you're producing it and then you are also sending it off. And that is a part of your economy. But that is also why certain countries are advancing the self sufficiency technologies of solar and wind and nuclear and geothermal now is that you can then also export that technology. And so we're going to see this is a time of intense competition around that and we will see what is the demand for these different technologies. And some countries are betting that nuclear or solar or wind will be an export technology that they will be able to export. They will have with their trading partners that they have competitive advantage in how to do it and de risking those companies and those technologies and science, scaling them and bringing the cost down and that that will be a form of their future economy. And we're seeing these blocks develop as well around places that can have that generation and then are now also exporting it to their neighbors. And this is a point that we put in here also because it's very different around the world versus the United States in terms of grid development. Whereas if we think about the grid in the US you have many different utilities and we are not even connected at regional scales that they are all connecting. And very complicated, very controversial when discussions about connection take place in Africa, in the Middle east and in Asia, they are starting to create interconnections across the grids, across countries and across neighbors that haven't necessarily had the best diplomatic relationships in the past. They're actually now linking their electricity grid, which means they're linking their industrial policy and their economic policies together through the grid now. And part of it is emerging because some of these countries are overproducing energy and now they have energy for export and for their neighbors who want energy security are agreeing to link their grids, which would been unheard of to discuss this even a decade ago in many of these places. And the reason we wrote this paper and put this information in is a lot of investors, a lot of leaders are very surprised by a lot of this analysis because they are unaware of these connections that are starting to take place around the world to be able to maintain energy security going forward.
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B
What's an example of countries that have linked up their grids that, you know, 10 years ago would have been like, that's crazy. They're connecting their power grids.
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C
You have power grid interconnections across Africa right now. There's a few blocks forming, but it's. You have one in East Africa, you have one in West Africa, you want to have one in the central and then the southern regions right now. And like, for example, on geothermal power, I bet a lot of people who are listening do not realize that geothermal power has been really built out in Kenya and they have actually had an overproduction. And so as a result, they have actually also interlinked their grids with Ethiopia, Uganda, up to Sudan, Egypt and Libya. There's now actually an interconnection across all. And so they are putting electrons onto the grid that is now being used across the countries that have had problems at their borders at different times, but they are now starting to link them because they recognize the importance of having electricity for their. Their cities that are massively growing because they of demographics and also the industry that is starting to build out.
- [32:27]
B
It also really reveals, I think, how much electrification, which is covered often, especially in the US as either an AI story, which is very important, or a China story, also very important is a much larger global trend than just something that's happening with data centers or in the Chinese economy because of their profusion of coal and renewables. It's like even in places that are obviously in the orbit of the United States or China or would like some kind of AI or even places kind of physically distant from those two kind of locuses of global development, like electrification is proceeding really rapidly. And we're seeing it happen across borders too.
- [33:11]
C
I was surprised by some of the analysis we also did in Asia because as you're saying, everyone thinks about China when they think about Asia and the discussions about it, or in the context of where American LNG going, G tanker is going, they're going to Japan, but actually on a grid build out, they are now building out a grid and they have current grid with interconnections, but they're really building out the grid further that goes from Vietnam and Myanmar all the way to Thailand, Singapore, Indonesia, into Malaysia and Brunei. So these countries that are also separated by oceans are now interconnecting their grid in ways that they haven't been previously. And so they are separate from all the other politics and discussions about where LNG can go. These other countries are figuring out and building out different sources and they are very, they are also very focused on starting to build out new technologies. Where there's interest in nuclear, this is where there's also an interest in solar because, because of how sunny it is. And they're also building out storage.
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B
There have been a number of goals when we talk about like American decarbonization policy and American energy policy beyond fossil fuel. There have been a number of goals that have been long standing kind of ideals of how a US that's more friendly to decarbonization could work. We'd have a solar industry, we'd make EVs, we'd export these technologies around the world. These were all big goals of the Biden administration.
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A
I feel like what we've seen in.
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B
The past five years, but also really in the past two years, is that China is just going to do all of these things. There are more EV sales in China this year than I think all US car sales combined. They have the globally dominant solar industry, globally dominant battery industry. They're taking the lead in wind, especially as the US steps back. What does this mean as you see it for US climate policy in the future or US energy policy at the moment? How should the US think about this fairly big change because we once imagined having a lot of roles that it seems like the US is just not going to play anymore.
- [35:19]
C
I think we should think about competitive advantages where we are today and where we are today in terms of technology and things that have been developed or are developing in the United States. We're seeing a ton of money going into geothermal and we're seeing a ton of money going into nuclear. And part of that also is it's not just coming up from the government right now. It's also coming from venture capital and growth equity and private equity. And as a result, we have this lead on certain technologies right now and a path towards commercialization for them. I think that it's very near our reach and we own these technologies right now. We are leading in them and we will have the ability to export those technologies and build them around the world and control those types of supply chains that we're starting to build for them right now. And as a someone who formerly worked in commerce and saw this time and time again with certain technologies that developed in the US but then it was made more cheaply overseas and then the industry built overseas, there's cases where this happens if there isn't a policy plan for long term of how one builds that out. So there's a chance right now, particularly for some of these emerging technologies now, for that to take place and to see that grow out. And I think both sides of the aisle would agree that if we have some consistency of choice of what we want to innovate on and then we want to commercialize and where we want to see industry growing, we can do that. We've done it in the past. And there's a moment right now and there's bipartisan support for geothermal and nuclear at this point in time. And I hope that I see that continue. Because there's nothing finance and investors prefer more than consistency and ability to see that growth all the way through commercialization and growth into the industry.
- [37:19]
B
So you're head of climate advisory for JP Morgan. When companies come to you looking for help navigating this particular moment where federal policy is quite up in the air, rates are coming down but kind of high, AI capex is surging, like, what advice do you give them for navigating this moment?
- [37:38]
C
The advice that I give them is looking to some of those things that strategically are likely to have more consistency over time and that they're looking for those places of more consistency and that they feel that they can invest in, that they will have support ongoing. Particularly if it's a project that is last beyond administrations. They're really concerned what they think is going to last. And then for the stuff that doesn't, that there may be more volatility. They want to identify that volatility and they want to think through, okay, how can I take opportunity now if I think there's a small window for it, or how do I plan for taking opportunity when the opportunity presents itself down the line? And so it's a mixture of long term planning and thinking through strategically where the world is headed and where they can fit in over time. Yet also taking opportunities that either present themselves now or they have conviction that will present themselves soon, and then being ready to be the first when that opportunity presents itself so that they can run with it.
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B
How much of climate tech, these companies that work in or around climate is about like just anticipating the future direction.
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A
Of policy in this way versus kind.
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B
Of seeing what's coming down the line from private equity or coming down the line in private markets.
- [38:55]
C
It is a mixture of both. And I think there's been a shift towards the fundamental thinking of some of these companies are really reliant on policy. And now in this as you said, also with the rates higher, cost of capital higher, they're being much more careful with making sure that they can grow without policy considerations or support. There's only a few sectors that we still see that, particularly in nuclear right now. But for the most part, I would say the discussions in climate tech have been around going back to fundamentals, being very careful with the funding, going after funding when they know that they have growth and they have a clear line of sight and investors are saying that as well.
- [39:39]
B
Do you feel like there's less energy in the climate tech space now than there was eight years ago? I do feel like it's harder sometimes to get speakers for events or you go to event and they're smaller than they would have been in say 2018 or 2019 or even 2022, the kind of peak of the post 1.5C report energy. What do you observe in the space broadly? Do you feel like it's kind of quasi, I want to say in recession, but smaller now than it was then, or what do you see?
- [40:10]
C
I still see a ton of interest and I think it's also shifting interests. So for the space that I see, I actually see growth in the resilience area. And I have so many more discussions on adaptation and resilience right now. Especially with recognition after certain events, people want to act after them. And so I think there's been a shift in conversation on various aspects of climate and depending on where you are headed and which conversations you're in, they can be smaller. But I would say my New York Climate Week expectations this year are greater than I've ever had before in terms of I've probably had close to 100, 150 requests for events and for speaking engagements. There is a lot going on and it's a lot more diverse than it has been in the past in terms of the types of events, the subject matters, the industries, it's across all industries and it's mitigation and adaptation and everything in between and combined. And I also went to London Climate Week a couple months ago and it was the same thing. It was larger than I've ever seen it before, or the discussions were far more nuanced, far more complex, but they were also more action oriented than I've ever seen. And so I think that there's been a shift of high level thinking towards what are we doing now, what can we get done? And really focusing on action.
- [41:40]
B
You were saying right before we started the call that you feel like conversations are more sophisticated now. What do you mean by That.
- [41:48]
C
I would say that they're becoming more sophisticated because people are realizing which solutions are actionable and which ones aren't. And everyone is learning on this and becoming experts in it in ways that people are trying to figure things out. A couple years ago, and there's so much more expertise out there and so much more focus on this and getting things done. Done. And I would even say that my being here at a bank is also proof of that. There's more sophistication than ever. The expertise that is going into institutions that haven't had it before has been increasing. And I think that we will continue to see more complex discussions and dialogue on these issues. And that gives me hope and energy that I think that we're going to see a lot of things happen. And it's not just in the United States, it is really around the world. My travel schedule shows that I'm going to various places to talk to our clients virtually or in person to figure these things out and chart courses ahead.
- [42:52]
B
When you talk to companies working in resilience or in mitigation in North America.
- [42:57]
A
Or abroad, is there like a particular.
- [42:59]
B
Gap or a particular need they have right now that's not being met by current options or firms on the market? And what is it?
- [43:07]
C
A growing need that I'm seeing is that people are concerned with the cost of resilience and adaptation and the speed of adaptation, how fast it's going and if it will meet the speed of adaptations actually implemented, will speak, will meet the speed of the need, meaning the advanced planning that is starting to take place to understand where people need to go. They're starting to realize that there may be a speed issue in terms of how much they can implement. There's, of course, uncertainty around all of this. And so there's thinking about figuring out how am I going to pay for things and who is going to pay for these things, and then how are they going to be implemented by the time I need them?
- [43:46]
B
What has surprised you most in the last few years about this energy space?
- [43:50]
C
As a climate scientist that got into this about two decades ago, I've always thought that people will say, see the changes and they will react quickly and we will move towards a different world at a faster pace than we perhaps have. But I think heavy dose of realism of it is very complex and it's very difficult to get things done. And sometimes it's just the speed of planning, the speed of getting the funds to do things, the speed of implementation, that all takes time and it can take decades and so my biggest learning is that we need smart people in every part of society and all the different types of businesses thinking through these issues and figuring out their plans and then implementing them. It's not just one person, it's not just one group, it's not just one geography. This complexity is broad and hopefully my writing is helping people navigate through that as they try and figure out what they're going to do.
- [44:49]
A
I'm going to let you go here.
- [44:50]
B
So you can fly to Singapore, but thank you so much for joining us, Sarah. Dr. Sarah Kaepnick and I hope to have you again soon on Shift Key. We should keep talking.
- [44:57]
C
Thank you. It was lovely to be here and I enjoy the conversation greatly and that.
- [45:02]
B
Will do it for us this week.
- [45:04]
A
Thank you so much for listening to Shift Key. You can follow me on X at obinsonmeyer or on bluesky or LinkedIn under my name. If you enjoyed Shift Key, please leave us a review on your favorite podcast. Appreciate My co host, the great Jesse Jenkins will be back next week and I should say you may have noticed that Jesse's kind of been going one week on, one week off for the past month or so. I think we're going to keep that going for the next few months because Jesse, frankly is a busy guy and has a very busy semester. But we're going to be experimenting with the format a little bit, bringing maybe some new people onto the show as well. And rest assured that Jesse is still here and will remain a very regular part of of your Shift Key listening diet. A regular part of the Shift Key family. Shift Key is a production of heatmap News. Our editors are Gillian Goodman and Nico Lauricella. Multimedia editing and audio engineering is by Jacob Lambert and by Nick Woodbury.
- [45:57]
B
Our music is by Adam Komalau.
- [45:58]
A
Thank you so much for listening and.
- [46:00]
B
See you next week.