Episode Transcript
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Speaker 1 (00:00):
And it's always a great pleasure for me when I
get to have a conversation with a chicken of any
color actually, but especially with a green chicken. This green
chicken is known as Doomberg. Doomberg is actually a team
of folks. One of them is more often than not,
the green chicken who will talk with me or others.
Speaker 2 (00:24):
And Doomberg is.
Speaker 1 (00:25):
The most successful sub stack in the finance category. They
have background in business and energy consulting, and it comes
through and everything that they write, and they're the most
interesting writers and thinkers on energy and energy policy and
other things that I know, right there, right up there
with Robert Brice and Roger Pilka, who are both friends
(00:45):
of mine. And if you care about energy policy at all,
you got to subscribe to Doomberg. So with that long introduction, Doomy,
welcome back to Koa.
Speaker 3 (00:56):
Rots, great to be here. Happy New Year to you.
Hope you had a wonderful joyce holiday season.
Speaker 1 (01:00):
Likewise, likewise, I've been pecking around for the highest quality
corn in your cage free environment. Let's start with a
nerdy thing. Let's start with a nerdy thing that's kind
of in the weeds. I mean this one is kind
of in the weeds even for you. But I do
a very nerdy show, so I want to make sure
my listeners know about this stuff. What is the new
(01:21):
European law that has abbreviated CSDDD.
Speaker 2 (01:26):
And why should we in Denver care?
Speaker 1 (01:30):
Yeah?
Speaker 4 (01:30):
Great question.
Speaker 3 (01:31):
So the CSDDD is, at its core a new set
of compliance regulations that are being imposed on not only
European companies but large global companies that do significant business
in Europe. And it's really two laws stuffed into one directive.
First of all, it requires companies to do a deep
dive on any labor abuses and environmental abuses that might
(01:53):
be hidden in their supply chains, and there's an awful
lot of that going on that nobody likes to talk about.
And then also at layers on top of that ticket
of new carbon counting regulations and plans for net zero
by twenty fifty and so on. And the core of
the piece that we wrote on this, called labor laundering,
is that if your listeners actually knew what was going
on to make your iPhone so cheap or various other
(02:16):
products that we use in our lives, you would be
aghast at some of the labor conditions and to the
extent that Europe is trying to uncover what's going on. Great,
but then they've coupled this co two requirements for it,
which we think will doom the bill, and so one
wonders whether that was even done on.
Speaker 1 (02:31):
Purpose when you say doomed the bill, and of course
you are doomberg so you know about doom and does
that mean that it hasn't passed yet and you think
it might not because of that, or has it passed
already and you think it will be impossible to implement
because of.
Speaker 3 (02:50):
That the second point you made, it begins to go
into a fact in twenty twenty seven, so there's lots
of time for the big companies in Europe and the
rest of the world to convince the europe In Parliament.
Speaker 4 (03:01):
That this is just unworkable.
Speaker 3 (03:02):
I'll give you two reasons why Europe is heavily dependent
on natural gas imports from countries like Qatar in the US,
and neither of those countries or the companies that provide
those LNG imports are going to be anywhere near hitting
European demands on net zero by twenty fifty, and Katar
in particular has a lot of labor issues and accusations
against it for forced labor and migrant workers and so on,
(03:26):
and so they'll just stop shipping the natural gas to Europe.
There'll be a crisis in Europe, and then Europe will say, Okay,
we're not going to implement this slaw.
Speaker 4 (03:32):
That's what we mean by doom the bill.
Speaker 1 (03:35):
Does this also include the stupid stuff like scope two
or scope three or whatever, which I've heard in some
maybe California regulations or something that I probably read about
in your writing, And can you tell people what those
stupid scopes are?
Speaker 3 (03:52):
Yeah, so it absolutely includes that. Scope one is your
direct emissions. I get in a car, I drive my truck,
I burn some dieselt how much carbon you know, carbon
dioxide admitted.
Speaker 4 (04:02):
That's scope one.
Speaker 3 (04:04):
Scope two is sort of your suppliers, and then Scope
three is their suppliers.
Speaker 4 (04:08):
Basically I've oversimplified it, but you get the point.
Speaker 3 (04:12):
And so if you know, we once wrote a piece
called Measurement Army, like how many measurers are you going
to have at all these companies all over the world
trying to count the same number of carbon emissions?
Speaker 4 (04:21):
It's just unworkable.
Speaker 3 (04:23):
But beyond that, like they're demanding a path to that
zero from a.
Speaker 4 (04:27):
Natural gas producer.
Speaker 3 (04:28):
How is a natural gas producer I'm ever going to
be able to get to that zero? And the point
of our piece is, Look, Europe can't live without that gas. Therefore,
this law really can't stand as written. And it's a
shame because if they had just kept it to the
labor issues, I think it would have highlighted something that
most of your listeners would would certainly.
Speaker 4 (04:46):
Support cracking down on.
Speaker 3 (04:48):
But because they've coupled it with this unworkable carbon you know,
the Church of Carbon, myopic focus on carbon emissions, I
think it'll doom the bill in its current form.
Speaker 1 (04:56):
Okay, so you just got me thinking about something that
I wasn't on asking you, even though I should have
been planning on asking you. So the contract, the contract
by which Russian gas transits Ukraine expired a week or
two ago, I guess at the end of the year,
and Ukraine I think has turned it off the pipeline
and not transmitting that Gazprom product through Ukraine to Europe anymore.
(05:20):
Is that is that an immediate problem for Europe? Do
they have lots of other supply? Is that was that
a big part of their supply.
Speaker 2 (05:28):
What do we need to know?
Speaker 4 (05:30):
Yeah, funny should ask.
Speaker 3 (05:31):
We literally just published a forty five minute video on
this twenty minutes ago. And I know that you didn't
know that because you were on the air. Yeah, we
did a deep dive on this for our prot here
at Boomberg dot com.
Speaker 4 (05:42):
Long story short, it's a big deal.
Speaker 3 (05:45):
There's still Russian natural gas flowing through Turkey, but all
the overland pipeline gas that went through places like Belarus
and Poland or you know, through Ukraine has now been
turned off.
Speaker 4 (05:55):
And at a very.
Speaker 3 (05:57):
Sort of angry press conference, putin Onto December twenty sixth
said well, there you have it. You've made your own bed.
Now you have to lie in it, live without our gas.
And the the upshot of all this is Europe will
be beholden to US and Katari LNG to meet it's
gas needs. It's a very cold winter over there this season,
(06:18):
gas storage is shrinking, and then next season they have
to rebuild it up. And so on the one hand
they've shut off all of the natural gas from Russia,
and on the other hand they're telling the LNG importers
that they have to obey all of these carbon rules,
and so Europe is basically making its own bed. And
as Putin said, it's it's high time they lie in it.
Speaker 2 (06:39):
Why should Americans care?
Speaker 3 (06:43):
Well, Americans get the good end of this year, We
get to sell them expensive lerg and in fact, in
Europe there's many who wonder whether this is was this
wasn't America's intent all along, cut the arteries between Russia
and Europe and make the Europeans pay, you know, the
Gulf Coast gas exporters, these exorbitant prices and so. But
there's a secondary impact, which is if the European economy
goes into a deeper session, it's not going to be
(07:03):
bullish necessarily for our economy.
Speaker 4 (07:06):
In the long term.
Speaker 3 (07:07):
You want to help the europe they are our allies.
You want their GDP to be expanding. Collectively, We're going
to have to confront China eventually, and a weaker Europe
makes for a very poor partner.
Speaker 2 (07:18):
We're talking with Doomberg.
Speaker 1 (07:19):
Check them out at Doomberg dot com or check out
their substack. Just go to substack dot com and type
in Doomberg.
Speaker 2 (07:26):
And you'll find them.
Speaker 1 (07:27):
And I absolutely urge you to become a paying subscriber
as I am now. It brought a smile to my
face when you wrote a piece recently called freight Hopping,
And why don't you tell folks what this piece is
about and why it brought a smile to my face
in particular?
Speaker 3 (07:46):
Yeah, well, I have to thank you because you're the
one who put this issue on a radar, and freight
hopping is about this solar training that the governor of
the great State of Colorado has thrown his good name
in support. And normally we wouldn't write about a small startup,
you know, with a crazy idea that we don't think
is going to work. But when we dug into it,
(08:07):
after you so graciously sent us the idea, we learned
that this startup is applying for a ten million dollar
grant from the federal government, and your governor is supporting
that application with a letter of support. And you know,
people in Washington, ten million dollars might not seem like
a lot, but it's a lot to me, it's a
lot to you, it's a lot to everybody listening. And
I think you have to put, you know, a stake
(08:27):
in the ground and say enough is enough on this
government spending. So in a nutshell, this company proposes to
put giant batteries on freight cars, move those batteries to
where the sun is shining, capture access electricity, charge the batteries,
and then move those batteries to where you know electricity
might be in short supply, and then discharge that electricity.
(08:50):
And it's one of those ideas, as we said in
the piece, you know, the social preview for the pieces.
Speaker 4 (08:54):
Sometimes these articles just write themselves.
Speaker 3 (08:57):
We had a lot of fun deconstructing that idea, but
it wouldn't been put on our radar if it wasn't
for you. And a shame on the governor for putting
his name behind this initiative.
Speaker 2 (09:05):
Just for fun. To give a sense of the kind
of work that you do.
Speaker 1 (09:08):
And this really shows your team's backgrounds as analysts and
consultants who have over your careers given companies. And I
don't really know the details of your business, but just
how you've written about yourselves in the early days of Doomberg,
you describe yourselves as energy consultants. So I'm not saying
(09:30):
anything that I know proprietarily because I don't know anything
about you proprietarily.
Speaker 2 (09:36):
You really dig into numbers. It's not just concepts, it's
not a theorial. Can you give folks a sense of how.
Speaker 1 (09:45):
You looked at this project numerically to then be able
to come on and give a more qualitative answer like
this isn't gonna work.
Speaker 3 (09:56):
Sure, So, anybody who's dealt with freight knows that it
is expensive to move freight, and the way freight is
built is by the ton mile. So how many tons
do you want to move and how far do you
want to move? It's pretty simple, right. If you have
light freight that's super valuable, it makes sense to move
it by rail. If you have heavy freight that isn't
that valuable, maybe it doesn't make that sense.
Speaker 4 (10:17):
That much sense. So the batteries are very expensive.
Speaker 3 (10:20):
So the first thing we did was how much does
a battery on one railcar way? And we gave the
company every benefit of the doubt, and we come up
with one hundred tons. One hundred tons is a lot
now in the railed industry. It's priced one way. But
when you discharge your battery, like electrons don't weigh anything,
so the battery is just as heavy on the round
trip home. So you actually got to pay both ways
wherever you're dispatching it to do and then bringing.
Speaker 4 (10:41):
It back because it's full. It's one hundred tons both ways.
Speaker 3 (10:44):
And then once you know that it's expensive to ship
very heavy batteries, then the question becomes how valuable is
the cargo. Well, wholesale electricity is dirt cheap, right, twenty
thirty forty cents per kill a lot hour in the
most extreme situations. And when you run the math given
the energy density of the batteries, how much it costs
to ship it around, and the value of the cargo,
(11:04):
you see immediately that you can't go very far until
you're losing money. And then on top of that, batteries
make money by how many you know, charge discharge cycles
they get. And this thing is going to be moving
all around the country waiting to be deployed just when
electricity prices are high.
Speaker 4 (11:18):
It's one of.
Speaker 3 (11:18):
These ideas that looks good in a rendition or a
slip video, but it just is never going to work
in practice. And so we detailed all of those assumptions,
the calculations, given the company every benefit of the doubt,
and it just doesn't work. And the primary reason it
doesn't work, And why we knew it wouldn't work before
we put the numbers to it is energy density. Batteries
are heavy, there's not much energy in them. Coal they
(11:40):
ship hunder tons of coal around all the time. Coal's
got a ton of energy in it, ten times more
than a battery, and so it's really hard to beat
an order of magnitude. And so we knew the answer
before we started, but we had a lot of fun
pooking fun of it. Last thing I'd say, I don't
blame the company, I blame the governor.
Speaker 1 (11:56):
Right, and we'll see, I don't know how far along
they are and getting this and getting this federal grant.
But you'd have to think that once Chris Wright is
running the Department of Energy, assuming he gets confirmed, that
companies are going to have a much harder time getting
getting grants for uneconomic projects.
Speaker 3 (12:16):
Right, one would hope he's he's truly an energy expert.
Speaker 4 (12:22):
We're big fans of his I know he's fans of
us as well.
Speaker 3 (12:25):
And when we saw his appointment to be, you know,
the nominee for Secretary of Energy, we couldn't have been
more pleased. In fact, we wrote a whole piece on
it called in praise of Chris Wright. So you can
guess where we land on that particular nomination.
Speaker 2 (12:37):
We're talking with Doomberg.
Speaker 1 (12:38):
Doomberg dot com is the website or Doomberg on sub stack.
I encourage you to subscribe, all right, last thing do
me and sticking sticking.
Speaker 2 (12:47):
With Chris Wright.
Speaker 1 (12:48):
I actually was texting with him last night, telling him
that you're going to be on the show, and I
asked him if there's anything he'd like me to ask you,
and he said, well, I'd like to ask Duomberg what
he slash They think about China's industrial economy right now
(13:09):
and China's energy supply and distribution capacities to fuel that economy.
Speaker 3 (13:20):
Yeah, you know, China's energy policy is amongst the smartest
in the world. We did a whole presentation on this
earlier in the year called the Year of the Dragon.
China through the lens of energy. China burns half the
world's coal. They don't care about carbon emissions. They are
responsible for the vast majority of carbon emission increases in
the past two decades.
Speaker 4 (13:37):
They get about half their energy from coal.
Speaker 3 (13:39):
They get a big chunk of energy from natural gas,
both through pipelines, with various dubious governments in Asia also
LNG imports.
Speaker 4 (13:48):
They don't have much in the way of oil.
Speaker 3 (13:50):
They have to import their oil, so they built out
their refining network so that all of the countries in
their neighborhood depend on them to provide gasoline and diesel
and jet fuel that comes from oil buddy. Who cuts
off China then cuts off all of their downstream partners.
They're very, very smart about their strategy. If they're building
out a huge fleet of nuclear reactors. The US is
the largest producer of nuclear electricity today, but that's going
(14:13):
to end very soon. They're building out a fleet like
you wouldn't believe. They churn them out faster and cheaper
than we do. They have an all of the above
energy strategy, and even in renewables, I'm sure they're putting
some in, but it's at the margins. But they dominate
the supply chains that Europe and the US must purchase
in order to meet the renewable agenda. So, however you
(14:34):
look at it, we would describe the Chinese energy strategy
as very very very wise, very tactical, very strategic, and
it fuels whatever industrial growth they're able to squeeze out
of that, and more power to them. And I know
that Chris Wright is a deep expert on energy, and
I hope that in his four years in his next position,
he moves the US into a situation where we're a
(14:57):
lot more like China, at least in that regard.
Speaker 1 (14:59):
I liked or perhaps unintentional more power to them, pun.
Speaker 2 (15:03):
I don't know if you even intended to make that pun.
Speaker 1 (15:11):
On last one, last quick follow up on that before
you were on the show, because I'm a nerd, I
was telling listeners that Chinese thirty year bond yield has
dropped below the Japanese thirty year bond yield for the
first time and who know, maybe ever and you know,
like below two percent on thirty year paper in China,
(15:32):
and the market surely thinks that that China has let's say,
recession risk. Do you think that smart energy policy can
be an important part of preventing or shortening or or
making more shallow a recession or do you think they're
(15:56):
more unrelated than that.
Speaker 3 (15:59):
I think Western analysts trying to predict the economic numbers
in China are facing an incredible challenge.
Speaker 4 (16:06):
It's just not noble from over here.
Speaker 3 (16:07):
But what we can see are things like the interest
rates that you're describing, and I think that probably has
a lot to do with energy, but it also has
a lot to do with the development of bricks and
an alternative to the US dollar. China obviously is a
big player in that bricks initiative. And if China is
going to be sort of the alternative for US treasuries
for the global South, which by the way, happens to
(16:30):
be composed of some seven billion people, who knows what
that means for their interest rates long term?
Speaker 4 (16:34):
It certainly means that.
Speaker 3 (16:36):
You can't look at it through the traditional macroeconomic lens
that we have in the dollar system, because bricks is
growing to be a competitor of the US dollar, and
how all of that manifests in various numbers that we
see on the screen is going to be interesting to observe.
Speaker 1 (16:51):
Yeah, and I know for econ nerds that Indonesia announced
just in the past day or two that they were
joining bricks.
Speaker 2 (16:57):
That's briics. You can go, you can go look it up.
Speaker 1 (17:01):
Do me. Thanks as always for your time, as you
are an anonymous chicken.
Speaker 2 (17:07):
I don't know what football team you root for.
Speaker 1 (17:10):
But If you have a team that's in the playoffs
this weekend, I wish you good luck as long as
they are not playing the Denver Broncos.
Speaker 4 (17:18):
Thanks Ross, and it is the Detroit Lions. Go Dan Campbell.
If he's not Coach of the Year, that award should
be retired.
Speaker 1 (17:25):
That's the green Chicken. Now we know he's a Lions fan.
Thanks for your time as always do me. I appreciate it.
Speaker 2 (17:32):
You bet all right,
And it's always a great pleasure for me when I
get to have a conversation with a chicken of any
color actually, but especially with a green chicken. This green
chicken is known as Doomberg. Doomberg is actually a team
of folks. One of them is more often than not,
the green chicken who will talk with me or others.
Speaker 2 (00:24):
And Doomberg is.
Speaker 1 (00:25):
The most successful sub stack in the finance category. They
have background in business and energy consulting, and it comes
through and everything that they write, and they're the most
interesting writers and thinkers on energy and energy policy and
other things that I know, right there, right up there
with Robert Brice and Roger Pilka, who are both friends
(00:45):
of mine. And if you care about energy policy at all,
you got to subscribe to Doomberg. So with that long introduction, Doomy,
welcome back to Koa.
Speaker 3 (00:56):
Rots, great to be here. Happy New Year to you.
Hope you had a wonderful joyce holiday season.
Speaker 1 (01:00):
Likewise, likewise, I've been pecking around for the highest quality
corn in your cage free environment. Let's start with a
nerdy thing. Let's start with a nerdy thing that's kind
of in the weeds. I mean this one is kind
of in the weeds even for you. But I do
a very nerdy show, so I want to make sure
my listeners know about this stuff. What is the new
(01:21):
European law that has abbreviated CSDDD.
Speaker 2 (01:26):
And why should we in Denver care?
Speaker 1 (01:30):
Yeah?
Speaker 4 (01:30):
Great question.
Speaker 3 (01:31):
So the CSDDD is, at its core a new set
of compliance regulations that are being imposed on not only
European companies but large global companies that do significant business
in Europe. And it's really two laws stuffed into one directive.
First of all, it requires companies to do a deep
dive on any labor abuses and environmental abuses that might
(01:53):
be hidden in their supply chains, and there's an awful
lot of that going on that nobody likes to talk about.
And then also at layers on top of that ticket
of new carbon counting regulations and plans for net zero
by twenty fifty and so on. And the core of
the piece that we wrote on this, called labor laundering,
is that if your listeners actually knew what was going
on to make your iPhone so cheap or various other
(02:16):
products that we use in our lives, you would be
aghast at some of the labor conditions and to the
extent that Europe is trying to uncover what's going on. Great,
but then they've coupled this co two requirements for it,
which we think will doom the bill, and so one
wonders whether that was even done on.
Speaker 1 (02:31):
Purpose when you say doomed the bill, and of course
you are doomberg so you know about doom and does
that mean that it hasn't passed yet and you think
it might not because of that, or has it passed
already and you think it will be impossible to implement
because of.
Speaker 3 (02:50):
That the second point you made, it begins to go
into a fact in twenty twenty seven, so there's lots
of time for the big companies in Europe and the
rest of the world to convince the europe In Parliament.
Speaker 4 (03:01):
That this is just unworkable.
Speaker 3 (03:02):
I'll give you two reasons why Europe is heavily dependent
on natural gas imports from countries like Qatar in the US,
and neither of those countries or the companies that provide
those LNG imports are going to be anywhere near hitting
European demands on net zero by twenty fifty, and Katar
in particular has a lot of labor issues and accusations
against it for forced labor and migrant workers and so on,
(03:26):
and so they'll just stop shipping the natural gas to Europe.
There'll be a crisis in Europe, and then Europe will say, Okay,
we're not going to implement this slaw.
Speaker 4 (03:32):
That's what we mean by doom the bill.
Speaker 1 (03:35):
Does this also include the stupid stuff like scope two
or scope three or whatever, which I've heard in some
maybe California regulations or something that I probably read about
in your writing, And can you tell people what those
stupid scopes are?
Speaker 3 (03:52):
Yeah, so it absolutely includes that. Scope one is your
direct emissions. I get in a car, I drive my truck,
I burn some dieselt how much carbon you know, carbon
dioxide admitted.
Speaker 4 (04:02):
That's scope one.
Speaker 3 (04:04):
Scope two is sort of your suppliers, and then Scope
three is their suppliers.
Speaker 4 (04:08):
Basically I've oversimplified it, but you get the point.
Speaker 3 (04:12):
And so if you know, we once wrote a piece
called Measurement Army, like how many measurers are you going
to have at all these companies all over the world
trying to count the same number of carbon emissions?
Speaker 4 (04:21):
It's just unworkable.
Speaker 3 (04:23):
But beyond that, like they're demanding a path to that
zero from a.
Speaker 4 (04:27):
Natural gas producer.
Speaker 3 (04:28):
How is a natural gas producer I'm ever going to
be able to get to that zero? And the point
of our piece is, Look, Europe can't live without that gas. Therefore,
this law really can't stand as written. And it's a
shame because if they had just kept it to the
labor issues, I think it would have highlighted something that
most of your listeners would would certainly.
Speaker 4 (04:46):
Support cracking down on.
Speaker 3 (04:48):
But because they've coupled it with this unworkable carbon you know,
the Church of Carbon, myopic focus on carbon emissions, I
think it'll doom the bill in its current form.
Speaker 1 (04:56):
Okay, so you just got me thinking about something that
I wasn't on asking you, even though I should have
been planning on asking you. So the contract, the contract
by which Russian gas transits Ukraine expired a week or
two ago, I guess at the end of the year,
and Ukraine I think has turned it off the pipeline
and not transmitting that Gazprom product through Ukraine to Europe anymore.
(05:20):
Is that is that an immediate problem for Europe? Do
they have lots of other supply? Is that was that
a big part of their supply.
Speaker 2 (05:28):
What do we need to know?
Speaker 4 (05:30):
Yeah, funny should ask.
Speaker 3 (05:31):
We literally just published a forty five minute video on
this twenty minutes ago. And I know that you didn't
know that because you were on the air. Yeah, we
did a deep dive on this for our prot here
at Boomberg dot com.
Speaker 4 (05:42):
Long story short, it's a big deal.
Speaker 3 (05:45):
There's still Russian natural gas flowing through Turkey, but all
the overland pipeline gas that went through places like Belarus
and Poland or you know, through Ukraine has now been
turned off.
Speaker 4 (05:55):
And at a very.
Speaker 3 (05:57):
Sort of angry press conference, putin Onto December twenty sixth
said well, there you have it. You've made your own bed.
Now you have to lie in it, live without our gas.
And the the upshot of all this is Europe will
be beholden to US and Katari LNG to meet it's
gas needs. It's a very cold winter over there this season,
(06:18):
gas storage is shrinking, and then next season they have
to rebuild it up. And so on the one hand
they've shut off all of the natural gas from Russia,
and on the other hand they're telling the LNG importers
that they have to obey all of these carbon rules,
and so Europe is basically making its own bed. And
as Putin said, it's it's high time they lie in it.
Speaker 2 (06:39):
Why should Americans care?
Speaker 3 (06:43):
Well, Americans get the good end of this year, We
get to sell them expensive lerg and in fact, in
Europe there's many who wonder whether this is was this
wasn't America's intent all along, cut the arteries between Russia
and Europe and make the Europeans pay, you know, the
Gulf Coast gas exporters, these exorbitant prices and so. But
there's a secondary impact, which is if the European economy
goes into a deeper session, it's not going to be
(07:03):
bullish necessarily for our economy.
Speaker 4 (07:06):
In the long term.
Speaker 3 (07:07):
You want to help the europe they are our allies.
You want their GDP to be expanding. Collectively, We're going
to have to confront China eventually, and a weaker Europe
makes for a very poor partner.
Speaker 2 (07:18):
We're talking with Doomberg.
Speaker 1 (07:19):
Check them out at Doomberg dot com or check out
their substack. Just go to substack dot com and type
in Doomberg.
Speaker 2 (07:26):
And you'll find them.
Speaker 1 (07:27):
And I absolutely urge you to become a paying subscriber
as I am now. It brought a smile to my
face when you wrote a piece recently called freight Hopping,
And why don't you tell folks what this piece is
about and why it brought a smile to my face
in particular?
Speaker 3 (07:46):
Yeah, well, I have to thank you because you're the
one who put this issue on a radar, and freight
hopping is about this solar training that the governor of
the great State of Colorado has thrown his good name
in support. And normally we wouldn't write about a small startup,
you know, with a crazy idea that we don't think
is going to work. But when we dug into it,
(08:07):
after you so graciously sent us the idea, we learned
that this startup is applying for a ten million dollar
grant from the federal government, and your governor is supporting
that application with a letter of support. And you know,
people in Washington, ten million dollars might not seem like
a lot, but it's a lot to me, it's a
lot to you, it's a lot to everybody listening. And
I think you have to put, you know, a stake
(08:27):
in the ground and say enough is enough on this
government spending. So in a nutshell, this company proposes to
put giant batteries on freight cars, move those batteries to
where the sun is shining, capture access electricity, charge the batteries,
and then move those batteries to where you know electricity
might be in short supply, and then discharge that electricity.
(08:50):
And it's one of those ideas, as we said in
the piece, you know, the social preview for the pieces.
Speaker 4 (08:54):
Sometimes these articles just write themselves.
Speaker 3 (08:57):
We had a lot of fun deconstructing that idea, but
it wouldn't been put on our radar if it wasn't
for you. And a shame on the governor for putting
his name behind this initiative.
Speaker 2 (09:05):
Just for fun. To give a sense of the kind
of work that you do.
Speaker 1 (09:08):
And this really shows your team's backgrounds as analysts and
consultants who have over your careers given companies. And I
don't really know the details of your business, but just
how you've written about yourselves in the early days of Doomberg,
you describe yourselves as energy consultants. So I'm not saying
(09:30):
anything that I know proprietarily because I don't know anything
about you proprietarily.
Speaker 2 (09:36):
You really dig into numbers. It's not just concepts, it's
not a theorial. Can you give folks a sense of how.
Speaker 1 (09:45):
You looked at this project numerically to then be able
to come on and give a more qualitative answer like
this isn't gonna work.
Speaker 3 (09:56):
Sure, So, anybody who's dealt with freight knows that it
is expensive to move freight, and the way freight is
built is by the ton mile. So how many tons
do you want to move and how far do you
want to move? It's pretty simple, right. If you have
light freight that's super valuable, it makes sense to move
it by rail. If you have heavy freight that isn't
that valuable, maybe it doesn't make that sense.
Speaker 4 (10:17):
That much sense. So the batteries are very expensive.
Speaker 3 (10:20):
So the first thing we did was how much does
a battery on one railcar way? And we gave the
company every benefit of the doubt, and we come up
with one hundred tons. One hundred tons is a lot
now in the railed industry. It's priced one way. But
when you discharge your battery, like electrons don't weigh anything,
so the battery is just as heavy on the round
trip home. So you actually got to pay both ways
wherever you're dispatching it to do and then bringing.
Speaker 4 (10:41):
It back because it's full. It's one hundred tons both ways.
Speaker 3 (10:44):
And then once you know that it's expensive to ship
very heavy batteries, then the question becomes how valuable is
the cargo. Well, wholesale electricity is dirt cheap, right, twenty
thirty forty cents per kill a lot hour in the
most extreme situations. And when you run the math given
the energy density of the batteries, how much it costs
to ship it around, and the value of the cargo,
(11:04):
you see immediately that you can't go very far until
you're losing money. And then on top of that, batteries
make money by how many you know, charge discharge cycles
they get. And this thing is going to be moving
all around the country waiting to be deployed just when
electricity prices are high.
Speaker 4 (11:18):
It's one of.
Speaker 3 (11:18):
These ideas that looks good in a rendition or a
slip video, but it just is never going to work
in practice. And so we detailed all of those assumptions,
the calculations, given the company every benefit of the doubt,
and it just doesn't work. And the primary reason it
doesn't work, And why we knew it wouldn't work before
we put the numbers to it is energy density. Batteries
are heavy, there's not much energy in them. Coal they
(11:40):
ship hunder tons of coal around all the time. Coal's
got a ton of energy in it, ten times more
than a battery, and so it's really hard to beat
an order of magnitude. And so we knew the answer
before we started, but we had a lot of fun
pooking fun of it. Last thing I'd say, I don't
blame the company, I blame the governor.
Speaker 1 (11:56):
Right, and we'll see, I don't know how far along
they are and getting this and getting this federal grant.
But you'd have to think that once Chris Wright is
running the Department of Energy, assuming he gets confirmed, that
companies are going to have a much harder time getting
getting grants for uneconomic projects.
Speaker 3 (12:16):
Right, one would hope he's he's truly an energy expert.
Speaker 4 (12:22):
We're big fans of his I know he's fans of
us as well.
Speaker 3 (12:25):
And when we saw his appointment to be, you know,
the nominee for Secretary of Energy, we couldn't have been
more pleased. In fact, we wrote a whole piece on
it called in praise of Chris Wright. So you can
guess where we land on that particular nomination.
Speaker 2 (12:37):
We're talking with Doomberg.
Speaker 1 (12:38):
Doomberg dot com is the website or Doomberg on sub stack.
I encourage you to subscribe, all right, last thing do
me and sticking sticking.
Speaker 2 (12:47):
With Chris Wright.
Speaker 1 (12:48):
I actually was texting with him last night, telling him
that you're going to be on the show, and I
asked him if there's anything he'd like me to ask you,
and he said, well, I'd like to ask Duomberg what
he slash They think about China's industrial economy right now
(13:09):
and China's energy supply and distribution capacities to fuel that economy.
Speaker 3 (13:20):
Yeah, you know, China's energy policy is amongst the smartest
in the world. We did a whole presentation on this
earlier in the year called the Year of the Dragon.
China through the lens of energy. China burns half the
world's coal. They don't care about carbon emissions. They are
responsible for the vast majority of carbon emission increases in
the past two decades.
Speaker 4 (13:37):
They get about half their energy from coal.
Speaker 3 (13:39):
They get a big chunk of energy from natural gas,
both through pipelines, with various dubious governments in Asia also
LNG imports.
Speaker 4 (13:48):
They don't have much in the way of oil.
Speaker 3 (13:50):
They have to import their oil, so they built out
their refining network so that all of the countries in
their neighborhood depend on them to provide gasoline and diesel
and jet fuel that comes from oil buddy. Who cuts
off China then cuts off all of their downstream partners.
They're very, very smart about their strategy. If they're building
out a huge fleet of nuclear reactors. The US is
the largest producer of nuclear electricity today, but that's going
(14:13):
to end very soon. They're building out a fleet like
you wouldn't believe. They churn them out faster and cheaper
than we do. They have an all of the above
energy strategy, and even in renewables, I'm sure they're putting
some in, but it's at the margins. But they dominate
the supply chains that Europe and the US must purchase
in order to meet the renewable agenda. So, however you
(14:34):
look at it, we would describe the Chinese energy strategy
as very very very wise, very tactical, very strategic, and
it fuels whatever industrial growth they're able to squeeze out
of that, and more power to them. And I know
that Chris Wright is a deep expert on energy, and
I hope that in his four years in his next position,
he moves the US into a situation where we're a
(14:57):
lot more like China, at least in that regard.
Speaker 1 (14:59):
I liked or perhaps unintentional more power to them, pun.
Speaker 2 (15:03):
I don't know if you even intended to make that pun.
Speaker 1 (15:11):
On last one, last quick follow up on that before
you were on the show, because I'm a nerd, I
was telling listeners that Chinese thirty year bond yield has
dropped below the Japanese thirty year bond yield for the
first time and who know, maybe ever and you know,
like below two percent on thirty year paper in China,
(15:32):
and the market surely thinks that that China has let's say,
recession risk. Do you think that smart energy policy can
be an important part of preventing or shortening or or
making more shallow a recession or do you think they're
(15:56):
more unrelated than that.
Speaker 3 (15:59):
I think Western analysts trying to predict the economic numbers
in China are facing an incredible challenge.
Speaker 4 (16:06):
It's just not noble from over here.
Speaker 3 (16:07):
But what we can see are things like the interest
rates that you're describing, and I think that probably has
a lot to do with energy, but it also has
a lot to do with the development of bricks and
an alternative to the US dollar. China obviously is a
big player in that bricks initiative. And if China is
going to be sort of the alternative for US treasuries
for the global South, which by the way, happens to
(16:30):
be composed of some seven billion people, who knows what
that means for their interest rates long term?
Speaker 4 (16:34):
It certainly means that.
Speaker 3 (16:36):
You can't look at it through the traditional macroeconomic lens
that we have in the dollar system, because bricks is
growing to be a competitor of the US dollar, and
how all of that manifests in various numbers that we
see on the screen is going to be interesting to observe.
Speaker 1 (16:51):
Yeah, and I know for econ nerds that Indonesia announced
just in the past day or two that they were
joining bricks.
Speaker 2 (16:57):
That's briics. You can go, you can go look it up.
Speaker 1 (17:01):
Do me. Thanks as always for your time, as you
are an anonymous chicken.
Speaker 2 (17:07):
I don't know what football team you root for.
Speaker 1 (17:10):
But If you have a team that's in the playoffs
this weekend, I wish you good luck as long as
they are not playing the Denver Broncos.
Speaker 4 (17:18):
Thanks Ross, and it is the Detroit Lions. Go Dan Campbell.
If he's not Coach of the Year, that award should
be retired.
Speaker 1 (17:25):
That's the green Chicken. Now we know he's a Lions fan.
Thanks for your time as always do me. I appreciate it.
Speaker 2 (17:32):
You bet all right,
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