Can Capitalism (Justly) Solve the Climate Crisis?

Quinn: [00:00:00] The climate clock is ticking faster and faster. How can we use capitalism to, you know, undo the bad stuff that capitalism did and maybe even make things better? That's today's big question, and my returning guest is Akshat Rathi. Akshat is a London based senior reporter, newsletter writer, and podcaster for Bloomberg News.

Akshat has a PhD in organic chemistry from the University of Oxford, and a BTech in chemical engineering from the Institute of Chemical Technology in Mumbai. Akshat was previously a senior reporter at Quartz and a science editor at The Conversation. Akshat's work has been cited widely including in the New York Times, Washington Post, Wall Street Journal, Financial Times, The Guardian, and he's won so many awards for his journalism. He is here today, again, probably against his will, because his first book is out, and it is called, da da da da, [00:01:00] Climate Capitalism. It's just fantastic, and I am so happy for him. Climate Capitalism is out right now in the UK and comes out in the U.S. on March 12th, 2024.

This book, this wonderful book, it's really, really great, tells the stories of people building solutions at scale, to tackle one of humanity's greatest challenges. Some of the solutions we've already built, like solar and batteries, and the ones we're still kind of working on, because they're hard.

And it takes a lot of work and money and politics. Look, when I started this work, Akshat was one of the first reporters that really helped me understand not only the pulse of the climate era from a really science and business and economics perspective and the work to be done and being done, but also just as importantly, what to look for in journalists in related fields, or at [00:02:00] least related to what we do.

Someone like Ed Yong in public health. And all the wonderful journalists at The Conversation, The 19th, STAT, The Markup, Capital B, and others. In a world where journalism is kind of going bye-bye, and the climate clock is ticking, but we've made so much progress, and we can make so much more, Akshat's reporting in this book couldn't be more timely, as we really seek to answer the question, where are we on this timeline?

What is happening and how can we go faster? Welcome to Important, Not Important. My name is Quinn Emmett, and this is science for people who give a shit. In these weekly conversations with folks like Akshat, I take a deep dive with someone who's working or reporting on, or both, the front lines of the future.

To build this radically better today and tomorrow for everyone. Because it is our mission to understand and unfuck the future. And it is our goal to help you answer the question, What can I do? [00:03:00]

Akshat Rathi, welcome back to the show. Are you regretting it yet?

Akshat Rathi: Oh, not yet. No, we'll see how it, how the questions go.

Quinn: Give me a few minutes. Give me a few minutes. It's less about the questions and more just about, do I actually have anything to offer? And according to my children, it's really not much, like decreasingly less each day.

So that's great. It really sends you out the door with some confidence. Akshat, you're back on the show because you're one of our favorite guests and our favorite reporters, but also you're a published author. Very exciting. Climate Capitalism: Winning the Global Race To Zero Emissions. For some reason you put your credit card number on the front, which I imagine has been a bit of a problem, including the date of expiration.

Akshat Rathi: I chose the wrong lawyer.

Quinn: Yeah. Yeah. That's the last box you got to check. Anyways. It is fantastic. We're going to talk all about it. Here's the people who like it. Bill Gates likes it. David Wallace Wells. It says it's dazzling. Paul Polman, who we talk about quite a bit. Hannah Ritchie, has her [00:04:00] own book.

Some guy, Kim Stanley Robinson, I don't know who that can be, not influential in the slightest. Anyways, everybody really digs it. I really dig it, of course and it's such a great compliment, but also you know, it's like your builds on all your reporting and is your manifesto and is such a great, really comprehensive take on sort of where we are.

And I think that's actually where I kind of want to get started because again, you know, recording this, what is it? My God, it's almost March, February 2024, somehow, which sounds like it should be Blade Runner. It is not for a real, some real pros and cons reasons. But you wrote in a recent Bloomberg article, and you said, effectively, are we in the hardest part of the transition?

And your short answer was, climate action is in a difficult phase, geopolitical crisis, lack of multilateralism, rising subsidies for fossil fuels, which is a real understatement and limited [00:05:00] techno fix solutions, all of which is true. And again, like I kind of said about the book, I appreciate the wholesale perspective and you've always brought this to your journalism as well.

You don't leave out what is usually the hardest work, the unsexy stuff, the politics, and the money, because techno fixes are great, I love them, it's very easy to get excited about the flashier things, but there's a lot of underlying stuff that needs to be done to get us to the flashier things. So, why did you feel like asking, besides obviously this, and this is what you do every day.

Why ask that question now? Where are we? How's it going? Basically.

Akshat Rathi: Well, I feel like if you think about where we need to go, that's clear now. We need to reach net zero because without that, we're not going to stop warming from happening. But knowing the destination is great, [00:06:00] which we didn't know for a while, but how exactly we get there is going to be different for everybody.

So where are we is a good question to ask. Depending on the context, you know, could be the political context, could be the economic context, could be the regional context where you happen to live, and knowing how we got here is very important. So that, if we need to get to net zero as the entire planet, we're not all going to take the same path, but there are things that you and I can do, which we can learn from each other, even though we are thousands of miles apart.

Quinn: I really love that. We've discovered recently that that is basically our work is, is trying to break down this ridiculous gatekeeping between this personal and systemic bullshit that everyone loves to argue about. And which frankly just keeps new people out a lot of the times because they're like, Whoa.

Why is everyone so mad at each other? And it's both because we've learned a lot to be able to answer this sort of question, right, of where are we? There's also a lot of known unknowns and, and even some [00:07:00] unknown unknowns, right? Modeling has been incredibly predictive so far, but at some point it's just like, we'll find out.

But at the same time, like you said, there's a lot of different journeys and paths and inputs and specialties and even among each of those specialties and inputs, different ways in or ways to hold back progress and I was inspired by it. I wrote a little post based on that question, basically thinking of asking that question, like you were saying, if people who are in climate-related stuff, even if indirectly, and even unrelated specialties, because how would, how would they, I mean, this is what you and I do all day, but like, how would quote-unquote regular folks, answer this question. Not just where are we, but are we in the hardest part?

Akshat Rathi: Yeah, and I feel like hard not to think about that because these days climate impacts are hitting hard and fast, right? It's been the warmest February as it was the warmest January and as it was the warmest December. Now that is [00:08:00] starting to feel strange to people in such big ways, you know, we walk out here in the UK nowadays with a summer jacket in February, and it feels wrong. And those are tiny discomforts that we are experiencing, but then we're also reading about the huge amount of discomforts that extreme weather events bring to people all around the world.

So that question is being asked increasingly by people who understand. Oh, yeah, this is climate change. It's here and now. So, where do we go from here?

Quinn: Yeah, where do we go from here? And I think it's a lot of like, it's, it's, it is this example, but it's really easy to read things like the jet stream might be slowing down and think, Akshat, what the hell am I supposed to do about that?

And the answer is like, not a lot, but there is a lot you can do about how you experience climate change right now and in the future and how your kids will in your community, because it really is the heat on your back, the chance of having storms, where there's going to be sea level rise or for the East Coast of the U.S. [00:09:00] are you sinking because you've pumped too much groundwater, you know, what's the insurance situation on your home or your parents home or, you know, whatever it might be. That's the stuff that's really applicable, but I also kind of came to this question. I'm curious what your thoughts are, so two things, you know, like you're saying you go out in London in February in a summer jacket and you know, like, uh oh, but I have this experience.

I'm in Colonial Williamsburg and it's not dissimilar where on a winter day, one of my children or a well-intentioned friend will say something like, what a nice warm winter day. And inside I'm going, don't ruin this day for them. Don't say it out loud. And then they'll notice me thinking about it and they'll go, oh, shit.

Right. I shouldn't be happy about this. And I'm like, we don't have to talk about it. We can totally talk about it or we don't have to. It's, but actually that's something I do a lot is go like, it's up to you. Do you want to, do you want to do this thing? Really try not to bring the work home too much as they say.[00:10:00]

But I also thought about it again. About that question. How can people answer it? Who can answer it? And how in the context of, you know, my kids are young. I thought about a second-grade teacher going: Here's how I can answer that question, but the kids read about storms and it's warm or we have really hot days and we don't necessarily have air conditioners or windows that open and I don't know exactly what to tell them because I'm underpaid and don't have time to keep up with it.

And I also don't know how much to tell them because their six, and seven, and eight, and again, like, that is one specific job among someone who works in carbon removal versus someone who works in financing, you know, all these different things. And I think that alludes to what you were saying, which is like, the experiences are just proliferating.

Akshat Rathi: Yeah. I mean, a lot of my job has been about, you know, writing about solutions and false solutions so that we can figure out as you put it, stuff that is important stuff that is not important. But as I am doing that I recognize [00:11:00] that people are also grappling with trying to figure out how to talk about this.

So I would say, you know, a fourth of my time I'm thinking about stories that are to do with giving people the language and the base to be able to have a conversation to understand where we are.

Quinn: And two things on that note, one, you just provided a perfect segue into the point of your book and two, I don't think I’ve ever read a non-fiction book with better segues in between the chapters than yours. It's so good.

I'm like, oh, here's what's coming. This is fantastic. It's very well considered but like you said we need this, I mean, we talk about common facts and things like that, but a common language, right? A common set of terminology, which even those of us on the inside, carbon removal, is it work in soil? How do we measure it?

Who measures it? We're still wrestling with half that stuff, but that don't want to say lowest common denominator things. But the things that everyone understands, because they're integral [00:12:00] already to us, are going to be helpful because that's what we have. And that's where we get to capitalism, right, has done some really amazing things for humanity.

We've paid the costs of so few of it. We just, it's kind of like when you're planning your wedding and eventually you're just like, I don't want to see the receipt. I'll deal with it later. Right. So we don't have time to wholesale replace those things. And, and I've got, I've had all these different conversations on the economics angle, one which was great with Rebecca Henderson about her book and her courses, Reimagining Capitalism In a World on Fire.

But I also ran across this great quote from you're familiar with Mariana Mazzucato, the economist.

Akshat Rathi: I am. She's here in London.

Quinn: Yeah. She's, she's amazing. And she's obviously done a ton of writing on this and I love her Mission Economy book and teaching. But there's one quote where she said: Most economic thinking today assigns the state and multilateral actors responsibility for removing barriers to economic activity, de [00:13:00] risking trade and finance, and leveling the playing field for business.

As a result, governments and international lenders tinker on the edges of markets rather than doing what is actually needed, deliberately shaping the economic and financial system to advance the common good. You've actually got some pretty great examples in here from Norway to India to Texas. Where that has actually been the case where governments have either gotten very involved or in the case of Texas took their hands off and unfortunately putting it back on.

So talk to me about, I guess, what's been transferable among those where have we seen successes, failures? What are examples where other countries can learn from that?

Akshat Rathi: Yeah , I feel like people take the idea of capitalism and just go oh that must be free markets and free market zealots and aren't they ruining the planet?

Well, first of all, there is no such thing as a free market. It is always regulated, almost always [00:14:00] by governments, definitely always by nature, right? There are limits to which you cannot push beyond because that's what the physics, chemistry, and biology have told us. So now that we accept there is no free market what we need to recognize is that because those regulations have always been there, if you do not use those regulations in the right way, then you do have problems. And those are the problems that are very much there. Capitalism has led us in places, as you say, to ignore the receipts, ignore the costs and to maximize profits, which is what it pushes us to do, without thinking about whether we can continue to make those kinds of profits in the long term.

And climate change is forcing us to reckon with that in real substantial ways as we talked. What I found was because that's happening, because we have a [00:15:00] globally agreed framework under the Paris Agreement to meet those goals, because those have been now converted into around the world legislation to try and meet those goals.

And because some of that legislation is actually turning into real world policy, shaping our lives on a day to day basis, from what power we use to what car we drive, to what food we eat. We need to learn what it is that the right kind of regulations can do to help us on this journey. And I take examples, as you say, all around the world, because it is actually happening all around the world.

It's no longer, you know, the sort of trolly idea of like, oh, but look at India and China, they're burning all the coal and like, that's going to be a problem, isn't it? Well, yes, they are burning all the coal, but they're also deploying way more renewables, in the case of China, than rest of the world combined.

And so you, you have to look at the story in a fuller way.

Quinn: Yeah. And I think that's the key. I mean, one of the [00:16:00] most annoying things I do to my children is try to explain to them that like 10 things can be true at once. We usually start with two things can be true at once, which is difficult when you're dealing with big emotions at eight or nine.

But you know, when I really want to push them, that's where we get to five, six, seven, eight, and then they just walk away, which is a great lesson for dealing with policymakers and investors and activists and things like that. Let's use India as an example, because obviously, you've got your own ties to it.

You talked about your family's experience and you trying to again in a wholesale way, get them some solar panels, which was great and super easy. And then everyone's favorite issue, transmission, kind of came up which is just, seems to be applicable everywhere, which is just lovely. I remember one of the first things I kind of learned about climate impacts that were happening quickly is India is for better and the worse in this climate transition, basically facing [00:17:00] directly towards the sun.

Which means there've been a lot of land that has been farmed for generations on generations that is now parched. We saw a study about so many suicides, I believe, which were in northern India. But now we're starting to see essentially these farmers signing solar leases essentially saying I have to make something off of this land, right?

And it seems to me to be a way of demonstrating and investigating for any transferable possibilities on the macro, the complexities of the cost of capital in developing countries, because those don't panels don't come from anywhere, etc etc, but also on the micro how to how to really demonstrate some real climate justice, right?

Yeah. So talk to me a little bit about what is happening in India, because again, it's so easy to focus on the US and Europe, but really like India, China, and Africa, obviously are going to write the course of the next 50 years.

Akshat Rathi: Very much so. And if [00:18:00] you think about it, you know, obviously it makes complete sense that countries in the tropics should be the places where solar should be the cheapest and deployed quickest, because of course they get the most amount of sun.

And yet the amount of sun that comes to the UK, which is very little, is captured more because there's more solar panels in the UK than there are in the rest of the entire continent of Africa. And then you go, that doesn't make any sense. Why is that? Well, that comes down to, as you say, the cost of capital.

Because when you build solar panels, you have to pay the money up front. That's the biggest expense. Running a solar panel, that's cheap, but getting that money up front is expensive. So if you were to build a solar farm in the UK, even now with these interest rates, you're paying six, seven percent of interest rate.

If you get a profit of about 10%, well, that's great. So [00:19:00] you've, you've made it work. If you want to do the same in India, you're looking at interest rates of 10, 15%, right? And so you need to have a profit margin that's 20 percent to be able to make the kind of return that you need. And of course, because it's India and has its own sovereign rating and the sovereign rating is tied to political risks and etc, etc, you actually need even more profit to be able to make it attractive for an investor to come into India.

And so, the logical will make sense because it's not just physics, it's also finance. You have to make both of them work to be able to scale this. And what I found in India is that it took a while, but now there are real examples of how to do this. And the person I profile in the book is Suman Sinha. He's the founder of a company called Renew, which is one of the largest renewable energy companies.

And, you know, he was born in India, studied in India, then went abroad to get a [00:20:00] master's and worked on Wall Street. When he came back to India to seek financial opportunities, he saw renewables could be an opportunity, but he needed his sort of Wall Street connections, his Wall Street brain to figure out how to bring that capital from outside to India to enable this transition.

So he worked with Goldman Sachs, he worked with the Canadian pension fund, and because those investments came in, and then he showed that you could take that money and actually build solar farms at scale and they can be profitable, it opened the floodgates. Now you don't always need foreign money to be able to build solar panels in India.

You can do it with local money, but that required somebody to take the first step. And I feel like that's what we're going to need if we want to scale up solar in other developing countries, other big developing countries like Nigeria or Kenya or South Africa, where it's still an earlier step than where India is on the solar journey.

Quinn: It is earlier, but it seems like we've got to be taking notes [00:21:00] on what works in these places and what doesn't, because it is obviously, again, 10 things can be true, completely understandable, and I mean, this is old news to you for these kinds of countries to say, like, Hello, Global North and West.

Like, we understand why you would like us to not use coal. However, you used so much of it and in some places still use quite a bit of it. I mean, Australia just stopped like six months ago and it's in some places is the cheapest and also easiest to get and places would love to sell it to us. However, solar is easiest to get, but you know, just started approving money to send our way to make sure we don't do that.

So it makes it difficult to judge any particular government on sort of their quote-unquote performance on this unless they're purely antagonist or purely protagonist like Modi had been complicated, right? Like, I mean, he has made it sooner. Let's put it that way. Right. But it's pretty hard to keep up with millions of people moving into the city and millions of people were looking around [00:22:00] saying, I'm so glad my kids don't have to deal with farming.

We just constantly have to go faster.

Akshat Rathi: Yeah. I mean, he set a goal in 2014, just, you know, a year about going into Paris to have India have 20 gigawatts of solar by 2022, and then they started going and had Renew Power and other companies and they were like, oh, actually we can surpass that. And so they re-upped that goal to 100 gigawatts by 2022 and then they didn't get there. They got to about 67 gigawatts, so they still fell short. But imagine not having set a goal at all. If you just stuck to the 20 gigawatt goal, you could have been muddling at 20 to 30 to 40 maybe. But because you aimed higher, you got a little bit further down, down the track.

So yes, goal setting is important. It sort of enables, you know, so many of the actors in this chain from government bureaucrats to investors to entrepreneurs to the consumers to fall in line because that goal needs to be met. [00:23:00]

Quinn: Well, and it's also even more complicated than that right because when we talk about climate justice, which obviously I think can be interpreted in a lot of different ways in different places But you know, I try to always dial everything we cover here back to air, water, power, food.

The cleanest versions of those, the most reliable and accessible and affordable versions of those, shelter, health care, education. In so many places, there is still either some form of energy poverty or you're cooking with wood stoves inside, which is toxic 42 different ways, or because of that, there's just been a history of fossil fuel companies, either, you know, building their facilities there or saying like, Hey, listen, if you want energy, this is what we've got and you go like, well, I need, I do need that because in order to do this in order to have power to charge my phone you know, whatever it might be.

And like you said, yeah. It's complicated when the inputs and the outputs are so are so complex and so [00:24:00] political and there's this version of corruption and this person's getting this and when the interest rates are so high still and even worse in places like India, that the incentives for bigger players to come in and build, for instance, a big solar farm, as opposed to micro installations on homes or neighborhoods is pretty disincentivized, right? The work to do that there is really what adds up to this cost of capital being so much higher than it should be. And so people remain in energy poverty. Even though it's getting hotter and it's harder to farm.

Akshat Rathi: Yeah, and I think you're right in that sense, you know, the reason to think about climate justice is, of course, because people should be treated properly in a just way. But without doing that, there is no way to make sure that the energy transition happens. Because if you don't bring the people along, if you don't show them it is in their benefit to cut emissions because they will also get access to [00:25:00] energy. You're not going to be able to convince them to do either of them, right? They will go and get whatever energy they can at whatever price they can, but if you can show them, no, actually, solar is better for you, it's cleaner, it's cheaper, and here is exactly how to do it, then they will choose it.

But yeah, it's, you know, we talk about big numbers and abstract technologies and policies and all this wonky phrase, but at the end of it, it comes down to people and whether people are choosing to make the decisions that will, in aggregate, take us to zero emissions.

Quinn: Yeah, and it's a little bit like when my children are being complicated about eating.

What we've adopted is the share plate policy, which is my wife and I decide what goes on the share plate. It's like three or four things they love, a couple maybe question marks, and then one or two new things. You give it to them, and we're like, eat as much as you want, from whatever you want, from the plate.

They think they've got the choice, but in reality, we've [00:26:00] already chosen for them. If you are in Sub-Saharan Africa, and your only choices are variations on fossil fuels or wood-burning stoves. And, you know, as much as we've made just this incredible progress in China and India and parts of Africa, reducing extreme poverty and poverty in general, it's still millions, if not close to a billion people that are living on less than two, I think it's like 2.50 a day or something like that.

You are going to choose whatever you can to do those things. And obviously we have to do better there. Let's move to the other part of solar, which you did such an incredible job of. I don't know, this is such a testament to your experience, but I think your skill here, of you're so able to bounce between these personal stories of entrepreneurs and also people like Bill Gates, but also with such tact describing how a battery works, but also how they used to work and how we got here and why they are the way they are and how difficult battery chemistry has been to improve on. Right. I'd [00:27:00] love to focus on CATL and on the other hand, QuantumScape. So most Westerners probably have no idea who these companies are. And if they’re made aware, they probably think they're these. fantastical Chinese overnight successes, right? China becomes a factory of the world after a free trade, and here they come. But they're not. And now at least CATL is an incredibly huge and important player on the world stage. So talk to me a little bit about what you learned, like, and obviously you've written about this stuff a lot, but like, really going down the rabbit hole in there.

And I mean, again, like besides China owning the entire supply manufacturing chain, like what it means to have a company like that now, just as this huge world player in everything.

Akshat Rathi: Yeah, well, there is a view of China, which is Simon says, so people do, but really it doesn't work that way. China is a huge, big, complicated society.

And yes, of course, it's politics are different[00:28:00] and there is more state-directed work that goes on. But it is not that somebody decided at some point we need to have the world's largest lithium-ion battery manufacturing, and so we will, that's not how it works. And that to me was what I wanted to try and understand through the story of CATL, which is now the world's largest battery maker with factories across Asia, but also in Europe and soon coming to North America.

So, what happened there? Well yes, it kind of got its start as China opened up to the world as a factory where this company called ATL, which is Amperix Technology Limited, was making lithium-ion batteries for iPods and, you know, those little consumer devices that we had in the late 90s that now they're all packed in one, but those devices were where they worked and they figured out, okay, lithium-ion batteries could work.

Then they got an inquiry from an Indian [00:29:00] electric car manufacturer in the early 2000s. It was a company called Reva and they were running these four wheeler, two seater cars, which were very popular and they were selling them in 25 countries. This is way before Tesla was even founded. They all ran on lead acid batteries, which are not great as we all know.

We use them up for our starters in the car. You have to keep adding water. They, you know, get depleted after a couple of years. And so they came to CATL and said, look, this thing's actually becoming quite popular and people have demands for it and feels like lithium-ion batteries might be a solution that we could deploy instead of lead acid batteries.

Could you help us? And the founders of ATL at the time looked around and they saw actually it's not just India. Even there's an advanced research program happening in China. They're thinking about how to make EVs. And, you know, it's not like we're reinventing the wheel here. Some of the people in Germany have made EVs before.

How about we [00:30:00] explore this idea? And that's when they started to work inside ATL, which had been by that time sold to a Japanese company as sort of a research project. Let's try and make lithium-ion batteries for cars. And suddenly they found actually we can make these and not just that there are all these demands coming, not just from India, but from our own domestic market.

How about we spin out and create CATL as a company? And so CATL is formed as a company. The technology that they are using has been actually licensed initially from the US, but then they have their own research and development program, which again, for, you know, China known as a copycat market that just takes technology and runs with it.

Actually, no, in CATL's case, they took licensed technology and then developed it on their own. And today, that shows. That work shows their ability to be able to not just operate in China and provide electric cars, electric batteries to their own manufacturing supply chain, but also to the global manufacturing supply chain.

The likelihood that [00:31:00] if you have a Tesla in the U. S. and you have a CATL battery is low because Tesla has its own battery manufacturing in the U. S., but if you have a Tesla and you live in Europe, the chances of it having a CATL battery are very high. You've got into this world where, starting from small, taking on opportunities, and of course, listening to and taking advantage of government policy that was available at the time, allowed CATL to become what it has.

Quinn: Just so everyone has the fullest perspective, obviously, a country like China has gone from sorry, sort of very few cars per capita to so many more. They're not just replacing gas clunkers like we are. But you've also got India and places in Indonesia where two-wheelers and three-wheelers have absolutely exploded.

I mean, the market for batteries is just incredible. I'm curious how you feel like they are going to be able to deal with, so, for instance you know, New [00:32:00] York flipped out when all the, this seems small scale, but again, considering everyone else in the world and two-wheelers, when electric bike batteries, lithium batteries kept exploding and setting things on fire.

And so they said you couldn't park them in apartments or this or that. It does seem like at some point there's going to have to be slightly more, obviously, to be clear, regular cars explode all of the time and have a thousand different issues. It seems like there's going to start to be more and more, if not disparate regulations across the world about battery chemistry, battery safety, while everyone is also racing to quicken charging time to increase storage and knowing again that these are very modular, like every single car version has to have a different size and set of battery.

So do you feel like they can keep up? Does tha pave the way for more players like a QuantumScape who's promising the world?

Akshat Rathi: It's starting to happen, but again, it's sort of like patchy, right? There's no world government. We don't have a standards body in the United Nations saying, no, all electric cars will have this kind of charger and this kind of [00:33:00] battery and that battery needs to be recycled and would be great, but also not how it works.

You're starting to see in some places where these things are working. So in the European Union, which is committed to its electric car transition, is committed to ensuring that its own auto industry actually is able to participate in that transition and not just get walloped by Chinese car makers.

And also is the continent, which does not have access to the metals that you need for manufacturing batteries. They've now set pretty clear, strict guidance on what needs to be done if you're going to make an electric car in the EU. You have to be able to make it in a certain way, it has to be recyclable.

Eventually, the amount of recyclable material that goes into each of those cars will start to increase as well as a proportion. And because you have that regulatory certainty going out over the next decade, companies are starting to also create the batteries so that they fit those [00:34:00] regulations and recycling companies are starting to be created so that they can take the batteries that are coming off from old electric cars.

And so you're starting to see, at least in the European Union, that happening. Now, we know that what happens in one region may not be copied exactly as that in another region, but people learn from that. So, a good example is again, in Europe, you know, there are the Euro 1, 2, 3, 4 standards which are basically fuel efficiency standards that require your gas car to be of a certain level of efficiency.

Initially, India just copied the Euro standards. And then it said, actually, we're going to do it differently. And then they got Bharat five and six standards. But the fact is they do have the standards. And so, you will see what European Union does with its legislative power and its ability to think systematically and create these systems, start to get copied in places like India.

Yeah, there may not be one standard, but it is pretty clear to [00:35:00] both governments and industry. It is in their benefit to be able to have a common standard that can work at least in one region.

Quinn: Sure, I mean, look at electric plugs in the wall, I mean, clearly, like, we have, we still have this enormous variation on things, but we've made it work, because at least there are some standards, and people know them, and they expect them when they travel, or when they, again, on the business side, are building these devices, or furnishings, or whatever it might be.

So we're not talking about Tesla or BYD the sexier sort of stuff. We can do that in another conversation if you want. What I'm interested in here again, because I think you make such a good point of, and I'm so interested in, is, and kind of what we were just alluding to, is how difficult and how long this all is, right?

When people complain that their iPhone doesn't last that long or charge quick enough and their car is the same way, if companies like China and companies like CATL, QuantumScape, which who knows, we'll see, and companies like [00:36:00] Apple, the biggest companies that have ever existed are throwing this much at these things.

They must be pretty difficult. They're gonna take time, right? These aren't business questions. They're chemistry questions. They're physics questions. Making a car is a whole different whole different thing, right? I mean, BYD can crank these things out all day, but that's why I'm so interested in and I want to steal this for something else.

But this idea of cement, steel, and cattle, right? They're not the biggest chunk, but they are by far the hardest small chunk, right? Relatively small chunk. And I think what you make such a good point of here and our friends at ClimaTech VC, who've been on the show, talk about it all the time, which is we're talking hardware, really.

You know, there's plenty of like climate software, there's your accountability companies and things like that and all that and reporting. But the hardware, the hard stuff really stands outside of all expectations of how everyone, at least in the U. S., got rich over the past [00:37:00] 40 years, which is these seven-year VC funds that either go public or get acquired or they don't.

And you know pretty quickly and you can iterate on them very quickly and the cost of capital is extremely low because it's two developers make an Instagram and then they sell it to Facebook. That is not how food or hardware in general works, much less steel, cement, and cattle. So you talked about Bill Gates's work with all of that which again is pretty comprehensive what they're doing there and setting those expectations.

How do you feel for both private investors, institutional investors, and public money? Have they started to wrap their head around again, how long some of this can take, how difficult some of these unsexier things are going to be?

Akshat Rathi: So one of the reasons why cement, steel, and cattle are difficult is because the profit margins on being able to do innovative stuff are very small.[00:38:00]

So a good sort of rubric in your head that you can have is that you can buy about one ton of cement for $100 that can be delivered to your door. That one ton of cement has actually produced one ton of CO2 in its production. So, you've just paid a carbon price of a hundred dollars in a way, but alongside you've got this commodity for free or the other way, you've got this commodity for a hundred dollars and you paid nothing for your carbon.

And that's why it's hard because if you're going to make cement without the CO2 emissions, it's certainly possible. It's that it's going to cost more. Initially, at least, until you are able to scale up with the new technology. And how do you come up with the emissions free part is hard, but not impossible.

You throw enough money and enough entrepreneurs and you motivate enough people. That happens. There are all these companies around the world that are now trying to make [00:39:00] cement in a carbon-free way. But eventually, it comes down to whether any of those ideas can actually scale to commercial because they will only be able to do so if there is a demand for it.

And, you know, entrepreneurs are really people with a deep desire to solve a problem. And the cement problem, you know, if you look at it in its entirety, you can break it down in chunks. You have to find limestone from a mine. You have to take that, you have to heat it up in something. As you heat it up with a fuel, ideally not fossil fuel, you will produce CO2 because that's the chemistry of the limestone.

As you make that limestone free of CO2, you are starting to slowly turn it into cement. And then once you've captured the cement portion and you actually put it to work in a construction site, that CO2 that was lost will actually be recaptured, some of it, in the process of making that site. We kind of know the [00:40:00] chemistry of all this and actually in each of those steps you can have technological interventions to find ways to do it carbon-free. So yes, you can actually heat that stuff without needing fossil fuels. You can use renewable electricity to do it. We have kilns made by companies at scale to do that. You can also capture the CO2 that's being produced from the chemistry, which is not from the fossil fuel, but from the very chemistry of limestone.

Because we have done that. There are examples here in Europe, a company called Calix that knows exactly what to do with it. You have solutions for each of those steps. It's just that to be able to make them work and why we call them hard to abate sectors is because those are commodities that are very cheap and if you want to make them clean, you've got to pay for it. And right now, the market isn't always there for it.

Quinn: And it brings me back to some of the, I guess, closer consumer touch points or sexier things that you might notice, which is fake meat, right? Plant based [00:41:00] meat. In the end, as it stands now, the regulatory environment, the market, it's just gotta be a better burger, right?

It can't just be like, hey, it's made outta plants, but it doesn't taste that great, which is how it started. If you wanna sell people on that, and obviously bury, can put a bunch of different stuff on it, or any of these things, meatballs, whatever it is, we're at the place now, it's gotta be better because we really don't disincentivize real meat. And like you said, there's so many of these other market issues. So, wind has had a hell of a time the past couple of years because interest rates have been so gnarly and the margins are lower. People are going, hold on a minute. Like, how can we possibly put all this upfront cash into these things?

It seems like it's getting a little better, but again, it's got to be better and cheaper, more reliable. And there has to be some returns in order to affect these things. A lot of folks. would say, understandably, but it's complicated and it sets people off, that the way to do this is with carbon pricing. [00:42:00] Obviously, the Biden Administration has started to do a lot of work on the social cost of carbon, which is pretty cool.

The way they're building that in again, I can include some resources on that. Europe's tickers going up a little bit by a little bit, but in a lot of places, it is a real no-go or touchy subject, obviously, but it is amazing how quickly that can start to incentivize moving to something different because that in itself is eating into prior margins if there were any. Where are we on that for some of these cattle, cement, and steel issues?

Akshat Rathi: So carbon pricing certainly is one way in which things work and, you know, some economists might say the most efficient way of making it work, but we also know that there doesn't need to be one global carbon price to actually make things work. You can have either a direct carbon price in a particular region, or you can have something called an implicit carbon price, where you actually are incentivizing [00:43:00] the deployment of, say, solar, which means there's a subsidy you're giving to solar, which is leading to reduction in coal, and so you can make a carbon price be implicit where you're, you know, solar carbon price in the U.S. can be 300, 400 dollars a ton of CO2 emissions avoided based on deploying that solar. So, there are many policies in which you can do it.

What we do know is, you can actually not just use the politics of one region to the solution, but also use that solution to deploy that around the world. So European Union is a very good example. The European emissions trading system created, you know, in the early 2000s had a problem because it did not predict the financial crisis and that meant that it did not figure out what the total amount of allowable tradable emissions should be. And the European economy fell through the floor and so you just had a very low [00:44:00] carbon price for a very long time. But the European Union learned from that experience and has since then increased the price slowly.

And so now it is actually biting. Now it's actually causing people to make greener decisions. And so what does it do next? It says, oh, actually through our carbon price, we are punishing our own industry for emissions, which is what we want to do because we want them to produce less. But then if their product, which is, say, steel is being imported from China, we're not punishing the Chinese steel maker.

And so, aren't we doing aren't we being unfair, the justice point, to our own industries, to our own employees, our own people who have jobs in these companies. And so, they've come up with this idea of a carbon border adjustment mechanism, where they say, now from 2025-26 onwards, if you're going to send us your aluminum and your steel and your cement, thank you, please do.

But you also have to tell us what are the embedded emissions in that. And then you have to pay the same price that our companies pay because [00:45:00] we want to make sure there is parity in the market. And already that is forcing countries like China and India, China already has a carbon price and it's going to slowly ramp it up.

India is now starting to discuss having a national carbon price so that it can create a system and continue to export to the European Union. So, you can learn from the difficulties of what the politics of carbon pricing can be. And, you know, nobody wants to pay any tax, really, if you can help it. But having done it and having learned how to deploy it, you can also try and get other parts of the world to follow through, which is kind of amazing.

Quinn: It is amazing. It is probably one of the, hesitate to use the word simplest, but most understandable mechanisms we have. And we do have a history of learning from previous versions of this. So, in the US there's been off and on a limited number of federal tax rebates for electric vehicles for quite a while.

They've [00:46:00] just been capped, and with each Congress, it's gone back and forth on how many there'll be, but one of the things the Inflation Reduction Act, the IRA, has done, is it kicked off with those, and then it later defined pretty strictly what, what's going to qualify based on manufacturing and where the battery minerals come from.

But finally, I think just this year, in most, again, it's going to roll out in each state to do differently, which should be fun, but it's now going to be rebates at the till. And that is the kind of thing, like you said, that, I mean, I guess we can call it implicit, but it really is, right? It's, that is what's going to move the needle for people who either don't qualify for income tax for some reason, or don't want to wait that long, or can't think that far into the future because it's May and they just finished their taxes from last year.

When are they going to see that money? They see it now, right? That matters. And then maybe even additional on the state level. I will ask this though, because you did mention it and going back to the initial question, the most recent Bloomberg article you wrote and you talk about [00:47:00] in here and it's one of the things that makes me want to lose my mind quite a bit.

How much our current carbon prices as much as they're working in certain places and we're learning things and vehicle rebates and heat pump rebates and all these different things and insulation, all this stuff, how much of it is dancing around the margins? When fossil fuel subsidies are the highest they've ever been.

Why aren't we consistently saying that quiet part out loud as much as we can, which is they're only going to move the needle so much if these are trillions of dollars every year, and only going up.

Akshat Rathi: Yeah, I mean the voices around that are getting louder and louder because the facts have been stark and have been very stark for a long time.

But I think especially after COVID where suddenly you had supply chain issues and you had here in Europe following Russia's attack on Ukraine a fear of a gas shortage and a cold shortage and [00:48:00] oil shortage. This rush to go out and buy access to fossil fuels at whatever price possible and does subsidize them.

That hypocrisy is now ever more clear to developing countries than it ever was before. And so, you know, I go to COP meetings on an annual basis. I was there in Glasgow and Sharm El-Sheikh in Egypt, and then last year in Dubai. In those places, the call for reducing fossil fuel subsidies, just keeps getting louder because the call for getting hundreds of billions of dollars or trillions of dollars to move to developing countries where that money is most needed, will have the greatest impact, will not just solve the climate problem, but also solve energy access problems, will bring equity, will bring justice, solves so many things by doing what?

Reducing fossil fuel subsidies, which we know aren’t helping. So there is a win-win nature of it, and then there is the ability and the moral authority with which developing [00:49:00] countries are calling for it. That is going to come to a fore this year at COP29 in Azerbaijan, which is another petro state. But the leaders have to figure out how to come up with a new goal, a new finance goal, increasing the annual spending investments, aid from developed countries to developing countries from a hundred billion dollars today to, I don't know what the next number will be. They'll call for a trillion dollars maybe, on an annual basis or 250 billion dollars. That's going to be a fight. It's not going to stick to a hundred billion dollars.

It's going to be a multiple of that. And so how are developed countries going to do that? They will have to find places in their pockets and those places will be very easily found if they introduce fossil fuel subsidies.

Quinn: And again, on the one hand, talking about moral authority and the fact that these companies might've just had, two of their most profitable years of all time.

And if you look even closer again, most people don't, [00:50:00] they're not putting their returns into infrastructure anymore. It's going into dividends and buybacks. They can see what's happening here, right? Or they're just selling them to private equity. And then they say they don't have them anymore.

Private equity is again, a whole ‘nother podcast conversation. But so that is simple enough for most people to understand. I think we can be constructive and say like, as we've talked about, we can't just put solar on every roof because we're having so many transmission issues as it is, right? Interconnect in the U.S. is a nightmare. We're working on it. It's complicated. We need to obviously phase out, not phase down, fossil fuels, which is the big contention. It's going to take some time. It probably needs to take some time because our infrastructure is not there, but it won't be until, like you said, we actually talk about where the money is for these things and the money is right there and it doesn't have to be black and white it does need to be eventually and quickly. But the money to pay these developing countries the money to increase the subsidies for solar, whatever it is, to get [00:51:00] wind back on its feet, to get transmission back on its feet, it's there it's very obvious and it's just a profound amount of money.

Akshat Rathi: Yes and what you do need is political will. Now developed countries give a tiny fraction of their annual budget to aid, and that aid goes for everything.

It goes for health, it goes for education, it goes for poverty reduction, and yes, some of it goes for climate. That aid has not changed in a proportion of these economies gross domestic product for a long time. So to expect them to suddenly start giving twice, thrice as much in just aid is not going to be politically feasible or doesn't seem like. If you want this transition to happen, you have to find the places where it will be politically feasible to get the money from. And fossil fuel subsidies are one place where, given the increased understanding all around the world, but especially in developed countries [00:52:00] on climate action and the desire to be able to push this transition, you can say, look, that will mean your gas is going to be a little more expensive, but it also means you have access to all these solar panels and heat pumps that you can go and buy. And then you don't have to rely on that gas. So, you can't just say it's going to cost more deal with it. You have to say it's going to cost more here, but actually, yeah, I have solutions which will cost you less in the long term and they are here. And because we are able to do that, we're going to take some of those fossil fuel subsidies and give it to developing countries who fairly deserve it.

Quinn: And again, what I appreciate about your book and there's room for every different version of these things that are informed and constructive, is that you don't mind doing the dirty work of talking about the politics required, which is, you know, we try to operate on a realistic front here too, which is, that is how politics works.

When I explain something to people, I love being an ideologue, right? And dreaming about crazy things. But there's a way the sausage gets made, or usually doesn't get made. And telling [00:53:00] people, sorry, your gas is going to be five dollars more expensive. While we take down fossil fuels is a non-starter in most places very quickly.

But there are ways to do it constructively and incrementally by also highlighting like how much there is to take from that pocketbook to move it here to make your home more comfortable and your power more reliable in a place like Texas or wherever it might be, or India where again, like these grids, we haven't touched in so long.

This infrastructure is now also facing more climate impacts than they ever have. I've kept you for a very long time. This is fantastic. Akshat we really try to focus on, turns out our work is really helping people answer the question, what can I do? And obviously buy your book. Very exciting. Climate Capitalism already out in the U.K., already out in the U. K., coming out in the U. S. What's our date in the U. S.?

Akshat Rathi: March 12th.

Quinn: March 12th, coming up. This is very exciting. We'll have 70 different links of where you can buy it. Support your indie bookstores or just get it anywhere and read it. It's such a wonderful primer on all of this.

It's [00:54:00] fantastic and I'm so excited to see you so celebrated for this. Dazzling, David Wallace Wells calls it. Last couple questions before we get out of here. What is, in all of your free time, a book you have read recently in the past year or so that has either changed your mind on something or helped you maybe consider a topic you hadn't considered before?

We throw it all in Bookshop and people love it.

Akshat Rathi: Yeah. So, recently I read a book by an author, a British journalist named Richard Fisher and it's called A Long View, and it's a really great read to give you perspective on the sort of finitude of our own lives, but also the impact that our lives can have on the long term, right?

We find ourselves in this moment where what we do to tackle climate change is going to have impact for thousands of years to come. You know, some of the sea level rise projections [00:55:00] are starting to get baked in. They are currently at the hundreds of years, like, even if we do everything else, there'll be sea level rise a certain amount for a few hundred years.

If you don't do anything, that'll become for a few thousand years. We forget in our day-to-day life this because we're dealing with, you know, where do I get groceries and, you know, what do I feed my kids? And, you know, what's the next thing to do in life? The long-term future of humans and humanity and of this planet that we are also shaping alongside, and it's just a wonderful treatise in exploring that philosophy. But also treating it as a journalist would in a fair way, because some of the people who are in that world of long view also take it far too extreme and don't care about the people in today's world because they think oh billions and hundreds of billions of humans are going to be born.

We should only really think about the future and that's also another extreme view. And I feel like he does a really nice job of bringing together of how to think about the long term [00:56:00] while we live our daily lives, looking at the clock and every second.

Quinn: I think that's fantastic. And it reminds me, gosh, 20 pre pandemic.

So a thousand years ago, I had on Bina Venkataraman not sure if you're familiar with her, but she's an editor.

Akshat Rathi: Yeah, I do know her work.

Quinn: Yeah. She's a fantastic editor, writer, author. And she wrote a book a few years ago called the Optimist Telescope, which I really recommend. But like you were just saying about The Long View, which I just realized he sent to me last year and I need to get, I haven't read, need to get back to him on, she had this quote and it really kind of like when I first really read about Paul Farmer and took in both Mountains Beyond Mountains and also his own work. She just has this one quote, which of course, I'm, you know, very white and ignorant, and this has been a part of indigenous thinking around the world for a long time, but it's this idea of how can I be a better ancestor?

And boy, I remember reading that and putting the book down and thinking. Oh, oh, [00:57:00] okay. That's where this work has to go, right? It's for all the people now who again are in energy poverty and the kids in the US who are hungry for truly like no reason, but because people are terrible, much less everywhere else, but because we've made so much progress on extreme poverty and on poverty in general, and all of these different things.

But it really does ground that work with taking, without getting too crazy into the effective altruism stuff of which there's a lot of pros and cons. It is this view of like everything compounds, whether that's the stock market and your investments or it's the actions we take or don't take right now.

It's clear that you think about that a lot in the sense of like, look, we're operating in the short term for the long term here. We've tried other systems besides capitalism. Real pros and cons. Don't have time to switch it out. Maybe we can make this one a little bit better because the decisions we make now, like you said, are really going to add up for a while.

Things like sea level rise are really already baked in. To me that's constructive, to me that helps people go, okay, so now tell me what I can do. Like, if that's our [00:58:00] perspective. How can I actually make an impact myself, but also together as a group? So, yeah, I appreciate it, man. Congrats on the book.

Akshat Rathi: Thank you very much.