TPG Holdings Chairman Jim Coulter Talks Climate Tech

Published Jul 11, 2024, 8:34 PM

TPG Holdings Chairman Jim Coulter discusses the importance of investing in climate change. He spoke to Bloomberg Originals Chief Correspondent Jason Kelly from the Bloomberg Green Festival in Seattle.

Bloomberg Audio Studios, podcasts, radio news. I want to have a wide ranging conversation.

I know you have some things to share with this, but I want to start by asking you, like, what's the biggest surprise.

This was a massive bet in a.

Lot of ways, maybe the biggest bet you've made in your career.

What have you learned.

I've learned that approaching climate change, you have to think of it as two sides of a coin. For years, since Kealing in the sixties, we've been focused on the need side. We have a problem to solve, but the other side of the coin is actually the opportunity.

We're about to under take one hundred.

And twenty trillion dollar reindustrialization of the world, and that need and that opportunity need to move together. The money can't come from governments, No coalition of NGOs can get it done. Unless we can get the money moving in a capitalist system, we can't solve the problem. So this idea of putting the need and the opportunity together has been more challenging than I expected.

All Right, So one of your signature moves as an investor over the past forty years has been every year you get together with your investors, and you put together this presentation. You and I have talked about it in the context of the year ahead. Now as you're totally focused on climate. You have a version that you've been playing around with and presenting. We have a version that we're going to share with you, and we're going to run through it if we can bring.

It up on the screen.

All right, so I get to pick and choose here, all right, Optimism Green Shoots, let's start there.

Just a little background on this.

As well as creating an organization that invests, we actually have a very interesting seat in the middle of the climate yaio system where meetian investors literally have met with fourteen hundred entrepreneurs around the world. We're operating nine billion dollars of climate companies. Those companies are forecasted to replace against the counterfactual about one hundred and sixty million cars off the road for a year.

So we're kind of in the mix.

But not only are we generating investments, we're hopefully generating insights.

So this is us stepping back from that process to watch so we're inside your brain right now. This is cool. Let's go.

So, first of all, Green Shoots and one of the things that I've been a tech investor, I've been a climate investor. Both of them are known for one thing, which is conferences. Like there are more tech conferences more climate conferences that I've ever seen, but they look and feel very different. Same hotels, same awful coffee, same bad damish But let me show you what a tech conference sounds like.

Can we get?

But I'm genuinely optimistic about work in the metaverse, whether it's a hologram sitting next to you in a physical meeting or in a discussion taking place in the metaverse.

I think this technology is inevitable. I think this is the future of the Internet. So I think over time you will see greater and greater acceptance.

I believe the AI will be about individual empowerment and agency at a scale that we've never seen before, and that will elevate humanity to a scale that we've never seen before.

Either, we'll be able to create a theory of the entire universe.

Which has a car. Next year will probably be fourteen.

I'm extremely confident of achieving full autonomy and releasing it to the telent customer.

Base next year.

Everything is possible. Everything is happening tomorrow. Like a font of optimism. If you go to a climate conference, it's it's different and for good reason. If we can go ahead on this, Bruna, I want to show you a word cloud from a recent climate conference. Schah went to supply chain problems, inflation, nimbiism, et cetera. Essentially, there's almost a paradox of pessimism, and that's well earned. But every once in a while I find myself saying, I want to just channel my enter tech for a second and like what could go right?

And let me share just a few things that are out there.

First of all, I think we have to assume discontinuities. If you look at most of the climate work that's done, it's over thirty years essentially assuming. And this is by the way that I'm sorry if you go back one please, if you go back to what SBTi just put out for the paths to net zero, I want to read this to you, Jason for a moment.

So this is what business is supposed to do.

The minimum forward looking ambition of near turn targets consistent with reaching net zero by twenty fifty ath the latest, assuming a linear absolute reduction, linear intensity reduction, and intensity convergence between the most recent year and not increasing absolute emissions or intensity.

I mean that makes total sense to me. Now, First of all, there's great science behind that. I admire it.

But imagine trying to figure out the iPhone in nineteen eighty two based on a computing graph. One thing I know from forty years in business is nothing is linear and there will be surprises. In fact, we should assume that there's going to be discontinuity. More people died from infections than heart attacks before penicillin. You know, taxis were taxis before uber, trading was trading until indexing. So industries constantly go through disruptions. As I travel the client world, I'm running into disruptions that are about to happen at any time. I can't yet tell you which will happen, but I would bet on the field there are going to be discontinuities.

That break our way. Our goal is to position for them.

The second thing I'd point out on the green shoot side is understand the power of cost curves. Think about cell phones. In about two thousand, they hit a whole new level and suddenly they were ubiquitous. It changed how video conferencing came out in nineteen sixty four, but it was fifty three hundred dollars an hour. When it's free. Things work very differently in the climate world. You are watching some of the most powerful industrial cost curves I've ever seen, twenty eight percent for solar, that is double a normal industry. And these cost curves, while they look linear, they hit points like right about now, when solar becomes dramatically cheaper.

Things happen.

We can predict the cost curves, we can't predict how the market change.

So then why that word cloud of pessimism?

Well, I think in some ways the voices that got us to this key moment have been calling out the need. And part of the reason I'm on the stage I don't do many conferences is we need to change our voices a little.

We need to also make sure that.

We're looking for that opportunity and we're looking for the Colin Powell once said about leadership is that optimism.

Is a force multiplier.

We have to find a little bit of optimism. That is not to deny that this is tough. And the last thing on optimism is, you know when things like this conference happened, where you get many parts of society, policy members, act activists working together, things happen.

Anyone remember the population bomb.

Thirty printings back in nineteen sixty eight, We were going to be out of food Los Angeles.

The smog was awful. I was in Beijing three weeks ago. The skies were clear.

The ozone layer is actually going the other way now.

With time and.

With action, I think we can make progress and that green shoots are something we need to grab hold of.

All right, So I'm going to go counter then for my next from a next question, which is the what about isms?

Yeah, we also, as well as some optimism, we have to basically.

Not fall for what about ism? Yeah, And you know, one of the.

Interesting things has happened if you look online in a social media the attacks of climate deniers have flattened, but the attacks.

On climate solutions have gone up. And these are what about isms? Now.

What about isms is a term that came from the seventies with the Irish Republican Army. Whenever they would do something, they'd say what about the journ what about the British soldiers? And sylviet propaganda uses what about isms? When Chernobyl hits it's what about three mile island. And what about isms have hit now an absolute art form in today's politics.

Let me just kind of show you what that sounds like. What about those twenty one Democrats? What about beans that have more oil? What about the Buddhists?

What about the alt left that came charging at the as you say, the alt right?

What about us? What about me? What about terrorism? Well, what about ben Ghazi?

What about the blatant lies that the Obama administration told us?

What about the fact that Ben Rhodes bragged about lying to the media and the public about the Iran deal.

Whenever a pundit or a politician starts with what about, be prepared to be deflected and potentially deceived. So what abouts are rampant in climate?

Like what about evs? Right, aren't they dirtier?

Well, yes, when it leaves a factory because you have the battery in it, it's slightly more emissions at manufacture, but once it gets on the road at ebe is ninety percent more efficient and uses one third of the emissions over its lifetime. It's a ridiculous argument. Or what about solar panels in China? Yes, they take some of the power from a grid that is still dirty and they generate emissions.

But if you look at the numbers, those emissions are.

Replaced in three months of their twenty five year life. Are we not supposed to use solar panels because we're trying to replace a grid that's dirty. We can never replace it if we don't start using them. It's a circular argument. Or one of my favorites is basically the pessimism and what about ism with materials.

Yes, we have a lot of work to do.

We can find oil and or sea, we can't find lithium. Like if you look at what happened in lithium, we went from worried we'd never have enough lithium to a massive oversupply in two years. So my point here is, as we're going down this path, we have to make sure that we don't get caught in.

The what about isms?

And I always say, like, you know, what about doing the work? What about solving the problem?

And so how do you institutionalize or how do you sort of create? I mean, because part of this is perception, Part of this is the dialogue.

Part of this.

You know, we saw a lot of cable news clips and between cable news and social.

Media, this it picks up a lot of steam.

So what can a group like this of the what about we do the work folks do?

It's exactly that. I think.

One of the things I've learned in climate into your earlier question of why I've gone deep, is you cannot be a tourist in climate. You can't just sort of pop in and think you know the answer. This is an immensely complicated revolution that we're going through. I don't think I have to tell this room because you're here, but we have to encourage people to do the work and not simply fall back on how things are done now as an aside here. You have to understand what we're doing is a simplify problem. I want you to think about our current energy system.

You want to turn on a white How does that work?

Well, First of all, fifty million years ago, the sunshines, it's captured a tree. The tree falls down. For fifty million years, it gets subsumed under thousands of feet. We then take an iron pipe, We put it down ten thousand feet, We turn it right, We put in water, We crack rock, We bring up a vapor. The vapor goes in three million miles of pipe. We wash it in a two hundred and fifty million dollars natural class processing plan. We put it in three million miles of pipe. Again, we put it to a billion dollar gas turbine. We basically blow it up, releasing a molecule that can destroy the world. And we have an electron. The other way to do that is we can get sun from this afternoon, hit a silicon panel or silicon everywhere.

We have an electron. So it seems hard to do. I mean, it's we have. This is hard to do, but what we're doing is hard, So like, why not make it a little more simple? All right?

So that takes me to the third one that I wanted to touch on with you, which is the policy box.

Because this is a room of doers.

As you mentioned, it's not totally simple how we get this done, and it requires a bunch.

Of different angles. So tell us about the policy side. Yeah, I am.

I think we have had an enormous gift and we've picked up an enormous set of allies in the recent policy wave. And I'm often asked like, are you nervous investing in areas that have subsidies?

I'm nervous investing in.

The food I mean there's four hundred million of subsidies in European food, healthcare, like that's subsidized.

And if you think about the IRA it's about.

Seventy six billion dollars a year. We are subsidizing fossil fuels around the world at close to.

Seven hundred billion dollars a year.

So it's not just about subsidies, it's are they settled and has it become part of the landscape in a way we can And you know, it's staggering what's happened in the last four years. If you look at it, you know, the US and three bills, and in three bills it's it's close to six hundred billion. If you go to Europe, it's a they've pledged at trillion six You can never really tell in Europe where the dollars are there, but it's a pledge. China, the only part of investment that grew in China last year is green.

Sector of their economy.

And you know it's not just there, it's it's uh India, which is all in Australia.

You know, Australia has a Green New Deal And I could go on and on around the world.

You know, Kenya, Malaysia, the world has decided, much like healthcare, much like education, that this is an area that needs to be subsidized. But what's important is actually not the numbers, and this has been a light going off for me.

It's the shape.

So the original policy dilemma was a bounce once beam affordability and sustainability. As I showed you, the affordability is getting better. But what happened is we've now changed the shape of policy. With the Ukraine, Suddenly Europe and around the world realized that they could not count on the current system for energy security. If you want energy security and you don't have oil and gas, you got to go green, right, So suddenly Green had a new ally, which was security, and then a fourth ally picked up because if you look at the IRA, probably the key part of it, and the reason Macron was so mad at us, was there was a industrial policy to it, a reindustrialization of the country. Two hundred and seventy thousand jobs in the US, millions of jobs in China.

They figured out in China that for every.

Job that they lose in the fossil fuel industry, they pick up four and a half in the green So suddenly this debate that many of us in the room have been rooting for the environmentalists. The activists got new allies, and those new allies are called energy security and jobs right, and those allies are showing up in weird places. One of the reasons that I'm maybe less worried about policy right now changing with an administration is the money has gone to the Red states.

The Blue states voted for it.

The money has gone to the Red States, and so your new set of allies looks like this.

In the heart of Texas, green jobs are booming, but increasingly Wyoming's energy comes not from mining what's down below, but for mining the wind above.

Different kind of farm in Crintain County is planning the seeds to grow jobs and produce green energy. Texas is seeing a boom in renewable energy. Then that means more companies are hiring.

The governors of Oklahoma, Arkansas, and Louisiana announced the hydrogen partnership this week. But essentially now politicians are in a box. If we did away with the IRA, we do away with a lot of jobs. And are the politicians that have been cutting ribbons willing to shut the factories.

Down and do you think does I mean we're headed for I think it's fair to say quite an.

Election is do you have confidence?

Do you have real confidence that a new administration, a non democratic administration, will continue to invest here.

As my partner Hank Paulson said, if some of the things happening in politics happen here, this is maybe number ten on my list. I can't have confidence about a lot of things, right, But what I can say is these allies of jobs make a.

Difference, and Texas, I mean Texas is a fascinating example of that because clearly not a lot redder than that place. All Right, we just have a couple of minutes left. Let's talk about passing the baton briefly, because I feel like that's a nice sort of way to send this audience off or send us off, I guess, and give them something into chew on.

Yeah.

So one of the things I'm watching, and this is important, It is an important moment, is a bit of a passing the baton of a race that we're all running together. And I think it's a very positive thing. We should celebrate it. In certain types of human endeavor, there tends to be a little bit of a relay race.

This is an Olympic year or something that you can relays.

And it often starts with the scientists, think about Neils Bohr, the Arpronet scientists, Mariko and Wiseman. Then it moves on to the profits. The people tell us we need to make pay attention. Eisenh Einstein sends a note to FDR says, you got to think about this bond thing.

Gates talks about pandemics.

It then moves to the policymakers, and finally it moves kind of to the people who then have to get it done, the people in this room and elsewhere that have to get it done. I do love that young handsome Al Gore up there about that he invented the internet.

Call back.

He didn't invent the internet, but he helped, he helped power it right. And so this relay race happens over and over again. And if you think about what's been happening climate, we owe so much to the sign is Yashio Keeling, who's got us started right. And then the people that have called out the need right, we owe so much to this. The policymakers, as I just showed, you stepped up, you know, part of the reason I'm on this stage is the rest.

Of us have to step up.

Yeah, there's a passing of a baton that needs to happen to people.

That's what to answer your question, that's what we're trying to do.

And so less than a minute, given everything that you've just told us, clearly you've thought about this a little bit, what does this room do, Like, what what do you send them off with to What's something that they can take home and say to their families, say to their partners, say to their kids about the next step that they need to take.

Given that you represent the money side of.

This, Yeah, I think the money is going to start moving because the opportunity is there. But I think importantly we need to take a bias to action into a touch of optimism. So one of the things that happens in a relay race is the last leg is sometimes the fastest. And what surprised people historically is when you look at the time, I mean, after thirty years of the atomic Revolution, Oppenheimer stepped in and won a war, won seven oscars, right, So I think there's an optimism here that we can get this moving there. We may not be moving fast enough, but we are moving faster and the path the progress is in perfection starts with progress, right.

And I see that.

I think that's happening, and the passing the baton will accelerate it.

So let's have some hope, all right, and let's get to work. Jim Culture, thank you very much, Thank you everyone,

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