Carbon Capture and Storage Technology

Tell you what, we've got just what you need on a Monday Yep, a little macroeconomic analysis. Fr American public media This is Marketplace In Los Angeles, I'm Cot Risdal. It is Monday today twenty two June. goodood as it always is to have you along, everybody There is A lot going on out there right now? Politics, of course, and always. foreign affairs and national security definitely. But as we say around these parts, do not sleep on the economy So we won't. Austin Gllesby is the president of the Federal Reserve Bank of Chicago. Austin, welcome back to the program. Always good to have you. Hi, thank you for having me back. Let's start where we left off last time, which was October ish of last year. Your general through line was that inflation was your big concern. The labor market maybe not so much. I guess I wonder if your thinking has changed at all Hasn't changed that much. I ended up, as you know, dissenting at the last meeting of the year on those same grounds that I wanted to get some more information to make me feel better about inflation before front loading too many rate cuts I don't regret dissent, I think We've continued to have a pretty stable labor market And we've continued to be dealing with and it's not a surprise to anybody. you look the window of your car or go to the grocery store, we've been dealing with an inflation problem that's well above the target and has has been going the wrong way So let's talk about it going the wrong way, you know, to sort of paraphrase what happened at Chairman Warsh's press conference you know, the number to the left of the decimal here is four. And I guess I wonder with inflation going the wrong way and economic growth going the other way, right? GDP is at one point six percent in the first quarter U stagflation on your mind, you said it in an interview the other day Stagflation, as you know, has been of the stagflationary shocks, as I would call them are the nightmaare scenario a nightmare scenario for any central bank because there's not an obvious playbook of what you do. Now the only thing that I will caveat with is this hasn't actually been A stagflationary shock in the sense that the job market pretty stable So what's been on my mind is what is the evidence this is going to be temporary. And then we're going to get back on path to two percent, which is what we've promised. And there are some signs The fact that some of the inflation came from tariffs and that's supposed to be one and done. get some resolution in the Middle East and maybe that inflation would go away. The fact that we've seen it in services, which historically is pretty persistent is a little more disturbing So where are you in the in the look through school? Do you subscribe or do you not subscribe to this idea that the Fed kind of look through what's going on? Well Some of both, you know, I guess I'd say some of both. I understand the argument in principle You want to look through temporary shocks. given that I wasn't there, so don't blame me, but given that the Fed dealt with that error in the very recent past, where it thought, hey, these shocks are supposed to go away quickly and they did not. do want us to at least terms of our credibility, Let's acknowledge the possibility that these things are lasting longer than than we wanted them. Well, I'm glad you mentioned the word credibility because I do want to play a piece of tape for you from the chairman's press conference a week ago. and the understanding here, of course, is that you speak for yourself in the seventh district and not the board of governors, But it does seem germane, and I'm going to play the tape and then we' I'll come back. Chairman Morsh, you've said repeatedly credibility is earned by delivering. If credibility requires delivering, the move would be to tighten or at least to threaten to. Now you didn't do that today. Why not That judgment you expressed was not expressed by any of the nineteen people around the table. So I gotta tell you, I was watching that press conference live and when Chairman War said that, I literally screamed at my TV. Really Well, look, you know this is on four different layers can't answer your question. I'm not all I'm allowed only to speak for me. I will say in my view, the critical through line that we must determine is In a situation in which the left of the decimal place number is a three or a four. How concerned are we that it's going to remain a three or a four? versus This is not going to be persistent and there are natural reasons why it would be coming down. That's a crucial factor to consider in my mind And you know that's what I express and have been expressing for some time. So So speaking of you expressing things, you know, Chairman Wars has made no secret to the fact that that he doesn't this to be fair to him. He wants less communication from the central bank. Let Let's just put it that way. And I guess my My question to you is you're among the most prolific, if not the most prolific members of that and I wonder how you feel about that My understanding is his approach is let's have less speculation about rates, less forward guidance about what the committee is going to do As you know, I'm pretty sympathetic to that approach. I think every time Cittee. makes statements about the future that end up not being true Our credibility takes at least a kick or a ding of some kind and at the same time I think one of the strongest things about the Federal Reserve system is that it's not just a central government controlled entity There are independent voices from all throughout the country. There's twelve reserve banks Out here in Chicago, we're in the heart of the Midwest. We have the most manufacturing of all the districts It's extremely important when I come to the FOMC meetings or when I'm out talking to you or anyone else, We reflect that diversity that's in the economy, that if manufacturing is having particular issues When I just got back a couple of weeks ago from Rockford, Illinois them talking about the supply chain at a moment like this That's crucial information that we get that shows up from the business leaders and small businesses before it ever shows up in the data I don't think it's wise to not get that information out into the bloodstream. Last thing, and then let's get back to your day job, A word here about Chairman Greenspan U You must have known him and worked with him me like thirty seconds on your thoughts on his passing. I did. I was friends with him and my heart goes out to his wife and his family a legendary figure in the Fed for sure. in many people's mind the iconic Fed chair A lot has changed about the way the Fed does its business and about the economy since he was there A lot remains timeless and his processing through How do you think through monetary policy when ivity growth rates are changing when you have big expansions of the tech sector How monetary policy Bnds when fiscal policy is going up or down All of those are lessons that we should go study at moments like this History matters. history matters. Austin Golsby. The seventh district of the Federal Reserve is where he's called home. He's the CEO greatest of all districts, the greatest of all districts. Fair enough Awesome, thanks for your time. I appreciate it Thank you, Kay No offense to the other twelve. obbviously. Wall Street to start the week live by the capapital markarkets suuffered by him to ticker symbol SPC X Off another sixteen percent. todayoday SpaceX just about right back to where it was when it went public The rest of the tech sector suffered as well, we will have the details when we do the numbers There is, as of this airing, some kind of deal with Iran, spepecifics very much TBD. But what we can tangibly point to is that crude oil today is lower than it's been in months. US crude below seventy five dollars a barrel, Brent, Norseea crude below seventy nine cents But as Robin Brooks was telling us late last week, there is a long, long way to go before the global oil market gets back to normal places Elizabeth Troball takes it from The world has been dealing with the largest oil market disruption in history And still Things could be a lot worse. That's Tom Sang with Texas Christian University, who says the average gas price here was more manageable because of all the oil the U S and other countries had in storage We did not get five dollars. We didn't have any rationing. But now, the strategic petroleum reserve, the oil, the US government stores, is at its lowest level in more than forty years. Commercial inventories have also been drawn down Before the world can stop relying on its backup oil, Garrett Goldening with the Dallas Fed says a lot needs to be dealt with, like rerouted ships and damaged infrastructure fields that need to be restarted throughout the Persian Gulf that have been shut in since the beginning of this. Those will take, in some cases, months to get back to full capacity. We're still, you know likely dealing with you know an oil market that has to rely on inventory drawdown for the next several weeks, if not longer Only after supply and demand rebalance, can countries start to rebuild their reserves again? Rice University Skip York says the U. S. should do it sooner than later. becausecause you never know when the next crisis is coming. He says the U.S. was worse prepared for Iran because it didn't aggressively stock up on oil after the Russia invasion of Ukraine. The next crisis happened and we were starting at a much Lower level. Lots of countries could end up replenishing their reserves at the same time, Tom sayang again There willll be a demand to fill reserves, which would be in addition to the whole normal global demand picture Elevated global oil demand means that for consumers I don't see pre war oil prices for at least a year If that Consumers are likely to be paying more at the pump for a while I'm Elizabeth Troval for Marketplace There's a cost benefit analysis American meat eaters are going to have to do as summertime and grilling season really get going. Literal costs, I should say. The Federal Reserve Bank of Stain. Louis says the price of a pound of beef is up almost thirteen percent over this time last year. It's more than doubled over the past fifteen years. And meananwhile, the Department of Agriculture is forecasting it's going to go up another ten percent this year faster. I do not need to tell you. I believe than the rate of inflation place is Kelly Wells, explains what's going on The High demand and low supply makes for a perfect storm, says Jamie Luke. She teaches agriculture, food, and resource economics at Michigan State University. On the supply side, right now we have a historically low number of beef cows in the country. The war in the Middle East has made fertilizer and fuel more expensive, which makes cattle feed more expensive On top of that, weather forecasters are predicting an especially hot and dry year in parts of the US with lots of cattle. Producers have had to make that difficult call to reduce the number of animals they have in their herd to be able to have enough forage to feed. And that's just the supply side. Personally, I think the bigger story in beef prices is the consumer demand side Ryan Coffee teaches agricultural economics at Kansas State. Protein is kind of all the rage now and specifically consumers have kind of gone back to red meat as a source of protein. Now, normally, cattle farmers might increase their herd size to meet that consumer demand But even in areas where there's likely to be plenty of rain, aren't And that suggests that cattle owners are not thinking that these prices will stay high and remain higher. William Masters is a professor of food policy and economics at Tufts University. He says it's more attractive to sell a cow at record high prices now than to hope her calves will be worth more later. It is entirely possible that people are expecting corn and soybeans stay high and that would lead them to not want to invest quite so much in feeder cattle. And even if cattle farmers do decide to make their herds bigger again, It takes about two years before a calf is ready for slaughter I'm Kayley Wells for Marketplace Coming up, we are testing out a robotuck dog for inspection. Oh what could possibly go wrong. First though Ture why not? let's do the number T industrial is up one hundred forty eight today and that's about three tenths of one percent finished at fifty one thousand seven hundred and twelve did the Blue chips. The NASDAQ sank three hundred fifty one points one and a third percent twenty six thousand one sixty six at the close. The S and P five hundred down twenty seven points, four tenths percent seventy four and seventy two there Elizabeth Robau was talking about oil inventories. Here are some drillers, Noble Corporation. that's a leading offshore drilling contractor lifted one point six percent Transocean does the same and trades under the ticker symbol. Oh, I love this. RIG, rig, get it. oil rig, RIG. Anyway, up one and nine tenths of one percent, Patterson UTI, which began as a drilling operation in West Texas up one and six tenths percent. Kle Well is talking about beef and the rising price thereof Some Bowvine related stocks, why don't? we We Archer Daniels Midland, major processor of agricultural commodities, moved up one and six tenth percent, JBSNV, one of the world's biggest processors of beef down just under a tenth of one percent on the day. Today marks the birthday of Richard Girleie Drew, the inventor of Scotch tape. Drew would have been one hundred twenty seven years old, three M, the beneficiary of his invention Surgge one and six tenths percent today as I always do when I mention three M in this phase of the program Quick, What does it stand for You're listening to Metplace This is Marketplace. I'm Kai Rizdol Austin Gsby and I talked about inflation a bit up the top of the program. We're going to get an update later this week, Thursday, to be precise, the May report on the personersal Consumption expenditures Price index. relevant to that data Is this a survey out today from the National Association for Business Economics, in which more than eighty percent of respondents said they believe the buildout of artificial intelligence infrastructure to the tune of hundreds of billions of dollars is going to be Wait for it Inflationary The placeac of Stepanie Hughes has more To build data centers to power artificial intelligence, you need memory chips, copper, electrical equipment Those things are also used in cars, toys, building out offices and apartment buildings. Ylena Malev, a senior economist for the audit and tax firm, KPMG, helped shape the questions for that NAabB survey She says there's a lot of competition for a finite amount of materials, and with tech companies really willing to splash the cash for their data center needs the other things kind of fall to the sidelines and they have to compete for higher prices for the same kind of workers to build out these facilities. And so over time, prices do get pushed up. The AI infrastructure buildout is also contributing to higher electricity prices George Washington professor Lear Brooks says data centers have been a shock to the system All of a sudden, you have a lot more demand for electricity, but not an immediate ability to increase the supply. Meanwhile, the stock market has been blowing up in the past couple of years, largely due to the performance of big tech firms that are investing in AI. And economist Alan Deeptmeister with the Bank UBS points out This increases wealth And people feeling more wealthy spend more. And if you're spending more, that tends to lead to higher inflation. UBS estimates that AI adoption is pushing up the core PCE price index, that's inflation minus food and energy by four tenths of a percent And Detmeister says it's a pretty big contributor to inflation overall. It's not as big as energy Certainly. and tariffs are a big driver of the inflation as well right now, but it is significant Dmistter says at some point, AI adoption is expected to lead to higher productivity, which will push inflation down He says, we are not there yet. I'm Stephanie Hughes from Marketplace. The Trump administration doesn't really care for renewable and clean energy. It has cancellled literally hundreds of projects amounting to billions of dollars in the past year and a half Not so, the Europeans who, among many other things are trying to build enough capacity to store fifty million tons of carbon dioxide every year by the end of this decade. store as and suck it out of the air and put it someplace How we survive, our climate podcast partnered with the German broadcaster DW and their podcast and radio program Living Planet On a visit to a new project in Norway, following CO two Pretty much from start to finish. Here's DW's Sam Baker The first stop on our carbon life cycle tour is at the source cement factory in southern Norway, owned by the German company, Heidelberg Materials. My name is Tor Gustab So I'm a CCS manager CGS is a carbon capture and storage. So we do the capturing part and the intermediate storage part We're starting here because cement is used to make concrete, and these products are responsible for about eight percent of global emissions. More than flying and shipping combined. Concrete is the most consumed material in the world after water. and it's hard to decarbonize Because most of its emissions come from cracking open the carbon rich limestone used to make it So by decomposing limestone, you are creating a lot of CO two emissions And that's where two thirds of the total emissions are coming from Heidelberg captures these emissions about fifteen stories up. in what's called the absorber The next stop on our tour. We need this to have the proper retention time, you know in the absorber Here, a chemical grabs onto the carbon dioxide so it can be isolated and compressed into liquid CO two. It's then pumped to giant steel tanks We' wait for a ship to come pick it up This brings us to our last stop the final resting place for this CO two On the other side of Norway, I visit the Northern Lights facility in Ogaten A carbon storage project owned by the fossil fuel companies, Ecuador, Shell and Total Energies Most of its spending so far has come from the Norwegian government Norway itself is quite wealthy, thanks to the country's majority stake in the state oil company, Ecuor The goal of this project is to inject massive amounts of CO two under the North Sea And turn a profit. Axa Plner, the operation managers and F Not Lights Planer is the guy in charge of making sure leaks don't happen, which can be deadly And to do this Oh Oh my gosh That's it That is a robot dog. you were not joking. No we are testing out a robot dog For inspection And he's now training how to walk and while he can actually climb steps and's remote operated and he can sniff here too He can sniff theO too. If a leak is detected, the plant shuts down automatically tenen months after opening its doors, Northern Lights had received ten shiploads of CO two well below how much it could be storing if everything was operating at full capacity, according to Gautistad there are quite a not hassle. and that's why you know nobody wants to be the first one. And We have been through quite a lot of you know hiccups and small problems And that was our first priority, really to fix all the problems, not to maximize the capture rate Some environmental groups like the Bolonna Foundation support carbon capture and storage worry that fossil fuel companies are investing in projects like Northern Lights so they can keep drilling for oil and gas. Jan Justas Andreas works for the group and says he doesn't want CCS to distract from the switch to renewables. What you can see here is that Renewables don't give the same profit margins as fossil fuels So where does CCS fall into all this? That's the difficult, difficult bit about it At what point do we become complicit with This narrative of fossil lock in However, capturing and storing CO two is seen as a crucial solution to bring emissions down Especially when it comes to those industries that are just so tricky to decarbonize, like cement In Norway, I'm Sam Baker for Marketplace Climate Solutions is what how we Survive is all about. You can hear more from the new season and you can hear more living planet too. onn your favorite podcast act This final note on the wayay out the today, your mileage may vary, but Bank of America said in a research note this morning, it figures the Federal Reserve is going to raise interest rates by three quarters of a percentage point. Let me say that again. raise interest rates by three quarters of a percentage point this year, which A glance at the calendar will tell you It's just about half over Next meeting, byye the bye, endnd of July Mmirbawi, Kaitlin Ash, John Gordon Noy Carr, Steve Mullet, and Stephanie Sek are the Marketplace editing staff. Kelly Silvera is the news director. And I'm Kyi Risol. We will see you tomorrow, everybody. This is APM