Rinaldo: 0:03

We can replace a hundred percent of the fossil fuel in this state within 10 years or less at a cost less than we're currently paying to maintain the old system and the operating cost will be less too. So it's a no brainer,

Tom Raftery: 0:17

Good morning, good afternoon, or good evening, wherever you are in the world. Welcome to episode 245 of the Climate Confident Podcast, the go-to show for best practices in climate emissions reductions. I'm your host, Tom Raftery, and before we get started, a quick reminder. This podcast has a subscription option. For just five euros or dollars a month you can unlock the full back catalog of hundreds of conversations with climate leaders who are actually moving the needle. Subscribers also, get a personal shout out here in the show plus direct access to me so you can pitch new directions, guests and ideas for Climate Confident. Everyone else still gets access to the most recent 30 days of episodes for free. But if you want access to the full archive and a hand on the wheel, hit the subscribe link in the show notes. Now onto today's conversation. My guest this week is Rinaldo Brutoco, founder and CEO of the World Business Academy. Rinaldo spent decades proving that, doing the right thing is also good for business. From helping shut down unsafe nuclear plants to showing that stakeholder capitalism consistently outperforms shareholder supremacy. In this episode, Rinaldo and I dig into how business not politics can lead the clean energy transition, the economics of microgrids and geothermal, and why hydrogen's time may finally have come. It's a sweeping conversation about change, courage, and the future of power, literally and figuratively. Rinaldo, welcome to the podcast. Would you like to introduce yourself?

Rinaldo: 2:04

Thank you very much. Tom I'm delighted to be with you. I'm not sure which part of my very checkered past is most interesting in, in the introduction, as I've been the founder and CEO of the World Business Academy since 1985, and in that capacity we've worked on all the various issues that I think are of interest to you publishing a tremendous number of books I've written for myself. There are associates who've written many more. I've written 45 major articles, 150 1,000 word op-ed pieces that were published weekly in the local Montecito Journal. And I'm, fascinated by what business can do to change society for the better. I became in 1985 hopelessly concerned that the political institutions were not capable to the times they're not capable of withstanding the pressure of the times. And that's true of academic and religious institutions as well, which is why you've seen them all unravel over the last decade or so. We saw that coming and we said the only thing we could do is get business community realise it's really bad for their markets when countries go broke. It's really bad for everybody, but arms suppliers when countries vastly include their military budgets, which is happening now. And I'm reminded of that great quote by Eisenhower, every bomb paraphrasing it is, you know, food you steal from a hungry mouth. Every ship could be several high schools, et cetera. I'm reminded of the fact that the business community has two things that are what it does really well that address the issues of our time. Number one, we change well. Business. The modus operandis is change or die. So if you don't change, the marketplace will get you. So, because we learn that we adapt to change very well. The number one challenge, I would say facing society that has created all the awful things like climate change and, and inequality and you name it, starvation, famine around the world. All of that stems from our inability to deal with the speed of change. Not change. Change. has been here since the time of Heraclitus, the Greeks. He said famously, you never step twice in the same river.'cause by the time you step in it, it's a new river. Well, that speed of change is what's been troubling people, and they're feeling more and more lost. The second thing is that business realises it commands massive international resources in a way that almost no other institution can. So when it links its own economic future with the wellbeing of the countries that it is arising from, business will turn and when it does things change.

Tom Raftery: 4:39

And tell me a little bit about the World Business Academy. You know, what, what's the function? You said it was set up in 85, who are the members? What do you do?

Rinaldo: 4:50

So we're, we're a 501 C3 tax exempt organisation. We started out primarily as a think tank, which we still are, but then a number of the things that we wrote about just did not get enough attention and the needle didn't move. So then we threw ourselves into that particular fray, and we called ourselves at that point a think and do tank because if no one else will do we'll, think and do. And to that extent, we've got into a very, quite a few number of really interesting things. So here in California the San Onofre nuclear power plant has been closed permanently, which was a direct result of the participation of the academy. And some other people helped. But basically we were able to prove what went wrong there and how much crime had been committed, which now has been admitted. The crimes were committed. And it's permanently closed. As business people, we go, okay, so what do you do about the unintended consequence of that closure? Like we have all these cooling ponds full of high grade nuclear waste sitting on the shores of California where a single 182 Cessna could do a dive bomb catch fire, and you would iradiate certainly a million people could be more, 'cause that's in the middle of Orange County. It depends on where the wind's blowing.'cause if it's blowing south, you can do San Diego County. So checking out the full system is what business does well, in other words, business doesn't just look at what does it cost to make it, they go what does it cost to make it, what does it cost to sell it? What does it cost to ultimately bury it? This full cycle thinking only business does that. Academia does not do it. Although they, they do some interesting things. Let me just quickly point out the contrast to academia.'Cos I'm an academic and I love to write and I love to publish. And what I know is that the world of academia. I've had the good fortune of teaching at the best business schools in the world. So I guest lecture at Stanford, Kenan, Flagler at my favorite, Kellogg, I shouldn't say a favorite, but I have a favorite Case, Western, Barcelona. All of these great business schools are all struggling with the same question. How do they prepare people to deal with the world that's changing so fast that nobody thinks in terms of careers anymore? They think in terms of, okay, where do I start? Then where do I go? And they don't think about what can I get into that will be good for the rest of my life?'cause they know that isn't gonna happen. The rest of their life is gonna flash by in less than 10 years, and there's gonna be a new life there. So what we do in the academy is we try to give the business community the tools it needs, both at the education level and at the level of individual financial wellbeing. We tell people how to make more money doing the right thing. So I think you're familiar with the, the spinoff we did about 11 years, 12 years ago, called Just Capital. And what we've been proven conclusively in the marketplace every year, our companies that we pick and research.'cause we research the 1000 largest public companies in America every year. And we have about 650 of 'em that participate in our data, analytics. And looking at what we do. We rank 'em. And our partner in that originally was Forbes Magazine. And I picked them because they were the most conservative magazine for business. And I wanted a conservative stamp on this. This was not a, a progressive agenda, this was a business objective. We did the same thing when we switched over to CNBC, who's our principal sponsor now. So we supplied a tremendous amount of on-air, time and talent, and we report back. what we found about these companies that seem to have a broader interest in how to make money, and they're outperforming their peers. We call that broader interest stakeholder-capitalism. So I started writing about that probably 15, 20 years ago. And the idea was to get the CEOs particularly, but the companies to realise that if they treat all of their stakeholders well, they will actually make more money for their shareholders and themselves. So then we formed an ETF to prove the point. I was successful. We got Goldman Sachs to manage that ETF for us. Now, why did we pick Goldman? Because Goldman is notorious for 120 years of doing nothing that doesn't make money. So they, they don't, they, they don't have a green bone in their body. If it doesn't make money, it doesn't matter whether it's green or gray, they're going to, they're gonna go with it. It took us a while, about a year to sell 'em on the principle. They put the ETF together and we actually got $1 million from Partners Capital to launch it. And every year for the last, I think it's now been out there for eight years, we outperform the Russell significantly. So we outperform them each year and we outperform them over the entire guess it's been now eight years we've been doing it. Why? Because it's a simple thing. If you are smart enough to know that you have to take care of your employees, you have to take care of your customers, you have to take care of your vendors, and of course you can take care of your shareholders and you gotta take care of the biosphere and the communities where you live. If you understand that, guess what? Your shareholders do better. And that's what we've proved. We've proved it year after year. And so our companies always outperforming good times and bad. The comparative index, which is the Russell 2000. That's an example of what we do for business. We try to show them where the win is by doing what makes sense for society. For example, in the case I just gave you of stakeholder capitalism. The reason I got caught up in that many years ago was Milton Friedman, the head of the Chicago School, Reagan's favorite economist, basically said in 1972, the only legitimate purpose of business is to make money for the shareholders. And that became labeled the Shareholder Supremacy Doctrine. And until we came along, everybody assumed it was true. And we said, wait a minute. No, no. It actually works better for your shareholders. You do not operate in, isolation from society. So you need to start getting responsible. And I'm gonna tell you one really great story. So Ray Anderson, good friend of mine, you were asking who the members of the Academy, Ray was until the day he died. Ray was making carpets down in Georgia. And he got inspired to want to end the huge amount of carpets putting into the landfills every year.'cause he, he found out that the number one contributor to landfills at that time was carpets. So he said, well, what can I do? And he noticed that the hall in his building was thread bare in the middle, but the carpets on the side were just fine. So he invented carpet tiles. Now, no need to tell you, his company went on to make Gazooks full of money. But he did that not because he was trying to make more money. He did that because he was trying to be more sustainable. And so what Ray did is he learned you can do the right thing for the right reason. Oh, and it can make more money too. Now, it doesn't always have to. Sometimes the rewards you get that are non-monetary actually can exceed the monetary ones, and that goes into your paycheck too, one way or the other. It goes in terms of, for example, our CEOs have a longer longevity than normal CEOs. They last longer,

Tom Raftery: 11:41

Right, right.

Rinaldo: 11:42

Which, when you consider that the Fortune one, fortune 500 probably turns the CEOs on average, what every three and a half years

Tom Raftery: 11:49

Yeah.

Rinaldo: 11:50

Our guys will be there for decades. I mean, Ray was there, til he died. So you ask who are the members of the academy? Well, there are people in business who want to see this broader view, want to understand how to connect it, and then how to actually have their own companies prosper. I just started Tom and I urge you to listen to it. If you wanna link, let us know. I just started doing a thing for the members about four months ago called the Brutoco Briefing.'cause I was getting so many calls from business people. What do I do in the face of what's coming? I mean, it, it looks like we're into a, we're gonna get into a heck of a recession. And several of them have heard me say on air. Yeah, the recession's baked in. I mean, if you unravel all the type of tariffs tomorrow morning, it's too late. You got a recession coming. You definitely have inflation already. Oh, and guess what? You have a reduction in GDP. Last time we had that was called stagflation. Okay? When you have a reduction of economic activity, but inflation, increasingly. That's what we're heading into now. This first, first phases of it are here. It's gonna get far worse. And the longer these tariffs stick around, the worse it'll get. Now, what will be the outcome of that will be entire businesses will be crushed. The economy's going to go into a serious recession, probably global. It'll probably drag the rest of the world down with it for a while. Oh, and here's the most important thing. We've now broken a pattern of 80 years of American dominance on the international scene. We're now gonna be one of several poles that hold up the global order. Another pole is called Europe. It's 320 million people there. It's an enormous economy The Euro is now very strong against the dollar. It's strengthened in ways that people saw coming, including me. It will not continue to strengthen against the dollar, but it's not gonna come back that far. Swiss francs have gone up against the dollar and will stay there as an example. So we talk about these things on the Brutoco Briefing, and we talk about where are the places that inflation's gonna bite you the hardest? Where are the places that the business be most severely impacted? Then we talk about the political choices people make, and what I try to make clear to folks is, haven't belonged to a political party in 35 years. When I started the academy, I dropped out of political parties and I've been an independent ever since. Now, the largest political party in America at this point is the independent party. We, outnumber the Democrats and the Republicans combined. And we're growing. They're not. Why? Because we've gotten to the point where doctrinaire politics doesn't serve anyone. It doesn't serve the people they think it serves, and it certainly doesn't serve the rest of us. I'll make one last point. Business can get very shortsighted about short term profits. And we try to talk about that a lot. That you, you know, there's that old saying, don't eat your seed corn. And what we try to tell people is, if you try to maximise your profit to the point where it hurts your consumer base, i.e. gouging, you'll end up with fewer profits in the long run and you'll end up with corporate instability. Nothing I just said is novel. Nothing I just said is new. But what's different is that the members of the academy believe, not only that it's true, but we're actively doing something to change it. And we are assisted, if you go on our website, which is world business.org, we're assisted by a group of extremely interesting fellows who have, I always like to say they're, the yeast that leavens the bread. Business people are the bread, we're the flour. Without those fellows writing and stirring us, we wouldn't be where we are. In fact, one of our associate members is the, the woman who first coined the term well brought it to the west. It was already a term, Ubuntu. I remember when we published that first article on Ubuntu Gotta be about 18, 20 years ago. And people go, well, why would I care what they're doing in darkest Africa? What, what, what does Ubuntu mean to me? I go, well actually if you think about it, it could be a lot 'cause it's a different form of collegiality. And so when you see that the old forms of power aggregation are beginning to dissipate, you see the Kinretsu are not as powerful as they used to be. And you can clearly see what's going on in South Korea where the cabals are not

Tom Raftery: 17:08

Yeah.

Rinaldo: 17:08

okay. So these breakdowns have to happen because they were, they, they came up in, in a colonial era. And now we live in this global marketplace. And we also have this one other problem that no one seems to want to deal with. And business has to, and that is, we just have way too many environmental refugees. Millions of them. And we have economic refugees and they're destabilising the political west. So if you don't think you need to get involved, watch what happens to your country when it goes the way of some of the ones that we've seen most recently take Orban, for example, who claims to be a capital country. He isn't. He's, he's an authoritarian. The economy of hungry continues to plummet. It's, it's in terrible shape and getting worse by the day. Well, unless you're making bombs, you don't do well in that economy. And as the last time I checked, only like 2% of us make bombs. 98% of us make Twinkies. Okay. Or the equivalent, right? So we need stable markets and in order to help stabilise them, need to help society understand where it's true stakeholder values are. Not it's like, can I get you a flashier car 'cause the Jones have one? But what can I do to help you have a transportation system that doesn't destroy the atmosphere so your children will be alive in 50 years instead of victims of climate change. That's what we do. And because business and, and that's the second thing of course, is we're so good at calculating outcomes. We're really good at that. We look at each stage of the each phase. Academia doesn't do that. Academia is looking backwards over time and projecting that knowledge of what we went out into the future. That system breaks down in periods of rapid change. I would stipulate, I would think you would agree. We are living in a place today of extraordinary rapid change, of accelerating rapid change. We're not looking anymore at like, arithmetic progression. We're looking at geometric progression. Two plus two is four versus two times two is four times four is 16 times 16, et cetera. That's where we live. Now we can't change that for a whole bunch of reasons, but we have to adapt to it, or it will be our undoing. People can begin to see. I, I think, you know, Tom, I hold some really basic patents in artificial intelligence and, and what's called gen AI. And, and the way I got into that was well first of all, I've been in AI since 1985.'cause my first guy that joined the academy who was Willis Harmon, and Willis invented AI, taught it as a course at Stanford University in the electrical engineering department and got pulled out of there and they made a futurist in residence for 16 years of SRI because they said, this guy's seeing the future. Well, my partner Willis, when he joined me, started telling you about this thing called AI in the engineering department. And I went, wow, Willis, that's way bigger than the engineering department. No wonder they pulled you out of there. And I've been playing with it ever since. When Gen AI came along and I saw that it was affecting our communications. How we talk to each other, what we think we say to each other. It was affecting the, the veracity, the truthfulness of our communications. ChatGPT hallucinates. So does Grok. So how do you live in a world where this amount of data's being thrown at you and you've got a machine talking back to you and it's off base? Well, the answer is you can't live by that machine alone. You have to put systems around it that crosscheck that machine. So let me give you an example. The CEO of Nvidia, the most successful company in the world uses use AI the same way I do. Actually, I learned this the other day when I do research, like I've just, right now I'm doing a major article on geothermal.'cause Geothermal's becoming a very new topic, hot topic. I've been involved with it for more than a decade, and right now it's time in the sun has come for reasons I can explain. When I write that article, I don't use ChatGPT. I go do my own research and I figure out what the answers are as a research scientist. And then when I get done and I write the article, I run it through ChatGPT and say, make it sound like me. In other words, make sure all the nouns, the pronouns and all that comes out like my voice. It comes back to me and I do a final edit just in case it hallucinated and then I release it. I'd never trust and no one should ChatGPT for original research or Grok

Tom Raftery: 21:41

Yep.

Rinaldo: 21:42

Grok's worse actually, but you know, they're both troublesome. Okay? So that's an example of an individual, me, putting a safety system around a great technology, which it is, and using it to leverage what I do rather than getting lazy and defaulting and let it do it for me and then it doesn't work well at all. Why did I do that?'cause I'm a business guy. What do business people co? We look for process and systems control. We constantly are looking for how to manufacture things more inexpensively and better. I urge everybody of your listeners to think through whether they're in business or not. If you look at the challenges we are facing with a pragmatic lens, and I'd like to think business is pragmatic in the end, what you'll see is information that is all over the place that you weren't paying attention to because you were getting distracted by what I call the shiny bobble syndrome. So I'll give you a priceless example. This has nothing to do with the politics of Republicans, has to do with an incident. So Doge, which I don't even believe was legal ex exercise. I think when we have a new Supreme Court one day, they will overturn all these silly decisions where, you know, the president is a new king and all that. But when Doge went in there and all those people got fired, everybody looked at that as the story. That wasn't the story, that's not what Doge was about. Doge was about sucking up data.

Tom Raftery: 23:04

Mm.

Rinaldo: 23:05

He sent young guys with hard drives in. First clue. And their job was to grab every particle of data he could. And he didn't care what happened to the people. They just got rid of him.'cause that made it look like that's what they were doing. But what they were really doing is grabbing all that data. And who ended up with all that data? None other than the partner, I would say over the last 30 years of Elon Musk, Palantir ended up with it. Okay. So, and with a contract on to boot to build the largest AI database in the world, which it's now gonna start doing. That's scary. That's very scary.'cause Palantir is run by some people who you would not want to trust with your child's life. Put it that way.

Tom Raftery: 23:50

Yeah.

Rinaldo: 23:51

Now, I, I, I say that because not all business people are good people. Right? In fact, the majority probably aren't.

Tom Raftery: 23:56

Fair.

Rinaldo: 23:57

The smart ones are.

Tom Raftery: 23:59

You mentioned geothermal, and this is the Climate Confident Podcast where we try, try and talk about emissions reduction strategies and, and stories. So you said that geothermal is, you know, coming for its time in the sun, as it were. Why?

Rinaldo: 24:15

Well, a couple reasons. First of all the company that's sort of like leading that industry now, the American company decided to use oil patch technology. So rather than using the technology that powered the China Lake geothermal project for, well since the early seventies, probably late sixties, we don't know when it started because it was a high security, China Lake is a place in California where they were doing advanced weapons research and they didn't want anybody to see that they were there.

Tom Raftery: 24:47

Mm-hmm.

Rinaldo: 24:48

So what they did is they didn't want any electrical wires going in. Oops. And, and when they did that, the, because they didn't want the electrical wires going in. They had to develop a new technology. And what they developed was geothermal. And the tech and the type of geothermal they invented was where you inject water, you don't find it there into a cavern, and you have a retrieval well on the other side, and it sucks the hot water up creates steam. And I've known of that for many, many years. So when I was the principal outside advisor of the state of Hawaii for renewable energy number of years ago, one of the things they asked me to look at was Puna Geothermal, how it was doing, what was it charging fair prices, was it gonna run outta steam, et cetera. And in that process, I learned a tremendous amount. And that particular plant is run by the most successful geothermal operators in the world. The Ormat family, which literally started out as a husband and wife and a son who were steam pipe fitters in Israel. And they now have Ormat facilities all over the world. Well, they realised instead of using the oil patch model, there was a better model that was, was more sustainable, would last longer and do less damage. And it's just slightly more expensive, but not a lot. Well, the companies getting into geothermal today based in part upon the favorable treatment, they are still getting under Trump. So one of the few renewable energies that get favorable treatment is geothermal. Why? Because what they're using is slant drilling perfected in the oil industry. So, you've got the same suppliers, Baker Hughes doing the oil field services only now they're doing geothermal services. You've got the technology of slant drilling. and what they do, and this is very visual, they're looking for two layers of hot rock and they're threading through it basically, a pipe. And their theory is that way they can capture the heat from both the top and the bottom, and that that well will last longer. Now we can talk a little bit about what causes wells to die, et cetera, but that technique will not provide the kind of heat that's been generated at China Lake since the early seventies and is still continuing to produce at enormous rates and does not use slant drilling, but it didn't have the right allies. So the oil companies got involved in geothermal, and once they got involved, the Trump administration decided to give it favorable treatment over other things because there's very few things that the oil industry is involved, which is renewable. Geothermal is one of 'em. And they love the drilling. It's just like drilling holes for oil. They love slant drilling. That's just like fracking. They love the retrieval process. And so from their point of view, oh, we're not drilling for oil. We're drilling for hot water. Now I can tell you the drawbacks to that, but that's really why it's, it's become so prominent. And now the economics are becoming very prominent because they're not only getting advantages that other renewable energy sources don't have and investment tax credits, et cetera. They are also in a situation where they are able to use a lot of resources and produce volumes of heat at scale in the megawatts. Many, many megawatts, the gigawatt scale probably eventually. That's attractive to them. Now, their technique by the way, which I don't approve of is they can drill to any depths and they like to brag about how they've revised their drill bits from the oil field and the diamondhead drill bits, which are the big thing in the oil field. They're now the only thing they use in, in thermal geothermal. And they like talking about they can go down to 12,000 feet and pull hot water out of there. Well, what the Ormats do is they go to a lot less shallow distances they pull up the heat through less dirt. So if you're going down 2000 feet and you gotta get hot water to the surface, that's one problem. You gotta go down 12,000 feet. It's a whole nother problem. So it introduces additional costs, but it does give you additional benefits, i.e. you're closer to the, magma of the earth. You're never gonna expire. And up comes all this heat. I believe the better geothermal approach is the one that is not now as popular, but the Ormats are still using it. And I think the one that's become popular with the Trump administration is not as viable from an environmental point of view, but it is economic as the dickens. That's why it's coming back.

Tom Raftery: 29:12

Yeah. Okay. Okay,

Rinaldo: 29:13

Okay. The Ormats build theirs with conventional capital, they're in, they're investing like 30 countries. It's only 20. The new guys, they're in one country, the USA, and they're getting tremendous support for it from the oil industry, from oil field services like Baker Hughes, from the government, Trump administration, et cetera.

Tom Raftery: 29:31

Okay. And you're a big proponent as well of distributed microgrids. What's the core problem with today's centralised grid that you think microgrids can solve?

Rinaldo: 29:42

Okay. Where to begin? Start with how did the grid start? There was a dispute in the 1880s. On one side was a very famous, well known inventor named Thomas Edison. On the other side was a very famous physicist of the, of the day and a businessman. The physicist was Nicola Tesla. The businessman was George Westinghouse. They had a fight. And what they wanted was they wanted to take Manhattan back from Edison, who, as you recall, his labs were in New Jersey. So he, he worked a lot in Manhattan. So he had already built four or five micro stations. And his theory was if you build them close enough to where the energy's used, you can use direct current. And direct current is much more efficient than AC or alternating current Tesla's argument was, look, why don't we build one that's really, really big, extremely economic because of size. And we'll put it someplace like Brooklyn where no one lives. Literally, that's what he said. We'll put it in Brooklyn'cause no one lives there.'Cos who cares what we put there. We'll just put a big monster plant there and we'll bring it over high powered lines using alternating current or AC at high power rates. No one ever stopped to reexamine if that was a good theory at some point in time. And like all technologies, things happen, which causes what was a brilliant technology yesterday to be less than a brilliant technology today. So we built these high tension wires all over the world. We sustain enormous line losses. We also sustain an enormous loss from the AC itself.'cause we gotta step it up to AC. Oh, and guess what? You gotta step it down if you wanna plug into it. Your computer cannot plug into AC. It can only do DC. Okay? Your TV has to convert AC to DC. If you've ever been in a, been in a recreational vehicle in your life,

Tom Raftery: 31:36

Yep.

Rinaldo: 31:36

okay? Every appliance on it is DC. If you've ever been in a boat, it's always DC. Why? Because when you're close to the source of production of the energy, the amount of energy you need is a fraction of what you need if it's AC. Okay. But no one ever stopped and examined that. And the money was all behind AC because that's how George Westing, I mean, you get an inventor, Westinghouse with a business guy and you get an inventor without the business guy, Edison, who's gonna win? Come on. The business guy's gonna win whether it's the right technology or not. And he did. You know, and, and it was, it's kind of amazing that he beat a guy as famous as Edison, but he did. Now, what's happened in the last 30 years is we are not only troubled because our science tells us about line loss. We're not only troubled about the inefficiency of AC, we now realise that if we could create the power where it is used, that's a like a microgrid. You could create far less power to run society just as well or better. And if you wanted to convert to DC, but you don't have to, you can leave it at AC. I'll come back to that in a moment. It's just to use the AC at the local level, because I don't wanna have to destroy every distribution line in the country. But all those incoming high powered lines, what are they doing? Well, in the state of California, 83% of our forest fires come from those lines, and it can't be stopped. It can't thing you do, but they're in the back country. Winds come up, high temperatures, they slap you get a spark. The rest is history. Okay. That's why we have forest fires in California. Okay. The other thing you can't do with it is we've now had this year at least 10 or 11 power shutoffs because the grid gets overstressed. Now, that was before we had electric cars. That's before we put all the demands for electricity that are growing every day on the web, which was already breaking down before. And in California, we are living under two pieces of paper that were filed with the PUC that say the grid. The, the grid in California where I live is going to, is gonna fall down and not be reparable in less than four to six months, which means you'll be without power. And that's on file with the PUC as the official statement of, of the electric company. So it's not something that an environmentist alleged. Okay? What happens when you add electric cars? Better yet, what happens when you want to add a data center? Well, data centers for the last four years don't use grid power because they can't afford to. They have to be a hundred percent resilient. They have to have no noise. They have to have no line loss. They have to just go, mm. The same thing is true, by the way, with bitcoin mining or the like. So these massive power consumptions, artificial intelligence, bitcoin mining, are putting enormous strains on our ability to generate electricity. And they, those people where the money to get your own power source isn't stopping them. They're going, wait a minute, we're gonna do a fuel cell supported server farm because the fuel cell is a hundred percent constant and resilient. Resilient and reliable. And if you're gonna use a fuel cell, you use hydrogen. Okay? So a hydrogen supported fuel cell is always gonna be your most stable, long-term source of power if you're the smartest guy in the world, like the people that run AI. So, what's keeping the rest of us dummies from understanding that? Well, capital formation basically resists technological innovation. So inertia. But if you were to take and construct, and we've designed 'em in the academy, many, many different ones, different times. We designed one for 350,000 households that clearly works. When we designed it, we identified where every single solar panel and all went to create that 350,000. It wasn't, like we said, theoretically we could put that many solar powers on. We went and got the locations and put'em on a map so they could see it. This is how you take away a peaker plant, which by the way, succeeded eventually'cause the peaker plants closed. We, the academy took a major role in closing the last two peaker plants in California. And we will oppose any peaker plant that comes forward in the future. we don't like to because we're a think tank, but we're also business guys. So if we think of something and the government is way off base, we will go, okay, we'll go lead that charge. We'll go investigate. Why did that power plant blow up? Who did what to whom? who's guilty? And what do we wanna avoid have happening in the future? And, what was the risk we had that we never knew we had that caused something to go and, and irradiate basically a cloud of radiation that went up over about 2 million people in a matter of less than 15 seconds. How do you do that? Well, you've gotta start with what makes more sense in the beginning. So, if you can produce as we can in Santa Barbara, California, power, we don't have a lot of wind. We have solar for, eh, I'm gonna say roughly 3 cents per kilowatt. That's not even, and that's without you giving me wind off shore, which we could do. Forget that for a minute. So 3 cents a kilowatt. If you can make electricity for 3 cents a kilowatt in a microgrid, that kilowatt is one kilowatt you did not have to take off the grid. So what do we recommend? Our research says you should do what the smart guys in AI did. You put a fuel cell, which is what uses hydrogen at the base of every one of our 3,300 substations. So you start generating power at the substation level. This is what I said I'd get back to, and now you can send that power without adjustments straight down the line. So, now it goes into my house. So, you leave Edison, in this case with the distribution of electricity to the home, which is the big business, you start to pull more and more of the power from the sun locally, so you can take less and less from the grid. And if the grid goes down, you won't care. But, but here's the beauty of that idea. It never requires a day where you switch the old system off and a new system on you incrementally replace it. That's what we do in business. We think, okay, what's the most economic way to make this shift? It's not to build an entire system of microgrids. And then on day one, flip the switch. No, put one microgrid at the base of one substation, and you've already reduced the demand on the grid. Keep doing it. And you'll never have power shutoffs and the grid will go away because it's a very inefficient mechanism. They can't produce and sell the electricity as cheaply as we can make it here in Santa Barbara for Santa Barbara. So if I can make electricity, which we can at 4 cents a kilowatt, and I'm paying 39 cents a kilowatt to the Edison Company, I got a lot of margins of businessmen to work with. I, I've made business, whole businesses and industries with thinner margins than that. Right. That's a good margin.

Tom Raftery: 38:09

Sure.

Rinaldo: 38:09

So we can do it. The question is, we don't do it. Why? Because politics. So, that's where business has to get in with its political clout. Say, wait a minute, paying for the electricity. We're also paying when the, when, when we get a shut, a shutoff. And Lord knows we pay with fires. And we gotta stop all this. This is insane. So continuing to do the same thing we invented in 1880 in Manhattan is not a smart idea. What's the new idea that doesn't have forest fires? It's cheaper to build, cheaper to run and can be an instant reduction of our capacity demands. Oh, and by the way, if you do wanna replace those local lines, I do with DC not AC, and then you can further drop the power consumption. That's the story. Now, if you wanna see how that can be applied to the largest state in the country, fifth largest economy, go to world business.org and look up our moonshot I think it's called California Moonshot, which I think I did 10 years ago. Well, no, maybe six years ago. And it lays it all out. So, because we've been working on microgrids for about 15 years now, and what's happening is people are starting to understand why they work. And all this invested power that we've given the utilities, which gives them enormous political power, is going to break down. It has to break down. The cost to society is too high. And sooner or later the people of the state will tell their politicians, I'm tired of my power going off, fix it. I'm tired of forest fires. Stop it. Oh, there's a way to do that. It's actually cheaper. And, and, and I'll make a statement for the record. We can replace a hundred, a hundred percent of the fossil fuel in this state within 10 years or less at a cost less than we're currently paying to maintain the old system and the operating cost will be less too. So it's a no brainer, but capital when it gets locked in, creates political outcomes. No one, I mean, we, we, in our country, United States of America, we think corruption's a bad thing, except we encourage it when it's called lobbying. Do you really think as the average citizen, you have the same vote back in DC as the lobbies? Of course not. Citizen action is required when politics gets bogged down in too much money and too much self-interest, and that's where we are. So now we gotta change it, and I believe the business people will be the first to react to that. Just as the bond market was the first to react to the insanity of firing the Fed chair, the bond and the stock markets reacted to the insanity of firing the head of the BLS. That's just completely crazy. And we could go on and on.

Tom Raftery: 40:42

Yeah, in terms of fuel cells, 95% of the hydrogen in the world today is essentially a fossil fuel. It's just steam reforming methane.

Rinaldo: 40:55

That's right.

Tom Raftery: 40:55

So,

Rinaldo: 40:56

And by the way It's almost all of it's created by refineries for their own use,

Tom Raftery: 41:00

yeah,

Rinaldo: 41:00

right?

Tom Raftery: 41:01

yeah, yeah. So not exactly climate friendly. So how do we shift that to green hydrogen at the scale that would be required for what you're talking about?

Rinaldo: 41:15

well, I wanna start with one basic fact. We have this incredible nuclear fusion reactor in the sky called the sun.

Tom Raftery: 41:24

Mm-hmm.

Rinaldo: 41:25

It produces enough power in about a minute that a thousand square miles will power the country indefinitely. If you could capture it all, it, the, the power of the sun is massive. It's not just solar and it's not just wind. It's all the ways the sun affects the earth. So if you've got this, huge source of energy, and that's not the bottleneck, the bottleneck's distribution. So how do you, how do you get to green? Well, it's very simple. You have to break through the monopolies and the, and the shared oligopolies that are blocking it. When you talk about green hydrogen, which is going to be the fuel of the future, I mean, when, when Saudi Arabia comes out and says, our export fuel of the future will be green hydrogen, they've said that in writing. The, the oil company said that the United Arab Emirates has said the same thing in writing in a report that was done for them by Boston Consulting three years ago. We, we know we have to be the exporter of green hydrogen. So you're gonna, the world's gonna go to green hydrogen. What is holding it back is the heart of your question. And I gave you the word a minute ago. It's distribution. Right now there is no way to distribute hydrogen economically. So if you wanna distribute methane, no problem. Call SoCal gas. They're moving it all over the place. Right? Largest utility in the world. Gas utility.'cause they have pipes.

Tom Raftery: 42:42

Yeah.

Rinaldo: 42:42

Okay. And because they have pipes, they can move it very cheaply to anywhere you want it, including your house. Well, we don't have a way to move hydrogen inexpensively, And we don't have a way to capture it, therefore. So let's say you make green hydrogen. How do you get it to the customer of green hydrogen? You have to have a connection. And that connection is going to be for short distances, meaning up to 500 miles or so. It's gonna be pipes and it's, and it's gonna be pipes that don't leak. That's key. We never put a criteria on, on on methane that it sht it can't leak. So we didn't realise what methane leakage would do to the planet. Well, with hydrogen, we're, we're, we're addressing that in upfront and we're saying we need pipeline distribution network, which we know can be paid for by private capital, once it's clear that the politicians will let it happen, and that has to be a leak proof system because we're gonna replace methane with hydrogen, which is what we're gonna do, we're not gonna do it through the same pipes. We have to have a separate pipe because you can't put green hydrogen through a methane pipe even after it's stopped being used because it, it ceases to be, pure enough to work in a fuel cell. So what we need to do, what we clearly need to do is to create I call it a barbell. There are plenty of people who want to make hydrogen and there are plenty of places to make it. I'll give you an example. Morocco. Morocco has wind and sun. It can make it cheaper than Saudi Arabia. Saudi Arabia's already got one plant built, second plant under construction, eight more planned. Emirates have got one plant designed, ready to go to construction. You've got Morocco has got one plant already under construction. When you have a place that has wind and sun, you really get a lot of hydrogen cheap. But you can actually get it just cheap enough from sun if you want. Now there is a small utility in Northern California that's making green hydrogen with the excess electricity from its, microgrid that is not using during the day. And that hydrogen now for sale and they're selling it. Get this, their, their cost to produce the hydrogen is four and a half dollars a kilogram. Now to put that in context, methane from a refinery is cheaper at a buck and a half kilogram. And I pay $36 a kilogram for my car. Now lemme repeat that. made for a buck and a half a kilogram. paying 36. is no conceivable way in a free marketplace that can happen. That has to be a monopoly,'cause it's not a monopoly. You'd be charging the four and a half dollars they're charging up in Northern California. But Rob is, they're only the California guys. They can only get it like the distance of one truck ride. So they're limited by how much they can produce by who they can sell to.

Tom Raftery: 45:29

Mm-hmm.

Rinaldo: 45:30

But if you live within that one truck ride, are you getting cheap hydrogen I'm paying $36 a kilogram. And when I started driving my hydrogen cars six years ago the cost was $12 a kilogram. it was 10 or 11, then it went to 12. Today it's 36. Did the cost to make it go up, no actually it went down. Is it green? No, it's methane reformed. What's doing it? Basically illegal competition violations of the Sherman and the Clayton Act happening rapidly and rampantly and, and obviously,

Tom Raftery: 46:02

Hmm.

Rinaldo: 46:02

and no one's doing anything about it, including the Attorney General of the state of California, which has identical statutes to the Clayton and the Sherman Antitrust Acts. So what, what the moral of the story is hydrogen is here. And I, I wanna leave the very optimistic thought 'cause you deal with these energy forms.

Tom Raftery: 46:18

Great.

Rinaldo: 46:19

Victor Hugo, very famous French author, said, nothing is as powerful as an idea whose time has come. Well, hydrogen's has come. It is a matter of actually survival for Western civilization to get off of fossil fuel. And as much as the current administration in Washington chooses to ignore that, and the oil companies that they favor continue to operate recklessly and intentionally try and extract the last drop before they're forced to change, not caring about the fact that their children will be victims of this as well as their grandchildren, which by the way is very much like the cigarette companies. Think of all the executives of the cigarette companies who didn't care that kids were being addicted and they had kids. Okay. And the analogy is pretty strong because the most illegitimate business I can think of in history was the cigarette business because its business was to addict people to the point of death. That's pretty strong. I would say a business that does that is an illegitimate business. I would say that's a, basically a criminal enterprise.'cause you're killing people

Tom Raftery: 47:32

Yep.

Rinaldo: 47:32

and you know that's the purpose of your product, is that statistically you're gonna kill people you know it's gonna drive a hospital cost and medical cost for everybody else and you don't care'cause you're just selling cigarettes. Okay, well the, the fossil fuel industry's in the same place today. They don't care that our biosphere is becoming non survivable. And you don't have to ask the 123 people, mostly kids that died in Texas, the floods. And you don't have to ask the people in North Carolina, you don't have to ask the people in all over the country. The East Coast got flooded. Where are you right now? Talking from Tom,

Tom Raftery: 48:04

Spain.

Rinaldo: 48:05

Spain. Okay, good. Well lucky you, 'cos Spain, of all the countries in Europe, is the most advanced country in Europe on hydrogen, and you're gonna continue to see really good advancements in Spain. Germany's the second. Now, France used to be the leader. It's a laggard at the third place, but it is still in the game. All of them are, are light years beyond the Americans in what they're getting done. And so you're gonna see some wonderful projects put together. In fact, the Scots putting one together right now with the Germans. The Canadians have already signed a deal for Nova Scotia to ship green hydrogen to Germany and they can't figure out how to get it there, which is, they should have figured that out first. But we have a solution for that, which we've written about. But, but they, they will sell now, find that out. And so they're scrambling to figure out can they turn it into LOHC, et cetera. And, and if they do, what are they gonna use it for?'cause then you can't use it in a fuel cell. And if you burn hydrogen, which for some applications is a good thing. For example, if you heard the term, hard to abate sectors?

Tom Raftery: 49:07

Yeah.

Rinaldo: 49:08

okay? So that's primarily cement and steel. And the only way you can produce coke fired furnaces those two industries is to use hydrogen.'cause the, the temperature of the flame. Now, I'm not a big fan of that in the sense that you do create some nitrous oxides, but you create so much less pollution with a hydrogen melting process than you do with coal and coke, that it's, it's to survive, you gotta switch to a better technology.

Tom Raftery: 49:36

Yeah.

Rinaldo: 49:37

We are in a non-survivable mode right now. And what's frightening to me and what I write a lot about is we're farther past the tipping point that people know. So don't think that you're gonna have mild consequences in the year 2300. By 2050 people are gonna be screaming for survival in Western civilization. So, you know, will we have the capability to develop the technologies to fruition when we're strapped, we're hanging onto a boat or to a piece of wood?'cause our boat just blew up. You know, we're fighting for survival in the ocean, we're hanging onto a board. How are we gonna build the future? And that's the position we're putting ourselves. And that's why it's a tipping point. You get past a certain point, very hard to turn it back around. I, I spoke to the people that, that advised Modi before he got elected the first time. And I said, what you want do is forget trying to get a power line to the villages. It'll never happen in a million years. It's too expensive, can't be maintained, et cetera. Put a microgrid in. When you put in a microgrid in, all you gotta do is get some hydrogen. When you do that, they not only get electricity, they get water, lots of water. So all of a sudden that solves two problems and it's so easy to make hydrogen. So now you're seeing his number one financial, by the way, he took the advice, they built 10 microgrids in, in India about 10 years ago. Now they're working beautifully. And the largest financial backer of Modi and his principal buddy all these years is building a massive green hydrogen plant in Gujarat, which is the city Modi comes from. Massive. In fact, they contacted his chief engineers engineer, contacted me more than a year ago, asking me to, to calculate the transportation numbers for how they could get their green hydrogen to four ports on the East coast of Africa. So we're keeping track of that. And it's, and by the way, you can read about it. It's no secret.

Tom Raftery: 51:38

Okay, super.

Rinaldo: 51:39

And, and, and Tom, after we, if we hang up, I'll, I'll send you the link to that town in Northern California and make it four point a half dollars kilogram hydrogen. And if you want, we can send you links to other things.'cause as part of the, as a researched institute, one of the things we do, like I just explained with geothermal, is we dive back in to a subject we've covered before we go, okay, we haven't been here for a few years. What's happened? How has it changed? What's still relevant, what isn't? For the most part, what we wrote in our book in 2007, Freedom from Mid East Oil, which is a compendium, all the renewable energies and, and which most cost effective, it's obvious that we've made great progress and it's also obvious we're running outta time. And it's obvious that what we wrote then stood the test of time. So, for example, I, I started talking to people in 19, in 2007 about methane from the ocean. And we now know that's the biggest source of, greenhouse gases. That's, that's killing us. We pioneered on permafrost, but no one wanted to cover it. They didn't even cover it till two years ago. The IPCC, same with Ocean. We look further ahead 'cause we're business people. Nobody can run a business that they don't have a good three to five year plan. And the really good ones have a 10 year plan. And when you look 10 years out on this plan, oh my goodness, you don't, you don't like what you see. So, and, and, and, and I'd wanna refer people if they don't recall it in that book that vice President Gore did, an inconvenient truth. And there's one graph in there called the hockey stick graph. You remember that? Talked about?

Tom Raftery: 53:06

Michael Mann's graph.

Rinaldo: 53:07

Yeah. Talked about the CO2 buildup. Well, if you look at that graph, he was right. And that stick, we're on it now, which is why we're not getting slow increases in heat each year. We're getting huge increases in heat each year. You watch, for example, there was a, there's an issue this summer in both Paris and Rome about people, older people dying without air conditioning.'cause it started to hit in triple digits. That's not a rare thing anymore. And what we used to call a thousand year flood is now not even a 10 year flood anymore. It's like the flood that happened yesterday. So if we don't look at these signs. If we don't open ourselves to the data in a neutral way, you're gonna get some really distorted answers. So what I always say to a businessman is, take off your personal economic filter for a minute. Put that aside. We know you make money selling petroleum. Okay? Put that aside. Now, just as a human being with a good mind trained in business, if I gave you this problem and I told you this is the source of it, what would you do as a businessman or woman? And the answer's pretty obvious. You don't wanna destroy your markets. Nobody wins when your market floods and everybody loses their job. And the town gets wiped out, but because of the inertia of capital formation and the political leverage it gives these companies, they don't ask that question. That's the problem. That is the problem.

Tom Raftery: 54:31

Yep. True. Rinaldo, if people would like to know more about yourself or any of the things we talked about on the podcast today, where would you have me direct them?

Rinaldo: 54:40

Yeah go to a world business.org. It's the nonprofit, and if you click on I think it's, there's a place where you can put a click about, you know, as we are, click on my piece of that. And, in all of my, not all but up until three months ago, all my publications and it takes 'em about, I dunno why it takes three months to get 'em up there, but it does. So all my publications, podcasts, all that's there, there's also an extensive biography on me in what I've done in the private sector as well as the public. It's sort of slanted towards the public sector, but it's got a lot of my private sector stuff in it. And it talks, it talks a little bit about the things I've innovated outside of the environment. Most people who know me know that I was one of the first co-founders of pay television in the world in 1972. And they also know I did some other things that were very, very breakthrough. I've got a lot of business skills and I've been with a lot of business success, but I also have been fortunate that when I've looked at things with a neutral filter I see things that other people don't see and I then I have to put money into it. I remember 35 years ago telling some of my friends, I was investing in this thing called organic food, and they, they thought it was crazy. They said, well, that's the Birkenstock crowd. And they said, what? That, that's like a very small market. You know, why don't you go to that? I go, I have a feeling that when people know what I know, more people are gonna go for organic. I got into organic food production years and years ago, I mean, 30 years, some years ago, and I'm still on some organic companies to this day, in my private side. And as you can imagine, they've been very lucrative.

Tom Raftery: 56:12

Yeah.

Rinaldo: 56:12

Much better than you buying Skippy peanut butter. So, this neutral opinion of what's out there that business people are capable of is a great asset. And we need to, we need to stimulate that. So go to the world business.org. You'll see all the articles we published over the last 35 years. You'll see the books that we've published. Take a look also at the Fellows. It's an odd group. It's a group of people who have a wide variety of disciplines. So we span the, from extraordinarily impactful, famous university business professors. The, the recent former Dean of Kellogg has been one of our fellows for a very long time. And we span that all the way to people who are looking at society and trying to redefine humanity in terms of quantum physics and Indian spirituality, and that's Deepak Chopra. And they have a tremendous amount to tell each other. And so what we do at the academy is we take these mixtures, traditional business people, non-traditional thinkers, and we go, okay, how can we reexamine what we took as obvious, what we took as like, oh, that's, that's just how it is. It's all we been that way. You know? Why would you question the grid, by the way two papers that they really want to get. And if you have trouble finding them, send a note to Viviana VIVI or admin@worldbusiness.org. Either one. And there are two papers. One by a man named Lorenzo Kristov, So Dr. Kristov was the head of California Independent System Operator for many years here in California. They operate the grid in California, and he was specifically the professor in charge of looking at, at the future of the grid 10 years out. And he published often with a friend of his over a professor at Caltech. They put out an article on microgrids, which happened to agree exactly with what we were saying in the academy. So I wrote him and I said, professor Kristov, I gotta tell you, I thought your article was fabulous, very technical. And he talked about creating a, a honeycomb of grids across California and how they would each support each other and you could eliminate high powered lines. And he made the conclusion as the head of the guy thinking 10 years of the future, there is no purpose in the grid anymore. It's outlived its usefulness. need to do is break it down, down into microgrids. But there was one footnote there where he said, the only thing we don't know how to solve is when you get a microgrid that's in isolation from all the microgrids. How do we port power to it? So I wrote him., I said, I got the solution, and I wrote a paper short one, and it's fairly technical, but a layman can read it. And it says you use fuel cell supported microgrids. So if there's a fuel cell support on that isolated microgrid, it doesn't need high power wires. Well, he liked it so much that we now publish the two articles together as bookends. So he and I have come to the agreement years ago that if people are gonna look at his solution for microgrids, they have to look at the, necessity for fuel cell assisted support for microgrids. So those two papers that go out and, you know, not that not that long, they were written technically, but you don't get caught up too much in the electronics of the electric, you can, work your way through it.

Tom Raftery: 59:25

Cool.

Rinaldo: 59:26

Yeah.

Tom Raftery: 59:26

Super Rinaldo. That's been fascinating. Thanks a million for coming on the podcast today.

Rinaldo: 59:30

Well thanks for having me, Tom. I appreciate it.

Tom Raftery: 59:32

Okay, we've come to the end of the show. Thanks everyone for listening. If you'd like to know more about the Climate Confident podcast, feel free to drop me an email to tomraftery at outlook. com or message me on LinkedIn or Twitter. If you like the show, please don't forget to click follow on it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.