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The 'Boring' Industries the UK Can’t Afford to Lose · Merryn Talks Money

0:02
Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.
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Speaker 2: This is a really dangerous moment for the UK. There's
0:11
Speaker 2: the national security challenges and then the question of whether
0:15
Speaker 2: we are going to be able to defend ourselves in
0:18
Speaker 2: the future. And that's something that goes beyond the economics.
0:21
Speaker 2: You know, are we going to be able to make
0:25
Speaker 2: the explosives that God forbid we don't have to use
0:28
Speaker 2: but we might well need in the future. Well, right
0:31
Speaker 2: now the answer is no, because we have just shut
0:35
Speaker 2: down the plants making the feedstocks that can provide us
0:39
Speaker 2: with the explosives that we may need in future. And that,
0:44
Speaker 2: for me is deeply unnerving. And the fact that so
0:48
Speaker 2: few people are talking about it, either inside government or out,
0:52
Speaker 2: is doubly unnerving.
1:02
Speaker 3: Welcome to Maren Talk's Money, the podcast in which people
1:05
Speaker 3: who know the markets explain the markets. I am Maren
1:08
Speaker 3: sumset Web and this week I am speaking with Ed Conway,
1:11
Speaker 3: the economics editor of Sky News and author of Material World,
1:14
Speaker 3: The Six Raw Materials that Shape Modern Civilization. Now we
1:18
Speaker 3: have had ed on before, just after he published this book,
1:21
Speaker 3: and we talked about that at great length. It was
1:23
Speaker 3: absolutely brilliant. I'm quite sure you've all read it by now,
1:26
Speaker 3: but the world is moving very fast in Ed's direction.
1:30
Speaker 3: There is a clear understanding now that it is the commodities,
1:34
Speaker 3: the materials that he wrote about that are the most
1:36
Speaker 3: important thing out there. And we are seeing a shift
1:39
Speaker 3: in the investment world away from thinking that you can
1:42
Speaker 3: simply make your returns out of digital stuff, software stuff,
1:45
Speaker 3: and in fact you need to be at least adjacent
1:48
Speaker 3: to the physical world. So I've asked ed back on
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Speaker 3: again to talk about this, and in particular to start
1:53
Speaker 3: off by talking about a recent video that you made
1:56
Speaker 3: Ed about the chemicals industry and how it is disappearing
1:59
Speaker 3: from the UK and how incredibly dangerous that is.
2:02
Speaker 1: Anyway, welcome, thank you, Thanks having on. I mean this
2:06
Speaker 1: this started.
2:07
Speaker 2: So we talked about this years ago, and I wrote
2:10
Speaker 2: this book all about how physical stuff matters, and we
2:13
Speaker 2: clearly it's not everything, but we underplay the extent to
2:16
Speaker 2: which everything, pretty much every piece of economic activity out
2:20
Speaker 2: there depends. There's one way or another on some form
2:24
Speaker 2: of physical stuff coming out of the ground being turned
2:26
Speaker 2: into a product we need, you know, maybe it's maybe
2:28
Speaker 2: it's kind of cement. You still need cement to make
2:31
Speaker 2: a data center. Maybe it's copper, or you need lots
2:33
Speaker 2: of copper for data centers, you need it for all
2:35
Speaker 2: of those wind turbines, you need it for conventional power
2:37
Speaker 2: as well. All this stuff is it doesn't actually kind
2:40
Speaker 2: of account for a very big part of GDP because
2:44
Speaker 2: you know, it's not in video and it's not AI,
2:47
Speaker 2: but you need to you need to make the things
2:49
Speaker 2: in video doesn't make a single chip. You know, they
2:53
Speaker 2: design the ships and they come up with the architecture,
2:55
Speaker 2: but then it's it's another company that makes them. And
2:58
Speaker 2: the point of the book was just to say, actually,
3:00
Speaker 2: the making of stuff is pretty important, and the physical
3:02
Speaker 2: materials are pretty important, and I think this is the
3:04
Speaker 2: critical kind of juncture. We've lived for a world, you know,
3:08
Speaker 2: in the world for decades and decades where you could
3:10
Speaker 2: kind of not have to think about physical things because
3:13
Speaker 2: you could always assume that if you ordered some copper
3:16
Speaker 2: anodes that they would turn up from Chili in a ship,
3:19
Speaker 2: or if you needed some concrete, then you'd be able
3:21
Speaker 2: to get it, or if you need a chemicals then
3:23
Speaker 2: you could find them. But that world may not be
3:26
Speaker 2: the world that we're living in in the coming decades.
3:28
Speaker 2: You know, whether it's the fact that people are kind
3:30
Speaker 2: of competing for this stuff, so there's a big race
3:32
Speaker 2: on for both AI and for renewables. That increases demands,
3:36
Speaker 2: So you've got a big kind of demand side thing,
3:38
Speaker 2: or just the fact that shipping is not as safe
3:41
Speaker 2: as it used to be, and your you know, ability
3:44
Speaker 2: to get stuff is not as kind of assured as
3:46
Speaker 2: it was. So that's the kind of backstory, and I
3:49
Speaker 2: was kind of banging on about a bit about it.
3:51
Speaker 2: And also part of the backstory of that is to say,
3:54
Speaker 2: if you're pursuing strategies like net zero, where you really
3:57
Speaker 2: ought to think about what that means in terms of
3:59
Speaker 2: how you physically get hold of stuff, because again, the
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Speaker 2: materials matter, you know, doubly triply when it comes to
4:05
Speaker 2: something like that.
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Speaker 1: When I wrote the book, I.
4:07
Speaker 2: Visited a lot of places in this quest to try
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Speaker 2: and understand, Okay, what are the physical things we need
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Speaker 2: to sustain our standard of living. I visited a lot
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Speaker 2: of like chemicals, plants, and oil refineries and glass furnaces.
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Speaker 2: And I live in like you, I live in the UK.
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Speaker 2: I kind of always assumed that of you know, as
4:25
Speaker 2: countries go, we had.
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Speaker 1: Deindustrialized basically faster.
4:29
Speaker 2: Than anyone else, and we had we had up until
4:32
Speaker 2: that point deindustrialized faster than any other kind of major
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Speaker 2: economy in the world. So surely the plants that we've
4:38
Speaker 2: got were probably you know, they've been tested through that
4:41
Speaker 2: will probably hang on to them. But in the intervening period,
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Speaker 2: loads of the places I visited to research that book
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Speaker 2: have shut down. You know, you've got glass furnaces that
4:51
Speaker 2: no longer you know, are their portthol have been one example,
4:54
Speaker 2: and then there's one that almost shut down in Scunthorpe.
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Speaker 2: You've got chemicals plants that have using down as well.
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Speaker 2: The point of this film that I made for Sky
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Speaker 2: News is I just visited some of these chemicals places
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Speaker 2: and you would be staggered at the speed with which
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Speaker 2: we are shutting things down. And it's not just a
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Speaker 2: UK story.
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Speaker 1: Across Europe.
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Speaker 2: I think in the last three years there's just some
5:16
Speaker 2: data that just came out about this, and just recently,
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Speaker 2: I think the last three years or so, about ten
5:23
Speaker 2: percent of the entire chemicals production ability of Europe has gone.
5:29
Speaker 1: It's just gone.
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Speaker 2: And people in the same way that they don't really
5:33
Speaker 2: think about whether you need concrete for a data center,
5:36
Speaker 2: they didn't spend that much time thinking about the chemicals
5:39
Speaker 2: you need for our day to day lives. But you know,
5:42
Speaker 2: without not something as simple as salt, you don't have
5:44
Speaker 2: ninety percent of the pharmaceuticals that are out there that
5:48
Speaker 2: are kind of life saving yourself. Pharmaceuticals they one where
5:50
Speaker 2: or another have salt or chemicals derived from salt inside them.
5:54
Speaker 2: You don't think about ethylene, you know, as a really
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Speaker 2: important building blot for the rest of you know, civilization
6:01
Speaker 2: as we know it. But without ethlene, you don't have
6:03
Speaker 2: the most important plastic in the world, you know, polyethylene.
6:06
Speaker 2: And without that, you don't have a lot of the
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Speaker 2: surgical equipment that we need in hospitals to keep people alive.
6:11
Speaker 2: And our ability to make this stuff in Europe has
6:16
Speaker 2: just diminished at an unprecedented rate in recent years. I
6:20
Speaker 2: would have thought that something we should be talking about,
6:23
Speaker 2: and yet the surprising thing is, I mean, we're trying
6:25
Speaker 2: to make a bit of noise about it on sky
6:28
Speaker 2: and I know you talk about it, but I'm just
6:30
Speaker 2: shocked at the extent to which this is all happening
6:33
Speaker 2: and people aren't more kind of nervous about it.
6:36
Speaker 3: Really, Yeah, I mean it is shocking, isn't it, Because
6:39
Speaker 3: I mean, your book was very well received. Everybody read it.
6:41
Speaker 3: I'm pretty sure a lot of politicians read it, but
6:43
Speaker 3: somehow they haven't moved forward to acting on those ideas.
6:47
Speaker 3: And one of the things you talk about in the
6:48
Speaker 3: film at the very beginning, as you look at salts, I.
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Speaker 1: Didn't have the impact Marin that I thought I would have.
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Speaker 3: Yeah, I think I think you did. It's just very
6:54
Speaker 3: hard for them to, you know, they have to confront
6:58
Speaker 3: reality in a bigger way than most politicians would like
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Speaker 3: to do in order to take action based on that kind
7:02
Speaker 3: of thing. Let's start with salt, right. I mean, you
7:05
Speaker 3: talk about this in the film at the beginning, and
7:08
Speaker 3: we look at the beginning in the beginning of your
7:10
Speaker 3: film at a salt plant, right, and it's incredibly old,
7:15
Speaker 3: it's rusting all over the place. And what they're doing
7:17
Speaker 3: here is they're taking brine and drying and drying and
7:19
Speaker 3: drying and drying until you're left with salt, which is
7:21
Speaker 3: a very simple procedure. And so it's very hard I
7:24
Speaker 3: think for people to see that and go, well, this
7:27
Speaker 3: rusty old factory churning out these big piles of salt
7:30
Speaker 3: is absolutely vital to a variety of industries across the
7:35
Speaker 3: UK and also probably to national security in the end.
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Speaker 2: Yeah, it is without salt, we are in big trouble
7:41
Speaker 2: without salt. Obviously, you know, we as humans need salt
7:43
Speaker 2: in order to stay alive. It's part of our kind
7:46
Speaker 2: of physiology.
7:47
Speaker 1: We need salt.
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Speaker 2: But then on top of that we have you know,
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Speaker 2: quite a big chemical sector and a pharmaceutical sector in
7:53
Speaker 2: this country.
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Speaker 1: You know, making drugs.
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Speaker 2: You can't do that without salt because there's various kind
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Speaker 2: of you know, sodium chloride, the various compounds derived from
8:01
Speaker 2: that that are absolutely essential to making drugs.
8:05
Speaker 1: We have some actually there's a place up in Cheshire.
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Speaker 2: So the boat story here is, you know, not every
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Speaker 2: country in the world has lots of salt under the ground.
8:13
Speaker 2: It just it kind of depends on the geology. You know,
8:16
Speaker 2: was there two hundred million years ago? Was there a
8:18
Speaker 2: sea that dried up underneath where your country is now?
8:22
Speaker 2: For many countries the answer is no. Germany has quite
8:24
Speaker 2: a lot of salts. There's a bit in France, but
8:26
Speaker 2: not an awful lot. But it so happens there's really
8:29
Speaker 2: rather a lot of it in the UK, and the
8:31
Speaker 2: upshot of that is we have for all of our
8:34
Speaker 2: history and obviously the interesting thing about Britain is we
8:38
Speaker 2: have the industrial revolution here before everywhere else, and so
8:40
Speaker 2: we were kind of taking different compounds and different products
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Speaker 2: and making them using coal in a way that other countries,
8:47
Speaker 2: you know, only learned to do kind of later on.
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Speaker 2: For all of this time, the UK has never had
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Speaker 2: to depend on getting salt in from overseas. Basically since
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Speaker 2: the beginning of civilization we have been self sufficient for salt.
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Speaker 2: And the point of this film was to say, right now,
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Speaker 2: quite a few plants have shut down.
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Speaker 1: Right now, there were two plants left. There's two. I
9:10
Speaker 1: have now visited both of them, and one of.
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Speaker 2: Them, this one that we've showed in the film, is
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Speaker 2: kind of on its last legs. What they do is
9:18
Speaker 2: there's lots of salt deep underground. You don't send people
9:21
Speaker 2: down with pickaxes these days. What you do is you
9:23
Speaker 2: pipe down some water and that comes up in the
9:26
Speaker 2: form of brine, say kind of twenty thirty percent salt solution,
9:30
Speaker 2: and then you evaporated away like like you were saying.
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Speaker 2: And that's kind of quite energy intensive. So so part
9:35
Speaker 2: of the issue that these plants are faced with like
9:38
Speaker 2: everything else. And I think a lot of what is
9:40
Speaker 2: going on in the chemical sector in Europe is the same,
9:43
Speaker 2: is the fact that it is super energy intensive to
9:46
Speaker 2: do chemical reactions most of the time. And then when
9:49
Speaker 2: you were talking about like petrochemicals, which is you know,
9:51
Speaker 2: another thing we might come to then Also your feedstock
9:54
Speaker 2: is literally it's oil and gas and all of that
9:57
Speaker 2: stuff is more expensive right now in Europe than it
10:00
Speaker 2: was before. And this is obviously kind of post Russia,
10:02
Speaker 2: post Ukraine thing that's kind of you know, I wouldn't
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Speaker 2: say terminal, but a massive, massive problem for Europe, and
10:08
Speaker 2: it's stelly existential for chemicals. But you've got the two
10:12
Speaker 2: plants going one of them is kind of on its
10:15
Speaker 2: last leg. This is the salt that we are consuming
10:17
Speaker 2: right now in this country. If you're sprinkling salt on
10:20
Speaker 2: your chips in you know, Englan, North Scotland, or you know,
10:22
Speaker 2: anywhere in the UK, it comes from one of these
10:25
Speaker 2: two plants. The vessels in there that they're using to
10:28
Speaker 2: do this evaporation, they are more than one hundred years
10:30
Speaker 2: old and if you see the film you will see.
10:34
Speaker 1: That it looks old. It is old.
10:36
Speaker 2: And one of the things that I'm kind of trying
10:38
Speaker 2: to scratch my head about is, you know that Britain
10:41
Speaker 2: kind of had the Industrial Revolution early, and there was
10:45
Speaker 2: this massive boom time for a lot of the kind
10:46
Speaker 2: of particularly kind of nineteenth century and a lot of
10:48
Speaker 2: stuff got built, and you would be kind of quite
10:52
Speaker 2: surprised at the extent to which some of that machinery
10:55
Speaker 2: is still being used today. I kind of spend a
10:58
Speaker 2: lot of time co traveling around and going to various
11:01
Speaker 2: plants in you know, whether it's chemicals places or manufacturing plants.
11:05
Speaker 1: I was really struck a few years ago.
11:06
Speaker 2: I went to this car plant they were making I
11:08
Speaker 2: think handles that went into Nissans or Honda's, I can't remember.
11:12
Speaker 2: And the steel pressing kind of machine they were using
11:15
Speaker 2: to press the steel was I think nineteen forties, and
11:20
Speaker 2: that is part of the infrastructure. And I've always kind
11:22
Speaker 2: of wondered to myself, we had this massive capital investment
11:26
Speaker 2: in the UK kind of you know, almost getting on
11:28
Speaker 2: for a century ago, and we've been able to some
11:30
Speaker 2: extent to just live off that capital investment for a
11:33
Speaker 2: long time.
11:34
Speaker 1: And that's the thing.
11:35
Speaker 2: Now we're kind of getting to the point where you
11:37
Speaker 2: need to put money in to invest in this stuff,
11:39
Speaker 2: and a lot of these decisions are coming due, and
11:42
Speaker 2: in the case of the salt plant, they need to
11:44
Speaker 2: invest the loss in the salt plant.
11:46
Speaker 1: You can see how rusty it is.
11:48
Speaker 2: I think there were some really legitimate and profound questions about, oh,
11:51
Speaker 2: why did they let it get on it onto its
11:53
Speaker 2: last legs, what's going on within EOS right now? Shouldn't
11:56
Speaker 2: they have been keeping it better? Why can't they put
11:58
Speaker 2: the money? And all of those questions are all the
11:59
Speaker 2: just But nonetheless, we're at this point where money needs
12:02
Speaker 2: to be put in, and if it doesn't get put in,
12:04
Speaker 2: then Britain has the very real chance that in the
12:08
Speaker 2: next few years we are going to become dependent on
12:11
Speaker 2: imports of salt, the most important of all chemicals. I
12:15
Speaker 2: would say, we're going to potentially be dependent on imports
12:18
Speaker 2: for the first time in civilization.
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Speaker 4: Extraordinary, and yet no one's kind of talking about this,
12:25
Speaker 4: well a least very few people are kind of talking
12:26
Speaker 4: about this, And I just feel that's partly because we
12:29
Speaker 4: don't think about the fundamentals as much as perhaps.
12:32
Speaker 1: We could do, much as we should.
12:33
Speaker 3: And I suppose that The obvious question here is we're
12:37
Speaker 3: getting to the point when, as you say, Sultan, maybe
12:40
Speaker 3: various other industries, they really need to put up a
12:42
Speaker 3: lot of money, a lot of capital expenditure to move
12:45
Speaker 3: themselves into the new age, or at the very least
12:46
Speaker 3: to continue doing what they're doing. But they need to
12:49
Speaker 3: do that at a time when they're cost a rising
12:51
Speaker 3: road dramatically, and in particular when energy cost rising road
12:55
Speaker 3: dramatically in highest electricity builds in the Western world, et cetera,
12:58
Speaker 3: et cetera. And that makes it impossible to do that investment.
13:02
Speaker 3: Is that what's happening.
13:03
Speaker 2: Well energy energy is much more expensive than it used
13:06
Speaker 2: to be, and that is a structural problem for Europe,
13:10
Speaker 2: and the difficult things we're faced within Europe is that
13:15
Speaker 2: it's not easy to see a way out of that.
13:17
Speaker 2: And for a long long time, for decades and decades,
13:21
Speaker 2: we were very complacent about it. We thought that we
13:24
Speaker 2: kind of transcended energy as a fundamental force, which was
13:27
Speaker 2: totally delusional. We I suppose, had deluded ourselves into not
13:33
Speaker 2: kind of thinking about the fact that we were completely
13:35
Speaker 2: reliant on Russian cheap Russian gas, I mean not directly
13:38
Speaker 2: in the UK but indirectly because it's all coming in
13:40
Speaker 2: in the pipelines and we all are part of one
13:43
Speaker 2: kind of gas network. And in this new world where
13:47
Speaker 2: we want to rid ourselves of that dependence, then there's
13:51
Speaker 2: not an easy cheap source of energy from elsewhere except coal,
13:56
Speaker 2: and we've forsworn coal, and so as a result of that,
13:59
Speaker 2: we are much more dependent on buying stuff from overseas.
14:03
Speaker 2: And to be honest with you, it is very hard
14:05
Speaker 2: to see an easy way out of that.
14:07
Speaker 3: The obvious immediate way out is to shift back from
14:10
Speaker 3: pull back from net zero, and to allow the North
14:14
Speaker 3: ced to be fully explored and developed, and to take
14:16
Speaker 3: quite a lot of the climate taxes off industrial electricity
14:19
Speaker 3: bills and personal electricity bills. I mean, there are ways,
14:22
Speaker 3: they're just ways that the government is not keen to take,
14:25
Speaker 3: and probably much of the population is not keen on either.
14:28
Speaker 2: The paradox I would posit is this, you know, look
14:31
Speaker 2: at China. Just how fixated is China on net zero?
14:35
Speaker 2: Not particularly, if at all, And yet China is where
14:38
Speaker 2: the vast, vast majority of development is happening. When it
14:42
Speaker 2: comes to you know, solar panels being made, wind turbine
14:46
Speaker 2: is being turned out as well, batteries being made, and
14:49
Speaker 2: why is that happening. It's happening not because China is
14:52
Speaker 2: fixated on trying to get its carbon emissions down low.
14:54
Speaker 1: I mean, yes, that they would.
14:56
Speaker 2: Like to have better air quality, for instance in Beijing,
15:00
Speaker 2: but it is not about a fixation on a particular
15:03
Speaker 2: kind of target of carbon emissions. It is because they
15:06
Speaker 2: see this as being a massive industrial opportunity, and also critically,
15:11
Speaker 2: they want energy security, so they don't want to have
15:14
Speaker 2: to rely or depend on on Middle Eastern oil, which
15:17
Speaker 2: is primarily the kind of the main source, and so
15:19
Speaker 2: they are making crazy amounts of solar panels and batteries
15:22
Speaker 2: right now powered by coal.
15:24
Speaker 3: I was going to say, this is the point. They
15:25
Speaker 3: are still using a lot of coal, increasing amounts of coal,
15:28
Speaker 3: increasing amounts of oil, increasing amounts of gas. So they're
15:30
Speaker 3: seeing everything go up at once, both the clean side,
15:34
Speaker 3: the extended is clean, and the absolutely filthy side as well.
15:37
Speaker 3: So they'll use any cap of energy.
15:38
Speaker 2: That's the point. It's kind of they are. It is
15:41
Speaker 2: not as straightforward as saying it's either net zero or
15:43
Speaker 2: the other. And I think I think America's strategy has
15:47
Speaker 2: always seen slightly more kind of feet on the ground
15:51
Speaker 2: to me, because they they you know, even during Biden's
15:55
Speaker 2: kind of time in office, they were putting a lot
15:57
Speaker 2: of money, you know, a lot of investment into through
15:59
Speaker 2: the Infectionionalduction Acts, which had some bits that were pretty ugly,
16:03
Speaker 2: but some bits that were kind of interesting. There are
16:05
Speaker 2: putting lots of money into batterys and solar panels and
16:07
Speaker 2: so on and so forth, but at the same time,
16:09
Speaker 2: there was a lot of kind of investment going into
16:11
Speaker 2: frecking and you know, we need if we are going
16:15
Speaker 2: to get to net zero, then you're going to just
16:18
Speaker 2: have to kind of have enormous amounts of energy and
16:21
Speaker 2: resources and metals and a whole lot of it.
16:23
Speaker 1: And it just feels like in Europe we've kind of
16:26
Speaker 1: forgotten that.
16:27
Speaker 2: You need that part of it, and we're just aiming
16:29
Speaker 2: for the kind of the net zero part of it.
16:30
Speaker 2: And if that is the case, fine, but you were
16:33
Speaker 2: just going to become incredibly dependent on everyone else and
16:36
Speaker 2: you're going to be buying your solar panels from China
16:38
Speaker 2: made of coal. They are literally, by the way, they're
16:41
Speaker 2: made with coal in order to make the silicon that
16:43
Speaker 2: you have in the solar panels, and also then there's
16:45
Speaker 2: power that goes into coal.
16:46
Speaker 1: You're going to be by getting your kind of wind turbines.
16:48
Speaker 2: You've been getting your chemicals from China, which again are
16:52
Speaker 2: made from coal.
16:53
Speaker 1: Like the way that we make fertilizer, we don't make
16:56
Speaker 1: it in the UK.
16:57
Speaker 2: When I wrote this book Material World, I talked about
16:59
Speaker 2: how there was bically one plant left in the UK
17:01
Speaker 2: making fertilizer ammonia, which the way you make it is
17:05
Speaker 2: you basically you take natural gas and you want to
17:08
Speaker 2: get the kind of nitrogen out of the air, and
17:10
Speaker 2: you use the hydrogen and the natural gas to kind of,
17:12
Speaker 2: you know, to do this incredible chemical reaction, the Harbour
17:14
Speaker 2: Bosh process, and you end up with the physical form,
17:17
Speaker 2: that solid form of nitrogen. It's amazing. It's one of
17:20
Speaker 2: the great leaps forward in scientific history. It's part of
17:24
Speaker 2: the explanation for how we are able to support eight billion, nine.
17:27
Speaker 1: Billion people on this planet. It is it's crazy.
17:30
Speaker 2: There is no way we should be able to be
17:32
Speaker 2: able to have that many people on this planet, and
17:34
Speaker 2: yet we can, and yet they are better fed than
17:36
Speaker 2: ever before thanks to the Harbor Bosh process, which we
17:39
Speaker 2: in this country had one plant doing when I wrote
17:41
Speaker 2: the book, we just shut it down.
17:43
Speaker 1: We just shut it down, and we shut it down
17:44
Speaker 1: because natural gas is too expensive.
17:46
Speaker 2: And obviously there's all sorts of consequences to that because
17:50
Speaker 2: partly we're not able to make our own fertilize it. Also,
17:52
Speaker 2: by the way, what's the other thing that you use
17:54
Speaker 2: nitrogen for? It is also explosive. So there's a lot
17:57
Speaker 2: of talk at the moment in the UK about whether
17:58
Speaker 2: we're going to make our own expect so you can't
18:00
Speaker 2: do it if you don't have those fundamental ingredients, but
18:04
Speaker 2: if we're going to start importing this stuff from China instead.
18:07
Speaker 2: In China, when they're making fertilizer, when they're making ammonia,
18:11
Speaker 2: they don't make it with natural gas. They make it
18:14
Speaker 2: with coal for the most part. And so you have
18:17
Speaker 2: dirtier chemicals coming from the other side of the world
18:20
Speaker 2: than the stuff that we would be making here. And
18:22
Speaker 2: yet because we are shutting down these plants, it means
18:26
Speaker 2: that our domestic emissions of carbon are lower, but the
18:31
Speaker 2: world as a whole will be greater because we're getting
18:33
Speaker 2: them from a dirtier plant somewhere else on the other
18:36
Speaker 2: side of the planet. And like I say it's it's
18:41
Speaker 2: a paradox, and it's from the design of some of
18:45
Speaker 2: these targets that we have.
18:46
Speaker 1: And I think even if you you know, even for
18:48
Speaker 1: those of.
18:48
Speaker 2: Us and you know, I'm one of them who thinks, listen,
18:51
Speaker 2: we should be thinking about carbon emissions, and we should
18:53
Speaker 2: be thinking about a way of making the planet, you know,
18:55
Speaker 2: more self sustaining in the future, and we.
18:57
Speaker 1: Should be kind of trying to cut down a pollution.
18:59
Speaker 2: This seem like it's a slightly perverse way of doing
19:02
Speaker 2: it if the net result of it is actually to
19:05
Speaker 2: raise planetary carbon emissions rather than to lower them.
19:09
Speaker 3: So be much more responsible planetary level to keep our
19:13
Speaker 3: plants going here let them shut down.
19:17
Speaker 1: All else EQL Yeah it would.
19:19
Speaker 2: And then that's before you get to the national security thing,
19:21
Speaker 2: which I think is just as if not even more profound,
19:24
Speaker 2: because BA recently said that it wanted to start making
19:27
Speaker 2: certain types of explosives in the UK.
19:29
Speaker 1: You can't. I don't want to go into how to
19:33
Speaker 1: make a bomb on this podcast.
19:35
Speaker 3: It's not the takeaway we like to leave people where
19:37
Speaker 3: we like investment advice.
19:39
Speaker 2: But here are two ingredients everyone you know that you
19:43
Speaker 2: definitely need if you're going to make any kind of explosives,
19:45
Speaker 2: you need it nitrogen. Okay, So the same stuff that
19:48
Speaker 2: you're using to make fertilized as part of the reason
19:49
Speaker 2: it helps plants grow, is nitron. It's this extraordinary kind
19:53
Speaker 2: of expensive, expensive element. Nitrogen is also the thing, the
19:58
Speaker 2: main thing in TNT the and it's nitrogen. And you
20:02
Speaker 2: also need sulphuric acid. It's another one of these things
20:05
Speaker 2: that you like. The thing about chemicals is basically the
20:07
Speaker 2: chemical helps you either break something down or combine it.
20:11
Speaker 2: In this country, we used to have a plant making
20:12
Speaker 2: sulfuric acid. We've shut it down. We used to have
20:14
Speaker 2: a plant making nitrogen, we've shut it down. These are
20:17
Speaker 2: the two main things we need to make the explosives
20:20
Speaker 2: that supposedly we're going to start making this country, and
20:22
Speaker 2: yet they've gone. And the thing that is I think
20:26
Speaker 2: a little disturbing is this stuff happened without anyone even
20:30
Speaker 2: noticing it. You go to Whitehall and talk to civil servants,
20:33
Speaker 2: they're mostly oblivious that this stuff has even happened in
20:36
Speaker 2: the first place. And so the worry for me is
20:40
Speaker 2: will there be some points, you know, in five ten
20:42
Speaker 2: years time in the future where it's like, Okay, well
20:44
Speaker 2: that was a silly thing that we allowed ourselves to do.
20:46
Speaker 1: Let's rebuild this.
20:48
Speaker 2: Oh it turns out actually it's going to cost kind
20:49
Speaker 2: of three billion rather than the kind of you know,
20:51
Speaker 2: five hundred thousand pounds that it might have done before.
20:54
Speaker 2: So that's I'm nervous. I'm yeah, a little bit terrified
21:00
Speaker 2: about where we're heading on this, but frankly to say,
21:03
Speaker 2: happening in the rest of Europe as well. The rest
21:05
Speaker 2: of Europe is shutting that. Germany is going even faster
21:08
Speaker 2: on this as well, and it's going even faster because
21:10
Speaker 2: all of a sudden, the bigot of natural gas from
21:13
Speaker 2: Russia has been kind of you know shut down, and
21:16
Speaker 2: basically most of the chemical sector, in the inusdustrial sector
21:19
Speaker 2: on Germany was totally dependent on that.
21:21
Speaker 1: And without that, what you're going to.
21:23
Speaker 2: Do, just if you're a if you're an international company,
21:25
Speaker 2: of course, you're going to look at your locations and
21:28
Speaker 2: you'll say, well, I'll just expand my plant in America
21:30
Speaker 2: where the gas is cheap, and I'll expand my plant
21:32
Speaker 2: in China where energy is cheap. And that's kind of
21:35
Speaker 2: what's happening right now.
22:00
Speaker 3: Yeah, So what's the way back from this? What's the
22:02
Speaker 3: way back from this? We suddenly say, well, we wanted
22:04
Speaker 3: to spend five percent of GDP on defense anyway, and
22:08
Speaker 3: it sounds like the best place to put a large
22:09
Speaker 3: part of that defense money is into our remaining chemicals plants,
22:13
Speaker 3: so we've got something left when the time comes.
22:16
Speaker 1: Yeah.
22:16
Speaker 2: I think a holistic conversation like that is where we
22:19
Speaker 2: need to be. I think politicians they made lots of good,
22:23
Speaker 2: kind of encouraging noises about this stuff.
22:25
Speaker 1: You know, Rachel Reeves when she came into.
22:26
Speaker 2: Office, her kind of big, you know, neologism was was
22:30
Speaker 2: secure and nomics, this idea that we you know, where
22:35
Speaker 2: something has made actually matters, and actually that's that's you know,
22:39
Speaker 2: I couldn't put it better myself. The problem is that
22:42
Speaker 2: it's not particularly evident. That's what the government is actually
22:45
Speaker 2: kind of that as they're guiding principle, And if you
22:48
Speaker 2: talk to people who are within governments, so kind officials, advisors,
22:54
Speaker 2: I think the UK still leans towards the kind of
22:56
Speaker 2: principle of well, if we're not making salt here, I mean,
23:01
Speaker 2: who cares because you can just buy it in from overseas.
23:04
Speaker 1: And if you're not making soda.
23:06
Speaker 2: Ash, so the other one, the other one, which for
23:09
Speaker 2: me is I find destabilizing and a bit unnerving that
23:13
Speaker 2: we've stopped making soda ash is basically one of those
23:16
Speaker 2: chemicals which is the building block of so many other things.
23:18
Speaker 2: So basically soda ash is still at the heart of
23:22
Speaker 2: so many kind of manufacturing things today.
23:26
Speaker 1: It was at the heart.
23:27
Speaker 2: Of the chemicals revolution when that happened two hundred years
23:31
Speaker 2: ago in the UK. In fact, one of the biggest
23:33
Speaker 2: chemical plants in the world was one in Glasgow where
23:36
Speaker 2: they had this It was the tallest chimney in the world,
23:39
Speaker 2: and this Tenants, it was the Tenant family had this
23:42
Speaker 2: plant in Glasgow.
23:44
Speaker 1: Which is which is obviously now being destroyed.
23:45
Speaker 2: I went there recently to look at and see if
23:47
Speaker 2: there was a plaque anywhere to show where it was
23:49
Speaker 2: once upon a time the tallest chimney in the world,
23:50
Speaker 2: the biggest chemical plant in the world. It has all
23:52
Speaker 2: been destroyed as like a most way underpass, now slightly depressing,
23:56
Speaker 2: but anyway, there was up until again, up until months ago,
24:01
Speaker 2: there was still one plant making sodash in this country
24:04
Speaker 2: and it just got shut down as well, And so
24:07
Speaker 2: again we are dependent on soda ash important I think,
24:10
Speaker 2: mostly from America, but you as they have some from
24:13
Speaker 2: North Africa to provide to make the glass that we
24:16
Speaker 2: need in this country to make the paper that we
24:18
Speaker 2: still make a fair bit of paper in this country.
24:21
Speaker 2: And again that's relevant, isn't it. And if you're thinking
24:25
Speaker 2: about the nexus between national security and economics and also
24:31
Speaker 2: sustainability and then defense, you should be thinking about all
24:35
Speaker 2: of those things. And I don't think we've got that
24:39
Speaker 2: holistic approach, you know, in the UK and in the US,
24:42
Speaker 2: I think they're slightly further further on from that. But
24:45
Speaker 2: what I would say is that the challenge here is
24:48
Speaker 2: that we as a civilization, what do we like?
24:51
Speaker 1: We like cheap stuff?
24:53
Speaker 2: We do, and I think you know, we've been able
24:56
Speaker 2: to enjoy a period for you know, decades since fall
24:59
Speaker 2: of the Bullo Wall where stuff has kind of tended
25:01
Speaker 2: to get cheaper, not everything obviously, but particularly physical manufactured products.
25:06
Speaker 2: We might now be at that period that might now
25:09
Speaker 2: be at an end and things might be more expensive.
25:12
Speaker 2: And if you then want to have more national security
25:15
Speaker 2: and more stuff made domestically, then things are going to
25:17
Speaker 2: be quite a bit more expensive and are we ready
25:19
Speaker 2: to pay for that right now, and probably most consumers
25:24
Speaker 2: are not ready. And what Donald Trump is doing in
25:27
Speaker 2: America right now is a pretty good natural experiment in
25:29
Speaker 2: that because things are likely to get more expensive given tariffs,
25:33
Speaker 2: And how are people going to feel about that? Well,
25:35
Speaker 2: they don't seem very happy about it right now, and
25:37
Speaker 2: they better wait because there's a big leg on these things.
25:41
Speaker 2: And from my impression, the Tier two three suppliers in
25:45
Speaker 2: America to the car industry are only now starting to
25:48
Speaker 2: ratchet up their prices. So you're only going to see
25:50
Speaker 2: that car prices go up this year and maybe next year.
25:54
Speaker 1: So are we ready for that? I don't know, well,
25:58
Speaker 1: I think.
25:58
Speaker 3: I mean, it's interesting that the conversation national security and
26:01
Speaker 3: defense is definitely changing fast, and so it's a presentation
26:04
Speaker 3: as much as anything else. In the most recent polls
26:06
Speaker 3: show that people, if you run down their list of worries,
26:09
Speaker 3: immigration is still at the top, but defense is now
26:11
Speaker 3: the second second highest thing on the worry list for
26:13
Speaker 3: the population of the UK. And I strongly suspect that
26:17
Speaker 3: if you were to explain to most people what you've
26:19
Speaker 3: just explained to me, that without basic chemicals, our national
26:23
Speaker 3: security is constantly, permanently at risk, then maybe you would
26:27
Speaker 3: find more of an appetite for it.
26:29
Speaker 2: Well maybe, but it comes at the un down to
26:31
Speaker 2: the question of you know, do you are you okay
26:33
Speaker 2: to pay a bit more for your salt?
26:36
Speaker 1: You know, if it comes from the UK.
26:38
Speaker 3: A lot of people spend a lot of money on
26:40
Speaker 3: artisanal salts, don't they Cornish salt, got and salt, Welsh salt. Yeah,
26:46
Speaker 3: you know, same stuff, different shape, So maybe I don't know.
26:50
Speaker 3: So when you speak to sales servers, government first alls
26:55
Speaker 3: about this, where do you think they should be going?
26:58
Speaker 3: What should happen? Does this require into government intervention or
27:01
Speaker 3: does it just involve at finding a way to make
27:04
Speaker 3: electricity energy cheaper? What does it involve? What should a
27:09
Speaker 3: responsible government do right now to at the very least
27:14
Speaker 3: halt the disappearance of these absolutely essential industries from the UK.
27:19
Speaker 2: Understanding what the building blocks are for our standard living
27:26
Speaker 2: would be a good start. Just in December the government
27:30
Speaker 2: stepped in and they put a bit of money into Grangemouth. Yeah,
27:34
Speaker 2: which is you know this, this ethylene plant used to
27:37
Speaker 2: be a massive refinery but now basically it's only the
27:39
Speaker 2: ethylene bit that's going in a few other little bits
27:41
Speaker 2: and pieces, and I think there was a realization.
27:44
Speaker 1: That if that had gone then.
27:49
Speaker 2: You would have seen this domino effect across the rest
27:52
Speaker 2: of the chemical sector because the whole pipeline that are
27:57
Speaker 2: feeds that of different plants. So I think there's some
28:01
Speaker 2: recognition that we're now the kind of at the very
28:05
Speaker 2: end of what you can sensibly cut before you start
28:10
Speaker 2: losing the basic building blocks.
28:12
Speaker 1: But to some extent, a lot of it's already gone.
28:16
Speaker 1: Talking to people on the.
28:16
Speaker 2: Chemical sector, they're saying that basically ninety percent is gone.
28:19
Speaker 2: The last ten percent was that ethylene plant. This is
28:23
Speaker 2: a really dangerous moment for the UK. There's the national
28:26
Speaker 2: security challenges and then the question of whether we are
28:30
Speaker 2: going to be able to defend ourselves in the future,
28:33
Speaker 2: and that's something that goes beyond the economics.
28:36
Speaker 1: Are we going to be.
28:36
Speaker 2: Able to make the explosives that God forbid, we don't
28:41
Speaker 2: have to use but we might well need in the future. Well,
28:44
Speaker 2: right now the answer is no, because we have just
28:48
Speaker 2: shut down the plants making the feedstocks that can provide
28:52
Speaker 2: us with the explosives that we may need in future,
28:57
Speaker 2: And that for me is is deeply unnerving, and the
29:01
Speaker 2: fact that so few people are talking about it, either
29:03
Speaker 2: inside government or out is doubly unnerving.
29:07
Speaker 3: Yeah, incredibly unnerving. Listen, is there anything positive you can say,
29:12
Speaker 3: any green shoes here, anything that we can look at
29:16
Speaker 3: and say, well, this is terrifying and distressing, and it's
29:19
Speaker 3: a grave concern that the government is not on it,
29:23
Speaker 3: or doesn't appear to be on it at all. But
29:25
Speaker 3: is there a positive way to spend any of this.
29:27
Speaker 3: I can't actually think of one at the moment. I'm
29:29
Speaker 3: just desperately hoping to end the pod on on something
29:32
Speaker 3: vaguely positive.
29:33
Speaker 2: There's always positive, and I mean we're at this moment
29:35
Speaker 2: where where there's there's We have these incredible kind of tools,
29:38
Speaker 2: two things like AI, which can provide you with the
29:43
Speaker 2: ability to test new compounds and to devise new kind
29:48
Speaker 2: of material formats that we never kind of had before.
29:52
Speaker 2: And so the ingeniousness that happened during the Industrial Revolution,
29:56
Speaker 2: we should be able to do that again. And much
30:00
Speaker 2: kind of quite quite optimistic about the future because if
30:02
Speaker 2: you marshal all of those tools and use it to
30:04
Speaker 2: make it, you know, make us better at kind of
30:06
Speaker 2: getting copper out of the ground or making concrete.
30:09
Speaker 1: Then that's amazing.
30:11
Speaker 2: And you know, the UK has always in particular been
30:14
Speaker 2: a place where where you've come up with lots of
30:16
Speaker 2: exciting ideas about this kind of thing. I think we've
30:19
Speaker 2: just kind of forgotten a little bit that we have
30:21
Speaker 2: this engineering heritage. And I think that the fact that
30:24
Speaker 2: we are mostly run by people ppe graduates dare I
30:29
Speaker 2: say from Oxford rather than people who have that kind
30:33
Speaker 2: of grounding in how to make the stuff that enables
30:37
Speaker 2: civilization to survive, that's slightly problematic for me.
30:41
Speaker 1: You know, it used to be the case. You know,
30:43
Speaker 1: when ICI was this massive institution.
30:45
Speaker 2: There all sorts of problems with it, but it had
30:48
Speaker 2: a big building which is right right where basically where
30:51
Speaker 2: where m I five is now, so right in the
30:53
Speaker 2: middle of Whitehall. That was ICI, and you had at
30:56
Speaker 2: the heart of Westminster, this institution that was thinking about
31:00
Speaker 2: how do we make the medicines, the pharmaceuticals, the chemicals,
31:04
Speaker 2: the explosives, the fertilizers, all of these things keeping the
31:08
Speaker 2: public alive and safe.
31:10
Speaker 1: And it was there, it was it was really close.
31:12
Speaker 2: We don't really have that mindset anymore, and perhaps we
31:15
Speaker 2: need to try and rediscover our kind of inner engineer,
31:18
Speaker 2: chemical engineer, but also kind of mechanical engineer, because we
31:21
Speaker 2: still need that stuff enormously and if we don't think
31:24
Speaker 2: of that stuff then other people will.
31:28
Speaker 3: Thanks for that, really appreciate it, really interesting. Thank you
31:31
Speaker 3: for joining us again. And by the way, everyone, if
31:33
Speaker 3: you haven't read edge Book yet, do please get it
31:36
Speaker 3: read it. And by the way, it's just been translated
31:38
Speaker 3: into French, so you haven't got any linguistic excuses anymore.
31:43
Speaker 3: Thanks for listening to this week's Marrying Talks Money. If
31:45
Speaker 3: you like us, share, rate, review, and subscribe wherever you
31:48
Speaker 3: listen to your podcast, and keep sending your questions or
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Speaker 3: at marrins w and John is John Underscore Stepic. This
31:58
Speaker 3: episode was hosted by me Marysimze. Web was produced by
32:00
Speaker 3: Somesadi and Moses and sound designed by Blake Maples and
32:04
Speaker 3: special thanks of course to Ed Conway.