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First Move with Julia Chatterley
Stocks Rise Even as the Federal Reserve Slows Stimulus Support; Nations Unite to Curb Fossil Fuels as President Biden tells OPEC Pump More Oil; Merck's COVID Pill Approved by U.K. Regulators. Aired 9-10a ET
Aired November 04, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:21]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
Taper time. Stocks rise even as the Federal Reserve slows stimulus support.
COP contradictions. Nations unite to curb fossil fuels as President Biden tells OPEC pump more oil.
And Merck's magic. The pharma giant's COVID pill approved by U.K. regulators.
It's Thursday. Let's make a move.
A warm welcome to FIRST MOVE, as always, and another busy show. As you will deduce, Patient Powell keeps Fed policy loose, but the Bank of England
closer to an interest rate boost. OPEC+ faces a world demanding more juice even as leaders plot to ensure their reliance is reduced. Today's COP 26
goal is phasing out the coal. We've got the latest, and in the meantime also the greatest lineup of green guests to keep you seduced, the E.U.
climate head Frans Timmermans and the Prime Minister of Barbados who is fighting to protect her nation from the impact of climate change and
demanding more from the world's biggest polluters, plus the cofounder and president of SES, a charged up company working on new generation batteries
to keep electric vehicles on the go for longer.
So from net zeros to stock heroes, U.S. markets remain at record highs, comforted I think by Jay Powell's assurances that rate hikes are still far
away even as the Fed reduces some of its bond buying support. Talented telegraphing, let's call it that. But will the Fed be forced to move
sooner? The market at least thinks so and we will discuss.
Europe in the meantime at records, too, and even within the past hour, the Bank of England defying expectations for a rate hike voting to keep policy
on hold. For now, all eyes now, on December's meeting. Lots to get to this Thursday. Let's get to our drivers.
And Jay Powell is patient, but on inflation, he is far from complacent. The rise in global prices alarming Central Bankers around the world, and a key
issue for U.S. voters this week, too. Christine Romans joins me now.
Great to have you with us. Taper telegraphing meant that stocks took this in their stride, but I think a unanimous decision from the Federal Reserve
Board members here that they simply had to act now.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, and I think you're absolutely right that it was well-telegraphed here. So you
have this new era, turning the page, there are so many different, you know, cliches to use here, but essentially the Fed is telling the world, it's
going to take its foot off the pedal, and it is eyeing inflation looking for that moment when it has to actually start tapping on the brakes, and
that will be sometime in the future.
The Fed also -- the Fed Chief also saying that he will be nimble -- he will be nimble if he has to, but doesn't exactly say what the parameters are for
them to start to taper more quickly right into next year.
So, I think all said, you had markets that were sanguine, frankly, about this decision and looking forward to record highs in the stock market, not
really big moves in the bond market here and on the inflation front. I mean, I think it's pretty clear that many of us, me included, I mean,
inflation has not -- it's lasted much longer and much, much deeper than I think many people thought several months ago.
But you know, Janet Yellen, the Treasury Secretary was very clear. Someone who had the Fed job actually, she said that, you know, we don't need to be
worried about like the 70s, that horrible stagflation that's why we worry so much about inflation is because the last time we really had it, it was
horrible. Listen to what she said.
(BEGIN VIDEO CLIP)
JANET YELLEN, U.S. TREASURY SECRETARY: We did see in the 1970s a series of supply shocks became a longer run problem as self-fulfilling prophecy,
but I certainly see no evidence that that's the case now. Inflation expectations remain well anchored.
(END VIDEO CLIP)
ROMANS: Well-anchored, and she says, you know, second half of next year, you'll start to see those inflation, those comparisons start -- the
inflation rates start to come down again a bit as well. So, just a lot going on, on this front and it's -- you know, the markets are taking it all
in stride.
CHATTERLEY: I mean, most of us don't remember the 70s quite frankly, and I think what a lot of families are facing today feels bad enough. I mean,
you've got some of these Board members, Raphael Bostic springs to mind that it's got a swear jar now in his Central Bank, every time someone says
transitory, he puts a dollar in the swear jar.
Do you think they're going to have to act quicker? Because as you said, actually, markets, investors took this in their stride, but the bond
markets are predicting three rate hikes in 2022. So even from very low levels, we could start to see in the face of higher prices and some of
those pressures, cost of things like mortgages, credit cards going up at the same time.
[09:05:21]
ROMANS: So Jay Powell said, "We need to be in position to act in case it becomes necessary," but he didn't say what the conditions were to make it
necessary to move more quickly, and I think that's on purpose. I think that gives the Fed breathing space. We have multiple things happening to drive
inflation here at the same time -- supply chain issues, you've got everybody consumers coming all out at the same time rushing after goods and
services, you've got a labor market shortage in the United States, so it is multiple wrinkles here that have fed into this inflation situation. Each
one of them could work themselves out on a different timeline.
So it's just -- I hate to use the word "unprecedented." It's like the word transitory, overused and I don't know, subjective but it is unprecedented.
CHATTERLEY: Swear jar. A dollar in there. Dollars for you. Thank you, Christine. Glad to have you with us.
We'll throw in energy prices there as well. It is one of the pressures and COP working on this, consigning coal to history. The U.K. says the end of
coal is in sight, as at least at 40 nations pledged to phase out its use. The coalition includes big coal users such as Poland and Vietnam, and comes
as COP 26 turns its focus to fuel and energy. Not signing up, China, which consumes more coal than the rest of the world combined.
Now, as top 26 nations plot the end of the fossil fuel era in the short term at least, many of the same countries are pressuring OPEC+ increase to
oil supply. Oh, the irony. The Alliance meets today as the Bank of America warns that $120.00 a barrel is on the horizon.
Eleni Giokos joins me now. Eleni, I'm sure the irony not lost in you either of the need to try and reduce our reliance on fossil fuels, but at the same
time saying, hey guys, OPEC+ members, you could keep the profits from oil prices and invest that into renewables. But hey, we'd rather use supply
more oil to the market and bring prices down.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Right. It's a paradox, isn't it? I mean, look, you've got COP 26 on the go. You've got big push
for everyone to commit to the climate change agenda, specifically, oil producing nations have really been pushed to make big commitments to help
themselves, but also the rest of the world wean themselves off fossil fuels.
Now at the same time, you have this commodity and you want to capitalize on the revenue while it's still around, while there's huge demand, but it's
not that simple.
OPEC+ countries are currently meeting to discuss the supply demand dynamics, and this is really important. It is coming at a really important
time. Crude prices have increased by over 60 percent this year alone. I want to take you back during the height of the pandemic, Julia, and I'm
sure you remember talking about crude prices dropping below zero, which was completely unprecedented, and now you have an oil prices sitting at levels
we haven't seen in seven years.
So OPEC+ countries want to try and get their books back on balance. It is an important time. They don't want to increase supply too dramatically.
They've committed to 400,000 barrels per month increases since August. Now, they're getting pressure from the U.S. India and Japan has also chimed in
as well saying OPEC+ countries need to assist. Why?
You've got an energy crunch and deficit that is occurring in the European region. You also have this playing out in the U.S. You have an increase of
petrol and oil prices, which of course, impacts households, it could derail the economic recovery, which many people by the way, didn't anticipate
would happen so quickly.
But Riyadh and the likes of Abu Dhabi are going to be taking consideration in terms of their economic ties and links to U.S. while this decision is
being made. However, many OPEC+ members have said, they are happy with the current state of the crude price, and they for now, are not willing to
budge. But I mean, the next few hours are going to be really interesting.
CHATTERLEY: Yes, and well put, Eleni. We shall see what comes of it the next few hours. So many challenges and not just about energy, the
geopolitics of this crucial, too.
Eleni Giokos there, thank you.
Another first in the fight against coronavirus. U.K. regulators have approved the world's first treatment for COVID in pill form created by
Merck. Elizabeth Cohen joins us on this. Elizabeth, great to have you with us. So, the British Health Secretary called it a day for the history books
that this is a game changer. What do we need to understand about this moment because it does feel like that?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Right, Julia. Let's talk about what's currently available for people in the early stages of
COVID-19. If you're in the early stages of COVID-19, at least in the United States, there's not a whole lot for you. There's monoclonal antibodies made
by Regeneron and other companies, and those do really work well, but at least in the U.S., they can be really hard to get because they have to be
given by a shot or given intravenously.
[09:10:05]
COHEN: This is a pill. Now, they've applied to the U.S. Food and Drug Administration for authorization and there is going to be a meeting on
November 30th among F.D.A. advisers to talk about this pill.
So the U.K. is sort of several steps ahead here. Let's take a look at the clinical trials that Merck did for this antiviral pill. What they found,
they had 762 clinical trial participants with early stage COVID-19. When they gave them a placebo, over time, 45 were hospitalized, and eight died.
When they gave them molnupiravir, the actual antiviral drug, 28 were hospitalized and zero died.
So you can see that when the even though these were split in half, you had far more hospitalizations, and far more deaths with the placebo group, you
didn't have any deaths with the molnupiravir group. So this data will be scrutinized by U.S. regulators. But you know, already U.K. regulators say
that they think that this ought to be in use. Again, very helpful because it's a pill. But remember, this is for early stage COVID. You have to get
to people early -- Julia.
CHATTERLEY: Yes. This is critical, and you also make the point with what else is available on the market. And clearly, as we've discussed on many
occasions, limited resources and expensive. Do we have any sense of how much this is going to cost? Obviously, it will be different for different
nations depending on who Merck is supplying, but any sense at this stage?
COHEN: You know, I think likely, Julia, it's going to be different for different countries. That's sort of been the way that this has worked
throughout the pandemic. The drugs are different prices for different countries. You know, hopefully this will be something where if it's
authorized in, for example, developing countries that they will get a very low price.
CHATTERLEY: Yes. Fingers crossed. Elizabeth, great to have you with us. Thank you for that. Elizabeth Cohen there.
COHEN: Thanks.
CHATTERLEY: Okay. Let me bring you up to speed now with some of the other stories making headlines around the world.
International diplomats are intensifying calls for a ceasefire in the East African nation of Ethiopia. One year ago, a government assault on forces in
the nation's Tigray region sparked a brutal war. The nation is now officially under a state of emergency as sources say Tigrayan fighters draw
closer to the capital.
And new reports by The Pentagon says China is expanding its nuclear arsenal much faster than previously thought. It estimates Beijing could have 1,000
nuclear warheads by the end of the decade. That's significantly higher than last year's projection of 400. China has defended its nuclear strategy and
says The Pentagon's report is biased.
Still to come on FIRST MOVE, broken promises. Barbados calls rich nations immoral for failing to deliver climate aid. An interview with the Prime
Minister is next.
And battery breakthrough. A GM backed startup unveils a battery that weighs less than a kilo, but can power a car. We speak to the CEO of SES. Stay
with us.
(COMMERCIAL BREAK)
[09:15:36]
CHATTERLEY: Welcome back to FIRST MOVE. The S&P and NASDAQ are on track for fresh all-time highs this Thursday. Investors seemingly pacified by
Powell. The Fed Chair saying U.S. rate hikes won't begin anytime soon, and the E.C.B., the European Central Bank mirroring that message today saying
high rates are unlikely even next year.
A different story in the United Kingdom, though, where rates could begin rising as soon as next month. They didn't act today despite expectations.
Investors' hopes for strong economies, robust profits, and rock bottom rates reflect in the VIX Volatility Index now hovering close to 52-week
lows. Wow, take a look at that.
But new challenges await markets soon. The U.S. releases its October non- farm payrolls report tomorrow, so we await that, too.
Now back to COP 26 and Smaller Nations Climate Conference came with a stern message for the world's largest polluters, pay more and move quicker. In
particular, Barbados in the Caribbean which generates less than one percent of world's emissions, criticizing which countries are missing a $100
billion a year target for funding climate action.
Prime Minister Mia Mottley says Barbados is suffering drought like conditions destruction of coral reefs, contamination of aquifers, and foul-
smelling seaweed from rising water temperatures. This year, Barbados was hit by its first hurricane in 66 years. And before that, a freak storm that
unleashed 45,000 lightning strikes in 90 minutes.
I spoke to the Prime Minister and the E.U. climate chief, Frans Timmermans, just a few moments ago.
(BEGIN VIDEOTAPE)
MIA MOTTLEY, BARBADOS PRIME MINISTER: I hope I was heard, I think that from the feedback that the message certainly is beginning to get home.
Whether we've made enough progress is a different story. I think we have made some, but some is not enough, and therefore, we will continue to be
able to make the sounds because if we don't reach 1.5 degrees above pre- industrial levels, we will literally face some very, very challenging times in our countries, ranging from shortages of water to excessive rainfall to
the destruction of life in our marine areas, to the literally destruction of aquifers with saltwater incursion.
So what is at stake is really our capacity to survive, as we know it, and not just small islands.
CHATTERLEY: It is life or death. I think that's the message that you came with. Vice President, your assessment of the announcements that have been
made. I mean, we've got a litany to tackle methane gas, to tackle our reliance on coal, a declaration to tackle deforestation over the coming
years. What do you make of what we've seen so far?
FRANS TIMMERMANS, EUROPEAN UNION CLIMATE POLICY CHIEF: Well, at least a sense of urgency has increased. Leaders are now saying things that Greta
Thunberg was saying four years ago. So that's progress, I guess. And I have to say, Prime Minister Mottley, she impressed the hell out of everyone with
her speech at the United Nations, which was extremely powerful, and has increased a sense of urgency across the board, that in the Caribbean, we
have specific challenges that need to be addressed. And that can only be addressed by the countries in the region, we all have to take that
responsibility. And she is a leader who doesn't just point to the problems, she also comes with some very constructive solutions.
CHATTERLEY: Prime Minister, come in here because you were impressive, but I think part of the problem is commitments are made and then we don't see
the follow through, and I think you were one of the loudest voices saying, hang on a second, $100 billion has been promised for the transition and to
mitigate the impact of climate change. And the some of the richer nations are saying look, sorry, but we're not going to give you the money until
2023. It's a commitment, and then it's a broken promise.
MOTTLEY: Yes, well, as you said, we've been waiting for this to come to fruition for some time, and it is still not going to come until 2023. I
have -- and hope to discuss with the others parallel opportunities that are not necessarily part of that $100 billion, because as I said on Monday,
$100 billion is not going to be enough to really do the kinds of transitions that we need.
And the other problem that we have is not just quantum of money, but it's the time to execute, and the third problem is access to fiscal space. If
governments don't have the fiscal space, no matter how much you make money available to them, they can't receive it. They can't borrow it because
they're highly indebted and that's where the justice of the situation comes in because this is the equivalent of you dumping in your neighbor's yard
and then telling your neighbor, he has to clean up, and the money that he had put down to pay rent or mortgage or to buy food are to do things around
the house, he can no longer do it, because he has to clean up the yard.
[09:20:23]
MOTTLEY: So it's fundamentally immoral, it is fundamentally unjust. And that is why we're saying, look, some of this has to be grants, some of this
has to be blended finance, some of it has to be to the private sector. But what's more importantly, is the essence of speed. Because if you take two,
three, four years to do this, and the adaptation has to happen, 1.5 is scheduled we believe, anywhere from 12 to 15 years, and it's not a case of
us starting to see consequences at 1.5 because we are seeing consequences or like, no, you're seeing it in Europe, we're seeing it in the Caribbean
and the Pacific Ocean, the Indian Ocean. So this is a complex, complex exercise that is not pausing to allow us to catch up, and that's the key
point.
CHATTERLEY: Vice President Timmons, I know we all agree here, the G20 came into these meetings, having had discussions or discussions about
perhaps some deficit allowance for climate spending, some debt relief for climate spending, because everything the Prime Minister makes sense is
certainly saying here, it makes sense to me and resonates with me, you've got to buy time and allow fiscal space in order to spend to meet the needs
of climate change.
TIMMERMANS: Yes, I think we're all faced with that challenge, but particularly in countries that don't have the means, especially in
adaptation. So what I want to push for in the next days and weeks at Glasgow is that first of all, we get to the $100 billion even quicker than
that was announced earlier.
So we really have to increase the efforts to get there very quickly. Secondly, to make sure that enough of that money is spent on adaptation,
because I believe in mitigation, which is actually reducing the emissions. The private sector is well and ready. But on adaptation, the private sector
is slightly more reluctant. So we will need more public funding for that part of our task.
CHATTERLEY: Prime Minister, I can hear you agreeing with that. There are two things that need to be financed here, adapting to the impact of climate
change, and then the mitigating steps that we take beyond.
MOTTLEY: Yes. I think one of the things that we need to do in addition to access in the public funding is that we need to look at what other market
instruments are necessary to be able to crowd in more money. So for example, our private sector is not necessarily the most -- how do I put it
--
CHATTERLEY: Able.
MOTTLEY: They are more risk averse than we would probably like, and the depth of resources is not there because of the size of our economies. So we
have to marry that with foreign capital, and it is critical for the marriage because you can't have foreign capital coming in alone to do some
of these projects.
But what we're finding is that we have to find ways of de-risking some of the investments. So, whether it is the use of guarantees, or whether it is
the use of private equity, with first loss being taken by entities like the Green Climate Fund, these are the things that will make investments that
are other ways too small, or not necessarily looking too good, but are absolutely critical for the adaptation that has to take place if we are to
learn to live in a post 1.5 world.
And may say, it starts with us. But you know, this is going to affect New York, it is going to affect Miami, it is going to affect all cities across
the developed world ultimately. And that's why we say, we are the canaries in the system. And if you don't get us right, you're putting yourselves at
greater peril.
CHATTERLEY: Yes. You're right. It's coming to everybody. You may be facing it first, but it's coming to everyone.
MOTTLEY: That's right.
CHATTERLEY: What you mentioned there as well, I think was quite fascinating about the need to have greater access to financing of different
kinds. The U.K. government announced that they hope to become the heart of green financing for the world. What did you make of that announcement?
MOTTLEY: Well, look, I mean, we hope that we can see opportunities for access for all of our people, whether it's in the U.K., whether it's in the
U.S., whether it's in China, whether it's in Europe, what matters is the access now, and I'm happy that they have that ambition, because with that
ambition, hopefully they'll have passion, and they'll begin to understand the urgency of time.
One of the problems with small island developing states is that we don't necessarily have the depth of capacity to be able to process and to do
complex applications, and it's one of the things that we have been in discussions over the years with the E.U. saying, look, we can't have a one
size fits all prescription because a country like Tuvalu can't do the same kind of analysis as Ghana.
And therefore, we have to be able to streamline instruments, and we also have -- even with risk, we have to ensure that risk is appropriate -- that
our actions are appropriate to the risk and one of the things therefore has to be to deconstruct the entire application process that allows people to
have access to the funds, recognize the absence of fiscal space, and hence the need for blended finance as much as possible and crowding in other
persons.
[09:25:16]
MOTTLEY: And then at the same time, there's some nontraditional mechanisms once you're hit with a climatic event, like the inclusion, for
example of natural disaster clauses.
Barbados is now the largest issuer of bonds with natural disaster clauses in the world, and what does that allow us to do? That if we really get hit
by a serious event, then we are in a position to suspend our principle payments for that, as well as to suspend our interest, but recapitalize the
interest at the back end. We accepted the recapitalization of interest. But quite frankly, I've always felt that there ought to be some haircut on the
interest too, because if we're going to share the burden, then the burden should be shared by all including those owners of capital.
CHATTERLEY: Yes, I mean, there's so many good ideas in there. And Vice President come in here, because I do see many inconsistencies. I read
recently, I.M.F. data that suggested that there are $11 million dollars spent a minute on subsidizing fossil fuels. We're making agreements to
effectively put some of the OPEC players out of the oil business, but we're also at the same time demanding in the short term, at least, they pump more
oil.
Barbados, and Prime Minister, I understand your issues there, but at the same time, you rely to a large extent on tourism, which has a carbon
footprint of its own. I do feel like we sort of want it all, can we have it all?
MOTTLEY: Yes, we can't. But the truth is, we have to do some balancing. And that's why it's a complex issue. Look, we're going to need some kind of
bridge and fuel probably, and the world is seeing it now, you're seeing it in Europe with the increase in energy price and the access to natural gas.
The question is, we know coal has to go. But then we know that we still have to have bridging fuels until we can get the capacity for renewable
energy, if not, people will have no energy, and that's clearly just as bad as having the wrong energy.
So we really need to do the kind of detailed drilling down work to see how best we can deal with it. And I know that there is a perspective among some
countries, that to ask them to abandon completely all of the fossil fuels, including the natural gas, which is the cleaner of the fuels, that that
will literally cement them into poverty. So that, this is a very complex discussion and we have to be able to come to the table recognizing that
there are going to have to be some kind of compensatory frameworks or some other alternatives into new research, even with respect to cruise ships,
and the airline industry in order to be able to reduce the footprint because quite frankly, I don't see the world going back into silos.
We didn't go back into silo and a pandemic, we're not going to go back into silos because once interconnected, it's likely to stay. But I have
confidence, as I've said elsewhere, that we will find fuels that can work.
Five years ago, if you were running fast ferries, you would be using marine gas oil. Now, you can use some form of LPG. And the question is, will we be
able to use hydrogen or other things that will have perhaps a much lesser carbon footprint, but can be as effective in moving people.
CHATTERLEY: You make the point that we have to move forward and we're all moving forward together. Vice President, final word, please, your view?
TIMMERMANS: Well, you know, we need to understand that this is an Industrial Revolution of a bigger scale than the first Industrial
Revolution that took a hundred years to be materialized. And now we need to change the world, at every place in the world, within one generation, which
is a most daunting challenge humanity has ever faced.
But the good news is we can do this, but we need to rethink our instruments. Just imagine the international financial institutions were
created for the world of 1945, not the world of today. So, we need to reimagine our instruments, reimagine the things we can do. And if we do
that, I'm sure we can come out of this stronger and better.
CHATTERLEY: I am glad that you both are involved in leading the discussion. Thank you. Thank you for your time.
MOTTLEY: Thank you. Thank you very much.
CHATTERLEY: Great to have you with us and hope we can speak again soon.
TIMMERMANS: Thank you.
(END VIDEOTAPE)
[09:32:29]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. investors hoping for a triumphant Thursday. Tech stocks, as well as the S&P 500 are at fresh
records. U.S. small caps meanwhile scaling new heights, too, a sign, I think of investor confidence in future economic growth. The Russell 2000
currently up some 22 percent year-to-date performing better even than the large cap Dow Index.
Meanwhile, Merck shares higher in early trade, as we've already discussed, the U.K. has just approved its antiviral pill for COVID. The first COVID
treatment in pill form to get regulatory approval. Shares of COVID vaccine maker in the meantime, Moderna are falling after cutting its vaccine sales
forecast and reporting weaker than expected Q3 results. Once again, context always key. Moderna is still up more than 200 percent year-to-date. There's
a look at the share prices since January.
The push to phase out coal power is one step closer after major consumers including Ukraine and Chile made up pledges at COP 26. But exactly how will
it all be implemented, such a crucial question. Phil Black has more from Austria, which has now closed its coal fired plants.
(BEGIN VIDEOTAPE)
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT (voice over): Two power stations near the Austrian city of Graz. The one on the left is retired, a
silent monument to a recent time when the country burned coal for some of its electricity.
The neighboring, shiny, new gas-fueled facility now does the work. The upgrade is significant. Austria is one of only three countries in Europe to
they shut down all coal-fired plants. Replacing coal with natural gas isn't carbon free, but it's a step in the right direction.
CHRISTOF KURZMANN-FRIEDL, MANAGES POWER PLANT: The footprint of this power plant is much lower than this footprint.
BLACK (voice over): About 60 percent lower. But gas can only be an interim move if Austria is to achieve its green power ambitions. Christof
Kurzmann-Friedl manages this site.
BLACK (on camera): Austria wants to be one hunted percent renewable by 2030. Does that mean this will close down by 2030?
KURZMANN-FRIEDL: I'm not sure.
BLACK (voice-over): Austria embraced a big renewable energy source decades before the first warnings about climate change. Most of its
electricity comes from hydro power.
MICHAEL STRUGL, CEO, VERBUND: We also have to build new capacity in solar power and wind power, as well.
BLACK (voice over): Michael Strugl, the CEO of Austria's largest energy company, says even with a big head start from hydro, getting to 100 percent
renewables in under a decade won't be easy.
[09:35:08]
STRUGL: It's ambitious, for sure.
BLACK (on camera): And you don't necessarily have all the answers yet?
STRUGL: Yes.
BLACK: But it's important to try.
STRUGL: We do not have all the answers. We have to do research. We have to put strong efforts on innovation, as well.
BLACK (voice-over): Much of the research, innovation, and hope in Austria is focused on green hydrogen. The basic idea is on windy or sunny days, you
use excess electricity to make hydrogen gas, which can be stored or transported.
Then, when it's cloudy, or the turbines aren't spinning, you turn the hydrogen back into electricity, using a clean chemical reaction.
MARKUS SARTORY, RESEARCH AND PROJECT MANAGER, HYCENTA HYDROGEN CENTRE AUSTRIA: We have many questions to solve.
BLACK: Markus Sartory is a project leader at Hydrogen Centre Austria.
SARTORY: Of course, it's a very complex system, but we have the possibility to incorporate the renewables and to build up new, sustainable,
green energy system. And this is -- this can be done with actual technologies, but it will cost us.
BLACK (voice over): At the power station in Graz, hydrogen's potential is being tested with a pilot project. The possibilities are vast, so are the
challenges.
BLACK (on camera): It's a potential game-changer. Do you think?
KURZMANN-FRIEDL: I do think, yes.
BLACK: And, crucially, there's still so much work that needs to be done ...
KURZMANN-FRIEDL: Yes, you're right.
BLACK: ... if it's to arrive at scale, because it's just too expensive right now.
KURZMANN-FRIEDL: It's too expensive. But we have to do the first steps. And this is one of the first steps.
BLACK (voice-over): Austria's coal habit was pretty modest, compared to some other European countries. Poland, for example, still mines and burns
it for around 80 percent of its electricity.
And, yet, even with Austria's strong starting position, early commitment, and willingness to innovate, the ultimate success of its low carbon
transition is still uncertain.
Phil Black, CNN, Graz, Austria.
(END VIDEOTAPE)
CHATTERLEY: We've got to do the research and we've got to share the research, too. And just a reminder of why these kind of dramatic steps are
needed, in South America, the Parana River has reached its lowest levels in decades due to a severe drought.
The crisis is disrupting energy production and commerce, and environmentalists say climate change is contributing to the problem as
CNN's Rafael Romo reports.
(BEGIN VIDEOTAPE)
RAFAEL ROMO, CNN CORRESPONDENT (voice over): Winding through three different countries, the Parana is the second longest river in South
America after the Amazon. It flows for nearly 4,900 kilometers, 3,000 miles through Brazil, Paraguay, and Argentina. The Parana not only provides water
for all three countries, it's a crucial waterway for Paraguay's commerce, according to the country's Director of the River and Ocean Navigators
Association.
But since April, that commerce has been dead in the water due to the river's low levels.
"The impact to the Paraguayan foreign trade is very important," Munoz says because 96 percent of this commerce is done through the waterways. The
problems caused by the low water levels go beyond commerce. The Parana feeds two crucial hydroelectric plants Itaipu which provides power to both
Paraguay and Brazil, and Yacyreta, which is shared with Argentina.
Lucas Chamorro, a chief engineer at Yacyreta says during the Southern Hemisphere's past winter, the Parana had its lowest water levels in more
than 50 years, which meant a 25 percent decrease in the power plant's ability to produce energy.
Maria Jose Villanueva, a leader for World Wildlife Fund Mexico, an environmental organization says drought conditions are affecting a wide
swath of Latin America and explain serious problems like increasing wildfires in Brazil's Amazon.
MARIA JOSE VILLANUEVA, WORLD WILDLIFE FUND MEXICO: This is something that we're seeing exacerbated along the region in Mexico to Argentina, the lack
of rainfall that is caused by climate change, but it's also exacerbated by the different drivers like land use, degradation, deforestation, and over
exploitation of aquifers.
ROMO (on camera): Are there any other explanations different from climate change?
VILLANUEVA: Droughts have happened all across the human and nature of the Earth's history. However, climate change is exacerbating the periods of
lack of rainfall.
ROMO (voice over): Last year, NASA published a map of severe drought conditions in South America showing parched land in dark red.
Earlier this month, local media reported that unusually powerful sandstorms had left at least six people dead in Brazil, a situation caused in part by
severe drought conditions grappling the country's southeast.
[09:40:10]
ROMO (voice over): And back in May, a surreal scene developed in Northwestern Mexico. For the first time in more than three decades,
residents in a town in Sinaloa State were able to visit the tombs of loved ones in a cemetery that had been underwater after a dam was built there in
1987. The country was going through one of its worst droughts in recent memory.
In April, Mexico's Water Authority reported 75 percent of its territory was experiencing moderate to exceptional drought conditions.
ROMO (on camera): A report by the Washington based American Society and Council of the Americas published over the summer stated that abnormally
dry conditions in Argentina, Brazil, Mexico, and Paraguay threaten water reserves and economic recovery, a situation that may not reverse itself
experts say, unless factors like deforestation, illegal mining, and over exploitation of natural water resources are halted.
Rafael Romo, CNN, Mexico City.
(END VIDEOTAPE)
CHATTERLEY: Okay, coming up on FIRST MOVE, a new battery that weighs less than a pineapple, but can power a car. Sounds juicy? Well, we'll discuss,
next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE into a battery breakthrough for the EV industry. The GM backed startup, SES, has unveiled a lithium metal
battery big enough to power a car. Lithium metal batteries are lighter than the traditional lithium ion ones and denser, effectively doubling the range
of an electric car, the company says.
SES also announced a new giga factory in Shanghai to produce the batteries, which it says will be in cars by 2025. Here to discuss is Qichao Hu. He is
cofounder and President of SES. Great to have you on the show. We've given our viewers a little taste of what this battery can mean. Just talk us
through what makes it so transforming in your mind.
QICHAO HU, COFOUNDER AND President, SES: Yes. Thanks for having me. And today there is this race among global carmakers really to be the first to
put next generation lithium ion batteries inside a car because it offers three things -- longer range, safer, and also essentially, lower cost. And
today, we showed this large 100 power lithium metal battery. It is the world's largest lithium metal battery ever and it's also the world's first
100 power lithium metal battery and this really is a major milestone for the automotive industry.
So, we and also our car maker partners are very excited about this.
[09:45:13]
CHATTERLEY: I want to get excited, too. But we need some more comparisons. You're saying it's a lot lighter, you're saying that it can go
around double the distance. What is the cost to produce this relative to a lithium ion battery? What's the timing to charge this battery? Can you give
us all the comparisons for what we're currently seeing on the market today?
HU: Sure. So, one example is look at the GM Hummer EV today powered by lithium ion. That can go 300 miles. If you keep everything the same using
lithium metal that can go 500 miles and then charge, these batteries are capable of being charged from 10 percent to 90 percent in 12 minutes, so it
can do fast charge and also significant increase in range.
CHATTERLEY: Price?
HU: Price-wise, we expect the final cost of battery to be lower than the conventional lithium ion using the same cathode. Actually, lithium metal
battery about 60 percent of the manufacturing process is quite similar to lithium ion. So cost-wise, we also expect that to be lower than lithium
ion.
CHATTERLEY: Okay, and the other question, I think, would be is we see the world trying to scale up charging infrastructure, one of the critical, I
think, hurdles for seeing greater adoption for electric vehicles, will you be able to charge this battery at what's being traditionally used and
created as charging stations for lithium ion batteries?
HU: Absolutely. Absolutely. Lithium metal and lithium ion will share the same charging infrastructure, yes.
CHATTERLEY: Okay. This is good news. So you had a quote, and they loved it, you said, look, we don't need another battery breakthrough. We need a
battery breakthrough that gets batteries actually out there produced and in the market.
You've also, as I mentioned, created this giga factory. Talk about how quickly you can scale up because I know you recently decided to go public.
So, you've got more money and the kitty now as well to spend. How quickly can we get these batteries to those that you've tied up with and get them
on the market?
HU: Yes. I think the one benefit about this lithium metal is more than half of this is lithium ion. So that means we can actually scale this up
fairly quickly. And I think our timeline is probably the most aggressive out there. But then we back it up with actual milestones.
And then today, we show this large battery, and this is a major milestone in this roadmap, and we expect to have A sample next year and then B sample
'23. C sample '24. So, start of production '25. That's the whole plan.
CHATTERLEY: I've read recently that I know you're working with GM and Hyundai that you would have vehicle ready cells to those companies for road
testing by the end of this year. Can you stick to that timetable? Is that correct?
HU: Yes. Absolutely. So, we just unveiled this battery at our Battery World, right? And then this really is a real battery. So this will go to GM
and Hyundai for testing now. Yes, absolutely.
CHATTERLEY: Okay. And you mentioned as well that you're at the forefront of this industry. I was just looking at some of your competitors like SK
Innovation, LG Energy Solutions, and their timeframe is sort of 2025 to 2030. How important is being the first mover and a first mover advantage in
this space, in your mind?
HU: Very important, and I think especially for a newcomer, if you're not the first, then really you shouldn't be there. For larger companies they
can afford to be to be second, but as a newcomer, you really have to be the first and one big advantage that we have compared to the established
players like SK, CHL is focus, and also the lack of legacy. We don't do any lithium ion batteries, the only thing that we do is lithium metal. And all
of our resource is focused on this, whereas the larger cell suppliers, they actually do a lot of LiB -- lithium ion batteries. So we are much more
focused on this, and I'm pretty confident that we will be the first to commercialize this.
CHATTERLEY: What's going to be the biggest challenge?
HU: So, I think the biggest challenge is actually lots of small things, lots of small details. And then anytime you try to build a real, large
scale, manufacturing company, just a lot of things could go wrong -- supply chain, quality control, performance, integration to the vehicles, the final
consumer, the data collection, the software -- a lot of things could go wrong, just a ton of small things.
CHATTERLEY: But that you are clearly thinking about them. So, it's a case of watch this space. Come back and talk to us soon, please. Fantastic to
hear about your technology.
HU: Thank you.
CHATTERLEY: Qichao Hu, thank you so much. The cofounder and the President of SES.
HU: Thank you, Julia. Thank you.
CHATTERLEY: Thank you. Great to chat.
Okay, coming up next, the most widespread outbreak there is since the virus began, China sticks to its zero COVID policy in the face of rising
infections. What does that mean for the rest of the Asia Pacific region? We'll discuss. Stay with us.
(COMMERCIAL BREAK)
[09:52:21]
CHATTERLEY: Welcome back to FIRST MOVE. China is determined to maintain its zero COVID policy even as other nations in the Asia Pacific region ease
restrictions. China is currently dealing with the most widespread outbreak since COVID began back in 2019. The number of infections is extremely small
compared with other parts of the world and this is a critical point, but it's still too high for China's standards.
CNN's Kristie Lu Stout reports on the drastic containment measures which put China at odds with the rest of the region.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT (voice over): "California Dreaming" in China, Chinese social media influencers pose at a Costco in Shanghai to
pretend they're in Los Angeles. A vivid reminder of how long China has been sealed off from the rest of the world.
For nearly two years, most people in China have been unable to travel abroad due to harsh and lengthy quarantines upon return, as well as limited
flights and some delays in visa processing. The country is sticking to a zero COVID strategy determined to eliminate the virus within its borders,
despite fully vaccinating more than 75 percent of the population.
STOUT (on camera): Hong Kong with its fate closely tied to China is also in a sort of coronavirus purgatory, with many of its residents, especially
expats waiting for the city to reopen just as the rest of the region is opening up.
STOUT (voice over): On Monday, South Korea took its first step to what they are calling a return to normal life, despite reporting thousands of
new cases every week. It is easing restrictions like lifting curfews and allowing some social gatherings.
In Tokyo, curfews were lifted for bars and restaurants at the end of October, despite hundreds of new cases reported across Japan each day.
Thailand, on Monday, started to welcome fully vaccinated travelers from low risk countries without quarantine.
Also on Monday, Sydney and Melbourne relaxed its border controls for citizens and permanent residents who are fully vaccinated. Fiji plans to
reopen to fully vaccinated tourists on December 1st.
Indonesia's resort island of Bali has reopened for some international arrivals, while New Zealand has abandoned its COVID-19 elimination
strategy, and Singapore has also embraced living with the virus.
The region's shift away from zero COVID follows generally high vaccination rates. Despite a slow vaccine rollout countries including Australia, Japan,
South Korea, and Singapore are now among the most vaccinated in the world per capita.
China, the country where the virus was first detected is the only country in the region still chasing zero COVID and it doesn't appear restrictions
will ease anytime soon as the Beijing Olympic Games edge closer, and President Xi Jinping pursues an unprecedented third term in power.
[09:55:04]
YANZHONG HUANG, SENIOR FELLOW FOR GLOBAL HEALTH, COUNCIL ON FOREIGN RELATIONS: To ensure a smooth transitioning of the leadership, then that
policy might be sustained through late next year.
STOUT (voice over): With most overseas travel no longer viable, Chinese officials have promoted domestic tourism instead, but with the highly
infectious delta variant, that too is risky.
A single confirmed case recently sent Shanghai Disneyland into temporary lockdown, and yet many Chinese netizens praised the government and Disney
for what they see as an effective response.
One writes, "Although a pity, this is Shanghai's speed with timely detection and control."
In zero COVID china, Disneyland can go into snap lockdown, and influencers pretend they're in LA.
Kristie Lou Stout, CNN, Hong Kong.
(END VIDEOTAPE)
CHATTERLEY: Okay, that just about wraps up the show. If you have missed any of our interviews today, they will be on my Twitter and Instagram
pages. You can search for @jchatterleyCNN.
In the meantime, stay safe. "Connect the World" with Becky Anderson is next, and we will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
