Latest / Trumponomics / Will Trump’s Bill Trigger a ‘Big, Beautiful’ Energy Crunch?

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Will Trump’s Bill Trigger a ‘Big, Beautiful’ Energy Crunch? · Trumponomics

• 0:02
  Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is not the
• 0:09
  Speaker 1: death of the US renewable energy industry in the United States,
• 0:12
  Speaker 1: but it is a major setback.
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  Speaker 2: I'm Stephanie Flanders, head of Government and Economics at Bloomberg.
• 0:25
  Speaker 2: Welcome to Trumponomics, the podcast that looks at the economic
• 0:29
  Speaker 2: world of Donald Trump. Now he's already shaped the global economy,
• 0:32
  Speaker 2: and what on earth is going to happen next? This
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  Speaker 2: week we're talking about the big Beautiful assault on renewable energy.
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  Speaker 2: Will the Republican megabill pass last week bring on a
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  Speaker 2: new American energy crisis? What could be the impact on
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  Speaker 2: electricity bills, the broader economy, and America's leadership in the
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  Speaker 2: race for artificial intelligence. We're recording this on Tuesday, the
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  Speaker 2: eighth of July. And of all the elements of the
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  Speaker 2: one Big Beautiful Bill, as Donald Trump called it, that
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  Speaker 2: he signed going into the July fourth holiday, one I
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  Speaker 2: find particularly hard to get my head round is the
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  Speaker 2: decision to get rid of tax credits for clean energy.
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  Speaker 2: As a result of that, wind and solar projects will
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  Speaker 2: cost more and more likely there will be a lot
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  Speaker 2: fewer built. In fact, in an analysis this week, a
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  Speaker 2: climate policy think tank called Energy Innovation forecast that the
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  Speaker 2: bill would put an end to three hundred gigawatts of
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  Speaker 2: wind and solar projects that would have otherwise come online
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  Speaker 2: in the next fifteen years. That's the equivalent of about
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  Speaker 2: three hundred nuclear reactors. Now, obviously that set back the
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  Speaker 2: fight against climate change and the decarbonization of the US economy.
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  Speaker 2: And that may not be much of a worry for
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  Speaker 2: the supporters of the big bill, but there could be
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  Speaker 2: more concern about another very likely consequence, higher electricity prices.
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  Speaker 2: That matters for voters facing rising utility bills, but it
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  Speaker 2: also matters for tech firms chasing the next breakthroughs in AI.
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  Speaker 2: The country that reigns supreme in AI will rule the world.
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  Speaker 2: Everyone seems to think that these days, including Donald Trump.
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  Speaker 2: In fact, you might remember on the day after his
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  Speaker 2: inauguration he announced the creation of Stargate, a project to
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  Speaker 2: expand AI infrastructure in the US.
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  Speaker 3: But to announce the largest AI infrastructure project by far
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  Speaker 3: in history. And it's all taking place right here in America.
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  Speaker 3: As you know, there's great competition for AI.
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  Speaker 2: And projects like Stargate need electricity, lots of it, And
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  Speaker 2: in fact, that's part of the reason electricity demand in
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  Speaker 2: the US is rising faster now than it has at
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  Speaker 2: anytime in the last twenty years. The tax credits in
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  Speaker 2: the Inflation Reduction Act on the President Biden helped the
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  Speaker 2: US keep up with that rising demand in theory by
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  Speaker 2: making clean power sources cheaper. Investments in wind, solar, and
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  Speaker 2: battery storage had spiked in the years after the IRA
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  Speaker 2: was passed, But now the Big Bill has changed all
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  Speaker 2: that and a lot of people including me, scratching their
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  Speaker 2: heads wondering what the plan is now. And this week
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  Speaker 2: I'm delighted to say I'm in the Washington Studio with
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  Speaker 2: two guests who have a good perspective on this topic
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  Speaker 2: and can help me think through the consequences for the
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  Speaker 2: US economy. First up, Ethan Zindler, the head of Country
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  Speaker 2: and Policy Research at Bloomberg NEF. That's the part of
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  Speaker 2: Bloomberg Research that's focused on the energy transition. And we
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  Speaker 2: should say that before joining US, Ethan served as Climate
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  Speaker 2: Counselor to the US Treasury Secretary of Janet Yellen from
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  Speaker 2: July twenty twenty three to January twenty five, so he
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  Speaker 2: was across a lot of policy efforts then, including helping
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  Speaker 2: to write and implement the Inflation Reduction Act.
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  Speaker 1: Welcome Ethan, thanks for having.
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  Speaker 2: Me and also with us Emily Bernbaut, who's a Bloomberg
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  Speaker 2: reporter here in DC who covers corporate lobbying and influence.
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  Speaker 2: Thank you so much for being on Trumpenomics. Emily.
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  Speaker 4: Thank you.
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  Speaker 2: So people will have heard quite a lot about that bill,
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  Speaker 2: but it's probably useful to just take stock of how
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  Speaker 2: that turned the tables for the renewable industry. What are
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  Speaker 2: the species measures that are going to be painful for
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  Speaker 2: that part of the US energy industry.
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  Speaker 4: There was a lot of last minute wrangling over the
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  Speaker 4: details of what this bill will do to the clean
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  Speaker 4: energy industry. The top line is that it's very bad.
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  Speaker 4: It's not as bad as it could have been. What
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  Speaker 4: ended up in the bill was pretty aggressive timelines for
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  Speaker 4: phasing out tax credits. But elements of the bill would
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  Speaker 4: encourage companies to begin construction over the next year, and
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  Speaker 4: if they're able to do so, it's likelier that they'll
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  Speaker 4: be able to get some of these important tax credits.
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  Speaker 4: But overall, they're going to have to begin construction very quickly,
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  Speaker 4: and these tax credits are going away on a more
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  Speaker 4: aggressive timeline than had initially been anticipated.
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  Speaker 2: Yeah, And that was what was interesting, because when it
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  Speaker 2: went from the House to the Senate, there was some
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  Speaker 2: expectation that the Senate would want to extend the time
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  Speaker 2: frame a little bit. The investments that drawer have been announced,
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  Speaker 2: give them a bit more time to get up and running.
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  Speaker 2: But if anything, the bills seemed to get worse.
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  Speaker 4: Yes, and at the last minute there was something that
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  Speaker 4: would have dealt a huge blow to the industry, which
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  Speaker 4: was this excise tax. There was basically panic in the
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  Speaker 4: industry and among moderate Republicans who said this excise tax
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  Speaker 4: would so dramatically increase costs for solar and wind projects,
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  Speaker 4: it would effectively make it untenable for a lot of
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  Speaker 4: these projects to move forward or begin construction. So right
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  Speaker 4: before the Senate passed it, they removed the excise tax,
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  Speaker 4: which is a huge relief, but they still are dealing
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  Speaker 4: with pretty aggressive phase outs.
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  Speaker 2: Ethan, you were saying just before we started that even
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  Speaker 2: though parts of the renewables industry was kind of breathing
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  Speaker 2: a sigh of relief or having at least dodged that
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  Speaker 2: particular bullet, not having this extra tax that the administration
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  Speaker 2: has already of vindicated that it's not done with the
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  Speaker 2: renewable industry. Yet what happened earlier this week.
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  Speaker 1: Yeah, things have kind of gone from bad to worse,
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  Speaker 1: even within the last less than twenty four hours. Basically,
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  Speaker 1: there's been some real questions about whether projects could qualify
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  Speaker 1: so long as they were quote unquote under construction, and
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  Speaker 1: the irs historically is to find under construction fairly liberally.
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  Speaker 1: And yesterday the White House issue to executive order basically
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  Speaker 1: saying that they are ordering the Treasury Department within the
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  Speaker 1: next forty five days to rewrite that rule, and if
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  Speaker 1: they do that in such a way, they can make
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  Speaker 1: it very challenging for projects to qualify. It is not
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  Speaker 1: even beyond the realm of the possible that they would
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  Speaker 1: write something that is essentially retroactive and effectively make it
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  Speaker 1: much more challenging for projects to actually be able to
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  Speaker 1: qualify for the credit. So, from our perspective at Bloomberg
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  Speaker 1: f we're trying to go back and sharpen our pencils
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  Speaker 1: and try and think about how much stuff is going
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  Speaker 1: to get built. But I think the one thing that's
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  Speaker 1: pretty clear as of this morning is that many who
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  Speaker 1: are in the wind and solar and storage industry are
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  Speaker 1: probably scrambling to get as much stuff as they can
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  Speaker 1: essentially under construction at this very moment, while they are
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  Speaker 1: concurrently probably lobbying the Treasury Department about what this new
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  Speaker 1: regulation is going to look like.
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  Speaker 2: I'm going to come back to you on some of
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  Speaker 2: the dynamics on the hill, But Ethan, let's just step back,
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  Speaker 2: and I know that's what Bloomerginny f likes doing. They
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  Speaker 2: tend to do the twenty five year horizons consider to
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  Speaker 2: be quite short term. But if you do take that
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  Speaker 2: kind of longer term, you know what has been happening
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  Speaker 2: to energy demand and electricity demand within that in recent years?
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  Speaker 2: And what was you know, until this bill, what was
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  Speaker 2: that basic plan for meeting it?
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  Speaker 1: Yeah, So the United States, like other wealthy developed countries,
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  Speaker 1: has been able to grow its economy without growing demand
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  Speaker 1: for electricity. Really for twenty years, essentially, we've had flat
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  Speaker 1: demand overall, largely because of energy efficiency improvements and new
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  Speaker 1: technologies and the desire to save costs. The last couple
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  Speaker 1: of years that started to change, and we think that's
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  Speaker 1: going to continue to change going forward. The number one
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  Speaker 1: driver in the short run has been AI and the
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  Speaker 1: demand from new data centers. We also think electric vehicles,
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  Speaker 1: as you look further out, are going to start to
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  Speaker 1: play a much bigger role as well. In the US,
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  Speaker 1: we think we're going to see demand for electricity double
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  Speaker 1: from about forty one hundred tarawad hours at the moment
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  Speaker 1: up over six thousand by the time you get to
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  Speaker 1: twenty fifty overall, and by twenty thirty five, we think
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  Speaker 1: that about eight percent of capacity in the United States
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  Speaker 1: is going to go specifically to powering data centers, which
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  Speaker 1: is a really considerable portion overall. One other quick just
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  Speaker 1: note in terms of trends, is that really over the
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  Speaker 1: last ten years or fifteen years or so, the US
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  Speaker 1: has really been rapidly decarbonizing our power generation sector. We
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  Speaker 1: went from about half our power coming from coal to
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  Speaker 1: well under twenty percent as the last year, could be
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  Speaker 1: even under fifteen percent this year depending on conditions. And meanwhile,
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  Speaker 1: renewables have grown from almost nothing to about twenty percent
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  Speaker 1: of generation. Nuclear is about twenty percent, so we're about
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  Speaker 1: forty percent zero carbon here, and the natural gas is
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  Speaker 1: a huge part of the story, which is a lot
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  Speaker 1: cleaner than coal overall. So the general trend has been
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  Speaker 1: towards cleaner sources of energy going forward. And if you
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  Speaker 1: look at what's gotten built in the last several years
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  Speaker 1: and what would get built in the next several years
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  Speaker 1: in terms of purely cost, it's renewables. The vast majority
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  Speaker 1: of new stuff that's due to come online is renewables,
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  Speaker 1: and so that is why it's so questionable that you
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  Speaker 1: would go out of your way to essentially raise the
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  Speaker 1: cost of those technologies, which is effectively what Congress is
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  Speaker 1: now done.
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  Speaker 2: Those of us who kind of looked on the outside
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  Speaker 2: and seen the US go from being a net consumer
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  Speaker 2: of energy or oil, I should say to an exporter,
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  Speaker 2: have been very familiar with a rather different story, which
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  Speaker 2: is America had this fracking revolution which was not environmentally friendly,
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  Speaker 2: but did bring an enormous amount of gas online, which
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  Speaker 2: has brought down the price of energy for US consumers.
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  Speaker 2: So I guess the story that you might tell against
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  Speaker 2: your story at least be sort of well, hang on
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  Speaker 2: a minute, it's fracking that has made this a kind
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  Speaker 2: of golden era for US energy prices, and the renewables
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  Speaker 2: is not completely reliable and is more is a sort
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  Speaker 2: of side show to that basic story.
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  Speaker 1: So yeah, really good points. I mean, certainly, we have
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  Speaker 1: the lowest price natural gas in the world in terms
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  Speaker 1: of production, and that has allowed a lot of manufacturing
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  Speaker 1: to be very competitive in the United States. I would
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  Speaker 1: note though, that first of all, that renewables plus storage
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  Speaker 1: gets you maybe not to twenty four hours of generation,
• 10:31
  Speaker 1: but can get you enough production of electricity into the
• 10:34
  Speaker 1: sort of key hours of the evening. And we're starting
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  Speaker 1: to see solar plus storage be very cost competitive in
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  Speaker 1: many markets around the world. Not all markets in the
• 10:42
  Speaker 1: United States, but a bunch of markets. But then just
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  Speaker 1: purely speaking practically in the United States in terms of
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  Speaker 1: what we're going to build over the next five years,
• 10:50
  Speaker 1: You're absolutely right that gas is cheap, and gas is
• 10:53
  Speaker 1: cost competitive in a number of markets in the United States.
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  Speaker 1: The problem is you just cannot get your hands on
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  Speaker 1: a combined cycle gas at the moment for a number
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  Speaker 1: of years, anywhere from three to seven depending on who
• 11:04
  Speaker 1: you asked. So in terms of what our next mega
• 11:07
  Speaker 1: out of capacity is going to be, it basically has
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  Speaker 1: to be renewables because there isn't really any other sources,
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  Speaker 1: and if we have rising demand from AI, that means
• 11:15
  Speaker 1: it's going to probably come from renewables. And again, if
• 11:18
  Speaker 1: you take away essentially what has been a long standing
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  Speaker 1: tax credit and subsidy to the clean energy industry that
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  Speaker 1: is effectively socialized a discounted electricity production price in the
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  Speaker 1: United States, you're just simply going to concentrate it on
• 11:31
  Speaker 1: certain markets. So the next place where you're going to
• 11:33
  Speaker 1: build wind or solar project, potentially you're going to have
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  Speaker 1: to sign a higher price contract in order for the
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  Speaker 1: developer to make the return that they need without the
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  Speaker 1: tax credit.
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  Speaker 2: But if they're the only short term viable source of
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  Speaker 2: additional energy, then it surely must be cost effective to build.
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  Speaker 1: I mean, here's the question, and I think we're going
• 11:52
  Speaker 1: to find this out over the next couple of years,
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  Speaker 1: is what's the breaking point for consumers? So, yes, you
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  Speaker 1: can pass on some form of higher electricity prices. But
• 12:01
  Speaker 1: if you're a developer of a large scale data center,
• 12:03
  Speaker 1: you're not necessarily entirely wedded to the United States. Just
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  Speaker 1: because the most AI has been built not that far
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  Speaker 1: from here, maybe thirty miles from here, just outside of Washington,
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  Speaker 1: doesn't mean that every next AI data center has to
• 12:15
  Speaker 1: be here. To some large degree, AI is some the servers,
• 12:19
  Speaker 1: not all To be clear, there's different types of servers
• 12:21
  Speaker 1: and that's not my area of expertise, but some can
• 12:24
  Speaker 1: really be anywhere in the world, and so they will
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  Speaker 1: go where the price of electricity is most affordable and reliable,
• 12:32
  Speaker 1: and there are other options. Brazil is about seventy eighty
• 12:35
  Speaker 1: percent hydropower, low cost. They've been trying very much to
• 12:39
  Speaker 1: market Brazil as an AI place. Gulf States have enormous
• 12:43
  Speaker 1: amounts of sun, very cheap solar. They don't put big
• 12:46
  Speaker 1: tariffs sun solar equipment like we do, can build batteries
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  Speaker 1: to go along with it. They are certainly trying to
• 12:52
  Speaker 1: market themselves as hubs for AI as well. So no
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  Speaker 1: foregone conclusion that the United States will be the one
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  Speaker 1: and only place where we build all this new capacity.
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  Speaker 2: But as far as you're concerned, the only way that
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  Speaker 2: this energy that we were expecting to come online, or
• 13:08
  Speaker 2: electricity that we were expecting to come online in the
• 13:10
  Speaker 2: US to meet this demand will actually come online is
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  Speaker 2: through higher prices.
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  Speaker 1: I mean, it seems inevitable. And I think one of
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  Speaker 1: the questions we're just trying to parse out, given the
• 13:19
  Speaker 1: incredible complexity of what Congress has just done, is how
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  Speaker 1: many projects could still qualify for the tax credit if
• 13:25
  Speaker 1: they get under construction basically yesterday, and how many of
• 13:29
  Speaker 1: them will not And those that don't obviously are going
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  Speaker 1: to have to figure out some way to get compensated
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  Speaker 1: correctly so that they can earn the return that they want.
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  Speaker 1: The best guess at the moment is that if you
• 13:39
  Speaker 1: get under construction sometime in this calendar year, you'll probably
• 13:42
  Speaker 1: be okay. But the White House just created an additional
• 13:45
  Speaker 1: uncertainty with this executive order.
• 13:47
  Speaker 2: One I saw is that the future clean energy products
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  Speaker 2: that don't have these tax credits will cost fifty percent
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  Speaker 2: more to get built. Do you think that's in the
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  Speaker 2: right ball part?
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  Speaker 1: That feels a little on the high side of me,
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  Speaker 1: But we need to do the analysis ourselves. I think historically,
• 14:03
  Speaker 1: if you look around the world, the history of clean
• 14:05
  Speaker 1: energy is you have a number of countries that have
• 14:07
  Speaker 1: put in place very generous supports in the form of
• 14:10
  Speaker 1: feed in tariffs like we've seen in countries in Europe
• 14:12
  Speaker 1: and elsewhere, and when they disappear, it's terrible news for
• 14:16
  Speaker 1: the industry. But we also find that the industry is
• 14:18
  Speaker 1: incredibly innovative about finding ways to reduce costs the US
• 14:22
  Speaker 1: is really not a low cost market when it comes
• 14:26
  Speaker 1: to putting solar on people's views in particular, but also
• 14:29
  Speaker 1: large scale projects. So there's definitely some room for cost reduction,
• 14:33
  Speaker 1: I think for the industry overall. But there's no question
• 14:35
  Speaker 1: this is going to boost costs. In the case of
• 14:37
  Speaker 1: a typical solar project, the tax credit is thirty percent
• 14:40
  Speaker 1: of CAPECK. So a billion dollar project, three hundred million
• 14:43
  Speaker 1: right off the top was basically disappearing because of tax credits.
• 14:47
  Speaker 1: That has to be dealt with somehow.
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  Speaker 2: And I've seen the Energy Innovation Thing Tank from what
• 14:51
  Speaker 2: you're saying, suggests that maybe it'd be a little bit
• 14:53
  Speaker 2: on the high side, but their estimate of the impact
• 14:56
  Speaker 2: on bills would be that the average energy bill by
• 14:59
  Speaker 2: twenty thirty five could be nearly five hundred dollars higher
• 15:03
  Speaker 2: in Michigan, similar maybe more in Maryland, and six or
• 15:07
  Speaker 2: seven hundred eight hundred dollars higher in Texas than it
• 15:10
  Speaker 2: would have been if the credits had remained.
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  Speaker 1: Yeah, I can't, I won't. I guess I want to
• 15:13
  Speaker 1: dispute that we haven't done that analysis ourselves. I've seen
• 15:15
  Speaker 1: different numbers from other research firms as well. There's no question,
• 15:18
  Speaker 1: particularly in a market like Texas, which is really deregulated
• 15:22
  Speaker 1: and where pricing can get passed along directly to large
• 15:24
  Speaker 1: scale consumers, there's no question this is going to have
• 15:27
  Speaker 1: a real impact ultimately. I think the interesting question is
• 15:30
  Speaker 1: what about businesses. I mean, we talk a lot about
• 15:32
  Speaker 1: retail consumers, and eventually they are the ones who get hit,
• 15:34
  Speaker 1: but more immediately and often cases it's wholesale purchases of
• 15:37
  Speaker 1: electricity that feel the effects. And that is one of
• 15:40
  Speaker 1: the puzzling things why in this debate where the utility
• 15:43
  Speaker 1: is not more engaged in this, because ultimately they're the
• 15:45
  Speaker 1: ones who are going to get bigger bills that they're
• 15:47
  Speaker 1: going to have to pass along to their consumers. Or
• 15:50
  Speaker 1: where were the manufacturers who are going to have to
• 15:52
  Speaker 1: pay higher prices for electricity than they would if you're
• 15:54
  Speaker 1: in the say Ercot market or PJM. I'm puzzled as
• 15:58
  Speaker 1: to why there wasn't a more engage conversation around this,
• 16:01
  Speaker 1: And you're.
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  Speaker 2: Really my mind, even because I was thinking about your title,
• 16:04
  Speaker 2: Emily and the fact that you are a reporter focusing
• 16:06
  Speaker 2: on corporate lobbying and influence. You know, people have focused
• 16:09
  Speaker 2: on the impact and the influence of the fossil fuel
• 16:12
  Speaker 2: lobby in driving part of this bill. And we know
• 16:15
  Speaker 2: that there's some parts of that industry that have been
• 16:19
  Speaker 2: big donors to Donald Trump. But there were awful lot
• 16:21
  Speaker 2: of people on the other side of the argument, including
• 16:23
  Speaker 2: as Ethan mentions, there's the utilities and sectors that would
• 16:28
  Speaker 2: really be hurt by this, not to mention the tech
• 16:30
  Speaker 2: firms who are lobbying to get more cheap electricity. So
• 16:35
  Speaker 2: why is it those voices just weren't heard in the
• 16:38
  Speaker 2: last few weeks.
• 16:39
  Speaker 4: Ultimately, the reason this bill goes so aggressively against clean
• 16:45
  Speaker 4: energy is because of House Speaker Mike Johnson's math issue,
• 16:51
  Speaker 4: which was that he could only stand to lose a
• 16:54
  Speaker 4: very small number of Republican votes, and so that made
• 16:59
  Speaker 4: the House Freedom Caucus, the group of hardline conservatives in
• 17:03
  Speaker 4: the House, that made them very powerful in this conversation,
• 17:08
  Speaker 4: and a lot of them, for the most part, really
• 17:11
  Speaker 4: leaned towards the oil and gas industry. So thinking about
• 17:15
  Speaker 4: Chip roy from Texas, he was one of the most
• 17:20
  Speaker 4: consistent voices saying we really need to phase out these
• 17:23
  Speaker 4: subsidies very quickly. He was in communication very closely with
• 17:29
  Speaker 4: a conservative activist named Alex Epstein who actually shaped a
• 17:34
  Speaker 4: lot of this debate behind the scenes, and basically Alex
• 17:38
  Speaker 4: Epstein's arguments are in favor of natural gas. He says
• 17:44
  Speaker 4: that solar and wind are unreliable sources of energy. You know,
• 17:49
  Speaker 4: I'll let you debunk some of what he has to say,
• 17:52
  Speaker 4: but essentially that the subsidies artificially lowered the cost of
• 17:57
  Speaker 4: electricity and we're creating lee And so there is a
• 18:01
  Speaker 4: lot of arguments behind the scenes against the clean energy
• 18:05
  Speaker 4: industry and ultimately I think oil and gas just really
• 18:09
  Speaker 4: won in this bill.
• 18:10
  Speaker 1: To be clear, they're subsidized too.
• 18:12
  Speaker 2: Yeah, say, I was going to say, there's a hell
• 18:15
  Speaker 2: of a lot of subsidy on that side, but somehow
• 18:18
  Speaker 2: they need subs tody, but the clean energy doesn't. I mean,
• 18:22
  Speaker 2: even Texas is a surprise, right. I Mean that was
• 18:24
  Speaker 2: one of the things that we said after Donald Trump
• 18:27
  Speaker 2: won the election, and there was obviously this question mark
• 18:29
  Speaker 2: about where would he go on And there was some
• 18:31
  Speaker 2: pushback initially on the idea that he would completely repeal
• 18:34
  Speaker 2: the IRA the Biden era tax credits, in part because
• 18:38
  Speaker 2: of the support from the tech industry, but also because
• 18:42
  Speaker 2: it was noticed that partly because it's easier to build
• 18:46
  Speaker 2: stuff in the red states, that there were a lot
• 18:49
  Speaker 2: of Republican states that had actually benefited enormously from the RA,
• 18:53
  Speaker 2: including Texas. I think most of its new electricity supply
• 18:57
  Speaker 2: had come from renewables in the last couple of years.
• 19:01
  Speaker 2: So it's interesting that the representat different Texas just doesn't
• 19:04
  Speaker 2: seem to factor that in.
• 19:07
  Speaker 4: Yeah, it just became such a political talking point, calling
• 19:11
  Speaker 4: the IRA the green new Scam, making it democrat led
• 19:16
  Speaker 4: project essentially that Republicans had to completely nix and create
• 19:23
  Speaker 4: their own path forward when it comes to energy, And
• 19:27
  Speaker 4: an interesting element of the bill is that it's a
• 19:30
  Speaker 4: lot less aggressive when it comes to nuclear energy, which
• 19:34
  Speaker 4: is an area that I know that tech companies have
• 19:37
  Speaker 4: been investing a lot into. Obviously, that's a lot slower
• 19:41
  Speaker 4: moving and it doesn't address the immediate energy needs of
• 19:45
  Speaker 4: data centers. But the nuclear energy industry came out with
• 19:49
  Speaker 4: far less battle scars than some other parts of the industry.
• 19:53
  Speaker 4: And that's a part of this conversation too, is sort
• 19:55
  Speaker 4: of like weighing things in favor of certain kinds of
• 19:58
  Speaker 4: energy over others.
• 19:59
  Speaker 2: That was again much conversation about the political fallout from
• 20:04
  Speaker 2: this bill. You know, over the last few weeks people
• 20:07
  Speaker 2: have wondered whether the Republicans are really kind of ready
• 20:10
  Speaker 2: for what happens in their constituencies when the impact of
• 20:14
  Speaker 2: Medicaid cuts and others come through. But you would think
• 20:17
  Speaker 2: if there's a short term big increase in energy prices
• 20:21
  Speaker 2: that hits people's utility bills, they're electricity bills, is there
• 20:25
  Speaker 2: not a fear on the hill the finger will be
• 20:28
  Speaker 2: pointed to this bill when it comes to that. I mean,
• 20:30
  Speaker 2: it's cost of living is such a big element of
• 20:32
  Speaker 2: the Trump pledge, the promise if you like to voters,
• 20:37
  Speaker 2: do they just think they'll be able to blame other stuff? Yeah?
• 20:39
  Speaker 4: I think part of the sleight of hand is that
• 20:41
  Speaker 4: tax cuts are coming in more immediately than some of
• 20:45
  Speaker 4: the spending cuts, So meaning in the more immediate term,
• 20:50
  Speaker 4: some people are going to see their taxes decrease, whereas
• 20:55
  Speaker 4: some of the potential added cost to electricity bills or
• 21:00
  Speaker 4: some of the loss of Medicaid coverage comes farther down
• 21:04
  Speaker 4: the line. So it is a lot about timelines as well.
• 21:08
  Speaker 4: They've written it in a way that at least Republicans
• 21:11
  Speaker 4: hope that people don't see the more negative effects until
• 21:15
  Speaker 4: after the midterms in twenty twenty eight.
• 21:17
  Speaker 1: If I could jump in, I think you're also maybe
• 21:19
  Speaker 1: ascribing a much higher level of sophistication to this conversation.
• 21:23
  Speaker 1: Then probably actually went on, I don't know that people
• 21:25
  Speaker 1: on the hill understand the economics of power generation at
• 21:30
  Speaker 1: the moment, and the fact that renewables are the most
• 21:32
  Speaker 1: cost competitive, and the fact that it's impossible to get
• 21:34
  Speaker 1: your hands on a natural turbine. These are things that
• 21:37
  Speaker 1: only nerds like me know, So I don't know that
• 21:39
  Speaker 1: stuff that they're kind of across.
• 21:41
  Speaker 2: Would their argument be, Yeah, it's hard under Biden to
• 21:45
  Speaker 2: get this stuff built, but we're going to lift all
• 21:47
  Speaker 2: of these stupid restrictions, and so that natural gas power
• 21:50
  Speaker 2: station could go up in a year.
• 21:52
  Speaker 1: So that just I mean, again, hard to not get
• 21:54
  Speaker 1: in the rabbit hole here. But if there's three or
• 21:56
  Speaker 1: four companies that make these we're talking large scale turbine
• 22:00
  Speaker 1: and so these are big things, specialized manufacturing that goes
• 22:03
  Speaker 1: into them. If you're one of the three or four
• 22:04
  Speaker 1: companies in the world that makes them, and you are
• 22:07
  Speaker 1: selling them at a very high price at the moment,
• 22:09
  Speaker 1: and you have a back order. I guess the question
• 22:11
  Speaker 1: is do you ramp up your manufacturing of those turbines?
• 22:15
  Speaker 1: And if you do, how long is it going to
• 22:17
  Speaker 1: take you to ramp that up? At least a couple
• 22:19
  Speaker 1: of years at the very very least, and then a
• 22:20
  Speaker 1: few more years at least before you can get some
• 22:22
  Speaker 1: more turbines out. And if you're one of those companies
• 22:25
  Speaker 1: and you're looking at the US situation, the political situation here,
• 22:28
  Speaker 1: I think you might very well ask yourself, well, is
• 22:30
  Speaker 1: this the new world we're living in? Or are we
• 22:32
  Speaker 1: going to see some flip back in two or three
• 22:33
  Speaker 1: years back to renewables and suddenly I've got more gas
• 22:37
  Speaker 1: turbine capacity, manufacturing capacity than I know what to do with.
• 22:40
  Speaker 1: I'd be very surprised if there's big investment. But keep
• 22:43
  Speaker 1: an eye on GE and some of the others to
• 22:44
  Speaker 1: see whether they make announcements around that.
• 22:47
  Speaker 2: And it is true when you say is that the
• 22:48
  Speaker 2: world we're living in? I mean it's pretty clear that
• 22:50
  Speaker 2: the world we're living in looks very different, looks more
• 22:52
  Speaker 2: like the IRA world. As you noted, there's lots of
• 22:56
  Speaker 2: countries that have got strong incentives in place for renewables,
• 23:01
  Speaker 2: and we also see developing countries moving to electrify large
• 23:06
  Speaker 2: parts of their grid because it is it's certainly cheaper
• 23:10
  Speaker 2: for them if they're reliant otherwise on imported oil and gas.
• 23:13
  Speaker 4: Yeah.
• 23:13
  Speaker 1: No, I think you raise a very good question. This
• 23:15
  Speaker 1: is not the depth of the US renewable energy industry
• 23:18
  Speaker 1: in the United States by any means, because of the
• 23:21
  Speaker 1: advancements that we've seen, but it is a major setback,
• 23:24
  Speaker 1: and most importantly maybe at the bottom line, as it
• 23:26
  Speaker 1: means our chances of coming anywhere close to reducing our
• 23:30
  Speaker 1: CO two missions in line with address and climate chains
• 23:33
  Speaker 1: are effectively over at the moment.
• 23:35
  Speaker 2: I guess there's one argument, which if it's so unstoppable,
• 23:38
  Speaker 2: we've had this period where we've ramped up production with
• 23:41
  Speaker 2: these massive credits, which were extremely expensive. They blew at
• 23:44
  Speaker 2: least a trillion dollar hole in the deficit, and of
• 23:48
  Speaker 2: course we can say there are other things that are
• 23:50
  Speaker 2: now going to blow a hole in the deficit over
• 23:52
  Speaker 2: the coming years thanks to the last week's bill. But
• 23:55
  Speaker 2: there is an argument that says it ought to be
• 23:57
  Speaker 2: able to stand on its own two feet.
• 23:58
  Speaker 1: No, well, two things the clean energy credits did not,
• 24:01
  Speaker 1: on their own blow a trillion dollar hole in the deficit.
• 24:03
  Speaker 1: They were projected potentially to have done so, but of
• 24:06
  Speaker 1: course now we're living in a different world where they
• 24:08
  Speaker 1: certainly are not going to cost as much as was projected.
• 24:11
  Speaker 1: And even that number I would take a little issue
• 24:13
  Speaker 1: with because it made certain assumptions about hydrogen and other
• 24:16
  Speaker 1: things that haven't really come to pass. But you're right,
• 24:18
  Speaker 1: they were living in a new world in which these
• 24:20
  Speaker 1: industry is going to have to compete without the benefit
• 24:23
  Speaker 1: of tax credits. Unfortunately, it's going to compete against, you know,
• 24:26
  Speaker 1: some existing sources of generation that have been subsidized for
• 24:29
  Speaker 1: a very long time. And of course the administration is
• 24:32
  Speaker 1: also going to try and take steps whatever they can
• 24:34
  Speaker 1: to try and make existing coal fire generation more cost competitive,
• 24:38
  Speaker 1: although it's very unclear to me like what they can
• 24:40
  Speaker 1: actually do that changes the economics of coal.
• 24:43
  Speaker 2: I was going to ask you that actually that's the
• 24:45
  Speaker 2: thing that Donald Trump has held out. You know, yes,
• 24:47
  Speaker 2: it's hard to build a new gas power station, but
• 24:51
  Speaker 2: if you have a coal powered station that you were
• 24:55
  Speaker 2: about to close down, or you've maybe just closed down,
• 24:57
  Speaker 2: how hard is it just to turn that back on?
• 24:59
  Speaker 2: And how hard is it to get the mines up
• 25:01
  Speaker 2: and running again, which is what he's talked about.
• 25:03
  Speaker 1: Hard, is the short answer. You can issue executive orders
• 25:06
  Speaker 1: to try and order certain plants to keep online, but
• 25:09
  Speaker 1: the reality is that coal is not economically competitive for
• 25:12
  Speaker 1: the most part in the United States, particularly with gas,
• 25:15
  Speaker 1: but also with renewable So you can try and force
• 25:18
  Speaker 1: operators to keep running plants, but no one. I'm not
• 25:20
  Speaker 1: a lawyer here, but I think it's tough to force
• 25:22
  Speaker 1: people to lose money on every megawat hour of electricity
• 25:24
  Speaker 1: that they produce because you're trying to make a point
• 25:27
  Speaker 1: about what you think the world should look like in
• 25:29
  Speaker 1: terms of energy consumption that looks something like nineteen eighty seven.
• 25:33
  Speaker 2: It is extraordinary to me as someone who kind of
• 25:36
  Speaker 2: grew up with Margaret Thatcher's defining battle in the nineteen
• 25:39
  Speaker 2: eighties against the uneconomic coal producing mines in the UK,
• 25:44
  Speaker 2: and there was obviously enormous controversy ever trying to shut
• 25:48
  Speaker 2: them down. But to have a republic administration trying to
• 25:50
  Speaker 2: reopen a lot of uneconomic coal mines is an interesting site.
• 25:54
  Speaker 1: I mean, the question is just is there money to
• 25:56
  Speaker 1: do this right? Ultimately, if you want to mobilize private
• 25:58
  Speaker 1: capital to go out and that then that money has
• 26:01
  Speaker 1: to believe that this is the world that we're going
• 26:04
  Speaker 1: to live in for the next five or ten or
• 26:05
  Speaker 1: twenty years. And I think most investors look at this
• 26:09
  Speaker 1: and say, Okay, certainly, this is a certainly regressive period
• 26:13
  Speaker 1: that we're living through, but the end of the day,
• 26:15
  Speaker 1: climate change isn't going anywhere. It's only going to get worse.
• 26:18
  Speaker 1: And so if you believe there's an inevitability that eventually
• 26:21
  Speaker 1: policy makers, whether they deal with climate change in the
• 26:23
  Speaker 1: short run of the long run, they eventually deal with it.
• 26:26
  Speaker 1: I think many people would find it very hard to
• 26:28
  Speaker 1: swallow the idea of making a ten or twenty year
• 26:31
  Speaker 1: investment in a new coal mine.
• 26:33
  Speaker 2: But Emily it seems like there'd be plenty of appetite
• 26:36
  Speaker 2: on the hill for that.
• 26:38
  Speaker 4: Yes, I think there will be. I think this bill
• 26:42
  Speaker 4: got held up in the House for just a couple
• 26:46
  Speaker 4: of days after leaving the Senate because this group of
• 26:52
  Speaker 4: Republicans said, we want to go harder against clean energy,
• 26:58
  Speaker 4: we want more favorable for oil and gas, and they
• 27:03
  Speaker 4: spent hours and hours in the White House at the
• 27:07
  Speaker 4: eleventh hour trying to extract as many concessions from the
• 27:11
  Speaker 4: administration on this as they possibly could, and they think
• 27:15
  Speaker 4: that is bearing out that bore out yesterday in terms
• 27:18
  Speaker 4: of this executive order, and we're going to continue to
• 27:22
  Speaker 4: see the deals that were made, the agreements that they
• 27:26
  Speaker 4: hashed out recreating the energy landscape in their image.
• 27:31
  Speaker 2: So, as Ethan pointedly made clear, this is the end
• 27:34
  Speaker 2: of the story for any expectation that the US would
• 27:38
  Speaker 2: meet its climate change obligations, but apparently not the end
• 27:41
  Speaker 2: of the story when it comes to the assault on renewables.
• 27:44
  Speaker 2: Emily Ethan, thank you so much, Thank you, thanks for
• 27:52
  Speaker 2: listening to Trumponomics from Bloomberg. It was hosted by me
• 27:55
  Speaker 2: Stephanie Flanders and I was joined by Bloomberg reporter Emily
• 27:58
  Speaker 2: Burnbaum and Bloomberg any Ethan Zindler. Trumponomics is produced by
• 28:03
  Speaker 2: Summer Sadi and Moses and Am with help from Amy
• 28:06
  Speaker 2: Keen and special thanks this week to Rachel Lewis Chrisky.
• 28:10
  Speaker 2: Sound design is by Blake Maples and Sage Bowman is
• 28:14
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• 28:19
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• 28:22
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